Mark Klein - Chairman, Chief Executive Officer Allison Green - Chief Financial Officer Jackson Stone - Investments

Good day ladies and gentlemen and thank you for standing by. Welcome to the SuRo Capital’s Second Quarter 2022 Earnings Call. During today’s presentation all parties will be in a listen-only mode. Following this presentation, the conference will be open for questions. This call is being recorded today, Wednesday, August 3, 2022. I will now turn the conference over to Jackson Stone of SuRo Capital. Please go ahead, sir.

Thank you for joining us on today’s call. I am joined today by the Chairman and Chief Executive Officer of SuRo Capital, Mark Klein; and Chief Financial Officer, Allison Green. Please note that a slide presentation corresponding to today’s prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events & Presentations. Today’s call is being recorded and broadcast live on our website, www.surocap.com. Replay information is included in our press release issued today. This call is the property of SuRo Capital and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today’s earnings press release regarding forward-looking information. Statements made in today’s conference call and webcast may constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates and uncertainties, including the impact of the COVID-19 pandemic and any market volatility that may be detrimental to our business, our portfolio companies, our industry and the global economy that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including but not limited to those described from time to time in the company’s filings with the SEC. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of SuRo Capital’s latest SEC filings, please visit our website at www.surocap.com or the SEC’s website at sec.gov. Now, I would like to turn the call over to Mark Klein.

Thank you, Jackson. Good afternoon and thank you for joining us. We are pleased to share the results of SuRo Capital Second Quarter 2022. As we previously mentioned, public equity market performance in the first half of 2022 was the worst first half performance in over 50 years. This decline occurs simultaneously with inflation hitting a four decade high of 9.1% and over 40% year-over-year decrease in the consumer sentiment index to its lowest level since the inception in the 1940s. Private market suffered as well, as numerous late stage unicorns experienced turbulent market conditions. This turbulence has forced new financing rounds, evaluations below previous capital raisings, secondary trades at significant discounts in companies lowering their internal valuations. Originally, reports of companies like Instacart cutting their internal valuation by 38% back in March were surprising. Now reports of companies like Clorina completing financing at an 85% discount to their last financing round, and Stripe marking down their internal valuation by 28% have become increasingly prevalent. While we exited a significant portion of our portfolio in 2021 and have maintained over 40% of our investable assets in cash, we also experienced a challenging quarter. At the end of the second quarter, SuRo Capital had a net asset value of approximately $280 million or $9.24 per share, down from $381 million or $12.22 per share at March 31, 2022. These market dynamics while impactful and short term valuations have provided us with compelling long term investment opportunities. With over $150 million in cash at quarters end, we remain confident and optimistic in seeking out compelling high growth companies. Given current conditions, we believe being judicious on price when assessing potential investment opportunities is paramount to creating shareholder value. Currently we are seeing private companies seeking primary financing at flat or discounted prices…

Thank you, Mark. I would like to follow Mark’s update with a more detailed review of our second quarter investment activity and financial results as of June 30, including details on the share repurchase program and the upcoming Modified Dutch Auction Tender offer, as well as our current liquidity position. First, I will review our own investment activity. Please turn to slide six. During the second quarter we invested a total of $11 million in new and follow-on investments. Investments during the second quarter include a $500,000 follow-on investment in Shogun, 25% short term convertible notes. A $500,000 investment in the Series C preferred shares of EDGE Markets Inc. through SuRo Capital Corp. and a $10 million investment in the Series C preferred shares of WHOOP, Inc. via a secondary trade. Please turn to slide seven. During the second quarter we continued to monetize our public common shares in NewLake Capital Partners and Rover Group and began to monetize our public common shares of Rent the Runway. We sold 3,676 common shares of NewLake Capital Partners for approximately $77,000 of net proceeds, resulting in a net realized gain of approximately $3,000. As of June 30 we have exited 45% of our NLCP position. We've sold 50,000 common shares of Rent the Runway for approximately $181,000 of net proceeds, resulting in a net realized loss of approximately $578,000. As of June 30 we have exited 15% of our rent position and we pulled 431,591 common shares of Rover for approximately $2.4 million of net proceeds, resulting in a net realized gain of approximately $1.1 million. As of June 30 we have exited 57% of our Rover position. Additionally during the quarter we received approximately $874,000 in distributions related to our Limited Partner Fund Investment and True Global Ventures 4 Plus. Finally,…

Thank you, ma'am. [Operator Instructions]. We will take the first question from Jon Hickman, Ladenburg. Your line is open, please go ahead.

Hi! First of all Allison, could you – what's the net liquidity. I missed that number, with including the public shares and cash?

Jon, it’s about $169 million.

$169.4 million.

$169.4, okay, thank you. And then Mark, could you outline a little bit on – so do you believe the private markets are down as much as or more than what’s happened say in the Russell or the NASDAQ.

Well Jon, I think it as most people have read and seen, that the indices while down sharply, don't really tell the whole story and I think we discussed it in our last call. Over 50% of the NASDAQ is down over 50% and something like 20% some odd are down, 70% or more. So – and specially the small, mid-cap growth, I think there's been a significant degradation in value. I think the over the last call it month or so, we are seeing very significant breaks in primary financing and especially in the secondary market. So there is catching up that's occurring and we're clearly seeing that in what we're looking at, including the opportunity to deploy the capital that we just did in Whoop. So thank you and thank you for your ongoing…

Well so, is it safe for us to assume that we could hear like more activity when we – when you talked to us on the third quarter call?

We, I will say that we evaluated more opportunities in this quarter than we've had in many quarters previously. We're being really, really careful of how we deploy our capital and trying to be as opportunistic as we can. But we are obviously open for business and looking to find the best opportunities to deploy the capital. Thank you.

Thank you, Mr. Hickman. It appears there is no further question at this time. I’d like to turn the conference back to you for any additional or closing remarks.

Well, thank all of you for joining us today on our conference call. We appreciate your interest and support and if there's any further questions please reach out through our investor portal and we’ll be sure to get back in touch with you. Thank you all very much. We appreciate it.

This concludes today's call. Thank you for your participation. You may now disconnect.