Q2 2021 SuRo Capital Corp Earnings Call

August 4, 2021

[music].

Good day, ladies and gentlemen, and thank you for standing by and welcome to the Zero capital second quarter 2021 earnings Conference call. During today's presentation. All parties will be in a listen only mode. Following the presentation. The conference will be open for questions. This call is being recorded.

Today Wednesday August 4th 'twenty, 'twenty, 1 and I'll now turn the conference over to Speaker clear Council of Zero capital. Please go ahead.

Thank you for joining us on today's call I'm joined today by the Chairman and Chief Executive Officer of Cerro Capital, Mark Klein, and Chief Financial Officer, Alex and Green. Please note that a slide presentation that corresponds to today's prepared remarks by management is available on our website at www Dot zero cap of Dot Com Underinvest.

The relations events and presentation today's call is being recorded and broadcast live on our website Www Dot zero cap Dot Com replay information is included in our press release issued today. This call is the property and share of capital and the unauthorized reproduction of this call and any for them is strictly prohibited I would also.

Like to call your attention the 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 our future performance or financial condition. The.

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 the COVID-19, pandemic and any market volatility that may be detrimental to our business our portfolio of companies our industry and the global economy that could cause actual.

The old to differ materially from the plans intentions and expectations reflected and or suggested by the forward looking statements actual results may differ materially from those and the forward looking statements as the root zone of a number of factors, including but not limited to those described from time to time and 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 Cerro Capital's latest SEC filings. Please visit our website at www dot sort of capped dot com or the SEC's website at SEC Dot Gov now I would like to turn the call over to Mark Klein.

Thank you Claire.

Afternoon, and thank you for joining us we're pleased to share of the result of sort of capitals second quarter 2021.

Today, I will discuss how our portfolio performed and the second quarter.

This has been 1 of the most exciting quarters to date for our for ranging from the portfolio exits and 2 exciting investment opportunities and various different verticals.

Part of our portfolio of companies have announced intentions to other become publicly traded companies by either of stack merger or traditional IPO 1 portfolio of company announcements of the pen it has to be acquired and when do you expect the lockup on remaining of course their shares to inspire and minimally.

And the investment side, we continue to evaluate the exciting new opportunities and the market and this quarter alone, we sourced and before of diligence or and more opportunities than any other prior quarter.

I am excited to share and more detail of performance over this quarter and then we'll hand the call over to Allison Green for a brief financial overview at the conclusion of our remarks, we will open the call for questions.

Let's start with slide 3.

This quarter serve capital reach of our highest dividend adjusted net asset value.

Per share since inception, beating the record remarks, we said in both Q4.2020 and Q1.2021.

And as of June 30 of 2021 net asset value was $16.56 per share, which is a dollar and 5 some increase on the dividend adjusted basis from the prior quarter.

As of June 30 of 2021 net of assets assets totaled approximately $440 million compared to $436 million from the first quarter.

On August 3 zero of Capital's board of directors consistent with our desire to be shareholder friendly and our continued practice of distributing realized gains.

For a $2.25 per share dividend to shareholder.

This dividend will be payable on September 30 of 2 shareholders of record on August 18th.

Given the positive receptivity of our previous dividend our board has again offering shareholders the option to elect to receive as much as the 100 per cent of their dividends and stock and as Kathy aggregate cash dividend to <unk> 50 per cent of the total dividend payable.

This $2.25 per share dividend follows $3 per share of dividends declared and paid during the first half of this year, resulting in an aggregate amount of $5.25 per share declared to date.

Later in the call Alison will walk through in detail the election process of this cash and stock dividend.

Looking forward and subject to ongoing portfolio activity and the board intends to declare at least 1 more of large dividend and the.

November on a similar cash and stock basis.

Please turn to slide for for a review of our top 5 positions.

Cerro Capital's top 5 positions as of June 30th were Coursera of course hero, Ozzie media and Joy and Blake health.

The positions accounted for approximately 61 per cent of the investment portfolio at fair value. Additionally, as of June 30 of our top 10 positions accounted for approximately 78 per cent of the portfolio.

First of all I want to highlight of our investment and Coursera CT currently our largest position.

As previously discussed from March 31, Coursera executed and the initial public offering and began trading on the New York stock exchange of.

Of course ore price of $33 per share of at the top of its range and closed the second quarter of $39.56 per share since the IPO of March 31st of Coursera shares have traded above the IPO price of $33 per share.

And the second quarter of 25% of zero capital is of course their shares become became unrestricted after certain pricing conditions were met we monetize these shares during the quarter for net proceeds of approximately $31 million and realized the gain of approximately $27 million.

Cerro of capitals core set of remaining shares are restricted until August 6.

Consistent with our past communications of practices, we will value of monetization of Coursera the Z shares become unrestricted.

We value our investment and of course are as of the quarters and at the closing share price of June 30th and apply a discount for lack of marketability due to the lockup restrictions on our holdings as of the valuation day. This is consistent with our valuation methodology applicable to the public shares subject to.

The lockup provisions as of June 30th we value of our remaining of course, our investment and $87.2 million.

As mentioned and of course, there is the earnings call yesterday, Jeff Maggie oncology, the CEO highlighted growing adoption and the impact of their platform around the world institutions have lots of course, they are at a large scale and new learners are coming to the platform for reskilling efforts as well as learners are coming to the plan.

And for them to Upskill for high demand digital roles. Jeff noted that this effort has been successful thanks to the partnerships with global brands like Google IBM and Facebook.

Following the pandemic related surge of the platform use and 2020 is of course Theres Leap day will continue to see sustained structural demand for online learning as businesses governments and individuals seek the skills required to compete in today's economy with 5 million new learners added to their platform of Q.

2 of course, so of course, there is total registered learn of talent is now $87 million.

And in Q2, Coursera grew quarterly revenue by 38% and your year over year to over $102 million Coursera is consumer segment grew 23% year over year. Its enterprise segment grew 69% year over year and its degree of segment grew 78% year over year.

Coursera raised their 2021 revenue estimates from 360 million $9 million to $381 million to a new range of $402 million to $410 million.

Today's share price increased by over 21% shows wall Street's enthusiasm for of course service earnings report.

We are delighted with the performance of course, the Arab following the IPO.

As previously announced from partial monetization of course are generated over $30 million of for the proceeds resulting in realized gains of nearly $27 million. We were pleased to have delivered these positive outcomes for our shareholders.

As reported and a June 'twenty, 1.2020 1 tech Crunch of article course hero, our second largest position acquired lit charts and education technology platform to help students studied literature. The acquisition allows of course here or to expand its already significant investment and the vertical and and.

<unk> of course, hero's second acquisition and 8 months. After its October 2020 acquisition of symbol of our platform that help students of complex mathematical equations.

We believe these acquisitions will continue to support of course hero's goal of being the leading comprehensive platform platform for students study materials.

According to Tech Crunch of course hero of estimates that it will hit between 2 million and 3 million paid subscribers. This year up from 1 million paid subscribers last year.

Due to the impact of Covid, the COVID-19, pandemic and related Quarantines and school closures with less in person student access to teachers or study groups students have increasingly turned to online learning supplements for their studies, including of course hero's online documentaries and document library, we the.

Of course hero of continues to capitalize on the same long term trends and as long as online learning is enjoying.

Our investments and online learning companies, most notably Coursera of course hero and our new investment and Skillsoft to be discussed later in the call represent approximately 51.3 per cent of our total investment portfolio folio of value of quarters that from recent media reports as well as the earnings reports from.

Public online companies. It is evident that the initial spike and online learning generated by the COVID-19 pandemic has continued through the current beginning of 2021 to 2022 academic year. We continue to believe the effects of the pandemic has accelerated the long term structural change and how.

Education is delivered and consumed with the clear transition toward online learning.

We believe our portfolio is well positioned to continue capturing the benefits of this trend.

However, we anticipate monetization of our Coursera of investment after the expiration lockup and the closing of the levers of acquisition by code together this would make our portfolio except exposure in the education technology much more evenly distributed across other sectors such.

As marketplaces financial technology, social and mobile cloud and cloud and big data categories.

While online learning and online communities are changing the way we live specs of continued to be a significant driver of change and the financial markets as such we have begun to see specs impact not only of our existing portfolio, but the investment opportunities with diligence and some.

And of the investments we are currently making.

Please turn to slide 5.

On July 6 next store of serve capital portfolio of company announcements attention to merge with coastal adventure acquisition company 2 stacked sponsored by an affiliate of coastal debentures and the potential transaction values of the combined company at a pro forma of enterprise value of $4.3 billion and <unk>.

The $270 million pipe and is expected to provide approximately $686 million and gross cash proceeds to the company and will trade under the ticker symbol K I N D.

Next door is more than is now more then and is now and more than 275000 neighborhoods around the world and as the nearly 1 and 3 households, and the United States Nabors turned to the next door to access trusted information.

Do you have and get help and build the real world connections with those nearby including Nabors businesses and public services next door's merger aims to fun next for its growth plans and accelerated strategies to monocyte monetize its social network with hyper local advertising.

According to the Investor presentation next door and expects to generate $178 million of revenue and 2021 and $249 million of revenue and 2020..2 next door and notes that the digital advertising and addressable market represents more than a $600 billion global opportunity by 2.

2020 for growing at an 8 up by 83% from $335 billion digital advertising market and 2020.

We are excited for the successful conclusion of this business combination.

As previously discussed on February or February 11, and Cerro portfolio of company Rover announced plans to merge with Nevertheless, Nevertheless, terrible acquisition Corp of spec sponsored by true wind capital stockholders approve the business combination and the transaction closed on July 30th the combined entity now trade.

And so on NASDAQ under the symbol R. O V R. The transaction value the company and an enterprise value of $1.35 billion and provided approximately $240 million and gross cash proceeds to the company. According to Rovers regulatory filings our shares will be.

For me and locked up until the end of January 2022, and.

And the initial reaction to those for this listing has been quite warm as the stock is up 30% since the closing of the business combination.

We're excited by this transaction for rubber, which we believe has emerged as the leading online marketplace for pet care.

As previously discussed on April 28th enjoy.

Cerro of capital portfolio of company announced plans to merge with marquee Rain acquisition Corp of spec sponsored by affiliates of the range group and marquee Sports Holdings.

Upon the successful closing of this transaction and the combined entity would trade on NASDAQ under the ticker symbol E. N J why the transaction values of the combined company and an enterprise price value of $1.2 billion and at <unk>.

And $80 million pipe and is expected to provide approximately $450 million and.

Gross cash and credit cash proceeds to the company enjoys.

The enjoys mission is to disrupt the physical retail model by bringing of personalized convenient retail experience through the door into the comfort of the customer's home through partnerships with companies like Apple AT&T and Rogers communication and Joy has achieved 100% compounded annual growth rate from 2018.

To 2020 accordingly, according to the transactions press release enjoy expects to achieve more than $1 billion of annual revenue and a 30% adjusted EBITDA margin by 2025.

This potential transaction marks a significant step for forward for enjoy and we look forward to the transaction closing and the next few months.

In addition to spec mergers 1 of our portfolio of companies has announced that it tends to be acquired and 2 of our portfolio of companies have announced their intention to go public through traditional Ipos on May 6.2021, Cahouet, Our global Education Technology company announced that it would acquire clever.

<unk> intends to acquire clever for $500 million $435 million of which is guaranteed and $65 million, which is the incentive base. The transaction is expected to close of this quarter clever.

Clever offers of learning platform to schools and school different districts and serves 50% of all of the United States students and over 89000 and schools. In 2020. This represents 65 per cent of the United States over 13000 and school districts clever has partnered with 600 application.

<unk>, including many of the leading U S and global learning providers like Khan Academy and Mcgraw Hill.

Clever expects to generate $44 million of until revenue and 2021, which was the representing annual growth rate of approximately 25% over the last 3 years on July 19th rent the runway Senate and confidentially filed for paperwork for an initial public offering because rents and rent the runway has not disclosed.

Target price range or the size of the offering we do not capture the potential transaction and our current valuation of rent the runway.

We look forward to rent the runway of becoming a public company.

On June 21st New like capital Partners filed the X 11 S 11, as the next step towards becoming a publicly traded cannabis, we where they are expected market capitalization and excess of $500 million newly.

New like merge with zero capital portfolio of company Green acres and the first quarter of this year and since then has continued to be active and the act acquisition of new properties and the cannabis real estate sector, New lakes portfolio is geographically diversified between.

Between both the industrial park properties and dispensaries and the company continues to find and ex execute on accretive opportunities around the country newer like as applied to have the stock quoted on the OTC <unk> and they intend to become a public company by the end of the third quarter.

Please turn to slide 6.

As previously discussed we have broadened our focus beyond our core equity strategy and.

And to private credit and pre spec merger pipes.

Since the inception of the company, we continue to focus on expanding and democratizing asset to asset classes and specific investments generally unavailable to the public.

For the past few quarters, we have highlighted the the spec asset class was growing by record amounts of last year. There were approximately $81.5 billion of stock issuance and increased from just over $13 billion and 2019. According to <unk> research over $116 billion of already been issued and <unk>.

2001 of 2 year to date to 387 Ipos.

According to current rig count and Cowen Research 142 spec deals have already been announced in 2021 tower and the research notes that 87 deals have closed through this period was the which is a substantial increase from 2020.

Beyond our existing portfolio, we believe our per rep.

Prior Terry access within the spec the universe has delivered and will continue to surface unique opportunities for zero capital while investors have had the ability to buy back common shares of the warrant and the open market. Most of investors do not have access to the other parts of the stack structures such as back of sponsor equity sponsor warrant.

For purchase agreements and pipes.

It has broadly been reported the sponsor equity and warrants are viewed to be highly valuable and for the most part only spec sponsors have had the opportunity to benefit from them and the favorable economic opportunities within the sponsor equity and warrants is something we are very focused on delivering to our shareholders. We have now invested in for difference.

Backed sponsor equity deals to date <unk>.

Additionally, pipe of opportunities, which we view similarly to pre IPO investments are occurring at a higher rate now than ever before according to spec research 427, and facts of currently looking for companies to effectuate business combinations, which translates into hundreds of the pipe of opportunities over the next couple of years.

And in effort to be a leader and the democratization of we continue to have active dialogue with sponsors and investment banks to participate and both sponsor economics and pipes.

And as a result, we are excited to provide shareholders unique access that we believe no other public vehicles presently providing.

Recently, the spec market as well as the pipe work and have exhibited weakness. This hasn't been the result of over saturation and unrealistic valuation of some of the announced deals as well as the regulatory scrutiny and has led to a broad reset and the market, including repricing of certain deals and limited new issues. We believe this current Moe.

And Terry weakness provides an opportunity for us to selectively deploy capital.

2 of those and during the second quarter, we invested and the sponsor economics of Columbia acquisition Corp. This comes in addition to our Churchill 6 and Churchill 7 sponsor share.

Q1.

Please turn to slide 7.

Columbia acquisition Corp is a special purpose acquisition company formed by the sponsor of team comprised of the principles of the Petite investment Bank Farber of our capital and early stage venture Capital Fund Torch capital with this investment <unk> has obtained board representation of the stack will leverage the notoriety of.

Of celebrities pacemakers, and influencers to grow of potentially.

Potential target companies brand identity and engagement and customer reach.

We have seen firsthand that today's customer marketplace can be over saturated with products and brands the lack of <unk>.

Differentiation significant consumer engagement and brand loyalty and today's digital ecosystem, having a good consumer product is not enough of the brand itself and that's the standout in order to drive the product to the front of the very crowded shelf.

We believe celebrity Association and endorsement of the proven power to drive brand awareness awareness and engagement. However, paid celebrity endorsements are expensive and often and authentic the.

And similar understands the their transactional nature and there's less impressed by that influence another nevertheless brands and utilized pacemakers and influences.

Partners are offense of successful and leveraging the celebrity Association for brand building.

We believe that the respective areas of expertise within our sponsor.

And our complementary and reinforcing to the belief that strategic influencer of involved and can differentiate the consumer or technology brand.

In addition to Colombia, we are in discussions with other sponsored teams to participate and their sponsor shares and warrants. Please turn to slide 8.

Subsequent to quarter, and we invested and the sponsor shares of all C. A spec led by the CEO and cofounder of open eye and Y Combinator President Sam all of the.

SaaS expertise within the venture capital community combined with Churchill capital history of successful spec mergers creates a unique opportunity for Cerro of capital all see is focused on opportunities and the broader technologies for <unk>.

Specifically on companies with large addressable markets of clear path to profit profitability and potential for inorganic growth.

Together with Columbia off see Churchill, 6 and Churchill 7 we know of interest and force back sponsors shares with an aggregate investment size of $3.5 million.

If business.

Combinations are consummated and these vehicles these shares and in aggregate are presently structured to be worth in excess of $30 million and would be of return of over 8 and a half times our initial investment.

To reiterate the spec market opportunity is broadly compelling. Furthermore, it is our opinion that we are extremely well positioned to take advantage of this market opportunity and ultimately deliver value to shareholders through this proprietary axis.

Please turn to slide 9.

Consistent with this goal, we funded our $10 million.

Commitment that we made and the fourth quarter of 2020 pre spec merger pipe and Churchill capital too.

On June 11th Churchill capital to announce it and completed its merger with Skillsoft, a global leader and the digital corporate learning market. We believe the same long term structural changes and how education is being consumed by individuals also applies for the corporate learning market and that skill softest poised the benefit from the.

These tail winds with 45 million users with the client base, including 70% of of Fortune 1000, and Skillsoft as 1 of the largest corporate learning companies now with the significantly de Levered balance sheet. After this transaction, we believe that skill saw has the.

Selling opportunity to scale through organic and inorganic growth and acquisitions. Additionally, with the 1.5 billion pro forma enterprise value, reflecting only a 2.2 times 22.2022 revenue multiple based on managements estimates, we believe that the transit.

And we've set up at a trend and attractive valuation, particularly compared to skills of public and private comparable companies. We were excited to support skill saw as it enters the next chapter of the public company.

And our investment strategies.

Continue to see of high volume of opportunities across our core investment strategies of few industries of focus include E Commerce retail financial technology, food technology transportation and logistics.

During the quarter, we made of new investment and tracks and an equity investment and Pedro and please turn to slide 10.

We made of $10 million of equity investment and tracks. This quarter. The company a company sponsored secondary transaction. The secondary transaction was executed alongside the company's series E financing round, which was completed at an undisclosed valuation.

This round was led by Blackrock and Softbank investment advisers with participation with Sony Innovation Fund and <unk> ventures tracks previous series of Defense and was completed in 2019 and of $1.2 billion of out of who should according to Pittsburgh.

Tracks and analytics and computer vision platform designed to deliver accurate and reliable analysis for CPG companies and retailers by providing insight into what is happening and every retail store the company's autonomous shelf monitoring.

Our solutions disrupt manual and labor intensive industry of practices by turning the retail shelf images and to real time actionable insights. These insights enable manufacturers and retailers to control performance gaps identified category opportunities and increase revenue track.

Tracks as broad Blue chip customer base spans the 90, plus countries and is diversified across food and beverage household and personal care pharmaceuticals tobacco and retail notable attracts customers include Coca Cola, Bestbuy, Procter and gamble and of hydrogen.

We believe that the trend towards Digitization and monetization of traditional retail will continue well beyond the COVID-19, pandemic and that our investment and tracks is well positioned to benefit from these technological shifts.

Please turn to slide 11.

Consistent with the rights contained within our loan from our architect capital pay Joy S. P. D. We were offered equity for the participation and Pedro and the $2.5 million dollar of investment and Pedro and made this quarter comes in addition to our existing $10 million commitment to the architect capital pay.

SPV and Anthony funding loans to pay Joy as.

And as we have discussed pay joy is a San Francisco based provider of smartphone locking technology that has raised over $67 million and capital to date. According to pitch book.

The joys latest series B equity capital raise was red led by <unk> partners and May 2019, with participation from the Union Square ventures, and core of innovation capital pay Joy of owns a smartphone locking technology that allows user users usually usually the day.

Direct lenders of the smartphone and leases to life any device, where the software, whereas installed pay Julian is monetize this technology by partnering with the phone retails and emerging countries to offer of leases at the point of sale consumers, who lease of phone with Pedro and partners commit a portion of the lease and cash upfront and the pay there.

Rest of the smartphone lease and weekly installments, if a customer misses of weekly installment pedros technology automatically likes the phone and the technology of lots of phone if the consumer zooms, making use of lease payments and the result of this technology is a powerful incentive mechanism that has produced the history of predictable and stable lease.

<unk>.

On our $2.5 million.

Investment in conjunction with other key leading investors will help fund Pedro is international expansion.

The company is true has had tremendous success of Mexico, and we look forward to supporting the business as it scales and technology globally.

Looking ahead, we believe our portfolio is as well positioned as ever to drive long term value to both exits and ongoing strategic investments and compelling industries and opportunities not readily available to public investors. We believe our healthy cash balance puts us and a strong position to deploy against this high bar.

And I am of attractive opportunities.

Thank you for your attention and with that I'll hand, it over to Allison.

Thank you Mark.

I'd like to follow Mark the update with the more detailed review of our second quarter of investment activity and financial results for the June 30th, including the recently declared dividend and our current liquidity position.

First I will review, our and button activity, please turn to bite squad strength.

The second quarter, we invested a total of $29.8 million and new and follow on investments and new investments. During the quarter include the $2.7 million and Beckman and the Crosby and quite double unit and.

Colombia and sponsor of the.

The sponsored vehicles for Columbia acquisition Corp, and $10 million net and class a common shares of the Churchill capital to share and subsequently converted the scaled dock Corp. Common shares after the completion of the business combination between the entities.

And the $10 million and Beckman and the common shares and the preferred shares of track additional funding of and aggregate coupon of $1 million related to capital calls from our $10 million commitment the architect of capital page weighing of T D.

The $1 million of which had been funded to date and and additional follow on investment of $5 million and the series C preferred share of the plane count.

Obviously all of the back activity and our portfolio is highly accretive but these transactions are evolving multi stage and highly complex and nuanced and nature and he's been a great deal of kind of with our valuation committee are independent valuation firm and our auditors to determine the appropriate fair value for these and Beckman and all parties are and full agreement on the valuations I presented there and the financial statements to be included in our form.

<unk> 10-Q filing for the second quarter of 2021 during the profit the fair value of 2 of our portfolio of companies currently and the process, but the back merger of what sounds to the initially had had missed the line and current value per share calculation. However, these errors were identified and corrected prior to the Finalization of our financial statements for the quarter ended June 30 of 2000, and 2021 and our financial statements and.

And I are accurately presented notwithstanding the fact that our financial statements are ultimately correct and part of marketing the review of our internal controls for financial reporting and anybody that their view that as the technical matter and the foregoing resulted in a material weakness for the quarter ended June 30 of 2021 through the process. We have adopted market and think that's used for valuations on the current back transaction and as long.

And any future valuations on back of mergers and please turn to slide 13. This book.

I would highlight of our active made and proceeds received during the second quarter net notably we sold 25% or 780090 of our of course. They are common shares subsequent to the lack of provision on the 25 per cent of our share is being lifted after certain pricing conditions were met with.

He sold the shares for approximately $37 million and net proceeds resulting in the net realized gain of approximately $29 million.

We anticipate our 2.346 million and 271 remaining question of course, there of shares will become freely tradable on the Friday Adil.

Additionally, during the second quarter, we realized approximately $270000 related to our June 'twenty, and 'twenty investment and pallets of your lending and trying to activate these additional proceeds are attributed directly to the equity participation and the underlying collateral as of today pinpoint and $5 million has been received and the talent of your lending and trusted C D and the parents about the other 290 shares of pound share common stock.

Comprising the underlying collateral, which we retained and equity and debt remains to be thought of as of December 31st 2020, the balance of the loan and all of guaranteed of interest had been fully repaid.

Finally during the quarter, we received approximately $352000 and proceeds from second Avenue related to the principal repayment and interest and the 15% of term loan due December 2023, and $490000 and net proceeds and realized gain from the exit of our remaining at the holding of keeping that day.

Please turn to slide 14, subsequent to quarter, and we made a $2.5 million of equity investment and the preferred share of the takeaway of Inc. It is in addition to our continued funding of an additional $2.5 million and the capital calls from my 10 million documents and the architect capital pay during the C. V. Today at $501 million of our 10 million of our commitment to the STB and had been comes on and we also funded the 250.

<unk> thousand 9 investments and the common share unit and private placement and it's about the sponsor of the the sponsored vehicle for all of the acquisition Corp. Please turn to slide 15.

I've mentioned basics channel and that's the thing themes the top of allocation of our investment portfolio at quarter and education technology, representing approximately 51 per cent of the investment portfolio at fair value.

The market places with the second largest category, representing approximately 16% of of the portfolio the.

Financial technology and services category accounted for approximately 15% of our investment portfolio and approximately 14% of of our portfolio was invested in social and mobile companies Big data cloud accounted for approximately 4 per cent of the fair value of our portfolio and sustainability of the kind of collecting 1 per cent of the fair value of our portfolio as of June 30th Please turn to slide 16.

We're pleased to report we ended the second quarter of 2021 within any of you and <unk> per share of $16 and to keep it quick.

A breakdown of NAV per share as of quarter and as shown on slide 16, and it is consistent with our financial reporting and most notably the decrease and NAV per share during the second quarter was largely driven by approximately $2.50 per share it should be about the dividends declared and paid during the quarter and 22 cents per share attributable to the issuance of common stock from the stock dividend and approximately 8 cents per share of net net net.

Yeah.

The secret the NAV per share was partially offset by $1.04 per share attributable to net realized gains on investments plenty of 9 cents per share attributable to the net change in unrealized depreciation and at quarter end and 1 cent per share attributable to stock based compensation.

And I would also like to take a moment to of you throw capital current liquidity, we ended the quarter with approximately $226.6 million of like what happened, including $131 million and cash and I need to point of $5 million and public securities subject to certain lockup restrictions and the quarter and.

Our cash balance of $131 million as of June 30th consisted primarily of the monetization of various portfolio of positions throughout the throughout 'twenty, and 2020 and 'twenty 1 state and.

Interest and the proceeds generated during the third quarter of 'twenty 'twenty via the ATM offering.

The $96 million of the public security subject. The lockup restriction held as of June 30, and represent our shares and of course, there of Inc. Valued at the June 30 of 2021 closing price of $39 and 56, and that's the discount for lack of marketability and related to the current market for provision and our shares of <unk> and scope of Corp, who shared we expect to be freely tradable tradable on share of registration.

As of June 30 of 2021 and there were 26.520 million and 743 shares of the company of common stock outstanding as of today and there are 26.555 million 823000 and chairs and the.

Pumping and common stock outstanding and.

In addition to the 2 dividends of 25 cents per share each declared and the first quarter and subsequently paid during the second quarter on May 4 at zero capital as board of directors declared a $2 per share dividend to be paid it and have dock and have cash on June 30 of the shareholders of record on may 18th.

Regarding the results of the main fourth dividend.

Based on the stockholder elections, approximately 44% of elected or were deemed to have elected to receive the dividend in shares of common stock and received approximately 2 million shares and aggregate and approximately 56 per cent elected to receive the dividend and cash and as a result of the proration received of approximately 89% of their dividend and cash totaling approximately $30 million and and parking.

And then the 11% and share the common stock totaling approximately 23 million shares. The total dividend amount paid to all stockholders consisted of approximately $30 million and cash and approximately $2.3 million share.

The kind of Doc and the number of shares of zero capital common stock issued of stockholders, receiving all of our portion of the dividend in shares of common stock based on the volume weighted average price per share of total capital common stock from the NASDAQ capital market on May 12th 13th and 14th 2021, and 2 now I think the deep and strip out the declared dividend for.

It's volume weighted average price per share most of the 2 arms. If you think declared dividend for such states was approximately $13.07 per share.

All of 2021 dividends declared to date are expected to be categorized as net long term capital gains for tax purposes. The.

The related realized gains are attributable to the monetization of my salary.

And I've been back within our portfolio.

As Mark mentioned on August 3rd So a couple of board of directors declared a dividend of $2.25 per share payable on September 30th 2021 did the company's common stockholders of record as of the close of business on August 18th 2021, the <unk>.

Have been and will be paid and half and half cash.

As described more fully and today's press release, the dividend will be paid in cash or shares of the company's common stock for the election of registered shareholders. Although the total amount of cash to be distributed to all shareholders will be limited to no more than 50 per cent of the total dividends to be paid for all shareholders. This dividend as being made in accordance with certain of applicable treasury regulations and guidance issued by the IRA the law.

Of our publicly traded regulated investment company that satisfy the distribution requirements from the distribution paid partly and common stock provided certain other requirements are satisfied.

We strongly encourage all shareholders to proactively reach out to the bank broker or nominee of our platform through which they hold their throw capital share to make our desired election outcome down only.

The only registered shareholders will be directly mailed and election for them by our transfer agent American stock transfer.

Zero capital does not process any election.

And those shareholders are not registered shareholders and must proactively make their likes and known through the bank broker and nominee or part for them on which they call it zero capital shares.

Each registered shareholder well have the opportunity to feel like to receive the dividend and cash or shares of the company's common stock.

Registered shareholders and electing to receive the dividend and share the company's common stock well see the entirety of and an appointment chair of the company's common stock regardless of the elections made by any other shareholders. However, and the total amount of cash to be distributed to all shareholders of electing to receive their dividends. The cash will be limited to no more than 50 per cent of the total amount to be distributed to all shareholders and the event the amount of cash to be district.

And it's all shareholders electing to receive the dividend and cash would exceed 50 per cent of the total dividend each registered shareholder like interest the patch and well receive a pro rata portion of.

The total cash to be the distributed based on the number of shares held by each such shareholder.

The remainder of the dividend in excess of the shareholders Pro rata share of the total amount of cash to be distributed will be paid and the form of shares of the company's common stock and the number of shares of our common stock to be issued the shareholders of eating all or a portion of the dividend and shares of our common stock will be based on the volume weighted average price per share of our common stock on the NASDAQ capital market on August 11, 12 and 13.

2021, that's $2 and 25 and sort of like the declared dividend the.

The company will caused to be mailed and election for them to receive cash of common stock only registered shareholders promptly. After the August 18, 2021 record day registered shareholders, who are those shareholders, who own their stock directly and not the of bank broker or nominee.

And I'll, let Keith 1 must be received by throw capital Corp's transfer agent American stock transfer part of 5 P. M. Eastern standard time on September 17th 2021.

Registered shareholders of the questions regarding the dividend may call of American stock transfer <unk>.

Registered shareholders and did not make an election will be deemed to have like didn't receive 100 per cent of their dividend and share that the company of common stock repurchase.

Current shareholders participating and the company's dividend reinvestment plan and will also receive an election of 1 investment feature of the dividend reinvestment plan will be suspended for the distribution and will be reinstated after the distribution has been completed.

Shareholders, who hold their shares through a bank broker or nominee will not receive an election for them from the company and should contact their bank broker and nominee for instructions on how to make an election shareholders, who hold their shares through a bank broker and how many are encouraged to contact their bank broker and how many and inform them of the election that should be made on the shareholders of that if they shareholder's bank broker and nominee on the shareholders the ha.

<unk> does not timely return of properly completed the election for them by the election day. The shareholder will have been deemed to have elected to receive 100% of the dividend and the form of shares of our common stock.

Regardless of whether of shareholder with the use of the dividend and cash stock or some combination of cash and stock for the entire amount of the dividend will be fully taxable to shareholders and throw capital Corp of report the actual tax characteristics and each ear of dividend annually to shareholders and the IRS to the IRS on form 10.99 debt.

The date and declaration of any amount of dividends, including any future dividends are subject to the sole discretion of sterile capital its board of directors and the argument aggregate amount of the dividend declared and paid by zero capital would be fully taxable the stockholders that the character of zero capital dividend cannot be finally determined until the close of throw of capital taxable year Zero capital will report the actual tax characteristics of each of them.

And and annually for the salary.

Subsequent to year end.

For example, there's the questions regarding declared dividend May call American stock transfer at 890.375 for for Knight shareholders, who hold their shares for a bank broker and I'm, an ear encourage to contact their break Burger and how many of for additional details on how their bank broker and how many what parts of the election on their behalf.

Shareholders can find additional information regarding the dividend and the Investor Relations section of the stereo capitals website at Www Dot zero cap dotcom year to day zero capital and has declared of approximately 5 to $5.25 per share to shareholders for total approximate distributions of about $130 million.

That concludes my comments and we would like to thank you for your interest and support of zero capital now I will turn the call over to the operator to start the Q&A session operator.

Thank you if you'd like to ask a question on the call today. Please press star followed by the number 1 and your telephone keypad, if you're calling from the speaker phone. Please make sure. Your mute function is off to share your signals from each of our equipment.

Star 1 to ask a question I'll pause for just the moment to give everyone a chance the signal.

And first we'll go to Kevin Phillips from JMP Securities. Your line is open.

Good afternoon, and thank you for taking my question.

Could you provide some commentary on the private credit strategy and your satisfaction with the investment opportunities and the deal flow that youre seeing there and possibly also touching on the cadence of investment activity and we should expect over the next few quarters. Thank you.

Sure.

We are actively seeing flow in the private credit and credit strategy.

And the spoke and and.

Absolutely proprietary we continue to evaluate opportunities and and have seen as good of a set of deal flow and that is we would've anticipated and are evaluating several as we speak.

Thank you.

And well pause just for a moment to compose our other question.

All right and it looks like and next we'll go to Alex Paris from Barrington Research. Your line is open.

Hey, guys. Thanks for taking my question.

And just had a couple of Theres a lot of information obviously within the prepared comments first off on of course Sara.

And how many shares did you say you have currently after selling the first tranche.

Earlier this year.

Great.

What we did say of.

Alex and thank you for for your question, we have $87 million worth of <unk>.

Price of $39.56 as of last quarter.

And the end of last quarter, plus the discount Alison if you have the exact count of the Showtime the weed.

We retained 75 per cent of our initial position, even though we have remaining 2.346 million 271 and related quite per shares as the security and as of today the way.

It'll be really terrible about it.

Thank you.

And next we'll go to Jon Hickman from Ladenburg. Your line is open.

Could you.

And could you.

Run through the skull Skillsoft thing again, you participated in the pipe and in return you got chairs of the.

Merged company.

And when will those be freely traded.

Tradable and me.

Yeah.

Sure, we made a commitment to invest and of pipe and.

And scale soft, which is the Churchill capital to at the end of last year, we joined process, who did a $500 million part of the pipe and obviously there are a large and well respected.

The industry and our online learning and other digital strategies.

That merger was completed.

The earlier this earlier at the end of Q2 and.

And the registration statement has just been filed and is not deemed effective yet and whats it seemed the type of we'd be able to freely trading.

Thank you John.

Okay.

And next we'll go to the here my Suwannee from HMC capital. Your line is open.

Hey, guys. Thanks for taking the call.

Just a quick question with regards to current share price.

And I and a little over 12.24 and.

The plans on doing stock buyback for the roughly 28% of desktop.

Sure. Thank you for your question and as you know we have a.

<unk> been involved and buying back our stock through the direct buybacks for through tenders and we still have a fairly large approved buyback available to us by our board of directors.

I think we've demonstrated and our pet and the past that we've utilized for we believe that that was the.

Most of appropriate use of our capital and to try and the share count.

And when it made sense and we will continue to evaluate the obviously, we are and the situation. We're actually doing a great deal of distributions, having just distributing and $5.25 to our shareholder for shareholders as well, we believe that are of communication strategy or and best performance should show.

Take hold as well.

Actively always we're looking at the best ways to enhance shareholder value and we obviously have deployed share buyout for share buybacks as 1 of the methodologies to cheap debt. Thank you.

And next we'll go to Lou grief from Morgan Stanley. Your line is open.

That's true.

Regulations.

But about the pipeline I think about it and it works.

Okay.

Right.

And.

And you put that kind of money.

The work.

And presumably.

So thanks for the call them, Unfortunately, you're coming in and out but I think you're asking me. If we have the ability to deploy the capital the debt, we have and sort of pipeline robust enough to be able to do that.

Given the market conditions et cetera.

And as the onset of my prepared remarks.

We are seeing more opportunities than ever before and this quarter. This is the most of opportunities that we've evaluated and diligence than we've done ever.

So our deal flow and he is extremely robust, we're obviously selective and judicious and the deployment of our capital given where markets are and where valuation is but or.

Our confidence to be able to deploy the capital where of opportunities to deploy the capital is extremely high but the we are conscious on valuation and and we'll make sure that we do it and and appropriate fashion.

Thank you.

And at this time I'll turn it back to management for closing remarks.

Well. Thank you all very much of it was it was a lengthy call and we appreciate it and obviously there is an awful lot going on and our portfolio.

And we're very fortunate to have the successes that we've been enjoying and no.

And the recent successes and numerous of our portfolio of companies either being acquired or going public we do find the the.

The investment pipeline to be as robust for more robust than ever and we.

We are highly excited and highly engaged about the future of our of our fund. So we appreciate all your support and thank you all for taking the time to be with US This afternoon.

Yeah.

Okay.

And that does conclude our call for today. Thank you for your participation you may now disconnect.

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<unk> 2021.

Now I'll turn the conference over to the Speaker clear Council of Zero capital. Please go ahead.

Thank you for joining us on today's call I'm joined today by the Chairman and Chief Executive Officer of share of capital, Mark Klein and Chief Financial Officer, Alison Greene. Please note that the slide presentation that corresponds to today's prepared remarks by management is available on our website at www Dot zero cap of Dot com under <unk>.

Relations events and presentation today's call is being recorded and broadcast live on our website www dot and <unk> Dot com.

And information is included in our press release issued today. This call is the property of share of capital and the unauthorized reproduction of this call and any for them is strictly prohibited I would also like to call. Your attention. The customary disclosures in today's earnings press release regarding forward looking information statements made in today's conference call and webcast.

And may constitute forward looking statements, which relate to future events or future performance or financial condition.

The results to differ materially from the plans intentions and expectations reflected and or suggested by the forward looking statements actual results may differ materially from those and the forward looking statements as a result of the number of factors, including but not limited to those described from time to time and 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 Cerro Capital's latest SEC filings. Please visit our website at www dot sort of capped dot com or the SEC's website at SEC Gov now I would like to turn the call over to Mark Klein.

Thank you Claire.

Good afternoon, and thank you for joining us we're pleased to share the results of <unk> capitals second quarter 2021.

Today, I will discuss how our portfolios performed and the second quarter and.

This has been 1 of the most exciting quarters to date for our funds ranging from portfolio exits 2 exciting investment opportunities and various different verticals.

5 of our portfolio of companies have announced intentions to either become publicly traded companies by either of spec merger or traditional IPO 1 portfolio of company announcements of the pen and tense to be acquired and we expect the lockup on remaining coursera shares to expire imminently.

On the investment side, we continue to evaluate the exciting new opportunities and the market and this quarter alone, we sourced and perform diligence or and more opportunities than any other prior quarter.

I am excited to share in more detail our performance over this quarter and then we'll hand the call over to Allison Green for a brief financial overview at the conclusion of our remarks, we will open the call for questions.

Let's start with slide 3.

This quarter serve capital reached our highest dividend adjusted net asset value.

Per share since inception, beating the record marks we set in both Q4.2020, and Q1.2021 and.

And as of June 30 of 2021, net asset value was $16 and 56 per share, which is a dollar and 5 some increase on the dividend adjusted basis from the prior quarter.

As of June 30 of 2021, net assets assets totaled approximately $440 million compared to $436 million and the first quarter.

On August 3rd Cerro Capital's board of directors, consistent with our desire to be shareholder friendly and our continued practice of distributing realized gains declared a $2.25 per share dividend to shareholders.

This dividend will be payable on September 30 to shareholders of record on August 18th.

Given the positive receptivity of our previous dividend our board has again offering shareholders the option to elect to receive as much as the 100% of their dividend and stock and as Kathy aggregate cash dividend to 50% of the total dividend payable.

This $2.25 per share dividend follows $3 per share of dividends declared and paid during the first half of this year, resulting in an aggregate amount of $5 of 25 per share declared to date.

Later in the call Alison will walk through in detail the election process of this cash and stock dividend.

Looking forward and subject to ongoing portfolio activity the board intends to declare at least 1 more large dividend and <unk>.

November on a similar cash and stock basis.

Please turn to slide for for a review of our top 5 positions.

Serve capital's top 5 positions as of June 30th were Coursera of course hero, Ozzie media and Joy and Blake health.

Positions accounted for approximately 61% of the investment portfolio at fair value. Additionally, as of June 30 of our top 10 positions accounted for approximately 78% of the portfolio.

First of all I want to highlight of our investment and Coursera CT currently our largest position.

As previously discussed our March 31, Coursera executed and the initial public offering and began trading on the New York stock exchange of coarse ore price of $33 per share of the top of its range and closed the second quarter of $39.56 per share.

Since the IPO of March 31 of Coursera shares have traded above the IPO price of $33 per share.

And the second quarter of 25% of zero capital of course their shares become became unrestricted after certain pricing conditions were met we monetize the shares during the quarter for net proceeds of approximately $31 million and realized the gain of approximately $27 million.

Cerro capitals Coursera remaining shares are restricted until August 6 <unk>.

Consistent with our past communications and practices, we will value monetization of Coursera is the shares become unrestricted.

The lockup provisions as of June 30, we value of our remaining of course, our investment and $87.2 million.

As mentioned and of course, there was the earnings call yesterday, Jeff Maggie oncology, the CEO highlighted growing adoption and the impact of their platform around the world institutions have lots of course and are at a large scale and new learners are coming to the platform for reskilling efforts as well as learners are coming to the plan.

And for them to Upskill for high demand digital roles. Jeff noted that this effort has been successful. Thanks, the partnerships with global brands like Google IBM and Facebook.

Following the pandemic related surge of the platform use and 2020 is of course, there's belief that they will continue to see sustained structural demand for online learning as businesses governments and individuals seek the skills required to compete in today's economy with 5 million new learners added to their platform of Q.

2 of course, so of course, there is total registered learner tower is now $87 million.

And in Q2, <unk> grew quarterly revenue by 38% year over year to over $102 million Coursera is consumer segment grew 23% year over year. Its enterprise segment grew 69% year over year and its degree of segment grew 78% year over year.

Coursera raised of 2021 revenue estimates from $369 million to $381 million to a new range of $402 million to $410 million.

Today's share price increased by over 21% shows wall Street's enthusiasm for of course serves earnings report.

We are delighted with the performance of course, the Arab following the IPO as previously announced from partial monetization of course are generated over $30 million of for the proceeds resulting in realized gains of nearly $27 million. We were pleased to have delivered these positive outcomes for our shareholders.

As reported and a June 'twenty, 1.2020, 1 type Crunch of article course hero, our second largest position acquired lit charts and education technology platform to help students study literature. The acquisition allows of course here or to expand its already significant investment and the vertical and and.

<unk> of course, hero's second acquisition and 8 months. After its October 2020 acquisition of symbol of our platform that help students solve complex mathematical equations.

We believe these acquisitions will continue to support of course hero's goal of being the leading comprehensive platform platform for students study materials.

According to Tech Crunch of course hero of estimates that it will hit between 2 million and 3 million paid subscribers. This year up from 1 million paid subscribers last year.

Due to the impact of Covid, the COVID-19, pandemic and related core and teas and school closures with less in person student access to teachers or study groups students have increasingly turned to online learning supplements for their studies, including of course hero's online documentaries and document library, we bill.

Of course hero of continues to capitalize on the same long term trends.

The 1 is online learning is enjoying.

Our investments and online learning companies, most notably Coursera of course hero and our new investment and Skillsoft will discuss later in the call represent approximately 51, 3% of our total investment portfolio folio of value of quarters and from recent media reports as well as the earnings reports from.

Public online companies. It is evident that the initial spike and online learning generated by the COVID-19 pandemic has continued through the current beginning of 2000 of 21 to 2022 academic year. We continue to believe the effects of the pandemic has accelerated the long term structural change and how.

Education is delivered and consumed with the clear transition toward online learning.

We believe our portfolio is well positioned to continue capturing the benefits of this trend.

However, we anticipate monetization of our Coursera investment after the expiration lockup and the closing of the clever the acquisition by code together this would make our portfolio except exposure in education technology much more evenly distributed across other sectors such.

As marketplaces financial technology, social and mobile cloud and cloud and big data categories.

All of the investments we are currently making.

Please turn to slide 5.

On July 6 next door the serve capital portfolio of company announcements attention to merge with coastal adventure acquisition company to spec sponsored by an affiliate of coastal debentures, the potential transaction value of the combined company at a pro forma enterprise value of $4.3 billion.

And the includes a $270 million pipe and is expected to provide approximately $686 million and gross cash proceeds to the company and we will trade under the ticker symbol K I M D.

Next door is more than is now more than is now and more than 275000 neighborhoods around the world and as the nearly 1 and 3 households, and the United States Nabors turned to the next door to access trusted information, giving good help and build the real world connections with those nearby.

Including Nabors businesses and public services next door's merger aims to fun next for its growth plans and accelerated strategies to monitor monetize its social network with hyper local advertising.

According to the Investor presentation next door and expects to generate $178 million of revenue and 2021 and $249 million of of revenue and 2022 next door notes that the digital advertising and addressable market represents more than a $600 billion global opportunity but.

2020 for growing at an 8 up by 83% from $335 billion digital advertising market in 2020.

We are excited for the successful conclusion of this business combination.

As previously discussed on February or February 11, Cerro portfolio of company Rover announced plans to merge with Nevertheless, Nevertheless, terrible acquisition Corp of spec sponsored by true wind capital stockholders approve the business combination and the transaction closed on July 30th the combined entity now trade.

And so on NASDAQ under the symbol R. O V R. The transaction valued the company and an enterprise value of $1.35 billion and.

Added approximately $240 million and gross cash proceeds to the company. According to Rovers regulatory filings our shares will be remain locked up until the end of January 2020 to the.

And the initial reaction to those for this listing has been quite warm as the stock is up 30% since the closing of the business combination.

We are excited by this transaction for rubber, which we believe has emerged as the leading online marketplace for pet care.

As previously discussed on April 28th enjoy.

Zero of capital portfolio of company announced plans to merge with marquee Rain acquisition Corp of spark sponsored by affiliates of the range group and marquee Sports holdings. Upon the successful closing of this transaction and the combined entity would trade on NASDAQ under the ticker symbol E N J y the transact.

Values of the combined company and an enterprise price value of $1.2 billion and at <unk>.

And $80 million pipe and is expected to provide approximately $450 million and.

Gross cash and credit cash proceeds to the company enjoys.

To 2020 accordingly, according to the transactions the press release enjoy expects to achieve more than $1 billion of annual revenue and a 30% adjusted EBITDA margin by 2025.

This potential transaction marks a significant step for.

For it for enjoy and we look forward to the transaction closing and the next few months.

In addition to spec of mergers 1 of our portfolio of companies has announced that it tends to be acquired and 2 of our portfolio of companies have announced their intention to go public through traditional ipos.

On May 6.2021, Cahouet, our global Education Technology company announced that it would acquire a clever co.

<unk> intends to acquire clever for $500 million.

$435 million of which is guaranteed and $65 million, which is the incentive base. The transaction is expected to close of this quarter clever offers of learning platform to schools and school different districts and serves 50% of all of the United States students and over 89000 and schools in 2000 and.

This represents 65 per cent of the United States over 13000 school districts clever has partnered with 600 application developers, including many of the leading U S and global learning providers like Khan Academy and Mcgraw Hill.

Clever expects to generate $44 million of until revenue and 2021, which was the representing annual growth rate of approximately 25% over the last 3 years.

On July 19th rent, the runway said and it confidentially pulp for paperwork for the initial public offering because rents north of the runway has not disclosed the target price range or the size of the offering we do not capture the potential transaction and and our current valuation of rent. The runway, we look forward to rent the runway of becoming public.

The company.

On June 21st newly capital Partners filed the X 11 S 11, as the next step towards becoming a publicly traded cannabis region, where they are expected market capitalization in excess of $500 million.

Newly merged with zero capital portfolio of company Greene acreage and the first quarter of this year and since then has continued to be active and the act acquisition of new properties and the cannabis real estate sector, New lakes portfolio is geographically diversified between.

And between both the industrial properties and dispensaries and the company continues to find and ex execute on accretive opportunities around the country newer Lake is applied to have the stock quoted on the OTC <unk> and they intend to become a public company by the end of the third quarter.

Please turn to slide 6 as.

As previously discussed we have broadened our focus beyond our core equity strategy into private credit and pre spec merger price since the inception of the company. We continue to focus on expanding and democratizing asset to asset classes and specific investments generally unavailable to the public.

For the past few quarters, we have highlighted the spec asset class was growing by record amounts of last year. There were approximately $81.5 billion of stock issuance and increased from just over $13 billion and 2019. According to <unk> research over $116 billion of already been issue.

And 2001 year to date to 387, Ipos and <unk>.

And you can read the Cowen with Cowen Research 142 spec deals have already been announced the 2021 tower and the research notes that 87 deals have closed through this period, which is a substantial increase from 2020.

Beyond our existing portfolio, we believe our proprietary access within the spec universe has delivered and will continue to surface unique opportunities for zero capital while investors have had the ability to buy back common shares and worn and the open market. Most of investors do not have access to the other parts of the stack structures.

Such as back of the sponsor equity sponsor warrants for purchase agreements and pipes.

It has broadly been reported the sponsor equity and warrants are viewed to be highly valuable and for the most part only spec sponsors have had the opportunity to benefit from them the <unk>.

Several economic opportunities within the sponsor equity and warrants is something we are very focused on delivering to our shareholders. We have now invested in for different spec sponsor equity deals to date.

Additionally, pipe of opportunities, which we view similarly to pre IPO investments are occurring at a higher rate now than ever before according to spec research for 127 and facts of currently looking for companies to effectuate business combinations, which translates into hundreds of the pipe opportunities over the next couple of years.

And in effort to be a leader and the democratization and we continue to have active dialogue with sponsors and investment banks to participate and both sponsor economics and pipes. As a result, we are excited to provide shareholders unique access that we believe no other public vehicles presently providing.

Monetary weakness provides an opportunity for us to selectively deploy capital.

And during the second quarter, we invested and the sponsor economics of Columbia acquisition Corp. This comes in addition to our Churchill 6 and Churchill 7 sponsor share of that.

And Q1.

Please turn to slide sort of Columbia acquisition Corp is a special purpose acquisition company formed by the sponsor team comprised of the principles of the particular investment bank Farber of our capital and early stage venture capital fund towards capital with this investment.

And has obtained board representation of the stock will leverage the notoriety of celebrities pacemakers and influencers to grow of potentially.

Potential targeted companies brand identity and engagement and customer reach.

We have seen firsthand that today's customer marketplace can be over saturated with products and brands the lack of.

The differentiation significant consumer engagement and brand loyalty and today's digital ecosystem, having a good consumer product is not enough of the brand itself and that's the standout in order to drive the product to the front of the very crowded shelf, we believe celebrity Association and endorsement of the proven power to drive brand awareness.

Awareness and engagement, however, paid celebrity endorsements of our expenses and often and authentic.

Consumer understands the transactional nature and is less impressed by that influence another nevertheless brands and utilized pacemakers and influences as partners our offense of successful and leveraging the celebrity Association for brand building.

We believe that the respective areas of expertise within our sponsors are complementary and reinforcing to the belief the strategic influencer of involvement can differentiate the consumer or technology breadth.

In addition to Colombia, we are in discussions with other sponsor teams to participate and their sponsor shares and warrants. Please turn to slide 8.

Subsequent to quarter, and we invested and the sponsor shares of all C. Spec led by the CEO and cofounder of open eye and Y Combinator President Sam all of them.

<unk> is the best capital.

Community combined with Churchill capital history of successful spec mergers creates a unique opportunity for Cerro of capital all see is focused on opportunities and the broader technologies for space, specifically on companies with large addressable markets of clear path to profitability profitability and.

For inorganic growth.

Together with Colombia, all see Churchill, 6 and Churchill 7 we know of interest of force back sponsors shares with an aggregate investment size of $3.5 million.

If business Combi.

Please turn to slide 9.

Consistent with this goal, we funded our $10 million.

And that we've made and the fourth quarter of 2020, and a priest back merger pipe and Churchill capital too on June 11th Churchill capital to announce that the completed its merger with Skillsoft, a global leader and the digital corporate learning market. We believe the same long term structural changes and how.

Education is being consumed by individuals also applies for the FERC corporate learning market and the skill softest poised the benefit from these tailwind.

With 45 million users with the client base, including 70% of of Fortune 1000, and Skillsoft as 1 of the largest corporate learning companies now with the significantly de Levered balance sheet. After this transaction. We believe that skill saw has a compelling opportunity to scale through organic and inorganic.

<unk> growth and acquisitions. Additionally, with of 1.5 billion pro forma enterprise value, reflecting only at 2.2 times 22.2022 revenue multiple based on managements estimates, we believe that the transaction was set up at an attractive valuation.

Particularly compared to skills of public and private comparable companies.

We're excited to support skill saw as it enters the next chapter of the public company.

And our investment strategies, we continue to see of high volume of opportunities across our core investment strategies of few industries of focus include E Commerce retail financial technology, food technology transportation and logistics.

During the quarter, we made of new investment and tracks and an equity investment and Pedro and please turn to slide 10.

We made of $10 million of equity investment and tracks. This quarter. The of company a company sponsored secondary transaction. The secondary transaction was executed alongside the company's series E financing round, which was completed at an undisclosed valuation of this round was led by Blackrock.

And Softbank investment advisers with participation with Sony Innovation Fund and owners ventures tracks previous series D. Financing was completed in 2019 and of $1.2 billion dollar valuation of according to pitch book.

Tracks as and analytics and computer vision platform designed to deliver accurate and reliable analysis for CPG companies and retailers by providing insight into what is happening and every retail store the company's autonomous shelf monitoring solutions.

Solutions disrupt manual and labor intensive industry practices by turning the retail shelf images and to real time actionable insights. These insights enable manufacturers and retailers to control performance gaps identify category opportunities and increase revenue.

Tracks as broad Blue chip customer base spans 90, plus countries and is diversified across food and beverage household and personal care pharmaceuticals tobacco and retail notable tracks customers include Coca Cola best by Procter and Gamble and hydrogen.

We believe that the trend towards Digitization and monetization of traditional retail will continue well beyond the COVID-19 pandemic and that our investment attract is well positioned to benefit from these technological shifts.

Please turn to slide 11.

Consistent with the rights contained within our loan from our architect capital pay Joy SPV, we were offered equity participation and Pedro and the <unk>.

The $2.5 million dollar of investment and Pedro and made this quarter comes in addition to our existing $10 million commitment to the architect capital Pedro the SPV and enter the funding loans to Pedro and as.

And as we have discussed pay joy is the San Francisco based provider of smartphone locking technology that has raised over $67 million and capital to day. According to pitch book paid jaws latest series B equity capital raise was red led by <unk> partners and May 2019.

With participation from the Union square ventures, and core of innovation capital Pedro and owns a smartphone locking technology that allows user users usually usually the direct lenders of the smartphone and leases to lots of any device, where the software, whereas installed pay joining us monetize this.

G by partnering with the phone retails and emerging countries to offer leases at the point of sale consumers, who lease of phone with Pedro and partners commit a portion of the beliefs and cash upfront and the pay the rest of the smartphone lease and weekly installments, if a customer misses of weekly installment pedros technology automatically locks of phone.

The technology of lots of phone if the consumer zooms, making use of lease payments and the result of this technology is a powerful incentive mechanism that has produced the history of predictable and stable lease payments.

Our $2.5 million.

And in conjunction with other key leading investors will help fund Pedro is internationally expansion. The company is true has had tremendous success of Mexico, and we look forward to supporting the business is at the <unk>.

<unk> technology globally.

Looking ahead, we believe our portfolio is as well positioned as ever to drive long term value to both exits and ongoing strategic investments and compelling industries and opportunities not readily available for public investors. We believe our healthy cash balance puts us and a strong position to deploy against us.

High volume of attractive opportunities.

Thank you for your attention and with that I'll hand, it over to Allison.

Thank you Mark.

During the second quarter, we invested a total of $29.8 million and new and follow on investments and new investments during the quarter include a $2.7 million and Beckman and the Crosby and clocked double unit and the Colombia the sponsor of the sponsor vehicle for Columbia acquisition Corp, and 10.

$10 million of Beckman and class a common shares of the Churchill capital to share and subsequently converted the Sculpsure Corp. Common shares after the completion of the business combination between these entities and 10 million of our investment and the common shares and the Investec preferred shares the track additional funding of an aggregate $2.1 million related to capital calls from our $10 million commitment the architect.

Capital page way of TB.

The $1 million of of what she'd been funded to date and and additional follow on investment of $5 million and the series C preferred share of the plane count.

Obviously, all of the stock activity and our portfolio is highly accretive but these transactions are evolving multi stage and highly complex and nuanced and nature and he's been a great deal of kind of with our evaluation Committee are independent valuation firm and our auditors to determine the appropriate fair value for these and Beckman and all parties are and full agreement on the valuations as presented in the financial statements to be included in our form 10.

And Q filing for the second quarter of 2021 during the profit the fair value of 2 of our portfolio of companies currently and the process of the bank merger what bounds of initially had the had missed the line current value per share calculation. However, these errors were identified and corrected prior to the Finalization of our financial statements for the quarter ended June 30 of 2000, and 2021 and our financial statements and this guy are accurate.

And the presented notwithstanding the fact that our financial statements are ultimately correct. It's part of marketing and review of our internal controls for financial reporting and advisers and their view that as the technical matter and the foregoing resulted in the material weakness for the quarter ended June 30 of 2021 through this process, we have adopted market and suggestions for valuations on the current back transaction and as long as any future.

Valuations on back of mergers. Please turn to slide 13. This slide highlights our active made and proceeds received during the second quarter, most notably we sold 25% for 782090 of our of course, there of common shares subsequent to the lack of provision on the 25 per cent of our share is being lifted after certain pricing conditions were met.

We sold the shares for approximately $37 million and net proceeds resulting in and net realized gain of approximately $29 million.

We anticipate our 2.346 million and 271 remaining question of course their shares will become freely tradable on the Friday Adil.

Additionally, during the second quarter, we liked the approximately $270000 related to our June 2020 investment and pallets of your lending Trust activate. These additional proceeds are attributed directly to the equity participation and the underlying collateral as of today pinpoint and $9 million has been received and the talent of our lending trust of C. D and the parents about <unk> thousand 290 shares of talent or common stock.

Comprising the underlying collateral, which we retained equity interest remained to be sold as of December 31, 2020, the balance of the loan and all guaranteed of interest had been fully repaid.

Finally during the quarter, we received approximately $352000 and proceeds from the second Avenue related to the principal repayment and interest from the 15% of term loan due December 2023, and $490000 and net proceeds and realized gain from the exit of our remaining at the holding of <unk> been back debt.

Please turn to slide 14, subsequent to quarter, and we made of $2.5 million of equity investment and the preferred share of the Patriot Inc. It is in addition to our continued funding of an additional $2.5 million and the capital calls from our 10 million documents and the architect the capital Pedro and STB today at $501 million of our 10 million of our commitment to the FCB had been calling funded and we also funded debt of 250.

<unk> thousand 9 investments and the common share unit and private placement units of the sponsor of the the sponsored vehicle for all of the acquisition Corp. Please turn to slide 15.

You mentioned basic general and that's the thing themes the top of allocation of our investment portfolio at quarter end, the education technology, representing approximately 51% of the investment portfolio at fair value.

The market places was the second largest category representing approximately 16% of of the portfolio.

The financial Technology and services category accounted for approximately 15% of our investment portfolio and approximately 40% of of our portfolio was invested in social and mobile companies Big data cloud accounted for approximately 4% of the fair value of our portfolio and sustainability of the kind of collect and 1% of the fair value of our portfolio as of June 30th Please turn to slide 16.

We're pleased to report we ended the second quarter of 2021 within any of the NAV per share of $16 and to keep expenses.

The breakdown of NAV per share as of quarter and as shown on slide 16, and it is consistent with our financial reporting most notably the decrease of NAV per share during the second quarter was largely driven by approximately $2.50 per share attributable to the dividends declared and paid during the quarter and 22 cents per share attributable to the issuance of common stock from the stock dividend and approximately 8 cents per share of net investment loss.

The secret to NAV per share was partially offset by $1.04 per share attributable to net realized gains on investment play and I. Appreciate it should be about the net change in unrealized depreciation and at quarter end.

And 1 cent per share attributable to stock based compensation I would also like to take a moment to of you throw capital current liquidity, we ended the quarter with approximately $226.6 million of liquid assets, including $130.1 million and cash and I need to point of $5 million and public security and subject to certain lockup restrictions in the quarter and our cash.

Cash balance of $131 million of the June 30th consisted primarily of the monetization of various portfolio of positions throughout the throughout 'twenty, and 2020 and 'twenty, 1 day and interest and the proceeds generated during the third quarter of 'twenty 'twenty via the ATM offering.

And the $96.5 million of the public securities subject to lockup restrictions held as of June 30th represent our shares and of course ore Inc. Valued at the June 30 of the 2021 closing price of $39 and 56%.

But the discount for lack of marketability and related to the current market for provision and our share is and scope of Corp, who shared we expect to be freely tradable tradable on share registration.

As of June 30 of 2021, there were $26 million 520743 shares of the company of common stock outstanding as of today and there are 26.555 million 823000, and chairs and the pumping of common stock outstanding.

And it just didn't get the 2 dividends of 25 cents per share each declared and the first quarter and subsequently paid during the second quarter on May 4 at zero capital as board of directors declared a $2 per share dividend to be paid it and have dock and have cash on June 30 of the shareholders of record on may 18th.

Regarding the results of the main for its dividend.

Just on the stockholder elections, approximately 44% of elected or were deemed to have elected to receive the dividend in shares of common stock and received approximately 2 million shares and aggregate and approximately 56% elected to receive the dividend and cash and as the result of the proration received of approximately 89% of their dividend and cash totaling approximately $30 million and apart from that.

The 11% and share the common stock totaling approximately 3 million shares the total dividend amount paid to all stockholders consisted of approximately $30 million of cash and approximately 2.3 million shares of common stock. The number of shares of zero capital common stock issued of stockholders, receiving all of our portion of the dividend in shares of common stock based on the volume.

The average price per share of zero capital common stock from the NASDAQ capital market on May 12th 13th and 14th 2021, and $2 and the teeth and strip out the declared dividend and such.

Volume weighted average price per share less the 2 arms that you think declared dividend for such states was approximately $13.07 per share of.

For 2021 dividends declared to date are expected to be categorized as net long term capital gains for tax purposes.

And the related realized gains are attributable to the monetization of Huntsville are actually up and back within our portfolio.

As Mark mentioned on August 3rd Joe a couple of his board of directors declared a dividend of $2.25 per share payable on September 30th 2021 did the company's common stockholders of record of just the close of business on August 18th 2021 the.

They have been and will be paid and half and half cash and.

The more fully and today's press release, the dividend will be paid in cash or shares of the company's common stock for the election of registered shareholders. Although the total amount of cash to be distributed to all shareholders will be limited to no more than 50 per cent of the total dividends to be paid for all shareholders. This dividend as being made in accordance with certain of applicable treasury regulations and guidance issued by the IRA The Lama.

We traded regulated investment company that satisfy the distribution requirements from a distribution paid partly and common stock provided certain other requirements are satisfied.

We strongly encourage all shareholders to proactively reach out to the bank broker nominee of our platform through which they hold their throw capital share to make our desired election outcome down.

Only registered shareholders will be directly mailed and election for them by our transfer agent American stock transfer.

Zero capital does not process any election.

Shareholders are not registered shareholders and must proactively make the election known to the bank broker and nominee or part for them on which they call it zero capital shares.

Each registered shareholder well have the opportunity to do like to receive the dividend in cash for shares of the company of common stock.

Registered shareholders of electing to receive the dividend and share the company's common stock well see the entire dividend and the appointment shares the company's common stock regardless of the elections made by any other shareholders. However, and the total amount of cash to be distributed to all shareholders of electing to receive their dividends. The cash will be limited to no more than 50 per cent of the total amount to be distributed to all shareholders in the event the amount of cash to be district.

And it's all shareholders of electing to receive the dividend and cash would exceed 50 per cent of the total dividend each registered shareholder like interest the attached and receive a pro rata portion of.

The total cash to be distributed based on the number of shares held by each of each such shareholder.

The remainder of the dividend and the excess I'm a shareholder its pro rata share of the total amount of cash to be distributed will be paid and the form of shares of the company's common stock the no.

Matter of shares of our common stock to be issued to shareholders of beating all our of portion of the dividend and shares of our common stock will be based on the volume weighted average price per share of our common stock on the NASDAQ capital market on August 11, 12, and 13.2021, that's $2 and 25 and sort of like the declared dividend. The company will caused to be mailed and election for them to receive cash of common stock owned.

The 2 registered shareholders promptly after the August 18, 2021 record day registered shareholders, who are those shareholders, who own the stock directly and not through a bank broker or nominee.

The electric 1 of must be received by throw capital Corp's transfer agent American stock transfer part of 5 P. M. Eastern standard time on September 17th 2021.

Registered shareholders of the questions regarding the dividend may call of American stock transfer.

Registered shareholders and did not make an election will be deemed to have liked didn't receive 100% of their dividend and share of the company's common stock repurchase.

Current shareholders participating and the company's dividend reinvestment plan and will also receive an election from investment feature of the dividend reinvestment plan will be suspended for the distribution and will be reinstated after the distribution has been completed.

Shareholders, who hold their series 2 of bank broker and nominee will not receive an election for them from the company and should contact their bank broker and nominee for instructions on how to make an election shareholders, who hold their shares through a bank broker or and how many are encouraged to contact their bank broker and harmony and inform them of the election and that should be made on the shareholders of that.

If any shareholders bank broker and nominee on the shareholders. The house does not timely return of properly completed the election for them by the election day. The shareholder will have been deemed to have like the truth is 100% of of the dividend and the form of shares of our common stock.

Regardless of whether of shareholder receipt of the dividend and cash stock or some combination of cash and stock for the entire amount of the dividend will be fully taxable to shareholders and throw capital Corp of report the actual tax characteristics of each year's dividend annually to shareholders and the IRS to the IRS on form 10.99 debt.

The date of the declaration of any amount of dividends, including any future dividends are subject to the full discussion of sterile capital. Its board of directors. The agreement aggregate amount of the dividend declared and paid by Spiro capital the fully tactical the stockholders that the character of zero capital dividend cannot be finally determined until the close of zero capital capital year Zero capital ROE report the actual tax characteristics of each of the.

Dividends annually for stockholders.

Subsequent to year end.

And just your stockholders for the questions regarding declared dividend May call American stock transfer at 893, 7 and 5.4 for 9 shareholders, who hold their shares to the bank broker and nominee or encourage to contact their break for growing on the need for additional details on how their bank broker and him and he will process the election on their behalf.

Shareholders can find additional information regarding the dividend and the Investor Relations section of the stereo capitals website at Www Dot zero cap dotcom year to day zero capital on the declared approximately 5 to $5.25 per share to shareholders for total document distributions of about $130 million.

That concludes my comments and we would like to thank you for your interest and support of zero capital now I will turn the call over to the operator to start the Q&A session operator.

Thank you if you'd like to ask a question on the call today. Please press star followed by the number 1 and your telephone keypad, if youre, calling from the speaker phone. Please make sure. Your mute function is off to share your signals from each of our equipment.

And then star 1 to ask a question I'll pause for just a moment to give everyone the chance to cigna.

And first we'll go to Kevin Phillips from JMP Securities. Your line is open.

Good afternoon, and thank you for taking my question.

Could you provide some commentary on the private credit strategy and your satisfaction with the investment opportunities and the deal flow that Youre seeing there and then possibly also touching on the cadence of investment activity and we should expect for the next few quarters. Thank you.

Sure.

We are actively seeing flow in the private credit and credit strategy.

The spoke and and.

Absolutely proprietary we continue to evaluate opportunities and and have seen as good of a set of deal flow in that and as we would've anticipated and.

And are evaluating several as we speak.

Thank you.

And we'll pause just for a moment to compose our other question.

Oh, great and it looks like and next we'll go to Alex Paris from Barrington Research. Your line is open.

Hey, guys. Thanks for taking my question.

Just had a couple of Theres a lot of information obviously within the prepared comments first off on of course Sara.

And how many shares did you say you have.

Currently after selling the first tranche.

Earlier this year.

Well, what we did say Alan.

Alex and <unk>.

Thank you for for your question, we of $87 million worth of <unk>.

Price of $39.56 as of last quarter.

At the end of last quarter, plus the discount Alison if you have the exact count of the share count right. So we've retained and 75 per cent of our initial position, though we have remaining 2.346 million 271 and remaining quite per shares as the security and as of today.

It will be fairly type of loss at it.

Thank you.

And next we'll go to Jon Hickman from Ladenburg. Your line is open.

Could you.

1 through the skull Skillsoft thing again, you participated in the pipe and in return you got chairs of the.

Merged company and when will those be freely traded.

Tradable Levine from.

Sure, we made a commitment to invest and of pipe and and.

And scale soft, which is the Churchill capital to at the end of last year, we joined process, who did a $500 million part of the pipe and obviously there are large and well respected.

The investor and online learning and other digital strategies.

And that merger was completed.

The earlier this earlier at the end of Q2 and.

And the registration statement has just been filed and is not deemed effective yet and whats at the steam detective we'd be able to freely trading.

Thank you John.

Okay.

And next we'll go to the here my Suwannee from HMC capital. Your line is open.

Hey, guys. Thanks for taking the call.

Just a quick question with regards to current share price side of things.

And I and a little over 12.24 and it.

The plans on doing a stock buyback the clause of the roughly 28% of desktop.

Sure. Thank you for your question as you know we have actively been involved and <unk>.

<unk> backer of stocks through direct buybacks for through tenders, we still have a fairly large approved buyback available to us by our board of directors.

I think we've demonstrated and our pad and the past that we've utilized.

We believe that that was the.

Most of appropriate use of our capital and try the share count.

And when it made sense and we will continue to evaluate the obviously we are and the situation. We are actually doing a great deal of distributions, having just distributing $5.25 to our shareholder shareholders as well and we believe that our communication strategy of investment performance should show.

Should take hold as well.

But we are actively always sort of looking at the best ways to enhance shareholder value and we obviously have deployed share buyout for share buybacks as 1 of the methodologies to achieve that thank you.

And next we'll go to Lou grief from Morgan Stanley. Your line is open.

Congratulations.

But.

The pipeline.

Goodbye.

That's cool.

Okay.

Demand for book.

And you put that kind of money to work.

And that'll be.

So thanks for the call them. Unfortunately.

For your coming in and out, but I think youre asking if we have the ability to deploy the capital.

The.

And then we have and sort of pipeline robust enough to be able to do that and given market conditions et cetera.

And as the onset of my prepared remarks.

We are seeing more opportunities than ever before and this quarter. This is the most of opportunities that we've evaluated and diligence.

And then we've done ever.

So our deal flow is extremely robust, we're obviously selective and judicious and the deployment of our capital given where markets are and what evaluation is but from.

Our confidence to be able to deploy the capital or of opportunities to deploy the capital is extremely high but.

But we are conscious of evaluation and we'll make sure that we do it and and appropriate fashion.

Thank you.

And at this time I'll turn it back to management for closing remarks.

Well. Thank you all very much of it was it was the lengthy call. We appreciate it obviously there is an awful lot going on and our portfolio.

We're very fortunate to have the successes that we've been enjoying and.

Debt and the recent successes and numerous of our portfolio of companies either being acquired or going public we do find the the.

The investment pipeline to be as robust for more robust than ever and we.

We are highly excited and highly engaged about the future of of our of our funds. So we appreciate all your support and thank you all for taking the time to be with US This afternoon.

Yeah.

Okay.

And that does conclude our call for today. Thank you for your participation you may now disconnect.

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