UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
____________________________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2020
¨ 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 of incorporation) | (I.R.S. Employer Identification No.) | ||||
| One Sansome Street, Suite 730, San Francisco, CA | 94104 | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
| (650) 235-4769 | |||||
| (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 Capital 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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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, 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 o | Accelerated filer x | ||||
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | ||||
Emerging growth company o | | ||||
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x
The issuer had 16,754,590 shares of common stock, $0.01 par value per share, outstanding as of August 6, 2020.
SURO CAPITAL CORP.
TABLE OF CONTENTS
| PAGE | ||||||||
| PART I. FINANCIAL INFORMATION | ||||||||
| PART II. OTHER INFORMATION | ||||||||
i
PART I
FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
| June 30, 2020 | December 31, 2019 | ||||||||||
| ASSETS | |||||||||||
| Investments at fair value: | |||||||||||
| Non-controlled/non-affiliate investments (cost of $99,121,577 and $90,567,041, respectively) | $ | 168,700,422 | $ | 152,866,112 | |||||||
| Non-controlled/affiliate investments (cost of $52,857,243 and $52,857,243, respectively) | 29,438,698 | 37,944,268 | |||||||||
| Controlled investments (cost of $7,161,412 and $7,161,412, respectively) | 860,198 | 775,198 | |||||||||
Total Portfolio Investments | 198,999,318 | 191,585,578 | |||||||||
| Investments in U.S. Treasury bills (cost of $99,999,611 and $49,996,667, respectively) | 100,000,000 | 50,000,000 | |||||||||
| Total Investments (cost of $259,139,843 and $200,582,363, respectively) | 298,999,318 | 241,585,578 | |||||||||
| Cash | 23,285,073 | 44,861,263 | |||||||||
| Escrow proceeds receivable | 67,135 | 265,303 | |||||||||
| Interest and dividends receivable | 70,274 | 84,630 | |||||||||
| Deferred financing costs | 11,382 | 11,382 | |||||||||
Prepaid expenses and other assets(1) | 1,197,711 | 1,755,933 | |||||||||
| Total Assets | 323,630,893 | 288,564,089 | |||||||||
| LIABILITIES | |||||||||||
Accounts payable and accrued expenses(1) | 1,933,219 | 1,143,923 | |||||||||
| Payable to executive officers | — | 1,369,873 | |||||||||
| Accrued interest payable | 475,000 | 475,000 | |||||||||
| Dividends payable | — | 2,107,709 | |||||||||
| Payable for securities purchased | 89,499,611 | 44,746,660 | |||||||||
| Income tax payable | 38,965 | — | |||||||||
4.75% Convertible Senior Notes due March 28, 2023(2) | 38,991,657 | 38,803,635 | |||||||||
| Total Liabilities | 130,938,452 | 88,646,800 | |||||||||
| Commitments and contingencies (Notes 7 and 10) | |||||||||||
| Net Assets | $ | 192,692,441 | $ | 199,917,289 | |||||||
| NET ASSETS | |||||||||||
| Common stock, par value $0.01 per share (100,000,000 authorized; 16,279,679 and 17,564,244 issued and outstanding, respectively) | $ | 162,797 | $ | 175,642 | |||||||
| Paid-in capital in excess of par | 173,199,798 | 178,550,374 | |||||||||
| Accumulated net investment loss | (33,351,303) | (25,679,362) | |||||||||
| Accumulated net realized gain on investments | 12,821,670 | 5,867,417 | |||||||||
| Accumulated net unrealized appreciation/(depreciation) of investments | 39,859,479 | 41,003,218 | |||||||||
| Net Assets | $ | 192,692,441 | $ | 199,917,289 | |||||||
| Net Asset Value Per Share | $ | 11.84 | $ | 11.38 | |||||||
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 June 30, 2020 and December 31, 2019, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000. Refer to “Note 10—Debt Capital Activities” for a reconciliation of the carrying value to the face value.
1
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| INVESTMENT INCOME | |||||||||||||||||||||||
| Non-controlled/non-affiliate investments: | |||||||||||||||||||||||
| Interest income | $ | 61,126 | $ | 198,175 | $ | 216,211 | $ | 336,672 | |||||||||||||||
| Dividend income | — | — | 50,000 | — | |||||||||||||||||||
| Non-controlled/affiliate investments: | | ||||||||||||||||||||||
| Interest income/(reversal of interest income accrual) | (49,612) | 60,127 | (29,184) | 119,593 | |||||||||||||||||||
| Dividend income | 30,000 | — | 56,250 | — | |||||||||||||||||||
| Controlled investments: | | ||||||||||||||||||||||
| Interest income | — | 29,650 | — | 58,937 | |||||||||||||||||||
| Dividend income | 200,000 | 200,000 | 200,000 | 200,000 | |||||||||||||||||||
| Total Investment Income | 241,514 | 487,952 | 493,277 | 715,202 | |||||||||||||||||||
| OPERATING EXPENSES | | ||||||||||||||||||||||
Management fees(1) | — | — | — | 848,723 | |||||||||||||||||||
Reversal of incentive fee accrual(1) | — | — | — | (4,660,472) | |||||||||||||||||||
Costs incurred under Administration Agreement(1) | — | — | — | 306,084 | |||||||||||||||||||
Compensation expense(2) | 3,005,524 | 469,944 | 3,930,440 | 632,108 | |||||||||||||||||||
| Directors’ fees | 111,250 | 86,250 | 222,500 | 172,500 | |||||||||||||||||||
| Professional fees | 678,472 | 1,310,028 | 1,817,838 | 3,371,950 | |||||||||||||||||||
| Interest expense | 568,627 | 600,205 | 1,142,027 | 1,204,373 | |||||||||||||||||||
| Income tax expense | 39,590 | 29,949 | 48,255 | 33,712 | |||||||||||||||||||
| Other expenses | 505,439 | 796,807 | 1,004,158 | 991,753 | |||||||||||||||||||
| Total Operating Expenses | 4,908,902 | 3,293,183 | 8,165,218 | 2,900,731 | |||||||||||||||||||
| Net Investment Loss | (4,667,388) | (2,805,231) | (7,671,941) | (2,185,529) | |||||||||||||||||||
| Realized Gains/(Losses) on Investments: | | | |||||||||||||||||||||
| Non-controlled/non-affiliated investments | (23,987) | 13,590,233 | 6,954,253 | 21,859,371 | |||||||||||||||||||
| Non-controlled/affiliate investments | — | — | — | (12,334,831) | |||||||||||||||||||
| Net Realized Gain/(Loss) on Investments | (23,987) | 13,590,233 | 6,954,253 | 9,524,540 | |||||||||||||||||||
| Change in Unrealized Appreciation/(Depreciation) of Investments: | | ||||||||||||||||||||||
| Non-controlled/non-affiliated investments | 24,821,654 | (6,751,196) | 7,276,832 | 10,277,147 | |||||||||||||||||||
| Non-controlled/affiliate investments | 1,569,843 | (1,220,012) | (8,505,571) | 7,802,636 | |||||||||||||||||||
| Controlled investments | 130,698 | (4,469,112) | 85,000 | (9,820,352) | |||||||||||||||||||
Net Change in Unrealized Appreciation/(Depreciation) of Investments | 26,522,195 | (12,440,320) | (1,143,739) | 8,259,431 | |||||||||||||||||||
| Provision for taxes on unrealized appreciation of investments | — | 979,713 | — | 885,566 | |||||||||||||||||||
| Net Change in Net Assets Resulting from Operations | $ | 21,830,820 | $ | (675,605) | $ | (1,861,427) | $ | 16,484,008 | |||||||||||||||
Net Change in Net Assets Resulting from Operations per Common Share: | | ||||||||||||||||||||||
| Basic | $ | 1.33 | $ | (0.03) | $ | (0.11) | $ | 0.84 | |||||||||||||||
Diluted(3) | $ | 1.10 | $ | (0.03) | $ | (0.11) | $ | 0.75 | |||||||||||||||
| Weighted-Average Common Shares Outstanding | | | | | |||||||||||||||||||
| Basic | 16,383,188 | 19,719,706 | 16,912,091 | 19,741,058 | |||||||||||||||||||
Diluted(3) | 20,300,980 | 19,719,706 | 16,912,091 | 23,472,402 | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
____________________________________________________________________________________________________________________________
(1) This balance references a related-party transaction. Refer to “Note 3—Related-Party Arrangements” for more detail.
(2) For the three and six months ended June 30, 2020, this balance includes $1,962,431 of accelerated recognition of compensation cost related to the cancellation of unvested options on April 28, 2020. Refer to "Note 11— Stock-Based Compensation" for more detail.
(3) For the six months ended June 30, 2020 and the three months ended June 30, 2019, 3,917,792 and 3,731,344 potentially dilutive common shares, respectively, were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive. Refer to “Note 6—Net Change in Net Assets Resulting from Operations per Common Share—Basic and Diluted”.
2
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
| Six Months Ended June 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Net Assets at Beginning of Year | $ | 199,917,289 | $ | 195,378,159 | |||||||
| Change in Net Assets Resulting from Operations | | | |||||||||
| Net investment income/(loss) | (3,004,553) | 619,702 | |||||||||
| Net realized gain/(loss) on investments | 6,978,240 | (4,065,693) | |||||||||
| Net change in unrealized appreciation/(depreciation) of investments | (27,665,934) | 20,699,751 | |||||||||
| Benefit from taxes on unrealized depreciation of investments | — | (94,147) | |||||||||
| Net Change in Net Assets Resulting from Operations | (23,692,247) | 17,159,613 | |||||||||
| Change in Net Assets Resulting from Capital Transactions | | | |||||||||
| Repurchases of common stock | (3,709,244) | — | |||||||||
| Net Change in Net Assets Resulting from Capital Transactions | (3,709,244) | — | |||||||||
| Total Change in Net Assets | (27,401,491) | 17,159,613 | |||||||||
| Net Assets at March 31 | $ | 172,515,798 | $ | 212,537,772 | |||||||
| Change in Net Assets Resulting from Operations | | | |||||||||
| Net investment income/(loss) | $ | (4,667,388) | $ | (2,805,231) | |||||||
| Net realized gain/(loss) on investments | (23,987) | 13,590,233 | |||||||||
| Net change in unrealized appreciation/(depreciation) of investments | 26,522,195 | (12,440,320) | |||||||||
| Benefit from taxes on unrealized depreciation of investments | — | 979,713 | |||||||||
| Net Change in Net Assets Resulting from Operations | 21,830,820 | (675,605) | |||||||||
| Change in Net Assets Resulting from Capital Transactions | | | |||||||||
| Stock-based compensation | 1,962,431 | — | |||||||||
| Repurchases of common stock | (3,616,608) | (737,119) | |||||||||
| Net Decrease in Net Assets Resulting from Capital Transactions | (1,654,177) | (737,119) | |||||||||
| Total Change in Net Assets | 20,176,643 | (1,412,724) | |||||||||
| Net Assets at June 30 | $ | 192,692,441 | $ | 211,125,048 | |||||||
| Capital Share Activity | |||||||||||
| Shares outstanding at beginning of year | 17,564,244 | 19,762,647 | |||||||||
| Shares issued | — | — | |||||||||
| Shares repurchased | (1,284,565) | (115,801) | |||||||||
| Shares Outstanding at End of Period | 16,279,679 | 19,646,846 | |||||||||
See accompanying notes to condensed consolidated financial statements.
3
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Six Months Ended June 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net change in net assets resulting from operations | $ | (1,861,427) | $ | 16,484,008 | |||||||
Adjustments to reconcile net change in net assets resulting from operations to net cash provided by/(used in) operating activities: | |||||||||||
| Net realized gain on investments | (6,954,253) | (9,524,540) | |||||||||
| Net change in unrealized (appreciation)/depreciation of investments | 1,143,739 | (8,259,431) | |||||||||
| Change in deferred tax liability | — | (885,566) | |||||||||
| Income tax payable | 38,965 | — | |||||||||
| Amortization of discount on 4.75% Convertible Senior Notes due 2023 | 188,022 | 183,045 | |||||||||
| Amortization of fixed income security premiums and discounts | — | (2,433) | |||||||||
Stock-based compensation(1) | 1,962,431 | — | |||||||||
| Adjustments to escrow proceeds receivable | 75,840 | 14,891 | |||||||||
| Purchases of investments in: | |||||||||||
| Portfolio investments | (12,555,520) | (10,008,040) | |||||||||
| U.S. Treasury bills | (150,000,167) | (199,940,333) | |||||||||
| Proceeds from sales or maturity of investments in: | |||||||||||
| Portfolio investments | 10,876,621 | 43,119,593 | |||||||||
| U.S. Treasury bills | 100,000,000 | 200,000,000 | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other assets | 558,222 | (1,295,152) | |||||||||
| Interest and dividends receivable | 14,356 | (171,325) | |||||||||
| Deferred financing costs | — | 267,541 | |||||||||
| Escrow proceeds receivable | 198,168 | 419,762 | |||||||||
| Receivable from unsettled trades | — | (51,511) | |||||||||
| Payable for securities purchased | 44,752,951 | (2,451) | |||||||||
| Accounts payable and accrued expenses | 789,296 | 1,698,680 | |||||||||
| Payable to executive officers | (1,369,873) | — | |||||||||
Accrued incentive fees(2) | — | (4,660,472) | |||||||||
Accrued management fees(2) | — | (415,056) | |||||||||
| Net Cash Provided by/(Used in) Operating Activities | (12,142,629) | 26,971,210 | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Repurchases of common stock | (7,325,852) | (737,119) | |||||||||
| Dividends paid | (2,107,709) | — | |||||||||
| Net Cash Used in Financing Activities | $ | (9,433,561) | $ | (737,119) | |||||||
| Total Increase/(Decrease) in Cash Balance | $ | (21,576,190) | $ | 26,234,091 | |||||||
| Cash Balances at Beginning of Year | 44,861,263 | 28,184,163 | |||||||||
| Cash Balances at End of Period | $ | 23,285,073 | $ | 54,418,254 | |||||||
| Supplemental Information: | |||||||||||
| Interest paid | $ | 957,607 | $ | 1,024,911 | |||||||
| Taxes paid | $ | 9,290 | $ | 14,726 | |||||||
See accompanying notes to condensed consolidated financial statements.
_______________________
(1) For the three and six months ended June 30, 2020, this balance includes $1,962,431 of accelerated recognition of compensation cost related to the cancellation of unvested options on April 28, 2020. Refer to "Note 11— Stock-Based Compensation" for more detail.
(2) This balance references a related-party transaction. Refer to “Note 3—Related-Party Arrangements” for more detail.
4
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30, 2020
| Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||||||||||||||||||||
| NON-CONTROLLED/NON-AFFILIATE | ||||||||||||||||||||||||||||||||||||||
| Coursera, Inc. | Mountain View, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 8% | Online Education | 6/9/2013 | 2,961,399 | $ | 14,519,519 | $ | 49,868,841 | 25.88 | % | |||||||||||||||||||||||||||||
| Course Hero, Inc. | Redwood City, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A 8% | Online Education | 9/18/2014 | 2,145,509 | 5,000,001 | 33,231,041 | 17.25 | % | |||||||||||||||||||||||||||||||
| Palantir Technologies, Inc. | Palo Alto, CA | |||||||||||||||||||||||||||||||||||||
| Common shares, Class A | Data Analysis | 5/7/2012 | 5,773,690 | 16,189,935 | 30,542,820 | 15.85 | % | |||||||||||||||||||||||||||||||
| Nextdoor.com, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Common shares | Social Networking | 9/27/2018 | 580,360 | 10,002,666 | 10,537,655 | 5.47 | % | |||||||||||||||||||||||||||||||
| SharesPost, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 6% | Online Marketplace Finance | 7/19/2011 | 1,771,653 | 2,259,716 | 8,258,137 | 4.29 | % | |||||||||||||||||||||||||||||||
| Common shares | 7/20/2011 | 770,934 | 123,987 | 1,188,410 | 0.62 | % | ||||||||||||||||||||||||||||||||
| Total | | 2,383,703 | 9,446,547 | 4.91 | % | |||||||||||||||||||||||||||||||||
Palantir Lending Trust SPV I **(10) | Palo Alto, CA | |||||||||||||||||||||||||||||||||||||
| Collateralized Loan 15%, Due 6/19/2022*** | Data Analysis | 6/19/2020 | $ | 6,900,000 | 6,900,429 | 6,900,000 | 3.58 | % | ||||||||||||||||||||||||||||||
| Equity Participation in Underlying Collateral | 6/19/2020 | — | — | — | % | |||||||||||||||||||||||||||||||||
| Total | 6,900,429 | 6,900,000 | 3.58 | % | ||||||||||||||||||||||||||||||||||
| Enjoy Technology, Inc. | Menlo Park, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 6% | On-Demand Commerce | 7/29/2015 | 1,681,520 | 4,000,280 | 4,000,000 | 2.08 | % | |||||||||||||||||||||||||||||||
| Preferred shares, Series A 6% | 10/16/2014 | 879,198 | 1,002,440 | 1,672,474 | 0.87 | % | ||||||||||||||||||||||||||||||||
| Total | 5,002,720 | 5,672,474 | 2.95 | % | ||||||||||||||||||||||||||||||||||
| Rent the Runway, Inc. | New York, NY | |||||||||||||||||||||||||||||||||||||
| Preferred shares | Subscription Fashion Rental | 6/17/2020 | 339,191 | 5,152,140 | 5,000,001 | 2.59 | % | |||||||||||||||||||||||||||||||
| Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A | Financial Services | 8/11/2015 | 540,270 | 1,001,815 | 4,591,904 | 2.38 | % | |||||||||||||||||||||||||||||||
Preferred shares, Series C-3 (12) | 8/12/2019 | 24,912 | 281,190 | 251,994 | 0.13 | % | ||||||||||||||||||||||||||||||||
| Total | 1,283,005 | 4,843,898 | 2.51 | % | ||||||||||||||||||||||||||||||||||
| Treehouse Real Estate Investment Trust, Inc. | Chicago, IL | |||||||||||||||||||||||||||||||||||||
Common shares***(8) | Cannabis REIT | 9/11/2019 | 312,500 | 7,500,000 | 4,281,692 | 2.22 | % | |||||||||||||||||||||||||||||||
| Neutron Holdings, Inc. (d/b/a/ Lime) | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
Junior Preferred shares, Series 1-D(11) | Micromobility | 1/25/2019 | 41,237,113 | 10,007,322 | 3,485,014 | 1.81 | % | |||||||||||||||||||||||||||||||
| Junior Preferred Convertible Note 4% Due 5/11/2027*** | 5/11/2020 | $ | 506,339 | 506,339 | 506,339 | 0.26 | % | |||||||||||||||||||||||||||||||
| Total | | | 10,513,661 | 3,991,353 | 2.07 | % | ||||||||||||||||||||||||||||||||
| Clever, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 8% | Education Software | 12/5/2014 | 1,799,047 | 2,000,601 | 2,000,001 | 1.04 | % | |||||||||||||||||||||||||||||||
| 4C Insights (f/k/a The Echo Systems Corp.) | Chicago, IL | |||||||||||||||||||||||||||||||||||||
| Common shares | Social Data Platform | 3/30/2012 | 436,219 | 1,436,404 | 813,093 | 0.42 | % | |||||||||||||||||||||||||||||||
| Tynker (f/k/a Neuron Fuel, Inc.) | Mountain View, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A 8% | Computer Software | 8/8/2012 | 534,162 | 309,310 | 791,361 | 0.41 | % | |||||||||||||||||||||||||||||||
| A Place for Rover Inc. (f/k/a DogVacay, Inc.) | Seattle, WA | |||||||||||||||||||||||||||||||||||||
| Common shares | Peer-to-Peer Pet Services | 11/3/2014 | 707,991 | 2,506,119 | 779,645 | 0.40 | % | |||||||||||||||||||||||||||||||
| 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) | 3/3/2016 | $ | 2,270,458 | 2,270,858 | — | — | % | |||||||||||||||||||||||||||||||
| Total | 8,421,364 | — | — | % | ||||||||||||||||||||||||||||||||||
| Total Non-controlled/Non-affiliate | $ | 99,121,577 | $ | 168,700,422 | 87.55 | % | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 2020
| Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||||||||||||||||||||
NON-CONTROLLED/AFFILIATE(1) | ||||||||||||||||||||||||||||||||||||||
| Ozy Media, Inc. | Mountain View, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series C-2 6% | Digital Media Platform | 9/11/2019 | 683,482 | $ | 2,414,178 | $ | 2,114,591 | 1.10 | % | |||||||||||||||||||||||||||||
| Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028 | 4/9/2018 | 295,565 | 30,647 | 913,296 | 0.47 | % | ||||||||||||||||||||||||||||||||
| Preferred shares, Series B 6% | 10/3/2014 | 922,509 | 4,999,999 | 3,350,952 | 1.74 | % | ||||||||||||||||||||||||||||||||
| Preferred shares, Series A 6% | 12/11/2013 | 1,090,909 | 3,000,200 | 3,375,109 | 1.75 | % | ||||||||||||||||||||||||||||||||
| Preferred shares, Series Seed 6% | 11/2/2012 | 500,000 | 500,000 | 1,546,925 | 0.80 | % | ||||||||||||||||||||||||||||||||
| Total | 10,945,024 | 11,300,873 | 5.86 | % | ||||||||||||||||||||||||||||||||||
StormWind, LLC(5) | Scottsdale, AZ | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series D 8% | Interactive Learning | 11/26/2019 | 329,337 | 257,267 | 456,355 | 0.24 | % | |||||||||||||||||||||||||||||||
| Preferred shares, Series C 8% | 1/7/2014 | 2,779,134 | 4,000,787 | 4,952,680 | 2.57 | % | ||||||||||||||||||||||||||||||||
| Preferred shares, Series B 8% | 12/16/2011 | 3,279,629 | 2,019,687 | 2,783,101 | 1.44 | % | ||||||||||||||||||||||||||||||||
| Preferred shares, Series A 8% | 2/25/2014 | 366,666 | 110,000 | 105,883 | 0.05 | % | ||||||||||||||||||||||||||||||||
| Total | 6,387,741 | 8,298,019 | 4.31 | % | ||||||||||||||||||||||||||||||||||
| GreenAcreage Real Estate Corp. | New York, NY | |||||||||||||||||||||||||||||||||||||
Common shares***(9) | Cannabis REIT | 8/12/2019 | 375,000 | 7,501,530 | 6,750,000 | 3.50 | % | |||||||||||||||||||||||||||||||
| NestGSV, Inc. (d/b/a GSV Labs, Inc.) | San Mateo, CA | |||||||||||||||||||||||||||||||||||||
Derivative Security, Expiration Date 8/23/2024(7) | Global Innovation Platform | 8/23/2019 | 1 | 8,555,124 | 2,053,431 | 1.07 | % | |||||||||||||||||||||||||||||||
Convertible Promissory Note 8% Due 8/23/2024(4)(7) | 2/17/2016 | $ | 1,010,198 | 1,030,176 | 505,099 | 0.26 | % | |||||||||||||||||||||||||||||||
| Preferred Warrants Series A-3, Strike Price $1.33, Expiration Date 4/4/2021 | 4/4/2014 | 187,500 | — | 12,188 | 0.01 | % | ||||||||||||||||||||||||||||||||
| Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 10/6/2021 | 10/6/2014 | 500,000 | — | 70,000 | 0.04 | % | ||||||||||||||||||||||||||||||||
| Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 7/18/2021 | 7/8/2016 | 250,000 | 74,380 | 37,500 | 0.02 | % | ||||||||||||||||||||||||||||||||
| Preferred Warrants Series B, Strike Price $2.31, Expiration Date 11/29/2021 | 11/29/2016 | 100,000 | 29,275 | — | — | % | ||||||||||||||||||||||||||||||||
| Preferred Warrant Series B, Strike Price $2.31, Expiration Date 5/29/2022 | 5/29/2017 | 125,000 | 70,379 | — | — | % | ||||||||||||||||||||||||||||||||
| Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023 | 12/31/2018 | 250,000 | 5,080 | 6,125 | 0.00 | % | ||||||||||||||||||||||||||||||||
| Total | 9,764,414 | 2,684,343 | 1.39 | % | ||||||||||||||||||||||||||||||||||
| CUX, Inc. (d/b/a CorpU) | Philadelphia, PA | |||||||||||||||||||||||||||||||||||||
Senior Subordinated Convertible Promissory Note 4% Due 2/14/2023(4) | Corporate Education | 11/26/2014 | $ | 1,251,158 | 1,256,191 | 312,789 | 0.16 | % | ||||||||||||||||||||||||||||||
| Convertible preferred shares, Series D 6% | 5/31/2013 | 169,033 | 778,607 | 92,674 | 0.05 | % | ||||||||||||||||||||||||||||||||
| Convertible preferred shares, Series C 8% | 3/29/2012 | 615,763 | 2,006,077 | — | — | % | ||||||||||||||||||||||||||||||||
| Total | 4,040,875 | 405,463 | 0.21 | % | ||||||||||||||||||||||||||||||||||
| Maven Research, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series C 8% | Knowledge Networks | 7/2/2012 | 318,979 | 2,000,447 | — | — | % | |||||||||||||||||||||||||||||||
| Preferred shares, Series B 5% | 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 | $ | 52,857,243 | $ | 29,438,698 | 15.28 | % | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
6
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 2020
| Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||||||||||||||||||||
CONTROLLED(2) | ||||||||||||||||||||||||||||||||||||||
| SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) | Cupertino, CA | |||||||||||||||||||||||||||||||||||||
Preferred shares, Class A***(6) | Clean Technology | 4/15/2014 | 14,300,000 | $ | 7,151,412 | $ | 860,198 | 0.45 | % | |||||||||||||||||||||||||||||
| Common shares | 4/15/2014 | 100,000 | 10,000 | — | — | % | ||||||||||||||||||||||||||||||||
| Total | 7,161,412 | 860,198 | 0.45 | % | ||||||||||||||||||||||||||||||||||
| Total Controlled | $ | 7,161,412 | $ | 860,198 | 0.45 | % | ||||||||||||||||||||||||||||||||
| Total Portfolio Investments | $ | 159,140,232 | $ | 198,999,318 | 103.27 | % | ||||||||||||||||||||||||||||||||
| U.S. Treasury | ||||||||||||||||||||||||||||||||||||||
U.S. Treasury bill, 0%, due 7/2/2020***(3) | 6/29/2020 | $ | 100,000,000 | 99,999,611 | 100,000,000 | 51.90 | % | |||||||||||||||||||||||||||||||
| TOTAL INVESTMENTS | $ | 259,139,843 | $ | 298,999,318 | 155.17 | % | ||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
__________________________________________
* 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 June 30, 2020, 2.31% 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. owns 5% or more 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 owned 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. As of June 30, 2020, no investments held by SuRo Capital Corp. were considered Level 1 or Level 2. Refer to “Note 4—Investments at Fair Value”.
(4)As of June 30, 2020, 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)The SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) preferred shares held by SuRo Capital Corp. do not entitle SuRo Capital Corp. to a preferred dividend rate. During the three months ended June 30, 2020, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) declared, and SuRo Capital Corp. received, an aggregate of $200,000 in dividend distributions. SuRo Capital Corp. does not anticipate that SPBRX, INC. will pay distributions on a quarterly or regular basis or become a predictable distributor of distributions.
7
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 2020
(7)On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in NestGSV, Inc. (d/b/a GSV Labs, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. NestGSV, Inc. (d/b/a GSV Labs,Inc.) has the right to call the position at any time over a five year period, while SuRo Capital Corp. can put the shares to NestGSV, Inc. (d/b/a GSV Labs, Inc.) at the end of the five year period.
(8)During the six months ended June 30, 2020, Treehouse Real Estate Investment Trust Inc. declared, and SuRo Capital Corp. received, an aggregate of $50,000 in dividend distributions. SuRo Capital Corp. does not anticipate that Treehouse Real Estate Investment Trust Inc. will pay distributions on a recurring or regular basis or become a predictable distributor of distributions.
(9)During the six months ended June 30, 2020, GreenAcreage Real Estate Corp. declared a $26,250 dividend distribution. SuRo Capital Corp. does not anticipate that GreenAcreage Real Estate Corp. will pay distributions on a recurring or regular basis or become a predictable distributor of distributions.
(10)On June 19, 2020, SuRo Capital Corp. extended a $6.9 million, non-recourse, collateralized loan to Palantir Lending Trust SPV I. The collateralized loan to Palantir Lending Trust SPV I matures on June 19, 2022 and includes a 15% interest rate. Through the collateralized loan, SuRo Capital Corp. participates in additional upside in a future Palantir Technologies, Inc. liquidity event by receiving a percentage of the share price appreciation as captured in the Equity Participation in Underlying Collateral security.
(11)On May 11, 2020, SuRo Capital Corp. made a follow-on investment in a junior preferred convertible note to Neutron Holdings, Inc. (d/b/a Lime) as part of a recapitalization of Neutron Holdings, Inc. (d/b/a Lime), led by Uber Technologies, Inc. On May 11, 2020, SuRo Capital Corp.'s existing Series D Preferred shares were converted to Series 1-D Junior Preferred shares.
(12)On June 6, 2020, the convertible note SuRo Capital Corp. had extended to Aspiration Partners, Inc. converted into Series C-3 Preferred shares at a 15% discount to Aspiration Partners, Inc.'s most recent financing round. SuRo Capital Corp. received 24,912 Series C-3 Preferred shares as a result of the conversion.
8
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2019
| Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||||||||||||||||||||
| NON-CONTROLLED/NON-AFFILIATE | ||||||||||||||||||||||||||||||||||||||
| Coursera, Inc. | Mountain View, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 8% | Online Education | 6/9/2013 | 2,961,399 | $ | 14,519,519 | $ | 33,569,902 | 16.79 | % | |||||||||||||||||||||||||||||
| Palantir Technologies, Inc. | Palo Alto, CA | |||||||||||||||||||||||||||||||||||||
| Common shares, Class A | Data Analysis | 5/7/2012 | 5,773,690 | 16,189,935 | 31,582,084 | 15.80 | % | |||||||||||||||||||||||||||||||
| Course Hero, Inc. | Redwood City, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A 8% | Online Education | 9/18/2014 | 2,145,509 | 5,000,001 | 25,674,019 | 12.84 | % | |||||||||||||||||||||||||||||||
| Parchment, Inc. | Scottsdale, AZ | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series D 8% | E-Transcript Exchange | 10/1/2012 | 3,200,512 | 4,000,982 | 10,896,585 | 5.45 | % | |||||||||||||||||||||||||||||||
| Nextdoor.com, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Common shares | Social Networking | 9/27/2018 | 580,360 | 10,006,578 | 10,867,365 | 5.43 | % | |||||||||||||||||||||||||||||||
| Neutron Holdings, Inc. (d/b/a/ Lime) | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series D 6% | Micromobility | 1/25/2019 | 41,237,113 | 10,006,800 | 10,000,000 | 5.00 | % | |||||||||||||||||||||||||||||||
| Treehouse Real Estate Investment Trust, Inc. | Chicago, IL | |||||||||||||||||||||||||||||||||||||
Common shares***(11) | Cannabis REIT | 9/11/2019 | 312,500 | 7,500,000 | 7,384,738 | 3.69 | % | |||||||||||||||||||||||||||||||
| Enjoy Technology, Inc. | Menlo Park, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 6% | On-Demand Commerce | 7/29/2015 | 1,681,520 | 4,000,280 | 4,758,702 | 2.38 | % | |||||||||||||||||||||||||||||||
| Preferred shares, Series A 6% | 10/16/2014 | 879,198 | 1,002,440 | 2,488,130 | 1.24 | % | ||||||||||||||||||||||||||||||||
| Total | 5,002,720 | 7,246,832 | 3.62 | % | ||||||||||||||||||||||||||||||||||
| SharesPost, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 6% | Online Marketplace Finance | 7/19/2011 | 1,771,653 | 2,259,716 | 6,186,877 | 3.09 | % | |||||||||||||||||||||||||||||||
| Common shares | 7/20/2011 | 770,934 | 123,987 | 890,340 | 0.45 | % | ||||||||||||||||||||||||||||||||
| Total | 2,383,703 | 7,077,217 | 3.54 | % | ||||||||||||||||||||||||||||||||||
| Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A | Financial Services | 8/11/2015 | 540,270 | 1,001,815 | 4,471,678 | 2.24 | % | |||||||||||||||||||||||||||||||
| Convertible Promissory Note 5%, Due 1/31/2021*** | 8/12/2019 | $ | 280,000 | 281,190 | 321,168 | 0.16 | % | |||||||||||||||||||||||||||||||
| Total | 1,283,005 | 4,792,846 | 2.40 | % | ||||||||||||||||||||||||||||||||||
| Clever, Inc. | San Francisco, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series B 8% | Education Software | 12/5/2014 | 1,799,047 | 2,000,601 | 2,000,001 | 1.00 | % | |||||||||||||||||||||||||||||||
| A Place for Rover Inc. (f/k/a DogVacay, Inc.) | Seattle, WA | |||||||||||||||||||||||||||||||||||||
| Common shares | Peer-to-Peer Pet Services | 11/3/2014 | 707,991 | 2,506,119 | 963,533 | 0.48 | % | |||||||||||||||||||||||||||||||
| Tynker (f/k/a Neuron Fuel, Inc.) | Mountain View, CA | |||||||||||||||||||||||||||||||||||||
| Preferred shares, Series A 8% | Computer Software | 8/8/2012 | 534,162 | 309,310 | 789,491 | 0.39 | % | |||||||||||||||||||||||||||||||
| 4C Insights (f/k/a The Echo Systems Corp.) | Chicago, IL | |||||||||||||||||||||||||||||||||||||
| Common shares | Social Data Platform | 3/30/2012 | 436,219 | 1,436,404 | 21,499 | 0.01 | % | |||||||||||||||||||||||||||||||
| 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) | 3/3/2016 | $ | 2,270,458 | 2,270,858 | — | — | % | |||||||||||||||||||||||||||||||
| Total | 8,421,364 | — | ||||||||||||||||||||||||||||||||||||