SuRo Capital(SSSS) - 2023 Q2 - Quarterly Report

Investment Portfolio - As of June 30, 2023, the fair value of the investment portfolio was $160,283,146[225]. - During the six months ended June 30, 2023, the company funded investments totaling $13,829,990, including $9,999,990 in ServiceTitan, Inc.[226]. - The company realized a net loss on investments of $(13,080,856) during the six months ended June 30, 2023, with total proceeds from investments amounting to $7,587,861[229]. - The average net share price realized from investments was significantly impacted by losses from Nextdoor Holdings, Inc. and Rent the Runway, Inc., totaling $(2,428,701) and $(961,837) respectively[229]. - For the same period in 2022, the company funded investments of $11,000,000 and realized a net gain on investments of $1,130,050[234]. - The company has a disciplined investment philosophy focusing on high-growth, venture-backed companies across key industry themes[217]. - The company aims to maximize total return primarily through capital gains on equity investments, with a secondary focus on income from debt investments[215]. - The company is actively negotiating investments in various private companies, subject to applicable closing conditions[253]. Financial Performance - Total investment income increased to $1,372,218 for the three months ended June 30, 2023, up from $890,631 for the same period in 2022, driven by interest income from U.S. Treasury bills and Xgroup Holdings Limited[238][239]. - Total operating expenses rose to $5,177,558 for the three months ended June 30, 2023, compared to $4,701,519 for the same period in 2022, primarily due to increased compensation expenses[241]. - Net investment loss for the three months ended June 30, 2023, was $(3,805,340), slightly improved from $(3,810,888) in the same period of 2022[243]. - The company recognized a net realized loss on investments of $(13,270,199) for the three months ended June 30, 2023, compared to a net realized loss of $(1,966,225) for the same period in 2022[245]. - There was a net change in unrealized appreciation of $1,455,515 for the three months ended June 30, 2023, contrasting with a significant depreciation of $(88,562,575) in the same period of 2022[247]. - Total investment income for the six months ended June 30, 2023, reached $2,671,300, up from $1,473,731 for the same period in 2022[240]. - Total operating expenses for the six months ended June 30, 2023, increased to $10,698,405 from $9,509,324 in the same period of 2022[242]. - Net investment loss for the six months ended June 30, 2023, was $(8,027,105), compared to $(8,035,593) for the same period in 2022[244]. - The net change in unrealized appreciation for the six months ended June 30, 2023, was $10,104,446, compared to a depreciation of $(66,977,690) in the same period of 2022[250]. Share Repurchase and Cash Reserves - The company authorized an extension and a $5.0 million increase in its Share Repurchase Program, allowing for a total repurchase of up to $60.0 million in common stock until October 31, 2024[254]. - As of August 8, 2023, approximately $21.4 million remained available for repurchase under the Share Repurchase Program[256]. - Cash reserves decreased to $24,542,729 as of June 30, 2023, down from $40,117,598 at the beginning of the year, primarily due to stock repurchases and operating expenses[262]. - The company repurchased 3,000,000 shares, representing 10.6% of outstanding shares, at a price of $4.50 per share during the Modified Dutch Auction Tender Offer[268]. - The total cash reserves and liquid securities amounted to $111,989,560 as of June 30, 2023, compared to $138,497,900 as of December 31, 2022, indicating a decrease of approximately 19.2%[260]. - The company did not repurchase any shares under the Share Repurchase Program during the three and six months ended June 30, 2023, contrasting with repurchases of 855,159 and 1,008,676 shares in the same periods of 2022[265]. Debt and Distributions - The company issued $75.0 million in 6.00% Notes due 2026, with a maturity date of December 30, 2026, and interest payable quarterly[273]. - Total contractual obligations as of June 30, 2023, amounted to $75.2 million, primarily related to the 6.00% Notes[264]. - The company intends to focus on equity-based investments primarily for capital gains, with distributions expected to be less consistent than those of other BDCs that primarily make debt investments[280]. - The company plans to declare and pay distributions at least annually if there are earnings or realized capital gains available for distribution[280]. - The company’s dividend reinvestment plan allows stockholders to reinvest cash distributions into additional shares, impacting tax obligations[281]. Investment Risks and Valuation - The company’s investments are primarily in growth companies, which may be illiquid and subject to market risk, impacting valuation[285]. - The fair value of investments is determined by the Board of Directors, which may fluctuate due to the inherent uncertainty of valuation[286]. - As of June 30, 2023, all debt investments and outstanding borrowings bore fixed rates of interest, mitigating interest rate risk[288].