UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

 November 6, 2019

 

SUTTER ROCK CAPITAL CORP.

(Exact name of registrant as specified in its charter)

 

Maryland 1-35156 27-4443543
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

 

One Sansome Street

Suite 730

San Francisco, CA 94104

(Address of principal executive offices and zip code)

 

Registrant’s telephone number, including area code: (650) 235-4769

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 Capital Market  

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

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. ¨

  

 

 
 

 

Item 2.02. Results of Operations and Financial Condition.

 

On November 6, 2019, Sutter Rock Capital Corp. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2019. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 2.02 by reference.

 

The information disclosed under this Item 2.02, including the information set forth in Exhibit 99.1 hereto, is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

 

Item 8.01. Other Events.

 

On November 6, 2019, in connection with the Company’s conference call to announce its financial results for the fiscal quarter ended September 30, 2019, the Company provided a presentation to stockholders, analysts and any other parties participating on the call. A copy of the slides that the Company used during the presentation has been included as Exhibit 99.2 to this Current Report on Form 8-K and has been posted on the Company’s website.

 

Item 9.01 Financial Statements and Exhibits.

 

Exhibit 99.1 Press Release dated November 6, 2019*
Exhibit 99.2 Earnings Presentation dated November 6, 2019

 

*The press release attached hereto as Exhibit 99.1 is “furnished” and not “filed,” as described in Item 2.02 of this Current Report on Form 8-K.

  

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  November 6, 2019 SUTTER ROCK CAPITAL CORP.  
     
     
  By:  /s/ Allison Green  
   

Allison Green
Chief Financial Officer, Treasurer and Corporate Secretary 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

Sutter Rock Capital Corp. Reports Third Quarter 2019 Financial Results

 

Net Asset Value of $11.24 Per Share as of September 30, 2019

 

Sutter Rock Declares $0.20 Per Share Dividend

 

SAN FRANCISCO, Calif., November 6, 2019 (GLOBE NEWSWIRE) – Sutter Rock Capital Corp. (“Sutter Rock” or the “Company”) (Nasdaq:SSSS) today announced financial results for the quarter ended September 30, 2019. Net assets totaled approximately $213.9 million, or $11.24 per share, at September 30, 2019, as compared to $9.89 per share at December 31, 2018 and $10.58 per share at September 30, 2018. On November 5, 2019, Sutter Rock’s Board of Directors declared a dividend in the amount of $0.20 per share payable on December 12, 2019 to the Company’s common stockholders of record as of the close of business on December 2, 2019.

 

“We are pleased to announce that our Board of Directors has declared a dividend in the amount of $0.20 per share,” said Mark Klein, President and Chief Executive Officer of Sutter Rock. “This dividend is driven by monetizations in Sutter Rock’s public and private securities. Based on ongoing portfolio activity and the results of the recently announced tender offer, we anticipate declaring an additional de minimis dividend by year end.”

 

“Additionally, our portfolio companies continue to demonstrate strong operating fundamentals and we are excited about their positioning in their respective markets,” Klein continued. “We believe that our portfolio is undervalued and as such we continue to take initiatives to drive shareholder value, including the $10.0 million Modified Dutch Auction Tender.”

 

Investment Portfolio as of September 30, 2019

 

At September 30, 2019, Sutter Rock held positions in 25 portfolio companies with an aggregate fair value of approximately $199.8 million. In line with the Company’s continued strategy to increase the size of its investments in individual portfolio companies, Sutter Rock has consolidated its investment portfolio around its top positions. The Company’s top five portfolio company investments accounted for approximately 55% of the total portfolio at fair value as of September 30, 2019 and for approximately 87% of Sutter Rock’s market capitalization as of November 5, 2019.

 

Top Five Investments as of September 30, 2019

 

$ in millions  Fair Value   % of Total
Portfolio
 
Coursera, Inc.  $34.8    17.4%
Palantir Technologies, Inc.   30.4    15.2 
Ozy Media, Inc.   16.9    8.4 
Course Hero, Inc.   16.0    8.0 
Lyft, Inc.   12.4    6.2 
Total (rounded)  $110.4    55.3%

 

 

 

 

 

 

Third Quarter 2019 Investment Portfolio Activity

 

During the three months ended September 30, 2019, Sutter Rock exited its remaining investment in Dropbox, Inc.:

 

Portfolio Company Shares Sold

Average Net

Share Price (1)

Net Proceeds

(in millions)

Realized Gain

(in millions)

Dropbox, Inc. 437,530 $21.03 $9.2 $1.7
__________________
(1)The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.

 

Subsequent to quarter-end, through November 6, 2019, Sutter Rock exited its entire investment in Lyft, Inc.:

 

Portfolio Company Shares Sold

Average Net

Share Price (1)

Net Proceeds

(in millions)

Realized Gain

(in millions)

Lyft, Inc. 304,829 $43.57 $13.3 $9.0
__________________
(1)The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.

 

During the three months ended September 30, 2019, Sutter Rock funded the following new and follow-on investments:

 

Portfolio Company Investment Transaction Date Amount Invested
Aspiration, Inc. Convertible Note 8/9/2019 $0.3 million
GreenAcreage Real Estate Corp. Common Stock 8/13/2019 $7.5 million
Treehouse Real Estate Investment Trust, Inc. Common Stock 9/11/2019 $7.5 million

 

During the three months ended September 30, 2019, Sutter Rock amended the structure of its investment in NestGSV, Inc. The amended agreement restructured Sutter Rock’s equity positions, not including warrants, into a derivative security. The agreement is intended to protect Sutter Rock’s downside while affording Sutter Rock upside participation. Sutter Rock will maintain its outstanding convertible note with amended terms and warrant positions in NestGSV, Inc..

 

Third Quarter 2019 Financial Results

 

 

Quarter Ended

September 30, 2019

Quarter Ended

September 30, 2018

 

$ in millions

 

per share

 

$ in millions

 

per share

         
Net investment loss ($4.7) ($0.24)  ($3.9) ($0.19)
         
Net realized gain/(loss) on investments 1.8   0.09   (10.1)   (0.49)
         
Net change in unrealized appreciation of investments, net of tax benefit(1) 8.2   0.42   14.4   0.70
         
Net change in net assets resulting from operations  $5.3 $0.27  $0.3  $0.02
         
Stock-based compensation(2) 1.4  0.08 - -
         
Repurchase of common stock(3) (3.9) 0.14 (4.1) 0.10
         
Increase/(decrease) in net asset value(4) $2.8 $0.49 ($3.7)  $0.12

__________________

(1)Includes related net tax benefit of $0.2 million for the quarter ended September 30, 2018.
(2)On June 5, 2019, our Board of Directors adopted, and our stockholders approved, an equity-based incentive plan (“the 2019 Plan”), which authorizes equity awards to be granted for up to 1,976,264 shares of our common stock. On July 17, 2019, stock options providing the right to purchase up to 1,125,000 shares were granted under the 2019 Plan. During the quarter ended September 30, 2019, the Company recognized a stock-based compensation expense of $1.4 million; the amount of cash received from the exercise of stock options was $0. This amount represents the estimated annual expense.
(3)During the quarters ended September 30, 2019 and 2018, the Company repurchased 605,327 and 575,958 shares of Sutter Rock Capital Corp. common stock for approximately $3.9 million and $4.1 million in cash, respectively. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in an increase in the net asset value per share.
(4)Total may not sum due to rounding.

 

 

 

 

 

Weighted-average common basic shares outstanding were approximately 19.5 million and 20.5 million for the quarters ended September 30, 2019 and 2018, respectively.

 

Sutter Rock’s liquid assets were approximately $57.6 million as of September 30, 2019, consisting of approximately $45.2 million of cash and $12.4 million of public securities.

 

Dividend Declaration for Third Quarter 2019

 

On November 5, 2019, Sutter Rock’s Board of Directors declared a dividend of $0.20 per share payable on December 12, 2019 to the Company’s common stockholders of record as of the close of business on December 2, 2019. The dividend will be paid in cash.

 

Modified Dutch Auction Tender Offer

 

On October 21, 2019, the Company commenced a modified “Dutch Auction” tender offer (the “Tender Offer”) to purchase for cash up to $10.0 million in shares of its common stock from its stockholders. In accordance with the terms of the Tender Offer, the Company intends to select the lowest price per share, not less than $6.00 per share and not greater than $8.00 per share, less any applicable withholding taxes and without interest, that will allow the Company to purchase that number of shares having an aggregate purchase price of $10.0 million. Upon the terms and subject to the conditions of the Tender Offer, if shares having an aggregate purchase price of less than $10.0 million are properly tendered and not properly withdrawn, the Company will purchase all shares properly tendered and not properly withdrawn. The Company expects to use available cash to fund any purchases of its shares of common stock in the Tender Offer and to pay for all related fees and expenses. The Tender Offer will expire at 5:00 P.M. ET, on November 20, 2019, unless extended by the Company.

 

Share Repurchase Program

 

During the three months ended September 30, 2019, the Company repurchased an additional 605,327 shares of its common stock for an aggregate purchase price of $3.9 million. Subsequent to quarter-end, through November 6, 2019, the Company repurchased an additional 28,000 shares under the Share Repurchase Program for an aggregate purchase price of $0.2 million.

 

Under the publicly announced Share Repurchase Program, as of November 6, 2019, the Company has repurchased 3,167,484 shares of its common stock for approximately $20.0 million since the Share Repurchase Program was announced in August 2017.

 

Conference Call and Webcast

 

Management will hold a conference call and webcast for investors today at 2:00 p.m. PT (5:00 p.m. ET). The conference call access number for U.S. participants is 334-777-6978, and the conference call access number for participants outside the U.S. is +1 800-367-2403. The conference ID number for both access numbers is 9176331. Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of Sutter Rock’s website at www.sutterrock.com. An archived replay of the webcast will also be available for 12 months following the live presentation.

 

A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on November 13, 2019 by dialing 888-203-1112 (U.S.) or +1 719-457-0820 (International) and using conference ID number 9176331.

 

 

 

 

 

About Sutter Rock Capital Corp.

 

Sutter Rock Capital Corp. (Nasdaq:SSSS) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. Sutter Rock is headquartered in San Francisco, CA. www.sutterrock.com

 

Forward-Looking Statements

 

Statements included herein, including statements regarding Sutter Rock's beliefs, expectations, intentions or strategies for the future, may constitute "forward-looking statements". Sutter Rock cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Risk factors, cautionary statements and other conditions which could cause Sutter Rock's actual results to differ from management's current expectations are contained in Sutter Rock's filings with the Securities and Exchange Commission. Sutter Rock undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

 

Contact

Sutter Rock Capital Corp.

(650) 235-4769

IR@sutterrock.com

 

Media Contact

Bill Douglass

Gotham Communications, LLC

Communications@sutterrock.com

 

 

 

 

 

SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

 

   September 30,
 2019
   December 31,
 2018
 
ASSETS          
Investments at fair value:          
Non-controlled/non-affiliate investments (cost of $94,863,935 and $105,869,607, respectively)  $161,350,359   $170,067,233 
Non-controlled/affiliate investments (cost of $47,576,383 and $42,333,854, respectively)   30,241,445    5,931,863 
Controlled investments (cost of $13,291,886 and $22,960,942, respectively)   8,251,634    22,816,733 
Total Portfolio Investments   199,843,438    198,815,829 
Investments in U.S. Treasury bills (cost of $49,993,250 and $99,982,067, respectively)   49,995,500    99,994,000 
Total Investments (cost of $205,725,454 and $271,146,470, respectively)   249,838,938    298,809,829 
Cash   45,155,784    28,184,163 
Escrow proceeds receivable   2,086,145    2,494,582 
Interest and dividends receivable   125,348    255,670 
Deferred financing costs   5,502    267,541 
Prepaid expenses and other assets(3)   2,332,410    207,769 
Total Assets   299,544,127    330,219,554 
LIABILITIES          
Accounts payable and accrued expenses(3)   2,142,052    490,687 
Accrued incentive fees, net of waiver of incentive fees(1)       4,660,472 
Accrued management fees, net of waiver of management fees(1)       415,056 
Accrued interest payable       475,000 
Payable for securities purchased   44,742,449    89,480,103 
Deferred tax liability       885,566 
4.75% Convertible Senior Notes due March 28, 2023(2)   38,710,596    38,434,511 
Total Liabilities   85,595,097    134,841,395 
           
Net Assets  $213,949,030   $195,378,159 
NET ASSETS          
Common stock, par value $0.01 per share (100,000,000 authorized; 19,041,519 and 19,762,647 issued and outstanding, respectively)  $190,415   $197,626 
Paid-in capital in excess of par   189,155,021    192,322,399 
Accumulated net investment loss   (23,116,027)   (16,228,294)
Accumulated net realized gain/(loss) on investments   3,606,136    (7,691,365)
Accumulated net unrealized appreciation of investments   44,113,485    26,777,793 
Net Assets  $213,949,030   $195,378,159 
Net Asset Value Per Share  $11.24   $9.89 

 

 

(1)This balance references a related-party transaction.
(2)As of September 30, 2019 and December 31, 2018, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000.
(3)This balance includes a right of use asset and corresponding operating lease liability, respectively.

 

 

 

 

 

SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2019   2018   2019   2018 
INVESTMENT INCOME                    
Non-controlled/non-affiliate investments:                    
Interest income  $298,515   $164,310   $635,187   $174,922 
Non-controlled/affiliate investments:                    
Interest income   81,711    65,790    201,304    521,685 
Controlled investments:                    
Interest income       16,252    58,937    41,153 
Dividend income           200,000    350,000 
Total Investment Income   380,226    246,352    1,095,428    1,087,760 
OPERATING EXPENSES                    
Management fees(1)       1,345,090    848,723    3,954,732 
Incentive fees/(Reversal of incentive fee accrual)(1)       804,520    (4,660,472)   4,863,939 
Costs incurred under Administration Agreement(1)       355,599    306,084    1,176,857 
Directors’ fees   99,620    86,250    272,120    258,750 
Professional fees   807,143    552,179    4,179,093    1,218,875 
Compensation expense   3,070,409        3,702,517     
Interest expense   591,512    1,311,534    1,795,885    3,925,292 
Income tax expense   954    (6,235)   34,666    142,264 
Other expenses   512,792    107,688    1,504,545    756,994 
Total Operating Expenses   5,082,430    4,556,625    7,983,161    16,297,703 
Management fee waiver(1)       (402,074)       (892,421)
Incentive fee waiver(1)               (5,000,000)
Total operating expenses, net of waiver of management and incentive fees   5,082,430    4,154,551    7,983,161    10,405,282 
Net Investment Loss   (4,702,204)   (3,908,199)   (6,887,733)   (9,317,522)
Realized Gains/(Losses) on Investments:                    
Non-controlled/non-affiliated investments   1,772,961    (10,119,771)   23,632,332    (7,532,483)
Non-controlled/affiliate investments           (12,334,831)    
Controlled investments               (680)
Net Realized Gain/(Loss) on Investments   1,772,961    (10,119,771)   11,297,501    (7,533,163)
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018               (397,846)
Change in Unrealized Appreciation/(Depreciation) of Investments:                    
Non-controlled/non-affiliated investments   (7,998,030)   16,245,474    2,279,117    36,655,159 
Non-controlled/affiliate investments   11,264,416    (2,350,413)   19,067,052    (10,979,378)
Controlled investments   4,924,309    247,314    (4,896,043)   6,472,584 
Net Change in Unrealized Appreciation/(Depreciation) of Investments   8,190,695    14,142,375    16,450,126    32,148,365 
Benefit from taxes on unrealized depreciation of investments       214,404    885,566    1,225,275 
Net Change in Net Assets Resulting from Operations  $5,261,452   $328,810   $21,745,460   $16,125,108 
Net Change in Net Assets Resulting from Operations per Common Share:                    
Basic  $0.27   $0.02   $1.11   $0.77 
Diluted(2)  $0.25   $0.02   $1.00   $0.72 
Weighted-Average Common Shares Outstanding                    
Basic   19,472,785    20,462,626    19,650,651    20,858,192 
Diluted(2)   23,204,129    20,462,626    23,381,995    27,728,434 

  

 

(1)This balance references a related-party transaction.
(2)For the three months ended September 30, 2018, 7,173,218 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net change in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive. For three and nine months ended September 30, 2019 and the nine months ended September 30, 2018, 0 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net change in net assets resulting from operations per common share.

 

 

 

 

SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (UNAUDITED)

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2019   2018   2019   2018 
Per Basic Share Data                    
Net asset value at beginning of the period  $10.75   $10.46   $9.89   $9.64 
Net investment loss(1)   (0.24)   (0.19)   (0.35)   (0.45)
Net realized gain/(loss) on investments(1)   0.09    (0.49)   0.57    (0.36)
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018(1)               (0.02)
Net change in unrealized appreciation of investments(1)   0.42    0.69    0.84    1.54 
Benefits from taxes on unrealized depreciation of investments(1)       0.01    0.05    0.06 
Repurchase of common stock   0.14    0.10    0.17    0.17 
Stock-based compensation   0.08        0.07     
Net asset value at end of period  $11.24   $10.58   $11.24   $10.58 
Per share market value at end of period  $6.24   $6.91   $6.24   $6.91 
Total return based on market value(2)   (2.50)%   0.73%   19.54%   26.79%
Total return based on net asset value(2)   4.56%   1.15%   13.65%   9.75%
Shares outstanding at end of period   19,041,519    20,174,955    19,041,519    20,174,955 
Ratios/Supplemental Data:                    
Net assets at end of period  $213,949,030   $213,403,364   $213,949,030   $213,403,364 
Average net assets  $215,020,159   $214,704,044   $207,111,511   $210,108,076 
Ratio of gross operating expenses to average net assets(3)   7.45%   8.51%   6.08%   10.18%
Ratio of incentive fee waiver to average net assets   %   %   %   (2.38)%
Ratio of management fee waiver to average net assets   %   (0.19)%   %   (0.42)%
Ratio of income tax provision to average net assets   %   %   (0.43)%   %
Ratio of net operating expenses to average net assets(3)   7.45%   8.32%   5.65%   7.38%
Ratio of net investment loss to average net assets(3)   (8.77)%   (7.30)%   (4.46)%   (5.95)%
Portfolio Turnover Ratio   4.80%   2.98%   12.72%   3.08%

  

 

(1)Based on weighted-average number of shares outstanding for the relevant period.
(2)Total return based on market value is based on the change in market price per share between the opening and ending market values per share in the year. 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.
(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. Non-recurring expenses, including the $5.0 million accrued incentive fee forfeiture pursuant to the Waiver Agreement, are not annualized. For the three and nine months ended September 30, 2019, the Company excluded $0 and $(1,769,820) of non-recurring expenses and did not annualize the income tax provision. For three and nine months ended September 30, 2018, the Company excluded $0 and $352,667 of non-recurring expenses and did not annualize the incentive fee waiver. 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.

 

 

Exhibit 99.2

 

 

Q3 2019 Earnings Call November 6, 2019

 

 

2 Forward Looking Statements Statements included herein, including statements regarding Sutter Rock's beliefs, expectations, intentions or strategies for the future, may constitute "forward - looking statements" . Sutter Rock cautions you that forward - looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements . All forward - looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward - looking statements . Risk factors, cautionary statements and other conditions which could cause Sutter Rock's actual results to differ from management's current expectations are contained in Sutter Rock's filings with the Securities and Exchange Commission . Sutter Rock undertakes no obligation to update any forward - looking statement to reflect events or circumstances that may arise after the date of this press release . Certain information discussed in this presentation (including information relating to portfolio companies) was derived from third - party sources and has not been independently verified . SSSS makes no representation or warranty with respect to this information . The following slides contain summaries of certain financial and statistical information about SSSS . The information contained in this presentation is summary information intended to be considered in connection with review of our SEC filings and other public announcements we may make, by press release or otherwise, from time to time . We undertake no duty or obligation to publicly update or revise the information contained in this presentation unless required to do so by law . In addition, information related to past performance, while it may be helpful as an evaluative tool, is not indicative of future results, the achievement of which cannot be assured . You should not view the past performance of SSSS or any of its portfolio companies, or information about the market, as indicative of SSSS’ or any of its portfolio companies’ future results . The performance data stated herein may have been due to extraordinary market or other conditions, which may not be duplicated in the future . Current performance may be lower or higher than the performance data quoted . This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of SSSS . Third Quarter 2019

 

 

3 3 rd Quarter 2019 NAV Third Quarter 2019 Preliminary NAV of $11.24 9.99 $10.46 $10.58 $9.89 $10.75 $10.75 $11.24 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

 

 

Key Shareholder Initiatives 4 Third Quarter 2019  Shareholder Dividend  Sutter Rock is pleased to declare a $ 0 . 20 per share dividend to shareholders  This dividend is driven by monetizations in Sutter Rock’s public and private securities  Based on ongoing portfolio activity and the results of the tender offer, we anticipate declaring an additional de minimis dividend by year end  Modified Dutch Auction Tender Offer  On October 21 , 2019 , Sutter Rock commenced a currently outstanding modified Dutch Auction tender offer for an aggregate purchase of up to $ 10 . 0 million in common stock at a price per share between $ 6 . 00 and $ 8 . 00  The tender offer will expire at 5 PM Eastern on November 20 , 2019 , unless otherwise noted  If the modified Dutch Auction tender offer is fully subscribed, Sutter Rock will purchase between 1 . 25 million shares and 1 . 67 million shares, or between 6 . 57 % and 8 . 77 % , respectively, of outstanding common shares  Share Repurchase Program  To date, under the Share Repurchase Program, we have repurchased $ 20 . 0 million in stock since the program was announced in August 2017  During the third quarter, Sutter Rock repurchased 605 , 327 shares of Sutter Rock Capital common stock for approximately $ 3 . 9 million  Subsequent to quarter end, Sutter Rock repurchased 28 , 000 shares for approximately $ 0 . 2 million 1 2 3

 

 

5 Share Repurchase Program Third Quarter 2019 Since commencement of the Share Repurchase Program in August 2017, Sutter Rock has repurchased approximately 14% of its then - outstanding shares. Purchases to Date Shares Repurchased Cash Used Allocation Remaining 2017 Total Repurchases 934,658 $4.9 $5.1 2018 Total Repurchases 1,483,698 $10.3 $4.8 Q1 2019 - - $4.8 Q2 2019 115,801 $0.7 $4.1 Q3 2019 605,327 $3.9 $5.2 Q4 2019 (to date) 28,000 $0.2 $5.0 Total 2019 to Date 749,128 $4.8 $5.0 Total To Date 3,167,484 $20.0 $5.0 ($ in millions) ($ in millions)

 

 

Top 5 Positions = 55% of Total Investment Portfolio at Fair Value Based on Total Investment Portfolio Value of $199.8 million 6 Third Quarter 2019 Fair Value ($ in millions) % of Total Portfolio 5 $12.4 6.2% 4 $16.0 8.0% 3 $16.9 8.4% 2 $30.4 15.2% 1 $34.8 17.4 % $110.4 55.3% $118.8 Market Capitalization (9/30/2019) • Sutter Rock’s Top 5 positions account for approximately 55% of the invested portfolio at fair value, excluding treasuries, as of 09/30/19 • The Top 5 positions accounted for roughly 93% of Sutter Rock’s market capitalization as of 09/30/19

 

 

35.5% 18.8% 15.2% 15.9% 14.1% Key Investment Themes As a Percentage of Total Investment Portfolio at Fair Value as of 09/30/19 Third Quarter 2019 Note: Sustainability investment theme accounted for 0.4% of Total Investment Portfolio in the third quarter. 7 ($ in millions) (1) Total may not sum due to rounding. Legend Industry Theme Fair Value % of Portfolio Education Technology $71.0 35.5% Marketplaces $37.6 18.8% Financial Technology $31.8 15.9% Big Data & Cloud $30.4 15.2% Social & Mobile $28.2 14.1% Sustainability $0.9 0.4% Total (1) $199.8 100.0%

 

 

Lyft • Following Q3 2019 close, Sutter Rock sold its entire position in Lyft, realizing a total $9.0 million gain on its Lyft invest men t since inception Investment Portfolio Activity – Dropbox, Lyft Exits Net realized gain for Q3 of approximately $1.7 million (1) Weighted average price per share, net of fees. (2) Proceeds net of fees. Dropbox • At the beginning of Q3 2019, Sutter Rock held 50% of its initial Dropbox position following sales in Q2 2019 • During Q3, Sutter Rock sold the remainder of its position in Dropbox, realizing a total $6.1 million gain on its Dropbox inve stm ent since inception Portfolio Company Investment Transaction Date Shares Sold Price per Share (1) Proceeds (2) Realized Gain Dropbox, Inc. Common Shares Q2 2019 437,460 $24.06 $10,520,449 $4,326,029 Dropbox, Inc. Common Shares Q3 2019 437,530 $21.03 $9,203,142 $1,740,647 Total 874,990 $22.54 $19,723,591 $6,066,675 Portfolio Company Investment Transaction Date Shares Sold Price per Share (1) Proceeds (2) Realized Gain Lyft, Inc. Common Shares Q4 2019 304,829 $43.57 $13,280,517 $8,994,623 Total 304,829 $43.57 $13,280,517 $8,994,623 Investment Portfolio Activity Subsequent to Quarter End – Lyft Exit 8 Third Quarter 2019 Q3 Investment Portfolio Activity – Dropbox Exit

 

 

Dollars ($ in millions) Per Share Net Assets at Beginning of Period $211.1 $10.75 Net Investment Loss ($4.7) ($0.24) Net Realized Gain on Investments $1.8 $0.09 Net Unrealized Gain on Investments $8.2 $0.42 Stock - Based Compensation Expense (1) $1.4 $0.08 Repurchase of Common Stock (2) ($3.9) $0.14 Net Assets at September 30, 2019 $213.9 $11.24 9 Financial Highlights For the Quarter Ended September 30, 2019 Third Quarter 2019 (1) On June 5, 2019, Sutter Rock’s Board of Directors adopted, and our stockholders approved, an equity - based incentive plan (“the 2 019 Plan”), which authorizes equity awards to be granted for up to 1,976,264 shares of our common stock. On July 17, 2019, stock options providing the right to purchase up to 1,125,000 shares were grant ed under the 2019 Plan. During the quarter ended September 30, 2019, Sutter Rock recognized a stock - based compensation expense of $1.4 million; the amount of cash received from the exercise of stock options wa s $0. This amount represents the estimated annual expense. (2) During the quarter ended September 30, 2019, Sutter Rock repurchased 605,327 shares of Sutter Rock Capital common stock for a ppr oximately $3.9 million in cash. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulte d i n an increase in the net asset value per share.