3 unchanged sentences
(in thousands, except shares and per share data)
−Removed: September 30,
Investments, at fair value:
12 unchanged sentences
SBA debentures, net of deferred financing costs (Note 6)
−Removed: Public Notes, net of deferred financing costs (Note 6)
+Added: Notes, net of deferred financing costs (Note 6)
Borrowings under Credit Facility, net of deferred financing costs (Note 6)
4 unchanged sentences
Administration fee payable and other due to affiliate
−Removed: Taxes payable
+Added: Taxes (receivable) payable
Accounts payable and other liabilities
1 unchanged sentence
Commitments and contingencies (Note 7)
−Removed: Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,463,119 shares
−Removed: outstanding at September 30, 2020 and December 31, 2019, respectively)
+Added: Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,437,400
+Added: issued and outstanding at March 31, 2021 and December 31, 2020, respectively)
Additional paid-in capital
8 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Investment Income:
19 unchanged sentences
Total fee income
−Removed: Interest on idle funds and other income
+Added: Interest on idle funds
Total investment income
2 unchanged sentences
Incentive fee - income
−Removed: Incentive fee - capital gains
+Added: Incentive fee (reversal) - capital gains
Administrative service expenses
1 unchanged sentence
Other general and administrative expenses
−Removed: Total expenses before income incentive fee waiver
−Removed: Incentive fee waiver - income
−Removed: Total expenses, net of income incentive fee waiver
+Added: Total expenses
Net investment income before income taxes
15 unchanged sentences
Realized losses on extinguishment of debt
−Removed: Net increase in net assets resulting from operations
+Added: Net increase (decrease) in net assets resulting from operations
Per common share data:
9 unchanged sentences
Balances at December 31, 2019
+Added: Repurchases of common stock under Stock Repurchase Program (Note 8)
Net investment income
4 unchanged sentences
Balances at March 31, 2020
−Removed: Net investment income
−Removed: Net realized gain (loss) on investments, net of taxes
−Removed: Net unrealized appreciation (depreciation) on investments
−Removed: Realized losses on extinguishment of debt
−Removed: Dividends declared
−Removed: Balances at June 30, 2019
−Removed: Net investment income
−Removed: Net realized gain (loss) on investments, net of taxes
−Removed: Net unrealized appreciation (depreciation) on investments
−Removed: Realized losses on extinguishment of debt
−Removed: Dividends declared
−Removed: Balances at September 30, 2019
Balances at December 31, 2020
−Removed: Repurchases of common stock under Stock Repurchase Program (Note 8)
Net investment income
4 unchanged sentences
Balances at March 31, 2021
−Removed: Net investment income
−Removed: Net realized gain (loss) on investments, net of taxes
−Removed: Net unrealized appreciation (depreciation) on investments
−Removed: Realized losses on extinguishment of debt
−Removed: Dividends declared
−Removed: Balances at June 30, 2020
−Removed: Net investment income
−Removed: Net realized gain (loss) on investments, net of taxes
−Removed: Net unrealized appreciation (depreciation) on investments
−Removed: Realized losses on extinguishment of debt
−Removed: Dividends declared
−Removed: Balances at September 30, 2020
* amount is greater than zero but less than one
3 unchanged sentences
(in thousands)
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Cash Flows from Operating Activities:
−Removed: Net increase in net assets resulting from operations
−Removed: Adjustments to reconcile net increase in net assets resulting from operations to net cash provided
−Removed: by (used for) operating activities:
+Added: Net increase (decrease) in net assets resulting from operations
+Added: Adjustments to reconcile net increase (decrease) in net assets resulting from
+Added: operations to net
+Added: cash provided by (used for) operating activities:
Net change in unrealized (appreciation) depreciation on investments
15 unchanged sentences
Income incentive fee payable due to affiliate
−Removed: Capital gains incentive fee payable due to affiliate
+Added: Capital gains incentive fee (reversal) due to (from) affiliate
Administration fee payable and other due to affiliate
5 unchanged sentences
Repayments of SBA debentures
−Removed: Proceeds received from issuance of Public Notes
+Added: Principal payments on Notes
Proceeds received from (repayments of) borrowings under Credit Facility, net
13 unchanged sentences
Consolidated Schedule of Investments (unaudited)
−Removed: September 30, 2020
−Removed: (in thousands, except shares)
+Added: March 31, 2021
+Added: thousands, except shares)
Portfolio Company (a)(b)
3 unchanged sentences
Control Investments (t)
−Removed: FDS Avionics Corp.
−Removed: (dba Flight Display Systems)
−Removed: Aerospace & Defense Manufacturing
−Removed: Second Lien Debt
−Removed: Revolving Loan ($30 commitment)
−Removed: Common Equity (7,478 shares) (j)
−Removed: Preferred Equity (2,550 shares)
US GreenFiber, LLC
5 unchanged sentences
Common Equity (425,508 units) (j)
−Removed: Common Equity (1,022,813 units) (h)
+Added: Common Equity (1,022,813 units) (h)(j)
Total Control Investments
15 unchanged sentences
(L + 10.00%) / (1.00%)
−Removed: Common Equity (2,500,000 shares) (o)
+Added: Common Equity (2,500,000 shares)
Pfanstiehl, Inc.
Healthcare Products
−Removed: Subordinated Debt
Common Equity (4,250 units) (j)
2 unchanged sentences
Common Equity - Class A-2 (42,500 units) (j)
−Removed: Common Equity - Class B (1,000 units) (j)
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.)
+Added: Aerospace & Defense Manufacturing
+Added: First Lien Debt (ag)
+Added: (L + 5.50%) / (1.00%)
+Added: Common Equity (41,290 units) (j)
Steward Holding LLC (dba Steward Advanced Materials)
5 unchanged sentences
Consolidated Schedule of Investments (unaudited)
−Removed: September 30, 2020
−Removed: (in thousands, except shares)
+Added: March 31, 2021
+Added: thousands, except shares)
Portfolio Company (a)(b)
3 unchanged sentences
Non-control/Non-affiliate
−Removed: Accent Food Services, LLC
−Removed: Vending Equipment Manufacturing
−Removed: Second Lien Debt (k)(p)
−Removed: Common Equity (7,885 units) (h)(j)
Allied 100 Group, Inc.
8 unchanged sentences
Healthcare Services
−Removed: First Lien Debt (j)(w)
−Removed: (L + 5.75%) / (2.00%)
Common Equity (500 units) (h)(j)
5 unchanged sentences
Preferred Equity (207 units) (h)(j)
+Added: Preferred Equity (141 units) (h)(j)
+Added: Applied Data Corporation
+Added: Information Technology Services
+Added: First Lien Debt (v)
+Added: (L + 6.25%) / (1.50%)
+Added: Common Equity (22 units)
+Added: Preferred Equity (1,070,614 units)
Argo Turboserve Corporation
11 unchanged sentences
Bandon Fitness (Texas), Inc.
−Removed: First Lien Debt (j)(z)
−Removed: (L + 6.50%) / (2.25%)
Common Equity (545,810 units) (j)
−Removed: BCC Group Holdings, Inc.
−Removed: Information Technology Services
−Removed: Subordinated Debt
−Removed: Common Equity (451 shares)
−Removed: Preferred Equity (14 shares)
BCM One Group Holdings, Inc.
15 unchanged sentences
(L + 10.00%) / (2.00%)
−Removed: Revolving Loan ($200 commitment) (j)(ac)
+Added: Revolving Loan ($550 unfunded commitment) (j)(ac)
(L + 9.00%) / (2.00%)
−Removed: ControlScan, Inc.
−Removed: Information Technology Services
−Removed: Subordinated Debt (j)
−Removed: Common Equity (1,852 shares) (j)
−Removed: Preferred Equity (50 shares) (j)
+Added: Comply365, LLC
+Added: Aerospace & Defense Manufacturing
+Added: First Lien Debt (ad)
+Added: (L + 8.00%) / (1.00%)
+Added: Common Equity (1,000,000 units)
CRS Solutions Holdings, LLC (dba CRS Texas)
1 unchanged sentence
Second Lien Debt
−Removed: Common Equity (375,000 units) (h)(j)
+Added: Common Equity ($74 unfunded commitment) (489,712 units) (h)(j)
+Added: Dataguise, Inc.
+Added: Information Technology Services
+Added: First Lien Debt (j)
+Added: Common Equity (909 shares) (j)
Diversified Search LLC
4 unchanged sentences
EBL, LLC (EbLens)
−Removed: Second Lien Debt (j)
+Added: Second Lien Debt (j)(p)
Common Equity (75,000 units) (j)
3 unchanged sentences
Common Equity (1,000,000 units) (h)(j)
−Removed: French Transit, LLC
+Added: Elements Brands, LLC
Consumer Products
−Removed: First Lien Debt (j)
−Removed: (L + 10.00%) / (2.25%)
+Added: First Lien Debt
+Added: Revolving Loan ($838 unfunded commitment) (i)(j)
FIDUS INVESTMENT CORPORATION
Consolidated Schedule of Investments (unaudited)
−Removed: September 30, 2020
−Removed: (in thousands, except shares)
+Added: March 31, 2021
+Added: thousands, except shares)
Portfolio Company (a)(b)
2 unchanged sentences
Spread / Floor (d)
+Added: Frontline Food Services, LLC (f/k/a Accent Food Services, LLC)
+Added: Vending Equipment Manufacturing
+Added: Preferred Equity (Class A Units) (46 units) (j)
+Added: Common Equity (Class B Units) (124 units) (j)
+Added: Preferred Equity (Class C Units) (100 units) (j)
Global Plasma Solutions, Inc.
Component Manufacturing
−Removed: First Lien Debt (j)(v)
−Removed: (L + 5.00%) / (2.00%)
−Removed: Preferred Equity (947 shares) (j)
Common Equity (947 shares) (j)
+Added: GP&C Operations, LLC (dba Garlock Printing and Converting)
+Added: Component Manufacturing
+Added: First Lien Debt (w)
+Added: (L + 7.25%) / (1.00%)
+Added: Common Equity (515,625 units) (h)(j)
Gurobi Optimization, LLC
6 unchanged sentences
Common Equity (549 units) (h)(j)
+Added: Hallmark Health Care Solutions, Inc.
+Added: Healthcare Services
+Added: First Lien Debt (j)(ae)
+Added: (L + 7.25%) / (1.50%)
+Added: Common Equity (750,000 units) (j)
+Added: Healthfuse, LLC
+Added: Healthcare Services
+Added: First Lien Debt (af)
+Added: (L + 7.25%) / (1.00%)
+Added: Preferred Equity (197,980 units)
Hilco Plastics Holdings, LLC (dba Hilco Technologies)
7 unchanged sentences
Common Equity (72,507 units) (h)(j)
−Removed: Information Technology Services
−Removed: Preferred Equity (610 units) (h)(j)
Hub Acquisition Sub, LLC (dba Hub Pen)
2 unchanged sentences
Common Equity (3,750 units)
+Added: Preferred Equity (868 units) (j)
IBH Holdings, LLC (fka Inflexxion, Inc.)
12 unchanged sentences
Common Equity (765 shares) (j)
+Added: LifeSpan Biosciences, Inc.
+Added: Healthcare Products
+Added: Subordinated Debt (j)
+Added: Common Equity (100 shares) (j)
LNG Indy, LLC (dba Kinetrex Energy)
18 unchanged sentences
Information Technology Services
−Removed: Subordinated Debt (j)
Common Equity (50 shares) (j)
+Added: FIDUS INVESTMENT CORPORATION
+Added: Consolidated Schedule of Investments (unaudited)
+Added: March 31, 2021
+Added: thousands, except shares)
+Added: Portfolio Company (a)(b)
+Added: Variable Index
+Added: Investment Type
+Added: Spread / Floor (d)
Palmetto Moon, LLC
1 unchanged sentence
Common Equity (499 units) (j)
+Added: Pool & Electrical Products, LLC
+Added: Specialty Distribution
+Added: Second Lien Debt (j)
+Added: Common Equity (15,000 units) (h)(j)
Power Grid Components, Inc.
9 unchanged sentences
Preferred Equity (500,000 shares) (j)
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Consolidated Schedule of Investments (unaudited)
−Removed: September 30, 2020
−Removed: (in thousands, except shares)
−Removed: Portfolio Company (a)(b)
−Removed: Variable Index
−Removed: Investment Type
−Removed: Spread / Floor (d)
−Removed: Pugh Lubricants, LLC
+Added: Pugh Lubricants, LLC (n)
Specialty Distribution
−Removed: Second Lien Debt (k)
Common Equity (3,062 units) (h)(j)
5 unchanged sentences
Second Lien Debt (k)
−Removed: Delayed Draw Commitment ($875 commitment) (i)(j)
−Removed: Preferred Equity (8,864 units) (h)(j)
+Added: Delayed Draw Commitment ($875 unfunded commitment) (i)(j)
+Added: Common Equity (Class A Units) (8,864 units) (h)(j)
+Added: Preferred Equity (Units N/A) (h)(j)
+Added: Common Equity (Class F Units) (355 units) (h)(j)
Road Safety Services, Inc.
2 unchanged sentences
Common Equity (655 units)
−Removed: Rohrer Corporation
−Removed: Subordinated Debt (j)
−Removed: Common Equity (400 shares) (j)
Routeware, Inc.
6 unchanged sentences
Common Equity (6,000 units) (h)(j)
−Removed: Software Technology, LLC
−Removed: Information Technology Services
−Removed: Subordinated Debt (k)
−Removed: Common Equity (6 shares)
Specialized Elevator Services Holdings, LLC
30 unchanged sentences
Specialty Distribution
−Removed: Second Lien Debt (j)
−Removed: (L + 8.50%) / (0.00%)
Preferred Equity (347,222 units) (j)
+Added: Wonderware Holdings, LLC (dba CORE Business Technologies)
+Added: Information Technology Services
+Added: First Lien Debt ($2,000 unfunded commitment) (k)(z)
+Added: (L + 7.25%) / (1.00%)
Worldwide Express Operations, LLC
3 unchanged sentences
Common Equity (2,000 units) (h)(j)
+Added: Information Technology Services
+Added: First Lien Debt (j)
+Added: (L + 10.50%) / (1.50%)
+Added: Delayed Draw Commitment ($400 unfunded commitment) (j)(o)
Non-control/Non-affiliate Investments
Total Investments
+Added: FIDUS INVESTMENT CORPORATION
+Added: Consolidated Schedule of Investments (unaudited)
+Added: March 31, 2021
+Added: thousands, except shares)
See Note 3 to the consolidated financial statements for portfolio composition by geographic location.
5 unchanged sentences
Certain variable rate investments also include a LIBOR interest rate floor.
−Removed: For each investment, the Company has provided the spread over the reference rate and the LIBOR floor, if any, as of September 30, 2020.
−Removed: Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of September 30, 2020.
+Added: For each investment, the Company has provided the spread over the reference rate and the LIBOR floor, if any, as of March 31, 2021.
+Added: Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of March 31, 2021.
Generally, payment-in-kind interest can be paid-in-kind or all in cash.
5 unchanged sentences
Investment is held by a taxable subsidiary of the Company.
−Removed: The disclosed commitment represents the unfunded amount as of September 30, 2020.
+Added: The disclosed commitment represents the unfunded amount as of March 31, 2021.
The Company is earning 0.50%
1 unchanged sentence
The interest rate disclosed represents the rate which will be earned if the commitment is funded.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Consolidated Schedule of Investments (unaudited)
−Removed: September 30, 2020
−Removed: (in thousands, except shares)
Investment pledged as collateral for the Credit Facility and, as a result, is not directly available to the
9 unchanged sentences
Investment in portfolio company that has sold its operations and is in the process of winding down.
−Removed: Income producing.
−Removed: Maturity date, if any, represents mandatory redemption date.
−Removed: Investment was on non-accrual status as of September 30, 2020,
−Removed: meaning the Company has ceased recognizing interest income on the investment.
+Added: The disclosed commitment represents the unfunded amount as of March 31, 2021.
+Added: The Company is earning 5.20%
+Added: interest on the unfunded balance of the commitment.
+Added: The interest rate disclosed represents the rate which will be earned if the commitment is funded.
+Added: Investment was on PIK-only
+Added: non-accrual status as of March 31, 2021, meaning the Company has ceased recognizing PIK interest income on the investment.
Warrant entitles the Company to purchase 4.79% of the outstanding principal of Junior Subordinated Notes prior
34 unchanged sentences
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
−Removed: The disclosed commitment represents the unfunded amount as of September 30, 2020.
+Added: The disclosed commitment represents the unfunded amount as of March 31, 2021.
The Company is earning 1.00%
1 unchanged sentence
The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 3.33% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 3.31% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 4.03% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 5.50% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
See Notes to Consolidated Financial Statements (unaudited).
12 unchanged sentences
Second Lien Debt
−Removed: Revolving Loan ($30 commitment)
+Added: Revolving Loan ($30 unfunded commitment)
Common Equity (7,478 shares) (j)
2 unchanged sentences
Building Products Manufacturing
−Removed: Second Lien Debt (k)
−Removed: Second Lien Debt (k)
+Added: Second Lien Debt (j)
+Added: Second Lien Debt (j)
+Added: Second Lien Debt (j)
Common Equity (2,522 units) (h)(j)
Common Equity (425,508 units) (j)
+Added: Common Equity (1,022,813 units) (h)(j)
Total Control Investments
8 unchanged sentences
Healthcare Services
−Removed: Second Lien Debt
−Removed: Preferred Equity (126,662 units) (h)
−Removed: Warrant (505,176 units) (h)(m)
−Removed: Microbiology Research Associates, Inc.
−Removed: Healthcare Services
−Removed: Subordinated Debt
−Removed: Common Equity (1,625,731 units) (j)
+Added: Second Lien Debt (j)
+Added: Preferred Equity (63,331 units) (h)(j)
+Added: Warrant (252,588 units) (h)(j)(m)
Mirage Trailers LLC
5 unchanged sentences
Healthcare Products
−Removed: Subordinated Debt
Common Equity (4,250 units) (j)
1 unchanged sentence
Oil & Gas Services
−Removed: Common Equity - Class A-2 (42,500 units) (k)
−Removed: Common Equity - Class B (1,000 units) (k)
+Added: Common Equity - Class A-2 (42,500 units) (j)
Steward Holding LLC (dba Steward Advanced Materials)
6 unchanged sentences
December 31, 2020
−Removed: (in thousands, except shares)
+Added: thousands, except shares)
Portfolio Company (a)(b)
3 unchanged sentences
Non-control/Non-affiliate
−Removed: Accent Food Services, LLC
+Added: Frontline Food Services, LLC (f/k/a Accent Food Services, LLC)
Vending Equipment Manufacturing
−Removed: Second Lien Debt (k)(p)
−Removed: Subordinated Debt (j)(p)
−Removed: Common Equity (7,885 units) (h)(j)
+Added: Preferred Equity (Class A Units) (46 units) (j)
+Added: Common Equity (Class B Units) (124 units) (j)
+Added: Preferred Equity (Class C Units) (100 units) (j)
Allied 100 Group, Inc.
2 unchanged sentences
Common Equity (625,000 units) (j)
+Added: Allredi, LLC (fka Marco Group International OpCo, LLC)
+Added: Industrial Cleaning & Coatings
+Added: Second Lien Debt
+Added: Common Equity (570,636 units) (h)(j)
Alzheimers Research and Treatment Center, LLC
9 unchanged sentences
Preferred Equity (207 units) (h)(j)
+Added: Preferred Equity (141 units) (h)(j)
+Added: Applied Data Corporation
+Added: Information Technology Services
+Added: First Lien Debt (v)
+Added: (L + 6.25%) / (1.50%)
+Added: Common Equity (22 units)
+Added: Preferred Equity (1,070,614 units)
Argo Turboserve Corporation
5 unchanged sentences
Second Lien Debt (k)
−Removed: 11.50%/0.00%.
Common Equity (5,000 units) (j)
7 unchanged sentences
Common Equity (545,810 units) (j)
−Removed: BCC Group Holdings, Inc.
−Removed: Information Technology Services
−Removed: Subordinated Debt
−Removed: Common Equity(451 shares)
−Removed: Preferred Equity (14 shares)
BCM One Group Holdings, Inc.
11 unchanged sentences
Preferred Equity (1,043,133 units) (j)
−Removed: Control Scan, Inc.
−Removed: Information Technology Services
−Removed: Subordinated Debt (j)
−Removed: Common Equity (3,704 shares)(j)
−Removed: Preferred Equity (100 shares) (j)
+Added: Combined Systems, Inc.
+Added: Aerospace & Defense Manufacturing
+Added: First Lien Debt
+Added: (L + 10.00%) / (2.00%)
+Added: Revolving Loan ($1,050 unfunded commitment) (j)(ac)
+Added: (L + 9.00%) / (2.00%)
+Added: Comply365, LLC
+Added: Aerospace & Defense Manufacturing
+Added: First Lien Debt (ad)
+Added: (L + 8.00%) / (1.00%)
+Added: Common Equity (1,000,000 units)
CRS Solutions Holdings, LLC (dba CRS Texas)
2 unchanged sentences
Common Equity (450,382 units) (h)(j)
+Added: Dataguise, Inc.
+Added: Information Technology Services
+Added: First Lien Debt (j)
+Added: Common Equity (909 shares) (j)
Diversified Search LLC
4 unchanged sentences
EBL, LLC (EbLens)
−Removed: Second Lien Debt (j)
+Added: Second Lien Debt (j)(p)
Common Equity (75,000 units) (j)
2 unchanged sentences
December 31, 2020
−Removed: (in thousands, except shares)
+Added: thousands, except shares)
Portfolio Company (a)(b)
2 unchanged sentences
Spread / Floor (d)
+Added: ECM Industries, LLC
+Added: Component Manufacturing
+Added: Subordinated Debt (j)
+Added: Common Equity (1,000,000 units) (h)(j)
+Added: Elements Brands, LLC
+Added: Consumer Products
+Added: First Lien Debt
+Added: Revolving Loan ($838 unfunded commitment) (i)(j)
French Transit, LLC
2 unchanged sentences
(L + 10.00%) / (2.25%)
−Removed: Revolving Loan ($1,000 commitment) (j)(u)
−Removed: (L + 9.00%) / (2.25%)
Global Plasma Solutions, Inc.
Component Manufacturing
−Removed: First Lien Debt (j)(v)
−Removed: (L + 5.00%) / (2.00%)
−Removed: Preferred Equity (947 shares) (j)
Common Equity (947 shares) (j)
6 unchanged sentences
(L + 8.25%) / (2.00%)
+Added: Common Equity (549 units) (h)(j)
+Added: Hallmark Health Care Solutions, Inc.
+Added: Healthcare Services
+Added: First Lien Debt (j)(ae)
+Added: (L + 7.25%) / (1.50%)
Common Equity (750,000 units) (j)
+Added: Healthfuse, LLC
+Added: Healthcare Services
+Added: First Lien Debt (af)
+Added: (L + 7.25%) / (1.00%)
+Added: Preferred Equity (197,980 units)
Hilco Plastics Holdings, LLC (dba Hilco Technologies)
Component Manufacturing
−Removed: Second Lien Debt
+Added: Second Lien Debt (j)
Revolving Loan (j)
2 unchanged sentences
(L + 6.95%) / (0.00%)
−Removed: First Lien Debt (j)
−Removed: (L + 6.95%) / (0.00%)
Preferred Equity (1,000,000 units) (h)(j)
Common Equity (72,507 units) (h)(j)
−Removed: Information Technology Services
−Removed: First Lien Debt
−Removed: (L + 9.25%) / (2.25%)
−Removed: Preferred Equity (610 units) (h)(j)
Hub Acquisition Sub, LLC (dba Hub Pen)
2 unchanged sentences
Common Equity (3,750 units)
−Removed: Hunter Defense Technologies Inc.
−Removed: Aerospace & Defense Manufacturing
−Removed: First Lien Debt (j)
−Removed: (L + 7.00%) / (1.00%)
+Added: Preferred Equity (868 units) (j)
IBH Holdings, LLC (fka Inflexxion, Inc.)
1 unchanged sentence
Common Equity (150,000 units)
+Added: Ipro Tech, LLC
+Added: Information Technology Services
+Added: First Lien Debt (j)(u)
+Added: (L + 8.50%) / (2.00%)
K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)
Industrial Cleaning & Coatings
−Removed: Second Lien Debt
+Added: Second Lien Debt (j)
The Kyjen Company, LLC (dba Outward Hound)
6 unchanged sentences
Common Equity (500 units)
−Removed: Marco Group International OpCo, LLC
−Removed: Industrial Cleaning & Coatings
−Removed: Second Lien Debt
−Removed: Common Equity (960,482 units) (h)(j)
Mesa Line Services, LLC
15 unchanged sentences
December 31, 2020
−Removed: (in thousands, except shares)
+Added: thousands, except shares)
Portfolio Company (a)(b)
4 unchanged sentences
Information Technology Services
−Removed: Subordinated Debt (j)
Common Equity (50 shares) (j)
Palmetto Moon, LLC
−Removed: First Lien Debt
+Added: First Lien Debt (j)
Common Equity (499 units) (j)
+Added: Pool & Electrical Products, LLC
+Added: Specialty Distribution
+Added: Second Lien Debt (j)
+Added: Common Equity (15,000 units) (h)(j)
Power Grid Components, Inc.
9 unchanged sentences
Preferred Equity (500,000 shares) (j)
−Removed: Pugh Lubricants, LLC
−Removed: Specialty Distribution
−Removed: Second Lien Debt (k)
−Removed: Common Equity (6,125 units) (h)(j)
Revenue Management Solutions, LLC
4 unchanged sentences
Second Lien Debt (k)
−Removed: Delayed Draw Commitment ($875 commitment) (i)(j)
−Removed: Preferred Equity (8,864 units) (h)(j)
+Added: Delayed Draw Commitment ($875 unfunded commitment) (i)(j)
+Added: Common Equity (Class A Units) (8,864 units) (h)(j)
+Added: Preferred Equity (Units N/A) (h)(j)
+Added: Common Equity (Class F Units) (355 units) (h)(j)
Road Safety Services, Inc.
4 unchanged sentences
Subordinated Debt (j)
−Removed: Common Equity (400 shares)
+Added: Common Equity (400 shares) (j)
+Added: Routeware, Inc.
+Added: Information Technology Services
+Added: First Lien Debt (k)(aa)
+Added: (L + 7.00%) / (1.75%)
SES Investors, LLC (dba SES Foam)
13 unchanged sentences
Business Services
−Removed: Second Lien Debt (k)
Common Equity (1,000,000 units)
Component Manufacturing
−Removed: Common Equity (1,000 units)
+Added: Common Equity (500 units) (j)
The Tranzonic Companies
9 unchanged sentences
Preferred Equity (98,377 units) (h)(j)
−Removed: Warrant (57,469 units) (m)
−Removed: Vanguard Dealer Services, LLC.(n)
−Removed: Business Services
−Removed: Common Equity (6,000 units)
+Added: Warrant (57,469 units) (j)(m)
+Added: Virginia Tile Company, LLC
+Added: Specialty Distribution
+Added: Second Lien Debt (j)
Common Equity (17 units) (j)
+Added: Westerns Smokehouse, LLC
+Added: Consumer Products
+Added: First Lien Debt (j)(ab)
+Added: (L + 6.50%) / (1.25%)
FIDUS INVESTMENT CORPORATION
6 unchanged sentences
Spread / Floor (d)
−Removed: Virginia Tile Company, LLC
−Removed: Specialty Distribution
−Removed: Second Lien Debt (k)
−Removed: Common Equity (17 units)
Wheel Pros, Inc.
43 unchanged sentences
Maturity date, if any, represents mandatory redemption date.
−Removed: Investment was on non-accrual status as of December 31, 2019,
−Removed: meaning the Company has ceased recognizing interest income on the investment.
+Added: Investment was on PIK-only
+Added: non-accrual status as of December 31, 2020, meaning the Company has ceased recognizing PIK interest income on the investment.
Warrant entitles the Company to purchase 4.79% of the outstanding principal of Junior Subordinated Notes prior
10 unchanged sentences
which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are detailed in Note 3 to the consolidated financial statements.
−Removed: The disclosed commitment represents the unfunded amount as of December 31, 2019.
−Removed: The Company is earning
−Removed: 0.75% interest on the unfunded balance of the commitment.
−Removed: The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
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first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 4.21% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 2.84% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 2.95% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: The disclosed commitment represents the unfunded amount as of December 31, 2020.
+Added: The Company is earning
+Added: 1.00% interest on the unfunded balance of the commitment.
+Added: The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 3.33% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 3.31% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
+Added: In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
+Added: to receive an additional interest amount of 4.03% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
+Added: first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.
See Notes to Consolidated Financial Statements.
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under the program.
−Removed: For three or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350,000.
+Added: For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350,000.
Fund II and Fund III are not registered under the 1940 Act and rely on the exclusion from the definition of investment company contained in
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Use of estimates:
−Removed: The preparation of the consolidated financial statements in
−Removed: conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
+Added: The preparation of the consolidated financial statements
+Added: in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.
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The failure of a
−Removed: single product, service or distribution channel, or the loss or the ineffectiveness of a key executive or executives within the management team may have a materially adverse impact on such companies.
−Removed: Furthermore, these companies may be more
−Removed: vulnerable to competition and to overall economic conditions than larger, more established entities.
+Added: single product, service or distribution channel, or the loss or the
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
+Added: ineffectiveness of a key executive or executives within the management team may have a materially adverse impact on such companies.
+Added: Furthermore, these companies may be more vulnerable to
+Added: competition and to overall economic conditions than larger, more established entities.
Credit risk - Credit risk represents the risk that the Company would incur if the counterparties failed to
37 unchanged sentences
Deferred financing costs
−Removed: consist of fees and expenses paid in connection with the Credit Facility (as defined in Note 6) and SBA debentures.
−Removed: Deferred financing costs are capitalized and amortized to interest and financing expenses over the term of the debt agreement using
−Removed: the effective interest method.
+Added: consist of fees and expenses paid in connection with the SBA debentures, the Credit Facility and the Notes (as defined in Note 6).
+Added: Deferred financing costs are capitalized and amortized to interest and financing expenses over the term of the debt
+Added: agreement using the effective interest method.
Unamortized deferred financing costs are presented as an offset to the corresponding debt liabilities on the consolidated statements of assets and liabilities.
1 unchanged sentence
Upon the repayment of debt obligations which are deemed to be extinguishments, the
−Removed: difference between the principal amount due at maturity adjusted for any unamortized deferred financing costs is recognized as a loss (i.e., the unamortized deferred financing costs are recognized as a loss upon extinguishment of the underlying debt
−Removed: In 2019, the Company elected to change the manner in which it presents the derecognition of unamortized deferred financing costs upon extinguishment of the related debt obligation.
−Removed: Previously, the Company classified the extinguishment
−Removed: as a component of interest and financing expenses on the consolidated statements of operations.
−Removed: Comparative prior periods presented have been reclassified retrospectively to conform to the revised presentation.
−Removed: There is no change in historical net
−Removed: increase in net assets resulting from operations due to this change in presentation.
+Added: difference between the principal amount due at maturity, adjusted for any unamortized deferred financing costs, is recognized as a loss (i.e., the unamortized deferred financing costs are recognized as a loss upon extinguishment of the underlying
+Added: debt obligation).
+Added: There is no change in historical net increase in net assets resulting from operations due to this change in presentation.
Deferred offering costs:
−Removed: Deferred offering
−Removed: costs include registration expenses related to shelf filings.
−Removed: These expenses primarily consist of U.S.
+Added: Deferred offering costs include registration expenses related to shelf filings.
+Added: These expenses primarily
+Added: consist of U.S.
Securities and Exchange Commission (SEC) registration fees, legal fees and accounting fees incurred.
−Removed: These expenses are included in
−Removed: prepaid expenses and other assets on the Consolidated Statements of Assets and Liabilities.
−Removed: Upon the completion of an equity offering or a debt offering, the deferred expenses are charged to additional paid-in
−Removed: capital or deferred financing costs, respectively.
−Removed: If no offering is completed prior to the expiration of the registration statement, the deferred costs are charged to expense.
+Added: These expenses are included in prepaid expenses and other assets on the consolidated statements of assets and
+Added: Upon the completion of an equity offering or a debt offering, the deferred expenses are charged to additional paid-in capital or deferred financing costs, respectively.
+Added: If no offering is completed
+Added: prior to the expiration of the registration statement, the deferred costs are charged to expense.
+Added: Realized gains or losses and
+Added: unrealized appreciation or depreciation on investments:
+Added: Realized gains or losses on investments are recorded upon the sale or disposition of a portfolio investment and are calculated as the difference between the net proceeds from the sale or
+Added: disposition and the
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: Realized gains or losses and unrealized appreciation or depreciation on investments:
−Removed: Realized gains or losses on investments are recorded upon the sale or disposition of a portfolio investment and are calculated as the difference between the net proceeds from the sale or disposition and the cost basis of the investment, without
−Removed: regard to unrealized appreciation or depreciation previously recognized.
−Removed: Net change in unrealized appreciation or depreciation on the consolidated statements of operations includes changes in the fair value of investments from the prior period, as
−Removed: determined in good faith by the Companys board of directors (the Board) through the application of the Companys valuation policy, as well as reclassifications of any prior period unrealized appreciation or depreciation on
−Removed: exited investments to realized gains or losses on investments.
+Added: cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized.
+Added: Net change in unrealized appreciation or depreciation on the consolidated statements
+Added: of operations includes changes in the fair value of investments from the prior period, as determined in good faith by the Companys board of directors (the Board) through the application of the Companys valuation policy, as
+Added: well as reclassifications of any prior period unrealized appreciation or depreciation on exited investments to realized gains or losses on investments.
Interest and dividend income:
−Removed: Interest and dividend income is
−Removed: recorded on the accrual basis to the extent that the Company expects to collect such amounts.
+Added: Interest and dividend income are recorded on the accrual basis to the extent that the Company expects to
+Added: collect such amounts.
Interest is accrued daily based on the outstanding principal amount and the contractual terms of the debt.
−Removed: Dividend income is recorded as dividends are
−Removed: declared or at the point an obligation exists for the portfolio company to make a distribution, and is generally recognized when received.
−Removed: Distributions from portfolio companies are evaluated to determine if the distribution is a distribution of
−Removed: earnings or a return of capital.
−Removed: Distributions of earnings are included in dividend income while a return of capital is recorded as a reduction in the cost basis of the investment.
−Removed: Estimates are adjusted as necessary after the relevant tax forms are
−Removed: received from the portfolio company.
−Removed: Certain of the Companys investments contain a payment-in-kind (PIK) income provision.
+Added: Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to
+Added: make a distribution, and is generally recognized when received.
+Added: Distributions from portfolio companies are evaluated to determine if the distribution is a distribution of earnings or a return of capital.
+Added: Distributions of earnings are included in
+Added: dividend income while a return of capital is recorded as a reduction in the cost basis of the investment.
+Added: Estimates are adjusted as necessary after the relevant tax forms are received from the portfolio company.
+Added: Certain of the Companys investments contain a
+Added: payment-in-kind (PIK) income provision.
The PIK income, computed at the contractual rate specified in the applicable investment agreement, is added to the
30 unchanged sentences
Upon the prepayment of a debt investment, any prepayment penalties are recorded as fee income when earned.
−Removed: Partial loan sales:
−Removed: The Company follows the guidance in ASC 860, Transfers and Servicing, when accounting for loan (debt
−Removed: investment) participations and other partial loan sales.
−Removed: Such guidance requires a participation or other partial loan sale to meet the definition of a participating interest, as defined in the guidance, in order for sale treatment to be
−Removed: Participations or other partial loan sales which do not meet the definition of a participating interest should remain on the Companys consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing
−Removed: until the definition is met.
−Removed: Management has determined that all participations and other partial loan sale transactions entered into by the Company have met the definition of a participating interest.
−Removed: Accordingly, the Company uses sale treatment in
−Removed: accounting for such transactions.
+Added: In 2020, the Company elected to change the manner in which
+Added: it presents the recognition of management services fees income.
+Added: Previously, the Company classified management services fees as a component of interest on idle funds and other income on the consolidated statements of operations.
+Added: Currently management
+Added: services fees are a component of fee income on the consolidated statements of operations.
+Added: Comparative prior periods presented have been reclassified retrospectively to conform to the revised presentation.
+Added: There is no change in historical net
+Added: increase in net assets resulting from operations due to this change in presentation.
+Added: Partial loan and equity sales:
+Added: follows the guidance in ASC 860, Transfers and Servicing, when accounting for loan (debt investment) participations, equity assignments and other partial loan sales.
+Added: Such guidance requires a participation, assignment or other partial
+Added: loan or equity sale to meet the definition of a participating interest, as defined in the guidance, in order for sale treatment to be allowed.
+Added: Participations, assignments or other partial loan or equity sales which do not meet the
+Added: definition of a participating interest should remain on the Companys
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
+Added: consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing until the definition is met.
+Added: Management has determined that all participations, assignments and
+Added: other partial loan or equity sale transactions entered into by the Company have met the definition of a participating interest.
+Added: Accordingly, the Company uses sale treatment in accounting for such transactions.
Income taxes:
−Removed: The Company has elected to be treated as a RIC under Subchapter M of the
−Removed: Code, which will generally relieve the Company from U.S.
+Added: The Company has elected to be treated as a RIC under Subchapter M of the Code, which will generally relieve the Company
federal income taxes with respect to all income distributed to stockholders.
−Removed: To maintain the tax treatment of a RIC, the Company is required to timely distribute to its stockholders at least
−Removed: 90.0% of investment company taxable income, as defined by Subchapter M of the Code, each year.
−Removed: Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current
−Removed: year distributions into the next tax year;
+Added: To maintain the tax treatment of a RIC, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable
+Added: income, as defined by Subchapter M of the Code, each year.
+Added: Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year;
however, the Company will pay a 4.0% excise tax if it does not distribute at least 98.0% of the current years ordinary taxable income.
−Removed: Any such carryover taxable income must be distributed through a
−Removed: dividend declared prior to the later of the date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15 th day of the 10 th month following the close of such taxable year.
−Removed: In addition, the Company will be subject to federal excise tax if it does not distribute at least 98.2% of its net capital gains realized, computed
−Removed: for any one year period ending October 31.
−Removed: In the future, the Funds may be limited by provisions of the SBIC Act and SBA regulations
−Removed: governing SBICs from making certain distributions to FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC.
−Removed: The Company has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of
−Removed: the Companys portfolio investments listed on the consolidated schedules of investments.
−Removed: The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the
−Removed: Companys investment in the portfolio company investments owned by the Taxable Subsidiaries.
−Removed: The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for
−Removed: federal income tax purposes (such as entities organized as limited liability companies (LLCs) or other forms of pass through entities) while complying with the
−Removed: source-of-income requirements contained in the RIC tax provisions.
−Removed: The Taxable Subsidiaries are not consolidated with the Company for U.S.
−Removed: federal corporate
−Removed: income tax purposes, and each Taxable Subsidiary will be subject to U.S.
+Added: Any such carryover taxable income must be distributed through a dividend declared prior to the later of the
+Added: date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15 th day of the 10 th
+Added: month following the close of such taxable year.
+Added: In addition, the Company will be subject to federal excise tax if it does not distribute at least 98.2% of its net capital gains realized, computed for any one year period ending October 31.
+Added: In the future, the Funds may be limited by provisions of the SBIC Act and SBA regulations governing SBICs from making certain distributions to
+Added: FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC.
+Added: has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of the Companys portfolio investments listed on the consolidated schedules of investments.
+Added: The Taxable Subsidiaries
+Added: are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the Companys investment in the portfolio company investments owned by the Taxable Subsidiaries.
+Added: The purpose of the
+Added: Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for U.S.
+Added: federal income tax purposes (such as entities organized as limited liability companies (LLCs) or
+Added: other forms of pass through entities) while complying with the source-of-income requirements contained in the RIC tax provisions.
+Added: The Taxable Subsidiaries
+Added: are not consolidated with the Company for U.S.
+Added: federal corporate income tax purposes, and each Taxable Subsidiary will be subject to U.S.
federal corporate income tax on its taxable income.
−Removed: Any such income or expense is reflected in the consolidated statements of operations.
−Removed: federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax regulations may differ from net
−Removed: investment income and realized gains recognized under GAAP.
+Added: Any such income or expense is reflected in the consolidated
+Added: statements of operations.
+Added: federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax
+Added: regulations may differ from net investment income and realized gains recognized under GAAP.
Differences may be permanent or temporary.
−Removed: Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of certain assets and nondeductible
−Removed: federal income taxes.
+Added: Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of
+Added: certain assets and nondeductible federal income taxes.
Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
7 unchanged sentences
the income tax provision, if any.
−Removed: There were no material uncertain income tax positions at September 30, 2020 and December 31, 2019.
+Added: There were no material uncertain income tax positions at March 31, 2021 and December 31, 2020.
The Companys tax returns are generally subject to examination by U.S.
17 unchanged sentences
payment date will have their cash dividend automatically reinvested into additional shares of the Companys common stock.
−Removed: The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common
−Removed: stock or through open market purchases of common stock by the DRIP plan administrator.
−Removed: Newly issued shares are valued based upon the final closing price of the Companys common stock on a date determined by the Board.
−Removed: Shares purchased in the
−Removed: open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other costs.
−Removed: See Note 9 to the consolidated financial
−Removed: statements regarding dividend declarations and distributions.
+Added: The Company has the option to satisfy the share requirements of the DRIP through the issuance
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
+Added: of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator.
+Added: Newly issued shares are valued based upon the final closing price of the
+Added: Companys common stock on a date determined by the Board.
+Added: Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before
+Added: any associated brokerage or other costs.
+Added: See Note 9 to the consolidated financial statements regarding dividend declarations and distributions.
Earnings and net asset value per share:
−Removed: The earnings per share calculations for the
−Removed: three and nine months ended September 30, 2020 and 2019, are computed utilizing the weighted average shares outstanding for the period.
+Added: The earnings per share calculations for the three months ended March 31, 2021 and 2020,
+Added: are computed utilizing the weighted average shares outstanding for the period.
Net asset value per share is calculated using the number of shares outstanding as of the end of the period.
3 unchanged sentences
Under the Stock Repurchase Program, the Company may, but is not obligated to, repurchase outstanding common stock in the open market from time to time provided that the
−Removed: Company complies with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), including certain price, market value and timing
−Removed: The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability,
−Removed: applicable legal and regulatory requirements and other corporate considerations.
−Removed: On October 26, 2020, the Board extended the Stock Repurchase Program through December 31, 2021, or until the approved dollar amount has been used to
−Removed: repurchase shares.
−Removed: The Stock Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will be repurchased under the Stock Repurchase Program.
−Removed: The Stock Repurchase
−Removed: Program may be suspended, extended, modified or discontinued at any time.
−Removed: During the three and nine months ended September 30, 2020, the Company repurchased zero and 25,719 shares of common stock on the open market for zero and $268,
−Removed: respectively.
−Removed: The Company did not make any repurchases of common stock during the three and nine months ended September 30, 2019, respectively.
+Added: Company complies with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), including
+Added: certain price, market value and timing constraints.
+Added: The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of economic and market conditions,
+Added: stock price, capital availability, applicable legal and regulatory requirements and other corporate considerations.
+Added: On October 26, 2020, the Board extended the Stock Repurchase Program through December 31, 2021, or until the approved
+Added: dollar amount has been used to repurchase shares.
+Added: The Stock Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will be repurchased under the Stock Repurchase
+Added: The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time.
+Added: The Company did not make any repurchases of common stock during the three months ended March 31, 2021.
+Added: During the three months ended
+Added: March 31, 2020, the Company repurchased 25,719 shares of common stock on the open market for $268.
Refer to Note 8 for additional information concerning stock repurchases.
Recent accounting pronouncements:
−Removed: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)
−Removed: Changes to the Disclosure Requirements for Fair Value Measurement , which is intended to improve fair value disclosure requirements by removing disclosures that are not cost-beneficial, clarifying disclosures specific requirements, and
−Removed: adding relevant disclosure requirements.
−Removed: The guidance is effective for annual and interim reporting periods beginning after December 15, 2019.
−Removed: The Company adopted the ASU effective January 1, 2020.
−Removed: No significant changes to the fair value
−Removed: disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13.
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
7 unchanged sentences
The Company is evaluating the potential impact that the adoption of ASU 2020-04 will have on the Companys consolidated financial statements.
−Removed: SEC Rule 12b-2 Update:
−Removed: In March 2020, the SEC adopted a final rule under SEC Release No.
−Removed: 34-88365 (the Final
−Removed: Rule), amending the accelerated filer and large accelerated filer definitions in Exchange Act Rule 12b-2.
−Removed: The amendments include a provision under which a BDC will be excluded from the accelerated filer and large accelerated
−Removed: filer definitions if the BDC has (1) a public float of $75,000 or more, but less than $700,000, and (2) has annual investment income of less than $100,000.
−Removed: In addition, BDCs are subject to the same transition provisions for
−Removed: accelerated filer and large accelerated filer status as other issuers, but instead substituting investment income for revenue.
−Removed: The amendments will reduce the number of issuers required to comply with the auditor attestation on the internal control
−Removed: over financial reporting requirement provided under Section 404(b) of the Sarbanes-Oxley Act of 2002.
−Removed: The Final Rule applies to annual report filings due on or after April 27, 2020.
−Removed: The Company is currently assessing this Final Rule,
−Removed: but believes it will no longer be an accelerated filer.
+Added: SEC Rule 1-02(w)(2) Update:
+Added: In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the
+Added: financial statements of certain of their portfolio companies or certain acquired funds (the Final Rules).
+Added: The Final Rules adopted a new definition of significant subsidiary set forth in Rule
+Added: 1-02(w)(2) of Regulation S-X under the Securities Act.
+Added: Rules 3-09 and 4-08(g) of
+Added: Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment companys periodic reports for any portfolio company
+Added: that meets the definition of significant subsidiary. The Final Rules adopt a new definition of significant subsidiary applicable only to investment companies that (i) modifies the investment test and the income test, and
+Added: (ii) eliminates the asset test currently in the definition of significant subsidiary in Rule 1-02(w) of Regulation S-X.
+Added: The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an
+Added: investment company.
+Added: The Final Rules became effective on January 1, 2021, however the Company elected to early adopt this rule change as of December 31, 2020.
+Added: The adoption of this guidance did not have a material impact on the
+Added: Companys Consolidated Financial Statements.
+Added: SEC Regulation S-K Update:
+Added: In November 2020, the SEC issued a final rule that modernized and simplifies Managements Discussion and Analysis and certain financial
+Added: disclosure requirements in Regulation S-K (the Amendments).
+Added: Specifically, the Amendments:
+Added: (i) eliminate Item 301 of Regulation S-K (Selected Financial
+Added: (ii) simplify Item 302 of Regulation S-K (Supplementary Financial Information);
+Added: and (iii) amend certain aspects of Item 303 of Regulation S-K
+Added: (Managements Discussion and Analysis of Financial Condition and Results of Operations).
+Added: The Amendments became effective on February 10, 2021 and compliance will be required for the registrants fiscal year ending on or after
+Added: August 9, 2021.
+Added: Early adoption of the Amendments is permitted on an item-by-item basis after the effective date;
+Added: however, a registrant must fully comply with each
+Added: adopted item in its entirety.
+Added: The Company adopted the Amendments on the effective date which did not have a material impact on the Companys Consolidated Financial Statements.
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
Portfolio Company Investments
10 unchanged sentences
generally reported under the name of the operating company on the consolidated schedules of investments.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
−Removed: As of September 30, 2020, the Company had active investments in 63 portfolio companies
−Removed: and residual investments in three portfolio companies that have sold their underlying operations.
−Removed: The aggregate fair value of the total portfolio was $715,405 and the weighted average effective yield on the Companys debt investments was 12.1%
−Removed: as of such date.
−Removed: As of September 30, 2020, the Company held equity investments in 89.4% of its portfolio companies and the weighted average fully diluted equity ownership in those portfolio companies was 6.0%.
−Removed: The weighted average fully diluted
−Removed: equity ownership was computed using the fully diluted equity ownership for equity investments (including warrants) at cost as of September 30, 2020.
+Added: As of March 31, 2021, the
+Added: Company had active investments in 67 portfolio companies and residual investments in four portfolio companies that have sold their underlying operations.
+Added: The aggregate fair value of the total portfolio was $711,884 and the weighted average effective
+Added: yield on the Companys debt investments was 12.3% as of such date.
+Added: As of March 31, 2021, the Company held equity investments in 87.3% of its portfolio companies and the weighted average fully diluted equity ownership in those portfolio
+Added: companies was 5.3%.
+Added: The weighted average fully diluted equity ownership was computed using the fully diluted equity ownership for equity investments (including warrants) at cost as of March 31, 2021.
As of December 31, 2020, the Company had active investments in 66 portfolio companies and residual investments in three portfolio
8 unchanged sentences
Companys and its subsidiaries fees and expenses.
−Removed: The weighted average yields were computed using the effective interest rates for debt investments at cost as of September 30, 2020 and December 31, 2019, including
−Removed: accretion of OID and debt investment origination fees, but excluding investments on non-accrual status, if any.
−Removed: Purchases of debt and equity investments for the nine months ended September 30, 2020 and 2019 totaled $86,121 and $175,535,
−Removed: respectively.
−Removed: Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the nine months ended September 30, 2020 and 2019 totaled $110,149 and $98,805,
−Removed: respectively.
+Added: The weighted average yields were computed using the effective interest rates for debt investments at cost as of March 31, 2021 and December 31, 2020, including accretion
+Added: of OID and debt investment origination fees, but excluding investments on non-accrual status, if any.
+Added: Purchases of debt and equity investments for the three months ended March 31, 2021 and 2020 totaled $63,107 and $68,192, respectively.
+Added: Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the three months ended March 31, 2021 and 2020 totaled $98,565 and $73,772, respectively.
Investments by type with corresponding percentage of total portfolio investments consisted of the following:
−Removed: September 30,
−Removed: September 30,
Second Lien Debt
1 unchanged sentence
First Lien Debt (1)
−Removed: Royalty Rights
−Removed: All investments made by the Company as of September 30, 2020 and December 31, 2019 were made in
−Removed: portfolio companies headquartered in the U.S.
+Added: Includes unitranche investments, which account for 18.6% and 20.1% of our portfolio on a fair value and cost
+Added: basis as of March 31, 2021, respectively.
+Added: Includes unitranche investments, which account for 17.3% and 18.4% of our portfolio on a fair value and cost basis as of December 31, 2020, respectively.
+Added: All investments made by the Company as of March 31, 2021 and December 31, 2020 were made in portfolio companies headquartered in the
The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments.
−Removed: The geographic composition is determined by the location of the
−Removed: corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio companys business.
−Removed: September 30,
−Removed: September 30,
+Added: The geographic composition is determined by the location of the corporate headquarters of the portfolio
+Added: company, which may not be indicative of the primary source of the portfolio companys business.
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: The following table shows portfolio composition by type and by geographic region at fair
−Removed: value as a percentage of net assets.
+Added: The following table shows portfolio composition by type and by geographic region at fair value as a percentage
+Added: of net assets.
By Geographic Region
−Removed: September 30,
−Removed: September 30,
Second Lien Debt
1 unchanged sentence
First Lien Debt
−Removed: Royalty Rights
−Removed: As of September 30, 2020 and December 31, 2019, the Company had no portfolio company investments
−Removed: that represented more than 10% of the total investment portfolio on a fair value or cost basis.
−Removed: As of September 30, 2020 and
−Removed: December 31, 2019, the Company had debt investments in one portfolio company on non-accrual status:
−Removed: September 30, 2020
+Added: As of March 31, 2021 and December 31, 2020, the Company had no portfolio company investments that
+Added: represented more than 10% of the total investment portfolio on a fair value or cost basis.
+Added: As of March 31, 2021 and December 31, 2020, the Company had no portfolio company investments that represented more than 5% of our total assets.
+Added: As of March 31, 2021 and December 31, 2020, the Company had debt investments in one portfolio company on non-accrual status:
+Added: March 31, 2021
December 31, 2020
Portfolio Company
−Removed: Accent Food Services, LLC
+Added: EBL, LLC (EbLens)
+Added: Portfolio company was on PIK-only on
+Added: non-accrual status at period end, meaning the Company has ceased recognizing PIK interest income on the investment.
Consolidated Schedule of Investments In and Advances To Affiliates
The table below represents the fair value of control and affiliate investments as of December 31, 2020 and any additions and reductions
−Removed: made to such investments during the nine months ended September 30, 2020, the ending fair value as of September 30, 2020, and the total investment income earned on such investments during the period.
−Removed: Nine Months Ended September 30, 2020
+Added: made to such investments during the three months ended March 31, 2021, the ending fair value as of March 31, 2021, and the total investment income earned on such investments during the period.
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
+Added: Three Months Ended March 31, 2021
Portfolio Company (1)
−Removed: September 30,
2021 Principal
1 unchanged sentence
Additions (2)
−Removed: September 30,
+Added: Reductions (3)
Net Change in
1 unchanged sentence
Control Investments
−Removed: FDS Avionics Corp.
−Removed: (dba Flight Display Systems)
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.) (5)
US GreenFiber, LLC
4 unchanged sentences
Medsurant Holdings, LLC
−Removed: Microbiology Research Associates, Inc.
Mirage Trailers LLC
1 unchanged sentence
Pinnergy, Ltd.
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.) (5)
Steward Holding LLC (dba Steward Advanced Materials)
13 unchanged sentences
receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities.
+Added: Portfolio company was transferred to Affiliate investments from Control investments during the three months
+Added: ended March 31, 2021.
+Added: The table below represents the fair value of control and affiliate investments as of
+Added: December 31, 2019 and any additions and reductions made to such investments during the year ended December 31, 2020, including the total investment income earned on such investments during the period.
+Added: Year Ended December 31, 2020
+Added: Portfolio Company (1)
+Added: 2020 Principal
+Added: Amount - Debt
+Added: Additions (2)
+Added: Reductions (3)
+Added: Net Change in
+Added: (Depreciation)
+Added: Control Investments
+Added: FDS Avionics Corp.
+Added: (dba Fight Display Systems)
+Added: US GreenFiber, LLC
+Added: Total Control Investments
+Added: Affiliate Investments
+Added: FAR Research Inc.
+Added: Fiber Materials, Inc.
+Added: Medsurant Holdings, LLC
+Added: Microbiology Research Associates,
+Added: Mirage Trailers LLC
+Added: Pfanstiehl, Inc.
+Added: Pinnergy, Ltd.
+Added: Steward Holding LLC (dba Steward Advanced Materials)
+Added: Total Affiliate Investments
+Added: The investment type, industry, ownership detail for equity investment, and if the investment is income producing
+Added: is disclosed in the consolidated schedule of investments.
+Added: Gross additions include increases in the cost basis of investments resulting from new portfolio investments,
+Added: follow-on investments, accrued PIK interest and PIK dividend income, accretion of OID and origination fees, and net unrealized appreciation recognized during the period.
+Added: Gross additions also include transfers of portfolio companies into the control
+Added: or affiliate classification during the period, as applicable.
+Added: Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales
+Added: and net unrealized (depreciation) recognized during the period.
+Added: Gross reductions also include include transfers of portfolio companies out of the control or affiliate classification during the period, as applicable.
+Added: The schedule does not reflect realized gains or losses on escrow receivables for investments which were
+Added: previously exited and were not held during the period presented.
+Added: Gains and losses on escrow receivables are classified in the consolidated statements of operations according to the control classification at the time the investment was exited.
+Added: receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities.
Portfolio company was transferred to Non-control/Non-affiliate investments from Affiliate investments during the
−Removed: nine months ended September 30, 2020.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
−Removed: Unconsolidated Significant Subsidiaries
−Removed: In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, the Company must determine which of its unconsolidated controlled portfolio companies, if any, are considered significant subsidiaries. In evaluating these unconsolidated controlled
−Removed: portfolio companies, there are three tests utilized to determine if any of the Companys Control Investments (as defined in Note 2) are considered significant subsidiaries:
−Removed: the investment test, the asset test and the income test.
−Removed: income test is measured by dividing the absolute value of the combined total of investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from each Control Investment for the period being tested by the absolute value
−Removed: of the Companys pre-tax income for the same period.
−Removed: Rule 3-09 of Regulation S-X, as interpreted by the SEC,
−Removed: requires the Company to include separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which the Company owns greater than 50% of the voting securities) in an annual report if any of the three
−Removed: tests exceeds 20% of the Companys total assets or total income, as applicable.
−Removed: Rule 4-08(g) of Regulation S-X requires summarized financial information
−Removed: of a Control Investment in an annual report if any of the three tests exceeds 10% of the Companys annual total amounts and Rule 10-01(b)(1) of
−Removed: Regulation S-X requires summarized financial information in a quarterly report if any of the three tests exceeds 20% of the Companys
−Removed: year-to-date total amounts.
−Removed: As of September 30, 2020
−Removed: and December 31, 2019, the Company had no single investment that represented greater than 10% of its total investment portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets.
−Removed: performing the income test for the nine months ended September 30, 2020, the Company determined that its income from US GreenFiber, LLC (US GreenFiber) and FDS Avionics Corp.
−Removed: (dba Flight Display Systems) (FDS) generated
−Removed: more than 20% of its total income, primarily due to the net unrealized appreciation (depreciation) that was recognized by the Company for the nine months ended September 30, 2020.
−Removed: As such, US GreenFiber and FDS, unconsolidated portfolio
−Removed: companies that were Control Investments, were considered significant subsidiaries at the 20% level as of September 30, 2020.
−Removed: on the requirements under Regulation S-X Rule 10-01(b)(1), the summarized unaudited consolidated financial information of US GreenFiber and FDS is presented below:
−Removed: September 30,
−Removed: Balance Sheet Data
−Removed: (dollars in thousands)
−Removed: Current assets
−Removed: Noncurrent assets
−Removed: Current liabilities
−Removed: Noncurrent liabilities
−Removed: Total liabilities
−Removed: Total liabilities and equity
−Removed: September 30,
−Removed: September 30,
−Removed: September 30,
−Removed: September 30,
−Removed: Summary of Operations
−Removed: (dollars in thousands)
−Removed: Total revenue
−Removed: Net income (loss)
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
+Added: twelve months ended December 31, 2020.
Fair Value Measurements
11 unchanged sentences
prices for identical or similar assets in markets that are not active and inputs that are observable, either directly or indirectly, for substantially the full term, if applicable, of the investment.
−Removed: Level 3 Inputs include those that are both unobservable and significant to the overall fair value measurement.
−Removed: An investments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the
−Removed: fair value measurement.
−Removed: The Companys investment portfolio is comprised entirely of debt and equity securities of privately held companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs are not
+Added: Level 3 Inputs include those that are both unobservable and significant to the overall fair value
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
+Added: An investments categorization within the valuation hierarchy is based upon the lowest
+Added: level of input that is significant to the fair value measurement.
+Added: The Companys investment portfolio is comprised entirely of debt and equity securities of privately held companies for which quoted prices falling within the categories of
+Added: Level 1 and Level 2 inputs are not available.
Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the Board, using Level 3 inputs.
−Removed: The degree of judgment exercised by the Board in determining fair value is greatest for
−Removed: investments classified as Level 3 inputs.
−Removed: Due to the inherent uncertainty of determining the fair values of investments that do not have readily available market values, the Boards estimate of fair values may differ significantly from the
−Removed: values that would have been used had a ready market for the securities existed, and those differences may be material.
−Removed: In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of
−Removed: the investments may cause the amounts ultimately realized on these investments to be materially different than the valuations currently assigned.
+Added: The degree of judgment exercised by the Board
+Added: in determining fair value is greatest for investments classified as Level 3 inputs.
+Added: Due to the inherent uncertainty of determining the fair values of investments that do not have readily available market values, the Boards estimate of
+Added: fair values may differ significantly from the values that would have been used had a ready market for the securities existed, and those differences may be material.
+Added: In addition, changes in the market environment, portfolio company performance and
+Added: other events that may occur over the lives of the investments may cause the amounts ultimately realized on these investments to be materially different than the valuations currently assigned.
With respect to investments for which market quotations are not readily available, the Board undertakes a multi-step valuation process each
27 unchanged sentences
models to estimate the present value of future cash flows of either an individual debt investment or of the underlying portfolio company itself.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
−Removed: The Company evaluates investments in portfolio companies using the most recent portfolio
−Removed: company financial statements and forecasts.
−Removed: The Company also consults with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information such as industry trends, new
−Removed: product development and other operational issues.
−Removed: For the Companys debt investments the primary valuation technique used to
−Removed: estimate the fair value is the discounted cash flow method.
−Removed: However, if there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other methods in determining the fair value, including the value
−Removed: attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis.
−Removed: The Companys discounted cash flow models estimate a range of fair values by applying an
−Removed: appropriate discount rate to the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated debt investment agreements.
−Removed: The Company prepares a weighted average cost of capital for
−Removed: use in the discounted cash flow model for each investment, based on factors including, but not limited to:
+Added: The Company evaluates investments in portfolio companies using the most recent portfolio company financial statements and forecasts.
+Added: Company also consults with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information such as industry trends, new product development and other operational issues.
+Added: For the Companys debt investments the primary valuation technique used to estimate the fair value is the discounted cash flow
+Added: However, if there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other methods in determining the fair value, including the value attributable to the debt investment from the enterprise
+Added: value of the portfolio company or the proceeds that would be received in a liquidation analysis.
+Added: The Companys discounted cash flow models estimate a range of fair values by applying an appropriate discount rate to the future cash flow streams
+Added: of its debt investments, based on future interest and principal payments as set forth in the associated debt investment agreements.
+Added: The Company prepares a weighted average cost of capital for use in the discounted cash flow model for each
+Added: investment, based on factors including, but not limited to:
current pricing and credit metrics for similar proposed or executed investment transactions of private companies;
−Removed: the portfolio companys
−Removed: historical financial results and outlook;
−Removed: and the portfolio companys current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made.
−Removed: The Company may also consider the following factors
−Removed: when determining the fair value of debt investments:
+Added: the portfolio companys historical financial results and outlook;
+Added: the portfolio companys current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made.
+Added: The Company may also consider the following factors when determining the fair value of debt
the portfolio companys ability to make future scheduled payments;
1 unchanged sentence
estimated remaining life;
−Removed: the nature and realizable value of any collateral securing
−Removed: such debt investment;
−Removed: and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.
−Removed: The Company estimates the remaining life of its debt investments to generally be
−Removed: the legal maturity date of the instrument, as the Company generally intends to hold its debt investments to maturity.
−Removed: However, if the Company has information available to it that the debt investment is expected to be repaid in the near term, it
−Removed: would use an estimated remaining life based on the expected repayment date.
−Removed: For the Companys equity investments, including equity
−Removed: and warrants, the Company generally uses a market approach, including valuation methodologies consistent with industry practice, to estimate the enterprise value of portfolio companies.
−Removed: Typically, the enterprise value of a private company is based
−Removed: on multiples of EBITDA, net income, revenues, or in limited cases, book value.
−Removed: In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original
−Removed: transaction multiples, the portfolio companys historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral,
−Removed: the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public.
−Removed: Company may also utilize an income approach when estimating the fair value of its equity securities, either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting
−Removed: methodology to corroborate the fair value ranges determined by the market approach.
−Removed: The Company typically prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.
−Removed: The Company considers various factors, including, but not limited to, the portfolio companys projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which
−Removed: the portfolio company does business, and comparisons of financial ratios of peer companies that are public.
−Removed: The fair value of the
−Removed: Companys royalty rights are calculated based on projected future cash flows and the specific provisions contained in the pertinent agreements.
−Removed: The determination of the fair value of such royalty rights is not a significant component of the
−Removed: Companys valuation process.
−Removed: The Company reviews the fair value hierarchy classifications on a quarterly basis.
−Removed: Reclassifications
−Removed: impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.
−Removed: There were no transfers among Levels 1, 2, and 3 during
−Removed: the nine months ended September 30, 2020 and 2019.
+Added: the nature and realizable value of any collateral securing such debt investment;
+Added: and changes in the
+Added: interest rate environment and the credit markets
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: The following tables present a reconciliation of the beginning and ending balances for fair
−Removed: valued investments measured using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 and 2019:
+Added: that generally may affect the price at which similar investments may be made.
+Added: The Company estimates the remaining life of its debt investments to generally be the legal maturity date of the
+Added: instrument, as the Company generally intends to hold its debt investments to maturity.
+Added: However, if the Company has information available to it that the debt investment is expected to be repaid in the near term, it would use an estimated remaining
+Added: life based on the expected repayment date.
+Added: For the Companys equity investments, including equity and warrants, the Company
+Added: generally uses a market approach, including valuation methodologies consistent with industry practice, to estimate the enterprise value of portfolio companies.
+Added: Typically, the enterprise value of a private company is based on multiples of EBITDA, net
+Added: income, revenues, or in limited cases, book value.
+Added: In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples, the
+Added: portfolio companys historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the
+Added: portfolio company does business, and comparisons of financial ratios of peer companies that are public.
+Added: The Company may also utilize an
+Added: income approach when estimating the fair value of its equity securities, either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the
+Added: fair value ranges determined by the market approach.
+Added: The Company typically prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.
+Added: The Company considers various
+Added: factors, including, but not limited to, the portfolio companys projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does
+Added: business, and comparisons of financial ratios of peer companies that are public.
+Added: The Company reviews the fair value hierarchy
+Added: classifications on a quarterly basis.
+Added: Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.
+Added: There were no transfers among Levels 1, 2, and 3 during the three months ended March 31, 2021 and 2020.
+Added: The following tables
+Added: present a reconciliation of the beginning and ending balances for fair valued investments measured using significant unobservable inputs (Level 3) for the three months ended March 31, 2021 and 2020:
Balance, December 31, 2019
3 unchanged sentences
Proceeds from sales and repayments of investments
−Removed: Interest and dividend income paid-in-kind
+Added: Interest and dividend income
Proceeds from loan origination fees
1 unchanged sentence
Accretion of original issue discount
−Removed: Balance, September 30, 2019
+Added: Balance, March 31, 2020
Balance, December 31, 2020
3 unchanged sentences
Proceeds from sales and repayments of investments
−Removed: Interest and dividend income paid-in-kind
+Added: Interest and dividend income
Proceeds from loan origination fees
1 unchanged sentence
Accretion of original issue discount
−Removed: Balance, September 30, 2020
−Removed: Net change in unrealized appreciation and (depreciation) of $12,489 and $(62,591) for the three and nine
−Removed: months ended September 30, 2020, respectively, was attributable to Level 3 investments held at September 30, 2020.
−Removed: Net change in unrealized (depreciation) of $(10,334) and $(14,655) for the three and nine months ended
−Removed: September 30, 2019 was attributable to Level 3 investments held at September 30, 2019.
−Removed: The following tables summarize the
−Removed: significant unobservable inputs by valuation technique used to determine the fair value of the Companys Level 3 debt and equity investments as of September 30, 2020 and December 31, 2019.
−Removed: The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Companys determination of fair values.
+Added: Balance, March 31, 2021
+Added: Net change in unrealized appreciation/(depreciation) of $1,018 and ($73,964) for the three months ended
+Added: March 31, 2021 and 2020, was attributable to Level 3 investments held at March 31, 2021 and 2020, respectively.
+Added: following tables summarize the significant unobservable inputs by valuation technique used to determine the fair value of the Companys Level 3 debt and equity investments as of March 31, 2021 and December 31, 2020.
+Added: are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Companys determination of fair values.
FIDUS INVESTMENT CORPORATION
2 unchanged sentences
Fair Value at
−Removed: September 30,
Valuation Techniques
10 unchanged sentences
Enterprise value
−Removed: Revenue multiples
−Removed: 0.8x - 0.8x (0.8x)
−Removed: Enterprise value
Asset Coverage
8 unchanged sentences
6.9% - 16.4% (10.6%)
−Removed: Enterprise value
−Removed: Revenue multiples
−Removed: 0.6x - 0.6x (0.6x)
−Removed: Enterprise value
−Removed: Asset Coverage
−Removed: 1.6x - 1.6x (1.6x)
Equity investments:
3 unchanged sentences
Enterprise value
−Removed: Revenue multiples
−Removed: 1.1x - 4.4x (4.4x)
−Removed: Enterprise value
EBITDA multiples
4.5x - 7.0x (6.6x)
−Removed: Unobservable inputs were weighted by the relative fair value of the instruments.
+Added: Unobservable inputs were weighted by the relative fair value of the
Fair Value at
11 unchanged sentences
Enterprise value
+Added: Revenue multiples
+Added: 2.1x - 2.1x (2.1x)
+Added: Enterprise value
Asset Coverage
9 unchanged sentences
Enterprise value
−Removed: Revenue multiples
+Added: Asset Coverage
1.8x - 1.8x (1.8x)
10 unchanged sentences
Unobservable inputs were weighted by the relative fair value of the instruments.
−Removed: The significant unobservable input used in determining the fair value under the discounted cash flow technique is the
−Removed: weighted average cost of capital of each security.
+Added: The significant unobservable input used in determining the fair value under the discounted cash flow technique is the weighted average cost of
+Added: capital of each security.
Significant increases (or decreases) in this input would likely result in significantly lower (or higher) fair value estimates.
5 unchanged sentences
believes that the carrying amounts of its other financial instruments such as cash and cash equivalents, interest receivable and accounts payable and other liabilities approximate the fair value of such items due to the short maturity of such
−Removed: The Companys borrowings under the Credit Facility (as defined in Note 6), SBA debentures, and Public Notes (as defined in Note 6) are recorded at their respective carrying values.
+Added: The Companys borrowings under the Credit Facility (as defined in Note 6), SBA debentures, and Notes (as defined in Note 6) are recorded at their respective carrying values.
FIDUS INVESTMENT CORPORATION
2 unchanged sentences
The following tables summarize the carrying value and fair value of the Companys debt
−Removed: obligations as of September 30, 2020 and December 31, 2019.
−Removed: September 30, 2020
+Added: obligations as of March 31, 2021 and December 31, 2020.
+Added: March 31, 2021
December 31, 2020
6 unchanged sentences
November 2024 Notes (4)
+Added: 2026 Notes (5)
Carrying value represents the outstanding principal balance of the debt obligation.
−Removed: The fair value of SBA debentures is estimated by discounting the remaining payments using current market rates
−Removed: for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures, which are Level 3 inputs under ASC Topic 820.
+Added: The fair value of the SBA debentures is estimated by discounting the remaining payments using current market
+Added: rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures, which are Level 3 inputs under ASC Topic 820.
The fair value of borrowings under the Credit Facility, if valued under ASC Topic 820, are based on a market
2 unchanged sentences
Level 1 input.
−Removed: The following table summarizes the inputs used to value the Companys debt obligations if
−Removed: measured at fair value as of September 30, 2020 and December 31, 2019.
+Added: The fair value of the 2026 Notes is estimated by discounting the remaining payments using current market rates
+Added: for similar instruments and considering such factors as the legal maturity date, which are Level 3 inputs under ASC Topic 820.
+Added: The following table summarizes the inputs used to value the Companys debt obligations if measured at fair value as
+Added: of March 31, 2021 and December 31, 2020.
Valuation Inputs
−Removed: September 30,
Related Party Transactions
9 unchanged sentences
The base management fee under the Investment Advisory
−Removed: Agreement was $3,223 and $9,688 for the three and nine months ended September 30, 2020, respectively and $3,179 and $9,066, for the three and nine months ended September 30, 2019, respectively.
−Removed: September 30, 2020 and December 31, 2019, the base management fee payable was $3,224 and $3,334, respectively.
−Removed: The incentive
−Removed: fee consists of two parts.
−Removed: The first part is calculated and payable quarterly in arrears based on the Companys pre-incentive fee net investment income for the quarter.
−Removed: Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or
−Removed: other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses
−Removed: payable under the Administration Agreement (defined below) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee and excise taxes on realized gains).
−Removed: Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with PIK income, preferred stock with PIK dividends and zero-coupon securities), accrued income the Company has not yet received in cash.
−Removed: The Investment Advisor is not under any obligation to reimburse the Company for any part of the incentive fee it receives that was
−Removed: based on accrued interest that the Company never collects.
+Added: Agreement was $3,176 for the three months ended March 31, 2021, and $3,272 for the three months ended March 31, 2020, respectively.
+Added: As of March 31, 2021 and December 31, 2020, the base
+Added: management fee payable was $3,176 and $3,244, respectively.
+Added: The incentive fee consists of two parts.
+Added: The first part is calculated and
+Added: payable quarterly in arrears based on the Companys pre-incentive fee net investment income for the quarter.
+Added: Pre-incentive fee net investment income means interest
+Added: income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing
+Added: managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement (defined below) and any interest expense and dividends
+Added: paid on any outstanding preferred stock, but excluding the incentive fee and excise taxes on realized gains).
+Added: Pre-incentive fee net investment income includes, in the case of investments with a deferred
+Added: interest feature (such as market discount, original issue discount, debt instruments with PIK income, preferred stock with PIK dividends and zero-coupon securities), accrued income the Company has not yet
+Added: received in cash.
+Added: The Investment Advisor is not under any obligation to reimburse the Company for any part of the incentive fee it receives that was based on accrued interest that the Company never collects.
FIDUS INVESTMENT CORPORATION
26 unchanged sentences
The income incentive fee is appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the calendar quarter.
−Removed: The income incentive fee
−Removed: was $2,374 and $6,342, for the three and nine months ended September 30, 2020, respectively, and $2,163 and $5,947, for the three and nine months ended September 30, 2019, respectively.
−Removed: The Investment
−Removed: Advisor, in consultation with the Board, agreed to voluntarily waive $423 of the income incentive fee for the nine months ended September 30, 2020.
−Removed: There was no income incentive fee waiver for the three months ended September 30, 2020.
−Removed: There was no income incentive fee waiver for the three and nine months ended September 30, 2019.
−Removed: As of September 30, 2020 and December 31, 2019, the income incentive fee payable was $2,374 and $1,497, respectively.
−Removed: The second part of the incentive fee is a capital gains incentive fee that is determined and paid in arrears as of the end of each fiscal year
−Removed: (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.0% of the net capital gains as of the end of the fiscal year.
−Removed: In determining the capital gains incentive fee to be paid in cash to the Investment
−Removed: Advisor, the Company calculates the cumulative aggregate realized capital gains and losses since the Formation Transactions (realized capital gains and losses include realized gains and losses on investments, net of income tax provision from
−Removed: realized gains on investments, and realized losses on extinguishment of debt), and the aggregate unrealized capital depreciation on investments as of the date of the calculation.
−Removed: At the end of the applicable year, the amount of capital gains that
−Removed: serves as the basis for the calculation of the capital gains incentive fee to be paid equals the cumulative aggregate realized capital gains on investments, less cumulative aggregate realized capital losses on investments, less aggregate unrealized
−Removed: capital depreciation on investments, and less cumulative aggregate realized losses on extinguishment of debt.
−Removed: If this number is positive at the end of such year, then the capital gains incentive fee to be paid in cash for such year equals 20.0% of
−Removed: such amount, less the aggregate amount of any capital gains incentive fees paid in all prior years.
−Removed: As of September 30, 2020 and December 31, 2019, the capital gains incentive fee payable in cash was $0 (as cumulative aggregate realized
−Removed: capital gains and losses on investments plus aggregate unrealized capital depreciation on investments plus realized losses on extinguishment of debt was negative as of each period).
−Removed: The aggregate amount of capital gains incentive fees paid from the
−Removed: IPO through September 30, 2020 was $348.
−Removed: In addition, the Company accrues, but does not pay in cash, a capital gains incentive fee
−Removed: in connection with any unrealized capital appreciation on investments, as applicable.
−Removed: If, on a cumulative basis, the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation) on investments
−Removed: plus (iii) realized losses on extinguishment of debt decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 20.0%
−Removed: of the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation) on investments plus (iii) realized losses on extinguishment of debt.
−Removed: The capital gains incentive fee accrued (reversed)
−Removed: during the three and nine months ended September 30, 2020 was $2,761 and $(6,380) respectively, and $1,307 and $373 for the three and nine months ended September 30, 2019, respectively.
−Removed: As of September 30, 2020 and December 31,
−Removed: 2019, the accrued capital gains incentive fee payable was $6,335 and $12,715, respectively.
+Added: The income incentive fee was $2,669 for
+Added: the three months ended March 31, 2021, and $1,855 for the three months ended March 31, 2020, respectively.
+Added: As of March 31, 2021 and December 31, 2020, the income incentive fee payable was $2,669 and
+Added: $2,610, respectively.
+Added: The second part of the incentive fee is a capital gains incentive fee that is determined and paid in arrears as of
+Added: the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.0% of the net capital gains as of the end of the fiscal year.
+Added: In determining the capital gains incentive fee to be paid
+Added: in cash to the Investment Advisor, the Company calculates the cumulative aggregate realized capital gains and losses since the Formation Transactions (realized capital gains and losses include realized gains and losses on investments, net of income
+Added: tax provision from realized gains on investments, and realized losses on extinguishment of debt), and the aggregate unrealized capital depreciation on investments as of the date of the calculation.
+Added: At the end of the applicable year, the amount of
+Added: capital gains that serves as the basis for the calculation of the capital gains incentive fee to be paid equals the cumulative aggregate realized capital gains on investments, less cumulative aggregate realized capital losses on investments, less
+Added: aggregate unrealized capital depreciation on investments, and less cumulative aggregate realized losses on extinguishment of debt.
+Added: If this number is positive at the end of such year, then the capital gains incentive fee to be paid in cash for such
+Added: year equals 20.0% of such amount, less the aggregate amount of any capital gains incentive fees paid in all prior years.
+Added: As of March 31, 2021 and December 31, 2020, the capital gains incentive fee payable in cash was $0 (as cumulative
+Added: aggregate realized capital gains and losses on investments plus aggregate unrealized capital depreciation on investments plus realized losses on extinguishment of debt was negative as of each period).
+Added: The aggregate amount of capital gains incentive
+Added: fees paid from the IPO through March 31, 2021 was $348.
+Added: In addition, the Company accrues, but does not pay in cash, a capital gains
+Added: incentive fee in connection with any unrealized capital appreciation on investments, as applicable.
+Added: If, on a cumulative basis, the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation)
+Added: on investments plus (iii) realized losses on extinguishment of debt decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no
+Added: more than 20.0% of the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation) on investments plus (iii) realized losses on extinguishment of debt.
+Added: The capital gains incentive fee
+Added: accrued (reversed) during the three months ended March 31, 2021 was $91, and $(8,878) for the three months ended March 31, 2020.
+Added: As of March 31, 2021 and December 31, 2020, the accrued capital gains incentive fee payable was
+Added: $11,122 and $11,031, respectively.
+Added: Unless terminated earlier as described below, the Investment Advisory Agreement will continue in
+Added: effect from year to year if approved annually by the Board or by the affirmative vote of the holders of a majority of the Companys outstanding voting securities, and, in either case, if also approved by a majority of the directors who are not
+Added: interested persons of the Company, as such term is defined under Section 2(a)(19) of the 1940 Act (the Independent Directors).
+Added: The Investment Advisory Agreement automatically terminates in the event of its
+Added: assignment, as defined in the 1940 Act,
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: Unless terminated earlier as described below, the Investment Advisory Agreement will continue
−Removed: in effect from year to year if approved annually by the Board or by the affirmative vote of the holders of a majority of the Companys outstanding voting securities, and, in either case, if also approved by a majority of the directors who are
−Removed: not interested persons of the Company, as such term is defined under Section 2(a)(19) of the 1940 Act (the Independent Directors).
−Removed: The Investment Advisory Agreement automatically terminates in the event of its
−Removed: assignment, as defined in the 1940 Act, by the Investment Advisor and may be terminated by either party without penalty upon not less than 60 days written notice to the other.
−Removed: The holders of a majority of the Companys outstanding voting
−Removed: securities may also terminate the Investment Advisory Agreement without penalty.
+Added: by the Investment Advisor and may be terminated by either party without penalty upon not less than 60 days written notice to the other.
+Added: The holders of a majority of the Companys
+Added: outstanding voting securities may also terminate the Investment Advisory Agreement without penalty.
Administration Agreement:
−Removed: The Company also
−Removed: entered into an administration agreement (the Administration Agreement) with the Investment Advisor.
+Added: Company also entered into an administration agreement (the Administration Agreement) with the Investment Advisor.
On June 4, 2020, the Board approved the renewal of the Administration Agreement through June 20, 2021.
6 unchanged sentences
In addition, the Company reimburses the Investment Advisor for fees and expenses incurred while performing due diligence on the Companys prospective portfolio companies, including dead deal expenses .
−Removed: Administration Agreement, administrative service expenses for the three and nine months ended September 30, 2020 were $412 and $1,242, respectively, and $422 and $1,199 for the three and nine months ended September 30, 2019.
−Removed: September 30, 2020 and December 31, 2019, the accrued administrative service expense payable was $554 and $528, respectively.
+Added: Administration Agreement, administrative service expenses for the three months ended March 31, 2021 were $413, and $466 for the three months ended March 31, 2020.
+Added: As of March 31, 2021 and December 31, 2020, the accrued
+Added: administrative service expense payable was $214 and $593, respectively.
Fidus Equity Fund I, L.P.
−Removed: On February 25, 2020, the Company entered into a Limited Partnership Agreement (the
−Removed: Agreement) with Fidus Equity Fund I, L.P.
+Added: On February 25,
+Added: 2020, the Company entered into a Limited Partnership Agreement (the Agreement) with Fidus Equity Fund I, L.P.
Pursuant to the Agreement, the Company will serve as the General Partner of FEF I.
−Removed: Owned by third-party investors, FEF I was formed to purchase 50% of select equity
−Removed: investments from the Company.
−Removed: On February 25, 2020, the Company sold 50% of its equity investments in 20 portfolio companies to FEF I and received net proceeds of $35,903, resulting in a realized gain, net of estimated taxes, of $20,404.
−Removed: Company will not receive any fees from FEF I for any services provided in its capacity as the General Partner of FEF I.
−Removed: Revolving Credit Facility :
−Removed: On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the Credit
−Removed: Facility) with ING Capital LLC (ING), as the administrative agent, collateral agent, and lender.
−Removed: The Credit Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by the Funds are
−Removed: not collateral for the Credit Facility.
−Removed: On April 24, 2019, the Company entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the Amended Credit Agreement) among the Company, as borrower, the lenders
−Removed: party thereto, and ING Capital LLC, as administrative agent.
−Removed: The Amended Credit Agreement amends, restates, and replaces the Credit Facility.
−Removed: On June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were
−Removed: Among other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on
−Removed: June 30, 2020, 2.00 to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020, and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter.
−Removed: Under the Amended Credit Agreement, (i) revolving commitments by lenders were increased from $90,000 to $100,000, with an accordion
−Removed: feature that allows for an increase in total commitments up to $250,000, subject to satisfaction of certain conditions at the time of any such future increase, (ii) the maturity date of the Credit Facility was extended from June 16, 2019
−Removed: to April 24, 2023, and (iii) borrowings under the credit facility bear interest, at our election, at a rate per annum equal to (a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are
−Removed: included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of
−Removed: eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00%
−Removed: (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus 1.0%, and (D) zero.
−Removed: The Company pays a commitment fee that varies depending
−Removed: on the size of the unused portion of the Credit Facility:
−Removed: 3.00% per annum on the unused portion of the credit facility at or below 35% of the commitments and 0.50% per annum on any remaining unused portion of the Credit Facility between the total
−Removed: commitments and the 35% minimum utilization.
−Removed: The Amended Credit Agreement also modifies certain covenants in the credit facility, including to provide for a minimum asset coverage ratio of 2.00 to 1 (on a regulatory basis).
−Removed: The Credit Facility is
−Removed: secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.
+Added: third-party investors, FEF I was formed to purchase 50% of select equity investments from the Company.
+Added: On February 25, 2020, the Company sold 50% of its equity investments in 20 portfolio companies to FEF I and received net proceeds of $35,903,
+Added: resulting in a realized gain, net of estimated taxes, of $20,404.
+Added: The Company will not receive any fees from FEF I for any services provided in its capacity as the General Partner of FEF I.
+Added: Revolving Credit
+Added: On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the Credit Facility) with ING Capital LLC (ING), as the administrative agent, collateral agent, and lender.
+Added: Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by the Funds are not collateral for the Credit Facility.
+Added: On April 24, 2019, the Company entered into an Amended & Restated Senior
+Added: Secured Revolving Credit Agreement (the Amended Credit Agreement) among the Company, as borrower, the lenders party thereto, and ING Capital LLC, as administrative agent.
+Added: The Amended Credit Agreement amends, restates, and replaces the
+Added: Credit Facility.
+Added: On June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were unchanged.
+Added: Among other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including
+Added: to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on June 30, 2020, 2.00 to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020,
+Added: and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter.
+Added: Under the Amended Credit Agreement,
+Added: (i) revolving commitments by lenders were increased from $90,000 to $100,000, with an accordion feature that allows for an increase in total commitments up to $250,000, subject to satisfaction of certain conditions at the time of any such
+Added: future increase, (ii) the maturity date of the Credit Facility was extended from June 16, 2019 to April 24, 2023, and (iii) borrowings under the credit facility bear interest, at our election, at a rate per annum equal to
+Added: (a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first
+Added: lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater
+Added: than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%,
+Added: (C) three month LIBOR plus 1.0%, and (D) zero.
+Added: The Company pays a commitment fee that varies depending on the size of the unused portion of the Credit Facility:
+Added: 3.00% per annum on the unused portion of the credit facility at or below 35%
+Added: of the commitments and 0.50% per annum on any remaining unused portion of the Credit Facility between the total commitments and the 35% minimum utilization.
+Added: The Amended Credit Agreement also modifies certain covenants in the credit facility,
+Added: including to provide for a minimum asset coverage ratio of 2.00 to 1 (on a regulatory basis).
+Added: The Credit Facility is secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.
+Added: Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to
+Added: certain investments held by the Company, excluding investments held by the Funds.
+Added: The Company is subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector
+Added: concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow.
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: Amounts available to borrow under the Credit Facility are subject to a minimum
−Removed: borrowing/collateral base that applies an advance rate to certain investments held by the Company, excluding investments held by the Funds.
−Removed: The Company is subject to limitations with respect to the investments securing the Credit Facility,
−Removed: including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore
−Removed: amounts available to borrow.
−Removed: The Company has made customary representations and warranties and is required to comply with various
−Removed: covenants, reporting requirements and other customary requirements for similar credit facilities.
+Added: The Company has made customary representations and warranties and is required to comply with
+Added: various covenants, reporting requirements and other customary requirements for similar credit facilities.
These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility.
−Removed: September 30, 2020 and December 31, 2019, the Company was in compliance in all material respect with the terms of the Credit Facility.
+Added: of March 31, 2021 and December 31, 2020, the Company was in compliance in all material respect with the terms of the Credit Facility.
SBA debentures:
4 unchanged sentences
Interest on SBA debentures is payable semi-annually on March 1 and September 1.
−Removed: As of September 30,
+Added: As of March 31,
2021 and December 31, 2020, approved and unused SBA debenture commitments were $5,500 and $11,500, respectively.
1 unchanged sentence
the Companys full compliance, as determined by the SBA, with the terms and conditions set forth in the SBIC Act.
−Removed: September 30, 2020 and December 31, 2019, the Companys issued and outstanding SBA debentures mature as follows:
−Removed: September 30,
+Added: March 31, 2021 and December 31, 2020, the Companys issued and outstanding SBA debentures mature as follows:
Total outstanding SBA debentures
2 unchanged sentences
during the reporting periods may not be pooled until the subsequent pooling date.
−Removed: Public Notes:
−Removed: February 2, 2018, the Company closed the public offering of approximately $43,478 in aggregate principal amount of its 5.875% notes due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to
−Removed: purchase an additional $6,522 in aggregate principal of the 2023 Notes.
−Removed: The total net proceeds to the Company from the 2023 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $1,500 and
−Removed: offering expenses of $438, were approximately $48,062.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
+Added: The Company issued $6,000 in SBA debentures which will pool in September 2021.
+Added: Until the pooling date, the
+Added: debentures bear interest at a fixed rate interim interest rate of 0.60%.
+Added: The Company expects the current interim interest rate will reset to a higher long-term fixed rate on the pooling date.
+Added: On February 2, 2018, the Company closed the public offering of approximately $43,478 in aggregate principal amount of its
+Added: 5.875% notes due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to purchase an additional $6,522 in aggregate principal of the 2023 Notes.
+Added: The total net proceeds to the Company from the 2023
+Added: Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $1,500 and offering expenses of $438, were approximately $48,062.
The 2023 Notes mature on February 1, 2023 and bear interest at a rate of 5.875%.
−Removed: 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after February 1, 2020.
−Removed: Interest on the 2023 Notes is payable quarterly on February 1, May 1, August 1 and
−Removed: November 1 of each year.
−Removed: The 2023 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSL.
+Added: The 2023 Notes may be redeemed in whole or in part at
+Added: any time or from time to time at the Companys option on or after February 1, 2020.
+Added: Interest on the 2023 Notes is payable quarterly on February 1, May 1, August 1 and November 1 of each year.
+Added: The 2023 Notes are listed
+Added: on the NASDAQ Global Select Market under the trading symbol FDUSL.
+Added: On January 19, 2021, the Company redeemed $50,000 of
+Added: the aggregate principal amount on the 2023 Notes, resulting in a realized loss on extinguishment of debt of approximately $794.
February 8, 2019, the Company closed the public offering of approximately $60,000 in aggregate principal amount of its 6.000% notes due 2024, or the February 2024 Notes.
2 unchanged sentences
The total net proceeds to the Company from the February 2024 Notes, including the exercise of the underwriters option, after deducting underwriting
−Removed: discounts of approximately $2,070 and offering expenses of $409, were approximately $66,521.
−Removed: The February 2024 Notes mature on
−Removed: February 15, 2024 and bear interest at a rate of 6.000%.
+Added: discounts of approximately $2,070 and estimated offering expenses of $409, were approximately $66,521.
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
+Added: The February 2024 Notes mature on February 15, 2024 and bear interest at a rate of
The February 2024 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after February 15, 2021.
−Removed: Interest on the February 2024
−Removed: Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each year, beginning May 15, 2019.
−Removed: The February 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol
−Removed: On October 16, 2019, the Company closed the public offering of approximately $55,000 in aggregate principal
−Removed: amount of its 5.375% notes due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and February 2024 Notes, the Public Notes).
−Removed: On October 23, 2019, the underwriters exercised their option to purchase
−Removed: an additional $8,250 in aggregate principal of the November 2024 Notes.
−Removed: The total net proceeds to the Company from the November 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of
−Removed: approximately $1,898 and offering expenses of $300, were approximately $61,053.
−Removed: The November 2024 Notes will mature on November 1,
−Removed: 2024 and bear interest at a rate of 5.375%.
+Added: Interest on the February 2024 Notes is payable quarterly on February 15,
+Added: May 15, August 15 and November 15 of each year, beginning May 15, 2019.
+Added: The February 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ.
+Added: On February 16, 2021, the Company redeemed $50,000 of the $69,000 aggregate principal amount on the February 2024 Notes, resulting in a
+Added: realized loss on extinguishment of debt of approximately $1,081.
+Added: On October 16, 2019, the Company closed the public offering of
+Added: approximately $55,000 in aggregate principal amount of its 5.375% notes due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and February 2024 Notes, the Public Notes).
+Added: On October 23, 2019, the
+Added: underwriters exercised their option to purchase an additional $8,250 in aggregate principal of the November 2024 Notes.
+Added: The total net proceeds to the Company from the November 2024 Notes, including the exercise of the underwriters option,
+Added: after deducting underwriting discounts of approximately $1,898 and estimated offering expenses of $300, were approximately $61,053.
+Added: November 2024 Notes will mature on November 1, 2024 and bear interest at a rate of 5.375%.
The November 2024 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after November 1,
−Removed: Interest on the November 2024 Notes is payable
−Removed: quarterly on February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2020.
−Removed: The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG.
−Removed: The Public Notes are unsecured obligations of the Company and rank pari passu with the Companys future unsecured indebtedness;
−Removed: effectively subordinated to all of the Companys existing and future secured indebtedness;
−Removed: and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar
−Removed: facilities the Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.
−Removed: As of September 30, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $205,250, for which our
−Removed: asset coverage was 289.8%.
+Added: Interest on the November 2024 Notes is payable quarterly on February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2020.
+Added: The November 2024 Notes are listed on the NASDAQ Global Select Market
+Added: under the trading symbol FDUSG.
+Added: On December 23, 2020, the Company closed the offering of approximately $125,000 in
+Added: aggregate principal amount of its 4.75% notes due 2026, or the 2026 Notes (collectively with the Public Notes, the Notes).
+Added: The total net proceeds to the Company from the 2026 Notes after deducting underwriting discounts of
+Added: approximately $2,500 and estimated offering expenses of $400, were approximately $122,100.
+Added: The 2026 Notes will mature on January 31,
+Added: 2026 and bear interest at a rate of 4.75%.
+Added: The 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity.
+Added: Interest on the 2026
+Added: Notes is payable on January 31 and July 31 of each year, beginning July 31, 2021.
+Added: The Company does not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
+Added: The Notes are unsecured obligations of the Company and rank pari passu with the Companys future unsecured indebtedness;
+Added: subordinated to all of the Companys existing and future secured indebtedness;
+Added: and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar facilities the
+Added: Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.
+Added: As of March 31, 2021, the aggregate amount outstanding of the senior securities issued by the Company was $222,250, for which our asset
+Added: coverage was 285.8%.
The SBA-guaranteed debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective June 30, 2014.
−Removed: The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities
+Added: asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities
representing indebtedness.
Interest and Financing Expenses
−Removed: Interest and fees related to the Companys debt for the three and nine months ended September 30, 2020 and 2019 which are
−Removed: included in interest and financing expenses on the consolidated statements of operations, were as follows:
−Removed: Three Months Ended September 30, 2020
−Removed: Three Months Ended September 30, 2019
−Removed: Stated interest expense
−Removed: Amortization of deferred financing costs
−Removed: Total interest and financing expenses
−Removed: Nine Months Ended September 30, 2020
−Removed: Nine Months Ended September 30, 2019
+Added: Interest and fees related to the Companys debt for the three months ended March 31, 2021 and 2020 which are included in
+Added: interest and financing expenses on the consolidated statements of operations, were as follows:
+Added: Three Months Ended March 31, 2021
+Added: Three Months Ended March 31, 2020
Stated interest expense
3 unchanged sentences
Unused commitment fee rate, period end
+Added: Realized Losses on Extinguishment of Debt
+Added: During the three months ended March 31, 2021 and 2020, the Company prepaid $19,200 and $7,000 of SBA debentures, respectively, which were
+Added: scheduled to mature on dates ranging from 2025 to 2028 and 2024 to 2028, respectively.
+Added: As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of $305 and $125, respectively, equal to the write-off of the related unamortized deferred financing costs, during the three months ended March 31, 2021 and 2020.
FIDUS INVESTMENT CORPORATION
1 unchanged sentence
(in thousands, except shares and per share data)
−Removed: Realized Losses on Extinguishment of Debt
−Removed: During the nine months ended September 30, 2020 and 2019, the Company prepaid $16,500 and $41,000 of SBA debentures, respectively, which
−Removed: were scheduled to mature on dates ranging from 2024 to 2028 and 2021 to 2025, respectively.
−Removed: As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of $299 and $399, respectively, equal to the write-off of the related unamortized deferred financing costs, during the nine months ended September 30, 2020 and 2019.
Deferred Financing Costs
−Removed: financing costs are amortized into interest and financing expenses on the consolidated statements of operations, using the effective interest method, over the term of the respective financing instrument.
−Removed: Deferred financing costs related to the
−Removed: Credit Facility, SBA debentures, and Public Notes as of September 30, 2020 and December 31, 2019 were as follows:
−Removed: September 30, 2020
+Added: Deferred financing costs are amortized into interest and financing expenses on the consolidated statements of operations, using the effective
+Added: interest method, over the term of the respective financing instrument.
+Added: Deferred financing costs related to the Credit Facility, SBA debentures, and Notes as of March 31, 2021 and December 31, 2020 were as follows:
+Added: March 31, 2021
December 31, 2020
2 unchanged sentences
Credit Facility upfront fees
−Removed: Public Notes underwriting discounts
−Removed: Public Notes debt issue costs
+Added: Notes underwriting discounts
+Added: Notes debt issue costs
Total deferred financing costs
2 unchanged sentences
Unamortized deferred financing costs are presented as a direct offset to the SBA debentures, Credit Facility
−Removed: and Public Notes liabilities on the consolidated statements of assets and liabilities.
−Removed: The following table summarizes the outstanding debt net of unamortized deferred financing costs as of September 30, 2020 and December 31, 2019:
−Removed: September 30, 2020
+Added: and Notes liabilities on the consolidated statements of assets and liabilities.
+Added: The following table summarizes the outstanding debt net of unamortized deferred financing costs as of March 31, 2021 and December 31, 2020:
+Added: March 31, 2021
December 31, 2020
2 unchanged sentences
Debt, net of deferred financing costs
−Removed: As of September 30, 2020, the Companys debt liabilities are scheduled to mature as follows (1) :
+Added: As of March 31, 2021, the Companys debt liabilities are scheduled to mature as follows (1) :
The table above presents scheduled maturities of the Companys outstanding debt liabilities as of a point
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The Company had outstanding commitments to portfolio companies to fund various undrawn revolving loans, other debt
−Removed: investments and capital commitments totaling $3,957 and $4,757 as of September 30, 2020 and December 31, 2019, respectively.
+Added: investments and capital commitments totaling $7,589 and $5,645 as of March 31, 2021 and December 31, 2020, respectively.
Such outstanding commitments are summarized in the following table:
−Removed: September 30, 2020
+Added: March 31, 2021
December 31, 2020
2 unchanged sentences
- Revolving Loan
−Removed: FDS Avionics Corp.
−Removed: (dba Flight Display Systems)Revolving Loan
−Removed: French Transit, LLC - Revolving Loan
+Added: CRS Solutions Holdings, LLC (dba CRS Texas) - Common Equity (Units)
+Added: Elements Brands, LLC - Revolving Loan
Rhino Assembly Company, LLC - Delayed Draw Commitment
Safety Products Group, LLC - Common Equity (Units)
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.) - Revolving Loan
+Added: Wonderware Holdings, LLC (dba CORE Business Technologies) - Delayed Draw Term Loan
+Added: - Delayed Draw Term Loan
Portfolio company was no longer held at period end.
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Cumulative Underwriting Fees and
−Removed: Commissions and Offering Costs (1)
+Added: Commissions and Offering
Weighted Average
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All such payments made by Fidus Investment Advisors, LLC are not subject to reimbursement by the Company.
+Added: No shares have been issued for the three months ended March 31, 2021 and 2020.
Common Stock ATM Program
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Incorporated through which the Company could sell, by means of at-the-market offerings from time to time, shares of the Companys common stock having an aggregate offering price of up to $50,000 (the ATM Program).
−Removed: were no issuances of common stock under the ATM program during the last two fiscal years and for the nine months ended September 30, 2020.
+Added: were no issuances of common stock under the ATM program during the last two fiscal years and for the three months ended March 31, 2021.
+Added: Repurchase Program
+Added: As described in Note 2, the Company has a Stock Repurchase Program under which the Company may acquire up to $5,000
+Added: of its outstanding common stock.
+Added: The Company did not make any repurchases of common stock during the three months ended March 31, 2021.
+Added: During the three months ended March 31, 2020, the Company repurchased 25,719 shares of common stock, on
+Added: the open market for $268.
+Added: The Companys NAV per share
FIDUS INVESTMENT CORPORATION
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(in thousands, except shares and per share data)
−Removed: Stock Repurchase Program
−Removed: As described in Note 2, the Company has a Stock Repurchase Program under which the Company may acquire up to $5,000 of its outstanding common
−Removed: During the three and nine months ended September 30, 2020, the Company repurchased zero and 25,719 shares of common stock, respectively, on the open market for zero and $268, respectively.
−Removed: The Company did not make any repurchases of
−Removed: common stock during the three and nine months ended September 30, 2019.
−Removed: The Companys NAV per share increased by approximately zero and $0.01 for the three and nine months ended September 30, 2020, as a result of the share
−Removed: The following table summarizes the Companys share repurchases under the Stock Repurchase Program for the three and nine months ended September 30, 2020 and 2019:
−Removed: Three Months Ended September 30,
−Removed: Nine months ended September 30,
+Added: increased by approximately $0.01 for the three months ended March 31, 2020, as a result of the share repurchases.
+Added: The following table summarizes the Companys share repurchases under
+Added: the Stock Repurchase Program for the three months ended March 31, 2021 and 2020:
+Added: Three Months Ended March 31,
Repurchases of Common Stock
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Refer to Note 9 for additional information regarding the issuance of shares under the DRIP.
−Removed: The Company had 24,437,400 and 24,463,119 shares of common stock outstanding as of September 30, 2020 and December 31, 2019,
−Removed: respectively.
+Added: The Company had 24,437,400 shares of common stock outstanding as of March 31, 2021 and December 31, 2020.
Dividends and Distributions
−Removed: The Companys dividends and distributions are recorded on the record date.
−Removed: The following table summarizes the dividends paid during the
−Removed: last two fiscal years and for the nine months ended September 30, 2020.
−Removed: Fiscal Year Ended December 31, 2018:
+Added: Companys dividends and distributions are recorded on the record date.
+Added: The following table summarizes the dividends paid during the last two fiscal years and for the three months ended March 31, 2021.
+Added: Year Ended December 31, 2019:
10/29/2019 (1)
−Removed: Fiscal Year Ended December 31, 2019:
+Added: Year Ended December 31, 2020:
10/26/2020 (2)
−Removed: Nine Months Ended September 30, 2020:
+Added: Three Months Ended March 31, 2021:
+Added: 2/09/2021 (2)
Special dividend.
−Removed: During the nine months ended September 30, 2020 and the years ended December 31, 2019 and 2018, the
+Added: Supplemental dividend
+Added: During the three months ended March 31, 2021 and the years ended December 31, 2020 and 2019, the
Company directed the DRIP program plan administrator to repurchase shares on the open market in order to satisfy the DRIP obligation to deliver shares of common stock in lieu of issuing new shares.
1 unchanged sentence
shares to satisfy the DRIP obligation as follows:
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
Fiscal Year Ended December 31, 2019:
3 unchanged sentences
October 1, 2019 through December 31, 2019
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
Fiscal Year Ended December 31, 2020:
3 unchanged sentences
October 1, 2020 through December 31, 2020
−Removed: Nine Months Ended September 30, 2020:
+Added: Three Months Ended March 31, 2021:
January 1, 2021 through March 31, 2021
−Removed: April 1, 2020 through June 30, 2020
−Removed: July 1, 2020 through September 30, 2020
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
Financial Highlights
−Removed: The following is a schedule of financial highlights for the nine months ended September 30, 2020 and 2019:
−Removed: Nine Months Ended September 30,
+Added: The following is a schedule of financial highlights for the three months ended March 31, 2021 and 2020:
+Added: Three Months Ended March 31,
Per share data:
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Weighted average per share data.
−Removed: Represents the impact of different share amounts used in calculating per share data as a result of calculating
−Removed: certain per share data based on weighted average shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date, or other rounding.
−Removed: Annualized with the exception of the Income Incentive Fee Waiver.
Total return based on market value equals the change in the market value of the Companys common stock per
2 unchanged sentences
that may be paid by an investor.
−Removed: The total expenses to average net assets ratio is calculated using the total expenses before income incentive
−Removed: fee waiver caption as presented on the consolidated statements of operations, which includes incentive fee and excludes the income tax provision.
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
+Added: The total expenses to average net assets ratio is calculated using the total expenses and the income tax
+Added: provision (benefit) captions as presented on the consolidated statements of operations.
The net investment income to average net assets ratio is calculated using the net investment income caption as
7 unchanged sentences
Non-operating changes include any items that affect net asset value per share other than increase from investment operations, such as the effects of share issuances and repurchases and other miscellaneous
−Removed: The ratio of waived incentive fees to average net assets was (0.11%) and zero for the nine months ended
−Removed: September 30, 2020 and 2019, respectively.
−Removed: FIDUS INVESTMENT CORPORATION
−Removed: Notes to Consolidated Financial Statements (unaudited)
−Removed: (in thousands, except shares and per share data)
The following is a schedule of supplemental expense ratios to average net assets:
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Ratio to average net assets:
Expenses other than incentive fee
−Removed: Incentive fee, net of incentive fee waiver
+Added: Incentive fee (2)
Total expenses (2)(4)
Subsequent Events
−Removed: On October 1, 2020, the Company exited its debt and equity investments in Pugh Lubricants, LLC.
−Removed: The Company received payment in full of $26,630
−Removed: on its subordinated debt investment, which includes a prepayment fee.
−Removed: The Company received a distribution on its common equity investment for a realized gain of approximately $521.
−Removed: On October 26, 2020, the Board declared a regular quarterly dividend of $0.30 per share payable on December 18, 2020 to stockholders of record
−Removed: as of December 4, 2020.
−Removed: In addition, the Board of Directors declared a supplemental dividend of $0.04 per share payable December 18, 2020 to stockholders of record as of December 4, 2020.
−Removed: On October 28, 2020, the Company invested $6,000 in second lien debt, which was a partial funding of a $12,000 note commitment, and $1,500
−Removed: common equity in a leading regional distributor of pool equipment and supplies.
−Removed: Subsequent to September 30, 2020, the global outbreak of the coronavirus (COVID-19) pandemic, and the related effect on the
+Added: On April 1, 2021, the Company invested $11,000 in first lien debt of Winona Foods, Inc., a leading provider of natural and processed
+Added: cheese products, sauces, and plant-based alternatives.
+Added: On April 1, 2021, the Company invested $5,500 in first lien debt and $1,000
+Added: in common equity of Level Education Group, LLC (dba CE4Less), a leading provider of online continuing education for mental health and nursing professionals.
+Added: On April 5, 2021, the Company exited its debt investment in The Kyjen Company, LLC (dba Outward Hound).
+Added: The Company received payment in
+Added: full of $15,005 on its second lien debt, which includes a prepayment fee.
+Added: On April 5, 2021, the Company invested $25,500 in first
+Added: lien debt and common equity, and made a commitment up to $2,000 of additional first lien debt of ISI PSG Holdings, LLC (dba Incentive Solutions, Inc.), a tech-enabled incentive rewards and digital marketing firm that facilitates and optimizes its
+Added: clients indirect sales channel strategies.
+Added: On April 14, 2021, the Company exited its debt investment in Medsurant Holdings,
+Added: The Company received payment in full of $8,031 on its second lien debt.
+Added: On April 29, 2021, the Company exited its debt
+Added: investment in Virginia Tile Company, LLC.
+Added: The Company received payment in full of $12,000 on its second lien debt.
+Added: On May 3, 2021,
+Added: the Board declared a base quarterly dividend of $0.31 per share and a supplemental dividend of $0.08 per share payable June 28, 2021 to stockholders of record as of June 14, 2021.
+Added: Subsequent to March 31, 2021, the global outbreak of the coronavirus (COVID-19)
+Added: pandemic, and the related effect on the U.S.
and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies.
−Removed: The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets,
−Removed: industries and individual issuers, remain uncertain.
−Removed: The operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the outbreak, and such
−Removed: uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.
−Removed: Managements Discussion and Analysis of Financial Condition and
−Removed: Results of Operations.
−Removed: The following discussion and analysis of our financial condition and results of operations should be read in
−Removed: conjunction with Fidus Investment Corporations consolidated financial statements and related notes appearing in our annual report on Form 10-K for the year ended December 31, 2019, filed with the
−Removed: SEC on February 27, 2020.
+Added: The ultimate economic fallout from the pandemic, and the
+Added: long-term impact on economies, markets, industries and individual issuers, remain uncertain.
+Added: The operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration
+Added: and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.
+Added: Managements Discussion and Analysis of Financial Condition
+Added: and Results of Operations.
+Added: The following discussion and analysis of our financial condition and results of operations should be
+Added: read in conjunction with Fidus Investment Corporations consolidated financial statements and related notes appearing in our annual report on Form 10-K for the year ended December 31, 2020, filed
+Added: with the SEC on February 25, 2021.
The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q.
9 unchanged sentences
The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, including statements as to:
−Removed: our future operating results and the impact of the COVID-19 pandemic thereon;
+Added: our future operating results and the impact of the COVID-19 pandemic
our business prospects and the prospects of our portfolio companies, including our and their ability to achieve
8 unchanged sentences
the adequacy of our cash resources and working capital;
−Removed: the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19
−Removed: pandemic thereon;
+Added: the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19 pandemic thereon;
the ability of the Investment Advisor to locate suitable investments for us and to monitor and administer our
investments and the impacts of the COVID-19 pandemic thereon;
−Removed: These statements are not guarantees of future performance
−Removed: and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements,
−Removed: including without limitation:
−Removed: an economic downturn, including as a result of the current COVID-19 pandemic, could impair our portfolio
−Removed: companies ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
−Removed: a contraction of available credit and/or an inability to access the equity markets, including as a result of the
−Removed: COVID-19 pandemic, could impair our lending and investment activities;
+Added: the ability of our investment advisor to attract and retain highly talented professionals;
+Added: our regulatory structure and tax status;
+Added: our ability to operate as a BDC, a SBIC and a RIC;
+Added: the timing, form and amount of any dividend distributions;
+Added: the impact of fluctuations in interest rates on our business;
+Added: the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
+Added: our ability to recover unrealized losses.
+Added: These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond
+Added: our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
+Added: an economic downturn, including as a result of the current COVID-19
+Added: pandemic, could impair our portfolio companies ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
+Added: a contraction of available credit and/or an inability to access the equity markets, including as a result of the COVID-19 pandemic, could impair our lending and investment activities;
interest rate volatility could adversely affect our results, particularly because we use leverage as part of our
5 unchanged sentences
Annual Report on Form 10-K for the year ended December 31, 2020, elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC.
−Removed: Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of
−Removed: those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate.
−Removed: Important assumptions include our ability to originate new debt investments, certain margins and
−Removed: levels of profitability and the availability of additional capital.
−Removed: In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q
−Removed: should not be regarded as a representation by us that our plans and objectives will be achieved.
−Removed: These risks and uncertainties include those described or identified in Item 1.A Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020.
−Removed: You should not place undue reliance on these forward-looking statements, which apply only as of the date of this
−Removed: Quarterly Report on Form 10-Q.
+Added: FIDUS INVESTMENT CORPORATION
+Added: Notes to Consolidated Financial Statements (unaudited)
+Added: (in thousands, except shares and per share data)
+Added: Although we believe that the assumptions on which these forward-looking statements are based
+Added: are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate.
+Added: Important assumptions include our ability to originate new debt investments,
+Added: certain margins and levels of profitability and the availability of additional capital.
+Added: In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved.
+Added: These risks and uncertainties include those described or identified in Item 1.A Risk Factors
+Added: contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 25, 2021.
+Added: You should not place undue reliance on these forward-looking statements,
+Added: which apply only as of the date of this Quarterly Report on Form 10-Q.
General and Corporate Structure
5 unchanged sentences
other growth initiatives.
+Added: Although we are classified as a non-diversified investment company within the meaning of the 1940 Act, we maintain the flexibility to operate as a diversified investment company and
+Added: have done so for an extended period of time.
We seek to maintain a diversified portfolio of investments in order to help mitigate the potential effects of adverse economic events related to particular companies, regions or industries.
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COVID-19 Update
−Removed: On March 11, 2020, the World Health Organization declared the novel coronavirus, or COVID-19, as a pandemic, and on March 13, 2020
−Removed: the United States declared a national emergency with respect to COVID-19.
−Removed: The outbreak of COVID-19 has, and continues, to severely impact global economic activity and cause significant volatility and negative pressure in financial markets.
−Removed: global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel.
−Removed: Such actions are creating disruption in
−Removed: global supply chains and adversely impacting a number of industries.
+Added: On March 11, 2020, the World Health Organization declared the novel coronavirus, or COVID-19, as a
+Added: pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19.
+Added: The outbreak of COVID-19 has severely impacted global
+Added: economic activity and caused significant volatility and negative pressure in financial markets.
+Added: The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines,
+Added: restricting travel and hospitality, and temporarily closing or limiting operations at many corporate offices, retail stores, restaurants, fitness clubs and manufacturing facilities and factories in affected jurisdictions.
+Added: Such actions are creating
+Added: disruption in global supply chains and adversely impacting a number of industries.
The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown.
−Removed: The rapid development and fluidity of this
−Removed: situation precludes any prediction as to the ultimate adverse impact of COVID-19.
−Removed: Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of the Companys portfolio companies, the Companys
−Removed: business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the character of dividends in order to preserve liquidity,
−Removed: increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.
−Removed: evaluated subsequent events from October 1, 2020 through October 29, 2020.
+Added: The rapid development and
+Added: fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19.
+Added: Nevertheless, COVID-19 presents material uncertainty and risks with
+Added: respect to the underlying value of the Companys portfolio companies, the Companys business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to
+Added: delay, defer and/or modify the character of dividends in order to preserve liquidity, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.
+Added: We have evaluated subsequent events from April 1, 2021 to May 6, 2021.
However, as the discussion in this Item 2.
−Removed: Managements Discussion and Analysis of Financial Condition and Results of Operations relates to the Companys
−Removed: financial statements for the quarter-ended September 30, 2020, the analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic.
−Removed: In that regard, for example, as of September 30, 2020, the Company valued its
−Removed: portfolio investments in conformity with GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time.
−Removed: Due to the overall volatility that the COVID-19 pandemic has caused, any
−Removed: valuations conducted now or in the future in conformity with GAAP could result in a lower fair value of our portfolio.
−Removed: The potential impact to our results going forward will depend to a large extent on future developments and new information that
−Removed: may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are beyond our control.
+Added: Discussion and Analysis of Financial Condition and Results of Operations relates to the Companys financial statements for the year ended December 31, 2020, the analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic.
+Added: In that regard, for example, as of March 31, 2021, the Company valued its portfolio investments in conformity with GAAP based on the facts and circumstances known by the Company at that time,
+Added: or reasonably expected to be known at that time.
+Added: Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed March 31, 2021, any valuations conducted now or in the
+Added: future in conformity with GAAP could result in a lower fair value of our portfolio.
+Added: The potential impact to our results going forward will depend to a large extent on future developments and new information that may emerge regarding the duration and
+Added: severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are beyond our control.
Accordingly, the Company cannot predict the
58 unchanged sentences
connection with these equity interests, which may include demand and piggyback registration rights.
−Removed: Our equity investments typically are made in connection with debt investments to the same portfolio companies.
−Removed: We generate revenue in the form of interest and fee income on debt
−Removed: investments and dividends, if any, on equity investments.
−Removed: Our debt investments, whether in the form of second lien, subordinated or first lien loans, typically have terms of five to seven years and most bear interest at a fixed rate, but some bear
−Removed: interest at a floating rate.
+Added: Our equity investments typically are made in connection with debt investments to
+Added: the same portfolio companies.
+Added: We generate revenue in the form of interest and fee income on debt investments and
+Added: dividends, if any, on equity investments.
+Added: Our debt investments, whether in the form of second lien, subordinated or first lien loans, typically have terms of five to seven years and most bear interest at a fixed rate, but some bear interest at a
+Added: floating rate.
In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances.
−Removed: In addition, we may receive repayments of some of our debt investments prior to their scheduled
−Removed: maturity dates, which may include prepayment penalties.
+Added: In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity
+Added: dates, which may include prepayment penalties.
The frequency or volume of these repayments fluctuates significantly from period to period.
Our portfolio activity may reflect the proceeds of sales of securities.
−Removed: In some cases, our
−Removed: investments provide for deferred interest payments or PIK interest.
+Added: In some cases, our investments provide
+Added: for deferred interest payments or PIK interest.
The principal amount of debt investments and any accrued but unpaid interest generally become due at the maturity date.
−Removed: In addition, we may generate revenue in the form of
−Removed: commitment, origination, amendment, or structuring fees and fees for providing managerial assistance.
−Removed: Debt investment origination fees, OID and market discount or premium, if any, are capitalized, and we accrete or amortize such amounts into
−Removed: interest income.
−Removed: We record prepayment penalties on debt investments as fee income when earned.
+Added: In addition, we may generate revenue in the form of commitment, origination,
+Added: amendment, or structuring fees and fees for providing managerial assistance.
+Added: Debt investment origination fees, OID and market discount or premium, if any, are capitalized, and we accrete or amortize such amounts into interest income.
+Added: prepayment penalties on debt investments as fee income when earned.
Interest and dividend income is recorded on the accrual basis to the extent that we expect to collect such amounts.
−Removed: Interest is accrued daily based on the
−Removed: outstanding principal amount and the contractual terms of the debt investment.
−Removed: Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to make a distribution, and is generally recognized
−Removed: when received.
+Added: Interest is accrued daily based on the outstanding principal
+Added: amount and the contractual terms of the debt investment.
+Added: Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to make a distribution, and is generally recognized when received.
Distributions of earnings from portfolio companies are evaluated to determine if the distribution is a distribution of earnings or a return of capital.
−Removed: Distributions of earnings are included in dividend income while a return of
−Removed: capital is recorded as a reduction in the cost basis of the investment.
+Added: Distributions of earnings are included in dividend income while a return of capital is recorded
+Added: as a reduction in the cost basis of the investment.
Estimates are adjusted as necessary after the relevant tax forms are received from the portfolio company.
−Removed: Debt investments or preferred equity investments (for which we are
−Removed: accruing PIK dividends) are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or
−Removed: dividends will be collected.
−Removed: Interest and dividend payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on
−Removed: managements judgment.
−Removed: Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain
−Removed: See Critical Accounting Policies and Use of Estimates Revenue Recognition.
−Removed: We recognize realized gains or
−Removed: losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment, without regard to unrealized gains or losses previously recognized.
−Removed: We record current period changes in fair value of
−Removed: investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.
+Added: Debt investments or preferred equity investments (for which we are accruing PIK dividends)
+Added: are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected.
+Added: Interest and dividend payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on managements judgment.
+Added: Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain current.
+Added: See Critical Accounting
+Added: Policies and Use of Estimates Revenue Recognition.
+Added: We recognize realized gains or losses on investments based on the
+Added: difference between the net proceeds from the disposition and the cost basis of the investment, without regard to unrealized gains or losses previously recognized.
+Added: We record current period changes in fair value of investments that are measured at
+Added: fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.
All investment professionals of the Investment Advisor and/or its affiliates, when and to the extent engaged in providing
27 unchanged sentences
Portfolio Composition, Investment Activity and Yield
−Removed: During the nine months ended September 30, 2020 and 2019, we invested $86.1 million and $175.5 million, respectively, in debt
−Removed: and equity investments including five and 10 new portfolio companies, respectively.
−Removed: During the nine months ended September 30, 2020 and 2019, we received proceeds from sales or repayments, including principal, return of capital dividends and
−Removed: net realized gains (losses), of $110.1 million and $98.8 million, respectively, including exits of three and seven portfolio companies, respectively.
−Removed: The following table summarizes investment purchases and sales and repayments of
−Removed: investments by type for the nine months ended September 30, 2020 and 2019 (dollars in millions).
+Added: During the three months ended March 31, 2021 and 2020, we invested $63.1 million and $68.2 million, respectively, in debt and
+Added: equity investments including four and three new portfolio companies, respectively.
+Added: During the three months ended March 31, 2021 and 2020, we received proceeds from sales or repayments, including principal, return of capital dividends and net
+Added: realized gains (losses), of $98.6 million and $73.8 million, respectively, including exits of three and one portfolio companies, respectively.
+Added: The following table summarizes investment purchases and sales and repayments of investments by
+Added: type for the three months ended March 31, 2021 and 2020 (dollars in millions).
Purchases of Investments
Sales and Repayments of Investments
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Second Lien Debt
1 unchanged sentence
First Lien Debt (1)
−Removed: Royalty Rights
−Removed: As of September 30, 2020, the fair value of our investment portfolio totaled $715.4 million and
−Removed: consisted of 63 active portfolio companies and three portfolio companies that have sold their underlying operations.
−Removed: As of September 30, 2020, 19 portfolio companies debt investments bore interest at a variable rate, which represented
−Removed: $203.0 million, or 32.4%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments.
−Removed: Overall, the portfolio had net unrealized depreciation of $(1.0)
−Removed: million as of September 30, 2020.
−Removed: As of September 30, 2020, our average active portfolio company investment at amortized cost was $11.3 million, which excludes investments in the three portfolio companies that have sold their
−Removed: underlying operations.
−Removed: As of December 31, 2019, the fair value of our investment portfolio totaled $766.9 million and consisted
−Removed: of 61 active portfolio companies and three portfolio companies that have sold their underlying operations.
−Removed: As of December 31, 2019, 17 portfolio companies debt investments bore interest at a variable rate, which represented
−Removed: $181.3 million, or 28.7%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments.
−Removed: Overall, the portfolio had net unrealized appreciation of
−Removed: $62.4 million as of December 31, 2019.
−Removed: As of December 31, 2019, our average active portfolio company investment at amortized cost was $11.5 million, which excludes investments in the three portfolio companies that have sold their
−Removed: underlying operations.
−Removed: The weighted average yield on debt investments as of September 30, 2020 and December 31, 2019 was 12.1%
−Removed: and 12.0%, respectively.
−Removed: The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of
−Removed: our and our subsidiaries fees and expenses.
−Removed: The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding
−Removed: investments on non-accrual status, if any.
+Added: For the Three Months Ended March 31, 2021 and 2020, includes unitranche securities, which account for
+Added: 43.6% and 49.8% of purchases, respectively.
+Added: For the Three Months Ended March 31, 2021 and 2020, includes unitranche securities, which account for 22.1% and 0.5% of repayments, respectively.
+Added: As of March 31, 2021, the fair value of our investment portfolio totaled $711.9 million and consisted of 67 active portfolio
+Added: companies and four portfolio companies that have sold their underlying operations.
+Added: As of March 31, 2021, 22 portfolio companies debt investments bore interest at a variable rate, which represented $219.7 million, or 37.2%, of our
+Added: debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments.
+Added: Overall, the portfolio had net unrealized appreciation of $55.3 million as of March 31, 2021.
+Added: of March 31, 2021, our average active portfolio company investment at amortized cost was $9.8 million, which excludes investments in the four portfolio companies that have sold their underlying operations.
+Added: As of December 31, 2020, the fair value of our investment portfolio totaled $742.9 million and consisted of 66 active portfolio
+Added: companies and three portfolio companies that have sold their underlying operations.
+Added: As of December 31, 2020, 22 portfolio companies debt investments bore interest at a variable rate, which represented $230.9 million, or 36.8%, of our
+Added: debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments.
+Added: Overall, the portfolio had net unrealized appreciation of $55.8 million as of December 31, 2020.
+Added: As of December 31, 2020, our average active portfolio company investment at amortized cost was $10.4 million, which excludes investments in the three portfolio companies that have sold their underlying operations.
+Added: The weighted average yield on debt investments as of March 31, 2021 and December 31, 2020 was 12.3% and 12.2%, respectively.
+Added: weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries
+Added: fees and expenses.
+Added: The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status, if any.
The following table shows the portfolio composition by investment type at fair value and
cost and as a percentage of total investments (dollars in millions):
−Removed: September 30,
−Removed: September 30,
Second Lien Debt
1 unchanged sentence
First Lien Debt (1)
−Removed: Royalty Rights
−Removed: All investments made by us as of September 30, 2020 and December 31, 2019 were made in portfolio
−Removed: companies headquartered in the U.S.
−Removed: The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments (dollars in millions).
−Removed: The geographic composition is determined by the location
−Removed: of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio companys business.
−Removed: September 30,
−Removed: September 30,
+Added: Includes unitranche investments, which account for 18.6% and 20.1% of our portfolio on a fair value and cost
+Added: basis as of March 31, 2021, respectively.
+Added: Includes unitranche investments, which account for 17.3% and 18.4% of our portfolio on a fair value and cost basis as of December 31, 2020, respectively.
+Added: All investments made by us as of March 31, 2021 and December 31, 2020 were made in portfolio companies headquartered in the U.S.
+Added: following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments (dollars in millions).
+Added: The geographic composition is determined by the location of the corporate headquarters of the
+Added: portfolio company, which may not be indicative of the primary source of the portfolio companys business.
The following table shows the detailed industry composition of our portfolio at fair value
and cost as a percentage of total investments:
−Removed: September 30,
−Removed: September 30,
−Removed: Specialty Distribution
Information Technology Services
+Added: Specialty Distribution
Business Services
1 unchanged sentence
Component Manufacturing
−Removed: Consumer Products
Aerospace & Defense Manufacturing
+Added: Consumer Products
Healthcare Services
−Removed: Promotional Products
Building Products Manufacturing
Transportation Services
−Removed: Environmental Industries
+Added: Promotional Products
Oil & Gas Services
−Removed: Industrial Cleaning & Coatings
+Added: Environmental Industries
Oil & Gas Distribution
+Added: Industrial Cleaning & Coatings
Utility Equipment Manufacturing
23 unchanged sentences
The following table shows the distribution of our investments on the 1 to 5 investment
−Removed: rating scale at fair value and cost as of September 30, 2020 and December 31, 2019 (dollars in millions):
+Added: rating scale at fair value and cost as of March 31, 2021 and December 31, 2020 (dollars in millions):
Investment Rating
−Removed: September 30,
−Removed: September 30,
−Removed: Based on our investment rating system, the weighted average rating of our portfolio as of September 30,
−Removed: 2020 and December 31, 2019 was 2.0 on a fair value basis and 2.3 and 2.1, respectively, on a cost basis.
−Removed: As of September 30, 2020 and December 31, 2019, we had debt investments in one portfolio company on
−Removed: non-accrual status, (dollars in millions):
−Removed: September 30,
+Added: Based on our investment rating system, the weighted average rating of our portfolio as of March 31, 2021
+Added: and December 31, 2020 was 2.0 and 2.0, respectively, on a fair value basis and 2.1 and 2.2, respectively, on a cost basis.
+Added: As of March 31, 2021 and December 31, 2020, we had debt investments in one
+Added: portfolio company on non-accrual status, (dollars in millions):
Portfolio Company
−Removed: Accent Food Services, LLC
+Added: EBL, LLC (EbLens)
+Added: Portfolio company was on PIK-only on
+Added: non-accrual status at period end, meaning the Company has ceased recognizing PIK interest income on the investment.
Discussion and Analysis of Results of Operations
−Removed: Comparison of three and nine months ended September 30, 2020 and 2019
+Added: Comparison of three months ended March 31, 2021 and 2020
Investment Income
−Removed: is a summary of the changes in total investment income for the three months ended September 30, 2020 as compared to the same period in 2019 (dollars in millions):
+Added: is a summary of the changes in total investment income for the three months ended March 31, 2021 as compared to the same period in 2020 (dollars in millions):
Three Months Ended
−Removed: September 30,
% Change (1)(2)
Interest income
−Removed: Payment-in-kind interest
−Removed: Dividend income
−Removed: Interest on idle funds and other income
−Removed: Total investment income
−Removed: NM = Not meaningful
−Removed: Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
−Removed: statements of operations.
−Removed: For the three months ended September 30, 2020, total investment income was
−Removed: $21.1 million, an increase of $1.9 million or 9.8%, from the $19.2 million of total investment income for the three months ended September 30, 2019.
−Removed: As reflected in the table above, the increase is primarily attributable to the
−Removed: $1.6 million increase in total interest income (which includes a $1.1 million decrease in payment-in-kind interest income) resulting from higher average debt investment balances outstanding, during 2020 as compared to 2019.
−Removed: $0.5 million increase in dividend income, during 2020 as compared to 2019, due to increased levels of
−Removed: distributions received from equity investments and tax true-ups related to the tax character of prior year distributions.
−Removed: $(0.4) million decrease in fee income resulting from a decrease in structuring fees due to a comparative decrease
−Removed: in new investments partially offset by an increase in amendment fee income and an increase in prepayment fee income, during 2020 as compared to 2019.
−Removed: Below is a summary of the changes in total investment income for the nine months ended September 30, 2020 as compared to the same period
−Removed: in 2019 (dollars in millions):
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: % Change (1)(2)
−Removed: Interest income
−Removed: Payment-in-kind interest
+Added: Payment-in-kind interest income
Dividend income
4 unchanged sentences
statements of operations.
−Removed: For the nine months ended September 30, 2020, total investment income was
−Removed: $61.5 million, an increase of $3.9 million or 6.8%, from the $57.6 million of total investment income for the nine months ended September 30, 2019.
+Added: For the three months ended March 31, 2021, total investment income was
+Added: $23.3 million, an increase of $3.3 million or 16.5%, from the $20.0 million of total investment income for the three months ended March 31, 2020.
As reflected in the table above, the increase is primarily attributable to the
−Removed: $5.6 million increase in total interest income (which includes a $4.3 million decrease in payment-in-kind interest income) resulting from higher average debt investment balances outstanding, during 2020 as compared to 2019.
−Removed: $(0.3) million decrease in dividend income, during 2020 as compared to 2019, due to decreased levels of
−Removed: distributions received from equity investments.
−Removed: $(1.6) million decrease in fee income resulting from a decrease in prepayment fee income, a decrease in
−Removed: structuring fees due to a comparative decrease in new investments, offset by an increase in amendment fee income, during 2020 as compared to 2019.
−Removed: summary of the changes in total expenses, including income tax provision, for the three months ended September 30, 2020 as compared to the same period in 2019 (dollars in millions):
+Added: $1.8 million increase in fee income resulting from an increase in prepayment and amendment fees, partially
+Added: offset by a decrease in origination fees, during 2021 as compared to 2020.
+Added: $1.5 million increase in total interest income (which includes a $0.1 million decrease in payment-in-kind interest income) resulting from accelerated closing fee and OID amortization from prepayments and higher weighted average yield on debt investment balances
+Added: outstanding, partially offset by a decrease in average debt investment balances outstanding, during 2021 as compared to 2020.
+Added: summary of the changes in total expenses, including income tax provision, for the three months ended March 31, 2021 as compared to the same period in 2020 (dollars in millions):
Three Months Ended
−Removed: September 30,
% Change (1)(2)
2 unchanged sentences
Incentive fee - income
−Removed: Incentive fee - capital gains
+Added: Incentive fee (reversal) - capital gains
Administrative service expenses
1 unchanged sentence
Other general and administrative expenses
−Removed: Total expenses, before income incentive fee waiver
−Removed: Incentive fee waiver - income
Total expenses, before income tax provision
4 unchanged sentences
statements of operations.
−Removed: For the three months ended September 30, 2020, total expenses, including income tax
−Removed: provision, were $14.2 million, an increase of $2.4 million or 19.7%, from the $11.8 million of total expenses for the three months ended September 30, 2019.
+Added: For the three months ended March 31, 2021, total expenses, including income tax
+Added: provision, were $12.2 million, an increase of $9.6 million or 375.8%, from the $2.6 million of total expenses for the three months ended March 31, 2020.
As reflected in the table above, changes across periods were primarily
2 unchanged sentences
investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments, plus realized losses on extinguishment of debt during 2021 as compared to the same period in 2020.
−Removed: $0.5 million increase in interest and financing expenses due to an increase in average borrowings
−Removed: outstanding during 2020 as compared to 2019.
+Added: The reversal in the capital gains
+Added: incentive fee accrued for the three months ended March 31, 2020 was primarily driven by COVID related write-downs across the portfolio due to fair value calibration to public company multiples.
$0.8 million net increase in the income incentive fee due to a $3.5 million increase in pre-incentive fee net investment income during 2021 as compared to the same period in 2020.
−Removed: $0.1 million increase in professional fees due to increased legal, audit and tax compliance costs during
−Removed: 2020 as compared to 2019.
−Removed: Below is a summary of the changes in total expenses, including income tax provision for the
−Removed: nine months ended September 30, 2020 as compared to the same period in 2019 (dollars in millions):
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: % Change (1)(2)
−Removed: Interest and financing expenses
−Removed: Base management fee
−Removed: Incentive fee - income
−Removed: Incentive fee - capital gains
−Removed: Administrative service expenses
−Removed: Professional fees
−Removed: Other general and administrative expenses
−Removed: Total expenses, before income incentive fee waiver
−Removed: Incentive fee waiver - income
−Removed: Total expenses, before income tax provision
−Removed: Income tax provision (benefit)
−Removed: Total expenses, including income tax provision
−Removed: NM = Not meaningful
−Removed: Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
−Removed: statements of operations.
−Removed: For the nine months ended September 30, 2020, total expenses, including income tax
−Removed: provision, were $28.0 million, a decrease of $(3.0) million, or (10.0)%, from the $31.0 million of total expenses, including income tax provision, for the nine months ended September 30, 2019.
−Removed: As reflected in the table above, the
−Removed: decrease is primarily attributable to the following:
$0.3 million increase in interest and financing expenses due to an increase in average borrowings
outstanding during 2021 as compared to 2020.
−Removed: $0.6 million increase in base management fee due to higher average total assets during 2020 as compared to
−Removed: $0.3 million increase in professional fees due to increased legal, audit and tax compliance costs during
+Added: $0.2 million decrease in base management fee due to lower average total assets during 2021 as compared to
+Added: $0.2 million decrease in professional fees due to decreased legal, audit and tax compliance costs during
2021 as compared to 2020.
−Removed: No meaningful change in the income incentive fee as the $0.4 million net increase in the income incentive
−Removed: fee due to a $0.6 million increase in pre-incentive fee net investment income during 2020 was offset by a one-time $0.4 million incentive fee waiver
−Removed: during 2020 as compared to the same period in 2019.
−Removed: $(6.8) million decrease in the capital gains incentive fee due to a $(33.8) million increase in net
−Removed: (loss) on investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments, plus realized losses on extinguishment of debt), as compared to the same period in 2019.
Net Investment Income
−Removed: Net investment income decreased by $(0.5) million, or (6.2)%, to $6.9 million during the three months ended September 30, 2020 as
−Removed: compared to the same period in 2019, as a result of the $2.4 million increase in total expenses, including incentive fee waiver and income tax provision, partially offset by the $1.9 increase in total investment income.
−Removed: Net investment income increased by $6.9 million, or 26.3%, to $33.5 million during the nine months ended September 30, 2020 as
−Removed: compared to the same period in 2019, as a result of the $3.9 million increase in total investment income and a decrease in total expenses, including incentive fee waiver and income tax provision, of $(3.0) million.
+Added: Net investment income decreased by $(6.3) million, or (36.4)%, to $11.1 million during the three months ended March 31, 2021 as
+Added: compared to the same period in 2020, as a result of the $9.6 million increase in total expenses and income tax provision, partially offset by the $3.3 increase in total investment income.
Net Gain (Loss) on Investments
−Removed: For the three and nine months ended September 30, 2020, the total net realized gain on investments, before income tax provision on
−Removed: realized gains, was $1.3 million and $32.9 million, respectively.
−Removed: Income tax (provision) benefit from realized gains on investments was zero and $(1.1) for the three and nine months ended September 30, 2020, respectively.
−Removed: realized gains (losses) for the three and nine months ended September 30, 2020 are summarized below (dollars in millions):
−Removed: September 30, 2020
+Added: For the three months ended March 31, 2021, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was
+Added: $3.2 million.
+Added: There was no income tax (provision) benefit from realized gains on investments for the three months ended March 31, 2021.
+Added: Significant realized gains (losses) for the three months ended March 31, 2021 are summarized below
+Added: (dollars in millions):
Portfolio Company
Realization Event
+Added: Gains (Losses)
+Added: Software Technology, LLC
+Added: Exit of portfolio company
+Added: Rohrer Corporation
+Added: Exit of portfolio company
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.)
+Added: Sale of portfolio company
+Added: Net realized gain (loss) on investments
+Added: Income tax provision from realized gains on investments
+Added: Net realized gain (loss), net of income tax provision, on investments
+Added: As it relates to realization events, we define an exit of a portfolio company as situations where
+Added: we have completely exited our position in all of the portfolio companys securities and no longer carry the portfolio company on our schedule of investments.
+Added: We define a sale of a portfolio company, distinguished from an exit, as
+Added: situations where the underlying operations of a portfolio company have been sold, but where we retain a residual ownership interest in the legacy entity (we generally distinguish these residual portfolio company investments from active
+Added: portfolio company investments).
+Added: For the three months ended March 31, 2020, the total net realized gain/(loss) on
+Added: investments, before income tax (provision)/benefit, was $31.4 million.
+Added: Income tax (provision) benefit from realized gains on investments was $(1.1) for the three months ended March 31, 2020.
+Added: Significant realized gains (losses) for the
+Added: three months ended March 31, 2020 are summarized below (dollars in millions):
+Added: Portfolio Company
+Added: Realization Event
+Added: Gains (Losses)
Pfanstiehl, Inc.
2 unchanged sentences
Sale of portfolio company
−Removed: Microbiology Research Associates, Inc.
−Removed: Sale of portfolio company
Medsurant Holdings, LLC
12 unchanged sentences
Sold 50% of equity investment
−Removed: ControlScan, Inc.
+Added: Microbiology Research Associates, Inc.
Sold 50% of equity investment
+Added: Control Scan, Inc.
+Added: Sold 50% of equity investment
Alzheimers Research and Treatment Center, LLC
8 unchanged sentences
Sold 50% of equity investment
−Removed: New Era Technology, Inc.
−Removed: Escrow distribution
−Removed: Apex Microtechnology, Inc.
−Removed: Escrow distribution
Allied 100 Group, Inc.
2 unchanged sentences
Escrow distribution
−Removed: Allredi, LLC (fka Marco Group International OpCo, LLC)
+Added: Marco Group International OpCo, LLC
Sold 50% of equity investment
−Removed: Vanguard Dealer Services, L.L.C.
+Added: New Era Technology, Inc.
Escrow distribution
2 unchanged sentences
Net realized gain (loss) on investments
−Removed: Income tax (provision) benefit from realized gains on investments
−Removed: Net realized gain (loss), net of income tax provision, on investments
−Removed: As it relates to realization events, we define an exit of a portfolio company as situations where
−Removed: we have completely exited our position in all of the portfolio companys securities and no longer carry the portfolio company on our schedule of investments.
−Removed: We define a sale of a portfolio company, distinguished from an exit, as
−Removed: situations where the underlying operations of a portfolio company have been sold, but where we retain a residual ownership interest in the legacy entity (we generally distinguish these residual portfolio company investments from active
−Removed: portfolio company investments).
−Removed: For the three and nine months ended September 30, 2019, the total net realized gain
−Removed: (loss) on investments, before income tax provision on realized gains, was $10.5 million and $8.8 million, respectively.
−Removed: Income tax provision from realized gains on investments was $0.1 million and $(0.2) million for the three and nine
−Removed: months ended September 30, 2019, respectively.
−Removed: Significant realized gains (losses) for the three and nine months ended September 30, 2019 are summarized below (dollars in millions):
−Removed: Period Ended September 30, 2019
−Removed: Portfolio Company
−Removed: Realization Event
−Removed: The Wolf Organization, LLC
−Removed: Exit of portfolio company
−Removed: Vanguard Dealer Services, L.L.C.
−Removed: Sale of portfolio company
−Removed: New Era Technology, Inc.
−Removed: Exit of portfolio company
−Removed: Malabar International
−Removed: Escrow distribution
−Removed: inthinc Technology Solutions, Inc.
−Removed: Exit of portfolio company
−Removed: Trantech Radiator Products, Inc.
−Removed: Exit of portfolio company
−Removed: Consolidated Infrastructure Group Holdings, LP
−Removed: Exit of portfolio company
−Removed: K2 Industrial Services, Inc.
−Removed: Exit of portfolio company
−Removed: Net realized gain (loss) on investments
−Removed: Income tax (provision) benefit from realized gains on investments
+Added: Income tax provision from realized gains on investments
Net realized gain (loss), net of income tax provision, on investments
4 unchanged sentences
portfolio company investments).
−Removed: During the three and nine months ended September 30, 2020 and 2019, we recorded a
−Removed: net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):
+Added: During the three months ended March 31, 2021 and 2020, we recorded a net change in
+Added: unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Unrealized Appreciation (Depreciation)
4 unchanged sentences
Net Increase in Net Assets Resulting From Operations
−Removed: Net increase (decrease) in net assets resulting from operations during the three months ended September 30, 2020 and 2019 was
+Added: Net increase (decrease) in net assets resulting from operations during the three months ended March 31, 2021 and 2020 was
$11.5 million and ($27.0) million, respectively, as a result of the events described above.
−Removed: Net increase in net assets resulting
−Removed: from operations during the nine months ended September 30, 2020 and 2019 was $1.7 million and $28.5 million, respectively, as a result of the events described above.
Liquidity and Capital Resources
−Removed: As of September 30, 2020, we had $24.7 million in cash and cash equivalents and our net assets totaled $389.6 million.
+Added: As of March 31, 2021, we had $60.2 million in cash and cash equivalents and our net assets totaled $413.0 million.
believe that our current cash and cash equivalents on hand, our Credit Facility, our continued access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital
2 unchanged sentences
short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders.
−Removed: During the nine months ended September 30, 2020, we repaid $16.5 million of SBA debentures
−Removed: which would have matured during the period September 1, 2024 through September 1, 2028.
−Removed: Our remaining outstanding SBA debentures continue to mature in 2025 and subsequent years through 2030, which will require repayment on or before the
−Removed: respective maturity dates.
−Removed: For the nine months ended September 30, 2020, we experienced a net increase in cash and cash equivalents in the amount of
−Removed: $9.7 million.
−Removed: During that period, $47.1 million of cash was provided by operating activities, which included the funding of $86.1 million of investments, which were offset by proceeds received from sales and repayments of investments of
−Removed: $110.1 million.
−Removed: During the same period, we paid $24.2 million in cash dividends to stockholders, repaid net SBA debentures of $10.5 million, repaid net borrowings of $2.0 million under our Credit Facility, paid deferred financing
−Removed: costs related to our debt financings of $0.5 million, and repurchased of common stock under the Stock Repurchase Program of $0.3 million.
+Added: During the three months ended March 31, 2021, we repaid $19.2 million of SBA debentures which
+Added: would have matured during the period September 1, 2025 through March 1, 2028.
+Added: Our remaining outstanding SBA debentures continue to mature in 2025 and subsequent years through 2031, which will require repayment on or before the respective
+Added: maturity dates.
+Added: For the three months ended March 31, 2021, we experienced a net decrease in cash and cash equivalents in the amount of $64.1 million.
+Added: During that period, we received proceeds of $43.5 million of cash for operating activities, which included proceeds received from sales and repayments of investments of $98.6 million, which were partially offset by the funding of
+Added: $63.1 million of investments.
+Added: During the same period, we received proceeds of $15.0 million from borrowings under our Credit Facility, made principal payments of $100.0 million on outstanding notes, made repayments of SBA debentures
+Added: of $19.2 million;
+Added: which were partially offset by proceeds from the issuances of SBA debentures of $6.0 million, paid cash dividends paid to stockholders of $9.3 million, and made payment of deferred financing costs related to our debt
+Added: financings of $0.1 million.
Capital Resources
−Removed: anticipate that we will continue to fund our investment activities on a long-term basis through a combination of additional debt and equity capital.
+Added: We anticipate that we will continue to fund our investment activities on a long-term basis through a combination of additional debt and equity
SBA debentures
−Removed: are licensed SBICs, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates.
−Removed: Under the Small Business Investment Act and the SBA rules applicable to SBICs, an SBIC can have outstanding at any time debentures
−Removed: guaranteed by the SBA in an amount up to twice its regulatory capital.
−Removed: The SBA regulations currently limit the amount that is available to be borrowed by any SBIC and guaranteed by the SBA to 300.0% of an SBICs regulatory capital or
−Removed: $175.0 million, whichever is less.
−Removed: For three or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million.
−Removed: SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable semi-annually.
+Added: The Funds are licensed SBICs, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates.
+Added: Under the Small
+Added: Business Investment Act and the SBA rules applicable to SBICs, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital.
+Added: The SBA regulations currently limit the amount that is
+Added: available to be borrowed by any SBIC and guaranteed by the SBA to 300.0% of an SBICs regulatory capital or $175.0 million, whichever is less.
+Added: For two or more SBICs under common control, the maximum amount of outstanding SBA debentures
+Added: cannot exceed $350.0 million.
+Added: SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable
+Added: semi-annually.
The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time.
−Removed: As of September 30, 2020, Fund II and Fund III had $133.5 million and $13.5 million of outstanding SBA debentures, respectively.
−Removed: Subject to SBA regulatory requirements and
−Removed: approval, Fund III may access up to $161.5 million of additional SBA debentures under the SBIC debenture program.
−Removed: For more information on the SBA debentures, please refer to Note 6 to our consolidated financial statements.
+Added: As of March 31, 2021, Fund II and Fund III had $114.3 million and
+Added: $19.5 million of outstanding SBA debentures, respectively.
+Added: Subject to SBA regulatory requirements and approval, Fund III may access up to $155.5 million of additional SBA debentures under the SBIC debenture program.
+Added: For more information on
+Added: the SBA debentures, please refer to Note 6 to our consolidated financial statements.
Credit Facility
−Removed: 2014, we entered into the Credit Facility to provide additional funding for our investment and operational activities.
−Removed: On April 24, 2019, we entered into the Amended Credit Agreement, which amends, restates, and replaces the Credit Facility.
−Removed: June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were unchanged.
−Removed: Among other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including to amend the minimum
−Removed: consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on June 30, 2020, 2.00 to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020, and 1.75 to 1.00 for
−Removed: each four quarter period ending at the end of each quarter thereafter.
−Removed: The Credit Facility is secured by substantially all of our assets, excluding the assets of the Funds.
−Removed: Under the Amended Credit Agreement, (i) revolving commitments by lenders were increased from $90.0 million to $100.0 million,
−Removed: with an accordion feature that allows for an increase in total commitments up to $250.0 million, subject to satisfaction of certain conditions at the time of any such future increase, (ii) the maturity date of the credit facility was
−Removed: extended from June 16, 2019 to April 24, 2023, and (iii) borrowings under the Credit Facility bear interest, at our election, at a rate per annum equal to (a) 3.00% (or 2.75% if certain conditions are satisfied, including if
−Removed: (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans is greater than or equal to 35%, and (z) the
−Removed: contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater than or equal to 60%) plus the one, two, three or six month LIBOR
−Removed: rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus 1.0%, and (D) zero.
−Removed: commitment fee that varies depending on the size of the unused portion of the Credit Facility:
−Removed: 3.00% per annum on the unused portion of the Credit Facility at or below 35% of the commitments and 0.50% per annum on any remaining unused portion of the
−Removed: Credit Facility between the total commitments and the 35% minimum utilization.
−Removed: The Amended Credit Agreement also modifies certain covenants in the Credit Facility, including to provide for a minimum asset coverage ratio of 2.00 to 1 (on a regulatory
+Added: In June 2014, we entered into the Credit Facility to provide additional funding for our investment and operational activities.
+Added: April 24, 2019, we entered into the Amended Credit Agreement, which amends, restates, and replaces the Credit Facility.
+Added: On June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were unchanged.
+Added: other revisions, the amendment to the Amended Credit Agreement
+Added: modifies certain covenants therein, including to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on June 30, 2020, 2.00 to 1.00
+Added: for the four quarter periods ending on each of September 30, 2020 and December 31, 2020, and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter.
+Added: The Credit Facility is secured by substantially all of our
+Added: assets, excluding the assets of the Funds.
+Added: Under the Amended Credit Agreement, (i) revolving commitments by lenders were increased
+Added: from $90.0 million to $100.0 million, with an accordion feature that allows for an increase in total commitments up to $250.0 million, subject to satisfaction of certain conditions at the time of any such future increase,
+Added: (ii) the maturity date of the credit facility was extended from June 16, 2019 to April 24, 2023, and (iii) borrowings under the Credit Facility bear interest, at our election, at a rate per annum equal to (a) 3.00% (or 2.75%
+Added: if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans is greater
+Added: than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater than or equal to 60%) plus
+Added: the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus
+Added: 1.0%, and (D) zero.
+Added: We pay a commitment fee that varies depending on the size of the unused portion of the Credit Facility:
+Added: 3.00% per annum on the unused portion of the Credit Facility at or below 35% of the commitments and 0.50% per annum on
+Added: any remaining unused portion of the Credit Facility between the total commitments and the 35% minimum utilization.
+Added: The Amended Credit Agreement also modifies certain covenants in the Credit Facility, including to provide for a minimum asset coverage
+Added: ratio of 2.00 to 1 (on a regulatory basis).
The Credit Facility is secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.
6 unchanged sentences
These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility.
−Removed: As of September 30, 2020, we were in compliance with
−Removed: all covenants of the Credit Facility.
+Added: As of March 31, 2021, we were in compliance with all
+Added: covenants of the Credit Facility and there were $15.0 million of borrowings outstanding under the Credit Facility.
On February 2, 2018, we closed the public offering of approximately $43.5 million in aggregate principal amount of our 5.875% notes
7 unchanged sentences
The 2023 Notes are listed on the NASDAQ
−Removed: Global Select Market under the trading symbol FDUSL. As of September 30, 2020, the outstanding principal balance of the 2023 Notes was $50.0 million.
+Added: Global Select Market under the trading symbol FDUSL.
+Added: On January 19, 2021, we redeemed $50.0 million of the
+Added: aggregate principal amount on the 2023 Notes, resulting in a realized loss on extinguishment of debt of approximately $0.8 million.
On February 8, 2019, we closed the public offering of approximately $60.0 million in aggregate principal amount of our 6.000% notes
7 unchanged sentences
Interest on the 2024 Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each year, beginning May 15, 2019.
−Removed: 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ. As of September 30, 2020, the outstanding principal balance of the 2024 Notes was $69.0 million.
−Removed: On October 16, 2019, we closed the public offering of approximately $55.0 million in aggregate principal amount of our 5.375% notes
−Removed: due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and the February 2024 Notes, the Public Notes).
−Removed: On October 23, 2019, the underwriters exercised their option to purchase an additional
−Removed: $8.3 million in aggregate principal of the November 2024 Notes.
−Removed: The total net proceeds to us from the November 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately
−Removed: $1.9 million and offering expenses of $0.3 million, were approximately $61.1 million.
−Removed: The November 2024 Notes will mature
−Removed: on November 1, 2024 and bear interest at a rate of 5.375%.
−Removed: The November 2024 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after November 1, 2021.
−Removed: Interest on the November 2024 Notes is
−Removed: payable quarterly on February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2020.
−Removed: The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG. As
−Removed: of September 30, 2020, the outstanding principal balance of the November 2024 Notes was approximately $63.3 million.
−Removed: Notes are unsecured obligations and rank pari passu with our future unsecured indebtedness;
−Removed: effectively subordinated to all of our existing and future secured indebtedness;
−Removed: and structurally subordinated to all existing and future indebtedness and
−Removed: other obligations of any of our subsidiaries, financing vehicles, or similar facilities we may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.
−Removed: As of September 30, 2020, the weighted average stated interest rates for our SBA debentures, Public Notes, and the Credit Facility were
−Removed: 3.297%, 5.749%, and 3.188% respectively.
−Removed: As of September 30, 2020, we had $77.0 million of unutilized commitment under our Credit Facility, and we were subject to a 0.890% fee on such amount.
−Removed: As of September 30, 2020, the weighted
−Removed: average stated interest rate on total debt outstanding was 4.558%.
−Removed: As a BDC, we are generally required to meet an asset coverage ratio of
−Removed: at least 200.0% (or 150.0% on and after April 29, 2020) (defined as the ratio which the value of our consolidated total assets, less all consolidated liabilities and indebtedness not represented by senior securities, bears to the aggregate
−Removed: amount of senior securities representing indebtedness), which includes borrowings and any preferred stock we may issue in the future.
+Added: 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ.
+Added: On February 16, 2021, we
+Added: redeemed $50.0 million of the $69.0 million aggregate principal amount on the February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately $1.1 million.
+Added: As of March 31, 2021, the outstanding
+Added: principal balance of the 2024 Notes was $19.0 million.
+Added: On October 16, 2019, we closed the public offering of approximately $55.0 million
+Added: in aggregate principal amount of our 5.375% notes due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and the February 2024 Notes, the Public Notes).
+Added: On October 23, 2019, the underwriters exercised
+Added: their option to purchase an additional $8.3 million in aggregate principal of the November 2024 Notes.
+Added: The total net proceeds to us from the November 2024 Notes, including the exercise of the underwriters option, after deducting
+Added: underwriting discounts of approximately $1.9 million and offering expenses of $0.3 million, were approximately $61.1 million.
+Added: The November 2024 Notes will mature on November 1, 2024 and bear interest at a rate of 5.375%.
+Added: The November 2024 Notes may be redeemed in
+Added: whole or in part at any time or from time to time at our option on or after November 1, 2021.
+Added: Interest on the November 2024 Notes is payable quarterly on February 1, May 1, August 1 and November 1 of each year, beginning
+Added: February 1, 2020.
+Added: The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG. As of March 31, 2021, the outstanding principal balance of the November 2024 Notes was approximately
+Added: $63.3 million.
+Added: On December 23, 2020, we closed the offering of approximately $125.0 million in aggregate principal amount
+Added: of our 4.75% notes due 2026, or the 2026 Notes (collectively with the Public Notes, the Notes).
+Added: The total net proceeds to us from the 2026 Notes after deducting underwriting discounts of approximately $2.5 million and
+Added: estimated offering expenses of $0.4 million, were approximately $122.1 million.
+Added: The 2026 Notes will mature on January 31,
+Added: 2026 and bear interest at a rate of 4.75%.
+Added: The 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity.
+Added: Interest on the 2026
+Added: Notes is payable on January 31 and July 31 of each year, beginning July 31, 2021.
+Added: We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
+Added: The Notes are unsecured obligations and rank pari passu with our future unsecured indebtedness;
+Added: effectively subordinated to all of our
+Added: existing and future secured indebtedness;
+Added: and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities we may form in the future, with respect to
+Added: claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.
+Added: As of March 31, 2021, the weighted average
+Added: stated interest rates for our SBA debentures, Notes, and the Credit Facility were 3.102%, 5.055%, and 4.117% respectively.
+Added: As of March 31, 2021, we had $85.0 million of unutilized commitment under our Credit Facility, and we were subject
+Added: to a 1.088% fee on such amount.
+Added: As of March 31, 2021, the weighted average stated interest rate on total debt outstanding was 4.282%.
+Added: As a BDC, we are generally required to meet an asset coverage ratio of at least 150.0% (defined as the ratio which the value of our
+Added: consolidated total assets, less all consolidated liabilities and indebtedness not represented by senior securities, bears to the aggregate amount of senior securities representing indebtedness), which includes borrowings and any preferred stock we
+Added: may issue in the future.
This requirement limits the amount that we may borrow.
−Removed: We have received exemptive relief from the SEC to allow us
−Removed: to exclude any indebtedness guaranteed by the SBA and issued by the Funds from the 200.0% asset coverage requirements, which, in turn, will enable us to fund more investments with debt capital.
−Removed: Recent legislation, however, modifies the required
−Removed: minimum asset coverage ratio from 200.0% to 150.0%, if certain requirements are met.
−Removed: Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is
−Removed: present, approve a proposal to do so.
−Removed: If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval.
−Removed: Alternatively, the legislation allows the majority of the Independent Directors to
−Removed: approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval.
−Removed: On April 29, 2019, the Board, including a majority of the Independent Directors,
−Removed: approved a minimum asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act.
−Removed: As a result, we became subject to the 150% asset coverage ratio effective as of April 29, 2020.
−Removed: At present time, we do not intend to seek
−Removed: stockholder approval to reduce our asset coverage requirement.
−Removed: As of September 30, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $205.3 million, for which our asset coverage was 289.8%.
−Removed: The SBA-guaranteed debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective March 27, 2012.
−Removed: The asset coverage ratio for a
−Removed: class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.
−Removed: As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value per share.
−Removed: We may, however, sell
−Removed: our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if the Board, including the Independent Directors, determines that such sale is in the best
−Removed: interests of us and our stockholders, and if our stockholders approve such sale.
−Removed: On June 4, 2020, our stockholders voted to allow us to sell or otherwise issue common stock at a price below net asset value per share for a period of one year
−Removed: ending on the earlier of June 4, 2021 or the date of our 2021 Annual Meeting of Stockholders.
−Removed: We expect to present to our stockholders a similar proposal at our 2021 Annual Meeting of Stockholders.
−Removed: Our stockholders specified that the cumulative
−Removed: number of shares sold in each offering during the one-year period ending on the earlier of June 4, 2021 or the date of our 2021 Annual Meeting of Stockholders may not exceed 25.0% of our outstanding
−Removed: common stock immediately prior to each such sale.
+Added: We have received exemptive relief from the SEC to allow us to exclude any indebtedness guaranteed by the SBA and issued by the Funds from the 150.0% asset coverage
+Added: requirements, which, in turn, will enable us to fund more investments with debt capital.
+Added: As a BDC, we are generally not permitted to
+Added: issue and sell our common stock at a price below net asset value per share.
+Added: We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common
+Added: stock if the Board, including the Independent Directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale.
+Added: On June 4, 2020, our stockholders voted to allow us to sell or
+Added: otherwise issue common stock at a price below net asset value per share for a period of one year ending on the earlier of June 4, 2021 or the date of our 2021 Annual Meeting of Stockholders.
+Added: We expect to present to our stockholders a similar
+Added: proposal at our 2021 Annual Meeting of Stockholders.
+Added: Our stockholders specified that the cumulative number of shares sold in each offering during the one-year period ending on the earlier of June 4, 2021
+Added: or the date of our 2021 Annual Meeting of Stockholders may not exceed 25.0% of our outstanding common stock immediately prior to each such sale.
Stock Repurchase Program
3 unchanged sentences
policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints.
−Removed: The timing, manner, price and amount of any share repurchases will be determined by our
−Removed: management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate considerations.
−Removed: On October 26, 2020, the Board
−Removed: extended the Stock Repurchase Program through December 31, 2021, or until the approved dollar amount has been used to repurchase shares.
−Removed: The Stock Repurchase Program does not require us to repurchase any specific number of shares and we cannot
−Removed: assure that any shares will be repurchased under the Stock Repurchase Program.
+Added: The timing, manner, price and amount of any share
+Added: repurchases will be determined by our management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate
+Added: considerations.
+Added: On October 26, 2020, the Board extended the Stock Repurchase Program through December 31, 2021, or until the approved dollar amount has been used to repurchase shares.
+Added: The Stock Repurchase Program does not require us
+Added: to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock
+Added: Repurchase Program.
The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time.
−Removed: During the three and nine months ended September 30, 2020, we
−Removed: repurchased zero and 25,719 shares of common stock on the open market for zero and $0.3 million, respectively.
−Removed: We did not make any repurchases of common stock during the three and nine months ended September 30, 2019.
−Removed: Refer to Note 8 to
−Removed: our consolidated financial statements for additional information concerning stock repurchases.
+Added: We did not make any repurchases of common stock during the three months ended
+Added: March 31, 2021.
+Added: During the three months ended March 31, 2020, we repurchased 25,719 shares of common stock on the open market for $0.3 million.
+Added: Refer to Note 8 to our consolidated financial statements for additional information
+Added: concerning stock repurchases.
Critical Accounting Policies and Use of Estimates
−Removed: The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions
−Removed: affecting amounts reported in the financial statements.
−Removed: We have identified investment valuation and revenue recognition as our most critical accounting estimates.
−Removed: We continuously evaluate our estimates, including those related to the matters
−Removed: described below.
+Added: The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions affecting amounts
+Added: reported in the financial statements.
+Added: We have identified investment valuation, revenue recognition and transfers of financial assets as our most critical accounting policies and estimates.
+Added: We continuously evaluate our policies and estimates,
+Added: including those related to the matters described below.
These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances.
−Removed: Actual results could differ materially from those estimates
−Removed: under different assumptions or conditions.
+Added: Actual results could
+Added: differ materially from those estimates under different assumptions or conditions.
A discussion of our critical accounting policies follows.
24 unchanged sentences
The Board consulted with the independent valuation firm(s) in arriving at our determination of fair value for 11 and 12 of our portfolio company investments representing 27.3% and 25.8% of the total portfolio investments at fair value
−Removed: (exclusive of new portfolio company investments made during the three months ended September 30, 2020 and December 31, 2019, respectively) as of September 30, 2020 and December 31, 2019, respectively;
+Added: (exclusive of new portfolio company investments made during the three months ended March 31, 2021 and December 31, 2020, respectively) as of March 31, 2021 and December 31, 2020, respectively;
the audit committee of the Board reviews the preliminary valuations of the Investment Advisor and of the
13 unchanged sentences
flows of either an individual debt investment or of the underlying portfolio company itself.
−Removed: We evaluate investments in portfolio
−Removed: companies using the most recent portfolio company financial statements and forecasts.
−Removed: We also consult with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information
−Removed: such as industry trends, new product development and other operational issues.
−Removed: For our debt investments the primary valuation technique
−Removed: used to estimate the fair value is the discounted cash flow method.
−Removed: However, if there is deterioration in credit quality or a debt investment is in workout status, we may consider other methods in determining the fair value, including the value
−Removed: attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis.
−Removed: Our discounted cash flow models estimate a range of fair values by applying an appropriate
−Removed: discount rate to the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated debt investment agreements.
−Removed: We prepare a weighted average cost of capital for use in the discounted
−Removed: cash flow model for each investment, based on factors including, but not limited to:
+Added: We evaluate investments in portfolio companies using the most recent portfolio company
+Added: financial statements and forecasts.
+Added: We also consult with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information such as industry trends, new product development and
+Added: other operational issues.
+Added: For our debt investments the primary valuation technique used to estimate the fair value is the discounted cash
+Added: However, if there is deterioration in credit quality or a debt investment is in workout status, we may consider other methods in determining the fair value, including the value attributable to the debt investment from the enterprise
+Added: value of the portfolio company or the proceeds that would be received in a liquidation analysis.
+Added: Our discounted cash flow models estimate a range of fair values by applying an appropriate discount rate to the future cash flow streams of our debt
+Added: investments, based on future interest and principal payments as set forth in the associated debt investment agreements.
+Added: We prepare a weighted average cost of capital for use in the discounted cash flow model for each investment, based on factors
+Added: including, but not limited to:
current pricing and credit metrics for similar proposed or executed investment transactions of private companies;
−Removed: the portfolio companys historical financial
−Removed: results and outlook;
−Removed: and the portfolio companys current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made.
−Removed: We may also consider the following factors when determining the fair value
−Removed: of debt investments:
−Removed: the portfolio companys ability to make future scheduled payments;
+Added: the portfolio companys historical financial results and outlook;
+Added: and the portfolio companys
+Added: current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made.
+Added: We may also consider the following factors when determining the fair value of debt investments:
+Added: the portfolio companys
+Added: ability to make future scheduled payments;
prepayment penalties and other fees;
1 unchanged sentence
the nature and realizable value of any collateral securing such debt investment;
−Removed: in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.
−Removed: We estimate the remaining life of our debt investments to generally be the legal maturity date of the instrument,
−Removed: as we generally intend to hold debt investments to maturity.
−Removed: However, if we have information available to us that the debt investment is expected to be repaid in the near term, we would use an estimated remaining life based on the expected repayment
−Removed: For our equity investments, including equity securities and warrants, we generally use a market approach, including valuation
−Removed: methodologies consistent with industry practice, to estimate the enterprise value of portfolio companies.
+Added: and changes in the interest rate environment and the credit
+Added: markets that generally may affect the price at which similar investments may be made.
+Added: We estimate the remaining life of our debt investments to generally be the legal maturity date of the instrument, as we generally intend to hold debt investments
+Added: However, if we have information available to us that the debt investment is expected to be repaid in the near term, we would use an estimated remaining life based on the expected repayment date.
+Added: For our equity investments, including equity securities and warrants, we generally use a market approach, including valuation methodologies
+Added: consistent with industry practice, to estimate the enterprise value of portfolio companies.
Typically, the enterprise value of a private company is based on multiples of EBITDA, net income, revenues, or in limited cases, book value.
−Removed: estimating the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio companys historical and projected financial
−Removed: results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial
−Removed: ratios of peer companies that are public.
−Removed: We may also utilize an income approach when estimating the fair value of our equity securities,
−Removed: either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the fair value ranges determined by the market approach.
−Removed: We typically prepare
−Removed: and analyze discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.
−Removed: We consider various factors, including but not limited to the portfolio companys projected financial results,
−Removed: applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public.
−Removed: The fair value of our royalty rights are calculated based on projected future cash flows and
−Removed: the specific provisions contained in the pertinent royalty agreement.
−Removed: The determination of the fair value of such royalty rights is not a significant component of our valuation process.
+Added: In estimating
+Added: the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio companys historical and projected financial results,
+Added: applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of
+Added: peer companies that are public.
+Added: We may also utilize an income approach when estimating the fair value of our equity securities, either as
+Added: a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the fair value ranges determined by the market approach.
+Added: We typically prepare and analyze
+Added: discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.
+Added: We consider various factors, including but not limited to the portfolio companys projected financial results, applicable
+Added: market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public.
Determination of fair value involves subjective judgments and estimates.
25 unchanged sentences
PIK income that has been contractually
−Removed: capitalized to the principal balance of the investment prior to the non-accrual designation date is not reserved against interest or dividend income, but rather is assessed through the valuation of the
−Removed: investment (with corresponding adjustments to unrealized depreciation, as applicable).
−Removed: PIK income is included in our taxable income and, therefore, affects the amount we are required to pay to our stockholders in the form of dividends in order to
−Removed: maintain our tax treatment as a RIC and to avoid paying corporate-level U.S.
+Added: capitalized to the principal balance of the
+Added: investment prior to the non-accrual designation date is not reserved against interest or dividend income, but rather is assessed through the valuation of
+Added: the investment (with corresponding adjustments to unrealized depreciation, as applicable).
+Added: PIK income is included in our taxable income and, therefore, affects the amount we are required to pay to our stockholders in the form of dividends in order
+Added: to maintain our tax treatment as a RIC and to avoid paying corporate-level U.S.
federal income tax, even though we have not yet collected the cash.
16 unchanged sentences
Upon the prepayment of a debt investment, any prepayment penalties are recorded as fee income when earned.
+Added: Company elected to change the manner in which it presents the recognition of management services fees income.
+Added: Previously, the Company classified management services fees as a component of interest on idle funds and other income on the Consolidated
+Added: Statement of Operations.
+Added: Comparative prior periods presented have been reclassified retrospectively to conform to the revised presentation.
+Added: There is no change in historical net increase in net assets resulting from operations due to this change in
+Added: presentation.
We also typically receive debt investment origination or closing fees in connection with investments.
−Removed: Such debt investment origination and
−Removed: closing fees are capitalized as unearned income and offset against investment cost basis on our consolidated statements of assets and liabilities and accreted into interest income over the term of the investment.
−Removed: Upon the prepayment of a debt
−Removed: investment, any unaccreted debt investment origination and closing fees are accelerated into interest income.
+Added: Such debt investment
+Added: origination and closing fees are capitalized as unearned income and offset against investment cost basis on our consolidated statements of assets and liabilities and accreted into interest income over the term of the investment.
+Added: Upon the prepayment
+Added: of a debt investment, any unaccreted debt investment origination and closing fees are accelerated into interest income.
+Added: Transfers of Financial
+Added: Partial loan and equity sales.
+Added: The Company follows the guidance in ASC 860, Transfers and Servicing, when
+Added: accounting for loan (debt investment) participations, equity assignments and other partial loan sales.
+Added: Such guidance requires a participation, assignment or other partial loan or equity sale to meet the definition of a participating
+Added: interest, as defined in the guidance, in order for sale treatment to be allowed.
+Added: Participations, assignments or other partial loan or equity sales which do not meet the definition of a participating interest should remain on the Companys
+Added: consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing until the definition is met.
+Added: Management has determined that all participations, assignments and other partial loan or equity sale transactions entered
+Added: into by the Company have met the definition of a participating interest.
+Added: Accordingly, the Company uses sale treatment in accounting for such transactions.
Recently Issued Accounting Standards
−Removed: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)
−Removed: Changes to the Disclosure Requirements for Fair Value Measurement , which is intended to improve fair value disclosure requirements by removing disclosures that are not cost-beneficial, clarifying disclosures specific requirements, and
−Removed: adding relevant disclosure requirements.
−Removed: The guidance is effective for annual and interim reporting periods beginning after December 15, 2019.
−Removed: We adopted the ASU effective January 1, 2020.
−Removed: No significant changes to the fair value
−Removed: disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13.
−Removed: In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
−Removed: 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by
−Removed: reference rate reform if certain criteria are met.
−Removed: The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
−Removed: 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.
−Removed: The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging
−Removed: relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging
−Removed: relationship.
+Added: March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
+Added: 2020-04, Reference Rate Reform (Topic 848), which
+Added: provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
+Added: The amendments apply only to contracts, hedging relationships,
+Added: and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
+Added: ASU 2020-04 is effective for all entities as of March 12, 2020 through
+Added: December 31, 2022.
+Added: The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of
+Added: December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.
The Company is evaluating the potential impact that the adoption of ASU 2020-04 will have on the Companys consolidated financial statements.
−Removed: SEC Rule 12b-2 Update
−Removed: In March 2020, the
−Removed: SEC adopted a final rule under SEC Release No.
−Removed: 34-88365 (the Final Rule), amending the accelerated filer and large accelerated filer definitions in Exchange Act Rule 12b-2.
−Removed: The amendments
−Removed: include a provision under which a BDC will be excluded from the accelerated filer and large accelerated filer definitions if the BDC has (1) a public float of $75 million or more, but less than $700 million,
−Removed: and (2) has annual investment income of less than $100 million.
−Removed: In addition, BDCs are subject to the same transition provisions for accelerated filer and large accelerated filer status as other issuers, but instead substituting investment
−Removed: income for revenue.
−Removed: The amendments will reduce the number of issuers required to comply with the auditor attestation on the internal control over financial reporting requirement provided under Section 404(b) of the Sarbanes-Oxley Act of
−Removed: The Final Rule applies to annual report filings due on or after April 27, 2020.
−Removed: The Company is currently assessing this Final Rule, but believes it will no longer be an accelerated filer.
+Added: SEC Rule 1-02(w)(2) Update
+Added: In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the
+Added: financial statements of certain of their portfolio companies or certain acquired funds (the Final Rules).
+Added: The Final Rules adopted a new definition of significant subsidiary set forth in
+Added: Rule 1-02(w)(2) of Regulation S-X under the Securities Act.
+Added: Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial
+Added: statements or summary financial information, respectively, in such investment companys periodic reports for any portfolio company that meets the definition of significant subsidiary. The Final Rules adopt a new definition of
+Added: significant subsidiary applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of significant subsidiary in Rule 1-02(w) of Regulation S-X.
+Added: The new Rule 1-02(w)(2) of
+Added: Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company.
+Added: The Final Rules became
+Added: effective on January 1, 2021, however the Company elected to early adopt this rule change as of December 31, 2020.
+Added: The adoption of this guidance did not have a material impact on the Companys Consolidated Financial Statements.
+Added: SEC Regulation S-K Update
+Added: In November 2020, the SEC issued a final rule that modernized and simplifies Managements Discussion and Analysis of Financial Condition
+Added: and Results of Operations and certain financial disclosure requirements in Regulation S-K (the Amendments).
+Added: Specifically, the Amendments:
+Added: (i) eliminate Item 301 of Regulation S-K (Selected Financial Data);
+Added: (ii) simplify Item 302 of Regulation S-K (Supplementary Financial Information);
+Added: and (iii) amend certain
+Added: aspects of Item 303 of Regulation S-K (Managements Discussion and Analysis of Financial Condition and Results of Operations).
+Added: The Amendments became effective on February 10, 2021 and compliance
+Added: will be required for the registrants fiscal year ending on or after August 9, 2021.
+Added: Early adoption of the Amendments is permitted on
+Added: an item-by-item basis after the effective date;
+Added: however, a registrant must fully comply with each adopted item in its entirety.
+Added: The Company adopted the
+Added: Amendments on the effective date which did not have a material impact on the Companys Consolidated Financial Statements.
Off-Balance Sheet Arrangements
−Removed: We may be a party to financial instruments with off-balance sheet risk in the normal course of business
−Removed: to meet the financial needs of our portfolio companies.
−Removed: We had off-balance sheet arrangements consisting of outstanding commitments to fund various undrawn revolving loans, other debt investments and capital
−Removed: commitments totaling $4.0 and 4.8 million as of September 30, 2020 and December 31, 2019, respectively.
−Removed: Such outstanding commitments are summarized in the following table (dollars in millions):
−Removed: September 30, 2020
+Added: We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies.
+Added: We had off-balance sheet arrangements consisting of outstanding
+Added: commitments to fund various undrawn revolving loans, other debt investments and capital commitments totaling $7.6 and 5.6 million as of March 31, 2021 and December 31, 2020, respectively.
+Added: Such outstanding commitments are summarized in
+Added: the following table (dollars in millions):
+Added: March 31, 2021
December 31, 2020
2 unchanged sentences
- Revolving Loan
−Removed: FDS Avionics Corp.
−Removed: (dba Flight Display Systems) - Revolving Loan
−Removed: French Transit, LLC - Revolving Loan
+Added: CRS Solutions Holdings, LLC (dba CRS Texas) - Common Equity (Units)
+Added: Elements Brands, LLC - Revolving Loan
Rhino Assembly Company, LLC - Delayed Draw Commitment
Safety Products Group, LLC - Common Equity (Units)
+Added: Spectra A&D Acquisition, Inc.
+Added: (fka FDS Avionics Corp.) - Revolving Loan
+Added: Wonderware Holdings, LLC (dba CORE Business Technologies) - Delayed Draw Term Loan
+Added: - Delayed Draw Term Loan
Portfolio company was no longer held at period end.
4 unchanged sentences
entered into a number of business relationships with affiliated or related parties, including the following:
−Removed: We have entered into the Investment Advisory Agreement with Fidus Investment Advisors as our investment advisor.
+Added: We have entered into the Investment Advisory Agreement with Fidus Investment
+Added: Advisors as our investment advisor.
Pursuant to the agreement, the Investment Advisor manages our day-to-day operating and investing activities.
−Removed: We pay the Investment Advisor a fee for its services under
−Removed: the Investment Advisory Agreement consisting of two components a base management fee and an incentive fee.
+Added: We pay the Investment
+Added: Advisor a fee for its services under the Investment Advisory Agreement consisting of two components a base management fee and an incentive fee.
See Note 5 to our consolidated financial statements.
Ross, our Chairman and Chief Executive Officer, and Thomas C.
−Removed: Lauer, our President, are managers of
−Removed: Fidus Investment Advisors.
−Removed: In May 2015, Fidus Investment Advisors entered into a combination with Fidus Partners, LLC (the Combination), by which members of Fidus Investment Advisors and Fidus Partners, LLC (Partners)
−Removed: contributed all of their respective membership interest in Fidus Investment Advisors and Partners to a newly formed limited liability company, Fidus Group Holdings, LLC (Holdings).
−Removed: As a result, Fidus Investment Advisors is a wholly-owned
−Removed: subsidiary of Holdings, which is a limited liability company organized under the laws of Delaware.
−Removed: We entered into the Administration Agreement with Fidus Investment Advisors to provide us with the office
−Removed: facilities and administrative services necessary to conduct day-to-day operations.
+Added: Lauer, our President, are managers of Fidus Investment Advisors.
+Added: In May 2015, Fidus Investment Advisors entered into a combination with Fidus Partners, LLC (the Combination), by which members of Fidus Investment Advisors and Fidus
+Added: Partners, LLC (Partners) contributed all of their respective membership interest in Fidus Investment Advisors and Partners to a newly formed limited liability company, Fidus Group Holdings, LLC (Holdings).
+Added: As a result, Fidus
+Added: Investment Advisors is a wholly-owned subsidiary of Holdings, which is a limited liability company organized under the laws of Delaware.
+Added: We entered into the Administration Agreement with Fidus Investment Advisors
+Added: to provide us with the office facilities and administrative services necessary to conduct day-to-day operations.
See Note 5 to our consolidated financial statements.
−Removed: We entered into a license agreement with Fidus Partners, LLC, pursuant to which Fidus Partners, LLC has granted
−Removed: us a non-exclusive, royalty-free license to use the name Fidus.
−Removed: On February 25, 2020, the Company entered into a Limited Partnership Agreement (the Agreement)
−Removed: with Fidus Equity Fund I, L.P.
+Added: We entered into a license agreement with Fidus Partners, LLC, pursuant to
+Added: which Fidus Partners, LLC has granted us a non-exclusive, royalty-free license to use the name Fidus.
+Added: On February 25, 2020, the Company entered into a Limited Partnership
+Added: Agreement (the Agreement) with Fidus Equity Fund I, L.P.
Pursuant to the Agreement, we will serve as the General Partner of FEF I.
−Removed: Owned by third-party investors, FEF I was formed to purchase 50% of select equity investments from us.
−Removed: February 25, 2020, we sold 50% of our equity investments in 20 portfolio companies to FEF I and received net proceeds of $35.9 million, resulting in a realized gain, net of estimated taxes, of approximately $20.4 million.
−Removed: receive any fees from FEF I for any services provided in our capacity as the General Partner of FEF I.
−Removed: The Investment Advisor, in consultation with the Board, agreed to voluntarily waive $0.4 of the income incentive
−Removed: fee for the nine months ended September 30, 2020.
−Removed: There was no income incentive fee waiver for the three months ended September 30, 2020 and the three and nine months ended September 30, 2019.
+Added: Owned by third-party investors, FEF I was formed to purchase 50% of select
+Added: equity investments from us.
+Added: On February 25, 2020, we sold 50% of our equity investments in 20 portfolio companies to FEF I and received net proceeds of $35.9 million, resulting in a realized gain, net of estimated taxes, of approximately
+Added: $20.4 million.
+Added: We will not receive any fees from FEF I for any services provided in our capacity as the General Partner of FEF I.
In connection with the IPO and our election to be regulated as a BDC, we applied for and received exemptive relief from the SEC on
10 unchanged sentences
with our investment objective and strategies.
−Removed: In addition, we and the Investment Advisor have each adopted a joint code of ethics
+Added: In addition, we and our Investment Advisor have each adopted a joint code of ethics
pursuant to Rule 17j-1 under the 1940 Act that governs the conduct of our and the Investment Advisors officers, directors and employees.
−Removed: Additionally, the Investment Advisor has adopted a code of ethics pursuant to
−Removed: rule 204A-1 under the Investment Advisers Act of 1940, as amended, and in accordance with Rule 17j-1(c) under the 1940 Act.
−Removed: We have also adopted a code of business conduct that is applicable to all officers, directors and
−Removed: employees of Fidus and the Investment Advisor.
+Added: Additionally, the Investment Advisor has adopted a code
+Added: of ethics pursuant to rule 204A-1 under the Advisers Act of 1940 and in accordance with Rule 17j-1(c) under the 1940 Act.
+Added: We have also adopted a code
+Added: of business conduct that is applicable to all officers, directors and employees of Fidus and our Investment Advisor.
Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.
Recent Developments
−Removed: On October 1, 2020,
−Removed: we exited our debt and equity investments in Pugh Lubricants, LLC.
−Removed: We received payment in full of $26.6 million on our subordinated debt investment, which includes a prepayment fee.
−Removed: We received a distribution on our common equity investment for a
−Removed: realized gain of approximately $0.5 million.
−Removed: On October 26, 2020, our Board declared a regular quarterly dividend of $0.30 per share
−Removed: payable on December 18, 2020 to stockholders of record as of December 4, 2020.
−Removed: In addition, our Board of Directors declared a supplemental dividend of $0.04 per share payable December 18, 2020 to stockholders of record as of December 4, 2020.
−Removed: On October 28, 2020, we invested $6.0 million in second lien debt, which was a partial funding of a $12.0 million note commitment, and $1.5
−Removed: million common equity in a leading regional distributor of pool equipment and supplies.
−Removed: Subsequent to September 30, 2020, the global
−Removed: outbreak of the COVID-19 pandemic, and the related effect on the U.S.
+Added: April 1, 2021, we invested $11.0 million in first lien debt of Winona Foods, Inc., a leading provider of natural and processed cheese products, sauces, and plant-based alternatives.
+Added: On April 1, 2021, we invested $5.5 million in first lien debt and $1.0 million in common equity of Level Education Group, LLC
+Added: (dba CE4Less), a leading provider of online continuing education for mental health and nursing professionals.
+Added: On April 5, 2021, we
+Added: exited our debt investment in The Kyjen Company, LLC (dba Outward Hound).
+Added: We received payment in full of $15.0 million on our second lien debt, which includes a prepayment fee.
+Added: On April 5, 2021, we invested $25.5 million in first lien debt and common equity, and made a commitment up to $2.0 million of
+Added: additional first lien debt of ISI PSG Holdings, LLC (dba Incentive Solutions, Inc.), a tech-enabled incentive rewards and digital marketing firm that facilitates and optimizes its clients indirect sales channel strategies.
+Added: On April 14, 2021, we exited our debt investment in Medsurant Holdings, LLC.
+Added: received payment in full of $8.0 million on our second lien debt.
+Added: On April 29, 2021, we exited our debt investment in Virginia
+Added: Tile Company, LLC.
+Added: We received payment in full of $12.0 million on our second lien debt.
+Added: On May 3, 2021, our Board declared a
+Added: base quarterly dividend of $0.31 per share and a supplemental dividend of $0.08 per share payable June 28, 2021 to stockholders of record as of June 14, 2021.
+Added: Subsequent to March 31, 2021, the global outbreak of the COVID-19 pandemic, and the related
+Added: effect on the U.S.
and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies.
−Removed: The ultimate economic fallout from
−Removed: the pandemic, and the long-term impact on economies, markets, industries and individual issuers, remain uncertain.
−Removed: The operational and financial performance of the issuers of securities in which the Company invests depends on future developments,
−Removed: including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.
+Added: The ultimate economic fallout from the pandemic, and the long-term impact on
+Added: economies, markets, industries and individual issuers, remain uncertain.
+Added: The operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the
+Added: outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.