SURO CAPITAL CORP. Forward-Looking statements
This quarterly report on Form 10-Q 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," "could," "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 quarterly report on Form 10-Q
involve risks and uncertainties, including, without limitation, statements as
to:
•the effect and consequences of the novel coronavirus ("COVID-19") public health
crisis on matters including global, U.S. and local economies, our business
operations and continuity, potential disruption to our portfolio companies,
tightened availability to capital and financing, the health and productivity of
our employees, the ability of third-party providers to continue uninterrupted
service, and the regulatory environment in which we operate;
• our future operating results;
• our business prospects and the prospects of our portfolio companies;
• the impact of investments that we expect to make;
• our contractual arrangements and relationships with third parties;
• the dependence of our future success on the general economy and its impact on the industries in which we invest;
• the ability of our portfolio companies to achieve their objectives;
• our expected financings and investments;
• the adequacy of our cash resources and working capital; and
• the timing of cash flows, if any, from the operations of our portfolio companies.
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:
• an economic downturn 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;
• an economic downturn could disproportionately impact the market sectors in which a significant portion of our portfolio is concentrated, causing us to suffer losses in our portfolio;
• a contraction of available credit and/or an inability to access the equity markets could impair our investment activities;
• interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; and
• the risks, uncertainties and other factors we identify in the sections
entitled "Risk Factors" in our quarterly reports on Form 10-Q, our annual report
on Form 10-K, and in our other filings with the
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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 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 quarterly report on Form 10-Q 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 our quarterly reports on Form 10-Q and our annual report on Form 10-K, in the "Risk Factors" sections. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q. The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this quarterly report on Form 10-Q.
Overview
We are an internally-managed, non-diversified closed-end management investment
company that has elected to be regulated as a business development company
("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has elected to be treated, and intends to qualify annually, as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code").
Our investment objective is to maximize our portfolio's total return,
principally by seeking capital gains on our equity and equity-related
investments, and to a lesser extent, income from debt investments. We invest
principally in the equity securities of what we believe to be rapidly growing
venture-capital-backed emerging companies. We acquire our investments through
direct investments in prospective portfolio companies, secondary marketplaces
for private companies and negotiations with selling stockholders. In addition,
we may invest in private credit and in the founders equity, founders warrants,
forward purchase agreements, and private investment in public equity ("PIPE")
transactions of special purpose acquisition companies ("SPACs"). We may also
invest on an opportunistic basis in select publicly traded equity securities or
certain non-U.S. companies that otherwise meet our investment criteria, subject
to applicable requirements of the 1940 Act. To the extent we make investments in
private equity funds and hedge funds that are excluded from the definition of
"investment company" under the 1940 Act by Section 3(c)(1) or 3(c)(7) of the
1940 Act, we will limit such investments to no more than 15% of our net assets.
In regard to the regulatory requirements for BDCs under the 1940 Act, some of
these investments may not qualify as investments in "eligible portfolio
companies," and thus may not be considered "qualifying assets." "Eligible
portfolio companies" generally include U.S. companies that are not investment
companies and that do not have securities listed on a national exchange. If at
any time less than 70% of our gross assets are comprised of qualifying assets,
including as a result of an increase in the value of any non-qualifying assets
or decrease in the value of any qualifying assets, we would generally not be
permitted to acquire any additional non-qualifying assets until such time as 70%
of our then-current gross assets were comprised of qualifying assets. We would
not be required, however, to dispose of any non-qualifying assets in such
circumstances.
Our investment philosophy is based on a disciplined approach of identifying
promising investments in high-growth, venture-backed companies across several
key industry themes which may include, among others, social mobile, cloud
computing and big data, internet commerce, financial technology, mobility, and
enterprise software. Our investment decisions are based on a disciplined
analysis of available information regarding each potential portfolio company's
business operations, focusing on the portfolio company's growth potential, the
quality of recurring revenues, and path to profitability, as well as an
understanding of key market fundamentals. Venture capital funds or other
institutional investors have invested in the vast majority of companies that we
evaluate.
We seek to deploy capital primarily in the form of non-controlling equity and
equity-related investments, including common stock, warrants, preferred stock
and similar forms of senior equity, which may or may not be convertible into a
portfolio company's common equity, and convertible debt securities with a
significant equity component. Typically, our preferred stock investments are
non-income producing, have different voting rights than our common stock
investments and are generally convertible into common stock at our discretion.
As our investment strategy is primarily focused on equity positions, our
investments generally do not produce current income and therefore we may be
dependent on future capital raising to meet our operating needs if no other
source of liquidity is available.
We seek to create a low-turnover portfolio that includes investments in companies representing a broad range of investment themes.
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Internalization of Operating Structure
On and effectiveMarch 12, 2019 (the "Effective Date"), our Board of Directors approved internalizing our operating structure ("Internalization") and we began operating as an internally managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Our Board of Directors approved the Internalization in order to better align the interests of the Company's stockholders with its management. As an internally managed BDC, the Company is managed by its employees, rather than the employees of an external investment adviser, thereby allowing for greater transparency to stockholders through robust disclosure regarding the Company's compensation structure. Prior to the Effective Date, we were externally managed by our former investment adviser,GSV Asset Management, LLC ("GSV Asset Management"), pursuant to an investment advisory agreement (the "Investment Advisory Agreement"), and our former administrator,GSV Capital Service Company, LLC ("GSV Capital Service Company "), provided the administrative services necessary for our operations pursuant to an administration agreement (the "Administration Agreement"). In connection with our Internalization, the Investment Advisory Agreement and the Administration Agreement were terminated as of the Effective Date, in accordance with their respective terms. As a result, we no longer pay any fees or expenses under an investment advisory agreement or administration agreement, and instead pay the operating costs associated with employing investment management professionals including, without limitation, compensation expenses related to salaries, discretionary bonuses and restricted stock grants. See "Note 11-Stock-Based Compensation" in this Form 10-Q for more information. Except as otherwise disclosed herein, this Form 10-Q discusses our business and operations as an internally-managed BDC during the period covered by this Form 10-Q. Recent COVID-19 Developments InMarch 2020 , the outbreak of the novel coronavirus ("COVID-19") was recognized as a pandemic by theWorld Health Organization . Shortly thereafter, the President ofthe United States declared a National Emergency throughoutthe United States attributable to such pandemic. The pandemic has become increasingly widespread inthe United States , including in the markets in which the Company primarily operates. As of the three months endedSeptember 30, 2021 , and subsequent toSeptember 30, 2021 , the COVID-19 pandemic has had a significant impact on theU.S. and global economy. We have and continue to assess the impact of the COVID-19 pandemic on our portfolio companies. We cannot predict the full impact of the COVID-19 pandemic, including its duration inthe United States and worldwide, the effectiveness of governmental responses designed to mitigate strain to businesses and the economy, and the magnitude of the economic impact of the outbreak, including with respect to the travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. While several countries, as well as certain states, counties and cities inthe United States , have relaxed initial public health restrictions with a view to partially or fully reopening their economies, many cities world-wide have since experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic. These increases have led to the re-introduction of restrictions and business shutdowns in certain states, counties and cities inthe United States and globally and could continue to lead to the re-introduction of such restrictions and business shutdowns elsewhere. These continued travel restrictions may prolong the global economic downturn. In addition, although theFederal Food and Drug Administration authorized vaccines produced by Pfizer-BioNTech and Moderna for emergency use starting inDecember 2020 , it remains unclear how quickly the vaccines will be distributed nationwide and globally or when "herd immunity" will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely. The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides, theU.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession inthe United States and other major markets. As such, we are unable to predict the duration of any business and supply-chain disruptions, the extent to which the COVID-19 pandemic will negatively affect our portfolio companies' operating results or the impact that such disruptions may have on our results of operations and financial condition. Though the magnitude of the impact remains to be seen, our portfolio companies and, by extension, our operating results may be adversely impacted by the COVID-19 pandemic and, depending on the duration and extent of the disruption to the operations of our portfolio companies, certain portfolio companies may experience financial distress and may possibly default on their financial obligations to us and their other capital providers. Some of our portfolio companies have significantly curtailed business operations, furloughed or laid off employees and terminated service providers, and deferred capital expenditures, which could impair their business on a permanent basis and additional portfolio companies may take similar actions. We continue to closely monitor our portfolio companies, which includes assessing each portfolio company's operational and liquidity exposure and outlook; however, any of these developments would likely result in a decrease in the value of our investment in any such portfolio company. In addition, to the extent that the impact to our portfolio companies 60
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results in reduced interest payments or permanent impairments on our investments, we could see a decrease in our net investment income, which would increase the percentage of our cash flows dedicated to our debt obligations and could impact the amount of any future distributions to our stockholders. In response to the COVID-19 pandemic, we instituted a temporary work-from-home policy inMarch 2020 , pursuant to which our employees have and continue to primarily work remotely without disruption to our operations. This policy will remain in effect until it is deemed safe to return to our office. As ofNovember 3, 2021 , there is no indication of a reportable subsequent event impacting the Company's financial statements for the three months endedSeptember 30, 2021 . The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business. 61
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Portfolio and Investment Activity
Nine Months Ended
The value of our investment portfolio will change over time due to changes in
the fair value of our underlying investments, as well as changes in the
composition of our portfolio resulting from purchases of new and follow-on
investments and the sales of existing investments. The fair value, as of
During the nine months endedSeptember 30, 2021 , we funded investments in an aggregate amount of$70,668,175 (not including capitalized transaction costs) as shown in the following table: Portfolio Company Investment Transaction Date Gross Payments NewLake Capital Partners, Inc. (f/k/aGreenAcreage Real Estate Corp.) Common Shares 2/12/2021$ 499,986 Churchill Sponsor VI LLC(1) Common Share Units & Warrant Units 2/25/2021 200,000 Churchill Sponsor VII LLC(2) Common Share Units & Warrant Units 2/25/2021 300,000 Preferred Shares, Series B-1 &
Series
Shogun Enterprises, Inc.(3) B-2 2/26/2021 6,999,992 Commercial Streaming Solutions Simple Agreement for Future
Equity
Inc. (d/b/a BettorView) ("SAFE") 3/25/2021 1,000,000
Churchill Capital Corp. II(4) Common Shares, Class A 6/8/2021 10,000,000
Common Shares & Investec Preferred
Trax Ltd. Shares 6/9/2021 10,000,000
Blink Health, Inc. Preferred Shares, Series C 6/28/2021 4,999,987
Colombier Sponsor LLC(5) Class B Units & Class W Units Various 2,711,842
AltC Sponsor LLC(6) Share Units 7/21/2021 250,000
PayJoy, Inc. Preferred Shares 7/23/2021 2,500,002
Orchard Technologies, Inc. Preferred Shares, Series D 8/9/2021 9,999,996
Varo Money, Inc. Common Shares 8/11/2021 10,000,371
YouBet Technology, Inc. (d/b/a
PickUp) Preferred Shares, Series Seed-2 8/26/2021 499,999
True Global Ventures 4 Plus Pte
Ltd(7) Limited Partner Fund Investment 8/27/2021 706,000
Architect Capital PayJoy SPV,
LLC(8) Membership Interest in Lending SPV Various 10,000,000
Total $ 70,668,175 _________________________________
(1)Churchill Sponsor VI LLC is the sponsor of Churchill Capital Corp VI, a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Our investment inChurchill Sponsor VI LLC constituted a "remote-affiliate" transaction for purposes of the 1940 Act in light of the fact thatMark Klein , our Chairman, CEO and President, has a non-controlling interest in the entity that controlsChurchill Sponsor VI LLC , and is a non-controlling board member of Churchill Capital Corp VI. (2)Churchill Sponsor VII LLC is the sponsor of Churchill Capital Corp VII, a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Our investment inChurchill Sponsor VII LLC constituted a "remote-affiliate" transaction for purposes of the 1940 Act in light of the fact thatMark Klein , our Chairman, CEO and President, has a non-controlling interest in the entity that controlsChurchill Sponsor VII LLC , and is a non-controlling board member of Churchill Capital Corp VII. (3)Keri Findley , a senior managing director of the Company, is a non-controlling member of the board of directors ofShogun Enterprises, Inc. and holds a minority equity interest in such company. (4)OnJune 11, 2021 ,Churchill Capital Corp. II , a special purpose acquisition company, executed a private investment in public equity transaction in order to acquire shares ofSoftware Luxembourg Holding S.A. alongside the merger ofSoftware Luxembourg Holding S.A. andChurchill Capital Corp. II . Following the merger,Software Luxembourg Holding S.A. changed its name to Skillsoft Corp. This investment constituted a "remote-affiliate" transaction for purposes of the 1940 Act in light of the fact thatMark Klein , our Chairman, CEO and President, has a non-controlling interest in the entity that controlsChurchill Sponsor II LLC , the sponsor ofChurchill Capital Corp II , and is a non-controlling board member ofChurchill Capital Corp II . (5)Colombier Sponsor LLC is the sponsor of Colombier Acquisition Corp., a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.Keri Findley , a senior managing director of the Company, andClaire Councill , an investment professional of the Company, are non-controlling members of the board of directors of Colombier Acquisition Corp. (6)AltC Sponsor LLC is the sponsor of AltC Acquisition Corp., a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company's investment inAltC Sponsor LLC constituted a "remote-affiliate" transaction for purposes of the 1940 Act in light of the fact thatMark D. Klein , the Company's Chairman, Chief Executive Officer and President, has a non-controlling interest in one of the entities that controlsAltC Sponsor LLC , andAllison Green , the Company's Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, is a non-controlling member of the board of directors of AltC Acquisition Corp. (7)As ofSeptember 30, 2021 ,$0.7 million of a$2.0 million capital commitment toTrue Global Ventures 4Plus Fund LP had been called and funded. 62
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(8)As of
During the nine months ended
During the nine months ended
Average Net Share
Portfolio Company Transaction Date Shares Price (1) Net Proceeds Realized Gain(2)
Palantir Technologies, Inc.(3) Various 4,618,952 26.72 123,419,184
110,544,068
Palantir Lending Trust SPV I(4) Various N/A N/A 2,172,637
2,172,637
Residential Homes forRent, LLC (d/b/a Second Avenue)(5) Various N/A N/A 1,054,305 - SP Holdings Group, Inc. 4/28/2021 2,542,587 0.19 490,246 490,246 Coursera, Inc.(6) Various 1,619,271 39.21 63,486,311 55,547,167 CUX, Inc. (d/b/a CorpU)(7) 8/24/2021
N/A N/A 6,009,092 1,968,218 Clever, Inc.(8) 9/3/2021 N/A N/A 3,011,486 1,010,886 Total$ 199,643,261 $ 171,733,222
_________________________________
(1)The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. (2)Realized gain does not include adjustments to amounts held in escrow receivable. (3)As ofMarch 4, 2021 , all remaining shares of Palantir Technologies, Inc. held by us had been sold. (4)The Palantir Lending Trust SPV I promissory note was initially collateralized with 2,260,000 Class A common shares of Palantir Technologies, Inc. to whichSuRo Capital Corp. retains a beneficial equity upside interest. As ofSeptember 30, 2021 , 512,290 Class A common shares remain in Palantir Lending Trust SPV I, none of which are subject to lock-up restrictions. The realized gain fromSuRo Capital Corp.'s investment in Palantir Lending Trust SPV I is generated by the proceeds from the sale of a portion of the shares collateralizing the promissory note to Palantir Lending Trust SPV I and attributable to the Equity Participation in Underlying Collateral. (5)During the nine months endedSeptember 30, 2021 , approximately$1.1 million has been received fromResidential Homes forRent, LLC (d/b/aSecond Avenue ) related to the 15% term loan dueDecember 23, 2023 . Of the proceeds received, approximately$0.8 million repaid a portion of the outstanding principal and approximately$0.3 million was attributed to interest. (6)As ofSeptember 30, 2021 , none ofSuRo Capital Corp.'s common shares in Coursera, Inc. were subject to lock-up restrictions. (7)As ofSeptember 30, 2021 , net proceeds includes approximately$0.3 million in additional proceeds currently held in escrow. (8)OnSeptember 3, 2021 ,Clever, Inc. completed its sale to Kahoot! ASA. In connection with this transaction,SuRo Capital Corp. received 61,367 common shares in Kahoot! ASA in addition to cash proceeds and amounts currently held in escrow.SuRo Capital Corp. is also eligible to receive cash and Kahoot! ASA common shares subject to certain earn-out provisions and contingencies. As ofSeptember 30, 2021 ,SuRo Capital Corp.'s common shares in Kahoot! ASA were subject to certain lock-up restrictions. Net proceeds includes approximately$0.7 million in additional proceeds currently held in escrow. During the nine months endedSeptember 30, 2021 , we realized a net investment loss of$0.1 million due to the expiration of ourOneValley, Inc. (f/k/aNestGSV, Inc. ) Series A-3 preferred warrants with a strike price of$1.33 onApril 4, 2021 , and the expiration of unexercised options of ourOneValley, Inc. (f/k/aNestGSV, Inc. ) Series A-4 preferred warrants with a strike price of$1.33 onJuly 18, 2021 .
As the COVID-19 situation continues to evolve, we are maintaining close communications with our portfolio companies to proactively assess and manage potential risks across our investment portfolio.
Nine Months Ended
During the nine months endedSeptember 30, 2020 , we funded investments in an aggregate amount of$15,214,694 (not including capitalized transaction costs) as shown in the following table: Portfolio Company Investment Transaction Date Gross PaymentsNeutron Holdings, Inc. (d/b/a Lime) Convertible Promissory Note 5/11/2020$ 506,339 Rent the Runway, Inc. Preferred Shares 6/17/2020 5,000,001 Palantir Lending Trust SPV I Collateralized Loan 6/19/2020 6,870,000 Coursera, Inc. Preferred Shares, Series F 7/15/2020 2,838,354 Total$ 15,214,694
During the nine months ended
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During the nine months endedSeptember 30, 2020 , we exited investments in an amount of$15,779,482 , net of transaction costs, and realized a net gain on investments of approximately$9,332,643 (includingU.S. Treasury investments) as shown in following table: Average Net Realized Portfolio Investment Transaction Date Shares Share Price (1) Net Proceeds Gain/(Loss)(2) Parchment, Inc. 1/31/2020 3,200,512$ 3.40 $ 10,876,621 $ 6,875,639 4C Insights (f/k/a The Echo Systems Corp.)(3) 7/29/2020 436,219 1.85 807,952
(628,452)
Palantir Technologies, Inc.(4) 9/30/2020 400,000 10.24 4,094,909 3,006,451 Total$ 15,779,482 $ 9,253,638
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(1)The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. (2)Realized gain/(loss) does not include realized gain or loss incurred on the maturity of ourU.S. Treasury investments. (3)OnJuly 29, 2020 SuRo Capital Corp. exited its investment in4C Insights (f/k/aThe Echo Systems Corp. ). In connection with this exit,SuRo Capital Corp. received 112,374 Class A common shares inKinetiq Holdings, LLC in addition to cash proceeds and amounts currently held in escrow. As ofSeptember 30, 2020 , all remaining shares of4C Insights (f/k/a The Echo System) held by us had been sold, subject to an escrow receivable of$56,124 . (4)As ofSeptember 30, 2020 , we held 5,373,690 Class A common shares of Palantir Technologies, Inc. Of the remaining shares, 754,738 were unrestricted and 4,618,952 were subject to lock-up restrictions.
During the nine months ended
Results of Operations
Comparison of the three and nine months ended
Operating results for the three and nine months endedSeptember 30, 2021 and 2020 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Total Investment Income $ 523,916$ 408,107 $ 1,090,088 $ 901,384 Interest income 248,072 284,357 560,768 471,384 Dividend income 275,844 123,750 529,320 430,000 Total Operating Expenses$ 2,747,394 $ 2,995,998 $ 8,190,884 $ 11,161,216 Compensation expense 1,500,061 1,030,239 4,139,263 4,960,679 Directors' fees 368,281 111,250 590,781 333,750 Professional fees 604,475 714,345 2,107,158 2,532,183 Interest expense - 555,935 504,793 1,697,962 Income tax expense (1,975) (1,657) 7,648 46,598 Other expenses 276,552 585,886 841,241 1,590,044 Net Investment Loss$ (2,223,478) $ (2,587,891) $ (7,100,796) $ (10,259,832) Net realized gain on investments 32,495,660 2,378,390 172,306,990 9,332,643
Net change in unrealized appreciation/(depreciation) of investments
(15,023,778) 16,129,442 (8,598,363) 14,985,703
Net Change in Net Assets Resulting from Operations
$ 15,919,941 $ 156,607,831 $ 14,058,514 64
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Investment Income
Investment income increased to$523,916 for the three months endedSeptember 30, 2021 from$408,107 for the three months endedSeptember 30, 2020 . The net increase between periods was due to an increase in dividend income fromAventine Property Group, Inc. and a special dividend fromTreehouse Real Estate Investment Trust, Inc. , and an increase in interest income from theResidential Homes forRent, LLC (d/b/aSecond Avenue ) term loan, Enjoy Technologies, Inc. convertible promissory note, andArchitect Capital PayJoy SPV, LLC membership interest in lending SPV. The increase was offset by a decrease in dividend income from NewLake Capital Partners, Inc. (f/k/aGreenAcreage Real Estate Corp. ) and a decrease in accrued interest income from Palantir Lending Trust SPV I during the three months endedSeptember 30, 2021 , relative to the three months endedSeptember 30, 2020 . Investment income increased to$1,090,088 for the nine months endedSeptember 30, 2021 from$901,384 for the nine months endedSeptember 30, 2020 . The net increase between periods was due to an increase in dividend income fromAventine Property Group, Inc. ,Treehouse Real Estate Investment Trust, Inc. , and NewLake Capital Partners, Inc. (f/k/aGreenAcreage Real Estate Corp. ), and interest income from theResidential Homes forRent, LLC (d/b/aSecond Avenue ) term loan, Enjoy Technologies, Inc. convertible promissory note, andArchitect Capital PayJoy SPV, LLC membership interest in lending SPV. The increase was offset by a decrease in dividend income fromSPBRX, Inc. (f/k/aGSV Sustainability Partners, Inc. ), and a decrease in accrued interest income from Palantir Lending Trust SPV I during the nine months endedSeptember 30, 2021 , relative to the nine months endedSeptember 30, 2020 . Operating Expenses Total operating expenses decreased to$2,747,394 for the three months endedSeptember 30, 2021 from$2,995,998 for the three months endedSeptember 30, 2020 . The decrease in operating expense was primarily due to a decrease in interest expense, professional fees, and other expenses. The decrease was offset by an increase in compensation expense during the three months endedSeptember 30, 2021 , relative to the three months endedSeptember 30, 2020 . Total operating expenses decreased to$8,190,884 for the nine months endedSeptember 30, 2021 from$11,161,216 for the nine months endedSeptember 30, 2020 . The decrease in operating expense was primarily due to the decrease in the recognition of all unvested and unrecognized compensation cost related to the stock-based compensation plan upon cancellation of all outstanding options onApril 28, 2020 , as well as a decrease in interest expense, professional fees, and other expenses during the nine months endedSeptember 30, 2021 , relative to the nine months endedSeptember 30, 2020 .
Net Investment Loss
For the three months endedSeptember 30, 2021 , we recognized a net investment loss of$2,223,478 , compared to a net investment loss of$2,587,891 for the three months endedSeptember 30, 2020 . The change between periods resulted from the decrease in operating expenses and an increase in total investment income between periods during the three months endedSeptember 30, 2021 , relative to the three months endedSeptember 30, 2020 . For the nine months endedSeptember 30, 2021 , we recognized net investment loss of$7,100,796 , compared to net investment loss of$10,259,832 for the nine months endedSeptember 30, 2020 . The change between periods resulted from the decrease in operating expenses and an increase in total investment income between periods during the nine months endedSeptember 30, 2021 , relative to the nine months endedSeptember 30, 2020 .
Net Realized Gain on Investments
For the three months endedSeptember 30, 2021 , we recognized a net realized gain on our investments of$32,495,660 , compared to a net realized gain of$2,378,390 for the three months endedSeptember 30, 2020 . For the nine months endedSeptember 30, 2021 , we recognized net realized gain on our investments of$172,306,990 , compared to net realized gain of$9,332,643 for the nine months endedSeptember 30, 2020 . The components of our net realized gains on portfolio investments for the nine months endedSeptember 30, 2021 and 2020, excludingU.S. Treasury investments, are reflected in the tables above, under "-Portfolio and Investment Activity." 65
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Net Change in Unrealized Appreciation/(Depreciation) of Investments
For the three months endedSeptember 30, 2021 , we had a net change in unrealized depreciation of$15,023,778 . For the three months endedSeptember 30, 2020 , we had a net change in unrealized appreciation of$16,129,442 . The following tables summarize, by portfolio company, the significant changes in unrealized appreciation and/or depreciation of our investment portfolio for the three months endedSeptember 30, 2021 and 2020. Net Change in Unrealized Net Change in Unrealized Appreciation/(Depreciation) For the Appreciation/(Depreciation) For Three Months Ended September 30, the Three Months Ended Portfolio Company 2021 Portfolio Company September 30, 2020 Course Hero, Inc. $ 26,605,110 Palantir Technologies, Inc.(1) $
17,207,689
Forge Global, Inc. 10,317,564 Palantir Lending Trust SPV I
1,684,485
Rover Group, Inc. 2,877,675 Aspiration Partners, Inc. (1,385,751) StormWind, LLC 2,460,400 Course Hero, Inc. (1,412,210) Skillsoft Corp. 2,431,000 NewLake Capital Partners, Inc. (f/k/aGreenAcreage Real Estate Corp.) 1,967,858 Nextdoor, Inc. 1,773,248 Tynker (f/k/a Neuron Fuel, Inc.) 1,441,516 Clever, Inc.(1) (1,013,252) Enjoy Technology, Inc. (2,103,673) Ozy Media, Inc. (27,203,344) Coursera, Inc.(1) (35,382,037) Other(2) 804,157 Other(2) 35,229 Total $ (15,023,778) Total $ 16,129,442 _______________________ (1)The change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment, which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable. (2)"Other" represents investments (includingU.S. Treasury bills) for which individual change in unrealized appreciation/(depreciation) was less than$1.0 million for the three months endedSeptember 30, 2021 and 2020. For the nine months endedSeptember 30, 2021 , we had a net change in unrealized depreciation of$8,598,363 . For the nine months endedSeptember 30, 2020 , we had a net change in unrealized appreciation of$14,985,703 . The following tables summarize, by portfolio company, the significant changes in unrealized appreciation and/or depreciation of our investment portfolio for the nine months endedSeptember 30, 2021 and 2020. 66
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Net Change in Unrealized Net Change in Unrealized
Appreciation/(Depreciation) For Appreciation/(Depreciation) For
the Nine Months Ended September the Nine Months Ended September
Portfolio Company 30, 2021 Portfolio Company 30, 2020
Course Hero, Inc. $ 36,581,727 Coursera, Inc. $ 16,287,974
Forge Global, Inc. 10,320,512 Palantir Technologies, Inc.(1) 16,168,424
Aspiration Partners, Inc. 8,255,466 Course Hero, Inc. 6,144,812
Rover Group, Inc. 7,512,791 SharesPost, Inc. 2,369,329
StormWind, LLC 4,147,092 Palantir Lending Trust SPV I 1,684,056
NewLake Capital Partners, Inc.
(f/k/a GreenAcreage Real Estate 4C Insights (f/k/a The Echo
Corp.) 3,685,499 Systems Corp.)(1) 1,414,905
CUX, Inc. (d/b/a CorpU)(1) 3,654,203 StormWind, LLC (1,221,858)
Nextdoor, Inc. 3,384,446 Enjoy Technology, Inc. (1,307,690)
Coursera, Inc.(1) 2,519,727 Aspiration Partners, Inc. (1,334,699)
NestGSV, Inc. (d/b/a GSV Labs,
Skillsoft Corp. 1,690,000 Inc.) (2,374,341)
Treehouse Real Estate
Tynker (f/k/a Neuron Fuel, Inc.) 1,441,516 Investment Trust, Inc. (3,501,442)
Enjoy Technology, Inc. 1,317,436 Ozy Media, Inc. (5,364,897)
Neutron Holdings, Inc. (d/b/a/
Palantir Lending Trust SPV I (1,351,442) Lime) (6,515,508)
Ozy Media, Inc. (10,098,381) Parchment, Inc.(1) (6,895,603)
Palantir Technologies, Inc.(1) (81,760,272)
Other(2) 101,317 Other(2) (567,759)
Total $ (8,598,363) Total $ 14,985,703
_______________________
(1)The change in unrealized appreciation/(depreciation) reflected for these
investments resulted from the full or partial exit of the investment, which
resulted in the reversal of previously accrued unrealized
appreciation/(depreciation), as applicable.
(2)"Other" represents investments (including U.S. Treasury bills) for which
individual change in unrealized appreciation/(depreciation) was less than $1.0
million for the nine months ended September 30, 2021 and 2020.
Recent Developments
Portfolio Activity
Please refer to "Note 12-Subsequent Events" to our condensed consolidated
financial statements as of
As the COVID-19 situation continues to evolve, we are maintaining close communications with our portfolio companies to proactively assess and manage potential risks across our investment portfolio.
We are frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination rights by the seller or us. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.
Dividends
OnNovember 2, 2021 , the Company's Board of Directors declared a dividend of$2.00 per share payable onDecember 30, 2021 to stockholders of record as of the close of business onNovember 17, 2021 . The dividend will be paid in cash or shares of the Company's common stock at the election of the stockholders, although the total amount of cash to be distributed to all stockholders will be limited to no more than 50% of the total dividend to be paid to all stockholders. The number of shares of the Company's common stock to be issued to stockholders receiving all or a portion of the dividend in shares of common stock will be based on the volume weighted-average price per share of the Company's common stock on the Nasdaq Capital Market onNovember 10, 11 , and 12, 2021, less$2.00 to reflect the declared dividend. This dividend is being made in accordance with certain applicableTreasury regulations and guidance issued by theIRS that allow a publicly traded RIC to satisfy its distribution requirements from a distribution paid partly in common stock provided 67
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certain requirements are satisfied. For additional information, please refer to "Certain Information Regarding the Dividends" in the Company's press release datedNovember 3, 2021 included as Exhibit 99.1 to the Company's Current Report on Form 8-K filed with theSEC onNovember 3, 2021 .
Share Repurchase Program
OnOctober 27, 2021 , the Company's Board of Directors approved an extension of the Share Repurchase Program until the earlier of (i)October 31, 2022 or (ii) the repurchase of$40.0 million in aggregate amount of the Company's common stock. Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market provided that it complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the 1940 Act and the Securities Exchange Act of 1934, as amended. Please refer to "Note 5 - Common Stock" to our condensed consolidated financial statements as ofSeptember 30, 2021 for additional information on the Share Repurchase Program.
COVID-19
The Company has been closely monitoring the COVID-19 pandemic, its broader impact on the global economy and the more recent impacts on theU.S. economy. Subsequent toSeptember 30, 2021 , the global outbreak of the COVID-19 pandemic, and the related effect on theU.S. and global economies, may have adverse consequences for the business operations of some of the Company's portfolio companies and, as a result, may have adverse effects on the Company's operations. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, remain uncertain. 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 uncertainty may in turn adversely affect the value and liquidity of the Company's investments and negatively impact the Company's performance. As ofNovember 3, 2021 , there is no indication of a reportable subsequent event impacting the Company's financial statements for the three and nine months endedSeptember 30, 2021 . The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business.
Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from the sales of our investments and the net proceeds from public offerings of our equity and debt securities, including pursuant to our continuous at-the-market offering of shares of our common stock as discussed below under "At-the-Market Offering". OnMarch 28, 2018 , we issued$40.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2023, the outstanding principal amount of which we redeemed in full onMarch 29, 2021 , as discussed further below and in "Note 10-Debt Capital Activities" to our condensed consolidated financial statements as ofSeptember 30, 2021 . Our primary uses of cash are to make investments, pay our operating expenses, and make distributions to our stockholders. For the nine months endedSeptember 30, 2021 , our operating expenses were$8,190,884 . For the nine months endedSeptember 30, 2020 , our operating expenses were$11,161,216 . Cash Reserves and Liquid Securities September 30, 2021 December 31, 2020 Cash $
108,248,871
Securities of publicly traded portfolio companies: Unrestricted securities(1)
72,576,206 -
Subject to other sales restrictions(2) 9,363,955 94,635,398
Securities of publicly traded portfolio companies 81,940,161 94,635,398
Total Cash Reserves and Liquid Securities $
190,189,032
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(1)"Unrestricted securities" represents common stock of our publicly traded companies that are not subject to any restrictions upon sale. We may incur losses if we liquidate these positions to pay operating expenses or fund new investments. (2)Securities of publicly traded portfolio companies "subject to other sales restrictions" represents common stock of our publicly traded companies that are subject to certain lock-up restrictions. During the nine months endedSeptember 30, 2021 , cash increased to$108,248,871 from$45,793,724 at the beginning of the year. The increase in cash was primarily due to proceeds from the sale of our investment in Palantir Technologies, Inc., Coursera, Inc., offset by cash used to purchase investments, pay dividends, and pay our operating expenses. 68
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Currently, we believe we have ample liquidity to support our near-term capital requirements. As the impact of the COVID-19 continues to unfold and consistent with past and current practices, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the current circumstances.
Contractual Obligations
A summary of our significant contractual payment obligations as of
Payments Due By Period ( in millions)
Less than More than
Total 1 year 1-3 years 3-5 years 5 years
Operating lease liability 0.5 0.2 0.3 0.0 -
Share Repurchase Program
During the three and nine months ended September 30, 2021 , we did not repurchase
shares of our common stock pursuant to the Share Repurchase Program. As of
September 30, 2021 , the dollar value of shares that remained available to be
purchased under the Share Repurchase Program was approximately $9.6 million .
During the three and nine months ended September 30, 2020 , the Company
repurchased 0 and 1,284,565 shares, respectively, of the Company's common stock.
Under the Share Repurchase Program, we may repurchase our outstanding common
stock in the open market provided that we comply with the prohibitions under our
insider trading policies and procedures and the applicable provisions of the
1940 Act and the Securities Exchange Act of 1934, as amended. For more
information on the Share Repurchase Program, see "- Recent Developments" and
"Note 5-Common Stock" to our condensed consolidated financial statements as of
September 30, 2021 .
Off-Balance Sheet Arrangements
As ofSeptember 30, 2021 , we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices. However, we may employ hedging and other risk management techniques in the future.
Equity Issuances & Debt Capital Activities
At-the-Market Offering
OnJuly 29, 2020 , the Company entered into an At-the-Market Sales Agreement, datedJuly 29, 2020 (the "Initial Sales Agreement"), withBTIG, LLC ,JMP Securities LLC , andLadenburg Thalmann & Co., Inc. (collectively, the "Agents"). Under the Initial Sales Agreement, the Company may, but has no obligation to, issue and sell up to$50.0 million in aggregate amount of shares of its common stock (the "Shares") from time to time through the Agents or to them as principal for their own account (the "ATM Program"). OnSeptember 23, 2020 , the Company increased the maximum amount of Shares to be sold through the ATM Program to$150.0 million from$50.0 million . In connection with the upsize of the ATM Program to$150.0 million , the Company entered into the Amendment No. 1 to the At-the-Market Sales Agreement, datedSeptember 23, 2020 , with the Agents. The Company intends to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with its investment objective and strategy and for general corporate purposes. During the three and nine months endedSeptember 30, 2021 , the Company did not issue or sell any shares under the ATM Program. As ofSeptember 30, 2021 , up to$99.1 million in aggregate amount of the Shares remain available for sale under the ATM Program. Refer to "Note 5-Common Stock" to our consolidated financial statements as ofSeptember 30, 2021 for more information regarding the ATM Program.
4.75% Convertible Senior Notes due 2023
OnMarch 28, 2018 , we issued$40.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2023, which bore interest at a fixed rate of 4.75% per year, payable semi-annually in arrears onMarch 31 andSeptember 30 of each year, commencing onSeptember 30, 2018 . We received approximately$38.2 million in proceeds from the offering, net of underwriting discounts and commissions and other offering expenses. The 4.75% Convertible Senior Notes due 2023 had a maturity date ofMarch 28, 2023 , unless previously repurchased or converted in accordance with their terms. We did not have the right to redeem the 4.75% Convertible Senior Notes due 2023 prior toMarch 27, 2021 . 69
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OnMarch 29, 2021 , the Company redeemed$0.3 million in aggregate principal amount of the 4.75% Convertible Senior Notes due 2023 at a redemption price equal to 100% of their principal amount ($1,000 per convertible note), plus accrued and unpaid interest thereon, which amounted to approximately$0.8 million . As a result of this redemption and prior conversions of the 4.75% Convertible Senior Notes due 2023 into shares of our common stock by the holders thereof, the 4.75% Convertible Senior Notes due 2023 were no longer outstanding as ofMarch 29, 2021 . During the three and nine months endedSeptember 30, 2021 , the Company issued 0 and 4,097,808 shares, respectively, of its common stock and cash for fractional shares upon the conversion of approximately$0 and$37.9 million , respectively, in aggregate principal amount of the 4.75% Convertible Senior Notes due 2023. The Company also redeemed approximately$0.3 million of aggregate principal amount for cash plus accrued and unpaid interest onMarch 29, 2021 . During the three and nine months endedSeptember 30, 2020 , the Company issued 174,393 shares of its common stock and cash for fractional shares upon the conversion of$1,780,000 in aggregate principal amount of the 4.75% Convertible Senior Notes due 2023.
Refer to "Note 10-Debt Capital Activities" to our condensed consolidated
financial statements as of
Distributions
The timing and amount of our distributions, if any, will be determined by our Board of Directors and will be declared out of assets legally available for distribution. The following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our formation throughSeptember 30, 2021 . The table is divided by fiscal year according to record date: Date Declared Record Date Payment Date Amount per Share Fiscal 2015: November 4, 2015(1) November 16, 2015 December 31, 2015 $ 2.76 Fiscal 2016: August 3, 2016(2) August 16, 2016 August 24, 2016 0.04 Fiscal 2019: November 5, 2019(3) December 2, 2019 December 12, 2019 0.20 December 20, 2019(4) December 31, 2019 January 15, 2020 0.12 Fiscal 2020: July 29, 2020(5) August 11, 2020 August 25, 2020 0.15 September 28, 2020(6) October 5, 2020 October 20, 2020 0.25 October 28, 2020(7) November 10, 2020 November 30, 2020 0.25 December 16, 2020(8) December 30, 2020 January 15, 2021 0.22 Fiscal 2021: January 26, 2021(9) February 5, 2021 February 19, 2021 0.25 March 8, 2021(10) March 30, 2021 April 15, 2021 0.25 May 4, 2021(11) May 18, 2021 June 30, 2021 2.50 August 3, 2021(12) August 18, 2021 September 30, 2021 2.25 Total $ 9.24 ___________________ (1) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,860,903 shares of common stock issued in lieu of cash, or approximately 14.8% of our outstanding shares prior to the distribution, as well as cash of$26,358,885 . The number of shares of common stock comprising the stock portion was calculated based on a price of$9.425 per share, which equaled the average of the volume weighted-average trading price per share of our common stock onDecember 28 , 29 and 30, 2015. None of the$2.76 per share distribution represented a return of capital. (2) Of the total distribution of$887,240 onAugust 24, 2016 ,$820,753 represented a distribution from realized gains, and$66,487 represented a return of capital. (3) All of the$3,512,849 distribution paid onDecember 12, 2019 represented a distribution from realized gains. None of the distribution represented a return of capital. (4) All of the$2,107,709 distribution paid onJanuary 15, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. 70
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(5) All of the$2,516,452 distribution paid onAugust 25, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (6) All of the$5,071,326 distribution paid onOctober 20, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (7) All of the$4,978,504 distribution paid onNovember 30, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (8) All of the$4,381,084 distribution paid onJanuary 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. (9) All of the$4,981,131 distribution paid onFebruary 19, 2021 represented a distribution from realized gains. None of the distribution is anticipated to represent a return of capital. (10) All of the$6,051,304 distribution paid onApril 15, 2021 represented a distribution from realized gains. None of the distribution is anticipated to represent a return of capital. (11) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding shares prior to the distribution, as well as cash of$29,987,589 . The number of shares of common stock comprising the stock portion was calculated based on a price of$13.07 per share, which equaled the average of the volume weighted-average trading price per share of our common stock onMay 12, 13 , and 14, 2021. None of the$2.50 per share distribution is anticipated to represent a return of capital. (12) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding shares prior to the distribution, as well as cash of$29,599,164 . The number of shares of common stock comprising the stock portion was calculated based on a price of$13.55 per share, which equaled the average of the volume weighted-average trading price per share of our common stock onAugust 11, 12 , and 13, 2021. None of the$2.25 per share distribution is anticipated to represent a return of capital. We intend to focus on making capital gains-based investments from which we will derive primarily capital gains. As a consequence, we do not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments. If there are earnings or realized capital gains to be distributed, we intend to declare and pay a distribution at least annually. The amount of realized capital gains available for distribution to stockholders will be impacted by our tax status. Our current intention is to make any future distributions out of assets legally available therefrom in the form of additional shares of our common stock under our dividend reinvestment plan, except in the case of stockholderswho elect to receive dividends and/or long-term capital gains distributions in cash. Under the dividend reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. Any distributions reinvested under the plan will nevertheless be treated as received by theU.S. stockholder forU.S. federal income tax purposes, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the dividend reinvestment plan, it will be required to pay applicable federal, state and local taxes on any reinvested dividends even though such stockholder will not receive a corresponding cash distribution. Stockholders that hold shares in the name of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash. So long as we qualify and maintain our tax treatment as a RIC, we generally will not pay corporate-levelU.S. federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. Rather, any tax liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our consolidated financial statements. See "Note 2-Significant Accounting Policies-U.S. Federal and State Income Taxes" and "Note 9-Income Taxes" to our consolidated financial statements as ofSeptember 30, 2021 for more information. The Taxable Subsidiaries included in our consolidated financial statements are taxable subsidiaries, regardless of whether we are taxed as a RIC. These taxable subsidiaries are not consolidated for income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in our consolidated financial statements.
Critical Accounting Policies
Critical accounting policies and practices are the policies that are both most
important to the portrayal of our financial condition and results, and require
management's most difficult, subjective, or complex judgments, often as a result
of the need to make estimates about the effects of matters that are inherently
uncertain. These include estimates of the fair value of our
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Level 3 investments and other estimates that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ materially from such estimates. See "Note 2-Significant Accounting Policies" to our condensed consolidated financial statements as ofSeptember 30, 2021 for further detail regarding our critical accounting policies and recently issued or adopted accounting pronouncements.
Related-Party Transactions
See "Note 3-Related-Party Arrangements" to our condensed consolidated financial
statements as of
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