Document
TABLE OF CONTENTS


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
____________________________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2020
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 814-00852
__________________________
Sutter Rock Capital Corp.
(Exact name of registrant as specified in its charter)
____________________________
Maryland
27-4443543
(State of incorporation)
(I.R.S. Employer Identification No.)
One Sansome Street, Suite 730, San Francisco, CA
94104
(Address of principal executive offices)
(Zip Code)
 
 
(650) 235-4769
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
 
SSSS
 
Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ¨ NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x

The issuer had 16,279,679 shares of common stock, $0.01 par value per share, outstanding as of May 8, 2020.


 



TABLE OF CONTENTS


​​

SUTTER ROCK CAPITAL CORP.

TABLE OF CONTENTS
 
 
PAGE
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
PART II. OTHER INFORMATION
 
 


i

TABLE OF CONTENTS


PART I

FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements

SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
 
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
Investments at fair value:
 
 
 
Non-controlled/non-affiliate investments (cost of $86,566,059 and $90,567,041, respectively)
$
131,324,194

 
$
152,866,112

Non-controlled/affiliate investments (cost of $52,857,243 and $52,857,243, respectively)
27,868,854

 
37,944,268

Controlled investments (cost of $7,161,412 and $7,161,412, respectively)
729,500

 
775,198

Total Portfolio Investments
159,922,548

 
191,585,578

Investments in U.S. Treasury bills (cost of $50,000,556 and $49,996,667, respectively)
50,000,000

 
50,000,000

Total Investments (cost of $196,585,270 and $200,582,363, respectively)
209,922,548

 
241,585,578

Cash
46,095,103

 
44,861,263

Escrow proceeds receivable
207,375

 
265,303

Interest and dividends receivable
84,799

 
84,630

Deferred financing costs
11,382

 
11,382

Prepaid expenses and other assets(1)
1,721,265

 
1,755,933

Total Assets
258,042,472

 
288,564,089

LIABILITIES
 
 
 
Accounts payable and accrued expenses(1)
1,526,212

 
1,143,923

Payable to executive officers
1,557

 
1,369,873

Accrued interest payable

 
475,000

Dividends payable

 
2,107,709

Payable for securities purchased
45,101,259

 
44,746,660

4.75% Convertible Senior Notes due March 28, 2023(2)
38,897,646

 
38,803,635

Total Liabilities
85,526,674

 
88,646,800

Commitments and contingencies (Notes 7 and 10)
 
 
 
Net Assets
$
172,515,798

 
$
199,917,289

NET ASSETS
 
 
 
Common stock, par value $0.01 per share (100,000,000 authorized; 16,874,316 and 17,564,244 issued and outstanding, respectively)
$
168,743

 
$
175,642

Paid-in capital in excess of par
174,848,029

 
178,550,374

Accumulated net investment loss
(28,683,915
)
 
(25,679,362
)
Accumulated net realized gain/(loss) on investments
12,845,657

 
5,867,417

Accumulated net unrealized appreciation/(depreciation) of investments
13,337,284

 
41,003,218

Net Assets
$
172,515,798

 
$
199,917,289

Net Asset Value Per Share
$
10.22

 
$
11.38

See accompanying notes to condensed consolidated financial statements.
__________________________________________________
(1)
This balance includes a right of use asset and corresponding operating lease liability, respectively. Refer to "Note 7—Commitments and Contingencies—Operating Leases and Related Deposits" for more detail.
(2)
As of March 31, 2020 and December 31, 2019, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000. Refer to “Note 10—Debt Capital Activities” for a reconciliation of the carrying value to the face value.

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TABLE OF CONTENTS
SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 
Three Months Ended March 31,
 
2020
 
2019
INVESTMENT INCOME
 
 
 
Non-controlled/non-affiliate investments:
 
 
 
Interest income
$
155,085

 
$
138,497

Dividend income
50,000

 

Non-controlled/affiliate investments:
 
 
 
Interest income
20,428

 
59,466

Dividend income
26,250

 

Controlled investments:
 
 
 
Interest income

 
29,287

Total Investment Income
251,763

 
227,250

OPERATING EXPENSES
 
 
 
Management fees(1)

 
848,723

Incentive fees/(Reversal of incentive fee accrual)(1)

 
(4,660,472
)
Costs incurred under Administration Agreement(1)

 
306,084

Compensation expense
924,916

 

Directors’ fees
111,250

 
86,250

Professional fees
1,139,366

 
2,061,922

Interest expense
573,400

 
604,168

Income tax expense
8,665

 
3,763

Other expenses
498,719

 
357,110

Total Operating Expenses
3,256,316

 
(392,452
)
Net Investment Income/(Loss)
(3,004,553
)
 
619,702

Realized Gains/(Losses) on Investments:
 
 
 
Non-controlled/non-affiliated investments
6,978,240

 
8,269,138

Non-controlled/affiliate investments

 
(12,334,831
)
Net Realized Gain/(Loss) on Investments
6,978,240

 
(4,065,693
)
Change in Unrealized Appreciation/(Depreciation) of Investments:
 
 
 
Non-controlled/non-affiliated investments
(17,544,822
)
 
17,028,343

Non-controlled/affiliate investments
(10,075,414
)
 
9,022,648

Controlled investments
(45,698
)
 
(5,351,240
)
Net Change in Unrealized Appreciation/(Depreciation) of Investments
(27,665,934
)
 
20,699,751

Provision for taxes on unrealized appreciation of investments

 
(94,147
)
Net Change in Net Assets Resulting from Operations
$
(23,692,247
)
 
$
17,159,613

Net Change in Net Assets Resulting from Operations per Common Share:
 
 
 
Basic
$
(1.36
)
 
$
0.87

Diluted(2)
$
(1.36
)
 
$
0.75

Weighted-Average Common Shares Outstanding
 
 
 
Basic
17,440,994

 
19,762,647

Diluted(2)
17,440,994

 
23,493,991

See accompanying notes to condensed consolidated financial statements.
____________________________________________________________________________________________________________________________
(1)
This balance references a related-party transaction. Refer to “Note 3—Related-Party Arrangements” for more detail.
(2)
For the three months ended March 31, 2020 and 2019, 3,917,792 and 0 potentially dilutive common shares, respectively, were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive. Refer to “Note 6—Net Change in Net Assets Resulting from Operations per Common Share—Basic and Diluted”.




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TABLE OF CONTENTS


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
 
Three Months Ended March 31,
 
2020
 
2019
Change in Net Assets Resulting from Operations
 
 
 
Net investment income/(loss)
$
(3,004,553
)
 
$
619,702

Net realized gains/(losses) on investments
6,978,240

 
(4,065,693
)
Net change in unrealized appreciation/(depreciation) of investments
(27,665,934
)
 
20,699,751

Provision for taxes on unrealized appreciation of investments

 
(94,147
)
Net Change in Net Assets Resulting from Operations
(23,692,247
)
 
17,159,613

Change in Net Assets Resulting from Capital Transactions
 
 
 
Repurchases of common stock
(3,709,244
)
 

Net Decrease in Net Assets Resulting from Capital Transactions
(3,709,244
)
 

Total Change in Net Assets
(27,401,491
)
 
17,159,613

Net Assets at Beginning of Year
199,917,289

 
195,378,159

     Net Assets at End of Period
$
172,515,798

 
$
212,537,772

Capital Share Activity
 
 
 
Shares outstanding at beginning of year
17,564,244

 
19,762,647

Shares issued

 

Shares repurchased
(689,928
)
 

Shares Outstanding at End of Period
16,874,316

 
19,762,647



See accompanying notes to condensed consolidated financial statements.

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TABLE OF CONTENTS
SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


 
Three Months Ended March 31,
 
2020
 
2019
Cash Flows from Operating Activities
 
 
 
Net change in net assets resulting from operations
$
(23,692,247
)
 
$
17,159,613

Adjustments to reconcile net change in net assets resulting from operations to net cash provided by/(used in) operating activities:
 
 
 
Net realized (gain)/loss on investments
(6,978,240
)
 
4,065,693

Net change in unrealized (appreciation)/depreciation of investments
27,665,934

 
(20,699,751
)
Change in deferred tax liability

 
94,147

Amortization of discount on 4.75% Convertible Senior Notes due 2023
94,011

 
91,017

Amortization of fixed income security premiums and discounts

 
(1,191
)
Adjustments to escrow proceeds receivable
189,546

 
(8,359
)
Purchases of investments in:
 
 
 
Portfolio investments

 
(10,008,040
)
U.S. Treasury bills
(50,000,556
)
 
(99,961,333
)
Proceeds from sales or maturity of investments in:
 
 
 
Portfolio investments
10,786,346

 
11,871,346

U.S. Treasury bills
50,000,000

 
100,000,000

Change in operating assets and liabilities:
 
 
 
Prepaid expenses and other assets
34,668

 
(491,345
)
Interest and dividends receivable
(169
)
 
(90,214
)
Escrow proceeds receivable
57,928

 
317,027

Receivable from unsettled trades

 
(2,017,423
)
Due to GSV Asset Management(1)

 
207,710

Payable for securities purchased
354,599

 
(19,449
)
Accounts payable and accrued expenses
382,289

 
1,854,399

Payable to executive officers
(1,368,316
)
 

Accrued incentive fees(1)

 
(4,660,472
)
Accrued management fees(1)

 
(415,056
)
Accrued interest payable
(475,000
)
 
(475,000
)
Net Cash Provided by/(Used in) Operating Activities
7,050,793

 
(3,186,681
)
Cash Flows from Financing Activities
 
 
 
Repurchases of common stock
(3,709,244
)
 

Dividends paid
(2,107,709
)
 

Net Cash Used in Financing Activities
$
(5,816,953
)
 
$
18,061,873

 
 
 
 
Total Increase/(Decrease) in Cash Balance
$
1,233,840

 
$
(3,186,681
)
Cash Balance at Beginning of Year
44,861,263

 
28,184,163

Cash Balance at End of Period
$
46,095,103

 
$
24,997,482

 
 
 
 
Supplemental Information:
 
 
 
Interest paid
$
956,190

 
$
974,932

Taxes paid
$
8,665

 
$
3,763

See accompanying notes to condensed consolidated financial statements.
_______________________
(1)
This balance references a related-party transaction. Refer to “Note 3—Related-Party Arrangements” for more detail.

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TABLE OF CONTENTS


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED)
March 31, 2020
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/NON-AFFILIATE
 
 
 
 
 
 
 
 
 
 
 
 
Coursera, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 8%
 
Online Education
 
6/9/2013
 
2,961,399

 
$
14,519,519

 
$
34,707,596

 
20.12
%
Palantir Technologies, Inc.
 
Palo Alto, CA
 
 
 
 
 
 
 
 
 
 
Common shares, Class A
 
Data Analysis
 
5/7/2012
 
5,773,690

 
16,189,935

 
30,542,820

 
17.70
%
Course Hero, Inc.
 
Redwood City, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A 8%
 
Online Education
 
9/18/2014
 
2,145,509

 
5,000,001

 
24,635,508

 
14.28
%
Nextdoor.com, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Networking
 
9/27/2018
 
580,360

 
10,006,578

 
10,753,200

 
6.23
%
Enjoy Technology, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 6%
 
On-Demand Commerce
 
7/29/2015
 
1,681,520

 
4,000,280

 
4,758,702

 
2.76
%
Preferred shares, Series A 6%
 
 
 
10/16/2014
 
879,198

 
1,002,440

 
2,488,130

 
1.44
%
Total
 
 
 
 
 
 
 
5,002,720

 
7,246,832

 
4.20
%
Treehouse Real Estate Investment Trust, Inc.
 
Chicago, IL
 
 
 
 
 
 
 
 
 
 
Common shares***(8)
 
Cannabis REIT
 
9/11/2019
 
312,500

 
7,500,000

 
6,592,922

 
3.82
%
Aspiration Partners, Inc.
 
Marina Del Rey, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Financial Services
 
8/11/2015
 
540,270

 
1,001,815

 
5,160,592

 
2.99
%
Convertible Promissory Note 5%, Due 1/31/2021***
 
 
 
8/12/2019
 
$
280,000

 
281,190

 
356,168

 
0.21
%
Total
 
 
 
 
 
 
 
1,283,005

 
5,516,760

 
3.20
%
SharesPost, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 6%
 
Online Marketplace Finance
 
7/19/2011
 
1,771,653

 
2,259,716

 
3,958,470

 
2.29
%
Common shares
 
 
 
7/20/2011
 
770,934

 
123,987

 
569,654

 
0.33
%
Total
 
 
 
 
 
 
 
2,383,703

 
4,528,124

 
2.62
%
Neutron Holdings, Inc. (d/b/a/ Lime)
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 6%
 
Micromobility
 
1/25/2019
 
41,237,113

 
10,006,800

 
3,548,387

 
2.06
%
Clever, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 8%
 
Education Software
 
12/5/2014
 
1,799,047

 
2,000,601

 
2,000,001

 
1.16
%
Tynker (f/k/a Neuron Fuel, Inc.)
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A 8%
 
Computer Software
 
8/8/2012
 
534,162

 
309,310

 
791,361

 
0.46
%
A Place for Rover Inc. (f/k/a DogVacay, Inc.)
 
Seattle, WA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Peer-to-Peer Pet Services
 
11/3/2014
 
707,991

 
2,506,119

 
460,683

 
0.27
%
4C Insights (f/k/a The Echo Systems Corp.)
 
Chicago, IL
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Data Platform
 
3/30/2012
 
436,219

 
1,436,404

 

 
%
Fullbridge, Inc.
 
Cambridge, MA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Business Education
 
5/13/2012
 
517,917

 
6,150,506

 

 
%
Promissory Note 1.47%, Due 11/9/2021(4)
 
 
 
3/3/2016
 
$
2,270,458

 
2,270,858

 

 
%
Total
 
 
 
 
 
 
 
8,421,364

 

 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-controlled/Non-affiliate
 
 
 
 
 
 
 
$
86,566,059

 
$
131,324,194

 
76.12
%
See accompanying notes to condensed consolidated financial statements.

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TABLE OF CONTENTS


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
March 31, 2020
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/AFFILIATE(1)
 
 
 
 
 
 
 
 
 
 
 
 
Ozy Media, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C-2 6%
 
Digital Media Platform
 
9/11/2019
 
683,482

 
$
2,414,178

 
$
1,856,266

 
1.08
%
Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028
 
 
 
4/9/2018
 
295,565

 
30,647

 
529,061

 
0.31
%
Preferred shares, Series B 6%
 
 
 
10/3/2014
 
922,509

 
4,999,999

 
3,334,280

 
1.93
%
Preferred shares, Series A 6%
 
 
 
12/11/2013
 
1,090,909

 
3,000,200

 
2,679,159

 
1.55
%
Preferred shares, Series Seed 6%
 
 
 
11/2/2012
 
500,000

 
500,000

 
936,281

 
0.54
%
Total
 
 
 
 
 
 
 
10,945,024

 
9,335,047

 
5.41
%
StormWind, LLC(5)
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 8%
 
Interactive Learning
 
11/26/2019
 
329,337

 
257,267

 
481,017

 
0.28
%
Preferred shares, Series C 8%
 
 
 
1/7/2014
 
2,779,134

 
4,000,787

 
5,183,837

 
3.00
%
Preferred shares, Series B 8%
 
 
 
12/16/2011
 
3,279,629

 
2,019,687

 
3,028,699

 
1.76
%
Preferred shares, Series A 8%
 
 
 
2/25/2014
 
366,666

 
110,000

 
133,341

 
0.08
%
Total
 
 
 
 
 
 
 
6,387,741

 
8,826,894

 
5.12
%
GreenAcreage Real Estate Corp.
 
New York, NY
 
 
 
 
 
 
 
 
 
 
Common shares***(9)
 
Cannabis REIT
 
8/12/2019
 
375,000

 
7,501,530

 
6,750,000

 
3.91
%
NestGSV, Inc. (d/b/a GSV Labs, Inc.)
 
San Mateo, CA
 
 
 
 
 
 
 
 
 
 
Derivative Security, Expiration Date 8/23/2024(7)
 
Global Innovation Platform
 
8/23/2019
 
1

 
8,555,124

 
1,996,070

 
1.16
%
Convertible Promissory Note 8% Due 8/23/2024(4)(7)
 
 
 
2/17/2016
 
$
1,010,198

 
1,030,176

 
505,099

 
0.29
%
Preferred Warrants Series A-3, Strike Price $1.33, Expiration Date 4/4/2021
 
 
 
4/4/2014
 
187,500

 

 
10,313

 
0.01
%
Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 10/6/2021
 
 
 
10/6/2014
 
500,000

 

 
70,000

 
0.04
%
Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 7/18/2021
 
 
 
7/8/2016
 
250,000

 
74,380

 
32,500

 
0.02
%
Preferred Warrants Series B, Strike Price $2.31, Expiration Date 11/29/2021
 
 
 
11/29/2016
 
100,000

 
29,275

 

 
%
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 5/29/2022
 
 
 
5/29/2017
 
125,000

 
70,379

 

 
%
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023
 
 
 
12/31/2018
 
250,000

 
5,080

 
2,500

 
0.00
%
Total
 
 
 
 
 
 
 
9,764,414

 
2,616,482

 
1.52
%
CUX, Inc. (d/b/a CorpU)
 
Philadelphia, PA
 
 
 
 
 
 
 
 
 
 
Senior Subordinated Convertible Promissory Note 4% Due 2/14/2023(4)
 
Corporate Education
 
11/26/2014
 
$
1,251,158

 
1,256,191

 
312,789

 
0.18
%
Convertible preferred shares, Series D 6%
 
 
 
5/31/2013
 
169,033

 
778,607

 
27,642

 
0.02
%
Convertible preferred shares, Series C 8%
 
 
 
3/29/2012
 
615,763

 
2,006,077

 

 
%
Total
 
 
 
 
 
 
 
4,040,875

 
340,431

 
0.20
%
Maven Research, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C 8%
 
Knowledge Networks
 
7/2/2012
 
318,979

 
2,000,447

 

 
%
Preferred shares, Series B 5%
 
 
 
2/28/2012
 
49,505

 
217,206

 

 
%
Total
 
 
 
 
 
 
 
2,217,653

 

 
%
Curious.com, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Online Education
 
11/22/2013
 
1,135,944

 
12,000,006

 

 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-controlled/Affiliate
 
 
 
 
 
 
 
$
52,857,243

 
$
27,868,854

 
16.15
%

See accompanying notes to condensed consolidated financial statements.

6

TABLE OF CONTENTS


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
March 31, 2020
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
CONTROLLED(2)
 
 
 
 
 
 
 
 
 
 
 
 
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)
 
Cupertino, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Class A***(6)
 
Clean Technology
 
4/15/2014
 
14,300,000

 
$
7,151,412

 
$
729,500

 
0.42
%
Common shares
 
 
 
4/15/2014
 
100,000

 
10,000

 

 
%
Total
 
 
 
 
 
 
 
7,161,412

 
729,500

 
0.42
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Controlled
 
 
 
 
 
 
 
$
7,161,412

 
$
729,500

 
0.42
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio Investments
 
 
 
 
 
 
 
$
146,584,714

 
$
159,922,548

 
92.70
%
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury bill, 0%, due 4/2/2020***(3)
 
 
 
3/30/2020
 
$
50,000,000

 
50,000,556

 
50,000,000

 
28.98
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
196,585,270

 
$
209,922,548

 
121.68
%

See accompanying notes to condensed consolidated financial statements.
__________________________________________
*
All portfolio investments are non-control/non-affiliated and non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their initial public offering (“IPO”). Preferred dividends are generally only payable when declared and paid by the portfolio company's board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All of the Company's portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to "Note 2—Significant Accounting Policies—Investments at Fair Value").
**
Indicates assets that Sutter Rock Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Of the Company’s total investments as of March 31, 2020, 0.00% of its total investments are non-qualifying assets.
***
Investment is income-producing.

(1)
“Affiliate Investments” are investments in those companies that are “Affiliated Companies” of Sutter Rock Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of Sutter Rock Capital Corp. if Sutter Rock Capital Corp. owns 5% or more of the voting securities (i.e., securities with the right to elect directors) of such company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.

(2)
“Control Investments” are investments in those companies that are “Controlled Companies” of Sutter Rock Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.

(3)
Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. As of March 31, 2020, no investments held by Sutter Rock Capital Corp. were considered Level 1 or Level 2. Refer to “Note 4—Investments at Fair Value”.

(4)
As of March 31, 2020, the investments noted had been placed on non-accrual status.

(5)
Sutter Rock Capital Corp.’s investments in StormWind, LLC are held through Sutter Rock Capital Corp.'s wholly owned subsidiary, GSVC SW Holdings, Inc.

(6)
The SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) preferred shares held by Sutter Rock Capital Corp. do not entitle Sutter Rock Capital Corp. to a preferred dividend rate. During the three months ended March 31, 2020, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) declared, and Sutter Rock Capital Corp. received, an aggregate of $0 in dividend distributions. Sutter Rock Capital Corp. does not anticipate that SPBRX, INC. will pay distributions on a quarterly or regular basis or become a predictable distributor of distributions.

7

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued
March 31, 2020

(7)
On August 23, 2019, Sutter Rock Capital Corp. amended the structure of its investment in NestGSV, Inc. (d/b/a GSV Labs, Inc.). As part of the agreement, Sutter Rock Capital Corp’s equity holdings (warrants notwithstanding) were restructured into a derivative security. NestGSV, Inc. (d/b/a GSV Labs,Inc.) has the right to call the position at any time over a five year period, while Sutter Rock Capital Corp. can put the shares to NestGSV, Inc. (d/b/a GSV Labs, Inc.) at the end of the five year period.

(8)
During the three months ended March 31, 2020, Treehouse Real Estate Investment Trust Inc. declared, and Sutter Rock Capital Corp. received, an aggregate of $50,000 in dividend distributions. Sutter Rock Capital Corp. does not anticipate that Treehouse Real Estate Investment Trust Inc. will pay distributions on a recurring or regular basis or become a predictable distributor of distributions.

(9)
During the three months ended March 31, 2020, GreenAcreage Real Estate Corp. declared a $26,250 dividend distribution. Sutter Rock Capital Corp. does not anticipate that Green Acreage Real Estate Corp. will pay distributions on a recurring or regular basis or become a predictable distributor of distributions.


8

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2019
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/NON-AFFILIATE
 
 
 
 
 
 
 
 
 
 
 
 
Coursera, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 8%
 
Online Education
 
6/9/2013
 
2,961,399

 
$
14,519,519

 
$
33,569,902

 
16.79
%
Palantir Technologies, Inc.
 
Palo Alto, CA
 
 
 
 
 
 
 
 
 
 
Common shares, Class A
 
Data Analysis
 
5/7/2012
 
5,773,690

 
16,189,935

 
31,582,084

 
15.80
%
Course Hero, Inc.
 
Redwood City, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A 8%
 
Online Education
 
9/18/2014
 
2,145,509

 
5,000,001

 
25,674,019

 
12.84
%
Parchment, Inc.
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 8%
 
E-Transcript Exchange
 
10/1/2012
 
3,200,512

 
4,000,982

 
10,896,585

 
5.45
%
Nextdoor.com, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Networking
 
9/27/2018
 
580,360

 
10,006,578

 
10,867,365

 
5.43
%
Neutron Holdings, Inc. (d/b/a/ Lime)
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 6%
 
Micromobility
 
1/25/2019
 
41,237,113

 
10,006,800

 
10,000,000

 
5.00
%
Treehouse Real Estate Investment Trust, Inc.
 
Chicago, IL
 
 
 
 
 
 
 
 
 
 
Common shares***(11)
 
Cannabis REIT
 
9/11/2019
 
312,500

 
7,500,000

 
7,384,738

 
3.69
%
Enjoy Technology, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 6%
 
On-Demand Commerce
 
7/29/2015
 
1,681,520

 
4,000,280

 
4,758,702

 
2.38
%
Preferred shares, Series A 6%
 
 
 
10/16/2014
 
879,198

 
1,002,440

 
2,488,130

 
1.24
%
Total
 
 
 
 
 
 
 
5,002,720

 
7,246,832

 
3.62
%
SharesPost, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 6%
 
Online Marketplace Finance
 
7/19/2011
 
1,771,653

 
2,259,716

 
6,186,877

 
3.09
%
Common shares
 
 
 
7/20/2011
 
770,934

 
123,987

 
890,340

 
0.45
%
Total
 
 
 
 
 
 
 
2,383,703

 
7,077,217

 
3.54
%
Aspiration Partners, Inc.
 
Marina Del Rey, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Financial Services
 
8/11/2015
 
540,270

 
1,001,815

 
4,471,678

 
2.24
%
Convertible Promissory Note 5%, Due 1/31/2021***
 
 
 
8/12/2019
 
$
280,000

 
281,190

 
321,168

 
0.16
%
Total
 
 
 
 
 
 
 
1,283,005

 
4,792,846

 
2.40
%
Clever, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B 8%
 
Education Software
 
12/5/2014
 
1,799,047

 
2,000,601

 
2,000,001

 
1.00
%
A Place for Rover Inc. (f/k/a DogVacay, Inc.)
 
Seattle, WA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Peer-to-Peer Pet Services
 
11/3/2014
 
707,991

 
2,506,119

 
963,533

 
0.48
%
Tynker (f/k/a Neuron Fuel, Inc.)
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A 8%
 
Computer Software
 
8/8/2012
 
534,162

 
309,310

 
789,491

 
0.39
%
4C Insights (f/k/a The Echo Systems Corp.)
 
Chicago, IL
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Data Platform
 
3/30/2012
 
436,219

 
1,436,404

 
21,499

 
0.01
%
Fullbridge, Inc.
 
Cambridge, MA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Business Education
 
5/13/2012
 
517,917

 
6,150,506

 

 
%
Promissory Note 1.47%, Due 11/9/2021(4)
 
 
 
3/3/2016
 
$
2,270,458

 
2,270,858

 

 
%
Total
 
 
 
 
 
 
 
8,421,364

 

 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-controlled/Non-affiliate
 
 
 
 
 
 
 
$
90,567,041

 
$
152,866,112

 
76.46
%
See accompanying notes to consolidated financial statements.

9

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued
December 31, 2019
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/AFFILIATE(1)
 
 
 
 
 
 
 
 
 
 
 
 
Ozy Media, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C-2 6%(7)
 
Digital Media Platform
 
9/11/2019
 
683,482

 
$
2,414,178

 
$
2,970,252

 
1.49
%
Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028
 
 
 
4/9/2018
 
295,565

 
30,647

 
1,182,260

 
0.59
%
Preferred shares, Series B 6%
 
 
 
10/3/2014
 
922,509

 
4,999,999

 
5,001,420

 
2.50
%
Preferred shares, Series A 6%
 
 
 
12/11/2013
 
1,090,909

 
3,000,200

 
4,528,107

 
2.27
%
Preferred shares, Series Seed 6%
 
 
 
11/2/2012
 
500,000

 
500,000

 
2,002,143

 
1.00
%
Total
 
 
 
 
 
 
 
10,945,024

 
15,684,182

 
7.85
%
StormWind, LLC(5)
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 8%(10)
 
Interactive Learning
 
11/26/2019
 
329,337

 
257,267

 
503,120

 
0.25
%
Preferred shares, Series C 8%
 
 
 
1/7/2014
 
2,779,134

 
4,000,787

 
5,391,000

 
2.70
%
Preferred shares, Series B 8%
 
 
 
12/16/2011
 
3,279,629

 
2,019,687

 
3,248,804

 
1.62
%
Preferred shares, Series A 8%
 
 
 
2/25/2014
 
366,666

 
110,000

 
157,949

 
0.08
%
Total
 
 
 
 
 
 
 
6,387,741

 
9,300,873

 
4.65
%
GreenAcreage Real Estate Corp.
 
New York, NY
 
 
 
 
 
 
 
 
 
 
Common shares
 
Cannabis REIT
 
8/12/2019
 
375,000

 
7,501,530

 
7,500,000

 
3.75
%
NestGSV, Inc. (d/b/a GSV Labs, Inc.)
 
San Mateo, CA
 
 
 
 
 
 
 
 
 
 
Derivative Security, Expiration Date 8/23/2024(9)
 
Global Innovation Platform
 
8/23/2019
 
1

 
8,555,124

 
3,880,621

 
1.94
%
Convertible Promissory Note 8% Due 8/23/2024***(9)
 
 
 
2/17/2016
 
$
1,010,198

 
1,030,176

 
1,010,198

 
0.51
%
Preferred Warrants Series A-3, Strike Price $1.33, Expiration Date 4/4/2021
 
 
 
4/4/2014
 
187,500

 

 
20,625

 
0.01
%
Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 10/6/2021
 
 
 
10/6/2014
 
500,000

 

 
135,000

 
0.07
%
Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 7/18/2021
 
 
 
7/8/2016
 
250,000

 
74,380

 
62,500

 
0.03
%
Preferred Warrants Series B, Strike Price $2.31, Expiration Date 11/29/2021
 
 
 
11/29/2016
 
100,000

 
29,275

 

 
%
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 5/29/2022
 
 
 
5/29/2017
 
125,000

 
70,379

 

 
%
Preferred Warrant Series B, Strike Price $2.31, Expiration Date 12/31/2023
 
 
 
12/31/2018
 
250,000

 
5,080

 
2,500

 
0.00
%
Total
 
 
 
 
 
 
 
9,764,414

 
5,111,444

 
2.56
%
CUX, Inc. (d/b/a CorpU)
 
Philadelphia, PA
 
 
 
 
 
 
 
 
 
 
Senior Subordinated Convertible Promissory Note 4% Due 2/14/2023(4)(6)
 
Corporate Education
 
11/26/2014
 
$
1,251,158

 
1,256,191

 
312,789

 
0.15
%
Convertible preferred shares, Series D 6%
 
 
 
5/31/2013
 
169,033

 
778,607

 
34,980

 
0.02
%
Convertible preferred shares, Series C 8%
 
 
 
3/29/2012
 
615,763

 
2,006,077

 

 
%
Preferred Warrants Series D, Strike Price $4.59, Expiration Date 2/14/2020
 
 
 
5/31/2013
 
16,903

 

 

 
%
Total
 
 
 
 
 
 
 
4,040,875

 
347,769

 
0.17
%
Maven Research, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C 8%
 
Knowledge Networks
 
7/2/2012
 
318,979

 
2,000,447

 

 
%
Preferred shares, Series B 5%
 
 
 
2/28/2012
 
49,505

 
217,206

 

 
%
Total
 
 
 
 
 
 
 
2,217,653

 

 
%
Curious.com, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Online Education
 
11/22/2013
 
1,135,944

 
12,000,006

 

 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-controlled/Affiliate
 
 
 
 
 
 
 
$
52,857,243

 
$
37,944,268

 
18.98
%

See accompanying notes to consolidated financial statements.

10

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS - continued
December 31, 2019
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
CONTROLLED(2)
 
 
 
 
 
 
 
 
 
 
 
 
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)
 
Cupertino, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Class A***(8)
 
Clean Technology
 
4/15/2014
 
14,300,000

 
$
7,151,412

 
$
775,198

 
0.39
%
Common shares
 
 
 
4/15/2014
 
100,000

 
10,000

 

 
%
Total
 
 
 
 
 
 
 
7,161,412

 
775,198

 
0.39
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Controlled
 
 
 
 
 
 
 
$
7,161,412

 
$
775,198

 
0.39
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio Investments
 
 
 
 
 
 
 
$
150,585,696

 
$
191,585,578

 
95.83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury bill, 0%, due 1/2/2020***(3)
 
 
 
12/30/2019
 
$
50,000,000

 
49,996,667

 
50,000,000

 
25.01
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
200,582,363

 
$
241,585,578

 
120.84
%

See accompanying notes to consolidated financial statements.
__________________________________________
*
All portfolio investments are non-control/non-affiliated and non-income-producing, unless otherwise identified. Equity investments are subject to lock-up restrictions upon their initial public offering (“IPO”). Preferred dividends are generally only payable when declared and paid by the portfolio company's board of directors. The Company’s directors, officers, employees and staff, as applicable, may serve on the board of directors of the Company’s portfolio investments. (Refer to “Note 3—Related-Party Arrangements”). All portfolio investments are considered Level 3 and valued using significant unobservable inputs, unless otherwise noted. (Refer to “Note 4—Investments at Fair Value”). All of the Company's portfolio investments are restricted as to resale, unless otherwise noted, and were valued at fair value as determined in good faith by the Company’s Board of Directors. (Refer to "Note 2—Significant Accounting Policies—Investments at Fair Value").
**
Indicates assets that Sutter Rock Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Of the Company’s total investments as of December 31, 2019, 0.00% of its total investments are non-qualifying assets.
***
Investment is income-producing.

(1)
“Affiliate Investments” are investments in those companies that are “Affiliated Companies” of Sutter Rock Capital Corp., as defined in the 1940 Act. In general, a company is deemed to be an “Affiliate” of Sutter Rock Capital Corp. if Sutter Rock Capital Corp. owns 5% or more of the voting securities (i.e., securities with the right to elect directors) of such company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.

(2)
“Control Investments” are investments in those companies that are “Controlled Companies” of Sutter Rock Capital Corp., as defined in the 1940 Act. In general, under the 1940 Act, the Company would “Control” a portfolio company if the Company owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. For the Schedule of Investments In, and Advances To, Affiliates, as required by SEC Regulation S-X, Rule 12-14, refer to “Note 4—Investments at Fair Value”.

(3)
Denotes an investment considered Level 1 or Level 2 and valued using observable inputs. As of December 31, 2019, no investments held by Sutter Rock Capital Corp. were considered Level 1 or Level 2. Refer to “Note 4—Investments at Fair Value”.

(4)
As of December 31, 2019, the investments noted had been placed on non-accrual status.

(5)
Sutter Rock Capital Corp.’s investments in StormWind, LLC are held through Sutter Rock Capital Corp.'s wholly owned subsidiary, GSVC SW Holdings, Inc.

(6)
On October 24, 2019, CUX, Inc. (d/b/a CorpU) completed a recapitalization, which amended Sutter Rock Capital Corp.'s investment in the Senior Subordinated Convertible Promissory Note. As a result of the recapitalization, the principal amount of Sutter Rock Capital Corp.'s Senior Subordinated Convertible Promissory Note was reduced by $109,331, the interest rate was reduced to 4%, and the maturity was extended to February 14, 2023.

(7)
On September 11, 2019, Sutter Rock Capital Corp. agreed to convert its 5% Convertible Promissory Note due 12/31/2018 to Ozy Media, Inc. and all related accrued interest, into 683,482 shares of Ozy Media, Inc.'s Series C-2 preferred shares.

11

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS - continued
December 31, 2019


(8)
During the year ended December 31, 2019, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) declared, and Sutter Rock Capital Corp. received, an aggregate of $400,000 in dividend distributions.

(9)
On August 23, 2019, Sutter Rock Capital Corp. amended the structure of its investment in NestGSV, Inc. (d/b/a GSV Labs, Inc.). As part of the agreement, Sutter Rock Capital Corp’s equity holdings (warrants notwithstanding) were restructured into a derivative security. NestGSV, Inc. (d/b/a GSV Labs,Inc.) has the right to call the position at any time over a five year period, while Sutter Rock Capital Corp. can put the shares to NestGSV, Inc. (d/b/a GSV Labs, Inc.) at the end of the five year period. As part of the agreement, previously accrued interest under Sutter Rock Capital Corp’s 12% Convertible Promissory Note due 12/31/2019 will be capitalized into the principal of the extended Convertible Promissory Note, and the interest on the Convertible Promissory Note is reduced from 12% to 8%. The Convertible Promissory Note’s maturity was extended to August 23, 2024. Under the amended structure, Sutter Rock Capital Corp.’s fully diluted ownership of voting securities in the company decreased from 50.0% to 8.5%. As such, Sutter Rock Capital Corp.'s investments in NestGSV, Inc. (d/b/a GSV Labs, Inc.) have been recategorized from controlled investments to non-controlled/affiliated investments.

(10)
On November 26, 2019, Sutter Rock Capital Corp. invested $250,000 in StormWind, LLC's Series D financing round. As part of the round, Sutter Rock Capital Corp.'s fully diluted ownership of voting securities decreased from 25.6% to 23.4%. As such, Sutter Rock Capital Corp.'s investments in StormWind, LLC have been recategorized from controlled investments to non-controlled/affiliated investments.

(11)
During year ended December 31, 2019, Treehouse Real Estate Investment Trust Inc. declared, and Sutter Rock Capital Corp. received an aggregate of $100,000 in dividend distributions.


12

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2020


NOTE 1—NATURE OF OPERATIONS

Sutter Rock Capital Corp. ("we", "us", "our", “Company” or “Sutter Rock Capital”), formerly known as GSV Capital Corp. and formed in September 2010 as a Maryland corporation, is an internally-managed, non-diversified closed-end management investment company. The Company 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 treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

On and effective March 12, 2019, our Board of Directors approved internalizing our operating structure ("Internalization") and we began operating as an internally-managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Prior to March 12, 2019, we were externally managed by our former investment adviser, GSV Asset Management, LLC (“GSV Asset Management”), pursuant to an investment advisory agreement (the “Investment Advisory Agreement”), and our former administrator, GSV Capital Service Company, LLC (“GSV Capital Service Company”), provided the administrative services necessary for our operations pursuant to an administration agreement (the “Administration Agreement”). Refer to "Note 3 — Related-Party Arrangements" for further detail.

The Company’s date of inception was January 6, 2011, which is the date it commenced its development stage activities. The Company’s common stock is currently listed on the Nasdaq Capital Market under the symbol “SSSS” (formerly "GSVC"). The Company began its investment operations during the second quarter of 2011.

The table below displays the Company’s subsidiaries as of March 31, 2020, which, other than GSV Capital Lending, LLC (“GCL”), are collectively referred to as the “Taxable Subsidiaries.” The Taxable Subsidiaries were formed to hold portfolio investments. The Taxable Subsidiaries, including their associated portfolio investments, are consolidated with the Company for accounting purposes, but have elected to be treated as separate entities for U.S. federal income tax purposes. GCL was formed to originate portfolio loan investments within the state of California and is consolidated with the Company for accounting purposes. Refer to “Note 2—Significant Accounting Policies—Basis of Consolidation” below for further detail.

Subsidiary
 
Jurisdiction of
Incorporation
 
Formation
Date
 
Percentage
Owned
GCL
 
Delaware
 
April 13, 2012
 
100%
Subsidiaries below are referred to collectively, as the “Taxable Subsidiaries”
 
 
 
 
 
 
GSVC AE Holdings, Inc. (“GAE”)
 
Delaware
 
November 28, 2012
 
100%
GSVC AV Holdings, Inc. (“GAV”)
 
Delaware
 
November 28, 2012
 
100%
GSVC NG Holdings, Inc. (“GNG”)(1)
 
Delaware
 
November 28, 2012
 
100%
GSVC SW Holdings, Inc. (“GSW”)
 
Delaware
 
November 28, 2012
 
100%
GSVC WS Holdings, Inc. (“GWS”)(1)
 
Delaware
 
November 28, 2012
 
100%
GSVC SVDS Holdings, Inc. (“SVDS”)
 
Delaware
 
August 13, 2013
 
100%
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(1)    This Taxable Subsidiary was dissolved on April 16, 2020.

The Company’s investment objective is to maximize its portfolio’s total return, principally by seeking capital gains on its equity and equity-related investments. The Company invests principally in the equity securities of what it believes to be rapidly growing venture-capital-backed emerging companies. The Company may acquire its investments in these portfolio companies through: offerings of the prospective portfolio companies, transactions on secondary marketplaces for private companies, or negotiations with selling stockholders. The Company may also invest on an opportunistic basis in select publicly traded equity securities or certain non-U.S. companies that otherwise meet its investment criteria, subject to any applicable limitations under the 1940 Act.


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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2020

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim unaudited condensed consolidated financial statements of the Company are prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is an investment company following the specialized accounting and reporting guidance specified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies. In the opinion of management, all adjustments, all of which were of a normal recurring nature, considered necessary for the fair presentation of consolidated financial statements for the interim period have been included.

The results of operations for the current interim period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2020. The interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2019.

Basis of Consolidation

Under Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ (“AICPA”) Audit and Accounting Guide for Investment Companies, the Company is precluded from consolidating any entity other than another investment company, a controlled operating company that provides substantially all of its services and benefits to the Company, and certain entities established for tax purposes where the Company holds a 100% interest. Accordingly, the Company’s condensed consolidated financial statements include its accounts and the accounts of the Taxable Subsidiaries and GCL, its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires the Company’s management to make a number of significant estimates. These include estimates of the fair value of certain assets and liabilities and other estimates that affect the reported amounts of certain 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. The Company’s estimates are inherently subjective in nature and actual results could differ materially from such estimates.

Uncertainties and Risk Factors

The Company is subject to a number of risks and uncertainties in the nature of its operations, as well as vulnerability due to certain concentrations. Refer to "Risk Factors” in Part I, Item 1A of this Form 10-Q for a detailed discussion of the risks and uncertainties inherent in the nature of the Company’s operations. Refer to “Note 4—Investments at Fair Value” for an overview of the Company’s industry and geographic concentrations.

Investments at Fair Value

The Company applies fair value accounting in accordance with GAAP and the AICPA’s Audit and Accounting Guide for Investment Companies. The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2020


Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date.

Level 2—Valuations based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.