Investing in our common stock involves risks. Before making a decision to invest in our common stock, you should carefully consider the matters discussed under “Risk Factors” beginning on page 11 of the accompanying prospectus and in our most recent Annual Report on Form our most recent Quarterly Report on Form as well as any of our subsequent SEC filings.

 

 

 

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This document is in two parts. The first part is this prospectus supplement, which describes the specific details regarding this offering of our common stock and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part is the accompanying prospectus, which provides general information about us and the securities we may offer from time to time, some of which may not apply to this offering. To the extent the information contained in this prospectus supplement differs from the information contained in the accompanying prospectus or the information included in any document filed prior to the date of this prospectus supplement and incorporated by reference in this prospectus supplement and the accompanying prospectus, the information in this prospectus supplement shall control. Generally, when we refer to this “prospectus,” we are referring to both this prospectus supplement and the accompanying prospectus combined, together with any free writing prospectus that we have authorized for use in connection with this offering.

This prospectus supplement includes summaries of certain provisions contained in some of the documents described in this prospectus supplement, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference, as exhibits to the registration statement of which this prospectus supplement is a part, and you may obtain copies of those documents as described in the section titled “Available Information” in the accompanying prospectus.

 

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The following table is intended to assist you in understanding the costs and expenses that an investor in our common stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Moreover, the information set forth below does not include any transaction costs and expenses that investors will incur in connection with each offering of our securities pursuant to this prospectus supplement. Except where the context suggests otherwise, whenever this prospectus supplement or the accompanying prospectus contains a reference to fees or expenses paid by “us” or that “we” will pay fees or expenses, common stockholders will indirectly bear such fees or expenses.

 

 

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Information included or incorporated by reference in this prospectus supplement, the accompanying prospectus and in any free writing prospectus relating to this offering of shares of common stock may contain “forward-looking statements.” These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Although we believe that the assumptions on which these forward-looking statements are based 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. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be regarded as a representation by us that our plans and objectives will be achieved. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this prospectus supplement, the accompanying prospectus, and in any free writing prospectus relating to this offering of shares of common stock involve risks and uncertainties, including statements as to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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These statements are not guarantees of future performance 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, including without limitation:

 

 

 

 

 

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from our historical performance. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus supplement. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports or other documents we have filed, or in the future may file, with the SEC, including subsequent annual reports on Form quarterly reports on Form and current reports on Form

 

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Sales of shares of our common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through Nasdaq Global Select Market or sales made to or through a market maker other than on an exchange. There is no guarantee that there will be any sales of shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus. Actual sales, if any, of shares of our common stock under this prospectus supplement and the accompanying prospectus may be less than as set forth in this paragraph depending on the market price of our common stock at the time of any such sale. As a result, the actual net proceeds we receive, if any, may be more or less than the amount of net proceeds estimated in this prospectus supplement. However, the sales price per share of our common stock offered by this prospectus supplement and the accompanying prospectus, less the Sales Agents’ commission, will not be less than the NAV per share of our common stock at the time of such sale. The Adviser may from time to time, in its sole discretion, pay some or all of the Sales Agents’ commission. Any such payments made by the Adviser will not be subject to reimbursement by us. Assuming the sale of the remaining $162.8 million in aggregate amount of our common stock available under the ATM Program pursuant to this prospectus supplement and the accompanying prospectus, we anticipate that the net proceeds of this offering remaining available to us will be approximately $159.8 million, after deducting the commissions payable to the Sales Agents and estimated offering expenses.

We intend to use any net proceeds from this offering to repay outstanding indebtedness (including the Credit Facility), invest in lower middle-market companies in accordance with our investment objective and strategies and for working capital and general corporate purposes. Pending such uses we will invest the net proceeds primarily in high quality, short-term debt securities consistent with our BDC election and our election to be taxed as a RIC. The Credit Facility matures on August 17, 2027, and borrowings under the Credit Facility currently bear interest at a rate per annum equal to SOFR plus (a) 2.675% prior to satisfying certain step-down conditions or (b) % after satisfying certain step-down conditions, with commensurate reductions in the applicable margins for base rate loans.

 

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The offering of our shares of common stock pursuant to the Equity Distribution Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Equity Distribution Agreement or (ii) the termination of the Equity Distribution Agreement as permitted therein.

This summary of the material provisions of the Equity Distribution Agreement does not purport to be a complete statement of its terms and conditions. A copy of the Equity Distribution Agreement was incorporated by reference as an exhibit to our most recent Annual Report on Form and is incorporated into this prospectus supplement by reference.

The principal business addresses of the Sales Agents are: Raymond James & Associates, Inc., 880 Carillon Parkway St. Petersburg, FL 33716; and B. Riley Securities, Inc., 299 Park Avenue, 21st Floor, New York, New York 10171.

Other than in the United States, no action has been taken by us or the Sales Agents that would permit a public offering of the securities offered by this prospectus supplement in any jurisdiction where action for that purpose is required. The securities offered by this prospectus supplement may not be offered or sold, directly or indirectly, nor may this prospectus supplement or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus supplement comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus supplement. This prospectus supplement does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus supplement in any jurisdiction in which such an offer or a solicitation is unlawful.

 

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Certain legal matters regarding the shares of common stock offered hereby will be passed upon for us by Eversheds Sutherland (US) LLP, Washington, D.C. Certain legal matters regarding the shares of common stock offered hereby will be passed upon for the Sales Agents by Dechert LLP, Washington, D.C.

 

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We incorporate by reference in this prospectus supplement the documents listed below and any future reports and other documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until all of the securities offered by this prospectus have been sold or we otherwise terminate the offering of these securities (such reports and other documents deemed to be incorporated by reference into this prospectus supplement and to be part hereof from the date of filing of such reports and other documents); provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form or other information “furnished” to the SEC pursuant to the Exchange Act will not be incorporated by reference into this prospectus supplement:

 

 

 

 

Any reports filed by us with the SEC before the date that any offering of any securities by means of this prospectus supplement and the accompanying prospectus is terminated will automatically update and, where applicable, supersede any information contained in this prospectus supplement and the accompanying prospectus or incorporated by reference into this prospectus supplement and the accompanying prospectus.

To obtain copies of these filings, see “Available Information” in the accompanying prospectus.

 

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We may offer, from time to time, in one or more offerings or series, together or separately, up to $600,000,000 of our common stock, preferred stock, subscription rights, debt securities, or warrants representing rights to purchase shares of our common stock, preferred stock, or debt securities, which we refer to collectively as the “securities.” We may sell our common stock through underwriters or dealers, to or through a market maker into an existing trading market or otherwise directly to one or more purchasers or through agents or through a combination of methods of sale. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms to be described in one or more supplements to this prospectus.

Our stockholders specified that the cumulative number of shares sold in each offering during the period ending on the earlier of June 8, 2024 or the date of our 2024 Annual Meeting of Stockholders may not exceed 25.0% of our outstanding common stock immediately prior to such sale. In addition, we cannot issue shares of our common stock below net asset value unless our board of directors determines that it would be in our and our stockholders’ best interests to do so. Shares of investment companies such as us frequently trade at a discount to their net asset value. This risk is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade above, at or below net asset value. You should read this prospectus and the applicable prospectus supplement carefully before you invest in our common stock.

We provide customized debt and equity financing solutions to lower middle-market companies, which we define as U.S. based companies having revenues between $10.0 million and $150.0 million. We are an externally managed, management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Our investment objective is to provide attractive risk-adjusted returns by generating both current income from our debt investments and capital appreciation from our equity related investments. Our investment strategy includes partnering with business owners, management teams and financial sponsors by providing customized financing for ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives. 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.

Fidus Investment Advisors, LLC serves as our investment advisor and as our administrator.

This prospectus describes some of the general terms that may apply to an offering of our securities. We will provide the specific terms of these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also add, update, or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement, and any related free writing prospectus, and the documents incorporated by reference, before buying any of the securities offered. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, which is available free of charge upon written or oral request by contacting us by mail at 1603 Orrington Avenue, Suite 1005, Evanston, Illinois 60201, Attention: Investor Relations, by accessing our website at , by calling us collect at (847) or by sending an to us at investorrelations@fdus.com. The Securities and Exchange Commission also maintains a website at that contains such information, including the documents incorporated by reference into this prospectus. Information contained on our website is not incorporated by reference into this prospectus or any supplements to this prospectus, and you should not consider that information to be part of this prospectus or any supplements to this prospectus. The contact information provided above may be used by you to make investor inquiries. This prospectus should be retained for future reference.

 

 

The date of this prospectus is May 8, 2024

 

This prospectus is part of a registration statement that we have filed with the SEC, using the “shelf” registration process. Under this shelf registration statement, we may offer, from time to time, in one or more offerings, up to $600,000,000 of our common stock, preferred stock, subscription rights to purchase shares of our common stock, debt securities or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, on terms to be determined at the time of the offering. Our securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of our securities and the offerings thereof that we may make pursuant to this prospectus. Each time we use this prospectus to offer our securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to such offerings. In a prospectus supplement or free writing prospectus, we may also add, update or change any of the information contained in this prospectus or in the documents we have incorporated by reference into this prospectus. This prospectus, together with the applicable prospectus supplement, any related free writing prospectus, and the documents incorporated by reference into this prospectus and the applicable prospectus supplement, will include all material information relating to the applicable offering. Before buying any of the securities being offered, you should carefully read both this prospectus and the applicable prospectus supplement and any related free writing prospectus, together with any exhibits and the additional information described in the sections titled “Available Information,” “Incorporation of Certain Information by Reference,” “Summary” and “Risk Factors” in this prospectus.

This prospectus includes summaries of certain provisions contained in some of the documents described in this prospectus, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described in the section titled “Available Information” in this prospectus.

 

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This prospectus contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this report involve risks and uncertainties, including statements as to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

These statements are not guarantees of future performance 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, including without limitation:

 

 

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Although we believe that the assumptions on which these forward-looking statements are based 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. Important assumptions include our ability to originate new debt investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form in Part II, Item 1A of our most recent Quarterly Report on and elsewhere in this prospectus, any applicable prospectus supplement or free writing prospectus, including the documents we incorporate by reference. You should not place undue reliance on these forward-looking statements, which are based on information available to us as of the applicable date of this prospectus, any applicable prospectus supplement or free writing prospectus, including any documents incorporated by reference, and while we believe such information forms, or will form, a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements do not meet the safe harbor for forward-looking statements pursuant to Section 27A of the Securities Act or Section 21E of the Exchange Act.

 

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Unless otherwise specified in any prospectus supplement accompanying this prospectus, we intend to use the net proceeds from the sale of our securities to invest in lower middle-market companies in accordance with our investment objective and strategies, to repay the outstanding indebtedness under our Credit Facility and/or our unsecured debt, if any, and for working capital and general corporate purposes. We also will pay operating expenses, including management, incentive and administrative fees, and may pay other expenses, from the net proceeds of any offering. We plan to raise new equity when we have attractive investment opportunities available. Pending such use, we will invest the net proceeds of any offering primarily in short-term securities consistent with our BDC election and our election to be taxed as a RIC. See “Business — Regulation — Temporary Investments” in Part I, Item 1 in our most recent Annual Report on Form 10-K for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.

Pending such use, we will invest the net proceeds of this offering primarily in cash, cash equivalents, U.S. Government securities and other high-quality debt instruments that mature in one year or less, or “temporary investments,” as appropriate. These securities may have lower yields than our other investments and accordingly result in lower distributions, if any, by us during such period. See “Business — Regulation — Temporary Investments” in Part I, Item 1 in our most recent Annual Report on Form 10-K. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from the offering, pending full investment, are held in interest bearing deposits or other short-term instruments that produce income at a rate less than our cost of capital.

 

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FINANCIAL HIGHLIGHTS

 

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The information in the sections entitled “Business” in Part I, Item 1 and “Properties” in Part I, Item 2 of our most recent Annual Report on Form 10-K and in the section entitled “Legal Proceedings” in Part I, Item 3 in our most recent Annual Report on Form 10-K is incorporated herein by reference.

 

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Portfolio Company (a)(b)   Address of Portfolio Company		Investment Type (c)		Industry		Percentage of Class Held (aw)				Variable Index Spread / Floor (d)		Rate (e) Cash/PIK		Investment Date (f)				Maturity				Principal Amount				Cost				Fair Value (g)				Percent of Net Assets
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)				Aerospace & Defense Manufacturing
6435 Shiloh Road, Suite D		First Lien Debt (k)(ag)								(S + 6.00%) / (1.00%)		11.56%/0.00%			2/12/2021				2/11/2026				15,000				14,959				13,879
Alpharetta, GA 30005		Common Equity (12,035 units) (j)					1.54	%							8/25/2021												1,204				—
		Common Equity (38,493 units) (j)					4.80	%							12/16/2022												2,609				—
		Common Equity (6,783 units) (j)					0.80	%							7/10/2023												686				—
		Common Equity (4,663 units) (j)					0.61	%							9/16/2022												472				—
																											19,930				13,879				2	%
Steward Holding LLC (dba Steward Advanced Materials)				Aerospace & Defense Manufacturing
1245 E 38th St.		Common Equity (1,000,000 units)					5.80	%							11/12/2015												1,000				4,405				1	%
Chattanooga, TN 37407
Total Affiliate Investments																										$	46,161			$	80,316				13	%
Non-control/Non-affiliate Investments
2KDirect, Inc. (dba iPromote)				Information Technology Services
3000 Broad St; Suite 115		First Lien Debt (k)(at)								(S + 6.75%) / (0.50%)		12.23%/0.00%			6/25/2021				6/25/2026			$	10,594			$	10,555			$	10,594
San Luis Obispo, CA 93401		First Lien Debt (j)(aa)								(S + 6.75%) / (0.50%)		8.98%/0.00%			7/30/2021				6/25/2026				3,260				3,260				3,260
		Common Equity (1,000,000 units)					3.86	%							6/25/2021												1,000				523
																											14,815				14,377				2	%
301 Edison Holdings Inc. (dba LGG Industrial)				Specialty Distribution
650 Washington Road, Suite 500		First Lien Debt (j)										11.75%/1.50%			11/14/2023				11/13/2028				12,372				12,222				12,222
Pittsburgh, PA 15228		Preferred Equity (519,244 units) (j)					0.55	%							11/14/2023												1,000				1,000
																											13,222				13,222				2	%
Acendre Midco, Inc.				Information Technology Services
4350 N Fairfax Drive, Suite 830		First Lien Debt (j)								(S + 7.75%) / (0.50%)		13.34%/0.00%			10/6/2021				10/6/2026				5,445				5,437				5,445
Arlington, VA 22203		First Lien Debt (j)								(S + 7.75%) / (0.50%)		13.34%/0.00%			10/6/2021				10/6/2026				12,375				12,341				12,375
		Revolving Loan (j)								(S + 7.75%) / (0.50%)		13.34%/0.00%			10/6/2021				10/6/2026				1,000				1,000				1,000
		Common Equity (500,000 shares) (j)					0.78	%							10/6/2021												371				469
		Warrant (150,000 shares) (j)(m)					0.2	%							10/6/2021												129				141
		Preferred Equity (77,016 shares) (j)					0.0	%							9/26/2022												88				143
																											19,366				19,573				3	%

Portfolio Company (a)(b)   Address of Portfolio Company		Investment Type (c)		Industry		Percentage of Class Held (aw)				Variable Index Spread / Floor (d)		Rate (e) Cash/PIK		Investment Date (f)				Maturity				Principal Amount				Cost				Fair Value (g)				Percent of Net Assets
Ad Info Parent, Inc. (dba MediaRadar)				Information Technology Services
252 West 37th Street		First Lien Debt (j)								(S + 6.25%) / (1.00%)		11.70%/0.00%			11/1/2023				9/16/2029				12,469				12,403				12,403
New York, NY 10018		Revolving Loan ($1,442 unfunded commitment) (i)(j)								(S + 6.25%) / (1.00%)		11.70%/0.00%			11/1/2023				9/16/2029				—				(8	)			—
		Preferred Equity (1,250,000 units) (j)					0.38	%							11/1/2023												1,250				1,250
																											13,645				13,653				2	%
Aldinger Company				Business Services
1440 Prudential Drive		First Lien Debt(k)( ae)								(S + 6.25%) / (2.00%)		11.58%/0.00%			6/30/2023				6/29/2029				22,446				22,227				22,446
Dallas, TX 75235		Common Equity (8,227 units)					0.73	%							6/30/2023												19				586
		Preferred Equity (8,263 units)					0.73	%							6/30/2023												826				826
																											23,072				23,858				4	%
Allredi, LLC (fka Marco Group International OpCo, LLC)				Industrial Cleaning & Coatings
3009 Pasadena Freeway Frontage Rd, #100		Second Lien Debt										0.00%/15.00%			3/2/2020				9/2/2026				12,054				12,005				10,533
Pasadena, TX 77503		Common Equity (570,636 units) (h)(j)					0.30	%							7/21/2017												637				99
		Common Equity (39,443 units) (h)(j)					0.30	%							11/24/2021												22				32
		Common Equity (524,624 units) (h)(j)					0.30	%							8/3/2023												45				90
																											12,709				10,754				2	%
American AllWaste LLC (dba WasteWater Transport Services)				Environmental Industries
12141 Wickchester Ln., Suite 325		First Lien Debt (j)(p)								(S + 6.50%) / (1.00%)		12.09%/0.00%			6/28/2021				3/31/2025				22,218				22,062				21,456
Houston, TX 77079		First Lien Debt (j)(o)								(S + 6.50%) / (1.00%)		9.59%/0.00%			6/28/2021				3/31/2025				330				330				319
		Revolving Loan ($3,326 unfunded commitment) (j)(v)										15.00%/0.00%			3/28/2024				3/31/2025				2,924				2,924				2,924
		Preferred Equity (500 units) (h)(j)					0.60	%							5/31/2018												500				50
		Preferred Equity (207 units) (h)(j)					0.20	%							8/6/2019												250				25
		Preferred Equity (141 units) (h)(j)					0.20	%							11/2/2020												171				17
		Preferred Equity (74 units) (h)(j)					0.07	%							12/29/2021												97				10
																											26,334				24,801				4	%