SEC Filing | SuRo Capital Corp

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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 June 30, 2023

☐	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.)

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 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 ☒ 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 ☐	Accelerated filer ☐
Non-accelerated filer ☒ (Do not check if a smaller reporting company)	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 25,398,640 shares of common stock, $0.01 par value per share, outstanding as of August 8, 2023.

SURO CAPITAL CORP.

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Statements of Assets and Liabilities as of June 30, 2023 (Unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)	4
	Condensed Consolidated Schedule of Investments as of June 30, 2023 (Unaudited)	5
	Condensed Consolidated Schedule of Investments as of December 31, 2022	9
	Notes to Condensed Consolidated Financial Statements as of June 30, 2023 (Unaudited)	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
Signatures		58

Table of Contents

PART I

Item 1. Financial Statements and Supplementary Data

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)


	June 30, 2023			December 31, 2022
ASSETS
Investments at fair value:
Non-controlled/non-affiliate investments (cost of $159,012,912 and $155,103,810, respectively)	$	120,620,316		$	130,901,546
Non-controlled/affiliate investments (cost of $30,195,780 and $41,140,804, respectively)		11,546,197			12,591,162
Controlled investments (cost of $19,883,894 and $19,883,894, respectively)		28,116,633			13,695,870
Total Portfolio Investments		160,283,146			157,188,578
Investments in U.S. Treasury bills (cost of $75,478,668 and $84,999,598, respectively)		75,895,534			85,056,817
Total Investments (cost of $284,571,254 and $301,128,106, respectively)		236,178,680			242,245,395
Cash		24,542,729			40,117,598
Proceeds receivable		664,470			—
Escrow proceeds receivable		375,965			628,332
Interest and dividends receivable		119,548			138,766
Deferred financing costs		590,430			555,761
Prepaid expenses and other assets⁽¹⁾		485,171			727,006
Total Assets		262,956,993			284,412,858
LIABILITIES
Accounts payable and accrued expenses⁽¹⁾		2,511,200			708,827
Dividends payable		188,357			296,170
6.00% Notes due December 30, 2026⁽²⁾		73,564,712			73,387,159
Total Liabilities		76,264,269			74,392,156
Commitments and contingencies (Notes 7 and 10)		-
Net Assets	$	186,692,724		$	210,020,702
NET ASSETS
Common stock, par value $0.01 per share (100,000,000 authorized; 25,398,640 and 28,429,499 issued and outstanding, respectively)	$	253,986		$	284,295
Paid-in capital in excess of par		318,605,100			330,899,254
Accumulated net investment loss		(72,859,710	)		(64,832,605	)
Accumulated net realized gain/(loss) on investments, net of distributions		(10,528,391	)		2,552,465
Accumulated net unrealized appreciation/(depreciation) of investments		(48,778,261	)		(58,882,707	)
Net Assets	$	186,692,724		$	210,020,702
Net Asset Value Per Share	$	7.35		$	7.39

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, 2023, the 6.00% Notes due December 30, 2026 (effective interest rate of 6.53%) had a face value $75,000,000. As of December 31, 2022, the 6.00% Notes due December 30, 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.

Table of Contents

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
INVESTMENT INCOME
Non-controlled/non-affiliate investments:
Interest income	$	40,394		$	149,282		$	89,869		$	311,737
Dividend income		63,145			191,349			126,290			321,994
Controlled investments:
Interest income		318,425			550,000			554,425			840,000
Interest income from U.S. Treasury bills		950,254			—			1,900,716			—
Total Investment Income		1,372,218			890,631			2,671,300			1,473,731
OPERATING EXPENSES
Compensation expense		2,117,872			1,759,261			4,254,626			3,619,963
Directors’ fees⁽¹⁾		161,661			191,829			322,226			352,394
Professional fees		916,579			1,078,459			1,907,413			2,351,172
Interest expense		1,214,267			1,226,767			2,427,553			2,427,553
Income tax expense		90,826			5,691			620,606			7,741
Other expenses		676,353			439,512			1,165,981			750,501
Total Operating Expenses		5,177,558			4,701,519			10,698,405			9,509,324
Net Investment Loss		(3,805,340	)		(3,810,888	)		(8,027,105	)		(8,035,593	)
Realized Gain/(Loss) on Investments:
Non-controlled/non-affiliated investments		(2,325,175	)		(1,895,846	)		(2,135,832	)		1,200,429
Non-controlled/affiliate investments		(10,945,024	)		(70,379	)		(10,945,024	)		(70,379	)
Net Realized Gain/(Loss) on Investments		(13,270,199	)		(1,966,225	)		(13,080,856	)		1,130,050
Change in Unrealized Appreciation/(Depreciation) of Investments:
Non-controlled/non-affiliated investments		(12,152,800	)		(88,620,056	)		(14,216,377	)		(66,876,069	)
Non-controlled/affiliate investments		11,220,424			(72,519	)		9,900,060			(361,621	)
Controlled investments		2,387,891			130,000			14,420,763			260,000
Net Change in Unrealized Appreciation/(Depreciation) of Investments		1,455,515			(88,562,575	)		10,104,446			(66,977,690	)
Net Change in Net Assets Resulting from Operations	$	(15,620,024	)	$	(94,339,688	)	$	(11,003,515	)	$	(73,883,233	)
Net Change in Net Assets Resulting from Operations per Common Share:
Basic	$	(0.60	)	$	(3.08	)	$	(0.41	)	$	(2.39	)
Diluted⁽²⁾	$	(0.60	)	$	(3.08	)	$	(0.41	)	$	(2.39	)
Weighted-Average Common Shares Outstanding
Basic		25,952,447			30,633,878			27,158,786			30,929,321
Diluted⁽²⁾		25,952,447			30,633,878			27,158,786			30,929,321

See accompanying notes to condensed consolidated financial statements.

(1)	Refer to “Note 11 — Stock-Based Compensation” for more detail.
(2)	For the three and six months ended June 30, 2023 and June 30, 2022, 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”.

Table of Contents

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)


		Six Months Ended June 30,
		2023			2022
Net Assets at Beginning of Year	$	210,020,702		$	364,846,624

Change in Net Assets Resulting from Operations
Net investment loss	$	(4,221,765	)	$	(4,224,705	)
Net realized gain on investments		189,343			3,096,275
Net change in unrealized appreciation/(depreciation) of investments		8,648,931			21,584,885
Net Change in Net Assets Resulting from Operations		4,616,509			20,456,455
Distributions
Dividends declared		—			(3,441,824	)
Total Distributions	$	—		$	(3,441,824	)
Change in Net Assets Resulting from Capital Transactions
Issuance of common stock from public offering		—			229,896
Stock-based compensation		405,858			(30,016	)
Repurchases of common stock		—			(1,359,607	)
Net Change in Net Assets Resulting from Capital Transactions		405,858			(1,159,727	)
Total Change in Net Assets		5,022,367			15,854,904
Net Assets at March 31	$	215,043,069		$	380,701,528

Change in Net Assets Resulting from Operations
Net investment loss		(3,805,340	)		(3,810,888	)
Net realized loss on investments		(13,270,199	)		(1,966,225	)
Net change in unrealized appreciation/(depreciation) of investments		1,455,515			(88,562,575	)
Net Change in Net Assets Resulting from Operations		(15,620,024	)		(94,339,688	)
Change in Net Assets Resulting from Capital Transactions
Stock-based compensation		769,679			703,566
Repurchases of common stock		(13,500,000	)		(6,892,934	)
Net Change in Net Assets Resulting from Capital Transactions		(12,730,321	)		(6,189,368	)
Total Change in Net Assets		(28,350,345	)		(100,529,056	)
Net Assets at June 30	$	186,692,724		$	280,172,472

Capital Share Activity
Shares outstanding at beginning of year		28,429,499			31,118,556
Issuance of common stock from public offering		—			17,807
Issuance of common stock under restricted stock plan, net⁽¹⁾		(30,859	)		197,500
Shares repurchased		(3,000,000	)		(1,008,676	)
Shares Outstanding at End of Period		25,398,640			30,325,187

See accompanying notes to condensed consolidated financial statements.

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

Table of Contents

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Six Months Ended June 30,
	2023			2022
Cash Flows from Operating Activities
Net change in net assets resulting from operations	$	(11,003,515	)	$	(73,883,233	)
Adjustments to reconcile net change in net assets resulting from operations to net cash used in operating activities:
Net realized (gain)/loss on investments		13,080,856			(1,130,050	)
Net change in unrealized (appreciation)/depreciation of investments		(10,104,446	)		66,977,690
Amortization of discount on 6.00% Notes due 2026		142,894			211,033
Stock-based compensation		1,175,537			673,550
Adjustments to escrow proceeds receivable		211,918			179,134
Accrued interest on U.S. Treasury bills		(385,692	)		—
Purchases of investments in:
Portfolio investments		(12,514,713	)		(11,008,515	)
U.S. Treasury bills		(141,793,045	)		—
Proceeds from sales or maturity of investments in:
Portfolio investments		6,257,861			5,051,279
U.S. Treasury bills		151,313,976			—
Change in operating assets and liabilities:
Prepaid expenses and other assets		241,835			349,485
Interest and dividends receivable		19,218			(72,982	)
Proceeds receivable		(664,470	)		(3,450	)
Escrow proceeds receivable		252,367			41,626
Accounts payable and accrued expenses		1,802,373			1,830,782
Accrued interest payable		—			(162,500	)
Net Cash Used in Operating Activities		(1,967,046	)		(