SuRo Capital Corp.

Hey and welcome to the Soros Capital's third quarter 2023 earnings call. Today's call is being recorded. Your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you'll be connected to an operator. I will now hand you over to your host, Tim Bates, to begin today's conference. Thank you.

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

Thank you, Adam. Good afternoon, and thank you for joining us. We are pleased to share the results of Sero Capital's third quarter of 2023. The third quarter of 2023 was characterized by broad ongoing weakness in the public equity and bond market. Economic uncertainty has continued into the fourth quarter, although recent reports and commentary from the Federal Reserve has led investors to believe the Fed may be done, or close to done, raising interest rates. While the Fed may be done with interest rate hikes, geopolitical unrest, including the wars in Israel and Ukraine, coupled with the view that consumers are pulling back, has fueled continued volatility in the equity markets. In the first half of the year, we expressed our view that we believe the IPO market could open in Q3, which in fact did occur. Unfortunately, while there were several notable tech companies that debuted in the public markets, as of today, all of these companies have declined from their IPO price. The poor performance of these stocks, as well as other IPOs, has led to a pause in the IPO market. The IPO market is broadly closed and will likely reopen during the first or second quarter of 2024. The apparent delay in the IPO market has led to more volatility in the private markets, with secondary trading in many instances being significantly inconsistent with public comparables. As we have highlighted for several quarters, there is a disconnect between the pricing of late stage secondary opportunities and the recent performance of public markets. While we have been fortunate to find what we believe to be a couple of excellent opportunities, these are more the exception than the rule, as valuations of private markets remain inconsistent and higher than their public comparables. To that end, we have observed private secondary opportunities trading up or down around 25% within very short periods of time with no apparent catalyst. Additionally, we have noted stocks bid and offered simultaneously at meaningfully different prices. Finally, and perhaps the most instructive, we have observed trading in companies at levels that were meaningfully above where their IPO was first indicated and finally priced. It is clear to us that the private secondary markets are opaque. To navigate through them, it is imperative to have constant dialogue with the myriad of secondary participants. To be prudent in price in such an opaque and wide-ranging market, it is critical to perform rigorous valuation analysis as we deploy capital against these opportunities. As private companies face the prospects of prolonged timelines until IPO, our pipeline has remained extremely active with many companies and investors seeking liquidity. In fact, we continue to see more potential investments than other times. With that said, as always, we remain very focused on our potential entry levels. During the quarter, we were able to execute several new investments. Additionally, as previously discussed, one of our SPAC investments closed its previously announced merger, and two other SPACs announced definitive agreements to merge with target companies. We made two new investments during the quarter. We invested $5.8 million in Four Kites, a supply chain visibility software company through secondary transactions. And we also invested $1 million in Stake Trade, a sports betting exchange doing business as profit exchange through a primary transaction as part of the Suro Capital Sports portfolio. Please turn to slide four. Four Kites is a leading real-time supply chain visibility solution. Four Kites has been a pioneering force behind the idea that companies should know where their goods are at all time from the initial onset of being loaded onto a truck to when they finally reach a delivery destination. The impact of Four Kites technology is evidenced in its impressive clientele, which includes recognized brands such as nine of the top ten consumer packaged good companies and 18 of the 20 food and beverage companies. Today, 4Kites helps over 1,200 of the world's most recognized brands leverage real-time visibility and unlock efficiencies that save them millions of dollars a year. We believe that 4Kites is in a unique position to capture additional market share as they continue expanding their business and target customers with some of the most complex supply chain needs. We also made a $1 million investment in Profit Exchange through a primary transaction. Profit Exchange is a peer-to-peer sports betting exchange focused on providing bettors the best pricing and a seamless experience that is different from the incumbent operators. Bettors on the platform have the ability to request their own wagers or pick from outstanding options driven by both users and market makers. The company has gone through extensive licensing and regular steps and is now live in New Jersey with plans to expand to other legal betting states in the future. We are excited about the exchange wagering opportunity in the U.S. given the success Betfair has had in the U.K., and we believe Profit Exchange has both the team and the technology to execute on the large market opportunity. Please turn to slide five. During the quarter, Columbia Acquisition Corp, a SPAC in which we own both stock and warrants, successfully closed its business combination with PSQ Holdings, also known as Public Square. Public Square is a leading marketplace of patriotic businesses and consumers that began trading on the New York Stock Exchange under the symbol PSQH on July 20th. At quarter end, we valued our position at approximately $18 million and our cost basis in Public Square is approximately $2.7 million. The lockup restriction on the warrants expired on August 19th, and our common shares are subject to a one-year lockup period as of the business combinations closing with a pricing condition that would unlock shares earlier. Allison will provide additional details on our Public Square investment later in the call. As we previously discussed, the Acquisition Corp announced a signed definitive agreement to merge with Oklo, an advanced fission technology and nuclear fuel company, on July 11, 2023. On September 27, 2023, the company filed an S-4 with the SEC. The combined company will be named Oklo and intends to list on the New York Stock Exchange with the symbol OKLO. The transaction, which has been approved by the boards of directors of Oklo and Alt-C, is expected to close in late 2023 or early 2024 and is subject to approval by Alt-C and Oklo shareholders, as well as other closing conditions. Lastly, during the quarter on August 1, 2023, Churchill Capital Corp. 7 announced it signed a definitive agreement to merge with Corpac, a corporate compounder specialized in acquiring small and medium-sized business enterprise. also known as SMEs, in the UK. The transaction has been approved by the boards of directors of Corpac and Churchill 7, and is expected to close in early 24, subject to approval by Churchill 7 and Corpac shareholders, as well as other closing conditions. Turning to the third quarter, we ended the quarter with net asset value of $212 million, or $8.41 per share. This is an increase in net asset up from $7.35 a share in Q2 of 2023, and up from $7.83 a share in Q3 of 2022. Please turn to slide six. Turning to our top five positions, I first want to highlight our cash position. As of quarter end, our cash and short-term U.S. Treasuries available for investment were approximately $94 million, representing 32% of our gross assets. We continue to believe having cash in this environment advantageously positions us to continue seeking out new opportunities emerging from current market conditions. CSERA's top five positions as of September 30th were Learnio, PublicSquare, Service, Titan, Blink Health, and Stormwind. These positions accounted for approximately 61% of the investment portfolio at fair value. Additionally, as of September 30th, our top 10 positions accounted for approximately 82% of the investment portfolio at fair value. Transitioning to our public investments. As previously stated, it is our objective to sell our public positions when lockup restrictions expire and there's relative stability in a given public position's trading. In line with this approach, we've continued to monetize our public unrestricted positions. During the third quarter, we monetized most of our remaining position in Nextdoor and subsequent to quarter's end, we began monetizing our position in public square warrants. We plan to continue to opportunistically monetize our public editions as market conditions improve. As previously discussed, we continue to focus on our shareholder-friendly initiatives. To that end, on August 7th, our board of directors authorized an additional $5 million for share repurchases and an extension of the share repurchase program through October 31st, 2024. Given the significant discount in which our stock is trading compared to net asset value, we determine the current continuation of the share purchase program to be an efficient and accretive deployment of capital. As public and private market volatility persists, we remain patient and selective as we evaluate new opportunities. We believe our considerable investable capital affords us an opportunity to continue to add high-quality companies to our portfolio. Thank you for your attention, and with that, I will hand it over to Allison Green, our Chief Financial Officer.