What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-06 · 414 added, 279 removed, 374 unchanged (65% of the section changed)

47 unchanged sentences

with the SEC.

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

These risks and uncertainties include those described or identified in our quarterly reports on Form 10-Q and our

annual report on Form 10-K in the “Risk Factors” 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.

are an internally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development

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 our quarterly reports on Form 10-Q and our annual report on Form 10-K in the “Risk Factors”

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.

are an externally 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, as amended (the “1940 Act”), and has elected to be

1 unchanged sentence

Code of 1986, as amended (the “Code”).

Effective July 15, 2026, we are externally managed by Neostellar Advisors LLC (the

“Adviser”), which sources, evaluates and monitors our investments subject to the oversight of our Board of Directors, and

we pay the Adviser a base management fee and an incentive fee and reimburse the Administrator for certain expenses.

investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related

36 unchanged sentences

however, to dispose of any non-qualifying assets in such circumstances.

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.

formed in 2010 as a Maryland corporation and, until July 15, 2026, operated as an internally managed, non-diversified closed-end management investment company.

Our investment activities were supervised by our Board of Directors and managed by our executive officers and investment professionals,

all of whom were our employees.

date of inception was January 6, 2011, which is the date we commenced development stage activities.

6 unchanged sentences

As an internally managed BDC, we

are managed by our employees, rather than the employees of an external investment adviser.

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.

were managed by our employees, rather than the employees of an external investment adviser.

On June 10, 2026, our stockholders approved

a new investment advisory agreement and, effective July 15, 2026, we transitioned to an externally managed BDC managed by Neostellar

Advisors LLC and changed our name to “Neostellar Capital Corp.” As an externally managed BDC, our

investment activities are managed by the Adviser, and we no longer have employees.

Following the Externalization, we pay a base management

fee, an incentive fee and administration expense reimbursements.

and Investment Activity

Months Ended March 31, 2026

Months Ended June 30, 2026

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, 2026 of all of our portfolio investments was $388,534,651.

the three months ended March 31, 2026, we funded investments in an aggregate amount of $5,000,000 (not including capitalized transaction

The fair value as of June 30, 2026 of all of our portfolio investments was $405,851,701.

the six months ended June 30, 2026, we funded investments in an aggregate amount of $29,696,170 (not including capitalized transaction

costs) as shown in the following table:

Opportunity 2025-4 LP (1)

Opportunity 2025-4 LP is an SPV for which the Class A Interest is invested in TensorWave Inc.

On December 31, 2025, SuRo Capital

committed up to $20.0 million to Magnetar Opportunity 2025-4 LP.

On January 2, 2026, SuRo Capital funded $5.0 million of the

Magnetar Opportunity 2025-4 LP does not charge a management fee but does charge an incentive fee of 20%, subject to an

annual 15% IRR hurdle rate.

As of March 31, 2026, $15.0 million of the commitment remains to be funded, subject to the satisfaction

of certain conditions

the three months ended March 31, 2026, we capitalized fees of $12,250.

the three months ended March 31, 2026, we exited or received proceeds from investments in the amount of $1,603,659, net of transaction costs, and realized a net gain on investments

of $890,513 as shown in the following table :

Net Share Price (1)

GrabAGun Digital

Holdings Inc.

Portfolio Company

Transaction Date

Gross Payments

Magnetar Opportunity 2025-4 LP (1)

Class A Interest

Huntress Labs Inc.

Common Shares

True Global Ventures 4

ClickHouse, Inc.

Preferred Shares, Series A

Magnetar Opportunity 2025-4 LP (1)

Class B Interest

Opportunity 2025-4 LP is an SPV for which the Class A Interest and Class B Interest are invested

in the Class B Preferred Shares of TensorWave Inc.

Magnetar Opportunity 2025-4 LP does not charge a management fee but does

charge an incentive fee of 20%, subject to an annual 15% IRR hurdle rate.

the six months ended June 30, 2026, we capitalized fees of $124,628.

the six months ended June 30, 2026, we exited or received proceeds from investments in the amount of $13,746,165, net of transaction

costs, and realized a net gain on investments of $5,940,033 (including adjustments to amounts held in escrow receivable) as shown in the following table:

Portfolio Company

Transaction Date

Average Net Share Price (1)

Realized Gain (2)

GrabAGun Digital Holdings Inc.

- Common Shares (3)

CW Opportunity 2 LP (4)

True Global Ventures 4 Plus Pte Ltd (5)

HL Digital Assets Inc.

average net share price is the net share price realized after deducting all commissions and

fees on the sale(s), if applicable.

of March 31, 2026, SuRo Capital held 599,754 remaining GrabAGun Digital Holdings Inc.

Months Ended March 31, 2025

(2) Realized gain does not include adjustments to amounts held in escrow receivable.

of June 30, 2026, Neostellar Capital held 452,619 remaining GrabAGun Digital Holdings Inc.

Common Shares.

Opportunity 2 LP is an SPV for which the Class A Interest is solely invested in the Class

A Common Shares of CoreWeave, Inc.

Neostellar Capital is invested in the Class A Common Shares

of CoreWeave, Inc.

through its investment in the Class A Interest of CW Opportunity 2 LP.

CW Opportunity 2 LP does not charge a management fee but does charge an incentive fee of

20%, subject to an annual 15% IRR hurdle rate.

As of June 30, 2026, Neostellar Capital retains approximately 55.9% of its investment in

CW Opportunity 2 LP.

March 5, 2026, we received a return of capital distribution from our investment in True Global Ventures 4 Plus Pte Ltd.

(6) On June 5, 2026, the Company received a distribution

reflecting a full exit of our investment in HL Digital Assets Inc.

HL Digital Assets Inc.’s primary purpose is to invest in

HYPE, the digital token of Hyperliquid.

Months Ended June 30, 2025

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, 2025 of all of our portfolio investments was $213,577,198.

the three months ended March 31, 2025, we funded investments in an aggregate amount of $1,303,010 (not including capitalized transaction

The fair value as of June 30, 2025 of all of our portfolio investments was $243,798,547.

the six months ended June 30, 2025, we funded investments in an aggregate amount of $6,302,884 (not including capitalized transaction

costs) as shown in the following table:

Portfolio Company

Transaction Date

Gross Payments

Orchard Technologies, Inc.

2 unchanged sentences

Simple Agreement for Future Equity

Simple Agreement for

Future Equity

the three months ended March 31, 2025, we capitalized fees of $4,568.

the three months ended March 31, 2025, we did not exit or receive proceeds from any of our investments, and realized a net loss on investments

of $17,951 (including adjustments to amounts held in escrow receivable).

the three months ended March 31, 2025, we did not write-off any investments.

Simple Agreement for Future Equity

Common Shares, Class A

(1) Neostellar

Capital’s investment in the Class A Common Shares of Plaid Inc.

was made through 1789

Capital Nirvana II LP, an SPV in which Neostellar Capital is the Sole Limited Partner.

Capital paid a 7% origination fee at the time of investment.

the six months ended June 30, 2025, we capitalized fees of $400,237.

the six months ended June 30, 2025, we exited or received proceeds from investments in the amount of $41,251,774, net of transaction

costs, and realized a net gain on investments of $21,194,660 (including adjustments to amounts held in escrow receivable) as shown in

following table:

Portfolio Company

Transaction Date

Share Price (1)

Realized Gain (2)

CoreWeave, Inc.

ServiceTitan, Inc.

average net share price is the net share price realized after deducting all commissions and

fees on the sale(s), if applicable.

gain does not include adjustments to amounts held in escrow receivable.

of June 20, 2025, we had sold the entirety of our directly held CoreWeave, Inc.

public common

As of June 30, 2025, we continue to hold the entirety of our interest in CW Opportunity

of June 27, 2025, we had sold our entire position in ServiceTitan, Inc.

public common shares.

of Operations

of the Three Months Ended March 31, 2026 and 2025

results for the three months ended March 31, 2026 and 2025:

Months Ended March 31,

Total Investment

of the three and six months ended June 30, 2026 and 2025

results for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Six Months Ended June 30,

Total Investment Income

Interest income

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$ (3,722,160 )

Net realized gain/(loss) on investments

Realized loss on partial repurchase of 6.00%

Notes due December 30, 2026

Net change in unrealized appreciation/(depreciation)

of investments

Net Change in Net Assets

Resulting from Operations

$ (27,333,176 )

Investment income increased to $731,963 for the three months ended March

31, 2026 from $499,094 for the three months ended March 31, 2025.

The net increase between periods was primarily due to an increase in

interest income received on cash, an increase in interest accruals on our investment in the Supplying Demand, Inc.

(d/b/a Liquid Death) Convertible

Note, and an increase in dividend income from Treehouse Real Estate Investment Trust, Inc.

The increases were

offset by the cessation of dividend income from CW Opportunity 2 LP during the three months ended March 31, 2026, relative to the three months

ended March 31, 2025.

operating expenses increased to $4,710,455 for the three months ended March 31, 2026 from $4,160,863 for the three months ended

March 31, 2025.

The increase in operating expenses was primarily due to increases in compensation expense, professional fees, income

tax expense, directors’ fees, and other expenses.

These increases were partially offset by a decrease in interest expense during the

three months ended March 31, 2026, relative to the three months ended March 31, 2025.

$ (7,383,929 )

Net realized gain on investments

Realized loss on partial repurchase of 6.00% Notes due December 30, 2026

Net change in unrealized appreciation/(depreciation) of investments

Net Change in Net Assets Resulting from Operations

$ (18,703,673 )

$ 136,932,387

income increased to $299,650 for the three months ended June 30, 2026 from $167,304 for the three months ended June 30, 2025.

increase between periods was primarily due to an increase in interest income received on cash and an increase in interest accruals on

our investment in the Supplying Demand, Inc.

(d/b/a Liquid Death) Convertible Note.

income increased to $1,031,613 for the six months ended June 30, 2026 from $666,398 for the six months ended June 30, 2025.

The net increase

between periods was primarily due to an increase in interest income received on cash and an increase in interest accruals on our investment

in the Supplying Demand, Inc.

(d/b/a Liquid Death) Convertible Note.

operating expenses increased to $23,654,334 for the three months ended June 30, 2026 from $3,889,464 for the three months ended June

The increase in operating expenses was primarily due to an increase in compensation expense associated with the Externalization, including the acceleration of stock-based compensation expense and tax obligations associated with the vesting

of equity awards.

The increase was also attributable to higher professional fees, directors’ fees, and other expenses, partially

offset by a decrease in interest expense during the three months ended June 30, 2026, relative to the three months ended June 30, 2025.

operating expenses increased to $28,364,789 for the six months ended June 30, 2026 from $8,050,327 for the six months ended June 30,

of equity awards.

The increase was also attributable to higher professional fees, directors’ fees, and other expenses, partially

offset by a decrease in interest expense during the six months ended June 30, 2026, relative to the six months ended June 30, 2025.

Investment Loss

the three months ended March 31, 2026, we recognized a net investment loss of $3,978,492, compared to a net investment loss of $3,661,769

for the three months ended March 31, 2025.

the three months ended June 30, 2026, we recognized a net investment loss of $23,354,684, compared to a net investment loss of $3,722,160

for the three months ended June 30, 2025.

The change between periods resulted from an increase in operating expenses, partially offset

by an increase in total investment income, during the three months ended March 31, 2026, relative to the three months ended March 31,

by an increase in total investment income, during the three months ended June 30, 2026, relative to the three months ended June 30, 2025.

the six months ended June 30, 2026, we recognized a net investment loss of $27,333,176, compared to a net investment loss of $7,383,929

for the six months ended June 30, 2025.

The change between periods resulted from an increase in operating expenses, partially offset

by an increase in total investment income, during the six months ended June 30, 2026, relative to the six months ended June 30, 2025.

Realized Gain/Loss on Investments

the three months ended March 31, 2026, we recognized a net realized gain on our investments of $890,513, compared to a net realized loss

of $17,951 for the three months ended March 31, 2025.

the three months ended June 30, 2026, we recognized a net realized gain on our investments of $5,049,520, compared to a net realized

gain of $21,212,611 for the three months ended June 30, 2025.

The components of our net realized gains or losses on portfolio investments

for the three months ended June 30, 2026 and 2025, excluding short-term U.S.

Treasury bills, are reflected in the tables above, under

“—Portfolio and Investment Activity.”

the six months ended June 30, 2026, we recognized a net realized gain on our investments of $5,940,033, compared to a net realized gain

of $21,194,660 for the six months ended June 30, 2025.

The components of our net realized gains or losses on portfolio investments for

the three months ended March 31, 2026 and 2025, excluding short-term U.S.

Treasury bills, are reflected in the tables above, under “—Portfolio and Investment Activity.”

the six months ended June 30, 2026 and 2025, excluding short-term U.S.

Treasury bills and fluctuations in escrow receivables estimates,

are reflected in the tables above, under “—Portfolio and Investment Activity.”

Change in Unrealized Appreciation/(Depreciation) of Investments

the three months ended March 31, 2026, we had a net change in unrealized appreciation/(depreciation) of $158,724,039.

the three months ended June 30, 2026, we had a net change in unrealized appreciation/(depreciation) of $(398,509).

For the three months

ended March 31, 2025, we had a net change in unrealized appreciation/(depreciation) of $2,888,878.

ended June 30, 2025, we had a net change in unrealized appreciation/(depreciation) of $44,837,619.

The following table summarizes, by

portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the three months

ended March 31, 2026 and 2025.

Portfolio Company

Change in Unrealized Appreciation/(Depreciation) For the Quarter Ended

March 31, 2026

Change in Unrealized Appreciation/(Depreciation) For the Quarter Ended

March 31, 2025

ended June 30, 2026 and 2025.

Appreciation/

(Depreciation)

Appreciation/

(Depreciation)

StormWind, LLC

Opportunity 2 LP

CW Opportunity 2 LP (1)

Sponsor II LLC

Digital Assets Inc.

Holdings, Inc.

Robotics Corp.

ServiceTitan,

change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment,

which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable.

represents investments for which individual changes in unrealized appreciation/(depreciation)

was less than $1.0 million for the three months ended June 30, 2026 and 2025.

the six months ended June 30, 2026, we had a net change in unrealized appreciation/(depreciation) of $158,325,530.

For the six months

ended June 30, 2025, we had a net change in unrealized appreciation/(depreciation) of $47,726,497.

The following table summarizes, by

portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the six months ended

June 30, 2026 and 2025.

Appreciation/

(Depreciation) For the

Six Months Ended

June 30, 2026

Appreciation/

(Depreciation) For the

Six Months Ended

June 30, 2025

$ 122,409,743

ARK Type One Deep Ventures Fund

Colombier Sponsor II LLC

ARK Type One Deep Ventures Fund LLC

Opportunity 2 LP

Sponsor II LLC

Type One Deep Ventures Fund LLC

EDGE Markets, Inc.

PSQ Holdings, Inc.

(d/b/a PublicSquare)

Locus Robotics Corp.

HL Digital Assets Inc.

CW Opportunity 2 LP (1)

Learneo, Inc.

Enterprises, Inc.

(d/b/a Hearth)

Digital Assets Inc.

Holdings, Inc.

(d/b/a PublicSquare)

Property Group, Inc.

(f/k/a Course Hero, Inc.)

Aventine Property Group, Inc.

Blink Health, Inc.

Neutron Holdings, Inc.

(d/b/a/ Lime)

CoreWeave, Inc.

FourKites, Inc.

CW Opportunity 2 LP

Digital Holdings Inc.

ServiceTitan,

Holdings, Inc.

$ 158,325,530

change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment,

which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable.

represents investments for which individual changes in unrealized appreciation/(depreciation)

was less than $1.0 million for the three months ended March 31, 2026 and 2025.

was less than $1.0 million for the six months ended June 30, 2026 and 2025.

and Capital Resources

liquidity and capital resources are generated primarily from the sales of our investments, recent private convertible debt issuances,

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 “Equity Issuances and Debt Capital Activities—At-the-Market Offering”.

On December 17, 2021, we issued $75.0 million aggregate principal amount of our 6.00% Notes due 2026 (the “6.00% Notes due 2026”),

of which $35.8 million remain outstanding as of March 31, 2026.

In addition, on August 14, 2024, we issued $25.0 million in aggregate

principal amount of 6.50% Convertible Notes due 2029, and on October 9, 2024 and January 16, 2025, we issued $5.0 million and $5.0 million,

respectively, in aggregate principal amount of the Additional Notes (as defined below), all of which remain outstanding.

For additional

information, see “Equity Issuances and Debt Capital Activities—6.50% Convertible Notes due 2029” below and “Note

10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of March 31, 2026.

liquidity and capital resources are generated primarily from the sales of our investments, recent private convertible debt

issuances, 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 “Equity Issuances and Debt Capital

Activities—At-the-Market Offering”.

On December 17, 2021, we issued $75.0 million aggregate principal amount of our

6.00% Notes due 2026 (the “6.00% Notes due 2026”), of which $35.8 million remain outstanding as of June 30, 2026.

addition, on August 14, 2024, we issued $25.0 million in aggregate principal amount of 6.50% Convertible Notes due 2029, and on

October 9, 2024 and January 16, 2025, we issued $5.0 million and $5.0 million, respectively, in aggregate principal amount of the

Additional Notes (as defined below).

On July 30, 2026, we filed a shelf registration statement on Form N-2 with the SEC covering up

to $500.0 million of our common stock, preferred stock, subscription rights, debt securities and warrants, which had not been

declared effective as of the date of this quarterly report.

For additional information, see “Equity Issuances and Debt Capital

Activities—6.50% Convertible Notes due 2029” and “Equity Issuances and Debt Capital Activities—Shelf

Registration Statement” below and “Note 10—Debt Capital Activities” and “Note 12—Subsequent Events” to our Condensed Consolidated Financial

Statements as of June 30, 2026.

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, 2026 and 2025 our operating expenses, including interest payments on our debt obligations, were $4,710,455 and $4,160,863,

For the six months

ended June 30, 2026 and 2025 our operating expenses, including interest payments on our debt obligations, were $28,364,789 and $8,050,327,

respectively.

of March 31, 2026, $35.8 million in aggregate principal of our 6.00% Notes due 2026 remained outstanding, with a maturity date of December

We have the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time at a redemption price of 100%

of the outstanding principal amount plus accrued and unpaid interest.

We may also continue to repurchase the 6.00% Notes due 2026 in the

open market under the Note Repurchase Program, which was extended by our Board of Directors on October 29, 2025 and authorizes us to repurchase

of June 30, 2026, $35.8 million in aggregate principal of our 6.00% Notes due 2026 remained outstanding, with a maturity date of December

We have the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time at a redemption price of 100% of the

outstanding principal amount plus accrued and unpaid interest.

We may also continue to repurchase the 6.00% Notes due 2026 in the open

market under the Note Repurchase Program, which was extended by our Board of Directors on October 29, 2025 and authorizes us to repurchase

up to the remaining aggregate principal amount of the 6.00% Notes due 2026.

We intend to satisfy our repayment obligation at maturity

primarily from existing cash balances, and we may also consider refinancing alternatives, including the issuance of new debt securities,

We expect to satisfy our repayment obligation at maturity

through a combination of available cash and proceeds from the sale of portfolio investments, and we may also consider refinancing alternatives, including the issuance of new debt securities,

the sale of portfolio investments, or the issuance of equity under the ATM Program (under which approximately $87.9 million in aggregate

amount of shares remained available for sale as of March 31, 2026).

amount of shares remained available for sale as of June 30, 2026), in each case subject to the effectiveness of our shelf registration statement on Form N-2 filed on July 30,

Any refinancing involving the incurrence of new indebtedness would

require five business days’ prior written notice to the holder of our 6.50% Convertible Notes due 2029 pursuant to the Notes Purchase

As of March 31, 2026, we held approximately $43.3 million in cash, which exceeds the outstanding principal amount of the 6.00%

Notes due 2026 and which we believe is sufficient to satisfy this obligation at maturity.

In addition, as of March 31, 2026, we held approximately

As of June 30, 2026, we held approximately $12.9 million in cash and approximately

$1.7 million of unrestricted securities of publicly traded portfolio companies that could provide an additional source of liquidity.

will continue to evaluate our overall liquidity position and may take additional proactive steps, including the potential early redemption

We will continue to evaluate our overall liquidity position and may take additional proactive steps, including the potential early redemption

or open-market repurchase of some or all of the outstanding 6.00% Notes due 2026, to manage this near-term maturity.

Cash Reserves

and Liquid Securities

Cash Reserves and Liquid Securities

June 30, 2026

December 31, 2025

Restricted cash (1)

1 unchanged sentence

Unrestricted securities (2)

to other sales restrictions(3)

Securities of publicly

traded portfolio companies

Cash Reserves and Liquid Securities

Subject to other sales restrictions (3)

Securities of publicly traded portfolio companies

Total Cash Reserves and Liquid Securities

(1) Restricted

9 unchanged sentences

to certain lock-up restrictions.

the three months ended March 31, 2026, cash decreased to $43,315,750 from $49,034,154 at the beginning of the year.

July 16, 2026, in connection with the Externalization, we issued a $20.0 million redeemable promissory note to MCP Investing LLC, an

affiliate of Magnetar, bearing interest at 6.50% per annum, payable semi-annually in cash, and maturing in 2029, pursuant to a Securities Purchase Agreement dated

June 26, 2026.

Following the Externalization, our operating expenses will include the base management fee and incentive fee payable

to the Adviser and expense reimbursements payable to the Administrator, which will increase our expenses relative to the periods

See “Note 12—Subsequent Events.”

the six months ended June 30, 2026, cash decreased to $12,940,740 from $49,034,154 at the beginning of the year.

The decrease in

cash was primarily due to the purchase of new investments, payment of our operating expenses, and payment of interest on the

6.00% Notes due 2026 and 6.50% Convertible Notes due 2029.

The decrease was offset by the increase in cash from the sale of public securities and investment income received.

cash was primarily due to the purchase of new investments, payment of our operating expenses, including payment of compensation and

payroll taxes related to the anticipated Externalization, and payment of interest on the 6.00% Notes due 2026 and 6.50% Convertible

Notes due 2029.

The decrease was offset by the increase in cash from the sale of public securities and investment income

we believe we have ample liquidity to support our near-term capital requirements.

2 unchanged sentences

the current circumstances.

summary of our significant contractual payment obligations as of March 31, 2026 is as follows:

Due By Period (in millions)

summary of our significant contractual payment obligations as of June 30, 2026 is as follows:

Payments Due By Period (in millions)

6.00% Notes due 2026 (1)

1 unchanged sentence

Operating lease liability

the principal balance payable for the 6.00% Notes due 2026 as of March 31, 2026.

“Note 10—Debt Capital Activities” in our Condensed Consolidated Financial Statements

as of March 31, 2026 for more information.

the principal balance payable for the 6.50% Convertible Notes due 2029 as of March 31, 2026.

Refer to “Note 10—Debt Capital Activities” in our Condensed Consolidated Financial

Statements as of March 31, 2026 for more information.

the principal balance payable for the 6.00% Notes due 2026 as of June 30, 2026.

“Note 10—Debt Capital Activities” in our Condensed Consolidated Financial

Statements as of June 30, 2026 for more information.

the principal balance payable for the 6.50% Convertible Notes due 2029 as of June 30, 2026.

Refer to “Note 10—Debt Capital Activities” in our Condensed Consolidated

Financial Statements as of June 30, 2026 for more information.

Repurchase Program

the three months ended March 31, 2026, we did not repurchase any shares of our common stock under the discretionary open-market

the three and six months ended June 30, 2026 and 2025, we did not repurchase any shares of our common stock under the discretionary open-market

Share Repurchase Program.

As of March 31, 2026, the dollar value of shares that remained available to be purchased under the Share Repurchase

As of June 30, 2026, the dollar value of shares that remained available to be purchased under the Share Repurchase

Program is approximately $25.0 million.

5 unchanged sentences

For more information on the Share Repurchase Program,

see “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of March 31, 2026.

see “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of June 30, 2026.

Sheet Arrangements

of March 31, 2026 and 2025, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging

of June 30, 2026 and 2025, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging

However, we may employ hedging and other risk management techniques in the future.

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investment objective and strategy and for general corporate purposes.

the three months ended March 31, 2026 and 2025, we did not issue or sell Shares under the ATM Program.

As of March 31, 2026,

up to approximately $87.9 million in aggregate amount of the Shares remain available for sale under the ATM Program.

to “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of March 31, 2026 for more

information regarding the ATM Program.

the six months ended June 30, 2026 and 2025, we did not issue or sell Shares under the ATM Program.

As of June 30, 2026, up to approximately

$87.9 million in aggregate amount of the Shares remain available for sale under the ATM Program.

to “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of June 30, 2026 for more information

regarding the ATM Program.

Shelf Registration Statement

On July 30, 2026, we filed a registration statement on Form N-2 with the SEC pursuant to which we may offer,

from time to time in one or more offerings, up to $500.0 million of our common stock, preferred stock, subscription rights to purchase

shares of our common stock, debt securities, or warrants representing rights to purchase shares of our common stock, preferred stock or

debt securities.

As of the date of this quarterly report, the registration statement had not been declared effective, and we had not offered

or sold any securities thereunder.

We intend to use the net proceeds of any offering under the registration statement to make investments

in portfolio companies in accordance with our investment objective and strategy, to repay indebtedness, including the 6.00% Notes due

2026, and for general corporate purposes.

The offering price per share of our common stock, less any underwriting commissions or discounts,

will not be less than our net asset value per share at the time of the offering, except in connection with a rights offering to our existing

stockholders, with the requisite approval of our common stockholders or under such other circumstances as the SEC may permit.

seek stockholder authorization to issue shares of our common stock at a price below net asset value per share at our 2026 annual meeting

of stockholders.

Notes due 2026 - Note Repurchase Program

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December 31, 2025, the Company repurchased and retired $8.8 million of aggregate principal amount of the 6.00% Notes due 2026.

March 31, 2026, the aggregate principal dollar amount of 6.00% Notes due 2026 that remained available to be purchased under the Note

Repurchase Program was approximately $35.8 million.

to “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of March 31, 2026 for

more information regarding the 6.00% Notes due 2026.

June 30, 2026, the aggregate principal dollar amount of 6.00% Notes due 2026 that remained available to be purchased under the Note Repurchase

Program was approximately $35.8 million.

to “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of June 30, 2026 for more

information regarding the 6.00% Notes due 2026.

Convertible Notes due 2029

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cash dividend of $0.25 per share, paid on December 5, 2025 to stockholders of record as of the close of business on November 21, 2025.

to “Note 10—Debt Capital Activities” and “Note 12—Subsequent Events” to our Condensed

Consolidated Financial Statements as of March 31, 2026 for more information regarding the 6.50% Convertible Notes due

the six months ended June 30, 2026 the Company issued 1,092,504 shares of its common stock and cash for fractional shares upon the conversion

of $8.0 million in aggregate principal amount of the 6.50% Convertible Notes due 2029.

to “Note 10—Debt Capital Activities” and “Note 12—Subsequent Events” to our Condensed Consolidated

Financial Statements as of June 30, 2026 for more information regarding the 6.50% Convertible Notes due 2029.

Distributions

2 unchanged sentences

The following table lists the distributions, including dividends and returns of capital, if any, per share

that we have declared since our formation through March 31, 2026.

that we have declared since our formation through June 30, 2026.

The table is divided by fiscal year according to record date:

Date Declared

Amount per Share

November 4, 2015 (1)

November 16, 2015

December 31, 2015

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November 3, 2025 (17)

November 21, 2025

December 5, 2025

15 unchanged sentences

None of the distribution represented a return of capital.

All of the $2,107,709 distribution

paid on January 15, 2020 represented a distribution from realized gains.

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.

All of the $2,516,452 distribution

paid on August 25, 2020 represented a distribution from realized gains.

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.

All of the $5,071,326 distribution

paid on October 20, 2020 represented a distribution from realized gains.

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.

All of the $4,978,504 distribution

paid on November 30, 2020 represented a distribution from realized gains.

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.

All of the $4,381,084 distribution

paid on January 15, 2021 represented a distribution from realized gains.

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.

All of the $4,981,131 distribution

paid on February 19, 2021 represented a distribution from realized gains.

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.

All of the $6,051,304 distribution

paid on April 15, 2021 represented a distribution from realized gains.

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.

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.

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.

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.

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,

None of the $2.25 per share distribution represented a return of capital.

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.

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,

None of the $2.00 per share distribution represented a return of capital.

All of the $23,338,915 distribution

paid on January 14, 2022 represented a distribution from realized gains.

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.

All of the $3,441,824 distribution

paid on April 15, 2022 represented a distribution from realized gains.

of the $3,441,824 distribution paid on April 15, 2022 represented a distribution from realized

None of the distribution represented a return of capital.

All of the $5,972,027 distribution

paid on July 31, 2025 represented a distribution from realized gains.

of the $5,972,027 distribution paid on July 31, 2025 represented a distribution from realized

None of the distribution represented a return of capital.

All of the $6,281,422 distribution

paid on December 5, 2025 represented a distribution from realized gains.

of the $6,281,422 distribution paid on December 5, 2025 represented a distribution from realized

None of the distribution represented a return of capital.

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of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions

So long as we qualify 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.

To the extent all our ordinary income and capital gains are timely distributed to our stockholders as dividends, 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

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 March 31, 2026 for more information.

Subsidiaries included in our Condensed Consolidated Financial Statements are subject to U.S.

federal income tax imposed at corporate rates

on their income, regardless of whether we are taxed as a RIC.

long as we qualify 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.

To the extent all our ordinary income and capital gains

are timely distributed to our stockholders as dividends, 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.

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, 2026 for more information.

The Taxable Subsidiaries included in our Condensed Consolidated Financial

Statements are subject to U.S.

federal income tax imposed at corporate rates on their income, regardless of whether we are taxed as a

The Taxable Subsidiaries are not consolidated for U.S.

federal 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 .

federal 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.

Accounting Estimates and 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 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 2—Significant Accounting Policies”

to our Condensed Consolidated Financial Statements as of March 31, 2026 for further detail regarding our critical accounting policies

and recently issued or adopted accounting pronouncements.

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 2—Significant Accounting Policies” to our Condensed Consolidated Financial Statements as of June 30, 2026

for further detail regarding our critical accounting policies and recently issued or adopted accounting pronouncements.

Related-Party

“Note 3—Related-Party Arrangements” to our Condensed Consolidated Financial Statements as of March 31, 2026 for

more information.

refer to “Note 12—Subsequent Events” to our Condensed Consolidated Financial Statements as of March 31, 2026 for

details regarding activity in our investment portfolio from April 1, 2026 through May 5, 2026.

“Note 3—Related-Party Arrangements” to our Condensed Consolidated Financial Statements as of June 30, 2026 for more

refer to “Note 12—Subsequent Events” to our Condensed Consolidated Financial Statements as of June 30, 2026 for details

regarding activity in our investment portfolio from July 1, 2026 through August 5, 2026.

are frequently in negotiations with various private companies with respect to investments in such companies.

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advisory agreement (the “Advisory Agreement”) with Neostellar Advisors LLC (the “Adviser”), an entity jointly

owned by certain of our current employees and Magnetar Holdings LLC (“Magnetar”), pursuant to which the Adviser would be

owned by certain of our then-current employees and Magnetar Holdings LLC (“Magnetar”), pursuant to which the Adviser would be

appointed as our investment adviser.

Entry into the Advisory Agreement effectuating the Externalization is subject to approval by our

Entry into the Advisory Agreement effectuating the Externalization was subject to approval by our

stockholders.

If our stockholders do not approve the Advisory Agreement, we will continue to operate as an internally managed BDC.

are not being sold, and if the Externalization is consummated, our stockholders immediately prior to the Externalization will be our

stockholders immediately following the Externalization and will hold the same number of shares of our common stock as they held prior

to the Externalization.

At a special meeting held on June 10, 2026, the Company’s stockholders approved the Investment Advisory Agreement

with the Adviser.

As a result, effective July 15, 2026 (the “Effective Date”), the Company transitioned from an internally

managed BDC to an externally managed BDC managed by the Adviser, and changed its name from “SuRo Capital Corp.” to “Neostellar

Capital Corp.” Our common stock

continues to trade on the Nasdaq Global Select Market, now under the ticker symbol “NSLR.”

terms of the Externalization include:

(i) no incentive fee payable to the Adviser on realized gains attributable to our existing portfolio;

(ii) expected annual expense savings of approximately 0.77% of average total assets compared to the current internal management structure;

(iii) a $20 million capital commitment by Magnetar to invest in us, the form of which will depend on certain factors;

(iv) a base management

fee of 1.75% of our gross assets, which our Board of Directors determined to be competitive with fees charged by comparable BDCs and

below the median fee charged by private market venture and technology funds;

and (v) management continuity, with our current investment

team, including Mark D.

Klein and Allison Green, continuing in their current capacities, but as employees of the Adviser rather than

us following the Externalization.

Upon effectiveness of the Advisory Agreement, we also will enter into an administration agreement (the

“Administration Agreement”) with Neostellar Administrative Services LLC, an affiliate of the Adviser (the “Administrator”),

pursuant to which the Administrator will provide, or oversee the provision of, administrative services necessary for our operations,

subject to our reimbursement of the Administrator’s costs and expenses, including our allocable portion of overhead.

connection with the Externalization, on April 2, 2026, our Compensation Committee approved (a) a grant of 350,000 restricted shares (with

any aggregate income tax liability to be paid by us) to Mark D.

(b) a grant of 60,000 restricted shares (with any aggregate income

tax liability to be paid by us) to Allison Green;

and (d) a cash bonus of $500,000 to

Allison Green.

The foregoing compensation will be paid only if the Advisory Agreement is approved by our stockholders.

additional information regarding the Externalization and its impact on stockholders, the Advisory Agreement, the Administration Agreement,

Magnetar and the compensation of management relating to the Externalization, please refer to “Note 12—Subsequent Events”

to our Condensed Consolidated Financial Statements as of March 31, 2026 and to the Current Report on Form 8-K we filed on April 7, 2026.

(i) no incentive fee payable to the Adviser on realized gains attributable to our existing

(ii) expected annual expense savings of approximately 0.77% of average total assets compared to our former internal

management structure;

(iii) a $20 million investment in us by an affiliate of Magnetar, which was made on July 16, 2026 in the form of a redeemable

promissory note;

(iv) a base management fee of 1.75% of our gross assets, which our Board of Directors determined to be competitive

with fees charged by comparable BDCs and below the median fee charged by private market venture and technology funds;

management continuity, with our investment team, including Mark D.

Klein and Allison Green, continuing in their current

capacities, but as employees of the Adviser rather than us following the Externalization.

On the Effective Date, we also entered into an administration agreement

(the “Administration Agreement”) with Neostellar Administrative Services LLC, an affiliate of the Adviser (the

“Administrator”), pursuant to which the Administrator provides, or oversees the provision of, administrative services

necessary for our operations, subject to our reimbursement of the Administrator’s costs and expenses, including our allocable

portion of overhead.

On June 12, 2026, following

approval of the Externalization by our stockholders, we granted (a) 350,000 restricted shares (with any aggregate income tax liability

to be paid by us) to Mark D.

Klein and (b) 60,000 restricted shares (with any aggregate income tax liability to be paid by us) to Allison

Green, and we approved a cash bonus of $850,000 to Mark D.

Klein and a cash bonus of $500,000 to Allison Green.

On June 15, 2026, our

Board of Directors approved the acceleration in full of the vesting of all restricted shares then outstanding and unvested under the Amended

and Restated 2019 Equity Incentive Plan and the Second Amended and Restated 2019 Equity Incentive Plan, effective as of June 15, 2026.

Those shares vested on that date, subject to each holder’s entry into a lock-up agreement with us that replicates the holding periods

of the vesting schedules that otherwise would have applied to such shares.

additional information regarding the Externalization and its impact on stockholders, the Advisory Agreement, the Administration

Agreement, Magnetar and the compensation of management relating to the Externalization, please refer to “Note

11—Stock-Based Compensation” and “Note 12—Subsequent Events” to our Condensed Consolidated

Financial Statements as of June 30, 2026, our definitive proxy statement for the Special Meeting of Stockholders filed April 29,

2026, and our Current Reports on Form 8-K filed April 7, 2026 and July 21, 2026.

Shelf Registration Statement

On July 30, 2026, we

filed a registration statement on Form N-2 with the SEC covering the offer and sale, from time to time in one or more offerings, of up

to $500.0 million of our common stock, preferred stock, subscription rights, debt securities and warrants.

The registration statement

had not been declared effective as of the date of this quarterly report.

For additional information, see “Liquidity and Capital

Resources—Equity Issuances and Debt Capital Activities—Shelf Registration Statement” above and “Note 12—Subsequent

Events” to our Condensed Consolidated Financial Statements as of June 30, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis