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 September 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 25,209,108 shares of common stock, $0.01 par value per share, outstanding as of November 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 September 30, 2023 (Unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Net Assets for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Schedule of Investments as of September 30, 2023 (Unaudited)	6
	Condensed Consolidated Schedule of Investments as of December 31, 2022	10
	Notes to Condensed Consolidated Financial Statements as of September 30, 2023 (Unaudited)	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	58
Signatures		59

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)

	September 30, 2023			December 31, 2022
ASSETS
Investments at fair value:
Non-controlled/non-affiliate investments (cost of $162,899,416 and $155,103,810, respectively)	$	152,267,563		$	130,901,546
Non-controlled/affiliate investments (cost of $32,911,517 and $41,140,804, respectively)		30,297,127			12,591,162
Controlled investments (cost of $17,168,157 and $19,883,894, respectively)		10,928,028			13,695,870
Total Portfolio Investments		193,492,718			157,188,578
Investments in U.S. Treasury bills (cost of $19,990,216 and $84,999,598, respectively)		20,265,064			85,056,817
Total Investments (cost of $232,969,306 and $301,128,106, respectively)		213,757,782			242,245,395
Cash		73,503,279			40,117,598
Escrow proceeds receivable		309,484			628,332
Interest and dividends receivable		100,860			138,766
Deferred financing costs		611,736			555,761
Prepaid expenses and other assets⁽¹⁾		693,687			727,006
Total Assets		288,976,828			284,412,858
LIABILITIES
Accounts payable and accrued expenses⁽¹⁾		3,162,468			708,827
Dividends payable		188,357			296,170
6.00% Notes due December 30, 2026⁽²⁾		73,654,960			73,387,159
Total Liabilities		77,005,785			74,392,156
Commitments and contingencies (Notes 7 and 10)
Net Assets	$	211,971,043		$	210,020,702
NET ASSETS
Common stock, par value $0.01 per share (100,000,000 authorized; 25,209,108 and 28,429,499 issued and outstanding, respectively)	$	252,091		$	284,295
Paid-in capital in excess of par		318,691,954			330,899,254
Accumulated net investment loss		(75,528,136	)		(64,832,605	)
Accumulated net realized gain/(loss) on investments, net of distributions		(11,989,672	)		2,552,465
Accumulated net unrealized appreciation/(depreciation) of investments		(19,455,194	)		(58,882,707	)
Net Assets	$	211,971,043		$	210,020,702
Net Asset Value Per Share	$	8.41		$	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 September 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)

	2023			2022			2023			2022
	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
INVESTMENT INCOME
Non-controlled/non-affiliate investments:
Interest income	$	28,070		$	26,747		$	117,939		$	338,484
Dividend income		63,145			107,764			189,435			429,758
Controlled investments:
Interest income		400,000			385,000			954,425			1,225,000
Interest income from U.S. Treasury bills		974,531			—			2,875,247			—
Total Investment Income		1,465,746			519,511			4,137,046			1,993,242
OPERATING EXPENSES
Compensation expense		2,123,704			1,836,808			6,378,330			5,456,771
Directors’ fees⁽¹⁾		161,661			161,661			483,887			514,055
Professional fees		277,075			565,411			2,184,488			2,916,583
Interest expense		1,215,248			1,202,748			3,642,801			3,630,301
Income tax expense		—			74,497			620,606			82,238
Other expenses		356,484			487,619			1,522,465			1,238,120
Total Operating Expenses		4,134,172			4,328,744			14,832,577			13,838,068
Net Investment Loss		(2,668,426	)		(3,809,233	)		(10,695,531	)		(11,844,826	)
Realized Loss on Investments:
Non-controlled/non-affiliated investments		(1,461,281	)		(5,141,097	)		(3,597,113	)		(3,940,668	)
Non-controlled/affiliate investments		—			—			(10,945,024	)		(70,379	)
Net Realized Loss on Investments		(1,461,281	)		(5,141,097	)		(14,542,137	)		(4,011,047	)
Change in Unrealized Appreciation/(Depreciation) of Investments:
Non-controlled/non-affiliated investments		27,760,743			(34,763,904	)		13,544,366			(101,639,973	)
Non-controlled/affiliate investments		1,568,324			(1,866,488	)		25,939,147			(2,228,109	)
Controlled investments		(6,000	)		(321,528	)		(56,000	)		(61,528	)
Net Change in Unrealized Appreciation/(Depreciation) of Investments		29,323,067			(36,951,920	)		39,427,513			(103,929,610	)
Net Change in Net Assets Resulting from Operations	$	25,193,360		$	(45,902,250	)	$	14,189,845		$	(119,785,483	)
Net Change in Net Assets Resulting from Operations per Common Share:
Basic	$	0.99		$	(1.54	)	$	0.53		$	(