SURO CAPITAL CORP
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
NSLR$5.76+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001493152-24-018344
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001493152-24-030665
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 89 current paragraphs.
53 unchanged; 24 reworded; 9 added; 2 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 20 previous and 44 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Six Months Ended June 30, 2024
Current report
Six Months Ended June 30, 2023
Current report
Investment income decreased to $2,555,444 for the six months ended June 30, 2024 from $2,671,300 for the six months ended June 30, 2023. The net decrease between periods was due to a decrease in interest income from short-term U.S. Treasury bills and the repayment in full of the Residential Homes for Rent, LLC (d/b/a Second Avenue) term loan as of December 26, 2023, and a decrease in dividend income from NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) following our complete exit in December 2023. The decrease was offset by an increase in interest income received on cash and from Architect Capital PayJoy SPV, LLC during the six months ended June 30, 2024, relative to the six months ended June 30, 2023.
Current report
Total operating expenses decreased to $9,433,971 for the six months ended June 30, 2024 from $10,698,405 for the six months ended June 30, 2023. The decrease in operating expense was primarily due to decreases in income tax expense related to blocker corporations, professional fees, and other expenses, offset by increases primarily in compensation expense and stock-based compensation expense during the six months ended June 30, 2024, relative to the six months ended June 30, 2023.
Current report
For the six months ended June 30, 2024, we recognized a net investment loss of $6,878,527, compared to a net investment loss of $8,027,105 for the six months ended June 30, 2023. The change between periods resulted from a decrease in operating expenses during the six months ended June 30, 2024, relative to the six months ended June 30, 2023.
Current report
Note Repurchase Program
Current report
On August 6, 2024, our Board of Directors approved a discretionary note repurchase program (the “Note Repurchase Program”) which allows us to repurchase up to 46.67%, or $35.0 million in aggregate principal amount, of our 6.00% Notes due 2026 through open market purchases, including block purchases, in such manner as will comply with the provisions of the 1940 Act and the Exchange Act. As of August 7, 2024, we had not repurchased any of the 6.00% Notes due 2026 under the Note Repurchase Program.
Current report
Convertible Notes
Current report
On August 6, 2024, we entered into a Note Purchase Agreement (the “Note Purchase Agreement”), by and between the Company and the purchaser identified therein (the “Purchaser”), pursuant to which we may issue up to a maximum of $75.0 million in aggregate principal amount of 6.50% Convertible Notes due 2029 (the “Convertible Notes”). Pursuant to the Note Purchase Agreement, we agreed to issue and sell, and the Purchaser agreed to purchase, up to $25.0 million in aggregate principal amount of the Convertible Notes (the “Initial Notes”). Thereafter, upon mutual agreement between the Company and the Purchaser, we may issue additional Convertible Notes for sale in subsequent offerings (the “Additional Notes”), or issue additional notes with modified pricing terms (the “New Notes”), in the aggregate for both the Additional Notes and the New Notes, up to a maximum of $50.0 million in one or more private offerings. The Purchaser will acquire, and we will issue, up to $25.0 million of the Initial Notes on or about August 14, 2024 (the “Initial Closing Date”), and thereafter at such time and date as the Purchaser and we mutually agree to purchase and sell any Additional Notes. Interest on the Convertible Notes will be paid quarterly in arrears on March 30, June 30, September 30, and December 30, at a rate of 6.50% per year, beginning September 30, 2024. The Convertible Notes will mature on August 14, 2029 and may be redeemed in whole or in part at any time or from time to time at our option on or after August 6, 2027 upon the fulfillment of certain conditions. The Convertible Notes will be convertible into shares of our common stock at the Purchaser’s sole discretion at an initial conversion rate of 129.0323 shares of our common stock per $1,000 principal amount of the Convertible Notes, subject to adjustment as provided in the Note Purchase Agreement. The net proceeds from the offering will be used to repay outstanding indebtedness, make investments in accordance with our investment objective and investment strategy, and for other general corporate purposes. The Note Purchase Agreement includes customary representations, warranties, and covenants by the Company.
Removed paragraphs (2)
Previous report
Three Months Ended March 31, 2024
Previous report
Three Months Ended March 31, 2023
Reworded paragraphs (24)
Previous wording
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous wording
Our investment philosophy is based on a disciplined approach of identifying promising investments in high-growth, venture-backed companies across several key industry themes which may include, among others, social/mobile/consumer, cloud computing and big data, internet commerce, financial technology, mobility, enterprise software, and sustainability. 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 path to profitability, as well as an understanding of key market fundamentals. Venture capital funds or other institutional investors have invested in the vast majority of companies that we evaluate.
Current wording
Our investment philosophy is based on a disciplined approach of identifying promising investments in high-growth, venture-backed companies across several key industry themes which may include, among others, AI/big data/cloud, marketplaces, education technology, social/mobile/consumer, financial technology, and sustainability/alternative energy. 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 path to profitability, as well as an understanding of key market fundamentals. Venture capital funds or other institutional investors have invested in the vast majority of companies that we evaluate.
Previous wording
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 March 31, 2023, of all of our portfolio investments, excluding U.S. Treasury bills, was $165,088,040.
Current wording
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 June 30, 2024 of all of our portfolio investments was $182,904,880.
Previous wording
During the three months ended March 31, 2023, we funded investments in an aggregate amount of $3,330,000 (not including capitalized transaction costs or investments in short-term U.S. Treasury investments) as shown in the following table:
Current wording
During the six months ended June 30, 2024, we funded investments in an aggregate amount of $34,999,944 (not including capitalized transaction costs) as shown in the following table:
Previous wording
During the three months ended March 31, 2024, we capitalized fees of $3,938.
Current wording
During the six months ended June 30, 2024, we capitalized fees of $73,100.
Previous wording
During the three months ended March 31, 2024, we exited or received proceeds from investments in the amount of $318,316, net of transaction costs, and realized a net loss on investments of $424,074 (including adjustments to amounts held in escrow receivable) as shown in following table:
Current wording
During the six months ended June 30, 2024, we exited or received proceeds from investments (not including short-term U.S. Treasury bills) in the amount of $10,551,335, net of transaction costs, and realized a net loss on investments of $453,686 (including adjustments to amounts held in escrow receivable) as shown in following table:
Previous wording
During the three months ended March 31, 2024, we did not write-off any investments.
Current wording
During the six months ended June 30, 2024, we did not write-off any investments.
Previous wording
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 March 31, 2024, of all of our portfolio investments, excluding short-term U.S. Treasury bills, was $175,015,571.
Current wording
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 June 30, 2023, of all of our portfolio investments, excluding short-term U.S. Treasury bills, was $160,283,146.
Previous wording
During the three months ended March 31, 2024, we funded investments in an aggregate amount of $9,999,996 (not including capitalized transaction costs or investments in short-term U.S. Treasury bills) as shown in the following table:
Current wording
During the six months ended June 30, 2023, we funded investments in an aggregate amount of $13,829,990 (not including capitalized transaction costs or investments in short-term U.S. Treasury bills) as shown in the following table:
Previous wording
During the three months ended March 31, 2023, we capitalized fees of $3,698.
Current wording
During the six months ended June 30, 2023, we capitalized fees of $14,723.
Previous wording
During the three months ended March 31, 2023, we exited or received proceeds from investments in the amount of $4,190,159, net of transaction costs, and realized a net gain on investments of $189,343 (including adjustments to amounts held in escrow receivable) as shown in following table:
Current wording
During the six months ended June 30, 2023, we exited or received proceeds from investments (not including short-term U.S. Treasury bills) 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:
Previous wording
During the three months ended March 31, 2023, we did not write-off any investments.
Current wording
During the six months ended June 30, 2023, we did not write-off any investments, not otherwise noted above.
Previous wording
Comparison of the Three Months Ended March 31, 2024 and 2023
Current wording
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous wording
Operating results for the three months ended March 31, 2024 and 2023 are as follows:
Current wording
Operating results for the three and six months ended June 30, 2024 and 2023 are as follows:
Previous wording
Investment income increased to $1,528,091 for the three months ended March 31, 2024 from $1,299,082 for the three months ended March 31, 2023. The net increase between periods was due to increases in interest on idle cash and interest income from Architect Capital PayJoy SPV, LLC. The increase was offset by a decrease in interest income from U.S. Treasury Bills and Residential Homes for Rent, LLC (d/b/a Second Avenue), and a decrease in dividend income from NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) during the three months ended March 31, 2024, relative to the three months ended ended March 31, 2023.
Current wording
Investment income decreased to $1,027,353 for the three months ended June 30, 2024 from $1,372,218 for the three months ended June 30, 2023. The net decrease between periods was due to a decrease in interest income from short-term U.S. Treasury bills and the repayment in full of the Residential Homes for Rent, LLC (d/b/a Second Avenue) term loan as of December 26, 2023, and a decrease in dividend income from NewLake Capital Partners, Inc. (f/k/a GreenAcreage Real Estate Corp.) following our complete exit in December 2023. The decrease was offset by an increase in interest income on cash during the three months ended June 30, 2024, relative to the three months ended ended June 30, 2023.
Previous wording
Total operating expenses decreased to $4,750,993 for the three months ended March 31, 2024 from $5,520,847 for the three months ended March 31, 2023. The decrease in operating expense was primarily due to a decrease in income tax expense related to blocker corporations and professional fees, offset by an increase in compensation expense associated with an increased headcount and stock-based compensation expense during the three months ended March 31, 2024, relative to the three months ended March 31, 2023.
Current wording
Total operating expenses decreased to $4,682,978 for the three months ended June 30, 2024 from $5,177,558 for the three months ended June 30, 2023. The decrease in operating expense was primarily due to decreases in income tax expense related to blocker corporations, professional fees, and other expenses, offset by increases primarily in compensation expense and stock-based compensation expense during the three months ended June 30, 2024, relative to the three months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, we recognized a net investment loss of $3,222,902, compared to a net investment loss of $4,221,765 for the three months ended March 31, 2023. The change between periods resulted from an increase in total investment income and a decrease in operating expenses during the three months ended March 31, 2024, relative to the three months ended March 31, 2023.
Current wording
For the three months ended June 30, 2024, we recognized a net investment loss of $3,655,625, compared to a net investment loss of $3,805,340 for the three months ended June 30, 2023. The change between periods resulted from a decrease in total investment income and operating expenses during the three months ended June 30, 2024, relative to the three months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, we recognized a net realized loss on our investments of $424,074, compared to a net realized gain of $189,343 for the three months ended March 31, 2023. The components of our net realized losses on portfolio investments for the three months ended March 31, 2024 and 2023, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.”
Current wording
For the three months ended June 30, 2024, we recognized a net realized loss on our investments of $29,612, compared to a net realized loss of $13,270,199 for the three months ended June 30, 2023. The components of our net realized losses on portfolio investments for the three months ended June 30, 2024 and 2023, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.”
Previous wording
For the three months ended March 31, 2024, we had a net change in unrealized appreciation/(depreciation) of $(18,418,370). For the three months ended March 31, 2023, we had a net change in unrealized appreciation/(depreciation) of $8,648,931. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the three months ended March 31, 2024 and 2023.
Current wording
For the three months ended June 30, 2024 and 2023, we had a net change in unrealized appreciation/(depreciation) of $(6,965,946) and $1,455,515, respectively. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the three months ended June 30, 2024 and 2023.
Previous wording
Our primary uses of cash are to make investments, pay our operating expenses, and make distributions to our stockholders. For the three months ended March 31, 2024 and 2023 our operating expenses were $4,750,993 and $5,520,847, respectively.
Current wording
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, 2024 and 2023, our operating expenses including interest payments on our debt obligations were $9,433,971 and $10,698,405, respectively.
Previous wording
During the three months ended March 31, 2024, cash increased to $50,814,399 from $28,178,352 at the beginning of the year. The increase in cash was primarily due to the sale or exit of investments, including U.S. Treasury bills and other investment income received, offset by the purchase of new investments, our operating expenses, and interest payments on the 6.00% Notes due 2026.
Current wording
During the six months ended June 30, 2024, cash increased to $54,379,773 from $28,178,352 at the beginning of the year. The increase in cash was primarily due to the sale or exit of investments, including short-term U.S. Treasury bills and other investment income received, offset by the purchase of new investments, repurchase of our common stock pursuant to a modified “Dutch Auction” tender offer (the “Modified Dutch Auction Tender Offer”), payment of our operating expenses, and payment of interest on the 6.00% Notes due 2026. 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, 2024.
Previous wording
During the three months ended March 31, 2024, we did not repurchase any shares of our common stock under the discretionary open-market share repurchase program (the “Share Repurchase Program”). During the three months ended March 31, 2023, we did not repurchase any shares of our common stock under the Share Repurchase Program. As of March 31, 2024, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $20.7 million. Currently, the Share Repurchase Program is authorized until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0 million in aggregate amount of our common stock.
Current wording
During the three and six months ended June 30, 2024, we did not repurchase any shares of our common stock under the discretionary open-market share repurchase program (the “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. As of June 30, 2024, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $20.7 million. Currently, the Share Repurchase Program is authorized until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0 million in aggregate amount of our common stock.
Previous wording
On February 14, 2024, our Board of Directors authorized a modified Dutch Auction tender offer (the “Tender Offer”) to purchase up to 2,000,000 shares of our common stock at a price per share of not less than $4.00 and not greater than $5.00 in $0.10 increments, using available cash. The Tender Offer commenced on February 20, 2024 and expired at 5:00 P.M. Eastern Time on April 1, 2024. Pursuant to the terms of the Tender Offer, we repurchased 2,000,000 shares, representing 7.9% of our outstanding shares, on or about April 5, 2024 at a price of $4.70 per share. We used available cash to fund the purchase of our shares of common stock in the Tender Offer and to pay for all related fees and expenses.
Current wording
Pursuant to the Modified Dutch Auction Tender Offer, we repurchased 2,000,000 shares, representing 7.9% of our then-outstanding shares, on or about April 5, 2024 at a price of $4.70 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.
Previous wording
During the three months ended March 31, 2024, we did not issue or sell Shares under the ATM program. As of March 31, 2024, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.
Current wording
During the three and six months ended June 30, 2024, we did not issue or sell Shares under the ATM program. As of June 30, 2024, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program. During the three and six months ended June 30, 2023, we did not issue or sell Shares under the ATM program.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, we recognized a net realized loss on our investments of $453,686, compared to a net realized loss of $13,080,856 for the six months ended June 30, 2023. The components of our net realized losses on portfolio investments for the six months ended June 30, 2024 and 2023, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.”
Current report — wording carried from elsewhere
For the six months ended June 30, 2024 and 2023, we had a net change in unrealized appreciation/(depreciation) of $(25,384,316) and $10,104,446, respectively. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
On February 20, 2024, we commenced the Modified Dutch Auction Tender Offer to purchase up to 2,000,000 shares of our common stock from our stockholders, which expired on April 1, 2024. In accordance with the terms of the Modified Dutch Auction Tender Offer, we selected the lowest price per share of not less than $4.00 per share and not greater than $5.00 per share.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the three months ended March 31, 2023, we did not issue or sell Shares under the ATM program. As of March 31, 2023, up to approximately $98.8 million in aggregate amount of the Shares remain available for sale under the ATM Program.