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, 2024

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

COMMISSION FILE NUMBER: 814-00852

SuRo Capital Corp.

(Exact name of registrant as specified in its charter)

Maryland		27-4443543
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

640 Fifth Avenue, 12th Floor, New York, NY		10019
(Address of principal executive offices)		(Zip Code)

(212) 931-6331

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

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

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

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

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

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

The issuer had 23,378,002 shares of common stock, $0.01 par value per share, outstanding as of August 7, 2024.

SURO CAPITAL CORP.

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Assets and Liabilities as of June 30, 2024 (Unaudited) and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Schedule of Investments as of June 30, 2024 (Unaudited)	5
	Condensed Consolidated Schedule of Investments as of December 31, 2023	9
	Notes to Condensed Consolidated Financial Statements as of June 30, 2024 (Unaudited)	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
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	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

TABLE OF CONTENTS

PART I

Item 1. Financial Statements

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

	June 30, 2024			December 31, 2023
ASSETS
Investments at fair value:
Non-controlled/non-affiliate investments (cost of $195,251,769 and $160,994,161, respectively)	$	161,548,344		$	147,167,535
Non-controlled/affiliate investments (cost of $32,733,009 and $32,775,940, respectively)		19,386,536			24,931,333
Controlled investments (cost of $8,764,352 and $18,771,097, respectively)		1,970,000			11,982,381
Total Portfolio Investments		182,904,880			184,081,249
Investments in U.S. Treasury bills (cost of $0 and $63,792,704, respectively)		—			63,810,855
Total Investments (cost of $236,749,130 and $276,333,902, respectively)		182,904,880			247,892,104
Cash		54,379,773			28,178,352
Escrow proceeds receivable		71,044			309,293
Interest and dividends receivable		83,844			132,607
Deferred financing costs		561,075			594,726
Prepaid expenses and other assets⁽¹⁾		282,555			494,602
Total Assets		238,283,171			277,601,684
LIABILITIES
Accounts payable and accrued expenses⁽¹⁾		2,002,539			346,308
Dividends payable		44,700			152,523
6.00% Notes due December 30, 2026⁽²⁾		73,923,741			73,745,207
Total Liabilities		75,970,980			74,244,038
Commitments and contingencies (Notes 7 and 10)		-			-
Net Assets	$	162,312,191		$	203,357,646
NET ASSETS
Common stock, par value $0.01 per share (100,000,000 authorized; 23,378,002 and 25,445,805 issued and outstanding, respectively)	$	233,780		$	254,458
Paid-in capital in excess of par		240,145,859			248,454,107
Accumulated net investment loss		(11,182,638	)		(4,304,111	)
Accumulated net realized loss on investments, net of distributions		(12,802,458	)		(12,348,772	)
Accumulated net unrealized appreciation/(depreciation) of investments		(54,082,352	)		(28,698,036	)
Net Assets	$	162,312,191		$	203,357,646
Net Asset Value Per Share	$	6.94		$	7.99

See accompanying notes to condensed consolidated financial statements.

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

TABLE OF CONTENTS

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	2024			2023			2024			2023
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
INVESTMENT INCOME
Non-controlled/non-affiliate investments:
Interest income⁽¹⁾	$	290,750		$	40,394		$	532,757		$	89,869
Dividend income		—			63,145			21,875			126,290
Controlled investments:
Interest income		376,667			318,425			811,667			554,425
Interest income from U.S. Treasury bills		359,936			950,254			1,189,145			1,900,716
Total Investment Income		1,027,353			1,372,218			2,555,444			2,671,300
OPERATING EXPENSES
Compensation expense		2,198,509			2,117,872			4,383,827			4,254,626
Directors’ fees		167,825			161,661			338,938			322,226
Professional fees		586,825			916,579			1,315,384			1,907,413
Interest expense		1,214,267			1,214,267			2,428,534			2,427,553
Income tax expense		52,794			90,826			54,894			620,606
Other expenses		462,758			676,353			912,394			1,165,981
Total Operating Expenses		4,682,978			5,177,558			9,433,971			10,698,405
Net Investment Loss		(3,655,625	)		(3,805,340	)		(6,878,527	)		(8,027,105	)
Realized Gain/(Loss) on Investments:
Non-controlled/non-affiliated investments		(22,867	)		(2,325,175	)		(507,008	)		(2,135,832	)
Non-controlled/affiliate investments		—			(10,945,024	)		60,067			(10,945,024	)
Controlled investments		(6,745	)		—			(6,745	)		—
Net Realized Loss on Investments		(29,612	)		(13,270,199	)		(453,686	)		(13,080,856	)
Change in Unrealized Appreciation/(Depreciation) of Investments:
Non-controlled/non-affiliated investments		(3,481,638	)		(12,152,800	)		(19,876,809	)		(14,216,377	)
Non-controlled/affiliate investments		(3,485,172	)		11,220,424			(5,501,871	)		9,900,060
Controlled investments		864			2,387,891			(5,636	)		14,420,763
Net Change in Unrealized Appreciation/(Depreciation) of Investments		(6,965,946	)		1,455,515			(25,384,316	)		10,104,446
Net Change in Net Assets Resulting from Operations	$	(10,651,183	)	$	(15,620,024	)	$	(32,716,529	)	$	(11,003,515	)
Net Change in Net Assets Resulting from Operations per Common Share:
Basic	$	(0.45	)	$	(0.60	)	$	(1.34	)	$	(0.41	)
Diluted⁽²⁾	$	(0.45	)	$	(0.60	)	$	(1.34	)	$	(0.41	)
Weighted-Average Common Shares Outstanding
Basic		23,410,235			25,952,447			24,401,863			27,158,786
Diluted⁽²⁾		23,410,235			25,952,447			24,401,863			27,158,786

See accompanying notes to condensed consolidated financial statements.

(1)	Includes interest income earned on cash.
(2)	For the three and six months ended June 30, 2024 and June 30, 2023, there were no potentially dilutive securities outstanding. Refer to “Note 6 — Net Change in Net Assets Resulting from Operations per Common Share — Basic and Diluted”.

TABLE OF CONTENTS

SURO CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

	2024			2023
	Six Months Ended June 30,
	2024			2023
Net Assets at Beginning of Year	$	203,357,646		$	210,020,702

Change in Net Assets Resulting from Operations
Net investment loss		(3,222,902	)		(4,221,765	)
Net realized gain/(loss) on investments		(424,074	)		189,343
Net change in unrealized appreciation/(depreciation) of investments		(18,418,370	)		8,648,931
Net Change in Net Assets Resulting from Operations		(22,065,346	)		4,616,509
Change in Net Assets Resulting from Capital Transactions
Stock-based compensation		428,835			405,858
Net Change in Net Assets Resulting from Capital Transactions		428,835			405,858
Total Change in Net Assets		(21,636,511	)		5,022,367
Net Assets at March 31	$	181,721,135		$	215,043,069

Change in Net Assets Resulting from Operations
Net investment loss		(3,655,625	)		(3,805,340	)
Net realized loss on investments		(29,612	)		(13,270,199	)
Net change in unrealized appreciation/(depreciation) of investments		(6,965,946	)		1,455,515
Net Change in Net Assets Resulting from Operations		(10,651,183	)		(15,620,024	)
Change in Net Assets Resulting from Capital Transactions
Stock-based compensation		642,239			769,679
Repurchases of common stock		(9,400,000	)		(13,500,000	)
Net Change in Net Assets Resulting from Capital Transactions		(8,757,761	)		(12,730,321	)
Total Change in Net Assets		(19,408,944	)		(28,350,345	)
Net Assets at June 30	$	162,312,191		$	186,692,724

Capital Share Activity
Shares outstanding at beginning of year		25,445,805			28,429,499
Issuance of common stock under