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 June 30, 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 August 2, 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 — June 30, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Operations — three and six months ended June 30, 2022 (unaudited) and 2021 (unaudited)	4
	Consolidated Statements of Changes in Net Assets — three and six months ended June 30, 2022 (unaudited) and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows — three and six months ended June 30, 2022, (unaudited) and 2021 (unaudited)	6
	Consolidated Schedules of Investments — June 30, 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.	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	55
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.	58
Item 1A.	Risk Factors.	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	58
Item 3.	Defaults Upon Senior Securities.	58
Item 4.	Mine Safety Disclosures.	58
Item 5.	Other Information.	58
Item 6.	Exhibits.	59
Signatures		60
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)

	June 30,
	2022			December 31,
	(unaudited)			2021
ASSETS
Investments, at fair value:
Control investments (cost: $6,833 and $6,833, respectively)	$	—		$	2,151
Affiliate investments (cost: $45,537 and $55,519, respectively)		106,374			137,284
Non-control/non-affiliate investments (cost: $687,344 and $559,434, respectively)		704,146			579,689
Total investments, at fair value (cost: $739,714 and $621,786, respectively)		810,520			719,124
Cash and cash equivalents		72,466			169,417
Interest receivable		13,109			8,231
Proceeds receivable from investments sold		11,895			—
Prepaid expenses and other assets		1,131			413
Total assets	$	909,121		$	897,185
LIABILITIES
SBA debentures, net of deferred financing costs (Note 6)	$	124,447		$	103,978
Notes, net of deferred financing costs (Note 6)		245,567			245,016
Borrowings under Credit Facility, net of deferred financing costs (Note 6)		(370	)		(595	)
Secured borrowings		17,263			17,637
Accrued interest and fees payable		4,492			4,668
Base management fee payable, net of base management fee waiver – due to affiliate		3,542			3,135
Income incentive fee payable – due to affiliate		1,183			2,622
Capital gains incentive fee payable – due to affiliate		22,756			29,227
Administration fee payable and other – due to affiliate		645			668
Taxes (receivable) payable		343			2,410
Payables for investments purchased		2,773			-
Accounts payable and other liabilities		2,505			655
Total liabilities	$	425,146		$	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 June 30, 2022 and December 31, 2021, respectively)	$	24		$	24
Additional paid-in capital		361,807			361,807
Total distributable earnings		122,144			125,933
Total net assets		483,975			487,764
Total liabilities and net assets	$	909,121		$	897,185
Net asset value per common share	$	19.80		$	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						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Investment Income:
Interest income
Control investments	$	—		$	975		$	—		$	1,568
Affiliate investments		657			711			1,541			1,559
Non-control/non-affiliate investments		18,716			16,105			34,913			33,802
Total interest income		19,373			17,791			36,454			36,929
Payment-in-kind interest income
Control investments		—			596			—			937
Affiliate investments		—			84			30			195
Non-control/non-affiliate investments		367			424			884			940
Total payment-in-kind interest income		367			1,104			914			2,072
Dividend income
Control investments		—			568			—			568
Affiliate investments		69			110			725			110
Non-control/non-affiliate investments		7			149			40			242
Total dividend income		76			827			765			920
Fee income
Control investments		—			—			—			400
Affiliate investments		160			85			297			268
Non-control/non-affiliate investments		1,176			2,018			3,237			4,526
Total fee income		1,336			2,103			3,534			5,194
Interest on idle funds		1			1			4			1
Total investment income		21,153			21,826			41,671			45,116
Expenses:
Interest and financing expenses		4,639			4,562			9,051			9,756
Base management fee		3,618			3,215			6,961			6,391
Incentive fee - income		1,183			2,550			2,236			5,219
Incentive fee (reversal) - capital gains		(605	)		3,883			(335	)		3,974
Administrative service expenses		510			430			932			843
Professional fees		290			312			805			635
Other general and administrative expenses		531			396			818			741
Total expenses before base management fee waiver		10,166			15,348			20,468			27,559
Base management fee waiver		(76	)		(29	)		(152	)		(29	)
Total expenses, net of base management fee waiver		10,090			15,319			20,316			27,530
Net investment income before income taxes		11,063			6,507			21,355			17,586
Income tax provision (benefit)		55			34			9			32
Net investment income		11,008			6,473			21,346			17,554
Net realized and unrealized gains (losses) on investments:
Net realized gains (losses):
Control investments		(204	)		—			(65	)		957
Affiliate investments		15,300			—			15,624			—
Non-control/non-affiliate investments		3,212			2,150			9,617			4,409
Total net realized gain (loss) on investments		18,308			2,150			25,176			5,366
Income tax (provision) benefit from realized gains on investments		(122	)		—			(121	)		—
Net change in unrealized appreciation (depreciation):
Control investments		(2,151	)		(6,877	)		(2,151	)		(5,985	)
Affiliate investments		(15,049	)		12,416			(20,928	)		16,368
Non-control/non-affiliate investments		(4,013	)		11,724			(3,453	)		6,301
Total net change in unrealized appreciation (depreciation) on investments		(21,213	)		17,263			(26,532	)		16,684
Net gain (loss) on investments		(3,027	)		19,413			(1,477	)		22,050
Realized losses on extinguishment of debt		—			—			(198	)		(2,180	)
Net increase (decrease) in net assets resulting from operations	$	7,981		$	25,886		$	19,671		$	37,424
Per common share data:
Net investment income per share-basic and diluted	$	0.45		$	0.26		$	0.87		$	0.72
Net increase in net assets resulting from operations per share — basic and diluted	$	0.33		$	1.06		$	0.80		$	1.53
Dividends declared per share	$	0.43		$	0.39		$	0.96		$	0.77
Weighted average number of shares outstanding — basic and diluted		24,437,400			24,437,400			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
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
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
Net investment income		—		—		—		11,008			11,008
Net realized gain (loss) on investments, net of taxes		—		—		—		18,186			18,186
Net unrealized appreciation (depreciation) on investments		—		—		—		(21,213	)		(21,213	)
Realized losses on extinguishment of debt		—		—		—		—			—
Dividends declared		—		—		—		(10,508	)		(10,508	)
Balances at June 30, 2022		24,437,400	$	24	$	361,807	$	122,144		$	483,975

See Notes to Consolidated Financial Statements (unaudited).

5

FIDUS INVESTMENT CORPORATION

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Six Months Ended June 30,
	2022			2021
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	19,671		$	37,424
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		26,532			(16,684	)
Net realized (gain) loss on investments		(25,176	)		(5,366	)
Interest and dividend income paid-in-kind		(914	)		(2,177	)
Accretion of original issue discount		(60	)		(605	)
Accretion of loan origination fees		(711	)		(1,139	)
Purchase of investments		(160,098	)		(167,349	)
Proceeds from sales and repayments of investments		68,008			191,560
Proceeds from loan origination fees		1,023			1,171
Realized losses on extinguishment of debt		198			2,180
Amortization of deferred financing costs		1,058			1,117
Changes in operating assets and liabilities:
Interest receivable		(4,878	)		(219	)
Receivables from investments sold		(11,895	)		—
Prepaid expenses and other assets		(718	)		(1,164	)
Accrued interest and fees payable		(176	)		1,976
Base management fee payable, net of base management fee waiver – due to affiliate		407			(58	)
Income incentive fee payable – due to affiliate		(1,439	)		(60	)
Capital gains incentive fee (reversal) – due to (from) affiliate		(6,471	)		3,974
Administration fee payable and other – due to affiliate		(23	)		(393	)
Payables for investments purchased		2,773			—
Taxes payable		(2,067	)		(700	)
Accounts payable and other liabilities		1,850			463
Net cash provided by (used for) operating activities		(93,106	)		43,951
Cash Flows from Financing Activities:
Proceeds received from SBA debentures		41,500			11,500
Repayments of SBA debentures		(20,000	)		(19,200	)
Principal payments on Notes		—			(100,000	)
Proceeds received from (repayments of) borrowings under Credit Facility, net		—			—
Proceeds received from (repayments of) Secured Borrowings, net		(374	)		13,500
Payment of deferred financing costs		(1,511	)		(1,031	)
Dividends paid to stockholders, including expenses		(23,460	)		(18,817	)
Net cash provided by (used for) financing activities		(3,845	)		(114,048	)
Net increase (decrease) in cash and cash equivalents		(96,951	)		(70,097	)
Cash and cash equivalents:
Beginning of period		169,417			124,308
End of period	$	72,466		$	54,211
Supplemental disclosure of cash flow information:
Cash payments for interest	$	8,169		$	6,663
Cash payments for taxes, net of tax refunds received	$	2,197		$	732

See Notes to Consolidated Financial Statements (unaudited).

6

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments (unaudited)

June 30, 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) (j)				4/6/2021