UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2021
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
	For the transition period from  to

Commission file number 814-00861

Fidus Investment Corporation

(Exact Name of Registrant as Specified in its Charter)

Maryland	27-5017321
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1603 Orrington Avenue, Suite 1005 Evanston, Illinois	60201
(Address of Principal Executive Offices)	(Zip Code)

(847) 859-3940

(Registrant’s telephone number, including area code)

________________

n/a

(Former name, former address and former fiscal year, if changed since last report)

_______________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	FDUS	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☑	Smaller reporting company ☐	Emerging growth company ☐
(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 1, 2021, the Registrant had outstanding 24,437,400 shares of common stock, $0.001 par value.

1

FIDUS INVESTMENT CORPORATION

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q

	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Statements of Assets and Liabilities — September 30, 2021 (unaudited) and December 31, 2020	3
	Consolidated Statements of Operations — three and nine months ended September 30, 2021 (unaudited) and 2020 (unaudited)	4
	Consolidated Statements of Changes in Net Assets — three and nine months ended September 30, 2021 (unaudited) and 2020 (unaudited)	5
	Consolidated Statements of Cash Flows — three and nine months ended September 30, 2021, (unaudited) and 2020 (unaudited)	6
	Consolidated Schedules of Investments — September 30, 2021 (unaudited) and December 31, 2020	7
	Notes to Consolidated Financial Statements (unaudited)	17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	58
Item 4.	Controls and Procedures.	59
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.	60
Item 1A.	Risk Factors.	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	60
Item 3.	Defaults Upon Senior Securities.	60
Item 4.	Mine Safety Disclosures.	60
Item 5.	Other Information.	60
Item 6.	Exhibits.	61
Signatures		62
Exhibit Index

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Assets and Liabilities

(in thousands, except shares and per share data)

	September 30,
	2021			December 31,
	(unaudited)			2020
ASSETS
Investments, at fair value:
Control investments (cost: $52,889 and $32,969, respectively)	$	43,284		$	28,253
Affiliate investments (cost: $33,021 and $31,836, respectively)		107,053			81,394
Non-control/non-affiliate investments (cost: $545,353 and $622,222, respectively)		568,787			633,222
Total investments, at fair value (cost: $631,263 and $687,027, respectively)		719,124			742,869
Cash and cash equivalents		98,812			124,308
Interest receivable		8,246			7,548
Prepaid expenses and other assets		1,584			1,015
Total assets	$	827,766		$	875,740
LIABILITIES
SBA debentures, net of deferred financing costs (Note 6)	$	92,146		$	144,004
Notes, net of deferred financing costs (Note 6)		203,142			300,294
Borrowings under Credit Facility, net of deferred financing costs (Note 6)		39,291			(1,048	)
Secured Borrowings		17,746			-
Accrued interest and fees payable		2,202			3,500
Base management fee payable, net of base management fee waiver – due to affiliate		3,201			3,244
Income incentive fee payable, net of income incentive fee waiver – due to affiliate		2,425			2,610
Capital gains incentive fee payable – due to affiliate		19,669			11,031
Administration fee payable and other – due to affiliate		571			576
Taxes (receivable) payable		(883	)		275
Accounts payable and other liabilities		711			494
Total liabilities	$	380,221		$	464,980
Commitments and contingencies (Note 7)
NET ASSETS
Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,437,400 shares
issued and outstanding at September 30, 2021 and December 31, 2020, respectively)	$	24		$	24
Additional paid-in capital		363,751			363,751
Total distributable earnings		83,770			46,985
Total net assets		447,545			410,760
Total liabilities and net assets	$	827,766		$	875,740
Net asset value per common share	$	18.31		$	16.81

See Notes to Consolidated Financial Statements (unaudited).

3

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Operations (unaudited)

(in thousands, except shares and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Investment Income:
Interest income
Control investments	$	927		$	467		$	2,495		$	1,348
Affiliate investments		537			849			2,096			2,663
Non-control/non-affiliate investments		16,395			17,449			50,197			51,060
Total interest income		17,859			18,765			54,788			55,071
Payment-in-kind interest income
Control investments		724			453			1,661			1,323
Affiliate investments		86			106			281			175
Non-control/non-affiliate investments		450			690			1,390			2,013
Total payment-in-kind interest income		1,260			1,249			3,332			3,511
Dividend income
Control investments		—			—			568			—
Affiliate investments		—			357			110			465
Non-control/non-affiliate investments		457			114			699			160
Total dividend income		457			471			1,377			625
Fee income
Control investments		—			—			400			—
Affiliate investments		102			22			370			88
Non-control/non-affiliate investments		1,545			571			6,071			2,189
Total fee income		1,647			593			6,841			2,277
Interest on idle funds		6			(1	)		7			9
Total investment income		21,229			21,077			66,345			61,493
Expenses:
Interest and financing expenses		4,662			4,878			14,418			14,701
Base management fee		3,270			3,223			9,661			9,688
Incentive fee - income		2,425			2,374			7,644			6,342
Incentive fee (reversal) - capital gains		4,664			2,761			8,638			(6,380	)
Administrative service expenses		438			412			1,281			1,242
Professional fees		347			301			982			1,508
Other general and administrative expenses		374			224			1,115			1,059
Total expenses before base management and income incentive fee waivers		16,180			14,173			43,739			28,160
Base management and income incentive fee waivers		(69	)		—			(98	)		(423	)
Total expenses, net of base management and incentive fee waivers		16,111			14,173			43,641			27,737
Net investment income before income taxes		5,118			6,904			22,704			33,756
Income tax provision (benefit)		-			2			32			146
Net investment income		5,118			6,902			22,672			33,610
Net realized and unrealized gains (losses) on investments:
Net realized gains (losses):
Control investments		(990	)		—			(33	)		—
Affiliate investments		30			(65	)		30			24,354
Non-control/non-affiliate investments		9,266			1,380			13,675			8,543
Total net realized gain (loss) on investments		8,306			1,315			13,672			32,897
Income tax (provision) benefit from realized gains on investments		143			—			143			(1,065	)
Net change in unrealized appreciation (depreciation):
Control investments		1,096			607			(4,889	)		(1,157	)
Affiliate investments		8,106			7,158			24,474			(28,295	)
Non-control/non-affiliate investments		6,133			4,899			12,434			(33,982	)
Total net change in unrealized appreciation (depreciation) on investments		15,335			12,664			32,019			(63,434	)
Net gain (loss) on investments		23,784			13,979			45,834			(31,602	)
Realized losses on extinguishment of debt		(460	)		(174	)		(2,640	)		(299	)
Net increase (decrease) in net assets resulting from operations	$	28,442		$	20,707		$	65,866		$	1,709
Per common share data:
Net investment income per share-basic and diluted	$	0.21		$	0.28		$	0.93		$	1.37
Net increase in net assets resulting from operations per share — basic and diluted	$	1.16		$	0.85		$	2.70		$	0.07
Dividends declared per share	$	0.42		$	0.30		$	1.19		$	0.99
Weighted average number of shares outstanding — basic and diluted		24,437,400			24,437,400			24,437,400			24,444,120

See Notes to Consolidated Financial Statements (unaudited).

4

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Changes in Net Assets (unaudited)

(in thousands, except shares)

	Common Stock							Additional			Total
	Number of			Par				paid-in			distributable			Total net
	shares			value				capital			earnings			assets
Balances at December 31, 2019		24,463,119		$	24			$	366,061		$	46,225		$	412,310
Repurchases of common stock under Stock Repurchase Program (Note 8)		(25,719	)		(0	)	*		(268	)		—			(268	)
Net investment income		—			—				—			17,417			17,417
Net realized gain (loss) on investments, net of taxes		—			—				—			30,327			30,327
Net unrealized appreciation (depreciation) on investments		—			—				—			(74,590	)		(74,590	)
Realized losses on extinguishment of debt		—			—				—			(125	)		(125	)
Dividends declared		—			—				—			(9,537	)		(9,537	)
Balances at March 31, 2020		24,437,400			24				365,793			9,717			375,534
Net investment income		—			—				—			9,291			9,291
Net realized gain (loss) on investments, net of taxes		—			—				—			190			190
Net unrealized appreciation (depreciation) on investments		—			—				—			(1,508	)		(1,508	)
Realized losses on extinguishment of debt		—			—				—			—			—
Dividends declared		—			—				—			(7,331	)		(7,331	)
Balances at June 30, 2020		24,437,400			24				365,793			10,359			376,176
Net investment income		—			—				—			6,902			6,902
Net realized gain (loss) on investments, net of taxes		—			—				—			1,315			1,315
Net unrealized appreciation (depreciation) on investments		—			—				—			12,664			12,664
Realized losses on extinguishment of debt		—			—				—			(174	)		(174	)
Dividends declared		—			—				—			(7,331	)		(7,331	)
Balances at September 30, 2020		24,437,400		$	24			$	365,793		$	23,735		$	389,552
Balances at December 31, 2020		24,437,400		$	24			$	363,751		$	46,985		$	410,760
Net investment income		—			—				—			11,081			11,081
Net realized gain (loss) on investments, net of taxes		—			—				—			3,216			3,216
Net unrealized appreciation (depreciation) on investments		—			—				—			(579	)		(579	)
Realized losses on extinguishment of debt		—			—				—			(2,180	)		(2,180	)
Dividends declared		—			—				—			(9,286	)		(9,286	)
Balances at March 31, 2021		24,437,400			24				363,751			49,237			413,012
Net investment income		—			—				—			6,473			6,473
Net realized gain (loss) on investments, net of taxes		—			—				—			2,150			2,150
Net unrealized appreciation (depreciation) on investments		—			—				—			17,263			17,263
Realized losses on extinguishment of debt		—			—				—			—			—
Dividends declared		—			—				—			(9,531	)		(9,531	)
Balances at June 30, 2021		24,437,400			24				363,751			65,592			429,367
Net investment income		—			—				—			5,118			5,118
Net realized gain (loss) on investments, net of taxes		—			—				—			8,449			8,449
Net unrealized appreciation (depreciation) on investments		—			—				—			15,335			15,335
Realized losses on extinguishment of debt		—			—				—			(460	)		(460	)
Dividends declared		—			—				—			(10,264	)		(10,264	)
Balances at September 30, 2021		24,437,400		$	24			$	363,751		$	83,770		$	447,545
*amount is greater than zero but less than one

See Notes to Consolidated Financial Statements (unaudited).

5

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Nine Months Ended September 30,
	2021			2020
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	65,866		$	1,709
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Net change in unrealized (appreciation) depreciation on investments		(32,019	)		63,434
Net realized (gain) loss on investments		(13,672	)		(32,897	)
Interest and dividend income paid-in-kind		(3,437	)		(3,511	)
Accretion of original issue discount		(734	)		(118	)
Accretion of loan origination fees		(1,832	)		(866	)
Purchase of investments		(245,546	)		(86,121	)
Proceeds from sales and repayments of investments		319,036			110,149
Proceeds from loan origination fees		1,949			1,444
Realized losses on extinguishment of debt		2,640			299
Amortization of deferred financing costs		1,655			1,680
Changes in operating assets and liabilities:
Interest receivable		(698	)		(740	)
Prepaid expenses and other assets		(504	)		34
Accrued interest and fees payable		(1,298	)		(1,383	)
Base management fee payable, net of base management fee waiver – due to affiliate		(43	)		(110	)
Income incentive fee payable, net of income incentive fee waiver – due to affiliate		(185	)		877
Capital gains incentive fee (reversal) – due to (from) affiliate		8,638			(6,380	)
Administration fee payable and other – due to affiliate		(5	)		67
Taxes payable		(1,158	)		(424	)
Accounts payable and other liabilities		217			(16	)
Net cash provided by (used for) operating activities		98,870			47,127
Cash Flows from Financing Activities:
Proceeds received from SBA debentures		11,500			6,000
Repayments of SBA debentures		(63,500	)		(16,500	)
Principal payments on Notes		(100,000	)		—
Proceeds received from (repayments of) borrowings under Credit Facility, net		40,000			(2,000	)
Proceeds from Secured Borrowings		17,746			—
Payment of deferred financing costs		(1,031	)		(490	)
Dividends paid to stockholders, including expenses		(29,081	)		(24,199	)
Repurchases of common stock under Stock Repurchase Program		—			(268	)
Net cash provided by (used for) financing activities		(124,366	)		(37,457	)
Net increase (decrease) in cash and cash equivalents		(25,496	)		9,670
Cash and cash equivalents: