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 March 31, 2022
	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 May 3, 2022, 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 — March 31, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Operations — three months ended March 31, 2022 (unaudited) and 2021 (unaudited)	4
	Consolidated Statements of Changes in Net Assets — three months ended March 31, 2022 (unaudited) and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows — three months ended March 31, 2022, (unaudited) and 2021 (unaudited)	6
	Consolidated Schedules of Investments — March 31, 2022 (unaudited) and December 31, 2021	7
	Notes to Consolidated Financial Statements (unaudited)	15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	52
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.	54
Item 1A.	Risk Factors.	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	54
Item 3.	Defaults Upon Senior Securities.	54
Item 4.	Mine Safety Disclosures.	54
Item 5.	Other Information.	54
Item 6.	Exhibits.	55
Signatures		56
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)

	March 31,
	2022			December 31,
	(unaudited)			2021
ASSETS
Investments, at fair value:
Control investments (cost: $6,832 and $6,833, respectively)	$	2,150		$	2,151
Affiliate investments (cost: $46,542 and $55,519, respectively)		122,428			137,284
Non-control/non-affiliate investments (cost: $666,602 and $559,434, respectively)		687,417			579,689
Total investments, at fair value (cost: $719,976 and $621,786, respectively)		811,995			719,124
Cash and cash equivalents		86,113			169,417
Interest receivable		10,318			8,231
Prepaid expenses and other assets		580			413
Total assets	$	909,006		$	897,185
LIABILITIES
SBA debentures, net of deferred financing costs (Note 6)	$	124,803		$	103,978
Notes, net of deferred financing costs (Note 6)		245,290			245,016
Borrowings under Credit Facility, net of deferred financing costs (Note 6)		(483	)		(595	)
Secured Borrowings		17,443			17,637
Accrued interest and fees payable		3,615			4,668
Base management fee payable, net of base management fee waiver – due to affiliate		3,268			3,135
Income incentive fee payable – due to affiliate		1,053			2,622
Capital gains incentive fee payable – due to affiliate		23,361			29,227
Administration fee payable and other – due to affiliate		420			668
Taxes (receivable) payable		2,043			2,410
Accounts payable and other liabilities		1,691			655
Total liabilities	$	422,504		$	409,421
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 March 31, 2022 and December 31, 2021, respectively)	$	24		$	24
Additional paid-in capital		361,807			361,807
Total distributable earnings		124,671			125,933
Total net assets		486,502			487,764
Total liabilities and net assets	$	909,006		$	897,185
Net asset value per common share	$	19.91		$	19.96

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
	March 31,
	2022			2021
Investment Income:
Interest income
Control investments	$	-		$	593
Affiliate investments		884			848
Non-control/non-affiliate investments		16,197			17,697
Total interest income		17,081			19,138
Payment-in-kind interest income
Control investments		-			341
Affiliate investments		30			111
Non-control/non-affiliate investments		517			516
Total payment-in-kind interest income		547			968
Dividend income
Control investments		-			-
Affiliate investments		656			-
Non-control/non-affiliate investments		33			93
Total dividend income		689			93
Fee income
Control investments		-			400
Affiliate investments		137			183
Non-control/non-affiliate investments		2,061			2,508
Total fee income		2,198			3,091
Interest on idle funds		3			-
Total investment income		20,518			23,290
Expenses:
Interest and financing expenses		4,412			5,194
Base management fee		3,343			3,176
Incentive fee - income		1,053			2,669
Incentive fee (reversal) - capital gains		270			91
Administrative service expenses		422			413
Professional fees		515			323
Other general and administrative expenses		287			345
Total expenses before base management fee waiver		10,302			12,211
Base management fee waiver		(76	)		-
Total expenses, net of base management fee waiver		10,226			12,211
Net investment income before income taxes		10,292			11,079
Income tax provision (benefit)		(46	)		(2	)
Net investment income		10,338			11,081
Net realized and unrealized gains (losses) on investments:
Net realized gains (losses):
Control investments		139			957
Affiliate investments		324			-
Non-control/non-affiliate investments		6,405			2,259
Total net realized gain (loss) on investments		6,868			3,216
Income tax (provision) benefit from realized gains on investments		1			-
Net change in unrealized appreciation (depreciation):
Control investments		-			892
Affiliate investments		(5,879	)		3,952
Non-control/non-affiliate investments		560			(5,423	)
Total net change in unrealized appreciation (depreciation) on investments		(5,319	)		(579	)
Net gain (loss) on investments		1,550			2,637
Realized losses on extinguishment of debt		(198	)		(2,180	)
Net increase (decrease) in net assets resulting from operations	$	11,690		$	11,538
Per common share data:
Net investment income per share-basic and diluted	$	0.42		$	0.45
Net increase in net assets resulting from operations per share — basic and diluted	$	0.48		$	0.47
Dividends declared per share	$	0.53		$	0.38
Weighted average number of shares outstanding — basic and diluted		24,437,400			24,437,400

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, 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
Balances at December 31, 2021		24,437,400	$	24	$	361,807	$	125,933		$	487,764
Net investment income		—		—		—		10,338			10,338
Net realized gain (loss) on investments, net of taxes		—		—		—		6,869			6,869
Net unrealized appreciation (depreciation) on investments		—		—		—		(5,319	)		(5,319	)
Realized losses on extinguishment of debt		—		—		—		(198	)		(198	)
Dividends declared		—		—		—		(12,952	)		(12,952	)
Balances at March 31, 2022		24,437,400	$	24	$	361,807	$	124,671		$	486,502

See Notes to Consolidated Financial Statements (unaudited).

5

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Three Months Ended March 31,
	2022			2021
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	11,690		$	11,538
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		5,319			579
Net realized (gain) loss on investments		(6,868	)		(3,216	)
Interest and dividend income paid-in-kind		(547	)		(968	)
Accretion of original issue discount		(23	)		(597	)
Accretion of loan origination fees		(280	)		(747	)
Purchase of investments		(114,428	)		(63,107	)
Proceeds from sales and repayments of investments		23,185			98,565
Proceeds from loan origination fees		771			476
Realized losses on extinguishment of debt		198			2,180
Amortization of deferred financing costs		524			583
Changes in operating assets and liabilities:
Interest receivable		(2,087	)		457
Prepaid expenses and other assets		(167	)		(652	)
Accrued interest and fees payable		(1,053	)		(533	)
Base management fee payable, net of base management fee waiver – due to affiliate		133			(68	)
Income incentive fee payable – due to affiliate		(1,569	)		59
Capital gains incentive fee (reversal) – due to (from) affiliate		(5,866	)		91
Administration fee payable and other – due to affiliate		(248	)		(382	)
Taxes payable		(367	)		(700	)
Accounts payable and other liabilities		1,036			(57	)
Net cash provided by (used for) operating activities		(90,647	)		43,501
Cash Flows from Financing Activities:
Proceeds received from SBA debentures		41,500			6,000
Repayments of SBA debentures		(20,000	)		(19,200	)
Principal payments on Notes		—			(100,000	)
Proceeds received from (repayments of) borrowings under Credit Facility, net		—			15,000
Proceeds received from (repayments of) Secured Borrowings, net		(194	)		—
Payment of deferred financing costs		(1,011	)		(148	)
Dividends paid to stockholders, including expenses		(12,952	)		(9,286	)
Net cash provided by (used for) financing activities		7,343			(107,634	)
Net increase (decrease) in cash and cash equivalents		(83,304	)		(64,133	)
Cash and cash equivalents:
Beginning of period		169,417			124,308
End of period	$	86,113		$	60,175
Supplemental disclosure of cash flow information:
Cash payments for interest	$	4,941		$	5,144
Cash payments for taxes, net of tax refunds received	$	320		$	698

See Notes to Consolidated Financial Statements (unaudited).

6

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments (unaudited)

March 31, 2022

(in thousands, except shares)

Portfolio Company (a)(b)		Variable Index	Rate (e)	Investment		Principal				Fair		Percent of
Investment Type (c)	Industry	Spread / Floor (d)	Cash/PIK	Date (f)	Maturity	Amount		Cost		Value (g)		Net Assets
Control Investments (t)
Hilco Plastics Holdings, LLC (dba Hilco Technologies) (n)	Component Manufacturing
Common Equity (Units N/A)				4/6/2021				$	—	$	—		0	%
Mesa Line Services, LLC (n)	Utilities: Services
Common Equity (10 shares) (j)				4/22/2021					—		2,150		1	%
US GreenFiber, LLC (n)	Building Products Manufacturing
Second Lien Debt (j)(y)			10.00%/3.00%	7/3/2014	8/30/2024	$	5,226		5,223		—
Common Equity (2,522 units) (h)(j)				7/3/2014					585		—
Common Equity (425,508 units) (j)				8/30/2019					1		—
Common Equity (1,022,813 units) (h)(j)				7/1/2020					1,023		—
									6,832		—		0	%
Total Control Investments								$	6,832	$	2,150		1	%
Affiliate Investments (l)
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	Building Products Manufacturing
Subordinated Debt (j)			10.00%/0.00%	12/31/2021	12/31/2027	$	9,602	$	9,602	$	9,602
Common Equity (5,690units) (h) (j)				12/31/2021					5,690.00		5,690.00
Common Equity (7,113 units) (h) (j)				12/31/2021					7,113.00		7,113.00
Common Equity (2,012units) (h) (j)				12/31/2021					-		-
									22,405		22,405		4	%
FAR Research Inc. (n)	Specialty Chemicals
Common Equity (1,396 units)				3/31/2014					—		28		0	%
Medsurant Holdings, LLC	Healthcare Services
Preferred Equity (84,997 units) (h)(j)				4/12/2011					716		842
Warrant (252,588 units) (h)(j)(m)				4/12/2011					2,258		2,857
									2,974		3,699		1	%
Mirage Trailers LLC (n)	Utility Equipment Manufacturing
Common Equity (2,500,000 shares)				11/25/2015					—		—		0	%
Pfanstiehl, Inc.	Healthcare Products
Common Equity (4,250 units) (j)				3/29/2013					425		59,297		12	%
Pinnergy, Ltd.	Oil & Gas Services
Common Equity - Class A-2 (42,500 units) (j)				10/13/2016					3,000		18,440		4	%
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)	Aerospace & Defense Manufacturing
First Lien Debt (k)(ag)		(L + 5.50%) / (1.00%)	6.50%/0.00%	2/12/2021	2/11/2026		13,000		12,926		13,000
Common Equity (41,290 units) (j)				2/12/2021					2,609		801
Common Equity (12,035 units) (j)				8/25/2021					1,203		1,204
									16,738		15,005		3	%
Steward Holding LLC (dba Steward Advanced Materials)	Aerospace & Defense Manufacturing
Common Equity (1,000,000 units)				11/12/2015