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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

(Mark One)

 

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

 

FOR THE QUARTERLY PERIOD ENDED March 31, 2024

 

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

 

COMMISSION FILE NUMBER: 814-00852

 

 

 

SuRo Capital Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland 27-4443543
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
640 Fifth Avenue, 12th Floor, New York, NY 10019
(Address of principal executive offices) (Zip Code)

 

(212) 931-6331

(Registrant’s telephone number, including area code)

 

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

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share   SSSS   Nasdaq Global Select Market
6.00% Notes due 2026   SSSSL   Nasdaq Global Select Market

 

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 ☒ NO ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

 

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

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☐
Emerging growth company ☐  

 

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

 

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

 

The issuer had 23,353,284 shares of common stock, $0.01 par value per share, outstanding as of May 8, 2024.

 

 

 

 
 

 

SURO CAPITAL CORP.

 

TABLE OF CONTENTS

 

    PAGE
PART I. FINANCIAL INFORMATION  
Item 1. Financial Statements 1
  Condensed Consolidated Statements of Assets and Liabilities as of March 31, 2024 (Unaudited) and December 31, 2023 1
  Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 2
  Condensed Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 3
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 4
  Condensed Consolidated Schedule of Investments as of March 31, 2024 (Unaudited) 5
  Condensed Consolidated Schedule of Investments as of December 31, 2023 9
  Notes to Condensed Consolidated Financial Statements as of March 31, 2024 (Unaudited) 13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43
Item 3. Quantitative and Qualitative Disclosures About Market Risk 52
Item 4. Controls and Procedures 53
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 53
Item 1A. Risk Factors 53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54
Item 3. Defaults Upon Senior Securities 54
Item 4. Mine Safety Disclosures 54
Item 5. Other Information 54
Item 6. Exhibits 55
Signatures   56

 

i
 

 

PART I

 

Item 1. Financial Statements

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

 

   March 31, 2024   December 31, 2023 
ASSETS          
Investments at fair value:          
Non-controlled/non-affiliate investments (cost of $170,371,625 and $160,994,161, respectively)  $140,167,986   $147,167,535 
Non-controlled/affiliate investments (cost of $32,733,009 and $32,775,940, respectively)   22,871,704    24,931,333 
Controlled investments (cost of $18,771,097 and $18,771,097, respectively)   11,975,881    11,982,381 
Total Portfolio Investments   175,015,571    184,081,249 
Investments in U.S. Treasury bills (cost of $29,245,079 and $63,792,704, respectively)   29,621,913    63,810,855 
Total Investments (cost of $251,120,810 and $276,333,902, respectively)   204,637,484    247,892,104 
Cash   50,814,399    28,178,352 
Escrow proceeds receivable   236,303    309,293 
Interest and dividends receivable   137,657    132,607 
Deferred financing costs   577,900    594,726 
Prepaid expenses and other assets(1)   467,149    494,602 
Total Assets   256,870,892    277,601,684 
LIABILITIES          
Accounts payable and accrued expenses(1)   1,270,583    346,308 
Dividends payable   44,700    152,523 
6.00% Notes due December 30, 2026(2)   73,834,474    73,745,207 
Total Liabilities   75,149,757    74,244,038 
Commitments and contingencies (Notes 7 and 10)          
Net Assets  $181,721,135   $203,357,646 
NET ASSETS          
Common stock, par value $0.01 per share (100,000,000 authorized; 25,353,284 and 25,445,805 issued and outstanding, respectively)  $253,533   $254,458 
Paid-in capital in excess of par   248,883,867    248,454,107 
Accumulated net investment loss   (7,527,013)   (4,304,111)
Accumulated net realized loss on investments, net of distributions   (12,772,846)   (12,348,772)
Accumulated net unrealized appreciation/(depreciation) of investments   (47,116,406)   (28,698,036)
Net Assets  $181,721,135   $203,357,646 
Net Asset Value Per Share  $7.17   $7.99 

 

See accompanying notes to condensed consolidated financial statements.

 

 

(1) This balance includes a right of use asset and corresponding operating lease liability, respectively. Refer to “Note 7—Commitments and Contingencies—Operating Leases and Related Deposits” for more detail.
(2) As of March 31, 2024, the 6.00% Notes due December 30, 2026 (the “6.00% Notes due 2026”) (effective interest rate of 6.53%) had a face value $75,000,000. As of December 31, 2023, the 6.00% Notes due 2026 (effective interest rate of 6.53%) had a face value $75,000,000. Refer to “Note 10—Debt Capital Activities” for a reconciliation of the carrying value to the face value.

 

1
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

   2024   2023 
   Three Months Ended March 31, 
   2024   2023 
INVESTMENT INCOME          
Non-controlled/non-affiliate investments:          
Interest income(1)  $242,007   $49,475 
Dividend income   21,875    63,145 
Controlled investments:          
Interest income   435,000    236,000 
Interest income from U.S. Treasury bills   829,209    950,462 
Total Investment Income   1,528,091    1,299,082 
OPERATING EXPENSES          
Compensation expense   2,185,318    2,136,754 
Directors’ fees(2)   171,113    160,565 
Professional fees   728,559    990,834 
Interest expense   1,214,267    1,213,286 
Income tax expense   2,100    529,780 
Other expenses   449,636    489,628 
Total Operating Expenses   4,750,993    5,520,847 
Net Investment Loss   (3,222,902)   (4,221,765)
Realized Gain/(Loss) on Investments:          
Non-controlled/non-affiliated investments   (484,141)   189,343 
Non-controlled/affiliate investments   60,067    — 
Net Realized Gain/(Loss) on Investments   (424,074)   189,343 
Change in Unrealized Appreciation/(Depreciation) of Investments:          
Non-controlled/non-affiliated investments   (16,395,171)   (2,063,577)
Non-controlled/affiliate investments   (2,016,699)   (1,320,364)
Controlled investments   (6,500)   12,032,872 
Net Change in Unrealized Appreciation/(Depreciation) of Investments   (18,418,370)   8,648,931 
Net Change in Net Assets Resulting from Operations  $(22,065,346)  $4,616,509 
Net Change in Net Assets Resulting from Operations per Common Share:          
Basic  $(0.87)  $0.16 
Diluted(3)  $(0.87)  $0.16 
Weighted-Average Common Shares Outstanding          
Basic   25,393,490    28,378,529 
Diluted(3)   25,393,490    28,378,529 

 

See accompanying notes to condensed consolidated financial statements.

 

 

(1) Includes interest income earned on idle cash.
(2) Refer to “Note 11 — Stock-Based Compensation” for more detail.
(3)

For the three months ended March 31, 2024 and March 31, 2023, there were no potentially dilutive securities outstanding. Refer to “Note 6 — Net Change in Net Assets Resulting from Operations per Common Share — Basic and Diluted”.

 

2
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

 

   2024   2023 
   Three Months Ended March 31, 
   2024   2023 
Net Assets at Beginning of Year  $203,357,646   $210,020,702 
           
Change in Net Assets Resulting from Operations          
Net investment loss   (3,222,902)   (4,221,765)
Net realized gain/(loss) on investments   (424,074)   189,343 
Net change in unrealized appreciation/(depreciation) of investments   (18,418,370)   8,648,931 
Net Change in Net Assets Resulting from Operations   (22,065,346)   4,616,509 
Change in Net Assets Resulting from Capital Transactions          
Stock-based compensation   428,835    405,858 
Net Change in Net Assets Resulting from Capital Transactions   428,835    405,858 
Total Change in Net Assets   (21,636,511)   5,022,367 
Net Assets at March 31  $181,721,135   $215,043,069 
           
Capital Share Activity          
Shares outstanding at beginning of year   25,445,805    28,429,499 
Issuance of common stock under restricted stock plan, net(1)   (92,521)   (90,919)
Shares Outstanding at End of Period   25,353,284    28,338,580 

 

See accompanying notes to condensed consolidated financial statements.

 

 

(1) Refer to “Note 11 — Stock-Based Compensation” for more detail.

 

3
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   2024   2023 
   Three Months Ended March 31, 
   2024   2023 
Cash Flows from Operating Activities        
Net change in net assets resulting from operations  $(22,065,346)  $4,616,509 
Adjustments to reconcile net change in net assets resulting from operations to net cash provided by operating activities:          
Net realized (gain)/loss on investments   424,074    (189,343)
Net change in unrealized (appreciation)/depreciation of investments   18,418,370    (8,648,931)
Amortization of discount on 6.00% Notes due 2026   106,093    104,936 
Stock-based compensation   428,835    405,858 
Adjustments to escrow proceeds receivable   (72,997)   108,394 
Accrued interest on U.S. Treasury bills   (376,834)   (458,580)
Purchases of investments in:          
Portfolio investments   (10,003,934)   (2,003,698)
U.S. Treasury bills   —    (35,497,676)
Proceeds from sales or maturity of investments in:          
Portfolio investments   318,316    2,860,159 
U.S. Treasury bills   34,547,625    45,000,118 
Change in operating assets and liabilities:          
Prepaid expenses and other assets   27,453    72,804 
Interest and dividends receivable   (5,050)   33,758 
Escrow proceeds receivable   72,990    18,647 
Accounts payable and accrued expenses   924,275    1,680,946 
Net Cash Provided by Operating Activities   22,743,870    8,103,901 
Cash Flows from Financing Activities          
Cash dividends paid   (107,823)   (107,823)
Net Cash Used in Financing Activities   (107,823)   (107,823)
Total Increase in Cash Balance   22,636,047    7,996,078 
Cash Balance at Beginning of Year   28,178,352    40,117,598 
Cash Balance at End of Period  $50,814,399   $48,113,676 
           
Supplemental Information:   2024    2023 
Interest paid  $1,125,000   $1,125,000 
Taxes paid   2,100    4,314 

 

See accompanying notes to condensed consolidated financial statements.

 

4
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED)

March 31, 2024

 

Portfolio Investments* 

Headquarters/

Industry

  Date of
Initial
Investment		 

Shares/

Principal

   Cost   Fair
Value		   % of Net
Assets		 
NON-CONTROLLED/NON-AFFILIATE                          
Learneo, Inc. (f/k/a Course Hero, Inc.)  Redwood City, CA                       
Preferred shares, Series A 8%  Online Education  9/18/2014   2,145,509   $5,000,001   $32,983,548    18.15%
Preferred shares, Series C 8%  Online Education  11/5/2021   275,659    9,999,971    9,999,971    5.50%
Total              14,999,972    42,983,519    23.65%
ServiceTitan, Inc.  Glendale, CA                       
Common shares  Contractor Management Software  6/30/2023   151,515    10,008,233    13,406,349    7.38%
Blink Health, Inc.  New York, NY                       
Preferred shares, Series A  Pharmaceutical Technology  10/27/2020   238,095    5,000,423    1,558,654    0.86%
Preferred shares, Series C  Pharmaceutical Technology  10/27/2020   261,944    10,003,917    9,999,974    5.50%
Total              15,004,340    11,558,628    6.36%
Locus Robotics Corp.  Wilmington, MA                       
Preferred shares, Series F 6%  Warehouse Automation  11/30/2022   232,568    10,004,286    10,886,060    5.99%
Supplying Demand, Inc. (d/b/a Liquid Death)  Los Angeles, CA                       
Preferred shares, Series F-1  Lifestyle Beverage Brand  1/18/2024   776,747    10,003,934    9,999,996    5.50%
Whoop, Inc.  Boston, MA                       
Preferred shares, Series C  Fitness Technology  6/30/2022   13,293,450    10,011,460    8,817,987    4.85%
FourKites, Inc.  Chicago, IL                       
Common shares  Supply Chain Technology  7/7/2023   1,398,024    8,530,389    7,980,900    4.39%
Shogun Enterprises, Inc. (d/b/a Hearth)  Austin, TX                       
Preferred shares, Series B-1 Home Improvement Finance  2/26/2021   436,844    3,501,657    2,983,237    1.64%
Preferred shares, Series B-2 Home Improvement Finance  2/26/2021   301,750    3,501,661    2,983,241    1.64%
Preferred shares, Series B-3 Home Improvement Finance  5/2/2022   56,936    530,822    452,447    0.25%
Preferred shares, Series B-4 Home Improvement Finance  7/12/2023   48,267    366,606    356,146    0.20%
Common Warrants, Strike Price $0.01, Expiration Date 7/12/2026 Home Improvement Finance  7/12/2023   86,076    140,060    —    —%
Total             8,040,806    6,775,071    3.73%
Orchard Technologies, Inc.  New York, NY                       
Preferred shares, Series D 8% Real Estate Platform  8/9/2021   558,053    3,751,518    —    —%
Senior Preferred shares, Series 2 Real Estate Platform  8/9/2021   58,771    587,951    —    —%
Senior Preferred shares, Series 1 7% Real Estate Platform  1/13/2023   441,228    4,418,406    4,412,280    2.43%
Common shares Real Estate Platform  8/9/2021   558,053    3,751,518    —    —%
Total            12,509,393    4,412,280    2.43%
True Global Ventures 4 Plus Pte Ltd**  Singapore, Singapore                       
Limited Partner Fund Investment(8) Venture Investment Fund  8/27/2021   1    960,778    4,054,309    2.23%
Neutron Holdings, Inc. (d/b/a/ Lime)  San Francisco, CA                       
Junior Preferred shares, Series 1-D  Micromobility  1/25/2019   41,237,113    10,007,322    3,485,014    1.92%
Junior Preferred Convertible Note 4% Due 5/11/2027***  Micromobility  5/11/2020  $506,339    506,339    506,339    0.28%
Common Warrants, Strike Price $0.01, Expiration Date 5/11/2027  Micromobility  5/11/2020   2,032,967    —    40,659    0.02%
Total              10,513,661    4,032,012    2.22%
PayJoy, Inc.  San Francisco, CA                       
Preferred shares  Mobile Access Technology  7/23/2021   244,117    2,501,570    2,500,002    1.38%
Simple Agreement for Future Equity  Mobile Access Technology  5/25/2023   1    501,470    500,000    0.28%
Total             3,003,040    3,000,002    1.65%
Forge Global, Inc.**  San Francisco, CA                       
Common shares(3)**(3) Online Marketplace Finance  7/20/2011   1,145,875    2,093,988    2,211,539    1.22%
Varo Money, Inc.**  San Francisco, CA                       
Common shares Financial Services  8/11/2021   1,079,266    10,005,548    1,858,913    1.02%

 

See accompanying notes to condensed consolidated financial statements.

 

5
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued

March 31, 2024

 

Portfolio Investments* 

Headquarters/

Industry

 

Date of

Initial

Investment

 

Shares/

Principal

   Cost  

Fair

Value

  

% of Net

Assets

 
Xgroup Holdings Limited (d/b/a Xpoint)(7)  Philadelphia, PA                       
Convertible Note 6%, Due 10/17/2024(4)  Geolocation Technology 

8/17/2022

  $1,325,000    1,338,976    1,658,332    0.91%
Aventine Property Group, Inc.  Chicago, IL                       
Common shares*** Cannabis REIT  9/11/2019   312,500    2,580,750    1,212,796    0.67%
Commercial Streaming Solutions Inc. (d/b/a BettorView)(7)  Las Vegas, NV                       
Simple Agreement for Future Equity Interactive Media & Services  3/26/2021   1    1,004,240    1,000,000    0.55%
Stake Trade, Inc. (d/b/a Prophet Exchange)(7)  New York, NY                       
Simple Agreement for Future Equity Sports Betting  7/26/2023   1    1,002,153    1,000,000    0.55%
AltC Sponsor LLC**(10)(12)  New York, NY                       
Common shares, Class B Special Purpose Acquisition Company  7/21/2021   214,400    224,753    767,671    0.42%
Common shares, Class A Special Purpose Acquisition Company  7/21/2021   24,900    26,102    178,312    0.10%
Total             250,855    945,983    0.52%
Residential Homes for Rent, LLC (d/b/a Second Avenue)  Chicago, IL                       
Preferred shares, Series A(6) Real Estate Platform  12/23/2020   150,000    1,500,000    654,705    0.36%
EDGE Markets, Inc.(7)  San Diego, CA                       
Preferred shares, Series Seed Gaming Technology  5/18/2022   456,704    501,330    500,000    0.28%
Skillsoft Corp.**  Nashua, NH                       
Common shares(3) Online Education  6/8/2021   49,092    9,818,428    441,828    0.24%
Churchill Sponsor VII LLC**(10)(14)  New York, NY                       
Common share units Special Purpose Acquisition Company  2/25/2021   292,100    205,820    362,894    0.20%
Warrant units Special Purpose Acquisition Company  2/25/2021   277,000    94,180    31,880    0.02%
Total             300,000    394,774    0.22%
YouBet Technology, Inc. (d/b/a FanPower)(7)  New York, NY                       
Preferred shares, Series Seed-2 Digital Media Technology  8/26/2021   578,029    752,943    187,500    0.10%
Rebric, Inc. (d/b/a Compliable)(7)  Denver, CO                       
Preferred shares, Series Seed-4 Gaming Licensing  10/12/2021   2,406,492    1,002,755    157,658    0.09%
Kinetiq Holdings, LLC  Philadelphia, PA                       
Common shares, Class A  Social Data Platform  3/30/2012   112,374    —    36,845    0.02%
Trax Ltd.**  Singapore, Singapore                       
Common shares Retail Technology  6/9/2021   55,591    2,781,148    —    —%
Preferred shares, Investec Series Retail Technology  6/9/2021   144,409    7,224,600    —    —%
Total             10,005,748    —    —%
Aspiration Partners, Inc.  Marina Del Rey, CA                       
Preferred shares, Series A  Financial Services  8/11/2015   540,270    1,001,815    —    —%
Preferred shares, Series C-3  Financial Services  8/12/2019   24,912    281,190    —    —%
Total              1,283,005    —    —%
Fullbridge, Inc.  Cambridge, MA                       
Common shares  Business Education  5/13/2012   517,917    6,150,506    —    —%
Promissory Note 1.47%, Due 11/9/2021(4)(11) Business Education  3/3/2016  $2,270,458    2,270,858    —    —%
Total              8,421,364    —    —%
Treehouse Real Estate Investment Trust, Inc.  Chicago, IL                       
Common shares  Cannabis REIT  9/11/2019   312,500    4,919,250    —    —%
                           
Total Non-controlled/Non-affiliate             $170,371,625   $140,167,986    77.13%

 

See accompanying notes to condensed consolidated financial statements.

 

6
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued

March 31, 2024

 

Portfolio Investments* 

Headquarters/

Industry

 

Date of

Initial

Investment

 

Shares/

Principal

   Cost  

Fair

Value

  

% of Net

Assets

 
NON-CONTROLLED/AFFILIATE(1)                          
StormWind, LLC(5)  Scottsdale, AZ                       
Preferred shares, Series D 8% Interactive Learning  11/26/2019   329,337   $257,267   $565,571    0.31%
Preferred shares, Series C 8% Interactive Learning  1/7/2014   2,779,134    4,000,787    5,976,337    3.29%
Preferred shares, Series B 8% Interactive Learning  12/16/2011   3,279,629    2,019,687    3,870,706    2.13%
Preferred shares, Series A 8% Interactive Learning  2/25/2014   366,666    110,000    227,478    0.13%
Total             6,387,741    10,640,092    5.86%
PSQ Holdings, Inc. (d/b/a PublicSquare)**(13)  West Palm Beach, FL                       
Common shares, Class A(3) E-Commerce Marketplace  4/1/2021   1,976,032    1,556,587    9,036,394    4.97%
Warrants, Strike Price $11.50, Expiration Date 7/19/2028(3) E-Commerce Marketplace  4/1/2021   2,296,037    985,722    1,492,424    0.82%
Total             2,542,309    10,528,818    5.79%
OneValley, Inc. (f/k/a NestGSV, Inc.)  San Mateo, CA                       
Derivative Security, Expiration Date 8/23/2024(9) Global Innovation Platform  8/23/2019   1    8,555,124    424,489    0.23%
Convertible Promissory Note 8% Due 8/23/2024(4) Global Innovation Platform  2/17/2016  $1,010,198    1,030,176    1,278,305    0.70%
Total             9,585,300    1,702,794    0.94%
Maven Research, Inc.  San Francisco, CA                       
Preferred shares, Series C Knowledge Networks  7/2/2012   318,979    2,000,447    —    —%
Preferred shares, Series B Knowledge Networks  2/28/2012   49,505    217,206    —    —%
Total             2,217,653    —    —%
Curious.com, Inc.  Menlo Park, CA                       
Common shares Online Education  11/22/2013   1,135,944    12,000,006    —    —%
                           
Total Non-controlled/Affiliate            $32,733,009   $22,871,704    12.59%
                           
CONTROLLED(2)                          
Architect Capital PayJoy SPV, LLC**  San Francisco, CA                       
Membership Interest in Lending SPV*** Mobile Finance Technology  3/24/2021  $10,000,000   $10,006,745   $10,000,000    5.50%
Colombier Sponsor II LLC**(10)  Palm Beach, FL                       
Class B Units Special Purpose Acquisition Company  11/20/2023   1,040,000    1,103,719    1,101,695    0.61%
Class W Units Special Purpose Acquisition Company      1,600,000    499,221    498,305    0.27%
Total             1,602,940    1,600,000    0.88%
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)  Cupertino, CA                       
Preferred shares, Class A Clean Technology  4/15/2014   14,300,000    7,151,412    375,881    0.21%
Common shares Clean Technology  4/15/2014   100,000    10,000    —    —%
Total             7,161,412    375,881    0.21%
                           
Total Controlled            $18,771,097   $11,975,881    6.59%
                           
Total Portfolio Investments            $221,875,731   $175,015,571    96.31%
                           
U.S. Treasury                          
U.S. Treasury bill, 0%, due 6/27/2024***(3)    12/29/2023  $30,000,000   $29,245,079   $29,621,913    16.30%
Total             29,245,079    29,621,913    16.30%
                           
TOTAL INVESTMENTS             $251,120,810   $204,637,484    112.61%

 

See accompanying notes to condensed consolidated financial statements.

 

7
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued

March 31, 2024

 

 

* All portfolio investments are non-control/non-affiliated and non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their initial public offering (“IPO”). Preferred dividends are generally only payable when declared and paid by the portfolio company’s board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All of the Company’s portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value”).
   
** Indicates assets that SuRo Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Of the Company’s total investments as of March 31, 2024, 15.66% of its total investments are non-qualifying assets.
   
*** Investment is income-producing.

 

(1) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of SuRo Capital Corp. if SuRo Capital Corp. beneficially owns, directly or indirectly, between 5% and 25% of the voting securities (i.e., securities with the right to elect directors) of such company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.
   
(2) “Control Investments” are investments in those companies that are “Controlled Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company beneficially owns, directly or indirectly, more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.
   
(3) Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. Refer to “Note 4—Investments at Fair Value”.
   
(4) As of March 31, 2024, the investments noted had been placed on non-accrual status.
   
(5) SuRo Capital Corp.’s investments in StormWind, LLC are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SW Holdings, Inc.
   
(6) SuRo Capital Corp.’s investment in preferred shares of Residential Homes for Rent, LLC (d/b/a Second Avenue) are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC AV Holdings, Inc.
   
(7) SuRo Capital Corp.’s investments in Commercial Streaming Solutions Inc. (d/b/a BettorView), YouBet Technology, Inc. (d/b/a FanPower), Rebric, Inc. (d/b/a Compliable), EDGE Markets, Inc., Xgroup Holdings Limited (d/b/a Xpoint), and Stake Trade, Inc. (d/b/a Prophet Exchange) are held through SuRo Capital Corp.’s wholly owned subsidiary, SuRo Capital Sports, LLC (“SuRo Sports”).
   
(8) SuRo Capital Corp.’s investments in True Global Ventures 4 Plus Pte Ltd are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SVDS Holdings, Inc.
   
(9) On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in OneValley, Inc. (f/k/a NestGSV, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. OneValley, Inc. (f/k/a NestGSV, Inc.) has the right to call the position at any time over a five year period, ending August 23, 2024, while SuRo Capital Corp. can put the shares to OneValley, Inc. (f/k/a NestGSV, Inc.) at the end of the five year period.
   
(10) Denotes an investment that is the sponsor of a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
   
(11) On November 9, 2021, Fullbridge, Inc.’s obligations under its financing arrangements with the Company became past due.

  

(12) On July 11, 2023, AltC Acquisition Corp. announced it signed a definitive agreement to merge with Oklo, Inc. As part of the transaction, SuRo Capital Corp.’s Share units in AltC Sponsor LLC converted to 24,900 Class A Common shares and 214,400 Class B Common shares. SuRo Capital Corp.’s AltC Sponsor LLC position is adjusted for certain lock-up provisions.
   
(13) On July 19, 2023, Colombier Acquisition Corp. (“Colombier”) stockholders approved a business combination with PSQ Holdings, Inc. (d/b/a PublicSq.) and related proposals at a special meeting. Also on July 19, 2023, PSQ Holdings, Inc. announced that it had consummated the business combination with Colombier pursuant to a merger agreement between the parties, creating the resultant combined company PSQ Holdings, Inc. (d/b/a PublicSq.). SuRo Capital Corp.’s shares of PSQ Holdings, Inc. (d/b/a PublicSquare) Class A Common shares are subject to contractual sale restrictions in the form of a lock-up agreement applicable to the common shares after the company’s IPO, while the PSQ Holdings, Inc. (d/b/a PublicSquare) warrants are freely tradable. The lock-up agreement expires on July 19, 2024. The lock-up agreement has early lock-up expiration provisions which would allow SuRo Capital Corp. to sell its Class A common shares in PSQ Holdings, Inc. (d/b/a PublicSquare) if the closing price of the Class A common stock equals or exceeds $12.00 per share, as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations for any 20 trading days within any 30 trading day period commencing on December 16, 2023.
   
(14) On August 1, 2023, Churchill Capital Corp. VII announced it signed a definitive agreement to merge with CorpAcq Holdings Limited. The fair value of SuRo Capital Corp.’s Churchill Sponsor VII LLC position is adjusted for certain lock-up provisions.

 

8
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2023

 

Portfolio Investments* 

Headquarters/

Industry

 

Date of

Initial

Investment

 

Shares/

Principal

   Cost  

Fair

Value

   % of Net
Assets		 
NON-CONTROLLED/NON-AFFILIATE                          
Learneo, Inc. (f/k/a Course Hero, Inc.)  Redwood City, CA                       
Preferred shares, Series A 8%  Online Education  9/18/2014   2,145,509   $5,000,001   $45,982,580    22.61%
Preferred shares, Series C 8%  Online Education  11/5/2021   275,659    9,999,971    9,999,971    4.92%
Total              14,999,972    55,982,551    27.53%
ServiceTitan, Inc.  Glendale, CA                       
Common shares  Contractor Management Software  6/30/2023   151,515    10,008,233    11,960,975    5.88%
Blink Health, Inc.  New York, NY                       
Preferred shares, Series A  Pharmaceutical Technology  10/27/2020   238,095    5,000,423    1,692,855    0.83%
Preferred shares, Series C  Pharmaceutical Technology  10/27/2020   261,944    10,003,917    9,999,975    4.92%
Total              15,004,340    11,692,830    5.75%
Locus Robotics Corp.  Wilmington, MA                       
Preferred shares, Series F 6%  Warehouse Automation  11/30/2022   232,568    10,004,286    10,675,766    5.25%
Whoop, Inc.  Boston, MA                       
Preferred shares, Series C  Fitness Technology  6/30/2022   13,293,450    10,011,460    9,612,887    4.73%
Shogun Enterprises, Inc. (d/b/a Hearth)(13)  Austin, TX                       
Preferred shares, Series B-1 Home Improvement Finance  2/26/2021   436,844    3,501,657    3,132,942    1.54%
Preferred shares, Series B-2 Home Improvement Finance  2/26/2021   301,750    3,501,661    3,132,946    1.54%
Preferred shares, Series B-3 Home Improvement Finance  5/2/2022   56,936    530,822    475,152    0.23%
Preferred shares, Series B-4 Home Improvement Finance  7/12/2023   48,267    366,606    342,517    0.17%
Common Warrants, Strike Price $0.01, Expiration Date 7/12/2026 Home Improvement Finance  7/12/2023   86,076    140,060    —    —%
Total             8,040,806    7,083,557    3.48%
FourKites, Inc.  Chicago, IL                       
Common shares  Supply Chain Technology  7/7/2023   1,398,024    8,530,389    6,926,176    3.41%
Orchard Technologies, Inc.(12)  New York, NY                       
Preferred shares, Series D 8% Real Estate Platform  8/9/2021   558,053    3,751,518    —    —%
Senior Preferred shares, Series 2 Real Estate Platform  8/9/2021   58,771    587,951    —    —%
Senior Preferred shares, Series 1 7% Real Estate Platform  1/13/2023   441,228    4,418,406    4,854,086    2.39%
Common shares Real Estate Platform  8/9/2021   558,053    3,751,518    —    —%
Total            12,509,393    4,854,086    2.39%
True Global Ventures 4 Plus Pte Ltd**  Singapore, Singapore                       
Limited Partner Fund Investment(8) Venture Investment Fund  8/27/2021   1    960,778    4,054,309    1.99%
Neutron Holdings, Inc. (d/b/a/ Lime)  San Francisco, CA                       
Junior Preferred shares, Series 1-D  Micromobility  1/25/2019   41,237,113    10,007,322    3,485,014    1.71%
Junior Preferred Convertible Note 4% Due 5/11/2027*** Micromobility  5/11/2020  $506,339    506,339    506,339    0.25%
Common Warrants, Strike Price $0.01, Expiration Date 5/11/2027  Micromobility  5/11/2020   2,032,967    —    —    —%
Total              10,513,661    3,991,353    1.96%
Forge Global, Inc.**  San Francisco, CA                       
Common shares(3) Online Marketplace Finance  7/20/2011   1,145,875    2,093,988    3,930,351    1.93%
PayJoy, Inc.  San Francisco, CA                       
Preferred shares  Mobile Access Technology  7/23/2021   244,117    2,501,570    2,500,002    1.23%
Simple Agreement for Future Equity  Mobile Access Technology  5/25/2023   1    501,470    500,000    0.25%
Total         -    3,003,040    3,000,002    1.48%
Residential Homes for Rent, LLC (d/b/a Second Avenue)  Chicago, IL                       
Preferred shares, Series A(6) Real Estate Platform  12/23/2020   150,000    1,500,000    2,452,792    1.21%
Varo Money, Inc.**  San Francisco, CA                       
Common shares Financial Services  8/11/2021   1,079,266    10,005,548    2,316,590    1.14%

 

See accompanying notes to condensed consolidated financial statements.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued

December 31, 2023

 

Portfolio Investments* 

Headquarters/

Industry

 

Date of

Initial

Investment

 

Shares/

Principal

   Cost  

Fair

Value

  

% of Net

Assets

 
Aventine Property Group, Inc.  Chicago, IL                       
Common shares*** Cannabis REIT  9/11/2019   312,500    2,580,750    1,418,723    0.70%
Xgroup Holdings Limited (d/b/a Xpoint)**(7)  Philadelphia, PA                       
Convertible Note 6%, Due 10/17/2024(4) Geolocation Technology  8/17/2022  $1,000,000    1,338,976    1,325,000    0.65%
Commercial Streaming Solutions Inc. (d/b/a BettorView)(7)  Las Vegas, NV                       
Simple Agreement for Future Equity Interactive Media & Services  3/26/2021   1    1,004,240    1,000,000    0.49%
Stake Trade, Inc. (d/b/a Prophet Exchange)(7)  New York, NY                       
Simple Agreement for Future Equity Sports Betting  7/26/2023   1    1,002,153    1,000,000    0.49%
AltC Sponsor LLC**(10)(14)  New York, NY                       
Common shares, Class B Special Purpose Acquisition Company  7/21/2021   214,400    224,753    759,076    0.37%
Common shares, Class A Special Purpose Acquisition Company  7/21/2021   24,900    26,102    176,315    0.09%
Total             250,855    935,391    0.46%
Skillsoft Corp.**  Nashua, NH                       
Common shares(3) Online Education  6/8/2021   49,092    9,818,428    863,037    0.42%
Rebric, Inc. (d/b/a Compliable)(7)  Denver, CO                       
Preferred shares, Series Seed-4 Gaming Licensing  10/12/2021   2,406,492    1,002,755    799,323    0.39%
EDGE Markets, Inc.(7)  San Diego, CA                       
Preferred shares, Series Seed Gaming Technology  5/18/2022   456,704    501,330    500,000    0.25%
Churchill Sponsor VII LLC**(10)  New York, NY                       
Common share units Special Purpose Acquisition Company  2/25/2021   292,100    205,820    344,097    0.17%
Warrant units Special Purpose Acquisition Company  2/25/2021   277,000    94,180    18,929    0.01%
Total             300,000    363,026    0.18%
Nextdoor Holdings, Inc.**  San Francisco, CA                       
Common shares, Class B(3) Social Networking  9/27/2018   112,420    626,470    212,474    0.10%
YouBet Technology, Inc. (d/b/a FanPower)(7)  New York, NY                       
Preferred shares, Series Seed-2 Digital Media Technology  8/26/2021   578,029    752,943    187,500    0.09%
Kinetiq Holdings, LLC  Philadelphia, PA                       
Common shares, Class A  Social Data Platform  3/30/2012   112,374    —    28,836    0.01%
Trax Ltd.**  Singapore, Singapore                       
Common shares Retail Technology  6/9/2021   55,591    2,781,148    —    —%
Preferred shares, Investec Series Retail Technology  6/9/2021   144,409    7,224,600    —    —%
Total             10,005,748    —    —%
Aspiration Partners, Inc.  Marina Del Rey, CA                       
Preferred shares, Series A  Financial Services  8/11/2015   540,270    1,001,815    —    —%
Preferred shares, Series C-3  Financial Services  8/12/2019   24,912    281,190    —    —%
Total              1,283,005    —    —%
Fullbridge, Inc.  Cambridge, MA                       
Common shares  Business Education  5/13/2012   517,917    6,150,506    —    —%
Promissory Note 1.47%, Due 11/9/2021(4)(11) Business Education  3/3/2016  $2,270,458    2,270,858    —    —%
Total              8,421,364    —    —%
Treehouse Real Estate Investment Trust, Inc.  Chicago, IL                       
Common shares  Cannabis REIT  9/11/2019   312,500    4,919,250    —    —%
                           
Total Non-controlled/Non-affiliate             $160,994,161   $147,167,535    72.37%

 

See accompanying notes to condensed consolidated financial statements.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued

December 31, 2023

 

Portfolio Investments* 

Headquarters/

Industry

 

Date of

Initial

Investment

 

Shares/

Principal

   Cost  

Fair

Value

  

% of Net

Assets

 
NON-CONTROLLED/AFFILIATE(1)                          
StormWind, LLC(5)  Scottsdale, AZ                       
Preferred shares, Series D 8% Interactive Learning  11/26/2019   329,337   $257,267   $653,975    0.32%
Preferred shares, Series C 8% Interactive Learning  1/7/2014   2,779,134    4,000,787    6,804,933    3.35%
Preferred shares, Series B 8% Interactive Learning  12/16/2011   3,279,629    2,019,687    4,751,064    2.34%
Preferred shares, Series A 8% Interactive Learning  2/25/2014   366,666    110,000    325,903    0.16%
Total             6,387,741    12,535,875    6.16%
PSQ Holdings, Inc. (d/b/a PublicSquare)**(3)(15)  West Palm Beach, FL                       
Common shares, Class A E-Commerce Marketplace  4/1/2021   1,976,032    1,556,587    8,542,386    4.20%
Warrants, Strike Price $11.50, Expiration Date 7/19/2028 E-Commerce Marketplace  4/1/2021   2,396,037    1,028,653    1,964,750    0.97%
Total             2,585,240    10,507,136    5.17%
OneValley, Inc. (f/k/a NestGSV, Inc.)  San Mateo, CA                       
Derivative Security, Expiration Date 8/23/2024(9) Global Innovation Platform  8/23/2019   1    8,555,124    620,927    0.31%
Convertible Promissory Note 8% Due 8/23/2024(4) Global Innovation Platform  2/17/2016  $1,010,198    1,030,176    1,267,395    0.62%
Total             9,585,300    1,888,322    0.93%
Maven Research, Inc.  San Francisco, CA                       
Preferred shares, Series C Knowledge Networks  7/2/2012   318,979    2,000,447    —    —%
Preferred shares, Series B Knowledge Networks  2/28/2012   49,505    217,206    —    —%
Total             2,217,653    —    —%
Curious.com, Inc.  Menlo Park, CA                       
Common shares Online Education  11/22/2013   1,135,944    12,000,006    —    —%
                           
Total Non-controlled/Affiliate            $32,775,940   $24,931,333    12.26%
                           
CONTROLLED(2)                          
Architect Capital PayJoy SPV, LLC**  San Francisco, CA                       
Membership Interest in Lending SPV*** Mobile Finance Technology  3/24/2021  $10,000,000   $10,006,745   $10,000,000    4.92%
Colombier Sponsor II LLC**(10)  Palm Beach, FL                       
Class B Units Special Purpose Acquisition Company  11/20/2023   1,040,000    842,289    1,101,695    0.54%
Class W Units Special Purpose Acquisition Company      1,600,000    760,651    498,305    0.25%
Total             1,602,940    1,600,000    0.79%
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)  Cupertino, CA                       
Preferred shares, Class A Clean Technology  4/15/2014   14,300,000    7,151,412    382,381    0.19%
Common shares Clean Technology  4/15/2014   100,000    10,000    —    —%
Total             7,161,412    382,381    0.19%
                           
Total Controlled            $18,771,097   $11,982,381    5.89%
                           
Total Portfolio Investments            $212,541,198   $184,081,249    90.52%
                           
U.S. Treasury(3)                          
U.S. Treasury bill, 0%, due 3/28/2024***    12/29/2023  $35,000,000    34,547,625    34,559,949    16.99%
U.S. Treasury bill, 0%, due 6/27/2024***    12/29/2023  $30,000,000    29,245,079    29,250,906    14.38%
Total             63,792,704    63,810,855    31.38%
                           
TOTAL INVESTMENTS             $276,333,902   $247,892,104    121.90%

 

See accompanying notes to condensed consolidated financial statements.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued

December 31, 2023

 

 

* All portfolio investments are non-control/non-affiliated and non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their initial public offering (“IPO”). Preferred dividends are generally only payable when declared and paid by the portfolio company’s board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All of the Company’s portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value”).
   
** Indicates assets that SuRo Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Of the Company’s total investments as of December 31, 2023, 14.03% of its total investments are non-qualifying assets.
   
*** Investment is income-producing.

 

(1) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of SuRo Capital Corp. if SuRo Capital Corp. beneficially owns, directly or indirectly, between 5% and 25% of the voting securities (i.e., securities with the right to elect directors) of such company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.
   
(2) “Control Investments” are investments in those companies that are “Controlled Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company beneficially owns, directly or indirectly, more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.
   
(3) Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. Refer to “Note 4—Investments at Fair Value”.
   
(4) As of December 31, 2023, the investments noted had been placed on non-accrual status.
   
(5) SuRo Capital Corp.’s investments in StormWind, LLC are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SW Holdings, Inc.
   
(6) SuRo Capital Corp.’s investment in preferred shares of Residential Homes for Rent, LLC (d/b/a Second Avenue) are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC AV Holdings, Inc.
   
(7) SuRo Capital Corp.’s investments in Commercial Streaming Solutions Inc. (d/b/a BettorView), YouBet Technology, Inc. (d/b/a FanPower), Rebric, Inc. (d/b/a Compliable), EDGE Markets, Inc., Xgroup Holdings Limited (d/b/a Xpoint), and Stake Trade, Inc. (d/b/a Prophet Exchange) are held through SuRo Capital Corp.’s wholly owned subsidiary, SuRo Capital Sports, LLC (“SuRo Sports”).
   
(8) SuRo Capital Corp.’s investments in True Global Ventures 4 Plus Pte Ltd are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SVDS Holdings, Inc. On March 31, 2023, the previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions. On March 31, 2023, the full $2.0 million capital commitment to True Global Ventures 4 Plus Fund LP had been called and funded.
   
(9) On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in OneValley, Inc. (f/k/a NestGSV, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. OneValley, Inc. (f/k/a NestGSV, Inc.) has the right to call the position at any time over a five year period, ending August 23, 2024, while SuRo Capital Corp. can put the shares to OneValley, Inc. (f/k/a NestGSV, Inc.) at the end of the five year period.
   
(10) Denotes an investment that is the sponsor of a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
   
(11) On November 9, 2021, Fullbridge, Inc.’s obligations under its financing arrangements with the Company became past due.
   
(12) On January 13, 2023, SuRo Capital Corp. invested $2.0 million in Orchard Technologies, Inc.’s Series 1 Senior Preferred financing round. As part of the transaction, SuRo Capital Corp. exchanged a portion of its existing Series D Preferred shares investment for Series 1 Senior Preferred shares, Series 2 Senior Preferred shares, and Common shares. Additionally, SuRo Capital Corp.’s previous investment in the Simple Agreement for Future Equity was converted into additional Series 1 Senior Preferred shares.

  

(13) On July 12, 2023, SuRo Capital Corp. invested $0.5 million in Shogun Enterprises, Inc. (d/b/a Hearth)’s Series B-4 Preferred financing round. As part of the transaction, the previous investment in the Convertible Note was converted into Series B-3 Preferred shares. Additionally, SuRo Capital Corp. received Common Warrants as part of the transaction.
   
(14) On July 11, 2023, AltC Acquisition Corp. announced it signed a definitive agreement to merge with Oklo, Inc. As part of the transaction, SuRo Capital Corp.’s Share units converted to 24,900 Class A Common shares and 214,400 Class B Common shares.
   
(15) On July 19, 2023, Colombier Acquisition Corp. (“Colombier”) stockholders approved a business combination with PSQ Holdings, Inc. (d/b/a PublicSquare) and related proposals at a special meeting. Also on July 19, 2023, PSQ Holdings, Inc. announced that it had consummated the business combination with Colombier pursuant to a merger agreement between the parties, creating the resultant combined company PSQ Holdings, Inc. (d/b/a PublicSquare). SuRo Capital Corp.’s shares of PSQ Holdings, Inc. (d/b/a PublicSquare) Class A Common shares are subject to certain restrictions on transfer, while the Company’s PSQ Holdings, Inc. warrants are freely tradable.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 1—NATURE OF OPERATIONS

 

SuRo Capital Corp. (“we”, “us”, “our”, the “Company” or “SuRo Capital”), formerly known as Sutter Rock Capital Corp. and as GSV Capital Corp. and formed in September 2010 as a Maryland corporation, is an internally managed, non-diversified closed-end management investment company. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

The Company’s date of inception was January 6, 2011, which is the date it commenced development stage activities. The Company’s common stock is currently listed on the Nasdaq Global Select Market under the symbol “SSSS” (formerly “GSVC”). Prior to November 24, 2021, the Company’s common stock traded on the Nasdaq Capital Market under the same symbol (“SSSS”). The Company began its investment operations during the second quarter of 2011.

 

The table below displays the Company’s subsidiaries as of March 31, 2024, which, other than GSV Capital Lending, LLC (“GCL”) and SuRo Capital Sports, LLC, are collectively referred to as the “Taxable Subsidiaries.” The Taxable Subsidiaries were formed to hold certain portfolio investments. The Taxable Subsidiaries, including their associated portfolio investments, are consolidated with the Company for accounting purposes, but have elected to be treated as separate entities for U.S. federal income tax purposes. GCL was formed to originate portfolio loan investments within the state of California and is consolidated with the Company for accounting purposes. Refer to “Note 2—Significant Accounting Policies—Basis of Consolidation” below for further detail.

 

Subsidiary 

Jurisdiction of

Incorporation

 

Formation

Date

 

Percentage

Owned

 
GCL  Delaware  April 13, 2012   100%
SuRo Capital Sports, LLC (“SuRo Sports”)  Delaware  March 19, 2021   100%
Subsidiaries below are referred to collectively as the “Taxable Subsidiaries”           
GSVC AE Holdings, Inc. (“GAE”)  Delaware  November 28, 2012   100%
GSVC AV Holdings, Inc. (“GAV”)  Delaware  November 28, 2012   100%
GSVC SW Holdings, Inc. (“GSW”)  Delaware  November 28, 2012   100%
GSVC SVDS Holdings, Inc. (“SVDS”)  Delaware  August 13, 2013   100%

 

The Company’s investment objective is to maximize its portfolio’s total return, principally by seeking capital gains on its equity and equity-related investments, and to a lesser extent, income from debt investments. The Company invests principally in the equity securities of what it believes to be rapidly growing venture capital-backed emerging companies. The Company may invest in these portfolio companies through offerings of the prospective portfolio companies, transactions on secondary marketplaces for private companies, or negotiations with selling stockholders. In addition, the Company may invest in private credit and in founders equity, founders warrants, forward purchase agreements, and private investment in public equity transactions of special purpose acquisition companies (“SPACs”). The Company may also invest on an opportunistic basis in select publicly traded equity securities or certain non-U.S. companies that otherwise meet its investment criteria, subject to any applicable limitations under the 1940 Act.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The interim unaudited condensed consolidated financial statements of the Company are prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is an investment company following the specialized accounting and reporting guidance specified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies. In the opinion of management, all adjustments, all of which were of a normal recurring nature, were considered necessary for the fair presentation of consolidated financial statements for the period have been included.

 

The results of operations for the current interim period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2024. The interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

 

Basis of Consolidation

 

Under Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ (“AICPA”) Audit and Accounting Guide for Investment Companies, the Company is precluded from consolidating any entity other than another investment company, a controlled operating company that provides substantially all of its services and benefits to the Company, and certain entities established for tax purposes where the Company holds a 100% interest. Accordingly, the Company’s Condensed Consolidated Financial Statements include its accounts and the accounts of the Taxable Subsidiaries, GCL, and SuRo Sports, its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of Condensed Consolidated Financial Statements in accordance with GAAP requires the Company’s management to make a number of significant estimates. These include estimates of the fair value of certain assets and liabilities and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates may occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ materially from such estimates.

 

Uncertainties and Risk Factors

 

The Company is subject to a number of risks and uncertainties in the nature of its operations, as well as vulnerability due to certain concentrations. Refer to “Risk Factors” in Part II, Item 1A of this Form 10-Q for a detailed discussion of the risks and uncertainties inherent in the nature of the Company’s operations. Refer to “Note 4—Investments at Fair Value” for an overview of the Company’s industry and geographic concentrations.

 

Investments at Fair Value

 

The Company applies fair value accounting in accordance with GAAP and the AICPA’s Audit and Accounting Guide for Investment Companies. The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

 

Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Level 2—Valuations based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.

 

Level 3—Valuations based on unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The majority of the Company’s investments are Level 3 investments and are subject to a high degree of judgment and uncertainty in determining fair value.

 

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within the Level 3 table set forth in “Note 4—Investments at Fair Value” may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

 

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the measurement period in which the reclassifications occur. Refer to “Levelling Policy” below for a detailed discussion of the levelling of the Company’s financial assets or liabilities and events that may cause a reclassification within the fair value hierarchy.

 

Securities for which market quotations are readily available on an exchange are valued at the most recently available closing price of such security as of the valuation date. If there are legal or contractual restrictions on the sale or use of such security that under ASC 820-10-35, as modified by ASU 2022-03 (as defined below), should be incorporated into the security’s fair value measurement as a characteristic of the security that would transfer to market participants who would buy the security, the Company will consider those restrictions in the fair value determination of that security. Contractual sale restrictions on the sale or use of a security which are an entity-specific characteristic, rather than a security-specific characteristic (as discussed in ASU 2022-03), are not considered in the fair value determinations for such securities. The Company may also obtain quotes with respect to certain of its investments from pricing services, brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined to be adequate, the Company uses the quote obtained.

 

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

 

  1. The quarterly valuation process begins with each portfolio company or investment being initially valued by the internal investment professionals responsible for the portfolio investment;
     
  2. Preliminary valuation estimates are then documented and discussed with senior management;
     
  3. For all investments for which there are no readily available market quotations, the Valuation Committee engages an independent third-party valuation firm to conduct independent appraisals, review management’s preliminary valuations and make its own independent assessment;
     
  4. The Valuation Committee applies the appropriate valuation methodology to each portfolio asset in a consistent manner, considers the inputs provided by management and the independent third-party valuation firm, discusses the valuations and recommends to the Company’s Board of Directors a fair value for each investment in the portfolio; and
     
  5. The Company’s Board of Directors then discusses the valuations recommended by the Valuation Committee and determines in good faith the fair value of each investment in the portfolio.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

In making a good faith determination of the fair value of investments, the Board of Directors applies valuation methodologies consistent with industry practice. Valuation methods utilized include, but are not limited to, the following: comparisons to prices from secondary market transactions; venture capital financings; public offerings; purchase or sales transactions; analysis of financial ratios and valuation metrics of portfolio companies that issued such private equity securities to peer companies that are public; analysis of the portfolio company’s most recent financial statements, forecasts and the markets in which the portfolio company does business, and other relevant factors. The Company assigns a weighting based upon the relevance of each method to assist the Board of Directors in determining the fair value of each investment.

 

For investments that are not publicly traded or that do not have readily available market quotations, the Valuation Committee generally engages an independent valuation firm to provide an independent valuation, which the Company’s Board of Directors considers, among other factors, in making its fair value determinations for these investments. For the current and prior fiscal year, the Valuation Committee engaged an independent valuation firm to perform valuations of 100% of the Company’s investments for which there were no readily available market quotations.

 

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the condensed consolidated financial statements.

 

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. Equity investments with readily available market quotations that are subject to sales restrictions due to an initial public offering (“IPO”) by the portfolio company will be classified as Level 1. Any other equity investments with readily available market quotations that are subject to sales restrictions that would transfer to market participants who would buy the security may be valued at a discount for a lack of marketability (“DLOM”) to the most recently available closing market prices. These investments are generally classified as Level 2 assets. The DLOM used is generally based upon the market value of publicly traded put options with similar terms. For equity securities with readily available market quotations that are subject to entity-specific contractual sale restrictions, rather than security-specific contractual sale restrictions, if such entity-specific contractual sale restrictions first applied or were modified on or after December 15, 2023, the restrictions are not considered in the determination of fair value for that security.

 

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 Board of Directors applies the appropriate respective valuation methodology for the asset class or portfolio holding, which may involve analyzing the relevant portfolio company’s most recently available historical and projected financial results, public market comparables, and other factors. The Board of Directors may also consider other events, including the transaction in which the Company acquired its securities, subsequent equity sales by the portfolio company, and mergers or acquisitions affecting the portfolio company. In addition, the Board of Directors 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.

 

In determining the fair value of equity or equity-linked securities (including simple agreement for future equity (“SAFE”) notes and warrants to purchase common or preferred stock) in a portfolio company, the Board of Directors 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 Board of Directors may use an option pricing model to allocate value to each 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. When equity-linked securities expire worthless, any cost associated with these positions is recognized as a realized loss on investments in the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows. In the event these securities are exercised into common or preferred stock, the cost associated with these securities is reassigned to the cost basis of the new common or preferred stock. These conversions are noted as non-cash operating items on the Condensed Consolidated Statements of Cash Flows.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Debt Investments

 

Given the nature of the Company’s current debt investments (excluding U.S. Treasuries), which are principally convertible and promissory notes issued by venture capital-backed portfolio companies, these investments are classified as Level 3 assets because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. The Company’s debt investments are valued at estimated fair value as determined in good faith by the Company’s Board of Directors.

 

Options

 

The Company’s Board of Directors determines the fair value of options based on methodologies that can include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate. These investments are classified as Level 3 assets because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. The Company’s options are valued at estimated fair value as determined in good faith by the Company’s Board of Directors.

 

Special Purpose Acquisition Companies

 

The Company’s Board of Directors measures its SPAC sponsor investments at fair value, which is equivalent to cost until a SPAC transaction is announced. After a SPAC transaction is announced, the Company’s Board of Directors will determine the fair value of SPAC investments based on fair value analyses that can include option pricing models, probability-weighted expected return method analyses and other techniques as deemed appropriate. Upon completion of the SPAC transaction, the Board of Directors utilizes the public share price of the entity, less a DLOM if there are security-specific contractual sale restrictions on selling. The Company’s SPAC investments are valued at estimated fair value as determined in good faith by the Company’s Board of Directors.

 

Investment Funds

 

In valuing the Company’s investments in venture investment funds (“Venture Investment Funds”), the Company applies the practical expedient provided by the ASC Topic 820 relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). ASC Topic 820 permits an entity holding investments in certain entities that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.

 

Portfolio Company Investment Classification

 

The Company is a non-diversified company within the meaning of the 1940 Act. The Company classifies its investments by level of control. As defined in the 1940 Act, control investments are those where the investor retains the power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual directly or indirectly owns beneficially more than 25% of the voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist when a company or individual directly or indirectly owns, controls or holds the power to vote 5% or more of the outstanding voting securities of a portfolio company. Refer to the Condensed Consolidated Schedules of Investments as of March 31, 2024 and December 31, 2023 for details regarding the nature and composition of the Company’s investment portfolio.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Levelling Policy

 

The portfolio companies in which the Company invests may offer their shares in IPOs. The Company’s shares in such portfolio companies are typically subject to lock-up agreements for 180 days following the IPO. Upon the IPO date, the Company transfers its investment from Level 3 to Level 1 due to the presence of an active market, or Level 2 if limited by the lock-up agreement. The Company prices the investment at the closing price on a public exchange as of the measurement date. In situations where there are legal or contractual restrictions on the sale or use of such security that under ASC 820-10-35 (as modified by ASU 2022-03) should be incorporated into the security’s fair value measurement as a characteristic of the security that would transfer to market participants who would buy the security, the Company will classify the investment as Level 2 subject to an appropriate DLOM to reflect the restrictions upon sale. The Company transfers investments between levels based on the fair value at the beginning of the measurement period in accordance with FASB ASC 820. For investments transferred out of Level 3 due to an IPO, the Company transfers these investments based on their fair value at the IPO date.

 

Securities Transactions

 

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

 

Valuation of Other Financial Instruments

 

The carrying amounts of the Company’s other, non-investment financial instruments, consisting of cash, receivables, accounts payable, and accrued expenses, approximate fair value due to their short-term nature.

 

Cash

 

The Company custodies its cash with Western Alliance Trust Company, N.A., and may place cash in demand deposit accounts with other high-quality financial institutions. The cash held in these accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Company believes the risk of loss associated with any uninsured balance is remote.

 

Escrow Proceeds Receivable

 

A portion of the proceeds from the sale of portfolio investments are held in escrow as a recourse for indemnity claims that may arise under the sale agreement or other related transaction contingencies. Amounts held in escrow are held at estimated realizable value and included in net realized gains (losses) on investments in the Condensed Consolidated Statements of Operations for the period in which they occurred and are adjusted as needed. Any remaining escrow proceeds balances from these transactions reasonably expected to be received are reflected on the Condensed Consolidated Statement of Assets and Liabilities as escrow proceeds receivable. Escrow proceeds receivable resulting from contingent consideration are to be recognized when the amount of the contingent consideration becomes realized or realizable. As of March 31, 2024 and December 31, 2023, the Company had $236,303 and $309,293, respectively, in escrow proceeds receivable.

 

Deferred Financing Costs

 

The Company records fees and expenses incurred in connection with financing or capital raising activities other than the Company’s 6.00% Notes due 2026 as deferred financing costs. These costs are deferred and amortized as part of interest expense using the straight-line method over the respective life of the financing instrument. For modifications to a financing instrument, any unamortized origination costs are expensed. Included within deferred financing costs are offering costs incurred relating to the Company’s shelf registration statement on Form N-2. The Company defers these offering costs until capital is raised pursuant to the shelf registration statement or until the shelf registration statement expires. For equity capital raised, the offering costs reduce paid-in capital resulting from the offering. The Company records fees and expenses incurred in connection with its 6.00% Notes due 2026 as deferred debt issuance costs. Such costs are reflected in the carrying value of the 6.00% Notes due 2026, and not the Company’s deferred financing costs. For debt capital raised, the associated offering costs are amortized over the life of the debt instrument. As of March 31, 2024 and December 31, 2023, the Company had deferred financing costs of $577,900 and $594,726, respectively, on the Condensed Consolidated Statement of Assets and Liabilities.

 

   March 31, 2024   December 31, 2023 
Deferred debt issuance costs  $1,165,526   $1,254,793 
Deferred financing costs   577,900    594,726 
Total  $1,743,426   $1,849,519 

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Refer to “Note 10 — Debt Capital Activities” for further detail regarding the Company’s deferred debt issuance costs.

 

Operating Leases & Related Deposits

 

The Company accounts for its operating leases as prescribed by ASC 842, Leases, which requires lessees to recognize a right-of-use asset on the balance sheet, representing its right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The lease expense is presented as a single lease cost that is amortized on a straight-line basis over the life of the lease. Non-lease components (maintenance, property tax, insurance and parking) are not included in the lease cost. On June 3, 2019, the Company entered a 5-year operating lease for office space for which the Company has recorded a right-of-use asset and a corresponding lease liability for the operating lease obligation. These amounts have been discounted using the rate implicit in the lease. Refer to “Note 7—Commitments and Contingencies—Operating Leases and Related Deposits” for further detail.

 

Stock-based Compensation

 

Using the fair value recognition provisions as prescribed by ASC 718, Stock Compensation, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate service period. Determining the fair value of stock-based awards requires considerable judgment, including estimating the expected term of stock options and the expected volatility of the Company’s stock price. Differences between actual results and these estimates could have a material effect on the Company’s financial results. Forfeitures are accounted for as they occur. Refer to “Note 11—Stock-Based Compensation” for further detail.

 

Revenue Recognition

 

The Company recognizes gains or losses on the sale of investments using the specific identification method. The Company recognizes interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. The Company recognizes dividend income on the ex-dividend date.

 

Investment Transaction Costs and Escrow Deposits

 

Commissions and other costs associated with an investment transaction, including legal expenses not reimbursed by the portfolio company, are included in the cost basis of purchases and deducted from the proceeds of sales. The Company makes certain acquisitions on secondary markets, which may involve making deposits to escrow accounts until certain conditions are met, including the underlying private company’s right of first refusal. If the underlying private company does not exercise or assign its right of first refusal and all other conditions are met, then the funds in the escrow account are delivered to the seller and the account is closed. Such transactions would be reflected on the Condensed Consolidated Statement of Assets and Liabilities as escrow deposits. As of March 31, 2024 and December 31, 2023, the Company had no escrow deposits.

 

Unrealized Appreciation or Depreciation of Investments

 

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

 

U.S. Federal and State Income Taxes

 

The Company elected to be treated as a RIC under Subchapter M of the Code beginning with its taxable year ended December 31, 2014, has qualified to be treated as a RIC for subsequent taxable years and intends to continue to operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least the sum of 90% of its investment company taxable income (“ICTI”), including payment-in-kind interest income, as defined by the Code, and 90% of its net tax-exempt interest income (which is the excess of its gross tax-exempt interest income over certain disallowed deductions) for each taxable year (the “Annual Distribution Requirement”). Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward into the next tax year ICTI in excess of current year dividend distributions. Any such carryforward ICTI must be distributed on or before December 31 of the subsequent tax year to which it was carried forward.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

If the Company meets the Annual Distribution Requirement, but does not distribute (or is not deemed to have distributed) each calendar year a sum of (1) 98% of its net ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Excise Tax Avoidance Requirement”), it generally will be required to pay an excise tax equal to 4% of the amount by which the Excise Tax Avoidance Requirement exceeds the distributions for the year. To the extent that the Company determines that its estimated current year annual taxable income will exceed estimated current year dividend distributions from such taxable income, the Company will accrue excise taxes, if any, on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate. The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income.

 

So long as the Company qualifies and maintains its tax treatment as a RIC, it generally will not be subject to U.S. federal and state income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of the Company’s investors and will not be reflected in the condensed consolidated financial statements of the Company. Included in the Company’s condensed consolidated financial statements, the Taxable Subsidiaries are taxable subsidiaries, regardless of whether the Company is a RIC. These Taxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in the Company’s Condensed Consolidated Financial Statements.

 

If it is not treated as a RIC, the Company will be taxed as a regular corporation (a “C Corporation”) under Subchapter C of the Code for such taxable year. If the Company has previously qualified as a RIC but is subsequently unable to qualify for treatment as a RIC, and certain amelioration provisions are not applicable, the Company would be subject to tax on all of its taxable income (including its net capital gains) at regular corporate rates. The Company would not be able to deduct distributions to stockholders, nor would it be required to make distributions. Distributions, including distributions of net long-term capital gain, would generally be taxable to its stockholders as ordinary dividend income to the extent of the Company’s current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate stockholders would be eligible to claim a dividend received deduction with respect to such dividend; non-corporate stockholders would generally be able to treat such dividends as “qualified dividend income,” which is subject to reduced rates of U.S. federal income tax. Distributions in excess of the Company’s current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain. In order to requalify as a RIC, in addition to the other requirements discussed above, the Company would be required to distribute all of its previously undistributed earnings attributable to the period it failed to qualify as a RIC by the end of the first year that it intends to requalify for tax treatment as a RIC. If the Company fails to requalify for tax treatment as a RIC for a period greater than two taxable years, it may be subject to regular corporate tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would have been realized with respect to such assets if the Company had been liquidated) that it elects to recognize on requalification or when recognized over the next five years. Refer to “Note 9—Income Taxes” for further details.

 

Per Share Information

 

Net change in net assets resulting from operations per basic common share is computed using the weighted-average number of shares outstanding for the period presented. Diluted net change in net assets resulting from operations per common share is computed by dividing net increase/(decrease) in net assets resulting from operations for the period adjusted to include the pre-tax effects of interest incurred on potentially dilutive securities, by the weighted-average number of common shares outstanding plus any potentially dilutive shares outstanding during the period. The Company used the if-converted method in accordance with FASB ASC 260, Earnings Per Share (“ASC 260”), to determine the number of potentially dilutive shares outstanding. Refer to “Note 6—Net Increase in Net Assets Resulting from Operations per Common Share—Basic and Diluted” for further detail.

 

Recently Adopted Accounting Standards

 

In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This change prospectively prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. The standard is effective for annual periods beginning after December 15, 2023, and applied prospectively. The Company adopted the requirements of ASU 2022-03 during the period ended March 31, 2024.

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Recently Issued Accounting Standards

 

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” The amendments in this update require more disaggregated information on income taxes paid. The standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted; however, the Company has not elected to adopt this provision as of the date of the condensed consolidated financial statements. The Company is still assessing the impact of the new guidance. However, it does not expect ASU 2023-09 to have a material impact on the Company’s future financial statements.

 

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

 

NOTE 3—RELATED-PARTY ARRANGEMENTS

 

The Company’s executive officers and directors serve or may serve as officers, directors, or managers of entities that operate in a line of business similar to the Company’s, including new entities that may be formed in the future. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of the Company or the Company’s stockholders.

 

The 1940 Act prohibits the Company from participating in certain negotiated co-investments with certain affiliates unless it receives an order from the SEC permitting it to do so. As a BDC, the Company is prohibited under the 1940 Act from participating in certain transactions with certain of its affiliates without the prior approval of the Board of Directors, including its independent directors, and, in some cases, the SEC. The affiliates with which the Company may be prohibited from transacting include its officers, directors, and employees and any person controlling or under common control with the Company, subject to certain exceptions.

 

In the ordinary course of business, the Company may enter into transactions with portfolio companies that may be considered related-party transactions. To ensure that the Company does not engage in any prohibited transactions with any persons affiliated with the Company, the Company has implemented certain written policies and procedures whereby the Company’s executive officers screen each of the Company’s transactions for any possible affiliations between the proposed portfolio investment, the Company, companies controlled by the Company, and the Company’s executive officers and directors.

 

The Company’s investment in Churchill Sponsor VI LLC, the sponsor of Churchill Capital Corp. VI, a SPAC, constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mark D. Klein, the Company’s Chairman, Chief Executive Officer and President, has a non-controlling interest in the entity that controlled Churchill Sponsor VI LLC, and was a non-controlling member of the board of directors of Churchill Capital Corp. VI. In addition, Mr. Klein’s brother, Michael Klein, was a control person of such Churchill entities. On November 17, 2023, Churchill Capital Corp. VI announced that it would not consummate an initial business combination within the time period required by its Amended and Restated Certificate of Incorporation, as amended, and the Company realized a loss on the entirety of its Churchill Sponsor VI LLC common share units and warrant units in the amount of $200,000.

 

The Company’s investment in Churchill Sponsor VII LLC, the sponsor of Churchill Capital Corp. VII, a SPAC, constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mark D. Klein, the Company’s Chairman, Chief Executive Officer and President, has a non-controlling interest in the entity that controls Churchill Sponsor VII LLC, and is a non-controlling member of the board of directors of Churchill Capital Corp. VII. In addition, Mr. Klein’s brother, Michael Klein, is a control person of such Churchill entities. As of March 31, 2024, the fair value of the Company’s investment in Churchill Sponsor VII LLC was $394,774.

 

The Company’s investment in Skillsoft Corp. (f/k/a Software Luxembourg Holding S.A.) (“Skillsoft”) constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mr. Klein has a non-controlling interest in the entity that controlled Churchill Sponsor II LLC, the sponsor of Churchill Capital Corp. II, a SPAC, and was a non-controlling member of the board of directors of Churchill Capital Corp. II, through which the Company executed a private investment in public equity transaction in order to acquire common shares of Skillsoft alongside the merger of Skillsoft and Churchill Capital Corp II. In addition, Mr. Klein’s brother, Michael Klein, was a control person of such Churchill entities. As of March 31, 2024, the fair value of the Company’s investment in Skillsoft was $441,828.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

The Company’s initial investment in Shogun Enterprises, Inc. (d/b/a Hearth) on February 26, 2021 constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Keri Findley, a former senior managing director of the Company until her departure on March 9, 2022, was at the time of investment a non-controlling member of the board of directors of Shogun Enterprises, Inc., and held a minority equity interest in such portfolio company. As of March 31, 2024, the fair value of the Company’s remote-affiliate investment in Shogun Enterprises, Inc. (d/b/a Hearth) was $6,775,071.

 

The Company’s investment in Architect Capital PayJoy SPV, LLC also constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Ms. Findley, at the time of investment, was a non-controlling member of the board of directors of the investment manager to Architect Capital PayJoy SPV, LLC, and held a minority equity interest in such investment manager. As of March 31, 2024, the fair value of the Company’s remote-affiliate investment in Architect Capital PayJoy SPV, LLC was $10,000,000.

 

In addition, Ms. Findley and Claire Councill, a former investment professional of the Company until her departure on April 15, 2022, were non-controlling members of the board of directors of Colombier Acquisition Corp., a SPAC, which was sponsored by Colombier Sponsor LLC, one of the Company’s portfolio companies until its dissolution upon completion of Colombier Acquisition Corp.’s business combination into PSQ Holdings, Inc. (d/b/a PublicSquare). As of March 31, 2024, the fair value of the Company’s investment in PSQ Holdings, Inc. (d/b/a PublicSquare) was $10,528,818.

 

The Company’s investment in AltC Sponsor LLC, the sponsor of AltC Acquisition Corp, a SPAC, constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mr. Klein has a non-controlling interest in one of the entities that controls AltC Sponsor LLC, and Allison Green, the Company’s Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, is a non-controlling member of the board of directors of AltC Acquisition Corp. As of March 31, 2024, the fair value of the Company’s investment in AltC Sponsor LLC was $945,983.

 

NOTE 4—INVESTMENTS AT FAIR VALUE

 

Investment Portfolio Composition

 

The Company’s investments in portfolio companies consist primarily of equity securities (such as common stock, preferred stock and options or agreements to purchase or acquire common and preferred stock) and to a lesser extent, debt securities, issued by private and publicly traded companies. The Company may also, from time to time, invest in U.S. Treasury securities. Non-portfolio investments represent investments in U.S. Treasury securities. As of March 31, 2024, the Company had 63 positions in 38 portfolio companies. As of December 31, 2023, the Company had 63 positions in 38 portfolio companies.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

The following tables summarize the composition of the Company’s investment portfolio by security type at cost and fair value as of March 31, 2024 and December 31, 2023:

 

   March 31, 2024   December 31, 2023 
   Cost   Fair Value  

Percentage of

Net Assets

   Cost   Fair Value  

Percentage of

Net Assets

 
Private Portfolio Companies                              
Preferred Stock  $117,212,944   $113,934,393    62.8%  $73,003,835   $39,086,792    19.2%
Common Stock   73,265,265    40,960,684    22.5%   107,209,010    122,744,564    60.4%
Debt Investments   5,146,349    3,442,976    1.9%   5,146,349    3,098,734    1.5%
Options   11,796,448    3,495,333    1.9%   12,057,878    3,638,161    1.8%
Total Private Portfolio Companies   207,421,006    161,833,386    89.1%   197,417,072    168,568,251    82.9%
Publicly Traded Portfolio Companies                              
Common Stock   13,469,003    11,689,761    6.4%   14,095,473    13,548,248    6.7%
Options   985,722    1,492,424    0.8%   1,028,653    1,964,750    1.0%
Total Publicly Traded Portfolio Companies   14,454,725    13,182,185    7.2%   15,124,126    15,512,998    7.7%
Total Portfolio Investments   221,875,731    175,015,571    96.3%   212,541,198    184,081,249    90.6%
Non-Portfolio Investments                              
U.S. Treasury Bills   29,245,079    29,621,913    16.3%   63,792,704    63,810,855    31.4%
Total Investments  $251,120,810   $204,637,484    112.6%  $276,333,902   $247,892,104    121.9%

 

The geographic and industrial compositions of the Company’s portfolio at fair value as of March 31, 2024 and December 31, 2023 were as follows:

 

   As of March 31, 2024   As of December 31, 2023 
   Fair Value  

Percentage of

Portfolio

  

Percentage of

Net Assets

   Fair Value  

Percentage of

Portfolio

  

Percentage of

Net Assets

 
Geographic Region                              
West  $101,868,755    58.3%   56.1%  $108,500,197    58.9%   53.4%
Northeast   40,340,217    23.0%   22.2%   17,881,248    9.7%   8.8%
Midwest   16,623,472    9.5%   9.1%   12,107,136    6.6%   6.0%
Southeast   12,128,818    6.9%   6.7%   41,538,359    22.6%   20.4%
International   4,054,309    2.3%   2.2%   4,054,309    2.2%   2.0%
Total  $175,015,571    100.0%   96.3%  $184,081,249    100.0%   90.6%

 

   As of March 31, 2024   As of December 31, 2023 
   Fair Value  

Percentage of

Portfolio

  

Percentage of

Net Assets

   Fair Value  

Percentage of

Portfolio

  

Percentage of

Net Assets

 
Industry                              
Education Technology  $54,065,439    30.9%   29.7%  $69,381,463    37.7%   34.2%
Big Data/Cloud   34,089,299    19.5%   18.8%   32,201,947    17.5%   15.8%
Marketplaces   33,889,237    19.4%   18.6%   36,386,519    19.8%   17.9%
Financial Technology   29,553,385    16.8%   16.3%   31,687,240    17.2%   15.6%
Social/Mobile/Consumer   23,042,330    13.2%   12.7%   14,041,699    7.6%   6.9%
Sustainability   375,881    0.2%   0.2%   382,381    0.2%   0.2%
Total  $175,015,571    100.0%   96.3%  $184,081,249    100.0%   90.6%

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

The table below details the composition of the Company’s industrial themes presented in the preceding tables:

 

Industry Theme   Industry
Education Technology   Business Education
    Interactive Learning
    Online Education
Big Data/Cloud   Contractor Management Software
    Gaming Licensing
    Geolocation Technology
    Retail Technology
    Supply Chain Technology
    Warehouse Automation
Marketplaces   E-Commerce Marketplace
    Global Innovation Platform
    Knowledge Networks
    Micromobility
    Pharmaceutical Technology
    Real Estate Platform
    Sports Betting
Financial Technology   Cannabis REIT
    Financial Services
    Gaming Technology
    Home Improvement Finance
    Mobile Finance Technology
    Online Marketplace Finance
    Special Purpose Acquisition Company
    Venture Investment Fund
Social/Mobile/Consumer   Digital Media Technology
    Fitness Technology
    Interactive Media & Services
    Lifestyle Beverage Brand
    Mobile Access Technology
    Social Data Platform
    Social Networking
Sustainability   Clean Technology

 

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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Investment Valuation Inputs

 

The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of March 31, 2024 and December 31, 2023 are as follows:

 

   As of March 31, 2024 
  

Quoted Prices in

Active Markets for

Identical Securities

(Level 1)

  

Significant Other

Observable

Inputs

(Level 2)

  

Significant

Unobservable

Inputs

(Level 3)

   Total 
Investments at Fair Value                    
Private Portfolio Companies                    
Preferred Stock  $—   $—   $113,934,393   $113,934,393 
Common Stock   —    —    40,960,684    40,960,684 
Debt Investments   —    —    3,442,976    3,442,976 
Options   —    —    3,495,333    3,495,333 
Private Portfolio Companies   —    —    161,833,386    161,833,386 
Publicly Traded Portfolio Companies                    
Common Stock   2,653,367    9,036,394    —    11,689,761 
Options   1,492,424    —    —    1,492,424 
Publicly Traded Portfolio Companies   4,145,791    9,036,394    —    13,182,185 
Total Portfolio Investments   4,145,791    9,036,394    161,833,386    175,015,571 
Non-Portfolio Investments                    
U.S. Treasury bills   29,621,913    —    —    29,621,913 
Total Investments at Fair Value  $33,767,704   $9,036,394   $161,833,386   $204,637,484 

 

   As of December 31, 2023 
  

Quoted Prices in

Active Markets for

Identical Securities

(Level 1)

  

Significant Other

Observable

Inputs

(Level 2)

  

Significant

Unobservable

Inputs

(Level 3)

   Total 
Investments at Fair Value                    
Private Portfolio Companies                    
Preferred Stock  $—   $—   $122,744,564   $122,744,564 
Common Stock   —    —    39,086,792    39,086,792 
Debt Investments   —    —    3,098,734    3,098,734 
Options   —    —    3,638,161    3,638,161 
Private Portfolio Companies   —    —    168,568,251    168,568,251 
Publicly Traded Portfolio Companies                    
Common Stock   5,005,862    8,542,386    —    13,548,248 
Options   1,964,750    —    —    1,964,750 
Publicly Traded Portfolio Companies   6,970,612    8,542,386    —    15,512,998 
Total Portfolio Investments   6,970,612    8,542,386    168,568,251    184,081,249 
Non-Portfolio Investments                    
U.S. Treasury bills   63,810,855    —    —    63,810,855 
Total Investments at Fair Value  $70,781,467   $8,542,386   $168,568,251   $247,892,104 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Significant Unobservable Inputs for Level 3 Assets and Liabilities

 

In accordance with FASB ASC 820, Fair Value Measurement, the tables below provide quantitative information about the fair value measurements of the Company’s Level 3 assets as of March 31, 2024 and December 31, 2023. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the Board of Directors may also use other valuation techniques and methodologies when determining the fair value measurements of the Company’s assets. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3 inputs as they relate to the fair value measurements of the Company’s assets. To the extent an unobservable input is not reflected in the tables below, such input is deemed insignificant with respect to the Company’s Level 3 fair value measurements as of March 31, 2024 and December 31, 2023. Significant changes in the inputs in isolation would result in a significant change in the fair value measurement, depending on the input and the materiality of the investment. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail.

 

As of March 31, 2024

 

Asset  Fair Value  

Valuation

Approach/

Technique(1)

 

Unobservable

Inputs(2)

 

Range

(Weighted

Average)(3)

 
Common stock in private companies  $40,960,684   Market approach  Revenue multiples   0.12x - 10.08x (8.23x) 
        PWERM(5)  DLOM   15.0% - 25.0% (18.3%) 
           AFFO(4) multiple   8.79x
           Discount Rate   15.0%
Preferred stock in private companies  $113,934,393   Market approach  Revenue multiples   0.12x - 8.05x (1.83x) 
        PWERM(5)  Discount rate   15%
           Revenue multiples   1.55x - 1.76x (1.66x) 
Debt investments  $3,442,976   Market approach  Revenue multiples   0.87x - 1.82x (1.70x) 
        PWERM(5)  Discount Rate   15.0%
Options       Option Pricing Model  Term to expiration (Years)   3.11 
           Volatility   80%
   $3,495,333   PWERM(5)  Term to expiration (Years)   0.40 - 5.25 (0.54) 
           Volatility   70%
           Discount Rate   15.0%
           DLOM   15% - 18% (16.0%) 

 

 

(1) As of March 31, 2024, the Board of Directors used a hybrid market and income approach to value certain common and preferred stock investments, as the Board of Directors felt this approach better reflected the fair value of these investments. In considering multiple valuation approaches (and consequently, multiple valuation techniques), the valuation approaches and techniques are not likely to change from one period of measurement to the next; however, the weighting of each in determining the final fair value of a Level 3 investment may change based on recent events or transactions. The hybrid approach may also consider certain risk weightings to account for the uncertainty of future events. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail.
(2) The Board of Directors considers all relevant information that can reasonably be obtained when determining the fair value of Level 3 investments. Due to any given portfolio company’s information rights, changes in capital structure, recent events, transactions, or liquidity events, the type and availability of unobservable inputs may change. Increases/(decreases) in revenue multiples, earnings before interest and taxes (“EBIT”) multiples, time to expiration, and stock price/strike price would result in higher (lower) fair values, all else equal. Decreases/(increases) in discount rates, volatility, and annual risk rates, would result in higher (lower) fair values, all else equal. The market approach utilizes market value (revenue and EBIT) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Board of Directors carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value the Company’s portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. In general, precedent transactions include recent rounds of financing, recent purchases made by the Company, and tender offers. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

(3) The weighted averages are calculated based on the fair market value of each investment.
(4) Adjusted Funds From Operations, or “AFFO”.
(5) Probability-Weighted Expected Return Method, or “PWERM”.

 

As of December 31, 2023

 

Asset 

Fair

Value

  

Valuation

Approach/

  Technique(1)

 

Unobservable

Inputs(2)

 

Range

(Weighted

Average)(3)

 
Common stock in private companies  $39,086,792   Market approach  Revenue multiples   0.15x - 11.13x (9.29x) 
        PWERM(5)  DLOM   15.0% - 25.0% (18.5%) 
           AFFO(4) multiple   10.79x
           Discount Rate   15.0%
Preferred stock in private companies  $122,744,564   Market approach  Revenue multiples   0.15x - 11.41x (2.73x) 
        PWERM(5)  Discount rate   15%
Debt investments  $3,098,734   Market approach  Revenue multiples   1.21x - 1.66x (1.56x) 
        PWERM(5)  DLOM   15.0%
Options  $3,638,161   PWERM(5)  Term to expiration (Years)   0.65 - 5.63 (0.79) 
           Volatility   70%
           Discount Rate   15.0%
           DLOM   15% - 18% (16.0%) 

 

 

(1) As of December 31, 2023, the Board of Directors used a hybrid market and income approach to value certain common and preferred stock investments, as the Board of Directors felt this approach better reflected the fair value of these investments. In considering multiple valuation approaches (and consequently, multiple valuation techniques), the valuation approaches and techniques are not likely to change from one period of measurement to the next; however, the weighting of each in determining the final fair value of a Level 3 investment may change based on recent events or transactions. The hybrid approach may also consider certain risk weightings to account for the uncertainty of future events. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail.
(2) The Board of Directors considers all relevant information that can reasonably be obtained when determining the fair value of Level 3 investments. Due to any given portfolio company’s information rights, changes in capital structure, recent events, transactions, or liquidity events, the type and availability of unobservable inputs may change. Increases/(decreases) in revenue multiples, earnings before interest and taxes (“EBIT”) multiples, time to expiration, and stock price/strike price would result in higher (lower) fair values, all else equal. Decreases/(increases) in discount rates, volatility, and annual risk rates, would result in higher (lower) fair values, all else equal. The market approach utilizes market value (revenue and EBIT) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Board of Directors carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value the Company’s portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. In general, precedent transactions include recent rounds of financing, recent purchases made by the Company, and tender offers. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

(3) The weighted averages are calculated based on the fair market value of each investment.
(4) Adjusted Funds From Operations, or “AFFO”.
(5) Probability-Weighted Expected Return Method, or “PWERM”.

 

The aggregate values of Level 3 assets and liabilities changed during the three months ended March 31, 2024 as follows:

 

  

Common

Stock

  

Preferred

Stock

  

Debt

Investments

   Options   Total 
   Three Months Ended March 31, 2024 
  

Common

Stock

  

Preferred

Stock

  

Debt

Investments

   Options   Total 
Assets:                         
Fair Value as of December 31, 2023  $39,086,792   $122,744,564   $3,098,734   $3,638,161   $168,568,251 
Purchases, capitalized fees and interest   —    10,003,934    —    —    10,003,934 
Net change in unrealized appreciation/(depreciation) included in earnings   1,873,892   (18,814,105)   344,242    (142,828)   (16,738,799)
Fair Value as of March 31, 2024  $40,960,684   $113,934,393   $3,442,976   $3,495,333   $161,833,386 
Net change in unrealized appreciation/ (depreciation) of Level 3 investments still held as of March 31, 2024  $1,873,892  $(18,814,105)  $344,242  $(142,828)  $(16,738,799)

 

The aggregate values of Level 3 assets and liabilities changed during the year ended December 31, 2023 as follows:

 

  

Common

Stock

  

Preferred

Stock

  

Debt

Investments

   Options   Total 
   Year Ended December 31, 2023 
  

Common

Stock

  

Preferred

Stock

  

Debt

Investments

   Options   Total 
Assets:                         
Fair Value as of December 31, 2022  $18,692,931   $117,214,465   $4,488,200   $3,469,497   $143,865,093 
Transfers out of Level 3   (1,554,355)   —    —    (1,157,487)   (2,711,842)
Purchases, capitalized fees and interest   19,380,910    2,510,363    329,883    2,264,274    24,485,430 
Sales/Maturity of investments   (369,222)   —    (1,000,000)   (5,080)   (1,374,302)
Exercises and conversions(1)   3,751,518    (2,859,095)   (500,000)   (361,603)   30,820 
Realized gains/(losses)   1,195,703    (10,914,376)   —    (96,350)   (9,815,023)
Net change in unrealized appreciation/(depreciation) included in earnings   (2,010,693)   16,793,207    (219,349)   (475,090)   14,088,075 
Fair Value as of December 31, 2023  $39,086,792   $122,744,564   $3,098,734   $3,638,161   $168,568,251 
Net change in unrealized appreciation/ (depreciation) of Level 3 investments still held as of December 31, 2023  $(2,010,694)  $5,878,830   $(219,349)  $(512,480)  $3,136,307 

 

 

(1) During the year ended December 31, 2023, the Company’s portfolio investments had the following corporate actions which are reflected above:

 

Portfolio Company   Conversion from   Conversion to
Orchard Technologies, Inc.  

Preferred shares, Series D

Simple Agreement for Future Equity

  

Senior Preferred shares, Series 1

Senior Preferred shares, Series 2

Common Shares, Class A

Shogun Enterprises, Inc. (d/b/a Hearth)   Convertible Note 0.5%   Preferred Shares, Series B-3
Colombier Sponsor LLC  

Class B Units

Class W Units

  

PSQ Holdings, Inc. (d/b/a PublicSquare) - Common shares, Class A (Level 2)

PSQ Holdings, Inc. (d/b/a PublicSquare) Warrants (Level 1)

AltC Sponsor LLC   Share units  

Common shares, Class A

Common shares, Class B

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Schedule of Investments In, and Advances to, Affiliates

 

Transactions during the three months ended March 31, 2024 involving the Company’s controlled investments and non-controlled/affiliate investments were as follows:

 

Type/Industry/Portfolio Company/Investment 

Principal/

Quantity

  

Interest,

Fees, or

Dividends

Credited

in Income

  

Fair

Value at

December 31,

2023

    Sales  

Realized

Gains

  

Unrealized

Gains/(Losses)

  

Fair Value

at March 31,

2024

  

Percentage

of Net

Assets

 
CONTROLLED INVESTMENTS*(2)                                         
Options                                         
Special Purpose Acquisition Company                                         
Colombier Sponsor II LLC**–Class W Units   1,600,000   $—   $498,305    $—   $       —   $—  $498,305    0.27%
Total Options        —    498,305     —    —    —   498,305    0.27%
Preferred Stock                                         
Clean Technology                                         
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Preferred shares, Class A   14,300,000    —    382,381     —    —    (6,500)   375,881    0.21%
Total Preferred Stock        —    382,381     —    —    (6,500)   375,881    0.21%
Common Stock                                         
Clean Technology                                         
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Common shares   100,000    —    —     —    —    —    —    —%
Mobile Finance Technology                                         
Architect Capital PayJoy SPV, LLC**–Membership Interest in Lending SPV***  $10,000,000    435,000    10,000,000     —    —    —    10,000,000    5.50%
Special Purpose Acquisition Company                                         
Colombier Sponsor II LLC**–Class B Units   1,040,000    —    1,101,695     —    —    —    1,101,695    0.61%
Total Common Stock        435,000    11,101,695     —    —    —    11,101,695    6.11%
TOTAL CONTROLLED INVESTMENTS*(2)       $435,000   $11,982,381    $—   $—   $(6,500)  $11,975,881    6.59%
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1)                                         
Debt Investments                                         
Global Innovation Platform                                         
OneValley, Inc. (f/k/a NestGSV, Inc.) –Convertible Promissory Note 8%, Due 8/23/2024(4)  $1,010,198   $—   $1,267,395    $—   $—   $10,910  $1,278,305    0.70%
Total Debt Investments        —    1,267,395     —    —    10,910   1,278,305    0.70%

 

29

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Type/Industry/Portfolio Company/Investment 

Principal/

Quantity

  

Interest,

Fees, or

Dividends

Credited

in Income

  

Fair

Value at

December 31,

2022

    Sales  

Realized

Gains/(Losses)

  

Unrealized

Gains/(Losses)

  

Fair Value

at March 31,

2024

  

Percentage

of Net

Assets

 
Preferred Stock                                         
Knowledge Networks                                         
Maven Research, Inc.–Preferred shares, Series C   318,979    —    —     —    —    —    —    —%
Maven Research, Inc.–Preferred shares, Series B   49,505    —    —     —    —    —    —    —%
Total Knowledge Networks        —    —     —    —    —    —    —%
Interactive Learning                                         
StormWind, LLC(5) – Preferred shares, Series D 8%   329,337    —    653,975     —    —    (88,404)   565,571    0.31%
StormWind, LLC(5) – Preferred shares, Series C 8%   2,779,134    —    6,804,933     —    —    (828,596)   5,976,337    3.29%
StormWind, LLC(5) – Preferred shares, Series B 8%   3,279,629    —    4,751,064     —    —    (880,358)   3,870,706    2.13%
StormWind, LLC(5) – Preferred shares, Series A 8%   366,666    —    325,903     —    —    (98,425)   227,478    0.13%
Total Interactive Learning        —    12,535,875     —    —    (1,895,783)   10,640,092    5.86%
Total Preferred Stock        —    12,535,875     —    —   (1,895,783)   10,640,092    5.86%
Options                                         
Global Innovation Platform                                         
OneValley, Inc. (f/k/a NestGSV, Inc.)–Derivative Security, Expiration Date 8/23/2024(6)   1    —    620,927     —    —    (196,438)   424,489    0.23%
Total Global Innovation Platform        —    620,927     —    —   (196,438)   424,489    0.23%
E-Commerce Marketplace                                         
PSQ Holdings, Inc. (d/b/a PublicSquare)**(7)(3) – Warrants   2,296,037    —    1,964,750     (102,998)   60,067    (429,395)   1,492,424    0.82%
Total Options        —    2,585,677     (102,998)   60,067    (625,833)   1,916,913    1.05%
Common Stock                                         
Online Education                                         
Curious.com, Inc.–Common shares   1,135,944    —    —     —    —    —    —    —%
E-Commerce Marketplace                                         
PSQ Holdings, Inc. (d/b/a PublicSquare)**(7)(3) – Common shares, Class A   1,976,032    —    8,542,386     —    —    494,008    9,036,394    4.97%
Total Common Stock        —    8,542,386     —    —    494,008    9,036,394    4.97%
TOTAL NON-CONTROLLED/AFFILIATE INVESTMENTS*(1)       $—   $24,931,333    $(102,998)  $60,067  $(2,016,698)  $22,871,704    12.59%

 

30

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

 

* All portfolio investments are non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their IPO. Preferred dividends are generally only payable when declared and paid by the portfolio company’s board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All portfolio investments are considered Level 3 and valued using unobservable inputs, unless otherwise noted. All of the Company’s portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value”).
   
** Indicates assets that SuRo Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Of the Company’s total investments as of March 31, 2024, 15.66% of its total investments are non-qualifying assets.
   
*** Investment is income-producing.

 

(1) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of SuRo Capital Corp. if SuRo Capital Corp. beneficially owns, directly or indirectly, between 5% and 25% of the voting securities (i.e., securities with the right to elect directors) of such company.
   
(2) “Control Investments” are investments in those companies that are “Controlled Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company beneficially owns, directly or indirectly, more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company.
   
(3) Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. Refer to “Note 4—Investments at Fair Value”.
   
(4) As of March 31, 2024, the investments noted had been placed on non-accrual status.
   
(5) SuRo Capital Corp.’s investments in StormWind, LLC are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SW Holdings, Inc.
   
(6) On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in OneValley, Inc. (f/k/a NestGSV, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. OneValley, Inc. (f/k/a NestGSV, Inc.) has the right to call the position at any time over a five year period, ending August 23, 2024, while SuRo Capital Corp. can put the shares to OneValley, Inc. (f/k/a NestGSV, Inc.) at the end of the five year period.
   
(7) On July 19, 2023, Colombier Acquisition Corp. (“Colombier”) stockholders approved a business combination with PSQ Holdings, Inc. (d/b/a PublicSq.) and related proposals at a special meeting. Also on July 19, 2023, PSQ Holdings, Inc. announced that it had consummated the business combination with Colombier pursuant to a merger agreement between the parties, creating the resultant combined company PSQ Holdings, Inc. (d/b/a PublicSq.). SuRo Capital Corp.’s shares of PSQ Holdings, Inc. (d/b/a PublicSquare) Class A Common shares are subject to contractual sale restrictions in the form of a lock-up agreement applicable to the common shares after the company’s IPO, while the PSQ Holdings, Inc. (d/b/a PublicSquare) warrants are freely tradable. The lock-up agreement expires on July 19, 2024. The lock-up agreement has early lock-up expiration provisions which would allow SuRo Capital Corp. to sell its Class A common shares in PSQ Holdings, Inc. (d/b/a PublicSquare) if the closing price of the Class A common stock equals or exceeds $12.00 per share, as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations for any 20 trading days within any 30 trading day period commencing on December 16, 2023.

 

31

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Schedule of Investments In, and Advances to, Affiliates

 

Transactions during the year ended December 31, 2023 involving the Company’s controlled investments and non-controlled/affiliate investments were as follows:

 

Type/Industry/Portfolio Company/Investment 

Principal/

Quantity

  

Interest, Fees, or

Dividends

Credited

in Income

   Fair
Value at
December 31,
2022		  

Transfer

In/ (Out)

  

Purchases,

Capitalized

Fees,

Interest and

Amortization

   Sales  

Realized

Gains/(Losses)

  

Unrealized

Gains/(Losses)

  

Fair

Value at

December 31,

2023

  

Percentage

of Net

Assets

 
CONTROLLED INVESTMENTS*(2)                                                  
Options                                                  
Special Purpose Acquisition Company                                                  
Colombier Sponsor II LLC**–Class W Units   1,600,000   $—   $—   $—   $760,651   $—   $     —   $(262,347)  $498,305    0.25%
Colombier Sponsor LLC**(6) –Class W Units   —    —    1,157,487    (1,159,150)   —    —    —    1,663    —    —%
Total Options        —    1,157,487    (1,159,150)   760,651    —    —    (260,684)   498,304    0.25%
Preferred Stock                                                  
Clean Technology                                                  
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Preferred shares, Class A   14,300,000    500,000    984,028    —    —    —    —    (601,647)   382,381    0.19%
Total Preferred Stock        500,000    984,028    —    —    —    —    (601,647)   382,381    0.19%
Common Stock                                                  
Clean Technology                                                  
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Common shares   100,000    —    —    —    —    —    —    —    —    —%
Mobile Finance Technology                                                  
Architect Capital PayJoy SPV, LLC**–Membership Interest in Lending SPV***  $10,000,000    1,331,258    10,000,000    —    —    —    —    —    10,000,000    4.92%
Special Purpose Acquisition Company                                                  
Colombier Sponsor II LLC**–Class B Units   1,040,000    —    —    —    842,289    —    —    259,406    1,101,695    0.54%
                                                   
Colombier Sponsor LLC**(6) –Class B Units   —    —    1,554,355    (1,556,587)   —    —    —    2,232    —    —%
Total Common Stock        1,331,258    11,554,355    (1,556,587)   842,289    —    —    261,638    11,101,695    5.46%
TOTAL CONTROLLED INVESTMENTS*(2)       $1,831,258   $13,695,870   $(2,715,737)  $1,602,940   $—   $—   $(600,693)  $11,982,380    5.89%
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1)                                                  
Debt Investments                                                  
Global Innovation Platform                                                  
OneValley, Inc. (f/k/a NestGSV, Inc.) –Convertible Promissory Note 8%, Due 8/23/2024(3)  $1,010,198   $—   $1,988,200   $—   $—   $—   $—   $(720,805)  $1,267,395    0.62%
Total Debt Investments        —    1,988,200    —    —    —    —    (720,805)   1,267,395    0.62%

 

32

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Type/Industry/Portfolio Company/Investment 

Principal/

Quantity

  

Interest, Fees, or

Dividends

Credited

in Income

   Fair
Value at
December 31,
2022		  

Transfer

In/ (Out)

  

Purchases,

Capitalized

Fees,

Interest and

Amortization

   Sales  

Realized

Gains/(Losses)

  

Unrealized

Gains/(Losses)

  

Fair

Value at

December 31,

2023

  

Percentage

of Net

Assets

 
Preferred Stock                                                  
Knowledge Networks                                                  
Maven Research, Inc.–Preferred shares, Series C   318,979    —    —    —    —    —    —    —    —    —%
Maven Research, Inc.–Preferred shares, Series B   49,505      —    —    —        —    —    —    —    —    —%
Total Knowledge Networks        —    —    —    —    —    —    —    —    —%
Digital Media Platform                                                  
Ozy Media, Inc.(7) – Preferred shares, Series C-2 6%   —    —    —    —    —    —    (2,414,178)   2,414,178    —    —%
Ozy Media, Inc.(7) – Preferred shares, Series B 6%   —    —    —    —    —    —    (4,999,999)   4,999,999    —    —%
Ozy Media, Inc.(7) – Preferred shares, Series A 6%   —    —    —    —    —    —    (3,000,200)   3,000,200    —    —%
Ozy Media, Inc.(7) – Preferred shares, Series Seed 6%   —    —    —    —    —    —    (500,000)   500,000    —    —%
Total Digital Media Platform        —    —    —    —    —    (10,914,377)   10,914,377    —    —%
Interactive Learning                                                  
StormWind, LLC(4) – Preferred shares, Series D 8%   329,337    —    533,429    —    —    —    —    120,546    653,975    0.32%
StormWind, LLC(4) – Preferred shares, Series C 8%   2,779,134    —    5,675,081    —    —    —    —    1,129,852    6,804,933    3.35%
StormWind, LLC(4) – Preferred shares, Series B 8%   3,279,629    —    3,550,631    —    —    —    —    1,200,433    4,751,064    2.34%
StormWind, LLC(4) – Preferred shares, Series A 8%   366,666    —    191,694    —    —    —    —    134,209    325,903    0.16%
Total Interactive Learning        —    9,950,835    —    —     —      —    2,585,040    12,535,875    6.16%
Total Preferred Stock        —    9,950,835    —    —     —     (10,914,377)   13,499,417    12,535,875    6.16%
Options                                                     
Digital Media Platform                                                     
Ozy Media, Inc.(7) – Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028   —    —    —    —    —     —     (30,647)   30,647    —    —%
Global Innovation Platform                                                    
OneValley, Inc. (f/k/a NestGSV, Inc.)–Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023   —    —    —    —    —     —     (5,080)   5,080    —    —%
OneValley, Inc. (f/k/a NestGSV, Inc.)–Derivative Security, Expiration Date 8/23/2024(5)   1    —    652,127    —    —     —     —    (31,200)   620,927    0.31%
Total Global Innovation Platform        —    652,127    —    —           (5,080)   (26,120)   620,927    0.31%
E-Commerce Marketplace                                            
PSQ Holdings, Inc. (d/b/a PublicSquare)**(6) –Warrants   2,396,037    —    —    1,159,150    —     (318,368 )   187,872    936,096    1,964,750    0.97%
Total Options        —    652,127    1,159,150    —     (318,368 )   152,145    940,623    2,585,677    1.27%
Common Stock                                                     
Online Education                                                     
Curious.com, Inc.–Common shares   1,135,944    —    —    —    —     —     —    —    —    —%
E-Commerce Marketplace                                            
PSQ Holdings, Inc. (d/b/a PublicSquare)**(6) – Class A Common shares   1,976,032    —    —    1,556,587    —     —     —    6,985,799    8,542,386    4.20%
Total Common Stock        —    —    1,556,587    —     —     —    6,985,799    8,542,386    4.20%
TOTAL NON-CONTROLLED/AFFILIATE INVESTMENTS*(1)       $—   $12,591,162   $2,715,737   $—   $ (318,368 )  $(10,762,233)  $20,705,035   $24,931,333    12.26%

 

33

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

 

* All portfolio investments are non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their IPO. Preferred dividends are generally only payable when declared and paid by the portfolio company’s board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All portfolio investments are considered Level 3 and valued using unobservable inputs, unless otherwise noted. All of the Company’s portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value”).
   
** Indicates assets that SuRo Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Of the Company’s total investments as of December 31, 2023, 14.03% of its total investments are non-qualifying assets.
   
*** Investment is income-producing.

 

(1) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of SuRo Capital Corp. if SuRo Capital Corp. beneficially owns, directly or indirectly, between 5% and 25% of the voting securities (i.e., securities with the right to elect directors) of such company.
   
(2) “Control Investments” are investments in those companies that are “Controlled Companies” of SuRo Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company beneficially owns, directly or indirectly, more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company.
   
(3) As of December 31, 2023, the investments noted had been placed on non-accrual status.
   
(4) SuRo Capital Corp.’s investments in StormWind, LLC are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SW Holdings, Inc.
   
(5) On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in OneValley, Inc. (f/k/a NestGSV, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. OneValley, Inc. (f/k/a NestGSV, Inc.) has the right to call the position at any time over a five year period, ending August 23, 2024, while SuRo Capital Corp. can put the shares to OneValley, Inc. (f/k/a NestGSV, Inc.) at the end of the five year period.
   
(6) On July 19, 2023, Colombier Acquisition Corp. (“Colombier”) stockholders approved a business combination with PSQ Holdings, Inc. (d/b/a PublicSquare) and related proposals at a special meeting. Also on July 19, 2023, PSQ Holdings, Inc. announced that it had consummated the business combination with Colombier pursuant to a merger agreement between the parties, creating the resultant combined company PSQ Holdings, Inc. (d/b/a PublicSquare). SuRo Capital Corp.’s shares of PSQ Holdings, Inc. (d/b/a PublicSquare) Class A Common shares are subject to certain restrictions on transfer, while the Company’s PSQ Holdings, Inc. warrants are freely tradable.
   
(7) On March 1, 2023, Ozy Media, Inc. suspended operations. On May 4, 2023, SuRo Capital Corp. abandoned its investment in Ozy Media, Inc.

 

34
TABLE OF CONTENTS

 

SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 5—COMMON STOCK

 

Share Repurchase Program

 

On August 8, 2017, the Company announced a $5.0 million discretionary open-market share repurchase program of shares of the Company’s common stock, $0.01 par value per share, of up to $5.0 million until the earlier of (i) August 6, 2018 or (ii) the repurchase of $5.0 million in aggregate amount of the Company’s common stock (the “Share Repurchase Program”). Following several intervening approvals from the Company’s Board of Directors to increase the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program and/or to extend the Share Repurchase Program to later expiration dates, most recently, on August 7, 2023, the Company’s Board of Directors authorized an extension of, and an increase in the amount of shares of the Company’s common stock that may be repurchased under, the discretionary Share Repurchase Program until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0 million in aggregate amount of the Company’s common stock.

 

The timing and number of shares to be repurchased will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate the Company to acquire any specific number of shares of its common stock. Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market, provided that it complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act.

 

During the three months ended March 31, 2024 and 2023, the Company repurchased 0 shares of the Company’s common stock under the Share Repurchase Program. As of March 31, 2024, the dollar value of shares that remained available to be purchased by the Company under the Share Repurchase Program was approximately $20.7 million.

 

Amended and Restated 2019 Equity Incentive Plan

 

Refer to “Note 11—Stock-Based Compensation” for a description of the Company’s restricted shares of common stock granted under the Amended & Restated 2019 Equity Incentive Plan (as defined therein).

 

At-the-Market Offering

 

On July 29, 2020, the Company entered into an At-the-Market Sales Agreement, dated July 29, 2020 (as amended, the “Sales Agreement”), with BTIG, LLC, JMP Securities LLC and Ladenburg Thalmann & Co., Inc. (collectively, the “Agents”). Under the Sales Agreement, the Company may, but has no obligation to, issue and sell up to $150.0 million in aggregate amount of shares of its common stock (the “Shares”) from time to time through the Agents or to them as principal for their own account (the “ATM Program”). The Company intends to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with its investment objective and strategy and for general corporate purposes.

 

Sales of the Shares, if any, will be made by any method that is deemed to be an “at-the-market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on the Nasdaq Global Select Market or sales made to or through a market maker other than on an exchange, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at other negotiated prices. Actual sales in the ATM Program will depend on a variety of factors to be determined by the Company from time to time.

 

The Agents will receive a commission from the Company equal to up to 2.0% of the gross sales price of any Shares sold through the Agents under the Sales Agreement and reimbursement of certain expenses. The Sales Agreement contains customary representations, warranties and agreements of the Company, conditions to closing, indemnification rights and obligations of the parties and termination provisions.

 

During the three months ended March 31, 2024 and 2023, the Company did not issue or sell Shares under the ATM Program. As of March 31, 2024, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.

 

35
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SURO CAPITAL CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 6—NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE—BASIC AND DILUTED

 

The following information sets forth the computation of basic and diluted net change in net assets resulting from operations per common share, pursuant to ASC 260, for the three months ended March 31, 2024 and 2023.

 

         
   Three Months Ended March 31, 
   2024   2023 
Earnings per common share–basic:          
Net change in net assets resulting from operations  $(22,065,346)  $4,616,509
Weighted-average common shares–basic   25,393,490    28,378,529 
Earnings per common share–basic  $(0.87)  $0.16
Earnings per common share–diluted:          
Net change in net assets resulting from operations  $(22,065,346)  $4,616,509
Weighted-average common shares outstanding–diluted(1)   25,393,490    28,378,529 
Earnings per common share–diluted  $(0.87)  $0.16

 

 

(1) For the three months ended March 31, 2024 and March 31, 2023, there were no potentially dilutive securities outstanding.

 

NOTE 7—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.

 

From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of its rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon its business, financial condition or results of operations. The Company is not currently a party to any material legal proceedings.

 

Operating Leases and Related Deposits

 

The Company currently has one operating lease for office space for which the Company has recorded a right-of-use asset and lease liability for the operating lease obligation. The lease commenced June 3, 2019 and expires July 31, 2024. The lease expense is presented as a single lease cost that is amortized on a straight-line basis over the life of the lease.

 

As of March 31, 2024 and December 31, 2023, the Company booked a right-of-use asset and operating lease liability of $64,449 and $112,485, respectively, on the Condensed Consolidated Statement of Assets and Liabilities. As of March 31, 2024 and December 31, 2023, the Company recorded a security deposit of $16,574 and $16,574, respectively, on the Condensed Consolidated Statement of Assets and Liabilities. For the three months ended March 31, 2024 and 2023, the Company incurred $52,662 and $48,723, respectively, of operating lease expense. The amounts reflected on the Condensed Consolidated Statement of Assets and Liabilities have been discounted using the rate implicit in the lease. As of March 31, 2024, the remaining lease term was 0.3 years and the discount rate was 3.00%.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

The following table shows future minimum payments under the Company’s operating lease as of March 31, 2024:

 

For the Year Ended December 31,  Amount 
2024   65,330 
Total  $

65,330

 

 

NOTE 8—FINANCIAL HIGHLIGHTS

 

           
   Three Months Ended March 31, 
   2024   2023 
Per Basic Share Data          
Net asset value at beginning of the year  $7.99   $7.39 
Net investment loss(1)   (0.13)   (0.15)
Net realized gain/(loss) on investments(1)   (0.02)   0.01 
Net change in unrealized appreciation/(depreciation) of investments(1)   (0.73)   0.30 
Stock-based compensation(1)   0.06    0.04 
Net asset value at end of period  $7.17   $7.59 
Per share market value at end of period  $4.55   $3.62 
Total return based on market value(2)   15.48%   (4.74)%
Total return based on net asset value(2)   (10.26)%   2.71%
Shares outstanding at end of period   25,353,284    28,338,580 
Ratios/Supplemental Data:          
Net assets at end of period  $181,721,135   $215,043,069 
Average net assets  $202,519,594   $209,347,362 
Ratio of net operating expenses to average net assets(3)   9.44%   10.70%
Ratio of net investment loss to average net assets(3)   (6.40)%   (8.18)%
Portfolio Turnover Ratio   0.18%   1.24%

 

 

(1) Based on weighted-average number of shares outstanding for the relevant period.
(2) Total return based on market value is based upon the change in market price per share between the opening and ending market values per share in the period, adjusted for dividends and equity issuances. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period, adjusted for dividends and equity issuances.
(3) Financial highlights for periods of less than one year are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. 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.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 9—INCOME TAXES

 

The Company elected to be treated as a RIC under Subchapter M of the Code beginning with its taxable year ended December 31, 2014 and has qualified to be treated as a RIC for subsequent taxable years. The Company intends to continue to operate so as to qualify to be subject to tax treatment as a RIC under Subchapter M of the Code and, as such, will not be subject to U.S. federal income tax on the portion of taxable income (including gains) distributed as dividends for U.S. federal income tax purposes to stockholders. Taxable income includes the Company’s taxable interest, dividend and fee income, reduced by certain deductions, as well as taxable net realized investment gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as such gains or losses are not included in taxable income until they are realized.

 

To qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing dividends of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for distributions paid, to its stockholders. The amount to be paid out as a distribution is determined by the Board of Directors each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent that the Company’s earnings fall below the amount of dividend distributions declared, however, a portion of the total amount of the Company’s distributions for the fiscal year may be deemed a return of capital for tax purposes to the Company’s stockholders.

 

As a RIC, the Company will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless the Company makes distributions treated as dividends for U.S. federal income tax purposes in a timely manner to its stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of its ordinary income (taking into account certain deferrals and elections) for each calendar year, (2) 98.2% of its capital gain net income (adjusted for certain ordinary losses) for the 1-year period ending October 31 of each such calendar year and (3) any ordinary income and net capital gains for preceding years, but not distributed during such years and on which the Company paid no U.S. federal income tax. The Company will not be subject to this excise tax on any amount on which the Company incurred U.S. federal corporate income tax (such as the tax imposed on a RIC’s retained net capital gains).

 

Depending on the level of taxable income earned in a taxable year, the Company may choose to carry over taxable income in excess of current taxable year distributions from such taxable income into the next taxable year and incur a 4% excise tax on such taxable income, as required. The maximum amount of excess taxable income that may be carried over for distribution in the next taxable year under the Code is the total amount of distributions paid in the following taxable year, subject to certain declaration and payment guidelines. To the extent the Company chooses to carry over taxable income into the next taxable year, distributions declared and paid by the Company in a taxable year may differ from the Company’s taxable income for that taxable year as such distributions may include the distribution of current taxable year taxable income, the distribution of prior taxable year taxable income carried over into and distributed in the current taxable year, or returns of capital.

 

The Company has taxable subsidiaries which hold certain portfolio investments in an effort to limit potential legal liability and/or comply with source-income type requirements contained in the RIC tax provisions of the Code. These taxable subsidiaries are consolidated for GAAP and the portfolio investments held by the taxable subsidiaries are included in the Company’s condensed consolidated financial statements and are recorded at fair value. These taxable subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities as a result of their ownership of certain portfolio investments. Any income generated by these taxable subsidiaries generally would be subject to tax at normal corporate tax rates based on its taxable income.

 

The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that it may retain certain net capital gains for reinvestment and, depending upon the level of taxable income earned in a year, may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax.

 

The Company is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

For U.S. federal and state income tax purposes, a portion of the Taxable Subsidiaries’ net operating loss carryforwards and basis differences may be subject to limitations on annual utilization in case of a change in ownership, as defined by federal and state law. The amount of such limitations, if any, has not been determined. Accordingly, the amount of such tax attributes available to offset future profits may be significantly less than the actual amounts of the tax attributes.

 

The Company and the Taxable Subsidiaries identified their major tax jurisdictions as U.S. federal, New York, and California and may be subject to the taxing authorities’ examination for the tax years 2020–2023 in New York and 2019–2023 in California, respectively. Further, the Company and the Taxable Subsidiaries accrue all interest and penalties related to uncertain tax positions as incurred. As of March 31, 2024, there were no material interest or penalties incurred related to uncertain tax positions.

 

NOTE 10—DEBT CAPITAL ACTIVITIES

 

6.00% Notes due 2026

 

On December 17, 2021, the Company issued $70.0 million aggregate principal amount of its 6.00% Notes due 2026, pursuant to an Indenture, dated as of March 28, 2018 (the “Base Indenture”), between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee (the “Trustee”), as supplemented by a second supplemental indenture, dated as of December 17, 2021 (together with the Base Indenture, the “Indenture”), between the Company and the Trustee. On December 21, 2021, the Company issued an additional $5.0 million aggregate principal amount of 6.00% Notes due 2026 pursuant to an overallotment option. The 6.00% Notes due 2026 bear interest at a fixed rate of 6.00% per year, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year, commencing on March 30, 2022. The 6.00% Notes due 2026 have a maturity date of December 30, 2026, unless previously repurchased in accordance with their terms. The Company has the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time or from time to time, on or after December 30, 2024 at a redemption price of 100% of the outstanding principal amount of the 6.00% Notes due 2026 plus accrued and unpaid interest.

 

The 6.00% Notes due 2026 are direct unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all outstanding and future unsecured, unsubordinated indebtedness of the Company; senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 6.00% Notes due 2026; effectively subordinated to any of the Company’s future secured indebtedness (including indebtedness that is initially unsecured in respect of which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness (provided, however, that the Company has agreed under the Indenture to not incur any secured or unsecured indebtedness that would be senior to the 6.00% Notes due 2026 while the 6.00% Notes due 2026 are outstanding, subject to certain exceptions); and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.

 

The Company records fees and expenses incurred in connection with its 6.00% Notes due 2026 as deferred debt issuance costs. Such costs are reflected in the carrying value of the 6.00% Notes due 2026. As of March 31, 2024 and December 31, 2023, the Company had deferred debt issuance costs of $1,165,526 and $1,254,793, respectively, associated with the 6.00% Notes due 2026.

 

The 6.00% Notes due 2026 are listed for trading on the Nasdaq Global Select Market under the symbol “SSSSL”. The reported closing market price of SSSSL on March 31, 2024 and December 31, 2023 was $23.97 and $23.80 per note, respectively. As of March 31, 2024 and December 31, 2023, the fair value of the 6.00% Notes due 2026 was $71.9 million and $71.4 million, respectively. The 6.00% Notes due 2026 are classified as Level 1 of the fair value hierarchy (Refer to “Note 2 — Significant Accounting Policies”). As of March 31, 2024 and December 31, 2023, the Company was in compliance with the terms of the Indenture.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

NOTE 11—STOCK-BASED COMPENSATION

 

Amended and Restated 2019 Equity Incentive Plan

 

On June 19, 2020, the Company’s Board of Directors adopted, and the Company’s stockholders approved, an amendment and restatement of the Company’s 2019 Equity Incentive Plan (the “Amended & Restated 2019 Equity Incentive Plan”) under which the Company is authorized to grant equity awards for up to 1,627,967 shares of its common stock. In accordance with the exemptive relief granted to the Company by the SEC on June 16, 2020 with respect to the Amended & Restated 2019 Equity Incentive Plan, the Company is generally authorized to (i) issue restricted shares as part of the compensation package for certain of its employees, officers and all directors, including non-employee directors (collectively, the “Participants”), (ii) issue options to acquire shares of its common stock (“Options”) to certain employees, officers and employee directors as a part of such compensation packages, (iii) withhold shares of the Company’s common stock or purchase shares of common stock from the Participants to satisfy tax withholding obligations relating to the vesting of restricted shares or the exercise of Options granted to the certain Participants pursuant to the Amended & Restated 2019 Equity Incentive Plan, and (iv) permit the Participants to pay the exercise price of Options granted to them with shares of the Company’s common stock.

 

Under the Amended & Restated 2019 Equity Incentive Plan, each non-employee director will receive an annual grant of $50,000 worth of restricted shares of common stock (based on the closing stock price of the common stock on the grant date). Each grant of $50,000 in restricted shares will vest, in full, if the non-employee director is in continuous service as a director of the Company through the anniversary of such grant (or, if earlier, the annual meeting of the Company’s stockholders that is closest to the anniversary of such grant).

 

Other than such restricted shares granted to non-employee directors, the Compensation Committee of the Company’s Board of Directors may determine the time or times at which Options and restricted shares granted to other Participants will vest or become payable or exercisable, as applicable. The exercise price of each Option will not be less than 100% of the fair market value of the Company’s common stock on the date the option is granted. However, any optionee who owns more than 10% of the combined voting power of all classes of the Company’s outstanding common stock (a “10% Stockholder”), will not be eligible for the grant of an incentive stock option unless the exercise price of the incentive stock option is at least 110% of the fair market value of the Company’s common stock on the date of grant. Generally, no Option will be exercisable after the expiration of ten years from the date of grant. In the case of an Option granted to a 10% Stockholder, the term of an incentive stock option will be for no more than five years from the date of grant.

 

During the three months ended March 31, 2024, the Company did not grant any restricted shares to the Company’s officers pursuant to the Amended & Restated 2019 Equity Incentive Plan.

 

For the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of $750,037 and $755,581, respectively, not including executive and employee forfeits. As of March 31, 2024 and December 31, 2023, there were approximately $4,099,850 and $4,849,887, respectively, of total unrecognized compensation costs related to the restricted share grants. Compensation expense associated with the restricted shares is recognized on a quarterly basis over the respective vesting periods.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

The following table summarizes the activities for the Company’s restricted share grants for the three months ended March 31, 2024 under the Amended & Restated 2019 Equity Incentive Plan:

 

  

Number of

Restricted Shares

 
Outstanding as of December 31, 2023   624,963 
Granted   — 
Vested(1)   (141,570)
Forfeited   — 
Outstanding as of March 31, 2024   483,393 
Vested as of March 31, 2024   655,142 

 

 

(1) The balance of vested shares reflects the total shares vested during the period and has not been reduced for those vested shares forfeited at time of vest related to net share settlement.

 

The Amended & Restated 2019 Equity Incentive Plan provides for the concept of “net share settlement.” Specifically, it provides that the Company is authorized to withhold the Common Stock at the time the restricted shares are vested and taxed in satisfaction of the Participant’s tax obligations.

 

NOTE 12—SUBSEQUENT EVENTS

 

Portfolio Activity

 

From April 1, 2024 through May 8, 2024, the Company made the following investments (not including capitalized transaction costs or investments in short-term U.S. Treasury bills).

  

Portfolio Company  Investment  Transaction Date  Amount 
Canva, Inc.  Common shares  4/17/2024  $9,999,948 
CW Opportunity 2 LP  Class A Interest  5/7/2024   15,000,000 
Total        $24,999,948 

 

 

 

The Company is frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination rights by the seller or the Company. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024

 

Modified Dutch Auction Tender Offer

 

On February 14, 2024, the Company’s Board of Directors authorized a modified Dutch Auction tender offer (the “Tender Offer”) to purchase up to 2,000,000 shares of its common stock at a price per share of not less than $4.00 and not greater than $5.00 in $0.10 increments, using available cash. The Tender Offer commenced on February 20, 2024 and expired at 5:00 P.M. Eastern Time on April 1, 2024. Pursuant to the terms of the Tender Offer, the Company repurchased 2,000,000 shares, representing approximately 7.9% of its outstanding shares, on or about April 5, 2024, at a price of $4.70 per share. The Company used available cash to fund the purchase of its shares of common stock in the Tender Offer and to pay for all related fees and expenses.

 

NOTE 13—SUPPLEMENTAL FINANCIAL DATA

 

Summarized Financial Information of Unconsolidated Subsidiaries

 

In accordance with the SEC’s Regulation S-X and GAAP, the Company is not permitted to consolidate any subsidiary or other entity that is not an investment company, including those in which the Company has a controlling interest; however, the Company must disclose certain financial information related to any subsidiaries or other entities that are considered to be “significant subsidiaries” under the applicable rules of Regulation S-X.

 

In May 2020, the SEC adopted rule amendments that impacted the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or acquired funds (the “Final Rules”). The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules amended the definition of “significant subsidiary” in a manner that was intended to more accurately capture those portfolio companies that were more likely to materially impact the financial condition of an investment company.

 

The Company’s three controlled portfolio companies as of March 31, 2024, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.), Architect Capital PayJoy SPV, LLC, and Colombier Sponsor II LLC, did not meet the definition of a “significant subsidiary” as set forth in Rule 1-02(w)(2). For comparability purposes, the Company has omitted the previously disclosed summarized financial information of the Company’s significant subsidiaries for the quarter ended March 31, 2023 as the Company’s significant subsidiaries would not have been considered significant subsidiaries under the Final Rules.

 

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

 

Forward-Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements.

 

The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including, without limitation, statements as to:

 

  ● our future operating results;
     
  ● our dependence upon our management team and key investment professionals;
     
  ● our business prospects and the prospects of our portfolio companies;
     
  ● our ability to manage our business and future growth;
     
  ● the impact of investments that we expect to make;
     
  ● risks related to investments in growth-stage companies, other venture capital-backed companies, and generally U.S. companies;
     
  ● our contractual arrangements and relationships with third parties;
     
  ● our ability to make distributions;
     
  ● the dependence of our future success on the general economy and its impact on the industries in which we invest;
     
  ● risks related to the uncertainty of the value of our portfolio investments;
     
  ● the ability of our portfolio companies to achieve their objectives;
     
  ● change in political, economic or industry conditions;
     
  ● our expected financings and investments;
     
  ● the impact of changes in laws or regulations (including the interpretation thereof), including tax laws, on our operations and/or the operation of our portfolio companies;
     
  ● the adequacy of our cash resources and working capital;
     
  ● risks related to market volatility, including general price and volume fluctuations in stock markets; and
     
  ● the timing of cash flows, if any, from the operations of our portfolio companies.

 

These statements are not guarantees of future performance and are subject to 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 or forecasted in the forward-looking statements, including, without limitation:

 

  ● an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

 

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  ● an economic downturn could disproportionately impact the market sectors in which a significant portion of our portfolio is concentrated, causing us to suffer losses in our portfolio;
     
  ● a contraction of available credit and/or an inability to access the equity markets could impair our investment activities;
     
  ● increases in inflation or an inflationary economic environment could adversely affect our portfolio companies’ operating results, causing us to suffer losses in our portfolio;
     
  ● interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; and
     
  ● the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” in our quarterly reports on Form 10-Q, our annual report on Form 10-K, and in our other filings with the SEC.

 

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. Important assumptions include our ability to originate new investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q 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 our quarterly reports on Form 10-Q and our annual report on Form 10-K, in the “Risk Factors” sections. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q. The following analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto contained elsewhere in this quarterly report on Form 10-Q.

 

Overview

 

We are 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”), and has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Our investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related investments, and to a lesser extent, income from debt investments. We invest principally in the equity securities of what we believe to be rapidly growing venture capital-backed emerging companies. We acquire our investments through direct investments in prospective portfolio companies, secondary marketplaces for private companies and negotiations with selling stockholders. In addition, we may invest in private credit and in the founders equity, founders warrants, forward purchase agreements, and private investment in public equity (“PIPE”) transactions of special purpose acquisition companies (“SPACs”). We may also invest on an opportunistic basis in select publicly traded equity securities or certain non-U.S. companies that otherwise meet our investment criteria, subject to applicable requirements of the 1940 Act. To the extent we make investments in private equity funds and hedge funds that are excluded from the definition of “investment company” under the 1940 Act by Section 3(c)(1) or 3(c)(7) of the 1940 Act, we will limit such investments to no more than 15% of our net assets.

 

In regard to the regulatory requirements for BDCs under the 1940 Act, some of these investments may not qualify as investments in “eligible portfolio companies,” and thus may not be considered “qualifying assets.” “Eligible portfolio companies” generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange. If at any time less than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the value of any non-qualifying assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets until such time as 70% of our then-current gross assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying assets in such circumstances.

 

Our investment philosophy is based on a disciplined approach of identifying promising investments in high-growth, venture-backed companies across several key industry themes which may include, among others, social/mobile/consumer, cloud computing and big data, internet commerce, financial technology, mobility, enterprise software, and sustainability. Our investment decisions are based on a disciplined analysis of available information regarding each potential portfolio company’s business operations, focusing on the portfolio company’s growth potential, the quality of recurring revenues, and path to profitability, as well as an understanding of key market fundamentals. Venture capital funds or other institutional investors have invested in the vast majority of companies that we evaluate.

 

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We seek to deploy capital primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity, and convertible debt securities with a significant equity component. Typically, our preferred stock investments are non-income producing, have different voting rights than our common stock investments and are generally convertible into common stock at our discretion. As our investment strategy is primarily focused on equity positions, our investments generally do not produce current income and therefore we may be dependent on future capital raising to meet our operating needs if no other source of liquidity is available.

 

We seek to create a low-turnover portfolio that includes investments in companies representing a broad range of investment themes.

 

Our History

 

We formed in 2010 as a Maryland corporation and operate as an internally managed, non-diversified closed-end management investment company. Our investment activities are supervised by our Board of Directors and managed by our executive officers and investments professionals, all of which are our employees.

 

Our date of inception was January 6, 2011, which is the date we commenced development stage activities. We commenced operations as a BDC upon completion of our IPO in May 2011 and began our investment operations during the second quarter of 2011.

 

On and effective June 22, 2020, we changed our name to “SuRo Capital Corp.” from “Sutter Rock Capital Corp.”

 

On and effective March 12, 2019, our Board of Directors approved our internalization (the “Internalization”), and we began operating as an internally managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Our Board of Directors approved the Internalization in order to better align the interests of our stockholders with its management. As an internally managed BDC, we are managed by our employees, rather than the employees of an external investment adviser, thereby allowing for greater transparency to stockholders through robust disclosure regarding our compensation structure. As a result of the Internalization, we no longer pay any fees or expenses under an investment advisory agreement or administration agreement, and instead pay the operating costs associated with employing investment management professionals including, without limitation, compensation expenses related to salaries, discretionary bonuses and restricted stock grants.

 

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Portfolio and Investment Activity

 

Three Months Ended March 31, 2024

 

The value of our investment portfolio will change over time due to changes in the fair value of our underlying investments, as well as changes in the composition of our portfolio resulting from purchases of new and follow-on investments and the sales of existing investments. The fair value, as of March 31, 2024, of all of our portfolio investments, excluding short-term U.S. Treasury bills, was $175,015,571.

 

During the three months ended March 31, 2024, we funded investments in an aggregate amount of $9,999,996 (not including capitalized transaction costs or investments in short-term U.S. Treasury bills) as shown in the following table:

 

Portfolio Company  Investment  Transaction Date  Gross Payments 
Supplying Demand, Inc. (d/b/a Liquid Death)  Preferred shares, Series F-1  1/18/2024  $9,999,996 
Total        $9,999,996 

 

During the three months ended March 31, 2024, we capitalized fees of $3,938.

 

During the three months ended March 31, 2024, we exited or received proceeds from investments in the amount of $318,316, net of transaction costs, and realized a net loss on investments of $424,074 (including adjustments to amounts held in escrow receivable) as shown in following table:

 

Portfolio Company 

Transaction

Date

  Quantity  

Average

Net Share

Price(1)

  

Net

Proceeds

  

Realized

Gain/

(Loss)(2)

 
Nextdoor Holdings, Inc.(3)  Various   112,420   $1.92   $215,318   $(411,151)
PSQ Holdings, Inc. (d/b/a PublicSquare) - Warrants (4)  Various   100,000    1.03    102,998    60,067 
Total               $318,316   $(351,084)

 

 

(1) The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2) Realized gain/(loss) does not include adjustments to amounts held in escrow receivable.
(3) As of February 23, 2024, we had sold our remaining Nextdoor Holdings, Inc. public common shares.
(4) As of March 31, 2024, we held 2,296,037 remaining PSQ Holdings, Inc. (d/b/a PublicSquare) warrants.

 

During the three months ended March 31, 2024, we did not write-off any investments.

 

Three Months Ended March 31, 2023

 

The value of our investment portfolio will change over time due to changes in the fair value of our underlying investments, as well as changes in the composition of our portfolio resulting from purchases of new and follow-on investments and the sales of existing investments. The fair value, as of March 31, 2023, of all of our portfolio investments, excluding U.S. Treasury bills, was $165,088,040.

 

During the three months ended March 31, 2023, we funded investments in an aggregate amount of $3,330,000 (not including capitalized transaction costs or investments in short-term U.S. Treasury investments) as shown in the following table:

 

Portfolio Company  Investment  Transaction Date  Gross Payments 
Orchard Technologies, Inc.(1)  Preferred shares, Series 1  1/13/2023  $2,000,000 
True Global Ventures 4 Plus Pte Ltd(2)  Limited Partner Fund Investment  3/31/2023   1,330,000 
Total        $3,330,000 

 

 

(1) On January 13, 2023, we invested $2.0 million in Orchard Technologies, Inc.’s Series 1 Senior Preferred financing round. As part of the transaction, we exchanged a portion of our existing Series D Preferred shares investment for Series 1 Senior Preferred shares, Series 2 Senior Preferred shares, and Common shares. Additionally, our previous investment in the Simple Agreement for Future Equity was converted into additional Series 1 Senior Preferred shares.
(2) The previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions.

 

During the three months ended March 31, 2023, we capitalized fees of $3,698.

 

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During the three months ended March 31, 2023, we exited or received proceeds from investments in the amount of $4,190,159, net of transaction costs, and realized a net gain on investments of $189,343 (including adjustments to amounts held in escrow receivable) as shown in following table:

 

Portfolio Company 

Transaction

Date

  Shares  

Average

Net Share

Price (1)

  

Net

Proceeds

  

Realized

Gain/

(Loss)(2)

 
Rent the Runway, Inc.(3)  1/4/2023   79,191   $3.05   $241,456   $(961,837)
Kahoot! ASA(4)  Various   38,305    1.97    75,601    (100,466)
NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)(5)  Various   123,938    18.50    2,293,102    (186,748)
Residential Homes for Rent, LLC (d/b/a Second Avenue)(6)  Various   N/A    N/A    250,000    — 
True Global Ventures 4 Plus Pte Ltd(7)  3/31/2023   N/A    N/A    1,330,000    1,330,000 
Total               $4,190,159   $80,949 

 

 

(1) The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2) Realized gain/(loss) does not include adjustments to amounts held in escrow receivable.
(3) As of January 4, 2023, we had sold our remaining Rent the Runway, Inc. public common shares.
(4) As of March 8, 2023, we had sold our remaining Kahoot! ASA public common shares.
(5) As of March 31, 2023, we held 105,820 remaining NewLake Capital Partners, Inc. public common shares.
(6) During the three months ended March 31, 2023, approximately $0.3 million has been received from Residential Homes for Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.3 million repaid a portion of the outstanding principal and the remaining was attributed to interest.
(7) The previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions.

 

During the three months ended March 31, 2023, we did not write-off any investments.

 

Results of Operations

 

Comparison of the Three Months Ended March 31, 2024 and 2023

 

Operating results for the three months ended March 31, 2024 and 2023 are as follows:

 

   Three Months Ended March 31, 
   2024   2023 
Total Investment Income  $1,528,091   $1,299,082 
Interest income   1,506,216    1,235,937 
Dividend income   21,875    63,145 
Total Operating Expenses  $4,750,993   $5,520,847 
Compensation expense   2,185,318    2,136,754 
Directors’ fees   171,113    160,565 
Professional fees   728,559    990,834 
Interest expense   1,214,267    1,213,286 
Income tax expense   2,100    529,780 
Other expenses   449,636    489,628 
Net Investment Loss  $(3,222,902)  $(4,221,765)
Net realized gain/(loss) on investments   (424,074)   189,343
Net change in unrealized appreciation/(depreciation) of investments   (18,418,370)   8,648,931
Net Change in Net Assets Resulting from Operations  $(22,065,346)  $4,616,509

 

Investment Income

 

Investment income increased to $1,528,091 for the three months ended March 31, 2024 from $1,299,082 for the three months ended March 31, 2023. The net increase between periods was due to increases in interest on idle cash and interest income from Architect Capital PayJoy SPV, LLC. The increase was offset by a decrease in interest income from U.S. Treasury Bills and Residential Homes for Rent, LLC (d/b/a Second Avenue), and a decrease in dividend income from NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) during the three months ended March 31, 2024, relative to the three months ended ended March 31, 2023.

 

Operating Expenses

 

Total operating expenses decreased to $4,750,993 for the three months ended March 31, 2024 from $5,520,847 for the three months ended March 31, 2023. The decrease in operating expense was primarily due to a decrease in income tax expense related to blocker corporations and professional fees, offset by an increase in compensation expense associated with an increased headcount and stock-based compensation expense during the three months ended March 31, 2024, relative to the three months ended March 31, 2023.

 

Net Investment Loss

 

For the three months ended March 31, 2024, we recognized a net investment loss of $3,222,902, compared to a net investment loss of $4,221,765 for the three months ended March 31, 2023. The change between periods resulted from an increase in total investment income and a decrease in operating expenses during the three months ended March 31, 2024, relative to the three months ended March 31, 2023.

 

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Net Realized Loss on Investments

 

For the three months ended March 31, 2024, we recognized a net realized loss on our investments of $424,074, compared to a net realized gain of $189,343 for the three months ended March 31, 2023. The components of our net realized losses on portfolio investments for the three months ended March 31, 2024 and 2023, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.”

 

Net Change in Unrealized Appreciation/(Depreciation) of Investments

 

For the three months ended March 31, 2024, we had a net change in unrealized appreciation/(depreciation) of $(18,418,370). For the three months ended March 31, 2023, we had a net change in unrealized appreciation/(depreciation) of $8,648,931. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the three months ended March 31, 2024 and 2023.

 

Portfolio Company 

Net Change in

Unrealized

Appreciation/(Depreciation)
For the Three Months
Ended

March 31, 2024

   Portfolio Company 

Net Change in Unrealized

Appreciation/(Depreciation)
For the Three Months
Ended

March 31, 2023

 
ServiceTitan, Inc.  $1,445,375   Colombier Sponsor LLC  $12,082,872 
FourKites, Inc.   1,054,724   Varo Money, Inc.   3,116,622 
Forge Global, Inc.   (1,718,813)  Aspiration Partners, Inc.   (2,544,036)
Residential Homes for Rent, LLC (d/b/a Second Avenue)   (1,798,087)  Orchard Technologies, Inc.   (4,699,728)
StormWind, LLC   (1,895,784)        
Learneo, Inc. (f/k/a Course Hero, Inc.)   (12,999,032)        
Other(2)   (2,506,753)  Other(2)   693,201 
Total  $(18,418,370)  Total  $8,648,931 

 

 

(1) The change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment, which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable.
(2) “Other” represents investments for which individual changes in unrealized appreciation/(depreciation) was less than $1.0 million for the three months ended March 31, 2024.

 

Recent Developments

 

Portfolio Activity

 

Please refer to “Note 12—Subsequent Events” to our Condensed Consolidated Financial Statements as of March 31, 2024 for details regarding activity in our investment portfolio from April 1, 2024 through May 8, 2024.

 

We are frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination rights by the seller or us. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.

 

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Modified Dutch Auction Tender Offer

 

On February 14, 2024, our Board of Directors authorized a modified Dutch Auction tender offer (the “Tender Offer”) to purchase up to 2,000,000 shares of our common stock at a price per share of not less than $4.00 and not greater than $5.00 in $0.10 increments, using available cash. The Tender Offer commenced on February 20, 2024 and expired at 5:00 P.M. Eastern Time on April 1, 2024. Pursuant to the terms of the Tender Offer, we repurchased 2,000,000 shares, representing 7.9% of our outstanding shares, on or about April 5, 2024 at a price of $4.70 per share. We used available cash to fund the purchase of our shares of common stock in the Tender Offer and to pay for all related fees and expenses.

 

Liquidity and Capital Resources

 

Our liquidity and capital resources are generated primarily from the sales of our investments and the net proceeds from public offerings of our equity and debt securities, including pursuant to our continuous at-the-market offering of shares of our common stock as discussed below under “Equity Issuances and Debt Capital Activities — At-the-Market Offering”. In addition, on December 17, 2021, we issued $75.0 million aggregate principal amount of 6.00% Notes due December 30, 2026 (the “6.00% Notes due 2026”), all of which remain outstanding. For additional information, see below and “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of March 31, 2024.

 

Our primary uses of cash are to make investments, pay our operating expenses, and make distributions to our stockholders. For the three months ended March 31, 2024 and 2023 our operating expenses were $4,750,993 and $5,520,847, respectively.

 

Cash Reserves and Liquid Securities  March 31, 2024   December 31, 2023 
Cash  $50,814,399   $28,178,352 
Cash Equivalents:          
U.S. Treasury bills(1)   29,621,913    63,810,855 
Securities of publicly traded portfolio companies:          
Unrestricted securities(2)   4,145,791    6,970,612 
Subject to other sales restrictions(3)   9,036,394    8,542,386 
Securities of publicly traded portfolio companies   13,182,185    15,512,998 
Total Cash Reserves and Liquid Securities  $93,618,497   $107,502,205 

 

 

(1) Consists of short-term U.S. Treasury bills.
(2) “Unrestricted securities” represents common stock and warrants of our publicly traded portfolio companies that are not subject to any restrictions upon sale. We may incur losses.
(3) Securities of publicly traded portfolio companies “subject to other sales restrictions” represents common stock of our publicly traded portfolio companies that are subject to certain lock-up restrictions.

 

During the three months ended March 31, 2024, cash increased to $50,814,399 from $28,178,352 at the beginning of the year. The increase in cash was primarily due to the sale or exit of investments, including U.S. Treasury bills and other investment income received, offset by the purchase of new investments, our operating expenses, and interest payments on the 6.00% Notes due 2026.

 

Currently, we believe we have ample liquidity to support our near-term capital requirements. Consistent with past and current practices, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the current circumstances.

 

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Contractual Obligations

 

A summary of our significant contractual payment obligations as of March 31, 2024 is as follows:

 

   Payments Due By Period (in millions) 
   Total  

Less than

1 year

   1–3 years   3–5 years  

More than

5 years

 
6.00% Notes due 2026(1)  $75.0   $—   $75.0   $—   $— 
Operating lease liability   0.1    0.1    —    —    — 
Total  $75.1   $0.1   $75.0   $—   $— 

 

 

(1) Reflects the principal balance payable to investors for the 6.00% Notes due 2026 as of March 31, 2024. Refer to “Note 10—Debt Capital Activities” in our Condensed Consolidated Financial Statements as of March 31, 2024 for more information.

 

Share Repurchase Program

 

During the three months ended March 31, 2024, we did not repurchase any shares of our common stock under the discretionary open-market share repurchase program (the “Share Repurchase Program”). During the three months ended March 31, 2023, we did not repurchase any shares of our common stock under the Share Repurchase Program. As of March 31, 2024, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $20.7 million. Currently, the Share Repurchase Program is authorized until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0 million in aggregate amount of our common stock.

 

Under the Share Repurchase Program, we may repurchase our outstanding common stock in the open market provided that we comply with the prohibitions under our insider trading policies and procedures and the applicable provisions of the 1940 Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules promulgated thereunder. For more information on the Share Repurchase Program, see “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of March 31, 2024.

 

Off-Balance Sheet Arrangements

 

As of March 31, 2024 and December 31, 2023, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices. However, we may employ hedging and other risk management techniques in the future.

 

Equity Issuances and Debt Capital Activities

 

At-the-Market Offering

 

On July 29, 2020, we entered into an At-the-Market Sales Agreement, dated July 29, 2020 (as amended, the “Sales Agreement”), with BTIG, LLC, JMP Securities LLC, and Ladenburg Thalmann & Co., Inc. (collectively, the “Agents”). Under the Initial Sales Agreement, we may, but have no obligation to, issue and sell up to $150.0 million in aggregate amount of shares of our common stock (the “Shares”) from time to time through the Agents or to them as principal for their own account (the “ATM Program”). We intend to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with our investment objective and strategy and for general corporate purposes.

 

During the three months ended March 31, 2024, we did not issue or sell Shares under the ATM program. As of March 31, 2024, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.

 

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During the three months ended March 31, 2023, we did not issue or sell Shares under the ATM program. As of March 31, 2023, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.

 

Refer to “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of March 31, 2024 for more information regarding the ATM Program.

 

6.00% Notes due 2026

 

On December 17, 2021, we issued $70.0 million aggregate principal amount of 6.00% Notes due 2026, which bear interest at a fixed rate of 6.00% per year, payable quarterly in arrears on March 31, June 30, September 30, and December 30 of each year, commencing on March 30, 2022. On December 21, 2021, we issued an additional $5.0 million aggregate principal amount of 6.00% Notes due 2026. We received approximately $73.0 million in proceeds from the offering, net of underwriting discounts and commissions and other offering expenses. The 6.00% Notes due 2026 have a maturity date of December 30, 2026, unless previously repurchased or redeemed in accordance with their terms. We have the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time or from time to time, on or after December 30, 2024 at a redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest.

 

Refer to “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of March 31, 2024 for more information regarding the 6.00% Notes due 2026.

 

Distributions

 

The timing and amount of our distributions, if any, will be determined by our Board of Directors and will be declared out of assets legally available for distribution. The following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our formation through March 31, 2024. The table is divided by fiscal year according to record date:

 

Date Declared  Record Date  Payment Date  Amount per Share 
Fiscal 2015:           
November 4, 2015(1)  November 16, 2015  December 31, 2015  $2.76 
Fiscal 2016:           
August 3, 2016(2)  August 16, 2016  August 24, 2016   0.04 
Fiscal 2019:           
November 5, 2019(3)  December 2, 2019  December 12, 2019   0.20 
December 20, 2019(4)  December 31, 2019  January 15, 2020   0.12 
Fiscal 2020:           
July 29, 2020(5)  August 11, 2020  August 25, 2020   0.15 
September 28, 2020(6)  October 5, 2020  October 20, 2020   0.25 
October 28, 2020(7)  November 10, 2020  November 30, 2020   0.25 
December 16, 2020(8)  December 30, 2020  January 15, 2021   0.22 
Fiscal 2021:           
January 26, 2021(9)  February 5, 2021  February 19, 2021   0.25 
March 8, 2021(10)  March 30, 2021  April 15, 2021   0.25 
May 4, 2021(11)  May 18, 2021  June 30, 2021   2.50 
August 3, 2021(12)  August 18, 2021  September 30, 2021   2.25 
November 2, 2021(13)  November 17, 2021  December 30, 2021   2.00 
December 20, 2021(14)  December 31, 2021  January 14, 2022   0.75 
Fiscal 2022:           
March 8, 2022(15)  March 25, 2022  April 15, 2022   0.11 
Total        $12.10 

 

(1) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,860,903 shares of common stock issued in lieu of cash, or approximately 14.8% of our outstanding shares prior to the distribution, as well as cash of $26,358,885. The number of shares of common stock comprising the stock portion was calculated based on a price of $9.425 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on December 28, 29 and 30, 2015. None of the $2.76 per share distribution represented a return of capital.
(2) Of the total distribution of $887,240 on August 24, 2016, $820,753 represented a distribution from realized gains, and $66,487 represented a return of capital.
(3) All of the $3,512,849 distribution paid on December 12, 2019 represented a distribution from realized gains. None of the distribution represented a return of capital.
(4) All of the $2,107,709 distribution paid on January 15, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital.
(5) All of the $2,516,452 distribution paid on August 25, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital.
(6) All of the $5,071,326 distribution paid on October 20, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital.
(7) All of the $4,978,504 distribution paid on November 30, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital.

 

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(8) All of the $4,381,084 distribution paid on January 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital.
(9) All of the $4,981,131 distribution paid on February 19, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital.
(10) All of the $6,051,304 distribution paid on April 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital.
(11) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding shares prior to the distribution, as well as cash of $29,987,589. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.07 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on May 12, 13, and 14, 2021. None of the $2.50 per share distribution represented a return of capital.
(12) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding shares prior to the distribution, as well as cash of $29,599,164. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.55 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on August 11, 12, and 13, 2021. None of the $2.25 per share distribution represented a return of capital.
(13) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,170,807 shares of common stock issued in lieu of cash, or approximately 7.5% of our outstanding shares prior to the distribution, as well as cash of $28,494,812. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.39 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on November 11, 12, and 13, 2021. None of the $2.00 per share distribution represented a return of capital.
(14) All of the $23,338,915 distribution paid on January 14, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital.
(15) All of the $3,441,824 distribution paid on April 15, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital.

 

We intend to focus on making equity-based investments from which we will derive primarily capital gains. As a consequence, we do not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments. If there are earnings or realized capital gains to be distributed, we intend to declare and pay a distribution at least annually. The amount of realized capital gains available for distribution to stockholders will be impacted by our tax status.

 

Our current intention is to make any future distributions out of assets legally available therefrom in the form of additional shares of our common stock under our dividend reinvestment plan, except in the case of stockholders who elect to receive dividends and/or long-term capital gains distributions in cash. Under the dividend reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. Any distributions reinvested under the plan will nevertheless be treated as received by the U.S. stockholder for U.S. federal income tax purposes, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the dividend reinvestment plan, it will be required to pay applicable federal, state and local taxes on any reinvested dividends even though such stockholder will not receive a corresponding cash distribution. Stockholders that hold shares in the name of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash.

 

So long as we qualify and maintain our tax treatment as a RIC, we generally will not be subject to U.S. federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our condensed consolidated financial statements. See “Note 2—Significant Accounting Policies—U.S. Federal and State Income Taxes” and “Note 9—Income Taxes” to our Condensed Consolidated Financial Statements as of March 31, 2024 for more information. The Taxable Subsidiaries included in our Condensed Consolidated Financial Statements are taxable subsidiaries, regardless of whether we are taxed as a RIC. These taxable subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in our condensed consolidated financial statements.

 

Critical Accounting Estimates and Policies

 

Critical accounting policies and practices are the policies that are both most important to the portrayal of our financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. These include estimates of the fair value of our Level 3 investments and other estimates that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ materially from such estimates. See “Note 2—Significant Accounting Policies” to our Condensed Consolidated Financial Statements as of March 31, 2024 for further detail regarding our critical accounting policies and recently issued or adopted accounting pronouncements.

 

Related-Party Transactions

 

See “Note 3—Related-Party Arrangements” to our Condensed Consolidated Financial Statements as of March 31, 2024 for more information.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Market Risk

 

Our equity investments are primarily in growth companies that in many cases have short operating histories and are generally illiquid. In addition to the risk that these companies may fail to achieve their objectives, the price we may receive for these companies in private transactions may be significantly impacted by periods of disruption and instability in the capital markets. While these periods of disruption generally have little actual impact on the operating results of our equity investments, these events may significantly impact the prices that market participants will pay for our equity investments in private transactions. This may have a significant impact on the valuation of our equity investments.

 

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Valuation Risk

 

Our investments may not have a readily available market quotation, as such term is defined in Rule 2a-5 under the 1940 Act, and we value these investments at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material. In addition, if we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

 

Interest Rate Risk

 

We are subject to financial market risks, which could include, to the extent we utilize leverage with variable rate structures, changes in interest rates. As we invest primarily in equity rather than debt instruments, we would not expect fluctuations in interest rates to directly impact the return on our portfolio investments, although any significant change in market interest rates could potentially have an adverse effect on the business, financial condition and results of operations of the portfolio companies in which we invest. As of March 31, 2024, all of our debt investments and outstanding borrowings bore fixed rates of interest.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of March 31, 2024, our management, 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 Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the 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 by the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognizes 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 is required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

Item 1. Legal Proceedings

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings 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. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

 

Item 1A. Risk Factors

 

Investing in our securities involves a number of significant risks. In addition to the other information contained in this report, you should carefully consider the factors discussed in our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 14, 2024, which could materially affect our business, financial condition and/or operating results. Although the risks described in our annual report on Form 10-K for the fiscal year ended December 31, 2022 represent the principal risks associated with an investment in us, they are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, might materially and adversely affect our business, financial condition and/or operating results. Other than as stated below, there have been no material changes to the risk factors discussed in “Item 1A. Risk Factors” of Part I of our annual report on Form 10-K for the fiscal year ended December 31, 2023.

 

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

 

Sales of Unregistered Equity Securities

 

We did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933, as amended.

 

Issuer Purchases of Equity Securities(1)

 

Information relating to our purchases of our common stock during the three months ended March 31, 2024 is as follows:

 

Period 

Total

Number of

Shares

Purchased(2)

  

Average

Price Paid

Per Share

  

Total Number

of Shares

Purchased as

Part of
Publicly

Announced

Plans or
Programs

  

Approximate

Dollar
Value of

Shares that
May Yet Be
Purchased

Under the
Share

Repurchase

Program

 
January 1 through January 31, 2024   —   $—    —   $20,686,087 
February 1 through February 28, 2024   —    —    —    20,686,087 
March 1 through March 31, 2024   —    —    —    20,686,087 
Total   —         —      

 

 

(1) On August 7, 2023, our Board of Directors approved an extension of the Share Repurchase Program until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0 million in aggregate amount of our common stock. The timing and number of shares to be repurchased will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate us to acquire any specific number of shares of our common stock. During the three months ended March 31, 2024, we did not repurchase shares of common stock under the Share Repurchase Program. As of March 31, 2024, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $20.7 million.For more information on the Share Repurchase Program, see “Note 5 — Common Stock” to our Condensed Consolidated Financial Statements as of March 31, 2024.
(2) Includes purchases of our common stock made on the open market by or on behalf of any “affiliated purchaser,” as defined in Exchange Act Rule 10b-18(a)(3), of the Company.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

For the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company has entered into any (i) contract, instruction or written plan for the purchase or sale of securities of the registrant intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or (ii) any non-Rule 10b5-1 trading arrangement.

 

The Company has adopted insider trading policies and procedures governing the purchase, sale, and disposition of the Company’s securities by officers and directors of the Company that are reasonably designed to promote compliance with insider trading laws, rules and regulations.

 

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Item 6. Exhibits

 

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

 

3.1 Articles of Amendment and Restatement(1)
3.2 Articles of Amendment(2)
3.3 Articles of Amendment(3)
3.4 Articles of Amendment(4)
3.5 Second Amended and Restated Bylaws(4)
4.1 Base Indenture, dated March 28, 2018, by and between the Registrant and U.S. Bank National Association, as trustee(5)
4.2 Second Supplemental Indenture, dated December 17, 2021, relating to the 6.00% Notes due 2026, by and between the Company and U.S. Bank National Association, as trustee(6)
4.3 Form of 6.00% Notes due 2026 (incorporated by reference to Exhibit 4.2)(6)
4.4 Description of Securities(7)
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*

 

 

(1) Previously filed in connection with Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-171578), filed on March 30, 2011, and incorporated by reference herein.
   
(2) Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852), filed on June 1, 2011, and incorporated by reference herein.
   
(3) Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on August 1, 2019, and incorporated by reference herein.
   
(4) Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on June 16, 2020, and incorporated by reference herein.
   
(5) Previously filed in connection with the Registrant’s Registration Statement on Form N-2 (File No. 333-239681), filed on July 2, 2020, and incorporated by reference herein.
   
(6) Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on December 17, 2021, and incorporated by reference herein.
   
(7) Previously filed in connection with the Registrant’s Annual Report on Form 10-K (File No. 814-00852) filed on March 11, 2022, and incorporated by reference herein.
   
* Filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements 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.

 

      SURO CAPITAL CORP.
       
Date: May 9, 2024 By: /s/ Mark D. Klein
      Mark D. Klein
      Chairman, President and Chief Executive Officer
      (Principal Executive Officer)
       
Date: May 9, 2024 By: /s/ Allison Green
      Allison Green
      Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary
      (Principal Financial and Accounting 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 capacities and on the dates indicated.

 

Date: May 9, 2024 By:

/s/ Mark D. Klein

     

Mark D. Klein

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

       
Date: May 9, 2024 By:

/s/ Allison Green

     

Allison Green

Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary

(Principal Financial and Accounting Officer)

 

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Exhibit 31.1

 

Certification of Chief Executive Officer of SuRo Capital Corp.

pursuant to Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Mark D. Klein, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of SuRo Capital Corp.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

 

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated this 9th day of May, 2024.

 

By: /s/ Mark Klein  
  Mark D. Klein  
  Chief Executive Officer  

 

 

 

 

 

Exhibit 31.2

 

Certification of Chief Financial Officer of SuRo Capital Corp.

pursuant to Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Allison Green, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of SuRo Capital Corp.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

 

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated this 9th day of May, 2024.

 

By: /s/ Allison Green  
  Allison Green  
  Chief Financial Officer  

 

 

 

 

 

Exhibit 32.1

 

Certification of Chief Executive Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

 

In connection with the quarterly report on Form 10-Q for the three months ended March 31, 2024 (the “Report”) of SuRo Capital Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Mark D. Klein, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

  /s/ Mark D. Klein
  Name: Mark D. Klein
  Date: May 9, 2024

 

 

 

 

Exhibit 32.2

 

Certification of Chief Financial Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

 

In connection with the quarterly report on Form 10-Q for the three months ended March 31, 2024 (the “Report”) of SuRo Capital Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Allison Green, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

  /s/ Allison Green
  Name: Allison Green
  Date: May 9, 2024