FIDUS INVESTMENT Corp

Previous wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fidus Mezzanine Capital, L.P. ("Fund I") and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fidus Mezzanine Capital II, L.P. ("Fund II"). On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III. On November 28, 2023, we commenced operations of a fourth wholly-owned subsidiary, Fund IV.

Current wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fidus Mezzanine Capital, L.P. (“Fund I”) and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. We commenced operations of Fidus Mezzanine Capital II, L.P. (“Fund II”), Fidus Mezzanine Capital III, L.P. (“Fund III”), and Fidus Mezzanine Capital IV, L.P. (“Fund IV”), each a wholly owned subsidiary, on March 29, 2013, April 18, 2018, and November 28, 2023, respectively.

Previous wording

We have certain wholly-owned subsidiaries (the “Taxable Subsidiaries”), each of which generally holds one or more of our portfolio investments listed on the consolidated schedules of investments, that have elected to be treated as corporations for U.S. federal income tax purposes and are thus subject to U.S. federal income tax at corporate rates. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that our consolidated financial statements reflect our investment in the portfolio company investments owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit us to hold equity investments in portfolio companies that are taxed as partnerships for U.S. federal income tax purposes (such as entities organized as limited liability companies (“LLCs”) or other forms of pass through entities) while complying with the “source-of-income” requirements contained in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with us for U.S. federal corporate income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal corporate income tax on its taxable income. Any such income or expense is reflected in the consolidated statements of operations.

Current wording

We have certain wholly-owned subsidiaries (the “Taxable Subsidiaries”), each of which generally holds one or more of our portfolio investments listed on the consolidated schedules of investments, and have elected to be treated as corporations for U.S. federal income tax purposes and are thus subject to U.S. federal income tax imposed at corporate rates. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that our consolidated financial statements reflect our investment in the portfolio company investments owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries are to permit us to hold equity investments in portfolio companies that are classified as partnerships for U.S. federal income tax purposes (such as entities organized as limited liability companies (“LLCs”) or other forms of pass through entities) while complying with the “source-of-income” requirements contained in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with us for U.S. federal income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal income tax on its taxable income. Any such income or expense is reflected in the consolidated statements of operations.

Previous wording

During the nine months ended September 30, 2024 and 2023, we invested $274.2 million and $204.0 million, respectively, in debt and equity investments including eleven and ten new portfolio companies, respectively. During the nine months ended September 30, 2024 and 2023, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $154.1 million and $146.4 million, respectively, including an exit of six and six portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the nine months ended September 30, 2024 and 2023 (dollars in millions).

Current wording

During the three months ended March 31, 2025 and 2024, we invested $115.6 million and $145.9 million, respectively, in debt and equity investments including seven and seven new portfolio companies, respectively. During the three months ended March 31, 2025 and 2024, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $57.3 million and $60.2 million, respectively, including an exit of two portfolio companies and one portfolio company, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the three months ended March 31, 2025 and 2024 (dollars in millions).

Previous wording

(1) For the nine months ended September 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 32.3% and 35.7% of purchases, respectively. For the nine months ended September 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 6.3% and 3.9% of repayments, respectively.

Current wording

(1) For the three months ended March 31, 2025 and 2024, first lien debt includes unitranche securities, which account for 51.5% and 36.5% of purchases, respectively. For the three months ended March 31, 2025 and 2024, first lien debt includes unitranche securities, which account for 1.0% and 3.0% of repayments, respectively.

Previous wording

As of September 30, 2024, the fair value of our investment portfolio totaled $1,090.7 million and consisted of 85 active portfolio companies and five portfolio companies that have sold their underlying operations. As of September 30, 2024, 49 portfolio companies’ debt investments bore interest at a variable rate, which represented $702.0 million, or 73.2%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $15.9 million as of September 30, 2024. As of September 30, 2024, our average active portfolio company investment at amortized cost was $12.6 million, which excludes investments in five portfolio companies that have sold their underlying operations.

Current wording

As of March 31, 2025, the fair value of our investment portfolio totaled $1.2 billion and consisted of 92 active portfolio companies and four portfolio companies that have sold their underlying operations. As of March 31, 2025, 52 portfolio companies’ debt investments bore interest at a variable rate, which represented $740.3 million, or 72.8%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $5.6 million as of March 31, 2025. As of March 31, 2025, our average active portfolio company investment at amortized cost was $12.5 million, which excludes investments in four portfolio companies that have sold their underlying operations.

Previous wording

As of December 31, 2023, the fair value of our investment portfolio totaled $957.9 million and consisted of 81 active portfolio companies and one portfolio company that has sold its underlying operations. As of December 31, 2023, 46 portfolio companies’ debt investments bore interest at a variable rate, which represented $629.3 million, or 75.6%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $21.3 million as of December 31, 2023. As of December 31, 2023, our average active portfolio company investment at amortized cost was $11.6 million, which excludes an investment in one portfolio company that has sold its underlying operations.

Current wording

As of December 31, 2024, the fair value of our investment portfolio totaled $1.1 billion and consisted of 87 active portfolio companies and four portfolio companies that have sold their underlying operations. As of December 31, 2024, 50 portfolio companies’ debt investments bore interest at a variable rate, which represented $704.0 million, or 74.5%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $15.3 million as of December 31, 2024. As of December 31, 2024, our average active portfolio company investment at amortized cost was $12.4 million, which excludes investments in four portfolio companies that have sold their underlying operations.

Previous wording

The weighted average yield on debt investments as of September 30, 2024 and December 31, 2023 was 13.8% and 14.2%, respectively. 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 our and our subsidiaries’ fees and expenses. 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.

Current wording

The weighted average yield on debt investments as of March 31, 2025 and December 31, 2024 was 13.2% and 13.3%, respectively. 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 our and our subsidiaries’ fees and expenses. 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.

Previous wording

(1) Includes unitranche investments, which account for 36.8% and 37.4% of our portfolio on a fair value and cost basis as of September 30, 2024, respectively. Includes unitranche investments, which account for 37.6% and 38.5% of our portfolio on a fair value and cost basis as of December 31, 2023, respectively.

Current wording

(1) Includes unitranche investments, which account for 44.6% and 44.7% of our portfolio on a fair value and cost basis as of March 31, 2025, respectively. Includes unitranche investments, which account for 39.9% and 40.4% of our portfolio on a fair value and cost basis as of December 31, 2024, respectively.

Previous wording

We also have observed, and continue to observe, supply chain disruptions, labor and resource shortages, commodity inflation, elements of financial market instability (including high interest rates), an uncertain economic outlook for the United States (which may include a recession), and elements of geopolitical instability (including the ongoing war in Ukraine and U.S. and China relations and ongoing conflict in the Middle East). In the event that the U.S. economy enters into a protracted recession, it is possible that the results of certain U.S. middle market companies could experience deterioration. We are closely monitoring the effect of such market volatility may have on our portfolio companies and our investment activities. We also are maintaining close communications with our portfolio companies and have also increased oversight of credits in vulnerable industries to mitigate any decline in loan performance and reduce credit risk.

Current wording

We also have observed, and continue to observe, commodity inflation, elements of financial market instability (including elevated interest rates), supply chain disruptions, changes to U.S. tariff and trade policies, labor and resource shortages, an uncertain economic outlook for the United States (which may include a recession), and elements of geopolitical instability (including the ongoing war in Ukraine and U.S. and China relations and ongoing conflict in the Middle East). In the event that the U.S. economy enters into a protracted recession, it is possible that the results of certain U.S. middle market companies could experience deterioration. We are closely monitoring the effect of such market volatility may have on our portfolio companies and our investment activities. We also are maintaining close communications with our portfolio companies and have also increased oversight of credits in vulnerable industries to mitigate any decline in loan performance and reduce credit risk.

Previous wording

As of September 30, 2024 and December 31, 2023, we had debt investments in three portfolio companies on non-accrual status (dollars in millions), respectively.

Current wording

As of March 31, 2025 and December 31, 2024, we had debt investments in four portfolio companies on non-accrual status (dollars in millions), respectively.

Previous wording

Comparison of three and nine months ended September 30, 2024 and 2023

Current wording

Comparison of three months ended March 31, 2025 and 2024

Previous wording

For the three months ended September 30, 2024, total investment income was $38.4 million, an increase of $4.2 million or 12.3%, from the $34.2 million of total investment income for the three months ended September 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Current wording

For the three months ended March 31, 2025, total investment income was $36.5 million, an increase of $1.8 million or 5.3%, from $34.7 million of total investment income for the three months ended March 31, 2024. As reflected in the table above, the increase is primarily attributable to the following:

Previous wording

$2.6 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to the same period in 2023.

Current wording

$2.5 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2025 as compared to the same period in 2024.

Previous wording

$1.1 million increase in dividend income due to an increase in distributions received from equity investments, during 2024 as compared to the same period in 2023.

Current wording

$0.8 million increase in dividend income due to an increase in distributions received from equity investments, during 2025 as compared to the same period in 2024.

Previous wording

$0.5 million increase in fee income resulting from an increase in amendment during 2024 as compared to the same period in 2023.

Current wording

$0.3 million decrease in fee income resulting from a decrease in amendment and management services fees during 2025 as compared to the same period in 2024.

Previous wording

$1.0 million increase in interest on idle funds due to an increase in average cash balances outstanding during 2024 as compared to the same period in 2023.

Current wording

$1.2 million decrease in interest on idle funds and other income resulting from a decrease in average cash balances outstanding during 2025 as compared to the same period in 2024.

Previous wording

For the three months ended September 30, 2024, total expenses, including income tax provision, were $17.0 million, a decrease of $0.5 million or (3.2%), from the $17.5 million of total expenses for the three months ended September 30, 2023. As reflected in the table above, changes across the periods were primarily attributable to the following:

Current wording

For the three months ended March 31, 2025, total expenses, including income tax provision, were $18.3 million, an increase of $1.3 million or 7.3%, from the $17.0 million of total expenses, including income tax provision, for the three months ended March 31, 2024. As reflected in the table above, changes across the periods were primarily attributable to the following:

Previous wording

$1.3 million increase in interest and financing expenses due to an increase in the weighted average interest rate of our debt outstanding and an increase in average borrowings outstanding during 2024 as compared to 2023.

Current wording

$0.8 million increase in interest and financing expenses due to an increase the weighted average interest rate of our debt outstanding and an increase in average borrowings outstanding during 2025 as compared to the same period in 2024.

Previous wording

$0.7 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to the same period in 2023.

Current wording

$0.6 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2025 as compared to the same period in 2024.

Previous wording

$0.6 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to the same period in 2023.

Current wording

$0.1 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2025 as compared to the same period in 2024.

Previous wording

$2.5 million decrease in the accrued capital gains incentive fee due to a net $12.6 million decrease in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Current wording

$0.2 million decrease in the accrued capital gains incentive fee due to a net $1.0 million decrease in net gain on investments and realized losses on extinguishment of debt during 2025 as compared to the same period in 2024.

Previous wording

Net investment income increased by $4.7 million, or 28.5%, to $21.4 million during the three months ended September 30, 2024 as compared to the same period in 2023, as a result of the $4.2 million increase in total investment income and the $0.5 million decrease in total expenses, including base management fee waiver and income tax provision.

Current wording

Net investment income increased by $0.6 million, or 3.4%, to $18.2 million during the three months ended March 31, 2025 as compared to the same period in 2024, as a result of the $1.8 million increase in total investment income and the $1.3 million increase in total expenses, including income tax provision.

Previous wording

For the three and nine months ended September 30, 2023, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $9.8 and $4.3 million, respectively. Income tax (provision) benefit from realized gains on investments was zero and $(1.6) million for the three and nine months ended September 30, 2023, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and nine months ended September 30, 2023 are summarized below (dollars in millions):

Current wording

For the three months ended March 31, 2025, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $13.3 million. Income tax (provision) benefit from realized gains on investments was $(1.8) million for the three months ended March 31, 2025. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Realized gains (losses) for the three months ended March 31, 2025 are summarized below (dollars in millions):

Previous wording

For the three and nine months ended September 30, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $(0.4) million and $12.2 million, respectively. Income tax (provision) benefit from realized gains on investments was zero and $(1.6) million for the three and nine months ended September 30, 2024, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and nine months ended September 30, 2024 are summarized below (dollars in millions):

Current wording

For the three months ended March 31, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $1.7 million. Income tax (provision) benefit from realized gains on investments was $0.1 million for the three months ended March 31, 2024. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Realized gains (losses) for the three months ended March 31, 2024 are summarized below (dollars in millions):

Previous wording

During the three and nine months ended September 30, 2024 and 2023, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Current wording

During the three months ended March 31, 2025 and 2024, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Previous wording

Net increase (decrease) in net assets resulting from operations during the three months ended September 30, 2024 and 2023 was $16.5 million and $24.3 million, respectively, as a result of the events described above.

Current wording

Net increase (decrease) in net assets resulting from operations during the three months ended March 31, 2025 and 2024 was $19.7 million and $20.1 million, respectively, as a result of the events described above.

Previous wording

As of September 30, 2024, we had $54.4 million in cash and cash equivalents and our net assets totaled $658.8 million. We believe that our current cash and cash equivalents on hand, our Credit Facility, our anticipated access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the nine months ended September 30, 2024, we repaid $35.0 million of SBA debentures relating to Fund II that would have matured during the period March 1, 2026 through September 1, 2027. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2034, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Current wording

As of March 31, 2025, we had $67.5 million in cash and cash equivalents and our net assets totaled $677.9 million. We 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 resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of debt and equity securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the three months ended March 31, 2025, we repaid $12.5 million of SBA debentures relating to Fund III that would have matured during the period March 1, 2032 through September 1, 2033. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2035, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Previous wording

For the nine months ended September 30, 2024, we experienced a net decrease in cash and cash equivalents in the amount of $64.7 million. During that period, we made payments of $75.8 million of cash for operating activities, which included the funding of $274.2 million of investments that was partially offset by proceeds received from sales and repayments of investments of $154.1 million. During the same period, we repaid SBA debentures of $35.0 million relating to Fund II, received net borrowings of $40.0 million under our Credit Facility, received net proceeds from the ATM Program of approximately $66.3 million, received repayments of $1.9 million on our secured borrowings, paid cash dividends to stockholders of $57.7 million, and made payment of deferred financing costs related to our debt financings of $0.6 million.

Current wording

For the three months ended March 31, 2025, we experienced a net increase in cash and cash equivalents in the amount of $10.3 million. During that period, we made payments of $50.2 million of cash for operating activities, which included the funding of $115.6 million of investments that was partially offset by proceeds received from sales and repayments of investments of $57.3 million. During the same period, we received net proceeds from the issuance of the March 2030 Notes of $96.9 million, we received proceeds from the issuances of SBA debentures of $19.5 million, we repaid SBA debentures of $12.5 million relating to Fund III, repaid $45.0 million of our Credit Facility, received net proceeds from the ATM Program of approximately $20.7 million, received repayments of $0.1 million on our secured borrowings, paid cash dividends to stockholders of $18.8 million, and made payment of deferred financing costs related to our debt financings of $3.3 million.

Previous wording

Fund III and Fund IV are licensed to operate as an SBIC, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. 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 SBIC’s regulatory capital or $175.0 million, whichever is less. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on SBIC's full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. 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. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. Fund II has completed a wind-down plan, relinquished its SBIC license and can no longer issue additional SBA debentures, effective as of March 7, 2024. Effective September 30, 2024, the SBA approved a new SBIC license for Fund IV. As of September 30, 2024, Fund III and Fund IV had $175.0 million and zero outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval of SBA debenture commitments, we may access up to $175.0 million of additional SBA debentures under the SBIC debenture program. For more information on the SBA debentures, please refer to Note 6 to our consolidated financial statements.

Current wording

Each of Fund III and Fund IV is licensed to operate as an SBIC, and has the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. 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 SBIC’s regulatory capital or $175.0 million, whichever is less. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on such SBIC Fund's full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. 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. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. On September 30, 2024, Fund IV received a license to operate as a SBIC. As of March 31, 2025, Fund III and Fund IV had $162.5 million and $19.5 million outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval of SBA debenture commitments, we may access up to $155.5 million of additional SBA debentures under the SBIC debenture program. For more information on the SBA debentures, please refer to Note 6 to our consolidated financial statements.

Previous wording

On June 16, 2014, we entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, the “Credit Facility”) with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by us, but portfolio investments held by the SBIC Funds are not collateral for the Credit Facility. On April 24, 2019, we entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among us, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, we entered into an amendment to the Amended Credit Agreement that, among other changes, modified certain financial covenants. On August 17, 2022, the Company entered into a second amendment to the Amended Credit Agreement (“Second Amendment”). The Second Amendment, among other things: (i) changed the underlying benchmark used to compute interest under the Amended Credit Agreement to the Secured Overnight Financing Rate (SOFR) from the London Interbank Offered Rate (LIBOR); (ii) reduced the applicable margin from 3.00% to 2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date to August 17, 2027 from April 24, 2023; and (v) amended certain financial covenants, including (a) amending the asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a regulatory basis); and (b) requiring the Company to maintain a senior asset coverage ratio of no less than 2.00 to 1.00. On July 25, 2024, the Company entered into an incremental commitment agreement that increased the Credit Facility total commitment from $100.0 million to $140.0 million.

Current wording

On June 16, 2014, we entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, the “Credit Facility”) with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by us, but portfolio investments held by the SBIC Funds are not collateral for the Credit Facility. On April 24, 2019, we entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among us, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, we entered into an amendment to the Amended Credit Agreement that, among other changes, modified certain financial covenants. On August 17, 2022, the Company entered into a second amendment to the Amended Credit Agreement (“Second Amendment”). The Second Amendment, among other things: (i) changed the underlying benchmark used to compute interest under the Amended Credit Agreement to SOFR from LIBOR; (ii) reduced the applicable margin from 3.00% to 2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date to August 17, 2027 from April 24, 2023; and (v) amended certain financial covenants, including (a) amending the asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a regulatory basis); and (b) requiring the Company to maintain a senior asset coverage ratio of no less than 2.00 to 1.00. On July 25, 2024, the Company entered into an incremental commitment agreement that increased the total commitment under the Credit Facility from $100.0 million to $140.0 million.

Previous wording

We have made customary representations and warranties and we are required to comply with 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. As of September 30, 2024, we were in compliance in all material respects with the terms of the Credit Agreement and we had $40.0 million in borrowings outstanding under the Credit Facility.

Current wording

We have made customary representations and warranties and we are required to comply with 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. As of March 31, 2025, we were in compliance in all material respects with the terms of the Credit Agreement and we had no borrowings outstanding under the Credit Facility.

Previous wording

On December 23, 2020, we closed the offering of $125.0 million in aggregate principal amount of our 4.75% notes due 2026, or the “January 2026 Notes”. The total net proceeds to us from the January 2026 Notes, based on a public offering price of 100.00% of par, after deducting underwriting discounts of $2.5 million and offering expenses of $0.4 million, were $122.1 million. The January 2026 Notes will mature on January 31, 2026 and bear interest at a rate of 4.75%. The January 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 before October 31, 2025 (the date falling three months prior to maturity) and at par thereafter. Interest on the January 2026 Notes is payable on January 31 and July 31 of each year. We do not intend to list the January 2026 Notes on any securities exchange or automated dealer quotation system. As of September 30, 2024, the outstanding principal balance of the January 2026 Notes was $125.0 million.

Current wording

On December 23, 2020, we closed the offering of $125.0 million in aggregate principal amount of our 4.75% notes due 2026 (the “January 2026 Notes”). The total net proceeds to us from the January 2026 Notes, based on a public offering price of 100.00% of par, after deducting underwriting discounts of $2.5 million and offering expenses of $0.4 million, were $122.1 million. The January 2026 Notes will mature on January 31, 2026 and bear interest at a rate of 4.75%. The January 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 before October 31, 2025 (the date falling three months prior to maturity) and at par thereafter. Interest on the January 2026 Notes is payable on January 31 and July 31 of each year. We do not intend to list the January 2026 Notes on any securities exchange or automated dealer quotation system. As of March 31, 2025, the outstanding principal balance of the January 2026 Notes was $125.0 million.

Previous wording

On October 8, 2021, we closed the offering of $125.0 million in aggregate principal amount of our 3.50% notes due 2026, or the “November 2026 Notes” (collectively with the January 2026 Notes, the “Notes”). The total net proceeds to us from the November 2026 Notes, based on a public offering price of 99.996% of par, after deducting underwriting discounts of $2.5 million and offering expenses of $0.3 million, were $122.2 million. The November 2026 Notes will mature on November 15, 2026 and bear interest at a rate of 3.50%. The November 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 before August 15, 2026 (the date falling three months prior to maturity) and at par thereafter. Interest on the November 2026 Notes is payable on May 15 and November 15 of each year. We do not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system. As of September 30, 2024, the outstanding principal balance of the November 2026 Notes was $125.0 million.

Current wording

On October 8, 2021, we closed the offering of $125.0 million in aggregate principal amount of our 3.50% notes due 2026 (the “November 2026 Notes”). The total net proceeds to us from the November 2026 Notes, based on a public offering price of 99.996% of par, after deducting underwriting discounts of $2.5 million and offering expenses of $0.3 million, were $122.2 million. The November 2026 Notes will mature on November 15, 2026 and bear interest at a rate of 3.50%. The November 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 before August 15, 2026 (the date falling three months prior to maturity) and at par thereafter. Interest on the November 2026 Notes is payable on May 15 and November 15 of each year. We do not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system. As of March 31, 2025, the outstanding principal balance of the November 2026 Notes was $125.0 million.

Previous wording

As of September 30, 2024, the carrying value of secured borrowings totaled $14.0 million and the fair value of the associated loans included in investments was $14.0 million. As of December 31, 2023, carrying value of secured borrowings totaled $15.9 million and the fair value of the associated loans included in investments was $15.8 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest” as defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales” for more information). As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately 8.915% and 9.407% as of September 30, 2024 and December 31, 2023, respectively.

Current wording

As of March 31, 2025, the carrying value of secured borrowings totaled $13.6 million and the fair value of the associated loans included in investments was $13.6 million. As of December 31, 2024, the carrying value of secured borrowings totaled $13.7 million and the fair value of the associated loans included in investments was $13.5 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest” as defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales” for more information). As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately 8.498% and 8.568% as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

As of September 30, 2024, the weighted average stated interest rates for our SBA debentures and the Notes were 4.316% and 4.125%, respectively. As of September 30, 2024, we had $100.0 million of unutilized commitment under our Credit Facility, and we were subject to a 0.696% fee on such amount. As of September 30, 2024, the weighted average stated interest rate on total debt outstanding was 4.647%.

Current wording

As of March 31, 2025, the weighted average stated interest rates for our SBA debentures and the Notes were 4.323% and 4.875%, respectively. As of March 31, 2025, we had $140.0 million of unutilized commitment under our Credit Facility, and we were subject to a 1.261% fee on such amount. As of March 31, 2025, the weighted average stated interest rate on total debt outstanding was 4.781%.

Previous wording

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 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 may issue in the future. This requirement limits the amount that we may borrow. On April 29, 2019, our Board, including a majority of the non-interested directors, approved a minimum asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act, effective as of April 29, 2020. We also have received exemptive relief from the U.S. Securities and Exchange Commission (“SEC”) to allow us to exclude the senior securities issued by the SBIC Funds and any future SBIC subsidiary from the definition of senior securities in the 150% asset coverage requirement applicable to the Company under the 1940 Act, which, in turn, will enable us to fund more investments with debt capital.

Current wording

As a BDC, we are generally required to meet an asset coverage ratio of at least 150% (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 amount of senior securities representing indebtedness), which includes borrowings and any preferred stock we may issue in the future. This requirement limits the amount that we may borrow. On April 29, 2019, our Board, including a majority of the non-interested directors, approved a minimum asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act, effective as of April 29, 2020. We also have received exemptive relief from the U.S. Securities and Exchange Commission (“SEC”) to allow us to exclude the senior securities issued by the SBIC Funds and any future SBIC subsidiary from the definition of senior securities in the 150% asset coverage requirement applicable to the Company under the 1940 Act, which, in turn, will enable us to fund more investments with debt capital.

Previous wording

On November 10, 2022, the Company established the at-the-market program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through Raymond James & Associates, Inc. and B. Riley Securities, Inc., each as sales agents, shares of the Company's common stock having an aggregate offering price of up to $50.0 million. On August 11, 2023, the Company increased the maximum amount of shares to be sold through the ATM Program to $150.0 million from $50.0 million. On February 29, 2024, the Company increased the maximum amount of shares to be sold through the ATM Program to $300.0 million from $150.0 million. Cumulative to date, the Company has sold 9,364,244 shares of common stock under the ATM Program at a weighted-average price of $19.75, raising $185.0 million of gross proceeds. Net proceeds were $182.5 million after commissions to the sales agents on sales sold. As of September 30, 2024, the Company has $115.0 million available under the ATM Program.

Current wording

On November 10, 2022, the Company established the at-the-market program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through Raymond James & Associates, Inc. and B. Riley Securities, Inc., each as sales agents, shares of the Company's common stock having an aggregate offering price of up to $50.0 million. On August 11, 2023, the Company increased the maximum amount of shares to be sold through the ATM Program to $150.0 million from $50.0 million. On February 29, 2024, the Company increased the maximum amount of shares to be sold through the ATM Program to $300.0 million from $150.0 million. Cumulative to date, the Company has sold 10,384,056 shares of common stock under the ATM Program at a weighted-average price of $19.83, raising $206.0 million of gross proceeds. Net proceeds were $203.2 million after commissions to the sales agents on sales sold. As of March 31, 2025, the Company has $94.0 million available under the ATM Program.

Previous wording

We have an open market stock repurchase program (the “Stock Repurchase Program”) under which we may acquire up to $5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the prohibitions under our insider trading 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. The timing, manner, price and amount of any share 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 considerations. Most recently, on October 28, 2024, the Board extended the Stock Repurchase Program through December 31, 2025, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not require us to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time. We did not make any repurchases of common stock during the three and nine months ended September 30, 2024 and 2023. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases.

Current wording

We have an open market stock repurchase program (the “Stock Repurchase Program”) under which we may acquire up to $5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the prohibitions under our insider trading 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. The timing, manner, price and amount of any share 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 considerations. On October 28, 2024, the Board extended the Stock Repurchase Program through December 31, 2025, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not require us to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time. We did not make any repurchases of common stock during the three months ended March 31, 2025 and 2024. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases.

Previous wording

In making the good faith determination of the value of portfolio investments, the Board starts with the cost basis of the security. The transaction price is typically the best estimate of fair value at inception. When evidence supports a subsequent change to the carrying value from the original transaction price, adjustments are made to reflect the expected exit values.

Current wording

In making the good faith determination of the value of portfolio investments, we start with the cost basis of the security. The transaction price is typically the best estimate of fair value at inception. When evidence supports a subsequent change to the carrying value from the original transaction price, adjustments are made to reflect the expected exit values.

Previous wording

Our Board consulted with the independent third-party valuation firm(s) in arriving at our determination of fair value for 18 and 18 of our portfolio company investments representing 27.7% and 29.9% of the total portfolio investments at fair value (exclusive of new portfolio company investments made during the three months ended September 30, 2024 and December 31, 2023, respectively) as of September 30, 2024 and December 31, 2023, respectively.

Current wording

Our Board consulted with the independent third-party valuation firm(s) in arriving at our determination of fair value for 18 and 21 of our portfolio company investments representing 28.3% and 27.5% of the total portfolio investments at fair value (exclusive of new portfolio company investments made during the three months ended March 31, 2025 and December 31, 2024, respectively) as of March 31, 2025 and December 31, 2024, respectively.