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 SeptemberJune 30, 20172023
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)
(State of incorporation) | (I.R.S. Employer Identification No.) |
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 | ||
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 thatperiods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yesx Noodays. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).Yeso Noo. 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 | 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.o ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)Yeso Nox. YES ☐ NO ☒
The issuer had 21,321,882 shares of common stock, $0.01 par value per share, outstanding as of November 9, 2017.August 8, 2023.
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Table of Contents
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PART I. FINANCIAL INFORMATIONI
Item 1. Condensed Consolidated Financial StatementsGSV 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 $ | per share ( authorized; and 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.
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Non-controlled/non-affiliate investments (cost of $172,562,763 and $204,101,445, respectively) | $ | 234,922,519 | $ | 200,532,890 | ||||
Non-controlled/affiliate investments (cost of $49,198,848 and $51,773,388, respectively)(1) | 29,787,226 | 42,444,690 | ||||||
Controlled investments (cost of $23,101,258 and $22,893,441, respectively)(1) | 25,066,337 | 19,037,566 | ||||||
Investments in treasury bill (cost of $99,991,125 and $29,998,750, respectively) | 99,994,000 | 29,998,490 | ||||||
Total Investments (cost of $344,853,994 and $308,767,024, respectively) | 389,770,082 | 292,013,636 | ||||||
Cash | 5,154,436 | 8,332,634 | ||||||
Interest and dividends receivable | 218,437 | 92,946 | ||||||
Prepaid expenses and other assets | 297,785 | 213,942 | ||||||
Deferred financing costs | 425,316 | 311,268 | ||||||
Total Assets | 395,866,056 | 300,964,426 | ||||||
LIABILITIES | ||||||||
Due to: | ||||||||
GSV Asset Management(1) | 323,897 | 422,025 | ||||||
Accounts payable and accrued expenses | 257,386 | 335,611 | ||||||
Accrued incentive fees(1) | 9,608,629 | 2,126,444 | ||||||
Accrued management fees(1) | — | 524,054 | ||||||
Accrued interest payable | 156,104 | 1,056,563 | ||||||
Payable for shares repurchased | 153,560 | — | ||||||
Payable for securities purchased | 89,491,125 | 26,498,750 | ||||||
Deferred tax liability | 10,332,666 | 10,359,371 | ||||||
Credit facility payable | 8,000,000 | — | ||||||
Convertible Senior Notes Payable 5.25% due September 15, 2018(2) | 68,162,724 | 67,512,798 | ||||||
Total Liabilities | 186,486,091 | 108,835,616 | ||||||
Commitments and contingencies (Notes 6 and 9) | ||||||||
Net Assets | $ | 209,379,965 | $ | 192,128,810 | ||||
NET ASSETS | ||||||||
Common stock, par value $0.01 per share (100,000,000 authorized; 21,606,894 and 22,181,003 issued and outstanding, respectively) | $ | 216,069 | $ | 221,810 | ||||
Paid-in capital in excess of par | 218,442,567 | 221,237,636 | ||||||
Accumulated net investment loss | (18,761,130 | ) | (1,443,996 | ) | ||||
Accumulated net realized losses on investments | (25,100,964 | ) | (773,882 | ) | ||||
Accumulated net unrealized appreciation/(depreciation) of investments | 34,583,423 | (27,112,758 | ) | |||||
Net Assets | $ | 209,379,965 | $ | 192,128,810 | ||||
Net Asset Value Per Share | $ | 9.69 | $ | 8.66 |
(1) | This balance |
(2) |
1 |
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.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
INVESTMENT INCOME | ||||||||||||||||
Non-controlled/non-affiliate investments: | ||||||||||||||||
Interest income/(reversal of interest accrual) | $ | (21,447 | ) | $ | 2,503 | $ | (4,640 | ) | $ | 11,906 | ||||||
Other income | — | — | 73,096 | — | ||||||||||||
Non-controlled/affiliate investments: | ||||||||||||||||
Interest income/(reversal of interest accrual)(1) | (48,398 | ) | 61,145 | 143,974 | 79,858 | |||||||||||
Controlled investments: | ||||||||||||||||
Interest income(1) | 69,757 | 23,000 | 196,534 | 43,417 | ||||||||||||
Dividend income(1) | 175,000 | — | 475,000 | — | ||||||||||||
Total Investment Income | 174,912 | 86,648 | 883,964 | 135,181 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Management fees(1) | 1,397,332 | 1,625,963 | 4,210,932 | 5,324,186 | ||||||||||||
Incentive fees/(reversal of incentive fee accrual)(1) | 3,334,052 | 220,719 | 7,482,185 | (7,805,089 | ) | |||||||||||
Costs incurred under administration agreement(1) | 472,413 | 627,444 | 1,453,007 | 1,926,085 | ||||||||||||
Directors’ fees | 86,250 | 86,250 | 242,230 | 258,750 | ||||||||||||
Professional fees | 353,933 | 416,353 | 1,318,931 | 1,441,856 | ||||||||||||
Interest expense | 1,207,548 | 1,189,736 | 3,489,381 | 3,557,225 | ||||||||||||
Tax expense | 4,889 | — | 51,379 | — | ||||||||||||
Other expenses | 119,122 | 141,838 | 479,419 | 558,856 | ||||||||||||
Total Operating Expenses | 6,975,539 | 4,308,303 | 18,727,464 | 5,261,869 | ||||||||||||
Management fee waiver | (174,666 | ) | — | (526,366 | ) | — | ||||||||||
Total operating expenses, net of waiver of management fees | 6,800,873 | 4,308,303 | 18,201,098 | 5,261,869 | ||||||||||||
Net Investment Loss | (6,625,961 | ) | (4,221,655 | ) | (17,317,134 | ) | (5,126,688 | ) | ||||||||
Realized Gains/(Losses): | ||||||||||||||||
Non-controlled/non-affiliate investments | 1,033,577 | 2,658,715 | (21,748,173 | ) | (2,311,994 | ) | ||||||||||
Non-controlled/affiliate investments | — | — | (2,578,909 | ) | — | |||||||||||
Net Realized Gains/(Losses) | 1,033,577 | 2,658,715 | (24,327,082 | ) | (2,311,994 | ) | ||||||||||
Change in Unrealized Appreciation/(Depreciation): | ||||||||||||||||
Non-controlled/non-affiliate investments | 20,367,064 | 938,936 | 65,931,446 | (27,841,477 | ) | |||||||||||
Non-controlled/affiliate investments | (9,822,081 | ) | (584,077 | ) | (10,082,924 | ) | (6,951,895 | ) | ||||||||
Controlled investments | 5,091,700 | (1,616,568 | ) | 5,820,954 | (1,823,224 | ) | ||||||||||
Total Change in Unrealized Appreciation/(Depreciation) | 15,636,683 | (1,261,709 | ) | 61,669,476 | (36,616,596 | ) | ||||||||||
Benefit from taxes on unrealized depreciation of investments | 26,705 | 551,310 | 26,705 | 551,310 |
See accompanying notes to condensed consolidated financial statements.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 10,071,004 | $ | (2,273,339 | ) | $ | 20,051,965 | $ | (43,503,968 | ) | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations per Common Share | ||||||||||||||||
Basic | $ | 0.46 | $ | (0.10 | ) | $ | 0.91 | $ | (1.96 | ) | ||||||
Diluted(2) | $ | 0.40 | $ | (0.10 | ) | $ | 0.84 | $ | (1.96 | ) | ||||||
Weighted-Average Common Shares Outstanding | ||||||||||||||||
Basic | 22,000,571 | 22,181,003 | 22,120,198 | 22,181,003 | ||||||||||||
Diluted(2) | 27,752,386 | 22,181,003 | 27,872,013 | 22,181,003 |
(1) |
(2) | For the three and |
2 |
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. |
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SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||
Change in Net Assets Resulting from Operations | ||||||||
Net investment loss | $ | (17,317,134 | ) | $ | (5,126,688 | ) | ||
Net realized losses on investments | (24,327,082 | ) | (2,311,994 | ) | ||||
Net change in unrealized appreciation/(depreciation) of investments | 61,669,476 | (36,616,596 | ) | |||||
Benefit from taxes on unrealized depreciation of investments | 26,705 | 551,310 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 20,051,965 | (43,503,968 | ) | |||||
Change in Net Assets Resulting from Capital Transactions | ||||||||
Distributions from realized gains | — | (820,753 | ) | |||||
Distributions from return of capital | — | (66,487 | ) | |||||
Total distributions | — | (887,240 | ) | |||||
Repurchases of common stock | (2,800,810 | ) | — | |||||
Net Decrease in Net Assets Resulting from Capital Transactions | (2,800,810 | ) | (887,240 | ) | ||||
Total Increase/(Decrease) in Net Assets | 17,251,155 | (44,391,208 | ) | |||||
Net assets at beginning of period | 192,128,810 | 268,010,945 | ||||||
Net Assets at End of Period | $ | 209,379,965 | $ | 223,619,737 | ||||
Capital Share Activity | ||||||||
Shares repurchased | (574,109 | ) | — | |||||
Shares outstanding at beginning of period | 22,181,003 | 22,181,003 | ||||||
Shares Outstanding at End of Period | 21,606,894 | 22,181,003 |
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 | ) | (10,946,151 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from the issuance of common stock, net | — | 229,896 | ||||||
Repurchases of common stock | (13,500,000 | ) | (8,252,541 | ) | ||||
Cash dividends paid | (107,823 | ) | (26,481,943 | ) | ||||
Deferred financing costs | — | (1,540 | ) | |||||
Net Cash Used in Financing Activities | (13,607,823 | ) | (34,506,128 | ) | ||||
Total Decrease in Cash Balance | (15,574,869 | ) | (45,452,279 | ) | ||||
Cash Balance at Beginning of Year | 40,117,598 | 198,437,078 | ||||||
Cash Balance at End of Period | $ | 24,542,729 | $ | 152,984,799 | ||||
Supplemental Information: | 2023 | 2022 | ||||||
Interest paid | $ | 2,250,000 | $ | 2,412,500 | ||||
Taxes paid | 530,556 | 7,569 |
See accompanying notes to condensed consolidated financial statements.
4 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTSSCHEDULE OF CASH FLOWS
INVESTMENTS (UNAUDITED)
June 30, 2023
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||
Cash Flows from Operating Activities | ||||||||
Net increase/(decrease) in net assets resulting from operations | $ | 20,051,965 | $ | (43,503,968 | ) | |||
Adjustments to reconcile net increase/(decrease) in net assets resulting from operations to net cash used in operating activities: | ||||||||
Net realized losses on investments | 24,327,082 | 2,311,994 | ||||||
Net change in unrealized (appreciation)/depreciation of investments | (61,669,476 | ) | 36,616,596 | |||||
Deferred tax liability | (26,705 | ) | (551,310 | ) | ||||
Amortization of discount on Convertible Senior Notes | 649,926 | 645,891 | ||||||
Amortization of deferred financing costs | 27,751 | 165,999 | ||||||
Amortization of fixed income security premiums and discounts | (115,162 | ) | (9,808 | ) | ||||
Paid-in-kind-interest | (24,564 | ) | — | |||||
Change in restricted cash | — | (62,500 | ) | |||||
Purchases of investments in: | ||||||||
Portfolio investments | (2,080 | ) | (13,019,822 | ) | ||||
United States treasury bills | (260,045,503 | ) | (89,999,458 | ) | ||||
Proceeds from sales or maturity of investments in: | ||||||||
Portfolio investments | 9,773,257 | 25,631,067 | ||||||
United States treasury bills | 190,000,000 | 3,685,000 | ||||||
United States treasuries strips | — | 90,000,000 | ||||||
Change in operating assets and liabilities: | ||||||||
Due from GSV Asset Management(1) | — | 143,749 | ||||||
Due from portfolio companies(1) | — | 55,692 | ||||||
Prepaid expenses and other assets | (83,843 | ) | (87,412 | ) | ||||
Interest and dividends receivable | (125,491 | ) | (125,178 | ) | ||||
Due to GSV Asset Management(1) | (98,128 | ) | (4,151,497 | ) | ||||
Payable for securities purchased | 62,992,375 | 552 | ||||||
Accounts payable and accrued expenses | (78,225 | ) | 258,652 | |||||
Accrued incentive fees(1) | 7,482,185 | (7,805,089 | ) | |||||
Accrued management fees(1) | (524,054 | ) | (141,435 | ) | ||||
Accrued interest payable | (900,459 | ) | (905,625 | ) | ||||
Net Cash Used in Operating Activities | (8,389,149 | ) | (847,910 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Borrowings under credit facility | 16,000,000 | 3,500,000 | ||||||
Repayments under credit facility | (8,000,000 | ) | (3,500,000 | ) | ||||
Repurchases of common stock | (2,647,250 | ) | — | |||||
Deferred credit facility costs | (41,486 | ) | — | |||||
Deferred offering costs | (100,313 | ) | (169,614 | ) | ||||
Dividends distributed | — | (887,240 | ) | |||||
Net Cash Provided by/(Used in) Financing Activities | 5,210,951 | (1,056,854 | ) | |||||
Total Decrease in Cash Balance | (3,178,198 | ) | (1,904,764 | ) | ||||
Cash Balance at Beginning of Period | 8,332,634 | 13,349,877 | ||||||
Cash Balance at End of Period | $ | 5,154,436 | $ | 11,445,113 | ||||
Supplemental Information: | ||||||||
Interest paid | $ | 3,679,244 | $ | 3,650,961 | ||||
Taxes paid | $ | 52,481 | $ | — |
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
NON-CONTROLLED/NON-AFFILIATE | ||||||||||||||||||||
Learneo, Inc. (f/k/a Course Hero, Inc.) | Redwood City, CA | |||||||||||||||||||
Preferred shares, Series A 8% | Online Education | 9/18/2014 | 2,145,509 | $ | 5,000,001 | $ | 22,545,618 | 12.08 | % | |||||||||||
Preferred shares, Series C 8% | 11/5/2021 | 275,659 | 9,999,971 | 9,999,971 | 5.36 | % | ||||||||||||||
Total | 14,999,972 | 32,545,589 | 17.43 | % | ||||||||||||||||
Blink Health, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series A | Pharmaceutical Technology | 10/27/2020 | 238,095 | 5,000,423 | 1,692,856 | 0.91 | % | |||||||||||||
Preferred shares, Series C | 10/27/2020 | 261,944 | 10,003,917 | 9,999,975 | 5.36 | % | ||||||||||||||
Total | 15,004,340 | 11,692,831 | 6.26 | % | ||||||||||||||||
Locus Robotics Corp. | Wilmington, MA | |||||||||||||||||||
Preferred shares, Series F 6% | Warehouse Automation | 11/30/2022 | 232,568 | 10,004,286 | 10,008,042 | 5.36 | % | |||||||||||||
ServiceTitan, Inc. | Glendale, CA | |||||||||||||||||||
Common shares | Contractor Management Software | 6/30/2023 | 151,515 | 10,008,075 | 9,999,990 | 5.36 | % | |||||||||||||
Orchard Technologies, Inc.(14) | New York, NY | |||||||||||||||||||
Preferred shares, Series D 8% | (14) | Real Estate Platform | 8/9/2021 | 558,053 | 3,751,518 | — | — | % | ||||||||||||
Senior Preferred shares, Series 2 | (14) | 8/9/2021 | 58,771 | 587,951 | — | — | % | |||||||||||||
Senior Preferred shares, Series 1 7% | (14) | 1/13/2023 | 441,228 | 4,418,406 | 9,014,642 | 4.83 | % | |||||||||||||
Common shares | (14) | 8/9/2021 | 558,053 | 3,751,518 | — | — | % | |||||||||||||
Total | (14) | 12,509,393 | 9,014,642 | 4.83 | % | |||||||||||||||
Shogun Enterprises, Inc. (d/b/a Hearth) | Austin, TX | |||||||||||||||||||
Preferred shares, Series B-1 | Home Improvement Finance | 2/26/2021 | 436,844 | 3,501,657 | 3,499,994 | 1.87 | % | |||||||||||||
Preferred shares, Series B-2 | 2/26/2021 | 301,750 | 3,501,661 | 3,499,998 | 1.87 | % | ||||||||||||||
Convertible Note 0.5%, Due 4/18/2024*** | *** | 5/2/2022 | $ | 500,000 | 500,000 | 655,373 | 0.35 | % | ||||||||||||
Total | 7,503,318 | 7,655,365 | 4.10 | % | ||||||||||||||||
Forge Global, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares(3) | **(3) | Online Marketplace Finance | 7/20/2011 | 2,508,074 | 3,443,483 | 6,094,620 | 3.26 | % | ||||||||||||
True Global Ventures 4 Plus Pte Ltd** | Singapore, Singapore | |||||||||||||||||||
Limited Partner Fund Investment(8) | **(8) | Venture Investment Fund | 8/27/2021 | 1 | 1,077,371 | 4,081,077 | 2.19 | % | ||||||||||||
Varo Money, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares | ** | Financial Services | 8/11/2021 | 1,079,266 | 10,005,548 | 3,776,219 | 2.02 | % | ||||||||||||
Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||
Preferred shares, Series A | Financial Services | 8/11/2015 | 540,270 | 1,001,815 | 3,473,594 | 1.86 | % | |||||||||||||
Preferred shares, Series C-3 | 8/12/2019 | 24,912 | 281,190 | 216,239 | 0.12 | % | ||||||||||||||
Total | 1,283,005 | 3,689,833 | 1.98 | % | ||||||||||||||||
Residential Homes for Rent, LLC (d/b/a Second Avenue) | Chicago, IL | |||||||||||||||||||
Preferred shares, Series A(6) | (6) | Real Estate Platform | 12/23/2020 | 150,000 | 1,500,000 | 2,870,381 | 1.54 | % | ||||||||||||
Term loan 15%, Due 12/23/2023***(11) | ***(11) | 12/23/2020 | $ | 500,000 | 500,000 | 500,000 | 0.27 | % | ||||||||||||
Total | 2,000,000 | 3,370,381 | 1.81 | % | ||||||||||||||||
Whoop, Inc. | Boston, MA | |||||||||||||||||||
Preferred shares, Series C | Fitness Technology | 6/30/2022 | 13,293,450 | 10,011,460 | 3,308,740 | 1.77 | % | |||||||||||||
PayJoy, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares | Mobile Access Technology | 7/23/2021 | 244,117 | 2,501,570 | 2,500,002 | 1.34 | % | |||||||||||||
Simple Agreement for Future Equity | 5/25/2023 | 1 | 501,470 | 500,000 | 0.27 | % | ||||||||||||||
Total | 3,003,040 | 3,000,002 | 1.61 | % | ||||||||||||||||
Nextdoor Holdings, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares, Class B(3) | **(3) | Social Networking | 9/27/2018 | 852,416 | 4,678,896 | 2,778,876 | 1.49 | % | ||||||||||||
NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)** | New Canaan, CT | |||||||||||||||||||
Common shares***(3) | ***(3) ** | Cannabis REIT | 8/12/2019 | 105,820 | 2,198,836 | 1,460,316 | 0.78 | % |
See accompanying notes to condensed consolidated financial statements.
5 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(UNAUDITED)September - continued
June 30, 20172023
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Palantir Technologies, Inc. | Palo Alto, CA | |||||||||||||||||||
Preferred shares, Series G | Data Analysis | 326,797 | $ | 1,008,968 | $ | 1,955,290 | 0.93 | % | ||||||||||||
Common shares, Class A | 5,773,690 | 16,189,935 | 34,545,111 | 16.49 | % | |||||||||||||||
Total | 17,198,903 | 36,500,401 | 17.42 | % | ||||||||||||||||
JAMF Holdings, Inc.(14) | Minneapolis, MN | |||||||||||||||||||
Preferred shares, Series B | Mobile Device Management | 1,468,800 | 9,999,928 | 35,177,778 | 16.79 | % | ||||||||||||||
Spotify Technology S.A.** | Stockholm, Sweden | |||||||||||||||||||
Common shares | On-Demand Music Streaming | 9,541 | 13,599,572 | 32,283,584 | 15.41 | % | ||||||||||||||
Coursera, Inc. | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series B | Online Education | 2,961,399 | 14,519,519 | 18,364,968 | 8.77 | % | ||||||||||||||
Dropbox, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series A-1 | Cloud Computing Services | 552,486 | 5,015,773 | 6,954,844 | 3.32 | % | ||||||||||||||
Common shares | 760,000 | 8,641,153 | 9,567,086 | 4.57 | % | |||||||||||||||
Total | 13,656,926 | 16,521,930 | 7.89 | % | ||||||||||||||||
StormWind, LLC(2)(6) | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series C | Interactive Learning | 2,779,134 | 4,000,787 | 7,856,020 | 3.75 | % | ||||||||||||||
Preferred shares, Series B | 3,279,629 | 2,019,687 | 6,000,048 | 2.86 | % | |||||||||||||||
Preferred shares, Series A | 366,666 | 110,000 | 508,741 | 0.24 | % | |||||||||||||||
Total | 6,130,474 | 14,364,809 | 6.85 | % | ||||||||||||||||
General Assembly Space, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series C | Online Education | 126,552 | 2,999,978 | 5,924,582 | 2.83 | % | ||||||||||||||
Common shares | 133,213 | 2,999,983 | 5,960,277 | 2.85 | % | |||||||||||||||
Total | 5,999,961 | 11,884,859 | 5.68 | % | ||||||||||||||||
Chegg, Inc.** | Santa Clara, CA | |||||||||||||||||||
Common shares(3)(13) | Online Education Services | 782,192 | 9,273,458 | 11,607,729 | 5.54 | % | ||||||||||||||
Lytro, Inc. | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series D | Light Field Imaging Platform | 159,160 | 502,081 | 500,001 | 0.24 | % | ||||||||||||||
Preferred shares, Series C-1 | 3,378,379 | 10,000,002 | 10,000,002 | 4.77 | % | |||||||||||||||
Total | 10,502,083 | 10,500,003 | 5.01 | % | ||||||||||||||||
Course Hero, Inc. | Redwood City, CA | |||||||||||||||||||
Preferred shares, Series A | Online Education | 2,145,509 | 5,000,001 | 10,405,629 | 4.97 | % | ||||||||||||||
Ozy Media, Inc.(1) | Mountain View, CA | |||||||||||||||||||
Convertible Promissory Note 5% Due 2/28/2018*** | Digital Media Platform | $ | 2,000,000 | 2,000,000 | 2,000,000 | 0.95 | % | |||||||||||||
Preferred shares, Series B | 922,509 | 4,999,999 | 4,390,887 | 2.10 | % | |||||||||||||||
Preferred shares, Series A | 1,090,909 | 3,000,200 | 2,633,784 | 1.26 | % | |||||||||||||||
Preferred shares, Series Seed | 500,000 | 500,000 | 438,964 | 0.21 | % | |||||||||||||||
Total | 10,500,199 | 9,463,635 | 4.52 | % |
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
Aventine Property Group, Inc. | Chicago, IL | |||||||||||||||||||
Common shares*** | Cannabis REIT | 9/11/2019 | 312,500 | 2,580,750 | 1,363,844 | 0.73 | % | |||||||||||||
Skillsoft Corp.** | Nashua, NH | |||||||||||||||||||
Common shares(3) | **(3) | Online Education | 6/8/2021 | 981,843 | 9,818,430 | 1,217,485 | 0.65 | % | ||||||||||||
Commercial Streaming Solutions Inc. (d/b/a BettorView)(7) | Las Vegas, NV | |||||||||||||||||||
Simple Agreement for Future Equity | (7) | Interactive Media & Services | 3/26/2021 | 1 | 1,004,240 | 1,000,000 | 0.54 | % | ||||||||||||
Xgroup Holdings Limited (d/b/a Xpoint)**(7) | Dubai, UAE | |||||||||||||||||||
Convertible Note 6%, Due 8/17/2023*** | **(7)*** | Geolocation Technology | 8/17/2022 | $ | 1,000,000 | 1,010,091 | 1,000,000 | 0.54 | % | |||||||||||
Rebric, Inc. (d/b/a Compliable)(7) | Denver, CO | |||||||||||||||||||
Preferred shares, Series Seed-4 | (7) | Gaming Licensing | 10/12/2021 | 2,477,585 | 1,003,227 | 822,937 | 0.44 | % | ||||||||||||
YouBet Technology, Inc. (d/b/a FanPower)(7) | New York, NY | |||||||||||||||||||
Preferred shares, Series Seed-2 | (7) | Digital Media Technology | 8/26/2021 | 578,029 | 752,943 | 749,998 | 0.40 | % | ||||||||||||
Trax Ltd.** | Singapore, Singapore | |||||||||||||||||||
Common shares | ** | Retail Technology | 6/9/2021 | 55,591 | 2,781,148 | — | — | % | ||||||||||||
Preferred shares, Investec Series | ** | 6/9/2021 | 144,409 | 7,224,600 | 686,528 | 0.37 | % | |||||||||||||
Total | ** | 10,005,748 | 686,528 | 0.37 | % | |||||||||||||||
EDGE Markets, Inc.(7) | San Diego, CA | |||||||||||||||||||
Preferred shares, Series Seed | (7) | Gaming Technology | 5/18/2022 | 456,704 | 501,330 | 500,000 | 0.27 | % | ||||||||||||
Churchill Sponsor VII LLC**(12) | New York, NY | |||||||||||||||||||
Common share units | **(12) | Special Purpose Acquisition Company | 2/25/2021 | 292,100 | 205,820 | 205,820 | 0.11 | % | ||||||||||||
Warrant units | **(12) | 2/25/2021 | 277,000 | 94,180 | 94,180 | 0.05 | % | |||||||||||||
Total | **(12) | 300,000 | 300,000 | 0.16 | % | |||||||||||||||
AltC Sponsor LLC**(12) | New York, NY | |||||||||||||||||||
Share units | **(12) | Special Purpose Acquisition Company | 7/21/2021 | 239,300 | 250,855 | 250,000 | 0.13 | % | ||||||||||||
Churchill Sponsor VI LLC**(12) | New York, NY | |||||||||||||||||||
Common share units | **(12) | Special Purpose Acquisition Company | 2/25/2021 | 195,000 | 134,297 | 134,297 | 0.07 | % | ||||||||||||
Warrant units | **(12) | 2/25/2021 | 199,100 | 65,703 | 65,703 | 0.04 | % | |||||||||||||
Total | **(12) | 200,000 | 200,000 | 0.11 | % | |||||||||||||||
Kinetiq Holdings, LLC | Philadelphia, PA | |||||||||||||||||||
Common shares, Class A | Social Data Platform | 3/30/2012 | 112,374 | — | 53,001 | 0.03 | % | |||||||||||||
Neutron Holdings, Inc. (d/b/a/ Lime) | San Francisco, CA | |||||||||||||||||||
Junior Preferred shares, Series 1-D | Micromobility | 1/25/2019 | 41,237,113 | 10,007,322 | — | — | % | |||||||||||||
Junior Preferred Convertible Note 4% Due 5/11/2027(4) | (4) | 5/11/2020 | $ | 506,339 | 506,339 | — | — | % | ||||||||||||
Common Warrants, Strike Price $0.01, Expiration Date 5/11/2027 | 5/11/2020 | 2,032,967 | — | — | — | % | ||||||||||||||
Total | 10,513,661 | — | — | % | ||||||||||||||||
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)(13) | (4)(13) | 3/3/2016 | $ | 2,270,458 | 2,270,858 | — | — | % | ||||||||||||
Total | 8,421,364 | — | — | % | ||||||||||||||||
Treehouse Real Estate Investment Trust, Inc. | Chicago, IL | |||||||||||||||||||
Common shares | Cannabis REIT | 9/11/2019 | 312,500 | 4,919,250 | — | — | % | |||||||||||||
Total Non-controlled/Non-affiliate | $ | 159,012,912 | $ | 120,620,316 | 64.61 | % |
See accompanying notes to condensed consolidated financial statements.
6 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(UNAUDITED)September - continued
June 30, 20172023
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.)(2) | Redwood City, CA | |||||||||||||||||||
Convertible Promissory Note 8% Due 7/31/2018***(15) | Global Innovation Platform | $ | 560,199 | $ | 563,479 | $ | 560,199 | 0.27 | % | |||||||||||
Unsecured Promissory Note 12% Due 11/29/2017***(11) | $ | 557,735 | 533,353 | 533,353 | 0.25 | % | ||||||||||||||
Preferred shares, Series A-4 | 3,720,424 | 4,904,498 | 5,189,348 | 2.48 | % | |||||||||||||||
Preferred shares, Series A-3 | 1,561,625 | 2,005,730 | 1,815,164 | 0.87 | % | |||||||||||||||
Preferred shares, Series A-2 | 450,001 | 605,500 | 313,836 | 0.15 | % | |||||||||||||||
Preferred shares, Series A-1 | 1,000,000 | 1,021,778 | 523,060 | 0.25 | % | |||||||||||||||
Common shares | 200,000 | 1,000 | — | — | % | |||||||||||||||
Preferred Warrants Series A-3 – Strike Price $1.33 – Expiration Date 4/4/2019 | 187,500 | — | 13,125 | 0.01 | % | |||||||||||||||
Preferred Warrants Series A-4 – Strike Price $1.33 – Expiration Date 10/6/2019 | 500,000 | — | 165,000 | 0.08 | % | |||||||||||||||
Preferred Warrants Series A-4 – Strike Price $1.33 – Expiration Date 7/18/2021 | 250,000 | 74,380 | 100,000 | 0.05 | % | |||||||||||||||
Preferred Warrants Series A-4 – Strike Price $1.33 – Expiration Date 11/29/2021 | 100,000 | 29,275 | 40,000 | 0.02 | % | |||||||||||||||
Preferred Warrant Series B – Strike Price $2.31, Expiration Date 5/29/2022(11) | 125,000 | 70,379 | 81,250 | 0.04 | % | |||||||||||||||
Total | 9,809,372 | 9,334,335 | 4.47 | % | ||||||||||||||||
Lyft, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series E | On-Demand Transportation Services | 128,563 | 2,503,585 | 3,709,840 | 1.77 | % | ||||||||||||||
Preferred shares, Series D | 176,266 | 1,792,749 | 5,086,367 | 2.43 | % | |||||||||||||||
Total | 4,296,334 | 8,796,207 | 4.20 | % | ||||||||||||||||
SugarCRM, Inc. | Cupertino, CA | |||||||||||||||||||
Preferred shares, Series E | Customer Relationship Manager | 373,134 | 1,500,522 | 2,408,120 | 1.15 | % | ||||||||||||||
Common shares | 1,524,799 | 5,476,502 | 3,711,007 | 1.77 | % | |||||||||||||||
Total | 6,977,024 | 6,119,127 | 2.92 | % | ||||||||||||||||
Curious.com, Inc.(1) | Menlo Park, CA | |||||||||||||||||||
Preferred shares, Series B | Online Education | 3,407,834 | 12,000,006 | 5,960,187 | 2.85 | % | ||||||||||||||
Enjoy Technology, Inc. | Menlo Park, CA | |||||||||||||||||||
Preferred shares, Series B | On-Demand Commerce | 1,681,520 | 4,000,280 | 4,000,000 | 1.91 | % | ||||||||||||||
Preferred shares, Series A | 879,198 | 1,002,440 | 1,447,844 | 0.69 | % | |||||||||||||||
Total | 5,002,720 | 5,447,844 | 2.60 | % | ||||||||||||||||
Dataminr, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series C | Social Media Analytics | 301,369 | 1,100,909 | 1,205,476 | 0.58 | % | ||||||||||||||
Preferred shares, Series B | 904,977 | 2,063,356 | 3,619,908 | 1.73 | % | |||||||||||||||
Total | 3,164,265 | 4,825,384 | 2.31 | % | ||||||||||||||||
Parchment, Inc. | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series D | E-Transcript Exchange | 3,200,512 | 4,000,982 | 4,592,322 | 2.19 | % | ||||||||||||||
Avenues Global Holdings, LLC(4) | New York, NY | |||||||||||||||||||
Preferred shares, Junior Preferred Stock | Globally-Focused Private School | 10,014,270 | 10,151,854 | 4,514,409 | 2.16 | % | ||||||||||||||
Whittle Schools, LLC(1)(5) | New York, NY | |||||||||||||||||||
Preferred shares, Series B | Globally-Focused Private School | 3,000,000 | 3,000,000 | 3,000,000 | 1.43 | % | ||||||||||||||
Common shares | 229 | 1,577,097 | 1,500,000 | 0.72 | % | |||||||||||||||
Total | 4,577,097 | 4,500,000 | 2.15% |
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
NON-CONTROLLED/AFFILIATE(1) | ||||||||||||||||||||
StormWind, LLC(5) | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series D 8% | (1)(5) | Interactive Learning | 11/26/2019 | 329,337 | $ | 257,267 | $ | 563,039 | 0.30 | % | ||||||||||
Preferred shares, Series C 8% | (1)(5) | 1/7/2014 | 2,779,134 | 4,000,787 | 5,952,610 | 3.19 | % | |||||||||||||
Preferred shares, Series B 8% | (1)(5) | 12/16/2011 | 3,279,629 | 2,019,687 | 3,845,497 | 2.06 | % | |||||||||||||
Preferred shares, Series A 8% | (1)(5) | 2/25/2014 | 366,666 | 110,000 | 224,660 | 0.12 | % | |||||||||||||
Total | 6,387,741 | 10,585,806 | 5.67 | % | ||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.) | (10) | San Mateo, CA | ||||||||||||||||||
Derivative Security, Expiration Date 8/23/2024(10) | (1)(10) | Global Innovation Platform | 8/23/2019 | 1 | 8,555,124 | — | — | % | ||||||||||||
Convertible Promissory Note 8% Due 8/23/2024(4) | (1)(4) | 2/17/2016 | $ | 1,010,198 | 1,030,176 | 960,391 | 0.51 | % | ||||||||||||
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023 | (1) | 12/31/2018 | 250,000 | 5,080 | — | — | % | |||||||||||||
Total | (1) | 9,590,380 | 960,391 | 0.51 | % | |||||||||||||||
Maven Research, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series C | (1) | Knowledge Networks | 7/2/2012 | 318,979 | 2,000,447 | — | — | % | ||||||||||||
Preferred shares, Series B | (1) | 2/28/2012 | 49,505 | 217,206 | — | — | % | |||||||||||||
Total | 2,217,653 | — | — | % | ||||||||||||||||
Curious.com, Inc. | (12) | Menlo Park, CA | ||||||||||||||||||
Common shares | (1) | Online Education | 11/22/2013 | 1,135,944 | 12,000,006 | — | — | % | ||||||||||||
Total Non-controlled/Affiliate | (1) | $ | 30,195,780 | $ | 11,546,197 | 6.18 | % | |||||||||||||
CONTROLLED(2) | ||||||||||||||||||||
Colombier Sponsor LLC**(12) | New York, NY | |||||||||||||||||||
Class B Units | (2)**(12) | Special Purpose Acquisition Company | 4/1/2021 | 1,976,032 | 1,556,587 | 14,941,605 | 8.00 | % | ||||||||||||
Class W Units | (2)**(12) | 4/1/2021 | 2,700,000 | 1,159,150 | 2,241,000 | 1.20 | % | |||||||||||||
Total | (2)**(12) | 2,715,737 | 17,182,605 | 9.20 | % | |||||||||||||||
Architect Capital PayJoy SPV, LLC** | ** | San Francisco, CA | ||||||||||||||||||
Membership Interest in Lending SPV*** | **(2)*** | Mobile Finance Technology | 3/24/2021 | $ | 10,000,000 | $ | 10,006,745 | $ | 10,000,000 | 5.36 | % | |||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) | Cupertino, CA | |||||||||||||||||||
Preferred shares, Class A(9) | (2)(9) | Clean Technology | 4/15/2014 | 14,300,000 | 7,151,412 | 934,028 | 0.50 | % | ||||||||||||
Common shares | (2) | 4/15/2014 | 100,000 | 10,000 | — | — | % | |||||||||||||
Total | (2) | 7,161,412 | 934,028 | 0.50 | % | |||||||||||||||
Total Controlled | (2) | $ | 19,883,894 | $ | 28,116,633 | 15.06 | % | |||||||||||||
Total Portfolio Investments | $ | 209,092,586 | $ | 160,283,146 | 85.85 | % | ||||||||||||||
U.S. Treasury | (3) | |||||||||||||||||||
U.S. Treasury bill, 0%, due 9/28/2023*** | ***(3) | 12/29/2022 | $ | 56,605,000 | 55,488,452 | 55,898,163 | 29.94 | % | ||||||||||||
U.S. Treasury bill, 0%, due 12/28/2023*** | ***(3) | 3/30/2023 | $ | 20,529,000 | 19,990,216 | 19,997,371 | 10.71 | % | ||||||||||||
Total | 75,478,668 | 75,895,534 | 40.65 | % | ||||||||||||||||
TOTAL INVESTMENTS | $ | 284,571,254 | $ | 236,178,680 | 126.51 | % |
See accompanying notes to condensed consolidated financial statements.
7 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(UNAUDITED)September - continued
June 30, 20172023
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Knewton, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series E | Online Education | 375,985 | $ | 4,999,999 | $ | 3,688,268 | 1.76 | % | ||||||||||||
CUX, Inc. (d/b/a CorpU)(1) | Philadelphia, PA | |||||||||||||||||||
Senior Subordinated Convertible Promissory Note 8%, Due 11/26/2018***(8) | Corporate Education | $ | 1,166,400 | 1,166,400 | 1,166,400 | 0.56 | % | |||||||||||||
Convertible preferred shares, Series D | 169,033 | 778,607 | 775,861 | 0.37 | % | |||||||||||||||
Convertible preferred shares, Series C | 615,763 | 2,006,077 | 1,306,396 | 0.62 | % | |||||||||||||||
Preferred Warrants Series D – Strike Price $4.59 – Expiration Date 2/25/2018 | 16,903 | — | 2,535 | — | % | |||||||||||||||
Total | 3,951,084 | 3,251,192 | 1.55 | % | ||||||||||||||||
A Place for Rover Inc. (f/k/a DogVacay, Inc.)(10) | Seattle, WA | |||||||||||||||||||
Common shares | Peer-to-Peer Pet Services | 707,991 | 2,506,119 | 3,069,644 | 1.47 | % | ||||||||||||||
Declara, Inc.(1) | Palo Alto, CA | |||||||||||||||||||
Convertible Promissory Note 9% Due 12/31/2017(12)(16) | Social Cognitive Learning | $ | 2,120,658 | 2,121,458 | 2,210,411 | 1.06 | % | |||||||||||||
Preferred shares, Series A | 10,716,390 | 9,999,999 | 794,769 | 0.38 | % | |||||||||||||||
Total | 12,121,457 | 3,005,180 | 1.44 | % | ||||||||||||||||
DreamBox Learning, Inc. | Bellevue, WA | |||||||||||||||||||
Preferred shares, Series A-1 | Education Technology | 7,159,221 | 1,502,362 | 1,650,687 | 0.79 | % | ||||||||||||||
Preferred shares, Series A | 3,579,610 | 758,017 | 825,343 | 0.39 | % | |||||||||||||||
Total | 2,260,379 | 2,476,030 | 1.18 | % | ||||||||||||||||
SharesPost, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series B | Online Marketplace Finance | 1,771,653 | 2,259,716 | 2,326,864 | 1.11 | % | ||||||||||||||
Common warrants, $0.13 Strike Price, Expiration Date 6/15/2018 | 770,934 | 23,128 | 69,384 | 0.03 | % | |||||||||||||||
Total | 2,282,844 | 2,396,248 | 1.14 | % | ||||||||||||||||
Strategic Data Command, LLC(1)(7) | Sunnyvale, CA | |||||||||||||||||||
Common shares | Big Data Consulting | 2,400,000 | 989,277 | 2,057,155 | 0.98 | % | ||||||||||||||
Clever, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series B | Education Software | 1,799,047 | 2,000,601 | 2,000,001 | 0.95 | % | ||||||||||||||
Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||
Preferred shares, Series A | Financial Services | 540,270 | 1,001,815 | 1,759,577 | 0.84 | % | ||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)(2) | Woodside, CA | |||||||||||||||||||
Preferred shares, Class A*** | Clean Technology | 14,300,000 | 7,151,412 | 1,367,193 | 0.65 | % | ||||||||||||||
Common shares | 100,000 | 10,000 | — | — | % | |||||||||||||||
Total | 7,161,412 | 1,367,193 | 0.65 | % | ||||||||||||||||
EdSurge, Inc.(1) | Burlingame, CA | |||||||||||||||||||
Preferred shares, Series A-1 | Education Media Platform | 378,788 | 501,360 | 500,000 | 0.24 | % | ||||||||||||||
Preferred shares, Series A | 494,365 | 500,801 | 500,001 | 0.24 | % | |||||||||||||||
Total | 1,002,161 | 1,000,001 | 0.48 | % | ||||||||||||||||
Tynker (f/k/a Neuron Fuel, Inc.) | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series A | Computer Software | 534,162 | 309,310 | 849,550 | 0.41% |
See accompanying notes to condensed consolidated financial statements.
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
4C Insights (f/k/a The Echo Systems Corp.) | Chicago, IL | |||||||||||||||||||
Common shares | Social Data Platform | 436,219 | $ | 1,436,404 | $ | 591,004 | 0.28 | % | ||||||||||||
Fullbridge, Inc. | Cambridge, MA | |||||||||||||||||||
Common shares | Business Education | 517,917 | 6,150,506 | — | — | % | ||||||||||||||
Promissory note 1.47%, Due 11/9/2021***(16) | $ | 2,270,458 | 2,270,858 | 550,023 | 0.26 | % | ||||||||||||||
Total | 8,421,364 | 550,023 | 0.26 | % | ||||||||||||||||
Maven Research, Inc.(1) | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series C | Knowledge Networks | 318,979 | 2,000,447 | 500,000 | 0.24 | % | ||||||||||||||
Preferred shares, Series B | 49,505 | 217,206 | 49,876 | 0.02 | % | |||||||||||||||
Total | 2,217,653 | 549,876 | 0.26 | % | ||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i))(1) | New York, NY | |||||||||||||||||||
Promissory Note 12%, Due 11/17/2017***(16) | Sports Analytics | $ | 28,008 | 30,408 | — | — | % | |||||||||||||
Preferred shares, Series A | 1,864,495 | 1,777,576 | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 11/18/2022 | 5,360 | 576 | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 8/29/2021 | 175,815 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 6/26/2021 | 38,594 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 9/30/2020 | 160,806 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.00 Strike Price, Expiration Date 11/21/2017 | 500,000 | 31,354 | — | — | % | |||||||||||||||
Total | 1,839,914 | — | — | % | ||||||||||||||||
Handle Financial, Inc. (f/k/a PayNearMe, Inc.)(9) | Sunnyvale, CA | |||||||||||||||||||
Common shares | Cash Payment Network | 548,034 | 14,000,398 | — | — | % | ||||||||||||||
Total Portfolio Investments | 244,862,869 | 289,776,082 | 138.35 | % | ||||||||||||||||
U.S. Treasury | ||||||||||||||||||||
U.S. Treasury Bill, 0%, due 10/5/2017***(3) | $ | 100,000,000 | 99,991,125 | 99,994,000 | 47.74 | % | ||||||||||||||
TOTAL INVESTMENTS | $ | 344,853,994 | $ | 389,770,082 | 186.09 | % |
* | 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 |
** | Indicates assets that |
*** | Investment is income-producing. |
See accompanying notes to condensed consolidated financial statements.
(1) |
(2) |
(3) | Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. |
(4) |
As of | ||
(5) | SuRo Capital Corp.’s investments in StormWind, LLC are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SW Holdings, Inc. | |
(6) | SuRo Capital Corp.’s investments in preferred shares of Residential Homes for Rent, LLC (d/b/a Second Avenue) are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC AV Holdings, Inc. | |
(7) | SuRo Capital Corp.’s investments in Commercial Streaming Solutions Inc. (d/b/a BettorView), YouBet Technology, Inc. (d/b/a FanPower), Rebric, Inc. (d/b/a Compliable), EDGE Markets, Inc., and Xgroup Holdings Limited (d/b/a Xpoint) are held through SuRo Capital Corp.’s wholly owned subsidiary, SuRo Capital Sports, LLC (“SuRo Sports”). | |
(8) | SuRo Capital Corp.’s investments in True Global Ventures 4 Plus Pte Ltd are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC SVDS Holdings, Inc. As of March 31, 2023, the previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions. As of March 31, 2023, the full $2.0 million capital commitment to True Global Ventures 4 Plus Fund LP had been called and funded. | |
(9) | 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. 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. | |
(10) | On August 23, 2019, SuRo Capital Corp. amended the structure of its investment in OneValley, Inc. (f/k/a NestGSV, Inc.). As part of the agreement, SuRo Capital Corp.’s equity holdings (warrants notwithstanding) were restructured into a derivative security. OneValley, Inc. (f/k/a NestGSV, Inc.) has the right to call the position at any time over a five year period, ending August 23, 2024, while SuRo Capital Corp. can put the shares to OneValley, Inc. (f/k/a NestGSV, Inc.) at the end of the five year period. | |
(11) | During the six months ended June 30, 2023, approximately $0.6 million has been received from Residential Homes for Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.5 million repaid a portion of the outstanding principal and the remaining was attributed to interest. | |
(12) | Denotes an investment that is the sponsor of a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. | |
(13) | On November 9, 2021, Fullbridge, Inc.’s obligations under its financing arrangements with the Company became past due. | |
(14) | On January 13, 2023, SuRo Capital Corp. invested $2.0 million in Orchard Technologies, Inc.’s Series 1 Senior Preferred financing round. As part of the transaction, SuRo Capital Corp. exchanged a portion of its existing Series D Preferred shares investment for Series 1 Senior Preferred shares, Series 2 Senior Preferred shares, and Common shares. Additionally, SuRo Capital Corp.’s previous investment in the Simple Agreement for Future Equity was converted into additional Series 1 Senior Preferred shares. |
8 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2022
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
NON-CONTROLLED/NON-AFFILIATE | ||||||||||||||||||||
Learneo, Inc. (f/k/a Course Hero, Inc.) | Redwood City, CA | |||||||||||||||||||
Preferred shares, Series A 8% | Online Education | 9/18/2014 | 2,145,509 | $ | 5,000,001 | $ | 40,541,403 | 19.30 | % | |||||||||||
Preferred shares, Series C 8% | 11/5/2021 | 275,659 | 9,999,971 | 9,999,971 | 4.76 | % | ||||||||||||||
Total | 14,999,972 | 50,541,374 | 24.06 | % | ||||||||||||||||
Blink Health, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series A | Pharmaceutical Technology | 10/27/2020 | 238,095 | 5,000,423 | 949,924 | 0.45 | % | |||||||||||||
Preferred shares, Series C | 10/27/2020 | 261,944 | 10,003,917 | 9,999,974 | 4.76 | % | ||||||||||||||
Total | 15,004,340 | 10,949,898 | 5.21 | % | ||||||||||||||||
Orchard Technologies, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series D | Real Estate Platform | 8/9/2021 | 1,488,139 | 10,004,034 | 9,999,996 | 4.76 | % | |||||||||||||
Simple Agreement for Future Equity | 9/2/2022 | 1 | 501,663 | 500,000 | 0.24 | % | ||||||||||||||
Total | 10,505,697 | 10,499,996 | 5.00 | % | ||||||||||||||||
Locus Robotics Corp. | Wilmington, MA | |||||||||||||||||||
Preferred shares, Series F | Warehouse Automation | 11/30/2022 | 232,568 | 10,004,286 | 10,000,005 | 4.76 | % | |||||||||||||
Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||
Preferred shares, Series A | Financial Services | 8/11/2015 | 540,270 | 1,001,815 | 6,229,360 | 2.97 | % | |||||||||||||
Preferred shares, Series C-3 | 8/12/2019 | 24,912 | 281,190 | 312,151 | 0.15 | % | ||||||||||||||
Total | 1,283,005 | 6,541,511 | 3.11 | % | ||||||||||||||||
Whoop, Inc. | Boston, MA | |||||||||||||||||||
Preferred shares, Series C | Fitness Technology | 6/30/2022 | 13,293,450 | 10,011,460 | 6,084,041 | 2.90 | % | |||||||||||||
Forge Global, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares(3)(14) | **(3)(14) | Online Marketplace Finance | 7/20/2011 | 2,508,074 | 3,443,483 | 4,338,968 | 2.07 | % | ||||||||||||
Nextdoor Holdings, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares, Class B(3) | **(3) | Social Networking | 9/27/2018 | 1,802,416 | 10,002,666 | 3,712,977 | 1.77 | % | ||||||||||||
NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)** | New Canaan, CT | |||||||||||||||||||
Common shares***(3) | ***(3) | Cannabis REIT | 8/12/2019 | 229,758 | 4,678,686 | 3,680,723 | 1.75 | % | ||||||||||||
Shogun Enterprises, Inc. (d/b/a Hearth) | Austin, TX | |||||||||||||||||||
Preferred shares, Series B-1 | Home Improvement Finance | 2/26/2021 | 436,844 | 3,501,657 | 1,403,023 | 0.67 | % | |||||||||||||
Preferred shares, Series B-2 | 2/26/2021 | 301,750 | 3,501,661 | 1,403,024 | 0.67 | % | ||||||||||||||
Convertible Note 0.5%, Due 4/18/2024*** | *** | 5/2/2022 | $ | 500,000 | 500,000 | 500,000 | 0.24 | % | ||||||||||||
Total | 7,503,318 | 3,306,047 | 1.57 | % | ||||||||||||||||
True Global Ventures 4 Plus Pte Ltd**(8) | Singapore, Singapore | |||||||||||||||||||
Limited Partner Fund Investment | **(8) | Venture Investment Fund | 8/27/2021 | 1 | — | 3,063,358 | 1.46 | % | ||||||||||||
Residential Homes for Rent, LLC (d/b/a Second Avenue) | Chicago, IL | |||||||||||||||||||
Preferred shares, Series A(6) | (6) | Real Estate Platform | 12/23/2020 | 150,000 | 1,500,000 | 1,959,713 | 0.93 | % | ||||||||||||
Term loan 15%, Due 12/23/2023***(11) | ***(11) | 12/23/2020 | $ | 1,000,000 | 1,000,000 | 1,000,000 | 0.48 | % | ||||||||||||
Total | 2,500,000 | 2,959,713 | 1.41 | % | ||||||||||||||||
Trax Ltd.** | Singapore, Singapore | |||||||||||||||||||
Common shares | ** | Retail Technology | 6/9/2021 | 55,591 | 2,781,148 | 280,797 | 0.13 | % | ||||||||||||
Preferred shares, Investec Series | ** | 6/9/2021 | 144,409 | 7,224,600 | 2,647,017 | 1.26 | % | |||||||||||||
Total | ** | 10,005,748 | 2,927,814 | 1.39 | % | |||||||||||||||
PayJoy, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares | Mobile Access Technology | 7/23/2021 | 244,117 | 2,501,570 | 2,500,002 | 1.19 | % | |||||||||||||
Aventine Property Group, Inc. | Chicago, IL | |||||||||||||||||||
Common shares*** | *** | Cannabis REIT | 9/11/2019 | 312,500 | 2,580,750 | 1,917,521 | 0.91 | % | ||||||||||||
Varo Money, Inc.** | San Francisco, CA | |||||||||||||||||||
Common shares | ** | Financial Services | 8/11/2021 | 1,079,266 | 10,005,548 | 1,286,783 | 0.61 | % |
See accompanying notes to condensed consolidated financial statements.
9 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
- continued
December 31, 20162022
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Palantir Technologies, Inc. | Palo Alto, CA | |||||||||||||||||||
Preferred shares, Series G | Data Analysis | 326,797 | $ | 1,008,968 | $ | 2,223,594 | 1.16 | % | ||||||||||||
Common shares, Class A | 5,773,690 | 16,189,935 | 39,285,371 | 20.45 | % | |||||||||||||||
Total | 17,198,903 | 41,508,965 | 21.61 | % | ||||||||||||||||
Spotify Technology S.A.** | Stockholm, Sweden | |||||||||||||||||||
Common shares | On-Demand Music Streaming | 9,541 | 13,599,572 | 18,931,691 | 9.85 | % | ||||||||||||||
Coursera, Inc. | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series B | Online Education | 2,961,399 | 14,519,519 | 14,510,855 | 7.55 | % | ||||||||||||||
JAMF Holdings, Inc. | Minneapolis, MN | |||||||||||||||||||
Preferred shares, Series B | Mobile Device Management | 73,440 | 9,999,928 | 13,856,754 | 7.21 | % | ||||||||||||||
General Assembly Space, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series C | Online Education | 126,552 | 2,999,978 | 6,697,132 | 3.49 | % | ||||||||||||||
Common shares | 133,213 | 2,999,983 | 7,049,632 | 3.67 | % | |||||||||||||||
Total | 5,999,961 | 13,746,764 | 7.16 | % | ||||||||||||||||
Dropbox, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series A-1 | Cloud Computing Services | 552,486 | 5,015,773 | 5,552,484 | 2.89 | % | ||||||||||||||
Common shares | 760,000 | 8,641,153 | 7,638,000 | 3.98 | % | |||||||||||||||
Total | 13,656,926 | 13,190,484 | 6.87 | % | ||||||||||||||||
Lytro, Inc. | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series D | Light Field Imaging Platform | 159,160 | 502,081 | 500,001 | 0.26 | % | ||||||||||||||
Preferred shares, Series C-1 | 3,378,379 | 10,000,002 | 10,408,150 | 5.42 | % | |||||||||||||||
Total | 10,502,083 | 10,908,151 | 5.68 | % | ||||||||||||||||
Ozy Media, Inc.(1) | Mountain View, CA | |||||||||||||||||||
Convertible Promissory Note 5% Due 2/28/2018*** | Digital Media Platform | $ | 2,000,000 | 2,000,000 | 2,000,000 | 1.04 | % | |||||||||||||
Preferred shares, Series B | 922,509 | 4,999,999 | 4,999,999 | 2.60 | % | |||||||||||||||
Preferred shares, Series A | 1,090,909 | 3,000,200 | 3,000,000 | 1.56 | % | |||||||||||||||
Preferred shares, Series Seed | 500,000 | 500,000 | 610,000 | 0.32 | % | |||||||||||||||
Total | 10,500,199 | 10,609,999 | 5.52 | % | ||||||||||||||||
Course Hero, Inc. | Redwood City, CA | |||||||||||||||||||
Preferred shares, Series A | Online Education | 2,145,509 | 5,000,001 | 10,532,304 | 5.48 | % | ||||||||||||||
Curious.com Inc.(1) | Menlo Park, CA | |||||||||||||||||||
Preferred shares, Series B | Online Education | 3,407,834 | 12,000,006 | 9,984,954 | 5.20 | % | ||||||||||||||
StormWind, LLC(2)(6) | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series C | Interactive Learning | 2,779,134 | 4,000,787 | 4,650,838 | 2.42 | % | ||||||||||||||
Preferred shares, Series B | 3,279,629 | 2,019,687 | 4,470,403 | 2.33 | % | |||||||||||||||
Preferred shares, Series A | 366,666 | 110,000 | 499,796 | 0.26 | % | |||||||||||||||
Total | 6,130,474 | 9,621,037 | 5.01 | % | ||||||||||||||||
Chegg, Inc.**(18) | Santa Clara, CA | |||||||||||||||||||
Common shares | Online Education Services | 1,182,792 | 14,022,863 | 8,729,005 | 4.54 | % | ||||||||||||||
Declara, Inc.(1) | Palo Alto, CA | |||||||||||||||||||
Convertible Promissory Note 9% Due 6/30/2017***(12) | Social Cognitive Learning | $ | 2,120,658 | 2,120,658 | 2,827,020 | 1.47 | % | |||||||||||||
Preferred shares, Series A | 10,716,390 | 9,999,999 | 4,786,654 | 2.49 | % | |||||||||||||||
Total | 12,120,657 | 7,613,674 | 3.96 | % |
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
Skillsoft Corp.** | Nashua, NH | |||||||||||||||||||
Common shares(3) | **(3) | Online Education | 6/8/2021 | 981,843 | 9,818,430 | 1,276,396 | 0.61 | % | ||||||||||||
Commercial Streaming Solutions Inc. (d/b/a BettorView)(7) | Las Vegas, NV | |||||||||||||||||||
Simple Agreement for Future Equity | (7) | Interactive Media & Services | 3/26/2021 | 1 | 1,004,240 | 1,000,000 | 0.48 | % | ||||||||||||
Rebric, Inc. (d/b/a Compliable)(7) | Denver, CO | |||||||||||||||||||
Preferred shares, Series Seed-4 | (7) | Gaming Licensing | 10/12/2021 | 2,064,409 | 1,002,755 | 1,000,000 | 0.48 | % | ||||||||||||
Xgroup Holdings Limited (d/b/a Xpoint)**(7) | Dubai, UAE | |||||||||||||||||||
Convertible Note 6%, Due 8/17/2023*** | **(7) *** | Geolocation Technology | 8/17/2022 | $ | 1,000,000 | 1,009,093 | 1,000,000 | 0.48 | % | |||||||||||
YouBet Technology, Inc. (d/b/a FanPower)(7) | New York, NY | |||||||||||||||||||
Preferred shares, Series Seed-2 | (7) | Digital Media Technology | 8/26/2021 | 578,029 | 752,943 | 749,998 | 0.36 | % | ||||||||||||
EDGE Markets, Inc.(7) | San Diego, CA | |||||||||||||||||||
Preferred shares, Series Seed | (7) | Gaming Technology | 5/18/2022 | 456,704 | 501,330 | 500,000 | 0.24 | % | ||||||||||||
Churchill Sponsor VII LLC**(12) | New York, NY | |||||||||||||||||||
Common share units | **(12) | Special Purpose Acquisition Company | 2/25/2021 | 292,100 | 205,820 | 205,820 | 0.10 | % | ||||||||||||
Warrant units | **(12) | 2/25/2021 | 277,000 | 94,180 | 94,180 | 0.04 | % | |||||||||||||
Total | **(12) | 300,000 | 300,000 | 0.14 | % | |||||||||||||||
AltC Sponsor LLC**(12) | New York, NY | |||||||||||||||||||
Share units | **(12) | Special Purpose Acquisition Company | 7/21/2021 | 239,300 | 250,855 | 250,000 | 0.12 | % | ||||||||||||
Rent the Runway, Inc.** | New York, NY | |||||||||||||||||||
Common shares(3) | **(3) | Subscription Fashion Rental | 6/17/2020 | 79,191 | 1,203,293 | 241,533 | 0.12 | % | ||||||||||||
Churchill Sponsor VI LLC**(12) | New York, NY | |||||||||||||||||||
Common share units | **(12) | Special Purpose Acquisition Company | 2/25/2021 | 195,000 | 134,297 | 134,297 | 0.06 | % | ||||||||||||
Warrant units | **(12) | 2/25/2021 | 199,100 | 65,703 | 65,703 | 0.03 | % | |||||||||||||
Total | **(12) | 200,000 | 200,000 | 0.10 | % | |||||||||||||||
Kahoot! ASA** | Oslo, Norway | |||||||||||||||||||
Common shares(3) | **(3) | Education Software | 12/5/2014 | 38,305 | 176,067 | 72,888 | 0.03 | % | ||||||||||||
Neutron Holdings, Inc. (d/b/a/ Lime) | San Francisco, CA | |||||||||||||||||||
Junior Preferred shares, Series 1-D | Micromobility | 1/25/2019 | 41,237,113 | 10,007,322 | — | — | % | |||||||||||||
Junior Preferred Convertible Note 4% Due 5/11/2027(4) | (4) | 5/11/2020 | $ | 506,339 | 506,339 | — | — | % | ||||||||||||
Common Warrants, Strike Price $0.01, Expiration Date 5/11/2027 | 5/11/2020 | 2,032,967 | — | — | — | % | ||||||||||||||
Total | 10,513,661 | — | — | % | ||||||||||||||||
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)(13) | (4)(13) | 3/3/2016 | $ | 2,270,458 | 2,270,858 | — | — | % | ||||||||||||
Total | 8,421,364 | — | — | % | ||||||||||||||||
Treehouse Real Estate Investment Trust, Inc. | Chicago, IL | |||||||||||||||||||
Common shares | Cannabis REIT | 9/11/2019 | 312,500 | 4,919,250 | — | — | % | |||||||||||||
Kinetiq Holdings, LLC | Philadelphia, PA | |||||||||||||||||||
Common shares, Class A | Social Data Platform | 3/30/2012 | 112,374 | — | — | — | % | |||||||||||||
Total Non-controlled/Non-affiliate | $ | 155,103,810 | $ | 130,901,546 | 62.33 | % |
See accompanying notes to condensed consolidated financial statements.
10 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
- continued
December 31, 20162022
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Lyft, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series E | On-Demand Transportation Services | 128,563 | $ | 2,503,585 | $ | 3,249,430 | 1.69 | % | ||||||||||||
Preferred shares, Series D | 176,266 | 1,792,749 | 4,203,062 | 2.19 | % | |||||||||||||||
Total | 4,296,334 | 7,452,492 | 3.88 | % | ||||||||||||||||
Avenues Global Holdings, LLC(4) | New York, NY | |||||||||||||||||||
Preferred shares, Junior Preferred Stock | Globally-Focused Private School | 10,014,270 | 10,151,854 | 6,128,733 | 3.19 | % | ||||||||||||||
SugarCRM, Inc. | Cupertino, CA | |||||||||||||||||||
Preferred shares, Series E | Customer Relationship Manager | 373,134 | 1,500,522 | 2,354,476 | 1.23 | % | ||||||||||||||
Common shares | 1,524,799 | 5,476,502 | 3,762,442 | 1.96 | % | |||||||||||||||
Total | 6,977,024 | 6,116,918 | 3.19 | % | ||||||||||||||||
Dataminr, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series C | Social Media Analytics | 301,369 | 1,100,909 | 1,377,256 | 0.72 | % | ||||||||||||||
Preferred shares, Series B | 904,977 | 2,063,356 | 4,135,745 | 2.15 | % | |||||||||||||||
Total | 3,164,265 | 5,513,001 | 2.87 | % | ||||||||||||||||
Enjoy Technology, Inc. | Menlo Park, CA | |||||||||||||||||||
Preferred shares, Series B | On-Demand Commerce | 1,681,520 | 4,000,280 | 4,000,000 | 2.08 | % | ||||||||||||||
Preferred shares, Series A | 879,198 | 1,002,440 | 1,443,091 | 0.75 | % | |||||||||||||||
Total | 5,002,720 | 5,443,091 | 2.83 | % | ||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.)(2) | Redwood City, CA | |||||||||||||||||||
Convertible Promissory Note 8% Due 7/31/2017*** | Global Innovation Platform | $ | 500,000 | 457,592 | 427,900 | 0.22 | % | |||||||||||||
Unsecured Promissory Note 12% Due 5/29/2017*** | $ | 526,000 | 501,802 | 496,725 | 0.26 | % | ||||||||||||||
Preferred shares, Series A-4(14) | 3,720,424 | 4,904,498 | 2,715,910 | 1.41 | % | |||||||||||||||
Preferred shares, Series A-3(14) | 1,561,625 | 2,005,730 | 952,591 | 0.50 | % | |||||||||||||||
Preferred shares, Series A-2(14) | 450,001 | 605,500 | 166,500 | 0.09 | % | |||||||||||||||
Preferred shares, Series A-1(14) | 1,000,000 | 1,021,778 | 270,000 | 0.14 | % | |||||||||||||||
Common shares | 200,000 | 1,000 | — | 0.00 | % | |||||||||||||||
Preferred warrants, Series A-3 – $1.33 Strike Price, Expiration Date 4/4/2019 | 187,500 | — | 5,625 | — | % | |||||||||||||||
Preferred warrants, Series A-4 – $1.33 Strike Price, Expiration Date 10/6/2019 | 500,000 | — | 40,000 | 0.02 | % | |||||||||||||||
Preferred warrants, Series A-4 – $1.33 Strike Price, Expiration Date 7/18/2021 | 250,000 | 74,380 | 22,500 | 0.01 | % | |||||||||||||||
Preferred warrants, Series A-4 – $1.33 Strike Price, Expiration Date 11/29/2021 | 100,000 | 29,275 | 9,000 | — | ||||||||||||||||
Total | 9,601,555 | 5,106,751 | 2.65 | % | ||||||||||||||||
Whittle Schools, LLC(1)(5) | New York, NY | |||||||||||||||||||
Preferred shares, Series B | Globally-Focused Private School | 3,000,000 | 3,000,000 | 3,000,000 | 1.56 | % | ||||||||||||||
Common shares | 229 | 1,577,097 | 1,500,000 | 0.78 | % | |||||||||||||||
Total | 4,577,097 | 4,500,000 | 2.34 | % | ||||||||||||||||
Snap Inc. (f/k/a Snapchat, Inc.) | Venice, CA | |||||||||||||||||||
Preferred shares, Series F(17) | Social Communication | 130,208 | 2,001,135 | 2,184,565 | 1.14 | % | ||||||||||||||
Common shares, Class A(17) | 130,208 | 2,001,135 | 2,184,565 | 1.14 | % | |||||||||||||||
Total | 4,002,270 | 4,369,130 | 2.28% |
Portfolio Investments* | Headquarters/ Industry | Date of Initial Investment | Shares/ Principal | Cost | Fair Value | % of Net Assets | ||||||||||||||
NON-CONTROLLED/AFFILIATE(1) | ||||||||||||||||||||
StormWind, LLC(5) | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series D 8% | (1)(5) | Interactive Learning | 11/26/2019 | 329,337 | $ | 257,267 | $ | 533,429 | 0.25 | % | ||||||||||
Preferred shares, Series C 8% | (1)(5) | 1/7/2014 | 2,779,134 | 4,000,787 | 5,675,081 | 2.70 | % | |||||||||||||
Preferred shares, Series B 8% | (1)(5) | 12/16/2011 | 3,279,629 | 2,019,687 | 3,550,631 | 1.69 | % | |||||||||||||
Preferred shares, Series A 8% | (1)(5) | 2/25/2014 | 366,666 | 110,000 | 191,694 | 0.09 | % | |||||||||||||
Total | (1)(5) | 6,387,741 | 9,950,835 | 4.74 | % | |||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.) | San Mateo, CA | |||||||||||||||||||
Derivative Security, Expiration Date 8/23/2024(10) | (1)(10) | Global Innovation Platform | 8/23/2019 | 1 | 8,555,124 | 652,127 | 0.31 | % | ||||||||||||
Convertible Promissory Note 8% Due 8/23/2024(4)(10) | (1)(4)(10) | 2/17/2016 | $ | 1,010,198 | 1,030,176 | 1,988,200 | 0.95 | % | ||||||||||||
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023 | (1) | 12/31/2018 | 250,000 | 5,080 | — | — | % | |||||||||||||
Total | (1) | 9,590,380 | 2,640,327 | 1.26 | % | |||||||||||||||
Ozy Media, Inc. | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series C-2 6% | (1) | Digital Media Platform | 8/31/2016 | 683,482 | 2,414,178 | — | — | % | ||||||||||||
Preferred shares, Series B 6% | (1) | 10/3/2014 | 922,509 | 4,999,999 | — | — | % | |||||||||||||
Preferred shares, Series A 6% | (1) | 12/11/2013 | 1,090,909 | 3,000,200 | — | — | % | |||||||||||||
Preferred shares, Series Seed 6% | (1) | 11/2/2012 | 500,000 | 500,000 | — | — | % | |||||||||||||
Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028 | (1) | 4/9/2018 | 295,565 | 30,647 | — | — | % | |||||||||||||
Total | (1) | 10,945,024 | — | — | % | |||||||||||||||
Maven Research, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series C | (1) | Knowledge Networks | 7/2/2012 | 318,979 | 2,000,447 | — | — | % | ||||||||||||
Preferred shares, Series B | (1) | 2/28/2012 | 49,505 | 217,206 | — | — | % | |||||||||||||
Total | (1) | 2,217,653 | — | — | % | |||||||||||||||
Curious.com, Inc. | Menlo Park, CA | |||||||||||||||||||
Common shares | (1) | Online Education | 11/22/2013 | 1,135,944 | 12,000,006 | — | — | % | ||||||||||||
Total Non-controlled/Affiliate | (1) | $ | 41,140,804 | $ | 12,591,162 | 6.00 | % | |||||||||||||
CONTROLLED(2) | ||||||||||||||||||||
Architect Capital PayJoy SPV, LLC** | San Francisco, CA | |||||||||||||||||||
Membership Interest in Lending SPV*** | **(2)*** | Mobile Finance Technology | 3/24/2021 | $ | 10,000,000 | $ | 10,006,745 | $ | 10,000,000 | 4.76 | % | |||||||||
Colombier Sponsor LLC**(12) | New York, NY | |||||||||||||||||||
Class B Units | (2)**(12) | Special Purpose Acquisition Company | 4/1/2021 | 1,976,033 | 1,556,587 | 1,554,355 | 0.74 | % | ||||||||||||
Class W Units | (2)**(12) | 4/1/2021 | 2,700,000 | 1,159,150 | 1,157,487 | 0.55 | % | |||||||||||||
Total | (2)**(12) | 2,715,737 | 2,711,842 | 1.29 | % | |||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) | (14) | Cupertino, CA | ||||||||||||||||||
Preferred shares, Class A(9) | (2)(9) | Clean Technology | 4/15/2014 | 14,300,000 | 7,151,412 | 984,028 | 0.47 | % | ||||||||||||
Common shares | (2) | 4/15/2014 | 100,000 | 10,000 | — | — | % | |||||||||||||
Total | (2) | 7,161,412 | 984,028 | 0.47 | % | |||||||||||||||
Total Controlled | (2) | $ | 19,883,894 | $ | 13,695,870 | 6.52 | % | |||||||||||||
Total Portfolio Investments | $ | 216,128,508 | $ | 157,188,578 | 74.84 | % | ||||||||||||||
U.S. Treasury | ||||||||||||||||||||
U.S. Treasury bill, 0%, due 3/30/2023***(3) | ***(3) | 12/29/2022 | $ | 45,492,000 | 45,000,118 | 45,026,162 | 21.44 | % | ||||||||||||
U.S. Treasury bill, 0%, due 6/29/2023***(3) | ***(3) | 12/29/2022 | $ | 40,937,000 | 39,999,480 | 40,030,655 | 19.06 | % | ||||||||||||
Total | 84,999,598 | 85,056,817 | 40.50 | % | ||||||||||||||||
TOTAL INVESTMENTS | $ | 301,128,106 | $ | 242,245,395 | 115.34 | % |
See accompanying notes to condensed consolidated financial statements.
11 |
SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
- continued
December 31, 20162022
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)(2) | Woodside, CA | |||||||||||||||||||
Preferred shares, Class A | Clean Technology | 14,300,000 | $ | 7,151,412 | $ | 4,309,778 | 2.24 | % | ||||||||||||
Common shares | 100,000 | 10,000 | — | — | % | |||||||||||||||
Total | 7,161,412 | 4,309,778 | 2.24 | % | ||||||||||||||||
Parchment, Inc. | Scottsdale, AZ | |||||||||||||||||||
Preferred shares, Series D | E-Transcript Exchange | 3,200,512 | 4,000,982 | 4,000,000 | 2.08 | % | ||||||||||||||
CUX, Inc. (d/b/a CorpU)(1) | Philadelphia, PA | |||||||||||||||||||
Senior Subordinated Convertible Promissory Note 8%, Due 11/26/2018***(8) | Corporate Education | $ | 1,166,400 | 1,166,400 | 1,166,400 | 0.61 | % | |||||||||||||
Convertible preferred shares, Series D | 169,033 | 778,607 | 775,861 | 0.40 | % | |||||||||||||||
Convertible preferred shares, Series C | 615,763 | 2,006,077 | 1,913,484 | 1.00 | % | |||||||||||||||
Preferred warrants, Series D, $4.59 Strike Price, Expiration Date 2/25/2018 | 16,903 | — | 4,395 | — | % | |||||||||||||||
Total | 3,951,084 | 3,860,140 | 2.01 | % | ||||||||||||||||
Knewton, Inc. | New York, NY | |||||||||||||||||||
Preferred shares, Series E | Online Education | 375,985 | 4,999,999 | 3,782,409 | 1.97 | % | ||||||||||||||
DogVacay, Inc. | Santa Monica, CA | |||||||||||||||||||
Preferred shares, Series B-1 | Peer-to-Peer Pet Services | 514,562 | 2,506,119 | 2,500,771 | 1.30 | % | ||||||||||||||
SharesPost, Inc. | San Bruno, CA | |||||||||||||||||||
Preferred shares, Series B | Online Marketplace Finance | 1,771,653 | 2,259,716 | 2,249,999 | 1.17 | % | ||||||||||||||
Common warrants, $0.13 Strike Price, Expiration Date 6/15/2018 | 770,934 | 23,128 | 69,384 | 0.04 | % | |||||||||||||||
Total | 2,282,844 | 2,319,383 | 1.21 | % | ||||||||||||||||
DreamBox Learning, Inc. | Bellevue, WA | |||||||||||||||||||
Preferred shares, Series A-1 | Education Technology | 7,159,221 | 1,502,362 | 1,503,436 | 0.78 | % | ||||||||||||||
Preferred shares, Series A | 3,579,610 | 758,017 | 751,718 | 0.39 | % | |||||||||||||||
Total | 2,260,379 | 2,255,154 | 1.17 | % | ||||||||||||||||
Maven Research, Inc.(1) | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series C | Knowledge Networks | 318,979 | 2,000,447 | 1,999,998 | 1.04 | % | ||||||||||||||
Preferred shares, Series B | 49,505 | 217,206 | 223,763 | 0.12 | % | |||||||||||||||
Total | 2,217,653 | 2,223,761 | 1.16 | % | ||||||||||||||||
Strategic Data Command, LLC(1)(7) | Sunnyvale, CA | |||||||||||||||||||
Common shares | Big Data Consulting | 2,400,000 | 989,277 | 2,052,555 | 1.07 | % | ||||||||||||||
Clever, Inc. | San Francisco, CA | |||||||||||||||||||
Preferred shares, Series B | Education Software | 1,799,047 | 2,000,601 | 2,000,001 | 1.04 | % | ||||||||||||||
EdSurge, Inc.(1) | Burlingame, CA | |||||||||||||||||||
Preferred shares, Series A-1 | Education Media Platform | 378,788 | 501,360 | 500,000 | 0.26 | % | ||||||||||||||
Preferred shares, Series A | 494,365 | 500,801 | 588,294 | 0.31 | % | |||||||||||||||
Total | 1,002,161 | 1,088,294 | 0.57% |
See accompanying notes to condensed consolidated financial statements.
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Tynker (f/k/a Neuron Fuel, Inc.) | Mountain View, CA | |||||||||||||||||||
Preferred shares, Series A | Computer Software | 534,162 | $ | 309,310 | $ | 881,367 | 0.46 | % | ||||||||||||
Fullbridge, Inc. | Cambridge, MA | |||||||||||||||||||
Common shares | Business Education | 517,917 | 6,150,506 | — | — | % | ||||||||||||||
Junior note 1.49%, Due 11/9/2021 | 2,270,458 | 2,270,858 | 877,359 | 0.46 | % | |||||||||||||||
Total | 8,421,364 | 877,359 | 0.46 | % | ||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i))(1) | New York, NY | |||||||||||||||||||
Promissory Note 12%, Due 11/17/2017***(15) | Sports Analytics | $ | 25,000 | 26,840 | 26,544 | 0.01 | % | |||||||||||||
Preferred shares, Series A | 1,864,495 | 1,777,576 | 484,769 | 0.26 | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 11/18/2022 | 5,360 | 576 | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 8/29/2021 | 175,815 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 6/26/2021 | 38,594 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.17 Strike Price, Expiration Date 9/30/2020 | 160,806 | — | — | — | % | |||||||||||||||
Preferred warrants, $1.00 Strike Price, Expiration Date 11/21/2017 | 500,000 | 31,354 | — | — | % | |||||||||||||||
Total | 1,836,346 | 511,313 | 0.27 | % | ||||||||||||||||
4C Insights (f/k/a The Echo Systems Corp.) | Chicago, IL | �� | ||||||||||||||||||
Common shares | Social Data Platform | 436,219 | 1,436,404 | 505,744 | 0.26 | % | ||||||||||||||
Aspiration Partners, Inc. | Marina Del Rey, CA | |||||||||||||||||||
Preferred shares, Series A(11) | Financial Services | 540,270 | 1,001,815 | 307,954 | 0.16 | % | ||||||||||||||
Handle Financial, Inc. (f/k/a PayNearMe, Inc.) | Sunnyvale, CA | |||||||||||||||||||
Common shares(13) | Cash Payment Network | 5,480,348 | 14,000,398 | 164,410 | 0.09 | % | ||||||||||||||
Global Education Learning (Holdings) Ltd.(1)** | Hong Kong | |||||||||||||||||||
Preferred shares, Series A | Education Technology | 2,126,475 | 675,495 | — | — | % | ||||||||||||||
AlwaysOn, Inc.(1) | Woodside, CA | |||||||||||||||||||
Preferred shares, Series A-1 | Social Media | 4,465,925 | 876,023 | — | — | % | ||||||||||||||
Preferred shares, Series A | 1,066,626 | 1,027,391 | — | — | % | |||||||||||||||
Preferred warrants Series A, $1.00 Strike Price, Expiration Date 1/9/2017 | 109,375 | — | — | — | % | |||||||||||||||
Total | 1,903,414 | — | — | % | ||||||||||||||||
Orchestra One, Inc. (f/k/a Learnist Inc.) | San Francisco, CA | |||||||||||||||||||
Common shares | Consumer Health Technology | 57,026 | 4,959,614 | — | — | % | ||||||||||||||
Cricket Media (f/k/a ePals Inc.)(10) | Herndon, VA | |||||||||||||||||||
Common shares | Online Education | 133,333 | 2,448,959 | — | —% |
See accompanying notes to condensed consolidated financial statements.
Portfolio Investments* | Headquarters/Industry | Shares/ Principal | Cost | Fair Value | % of Net Assets | |||||||||||||||
Earlyshares.com, Inc. | Miami, FL | |||||||||||||||||||
Convertible Promissory Note 5%, Due 2/26/2017 ***(9)(3) | Equity Crowdfunding | $ | 50,000 | $ | 50,840 | $ | — | — | % | |||||||||||
Preferred shares, Series A | 165,715 | 261,598 | — | — | % | |||||||||||||||
Total | 312,438 | — | — | % | ||||||||||||||||
Beamreach Solar, Inc. (f/k/a Solexel, Inc.) | Milpitas, CA | |||||||||||||||||||
Convertible Promissory Note 9%, Due 5/10/2017***(3)(16) | Solar Power | $ | 250,000 | 254,444 | — | — | % | |||||||||||||
Preferred shares, Series D | 1,613,413 | 2,419,751 | — | — | % | |||||||||||||||
Preferred shares, Series C | 5,300,158 | 11,598,648 | — | — | % | |||||||||||||||
Total | 14,272,843 | — | — | % | ||||||||||||||||
AliphCom, Inc. (d/b/a Jawbone) | San Francisco, CA | |||||||||||||||||||
Common shares | Smart Device Company | 150,000 | 793,152 | — | — | % | ||||||||||||||
Total Portfolio Investments | 278,768,274 | 262,015,146 | 136.38 | % | ||||||||||||||||
U.S. Treasury | ||||||||||||||||||||
U.S. Treasury Bill, 0%, due 1/5/2017***(18) | $ | 30,000,000 | 29,998,750 | 29,998,490 | 15.62 | % | ||||||||||||||
TOTAL INVESTMENTS | $ | 308,767,024 | $ | 292,013,636 | 152.00 | % |
* | 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 |
** | Indicates assets that |
*** | Investment is income-producing. |
(1) |
(2) |
(3) | Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. Refer to “Note 4—Investments at Fair Value”. |
(4) | As of December 31, |
(5) | |
(6) | SuRo Capital Corp.’s investments in preferred shares of Residential Homes for Rent, LLC (d/b/a Second Avenue) are held through SuRo Capital Corp.’s wholly owned subsidiary, GSVC AV Holdings, Inc. |
See accompanying notes to condensed consolidated financial statements.
(7) |
(8) | SuRo Capital Corp.’s investments in |
(9) |
(10) | On August 23, 2019, SuRo Capital Corp. amended the structure of its |
(11) | |
(12) | Denotes an investment that is the sponsor of a special purpose acquisition company formed for the purpose of effecting a merger, capital stock |
(13) | On November 9, 2021, Fullbridge, Inc.’s obligations under its financing arrangements with the Company became past due. |
(14) | On March 22, 2022, Forge Global Holdings, Inc., completed its business combination with Motive Capital Corp. As a result of |
See accompanying notes to condensed consolidated financial statements.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)2023
NOTE 1 — 1—NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIESNature of Operations
SuRo Capital Corp. (“we”, “us”, “our”, “Company” or “SuRo Capital”), formerly known as Sutter Rock Capital Corp. and as GSV Capital Corp. (the “Company” or “GSV Capital”),and formed in September 2010 as a Maryland corporation, is an externally managed,internally-managed, non-diversified closed-end management investment company. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s investment activities are managed by GSV Asset Management, LLC (“GSV Asset Management”), and GSV Capital Service Company, LLChas elected to be treated, and intends to qualify annually, as a regulated investment company (“GSV Capital Service Company”RIC”) providesunder Subchapter M of the administrative services necessary for the Company to operate.Internal Revenue Code of 1986, as amended (the “Code”).
The Company’s date of inception was January 6, 2011, which is the date itwe commenced its development stage activities. The Company’s common stock is currently listed on the Nasdaq Global Select Market under the symbol “SSSS” (formerly “GSVC”). Prior to November 24, 2021, our common stock traded on the Nasdaq Capital Market under the same symbol “GSVC”(“SSSS”). The Company began its investment operations during the second quarter of 2011.
The table below displays all the Company’s subsidiaries as of SeptemberJune 30, 2017,2023, which, other than GSV Capital Lending, LLC (“GCL”), and SuRo Capital Sports, LLC, are collectively referred to as the “GSVC Holdings.“Taxable Subsidiaries.” The GSVC HoldingsTaxable Subsidiaries were formed to hold certain portfolio investments. The GSVC Holdings,Taxable Subsidiaries, including their associated portfolio investments, are consolidated with the Company for accounting purposes, but have elected to be treated as separate entities for U.S. federal income tax purposes. GCL was formed to originate portfolio loan investments within the state of California and is consolidated with the Company for accounting purposes. Refer to “Summary of “Note 2—Significant Accounting Policies — Policies—Basis of Consolidation”Consolidation” below for further detail.
SCHEDULE OF COMPANY’S SUBSIDIARIES
Subsidiary | Jurisdiction of Incorporation | Formation Date | Percentage Owned | |||||||||
GCL | Delaware | April 13, 2012 | 100 | % | ||||||||
SuRo Capital Sports, LLC (“SuRo Sports”) | Delaware | March 19, 2021 | 100 | % | ||||||||
Subsidiaries below are referred to collectively, as the | “Taxable Subsidiaries” | |||||||||||
GSVC AE Holdings, Inc. (“GAE”) | Delaware | November 28, 2012 | 100 | % | ||||||||
GSVC AV Holdings, Inc. (“GAV”) | Delaware | November 28, 2012 | 100 | % | ||||||||
GSVC SW Holdings, Inc. (“GSW”) | Delaware | November 28, 2012 | 100 | % | ||||||||
GSVC SVDS Holdings, Inc. (“SVDS”) | Delaware | August 13, 2013 | 100 | % |
The Company’s investment objective is to maximize its portfolio’s total return, principally by seeking capital gains on its equity and equity-related investments, and to a lesser extent, income from debt investments. The Company invests principally in the equity securities of what it believes to be rapidly growing venture-capital-backed emerging companies. The Company may acquire its investmentsinvest in these portfolio companies through:through offerings of the prospective portfolio companies, transactions on secondary marketplaces for private companies, or negotiations with selling stockholders. In addition, the Company may invest in private credit and in founders equity, founders warrants, forward purchase agreements, and private investment in public equity transactions of special purpose acquisition companies. The Company may also invest on an opportunistic basis in select publicly traded equity securities or certain non-U.S. companies that otherwise meet its investment criteria, subject to any applicable limitations under the 1940 Act.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The interim unaudited condensed consolidated financial statements of the Company are prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is an investment company following the specialized accounting and reporting guidance specified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 946,, Financial Services — Services—Investment
Companies. In the opinion of management, all adjustments, all of which were of a normal recurring nature, were considered necessary for the fair presentation of condensed consolidated financial statements for the interim period have been included.
The results of operations for the current interim period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2017.2023. The interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited condensed consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2016.2022.
Basis of Consolidation
Under Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ (“AICPA”) Audit and Accounting Guide for Investment Companies, the Company is precluded from consolidating any entity other than another investment company, a controlled operating company that provides substantially all of its services and benefits to the Company, and certain entities established for tax purposes where the Company holds a 100% interest. Accordingly, the Company’s condensed consolidated financial statements include its accounts and the accounts of the GSVC HoldingsTaxable Subsidiaries, GCL, and GCL,SuRo Sports, its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with GAAP requires the Company’s management to make a number of significant estimates. These include estimates of the fair value of certain assets and liabilities and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates willmay occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ materially from such estimates.
Uncertainties and Risk Factors
The Company is subject to a number of risks and uncertainties in the nature of its operations, as well as vulnerability due to certain concentrations. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements” and “Item 1A. Risk“Risk Factors” in Part II, Item 1A of this quarterly report on Form 10-Q and “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2016 for a detailed discussion of the risks and uncertainties inherent in the nature of the Company’s operations. Refer to “Note 3 — 4—Investments at Fair Value.”Value” for an overview of the Company’s industry and geographic concentrations.
Investments at Fair Value
The Company applies fair value accounting in accordance with GAAP and the AICPA’s Audit and Accounting Guide for Investment Companies. The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date.
Level 2—Valuations based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
Level 3—Valuations based on unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The majority of the Company’s investments are Level 3 investments and are subject to a high degree of judgment and uncertainty in determining fair value.
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within the Level 3 table set forth in “Note 3 — 4—Investments at Fair Value” may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quartermeasurement period in which the reclassifications occur. Refer to “Levelling Policy” below for a detailed discussion of the levelling of the Company’s financial assets or liabilities and events that may cause a reclassification within the fair value hierarchy.
Securities for which market quotations are readily available on an exchange are valued at the most recently available closing price of such security as of the valuation date, unless there are legal or contractual restrictions on the sale or use of such security that under ASC 820-10-35 should be incorporated into the security’s fair value measurement as a characteristic of the security that would transfer to market participants who would buy the security. The Company may also obtain quotes with respect to certain of its investments from pricing services, brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined to be adequate, the Company uses the quote obtained.
Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology, or provides a valuation or methodology that, in the judgment of GSV Asset Management, our boardmanagement, the Company’s Board of directorsDirectors or the valuation committee of the Company’s boardBoard of directorsDirectors (the “Valuation Committee”), does not reliably represent fair value, shall each be valued as follows:
1. | The quarterly valuation process begins with each portfolio company or investment being initially valued by the internal investment professionals |
2. | Preliminary valuation |
3. | For all investments for which there are no readily available market |
4. | The Valuation Committee applies the appropriate valuation methodology to each portfolio asset in a consistent manner, considers the inputs provided by management and the independent third-party valuation firm, discusses the valuations and recommends to the Company’s |
5. | The Company’s |
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
In making a good faith determination of the fair value of investments, the Company considersBoard applies valuation methodologies consistent with industry practice. Valuation methods utilized include, but are not limited to, the following: comparisons to prices from secondary market transactions; venture capital financings; public offerings; purchase or sales transactions; as well as analysis of financial ratios and valuation metrics of the portfolio companies that issued such private equity securities to peer companies that are public,public; analysis of the portfolio companies’company’s most recent financial statements, and forecasts and the markets in which the portfolio company does business, and other relevant factors. The Company assigns a weighting based upon the relevance of each method to determineassist the Board in determining the fair value of each investment.
For investments that are not publicly traded or that do not have readily available market quotations, the Valuation Committee generally engages at least onean independent valuation firm to provide an independent valuation, which the Company’s boardBoard of directorsDirectors considers, among other factors, in making its fair value determinations for these investments. For the current and prior fiscal year, the Valuation Committee engaged an independent valuation firm to perform valuations of 100% of the Company’s investments for which there were no readily available market quotations.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of September 30, 2017 and December 31, 2016.statements.
Equity Investments
Equity investments for which market quotations are readily available in an active market are generally valued at the most recently available closing market prices and are classified as Level 1 assets. Equity investments with readily available market quotations that are subject to sales restrictions due to an initial public offering (“IPO”) by the portfolio company will be classified as Level 1. Any other equity investments with readily available market quotations that are subject to sales restrictions that would transfer to market participants who would buy the security may be valued at a discount for a lack of marketability (“DLOM”), to the most recently available closing market prices depending upon the nature of the sales restriction. These investments are generally classified as Level 2 assets. The DLOM used is generally based upon the market value of publicly traded put options with similar terms.
The fair values of the Company’s equity investments for which market quotations are not readily available are determined based on various factors and are classified as Level 3 assets. To determine the fair value of a portfolio company for which market quotations are not readily available, the CompanyBoard applies the appropriate respective valuation methodology for the asset class or portfolio holding, which may analyzeinvolve analyzing the relevant portfolio company’s most recently available historical and projected financial results, public market comparables, and other factors. The CompanyBoard may also consider other events, including the transaction in which the Company acquired its securities, subsequent equity sales by the portfolio company,
and mergers or acquisitions affecting the portfolio company. In addition, the CompanyBoard may consider the trends of the portfolio company’s basic financial metrics from the time of its original investment until the measurement date, with material improvement of these metrics indicating a possible increase in fair value, while material deterioration of these metrics may indicate a possible reduction in fair value.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
In determining the fair value of equity or equity-linked securities (including warrants to purchase common or preferred stock) in a portfolio company, the CompanyBoard considers the rights, preferences and limitations of such securities. In cases where a portfolio company’s capital structure includes multiple classes of preferred and common stock and equity-linked securities with different rights and preferences, the Company may use an option pricing model to allocate value to each equity-linked security, unless it believes a liquidity event such as an acquisition or a dissolution is imminent, or the portfolio company is unlikely to continue as a going concern. When equity-linked securities expire worthless, any cost associated with these positions is recognized as a realized loss on investments in the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows. In the event these securities are exercised into common or preferred stock, the cost associated with these securities is reassigned to the cost basis of the new common or preferred stock. These conversions are noted as non-cash operating items on the Condensed Consolidated Statements of Cash Flows.
Debt Investments
Given the nature of the Company’s current debt investments (excluding U.S. Treasuries), principally convertible and promissory notes issued by venture-capital-backed portfolio companies, these investments are classified as Level 3 assets because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. The Company’s debt investments are valued at estimated fair value as determined in good faith by the Company’s boardBoard of directors.Directors.
Options
The Company’s boardBoard of directors will ascribeDirectors determines the fair value to warrantsof options based on fair value analysesmethodologies that can include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate. These investments are classified as Level 3 assets because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. The Company’s warrantsoptions are valued at estimated fair value as determined by the Company’s boardBoard of directors.Directors.
Special Purpose Acquisition Companies
The Company’s Board of Directors measures its Special Purpose Acquisition Company (“SPAC”) investments at fair value, which is equivalent to cost until a SPAC transaction is announced. After a SPAC transaction is announced, the Company’s Board of Directors will determine the fair value of SPAC investments based on fair value analyses that can include option pricing models, probability-weighted expected return method analyses and other techniques as deemed appropriate. Upon completion of the SPAC transaction, the Board utilizes the public share price of the entity, less a DLOM if there are restrictions on selling. The Company’s SPAC investments are valued at estimated fair value as determined in good faith by the Company’s Board of Directors.
Venture Investment Funds
In valuing the Company’s investments in venture investment funds (“Venture Investment Funds”), the Company applies the practical expedient provided by the ASC Topic 820 relating to investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent). ASC Topic 820 permits an entity holding investments in certain entities that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.
Portfolio Company Investment Classification
The Company is a non-diversified company within the meaning of the 1940 Act. The Company classifies its investments by level of control. As defined in the 1940 Act, control investments are those where the investor retains the power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual directly or indirectly owns beneficially more than 25% of the voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist when a company or individual directly or indirectly owns, controls or holds the power to vote 5% or more of the outstanding voting securities of a portfolio company. Refer to the Consolidated Schedules of Investments as of June 30, 2023 and December 31, 2022, for details regarding the nature and composition of the Company’s investment portfolio.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
Levelling Policy
The portfolio companies in which the Company invests may offer their shares in IPOs. The Company’s shares in such portfolio companies are typically subject to lock-up agreements for 180 days following the IPO. Upon the IPO date, the Company transfers its investment from Level 3 to Level 1 due to the presence of an active market, or Level 2 if limited by the lock-up agreement. The Company prices the investment at the closing price on a public exchange as of the measurement date. In situations where there are lock-up restrictions, as well as legal or contractual restrictions on the sale or use of such security that under ASC 820-10-35 should be incorporated into the security’s fair value measurement as a characteristic of the security that would transfer to market participants who would buy the security, the Company will classify the investment as Level 2 subject to an appropriate DLOM to reflect the restrictions upon sale. The Company transfers investments between levels based on the fair value at the beginning of the measurement period in accordance with FASB ASC 820. For investments transferred out of Level 3 due to an IPO, the Company transfers these investments based on their fair value at the IPO date.
The carrying amounts of the Company’s other, non-investment financial instruments, consisting of cash, receivables, accounts payable, and accrued expenses, approximate fair value due to their short-term nature.
Securities transactions are accounted for on the date the transaction for the purchase or sale of the securities is entered into by the Company (i.e., trade date). Securities transactions outside conventional channels, such as private transactions, are recorded as of the date the Company obtains the right to demand the securities purchased or to collect the proceeds from a sale and incurs an obligation to pay for securities purchased or to deliver securities sold, respectively.
PortfolioCompany Investment Classification
GSV Capital is a non-diversified company within the meaningValuation of the 1940 Act. GSV Capital classifies its investments by level of control. As defined in the 1940 Act, control investments are those where there is the power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual directly or indirectly owns beneficially more than 25% of the voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist when a company or individual directly or indirectly owns, controls or holds the power to vote 5% or more of the outstanding voting securities of a portfolio company. Refer to the Condensed Consolidated Schedules of Investments as of September 30, 2017 and December 31, 2016, respectively, for details regarding the nature and compositionOther Financial Instruments
The carrying amounts of the Company’s investment portfolio.other, non-investment financial instruments, consisting of cash, receivables, accounts payable, and accrued expenses, approximate fair value due to their short-term nature.
Cash
The Company placescustodies its cash with U.S. Bank,Western Alliance Trust Company, N.A., Bridge Bank (a subsidiary of Western Alliance Bank), and Silicon Valley Bank, and at times,may place cash in demand deposit accounts with other high-quality financial institutions. The cash held in these accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Company believes that U.S. Bank, N.A., Western Alliance Bank, and Silicon Valley Bank are high-quality financial institutions and that the risk of loss associated with any uninsured balance is remote.
Escrow Proceeds Receivable
A portion of the proceeds from the sale of portfolio investments are held in escrow as a recourse for indemnity claims that may arise under the sale agreement or other related transaction contingencies. Amounts held in escrow are held at estimated realizable value and included in net realized gains (losses) on investments in the Condensed Consolidated Statements of Operations for the period in which they occurred and are adjusted as needed. Any remaining escrow proceeds balances from these transactions reasonably expected to be received are reflected on the Condensed Consolidated Statement of Assets and Liabilities as escrow proceeds receivable. Escrow proceeds receivable resulting from contingent consideration are to be recognized when the amount of the contingent consideration becomes realized or realizable. As of June 30, 2023 and December 31, 2022, the Company had $375,965 and $628,332, respectively, in escrow proceeds receivable.
Deferred Financing Costs
The Company records origination costs related to lines of credit as deferred financing costs. These costs are deferred and amortized as part of interest expense using the straight-line method over the respective life of the line of credit. For modifications to a line of credit, any unamortized origination costs are expensed. Included within deferred financing costs are offering costs incurred relating to the Company’s shelf registration statement on Form N-2. The Company defers these offering costs until capital is raised pursuant to the shelf registration statement or until the shelf registration statement has expired.expires. For equity capital raised, the offering costs reduce paid-in capital resulting from the offering. For debt capital raised, the associated offering costs are amortized over the life of the debt instrument using the effective interest method.instrument. As of SeptemberJune 30, 2017,2023 and December 31, 2016,2022, the Company had deferred financing costs of $425,316$590,430 and $311,268,$555,761, respectively, on the Condensed Consolidated StatementsStatement of Assets and Liabilities.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES – (continued)2023
Operating Leases & Related Deposits
The Company accounts for its operating leases as prescribed by ASC 842, Leases, which requires lessees to recognize a right-of-use asset on the balance sheet, representing its right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The lease expense is presented as a single lease cost that is amortized on a straight-line basis over the life of the lease. Non-lease components (maintenance, property tax, insurance and parking) are not included in the lease cost. On June 3, 2019, the Company entered a 5-year operating lease for office space for which the Company has recorded a right-of-use asset and a corresponding lease liability for the operating lease obligation. These amounts have been discounted using the rate implicit in the lease. Refer to “Note 7—Commitments and Contingencies—Operating Leases and Related Deposits” for further detail.
Stock-based Compensation
Using the fair value recognition provisions as prescribed by ASC 718, Stock Compensation, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate service period. Determining the fair value of stock-based awards requires considerable judgment, including estimating the expected term of stock options and the expected volatility of our stock price. Differences between actual results and these estimates could have a material effect on our financial results. Forfeitures are accounted for as they occur. Refer to “Note 11—Stock-Based Compensation” for further detail.
Revenue Recognition
The Company recognizes gains or losses on the sale of investments using the specific identification method. The Company recognizes interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. The Company recognizes dividend income on the ex-dividend date.
Investment Transaction Costs and Escrow Deposits
Commissions and other costs associated with an investment transaction, including legal expenses not reimbursed by the portfolio company, are included in the cost basis of purchases and deducted from the proceeds of sales. The Company makes certain acquisitions on secondary markets, which may involve making deposits to escrow accounts until certain conditions are met, including the underlying private company’s right of first refusal. If the underlying private company does not exercise or assign its right of first refusal and all other conditions are met, then the funds in the escrow account are delivered to the seller and the account is closed. Such transactions would be reflected on the Condensed Consolidated Statement of Assets and Liabilities as escrow deposits. At SeptemberAs of June 30, 20172023 and December 31, 2016,2022, the Company had no escrow deposits.
Unrealized Appreciation or Depreciation of Investments
Unrealized appreciation or depreciation is calculated as the difference between the fair value of the investment and the cost basis of such investment.
U.S. Federal and State Income Taxes
The Company elected to be treated as a regulated investment company (a “RIC”)RIC under Subchapter M of the Internal Revenue Code, of 1986, as amended (the “Code”), beginning with its taxable year ended December 31, 2014, has qualified to be treated as a RIC for subsequent taxable years and intends to continue to operate in a manner so as to qualify for the tax treatment applicable to RICs.
To qualify for tax treatment as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of 90% of our investment company taxable income (“ICTI”), including payment-in-kind interest income, as defined by the Code, and 90% of our net tax-exempt interest income (which is the excess of its gross tax-exempt interest income over certain disallowed deductions) for each taxable year and meet certain source of income and asset diversification requirements on a quarterly basis.(the “Annual Distribution Requirement”). Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward into the next tax year ICTI in excess of current year dividend distributions. Any such carryforward ICTI must be distributed on or before December 31 of the subsequent tax year to which it was carried forward.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
If the Company meets the Annual Distribution Requirement, but does not distribute (or is not deemed to have distributed) each calendar year a sum of (1) 98% of its net ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Minimum Distribution Amount”“Excise Tax Avoidance Requirement”), it generally will be required to pay an excise tax equal to 4% of the amount by which the Minimum Distribution AmountExcise Tax Avoidance Requirement exceeds the distributions for the year. To the extent that the Company determines that its estimated current year annual taxable income will exceed estimated current year dividend distributions from such taxable income, the Company will accrue excise taxes, if any, on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate. The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income.
So long as the Company qualifies and maintains its tax treatment as a RIC, it generally will not pay corporate-levelbe subject to U.S. federal and state income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of the Company’s investors and will not be reflected in the condensed consolidated financial statements of the Company. Included in the Company’s condensed consolidated financial statements, the GSVC HoldingsTaxable Subsidiaries are taxable subsidiaries, regardless of whether the Company is a RIC. These taxable subsidiariesTaxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in the Company’s condensed consolidated financial statements.
If it is not treated as a RIC, the Company will be taxed as a regular corporation (a “C corporation”Corporation”) under subchapterSubchapter C of the Code for such taxable year. If the Company has previously qualified as a RIC but is subsequently unable to qualify for treatment as a RIC, and certain amelioration provisions are not applicable, the Company would be subject to tax on all of its taxable income (including its net capital gains) at regular corporate rates. The Company would not be able to deduct distributions to stockholders, nor would it be required to make distributions. Distributions, including distributions of net long-term capital gain, would generally be taxable to its stockholders as ordinary dividend income to the extent of the Company’s current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate stockholders would be eligible to claim a dividend received deduction with respect to such dividend; non-corporate stockholders would generally be able to treat such dividends as “qualified dividend income,” which is subject to reduced rates of U.S. federal income tax. Distributions in excess of the Company’s current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain. In order to requalify as a RIC, in addition to the other requirements discussed above, the Company would be required to distribute all of its previously undistributed earnings attributable to the period it failed to qualify as a RIC by the end of the first year that it intends to requalify for tax treatment as a RIC. If the Company fails to requalify for tax treatment as a RIC for a period greater than two taxable years, it may be subject to regular corporate tax on any net built-in gains with respect to certain of its assets (i.e.(i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would have been realized with respect to such assets if the Company had been liquidated) that it elects to recognize on requalification or when recognized over the next five years. The Company was taxed a C corporation for its 2012 and 2013 taxable years. Refer to “Note 8 — 9—Income Taxes” for further details regarding the Company’s tax status.details.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
Basic net increase/(decrease)
Net change in net assets resulting from operations per basic common share is computed using the weighted-average number of shares outstanding for the period presented. Diluted net increase/(decrease)change in net assets resulting from operations per common share is computed by dividing net increase/(decrease) in net assets resulting from operations for the period adjusted to include the pre-tax effects of interest incurred on potentially dilutive securities, by the weighted-average number of common shares outstanding plus any potentially dilutive shares outstanding during the period. The Company used the if-converted method in accordance withFASB ASC 260, Earnings Per Share(“ (“ASC 260”) to determine the number of potentially dilutive shares outstanding. Refer to “Note 5 — 6—Net Increase/(Decrease)Increase in Net Assets Resulting from Operations per Common Share — Share—Basic and Diluted” for further detail.
Recently Issued Accounting Standards
In January 2016,June 2022, the FASB issued Accounting Standards Update (“ASU”) 2016-01,Financial Instruments — Overall (Subtopic 825-10)ASU No. 2022-03 “Fair Value Measurements (Topic 820): Recognition andFair Value Measurement of Financial Assets and Financial Liabilities, which, among other things, requires (i) that allEquity Securities Subject to Contractual Sale Restrictions.” This change prohibits entities from taking into account contractual restrictions on the sale of equity investments, other than equity-method investments, in unconsolidated entities generally be measured atsecurities when estimating fair value through earnings, and (ii) an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value optionintroduces required disclosures for financial instruments. Additionally, ASU 2016-01 changes the disclosure requirements for financial instruments. ASU 2016-01such transactions. The standard is effective for annual reporting periods, and the interim periods within those periods beginning after December 15, 2017.2023, and should be applied prospectively. Early adoption is permitted for certain provisions. We dopermitted. The adoption of ASU 2022-03 is not believe that ASU 2016-01 willexpected to have a material impact on ourthe Company’s future financial statements.
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements and disclosures.upon adoption.
NOTE 2 — 3—RELATED-PARTY ARRANGEMENTSInvestment Advisory AgreementThe Company has entered into an investment advisory agreement with GSV Asset Management (the “Advisory Agreement”). Under the terms of the agreement, GSV Asset Management is paid a quarterly management fee and an annual incentive fee. GSV Asset Management is controlled by Michael Moe, the Executive Chairman of the Company’s board of directors. Mr. Moe, through his ownership interest in GSV Asset Management, is entitled to a portion of any profits earned by GSV Asset Management in performing its services under the Advisory Agreement. Mr. Moe and William Tanona, the Company’s President, Chief Financial Officer, Treasurer and Corporate Secretary, as principals of GSV Asset Management, collectively manage the business and internal affairs of GSV Asset Management. Mark Klein, the Company’s Chief Executive Officer and a member of the Company’s board of directors, or entities with which he is affiliated, receives fees from GSV Asset Management equal to a percentage of each of the base management fee and the incentive fee paid by the Company to GSV Asset Management pursuant to a consulting agreement with GSV Asset Management.
Under the Advisory Agreement, there are no restrictions on the right of any manager, partner, officer or employee of GSV Asset Management to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Company’s portfolio companies). GSV Asset Management has, however, adopted an internal policy whereby any fees or compensation received by a manager, partner, officer or employee of GSV Asset Management in exchange for serving as a director of, or providing consulting services to, any of the Company’s portfolio companies will be transferred to the Company, net of any personal taxes incurred, upon such receipt for the benefit of the Company and its stockholders.
Under the terms of the Advisory Agreement, GSV Asset Management is paid a base management fee of 2.0% of gross assets, which is the Company’s total assets reflected on its Condensed Consolidated Statements of Assets and Liabilities (with no deduction for liabilities) reduced by any non-portfolio investments. Effective January 1, 2017 through December 31, 2017, however, pursuant to a voluntary waiver by GSV Asset Management, the Company will pay GSV Asset Management a base management fee of 1.75%, a 0.25% reduction from the 2.0% base management fee payable under the Advisory Agreement. This waiver of a portion of the base management fee is not subject to recourse against or reimbursement by the Company. GSV Asset Management earned $1,397,332 and $4,210,932 in management fees for the three and nine months
ended September 30, 2017, respectively. GSV Asset Management earned $1,625,963 and $5,324,186 in management fees for the three and nine months ended September 30, 2016, respectively. GSV Asset Management waived $174,666 and $526,366 in management fees for the three and nine months ended September 30, 2017, respectively. GSV Asset Management did not waive management fees for the three and nine months ended September 30, 2016.
Under the terms of the Advisory Agreement, GSV Asset Management is paid an annual incentive fee equal to the lesser of (i) 20% of the Company’s realized capital gains during each calendar year, if any, calculated on an investment-by-investment basis, subject to a non-compounded preferred return, or “hurdle,” and a “catch-up” feature, and (ii) 20% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees.
For GAAP purposes, in accordance with the AICPA’s Technical Practice Aids (“TPA”) (TIS 6910.2), the Company is required to accrue incentive fees for all periods as if the Company had fully liquidated its entire investment portfolio at the fair value stated on the Condensed Consolidated Statements of Assets and Liabilities as of September 30, 2017 and December 31, 2016. This accrual considers both the hypothetical liquidation of the Company’s portfolio described previously, as well as the Company’s actual cumulative realized gains and losses since inception, as well any previously paid incentive fees.
For the three and nine months ended September 30, 2017, the Company accrued incentive fees of $3,334,052 and $7,482,185, respectively. For the three months ended September 30, 2016, the Company accrued incentive fees of $220,719. For the nine months ended September 30, 2016, the Company reversed previously accrued incentive fees of $7,805,089.
As of September 30, 2017, there were no receivables owed to the Company by GSV Asset Management. In addition, as of September 30, 2017, the Company owed GSV Asset Management $323,897 primarily for the reimbursement of overhead allocation expenses, as well as travel expenses.
As of December 31, 2016, there were no receivables owed to the Company by GSV Asset Management. In addition, as of December 31, 2016, the Company owed GSV Asset Management $422,025 primarily for the reimbursement of overhead allocation expenses.
The Company has entered into an administration agreement with GSV Capital Service Company (the “Administration Agreement”) to provide administrative services, including furnishing the Company with office facilities, equipment, clerical, bookkeeping, record keeping services, and other administrative services. GSV Asset Management controls GSV Capital Service Company. The Company reimburses GSV Capital Service Company an allocable portion of overhead and other expenses in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of the Company’s President, Chief Financial Officer, Chief Compliance Officer and other staff providing administrative services. While there is no limit on the total amount of expenses the Company may be required to reimburse to GSV Capital Service Company, GSV Capital Service Company will only charge the Company for the actual expenses GSV Capital Service Company incurs on the Company’s behalf, or the Company’s allocable portion thereof, without any profit to GSV Capital Service Company. There were $472,413 and $1,453,007 in such costs incurred under the Administration Agreement for the three and nine months ended September 30, 2017,
respectively. There were $627,444 and $1,926,085 in such costs incurred under the Administration Agreement for the three and nine months ended September 30, 2016, respectively.
The Company entered into a license agreement with GSV Asset Management pursuant to which GSV Asset Management has agreed to grant the Company a non-exclusive, royalty-free license to use the name “GSV.” Under this agreement, the Company has the right to use the GSV name for so long as the Advisory Agreement with GSV Asset Management is in effect. Other than with respect to this limited license, the Company has no legal right to the “GSV” name.
Mark Moe, who is the brother of Michael Moe, the Executive Chairman of the Company’s board of directors, serves as Vice President of Business Development, Global Expansion for NestGSV, Inc. (d/b/a GSV Labs, Inc.), one of the Company’s portfolio companies. Diane Flynn, who is the spouse of the Company’s former President, Mark Flynn, served as Chief Marketing Officer of NestGSV, Inc. until her resignation in January 2017. Ron Johnson, the Chief Executive Officer of Enjoy Technology, Inc., one of the Company’s portfolio companies, is the brother-in-law of the Company’s former President, Mark Flynn. As of September 30, 2017, the fair values of the Company’s investments in NestGSV, Inc. and Enjoy Technology, Inc. were $9,334,335 and $5,447,844, respectively. Another one of the Company’s portfolio companies, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.), was previously allowed to utilize office space paid for by GSV Asset Management. SPBRX, INC. was not required to pay GSV Asset Management or the Company any consideration for rent. The Company did not consider this to be an arms-length transaction. In August 2016, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) moved out of the office space paid for by GSV Asset Management.
In addition, the Company’s executive officers and directors and the principals of the Company’s investment adviser, GSV Asset Management, serve or may serve as officers, and directors, or managers of entities that operate in a line of business similar to the Company’s, including new entities that may be formed in the future. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of the Company or the Company’s stockholders. For example, as
The 1940 Act prohibits the Company from participating in certain negotiated co-investments with certain affiliates unless it receives an order from the SEC permitting it to do so. As a BDC, the Company is prohibited under the 1940 Act from participating in certain transactions with certain of November 9, 2017, GSV Asset Management also manages Coursera@GSV Fund, LP,its affiliates without the prior approval of the Board of Directors, including its independent directors, and, Coursera@GSV-EDBI Fund, LP, special purpose vehicles each comprised of an underlying investment in Coursera stock (the “Coursera Funds”). GSV Asset Management also serves as sub-adviser for certain investment series of GSV Ventures I LLC, GSV Ventures II LLC, GSV Ventures V LLC, GSV Ventures VI LLC and a pooled investment fund, GSV Ventures III LLC, each a venture capital fund (collectively,some cases, the “GSV Ventures Funds”). GSV Asset Management will likely manage one or more private funds, or series within such private funds, inSEC. The affiliates with which the future. The Company has no ownership interests in the Coursera Funds or the GSV Ventures Funds sub-advised by GSV Asset Management.
While the investment focus of each of these entities, including the Coursera Funds and the GSV Ventures Funds, may be differentprohibited from the Company’s investment objective, it is likely that new investment opportunities that meet the Company’s investment objective will come to the attention of one of these entities, or new entities that will likely be formed in the future in connection with another investment advisory client or program, and, if so, such opportunity might not be offered, or otherwise made available, to the Company. However, the Company’s executivetransacting include its officers, directors, and investment adviser, GSV Asset Management, intend to treatemployees and any person controlling or under common control with the Company, in a fair and equitable manner consistent with their applicable duties under law so that the Company will not be disadvantaged in relationsubject to any other particular client. In addition, while GSV Asset Management anticipates that it will from time to time identify investment opportunities that are appropriate for both the Company and the other funds that are currently, or in the future may be, managed by GSV Assetcertain exceptions.
21 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)NOTE 2 — RELATED-PARTY ARRANGEMENTS – (continued)Management, to the extent it does identify such opportunities, GSV Asset Management has established an allocation policy to ensure that the Company has priority over such other funds. The Company’s board of directors will monitor on a quarterly basis any such allocation of investment opportunities between the Company and any such other funds.2023
In the ordinary course of business, the Company may enter into transactions with portfolio companies that may be considered related-party transactions. To ensure that the Company does not engage in any prohibited transactions with any persons affiliated with the Company, the Company has implemented certain written policies and procedures whereby the Company’s executive officers screen each of the Company’s transactions for any possible affiliations between the proposed portfolio investment, the Company, companies controlled by the Company, and the Company’s executive officers and directors. During
The Company’s investment in Churchill Sponsor VI LLC, the year ended December 31, 2016,sponsor of Churchill Capital Corp. VI, a SPAC, constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mark D. Klein, the Company’s Chairman, Chief Executive Officer and President, has a non-controlling interest in the entity that controls Churchill Sponsor VI LLC, and is a non-controlling member of the board of directors of Churchill Capital Corp VI. The Company’s investment in Churchill Sponsor VII LLC, the sponsor of Churchill Capital Corp. VII, a SPAC, also constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mr. Klein has a non-controlling interest in the entity that controls Churchill Sponsor VII LLC, and is a non-controlling member of the board of directors of Churchill Capital Corp. VII. In addition, Mr. Klein’s brother, Michael Klein, is a control person of such Churchill entities. As of June 30, 2023, the fair values of the Company’s investments in Churchill Sponsor VI LLC and Churchill Sponsor VII LLC were $200,000 and $300,000, respectively.
The Company’s investment in Skillsoft Corp. (f/k/a Software Luxembourg Holding S.A.) (“Skillsoft”) constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mr. Klein has a non-controlling interest in the entity that controls Churchill Sponsor II LLC, the sponsor of Churchill Capital Corp. II, a SPAC, and was a non-controlling member of the board of directors of Churchill Capital Corp. II, through which the Company received other income of $212,795 from the proceeds of Michael Moe’s sale ofexecuted a private investment in public equity transaction in order to acquire common shares of 2U,Skillsoft alongside the merger of Skillsoft and Churchill Capital Corp II. In addition, Mr. Klein’s brother, Michael Klein, is a control person of such Churchill entities. As of June 30, 2023, the fair value of the Company’s investment in Skillsoft Corp. was $1,217,485.
The Company’s initial investment in Shogun Enterprises, Inc. (f/k/on February 26, 2021 constituted a 2tor,“remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Keri Findley, a former senior managing director of the Company until her departure on March 9, 2022, was at the time of investment a non-controlling member of the board of directors of Shogun Enterprises, Inc.), and held a minority equity interest in such portfolio company. The Company’s investment in Architect Capital PayJoy SPV, LLC also constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Ms. Findley, at the time of investment, was a non-controlling member of the board of directors of the investment manager to Architect Capital PayJoy SPV, LLC, and held a minority equity interest in such investment manager. As of June 30, 2023, the fair values of the Company’s remote-affiliate investments in Shogun Enterprises, Inc. (d/b/a Hearth) and Architect Capital PayJoy SPV, LLC were $7,655,365 and $10,000,000, respectively.
In addition, Ms. Findley and Claire Councill, a former investment professional of the Company until her departure on April 15, 2022, are non-controlling members of the board of directors of Colombier Acquisition Corp., a SPAC, which is sponsored by Colombier Sponsor LLC, one of the Company’s former portfolio companies,companies. The Company’s investment in AltC Sponsor LLC, the sponsor of AltC Acquisition Corp, a SPAC, constituted a “remote-affiliate” transaction for purposes of the 1940 Act in light of the fact that Mr. Moe received while serving on 2U’s boardKlein has a non-controlling interest in one of directors. These sales proceeds were remitted directly to the Company.
On August 8, 2017, the Company announced Michael Moe’s resignation asentities that controls AltC Sponsor LLC, and Allison Green, the Company’s Chief ExecutiveFinancial Officer, effective August 11, 2017,Chief Compliance Officer, Treasurer and thatSecretary, is a non-controlling member of the Company’s board of directors had appointed Mark Klein, a memberof AltC Acquisition Corp. As of June 30, 2023, the fair values of the Company’s boardaggregate investments in each of directorsColombier Sponsor LLC and a consultant to GSV Asset Management, to serve as the Company’s Chief Executive Officer, effective August 11, 2017. Mr. Moe continues to serve the Company as Executive Chairman of the Company’s board of directors. Further information regarding the management transition can be found in the Company’s Current Report on Form 8-K, filed with the SEC on August 8, 2017.AltC Sponsor LLC were $17,182,605 and $250,000, respectively.
22 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)2023
NOTE 3 — 4—INVESTMENTS AT FAIR VALUE
Investment Portfolio Composition
The Company’s investments in portfolio companies consist primarily of equity securities (such as common stock, preferred stock and warrantsoptions to purchase common and preferred stock) and to a lesser extent, debt securities, issued by private and publicly traded companies. The Company may also, from time to time, invest in U.S. Treasury Securities.securities. Non-portfolio investments represent investments in U.S. Treasury Securities. At Septembersecurities. As of June 30, 2017,2023, the Company had 7861 positions in 37 portfolio companies. AtAs of December 31, 2016,2022, the Company had 9164 positions in 4539 portfolio companies.
The following table summarizestables summarize the composition of the Company’s investment portfolio by security type at cost and fair value as of SeptemberJune 30, 20172023 and December 31, 2016:2022:
SCHEDULE OF COMPOSITION OF INVESTMENT PORTFOLIO
June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Cost | Fair Value | Percentage of Net Assets | Cost | Fair Value | Percentage of Net Assets | |||||||||||||||||||
Private Portfolio Companies | ||||||||||||||||||||||||
Preferred Stock | $ | 106,312,054 | $ | 96,909,349 | 51.9 | % | $ | 118,472,118 | $ | 117,214,465 | 55.8 | % | ||||||||||||
Common Stock | 65,438,476 | 44,805,853 | 24.0 | % | 50,601,512 | 18,692,931 | 8.9 | % | ||||||||||||||||
Debt Investments | 5,817,464 | 3,115,764 | 1.7 | % | 6,316,466 | 4,488,200 | 2.1 | % | ||||||||||||||||
Options | 11,384,947 | 3,900,883 | 2.1 | % | 11,415,787 | 3,469,497 | 1.7 | % | ||||||||||||||||
Total Private Portfolio Companies | 188,952,941 | 148,731,849 | 79.7 | % | 186,805,883 | 143,865,093 | 68.5 | % | ||||||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||||||||||
Common Stock | 20,139,645 | 11,551,297 | 6.2 | % | 29,322,625 | 13,323,485 | 6.3 | % | ||||||||||||||||
Total Portfolio Investments | 209,092,586 | 160,283,146 | 85.9 | % | 216,128,508 | 157,188,578 | 74.8 | % | ||||||||||||||||
Non-Portfolio Investments | ||||||||||||||||||||||||
U.S. Treasury Bills | 75,478,668 | 75,895,534 | 40.7 | % | 84,999,598 | 85,056,817 | 40.5 | % | ||||||||||||||||
Total Investments | $ | 284,571,254 | $ | 236,178,680 | 126.5 | % | $ | 301,128,106 | $ | 242,245,395 | 115.3 | % |
September 30, 2017 (Unaudited) | December 31, 2016 | |||||||||||||||||||||||
Cost | Fair Value | Percentage of Net Assets | Cost | Fair Value | Percentage of Net Assets | |||||||||||||||||||
Private Portfolio Companies | ||||||||||||||||||||||||
Common Stock | $ | 73,577,946 | $ | 93,284,868 | 44.6 | % | $ | 81,274,687 | $ | 83,074,410 | 43.2 | % | ||||||||||||
Preferred Stock | 153,096,417 | 177,391,805 | 84.7 | 174,462,577 | 162,238,879 | 84.4 | ||||||||||||||||||
Debt Investments | 8,685,956 | 7,020,386 | 3.4 | 8,849,434 | 7,821,948 | 4.1 | ||||||||||||||||||
Warrants | 229,092 | 471,294 | 0.2 | 158,713 | 150,904 | 0.1 | ||||||||||||||||||
Private Portfolio Companies | 235,589,411 | 278,168,353 | 132.9 | % | 264,745,411 | 253,286,141 | 131.8 | % | ||||||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||||||||||
Common Stock | 9,273,458 | 11,607,729 | 5.5 | 14,022,863 | 8,729,005 | 4.6 | ||||||||||||||||||
Total Portfolio Investments | 244,862,869 | 289,776,082 | 138.4 | % | 278,768,274 | 262,015,146 | 136.4 | % | ||||||||||||||||
Non-Portfolio Investments | ||||||||||||||||||||||||
U.S. Treasury Bill | 99,991,125 | 99,994,000 | 47.8 | 29,998,750 | 29,998,490 | 15.6 | ||||||||||||||||||
Total Investments | $ | 344,853,994 | $ | 389,770,082 | 186.2 | % | $ | 308,767,024 | $ | 292,013,636 | 152.0 | % |
23 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
The industrialgeographic and geographicindustrial compositions of the Company’s portfolio at fair value as of SeptemberJune 30, 20172023 and December 31, 20162022 were as follows:
As of June 30, 2023 | As of December 31, 2022 | |||||||||||||||||||||||
Fair Value | Percentage of Portfolio | Percentage of Net Assets | Fair Value | Percentage of Portfolio | Percentage of Net Assets | |||||||||||||||||||
Geographic Region | ||||||||||||||||||||||||
West | $ | 86,688,291 | 54.1 | % | 46.5 | % | $ | 94,996,805 | 60.4 | % | 45.1 | % | ||||||||||||
Northeast | 55,437,660 | 34.6 | % | 29.7 | % | 46,944,432 | 29.9 | % | 22.4 | % | ||||||||||||||
Midwest | 12,389,590 | 7.7 | % | 6.6 | % | 8,183,281 | 5.2 | % | 3.9 | % | ||||||||||||||
International | 5,767,605 | 3.6 | % | 3.1 | % | 7,064,060 | 4.5 | % | 3.4 | % | ||||||||||||||
Total | $ | 160,283,146 | 100.0 | % | 85.9 | % | $ | 157,188,578 | 100.0 | % | 74.8 | % |
As of June 30, 2023 | As of December 31, 2022 | |||||||||||||||||||||||
Fair Value | Percentage of Portfolio | Percentage of Net Assets | Fair Value | Percentage of Portfolio | Percentage of Net Assets | |||||||||||||||||||
Industry | ||||||||||||||||||||||||
Financial Technology | $ | 56,553,879 | 35.3 | % | 30.3 | % | $ | 38,096,753 | 24.2 | % | 18.1 | % | ||||||||||||
Education Technology | 44,348,880 | 27.7 | % | 23.8 | % | 61,841,493 | 39.4 | % | 29.4 | % | ||||||||||||||
Marketplaces | 25,038,245 | 15.6 | % | 13.4 | % | 27,291,467 | 17.4 | % | 13.0 | % | ||||||||||||||
Big Data/Cloud | 22,517,497 | 14.0 | % | 12.1 | % | 14,927,819 | 9.5 | % | 7.1 | % | ||||||||||||||
Social/Mobile | 10,890,617 | 6.8 | % | 5.8 | % | 14,047,018 | 8.9 | % | 6.7 | % | ||||||||||||||
Sustainability | 934,028 | 0.6 | % | 0.5 | % | 984,028 | 0.6 | % | 0.5 | % | ||||||||||||||
Total | $ | 160,283,146 | 100.0 | % | 85.9 | % | $ | 157,188,578 | 100.0 | % | 74.8 | % |
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Investments at Fair Value | Percentage of Portfolio | Percentage of Net Assets | Investments at Fair Value | Percentage of Portfolio | Percentage of Net Assets | |||||||||||||||||||
Industry | ||||||||||||||||||||||||
Big Data/Cloud | $ | 104,206,955 | 36.0 | % | 49.8 | % | $ | 89,852,351 | 34.3 | % | 46.8 | % | ||||||||||||
Education Technology | 100,009,977 | 34.5 | 47.7 | 96,498,376 | 36.8 | 50.2 | ||||||||||||||||||
Social/Mobile | 52,838,226 | 18.2 | 25.2 | 45,836,028 | 17.6 | 23.9 | ||||||||||||||||||
Marketplaces | 31,353,731 | 10.8 | 15.0 | 25,518,613 | 9.7 | 13.3 | ||||||||||||||||||
Sustainability | 1,367,193 | 0.5 | 0.7 | 4,309,778 | 1.6 | 2.2 | ||||||||||||||||||
Total | $ | 289,776,082 | 100.0 | % | 138.4 | % | $ | 262,015,146 | 100.0 | % | 136.4 | % |
24 |
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Investments at Fair Value | Percentage of Portfolio | Percentage of Net Assets | Investments at Fair Value | Percentage of Portfolio | Percentage of Net Assets | |||||||||||||||||||
Geographic Region | ||||||||||||||||||||||||
West | $ | 188,509,581 | 65.1 | % | 90.1 | % | $ | 187,300,467 | 71.5 | % | 97.5 | % | ||||||||||||
Mid-west | 35,768,782 | 12.3 | 17.1 | 14,362,498 | 5.5 | 7.4 | ||||||||||||||||||
Northeast | 33,214,135 | 11.5 | 15.9 | 41,420,490 | 15.8 | 21.6 | ||||||||||||||||||
International | 32,283,584 | 11.1 | 15.4 | 18,931,691 | 7.2 | 9.9 | ||||||||||||||||||
Total | $ | 289,776,082 | 100.0 | % | 138.4 | % | $ | 262,015,146 | 100.0 | % | 136.4 | % |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)
The table below details the composition of the Company’s industrial themes presented above:in the preceding tables:
Education Software | ||||
Interactive Learning | ||||
Online Education | ||||
Big Data/Cloud | Gaming Licensing | |||
Retail Technology | ||||
Geolocation Technology | ||||
Software | ||||
Warehouse Automation | ||||
Marketplaces | Global Innovation Platform | |||
Knowledge Networks | ||||
Micromobility | ||||
Pharmaceutical Technology | ||||
Real Estate Platform | ||||
Subscription Fashion Rental | ||||
Financial Technology | Cannabis REIT | |||
Financial Services | ||||
Home Improvement Finance | ||||
Mobile Finance Technology | ||||
Online Marketplace Finance | ||||
Gaming Technology | ||||
Special Purpose Acquisition Company | ||||
Venture Investment Fund | ||||
Social/Mobile | Digital Media Platform | |||
Digital Media Technology | ||||
Interactive Media & Services | ||||
Mobile Access Technology | ||||
Social Data Platform | ||||
Fitness Technology | ||||
Social Networking | ||||
Sustainability | Clean Technology |
25 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)2023
Investment Valuation Inputs
The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of SeptemberJune 30, 20172023 and December 31, 20162022 are as follows:
SCHEDULE OF FAIR VALUE OF INVESTMENT VALUATION INPUTS
As of June 30, 2023 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Securities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Investments at Fair Value | ||||||||||||||||
Private Portfolio Companies | ||||||||||||||||
Preferred Stock | $ | — | $ | — | $ | 96,909,349 | $ | 96,909,349 | ||||||||
Common Stock | — | — | 44,805,853 | 44,805,853 | ||||||||||||
Debt Investments | — | — | 3,115,764 | 3,115,764 | ||||||||||||
Options | — | — | 3,900,883 | 3,900,883 | ||||||||||||
Private Portfolio Companies | — | — | 148,731,849 | 148,731,849 | ||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||
Common Stock | 11,551,297 | — | — | 11,551,297 | ||||||||||||
Non-Portfolio Investments | ||||||||||||||||
U.S. Treasury bills | 75,895,534 | — | — | 75,895,534 | ||||||||||||
Total Investments at Fair Value | $ | 87,446,831 | $ | — | $ | 148,731,849 | $ | 236,178,680 |
As of December 31, 2022 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Securities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Investments at Fair Value | ||||||||||||||||
Private Portfolio Companies | ||||||||||||||||
Preferred Stock | $ | — | $ | — | $ | 117,214,465 | $ | 117,214,465 | ||||||||
Common Stock | — | — | 18,692,931 | 18,692,931 | ||||||||||||
Debt Investments | — | — | 4,488,200 | 4,488,200 | ||||||||||||
Options | — | — | 3,469,497 | 3,469,497 | ||||||||||||
Private Portfolio Companies | — | — | 143,865,093 | 143,865,093 | ||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||
Common Stock | 13,298,992 | 24,493 | — | 13,323,485 | ||||||||||||
Non-Portfolio Investments | ||||||||||||||||
U.S. Treasury bills | 85,056,817 | — | — | 85,056,817 | ||||||||||||
Total Investments at Fair Value | $ | 98,355,809 | $ | 24,493 | $ | 143,865,093 | $ | 242,245,395 |
As of September 30, 2017 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Securities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Investments at Fair Value Private Portfolio Companies | ||||||||||||||||
Common Stock | $ | — | $ | — | $ | 93,284,868 | $ | 93,284,868 | ||||||||
Preferred Stock | — | — | 177,391,805 | 177,391,805 | ||||||||||||
Debt Investments | — | — | 7,020,386 | 7,020,386 | ||||||||||||
Warrants | — | — | 471,294 | 471,294 | ||||||||||||
Private Portfolio Companies | — | — | 278,168,353 | 278,168,353 | ||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||
Common Stock | 11,607,729 | — | — | 11,607,729 | ||||||||||||
Total Portfolio Investments | 11,607,729 | — | 278,168,353 | 289,776,082 | ||||||||||||
Non-Portfolio Investments | ||||||||||||||||
U.S. Treasury Bill | 99,994,000 | — | — | 99,994,000 | ||||||||||||
Total Investments at Fair Value | $ | 111,601,729 | $ | — | $ | 278,168,353 | $ | 389,770,082 |
26 |
As of December 31, 2016 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Securities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Investments at Fair Value Private Portfolio Companies | ||||||||||||||||
Common Stock | $ | — | $ | — | $ | 83,074,410 | $ | 83,074,410 | ||||||||
Preferred Stock | — | — | 162,238,879 | 162,238,879 | ||||||||||||
Debt Investments | — | — | 7,821,948 | 7,821,948 | ||||||||||||
Warrants | — | — | 150,904 | 150,904 | ||||||||||||
Private Portfolio Companies | — | — | 253,286,141 | 253,286,141 | ||||||||||||
Publicly Traded Portfolio Companies | ||||||||||||||||
Common Stock | 8,729,005 | — | — | 8,729,005 | ||||||||||||
Total Portfolio Investments | 8,729,005 | — | 253,286,141 | 262,015,146 | ||||||||||||
Non-Portfolio Investments | ||||||||||||||||
U.S. Treasury Bill | 29,998,490 | — | — | 29,998,490 | ||||||||||||
Total Investments at Fair Value | $ | 38,727,495 | $ | — | $ | 253,286,141 | $ | 292,013,636 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)2023
Significant Unobservable Inputs for Level 3 Assets and Liabilities
In accordance with FASB ASC 820,Fair Value Measurement, the tables below provide quantitative information about the Company’s fair value measurements of itsthe Company’s Level 3 assets as of SeptemberJune 30, 20172023 and December 31, 2016.2022. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the CompanyBoard may also use other valuation techniques and methodologies when determining the Company’s fair value measurements.measurements of the Company’s assets. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.measurements of the Company’s assets. To the extent an unobservable input is not reflected in the tables below, such input is deemed insignificant with respect to the Company’s Level 3 fair value measurements as of SeptemberJune 30, 20172023 and December 31, 2016.2022. Significant changes in the inputs in isolation would result in a significant change in the fair value measurement, depending on the input and the materiality of the investment. Refer to “Note 1 — Nature of Operations and 2—Significant Accounting Policies — Policies—Investments at Fair Value” for more detail.
SCHEDULE OF FAIR VALUE OF ASSETS ON UNOBSERVABLE INPUT
As of June 30, 2023
Fair Value | Valuation | Unobservable Inputs(2) | Range | ||||||||
Common stock in private companies | | $ | 44,805,853 | | Market approach | ||||||
Revenue multiples | |||||||||||
| PWERM(5) | AFFO(4) multiple | 10.2x | ||||||||
Preferred stock in private companies | | $ | 96,909,349 | | Market approach | 0.16x - 11.7x (2.79x) | |||||
PWERM(5) | Discount rate | ||||||||||
Debt investments | $ | 3,115,764 | Market approach | 0.44x - 5.44x (5.29x) | |||||||
| $ | 3,900,883 | | Option pricing model | Term to expiration (Years) | ||||||
(1) | As of |
final fair value of a Level 3 investment may change based on recent events or transactions. The hybrid approach may also consider certain risk weightings to account for the uncertainty of future events. Refer to “Note |
(2) | The | |
(3) | The weighted averages are calculated based on the fair market value of each investment. | |
(4) | Adjusted Funds From Operations, or “AFFO”. |
27 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(5) | Probability-Weighted Expected Return Method, or “PWERM”. |
As of December 31, 2022
Asset | Fair Value | Valuation Approach/ Technique(1) | Unobservable Inputs(2) | Range (Weighted Average)(3) | |||||||
Common stock in private companies | $ | 18,692,931 | Market approach | Revenue multiples | 1.06x - 4.42x (1.74x) | ||||||
Liquidation Value | N/A | ||||||||||
PWERM(5) | AFFO(4) multiple | 8.62x -12.62x (10.94x) | |||||||||
Preferred stock in private companies | $ | 117,214,465 | Market approach | Revenue multiples | 0.47x - 5.45x (2.38x) | ||||||
Liquidation Value | N/A | ||||||||||
Discounted cash flow | Discount rate | 15.0% (15.0%) | |||||||||
PWERM(5) | Revenue multiples | 1.17x - 1.26x | |||||||||
DLOM | 10.0% (10.0%) | ||||||||||
Financing Risk | 10.0% (10.0%) | ||||||||||
Debt investments | $ | 4,488,200 | Market approach | Revenue multiples | 0.47x - 5.45x (3.6x) | ||||||
Options | $ | 3,469,497 | Option pricing model | Term to expiration (Years) | 1.00x - 5.29x (1.65x) | ||||||
Discounted cash flow | Discount Rate | 15.0% (15.0%) |
(1) | As of December 31, 2022, the Board used a hybrid market and income approach to value certain common and preferred stock investments as the Board felt this approach better reflected the fair value of these investments. In considering multiple valuation approaches (and consequently, multiple valuation techniques), the valuation approaches and techniques are not likely to change from one period of measurement to the next; however, the weighting of each in determining the final fair value of a Level 3 investment may change based on recent events or transactions. The hybrid approach may also consider certain risk weightings to account for the uncertainty of future events. Refer to “Note 2—Significant Accounting Policies—Investments at Fair Value” for more detail. |
(2) | The Board considers all relevant information that can reasonably be obtained when determining the fair value of Level 3 investments. Due to any given portfolio company’s information rights, changes in capital structure, recent events, transactions, or liquidity events, the type and availability of unobservable inputs may change. Increases/(decreases) in revenue multiples, earnings before interest and taxes (“EBIT”) multiples, time to expiration, and stock price/strike price would result in higher (lower) fair values, all else equal. Decreases/(increases) in discount rates, volatility, and annual risk rates, would result in higher (lower) fair values, all else equal. The market approach utilizes market value (revenue and EBIT) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Company carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. In general, precedent transactions include recent rounds of financing, recent purchases made by the Company, and tender offers. Refer to “Note |
(3) | The weighted averages are calculated based on the fair market value of each investment. |
(4) | Adjusted Funds From Operations, or “AFFO”. |
(5) | Probability-Weighted Expected Return Method, or “PWERM”. |
Table of | ||||
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)
The aggregate values of Level 3 assets and liabilities changed during the ninesix months ended SeptemberJune 30, 2017,2023 as follows:
SCHEDULE OF AGGREGATE VALUE OF ASSETS AND LIABILITIES
Common Stock | Preferred Stock | Debt Investments | Options | Total | ||||||||||||||||
Six Months Ended June 30, 2023 | ||||||||||||||||||||
Common Stock | Preferred Stock | Debt Investments | Options | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Fair Value as of December 31, 2022 | $ | 18,692,931 | $ | 117,214,465 | $ | 4,488,200 | $ | 3,469,497 | $ | 143,865,093 | ||||||||||
Purchases, capitalized fees and interest | 10,008,075 | 2,004,171 | 998 | 501,470 | 12,514,714 | |||||||||||||||
Sales/Maturity of investments | (252,629 | ) | — | (500,000 | ) | — | (752,629 | ) | ||||||||||||
Exercises and conversions(1) | 3,751,518 | (3,249,855 | ) | — | (501,663 | ) | — | |||||||||||||
Realized gains/(losses) | 1,330,000 | (10,914,376 | ) | — | (30,647 | ) | (9,615,023 | ) | ||||||||||||
Net change in unrealized appreciation/(depreciation) included in earnings | 11,275,958 | (8,145,056 | ) | (873,434 | ) | 462,226 | 2,719,694 | |||||||||||||
Fair Value as of June 30, 2023 | $ | 44,805,853 | $ | 96,909,349 | $ | 3,115,764 | $ | 3,900,883 | $ | 148,731,849 | ||||||||||
Net change in unrealized appreciation/ (depreciation) of Level 3 investments still held as of June 30, 2023 | $ | 11,275,958 | $ | (19,059,432 | ) | $ | (873,434 | ) | $ | 429,916 | $ | (8,226,992 | ) |
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Common Stock | Preferred Stock | Debt Investments | Warrants | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Fair Value as of December 31, 2016 | $ | 83,074,410 | $ | 162,238,879 | $ | 7,821,948 | $ | 150,904 | $ | 253,286,141 | ||||||||||
Transfers out of Level 3 | (2,184,565 | ) | (2,184,565 | ) | — | — | (4,369,130 | ) | ||||||||||||
Purchases, capitalized fees and interest | — | — | 97,023 | 70,379 | 167,402 | |||||||||||||||
Sales of investments | — | — | (70,379 | ) | — | (70,379 | ) | |||||||||||||
Realized losses | (8,201,729 | ) | (16,858,906 | ) | (305,280 | ) | — | (25,365,915 | ) | |||||||||||
Exercises, conversions and assignments(1) | 2,506,119 | (2,506,119 | ) | — | — | — | ||||||||||||||
Amortization of fixed income security premiums and discounts | — | — | 115,162 | — | 115,162 | |||||||||||||||
Net change in unrealized appreciation/(depreciation) included in earnings | 18,090,633 | 36,702,516 | (638,088 | ) | 250,011 | 54,405,072 | ||||||||||||||
Fair Value as of September 30, 2017 | $ | 93,284,868 | $ | 177,391,805 | $ | 7,020,386 | $ | 471,294 | $ | 278,168,353 | ||||||||||
Net change in unrealized appreciation/(depreciation) of Level 3 investments still held as of September 30, 2017 | $ | 9,888,904 | $ | 19,838,262 | $ | (943,365 | ) | $ | 250,011 | $ | 29,033,812 |
(1) | During the |
Portfolio Company | Conversion from | Conversion to | ||
Preferred shares, Series Simple Agreement for Future Equity | Senior Preferred shares, Series 1 Senior Preferred shares, Series 2 Class A Common |
The aggregate values of Level 3 assets and liabilities changed during the year ended December 31, 20162022 as follows:
Common Stock | Preferred Stock | Debt Investments | Options | Total | ||||||||||||||||
Year Ended December 31, 2022 | ||||||||||||||||||||
Common Stock | Preferred Stock | Debt Investments | Options | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Fair Value as of December 31, 2021 | $ | 42,860,156 | $ | 163,801,798 | $ | 3,011,438 | $ | 4,959,112 | $ | 214,632,504 | ||||||||||
Fair value beginning balance | $ | 42,860,156 | $ | 163,801,798 | $ | 3,011,438 | $ | 4,959,112 | $ | 214,632,504 | ||||||||||
Transfers out of Level 3(1) | (6,918,251 | ) | (1,775,506 | ) | — | (48,639 | ) | (8,742,396 | ) | |||||||||||
Purchases, capitalized fees and interest | — | 20,767,788 | 1,509,093 | 503,183 | 22,780,064 | |||||||||||||||
Sales/Maturity of investments | (874,470 | ) | — | (1,000,000 | ) | — | (1,874,470 | ) | ||||||||||||
Realized gains/(losses) | 160,965 | — | — | (70,379 | ) | 90,586 | ||||||||||||||
Net change in unrealized appreciation/(depreciation) included in earnings | (16,535,469 | ) | (65,579,615 | ) | 967,669 | (1,873,780 | ) | (83,021,195 | ) | |||||||||||
Fair Value as of December 31, 2022 | $ | 18,692,931 | $ | 117,214,465 | $ | 4,488,200 | $ | 3,469,497 | $ | 143,865,093 | ||||||||||
Fair value ending balance | $ | 18,692,931 | $ | 117,214,465 | $ | 4,488,200 | $ | 3,469,497 | $ | 143,865,093 | ||||||||||
Net change in unrealized appreciation/ (depreciation) of Level 3 investments still held as of December 31, 2022 | $ | (7,023,165 | ) | $ | (63,138,372 | ) | $ | 967,669 | $ | (1,624,324 | ) | $ | (70,818,192 | ) |
Year Ended December 31, 2016 | ||||||||||||||||||||
Common Stock | Preferred Stock | Debt Investments | Warrants | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Fair value as of December 31, 2015 | $ | 102,319,140 | $ | 216,291,092 | $ | 4,175,859 | $ | 469,306 | $ | 323,255,397 | ||||||||||
Transfers into Level 3 | 143,733 | — | — | — | 143,733 | |||||||||||||||
Purchases of investments | 3,080 | 9,016,702 | 5,201,294 | 103,655 | 14,324,731 | |||||||||||||||
Sales of investments | (3,509,238 | ) | (7,651,891 | ) | (574,380 | ) | — | (11,735,509 | ) | |||||||||||
Realized gains (losses) | (7,127,146 | ) | 4,430,221 | — | (246,714 | ) | (2,943,639 | ) | ||||||||||||
Exercises, conversions and assignments(1) | 23,588,443 | (23,588,443 | ) | — | — | — | ||||||||||||||
Amortization of fixed income security premiums and discounts | — | — | 44,714 | — | 44,714 | |||||||||||||||
Net change in unrealized depreciation included in earnings | (32,343,602 | ) | (36,258,802 | ) | (1,025,539 | ) | (175,343 | ) | (69,803,286 | ) | ||||||||||
Fair Value as of December 31, 2016 | $ | 83,074,410 | $ | 162,238,879 | $ | 7,821,948 | $ | 150,904 | $ | 253,286,141 | ||||||||||
Net change in unrealized depreciation of Level 3 investments still held as of December 31, 2016 | $ | (39,307,692 | ) | $ | (40,126,793 | ) | $ | (1,025,539 | ) | $ | (195,637 | ) | $ | (80,655,661 | ) |
(1) | During the year ended December 31, |
Portfolio Company | ||||
Common Shares, | ||||
Junior Preferred Shares Junior Preferred Warrants, Strike Price $ , Expiration Date 11/9/2025 | (Level 2) Common |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)2023
Schedule of Investments In, and Advances Toto, Affiliates
Transactions during the ninesix months ended SeptemberJune 30, 20172023 involving the Company’s controlled investments and non-controlled/affiliate investments were as follows:
SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2022 | Realized Gains/(Losses) | Unrealized Gains/(Losses) | Fair Value at June 30, 2023 | Percentage of Net Assets | |||||||||||||||||||||
CONTROLLED INVESTMENTS*(2) | ||||||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||
Special Purpose Acquisition Company | ||||||||||||||||||||||||||||
Colombier Sponsor LLC**–Class W Units(7) | 2,700,000 | $ | — | $ | 1,157,487 | $ | — | $ | 1,083,513 | $ | 2,241,000 | 1.20 | % | |||||||||||||||
Total Options | — | 1,157,487 | — | 1,083,513 | 2,241,000 | 1.20 | % | |||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Preferred shares, Class A(4) | 14,300,000 | — | 984,028 | — | (50,000 | ) | 934,028 | 0.50 | % | |||||||||||||||||||
Total Preferred Stock | — | 984,028 | — | (50,000 | ) | 934,028 | 0.50 | % | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Common shares | 100,000 | — | — | — | — | — | — | % | ||||||||||||||||||||
Mobile Finance Technology | ||||||||||||||||||||||||||||
Architect Capital PayJoy SPV, LLC**–Membership Interest in Lending SPV*** | $ | 10,000,000 | 554,425 | 10,000,000 | — | — | 10,000,000 | 5.36 | % | |||||||||||||||||||
Special Purpose Acquisition Company | ||||||||||||||||||||||||||||
Colombier Sponsor LLC**–Class B Units(7) | 1,976,032 | — | 1,554,355 | — | 13,387,250 | 14,941,605 | 8.00 | % | ||||||||||||||||||||
Total Common Stock | 554,425 | 11,554,355 | — | 13,387,250 | 24,941,605 | 13.36 | % | |||||||||||||||||||||
TOTAL CONTROLLED INVESTMENTS*(2) | $ | 554,425 | $ | 13,695,870 | $ | — | $ | 14,420,763 | $ | 28,116,633 | 15.06 | % | ||||||||||||||||
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | ||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.) –Convertible Promissory Note 8%, Due 8/23/2024(3) | $ | 1,010,198 | $ | — | $ | 1,988,200 | $ | — | $ | (1,027,809 | ) | $ | 960,391 | 0.51 | % | |||||||||||||
Total Debt Investments | — | 1,988,200 | — | (1,027,809 | ) | 960,391 | 0.51 | % | ||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||
Knowledge Networks | ||||||||||||||||||||||||||||
Maven Research, Inc.–Preferred shares, Series C | 318,979 | — | — | — | — | — | — | % | ||||||||||||||||||||
Maven Research, Inc.–Preferred shares, Series B | 49,505 | — | — | — | — | — | — | % | ||||||||||||||||||||
Total Knowledge Networks | — | — | — | — | — | — | % | |||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series C-2 6%(8) | — | — | — | (2,414,178 | ) | 2,414,178 | — | — | % | |||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series B 6%(8) | — | — | — | (4,999,999 | ) | 4,999,999 | — | — | % | |||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series A 6%(8) | — | — | — | (3,000,200 | ) | 3,000,200 | — | — | % | |||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series Seed 6%(8) | — | — | — | (500,000 | ) | 500,000 | — | — | % | |||||||||||||||||||
Total Digital Media Platform | — | — | (10,914,377 | ) | 10,914,377 | — | — | % | ||||||||||||||||||||
Interactive Learning | ||||||||||||||||||||||||||||
StormWind, LLC–Preferred shares, Series D 8%(5) | 329,337 | — | 533,429 | — | 29,610 | 563,039 | 0.30 | % | ||||||||||||||||||||
StormWind, LLC–Preferred shares, Series C 8%(5) | 2,779,134 | — | 5,675,081 | — | 277,529 | 5,952,610 | 3.19 | % | ||||||||||||||||||||
StormWind, LLC–Preferred shares, Series B 8%(5) | 3,279,629 | — | 3,550,631 | — | 294,866 | 3,845,497 | 2.06 | % | ||||||||||||||||||||
StormWind, LLC–Preferred shares, Series A 8%(5) | 366,666 | — | 191,694 | — | 32,966 | 224,660 | 0.12 | % | ||||||||||||||||||||
Total Interactive Learning | — | 9,950,835 | — | 634,971 | 10,585,806 | 5.67 | % | |||||||||||||||||||||
Total Preferred Stock | — | 9,950,835 | (10,914,377 | ) | 11,549,348 | 10,585,806 | 5.67 | % | ||||||||||||||||||||
Options | ||||||||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||
Ozy Media, Inc.–Common Warrants, Strike Price $4/9/2028(8) , Expiration Date | — | $ | — | $ | — | $ | (30,647 | ) | $ | 30,647 | $ | — | — | % | ||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.)–Preferred Warrant Series B, Strike Price $12/31/2023 , Expiration Date | 250,000 | — | — | — | — | — | — | % | ||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.)–Derivative Security, Expiration Date 8/23/2024(6) | 1 | — | 652,127 | — | (652,127 | ) | — | — | % | |||||||||||||||||||
Total Global Innovation Platform | — | 652,127 | — | (652,127 | ) | — | — | % | ||||||||||||||||||||
Total Options | — | 652,127 | (30,647 | ) | (621,480 | ) | — | — | % | |||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||
Online Education | ||||||||||||||||||||||||||||
Curious.com, Inc.–Common shares | 1,135,944 | — | — | — | — | — | — | % | ||||||||||||||||||||
Total Common Stock | — | — | — | — | — | — | % | |||||||||||||||||||||
TOTAL NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | $ | — | $ | 12,591,162 | $ | (10,945,025) | $ | 9,900,060 | $ | 11,546,197 | 6.18 | % |
30 |
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2016 | Purchases, Capitalized Fees, Interest and Amortization | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at September 30, 2017 | Percentage of Net Assets | |||||||||||||||||||||||||||
CONTROLLED INVESTMENTS*(2) | ||||||||||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Convertible Promissory Note 8% Due 07/31/2018*** | 560,199 | $ | 77,151 | $ | 427,900 | $ | 105,890 | $ | — | $ | — | $ | 26,409 | $ | 560,199 | 0.27 | % | |||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Unsecured Promissory Note 12% Due 5/29/2017***(4) | — | 50,146 | 496,725 | 24,195 | (526,000 | ) | — | 5,080 | — | 0.00 | % | |||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Unsecured Promissory Note 12% Due 11/29/2017***(4) | 557,735 | 69,237 | — | 533,353 | — | — | 0 | 533,353 | 0.25 | % | ||||||||||||||||||||||||||
Total Global Innovation Platform | 196,534 | 924,625 | 663,438 | (526,000 | ) | — | 31,489 | 1,093,552 | 0.52 | % | ||||||||||||||||||||||||||
Total Debt Investments | $ | 196,534 | $ | 924,625 | $ | 663,438 | $ | (526,000 | ) | $ | — | $ | 31,489 | $ | 1,093,552 | 0.52 | % | |||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) – Preferred shares, Class A*** | 14,300,000 | 475,000 | 4,309,778 | — | — | — | (2,942,585 | ) | 1,367,193 | 0.65 | % | |||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-4 | 3,720,424 | — | 2,715,910 | — | — | — | 2,473,438 | 5,189,348 | 2.48 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-3 | 1,561,625 | — | 952,591 | — | — | — | 862,573 | 1,815,164 | 0.87 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-2 | 450,001 | — | 166,500 | — | — | — | 147,336 | 313,836 | 0.15 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-1 | 1,000,000 | — | 270,000 | — | — | — | 253,060 | 523,060 | 0.25 | % | ||||||||||||||||||||||||||
Total Global Innovation Platform | — | 4,105,001 | — | — | — | 3,736,407 | 7,841,408 | 3.75 | % |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2016 | Purchases, Capitalized Fees, Interest and Amortization | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at September 30, 2017 | Percentage of Net Assets | |||||||||||||||||||||||||||
Interactive Learning | ||||||||||||||||||||||||||||||||||||
StormWind, LLC(3) – Preferred shares, Series C | 2,779,134 | $ | — | $ | 4,650,838 | $ | — | $ | — | $ | — | $ | 3,205,182 | $ | 7,856,020 | 3.75 | % | |||||||||||||||||||
StormWind, LLC(3) – Preferred shares, Series B | 3,279,629 | — | 4,470,403 | — | — | — | 1,529,645 | 6,000,048 | 2.86 | % | ||||||||||||||||||||||||||
StormWind, LLC(3) – Preferred shares, Series A | 366,666 | — | 499,796 | — | — | — | 8,945 | 508,741 | 0.24 | % | ||||||||||||||||||||||||||
Total Interactive Learning | — | 9,621,037 | — | — | — | 4,743,772 | 14,364,809 | 6.85 | % | |||||||||||||||||||||||||||
Total Preferred Stock | $ | 475,000 | $ | 18,035,816 | $ | — | $ | — | $ | — | $ | 5,537,594 | $ | 23,573,410 | 11.25 | % | ||||||||||||||||||||
Warrants | ||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-3 – Strike Price $1.33, Expiration Date 4/4/2019 | 187,500 | $ | — | $ | 5,625 | $ | — | $ | — | $ | — | $ | 7,500 | $ | 13,125 | 0.01 | % | |||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33, Expiration Date 10/6/2019 | 500,000 | — | 40,000 | — | — | — | 125,000 | 165,000 | 0.08 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33, Expiration Date 7/18/2021 | 250,000 | — | 22,500 | — | — | — | 77,500 | 100,000 | 0.05 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33, Expiration Date 11/29/2021 | 100,000 | — | 9,000 | — | — | — | 31,000 | 40,000 | 0.02 | % | ||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series B – Strike Price $2.31, Expiration Date 5/29/2022(4) | 125,000 | — | — | 70,379 | — | — | 10,871 | 81,250 | 0.04 | % | ||||||||||||||||||||||||||
Total Global Innovation Platform | — | 77,125 | 70,379 | — | — | 251,871 | 399,375 | 0.20 | % | |||||||||||||||||||||||||||
Total Warrants | $ | — | $ | 77,125 | $ | 70,379 | $ | — | $ | — | $ | 251,871 | $ | 399,375 | 0.20 | % | ||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) – Common shares | 100,000 | — | — | — | — | — | — | — | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2016 | Purchases, Capitalized Fees, Interest and Amortization | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at September 30, 2017 | Percentage of Net Assets | |||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Common shares | 200,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00 | % | |||||||||||||||||||
Total Common Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00 | % | ||||||||||||||||||||
TOTAL CONTROLLED INVESTMENTS*(2) | $ | 671,534 | $ | 19,037,566 | $ | 733,817 | $ | (526,000 | ) | $ | — | $ | 5,820,954 | $ | 25,066,337 | 11.97 | % | |||||||||||||||||||
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | ||||||||||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||||||||||
Corporate Education | ||||||||||||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Senior Subordinated Convertible Promissory Note 8% Due 11/26/2018 ***(6) | 1,166,400 | $ | 69,792 | $ | 1,166,400 | $ | — | $ | — | $ | — | $ | — | $ | 1,166,400 | 0.56 | % | |||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||
Ozy Media, Inc – Convertible Promissory Note 5%, Due 02/28/2018*** | 2,000,000 | 74,795 | 2,000,000 | — | — | — | — | 2,000,000 | 0.95 | % | ||||||||||||||||||||||||||
Social Cognitive Learning | ||||||||||||||||||||||||||||||||||||
Declara, Inc. – Convertible Promissory Note 9% Due 12/31/2017***(8) | 2,120,658 | (523 | ) | 2,827,020 | 800 | — | — | (617,409 | ) | 2,210,411 | 1.06 | % | ||||||||||||||||||||||||
Sports Analytics | ||||||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Promissory Note, 12%, 11/17/2017*** | 28,008 | $ | (90 | ) | $ | 26,544 | $ | 3,289 | $ | — | $ | — | $ | (29,833 | ) | $ | — | 0.00 | % | |||||||||||||||||
Total Debt Investments | $ | 143,974 | $ | 6,019,964 | $ | 4,089 | $ | — | $ | — | $ | (647,242 | ) | $ | 5,376,811 | 2.57 | % | |||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||
Corporate Education | ||||||||||||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Convertible preferred shares, Series D | 169,033 | — | 775,861 | — | — | — | — | 775,861 | 0.37 | % | ||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Convertible preferred shares, Series C | 615,763 | — | 1,913,484 | — | — | — | (607,088 | ) | 1,306,396 | 0.62 | % | |||||||||||||||||||||||||
Total Corporate Education | — | 2,689,345 | — | — | — | (607,088 | ) | 2,082,257 | 0.99 | % | ||||||||||||||||||||||||||
Globally-Focused Private School | ||||||||||||||||||||||||||||||||||||
Whittle Schools, LLC(5) – Preferred shares, Series B | 3,000,000 | — | 3,000,000 | — | — | — | — | 3,000,000 | 1.43 | % | ||||||||||||||||||||||||||
Online Education | ||||||||||||||||||||||||||||||||||||
Curious.com, Inc. – Preferred shares, Series B | 3,407,834 | — | 9,984,954 | 280 | — | — | (4,025,047 | ) | 5,960,187 | 2.85% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2016 | Purchases, Capitalized Fees, Interest and Amortization | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at September 30, 2017 | Percentage of Net Assets | |||||||||||||||||||||||||||
Sports Analytics | ||||||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred shares, Series A | 1,864,495 | $ | — | $ | 484,769 | $ | — | $ | — | $ | — | $ | (484,769 | ) | $ | — | 0.00 | % | ||||||||||||||||||
Social Cognitive Learning | ||||||||||||||||||||||||||||||||||||
Declara, Inc. – Preferred shares, Series A | 10,716,390 | — | 4,786,654 | — | — | — | (3,991,885 | ) | 794,769 | 0.38 | % | |||||||||||||||||||||||||
Education Media Platform | ||||||||||||||||||||||||||||||||||||
EdSurge, Inc. – Preferred shares, Series A-1 | 378,788 | — | 500,000 | — | — | — | — | 500,000 | 0.24 | % | ||||||||||||||||||||||||||
EdSurge, Inc. – Preferred shares, Series A | 494,365 | — | 588,294 | — | — | — | (88,293 | ) | 500,001 | 0.24 | % | |||||||||||||||||||||||||
Total Education Media Platform | — | 1,088,294 | — | — | — | (88,293 | ) | 1,000,001 | 0.48 | % | ||||||||||||||||||||||||||
Education Technology | ||||||||||||||||||||||||||||||||||||
Global Education Learning (Holdings) Ltd. **(9) – Preferred shares, Series A | — | — | — | — | — | (675,495 | ) | 675,495 | — | 0.00 | % | |||||||||||||||||||||||||
Knowledge Networks | ||||||||||||||||||||||||||||||||||||
Maven Research, Inc. -Preferred shares, Series C | 318,979 | — | 1,999,998 | — | — | — | (1,499,998 | ) | 500,000 | 0.24 | % | |||||||||||||||||||||||||
Maven Research, Inc. -Preferred shares, Series B | 49,505 | — | 223,763 | — | — | — | (173,887 | ) | 49,876 | 0.02 | % | |||||||||||||||||||||||||
Total Knowledge Networks | — | 2,223,761 | — | — | — | (1,673,885 | ) | 549,876 | 0.26 | % | ||||||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||
OzyMedia, Inc. – Preferred shares, Series B | 922,509 | — | 4,999,999 | — | — | — | (609,112 | ) | 4,390,887 | 2.10 | % | |||||||||||||||||||||||||
OzyMedia, Inc. – Preferred shares, Series A | 1,090,909 | — | 3,000,000 | — | — | — | (366,216 | ) | 2,633,784 | 1.26 | % | |||||||||||||||||||||||||
OzyMedia, Inc. – Preferred shares, Series Seed | 500,000 | — | 610,000 | — | — | — | (171,036 | ) | 438,964 | 0.21 | % | |||||||||||||||||||||||||
Total Digital Media Platform | — | 8,609,999 | — | — | — | (1,146,364 | ) | 7,463,635 | 3.57 | % | ||||||||||||||||||||||||||
Social Media | ||||||||||||||||||||||||||||||||||||
AlwaysOn, Inc. – Preferred shares, Series A-1(10) | — | $ | — | $ | — | $ | — | $ | — | $ | (876,023 | ) | $ | 876,023 | $ | — | 0.00 | % | ||||||||||||||||||
AlwaysOn, Inc. – Preferred shares, Series A(10) | — | — | — | — | — | (1,027,391 | ) | 1,027,391 | — | 0.00 | % | |||||||||||||||||||||||||
Total Social Media | — | — | — | — | (1,903,414 | ) | 1,903,414 | — | 0.00 | % | ||||||||||||||||||||||||||
Total Preferred Stock | $ | — | $ | 32,867,776 | $ | 280 | $ | — | $ | (2,578,909 | ) | $ | (9,438,422 | ) | $ | 20,850,725 | 9.95 | % | ||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||
Big Data Consulting | ||||||||||||||||||||||||||||||||||||
Strategic Data Command, LLC(7) – Common shares | 2,400,000 | — | 2,052,555 | — | — | — | 4,600 | 2,057,155 | 0.98% |
* | All portfolio investments are non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their IPO. |
** | Indicates assets that |
*** | Investment is income-producing. |
(1) |
(2) |
(3) | As of June 30, 2023, the investments noted had been placed on non-accrual status. |
(4) | 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. 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. |
(5) | SuRo Capital Corp.’s |
(6) | On |
(7) | Colombier Sponsor LLC is | |
(8) | On March 1, 2023, Ozy Media, Inc. |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)
Schedule of Investments In, and Advances to, Affiliates
Transactions during the year ended December 31, 20162022 involving the Company’s controlled investments and non-controlled/affiliate investments were as follows:
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2021 | Transfer In/ (Out) | Purchases, Capitalized Fees, Interest and Amortization | Sales | Realized Gains/(Losses) | Unrealized Gains/(Losses) | Fair Value at December 31, 2022 | Percentage of Net Assets | ||||||||||||||||||||||||||||||
CONTROLLED INVESTMENTS*(2) | ||||||||||||||||||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||||||||||||||
Special Purpose Acquisition Company | ||||||||||||||||||||||||||||||||||||||||
Colombier Sponsor LLC**–Class W Units(7) | 2,700,000 | $ | — | $ | 1,157,487 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,157,487 | 0.55 | % | |||||||||||||||||||||
Total Options | — | 1,157,487 | — | — | — | — | — | 1,157,487 | 0.55 | % | ||||||||||||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Preferred shares, Class A(4) | 14,300,000 | — | 1,047,033 | — | — | — | — | (63,005 | ) | 984,028 | 0.47 | % | ||||||||||||||||||||||||||||
Total Preferred Stock | — | 1,047,033 | — | — | — | — | (63,005 | ) | 984,028 | 0.47 | % | |||||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)–Common shares | 100,000 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Mobile Finance Technology | ||||||||||||||||||||||||||||||||||||||||
Architect Capital PayJoy SPV, LLC**–Membership Interest in Lending SPV*** | $ | 10,000,000 | 1,685,000 | 10,000,000 | — | — | — | — | — | 10,000,000 | 4.76 | % | ||||||||||||||||||||||||||||
Special Purpose Acquisition Company | ||||||||||||||||||||||||||||||||||||||||
Colombier Sponsor LLC**–Class B Units(7) | 1,976,033 | — | 1,554,354 | — | — | — | — | 1 | 1,554,355 | 0.74 | % | |||||||||||||||||||||||||||||
Total Common Stock | 1,685,000 | 11,554,354 | — | — | — | — | 1 | 11,554,355 | 5.50 | % | ||||||||||||||||||||||||||||||
TOTAL CONTROLLED INVESTMENTS*(2) | $ | 1,685,000 | $ | 13,758,874 | $ | — | $ | — | $ | — | $ | — | $ | (63,004 | ) | $ | 13,695,870 | 6.52 | % | |||||||||||||||||||||
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | ||||||||||||||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.) –Convertible Promissory Note 8%, Due 8/23/2024(3) | $ | 1,010,198 | $ | — | $ | 505,099 | $ | — | $ | — | $ | — | $ | — | $ | 1,483,101 | $ | 1,988,200 | 0.95 | % | ||||||||||||||||||||
Total Debt Investments | — | 505,099 | — | — | — | — | 1,483,101 | 1,988,200 | 0.95 | % | ||||||||||||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||||||
Knowledge Networks | ||||||||||||||||||||||||||||||||||||||||
Maven Research, Inc.–Preferred shares, Series C | 318,979 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Maven Research, Inc.–Preferred shares, Series B | 49,505 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Total Knowledge Networks | — | — | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series C-2 6% | 683,482 | — | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series B 6% | 922,509 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series A 6% | 1,090,909 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Ozy Media, Inc.–Preferred shares, Series Seed 6% | 500,000 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Total Digital Media Platform | — | — | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||
Interactive Learning | ||||||||||||||||||||||||||||||||||||||||
StormWind, LLC–Preferred shares, Series D 8%(5) | 329,337 | — | 621,093 | — | — | — | (87,664 | ) | 533,429 | 0.25 | % | |||||||||||||||||||||||||||||
StormWind, LLC–Preferred shares, Series C 8%(5) | 2,779,134 | — | 6,496,729 | — | — | — | — | (821,648 | ) | 5,675,081 | 2.70 | % | ||||||||||||||||||||||||||||
StormWind, LLC–Preferred shares, Series B 8%(5) | 3,279,629 | — | 4,423,607 | — | — | — | — | (872,976 | ) | 3,550,631 | 1.69 | % | ||||||||||||||||||||||||||||
StormWind, LLC–Preferred shares, Series A 8%(5) | 366,666 | — | 289,293 | — | — | — | — | (97,599 | ) | 191,694 | 0.09 | % | ||||||||||||||||||||||||||||
Total Interactive Learning | — | 11,830,722 | — | — | — | — | (1,879,887 | ) | 9,950,835 | 4.74 | % | |||||||||||||||||||||||||||||
Total Preferred Stock | — | 11,830,722 | — | — | — | — | (1,879,887 | ) | 9,950,835 | 4.74 | % | |||||||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||||||
Ozy Media, Inc.–Common Warrants, Strike Price $4/9/2028 , Expiration Date | 295,565 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | — | % | |||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.)–Preferred Warrant Series B, Strike Price $5/29/2022 , Expiration Date | — | — | — | — | — | — | (70,379 | ) | 70,379 | — | — | % | ||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.)–Preferred Warrant Series B, Strike Price $12/31/2023 , Expiration Date | 250,000 | — | 5,000 | — | — | — | — | (5,000 | ) | — | — | % | ||||||||||||||||||||||||||||
OneValley, Inc. (f/k/a NestGSV, Inc.)–Derivative Security, Expiration Date 8/23/2024(6) | 1 | — | 2,268,268 | — | — | — | — | (1,616,141 | ) | 652,127 | 0.31 | % | ||||||||||||||||||||||||||||
Total Global Innovation Platform | — | 2,273,268 | — | — | (70,379 | ) | (1,550,762 | ) | 652,127 | 0.31 | % | |||||||||||||||||||||||||||||
Total Options | — | 2,273,268 | — | — | — | (70,379 | ) | (1,550,762 | ) | 652,127 | 0.31 | % | ||||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||||
Online Education | ||||||||||||||||||||||||||||||||||||||||
Curious.com, Inc.–Common shares | 1,135,944 | — | — | — | — | — | — | — | — | — | % | |||||||||||||||||||||||||||||
Total Common Stock | — | — | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||
TOTAL NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | $ | — | $ | 14,609,089 | $ | — | $ | — | $ | — | $ | (70,379 | ) | $ | (1,947,548 | ) | $ | 12,591,162 | 6.00 | % |
32 |
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
CONTROLLED INVESTMENTS*(2) | ||||||||||||||||||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Convertible Promissory Note 8% Due 07/31/2017*** | 500,000 | $ | 16,889 | $ | — | $ | — | $ | 425,620 | $ | 31,972 | $ | — | $ | — | $ | (29,692 | ) | $ | 427,900 | 0.22 | % | ||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Convertible Promissory Note 8% Due 06/30/16*** | — | 48,248 | — | — | (500,000 | ) | 500,000 | — | — | — | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Promissory Note 10% Due 11/23/2016*** | — | 26,000 | — | — | — | 500,000 | (500,000 | ) | — | — | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Unsecured Promissory Note 12% Due 05/29/2017*** | 526,000 | 10,862 | — | — | — | 501,802 | — | — | $ | (5,077 | ) | 496,725 | 0.26 | % | ||||||||||||||||||||||||||||||
Total Global Innovation Platform | 101,999 | — | — | (74,380 | ) | 1,533,774 | (500,000 | ) | — | (34,769 | ) | 924,625 | 0.48 | % | ||||||||||||||||||||||||||||||
Total Debt Investments | $ | 101,999 | $ | — | $ | — | $ | (74,380 | ) | $ | 1,533,774 | $ | (500,000 | ) | $ | — | $ | (34,769 | ) | $ | 924,625 | 0.48 | % | |||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) – Preferred shares, Class A | 14,300,000 | — | 6,250,000 | — | — | — | — | — | (1,940,222 | ) | 4,309,778 | 2.24 | % |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred shares, Series D | — | $ | — | $ | 4,960,565 | $ | — | $ | (4,904,498 | ) | $ | — | $ | — | $ | — | $ | (56,067 | ) | $ | — | 0.00 | % | |||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred shares, Series C | — | — | 1,733,404 | — | (2,005,730 | ) | — | — | — | 272,326 | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred shares, Series B | — | — | — | — | (605,500 | ) | — | — | — | 605,500 | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred shares, Series A | — | — | — | — | (1,021,778 | ) | — | — | — | 1,021,778 | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-4 | 3,720,424 | — | — | — | 4,904,498 | — | — | — | (2,188,588 | ) | 2,715,910 | 1.41 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-3 | 1,561,625 | — | — | — | 2,005,730 | — | — | — | (1,053,139 | ) | 952,591 | 0.50 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-2 | 450,001 | — | — | — | 605,500 | — | — | — | (439,000 | ) | 166,500 | 0.09 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred stock Series A-1 | 1,000,000 | — | — | — | 1,021,778 | — | — | — | (751,778 | ) | 270,000 | 0.14 | % | |||||||||||||||||||||||||||||||
Total Global Innovation Platform | — | 6,693,969 | — | — | — | — | — | (2,588,968 | ) | 4,105,001 | 2.14 | % | ||||||||||||||||||||||||||||||||
Interactive Learning | — | |||||||||||||||||||||||||||||||||||||||||||
StormWind, LLC – Preferred shares, Series C(4) | 2,779,134 | $ | — | $ | 4,599,718 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 51,120 | $ | 4,650,838 | 2.42% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
StormWind, LLC – Preferred shares, Series B(4) | 3,279,629 | $ | — | $ | 4,633,228 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (162,825 | ) | $ | 4,470,403 | 2.33 | % | ||||||||||||||||||||||
StormWind, LLC – Preferred shares, Series A (4) | 366,666 | — | 518,000 | — | — | — | — | — | (18,204 | ) | 499,796 | 0.26 | % | |||||||||||||||||||||||||||||||
Total Interactive Learning | — | 9,750,946 | — | — | — | — | — | (129,909 | ) | 9,621,037 | 5.01 | % | ||||||||||||||||||||||||||||||||
Total Preferred Stock | $ | — | $ | 22,694,915 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (4,659,099 | ) | $ | 18,035,816 | 9.39 | % | |||||||||||||||||||||||
Warrants | ||||||||||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33333, Expiration Date 10/6/2019 | 500,000 | — | — | — | — | — | — | — | 40,000 | 40,000 | 0.02 | % | ||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33333, Expiration Date 7/18/2021 | 250,000 | — | — | — | 74,380 | — | — | — | (51,880 | ) | 22,500 | 0.01 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-4 – Strike Price $1.33333, Expiration Date 11/29/2021 | 100,000 | — | — | — | — | 29,275 | — | — | (20,275 | ) | 9,000 | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred Warrant Series A-3 – Strike Price $1.33333, Expiration Date 4/4/2019 | 187,500 | — | — | — | — | — | — | — | 5,625 | 5,625 | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred warrants, Series D – $1.33 Strike Price, Expiration Date 10/6/2019 | — | $ | — | $ | 145,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (145,000 | ) | $ | — | 0.00 | % | ||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred warrants, Series C – $1.33 Strike Price, Expiration Date 4/4/2019 | — | — | 31,875 | — | — | — | — | — | (31,875 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Preferred warrants Series D – Strike Price $1.33, Expiration Date 7/18/2021 | — | — | — | — | — | — | — | — | — | — | 0.00 | % | ||||||||||||||||||||||||||||||||
Total Global Innovation Platform | — | 176,875 | — | 74,380 | 29,275 | — | — | (203,405 | ) | 77,125 | 0.03 | % | ||||||||||||||||||||||||||||||||
Total Warrants | $ | — | $ | 176,875 | $ | — | $ | 74,380 | $ | 29,275 | $ | — | $ | — | $ | (203,405 | ) | $ | 77,125 | 0.03 | % | |||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||||||||
Global Innovation Platform | ||||||||||||||||||||||||||||||||||||||||||||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) – Common shares | 200,000 | — | — | — | — | — | — | — | — | — | 0.00 | % | ||||||||||||||||||||||||||||||||
Clean Technology | ||||||||||||||||||||||||||||||||||||||||||||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) – Common shares | 100,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00 | % | |||||||||||||||||||||||
Total Common Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00 | % | ||||||||||||||||||||||||
TOTAL CONTROLLED INVESTMENTS*(2) | $ | 101,999 | $ | 22,871,790 | $ | — | $ | — | $ | 1,563,049 | $ | (500,000 | ) | $ | — | $ | (4,897,273 | ) | $ | 19,037,566 | 9.90% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
NON-CONTROLLED/AFFILIATE INVESTMENTS*(1) | ||||||||||||||||||||||||||||||||||||||||||||
Debt Investments | ||||||||||||||||||||||||||||||||||||||||||||
Corporate Education | ||||||||||||||||||||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Senior Subordinated Convertible Promissory Note 8% Due 11/26/2018***(5) | 1,166,400 | $ | 87,318 | $ | 1,080,000 | $ | — | $ | — | $ | 86,400 | $ | — | $ | — | $ | — | $ | 1,166,400 | 0.61 | % | |||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||||||||||
Ozy Media, Inc. – Convertible Promissory Note 5%, Due 02/28/2018*** | 2,000,000 | 33,700 | — | — | — | 2,000,000 | — | — | — | 2,000,000 | 1.04 | % | ||||||||||||||||||||||||||||||||
Social Cognitive Learning | ||||||||||||||||||||||||||||||||||||||||||||
Declara, Inc. – Convertible Promissory Note 9% Due 6/30/2017*** | 2,120,658 | 120,523 | 2,000,000 | — | — | 120,658 | — | — | 706,362 | 2,827,020 | 1.47 | % | ||||||||||||||||||||||||||||||||
Sports Analytics | ||||||||||||||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Promissory Note, 12%, 11/17/2017*** | 25,000 | 3,304 | 25,000 | — | — | 736 | — | — | 808 | 26,544 | 0.01 | % | ||||||||||||||||||||||||||||||||
Business Education | ||||||||||||||||||||||||||||||||||||||||||||
Fullbridge, Inc. – Convertible Promissory Note, 10% Due 3/2/2016(8) | — | (85,829 | ) | 1,020,859 | (354,075 | ) | — | 400 | — | — | (667,184 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||
Fullbridge, Inc. – Convertible Promissory Note, 10% Due 3/14/2017(8) | — | — | — | (935,849 | ) | — | 1,000,000 | — | — | (64,151 | ) | — | 0.00 | % | ||||||||||||||||||||||||||||||
Total Business Education | (85,829 | ) | 1,020,859 | (1,289,924 | ) | — | 1,000,400 | — | — | (731,335 | ) | — | 0.00 | % | ||||||||||||||||||||||||||||||
Total Debt Investments | $ | 159,016 | $ | 4,125,859 | $ | (1,289,924 | ) | $ | — | $ | 3,208,194 | $ | — | $ | — | $ | (24,165 | ) | $ | 6,019,964 | 3.13% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||
Corporate Education | ||||||||||||||||||||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Convertible preferred shares, Series D | 169,033 | $ | — | $ | 775,861 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 775,861 | 0.40 | % | |||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Convertible preferred shares, Series C | 615,763 | — | 1,959,127 | — | — | — | — | — | (45,643 | ) | 1,913,484 | 1.00 | % | |||||||||||||||||||||||||||||||
Total Corporate Education | — | 2,734,988 | — | — | — | — | — | (45,643 | ) | 2,689,345 | 1.40 | % | ||||||||||||||||||||||||||||||||
Globally-Focused Private School | ||||||||||||||||||||||||||||||||||||||||||||
Whittle Schools, LLC – Preferred shares, Series B(3) | 3,000,000 | $ | — | $ | 3,000,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,000,000 | 1.56 | % | |||||||||||||||||||||||
Online Education | ||||||||||||||||||||||||||||||||||||||||||||
Curious.com Inc. – Preferred shares, Series B | 3,407,834 | — | 9,996,311 | — | — | 2,000,003 | — | — | (2,011,360 | ) | 9,984,954 | 5.20 | % | |||||||||||||||||||||||||||||||
Sports Analytics | ||||||||||||||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred shares, Series A | 1,864,495 | — | 1,156,175 | — | — | — | — | — | (671,406 | ) | 484,769 | 0.26 | % | |||||||||||||||||||||||||||||||
Social Cognitive Learning | ||||||||||||||||||||||||||||||||||||||||||||
Declara, Inc. – Preferred shares, Series A | 10,716,390 | — | 9,999,999 | — | — | — | — | — | (5,213,345 | ) | 4,786,654 | 2.49 | % | |||||||||||||||||||||||||||||||
Education Media Platform | ||||||||||||||||||||||||||||||||||||||||||||
EdSurge, Inc. – Preferred shares, Series A-1 | 378,788 | — | 500,000 | — | — | 400 | — | — | (400 | ) | 500,000 | 0.26 | % | |||||||||||||||||||||||||||||||
EdSurge, Inc. – Preferred shares, Series A | 494,365 | — | 524,867 | — | — | — | — | — | 63,427 | 588,294 | 0.31 | % | ||||||||||||||||||||||||||||||||
Total Education Media Platform | — | 1,024,867 | — | — | 400 | — | — | 63,027 | 1,088,294 | 0.57% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Education Technology | ||||||||||||||||||||||||||||||||||||||||||||
Global Education Learning (Holdings) Ltd. – Preferred shares, Series A ** | 2,126,475 | $ | — | $ | — | $ | — | $ | — | $ | 120 | $ | — | $ | — | $ | (120 | ) | $ | — | 0.00 | % | ||||||||||||||||||||||
Knowledge Networks | ||||||||||||||||||||||||||||||||||||||||||||
Maven Research, Inc. – Preferred shares, Series C | 318,979 | — | 1,999,998 | — | — | — | — | — | — | 1,999,998 | 1.04 | % | ||||||||||||||||||||||||||||||||
Maven Research, Inc. – Preferred shares, Series B | 49,505 | — | 249,691 | — | — | — | — | — | (25,928 | ) | 223,763 | 0.12 | % | |||||||||||||||||||||||||||||||
Total Knowledge Networks | — | 2,249,689 | — | — | — | — | — | (25,928 | ) | 2,223,761 | 1.16 | % | ||||||||||||||||||||||||||||||||
Digital Media Platform | ||||||||||||||||||||||||||||||||||||||||||||
Ozy Media, Inc. – Preferred shares, Series B | 922,509 | — | 4,690,178 | — | — | — | — | — | 309,821 | 4,999,999 | 2.60 | % | ||||||||||||||||||||||||||||||||
Ozy Media, Inc. – Preferred shares, Series A | 1,090,909 | — | 3,907,004 | — | — | — | — | — | (907,004 | ) | 3,000,000 | 1.56 | % | |||||||||||||||||||||||||||||||
Ozy Media, Inc. – Preferred shares, Series Seed | 500,000 | — | 1,531,812 | — | — | — | — | — | (921,812 | ) | 610,000 | 0.32 | % | |||||||||||||||||||||||||||||||
Total Digital Media Platform | — | 10,128,994 | — | — | — | — | — | (1,518,995 | ) | 8,609,999 | 4.48 | % | ||||||||||||||||||||||||||||||||
Social Media | ||||||||||||||||||||||||||||||||||||||||||||
AlwaysOn, Inc. – Preferred shares, Series A-1 | 4,465,925 | — | 133,978 | — | — | — | — | — | (133,978 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
AlwaysOn, Inc. – Preferred shares, Series A | 1,066,626 | — | 191,993 | — | — | — | — | — | (191,993 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Total Social Media | — | 325,971 | — | — | — | — | — | (325,971 | ) | — | 0.00 | % | ||||||||||||||||||||||||||||||||
Business Education | ||||||||||||||||||||||||||||||||||||||||||||
Fullbridge, Inc. – Preferred shares, Series D(8) | — | — | 3,111,714 | — | — | 1,040 | — | — | (3,112,754 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Preferred shares, Series C(8) | — | — | 1,625,001 | — | — | — | — | — | (1,625,001 | ) | — | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Total Business Education | $ | — | $ | 4,736,715 | $ | — | $ | — | $ | 1,040 | $ | — | $ | — | $ | (4,737,755 | ) | $ | — | 0.00 | % | |||||||||||||||||||||||
Cash Payment Network | ||||||||||||||||||||||||||||||||||||||||||||
Handle Financial, Inc. (f/k/a PayNearMe, Inc.) – Preferred shares, Series E(8) | — | $ | — | $ | 13,974,887 | $ | (13,974,887 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00 | % | ||||||||||||||||||||||
Total Preferred Stock | $ | — | $ | 59,328,596 | $ | (13,974,887 | ) | $ | — | $ | 2,001,563 | $ | — | $ | — | $ | (14,487,496 | ) | $ | 32,867,776 | 17.11 | % | ||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||||||||
Big Data Consulting | ||||||||||||||||||||||||||||||||||||||||||||
Strategic Data Command, LLC – Common shares(7) | 2,400,000 | — | 1,001,650 | — | — | — | — | — | 1,050,905 | 2,052,555 | 1.07 | % | ||||||||||||||||||||||||||||||||
Globally-Focused Private School | ||||||||||||||||||||||||||||||||||||||||||||
Whittle Schools, LLC – Common shares(3) | 229 | — | 1,500,000 | — | — | — | — | — | — | 1,500,000 | 0.78 | % | ||||||||||||||||||||||||||||||||
Consumer Health Technology | ||||||||||||||||||||||||||||||||||||||||||||
Orchestra One, Inc. (f/k/a Learnist Inc.) – Common shares (6) | 57,026 | — | 4,364 | (4,364 | ) | — | — | — | — | — | — | 0.00 | % | |||||||||||||||||||||||||||||||
Total Common Stock | $ | — | $ | 2,506,014 | $ | (4,364 | ) | $ | — | $ | — | $ | — | $ | — | $ | 1,050,905 | $ | 3,552,555 | 1.85 | % | |||||||||||||||||||||||
Warrants | ||||||||||||||||||||||||||||||||||||||||||||
Sports Analytics | ||||||||||||||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred warrants, $1.17 Strike Price, Expiration Date 11/18/2022 | 5,360 | — | 429 | — | — | — | — | — | (429 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred warrants, $1.17 Strike Price, Expiration Date 8/29/2021 | 175,815 | — | 14,065 | — | — | — | — | — | (14,065 | ) | — | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred warrants, $1.17 Strike Price, Expiration Date 6/26/2021 | 38,594 | $ | — | $ | 3,088 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3,088 | ) | $ | — | 0.00 | % | ||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred warrants, $1.17 Strike Price, Expiration Date 9/30/2020 | 160,806 | — | 12,864 | — | — | — | — | — | (12,864 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Circle Media (f/k/a S3 Digital Corp. (d/b/a S3i)) – Preferred warrants, $1.00 Strike Price, Expiration Date 11/21/2017 | 500,000 | — | 55,000 | — | — | — | — | — | (55,000 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Total Sports Analytics | — | 85,446 | — | — | — | — | — | (85,446 | ) | — | 0.00 | % | ||||||||||||||||||||||||||||||||
Corporate Education | ||||||||||||||||||||||||||||||||||||||||||||
CUX, Inc. (d/b/a CorpU) – Preferred warrants, $4.59 Strike Price, Expiration Date 2/25/2018 | 16,903 | — | 10,142 | — | — | — | — | — | (5,747 | ) | 4,395 | 0.00 | % | |||||||||||||||||||||||||||||||
Social Media | ||||||||||||||||||||||||||||||||||||||||||||
AlwaysOn, Inc. – Preferred warrants Series A, $1.00 Strike Price, Expiration Date 1/9/2017 | 109,375 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
Business Education | ||||||||||||||||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 3/2/2020(8) | — | $ | — | $ | 2,831 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (2,831 | ) | $ | — | 0.00 | % | ||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 3/22/2020(8) | — | — | 1,862 | — | — | — | — | — | (1,862 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 5/16/2019(8) | — | — | 1,923 | — | — | — | — | — | (1,923 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 4/3/2019(8) | — | — | 4,121 | — | — | — | — | — | (4,121 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 10/10/2018(8) | — | — | 824 | — | — | — | — | — | (824 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 12/11/2018(8) | — | — | 824 | — | — | — | — | — | (824 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Fullbridge, Inc. – Common warrants, $0.91 Strike Price, Expiration Date 2/18/2019(8) | — | — | 7,143 | — | — | — | — | — | (7,143 | ) | — | 0.00 | % | |||||||||||||||||||||||||||||||
Total Business Education | — | 19,528 | — | — | — | — | — | (19,528 | ) | — | 0.00 | % | ||||||||||||||||||||||||||||||||
Total Warrants | $ | — | $ | 115,116 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (110,721 | ) | $ | 4,395 | 0.00% |
Schedule of Investments In and Advances To Affiliates | ||||||||||||||||||||||||||||||||||||||||||||
Type/Industry/Portfolio Company/Investment | Principal/ Quantity | Interest, Fees, or Dividends Credited in Income | Fair Value at December 31, 2015 | Transfer from Control Investment to Non-Control/ Non-Affiliate Investment | Corporate Action | Purchases | Sales | Realized Gains/ (Losses) | Unrealized Gains/ (Losses) | Fair Value at December 31, 2016 | Percentage of Net Assets | |||||||||||||||||||||||||||||||||
TOTAL NON-CONTROLLED/ AFFILIATE INVESTMENTS*(1) | $ | 159,016 | $ | 66,075,585 | $ | (15,269,175 | ) | $ | — | $ | 5,209,757 | $ | — | $ | — | $ | (13,571,477 | ) | $ | 42,444,690 | 22.09 | % |
* | All portfolio investments are non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their IPO. |
** | Indicates assets that |
*** | Investment is income-producing. |
(1) |
(2) |
(3) | As of December 31, 2022, the investments noted had been placed on non-accrual status. |
(4) | 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. 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. |
(5) | SuRo Capital Corp.’s |
(6) |
(7) | Colombier Sponsor LLC is |
33 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)2023
NOTE 3 — INVESTMENTS AT FAIR VALUE – (continued)(8)GSV Capital Corp.’s ownership percentage in Handle Financial, Inc. (f/k/a PayNearMe, Inc.) and Fullbridge, Inc. decreased to below 5% and, as such, Handle Financial, Inc. (f/k/a PayNearMe, Inc.) and Fullbridge, Inc. are no longer classified as “affiliate investments” as of December 31, 2016. As such, the Company has reflected a “transfer out” of the “Affiliate Investment” category above as of December 31, 2016 to indicate that the investment in Handle Financial, Inc. (f/k/a PayNearMe, Inc.) and Fullbridge, Inc., while still held as of December 31, 2016, does not meet the criteria of an affiliate investment as defined in the Investment Company Act of 1940.
5—COMMON STOCKNOTE 4 — SHARE REPURCHASE PROGRAM, EQUITY OFFERINGS AND RELATED EXPENSES
Share Repurchase Program
On August 7,8, 2017, the Company’s board of directors authorizedCompany announced a $ million discretionary open-market share repurchase program of shares of the Company’s common stock, $0.01$ par value per share, of up to $5.0$ million until the earlier of (i) August 6, 2018 or (ii) the repurchase of $5.0$ million in aggregate amount of the Company’s common stock (the “Share Repurchase Program”). During each of the three and nine months ended September 30,On November 7, 2017, the Company repurchased 574,109Company’s Board of Directors authorized an extension of, and an increase in the amount of shares of the Company’s common stock pursuant tothat may be repurchased under the discretionary Share Repurchase Program for anuntil the earlier of (i) November 6, 2018 or (ii) the repurchase of $ million in aggregate amount of $2,800,810. For more information on the Share Repurchase Program, see “Part II. Item 2. Unregistered SalesCompany’s common stock. On May 3, 2018, the Company’s Board of Equity Securities and UseDirectors authorized a $ million increase in the amount of Proceeds.”
No new shares of the Company’s common stock were issued duringthat may be repurchased under the ninediscretionary Share Repurchase Program until the earlier of (i) November 6, 2018 or (ii) the repurchase of $ million in aggregate amount of the Company’s common stock. On November 1, 2018, our Board of Directors authorized a $ million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) October 31, 2019 or (ii) the repurchase of $ million in aggregate amount of our common stock. On August 5, 2019, our Board of Directors authorized a $ million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) August 4, 2020 or (ii) the repurchase of $ million in aggregate amount of our common stock. On March 9, 2020, our Board of Directors authorized a $ million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) March 8, 2021 or (ii) the repurchase of $ million in aggregate amount of our common stock. On October 28, 2020, our Board of Directors authorized a $ million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) October 31, 2021 or (ii) the repurchase of $ million in aggregate amount of our common stock. On October 27, 2021, our Board of Directors approved an extension of the Share Repurchase Program until the earlier of (i) October 31, 2022 or (ii) the repurchase of $ million in aggregate amount of our common stock. On March 13, 2022, our Board of Directors authorized a $ million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) October 31, 2022 or (ii) the repurchase of $ million in aggregate amount of our common stock. On October 19, 2022, the Company’s Board of Directors approved an extension of the Share Repurchase Program until the earlier of (i) October 31, 2023 or (ii) the repurchase of $ million in aggregate amount of the Company’s common stock.
The timing and number of shares to be repurchased will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate the Company to acquire any specific number of shares of its common stock. Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market provided that it complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act.
During the three and six months ended SeptemberJune 30, 20172023, the Company did t repurchase any shares of the Company’s common stock under the Share Repurchase Program. During the three and 2016, respectively.six months ended June 30, 2022, the Company repurchased and shares of the Company’s common stock under the Share Repurchase Program. As of June 30, 2023, the dollar value of shares that remained available to be purchased by the Company under the Share Repurchase Program was approximately $million.
Modified Dutch Auction Tender Offer
On March 17, 2023, the Company commenced a modified “Dutch Auction” tender offer (the “Modified Dutch Auction Tender Offer”) to purchase up to shares of its common stock from its stockholders, which expired on April 17, 2023. In accordance with the terms of the Modified Dutch Auction Tender Offer, the Company selected the lowest price per share of not less than $ per share and not greater than $ per share.
Pursuant to the Modified Dutch Auction Tender Offer, the Company repurchased 10.6% of its outstanding shares, on or about April 21, 2023 at a price of $ per share. The Company used available cash to fund the purchase of its shares of common stock in the Modified Dutch Auction Tender Offer and to pay for all related fees and expenses. shares, representing
Amended and Restated 2019 Equity Incentive Plan
Refer to “Note 11—Stock-Based Compensation” for a description of the Company’s restricted shares of common stock granted under the Amended & Restated 2019 Equity Incentive Plan (as defined therein).
34 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
At-the-Market Offering
On July 29, 2020, the Company entered into an At-the-Market Sales Agreement, dated July 29, 2020 (the “Initial Sales Agreement”), with BTIG, LLC, JMP Securities LLC and Ladenburg Thalmann & Co., Inc. (collectively, the “Agents”). Under the Initial Sales Agreement, the Company may, but has no obligation to, issue and sell up to $50.0 million in aggregate amount of shares of its common stock (the “Shares”) from time to time through the Agents or to them as principal for their own account (the “ATM Program”). On September 23, 2020, the Company increased the maximum amount of Shares to be sold through the ATM Program to $150.0 million from $50.0 million. In connection with the upsize of the ATM Program to $150.0 million, the Company entered into Amendment No. 1 to the At-the-Market Sales Agreement, dated September 23, 2020, with the Agents (the “Amendment No. 1 to the Sales Agreement,” and together with the Initial Sales Agreement, the “Sales Agreement”). The Company intends to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with its investment objective and strategy and for general corporate purposes.
Sales of the Shares, if any, will be made by any method that is deemed to be an “at-the-market” offering as defined in Rule 415 under the Securities Act, including sales made directly on the Nasdaq Global Select Market or sales made to or through a market maker other than on an exchange, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at other negotiated prices. Actual sales in the ATM Program will depend on a variety of factors to be determined by the Company from time to time.
The Agents will receive a commission from the Company equal to up to 2.0% of the gross sales price of any Shares sold through the Agents under the Sales Agreement and reimbursement of certain expenses. The Sales Agreement contains customary representations, warranties and agreements of the Company, conditions to closing, indemnification rights and obligations of the parties and termination provisions.
During the three and six months ended June 30, 2017(Unaudited)2023, the Company did 231,677 and net proceeds of $229,896, after deducting commissions to the Agents on Shares sold. As of June 30, 2023, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.
t issue or sell shares under the ATM program. During the three and six months ended June 30, 2022, the Company issued and sold and shares, respectively, under the ATM Program at weighted-average price of $ per share, for gross proceeds of $
SCHEDULE OF BASIC AND DILUTED COMMON SHARE
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Earnings per common share–basic: | ||||||||||||||||
Net change in net assets resulting from operations | $ | (15,620,024 | ) | $ | (94,339,688 | ) | $ | (11,003,515 | ) | $ | (73,883,233 | ) | ||||
Weighted-average common shares–basic | 25,952,447 | 30,633,878 | 27,158,786 | 30,929,321 | ||||||||||||
Earnings per common share–basic | $ | (0.60 | ) | $ | (3.08 | ) | $ | (0.41 | ) | $ | (2.39 | ) | ||||
Earnings per common share–diluted: | ||||||||||||||||
Net change in net assets resulting from operations | $ | (15,620,024 | ) | $ | (94,339,688 | ) | $ | (11,003,515 | ) | $ | (73,883,233 | ) | ||||
Weighted-average common shares outstanding–diluted(1) | 25,952,447 | 30,633,878 | 27,158,786 | 30,929,321 | ||||||||||||
Earnings per common share–diluted | $ | (0.60 | ) | $ | (3.08 | ) | $ | (0.41 | ) | $ | (2.39 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Earnings/(loss) per common share – basic: | ||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | $ | 10,071,004 | $ | (2,273,339 | ) | $ | 20,051,965 | $ | (43,503,968 | ) | ||||||
Weighted-average common shares – basic | 22,000,571 | 22,181,003 | 22,120,198 | 22,181,003 | ||||||||||||
Earnings/(loss) per common share – basic: | $ | 0.46 | $ | (0.10 | ) | $ | 0.91 | $ | (1.96 | ) | ||||||
Earnings/(loss) per common share – diluted: | ||||||||||||||||
Net increase/(decrease) in net assets resulting from operations, before adjustments | $ | 10,071,004 | $ | (2,273,339 | ) | $ | 20,051,965 | $ | (43,503,968 | ) | ||||||
Adjustments for interest on Convertible Senior Notes and deferred debt issuance costs | 1,124,917 | — | 3,366,801 | — | ||||||||||||
Net increase/(decrease) in net assets resulting from operations, as adjusted | 11,195,921 | (2,273,339 | ) | 23,418,766 | (43,503,968 | ) | ||||||||||
Weighted-average common shares outstanding – basic | 22,000,571 | 22,181,003 | 22,120,198 | 22,181,003 | ||||||||||||
Adjustments for dilutive effect of Convertible Senior Notes(1) | 5,751,815 | — | 5,751,815 | — | ||||||||||||
Weighted-average common shares outstanding – diluted | 27,752,386 | 22,181,003 | 27,872,013 | 22,181,003 | ||||||||||||
Earnings/(loss) per common share – diluted | $ | 0.40 | $ | (0.10 | ) | $ | 0.84 | $ | (1.96 | ) |
(1) | For |
35 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
NOTE 6 — 7—COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. At SeptemberAs of June 30, 2017 and December 31, 2016,2023, the Company had not entered into anyapproximately $5.8 million in non-binding investment agreements that required it to make a future investment in a portfolio company.
The Company is currently not subject to any material legal proceedings, nor, to its knowledge, is any material legal proceeding threatened against it.
From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of its
rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon its business, financial condition or results of operations. The Company is not currently a party to any material legal proceedings.
Operating Leases and Related Deposits
The Company currently has one operating lease for office space for which the Company has recorded a right-of-use asset and lease liability for the operating lease obligation. The lease commenced June 3, 2019 and expires July 31, 2024. The lease expense is presented as a single lease cost that is amortized on a straight-line basis over the life of the lease.
As of June 30, 2023 and December 31, 2022, the Company booked a right-of-use asset and operating lease liability of $206,554 and $288,268, respectively, on the Condensed Consolidated Statement of Assets and Liabilities. As of June 30, 2023 and December 31, 2022, the Company recorded a security deposit of $16,574 and $16,574, respectively, on the Condensed Consolidated Statement of Assets and Liabilities. For the three months ended June 30, 2023 and 2022, the Company incurred $50,441 and $47,349, respectively, of operating lease expense. For the six months ended June 30, 2023 and 2022, the Company incurred $99,164 and $94,721, respectively, of operating lease expense. The amounts reflected on the Condensed Consolidated Statement of Assets and Liabilities have been discounted using the rate implicit in the lease. As of June 30, 2023, the remaining lease term was 1.1 years and the discount rate was 3.00%.
The following table shows future minimum payments under the Company’s operating lease as of June 30, 2023:
SCHEDULE OF FUTURE MINIMUM PAYMENTS OF OPERATING LEASE
For the Years Ended December 31, | Amount | |||
2023 | 96,547 | |||
2024 | 113,603 | |||
Total | $ | 210,150 |
36 |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||
Per Basic Share Data: | ||||||||
Net asset value at beginning of period | $ | 9.11 | (1) | $ | 10.22 | (1) | ||
Net investment loss | (0.30 | )(1) | (0.19 | )(1) | ||||
Realized gain | 0.05 | (1) | 0.12 | (1) | ||||
Change in unrealized appreciation/(depreciation) | 0.71 | (1) | (0.06 | )(1) | ||||
Benefit from taxes on unrealized depreciation of investments | — | (1) | 0.02 | (1) | ||||
Dividends distributed | — | (0.04 | ) | |||||
Repurchase of common stock | 0.12 | (1) | — | |||||
Net asset value at end of period | $ | 9.69 | (1) | $ | 10.08 | (1) | ||
Per share market value at end of period | $ | 5.41 | $ | 4.72 | ||||
Total return based on market value | 24.65 | %(2) | (5.23 | )%(2) | ||||
Total return based on net asset value | 6.37 | %(2) | (0.59 | )%(2) | ||||
Shares outstanding at end of period | 21,606,894 | 22,181,003 | ||||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period | $ | 209,379,965 | $ | 223,619,737 | ||||
Average net assets | $ | 201,557,182 | $ | 226,900,410 | ||||
Ratio of gross operating expenses to average net assets(3) | 13.73 | % | 7.53 | % | ||||
Ratio of net income tax provisions to average net assets(3) | (0.05 | )% | (0.96 | )% | ||||
Ratio of operating expenses to average net assets(3) | 13.68 | % | 6.57 | % | ||||
Ratio of management fee waiver to average net assets(3) | (0.34 | )% | — | % | ||||
Ratio of net operating expenses to average net assets(3) | 13.34 | % | 6.57 | % | ||||
Ratio of net investment loss to average net assets(3) | (13.04 | )% | (7.38 | )% | ||||
Portfolio Turnover Ratio | 0.00 | % | 0.82 | % |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)2023
NOTE 7 — 8—FINANCIAL HIGHLIGHTS – (continued)
SCHEDULE OF FINANCIAL HIGHLIGHTS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Per Basic Share Data | ||||||||||||||||
Net asset value at beginning of the year | $ | 7.59 | $ | 12.22 | $ | 7.39 | $ | 11.72 | ||||||||
Net investment loss(1) | (0.15 | ) | (0.12 | ) | (0.30 | ) | (0.26 | ) | ||||||||
Net realized gain/(loss) on investments(1) | (0.51 | ) | (0.06 | ) | (0.48 | ) | 0.04 | |||||||||
Net change in unrealized appreciation/(depreciation) of investments(1) | 0.06 | (2.89 | ) | 0.37 | (2.17 | ) | ||||||||||
Dividends declared | — | — | — | (0.11 | ) | |||||||||||
Issuance of common stock from public offering(1) | — | — | — | 0.01 | ||||||||||||
Repurchase of common stock(1) | 0.33 | 0.07 | 0.33 | (0.01 | ) | |||||||||||
Stock-based compensation(1) | 0.03 | 0.02 | 0.04 | 0.02 | ||||||||||||
Net asset value at end of period | $ | 7.35 | $ | 9.24 | $ | 7.35 | $ | 9.24 | ||||||||
Per share market value at end of period | $ | 3.20 | $ | 6.40 | $ | 3.20 | $ | 6.40 | ||||||||
Total return based on market value(2) | (11.60 | )% | (25.84 | )% | (15.79 | )% | (49.14 | )% | ||||||||
Total return based on net asset value(2) | (3.16 | )% | (24.39 | )% | (0.54 | )% | (20.22 | )% | ||||||||
Shares outstanding at end of period | 25,398,640 | 30,325,187 | 25,398,640 | 30,325,187 | ||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets at end of period | $ | 186,692,724 | $ | 280,172,472 | $ | 186,692,724 | $ | 280,172,472 | ||||||||
Average net assets | $ | 205,097,855 | $ | 378,428,728 | $ | 207,210,870 | $ | 371,249,600 | ||||||||
Ratio of net operating expenses to average net assets(3) | 10.13 | % | 4.24 | % | 10.41 | % | 4.80 | % | ||||||||
Ratio of net investment loss to average net assets(3) | (7.44 | )% | (3.48 | )% | (7.81 | )% | (4.18 | )% | ||||||||
Portfolio Turnover Ratio | 2.09 | % | 1.57 | % | 3.89 | % | 2.05 | % |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||
Per Basic Share Data: | ||||||||
Net asset value at beginning of period | $ | 8.66 | (1) | $ | 12.08 | (1) | ||
Net investment loss | (0.78 | )(1) | (0.23 | )(1) | ||||
Realized loss | (1.10 | )(1) | (0.10 | )(1) | ||||
Change in unrealized appreciation/(depreciation) | 2.79 | (1) | (1.65 | )(1) | ||||
Benefit from taxes on unrealized depreciation of investments | — | (1) | 0.02 | (1) | ||||
Dividends distributed | — | (0.04 | ) | |||||
Repurchase of common stock | 0.12 | (1) | — | |||||
Net asset value at end of period | $ | 9.69 | (1) | $ | 10.08 | (1) | ||
Per share market value at end of period | $ | 5.41 | $ | 4.72 | ||||
Total return based on market value | 7.55 | %(2) | (28.03 | )%(2) | ||||
Total return based on net asset value | 11.89 | %(2) | (15.90 | )%(2) | ||||
Shares outstanding at end of period | 21,606,894 | 22,181,003 | ||||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period | $ | 209,379,965 | $ | 223,619,737 | ||||
Average net assets | $ | 196,478,030 | $ | 250,723,620 | ||||
Ratio of gross operating expenses to average net assets(3) | 12.74 | % | 2.80 | % | ||||
Ratio of net income tax provisions to average net assets(3) | (0.02 | )% | (0.29 | )% | ||||
Ratio of operating expenses to average net assets(3) | 12.72 | % | 2.51 | % | ||||
Ratio of management fee waiver to average net assets(3) | (0.36 | )% | — | % | ||||
Ratio of net operating expenses to average net assets(3) | 12.36 | % | 2.51 | % | ||||
Ratio of net investment loss to average net assets(3) | (11.78 | )% | (2.72 | )% | ||||
Portfolio Turnover Ratio | 0.00 | % | 4.05 | % |
(1) |
(2) | Total return based on market value is based |
(3) | Financial |
37 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)2023
NOTE 8 — 9—INCOME TAXES
The Company elected to be treated as a RIC under Subchapter M of the Code beginning with its taxable year ended December 31, 2014 and has qualified to be treated as a RIC for subsequent taxable years and expectsyears. The Company intends to continue to operate in a manner so as to qualify for the tax treatment applicable to RICs. Accordingly, the Company must generally distribute at least 90% of its ICTIbe subject to qualify for the treatment accorded to a RIC. As part of maintaining tax treatment as a RIC undistributed taxable income (subject to a 4% excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared prior to the later of (1) the fifteenth dayunder Subchapter M of the ninth month following the close of that fiscal year or (2) the extended due date for filing the U.S. federal income tax return for that fiscal year.
As a result of the Company electingCode and, as such, will not be subject to be treated as a RIC for the taxable year ended December 31, 2014 in connection with the filing of its 2014 tax return, it may be required to pay a corporate-level U.S. federal income tax on the portion of taxable income (including gains) distributed as dividends for U.S. federal income tax purposes to stockholders. Taxable income includes the Company’s taxable interest, dividend and fee income, reduced by certain deductions, as well as taxable net realized investment gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as such gains or losses are not included in taxable income until they are realized.
To qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing dividends of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for distributions paid, to its stockholders. The amount to be paid out as a distribution is determined by the Board of Directors each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent that the Company’s earnings fall below the amount of dividend distributions declared, however, a portion of the total amount of the Company’s distributions for the fiscal year may be deemed a return of capital for tax purposes to the Company’s stockholders.
As a RIC, the Company will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless the Company makes distributions treated as dividends for U.S. federal income tax purposes in a timely manner to its stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our ordinary income (taking into account certain deferrals and elections) for each calendar year, (2) 98.2% of our capital gain net built-inincome (adjusted for certain ordinary losses) for the 1-year period ending October 31 of each such calendar year and (3) any ordinary income and net capital gains if any, in its assets (the amount byfor preceding years, but not distributed during such years and on which the net fair market value of the Company’s assets exceeds the net adjusted basis in its assets) as of the date of conversionCompany paid no U.S. federal income tax. The Company will not be subject to a RIC (i.e., the beginning of the first taxable year thatthis excise tax on any amount on which the Company qualifiesincurred U.S. federal corporate income tax (such as the tax imposed on a RIC, which would be January 1, 2014) to the extent that such gains are recognized by the Company during the applicable recognition period, which is the five-year period beginningRIC’s retained net capital gains).
Depending on the datelevel of conversion.
Any corporate-level built-in-gains tax is payable at the time the built-in gains are recognized (which generally will be the years in which the assets with the built-in-gains are soldtaxable income earned in a taxable transaction).year, the Company may choose to carry over taxable income in excess of current taxable year distributions from such taxable income into the next taxable year and incur a 4% excise tax on such taxable income, as required. The maximum amount of this tax will vary depending onexcess taxable income that may be carried over for distribution in the assets that are actually soldnext taxable year under the Code is the total amount of distributions paid in the following taxable year, subject to certain declaration and payment guidelines. To the extent the Company chooses to carry over taxable income into the next taxable year, distributions declared and paid by the Company in this five-year period,a taxable year may differ from the actual amountCompany’s taxable income for that taxable year as such distributions may include the distribution of net built-in gaincurrent taxable year taxable income, the distribution of prior taxable year taxable income carried over into and distributed in the current taxable year, or loss presentreturns of capital.
The Company has taxable subsidiaries which hold certain portfolio investments in those assets asan effort to limit potential legal liability and/or comply with source-income type requirements contained in the RIC tax provisions of the date of conversion,Code. These taxable subsidiaries are consolidated for GAAP and the effective tax ratesportfolio investments held by the taxable subsidiaries are included in the Company’s consolidated financial statements and are recorded at such times. The payment of any such corporate-level U.S. federalfair value. These taxable subsidiaries are not consolidated with the Company for income tax on built-in gains will be a Company expense that will reduce the amount available for distribution to stockholders. The built-in-gains tax is calculated by determining the RIC’s net unrealized built-in gains, if any, by which the fair market value of the assets of the RIC at the beginning of its first RIC year exceeds the aggregate adjusted basis of such assets at that time.
As of January 1, 2014, the Company had net unrealized built-in gains. It did not incur a built-in-gains tax for the 2014 tax year due to the fact that there were sufficient net capital loss carryforwards to completely offset recognized built-in gains as well as available net operating losses. The GSVC Holdings are C corporations for U.S. federalpurposes and statemay generate income tax purposes. The Company uses the assetexpense, or benefit, and liability method to account for the GSVC Holdings’ income taxes. Using this method, the Company recognizes deferred tax assets and liabilities as a result of their ownership of certain portfolio investments. Any income generated by these taxable subsidiaries generally would be subject to tax at normal corporate tax rates based on its taxable income.
The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for the estimated future tax effects attributable to temporary differences between the financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net operating loss carryforwardseach year, except that it may useretain certain net capital gains for reinvestment and, depending upon the level of taxable income earned in a year, may choose to offset future tax obligations. carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax.
The Company measuresis required to include net deferred tax assetsprovision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable. Taxable income generally differs from net income for financial reporting purposes due to temporary and liabilities usingpermanent differences in the enacted tax rates expected to apply torecognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as such gains or losses are not included in taxable income in the years in which it expects to recover or settle those temporary differences.until they are realized.
As of both September
38 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2017 and December 31, 3016, the Company recorded a deferred tax liability of approximately $10.3 million, of which approximately $10.2 million has been recorded in the event that such gains are recognized by December 31, 2018, and approximately $0.2 million relates to the difference in the book and tax basis of certain equity investments and tax net operating losses held by the GSVC Holdings.2023
For U.S. federal and state income tax purposes, a portion of the GSVC Holdings’Taxable Subsidiaries’ net operating loss carryforwards and basis differences may be subject to limitations on annual utilization in case of a change in ownership, as defined by federal and state law. The amount of such limitations, if any, has not been determined. Accordingly, the amount of such tax attributes available to offset future profits may be significantly less than the actual amounts of the tax attributes.
The Company and the GSVC HoldingsTaxable Subsidiaries identified their major tax jurisdictions as U.S. federal, New York, and California and may be subject to the taxing authorities’ examination for the tax years 2013 – 20162020–2023 in New York and 2012 – 2016,2019–2023 in California, respectively.
The Further, the Company and the GSVC HoldingsTaxable Subsidiaries accrue all interest and penalties related to uncertain tax positions as incurred. As of SeptemberJune 30, 2017,2023, there were no material interest or penalties incurred related to uncertain tax positions.
NOTE 9 — 10—DEBT CAPITAL ACTIVITIESConvertible Senior
6.00% Notes Payabledue 2026
On SeptemberDecember 17, 2013,2021, the Company issued $69.0$70.0 million aggregate principal amount of Convertible Seniorits 6.00% Notes whichdue 2026 (the “6.00% Notes due 2026”), pursuant to an Indenture, dated as of March 28, 2018 (the “Base Indenture”), between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee (the “Trustee”), as supplemented by a second supplemental indenture, dated as of December 17, 2021 (together with the Base Indenture, the “Indenture”), between the Company and the Trustee. On December 21, 2021, the Company issued an additional $5.0 million aggregate principal amount of 6.00% Notes due 2026 pursuant to an overallotment option. The 6.00% Notes due 2026 bear interest at a fixed rate of 5.25%6.00% per year, payable semi-annuallyquarterly in arrears on March 1530, June 30, September 30, and September 15December 30 of each year, commencing on March 15, 2014 (the “Convertible Senior Notes”).30, 2022. The Convertible Senior6.00% Notes mature on September 15, 2018,due 2026 have a maturity date of December 30, 2026, unless previously repurchased or converted in accordance with their terms. The Company does not havehas the right to redeem the Convertible Senior6.00% Notes priordue 2026, in whole or in part, at any time or from time to maturity. The Convertible Senior Notes are convertible into sharestime, on or after December 30, 2024 at a redemption price of 100% of the Company’s common stock based on a conversion rate of 83.3596 shares of the Company’s common stock per $1,000 ofoutstanding principal amount of the Convertible Senior6.00% Notes which is equivalent to a conversion price of approximately $12.00 per share of common stock.due 2026 plus accrued and unpaid interest.
The table below shows a reconciliation from the aggregate principal amount of Convertible Senior6.00% Notes to the balance shown on the Condensed Consolidated Statements of Assets and Liabilities.
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | ||||||||
Aggregate principal amount of Convertible Senior Notes | $ | 69,000,000 | $ | 69,000,000 | ||||
Unamortized embedded derivative discount | (149,721 | ) | (261,099 | ) | ||||
Direct deduction of deferred debt issuance costs | (687,555 | ) | (1,226,103 | ) | ||||
Convertible Senior Notes | $ | 68,162,724 | $ | 67,512,798 |
As of September 30, 2017 and December 31, 2016, the principal amountdue 2026 are direct unsecured obligations of the Convertible Senior Notes exceeded the value of the underlying shares multiplied by the per share closing price of the Company’s common stock.
The Convertible Senior Notes are the Company’s senior, unsecured obligationsCompany and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes,pari passu, or equal in right of payment, with all outstanding and future unsecured, unsubordinated indebtedness of the Company; senior to any of the Company’s future unsecuredindebtedness that expressly provides it is subordinated to the 6.00% Notes due 2026; effectively subordinated to any of the Company’s future secured indebtedness (including indebtedness that is not so subordinated toinitially unsecured in respect of which the Convertible Senior Notes, junior to any future secured indebtednessCompany subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness (provided, however, that the Company has agreed under the Indenture to not incur any secured or unsecured indebtedness that would be senior to the 6.00% Notes due 2026 while the 6.00% Notes due 2026 are outstanding, subject to certain exceptions); and structurally juniorsubordinated to all existing and future indebtedness (including trade payables) incurred byand other obligations of any of the Company’s subsidiaries.
The Convertible Senior6.00% Notes containeddue 2026 are listed for trading on the Nasdaq Global Select Market under the symbol “SSSSL”. The reported closing market price of SSSSL on June 30, 2023 and December 31, 2022 was $23.20 and $23.51 per note, respectively. As of June 30, 2023 and December 31, 2022, the fair value of the 6.00% Notes due 2026 was $69.6 million and $70.5 million, respectively. The 6.00% Notes due 2026 are classified as Level 1 of the fair value hierarchy (Refer to “Note 2 — Significant Accounting Policies”). As of June 30, 2023 and December 31, 2022, the Company was in compliance with the terms of the Indenture.
39 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
2019 Equity Incentive Plan
On June 5, 2019, our Board of Directors adopted, and our stockholders approved, an interest make-wholeequity-based incentive plan (the “2019 Equity Incentive Plan”), which authorized equity awards to be granted for up to shares of our common stock. Under the 2019 Equity Incentive Plan, the exercise price of awards would be set on the grant date and could not be less than the fair market value per share on such date, however, that in the case of an incentive stock option granted to an employee who, at the time of the grant of such option, owned stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or the Company’s present or future parent or subsidiary corporations, as defined in Section 424(e) or (f) of the Code, or other Affiliates the employees of which were eligible to receive incentive stock options under the Code (the “10% Shareholders”), the exercise price per share would be no less than one hundred ten percent (110%) of the fair market value per share on the date of grant. The fair market value would be the closing price of the shares on Nasdaq on the date of grant.
On July 17, 2019, stock options providing the right to purchase up to shares were granted under the 2019 Equity Incentive Plan with an exercise price equal to the market price of our common stock at the grant date. with 1/3 vesting immediately on the grant date, 1/3 vesting on July 17, 2020, and the remaining 1/3 vesting on July 17, 2021.
Cancellation of Stock Option Awards Under 2019 Equity Incentive Plan
On April 28, 2020, all stock option awards granted under the 2019 Equity Incentive Plan were canceled for no payment provision pursuant to an option cancellation agreement (the “Option Cancellation Agreement”). As a result, there are no stock option awards outstanding under the 2019 Equity Incentive Plan. In accordance with FASB ASC 718, Compensation – Stock Compensation (“ASC 718”) all unrecognized compensation cost related to still unvested shares was recognized as of the date of cancellation. For more information, including a description of the Option Cancellation Agreement, please refer to our current report on Form 8-K filed with the SEC on April 29, 2020. Such description of the Option Cancellation Agreement is qualified in its entirety by reference to the text of such Option Cancellation Agreement filed as Exhibit 10.3 to our quarterly report on Form 10-Q for the period ended March 31, 2020 filed with the SEC on May 8, 2020.
The Company follows ASC 718 to account for stock options granted. Under ASC 718, compensation expense associated with stock-based compensation is measured at the grant date based on the fair value of the award and is recognized over the vesting period. Determining the appropriate fair value model and calculating the fair value of stock-based awards at the grant date requires judgment, including estimating stock price volatility, forfeiture rate, and expected option life. The time-based options granted on July 17, 2019 were ascribed a weighted-average fair value of $ per share. The fair value of options granted under the 2019 Equity Incentive Plan was based upon a Black Scholes option pricing model using the assumptions in the following table:
Input Assumptions | As of July 17, 2019 Grant Date | ||
Term (years) | |||
Volatility | % | ||
Risk-free rate | % | ||
Dividend yield | % |
Number of Shares | Weighted-Average Exercise Price | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding as of December 31, 2019 | $ | $ | ||||||||||
Cancelled | ||||||||||||
Outstanding | ||||||||||||
Vested and Exercisable as of December 31, 2019 | $ | $ | ||||||||||
Outstanding | ||||||||||||
Cancelled | ( | ) | $ | $ | ||||||||
Outstanding as of June 30, 2023 and December 31, 2022 |
40 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
As of June 30, 2023 and December 31, 2022, there was $ of total unrecognized compensation cost related to non-vested stock options granted under the 2019 Equity Incentive Plan, as the options were cancelled effective April 28, 2020.
Amended and Restated 2019 Equity Incentive Plan
On June 19, 2020, our Board of Directors adopted, and our stockholders approved, an amendment and restatement of the Company’s 2019 Equity Incentive Plan (the “Amended & Restated 2019 Equity Incentive Plan”) under which holders who converted their notes priorthe Company is authorized to September 15, 2016, would receive, in additiongrant equity awards for up to shares of its common stock. In accordance with the exemptive relief granted to the Company by the SEC on June 16, 2020 with respect to the Amended & Restated 2019 Equity Incentive Plan, the Company is generally authorized to (i) issue restricted shares as part of the compensation package for certain of its employees, officers and all directors, including non-employee directors (collectively, the “Participants”), (ii) issue options to acquire shares of its common stock (“Options”) to certain employees, officers and employee directors as a numberpart of such compensation packages, (iii) withhold shares of the Company’s common stock calculatedor purchase shares of common stock from the Participants to satisfy tax withholding obligations relating to the vesting of restricted shares or the exercise of Options granted to the certain Participants pursuant to the Amended & Restated 2019 Equity Incentive Plan, and (iv) permit the Participants to pay the exercise price of Options granted to them with shares of the Company’s common stock.
Under the Amended & Restated 2019 Equity Incentive Plan, each non-employee director will receive an annual grant of $50,000 worth of restricted shares of common stock (based on the closing stock price of the common stock on the grant date). Each grant of $ in restricted shares will vest, in full, if the non-employee director is in continuous service as a director of the Company through the anniversary of such grant (or, if earlier, the annual meeting of the Company’s stockholders that is closest to the anniversary of such grant). During the six months ended June 30, 2023, the Company granted 60,060 restricted shares to the Company’s non-employee directors pursuant to the Amended & Restated 2019 Equity Incentive Plan. Additionally, on May 31, 2023, 26,736 restricted shares related to the 2022 non-employee director grants vested. Compensation expense associated with the restricted shares is recognized on a quarterly basis over the respective vesting periods.
Other than such restricted shares granted to non-employee directors, the Company’s Compensation Committee may determine the time or times at which Options and restricted shares granted to other Participants will vest or become payable or exercisable, as applicable. The exercise price of each Option will not be less than 100% of the applicable conversion ratefair market value of the Company’s common stock on the date the option is granted. However, any optionee who owns more than 10% of the combined voting power of all classes of the Company’s outstanding common stock (a “10% Stockholder”), will not be eligible for the principal amountgrant of notes being converted,an incentive stock option unless the cash proceedsexercise price of the incentive stock option is at least 110% of the fair market value of the Company’s common stock on the date of grant. Generally, no Option will be exercisable after the expiration of ten years from the sale bydate of grant. In the escrow agentcase of an Option granted to a 10% Stockholder, the portionterm of an incentive stock option will be for no more than five years from the U.S. Treasury Stripsdate of grant.
During the six months ended June 30, 2023, the Company did not grant any restricted shares to the Company’s officers pursuant to the Amended & Restated 2019 Equity Incentive Plan. The Company determined that the fair values, based on the grant date close price of such restricted shares granted to the Company’s officers under the Amended & Restated 2019 Equity Incentive Plan during the six months ended June 30, 2023 and 2022 were approximately $escrow account thataggregate. and $ , respectively, in the
For the six months ended June 30, 2023 and 2022, the Company recognized stock-based compensation expense of $and $, respectively. As of June 30, 2023 and December 31, 2022, there were remainingapproximately $and $of total unrecognized compensation costs related to the restricted share grants. Compensation expense associated with respect to any of the first six interest payments that had not been maderestricted shares is recognized on a quarterly basis over the notes being converted. Under FASB ASC 815-10-15-74(a), the interest make-whole payment was considered an embedded derivative and was separated from the host contract, the Convertible Senior Notes, and carried at fair value. The interest make-whole payment provisionrespective vesting periods.
41 |
SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember
June 30, 2017(Unaudited)
2023NOTE 9 — DEBT CAPITAL ACTIVITIES – (continued)
expired on September 15, 2016 rendering
The Company entered into a Loan and Security Agreement, effective May 31, 2017 (the “Loan Agreement”), with Western Alliance Bank, pursuant to which Western Alliance Bank agreed to provide the Company with a $12.0 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility, among other things, matures on the later of (i) August 15, 2018 or (ii) thirty days prior to the due date of the Convertible Senior Notes, which mature on September 15, 2018.
The Credit Facility bears interest at a per annum rate equal to the prime rate plus 3.50%. In addition, a facility fee of $60,000 was charged upon closing of the Credit Facility, and the Loan Agreement requires payment of a fee for unused amounts during the revolving period in an amount equal to 0.50% per annum of the average unused portion of the Credit Facility payable quarterly in arrears.
Under the Loan Agreement, the Company has made certain customary representations and warranties and is required to comply with various affirmative and negative covenants, reporting requirements, and other customary requirements for similar credit facilities, including, without limitation, restrictions on incurring additional indebtedness (with unsecured longer-term indebtedness limited to $70.0 million in the aggregate), compliance with the asset coverage requirements under the 1940 Act, a minimum net asset value requirement of at least the greater of $60.0 million or five times the amount of the Credit Facility, a limitation on the Company’s net asset value being reduced by more than 15% of its net asset value at December 31, 2016, and maintenance of RIC and business development company status. The Loan Agreement includes usual and customary events of default for credit facilities of this nature, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to certain other indebtedness, bankruptcy, the cessation of the Advisory Agreement, and the occurrence of a material adverse effect. As of September 30, 2017 and December 31, 2016, the Company was in compliance with all covenants of the Credit Facility.
The Credit Facility is secured by all of the Company’s property and assets, exceptactivities for the Company’s assets pledgedrestricted share grants for the six months ended June 30, 2023 under the Amended & Restated 2019 Equity Incentive Plan:
SCHEDULE OF EQUITY INCENTIVE PLAN
Number of Restricted Shares | ||||
Outstanding as of December 31, 2022 | 606,620 | |||
Granted | 60,060 | |||
Vested(1) | (168,306 | ) | ||
Forfeited | — | |||
Outstanding as of June 30, 2023 | 498,374 | |||
Vested as of June 30, 2023 | 339,106 |
(1) | The balance of vested shares reflects the total shares vested during the period and has not been reduced for those vested shares forfeited at time of vest related to net share settlement. |
The Amended & Restated 2019 Equity Incentive Plan provides for the concept of “net share settlement.” Specifically, it provides that the Company is authorized to secure certain obligationswithhold the Common Stock at the time the restricted shares are vested and taxed in connection with the Company’s issuancesatisfaction of the Convertible Senior Notes and as may be pledged in connection with any future issuance byParticipant’s tax obligations. On June 16, 2020, the Company received exemptive relief from the SEC to permit such withholding of Convertible Senior Notes on substantially similar terms. As of September 30, 2017,shares.
NOTE 12—SUBSEQUENT EVENTS
Portfolio Activity
From July 1, 2023 through August 8, 2023, the Company had $8.0 million in borrowings outstanding underexited or received proceeds from the Credit Facility.
The Company entered into a Loan and Security Agreement, effective December 31, 2013 (the “SVB Loan Agreement”), with Silicon Valley Bank, pursuant to which Silicon Valley Bank agreed to provide the Company with an $18.0 million credit facility (the “SVB Credit Facility”). The SVB Credit Facility expired on December 31, 2016 in accordance with its terms. Under the SVB Credit Facility, the Company was permitted to borrow an amount equal to the lesser of $18.0 million or 20% of the Company’s then-current net asset value.following investments (excluding short-term U.S. Treasury investments):
The SVB Credit Facility bore interest at a per annum rate equal to the greater of (i) the prime rate plus 4.75% or (ii) 8.0% on amounts drawn under the SVB Credit Facility based on a 360-day year. In addition, a fee of $180,000 per annum (1.0% of the $18.0 million revolving line of credit) was charged under the SVB Loan Agreement. Under the terms of the SVB Credit Facility, the Company was required to repay allSCHEDULE OF INVESTMENTS
Portfolio Company | Transaction Date | Shares Sold | Average Net Share Price (1) | Net Proceeds | Realized Loss(2) | ||||||||||||||
Nextdoor Holdings, Inc.(3) | Various | $ | $ | 1,820,302 | $ | (1,394,547 | ) | ||||||||||||
Residential Homes For Rent, LLC (d/b/a Second Avenue)(4) | 7/24/2023 | N/A | N/A | 83,333 | — | ||||||||||||||
Total | $ | 1,903,635 | $ | (1,394,547 | ) |
outstanding borrowings on the SVB Credit Facility so that there is at least one 30-day period every 12 months during which the Company has no balance outstanding. The Company made certain customary representations and warranties under the SVB Loan Agreement and was required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities. The SVB Loan Agreement included usual and customary events of default for credit facilities of a similar nature, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to certain other indebtedness, bankruptcy, change of control, and the occurrence of a material adverse effect.
The SVB Credit Facility was secured by all of the Company’s property and assets, except for the Company’s assets pledged to secure certain obligations in connection with the Company’s issuance of the Convertible Senior Notes. Borrowing under the SVB Credit Facility was subject to the leverage restrictions contained in the 1940 Act. In addition, under the SVB Loan Agreement, the Company agreed not to incur certain additional permitted indebtedness in an aggregate amount exceeding 50% of the Company’s then-applicable net asset value.
For the three and nine months ended September 30, 2017, the Company had average borrowings outstanding under the Credit Facility of $782,609 and $351,648, respectively. For the three and nine months ended September 30, 2016, the Company had average borrowings outstanding under the SVB Credit Facility of $266,304 and $140,511 respectively.
From October 1, 2017 through November 9, 2017, the Company did not purchase any investments.
From October 1, 2017 through November 9, 2017, the Company sold investments of $16,755,417, net of transaction costs, as shown in following table:
Portfolio Company | Transaction Date | Shares Sold | Average Net Share Price(1) | Net Proceeds | Realized Gain | |||||||||||||||
Spotify Technology S. A | 10/13/2017 | 3,657 | $ | 3,800.00 | $ | 13,896,600 | $ | 8,683,977 | ||||||||||||
| ||||||||||||||||||||
Chegg, Inc. | 10/19/2017 | 100,028 | 15.69 | 1,569,003 | 383,098 | |||||||||||||||
Chegg, Inc. | 10/20/2017 | 82,164 | 15.70 | 1,289,814 | 315,700 | |||||||||||||||
182,192 | 15.69 | 2,858,817 | 698,798 | |||||||||||||||||
Total | $ | 16,755,417 | $ | 9,382,775 |
(1) | The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. | |
(2) | Realized loss does not include adjustments to amounts held in escrow receivable. | |
(3) | As of August 8, 2023, SuRo Capital held shares of Nextdoor Holdings, Inc. public common shares. | |
(4) | Subsequent to June 30, 2023, $0.1 million has been received from Residential Homes for Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, $0.1 million repaid a portion of the outstanding principal and the remaining proceeds were attributed to interest. |
As announced on October 11, 2017, Vista Equity Partners (“Vista”), a leading investment firm focused on software, data, and technology-enabled businesses, announced that it has entered into a definitive agreement to make a majority investment in JAMF Holdings, Inc., one of
From July 1, 2023 through August 8, 2023, the Company’s portfolio companies andCompany made the leader in Apple device management. Financial terms of the deal were not disclosed. Thefollowing investments (not including capitalized transaction is expected to close in the fourth quarter of 2017.costs).
INVESTMENT NOT INCLUDING CAPITALIZED TRANSACTION COSTS
Portfolio Company | Investment | Transaction Date | Amount | |||||
FourKites, Inc. | Common shares | Various | $ | 5,803,269 | ||||
Shogun Enterprises, Inc. (d/b/a Hearth) | Preferred shares | 7/12/2023 | 499,998 | |||||
Stake Trade, Inc. (d/b/a Prophet Exchange) | Simple Agreement for Future Equity | 7/26/2023 | 1,000,000 | |||||
Total | $ | 7,303,267 |
The Company is frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination
rights by the seller or the Company. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.
Share Repurchase Program
From October 1, 2017 through November 9, 2017, the Company repurchased 285,012 shares of its common stock, pursuant to the Share Repurchase Program, at an average price of $5.73 per share.
On October 17, 2017, Mark Flynn resigned from his positions as President of the Company and as a member ofAugust 7, 2023, the Company’s boardBoard of directors, effective October 17, 2017. In connection with Mr. Flynn’s resignation, the Company’s board of directors reduced the number of directors that constitute the full board to six (6) directors from seven (7) directors. Mr. Flynn will continue to provide services to GSV Asset Management pursuant to a consulting agreement with GSV Asset Management.
In addition, on October 17, 2017, the Company’s board of directors appointed William Tanona to serve as President of the Company, effective October 17, 2017, in order to fill the vacancy created by Mr. Flynn’s resignation as President of the Company. Mr. Tanona previously served, and continues to serve, as Chief Financial Officer, Treasurer and Corporate Secretary of the Company.
On November 7, 2017, the Company’s board of directorsDirectors authorized an extension of, and ana $ million increase in the amount of shares of the Company’s common stock that may be repurchased under, the Company’s discretionary Share Repurchase Program until the earlier of (i) November 6, 2018October 31, 2024 or (ii) the repurchase of $10.0$60.0 million in aggregate amount of the Company’s common stock.
The timing and number of shares to be repurchased pursuant to the Company’s discretionary Share Repurchase Program will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate the Company to acquire any specific number of shares of its common stock. Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market, provided that the Companyit complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act.
Subsequent
As of August 8, 2023, the dollar value of shares that remained available to quarter-end, GSV Asset Management voluntarily agreed to extend its waiver of a portion of the advisory fees payablebe purchased by the Company to GSV Asset Management under the Advisory Agreement. Under the extension of the waiver, through December 31, 2018, the Company will pay GSV Asset Management a base management fee of 1.75%, a 0.25% reduction from the 2.0% base management fee payable under the Advisory Agreement. This waiver of a portion of the base management fee is not subject to recourse against or reimbursement by the Company.Share Repurchase Program was approximately $21.4 million.
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SURO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
NOTE 11 — 13—SUPPLEMENTAL FINANCIAL DATA
Under Rule 6-03
Summarized Financial Information of Unconsolidated Subsidiaries
In accordance with the SEC’s Regulation S-X and in accordance with GAAP, as an investment company, the Company is not permitted to consolidate any subsidiary or other entity that is not an investment company, including those in which the Company has a controlling interest. However,interest; however, the Company must disclose certain financial information related to any subsidiaries or other entities that are considered to be “significant subsidiaries” under the applicable rules of Regulation S-X.
During
In May 2020, the threeSEC adopted rule amendments that impacted the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or acquired funds (the “Final Rules”). The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and nine months ended September 30, 2017 and 2016 the Company had at least one4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in asuch investment company’s periodic reports for any portfolio company that qualifiedmeets the definition of “significant subsidiary.” The Final Rules amended the definition of “significant subsidiary” in a manner that was intended to more accurately capture those portfolio companies that were more likely to materially impact the financial condition of an investment company.
The Company’s three controlled portfolio companies as of June 30, 2023, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.), Architect Capital PayJoy SPV, LLC and Colombier Sponsor LLC, did not meet the definition of a “significant subsidiary” underas set forth in Rule 1-02(w)(2). For comparability purposes, the applicable rules of Regulation S-X. Accordingly, comparativeCompany has omitted the previously disclosed summarized financial information is presented below for our unconsolidatedof the Company’s significant subsidiaries for the three and nine monthsquarter ended SeptemberJune 30, 2017 and 2016:2022 as the Company’s significant subsidiaries would not have been considered significant subsidiaries under the Final Rules.
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Income Statement Data for the Three Months Ended: | September 30, 2017 | September 30, 2016 | ||||||
Revenue | $ | 5,745,750 | $ | 5,995,846 | ||||
Gross profit | 4,623,687 | 4,717,151 | ||||||
Loss from operations | (729,028 | ) | (1,679,034 | ) | ||||
Total net income including net income attributable to non-controlling interest | — | — | ||||||
Net loss attributable to controlling interest | (729,028 | ) | (1,679,034 | ) |
Table of Contents |
Income Statement Data for the Nine Months Ended: | September 30, 2017 | September 30, 2016 | ||||||
Revenue | $ | 17,442,574 | $ | 16,599,214 | ||||
Gross profit | 14,229,837 | 13,043,312 | �� | |||||
Loss from operations | (2,128,030 | ) | (6,644,452 | ) | ||||
Total net income including net income attributable to non-controlling interest | — | — | ||||||
Net loss attributable to controlling interest | (2,128,030 | ) | (6,644,452 | ) |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements.
The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including, without limitation, statements as to:
● | our future operating results; | |
● | our dependence upon our management team and key investment professionals; | |
● | our business prospects and the prospects of our portfolio companies; | |
● | our ability to manage our business and future growth; | |
● | the impact of investments that we expect to make; | |
● | risks related to investments in growth-stage companies, other venture capital-backed companies, and generally U.S. companies; | |
● | our contractual arrangements and relationships with third parties; | |
● | our ability to make distributions; | |
● | the dependence of our future success on the general economy and its impact on the industries in which we invest; | |
● | risks related to the uncertainty of the value of our portfolio investments; | |
● | the ability of our portfolio companies to achieve their objectives; | |
● | change in political, economic or industry conditions; | |
● | our expected financings and investments; | |
● | the impact of changes in laws or regulations (including the interpretation thereof), including tax laws, on our operations and/or the operation of our portfolio companies; | |
● | the adequacy of our cash resources and working capital; | |
● | risks related to market volatility, including general price and volume fluctuations in stock markets; and | |
● | the timing of cash flows, if any, from the operations of our portfolio companies. |
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
● | an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies; | |
● | an economic downturn could disproportionately impact the market sectors in which a significant portion of our portfolio is concentrated, causing us to suffer losses in our portfolio; | |
● | a contraction of available credit and/or an inability to access the equity markets could impair our investment activities; | |
● | increases in inflation or an inflationary economic environment could adversely affect our portfolio companies’ operating results, causing us to suffer losses in our portfolio; | |
● | interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; and | |
● | the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” in our quarterly reports on Form 10-Q, our annual report on Form 10-K, and in our other filings with the SEC. |
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Table of Contents |
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in thisour quarterly reportreports on Form 10-Q and our annual report on Form 10-K, in the “Risk Factors” section.sections. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q.
The following analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto contained elsewhere in this quarterly report on Form 10-Q.
Overview
We are an externally managed,internally-managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, Act. as amended (the “1940 Act”), and has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
Our investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related investments, and to a lesser extent, income from debt investments. We invest principally in the equity securities of what we believe to be rapidly growing venture-capital-backed emerging companies. We haveacquire our investments through direct investments in prospective portfolio companies, secondary marketplaces for private companies and negotiations with selling stockholders. In addition, we may invest in private credit and in the founders equity, founders warrants, forward purchase agreements, and private investment in public equity (“PIPE”) transactions of special purpose acquisition companies (“SPACs”). We may also invested,invest on an opportunistic basis in select publicly traded equity securities of rapidly growing companies that otherwise meet our investment criteria, and may continue to do so in the future. In addition, while we invest primarily in U.S. companies, we may invest on an opportunistic basis inor certain non-U.S. companies that otherwise meet our investment criteria. criteria, subject to applicable requirements of the 1940 Act. To the extent we make investments in private equity funds and hedge funds that are excluded from the definition of “investment company” under the 1940 Act by Section 3(c)(1) or 3(c)(7) of the 1940 Act, we will limit such investments to no more than 15% of our net assets.
In regardsregard to the regulatory requirements for business development companiesBDCs under the 1940 Act, some of these investments may not qualify as investments in “eligible portfolio companies,” and thus may not be considered “qualifying assets.” “Eligible portfolio companies” generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange. If at any time less than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the value of any non-qualifying assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets until such time as 70% of our then-current gross assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying assets in such circumstances.
We acquire our investments in portfolio companies through offerings of the prospective portfolio companies, transactions on secondary marketplaces for private companies and negotiations with selling stockholders. Our investment activities are managed by GSV Asset Management. GSV Capital Service Company provides the administrative services necessary for us to operate.
Our investment philosophy is premisedbased on a disciplined approach of identifying promising investments in high-growth, emergingventure-backed companies across several key industry themes thatwhich may include, among others, social social/mobile, cloud computing and big data, internet commerce, sustainabilityfinancial technology, mobility, and education technology. GSV Asset Management’senterprise software. Our investment decisions are based on a disciplined analysis of available information regarding each potential portfolio company’s business operations, focusing on the portfolio company’s growth potential, the quality of recurring revenues, and cash flow and cost structures,path to profitability, as well as an understanding of key market fundamentals. Many of the companies that our investment adviser, GSV Asset Management, evaluates have financial backing from top-tier ventureVenture capital funds or other financial or strategic sponsors.institutional investors have invested in the vast majority of companies that we evaluate.
We seek to deploy capital primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity, and convertible debt securities with a significant equity component. Typically, our preferred stock investments are non-income-producing,non-income producing, have different voting rights than our common stock investments and are generally convertible into common stock at our discretion. OurAs our investment strategy is primarily focused on equity positions, our investments generally do not produce current income and therefore we may be dependent on future capital raising to meet our operating needs if no other source of liquidity is available.
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We seek to create a low-turnover portfolio that includes investments in companies representing a broad range of investment themes.
Our History
We formed in 2010 as a Maryland corporation and operate as an internally managed, non-diversified closed-end management investment company. Our investment activities are supervised by our Board of Directors and managed by our executive officers and investments professionals, all of which are our employees.
Our date of inception was January 6, 2011, which is the date we commenced development stage activities. We commenced operations as a BDC upon completion of our IPO in May 2011 and began our investment operations during the second quarter of 2011.
On and effective June 22, 2020, we changed our name to “SuRo Capital Corp.” from “Sutter Rock Capital Corp.”
On and effective March 12, 2019, our Board of Directors approved our internalization (the “Internalization”) and we began operating as an internally-managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Our Board of Directors approved the Internalization in order to better align the interests of our stockholders with its management. As an internally managed BDC, we are managed by our employees, rather than the employees of an external investment adviser, thereby allowing for greater transparency to stockholders through robust disclosure regarding our compensation structure. As a result of the Internalization, we no longer pay any fees or expenses under an investment advisory agreement or administration agreement, and instead pay the operating costs associated with employing investment management professionals including, without limitation, compensation expenses related to salaries, discretionary bonuses and restricted stock grants.
Except as otherwise disclosed herein, this Form 10-Q discusses our business and operations as an internally-managed BDC during the period covered by this Form 10-Q.
Portfolio and Investment Activity
Six Months Ended June 30, 2023
The value of our investment portfolio will change over time due to changes in the fair value of our underlying investments, as well as changes in the composition of our portfolio resulting from purchases of new and follow-on investments and the sales of existing investments.
The fair value, as of SeptemberJune 30, 2017,2023, of all of our portfolio investments, excluding U.S. Treasury Bills and Strips,bills, was $289,776,082. Refer to “Note 1 — Nature of Operations and Significant Accounting Policies” to our condensed consolidated financial statements as of September 30, 2017 for further detail.$160,283,146.
During the ninesix months ended SeptemberJune 30, 20172023, we did not fund anyfunded investments in an aggregate amount of $13,829,990 (not including capitalized transaction costs or investments in short-term U.S. Treasury investments) as shown in the following table:
Portfolio Company | Investment | Transaction Date | Gross Payments | |||||
Orchard Technologies, Inc.(1) | Preferred shares, Series 1 | 1/13/2023 | $ | 2,000,000 | ||||
True Global Ventures 4 Plus Pte Ltd(2) | Limited Partner Fund Investment | 3/31/2023 | 1,330,000 | |||||
PayJoy, Inc. | Simple Agreement for Future Equity (SAFE) | 5/25/2023 | 500,000 | |||||
ServiceTitan, Inc. | Common shares | 6/30/2023 | 9,999,990 | |||||
Total | $ | 13,829,990 |
(1) | On January 13, 2023, we invested $2.0 million in Orchard Technologies, Inc.’s Series 1 Senior Preferred financing round. As part of the transaction, we exchanged a portion of its existing Series D Preferred shares investment for Series 1 Senior Preferred shares, Series 2 Senior Preferred shares, and Common shares. Additionally, our previous investment in the Simple Agreement for Future Equity was converted into additional Series 1 Senior Preferred shares. |
(2) | The previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions. |
During the six months ended June 30, 2023, we capitalized fees of $2,080.$14,723.
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The table below summarizes
During the portfolio investments we sold or wrote-off during the three and ninesix months ended SeptemberJune 30, 2017:2023, we exited or received proceeds from investments in the amount of $7,587,861, net of transaction costs, and realized a net loss on investments of $(13,080,856) (including adjustments to amounts held in escrow receivable) as shown in following table:
Portfolio Company | Transaction Date | Shares | Average Net Share Price (1) | Net Proceeds | Realized Gain/(Loss)(2) | |||||||||||||
Kahoot! ASA(3) | Various | 38,305 | $ | 1.97 | $ | 75,601 | $ | (100,466 | ) | |||||||||
NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)(4) | Various | 123,938 | 18.50 | 2,293,102 | (186,748 | ) | ||||||||||||
Nextdoor Holdings, Inc.(5) | Various | 950,000 | 3.05 | 2,895,073 | (2,428,701 | ) | ||||||||||||
Rent the Runway, Inc.(6) | 1/4/2023 | 79,191 | 3.05 | 241,456 | (961,837 | ) | ||||||||||||
Residential Homes for Rent, LLC (d/b/a Second Avenue)(7) | Various | N/A | N/A | 500,000 | — | |||||||||||||
True Global Ventures 4 Plus Pte Ltd(8) | Various | N/A | N/A | 1,582,629 | 1,330,000 | |||||||||||||
Ozy Media, Inc.(9) | 5/4/2023 | 3,492,465 | N/A | — | (10,945,024 | ) | ||||||||||||
Total | $ | 7,587,861 | $ | (13,292,776 | ) |
Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | |||||||||||||||
Portfolio Company | Net Proceeds | Realized Gains/ (Losses)(1) | Net Proceeds | Realized Gains/ (Losses)(1) | ||||||||||||
AliphCom, Inc. (d/b/a Jawbone) | $ | — | $ | — | $ | — | $ | (793,152 | ) | |||||||
AlwaysOn, Inc. | — | — | — | (1,903,414 | ) | |||||||||||
Beamreach Solar, Inc. (f/k/a Solexel, Inc.) | — | — | — | (14,272,840 | ) | |||||||||||
Cricket Media (f/k/a ePals Corporation) | — | — | — | (2,448,959 | ) | |||||||||||
EarlyShares.com, Inc. | — | — | — | (312,438 | ) | |||||||||||
Orchestra One, Inc. (f/k/a Learnist, Inc.) | — | — | — | (4,959,614 | ) | |||||||||||
Global Education Learning (Holdings) Ltd. | — | — | — | (675,495 | ) | |||||||||||
Chegg, Inc. | 5,739,897 | 990,489 | 5,739,897 | 990,489 | ||||||||||||
Snap, Inc. | 4,033,360 | 31,090 | 4,033,360 | 31,090 | ||||||||||||
Total Sales | $ | 9,773,257 | $ | 1,021,579 | $ | 9,773,257 | $ | (24,344,333 | ) |
(1) | ||
(2) | Realized gain/(loss) does not include adjustments to amounts held in escrow receivable. | |
(3) | As of March 8, 2023, we had sold our | |
(4) | As of June 30, 2023, we held 105,820 remaining NewLake Capital Partners, Inc. public common shares. | |
(5) | As of June 30, 2023, we held 852,416 remaining Nextdoor Holdings, Inc. public common shares. | |
(6) | As of January 4, 2023, we had sold our remaining Rent the Runway, Inc. public common shares. | |
(7) | During the six months ended June 30, 2023, approximately $0.6 million was received from Residential Homes for Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.5 million repaid a portion of the outstanding principal and the remaining was attributed to interest. | |
(8) | The previously unfunded capital commitment of $1.3 million was deemed fully contributed in lieu of cash distributions. | |
(9) | On May 4, 2023, we abandoned our investment in Ozy Media, Inc. |
The table below summarizes
Six Months Ended June 30, 2022
During the portfolio investments we sold or wrote-off during the three and ninesix months ended SeptemberJune 30, 2016:2022, we funded investments in an aggregate amount of $11,000,000 (not including capitalized transaction costs) as shown in the following table:
Portfolio Company | Investment | Transaction Date | Gross Payments | |||||
Shogun Enterprises, Inc. (d/b/a Hearth) | Convertible Note | 5/2/2022 | $ | 500,000 | ||||
EDGE Markets, Inc. | Preferred Shares, Series Seed | 5/18/2022 | 500,000 | |||||
Whoop, Inc. | Preferred Shares, Series C | 6/30/2022 | 10,000,000 | |||||
Total | $ | 11,000,000 |
During the six months ended June 30, 2022, we capitalized fees of $8,515.
During the six months ended June 30, 2022, we exited or received proceeds from investments in the amount of $5,051,279, net of transaction costs, and realized a net gain on investments of $1,130,050 (including adjustments to amounts held in escrow receivable) as shown in following table:
Portfolio Company | Transaction Date | Shares | Average Net Share Price (1) | Net Proceeds | Realized Gain/(Loss)(2) | |||||||||||||
NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) | Various | 31,028 | $ | 26.96 | $ | 836,485 | $ | 215,799 | ||||||||||
Rover Group, Inc. | Various | 474,335 | 5.61 | 2,659,209 | 1,241,310 | |||||||||||||
Rent the Runway, Inc. | Various | 50,000 | 3.62 | 181,115 | (578,626 | ) | ||||||||||||
Residential Homes for Rent, LLC (d/b/a Second Avenue)(3) | Various | N/A | N/A | 500,000 | — | |||||||||||||
True Global Ventures 4 Plus Pte Ltd | 5/31/2022 | N/A | N/A | 874,470 | 160,965 | |||||||||||||
Total | $ | 5,051,279 | $ | 1,039,448 |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||||||
Portfolio Company | Net Proceeds | Realized Gains/ (Losses)(1) | Net Proceeds | Realized Gains/ (Losses)(1) | ||||||||||||
Bloom Energy Corporation | $ | — | $ | — | $ | 2,973,438 | $ | (882,162 | ) | |||||||
Gilt Groupe Holdings, Inc. | — | — | 427,270 | (6,167,164 | ) | |||||||||||
Lyft, Inc. | 4,080,000 | 2,351,752 | 7,651,890 | 4,430,220 | ||||||||||||
Twitter, Inc. | 14,578,469 | 306,603 | 14,578,469 | 306,603 | ||||||||||||
Total Sales | $ | 18,658,469 | $ | 2,658,355 | $ | 25,631,067 | $ | (2,312,503 | ) |
(1) | ||
(2) | Realized gain/(loss) does not include adjustments to amounts held in escrow receivable. | |
(3) | During the six months ended June 30, 2022, approximately $0.6 million has been received from Residential Homes for Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.5 million repaid a portion of |
During the six months ended June 30, 2022, we did not write-off any investments and our OneValley, Inc. (f/k/a NestGSV, Inc.) Series B preferred warrants with a strike price of $2.31 expired on May 29, 2022.
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Results of Operations —
ForComparison of the Three and NineSix Months Ended SeptemberJune 30, 20172023 and 20162022
Operating results for the three and six months ended SeptemberJune 30, 20172023 and 20162022 are as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Total Investment Income | $ | 1,372,218 | $ | 890,631 | $ | 2,671,300 | $ | 1,473,731 | ||||||||
Interest income | 1,309,073 | 699,282 | 2,545,010 | 1,151,737 | ||||||||||||
Dividend income | 63,145 | 191,349 | 126,290 | 321,994 | ||||||||||||
Total Operating Expenses | $ | 5,177,558 | $ | 4,701,519 | $ | 10,698,405 | $ | 9,509,324 | ||||||||
Compensation expense | 2,117,872 | 1,759,261 | 4,254,626 | 3,619,963 | ||||||||||||
Directors’ fees | 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 | ||||||||||||
Net Investment Loss | $ | (3,805,340 | ) | $ | (3,810,888 | ) | $ | (8,027,105 | ) | $ | (8,035,593 | ) | ||||
Net realized gain/(loss) on investments | (13,270,199 | ) | (1,966,225 | ) | (13,080,856 | ) | 1,130,050 | |||||||||
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 | ) |
September 30, 2017 | September 30, 2016 | |||||||||||||||
Total | Per Basic Share(1) | Total | Per Basic Share(1) | |||||||||||||
Total Investment Income | $ | 174,912 | $ | 0.01 | $ | 86,648 | $ | 0.00 | ||||||||
Interest income/(reversal of interest accrual) | (88 | ) | — | 86,648 | 0.00 | |||||||||||
Dividend income | 175,000 | 0.01 | — | |||||||||||||
Other income | — | — | — | |||||||||||||
Gross Operating Expenses | 6,975,539 | 0.32 | 4,308,303 | 0.19 | ||||||||||||
Management fee waiver | (174,666 | ) | (0.01 | ) | — | — | ||||||||||
Net Operating Expenses | 6,800,873 | 0.31 | 4,308,303 | 0.19 | ||||||||||||
Management fees | 1,397,332 | 0.06 | 1,625,963 | 0.07 | ||||||||||||
Incentive fees | 3,334,052 | 0.15 | 220,719 | 0.01 | ||||||||||||
Costs incurred under administration agreement | 472,413 | 0.02 | 627,444 | 0.03 | ||||||||||||
Directors’ fees | 86,250 | — | 86,250 | 0.00 | ||||||||||||
Professional fees | 353,933 | 0.02 | 416,353 | 0.02 | ||||||||||||
Interest expense | 1,207,548 | 0.05 | 1,189,736 | 0.05 | ||||||||||||
Tax expense | 4,889 | — | — | — | ||||||||||||
Other expenses | 119,122 | 0.01 | 141,838 | 0.01 | ||||||||||||
Net investment loss | (6,625,961 | ) | (0.30 | ) | (4,221,655 | ) | (0.19 | ) | ||||||||
Net realized gain on investments | 1,033,577 | 0.05 | 2,658,715 | 0.12 | ||||||||||||
Net change in unrealized appreciation/(depreciation) of investments | 15,636,683 | 0.71 | (1,261,709 | ) | (0.06 | ) | ||||||||||
Benefit from taxes on unrealized depreciation | 26,705 | — | 551,310 | 0.02 | ||||||||||||
Net increase/(decrease) in net assets resulting from operations | $ | 10,071,004 | $ | 0.46 | $ | (2,273,339 | ) | $ | (0.10 | ) |
TABLE OF CONTENTSInvestment Income
Operating results for the nine months ended September 30, 2017 and 2016 are as follows:
September 30, 2017 | September 30, 2016 | |||||||||||||||
Total | Per Basic Share(1) | Total | Per Basic Share(1) | |||||||||||||
Total Investment Income | $ | 883,964 | $ | 0.04 | $ | 135,181 | $ | 0.01 | ||||||||
Interest income | 335,868 | 0.02 | 135,181 | 0.01 | ||||||||||||
Dividend income | 475,000 | 0.02 | — | — | ||||||||||||
Other income | 73,096 | — | — | — | ||||||||||||
Gross Operating Expenses | 18,727,464 | 0.85 | 5,261,869 | 0.24 | ||||||||||||
Management fee waiver | (526,366 | ) | (0.02 | ) | — | — | ||||||||||
Net Operating Expenses | 18,201,098 | 0.83 | 5,261,869 | 0.24 | ||||||||||||
Management fees | 4,210,932 | 0.19 | 5,324,186 | 0.24 | ||||||||||||
Incentive fees/(reversal of incentive fee accrual) | 7,482,185 | 0.34 | (7,805,089 | ) | (0.35 | ) | ||||||||||
Costs incurred under administration agreement | 1,453,007 | 0.07 | 1,926,085 | 0.09 | ||||||||||||
Directors’ fees | 242,230 | 0.01 | 258,750 | 0.01 | ||||||||||||
Professional fees | 1,318,931 | 0.06 | 1,441,856 | 0.07 | ||||||||||||
Interest expense | 3,489,381 | 0.16 | 3,557,225 | 0.16 | ||||||||||||
Tax expense | 51,379 | — | — | — | ||||||||||||
Other expenses | 479,419 | 0.02 | 558,856 | 0.03 | ||||||||||||
Net investment loss | (17,317,134 | ) | (0.78 | ) | (5,126,688 | ) | (0.23 | ) | ||||||||
Net realized loss on investments | (24,327,082 | ) | (1.10 | ) | (2,311,994 | ) | (0.10 | ) | ||||||||
Net change in unrealized appreciation/ | ||||||||||||||||
(depreciation) of Investments | 61,669,476 | 2.79 | (36,616,596 | ) | (1.65 | ) | ||||||||||
Benefit from taxes on unrealized depreciation | 26,705 | — | 551,310 | 0.02 | ||||||||||||
Net increase/(decrease) in net assets resulting from operations | $ | 20,051,965 | $ | 0.91 | $ | (43,503,968 | ) | $ | (1.96 | ) |
Investment income increased to $174,912$1,372,218 for the three months ended SeptemberJune 30, 2017, as compared to $86,6482023 from $890,631 for the three months ended SeptemberJune 30, 2016.2022. The net increase between periods was due to the addition of interest income from U.S. Treasury bills and Xgroup Holdings Limited (d/b/a Xpoint). The increase was due to increased dividend income which was partially offset by reversals ofa decrease in interest accruals. The increaseincome from Architect Capital PayJoy SPV, LLC, Residential Homes for Rent, LLC (d/b/a Second Avenue) and Neutron Holdings, Inc. (d/b/a/ Lime), plus a decrease in dividend income resulted from a $175,000 dividend received from our investment in SPBRX, INC.NewLake Capital Partners, Inc. (f/k/a GSV Sustainability Partners,GreenAcreage Real Estate Corp.) and a cessation in dividend income from Treehouse Real Estate Investment Trust, Inc.). during the three months ended June 30, 2023, relative to the three months ended June 30, 2022.
Investment income also increased to $883,964$2,671,300 for the ninesix months ended SeptemberJune 30, 2017, as compared to $135,1812023 from $1,473,731 for the ninesix months ended SeptemberJune 30, 2016.2022. The net increase between periods was due to the addition of interest income from U.S. Treasury Bills and Xgroup Holdings Limited (d/b/a Xpoint). The increase was primarily due to increased dividend andoffset by a decrease in interest income from Architect Capital PayJoy SPV, LLC, Residential Homes for Rent, LLC (d/b/a Second Avenue) and toNeutron Holdings, Inc. (d/b/a/ Lime), plus a lesser extent, other income. The increasedecrease in dividend income resulted from $475,000NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) and a cessation in dividend payments receivedincome from our investment in SPBRX, INC. (f/k/a GSV Sustainability Partners,Treehouse Real Estate Investment Trust, Inc.) during the ninesix months ended SeptemberJune 30, 2017. Interest income increased as a result of our debt investments in Ozy Media, Inc. and NestGSV, Inc. (d/b/a GSV Labs, Inc.). Additionally, we received $73,096 in proceeds from GILT Groupe Holdings, Inc., an investment we previously held that was sold2023, relative to Hudson’s Bay Co., the parent company of Saks Fifth Avenue, in January 2016.six months ended June 30, 2022.
Operating Expenses
Total operating expenses (net of the management fee waiver) increased to $6,800,873$5,177,558 for the three months ended SeptemberJune 30, 2017, as compared to $4,308,3032023 from $4,701,519 for the three months ended SeptemberJune 30, 2016,2022. The increase in operating expense was primarily due to an increase in compensation expense associated with an increased incentive fees for the three months ended September 30, 2017headcount and stock-based compensation, income tax expense due to estimates on blocker corporations, offset by a lesser extent, increased interest expense. We accrued incentivedecrease in professional fees during the three months ended
TABLE OF CONTENTS June 30, 2023, relative to the six months ended June 30, 2022.
September
Total operating expenses increased to $10,698,405 for the six months ended June 30, 2017 as a result of2023 from $9,509,324 for the unrealized appreciation of our portfolio investments in the aggregate during the period.six months ended June 30, 2022. The increase in operating expenses during the three months ended September 30, 2017, as compared to the three months ended September 30, 2016,expense was partially offset by lower management fees, due to lower average gross assets outstanding and GSV Asset Management’s voluntary 0.25% reduction to the base management fee payable under the Advisory Agreement, as well as a decrease in costs incurred under the Administration Agreement. The increase in operating expenses were also offset, to a lesser extent, by decreases in professional fees, which include legal, valuation, audit and consulting fees.
Total operating expenses (net of the management fee waiver) increased to $18,201,098 for the nine months ended September 30, 2017, as compared to $5,261,869 for the nine months ended September 30, 2016, primarily due to a reversal of accrued incentive fees for the nine months ended September 30, 2016. We accrued incentive fees during the nine months ended September 30, 2017 as a result of the unrealized appreciation of our portfolio investments in the aggregate during the period. Thean increase in total operating expenses during the nine months ended September 30, 2017 was partiallycompensation expense associated with an increased headcount and stock-based compensation, income tax expense due to estimates on blocker corporations, offset by lower management fees due to lower average gross assets outstanding, GSV Asset Management’s voluntary 0.25% reduction to the base management fee payable under the Advisory Agreement, a decrease in costs incurred under the Administration Agreement, and a decrease in professional fees which include legal, valuation, audit and consulting fees.during the six months ended June 30, 2023, relative to the six months ended June 30, 2022.
Net Investment Loss
For the three months ended SeptemberJune 30, 2017,2023, we recognized a net investment loss of $6,625,961,$(3,805,340), compared to a net investment loss of $4,221,655$(3,810,888) for the three months ended SeptemberJune 30, 2016.2022. The change between periods resulted from an increase in netoperating expenses, offset by an increase in total investment loss resulted primarily from the accrual of incentive feesincome between periods during the three months ended SeptemberJune 30, 2017, as discussed above, partially offset by an increase in investment income.2023, relative to the three months ended June 30, 2022.
For the ninesix months ended SeptemberJune 30, 2017,2023, we recognized a net investment loss of $17,317,134,$(8,027,105), compared to a net investment loss of $5,126,688$(8,035,593) for the ninesix months ended SeptemberJune 30, 2016.2022. The change between periods resulted from an increase in net investment loss resulted primarily from the accrual of incentive fees during the nine months ended September 30, 2017, as discussed above, partiallyoperating expenses, offset by an increase in total investment income.income between periods during the six months ended June 30, 2023, relative to the six months ended June 30, 2022.
Net Realized Gain/LossGain on Investments
For the three months ended SeptemberJune 30, 2017,2023, we recognized a net realized gainsloss on our investments of $1,033,577,$(13,270,199), compared to a net realized gainsloss of $2,658,715$(1,966,225) for the three months ended SeptemberJune 30, 2016.2022.
For the six months ended June 30, 2023, we recognized a net realized loss on our investments of $(13,080,856), compared to a net realized gain of $1,130,050 for the six months ended June 30, 2022. The components of our net realized gains/lossesgains on portfolio investments for the six months ended June 30, 2023 and 2022, excluding treasuryU.S. Treasury investments and fluctuations in escrow receivables estimates, are reflected in the tables above, under “— Overview — Investments — (Portfolio Activity).Portfolio and Investment Activity.”
For the nine months ended September 30, 2017, we recognized net realized losses of $24,327,082, compared to a net realized losses of $2,311,994 for the nine months ended September 30, 2016. The components of our net realized gains/losses on portfolio investments, excluding treasury investments, are reflected above, under “— Overview — Investments — (Portfolio Activity).”
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Net Change in Unrealized Appreciation/(Depreciation) of Investments
For the three months ended SeptemberJune 30, 2017,2023 and 2022, we had a net change in unrealized appreciationappreciation/(depreciation) of investments of $15,636,683. For the three months ended September 30, 2016, we had a net change in unrealized depreciation of investments of $1,261,709.$1,455,515 and $(88,562,575), respectively. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for each of the three months ended SeptemberJune 30, 20172023 and 2016:2022.
Portfolio Company | Net Change in Unrealized Appreciation/(Depreciation) For the Three Months Ended | Portfolio Company | Net Change in Unrealized Appreciation/(Depreciation) For the Three Months Ended | |||||||
Ozy Media, Inc.(1) | $ | 10,945,024 | NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)(1) | $ | (1,625,807 | ) | ||||
Nextdoor Holdings, Inc.(1) | 4,227,458 | Rover Group, Inc.(1) | (1,931,885 | ) | ||||||
Shogun Enterprises, Inc. (d/b/a Hearth) | 4,051,105 | Blink Health, Inc. | (2,104,711 | ) | ||||||
Colombier Sponsor LLC | 2,387,898 | Skillsoft Corp. | (2,474,244 | ) | ||||||
Forge Global, Inc. | 1,705,490 | Varo Money, Inc. | (2,700,966 | ) | ||||||
Orchard Technologies, Inc. | 1,210,675 | Enjoy Technology, Inc. | (3,741,844 | ) | ||||||
Stormwind, LLC | 1,206,200 | Neutron Holdings, Inc. (d/b/a/ Lime) | (3,991,353 | ) | ||||||
Whoop, Inc. | (1,775,407 | ) | Nextdoor Holdings, Inc. | (4,020,739 | ) | |||||
Trax, Ltd. | (2,346,683 | ) | Trax Ltd. | (5,588,395 | ) | |||||
Learneo, Inc. (f/k/a Course Hero, Inc.) | (18,251,804 | ) | Course Hero, Inc. | (17,273,549 | ) | |||||
Forge Global Holdings, Inc. | (41,488,638 | ) | ||||||||
Other(2) | (1,904,441 | ) | Other(2) | (1,620,444 | ) | |||||
Total | $ | 1,455,515 | Total | $ | (88,562,575 | ) |
Portfolio Company | Change in Unrealized Appreciation/ (Depreciation) for the Three Months Ended September 30, 2017 | |||
JAMF Holdings, Inc. | $ | 14,601,826 | ||
Spotify Technology S.A. | 5,250,385 | |||
StormWind, LLC | 4,743,771 | |||
Chegg, Inc. | 1,820,621 | |||
Dropbox, Inc. | 1,584,490 | |||
Ozy Media, Inc. | (1,036,364 | ) | ||
General Assembly Space, Inc. | (1,077,414 | ) | ||
Avenues Global Holdings, LLC | (1,358,960 | ) | ||
Maven Research, Inc. | (1,600,515 | ) | ||
Curious.com, Inc. | (2,973,142 | ) | ||
Declara, Inc. | (4,216,360 | ) | ||
Other(1) | (101,655 | ) | ||
Total | $ | 15,636,683 |
Portfolio Company | Change in Unrealized Appreciation/ (Depreciation) for the Three Months Ended September 30, 2016 | |||
Palantir Technologies, Inc. | $ | (2,206,354 | ) | |
Lyft, Inc. | (1,478,090 | ) | ||
Chegg, Inc. | 2,472,035 | |||
Other(1) | (49,300 | ) | ||
Total | $ | (1,261,709 | ) |
(1) | |
(2) |
For the ninesix months ended SeptemberJune 30, 2017,2023 and 2022, we had a net change in unrealized appreciationappreciation/(depreciation) of investments of $61,669,476. For the nine months ended September 30, 2016, we had a net change in unrealized depreciation of $36,616,596.$10,104,446 and $(66,977,690), respectively. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for each of the ninesix months ended SeptemberJune 30, 20172023 and 2016:2022.
Portfolio Company | Net Change in Unrealized Appreciation/(Depreciation) For the Six Months Ended June 30, 2023 | Portfolio Company | Net Change in Unrealized Appreciation/(Depreciation) For the Six Months Ended June 30, 2022 | |||||||
Colombier Sponsor LLC | $ | 14,470,770 | True Global Ventures 4 Plus Fund Pte Ltd(1) | $ | 3,106,863 | |||||
Ozy Media, Inc.(1) | 10,945,024 | Blink Health, Inc. | (2,622,697 | ) | ||||||
Nextdoor Holdings, Inc.(1) | 4,389,675 | NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.)(1) | (2,788,019 | ) | ||||||
Shogun Enterprises, Inc. (d/b/a Hearth) | 4,349,318 | Varo Money, Inc. | (2,994,723 | ) | ||||||
Varo Money, Inc. | 2,489,436 | Neutron Holdings, Inc. (d/b/a/ Lime) | (3,991,353 | ) | ||||||
Forge Global, Inc. | 1,755,652 | Enjoy Technology, Inc. | (4,371,009 | ) | ||||||
OneValley, Inc. (f/k/a NestGSV, Inc.) | (1,679,936 | ) | Rover Group, Inc.(1) | (4,978,791 | ) | |||||
Trax, Ltd. | (2,241,286 | ) | Skillsoft Corp. | (5,527,776 | ) | |||||
Whoop, Inc. | (2,775,301 | ) | Nextdoor Holdings, Inc. | (6,473,525 | ) | |||||
Aspiration Partners, Inc. | (2,851,678 | ) | Trax Ltd. | (7,188,572 | ) | |||||
Orchard Technologies, Inc. | (3,489,052 | ) | Course Hero, Inc. | (28,304,092 | ) | |||||
Learneo, Inc. (f/k/a Course Hero, Inc.) | (17,995,785 | ) | ||||||||
Other(2) | 2,737,609 | Other(2) | (843,996 | ) | ||||||
Total | $ | 10,104,446 | Total | $ | (66,977,690 | ) |
Portfolio Company | Change in Unrealized Appreciation/ (Depreciation) for the Nine Months Ended September 30, 2017 | |||
JAMF Holdings, Inc. | $ | 21,321,024 | ||
Beamreach Solar, Inc. (f/k/a Solexel, Inc.)(1) | 14,272,843 | |||
Spotify Technology S.A. | 13,351,893 | |||
Chegg, Inc. | 7,628,129 | |||
Orchestra One, Inc. (f/k/a Learnist, Inc.)(1) | 4,959,614 | |||
StormWind, LLC | 4,743,772 | |||
NestGSV, Inc. (d/b/a GSV Labs, Inc.) | 4,019,767 | |||
Coursera, Inc. | 3,854,113 | |||
Dropbox, Inc. | 3,331,446 | |||
Cricket Media (f/k/a ePals Inc.)(1) | 2,448,959 | |||
AlwaysOn, Inc.(1) | 1,903,414 | |||
Aspiration Partners, Inc. | 1,451,623 | |||
Lyft, Inc. | 1,343,714 | |||
Ozy Media, Inc. | (1,146,364 | ) | ||
Avenues Global Holdings, LLC | (1,614,324 | ) | ||
Maven Research, Inc. | (1,673,885 | ) | ||
General Assembly Space, Inc. | (1,861,905 | ) | ||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) | (2,942,585 | ) | ||
Curious.com, Inc. | (4,024,767 | ) | ||
Declara, Inc. | (4,609,294 | ) | ||
Palantir Technologies, Inc. | (5,008,564 | ) | ||
Other(2) | (79,147 | ) | ||
Total | $ | 61,669,476 |
Portfolio Company | Change in Unrealized Appreciation/ (Depreciation) for the Nine Months Ended September 30, 2016 | |||
Palantir Technologies, Inc. | $ | (13,338,122 | ) | |
Fullbridge, Inc. | (5,488,622 | ) | ||
Dataminr, Inc. | (5,102,507 | ) | ||
Twitter, Inc. | (4,254,018 | ) | ||
Dropbox, Inc. | (5,139,483 | ) | ||
Solexel, Inc. | (5,157,254 | ) | ||
JAMF Holdings, Inc. | 1,707,179 | |||
Lyft, Inc. | (3,253,734 | ) | ||
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) | (1,799,396 | ) | ||
SugarCRM, Inc. | (1,401,493 | ) | ||
Gilt Groupe Holdings, Inc. | 6,055,046 | |||
Other(2) | 555,808 | |||
Totals | $ | (36,616,596 | ) |
(1) | The change in unrealized |
(2) |
For the three months ended September 30, 2017 and 2016, our net increase/(decrease) in net assets resulting from operations was $10,071,004 and $(2,273,339), respectively.
For the nine months ended September 30, 2017 and 2016, our net increase/(decrease) in net assets resulting from operations was $20,051,965 and $(43,503,968), respectively.
Our liquidity and capital resources are generated primarily from the sales of our investments and advances from any credit facility from which we may borrow. For example, prior to its expiration in accordance with its terms on December 31, 2016, we also generated liquidity and capital resources from advances from the SVB Credit Facility and have entered into the Credit Facility, which matures on the later of (i) August 15, 2018 or (ii) 30 days prior to the due date of the Convertible Senior Notes, which mature on September 15, 2018. In management’s view, we have sufficient liquidity and capital resources to pay our operating expenses and conduct investment activities. With regard to the Convertible Senior Notes, which mature on September 15, 2018, we are actively managing our liquidity in anticipation of meeting our obligations thereunder.
Our primary uses of cash are to make investments, pay our operating expenses and make distributions to our stockholders. For the nine months ended September 30, 2017 and 2016, our net operating expenses were $18,201,098 and $5,261,869, respectively.
Cash Reserves and Liquid Securities | September 30, 2017 | December 31, 2016 | ||||||
Cash | $ | 5,154,436 | $ | 8,332,634 | ||||
Amounts available for borrowing under the Credit Facility(1)(2) | 4,000,000 | — | ||||||
Securities of publicly traded portfolio companies: | ||||||||
Unrestricted securities(3) | 11,607,729 | 8,729,005 | ||||||
Subject to other sales restrictions | — | — | ||||||
Total securities of publicly traded portfolio companies | 11,607,729 | 8,729,005 | ||||||
Total Cash Reserves and Liquid Securities | $ | 20,762,165 | $ | 17,061,639 |
During the nine months ended September 30, 2017, cash decreased to $5,154,436 from $8,332,634 at the beginning of the period. The decrease was primarily due to an additional $7.5 million margin deposit posted for the purchase of a U.S. Treasury Bill, $3.6 million in interest payments on the Convertible Senior Notes, $4.2 million in management fees paid under the Advisory Agreement, $2.6 million of share repurchases under the Share Repurchase Program, $1.0 million in allocation of overhead expenses paid to GSV Capital Service Company and $1.4 million of audit and legal fees. During the nine months ended September 30, 2017, we sold portfolio investments for net proceeds of $9.8 million and borrowed a net of $8.0 million under the Credit Facility, which partially offset the decrease in cash.
There were no sales of our equity or debt securities during the nine months ended September 30, 2017 or the year ended December 31, 2016.
On August 7, 2017, our board of directors authorized the $5.0 million discretionary open-market Share Repurchase Program under which we may repurchase shares of our common stock in the open market until the earlier of (i) August 6, 2018 or (ii) the repurchase of $5.0 million in aggregate amount of our common
stock. During each of the three and nine months ended September 30, 2017, we repurchased 574,109 shares of our common stock for approximately $2.8 million under the Share Repurchase Program. For more information on the Share Repurchase Program, see “Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.”
Payments Due By Period (dollars in millions) | ||||||||||||||||||||
Total | Less than 1 year | 1 – 3 years | 3 – 5 years | More than 5 years | ||||||||||||||||
Payable for securities purchased(1) | $ | 89.6 | $ | 89.6 | $ | — | $ | — | $ | — | ||||||||||
Credit facility payable(2)(3)(4) | 8.0 | 8.0 | — | — | — | |||||||||||||||
Convertible Senior Notes(5) | 69.0 | 69.0 | — | — | — | |||||||||||||||
Total | $ | 166.6 | $ | 166.6 | $ | — | $ | — | $ | — |
As of September 30, 2017, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices. However, we may employ hedging and other risk management techniques in the future.
The timing and amount of our distributions, if any, will be determined by our board of directors and will be declared out of assets legally available for distribution. The following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our formation through September 30, 2017. The table is divided by fiscal year according to record date:
Date Declared | Record Date | Payment Date | Amount Per Share | |||||||||
Fiscal 2015: | ||||||||||||
November 4, 2015(1) | November 16, 2015 | December 31, 2015 | $ | 2.76 | ||||||||
Fiscal 2016: | ||||||||||||
August 3, 2016(2) | August 16, 2016 | August 24, 2016 | 0.04 | |||||||||
Total | $ | 2.80 |
We intend to focus on making capital gains-based investments from which we will derive primarily capital gains. As a consequence, we do not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other business development companies that primarily make debt investments. If there are earnings or realized capital gains to be distributed, we intend to declare and pay a distribution at least annually. The amount of realized capital gains available for distribution to stockholders will be impacted by our tax status.
Our current intention is to make any future distributions out of assets legally available in the form of additional shares of our common stock under our dividend reinvestment plan, unless a stockholder elects to receive dividends and/or long-term capital gains distributions in cash. Under the dividend reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. Any distributions reinvested under the plan will nevertheless remain taxable to the U.S. stockholder, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the dividend reinvestment plan, it will be required to pay applicable federal, state and local taxes on any reinvested dividends even though such stockholder will not receive a corresponding cash distribution. In addition, reinvested dividends have the effect of increasing our gross assets, which may correspondingly increase the management fee payable to our investment adviser, GSV Asset Management. Stockholders who hold shares in the name of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash.
We elected to be treated as a RIC under Subchapter M of the Code beginning with our taxable year ended December 31, 2014 and continue to qualify to be treated as a RIC. So long as we qualify and maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S. federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our condensed consolidated financial statements. In order to qualify as a RIC and to avoid corporate-level tax on the income we distribute to our stockholders, we are required, under Subchapter M of the Code, to distribute at least 90% of our ordinary income and short-term capital gains to our stockholders on an annual basis. See “Note 1 — Nature of Operations and Significant Accounting Policies — Summary of Significant Accounting Policies — U.S. Federal and State Income Taxes” and “Note 8 — Income Taxes” to our condensed consolidated financial statements as of September 30, 2017 for more information. The GSVC Holdings included in our condensed consolidated financial statements are taxable subsidiaries, regardless of whether we are a RIC. These taxable subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in our condensed consolidated financial statements.
On September 17, 2013, we issued $69.0 million aggregate principal amount of Convertible Senior Notes (including $9.0 million aggregate principal amount issued pursuant to the exercise of the initial purchasers’ option to purchase additional Convertible Senior Notes), which bear interest at a fixed rate of 5.25% per year, are payable semi-annually and mature on September 15, 2018, unless previously repurchased or converted in accordance with their terms. We do not have the right to redeem the Convertible Senior Notes prior to maturity. As of September 30, 2017, the Convertible Senior Notes were convertible into shares of our common stock based on a conversion rate of 83.3596 shares of our common stock per $1,000 principal amount of the Convertible Senior Notes, which is equivalent to a conversion price of approximately $12.00 per share of common stock. Refer to “Note 9 — Debt Capital Activities” to our condensed consolidated financial statements as of September 30, 2017 for more information regarding the Convertible Senior Notes.
On May 31, 2017, we entered into the Loan Agreement with Western Alliance Bank, pursuant to which Western Alliance Bank agreed to provide us with the $12.0 million Credit Facility. The Credit Facility, among other things, matures on the later of (i) August 15, 2018 or (ii) thirty days prior to the due date of the Convertible Senior Notes, which mature on September 15, 2018. The Credit Facility bears interest at a per annum rate equal to the prime rate plus 3.50%. In addition, a facility fee of $60,000 was charged upon closing of the Credit Facility, and the Loan Agreement requires payment of a fee for unused amounts during the revolving period in an amount equal to 0.50% per annum of the average unused portion of the Credit Facility payable quarterly in arrears. Refer to “Note 9 — Debt Capital Activities” to our condensed consolidated financial statements as of September 30, 2017 for more information regarding the Credit Facility.
Critical accounting policies and practices are the policies that are both most important to the portrayal of our financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. These include estimates of the fair value of our Level 3 investments and other estimates that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ materially from such estimates. See “Note 1 — Nature of Operations and Significant Accounting Policies — Summary of Significant Accounting Policies” to our condensed consolidated financial statements as of September 30, 2017 for further detail regarding our critical accounting policies and recently issued accounting pronouncements.
Portfolio Activity
Please refer to “Note 10 — 12—Subsequent Events” to our condensed consolidated financial statements as of SeptemberJune 30, 20172023 for details regarding activity in our investment portfolio activity from OctoberJuly 1, 20172023 through November 9, 2017.August 8, 2023.
We are frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination rights by the seller or us. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.
Share Repurchase Program
From October 1, 2017 through November 9, 2017, we repurchased 285,012 shares
On August 7, 2023, our Board of our common stock pursuant to the Share Repurchase Program at an average price of $5.73 per share.
On November 7, 2017, our board of directorsDirectors authorized an extension of, and ana $5.0 million increase in the amount of shares of our common stock that may be purchasedrepurchased under, theour discretionary Share Repurchase Program until the earlier of (i) November 6, 2018October 31, 2024 or (ii) the repurchase of $10.0$60.0 million in aggregate amount of our common stock.
The timing and number of shares to be repurchased pursuant to our discretionary Share Repurchase Program will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate us to acquire any specific number of shares of our common stock. Under the Share Repurchase Program, we may repurchase our outstanding common stock in the open market, provided that we comply with the prohibitions under our insider trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act.
As of August 8, 2023, the dollar value of shares that remained available to be purchased by us under the Share Repurchase Program was approximately $21.4 million.
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Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from the sales of our investments and the net proceeds from public offerings of our equity and debt securities, including pursuant to our continuous at-the-market offering of shares of our common stock as discussed below under “At-the-Market Offering”. In addition, on December 17, 2021, we issued $75.0 million aggregate principal amount of 6.00% Notes due 2026, all of which remain outstanding. For additional information, see below and “Note 10—Debt Capital Activities” to our condensed consolidated financial statements as of June 30, 2023.
Our primary uses of cash are to make investments, pay our operating expenses, and make distributions to our stockholders. For the six months ended June 30, 2023 and 2022, our operating expenses were $10,698,405 and $9,509,324, respectively.
Cash Reserves and Liquid Securities | June 30, 2023 | December 31, 2022 | ||||||
Cash | $ | 24,542,729 | $ | 40,117,598 | ||||
Cash Equivalents: | ||||||||
U.S. Treasury bills(1) | 75,895,534 | 85,056,817 | ||||||
Securities of publicly traded portfolio companies: | ||||||||
Unrestricted securities(2) | 11,551,297 | 13,298,992 | ||||||
Subject to other sales restrictions(3) | — | 24,493 | ||||||
Securities of publicly traded portfolio companies | 11,551,297 | 13,323,485 | ||||||
Total Cash Reserves and Liquid Securities | $ | 111,989,560 | $ | 138,497,900 |
(1) | Consists of short-term U.S. Treasury bills. |
(2) | “Unrestricted securities” represents common stock of our publicly traded portfolio companies that are not subject to any restrictions upon sale. We may incur losses. |
(3) | Securities of publicly traded portfolio companies “subject to other sales restrictions” represents common stock of our publicly traded companies that are subject to certain lock-up restrictions. |
During the six months ended June 30, 2023, cash decreased to $24,542,729 from $40,117,598 at the beginning of the year. The decrease in cash was primarily due to the repurchase of our common stock pursuant to a modified “Dutch Auction” tender offer (the “Modified Dutch Auction Tender Offer”), purchase of new and follow-on investments, interest on the 6.00% Notes due 2026, and to pay our operating expenses offset by the sale or exit of investments, including U.S. Treasury bills and other investment income received. For additional information relating to the Modified Dutch Auction Tender Offer, see “Modified Dutch Auction Tender Offer” below and “Note 5 - Common Stock” to our condensed consolidated financial statements as of June 30, 2023.
Currently, we believe we have ample liquidity to support our near-term capital requirements. Consistent with past and current practices, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the current circumstances.
Contractual Obligations
A summary of our significant contractual payment obligations as of June 30, 2023 is as follows:
Payments Due By Period (in millions) | ||||||||||||||||||||
Total | Less than 1 year | 1–3 years | 3–5 years | More than 5 years | ||||||||||||||||
6.00% Notes due December 30, 2026(1) | $ | 75.0 | $ | — | $ | — | $ | 75.0 | $ | — | ||||||||||
Operating lease liability | 0.2 | 0.2 | — | — | — | |||||||||||||||
Total | $ | 75.2 | $ | 0.2 | $ | — | $ | 75.0 | $ | — |
(1) | Reflects the principal balance payable to investors for the 6.00% Notes due 2026 as of June 30, 2023. Refer to “Note 10—Debt Capital Activities” in our condensed consolidated financial statements as of June 30, 2023 for more information. |
Share Repurchase Program
During the three and six months ended June 30, 2023, we did not repurchase any shares of our common stock under the Share Repurchase Program. During the three and six months ended June 30, 2022, we repurchased 855,159 and 1,008,676 shares of our common stock under the Share Repurchase Program, respectively. As of June 30, 2023, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $16.4 million. On October 17, 2017, Mark Flynn resigned from his positions as19, 2022, our President and as a memberBoard of Directors approved an extension of the Share Repurchase Program until the earlier of (i) October 31, 2023 or (ii) the repurchase of $55.0 million in aggregate amount of our boardcommon stock.
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Under the Share Repurchase Program, we may repurchase our outstanding common stock in the open market provided that we comply with the prohibitions under our insider trading policies and procedures and the applicable provisions of directors, effective Octoberthe 1940 Act and the Exchange Act. For more information on the Share Repurchase Program, see “Note 5—Common Stock” to our condensed consolidated financial statements as of June 30, 2023.
Modified Dutch Auction Tender Offer
On March 17, 2017.2023, we commenced the Modified Dutch Auction Tender Offer to purchase up to 3,000,000 shares of our common stock from our stockholders, which expired on April 17, 2023. In accordance with the terms of the Modified Dutch Auction Tender Offer, we selected the lowest price per share of not less than $3.00 per share and not greater than $4.50 per share.
Pursuant to the Modified Dutch Auction Tender Offer, we repurchased 3,000,000 shares, representing 10.6% of our outstanding shares, on or about April 21, 2023 at a price of $4.50 per share. We used available cash to fund the purchase of our shares of common stock in the Modified Dutch Auction Tender Offer and to pay for all related fees and expenses.
Off-Balance Sheet Arrangements
As of June 30, 2023 and December 31, 2022, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices. However, we may employ hedging and other risk management techniques in the future.
Equity Issuances & Debt Capital Activities
At-the-Market Offering
On July 29, 2020, we entered into an At-the-Market Sales Agreement, dated July 29, 2020 (the “Initial Sales Agreement”), with BTIG, LLC, JMP Securities LLC, and Ladenburg Thalmann & Co., Inc. (collectively, the “Agents”). Under the Initial Sales Agreement, we may, but have no obligation to, issue and sell up to $50.0 million in aggregate amount of shares of our common stock (the “Shares”) from time to time through the Agents or to them as principal for their own account (the “ATM Program”). On September 23, 2020, we increased the maximum amount of Shares to be sold through the ATM Program to $150.0 million from $50.0 million. In connection with Mr. Flynn’s resignation, our board of directors reduced the number of directors that constitute the full board to six (6) directors from seven (7) directors. Mr. Flynn will continue to provide services to GSV Asset Management pursuant to a consulting agreement with GSV Asset Management.
In addition, on October 17, 2017, our board of directors appointed William Tanona to serve as our President, effective October 17, 2017, in order to fill the vacancy created by Mr. Flynn’s resignation as President. Mr. Tanona previously served, and continues to serve, as our Chief Financial Officer, Treasurer and Corporate Secretary.
Subsequent to quarter-end, GSV Asset Management voluntarily agreed to extend its waiver of a portionupsize of the advisory fees payable by usATM Program to GSV Asset Management$150.0 million, we entered into the Amendment No. 1 to the At-the-Market Sales Agreement, dated September 23, 2020, with the Agents. We intend to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with our investment objective and strategy and for general corporate purposes.
During the three and six months ended June 30, 2023, we did not issue or sell shares under the Advisory Agreement. UnderATM program. During the extensionthree and six months ended June 30, 2022, we issued and sold 0 and 17,807 shares, respectively, under the ATM Program at weighted-average price of $13.01 per share, for gross proceeds of $231,677 and net proceeds of $229,896, after deducting commissions to the Agents on Shares sold. As of June 30, 2023, up to approximately $98.8 million in aggregate amount of the waiver,Shares remain available for sale under the ATM Program.
Refer to “Note 5—Common Stock” to our condensed consolidated financial statements as of June 30, 2023 for more information regarding the ATM Program.
6.00% Notes due 2026
On December 17, 2021, we issued $70.0 million aggregate principal amount of 6.00% Notes due 2026, which bear interest at a fixed rate of 6.00% per year, payable quarterly in arrears on March 31, June 30, September 30, and December 30 of each year, commencing on March 30, 2022. On December 21, 2021, we issued an additional $5.0 million aggregate principal amount of 6.00% Notes due 2026. We received approximately $73.0 million in proceeds from the offering, net of underwriting discounts and commissions and other offering expenses. The 6.00% Notes due 2026 have a maturity date of December 30, 2026, unless previously repurchased or redeemed in accordance with their terms. We have the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time or from time to time, on or after December 30, 2024 at a redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest.
Refer to “Note 10—Debt Capital Activities” to our condensed consolidated financial statements as of June 30, 2023 for more information regarding the 6.00% Notes due 2026.
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Distributions
The timing and amount of our distributions, if any, will be determined by our Board of Directors and will be declared out of assets legally available for distribution. The following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our formation through December 31, 2018,June 30, 2023. The table is divided by fiscal year according to record date:
Date Declared | Record Date | Payment Date | Amount per Share | |||||
Fiscal 2015: | ||||||||
November 4, 2015(1) | November 16, 2015 | December 31, 2015 | $ | 2.76 | ||||
Fiscal 2016: | ||||||||
August 3, 2016(2) | August 16, 2016 | August 24, 2016 | 0.04 | |||||
Fiscal 2019: | ||||||||
November 5, 2019(3) | December 2, 2019 | December 12, 2019 | 0.20 | |||||
December 20, 2019(4) | December 31, 2019 | January 15, 2020 | 0.12 | |||||
Fiscal 2020: | ||||||||
July 29, 2020(5) | August 11, 2020 | August 25, 2020 | 0.15 | |||||
September 28, 2020(6) | October 5, 2020 | October 20, 2020 | 0.25 | |||||
October 28, 2020(7) | November 10, 2020 | November 30, 2020 | 0.25 | |||||
December 16, 2020(8) | December 30, 2020 | January 15, 2021 | 0.22 | |||||
Fiscal 2021: | ||||||||
January 26, 2021(9) | February 5, 2021 | February 19, 2021 | 0.25 | |||||
March 8, 2021(10) | March 30, 2021 | April 15, 2021 | 0.25 | |||||
May 4, 2021(11) | May 18, 2021 | June 30, 2021 | 2.50 | |||||
August 3, 2021(12) | August 18, 2021 | September 30, 2021 | 2.25 | |||||
November 2, 2021(13) | November 17, 2021 | December 30, 2021 | 2.00 | |||||
December 20, 2021(14) | December 31, 2021 | January 14, 2022 | 0.75 | |||||
Fiscal 2022: | ||||||||
March 8, 2022(15) | March 25, 2022 | April 15, 2022 | 0.11 | |||||
Total | $ | 12.10 |
(1) | The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,860,903 shares of common stock issued in lieu of cash, or approximately 14.8% of our outstanding shares prior to the distribution, as well as cash of $26,358,885. The number of shares of common stock comprising the stock portion was calculated based on a price of $9.425 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on December 28, 29 and 30, 2015. None of the $2.76 per share distribution represented a return of capital. |
(2) | Of the total distribution of $887,240 on August 24, 2016, $820,753 represented a distribution from realized gains, and $66,487 represented a return of capital. |
(3) | All of the $3,512,849 distribution paid on December 12, 2019 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(4) | All of the $2,107,709 distribution paid on January 15, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(5) | All of the $2,516,452 distribution paid on August 25, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(6) | All of the $5,071,326 distribution paid on October 20, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(7) | All of the $4,978,504 distribution paid on November 30, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(8) | All of the $4,381,084 distribution paid on January 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(9) | All of the $4,981,131 distribution paid on February 19, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(10) | All of the $6,051,304 distribution paid on April 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. |
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(11) | The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding shares prior to the distribution, as well as cash of $29,987,589. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.07 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on May 12, 13, and 14, 2021. None of the $2.50 per share distribution represented a return of capital. |
(12) | The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding shares prior to the distribution, as well as cash of $29,599,164. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.55 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on August 11, 12, and 13, 2021. None of the $2.25 per share distribution represented a return of capital. |
(13) | The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,170,807 shares of common stock issued in lieu of cash, or approximately 7.5% of our outstanding shares prior to the distribution, as well as cash of $28,494,812. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.39 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on November 11, 12, and 13, 2021. None of the $2.00 per share distribution represented a return of capital. |
(14) | All of the $23,338,915 distribution paid on January 14, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital. |
(15) | All of the $3,441,824 distribution paid on April 15, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital. |
We intend to focus on making equity-based investments from which we will derive primarily capital gains. As a consequence, we do not anticipate that we will pay GSV Asset Managementdistributions on a base management feequarterly basis or become a predictable distributor of 1.75%,distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments. If there are earnings or realized capital gains to be distributed, we intend to declare and pay a 0.25% reduction fromdistribution at least annually. The amount of realized capital gains available for distribution to stockholders will be impacted by our tax status.
Our current intention is to make any future distributions out of assets legally available therefrom in the 2.0% base management fee payableform of additional shares of our common stock under our dividend reinvestment plan, except in the case of stockholders who elect to receive dividends and/or long-term capital gains distributions in cash. Under the dividend reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. Any distributions reinvested under the Advisory Agreement. This waiverplan will nevertheless be treated as received by the U.S. stockholder for U.S. federal income tax purposes, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the dividend reinvestment plan, it will be required to pay applicable federal, state and local taxes on any reinvested dividends even though such stockholder will not receive a corresponding cash distribution. Stockholders that hold shares in the name of a portionbroker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash.
So long as we qualify and maintain our tax treatment as a RIC, we generally will not be subject to U.S. federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our consolidated financial statements. See “Note 2—Significant Accounting Policies—U.S. Federal and State Income Taxes” and “Note 9—Income Taxes” to our condensed consolidated financial statements as of June 30, 2023 for more information. The Taxable Subsidiaries included in our condensed consolidated financial statements are taxable subsidiaries, regardless of whether we are taxed as a RIC. These taxable subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the base management feeportfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in our condensed consolidated financial statements.
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Critical Accounting Policies
Critical accounting policies and practices are the policies that are both most important to the portrayal of our financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. These include estimates of the fair value of our Level 3 investments and other estimates that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of certain revenues and expenses during the reporting period. It is not subjectlikely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ materially from such estimates. See “Note 2—Significant Accounting Policies” to recourse againstour condensed consolidated financial statements as of June 30, 2023 for further detail regarding our critical accounting policies and recently issued or reimbursement by us.adopted accounting pronouncements.
Related-Party Transactions
See “Note 3—Related-Party Arrangements” to our condensed consolidated financial statements as of June 30, 2023 for more information.
Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk
Market Risk
Our equity investments are primarily in growth companies that in many cases have short operating histories and are generally illiquid. In addition to the risk that these companies may fail to achieve their objectives, the price we may receive for these companies in private transactions may be significantly impacted by periods of disruption and instability in the capital markets. While these periods of disruption generally have little actual impact on the operating results of our equity investments, these events may significantly impact the prices that market participants will pay for our equity investments in private transactions. This may have a significant impact on the valuation of our equity investments.
Valuation Risk
Our investments may not have a readily available market quotation, as such term is defined in Rule 2a-5, and we value these investments at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy, as applicable. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material. In addition, if we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.
Interest Rate Risk
We are subject to financial market risks, which could include, to the extent we utilize leverage with variable rate structures, changes in interest rates. As we invest primarily in equity rather than debt instruments, we would not expect fluctuations in interest rates to directly impact the return on our portfolio investments, although any significant change in market interest rates could potentially have an adverse effect on the business, financial condition and results of operations of the portfolio companies in which we invest.
As of SeptemberJune 30, 2017,2023, all of our debt investments and outstanding borrowings bore a fixed raterates of interest. As of September 30, 2017, all of our borrowings bore a fixed rate of interest with the exception of the Credit Facility, which is indexed to the prime rate. We do not expect a significant impact on net investment income or loss due to changes in the prime rate, based on its historical stability. The table below, however, indicates the impact on our net investment income or loss should the prime rate change.
Based on our September 30, 2017 Condensed Consolidated Statement of Assets and Liabilities, the following table shows the various, incremental impact of changes in interest rates on our net income or loss related to the Credit Facility for the nine months ended September 30, 2017, assuming no changes in our investment income and borrowing structure.
Basis Point Change(1) | Interest Income | Interest Expense | Net Income/(Loss) | |||||||||
Up 300 Basis points | $ | — | $ | 270,000 | $ | (270,000 | ) | |||||
Up 200 Basis points | $ | — | $ | 180,000 | $ | (180,000 | ) | |||||
Up 100 Basis points | $ | — | $ | 90,000 | $ | (90,000 | ) | |||||
Down 100 Basis points | $ | — | $ | (90,000 | ) | $ | 90,000 | |||||
Down 200 Basis points | $ | — | $ | (180,000 | ) | $ | 180,000 | |||||
Down 300 Basis points | $ | — | $ | (270,000 | ) | $ | 270,000 |
Although we believe that this measure is indicative of our sensitivity to the above-referenced interest rate changes, it does not reflect potential changes in credit quality, size and composition of the assets on our statement of assets and liabilities and other business developments that could affect net increase or decrease in net assets resulting from operations, or net income or loss.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of SeptemberJune 30, 2017, we,2023, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended SeptemberJune 30, 2017,2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Item 1. Legal Proceedings
Although we and
We are not currently subject to any material legal proceedings, nor, to our subsidiaries may, fromknowledge, are any material legal proceedings threatened against us. From time to time, we may be involved in litigation arising out of our and our subsidiaries’ operationsa party to certain legal proceedings in the normalordinary course of business, or otherwise, neither we nor anyincluding proceedings relating to the enforcement of our subsidiaries are currently partyrights under contracts with our portfolio companies. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any pendingfuture legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material legal proceedings.effect upon our financial condition or results of operations.
Item 1A. Risk Factors
Investing in our securities involves a number of significant risks. In addition to the other information set forthcontained in this report, you should carefully consider the factors discussed in “Part I. Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2016,2022, filed with the SEC on March 16, 2017,2023, and in “Part II. Item 1A. Risk Factors”the factors discussed in our quarterly report on Form 10-Q for the periodquarter ended June 30, 2017,March 31, 2023, filed with the SEC on August 9, 2017,May 10, 2023, which could materially affect our business, financial condition and/or operating results. TheAlthough the risks described in our annual report on Form 10-K for the fiscal year ended December 31, 20162022 and in our quarterly report on Form 10-Q for the periodquarter ended June 30, 2017March 31, 2023 represent the principal risks associated with an investment in us, they are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also maymight materially and adversely affect our business, financial condition and/or operating results. During the three months ended September 30, 2017, thereThere have been no material changes to the risk factors discussed in “Part I. Item“Item 1A. Risk Factors” inof Part I of our annual report on Form 10-K for the fiscal year ended December 31, 2016, and2022, or the risk factors discussed in “Part II. Item“Item 1A. Risk Factors” inor Part II of our quarterly report on Form 10-Q for the periodquarter ended June 30, 2017.March 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Equity Securities
We did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933, as amended.
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Issuer Purchases of Equity Securities(1)
Information relating to the Company’sour purchases of itsour common stock during the threesix months ended SeptemberJune 30, 20172023 is as follows:
Period | Total Number of Shares Purchased(2) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Share Repurchase Program | ||||||||||||
January 1 through January 31, 2023 | — | $ | — | — | $ | 16,364,771 | ||||||||||
February 1 through February 28, 2023 | — | — | — | 16,364,771 | ||||||||||||
March 1 through March 31, 2023 | — | — | — | 16,364,771 | ||||||||||||
April 1 through April 30, 2023 | 3,000,000 | 4.50 | 3,000,000 | 16,364,771 | ||||||||||||
May 1 through May 31, 2023 | — | — | — | 16,364,771 | ||||||||||||
June 1 through June 30, 2023 | — | — | — | 16,364,771 | ||||||||||||
Total | 3,000,000 | 3,000,000 |
On March 17, 2023, we commenced the Modified Dutch Auction Tender Offer to purchase up to 3,000,000 shares of our common stock from our stockholders, which expired on April 17, 2023. In accordance with the terms of the Modified Dutch Auction Tender Offer, we selected the lowest price per share of not less than $3.00 per share and not greater than $4.50 per share.
Pursuant to the Modified Dutch Auction Tender Offer, we repurchased 3,000,000 shares, representing 10.6% of our outstanding shares, on or about April 21, 2023 at a price of $4.50 per share. We used available cash to fund the purchase of our shares of common stock in the Modified Dutch Auction Tender Offer and to pay for all related fees and expenses.
Period | Total Number of Shares Purchased(2) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Share Repurchase Program(4) | ||||||||||||
July 1 through July 31, 2017 | — | $ | — | — | $ | — | ||||||||||
August 1 through August 31, 2017 | 301,712 | 4.60 | 291,712 | 3,658,307 | ||||||||||||
September 1 through September 30, 2017 | 323,322 | 5.16 | 282,397 | $ | 2,199,190 | |||||||||||
Total | 625,034 | 574,109 | (3) |
(1) | On August 8, 2017, we announced the $5.0 million discretionary open-market Share Repurchase Program under which |
(2) | Includes purchases of our common stock made on the open market by or on behalf of any “affiliated purchaser,” as defined in Exchange Act Rule 10b-18(a)(3), of the Company. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety DisclosureDisclosures
Not applicable.
Item 5. Other Information
Not applicable.
For the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company has entered into any (i) contract, instruction or written plan for the purchase or sale of securities of the registrant intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or (ii) any non-Rule 10b5-1 trading arrangement.
The Company has adopted insider trading policies and procedures governing the purchase, sale, and disposition of the Company’s securities by officers and directors of the Company that are reasonably designed to promote compliance with insider trading laws, rules and regulations.
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Item 6. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
(1) |
Previously filed in connection with Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-171578), filed on March 30, 2011, and incorporated by reference herein. |
(2) | Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852), filed on June 1, 2011, and incorporated by reference herein. |
(3) | Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on August 1, 2019, and incorporated by reference herein. |
(4) | Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on June |
(5) | Previously filed in connection with the Registrant’s Registration Statement on Form N-2 (File No. 333-239681), filed on July 2, 2020, and incorporated by reference herein. |
(6) | Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on December 17, 2021, and incorporated by reference herein. |
(7) | Previously filed in connection with the Registrant’s Annual Report on Form 10-K (File No. 814-00852) filed on March 11, 2022, and incorporated by reference herein. |
(8) | Previously filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on April 19, 2023, and incorporated by reference herein. |
* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: | August 9, | By: | /s/ Mark D. Klein | |
Mark D. Klein | ||||
Chairman, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | August 9, 2023 | By: | /s/ | |
Allison Green | ||||
Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary | ||||
(Principal Financial and Accounting Officer) |
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