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 June 30, 2019
¨ 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 19,646,846 shares of common stock, $0.01 par value per share, outstanding as of August 8, 2019.


 


TABLE OF CONTENTS


​​

SUTTER ROCK CAPITAL CORP.

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


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TABLE OF CONTENTS


PART I

Item 1. Condensed Consolidated Financial Statements

SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
June 30,
2019
 
December 31,
2018
ASSETS

 

Investments at fair value:

 

Non-controlled/non-affiliate investments (cost of $94,545,251 and $105,869,607, respectively)
$
169,015,959

 
$
170,067,233

Non-controlled/affiliate investments (cost of $29,999,703 and $42,333,854, respectively)
1,400,349

 
5,931,863

Controlled investments (cost of $22,963,375 and $22,960,942, respectively)
12,998,814

 
22,816,733

Total Portfolio Investments
183,415,122

 
198,815,829

Investments in U.S. Treasury bills (cost of $99,979,000 and $99,982,067, respectively)
99,995,000

 
99,994,000

Total Investments (cost of $247,487,329 and $271,146,470, respectively)
283,410,122

 
298,809,829

Cash
54,418,254

 
28,184,163

Proceeds receivable
51,511

 

Escrow proceeds receivable
2,074,820

 
2,494,582

Interest and dividends receivable
426,995

 
255,670

Deferred financing costs

 
267,541

Prepaid expenses and other assets(3)
1,502,921

 
207,769

Total Assets
341,884,623

 
330,219,554

LIABILITIES

 

Accounts payable and accrued expenses(3)
2,189,367

 
490,687

Accrued incentive fees, net of waiver of incentive fees(1)

 
4,660,472

Accrued management fees, net of waiver of management fees(1)

 
415,056

Accrued interest payable
475,000

 
475,000

Payable for securities purchased
89,477,652

 
89,480,103

Deferred tax liability

 
885,566

4.75% Convertible Senior Notes due March 28, 2023(2)
38,617,556

 
38,434,511

Total Liabilities
130,759,575

 
134,841,395

Commitments and contingencies (Notes 7 and 10)

 

Net Assets
$
211,125,048

 
$
195,378,159

NET ASSETS

 

Common stock, par value $0.01 per share (100,000,000 authorized; 19,646,846 and 19,762,647 issued and outstanding, respectively)
$
196,468

 
$
197,626

Paid-in capital in excess of par
191,586,438

 
192,322,399

Accumulated net investment loss
(18,413,823
)
 
(16,228,294
)
Accumulated net realized gain/(loss) on investments
1,833,175

 
(7,691,365
)
Accumulated net unrealized appreciation of investments
35,922,790

 
26,777,793

Net Assets
$
211,125,048

 
$
195,378,159

Net Asset Value Per Share
$
10.75

 
$
9.89

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)
As of June 30, 2019 and December 31, 2018, 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.
(3)
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.

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended June 30
 
Six Months Ended June 30
 
2019
 
2018
 
2019
 
2018
INVESTMENT INCOME

 

 
 
 
 
Non-controlled/non-affiliate investments:

 

 
 
 
 
Interest income
$
198,175

 
$
8,932

 
$
336,672

 
$
10,612

Non-controlled/affiliate investments:

 

 
 
 
 
Interest income
60,127

 
221,813

 
119,593

 
455,895

Controlled investments:

 

 
 
 
 
Interest income
29,650

 
11,328

 
58,937

 
24,901

Dividend income
200,000

 
350,000

 
200,000

 
350,000

Total Investment Income
487,952

 
592,073

 
715,202

 
841,408

OPERATING EXPENSES

 

 
 
 
 
Management fees(1)

 
1,286,066

 
848,723

 
2,609,642

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

 
2,588,085

 
(4,660,472
)
 
4,059,419

Costs incurred under Administration Agreement(1)

 
397,113

 
306,084

 
821,258

Directors’ fees
86,250

 
86,250

 
172,500

 
172,500

Professional fees
1,310,028

 
326,798

 
3,371,950

 
666,696

Interest expense
600,205

 
1,473,695

 
1,204,373

 
2,613,758

Compensation expense
469,944

 

 
632,108

 

Income tax expense
29,949

 
26,229

 
33,712

 
148,499

Other expenses
796,807

 
160,036

 
991,753

 
649,306

Total Operating Expenses
3,293,183

 
6,344,272

 
2,900,731

 
11,741,078

Management fee waiver(1)

 
(335,403
)
 

 
(490,347
)
Incentive fee waiver(1)

 

 

 
(5,000,000
)
Total operating expenses, net of waiver of management and incentive fees
3,293,183

 
6,008,869

 
2,900,731

 
6,250,731

Net Investment Loss
(2,805,231
)
 
(5,416,796
)
 
(2,185,529
)
 
(5,409,323
)
Realized Gains/(Losses) on Investments:

 

 

 

Non-controlled/non-affiliated investments
13,590,233

 
3,363,333

 
21,859,371

 
2,587,288

Non-controlled/affiliate investments

 

 
(12,334,831
)
 
(680
)
Controlled investments

 

 

 

Net Realized Gain on Investments
13,590,233

 
3,363,333

 
9,524,540

 
2,586,608

Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018

 

 

 
(397,846
)
Change in Unrealized Appreciation/(Depreciation) of Investments:
 
 

 
 
 
 
Non-controlled/non-affiliated investments
(6,751,196
)
 
10,555,021

 
10,277,147

 
20,409,685

Non-controlled/affiliate investments
(1,220,012
)
 
(952,635
)
 
7,802,636

 
(8,628,965
)
Controlled investments
(4,469,112
)
 
270,209

 
(9,820,352
)
 
6,225,269

Net Change in Unrealized Appreciation/(Depreciation) of Investments
(12,440,320
)
 
9,872,595

 
8,259,431

 
18,005,989

Benefit from taxes on unrealized depreciation of investments
979,713

 
1,010,871

 
885,566

 
1,010,871

Net Change in Net Assets Resulting from Operations
$
(675,605
)
 
$
8,830,003

 
$
16,484,008

 
$
15,796,299

Net Change in Net Assets Resulting from Operations per Common Share:
 
 

 
 
 
 
Basic
$
(0.03
)
 
$
0.42

 
$
0.84

 
$
0.75

Diluted(2)
$
(0.03
)
 
$
0.35

 
$
0.75

 
$
0.66

Weighted-Average Common Shares Outstanding

 

 

 

Basic
19,719,706

 
20,968,850

 
19,741,058

 
21,059,254

Diluted(2)
19,719,706

 
28,866,674

 
23,472,402

 
28,866,674

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 June 30, 2019, 3,731,344 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net change in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive. For the six months ended June 30, 2019 and the three and six months ended June 30, 2018, 0 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net change in net assets resulting from operations per common share. Refer to “Note 6—Net Change in Net Assets Resulting from Operations per Common Share—Basic and Diluted” for further detail.




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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
Six Months Ended June 30,
 
2019
 
2018
Net Assets at Beginning of Year
$
195,378,159

 
$
204,762,866

 
 
 
 
Change in Net Assets Resulting from Operations

 

Net investment gain
619,702

 
7,473

Net realized loss on investments
(4,065,693
)
 
(776,725
)
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018

 
(397,846
)
Net change in unrealized appreciation of investments
20,699,751

 
8,133,394

Provision for taxes on unrealized appreciation of investments
(94,147
)
 

Net Change in Net Assets Resulting from Operations
17,159,613

 
6,966,296

Change in Net Assets Resulting from Capital Transactions

 

Repurchases of common stock

 
(1,241,428
)
Net Change in Net Assets Resulting from Capital Transactions

 
(1,241,428
)
Total Change in Net Assets
17,159,613

 
5,724,868

Net Assets at March 31
$
212,537,772

 
$
210,487,734

 
 
 
 
Change in Net Assets Resulting from Operations

 

Net investment loss
$
(2,805,231
)
 
$
(5,416,796
)
Net realized gain on investments
13,590,233

 
3,363,333

Net change in unrealized appreciation/(depreciation) of investments
(12,440,320
)
 
9,872,595

Benefit from taxes on unrealized depreciation of investments
979,713

 
1,010,871

Net Change in Net Assets Resulting from Operations
(675,605
)
 
8,830,003

Change in Net Assets Resulting from Capital Transactions

 

Repurchases of common stock
(737,119
)
 
(2,169,124
)
Net Decrease in Net Assets Resulting from Capital Transactions
(737,119
)
 
(2,169,124
)
Total Change in Net Assets
(1,412,724
)
 
6,660,879

Net Assets at June 30
$
211,125,048

 
$
217,148,613

 
 
 
 
Capital Share Activity

 

Shares outstanding at beginning of year
19,762,647

 
21,246,345

Shares issued

 

Shares repurchased
(115,801
)
 
(495,432
)
Shares Outstanding at End of Period
19,646,846

 
20,750,913


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)


Six Months Ended June 30,
 
2019
 
2018
Cash Flows from Operating Activities

 

Net change in net assets resulting from operations
$
16,484,008

 
$
15,796,299

Adjustments to reconcile net change in net assets resulting from operations to net cash provided by operating activities:

 

Net realized gain on investments
(9,524,540
)
 
(2,586,608
)
Net change in unrealized appreciation of investments
(8,259,431
)
 
(18,005,989
)
Change in deferred tax liability
(885,566
)
 
(1,354,386
)
Amortization of discount on 5.25% Convertible Senior Notes due 2018

 
359,444

Amortization of discount on 4.75% Convertible Senior Notes due 2023
183,045

 
95,051

Amortization of deferred financing costs

 
41,172

Amortization of fixed income security premiums and discounts
(2,433
)
 
(12,017
)
Write-off of deferred offering costs
267,541

 
325,248

Paid-in-kind interest

 
(209,453
)
Adjustments to escrow proceeds receivable
14,891

 

Purchases of investments in:

 

Portfolio investments
(10,008,040
)
 
(209,656
)
U.S. Treasury bills
(199,940,333
)
 
(199,943,927
)
Proceeds from sales or maturity of investments in:

 

Portfolio investments
43,119,593

 
25,297,380

U.S. Treasury bills
200,000,000

 
200,000,000

Change in operating assets and liabilities:

 

Due from controlled investments

 
840

Prepaid expenses and other assets
(1,295,152
)
 
120,751

Interest and dividends receivable
(171,325
)
 
(250,642
)
Proceeds receivable
(51,511
)
 

Escrow proceeds receivable
419,762

 
(1,056,823
)
Due to GSV Asset Management(1)

 
1,308

Payable for securities purchased
(2,451
)
 
129,805

Accounts payable and accrued expenses
1,698,680

 
101,334

Accrued incentive fees(1)
(4,660,472
)
 
(940,581
)
Accrued management fees(1)
(415,056
)
 
(107,559
)
Accrued interest payable

 
212,187

Net Cash Provided by Operating Activities
26,971,210

 
17,803,179

Cash Flows from Financing Activities

 

Proceeds from the issuance of 4.75% Convertible Senior Notes due 2023

 
40,000,000

Deferred debt issuance costs

 
(1,846,620
)
Repurchases of common stock
(737,119
)
 
(3,410,552
)
Repurchase of 5.25% Convertible Senior Notes due 2018

 
(19,290,565
)
Realized loss on repurchase of 5.25% Convertible Senior Notes due 2018

 
397,846

Deferred offering costs

 
(6,312
)
Net Cash Provided by/(Used in) Financing Activities
(737,119
)
 
15,843,797

Total Increase in Cash Balance
26,234,091

 
33,646,976

Cash Balance at Beginning of Year
28,184,163

 
59,838,600

Cash Balance at End of Period
$
54,418,254

 
$
93,485,576

See accompanying notes to condensed consolidated financial statements.

 
Six Months Ended June 30,
 
2019
 
2018
Supplemental Information:

 

Interest paid
$
1,024,911

 
$
1,891,542

Taxes paid
$
14,726

 
$
492,014

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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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30, 2019
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/NON-AFFILIATE
 
 
 
 
 
 
 
 
 
 
 
 
Palantir Technologies, Inc.
 
Palo Alto, CA
 
 
 
 
 
 
 
 
 
 
Common shares, Class A
 
Data Analysis
 
5/7/2012
 
5,773,690

 
$
16,189,935

 
$
30,658,294

 
14.52
%
Coursera, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Online Education
 
6/9/2013
 
2,961,399

 
14,519,519

 
30,634,115

 
14.51
%
Lyft, Inc.**
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares, Class A(3)(7)
 
On-Demand Transportation Services
 
3/21/2014
 
304,829

 
4,296,894

 
19,028,798

 
9.00
%
Course Hero, Inc.
 
Redwood City, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Online Education
 
9/18/2014
 
2,145,509

 
5,000,001

 
18,769,599

 
8.89
%
Nextdoor.com, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Networking
 
9/27/2018
 
580,360

 
10,006,578

 
11,040,043

 
5.23
%
Dropbox, Inc.**
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares(3)(10)
 
Cloud Computing Services
 
11/15/2011
 
437,530

 
7,462,506

 
10,960,127

 
5.19
%
Neutron Holdings, Inc. (d/b/a/ Lime)
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred Shares, Series D
 
Micromobility
 
1/25/2019
 
41,237,113

 
10,006,800

 
10,000,000

 
4.74
%
Enjoy Technology, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
On-Demand Commerce
 
7/29/2015
 
1,681,520

 
4,000,280

 
6,380,359

 
3.02
%
Preferred shares, Series A
 
 
 
10/16/2014
 
879,198

 
1,002,440

 
3,336,029

 
1.58
%
Total
 
 
 
 
 
 
 
5,002,720

 
9,716,388

 
4.60
%
Parchment, Inc.
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 8%
 
E-Transcript Exchange
 
10/1/2012
 
3,200,512

 
4,000,982

 
8,904,893

 
4.22
%
SharesPost, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Online Marketplace Finance
 
7/19/2011
 
1,771,653

 
2,259,716

 
6,824,466

 
3.23
%
Common shares
 
 
 
7/20/2011
 
770,934

 
123,987

 
982,093

 
0.47
%
Total
 
 
 
 
 
 
 
2,383,703

 
7,806,559

 
3.70
%
Aspiration Partners, Inc.
 
Marina Del Rey, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Financial Services
 
8/11/2015
 
540,270

 
1,001,815

 
6,032,799

 
2.86
%
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

 
2,473,496

 
1.17
%
Clever, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Education Software
 
12/5/2014
 
1,799,047

 
2,000,601

 
2,000,001

 
0.95
%
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

 
0.37
%
4C Insights (f/k/a The Echo Systems Corp.)
 
Chicago, IL
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Data Platform
 
3/30/2012
 
436,219

 
1,436,404

 
201,356

 
0.10
%
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
 
 
 
 
 
 
 
$
94,545,251

 
$
169,015,959

 
80.05
%
See accompanying notes to condensed consolidated financial statements.

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 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
 
 
 
 
 
 
 
 
 
 
Convertible Promissory Note 5% Due 12/31/2018***(8)
 
Digital Media Platform
 
8/31/2016
 
$
2,102,384

 
$
2,102,384

 
$
630,715

 
0.30
%
Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028
 
 
 
4/9/2018
 
295,565

 
30,647

 

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

 
4,999,999

 

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

 
3,000,200

 

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

 
500,000

 

 
%
Total
 
 
 
 
 
 
 
10,633,230

 
630,715

 
0.30
%
EdSurge, Inc.
 
Burlingame, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A-1
 
Education Media Platform
 
11/12/2015
 
378,788

 
501,360

 
250,000

 
0.12
%
Preferred shares, Series A
 
 
 
2/28/2014
 
494,365

 
500,801

 
269,634

 
0.13
%
Total
 
 
 
 
 
 
 
1,002,161

 
519,634

 
0.25
%
CUX, Inc. (d/b/a CorpU)
 
Philadelphia, PA
 
 
 
 
 
 
 
 
 
 
Senior Subordinated Convertible Promissory Note 10% Due 2/14/2020***(6)
 
Corporate Education
 
11/26/2014
 
$
1,360,489

 
1,361,969

 
250,000

 
0.12
%
Convertible preferred shares, Series D 6%
 
 
 
5/31/2013
 
169,033

 
778,607

 

 
%
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
 
 
 
 
 
 
 
4,146,653

 
250,000

 
0.12
%
Maven Research, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C
 
Knowledge Networks
 
7/2/2012
 
318,979

 
2,000,447

 

 
%
Preferred shares, Series B
 
 
 
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
 
 
 
 
 
 
 
$
29,999,703

 
$
1,400,349

 
0.67
%
 
 
 
 
 
 
 
 
 
 
 
 
 
CONTROLLED(2)
 
 
 
 
 
 
 
 
 
 
 
 
StormWind, LLC(5)
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C 8%
 
Interactive Learning
 
1/7/2014
 
2,779,134

 
4,000,787

 
4,593,188

 
2.17
%
Preferred shares, Series B 8%
 
 
 
12/16/2011
 
3,279,629

 
2,019,687

 
2,699,990

 
1.28
%
Preferred shares, Series A 8%
 
 
 
2/25/2014
 
366,666

 
110,000

 
78,258

 
0.04
%
Total
 
 
 
 
 
 
 
6,130,474

 
7,371,436

 
3.49
%

See accompanying notes to condensed consolidated financial statements.

6

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 2019
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NestGSV, Inc. (d/b/a GSV Labs, Inc.)
 
San Mateo, CA
 
 
 
 
 
 
 
 
 
 
Convertible Promissory Note 12% Due 12/31/2019***
 
Global Innovation Platform
 
2/17/2016
 
$
936,525

 
$
953,869

 
$
462,864

 
0.22
%
Preferred shares, Series A-4
 
 
 
10/6/2014
 
3,720,424

 
4,904,498

 
2,212,644

 
1.05
%
Preferred shares, Series A-3
 
 
 
4/4/2014
 
1,561,625

 
2,005,730

 
928,743

 
0.44
%
Preferred shares, Series A-2
 
 
 
7/15/2013
 
450,001

 
605,500

 
267,629

 
0.13
%
Preferred shares, Series A-1
 
 
 
5/25/2012
 
1,000,000

 
1,021,778

 
594,729

 
0.28
%
Common shares
 
 
 
7/1/2014
 
200,000

 
1,000

 
118,946

 
0.06
%
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

 
0.06
%
Preferred Warrants Series A-4, Strike Price $1.33, Expiration Date 7/18/2021
 
 
 
7/8/2016
 
250,000

 
74,380

 
65,000

 
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

 
5,000

 
%
Total
 
 
 
 
 
 
 
9,671,489

 
4,811,180

 
2.28
%
SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.)
 
Woodside, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Class A***(9)
 
Clean Technology
 
4/15/2014
 
14,300,000

 
7,151,412

 
816,198

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

 
10,000

 

 
%
Total
 
 
 
 
 
 
 
7,161,412

 
816,198

 
0.39
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Controlled
 
 
 
 
 
 
 
$
22,963,375

 
$
12,998,814

 
6.16
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio Investments
 
 
 
 
 
 
 
$
147,508,329

 
$
183,415,122

 
86.88
%
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury bill, 0%, due 7/2/2019***(3)
 
 
 
6/27/2019
 
$
100,000,000

 
99,979,000

 
99,995,000

 
47.36
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
247,487,329

 
$
283,410,122

 
134.24
%

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 June 30, 2019, 10.58% 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”.



7

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) - continued
June 30, 2019

(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.

(4)
As of June 30, 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)
Interest will accrue daily on the unpaid principal balance of the note. Interest began compounding annually on November 26, 2015. Accrued interest is not payable until the earlier of (a) the closing of a subsequent equity offering by CUX, Inc. (d/b/a CorpU), or (b) the maturity of the note.

(7)
On March 29, 2019, Lyft, Inc. priced its initial public offering for 32,500,000 Class A common shares at a price of $72.00 per share. Sutter Rock Capital Corp.'s 176,266 Series D preferred shares and 128,563 Series E preferred shares of Lyft, Inc. automatically converted to Class A common shares immediately prior to the close of the offering and are subject to a lock-up provision. At June 30, 2019, Sutter Rock Capital Corp. valued is common shares of Lyft, Inc. based on its June 30, 2019 closing price, less a 5% liquidity discount due to the lock-up provision.

(8)
Subsequent to December 31, 2018, Ozy Media Inc.'s obligations under its financing arrangements with the Company became past due.

(9)
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 six months ended June 30, 2019, SPBRX, INC. declared, and Sutter Rock Capital Corp. received, an aggregate of $200,000 in cash 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.

(10)
On March 23, 2018, Dropbox, Inc. priced its IPO. The lock-up agreement for Sutter Rock Capital Corp.'s common shares expired on August 23, 2018. At June 30, 2019, Sutter Rock Capital Corp. valued its common shares of Dropbox, Inc. based on its June 30, 2019 closing price.



8

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SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2018
Portfolio Investments*
 
Headquarters/
Industry
 
Date of Initial Investment
 
Shares/
Principal
 
Cost
 
Fair Value
 
% of Net
Assets
NON-CONTROLLED/NON-AFFILIATE
 
 
 
 
 
 
 
 
 
 
 
 
Palantir Technologies, Inc.
 
Palo Alto, CA
 
 
 
 
 
 
 
 
 
 
Common shares, Class A
 
Data Analysis
 
5/7/2012
 
5,773,690

 
$
16,189,935

 
$
34,053,394

 
17.43
%
Spotify Technology S.A.**
 
Stockholm, Sweden
 
 
 
 
 
 
 
 
 
 
Common shares(3)(7)
 
On-Demand Music Streaming
 
8/6/2012
 
235,360

 
10,002,084

 
26,713,360

 
13.67
%
Coursera, Inc.
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Online Education
 
6/9/2013
 
2,961,399

 
14,519,519

 
23,111,889

 
11.83
%
Dropbox, Inc.**
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares(3)(8)
 
Cloud Computing Services
 
11/15/2011
 
874,990

 
13,656,926

 
17,876,046

 
9.15
%
Lyft, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series E
 
On-Demand Transportation
 
3/11/2015
 
128,563

 
2,503,585

 
6,583,483

 
3.37
%
Preferred shares, Series D
 
 
 
3/21/2014
 
176,266

 
1,792,749

 
9,026,269

 
4.62
%
Total
 
 
 
 
 
 
 
4,296,334

 
15,609,752

 
7.99
%
Course Hero, Inc.
 
Redwood City, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Online Education
 
9/18/2014
 
2,145,509

 
5,000,001

 
14,106,625

 
7.22
%
Nextdoor.com, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Common shares
 
Social Networking
 
9/27/2018
 
580,360

 
10,006,578

 
10,097,442

 
5.17
%
SharesPost, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Online Marketplace Finance
 
7/19/2011
 
1,771,653

 
2,259,716

 
5,943,577

 
3.04
%
Common shares(13)
 
 
 
7/20/2011
 
770,934

 
123,987

 
855,327

 
0.44
%
Total
 
 
 
 
 
 
 
2,383,703

 
6,798,904

 
3.48
%
Parchment, Inc.
 
Scottsdale, AZ
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series D 8%
 
E-Transcript Exchange
 
10/1/2012
 
3,200,512

 
4,000,982

 
6,151,161

 
3.15
%
Enjoy Technology, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
On-Demand Commerce
 
7/29/2015
 
1,681,520

 
4,000,280

 
4,000,000

 
2.05
%
Preferred shares, Series A
 
 
 
10/16/2014
 
879,198

 
1,002,440

 
2,091,436

 
1.07
%
Total
 
 
 
 
 
 
 
5,002,720

 
6,091,436

 
3.12
%
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

 
3,511,661

 
1.80
%
Knewton, Inc.
 
New York, NY
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series E
 
Online Education
 
12/16/2013
 
375,985

 
4,999,999

 
2,021,690

 
1.03
%
Convertible Promissory Note 8% Due 12/31/2019(12)
 
 
 
7/23/2018
 
$
134,405

 
135,213

 
134,405

 
0.07
%
Total
 
 
 
 
 
 
 
5,135,212

 
2,156,095

 
1.10
%
Clever, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series B
 
Education Software
 
12/5/2014
 
1,799,047

 
2,000,601

 
2,000,001

 
1.02
%
Aspiration Partners, Inc.
 
Marina Del Rey, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A
 
Financial Services
 
8/11/2015
 
540,270

 
1,001,815

 
999,975

 
0.51
%
Tynker (f/k/a Neuron Fuel, Inc.)
 
Mountain View, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A 8%
 
Computer Software
 
8/8/2012
 
534,162

 
309,310

 
789,492

 
0.41
%
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 1.49% Due 11/9/2021(4)
 
 
 
3/3/2016
 
$
2,270,458

 
2,270,858

 

 
%
Total
 
 
 
 
 
 
 
8,421,364

 

 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-controlled/Non-affiliate
 
 
 
 
 
 
 
$
105,869,607

 
$
170,067,233

 
87.05
%
See accompanying notes to condensed consolidated financial statements.

9

TABLE OF CONTENTS


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS –continued
December 31, 2018
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
 
 
 
 
 
 
 
 
 
 
Convertible Promissory Note 5% Due 12/31/2018(11)
 
Digital Media Platform
 
8/31/2016
 
$
2,102,384

 
$
2,102,384

 
$
3,153,575

 
1.61
%
Preferred shares, Series B 6%
 
 
 
10/3/2014
 
922,509

 
4,999,999

 

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

 
3,000,200

 

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

 
500,000

 

 
%
Common Warrants, Strike Price $0.01, Expiration Date 4/9/2028(11)
 
 
 
4/9/2018
 
295,565

 
30,647

 

 
%
Total
 
 
 
 
 
 
 
10,633,230

 
3,153,575

 
1.61
%
CUX, Inc. (d/b/a CorpU)
 
Philadelphia, PA
 
 
 
 
 
 
 
 
 
 
Senior Subordinated Convertible Promissory Note 10% Due 2/14/2020***(6)
 
Corporate Education
 
11/26/2014
 
$
1,360,489

 
1,361,969

 
1,360,489

 
0.70
%
Convertible preferred shares, Series D 6%
 
 
 
5/31/2013
 
169,033

 
778,607

 
878,005

 
0.45
%
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(9)
 
 
 
5/31/2013
 
16,903

 

 
19,946

 
0.01
%
Total
 
 
 
 
 
 
 
4,146,653

 
2,258,440

 
1.16
%
EdSurge, Inc.
 
Burlingame, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series A-1
 
Education Media Platform
 
11/12/2015
 
378,788

 
501,360

 
250,000

 
0.13
%
Preferred shares, Series A
 
 
 
2/28/2014
 
494,365

 
500,801

 
269,848

 
0.14
%
Total
 
 
 
 
 
 
 
1,002,161

 
519,848

 
0.27
%
Maven Research, Inc.
 
San Francisco, CA
 
 
 
 
 
 
 
 
 
 
Preferred shares, Series C
 
Knowledge Networks
 
7/2/2012
 
318,979

 
2,000,447

 

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

 
217,206

 

 
%
Total
 
 
 
 
 
 
 
2,217,653

 

 
%
Curious.com, Inc.
 
Menlo Park, CA
 
 
 
 
 
 
 
 
 
 
Common shares(15)
 
Online Education
 
11/22/2013
 
1,135,944

 
12,000,006

 

 
%
Declara, Inc.
 
Palo Alto, CA
 
 
 
 
 
 
 
 
 
 
Convertible Promissory Note 12% Due 4/30/2018(4)(10)