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Item 5. Market for Registrant’s Common Equity

2022-03-11 compared with 2021-03-12 · 70 added, 78 removed, 231 unchanged (39% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the Nasdaq Capital Market under the symbol “SSSS.” Our common stock has historically traded at prices both above and below our net asset value per share.

It is not possible to predict whether our common stock will trade at, above or below net asset value.

See "Risk Factors." The following table sets forth, for each fiscal quarter for the fiscal years ended December 31, 2020, 2019 and 2018, the net asset value per share of our common stock, the range of high and low closing sales prices for our common stock, and such closing sales price as a percentage (premium and discount) to our net asset value per share.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “SSSS.” Prior to November 24, 2021, our common stock traded on the Nasdaq Capital Market under the same symbol ("SSSS").

Our common stock has historically traded at prices both above and below our net asset value per share.

It is not possible to predict whether our common stock will trade at, above or below net asset value ("NAV").

See "Item 1A.

Risk Factors—Risks Related to an Investment in Our Securities." The following table sets forth, for each fiscal quarter for the fiscal years ended December 31, 2021, 2020 and 2019, the net asset value per share of our common stock, the range of high and low closing sales prices for our common stock, and such closing sales price as a percentage (premium and discount) to our net asset value per share.

The closing market prices reported below have been adjusted to give retroactive effect to material changes resulting from stock dividends.

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The NAV per share figures shown are based on outstanding shares at the end of each period.

(2) Calculated as the respective high or low close sales price divided by net asset value and subtracting 1.

(2) Calculated as the respective high or low close sales price divided by the NAV and subtracting 1.

As of March 10, 2022, there were 10 holders of record of our common stock (including Cede & Co.).

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In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed during such years.

In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, we may in the future decide to retain such capital gains for investment.

In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any,

at least annually, we may in the future decide to retain such capital gains for investment.

If this happens, our stockholders will be treated as if they received an actual distribution of the capital gains we retain and reinvested the net after-tax proceeds in us.

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December 30, 2020 January 15, 2021 0.22

January 26, 2021 (9)

February 5, 2021 February 19, 2021 0.25

March 8, 2021 (10)

March 30, 2021 April 15, 2021 0.25

May 4, 2021 (11)

May 18, 2021 June 30, 2021 2.50

August 3, 2021 (12)

August 18, 2021 September 30, 2021 2.25

November 2, 2021 (13)

November 17, 2021 December 30, 2021 2.00

December 20, 2021 (14)

December 31, 2021 January 14, 2022 0.75

Total $ 11.99

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None of the distribution represented a return of capital.

We intend to focus on making capital gains-based investments from which we will derive primarily capital gains.

(9) All of the $4,981,131 distribution paid on February 19, 2021 represented a distribution from realized gains.

None of the distribution represented a return of capital.

(10) All of the $6,051,304 distribution paid on April 15, 2021 represented a distribution from realized gains.

None of the distribution represented a return of capital.

(11) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders.

As a result of stockholder elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding shares prior to the distribution, as well as cash of $29,987,589.

The number of shares of common stock comprising the stock portion was calculated based on a price of $13.07 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on May 12, 13, and 14, 2021.

None of the $2.50 per share distribution represented a return of capital.

(12) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders.

As a result of stockholder elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding shares prior to the distribution, as well as cash of $29,599,164.

The number of shares of common stock comprising the stock portion was calculated based on a price of $13.55 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on August 11, 12, and 13, 2021.

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

(13) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders.

As a result of stockholder elections, the distribution consisted of 2,170,807 shares of common stock issued in lieu of cash, or approximately 7.5% of our outstanding shares prior to the distribution, as well as cash of $28,494,812.

The number of shares of common stock comprising the stock portion was calculated based on a price of $13.39 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on November 11, 12, and 13, 2021.

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

(14) All of the $23,338,915 distribution paid on January 14, 2022 represented a distribution from realized gains.

None of the distribution represented a return of capital.

We intend to focus on making equity-based investments from which we will derive primarily capital gains.

As a consequence, we do not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments.

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Our current intention is to make any future distributions out of assets legally available therefrom in the form of additional shares of our common stock under our dividend reinvestment plan, except in the case of stockholders who elect to receive dividends and/or long-term capital gains distributions in cash.

Under the dividend reinvestment plan, if a stockholder owns

shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution.

Under the dividend reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution.

Any distributions reinvested under the plan will nevertheless be treated as received by the U.S.

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Stockholders that hold shares in the name of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash.

So long as we qualify and maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S.

So long as we qualify and maintain our tax treatment as a RIC, we generally will not be subject to U.S.

federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends.

1 unchanged sentence

See “Note 2—Significant Accounting Policies— U.S.

Federal and State Income Taxes ” and “Note 9—Income Taxes” to our consolidated financial statements for the year ended December 31, 2020 for more information.

Federal and State Income Taxes ” and “Note 9—Income Taxes” to our consolidated financial statements as of December 31, 2021 for more information.

The Taxable Subsidiaries included in our consolidated financial statements are taxable subsidiaries, regardless of whether we are taxed as a RIC.

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Total 57,633 —

During the year ended December 31, 2020, we repurchased 1,655,848 shares of our common stock pursuant to the Share Repurchase Program.

During the year ended December 31, 2021, we did not repurchase shares of our common stock pursuant to the Share Repurchase Program.

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On October 28, 2020, our Board of Directors authorized a $10.0 million increase in the amount of shares of our common stock that may be repurchased under the discretionary Share Repurchase Program until the earlier of (i) October 31, 2021 or (ii) the repurchase of $40.0 million in aggregate amount of our common stock.

On October 27, 2021, our Board of Directors approved an extension of the Share Repurchase Program until the earlier of (i) October 31, 2022 or (ii) the repurchase of $40.0 million in aggregate amount of our common stock.

The timing and number of shares to be repurchased will depend on a number of factors, including market conditions and alternative investment opportunities.

The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate us to acquire any specific number of shares of our common stock.

During the year ended December 31, 2020, the Company repurchased 1,655,848 shares of the Company’s common stock pursuant to the Share Repurchase Program.

During the year ended December 31, 2021, the Company did not repurchase any shares of the Company's common stock pursuant to the Share Repurchase Program.

As of December 31, 2021, the dollar value of shares that remained available to be purchased by the Company under the Share Repurchase Program was approximately $9.6 million.

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Senior Securities

Information about our senior securities is shown in the following table as of the end of each fiscal year since our IPO.

There were no senior securities outstanding as of December 31, 2012 and 2011.

Information about our senior securities is shown in the following table as of the end of the last ten fiscal years.

There were no senior securities outstanding as of December 31, 2012.

The report of our independent registered public accounting firm, Marcum LLP, on the senior securities table, as of December 31, 2021, 2020 and 2019, is attached as an exhibit to this annual report on Form 10-K.

The report of our former independent registered public accounting firm, Deloitte & Touche LLP, on the senior securities table, as of December 31, 2018, 2017, 2016 and 2015, is attached as an exhibit to this annual report on Form 10-K.

Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1)

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Average Market Value Per Unit

6.00% Notes due 2026

Fiscal 2021 (4)

$ 75,000,000 $ 5,865 — $ 25.52

Fiscal 2020 — 8,892 — N/A

Fiscal 2019 — 5,998 — N/A

Fiscal 2018 — 5,884 — N/A

Fiscal 2017 — 3,968 — N/A

Fiscal 2016 — 3,784 — N/A

Fiscal 2015 — 4,884 — N/A

Fiscal 2014 — 4,286 — N/A

Fiscal 2013 — 5,173 — N/A

Fiscal 2012 — — — N/A

4.75% Convertible Senior Notes due 2023

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$ — $ 5,865 — N/A

Fiscal 2019 40,000,000 5,998 — N/A

Fiscal 2020 (5)

38,215,000 8,892 — N/A

Fiscal 2019 40,000,000 5,998 — N/A

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— 5,998 — N/A

Fiscal 2017 69,000,000 3,968 — N/A

Fiscal 2018 (6)

— 5,884 — N/A

Fiscal 2017 69,000,000 3,968 — N/A

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Fiscal 2021 $ — $ 5,865 — N/A

Fiscal 2020 — 8,892 — N/A

Fiscal 2019 (7)

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Fiscal 2012 — — — N/A

Fiscal 2011 — — — N/A

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The "—" in this column indicates that the SEC expressly does not require this information to be disclosed for the types of senior securities representing indebtedness issued by the Company as of the stated time periods.

(4) Not applicable for any of the senior securities because they are not registered for public trading.

(4) The 6.00% Notes due 2026 were issued on December 17, 2021.

(5) For the year ended December 31, 2020, the Company issued 174,888 shares of its common stock and cash for fractional shares upon the conversion of $1,785,000 in aggregate principal amount of the 4.75% Convertible Senior Notes due 2023.

The 4.75% Convertible Senior Notes due 2023 were repaid in full with interest on March 29, 2021.

(6) The 5.25% Convertible Senior Notes due 2018 were repaid in full with interest on September 15, 2018.

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(5) Operating expenses in this table represent estimated annual operating expenses based upon the actual annual operating expenses of SuRo Capital Corp.

and its consolidated subsidiaries for the twelve months ended December 31, 2020.

and its consolidated subsidiaries for the year ended December 31, 2021.

We do not have an investment adviser and are internally managed by our executive officers under the supervision of our Board of Directors.

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The use of leverage magnifies the potential for gain and loss on amounts invested and, therefore, increases the risks associated with an investment in us.

Interest payments on borrowed funds represents our estimated annual interest payments based on actual interest rate terms under our outstanding 4.75% Convertible Senior Notes due 2023 (the “4.75% Convertible Senior Notes due 2023”) as of December 31, 2020.

(7) "Other expenses," which we calculate to equal approximately $1.8 million, are estimated based upon actual "Other expenses" for the twelve months ended December 31, 2020.

Interest payments on borrowed funds represents our estimated annual interest payments based on actual interest rate terms under our outstanding 6.00% Notes due 2026 as of December 31, 2021.

(7) "Other expenses," which we calculate to equal approximately $1.1 million, are estimated based upon actual "Other expenses" for the year ended December 31, 2021.

(8) "Net assets attributable to common stock," which we calculate to equal approximately $364.8 million, reflect our net assets for the year ended December 31, 2021.

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See "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Distributions" for additional information regarding our DRIP.

Selected Financial Data

The following selected financial and other data for the fiscal years ended December 31, 2020, 2019, 2018, 2017, and 2016, respectively, have been derived from our audited financial statements.

The data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K and consolidated financial statements and notes thereto contained in this report.

Year Ended December 31,

2020 2019 2018 2017 2016

Income Statement Data

Total Investment Income $ 1,824,127 $ 1,495,724 $ 1,617,836 $ 852,768 $ 736,283

Gross Operating Expenses 16,338,543 10,946,792 15,144,834 22,439,855 1,999,646

Management fee waiver — — (892,421) (708,272) —

Incentive fee waiver — — (5,000,000) — —

Net Operating Expenses 16,338,543 10,946,792 9,252,413 21,731,583 1,999,646

Net Investment Loss (14,514,416) (9,451,068) (7,634,577) (20,878,815) (1,263,363)

Net realized gain/(loss) on investments

16,441,223 19,179,340 (7,433,619) 913,982 (2,634,471)

Realized loss on extinguishment of debt

— — (397,846) — —

Net change in unrealized appreciation/

(depreciation) of investments

73,410,631 13,339,859 9,641,050 34,775,696 (73,213,845)

Benefit from taxes on

unrealized depreciation of investments (3)

— 885,566 6,716,735 2,757,070 2,116,784

Net increase/(decrease) in net assets resulting from operations 75,337,438 23,953,697 891,743 17,567,933 (74,994,895)

Per Common Share Data

Weighted-Average Common Shares:

Basic 17,910,353 19,328,414 20,617,890 21,924,490 22,181,003

Diluted 21,790,898 23,069,622 20,617,890 21,924,490 22,181,003

Net increase/(decrease) in net assets resulting from operations per average share:

Basic $ 4.21 $ 1.24 $ 0.04 $ 0.80 $ (3.38)

Diluted 3.56 1.14 0.04 0.80 (3.38)

Net asset value per share (1)

15.14 11.38 9.89 9.64 8.66

Market price at year-end 13.09 6.55 5.22 5.45 5.03

Distributions declared 0.87 0.32 — — 0.04

Shares Outstanding at Year-End 19,914,023 17,564,244 19,762,647 21,246,345 22,181,003

Balance Sheet Data

Total Assets (2)

$ 478,875,704 $ 288,564,089 $ 330,219,554 $ 381,682,536 $ 300,964,426

5.25% Convertible Senior Notes due 2018 — — — 68,382,549 67,512,798

4.75% Convertible Senior Notes due 2023 37,395,437 38,803,635 38,434,511 — —

Total Liabilities 177,292,631 88,646,800 134,841,395 176,919,670 108,835,616

Net Assets 301,583,073 199,917,289 195,378,159 204,762,866 192,128,810

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(1) Net asset value per share is based on basic shares outstanding at the end of the period.

(2) During the year ended December 31, 2016, total assets and net assets decreased due to a change in unrealized depreciation of investments and net realized losses on investments.

During the year ended December 31, 2017, total assets and net assets increased due to a change in unrealized appreciation of investments and net realized gains on investments.

During the year ended December 31, 2018, total assets and net assets decreased due to a decrease in net unrealized appreciation of investments and net realized losses on investments.

During the year ended December 31, 2019, total assets decreased due to a lower investment in U.S.

Treasury bill and net assets increased due to an increase in net unrealized appreciation of investments and net realized gains on investments.

During the year ended December 31, 2020, total assets and net assets increased due to a change in unrealized appreciation of investments and net realized gains on investments, in addition to the issuance and sale of shares under the At-the-Market Program.

For further discussion of factors that affected our total assets and net assets refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” in Part II, Item 7 of this Form 10-K.

(3) During the year ended December 31, 2017, we recognized a net benefit from taxes on unrealized depreciation of $2,757,070 despite recording a net change in unrealized appreciation of approximately $34.8 million.

The net tax benefit from taxes on unrealized depreciation for the year ended December 31, 2017 was the result of an approximately $4.1 million decrease in built-in gains tax liability due to the recently passed tax legislation that reduced the U.S.

corporate federal income tax rate from 35% to 21%, partially offset by a $1.3 million increase in the net deferred tax liability generated by the Taxable Subsidiaries.

During the year ended December 31, 2018, in anticipation of the end of the RIC built-in gain measurement period, we reversed the accrual of related potential tax liabilities of approximately $6.1 million.

Refer to “Note 9 — Income Taxes” to our consolidated financial statements as of December 31, 2020 included in this annual report on Form 10-K for further detail.

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-K

Item 5. Market for Registrant’s Common Equity