##### Table of Contents

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 SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 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 registeredCommon Stock, par value $0.001 per share

FDUS

The NASDAQ Global Select Market5.875% Notes due 2023

FDUSL

The NASDAQ Global Select Market6.000% Notes due 2024

FDUSZ

The NASDAQ Global Select Market5.375% Notes due 2024

FDUSG

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 ☐ 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 6, 2020, the Registrant had
outstanding 24,437,400 shares of common stock, $0.001 par value.




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##### Table of Contents

FIDUS INVESTMENT CORPORATION TABLE OF CONTENTS QUARTERLY REPORT ON FORM 10-Q  PART I  FINANCIAL INFORMATIONItem 1.

Financial Statements


3Consolidated Statements of Assets and Liabilities  June 30, 2020 (unaudited) and December 31, 2019


3Consolidated Statements of Operations  Three and Six Months Ended June 30, 2020 (unaudited) and 2019 (unaudited)


4Consolidated Statements of Changes in Net Assets  Three and Six Months Ended June 30, 2020 (unaudited) and 2019 (unaudited)


5Consolidated Statements of Cash Flows  Six Months Ended June 30, 2020 (unaudited) and 2019 (unaudited)


6Consolidated Schedules of Investments  June 30, 2020 (unaudited) and December 31, 2019


7Notes to Consolidated Financial Statements (unaudited)


17Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations


38Item 3.

Quantitative and Qualitative Disclosures About Market Risk


56Item 4.

Controls and Procedures


57PART II  OTHER INFORMATIONItem 1.

Legal Proceedings


59Item 1A.

Risk Factors


59Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


63Item 3.

Defaults Upon Senior Securities


64Item 4.

Mine Safety Disclosures


64Item 5.

Other Information


64Item 6.

Exhibits


65Signatures


66Exhibit Index  2




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##### Table of Contents

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, 2020(unaudited)


December 31,2019ASSETSInvestments, at fair value:Control investments (cost: $29,591 and $27,718, respectively)

$
21,929


$
21,820Affiliate investments (cost: $40,792 and $56,328, respectively)


70,566



121,555Non-control/non-affiliate 
investments (cost: $675,915 and $620,453, respectively)


640,125



623,544Total investments, at fair value (cost: $746,298 and $704,499, respectively)


732,620



766,919Cash and cash equivalents


19,268



15,012Interest receivable


8,208



6,331Prepaid expenses and other assets


1,348



1,177Total assets

$
761,444


$
789,439LIABILITIESSBA debentures, net of deferred financing costs (Note 6)

$
153,061


$
153,802Public Notes, net of deferred financing costs (Note 6)


177,553



176,901Borrowings under Credit Facility, net of deferred financing costs (Note 6)


41,715



23,899Accrued interest and fees payable


3,411



3,505Base management fee payable  due to affiliate


3,193



3,334Income incentive fee payable, net of incentive fee waiver  due to affiliate


1,690



1,497Capital gains incentive fee payable  due to affiliate


3,574



12,715Administration fee payable and other  due to affiliate


415



487Taxes payable


123



547Accounts payable and other liabilities


533



442Total liabilities


385,268



377,129Commitments and contingencies (Note 7)NET ASSETSCommon stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,463,119 shares
issued andoutstanding at June 30, 2020 and December 31, 2019, respectively)


24



24Additional paid-in capital


365,793



366,061Total distributable earnings


10,359



46,225Total net assets


376,176



412,310Total liabilities and net assets

$
761,444


$
789,439Net asset value per common share

$
15.39


$
16.85 See Notes to Consolidated Financial Statements (unaudited).  3




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Statements of Operations (unaudited) (in thousands, except shares and per share data)  Three Months EndedJune 30,


Six Months EndedJune 30,2020


2019


2020


2019Investment Income:Interest incomeControl investments

$
449


$
68


$
881


$
350Affiliate investments


831



1,414



1,814



2,934Non-control/non-affiliate 
investments


17,559



12,365



33,611



25,815Total interest income


18,839



13,847



36,306



29,099Payment-in-kind interest
incomeControl investments


445



183



870



1,420Affiliate investments


29



85



69



168Non-control/non-affiliate 
investments


707



2,687



1,323



3,997Total payment-in-kind 
interest income


1,181



2,955



2,262



5,585Dividend incomeControl investments














Affiliate investments


1



573



108



941Non-control/non-affiliate 
investments


17



58



46



(15
)Total dividend income


18



631



154



926Fee incomeControl investments














349Affiliate investments


66







66



22Non-control/non-affiliate 
investments


175



601



1,457



2,329Total fee income


241



601



1,523



2,700Interest on idle funds and other income


154



34



171



88Total investment income


20,433



18,068



40,416



38,398Expenses:Interest and financing expenses


4,863



4,052



9,823



7,776Base management fee


3,193



3,016



6,465



5,887Incentive fee - income


2,113



1,299



3,968



3,784Incentive fee - capital gains


(263
)


(1,289
)


(9,141
)


(934
)Administrative service expenses


364



378



830



777Professional fees


654



406



1,207



996Other general and administrative expenses


500



510



835



815Total expenses before income incentive fee waiver


11,424



8,372



13,987



19,101Incentive fee waiver - income


(423
)






(423
)


Total expenses, net of income incentive fee waiver


11,001



8,372



13,564



19,101Net investment income before income taxes


9,432



9,696



26,852



19,297Income tax provision (benefit)


141



53



144



55Net investment income


9,291



9,643



26,708



19,242Net realized and unrealized gains (losses) on investments:Net realized gains (losses):Control investments














(1,268
)Affiliate investments


87



(134
)


24,419



(99
)Non-control/non-affiliate 
investments


117



23



7,163



(335
)Total net realized gain (loss) on investments


204



(111
)


31,582



(1,702
)Income tax (provision) benefit from realized gains on investments


(14
)


(301
)


(1,065
)


(293
)Net change in unrealized appreciation (depreciation):Control investments


(68
)


(64
)


(1,764
)


1,573Affiliate investments


3,797



2,527



(35,453
)


5,286Non-control/non-affiliate 
investments


(5,237
)


(8,492
)


(38,881
)


(9,343
)Total net change in unrealized appreciation (depreciation) on investments


(1,508
)


(6,029
)


(76,098
)


(2,484
)Net gain (loss) on investments


(1,318
)


(6,441
)


(45,581
)


(4,479
)Realized losses on extinguishment of debt










(125
)


(189
)Net increase (decrease) in net assets resulting from operations

$
7,973


$
3,202


$
(18,998
)

$
14,574Per common share data:Net investment income per share-basic and diluted

$
0.38


$
0.39


$
1.09


$
0.79Net increase (decrease) in net assets resulting from operations per share  basic and
diluted

$
0.33


$
0.13


$
(0.78
)

$
0.60Dividends declared per share

$
0.30


$
0.39


$
0.69


$
0.78Weighted average number of shares outstanding  basic and diluted


24,437,400



24,463,119



24,447,517



24,463,119 See Notes to Consolidated Financial Statements (unaudited).  4




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Statements of Changes in Net Assets (unaudited) (in thousands, except shares)  Common Stock


Additionalpaid-incapital


Totaldistributableearnings


Total netassetsNumber ofshares


ParvalueBalances at December 31, 2018


24,463,119


$
24


$
366,688


$
36,273


$
402,985Net investment income














9,599



9,599Net realized gain (loss) on investments, net of taxes














(1,583
)


(1,583
)Net unrealized appreciation (depreciation) on investments














3,545



3,545Realized losses on extinguishment of debt














(189
)


(189
)Dividends declared














(9,541
)


(9,541
)Balances at March 31, 2019


24,463,119


$
24


$
366,688


$
38,104


$
404,816Net investment income














9,643



9,643Net realized gain (loss) on investments, net of taxes














(412
)


(412
)Net unrealized appreciation (depreciation) on investments














(6,029
)


(6,029
)Realized losses on extinguishment of debt


















Dividends declared














(9,540
)


(9,540
)Balances at June 30, 2019


24,463,119


$
24


$
366,688


$
31,766


$
398,478Balances at December 31, 2019


24,463,119


$
24


$
366,061


$
46,225


$
412,310Repurchases of common stock under Stock Repurchase Program (Note 8)


(25,719
)


(0
)*


(268
)






(268
)Net investment income














17,417



17,417Net realized gain (loss) on investments, net of taxes














30,327



30,327Net 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


$
375,534Net investment income














9,291



9,291Net realized gain (loss) on investments, net of taxes














190



190Net 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  *
Amount is greater than zero but less than one See Notes to Consolidated Financial Statements (unaudited).  5




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Statements of Cash Flows (unaudited) (in thousands)  Six Months Ended June 30,2020


2019Cash Flows from Operating Activities:Net increase (decrease) in net assets resulting from operations

$
(18,998
)

$
14,574Adjustments 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


76,098



2,484Net realized (gain) loss on investments


(31,582
)


1,702Interest and dividend
income paid-in-kind


(2,262
)


(5,585
)Accretion of original issue discount


(103
)


(30
)Accretion of loan origination fees


(514
)


(567
)Purchase of investments


(85,097
)


(128,460
)Proceeds from sales and repayments of investments


76,315



75,320Proceeds from loan origination fees


1,444



846Realized losses on extinguishment of debt


125



189Amortization of deferred financing costs


1,098



858Changes in operating assets and liabilities:Interest receivable


(1,877
)


1,630Prepaid expenses and other assets


(171
)


517Accrued interest and fees payable


(94
)


339Base management fee payable  due to affiliate


(141
)


89Income incentive fee payable, net of incentive fee waiver  due to affiliate


193



(1,486
)Capital gains incentive fee payable  due to affiliate


(9,141
)


(934
)Administration fee payable and other  due to affiliate


(72
)


(174
)Taxes payable


(424
)


(803
)Accounts payable and other liabilities


91



196Net cash provided by (used for) operating activities


4,888



(39,295
)Cash Flows from Financing Activities:Proceeds received from SBA debentures


6,000



Repayments of SBA debentures


(7,000
)


(19,750
)Proceeds received from issuance of Public Notes






69,000Proceeds received from (repayments of) borrowings under Credit Facility, net


18,000



(7,000
)Payment of deferred financing costs


(496
)


(4,004
)Dividends paid to stockholders, including expenses


(16,868
)


(19,081
)Repurchases of common stock under Stock Repurchase Program


(268
)


Net cash provided by (used for) financing activities


(632
)


19,165Net increase (decrease) in cash and cash equivalents


4,256



(20,130
)Cash and cash equivalents:Beginning of period


15,012



42,015End of period

$
19,268


$
21,885Supplemental disclosure of cash flow information:Cash payments for interest

$
8,819


$
6,579Cash payments for taxes, net of tax refunds received

$
1,633


$
1,151 See Notes to Consolidated Financial Statements (unaudited).  6




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments (unaudited) June 30, 2020 (in
thousands, except shares)  Portfolio Company (a)(b)




Variable Index


Rate (e)


Investment





Principal





Fair


Percent ofInvestment Type (c)

Industry


Spread / Floor (d)


Cash/PIK


Date (f)


Maturity


Amount


Cost


Value (g)


Net AssetsControl Investments (t)FDS Avionics Corp. (dba Flight Display Systems)


Aerospace & Defense ManufacturingSecond Lien Debt










6.00%/9.00
%


11/5/2014



12/31/2021


$
4,621


$
4,621


$
3,811Revolving Loan ($30 commitment)










6.00%/9.00
%


4/12/2018



12/31/2021



273



273



273Common Equity (7,478 shares) (j)














11/10/2017











748



Preferred Equity (2,550 shares)














12/26/2019











2,550



8,192



4,084



1
%US GreenFiber, LLC


Building Products ManufacturingSecond Lien Debt (j)










7.00%/6.00
%


7/3/2014



8/30/2024



15,967



15,964



12,996Second Lien Debt (j)










7.50%/7.50
%


11/9/2018



8/30/2024



4,848



4,848



4,849Common Equity (2,522 units) (h)(j)














7/3/2014











586



Common Equity (425,508 units) (j)














8/30/2019











1



21,399



17,845



5
%Total Control Investments

























$
29,591


$
21,929



6
%Affiliate Investments (l)FAR Research Inc. (n)


Specialty ChemicalsCommon Equity (1,396 units)














3/31/2014










$



$
28



0
%Fiber Materials, Inc. (n)


Aerospace & Defense ManufacturingCommon Equity (10 units)














11/30/2016



















0
%Medsurant Holdings, LLC


Healthcare ServicesSecond Lien Debt (j)










13.00%/0.00
%


12/18/2015



3/10/2022



8,031



8,026



8,090Preferred Equity (63,331 units) (h)(j)














4/12/2011











674



543Warrant (252,588 units) (h)(j)(m)














4/12/2011











2,259



1,88910,959



10,522



3
%Mirage Trailers LLC


Utility Equipment ManufacturingSecond Lien Debt (k)(ad)






(L + 8.50%) / (1.00%
)


9.50%/4.50
%


11/25/2015



11/25/2020



6,250



6,300



5,258Common Equity (2,500,000 shares) (o)














11/25/2015











2,186



8,486



5,258



1
%Pfanstiehl, Inc.


Healthcare ProductsSubordinated Debt










10.50%/0.00
%


3/29/2013



9/29/2024



6,208



6,203



6,208Common Equity (4,250 units) (j)














3/29/2013











425



17,2396,628



23,447



6
%Pinnergy, Ltd.


Oil & Gas ServicesCommon Equity - Class A-2 (42,500 units) (j)














10/13/2016











3,000



18,186Common Equity - Class B (1,000 units) (j)














10/13/2016











3,000



3,2216,000



21,407



6
%Steward Holding LLC (dba Steward Advanced Materials)


Aerospace & Defense ManufacturingSecond Lien Debt










12.00%/1.50
%


11/12/2015



5/12/2021



7,725



7,719



7,725Common Equity (1,000,000 units)














11/12/2015











1,000



2,1798,719



9,904



3
%Total Affiliate Investments

























$
40,792


$
70,566



19
%  7




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments (unaudited) June 30, 2020 (in
thousands, except shares)  Portfolio Company (a)(b)




Variable Index


Rate (e)


Investment





Principal





Fair


Percent ofInvestment Type (c)

Industry


Spread / Floor (d)


Cash/PIK


Date (f)


Maturity


Amount


Cost


Value (g)


Net AssetsNon-control/Non-affiliate
InvestmentsAccent Food Services, LLC


Vending Equipment ManufacturingSecond Lien Debt (k)(p)










0.00%/17.00%



11/30/2016



5/30/2022


$
35,410


$
35,328


$
16,134Common Equity (7,885 units) (h)(j)














11/30/2016











800



36,128



16,134



4
%Allied 100 Group, Inc.


Healthcare ProductsSubordinated Debt (k)










11.25%/0.00%



7/31/2019



5/26/2023



21,500



21,419



21,500Common Equity (625,000 units) (j)














11/26/2014











625



93022,044



22,430



6
%Alzheimers Research and Treatment Center, LLC


Healthcare ServicesFirst Lien Debt (j)(w)






(L + 5.75%) / (2.00%)



7.75%/0.00%



10/23/2018



10/23/2023



6,500



6,466



6,500Common Equity (500 units) (h)(j)














10/23/2018











500



6976,966



7,197



2
%American AllWaste LLC (dba WasteWater Transport Services)


Environmental IndustriesSecond Lien Debt (j)






(L + 11.00%) / (2.00%)



13.00%/0.00%



5/31/2018



11/30/2023



17,503



17,422



17,503Preferred Equity (500 units) (h)(j)














5/31/2018











500



300Preferred Equity (207 units) (h)(j)














8/6/2019











250



25018,172



18,053



5
%Argo Turboserve Corporation


Business ServicesSecond Lien Debt (j)






(L + 10.75%) / (2.00%)



12.75%/0.00%



12/26/2018



6/28/2023



13,594



13,544



13,594



4
%AVC Investors, LLC (dba Auveco)


Specialty DistributionSecond Lien Debt (k)










11.50%/0.00%



1/3/2018



7/3/2023



22,500



22,436



22,373Common Equity (5,000 units) (j)














1/3/2018











490



44922,926



22,822



6
%B&B Roadway and Security Solutions, LLC


Component ManufacturingSecond Lien Debt










11.25%/4.00%



2/27/2018



1/1/2022



10,690



10,660



9,665Common Equity (50,000 units) (h)(j)














2/27/2018











500



11,160



9,665



3
%Bandon Fitness (Texas), Inc.


RetailFirst Lien Debt (j)(z)






(L + 6.00%) / (2.25%)



8.25%/0.25%



8/9/2019



8/9/2024



14,689



14,246



13,714Common Equity (545,810 units) (j)














8/9/2019











931



13915,177



13,853



4
%BCC Group Holdings, Inc.


Information Technology ServicesSubordinated Debt










11.00%/1.00%



1/28/2019



4/11/2023



18,258



18,139



18,258Common Equity (451 shares)














1/28/2019











232



176Preferred Equity (14 shares)














1/28/2019











143



14318,514



18,577



5
%BCM One Group Holdings, Inc.


Information Technology ServicesSubordinated Debt (k)










11.00%/0.00%



1/3/2019



7/3/2024



29,000



28,882



29,000Common Equity (1,143 shares)














1/3/2019











1



78Preferred Equity (66 shares)














1/3/2019











665



66529,548



29,743



8
%Bedford Precision Parts LLC


Specialty DistributionFirst Lien Debt (j)(s)






(L + 6.25%) / (2.00%)



8.25%/0.00%



3/12/2019



3/12/2024



5,000



4,972



5,000Common Equity (500,000 units) (h)(j)














3/12/2019











500



3405,472



5,340



1
%Cardboard Box LLC (dba Anthonys Coal Fired Pizza)


RestaurantsCommon Equity (521,021 units) (j)














12/15/2015











521



Preferred Equity (1,043,133 units) (j)














12/6/2019











72



81593



81



0
%Combined Systems, Inc.


Aerospace & Defense ManufacturingFirst Lien Debt






(L + 10.00%) / (2.00%)



12.00%/0.00%



1/31/2020



1/31/2025



7,800



7,747



7,747Revolving Loan ($100 commitment) (j)(ac)






(L + 9.00%) / (2.00%)



11.00%/0.00%



1/31/2020



1/31/2025



3,900



3,877



3,87711,624



11,624



3
%ControlScan, Inc.


Information Technology ServicesSubordinated Debt (j)










11.00%/0.00%



7/28/2017



1/28/2023



6,750



6,734



6,750Common Equity (1,852 shares) (j)














7/28/2017











2



243Preferred Equity (50 shares) (j)














7/28/2017











498



4987,234



7,491



2
%CRS Solutions Holdings, LLC (dba CRS Texas)


Business ServicesSecond Lien Debt










10.50%/1.00%



3/14/2018



4/30/2024



11,219



11,178



10,474Common Equity (375,000 units) (h)(j)














3/14/2018











375



16111,553



10,635



3
%Diversified Search LLC


Business ServicesFirst Lien Debt (k)(r)






(L + 6.00%) / (1.75%)



7.75%/0.00%



2/7/2019



2/7/2024



17,355



17,128



16,739Common Equity (573 units) (h)(j)














2/7/2019











593



26117,721



17,000



4
%EBL, LLC (EbLens)


RetailSecond Lien Debt (j)










12.00%/1.00%



7/13/2017



1/13/2023



9,221



9,174



7,764Common Equity (75,000 units) (j)














7/13/2017











750



409,924



7,804



2
%ECM Industries, LLC


Component ManufacturingSubordinated Debt (j)










11.50%/0.00%



4/30/2020



5/23/2026



11,500



11,276



11,276Common Equity (1,000,000 units) (h)(j)














4/30/2020











1,000



1,00012,276



12,276



3
%French Transit, LLC


Consumer ProductsFirst Lien Debt (j)






(L + 9.00%) / (2.25%)



11.25%/0.00%



6/21/2019



6/21/2024



4,100



4,068



4,100Revolving Loan ($1,000 commitment) (j)(u)






(L + 9.00%) / (2.25%)



11.25%/0.00%



6/21/2019



6/21/2024







(4
)


4,064



4,100



1
%Global Plasma Solutions, Inc.


Component ManufacturingFirst Lien Debt (j)(v)






(L + 5.00%) / (2.00%)



7.00%/0.00%



9/21/2018



9/21/2023



6,838



6,788



6,838Preferred Equity (947 shares) (j)














9/21/2018











360



415Common Equity (947 shares) (j)














9/21/2018











15



1,126$
7,163


$
8,379



2
%  8




---

##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments (unaudited) June 30, 2020 (in
thousands, except shares)  Portfolio Company (a)(b)




Variable Index


Rate (e)


Investment





Principal





Fair


Percent ofInvestment Type (c)

Industry


Spread / Floor (d)


Cash/PIK


Date (f)


Maturity


Amount


Cost


Value (g)


Net AssetsGurobi Optimization, LLC


Information Technology ServicesCommon Equity (3 shares)














12/19/2017










$
750


$
1,671



0
%Haematologic Technologies, Inc.


Healthcare ServicesFirst Lien Debt (x)






(L + 7.25%) / (2.00%)



9.25%/0.00%



10/11/2019



10/11/2024



5,500



5,466



5,350Common Equity (500 units) (h)(j)














10/11/2019











500



2535,966



5,603



1
%Hilco Plastics Holdings, LLC (dba Hilco Technologies)


Component ManufacturingSecond Lien Debt (j)










11.50%/1.50%



9/23/2016



12/31/2019



10,207



10,207



8,613Revolving Loan (j)






(L + 6.50%) / (0.00%)



6.67%/0.00%



12/20/2019



12/15/2019



5,962



5,962



5,962First Lien Debt (j)






(L + 6.95%) / (0.00%)



7.12%/0.00%



12/20/2019



12/15/2019



5,859



5,859



5,859Preferred Equity (1,000,000 units) (h)(j)














4/18/2018











1,000



Common Equity (72,507 units) (h)(j)














9/23/2016











473



23,501



20,434



5
%Hoonuit, LLC


Information Technology ServicesFirst Lien Debt






(L + 9.25%) / (2.25%)



11.50%/0.00%



6/7/2019



6/7/2024



7,165



7,126



7,165Preferred Equity (610 units) (h)(j)














6/20/2019



1/1/2022







250



2647,376



7,429



2
%Hub Acquisition Sub, LLC (dba Hub Pen)


Promotional productsSecond Lien Debt (k)










12.25%/0.00%



3/23/2016



9/23/2021



25,000



24,963



22,198Common Equity (3,750 units)














3/23/2016











131



19525,094



22,393



6
%IBH Holdings, LLC (fka Inflexxion, Inc.)


Business ServicesCommon Equity (150,000 units)














6/20/2018



















0
%Ipro Tech, LLC


Information Technology ServicesFirst Lien Debt (j)(ae)






(L + 8.50%) / (2.00%)



10.50%/0.00%



6/30/2020



6/30/2025



2,500



1,901



1,901



1
%K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)


Industrial Cleaning & CoatingsSecond Lien Debt (j)










0.00%/10.00%



1/28/2019



1/28/2021



2,034



2,034



2,034



1
%The Kyjen Company, LLC (dba Outward Hound)


Consumer ProductsSecond Lien Debt (k)










12.00%/0.00%



12/8/2017



6/8/2024



15,000



14,954



14,400Common Equity (765 shares) (j)














12/8/2017











765



56215,719



14,962



4
%LNG Indy, LLC (dba Kinetrex Energy)


Oil & Gas DistributionSecond Lien Debt (k)










11.50%/1.50%



12/28/2016



11/12/2021



10,050



10,021



10,021Common Equity (500 units)














12/28/2016











500



53510,521



10,556



3
%Marco Group International OpCo, LLC


Industrial Cleaning & CoatingsSecond Lien Debt










10.50%/0.75%



3/2/2020



9/2/2026



10,025



9,930



9,526Common Equity (570,636 units) (h)(j)














7/21/2017











637



47810,567



10,004



3
%Mesa Line Services, LLC


Utilities: ServicesSecond Lien Debt (j)










10.50%/1.75%



11/30/2017



8/1/2024



17,374



17,296



17,374Common Equity (981 shares) (j)














11/30/2017











1,148



55618,444



17,930



5
%Microbiology Research Associates, Inc.


Healthcare ServicesSubordinated Debt (j)










11.00%/1.50%



5/13/2015



3/13/2022



8,997



8,990



8,997Common Equity (812,866 units) (j)














5/13/2015











969



8739,959



9,870



3
%Midwest Transit Equipment, Inc.


Transportation servicesWarrant (7,192 shares) (j)(m)














6/23/2017











180



305Warrant (9.59% of Junior Subordinated Notes) (j)(q)














6/23/2017











190



241370



546



0
%NGT Acquisition Holdings, LLC (dba Techniks Industries)


Component ManufacturingCommon Equity (378 units) (j)














5/24/2017











500



157



0
%OMC Investors, LLC (dba Ohio Medical Corporation)


Healthcare ProductsSecond Lien Debt










13.00%/0.00%



1/15/2016



6/30/2022



10,000



9,979



10,000Common Equity (5,000 units)














1/15/2016











500



59010,479



10,590



3
%Palisade Company, LLC


Information Technology ServicesSubordinated Debt (j)










11.75%/0.00%



11/15/2018



5/15/2024



6,500



6,477



6,500Common Equity (50 shares) (j)














11/15/2018











500



4846,977



6,984



2
%Palmetto Moon, LLC


RetailFirst Lien Debt (j)










11.50%/2.50%



11/3/2016



10/31/2021



4,876



4,866



4,142Common Equity (499 units) (j)














11/3/2016











494



5,360



4,142



1
%Power Grid Components, Inc.


Specialty DistributionSecond Lien Debt (k)










11.00%/1.00%



4/12/2018



12/2/2025



22,318



22,235



22,318Preferred Equity (392 shares) (j)














4/12/2018











392



483Preferred Equity (48 shares) (j)














12/2/2019











48



60Common Equity (10,622 shares) (j)














4/12/2018











462



694$
23,137


$
23,555



6
%  9




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments (unaudited) June 30, 2020 (in
thousands, except shares)  Portfolio Company (a)(b)




Variable Index


Rate (e)


Investment





Principal





Fair


Percent ofInvestment Type (c)

Industry


Spread / Floor (d)


Cash/PIK


Date (f)


Maturity


Amount


Cost


Value (g)


Net AssetsPrime AE Group, Inc.


Business ServicesFirst Lien Debt (j)






(L + 6.25%) / (2.00%)



8.25%/0.00%



11/25/2019



11/25/2024


$
7,167


$
6,997


$
7,167Preferred Equity (500,000 shares) (j)














11/25/2019











500



5507,497



7,717



2
%Pugh Lubricants, LLC


Specialty DistributionSecond Lien Debt (k)










12.25%/0.00%



11/10/2016



5/10/2022



26,581



26,522



26,581Common Equity (3,062 units) (h)(j)














11/10/2016











284



65226,806



27,233



7
%Revenue Management Solutions, LLC


Information Technology ServicesCommon Equity (113 shares)














1/4/2017











1,125



2,852



1
%Rhino Assembly Company, LLC


Specialty DistributionSecond Lien Debt (k)










12.00%/1.00%



8/11/2017



2/11/2023



11,498



11,466



10,140Delayed Draw Commitment ($875 commitment) (i)(j)










12.00%/1.00%



8/11/2017



5/17/2022











Preferred Equity (8,864 units) (h)(j)














8/11/2017











944



18312,410



10,323



3
%Road Safety Services, Inc.


Business ServicesSecond Lien Debt










11.25%/1.50%



9/18/2018



3/18/2024



10,300



10,267



10,300Common Equity (655 units)














9/18/2018











621



82010,888



11,120



3
%Rohrer Corporation


PackagingSubordinated Debt (j)










10.50%/1.00%



10/1/2018



4/1/2024



13,945



13,898



13,945Common Equity (400 shares) (j)














7/18/2016











780



1,09914,678



15,044



4
%Routeware, Inc.


Information Technology ServicesFirst Lien Debt (k)(aa)






(L + 7.00%) / (1.75%)



8.75%/0.00%



2/7/2020



2/7/2025



14,962



14,880



14,880



4
%SES Investors, LLC (dba SES Foam)


Building Products ManufacturingSecond Lien Debt










13.00%/0.00%



9/8/2016



12/29/2020



3,095



3,089



3,095Common Equity (6,000 units) (h)(j)














9/8/2016











544



1,1953,633



4,290



1
%Software Technology, LLC


Information Technology ServicesSubordinated Debt (k)










11.00%/0.00%



12/23/2016



6/23/2023



10,000



9,976



10,000Common Equity (6 shares)














12/23/2016











646



82310,622



10,823



3
%Specialized Elevator Services Holdings, LLC


Business ServicesFirst Lien Debt (j)(y)






(L + 5.50%) / (2.00%)



7.50%/0.00%



5/7/2019



5/3/2024



12,889



12,766



12,889Common Equity (500 units) (j)














5/8/2019











596



61513,362



13,504



4
%SpendMend LLC


Business ServicesSecond Lien Debt (k)










11.00%/0.75%



1/8/2018



7/8/2023



10,535



10,505



10,535Common Equity (1,000,000 units)














1/8/2018











1,000



1,63811,505



12,173



3
%TransGo, LLC


Component ManufacturingCommon Equity (500 units) (j)














2/28/2017











499



568



0
%The Tranzonic Companies


Specialty DistributionSubordinated Debt (j)










10.00%/1.25%



3/27/2018



3/27/2025



6,966



6,919



6,966Preferred Equity (5,653 units) (j)














3/27/2018











565



695Common Equity (1 units) (j)














3/27/2018















1667,484



7,827



2
%UBEO, LLC


Business ServicesSubordinated Debt (j)










11.00%/0.00%



4/3/2018



10/3/2024



13,893



13,804



12,236Common Equity (705,000 units) (h)(j)














4/3/2018











668



48614,472



12,722



3
%United Biologics, LLC


Healthcare ServicesPreferred Equity (98,377 units) (h)(j)














4/1/2012











1,008



21Warrant (57,469 units) (j)(m)














3/5/2012











566



171,574



38



0
%Virginia Tile Company, LLC


Specialty DistributionSecond Lien Debt (j)










12.25%/0.00%



12/19/2014



4/7/2022



12,000



11,993



10,498Common Equity (17 units) (j)














12/19/2014











342



27212,335



10,770



3
%Westerns Smokehouse, LLC


Consumer ProductsFirst Lien Debt (j)(ab)






(L + 6.50%) / (1.25%)



7.75%/0.00%



2/28/2020



12/23/2024



10,000



9,860



9,860



3
%Wheel Pros, Inc.


Specialty DistributionSecond Lien Debt (j)






(L + 8.50%) / (0.00%)



9.57%/0.00%



5/17/2019



4/4/2026



20,000



19,833



19,379Preferred Equity (347,222 units) (j)














5/15/2019











750



62020,583



19,999



5
%Worldwide Express Operations, LLC


Transportation servicesSecond Lien Debt (j)






(L + 8.00%) / (1.00%)



9.00%/0.00%



2/27/2017



2/3/2025



20,000



19,766



19,015Common Equity (2,000 units) (h)(j)














2/27/2017











1,478



1,80821,244



20,823



5
%Total
Non-control/Non-affiliate Investments

























$
675,915


$
640,125



170
%Total Investments

























$
746,298


$
732,620



195
%   (a)
See Note 3 to the consolidated financial statements for portfolio composition by geographic
location. (b)
Equity ownership may be held in shares or units of companies related to the portfolio
companies. (c)
All debt investments are income producing, unless otherwise indicated. Equity investments are non-income producing unless otherwise noted. (d)
Variable rate investments bear interest at a rate indexed to LIBOR (L), which is reset monthly, bimonthly,
quarterly, or semi-annually. Certain variable rate investments also include a LIBOR interest rate floor. For each investment, the Company has provided the spread over the reference rate and the LIBOR floor, if any, as of June 30, 2020.  10




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments (unaudited) June 30, 2020 (in
thousands, except shares)  (e)
Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of June 30, 2020. Generally, payment-in-kind interest can be paid-in-kind or all in cash. (f)
Investment date represents the date of the initial investment in the security. (g)
The Companys investment portfolio is comprised entirely of debt and equity securities of privately held
companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs are not available. Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the board of
directors, using significant unobservable Level 3 inputs. (h)
Investment is held by a Taxable Subsidiary of the Company. (i)
The disclosed commitment represents the unfunded amount as of June 30, 2020. The Company is earning 0.50%
interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate which will be earned if the commitment is funded. (j)
Investment pledged as collateral for the Credit Facility and, as a result, is not directly available to the
creditors of the Company to satisfy any obligations of the Company other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements). (k)
The portion of the investment not held by the Funds is pledged as collateral for the Credit Facility and, as a
result, is not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements). (l)
As defined in the 1940 Act, the Company is deemed to be an Affiliated Person of this portfolio
company because it owns 5% or more of the portfolio companys outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company. Transactions in which the issuer was an Affiliated
Person are detailed in Note 3 to the consolidated financial statements. (m)
Warrants entitle the Company to purchase a predetermined number of shares or units of common equity, and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any. (n)
Investment in portfolio company that has sold its operations and is in the process of winding
down. (o)
Income producing. Maturity date, if any, represents mandatory redemption date. (p)
Investment was on non-accrual status as of June 30, 2020, meaning
the Company has ceased recognizing interest income on the investment. (q)
Warrant entitles the Company to purchase 9.59% of the outstanding principal of Junior Subordinated Notes prior
to exercise, and is non-income producing. (r)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 5.05% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (s)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.84% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (t)
As defined in the 1940 Act, the Company is deemed to be both an Affiliated Person of and
Control this portfolio company because it owns 25% or more of the portfolio companys outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company. Transactions in
which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are detailed in Note 3 to the consolidated financial statements. (u)
The disclosed commitment represents the unfunded amount as of June 30, 2020. The Company is earning 0.75%
interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment. (v)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.21% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (w)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.41% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (x)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 2.71% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (y)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 4.01% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (z)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 4.63% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (aa)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 2.87% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (ab)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.18% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (ac)
The disclosed commitment represents the unfunded amount as of June 30, 2020. The Company is earning 1.00%
interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment. (ad)
Investment was on PIK-only
non-accrual status as of June 30, 2020, meaning the Company has ceased recognizing PIK interest income on the investment. (ae)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 4.50% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. See Notes to Consolidated Financial Statements (unaudited).  11




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments December 31, 2019 (in thousands, except shares)  Portfolio Company (a)(b)
Investment Type (c)

Industry

Variable IndexSpread / Floor (d)

Rate (e)Cash/PIK

InvestmentDate (f)

Maturity

PrincipalAmount


Cost


FairValue (g)


Percent ofNet AssetsControl Investments (t)FDS Avionics Corp. (dba Flight Display Systems)

Aerospace & Defense ManufacturingSecond Lien Debt





6.00%/9.00%

11/5/2014

12/31/2021

$
4,420


$
4,418


$
4,277Revolving Loan ($30 commitment)





6.00%/9.00%

4/12/2018

12/31/2021


261



261



261Common Equity (7,478 shares) (j)







11/10/2017








748



Preferred Equity (2,550 shares)







12/26/2019








2,550



9157,977



5,403



1
%US GreenFiber, LLC

Building Products ManufacturingSecond Lien Debt (k)





7.00%/6.00%

7/3/2014

8/30/2024


14,498



14,494



11,757Second Lien Debt (k)





7.50%/7.50%

11/9/2018

8/30/2024


4,660



4,660



4,660Common Equity (2,522 units) (h)(j)







7/3/2014








586



Common Equity (425,508 units) (j)







8/30/2019








1



19,741



16,417



4
%Total Control Investments















$
27,718


$
21,820



5
%Affiliate Investments (l)FAR Research Inc. (n)

Specialty ChemicalsCommon Equity (1,396 units)







3/31/2014







$



$
28



0
%Fiber Materials, Inc.

Aerospace & Defense ManufacturingCommon Equity (10 units)







11/30/2016








645



10,449



3
%Medsurant Holdings, LLC

Healthcare ServicesSecond Lien Debt





13.00%/0.00%

12/18/2015

6/30/2020


8,823



8,814



8,823Preferred Equity (126,662 units) (h)







4/12/2011








1,346



1,780Warrant (505,176 units) (h)(m)







4/12/2011








4,516



6,37714,676



16,980



4
%Microbiology Research Associates, Inc.

Healthcare ServicesSubordinated Debt





11.00%/1.50%

5/13/2015

3/13/2022


8,930



8,921



8,930Common Equity (1,625,731 units) (j)







5/13/2015








1,939



2,68110,860



11,611



3
%Mirage Trailers LLC

Utility Equipment ManufacturingSecond Lien Debt (k)



(L + 8.50%) / (1.00%)

10.20%/4.50%

11/25/2015

11/25/2020


6,250



6,253



6,250Common Equity (2,500,000 shares) (o)







11/25/2015








2,184



9688,437



7,218



2
%Pfanstiehl, Inc.

Healthcare ProductsSubordinated Debt





10.50%/0.00%

3/29/2013

9/29/2022


6,208



6,201



6,208Common Equity (8,500 units) (j)







3/29/2013








850



26,6147,051



32,822



8
%Pinnergy, Ltd.

Oil & Gas ServicesCommon Equity - Class A-2 (42,500 units) (k)







10/13/2016








3,000



29,831Common Equity - Class B (1,000 units) (k)







10/13/2016








3,000



3,1476,000



32,978



8
%Steward Holding LLC (dba Steward Advanced Materials)

Aerospace & Defense ManufacturingSecond Lien Debt





12.00%/1.50%

11/12/2015

5/12/2021


7,667



7,659



7,667Common Equity (1,000,000 units)







11/12/2015








1,000



1,8028,659



9,469



2
%Total Affiliate Investments















$
56,328


$
121,555



30
%  12




---

##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments December 31, 2019 (in thousands, except shares)  Portfolio Company (a)(b)
Investment Type (c)

Industry

Variable IndexSpread / Floor (d)

Rate (e)Cash/PIK

InvestmentDate (f)

Maturity

PrincipalAmount


Cost


FairValue (g)


Percent ofNet AssetsNon-control/Non-affiliate
InvestmentsAccent Food Services, LLC

Vending Equipment ManufacturingSecond Lien Debt (k)(p)





10.00%/5.00%

11/30/2016

5/30/2022

$
33,842


$
33,760


$
31,626Subordinated Debt (j)(p)





000%/17.00%

6/28/2019

5/30/2022


1,567



1,567



1,441Common Equity (7,885 units) (h)(j)







11/30/2016








800



22736,127



33,294



8
%Allied 100 Group, Inc.

Healthcare ProductsSubordinated Debt (k)





11.25%/0.00%

7/31/2019

5/26/2023


21,500



21,405



21,405Common Equity (1,250,000 units) (j)







11/26/2014








1,250



1,46522,655



22,870



6
%Alzheimers Research and Treatment Center, LLC

Healthcare ServicesFirst Lien Debt (j)(w)



(L + 5.75%) / (2.00%)

7.75%/0.00%

10/23/2018

10/23/2023


6,500



6,461



6,500Common Equity (1,000 units) (h)(j)







10/23/2018








1,000



1,4067,461



7,906



2
%American AllWaste LLC (dba WasteWater Transport Services)

Environmental IndustriesSecond Lien Debt (j)



(L + 11.00%) / (2.00%)

13.00%/0.00%

5/31/2018

11/30/2023


17,503



17,411



17,503Preferred Equity (500 units) (h)(j)







5/31/2018








500



540Preferred Equity (207 units) (h)(j)







8/6/2019








250



25018,161



18,293



4
%Argo Turboserve Corporation

Business ServicesSecond Lien Debt (j)



(L + 9.75%) / (200%)

11.84%/0.00%

12/26/2018

6/28/2023


14,156



14,098



14,156



3
%AVC Investors, LLC (dba Auveco)

Specialty DistributionSecond Lien Debt (k)





11.50%/0.00%.

1/3/2018

7/3/2023


22,500



22,427



22,500Common Equity (5,000 units) (j)







1/3/2018








490



77622,917



23,276



6
%B&B Roadway and Security Solutions, LLC

Component ManufacturingSecond Lien Debt





10.50%/3.50%

2/27/2018

8/27/2023


10,493



10,456



9,569Common Equity (50,000 units) (h)(j)







2/27/2018








500



20010,956



9,769



2
%Bandon Fitness (Texas), Inc.

RetailFirst Lien Debt (j)(z)



(L + 6.00%) / (2.25%)

8.25%/0.00%

8/9/2019

8/9/2024


13,250



12,785



12,785Common Equity (497,549 units) (j)







8/9/2019








849



84913,634



13,634



3
%BCC Group Holdings, Inc.

Information Technology ServicesSubordinated Debt





11.00%/1.00%

1/28/2019

4/11/2023


18,167



18,027



18,167Common Equity(451 shares)







1/28/2019








232



167Preferred Equity (14 shares)







1/28/2019








143



14318,402



18,477



4
%BCM One Group Holdings, Inc.

Information Technology ServicesSubordinated Debt (k)





11.00%/0.00%

1/3/2019

7/3/2024


27,000



26,888



27,000Common Equity (2,286 shares)







1/3/2019








2



332Preferred Equity (133 shares)







1/3/2019








1,330



1,33028,220



28,662



7
%Bedford Precision Parts LLC

Specialty DistributionFirst Lien Debt (j)(s)



(L + 6.25%) / (2.00%)

8.25%/0.00%

3/12/2019

3/12/2024


5,000



4,969



5,000Common Equity (500,000 units)(h)(j)







3/12/2019








500



4455,469



5,445



1
%Cardboard Box LLC (dba Anthonys Coal Fired Pizza)

RestaurantsCommon Equity (521,021 units) (j)







12/15/2015








521



113Preferred Equity (99,889 units)(j)







12/6/2019








49



146570



259



0
%Control Scan, Inc.

Information Technology ServicesSubordinated Debt (j)





11.00%/0.00%

7/28/2017

1/28/2023


6,750



6,731



6,750Common Equity (3,704 shares)(j)







7/28/2017








4



624Preferred Equity (100 shares) (j)







7/28/2017








996



9967,731



8,370



2
%CRS Solutions Holdings, LLC (dba CRS Texas)

Business ServicesSecond Lien Debt





10.50%/1.00%

3/14/2018

9/14/2023


9,166



9,136



9,166Common Equity (750,000 units) (h)(j)







3/14/2018








750



8229,886



9,988



2
%Diversified Search LLC

Business ServicesFirst Lien Debt (k)(r)



(L + 5.75%) / (1.75%)

7.69%/0.00%

2/7/2019

2/7/2024


15,155



14,939



15,155Common Equity (573 units) (h)(j)







2/7/2019








593



72415,532



15,879



4
%EBL, LLC (Eb Lens)

RetailSecond Lien Debt (j)





12.00%/1.00%

7/13/2017

1/13/2023


9,484



9,433



9,484Common Equity (75,000 units) (j)







7/13/2017








750



66910,183



10,153



3
%  13




---

##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments December 31, 2019 (in thousands, except shares)  Portfolio Company (a)(b)
Investment Type (c)

Industry

Variable IndexSpread / Floor (d)

Rate (e)Cash/PIK

InvestmentDate (f)

Maturity

PrincipalAmount


Cost


FairValue (g)


Percent ofNet AssetsFrench Transit, LLC

Consumer ProductsFirst Lien Debt (j)



(L + 9.00%) / (2.25%)

11.25%/0.00%

6/21/2019

6/21/2024

$
8,000


$
7,964


$
8,000Revolving Loan ($1,000 commitment) (j)(u)



(L + 9.00%) / (2.25%)

11.25%/0.00%

6/21/2019

6/21/2024






(4
)


7,960



8,000



2
%Global Plasma Solutions, Inc.

Component ManufacturingFirst Lien Debt (j)(v)



(L + 5.00%) / (2.00%)

7.10%/0.00%

9/21/2018

9/21/2023


7,071



7,013



7,071Preferred Equity (947 shares) (j)







9/21/2018








360



399Common Equity (947 shares) (j)







9/21/2018








15



1617,388



7,631



2
%Gurobi Optimization, LLC

Information Technology ServicesCommon Equity (5 shares)







12/19/2017








1,500



3,382



1
%Haematologic Technologies, Inc.

Healthcare ServicesFirst Lien Debt (x)



(L + 7.25%) / (2.00%)

9.25%/0.00%

10/11/2019

10/11/2024


5,500



5,461



5,461Common Equity (500 units) (j)







10/11/2019








500



5005,961



5,961



1
%Hilco Plastics Holdings, LLC (dba Hilco Technologies)

Component ManufacturingSecond Lien Debt





11.50%/1.50%

9/23/2016

12/31/2019


10,116



10,116



9,057Revolving Loan (j)



(L + 6.50%) / (0.00%)

8.26%/0.00%

12/20/2019

12/15/2019


5,962



5,962



5,962First Lien Debt (j)



(L + 6.95%) / (0.00%)

8.66%/0.00%

12/20/2019

12/15/2019


4,812



4,812



4,812First Lien Debt (j)



(L + 6.95%) / (0.00%)

8.64%/0.00%

12/20/2019

12/15/2019


1,815



1,815



1,815Preferred Equity (1,000,000 units) (h)(j)







4/18/2018








1,000



Common Equity (72,507 units) (h)(j)







9/23/2016








473



24,178



21,646



5
%Hoonuit, LLC

Information Technology ServicesFirst Lien Debt



(L + 9.25%) / (2.25%)

11.50%/0.00%

6/7/2019

6/7/2024


7,165



7,121



7,165Preferred Equity (610 units) (h)(j)







6/20/2019

1/1/2022






250



2797,371



7,444



2
%Hub Acquisition Sub, LLC (dba Hub Pen)

Promotional productsSecond Lien Debt (k)





12.25%/0.00%

3/23/2016

9/23/2021


25,000



24,947



25,000Common Equity (7,500 units)







3/23/2016








263



1,48825,210



26,488



6
%Hunter Defense Technologies Inc.

Aerospace & Defense ManufacturingFirst Lien Debt (j)



(L + 7.00%) / (1.00%)

8.94%/0.00%

9/27/2018

3/29/2023


9,246



9,174



9,246



2
%IBH Holdings, LLC (fka Inflexxion, Inc.)

Business ServicesCommon Equity (150,000 units)







6/20/2018
















0
%K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)

Industrial Cleaning & CoatingsSecond Lien Debt





0.00%/10.00%

1/28/2019

1/28/2021


2,309



2,309



2,309



1
%The Kyjen Company, LLC (dba Outward Hound)

Consumer ProductsSecond Lien Debt (k)





12.00%/0.00%

12/8/2017

6/8/2024


15,000



14,948



13,024Common Equity (765 shares) (j)







12/8/2017








765



60915,713



13,633



3
%LNG Indy, LLC (dba Kinetrex Energy)

Oil & Gas DistributionSecond Lien Debt (k)





11.50%/0.00%

12/28/2016

11/12/2021


5,000



4,991



5,000Common Equity (1,000 units)







12/28/2016








1,000



1,2645,991



6,264



2
%Marco Group International OpCo, LLC

Industrial Cleaning & CoatingsSecond Lien Debt





10.50%/0.75%

7/21/2017

1/21/2023


12,225



12,192



12,120Common Equity (960,482 units) (h)(j)







7/21/2017








960



1,06313,152



13,183



3
%Mesa Line Services, LLC

Utilities: ServicesSecond Lien Debt (j)





10.50%/1.75%

11/30/2017

8/1/2024


17,221



17,133



17,221Common Equity (981 shares) (j)







11/30/2017








1,148



96118,281



18,182



4
%Midwest Transit Equipment, Inc.

Transportation servicesWarrant (14,384 shares) (j)(m)







6/23/2017








361



1,244Warrant (9.59% of Junior Subordinated Notes) (j)(q)







6/23/2017








381



467742



1,711



0
%NGT Acquisition Holdings, LLC (dba Techniks Industries)

Component ManufacturingCommon Equity (378 units) (j)







5/24/2017








500



155



0
%OMC Investors, LLC (dba Ohio Medical Corporation)

Healthcare ProductsSecond Lien Debt





12.00%/0.00%

1/15/2016

7/15/2021


10,000



9,972



10,000Common Equity (5,000 units)







1/15/2016








500



47510,472



10,475



3
%  14




---

##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments December 31, 2019 (in thousands, except shares)  Portfolio Company (a)(b)
Investment Type (c)

Industry

Variable IndexSpread / Floor (d)

Rate (e)Cash/PIK

InvestmentDate (f)

Maturity

PrincipalAmount


Cost


FairValue (g)


Percent ofNet AssetsPalisade Company, LLC

Information Technology ServicesSubordinated Debt (j)





11.75%/0.00%

11/15/2018

5/15/2024

$
6,500


$
6,474


$
6,500Common Equity (100 shares) (j)







11/15/2018








1,000



9017,474



7,401



2
%Palmetto Moon, LLC

RetailFirst Lien Debt





11.50%/2.50%

11/3/2016

10/31/2021


4,963



4,949



4,963Common Equity (499 units) (j)







11/3/2016








494



675,443



5,030



1
%Power Grid Components, Inc.

Specialty DistributionSecond Lien Debt (k)





11.00%/1.00%

4/12/2018

12/2/2025


22,207



22,115



22,207Preferred Equity (392 shares) (j)







4/12/2018








392



459Preferred Equity (48 shares) (j)







12/2/2019








48



57Common Equity (10,622 shares) (j)







4/12/2018








462



61023,017



23,333



6
%Prime AE Group, Inc.

Business ServicesFirst Lien Debt (j)



(L + 6.25%) / (2.00%)

8.25%/0.00%

11/25/2019

11/25/2024


7,500



7,312



7,312Preferred Equity (500,000 shares) (j)







11/25/2019








500



5007,812



7,812



2
%Pugh Lubricants, LLC

Specialty DistributionSecond Lien Debt (k)





12.25%/0.00%

11/10/2016

5/10/2022


23,581



23,521



23,581Common Equity (6,125 units) (h)(j)







11/10/2016








576



1,19924,097



24,780



6
%Revenue Management Solutions, LLC

Information Technology ServicesCommon Equity (2,250,000 shares)







1/4/2017








2,250



5,120



1
%Rhino Assembly Company, LLC

Specialty DistributionSecond Lien Debt (k)





12.00%/1.00%

8/11/2017

2/11/2023


11,440



11,402



10,101Delayed Draw Commitment ($875 commitment) (i)(j)





12.00%/1.00%

8/11/2017

5/17/2022










Preferred Equity (8,864 units) (h)(j)







8/11/2017








944



49912,346



10,600



3
%Road Safety Services, Inc.

Business ServicesSecond Lien Debt





11.25%/1.50%

9/18/2018

3/18/2024


10,222



10,185



10,222Common Equity (655 units)







9/18/2018








621



68010,806



10,902



3
%Rohrer Corporation

PackagingSubordinated Debt (j)





10.50%/1.00%

10/1/2018

4/1/2024


13,875



13,822



13,875Common Equity (400 shares)







7/18/2016








780



1,25614,602



15,131



4
%SES Investors, LLC (dba SES Foam)

Building Products ManufacturingSecond Lien Debt





13.00%/0.00%

9/8/2016

12/29/2020


3,095



3,082



3,095Common Equity (6,000 units) (h)(j)







9/8/2016








567



8563,649



3,951



1
%Software Technology, LLC

Information Technology ServicesSubordinated Debt (k)





11.00%/0.00%

12/23/2016

6/23/2023


10,000



9,972



10,000Common Equity (12 shares)







12/23/2016








1,291



1,57811,263



11,578



3
%Specialized Elevator Services Holdings, LLC

Business ServicesFirst Lien Debt (j)(y)



(L + 5.25%) / (2.00%)

7.25%/0.00%

5/7/2019

5/3/2024


7,080



6,985



7,080Common Equity (500 units) (j)







5/8/2019








500



5547,485



7,634



2
%SpendMend LLC

Business ServicesSecond Lien Debt (k)





11.00%/1.00%

1/8/2018

7/8/2023


10,491



10,456



10,491Common Equity (1,000,000 units)







1/8/2018








1,000



1,40011,456



11,891



3
%TransGo, LLC

Component ManufacturingCommon Equity (1,000 units)







2/28/2017








998



1,005



0
%The Tranzonic Companies

Specialty DistributionSubordinated Debt (j)





10.00%/1.50%

3/27/2018

3/27/2025


6,922



6,870



6,922Preferred Equity (5,653 units) (j)







3/27/2018








565



663Common Equity (1 units) (j)







3/27/2018












267,435



7,611



2
%UBEO, LLC

Business ServicesSubordinated Debt (j)





11.00%/0.00%

4/3/2018

10/3/2024


13,893



13,792



13,645Common Equity (705,000 units) (h)(j)







4/3/2018








705



81114,497



14,456



4
%United Biologics, LLC

Healthcare ServicesPreferred Equity (98,377 units) (h)(j)







4/1/2012








1,008



24Warrant (57,469 units) (m)







3/5/2012








566



201,574



44



0
%Vanguard Dealer Services, LLC.(n)

Business ServicesCommon Equity (6,000 units)







7/30/2015












22Common Equity (2,380 units) (j)







2/2/2018












9



31



0
%  15




---

##### Table of Contents

FIDUS INVESTMENT CORPORATION Consolidated Schedule of Investments December 31, 2019 (in
thousands, except shares)  Portfolio Company (a)(b)
Investment Type (c)

Industry

Variable IndexSpread / Floor (d)

Rate (e)Cash/PIK

InvestmentDate (f)

Maturity

PrincipalAmount

Cost


FairValue (g)


Percent ofNet AssetsVirginia Tile Company, LLC

Specialty DistributionSecond Lien Debt (k)





12.25%/0.00%

12/19/2014

4/7/2022

$12,000

$
11,989


$
12,000Common Equity (17 units)







12/19/2014






342



86012,331



12,860



3
%Wheel Pros, Inc.

Specialty DistributionSecond Lien Debt (j)



(L + 8.50%) / (0.00%)

10.30%/0.00%

5/17/2019

4/4/2026

20,000


19,818



20,000Preferred Equity (694,444 units)(j)







5/15/2019






1,500



1,78121,318



21,781



5
%Worldwide Express Operations, LLC

Transportation servicesSecond Lien Debt (j)



(L + 8.00%) / (1.00%)

9.90%/0.00%

2/27/2017

2/3/2025

20,000


19,740



20,000Common Equity (4,000 units) (h)(j)







2/27/2017






2,956



4,45222,696



24,452



6
%Total
Non-control/Non-affiliate Investments













$
620,453


$
623,544



151
%Total Investments













$
704,499


$
766,919



186
%  (a)
See Note 3 to the consolidated financial statements for portfolio composition by geographic location. (b)
Equity ownership may be held in shares or units of companies related to the portfolio companies. (c)
All debt investments are income producing, unless otherwise indicated. Equity investments are non-income producing unless otherwise noted. (d)
Variable rate investments bear interest at a rate indexed to LIBOR (L), which is reset monthly, bimonthly,
quarterly, or semi-annually. Certain variable rate investments also include a LIBOR interest rate floor. For each investment, the Company has provided the spread over the reference rate and the LIBOR floor, if any, as of December 31, 2019. (e)
Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of December 31, 2019. Generally, payment-in-kind interest can be paid-in-kind or all in cash. (f)
Investment date represents the date of the initial investment in the security. (g)
The Companys investment portfolio is comprised entirely of debt and equity securities of privately held
companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs are not available. Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the board of
directors, using significant unobservable Level 3 inputs. (h)
Investment is held by a Taxable Subsidiary of the Company. (i)
The disclosed commitment represents the unfunded amount as of December 31, 2019. The Company is earning
0.50% interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate which will be earned if the commitment is funded. (j)
Investment pledged as collateral for the Credit Facility and, as a result, is not directly available to the
creditors of the Company to satisfy any obligations of the Company other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements). (k)
The portion of the investment not held by the Funds is pledged as collateral for the Credit Facility and, as a
result, is not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements). (l)
As defined in the 1940 Act, the Company is deemed to be an Affiliated Person of this portfolio
company because it owns 5% or more of the portfolio companys outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company. Transactions in which the issuer was an Affiliated
Person are detailed in Note 3 to the consolidated financial statements. (m)
Warrants entitle the Company to purchase a predetermined number of shares or units of common equity, and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any. (n)
Investment in portfolio company that has sold its operations and is in the process of winding down. (o)
Income producing. Maturity date, if any, represents mandatory redemption date. (p)
Investment was on non-accrual status as of December 31, 2019,
meaning the Company has ceased recognizing interest income on the investment. (q)
Warrant entitles the Company to purchase 9.59% of the outstanding principal of Junior Subordinated Notes prior
to exercise, and is non-income producing. (r)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 4.70% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (s)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.95% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (t)
As defined in the 1940 Act, the Company is deemed to be both an Affiliated Person of and
Control this portfolio company because it owns 25% or more of the portfolio companys outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company. Transactions in
which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are detailed in Note 3 to the consolidated financial statements. (u)
The disclosed commitment represents the unfunded amount as of December 31, 2019. The Company is earning
0.75% interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment. (v)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.32% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (w)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.95% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (x)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 2.73% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (y)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 3.68% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. (z)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled
to receive an additional interest amount of 4.41% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the
first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder. See Notes to Consolidated Financial Statements.  16




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data) Note 1. Organization and Nature of Business Fidus Investment Corporation (FIC, and together with its subsidiaries, the Company), a Maryland corporation, operates
as an externally managed, closed-end, non-diversified business development company (BDC) under the Investment Company Act of 1940, as amended (1940
Act). FIC completed its initial public offering, or IPO, in June 2011. In addition, for federal income tax purposes, the Company elected to be treated as a regulated investment company (RIC) under Subchapter M of the Internal
Revenue Code of 1986, as amended (the Code). The Company provides customized debt and equity financing solutions to lower
middle-market companies, and may make investments directly or through its two wholly-owned investment company subsidiaries, Fidus Mezzanine Capital II, L.P. (Fund II) and Fidus Mezzanine Capital III, L.P. (Fund III)
(collectively, Fund II and Fund III are referred to as the Funds). The Funds are licensed by the U.S. Small Business Administration (the SBA) as small business investment companies (SBIC). The SBIC licenses allow
the Funds to obtain leverage by issuing SBA-guaranteed debentures (SBA debentures), subject to the issuance of leverage commitments by the SBA and other customary procedures. As SBICs, the Funds
are subject to a variety of regulations and oversight by the SBA under the Small Business Investment Act of 1958, as amended (the SBIC Act), concerning, among other things, the size and nature of the companies in which they may invest
and the structure of those investments. We believe that utilizing both FIC and the Funds as investment vehicles provides us with access
to a broader array of investment opportunities. Given our access to lower cost capital through the SBAs SBIC debenture program, we expect that we will continue to make investments through the Funds until the Funds reach their borrowing limit
under the program. For three or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350,000. Fund II and Fund III are not registered under the 1940 Act and rely on the exclusion from the definition of investment company contained in
Section 3(c)(7) of the 1940 Act. The Company pays a quarterly base management fee and an incentive fee to Fidus Investment Advisors,
LLC, our investment advisor (the Investment Advisor or Fidus Investment Advisors) under an investment advisory agreement (the Investment Advisory Agreement). Note 2. Significant Accounting Policies Basis of presentation: The accompanying consolidated financial statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America (GAAP) pursuant to the requirements for reporting on Form 10-Q, Accounting Standards Codification (ASC) 946, Financial
Services  Investment Companies(ASC 946), and Articles 6 or 10 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments and
reclassifications that are necessary for the fair presentation of financial results as of and for the periods presented. Certain prior period amounts have been reclassified to conform to the current period presentation. The current periods
results of operation are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes
thereto for the year ended December 31, 2019. Use of estimates: The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Consolidation: Pursuant to Article 6 of Regulation S-X and ASC 946, the Company will generally
not consolidate its investments in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. As a result, the consolidated financial statements of the
Company include only the accounts of the Company and its wholly-owned subsidiaries, including the Funds. All significant intercompany balances and transactions have been eliminated. Investment risks: The Companys investments are subject to a variety of risks. These risks may include, but are not limited to the
following:  

Market riskIn contrast to investment-grade bonds (the market prices of which change primarily as a
reaction to changes in interest rates), the market prices of high-yield bonds (which are also affected by changes in interest rates) are influenced much more by credit factors and financial results of the issuer as well as general economic factors
that influence the financial markets as a whole. The portfolio companies in which the Company invests may be unseasoned, unprofitable and/or have little established operating history or earnings. These companies may also lack technical, marketing,
financial, and other resources or may be dependent upon the success of one product or service, a unique distribution channel, or the effectiveness of a manager or management team, as compared to larger, more established entities. The failure of a
single product, service or distribution channel, or the loss or the ineffectiveness of a key executive or executives within the management team may have a materially adverse impact on such companies. Furthermore, these companies may be more
vulnerable to competition and to overall economic conditions than larger, more established entities.  17




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  

Credit risk -Credit risk represents the risk that the Company would incur if the counterparties failed to
perform pursuant to the terms of their agreements with the Company. Issues of high-yield debt securities in which the Company invests are more likely to default on interest or principal than are issues of investment-grade securities.  

Liquidity risk -Liquidity risk represents the possibility that the Company may not be able to sell its
investments quickly or at a reasonable price (given the lack of an established market).  

Interest rate risk -Interest rate risk represents the likelihood that a change in interest rates could
have an adverse impact on the fair value of an interest-bearing financial instrument.  

Prepayment risk -Certain of the Companys debt investments allow for prepayment of principal without
penalty. Downward changes in market interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the debt investments and making the instrument less likely to be an income producing
instrument through the stated maturity date.  

Off-Balance sheet risk -Some of the Companys financial
instruments contain off-balance sheet risk. Generally, these financial instruments represent future commitments to purchase other financial instruments at defined terms at defined future dates. See Note 7 for
further details. Fair value of financial instruments: The Company measures and discloses fair value with respect
to substantially all of its financial instruments in accordance with ASC Topic 820  Fair Value Measurements and Disclosures (ASC Topic 820). ASC Topic 820 defines fair value, establishes a framework used to measure fair
value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 to the consolidated financial statements for
further discussion regarding the fair value measurements and hierarchy. Investment classification: The Company classifies its
investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, Control Investments are defined as investments in those companies where the Company owns more than 25% of the voting securities of such company or has
rights to maintain greater than 50% of the board representation. Under the 1940 Act, Affiliate Investments are defined as investments in those companies where the Company owns between 5% and 25% of the voting securities of such company. Non-Control/Non-Affiliate Investments are those that neither qualify as Control Investments nor Affiliate Investments. Segments: In accordance with ASC Topic 280  Segment Reporting, the Company has determined that it has a single reporting
segment and operating unit structure. Cash and cash equivalents: Cash and cash equivalents are highly liquid investments with an
original maturity of three months or less at the date of acquisition. The Company places its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company does
not believe its cash balances are exposed to any significant credit risk. Deferred financing costs: Deferred financing costs
consist of fees and expenses paid in connection with the Credit Facility (as defined in Note 6) and SBA debentures. Deferred financing costs are capitalized and amortized to interest and financing expenses over the term of the debt agreement using
the effective interest method. Unamortized deferred financing costs are presented as an offset to the corresponding debt liabilities on the consolidated statements of assets and liabilities. Realized losses on extinguishment of debt: Upon the repayment of debt obligations which are deemed to be extinguishments, the
difference between the principal amount due at maturity adjusted for any unamortized deferred financing costs is recognized as a loss (i.e., the unamortized deferred financing costs are recognized as a loss upon extinguishment of the underlying debt
obligation). In 2019, the Company elected to change the manner in which it presents the derecognition of unamortized deferred financing costs upon extinguishment of the related debt obligation. Previously, the Company classified the extinguishment
as a component of interest and financing expenses on the consolidated statements of operations. Comparative prior periods presented have been reclassified retrospectively to conform to the revised presentation. There is no change in historical net
increase in net assets resulting from operations due to this change in presentation. Deferred offering costs: Deferred offering
costs include registration expenses related to shelf filings. These expenses primarily consist of U.S. Securities and Exchange Commission (SEC) registration fees, legal fees and accounting fees incurred. These expenses are included in
prepaid expenses and other assets on the Consolidated Statements of Assets and Liabilities. Upon the completion of an equity offering or a debt offering, the deferred expenses are charged to additional paid-in
capital or deferred financing costs, respectively. If no offering is completed prior to the expiration of the registration statement, the deferred costs are charged to expense.  18




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Realized gains or losses and unrealized appreciation or depreciation on investments:Realized gains or losses on investments are recorded upon the sale or disposition of a portfolio investment and are calculated as the difference between the net proceeds from the sale or disposition and the cost basis of the investment, without
regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation on the consolidated statements of operations includes changes in the fair value of investments from the prior period, as
determined in good faith by the Companys board of directors (the Board) through the application of the Companys valuation policy, as well as reclassifications of any prior period unrealized appreciation or depreciation on
exited investments to realized gains or losses on investments. Interest and dividend income: Interest and dividend income is
recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest is accrued daily based on the outstanding principal amount and the contractual terms of the debt. Dividend income is recorded as dividends are
declared or at the point an obligation exists for the portfolio company to make a distribution, and is generally recognized when received. Distributions from portfolio companies are evaluated to determine if the distribution is a distribution of
earnings or a return of capital. Distributions of earnings are included in dividend income while a return of capital is recorded as a reduction in the cost basis of the investment. Estimates are adjusted as necessary after the relevant tax forms are
received from the portfolio company. PIK income:Certain of the Companys investments contain a payment-in-kind (PIK) income provision. The PIK income, computed at the contractual rate specified in the applicable investment agreement, is added to the
principal balance of the investment, rather than being paid in cash, and recorded as interest or dividend income, as applicable, on the consolidated statements of operations. Generally, PIK can be paid-in-kind or all in cash. The Company stops accruing PIK income when there is reasonable doubt that PIK income will be collected. PIK income that has been contractually capitalized to the principal balance
of the investment prior to the non-accrual designation date is not reserved against interest or dividend income, but rather is assessed through the valuation of the investment (with corresponding adjustments
to unrealized depreciation, as applicable). PIK income is included in the Companys taxable income and, therefore, affects the amount the Company is required to pay to shareholders in the form of dividends in order to maintain the
Companys tax treatment as a RIC and to avoid corporate federal income tax, even though the Company has not yet collected the cash. Non-accrual:Debt investments or preferred equity investments (for which the Company is
accruing PIK dividends) are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or
dividends will be collected. Any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on full non-accrual status. Interest and dividend
payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on managements judgment. Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain current. Origination and closing fees:The Company also typically receives debt investment origination or closing fees in connection with such
investments. Such debt investment origination and closing fees are capitalized as unearned income and offset against investment cost basis on the consolidated statements of assets and liabilities and accreted into interest income over the life of
the investment. Upon the prepayment of a debt investment, any unaccreted debt investment origination and closing fees are accelerated into interest income. Warrants: In connection with the Companys debt investments, the Company will sometimes receive warrants or other equity-related
securities from the borrower (Warrants). The Company determines the cost basis of Warrants based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and Warrants received. Any
resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the Warrants is treated as original issue discount (OID), and accreted into interest income using the
effective interest method over the term of the debt investment. Upon the prepayment of a debt investment, any unaccreted OID is accelerated into interest income. Fee income: Transaction fees earned in connection with the Companys investments are recognized as fee income and are generally non-recurring. Such fees typically include fees for services, including structuring and advisory services, provided to portfolio companies. The Company recognizes income from fees for providing such structuring and
advisory services when the services are rendered or the transactions are completed. Upon the prepayment of a debt investment, any prepayment penalties are recorded as fee income when earned. Partial loan sales:The Company follows the guidance in ASC 860, Transfers and Servicing,when accountingfor loan (debt
investment) participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a participating interest, as defined in the guidance, in order for sale treatment to be
allowed. Participations or other partial loan sales which do not meet the definition of a participating interest should remain on the Companys consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing
until the definition is met. Management has determined that all participations and other partial loan sale transactions entered into by the Company have met the definition of a participating interest. Accordingly, the Company uses sale treatment in
accounting for such transactions.  19




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Income taxes: The Company has elected to be treated as a RIC under Subchapter M of the
Code, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to stockholders. To maintain the tax treatment of a RIC, the Company is required to timely distribute to its stockholders at least
90.0% of investment company taxable income, as defined by Subchapter M of the Code, each year. Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current
year distributions into the next tax year; however, the Company will pay a 4.0% excise tax if it does not distribute at least 98.0% of the current years ordinary taxable income. Any such carryover taxable income must be distributed through a
dividend declared prior to the later of the date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15th day of the 10th month following the close of such taxable year. In addition, the Company will be subject to federal excise tax if it does not distribute at least 98.2% of its net capital gains realized, computed
for any one year period ending October 31. In the future, the Funds may be limited by provisions of the SBIC Act and SBA regulations
governing SBICs from making certain distributions to FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC. The Company has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of
the Companys portfolio investments listed on the consolidated schedules of investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the
Companys investment in the portfolio company investments owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for
U.S. federal income tax purposes (such as entities organized as limited liability companies (LLCs) or other forms of pass through entities) while complying with the
source-of-income requirements contained in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with the Company for U.S. federal corporate
income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal corporate income tax on its taxable income. Any such income or expense is reflected in the consolidated statements of operations. U.S. federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax regulations may differ from net
investment income and realized gains recognized under GAAP. Differences may be permanent or temporary. Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of certain assets and nondeductible
federal income taxes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. ASC Topic 740  Accounting for Uncertainty in Income Taxes (ASC Topic 740) provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Companys tax returns to determine whether
the tax positions are more-likely-than-not to be respected by the applicable tax authorities. Tax benefits of positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Companys policy to recognize accrued interest and penalties related to uncertain tax benefits included in
the income tax provision, if any. There were no material uncertain income tax positions at June 30, 2020 and December 31, 2019. The Companys tax returns are generally subject to examination by U.S. federal and most state tax
authorities for a period of three years from the date the respective returns are filed, and, accordingly, the Companys 2016 through 2019 tax years remain subject to examination. Dividends to stockholders: Dividends to stockholders are recorded on the record date with respect to such distributions. The amount, if
any, to be distributed to stockholders, is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, may be distributed at least annually, although the Company may
decide to retain such capital gains for investment. The determination of the tax attributes for the Companys distributions is made
annually, and is based upon the Companys taxable income and distributions paid to its stockholders for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income
from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax characterization of
the Companys distributions generally includes both ordinary income and capital gains but may also include qualified dividends or return of capital. The Company has adopted a dividend reinvestment plan (DRIP) that provides for the reinvestment of dividends on behalf of its
stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if the Company declares a cash dividend, the Companys stockholders who have not opted out of the DRIP at least two days prior to the dividend
payment date will have their cash dividend automatically reinvested into additional shares of the Companys common stock. The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common
stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares are valued based upon the final closing price of the Companys common stock on a date determined by the Board. Shares purchased in the
open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other costs. See Note 9 to the consolidated financial
statements regarding dividend declarations and distributions.  20




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Earnings and net asset value per share: The earnings per share calculations for the
three and six months ended June 30, 2020 and 2019, are computed utilizing the weighted average shares outstanding for the period. Net asset value per share is calculated using the number of shares outstanding as of the end of the period. Stock Repurchase Program: The Company has an open market stock repurchase program (the Stock Repurchase Program) under
which the Company may acquire up to $5,000 of its outstanding common stock. Under the Stock Repurchase Program, the Company may, but is not obligated to, repurchase outstanding common stock in the open market from time to time provided that the
Company complies with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and
timing constraints. The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability,
applicable legal and regulatory requirements and other corporate considerations. On October 29, 2019, the Board extended the Stock Repurchase Program through December 31, 2020, or until the approved dollar amount has been used to
repurchase shares. The Stock Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase
Program may be suspended, extended, modified or discontinued at any time. During the three and six months ended June 30, 2020, the Company repurchased zero and 25,719 shares of common stock on the open market for zero and $268, respectively.
The Company did not make any repurchases of common stock during the three and six months ended June 30, 2019, respectively. Refer to Note 8 for additional information concerning stock repurchases. Recent accounting pronouncements: In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820) 
Changes to the Disclosure Requirements for Fair Value Measurement, which is intended to improve fair value disclosure requirements by removing disclosures that are not cost-beneficial, clarifying disclosures specific requirements, and
adding relevant disclosure requirements. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company adopted the ASU effective January 1, 2020. No significant changes to the fair value
disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by
reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU
2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging
relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging
relationship. The Company is evaluating the potential impact that the adoption of ASU 2020-04 will have on the Companys consolidated financial statements. Note 3. Portfolio Company Investments The Companys portfolio investments principally consist of secured and unsecured debt, equity warrants and direct equity investments in
privately held companies. The debt investments may or may not be secured by either a first or second lien on the assets of the portfolio company. The debt investments generally bear interest at fixed rates, and generally mature between five and
seven years from the original investment. In connection with a debt investment, the Company also may receive nominally priced equity warrants and/or make a direct equity investment in the portfolio company. The Companys warrants or equity
investments may be investments in a holding company related to the portfolio company. In addition, the Company periodically makes equity investments in its portfolio companies through Taxable Subsidiaries. In both situations, the investment is
generally reported under the name of the operating company on the consolidated schedules of investments. As of June 30, 2020, the
Company had active investments in 64 portfolio companies and residual investments in three portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was $732,620 and the weighted average
effective yield on the Companys debt investments was 12.0% as of such date. As of June 30, 2020, the Company held equity investments in 89.6% of its portfolio companies and the weighted average fully diluted equity ownership in those
portfolio companies was 4.7%. The weighted average fully diluted equity ownership was computed using the fully diluted equity ownership for equity investments (including warrants) at cost as of June 30, 2020.  21




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  As of December 31, 2019, the Company had active investments in 61 portfolio companies
and residual investments in three portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was $766,919 and the weighted average effective yield on the Companys debt investments was 12.0%
as of such date. As of December 31, 2019, the Company held equity investments in 93.7% of its portfolio companies and the weighted average fully diluted equity ownership in those portfolio companies was 5.3%. The weighted average fully diluted
equity ownership was computed using the fully diluted equity ownership for equity investments (including warrants) at cost as of December 31, 2019. The weighted average yield of the Companys debt investments is not the same as a return on investment for its stockholders but, rather,
relates to a portion of the Companys investment portfolio and is calculated before the payment of all of the Companys and its subsidiaries fees and expenses.The weighted average yields were computed using the effective
interest rates for debt investments at cost as of June 30, 2020 and December 31, 2019, including accretion of OID and debt investment origination fees, but excluding investments on non-accrual
status, if any. Purchases of debt and equity investments for the six months ended June 30, 2020 and 2019 totaled $85,097 and
$128,460, respectively. Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the six months ended June 30, 2020 and 2019 totaled $76,315 and $75,320,
respectively. Investments by type with corresponding percentage of total portfolio investments consisted of the following:  Fair Value


CostJune 30,2020


December 31,2019


June 30,2020


December 31,2019Second Lien Debt

$
366,536



50.0
%

$
383,077



49.9
%

$
402,553



53.9
%

$
392,196



55.7
%Subordinated Debt


151,636



20.7



140,843



18.4



152,717



20.5



140,670



20.0First Lien Debt


139,690



19.1



108,327



14.1



140,971



18.9



107,718



15.3Equity


72,306



9.9



126,564



16.5



46,862



6.3



58,091



8.2Warrants


2,452



0.3



8,108



1.1



3,195



0.4



5,824



0.8Royalty Rights






























Total

$
732,620



100.0
%

$
766,919



100.0
%

$
746,298



100.0
%

$
704,499



100.0
% All investments made by the Company as of June 30, 2020 and December 31, 2019 were made in portfolio
companies headquartered in the U.S. The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments. The geographic composition is determined by the location of the corporate
headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio companys business.  Fair Value


CostJune 30,2020


December 31,2019


June 30,2020


December 31,2019Midwest

$
211,071



28.8
%

$
208,248



27.1
%

$
196,238



26.3
%

$
181,353



25.7
%Southeast


148,653



20.3



159,959



20.9



141,265



18.9



138,142



19.6Northeast


148,532



20.3



154,713



20.2



154,343



20.7



142,054



20.2West


83,793



11.4



76,251



9.9



88,552



11.9



76,587



10.9Southwest


140,571



19.2



167,748



21.9



165,900



22.2



166,363



23.6Total

$
732,620



100.0
%

$
766,919



100.0
%

$
746,298



100.0
%

$
704,499



100.0
%  22




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FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  The following table shows portfolio composition by type and by geographic region at fair
value as a percentage of net assets.  By Type


By Geographic RegionJune 30,2020


December 31,2019




June 30,2020


December 31,2019Second Lien Debt


97.5
%


92.8
%

Midwest


56.1
%


50.5
%Subordinated Debt


40.3



34.2


Southeast


39.5



38.8First Lien Debt


37.1



26.3


Northeast


39.5



37.5Equity


19.2



30.7


West


22.3



18.5Warrants


0.7



2.0


Southwest


37.4



40.7Royalty Rights






Total


194.8
%


186.0
%

Total


194.8
%


186.0
% As of June 30, 2020 and December 31, 2019, the Company had no portfolio company investments that
represented more than 10% of the total investment portfolio on a fair value or cost basis. As of June 30, 2020 and December 31,
2019, the Company had debt investments in two and one portfolio companies on non-accrual status, respectively:  June 30, 2020


December 31, 2019Portfolio Company

FairValue


Cost


FairValue


CostAccent Food Services, LLC

$
16,134


$
35,328


$
33,067


$
35,327Mirage Trailers LLC


5,258
(1)


6,300
(1)



(2)



(2)Total

$
21,392


$
41,628


$
33,067


$
35,327  (1)
Portfolio company was on PIK-only on
non-accrual status at period end, meaning the Company has ceased recognizing PIK interest income on the investment. (2)
Portfolio company debt investments were not on non-accrual status at
period end. Consolidated Schedule of Investments In and Advances To Affiliates The table below represents the fair value of control and affiliate investments as of December 31, 2019 and any additions and reductions
made to such investments during the six months ended June 30, 2020, the ending fair value as of June 30, 2020, and the total investment income earned on such investments during the period.  Six Months Ended June 30, 2020Portfolio Company (1)

June 30, 2020PrincipalAmount -DebtInvestments


December 31,2019Fair Value


GrossAdditions (2)


GrossReductions(3)


June 30,2020 FairValue


NetRealizedGains(Losses)(4)


Net Change inUnrealizedAppreciation(Depreciation)


InterestIncome


Payment-in-kindInterestIncome


DividendIncome


FeeIncomeControl InvestmentsFDS Avionics Corp. (dba Flight Display Systems)

$
4,894


$
5,403


$
215


$
(1,534)


$
4,084


$



$
(1,534
)

$
146


$
214


$



$
US GreenFiber, LLC


20,815



16,417



1,657



(229)



17,845







(230
)


735



656







Total Control Investments

$
25,709


$
21,820


$
1,872


$
(1,763)


$
21,929


$



$
(1,764
)

$
881


$
870


$



$
Affiliate InvestmentsFAR Research Inc.

$



$
28


$



$



$
28


$



$



$



$



$



$
Fiber Materials, Inc.






10,449



9,769



(20,218
)






9,769



(9,804
)














Medsurant Holdings, LLC


8,031



16,980



1,719



(8,177
)


10,522



1,714



(2,739
)


592











66Microbiology Research Associates, Inc.(5)






11,611



21



(11,632
)










(752
)


84



11







Mirage Trailers LLC


6,250



7,218



51



(2,011
)


5,258







(2,010
)


349







2



Pfanstiehl, Inc.


6,208



32,822



12,814



(22,189
)


23,447



12,812



(8,951
)


326







106



Pinnergy, Ltd.






32,978







(11,571
)


21,407







(11,571
)














Steward Holding LLC (dba Steward Advanced Materials)


7,725



9,469



435







9,904







374



463



58







Total Affiliate Investments

$
28,214


$
121,555


$
24,809


$
(75,798)


$
70,566


$
24,295


$
(35,453
)

$
1,814


$
69


$
108


$
66  (1)
The investment type, industry, ownership detail for equity investments, and if the investment is income
producing is disclosed in the consolidated schedule of investments. (2)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest and PIK dividend income, accretion of OID and origination fees, and net unrealized appreciation recognized during the period. Gross additions also include transfers of
portfolio companies into the control or affiliate classification during the period, as applicable. (3)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales
and net unrealized (depreciation) recognized during the period. Gross reductions also include include transfers of portfolio companies out of the control or affiliate classification during the period, as applicable. (4)
The schedule does not reflect realized gains or losses on escrow receivables for investments which were
previously exited and were not held during the period presented. Gains and losses on escrow receivables are classified in the consolidated statements of operations according to the control classification at the time the investment was exited. Escrow
receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities. (5)
Portfolio company was transferred to
Non-control/Non-affiliate investments from Affiliate investments during the six months ended June 30, 2020.  23




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Note 4. Fair Value Measurements Investments The Board has established and
documented processes and methodologies for determining the fair values of portfolio company investments on a recurring basis in accordance with ASC Topic 820 and consistent with the requirements of the 1940 Act. Fair value is the price, determined
at the measurement date, that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Where available, fair value is based on observable market prices or parameters, or derived
from such prices or parameters. Where observable prices or inputs are not available or reliable, valuation techniques described below are applied. Under ASC Topic 820, portfolio investments recorded at fair value in the consolidated financial
statements are classified within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value, as defined below: Level1  Inputs are unadjusted, quoted prices in active markets for identical assets as of the measurement
date. Level2  Inputs include quoted prices for similar assets in active markets, or that are quoted
prices for identical or similar assets in markets that are not active and inputs that are observable, either directly or indirectly, for substantially the full term, if applicable, of the investment. Level3  Inputs include those that are both unobservable and significant to the overall fair value measurement. An investments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. The Companys investment portfolio is comprised entirely of debt and equity securities of privately held companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs are not
available. Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the Board, using Level 3 inputs. The degree of judgment exercised by the Board in determining fair value is greatest for
investments classified as Level 3 inputs. Due to the inherent uncertainty of determining the fair values of investments that do not have readily available market values, the Boards estimate of fair values may differ significantly from the
values that would have been used had a ready market for the securities existed, and those differences may be material. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of
the investments may cause the amounts ultimately realized on these investments to be materially different than the valuations currently assigned. With respect to investments for which market quotations are not readily available, the Board undertakes a multi-step valuation process each
quarter, as described below:  

the quarterly valuation process begins with each portfolio company or investment being initially evaluated and
rated by the investment professionals of the Investment Advisor responsible for the portfolio investment;  

preliminary valuation conclusions are then documented and discussed with the investment committee of the
Investment Advisor;  

the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of
our portfolio investments for which market quotations are not readily available. Each portfolio company investment is generally appraised by the valuation firm(s) at least once every calendar year and each new portfolio company investment is
appraised at least once in the twelve-month period following the initial investment. In certain instances, the Company may determine that it is not cost-effective, and as a result it is not in the Companys stockholders best interest, to
request the independent appraisal of certain portfolio company investments. Such instances include, but are not limited to, situations where the Company determines that the fair value of the portfolio company investment is relatively insignificant
to the fair value of the total portfolio.  

the audit committee of the Board reviews the preliminary valuations of the Investment Advisor and of the
independent valuation firm(s) and responds and supplements the valuation recommendations to reflect any comments; and  

the Board discusses these valuations and determines the fair value of each investment in our portfolio in good
faith, based on the input of the Investment Advisor, the independent valuation firm(s) and the audit committee. In
making the good faith determination of the value of portfolio investments, the Board starts with the cost basis of the security. The transaction price is typically the best estimate of fair value at inception. When evidence supports a subsequent
change to the carrying value from the original transaction price, adjustments are made to reflect the expected exit values. Consistent
with the policies and methodologies adopted by the Board, the Company performs detailed valuations of its debt and equity investments, including an analysis on the Companys unfunded debt investment commitments, using both the market and income
approaches as appropriate. Under the market approach, the Company typically uses the enterprise value methodology to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one
portfolio company, enterprise value is generally best expressed as a range of values, from which the Company derives a single estimate of enterprise value. Under the income approach, the Company typically prepares and analyzes discounted cash flow
models to estimate the present value of future cash flows of either an individual debt investment or of the underlying portfolio company itself.  24




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  The Company evaluates investments in portfolio companies using the most recent portfolio
company financial statements and forecasts. The Company also consults with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information such as industry trends, new
product development and other operational issues. For the Companys debt investments the primary valuation technique used to
estimate the fair value is the discounted cash flow method. However, if there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other methods in determining the fair value, including the value
attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. The Companys discounted cash flow models estimate a range of fair values by applying an
appropriate discount rate to the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated debt investment agreements. The Company prepares a weighted average cost of capital for
use in the discounted cash flow model for each investment, based on factors including, but not limited to: current pricing and credit metrics for similar proposed or executed investment transactions of private companies; the portfolio companys
historical financial results and outlook; and the portfolio companys current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made. The Company may also consider the following factors
when determining the fair value of debt investments: the portfolio companys ability to make future scheduled payments; prepayment penalties and other fees; estimated remaining life; the nature and realizable value of any collateral securing
such debt investment; and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made. The Company estimates the remaining life of its debt investments to generally be
the legal maturity date of the instrument, as the Company generally intends to hold its debt investments to maturity. However, if the Company has information available to it that the debt investment is expected to be repaid in the near term, it
would use an estimated remaining life based on the expected repayment date. For the Companys equity investments, including equity
and warrants, the Company generally uses a market approach, including valuation methodologies consistent with industry practice, to estimate the enterprise value of portfolio companies. Typically, the enterprise value of a private company is based
on multiples of EBITDA, net income, revenues, or in limited cases, book value. In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original
transaction multiples, the portfolio companys historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral,
the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. The
Company may also utilize an income approach when estimating the fair value of its equity securities, either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting
methodology to corroborate the fair value ranges determined by the market approach. The Company typically prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.
The Company considers various factors, including, but not limited to, the portfolio companys projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which
the portfolio company does business, and comparisons of financial ratios of peer companies that are public. The fair value of the
Companys royalty rights are calculated based on projected future cash flows and the specific provisions contained in the pertinent agreements. The determination of the fair value of such royalty rights is not a significant component of the
Companys valuation process. The Company reviews the fair value hierarchy classifications on a quarterly basis. Reclassifications
impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur. There were no transfers among Levels 1, 2, and 3 during
the six months ended June 30, 2020 and 2019.  25




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  The following tables present a reconciliation of the beginning and ending balances for fair
valued investments measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2020 and 2019:  Second Lien


Subordinated


First Lien








RoyaltyDebt


Debt


Debt


Equity


Warrants


Rights


TotalBalance, December 31, 2018

$
366,517


$
104,225


$
51,790


$
106,707


$
13,743


$



$
642,982Net realized gains (losses) on investments














(1,702
)










(1,702
)Net change in unrealized appreciation (depreciation) on investments


(1,990
)


1,445



(12,652
)


12,807



(2,094
)






(2,484
)Purchase of investments


35,599



47,743



39,215



5,903











128,460Proceeds from sales and repayments of investments


(35,194
)


(26,689
)


(12,359
)


(1,078
)










(75,320
)Interest and dividend income
paid-in-kind


4,838



680



67















5,585Proceeds from loan origination fees


(90
)


(327
)


(429
)














(846
)Accretion of loan origination fees


297



162



106



2











567Accretion of original issue discount


19







11















30Balance, June 30, 2019

$
369,996


$
127,239


$
65,749


$
122,639


$
11,649


$



$
697,272Balance, December 31, 2019

$
383,077


$
140,843


$
108,327


$
126,564


$
8,108


$



$
766,919Net realized gains (losses) on investments


100







(4
)


29,624



1,862







31,582Net change in unrealized appreciation (depreciation) on investments


(26,898
)


(1,254
)


(1,890
)


(43,029
)


(3,027
)






(76,098
)Purchase of investments


20,999



13,500



49,239



1,359











85,097Proceeds from sales and repayments of investments


(12,780
)


(1,567
)


(15,263
)


(42,214
)


(4,491
)






(76,315
)Interest and dividend income
paid-in-kind


1,918



273



71















2,262Proceeds from loan origination fees


(158
)


(250
)


(1,036
)














(1,444
)Accretion of loan origination fees


247



91



174



2











514Accretion of original issue discount


31







72















103Balance, June 30, 2020

$
366,536


$
151,636


$
139,690


$
72,306


$
2,452


$



$
732,620 Net change in unrealized (depreciation) of $(1,508) and $(75,441) for the three and six months ended
June 30, 2020, respectively, was attributable to Level 3 investments held at June 30, 2020. Net change in unrealized (depreciation) of $(6,335) and $(4,840) for the three and six months ended June 30, 2019 was attributable to
Level 3 investments held at June 30, 2019. The following tables summarize the significant unobservable inputs by valuation
technique used to determine the fair value of the Companys Level 3 debt and equity investments as of June 30, 2020 and December 31, 2019. The tables are not intended to be all-inclusive,
but instead capture the significant unobservable inputs relevant to the Companys determination of fair values.  Fair Value at


Valuation

Unobservable

RangeJune 30, 2020


Techniques

Inputs

(weighted average)(1)Debt investments:Second Lien Debt

$
325,265


Discounted cash flow

Weighted average cost of capital


9.7% - 26.4% (14.6%)39,237


Enterprise value

EBITDA multiples


4.5x - 9.1x (6.7x)2,034


Enterprise value

Asset Coverage


1.3x - 1.3x (1.3x)Subordinated Debt


151,636


Discounted cash flow

Weighted average cost of capital


10.9% - 15.7% (11.9%)First Lien Debt


128,383


Discounted cash flow

Weighted average cost of capital


7.6% - 15.1% (12.2%)7,165


Enterprise value

Revenue multiples


4.4x - 4.4x (4.4x)4,142


Enterprise value

EBITDA multiples


4.0x - 4.0x (4.0x)Equity investments:Equity


72,042


Enterprise value

EBITDA multiples


3.3x - 14.5x (7.1x)264


Enterprise value

Revenue multiples


1.1x - 4.4x (4.4x)Warrants


2,452


Enterprise value

EBITDA multiples


4.0x - 6.0x (5.7x)  (1)
Unobservable inputs were weighted by the relative fair value of the instruments.  26




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Debt investments:

Fair Value atDecember 31, 2019


Valuation Techniques

Unobservable Inputs

Range (weightedaverage)(1)Second Lien Debt

$
364,351


Discounted cash flow

Weighted average cost of capital

10.3% - 18.2% (13.2%)16,417


Enterprise value

EBITDA multiples

5.3x - 5.3x (5.3x)2,309


Enterprise value

Asset Coverage

1.2x - 1.2x (1.2x)Subordinated Debt


140,843


Discounted cash flow

Weighted average cost of capital

10.9% - 21.6% (12.0%)First Lien Debt


101,162


Discounted cash flow

Weighted average cost of capital

8.4% - 14.8% (11.8%)7,165


Enterprise value

Revenue multiples

4.4x - 4.4x (4.4x)Equity investments:Equity


125,370


Enterprise value

EBITDA multiples

3.5x - 20.7x (8.5x)1,194


Enterprise value

Revenue multiples

1.2x - 4.4x (2.0x)Warrants


8,108


Enterprise value

EBITDA multiples

4.0x - 7.0x (6.6x)  (1)
Unobservable inputs were weighted by the relative fair value of the
instruments. The significant unobservable input used in determining the fair value under the
discounted cash flow technique is the weighted average cost of capital of each security. Significant increases (or decreases) in this input would likely result in significantly lower (or higher) fair value estimates. The significant unobservable inputs used in determining fair value under the enterprise value technique are revenue and EBITDA multiples, as
well as asset coverage. Significant increases (or decreases) in these inputs could result in significantly higher (or lower) fair value estimates. Other Financial Assets and Liabilities ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company
believes that the carrying amounts of its other financial instruments such as cash and cash equivalents, interest receivable and accounts payable and other liabilities approximate the fair value of such items due to the short maturity of such
instruments. The Companys borrowings under the Credit Facility (as defined in Note 6), SBA debentures, and Public Notes (as defined in Note 6) are recorded at their respective carrying values. The following tables summarize the carrying value and fair value of the Companys debt obligations as of June 30, 2020 and
December 31, 2019.  June 30, 2020


December 31, 2019Carrying Value (1)


Fair Value


Carrying Value (1)


Fair ValueSBA debentures (2)

$
156,500


$
156,500


$
157,500


$
157,500Credit Facility borrowings (3)


43,000



43,000



25,000



25,0002023 Notes (4)


50,000



48,100



50,000



51,900February 2024 Notes (4)


69,000



64,170



69,000



72,422November 2024 Notes (4)


63,250



56,293



63,250



65,148Total

$
381,750


$
368,063


$
364,750


$
371,970  (1)
Carrying value represents the outstanding principal balance of the debt
obligation. (2)
The fair value of SBA debentures is estimated by discounting the remaining payments using current market rates
for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures, which are Level 3 inputs under ASC Topic 820. (3)
The fair value of borrowings under the Credit Facility, if valued under ASC Topic 820, are based on a market
yield approach and current interest rates, which are Level 3 inputs to the market yield model. (4)
The Public Notes, if valued under ASC Topic 820, are valued using available market quotes, which is a
Level 1 input.  27




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  The following table summarizes the inputs used to value the Companys debt obligations
if measured at fair value as of June 30, 2020 and December 31, 2019.  Fair ValueValuation Inputs

June 30, 2020


December 31, 2019Level 1

$
168,563


$
189,470Level 2






Level 3


199,500



182,500Total

$
368,063


$
371,970 Note 5. Related Party Transactions Investment Advisory Agreement: The Company has entered into an Investment Advisory Agreement with the Investment Advisor. On
June 4, 2020, the Board approved the renewal of the Investment Advisory Agreement through June 20, 2021. Pursuant to the Investment Advisory Agreement and subject to the overall supervision of the Board, the Investment Advisor provides
investment advisory services to the Company. For providing these services, the Investment Advisor receives a fee, consisting of two components  a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75% based on the average value of total assets (other than cash or cash
equivalents but including assets purchased with borrowed amounts) at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears. The base management fee under the Investment Advisory
Agreement was $3,193 and $6,465 for the three and six months ended June 30, 2020, respectively and $3,016 and $5,887, for the three and six months ended June 30, 2019, respectively. As of
June 30, 2020 and December 31, 2019, the base management fee payable was $3,193 and $3,334, respectively. The incentive fee
consists of two parts. The first part is calculated and payable quarterly in arrears based on the Companys pre-incentive fee net investment income for the quarter.
Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or
other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses
payable under the Administration Agreement (defined below) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee and excise taxes on realized gains).
Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with PIK income, preferred stock with PIK dividends and zero-coupon securities), accrued income the Company has not yet received in cash. The Investment Advisor is not under any obligation to reimburse the Company for any part of the incentive fee it receives that was
based on accrued interest that the Company never collects. Pre-incentive fee net investment
income does not include any realized capital gains, taxes associated with such realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the
Company may pay an incentive fee in a quarter where the Company incurs a loss. For example, if the Company generates pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for
a quarter, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to a net loss on investments. Pre-incentive fee net investment income, expressed as a rate of return on the value of the
Companys net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed hurdle
rate of 2.0% per quarter. If market interest rates rise, the Company may be able to invest funds in debt instruments that provide for a higher return, which would increase the Companys
pre-incentive fee net investment income and make it easier for the Investment Advisor to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. The Company pays the Investment Advisor an incentive fee with respect to pre-incentive fee net
investment income in each calendar quarter as follows:  

no incentive fee in any calendar quarter in which the pre-incentive fee
net investment income does not exceed the hurdle rate of 2.0%;  28




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  

100.0% of the Companys pre-incentive fee net investment income with
respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5% in any calendar quarter. This portion of the
pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.5%) is referred to as the catch-up provision. The catch-up is meant to provide the Investment Advisor with 20.0% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income
exceeds 2.5% in any calendar quarter; and  

20.0% of the amount of the Companys pre-incentive fee net
investment income, if any, that exceeds 2.5% in any calendar quarter. The sum of the calculations above equals the
income incentive fee. The income incentive fee is appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the calendar quarter. The income incentive fee
was $2,113 and $3,968, for the three and six months ended June 30, 2020, respectively, and $1,299 and $3,784, for the three and six months ended June 30, 2019, respectively. The Investment Advisor, in
consultation with the Board, agreed to voluntarily waive $423 of the income incentive fee for the three and six months ended June 30, 2020. There was no income incentive fee waiver for the three and six months ended June 30, 2019. As of
June 30, 2020 and December 31, 2019, the income incentive fee payable (net of the income incentive fee waiver) was $1,690 and $1,497, respectively. The second part of the incentive fee is a capital gains incentive fee that is determined and paid in arrears as of the end of each fiscal year
(or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.0% of the net capital gains as of the end of the fiscal year. In determining the capital gains incentive fee to be paid in cash to the Investment
Advisor, the Company calculates the cumulative aggregate realized capital gains and losses since the Formation Transactions (realized capital gains and losses include realized gains and losses on investments, net of income tax provision from
realized gains on investments, and realized losses on extinguishment of debt), and the aggregate unrealized capital depreciation on investments as of the date of the calculation. At the end of the applicable year, the amount of capital gains that
serves as the basis for the calculation of the capital gains incentive fee to be paid equals the cumulative aggregate realized capital gains on investments, less cumulative aggregate realized capital losses on investments, less aggregate unrealized
capital depreciation on investments, and less cumulative aggregate realized losses on extinguishment of debt. If this number is positive at the end of such year, then the capital gains incentive fee to be paid in cash for such year equals 20.0% of
such amount, less the aggregate amount of any capital gains incentive fees paid in all prior years. As of June 30, 2020 and December 31, 2019, the capital gains incentive fee payable in cash was $0 (as cumulative aggregate realized capital
gains and losses on investments plus aggregate unrealized capital depreciation on investments plus realized losses on extinguishment of debt was negative as of each period). The aggregate amount of capital gains incentive fees paid from the IPO
through June 30, 2020 was $348. In addition, the Company accrues, but does not pay in cash, a capital gains incentive fee in
connection with any unrealized capital appreciation on investments, as applicable. If, on a cumulative basis, the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation) on investments
plus (iii) realized losses on extinguishment of debt decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 20.0%
of the sum of (i) net realized gains/(losses) on investments plus (ii) net unrealized appreciation/(depreciation) on investments plus (iii) realized losses on extinguishment of debt. The capital gains incentive fee accrued (reversed)
during the three and six months ended June 30, 2020 was $(263) and $(9,141), respectively, and $(1,289) and $(934) for the three and six months ended June 30, 2019, respectively. As of June 30, 2020 and December 31, 2019, the
accrued capital gains incentive fee payable was $3,574 and $12,715, respectively. Unless terminated earlier as described below, the
Investment Advisory Agreement will continue in effect from year to year if approved annually by the Board or by the affirmative vote of the holders of a majority of the Companys outstanding voting securities, and, in either case, if also
approved by a majority of the directors who are not interested persons of the Company, as such term is defined under Section 2(a)(19) of the 1940 Act (the Independent Directors). The Investment Advisory Agreement
automatically terminates in the event of its assignment, as defined in the 1940 Act, by the Investment Advisor and may be terminated by either party without penalty upon not less than 60 days written notice to the other. The holders of a
majority of the Companys outstanding voting securities may also terminate the Investment Advisory Agreement without penalty. Administration Agreement:The Company also entered into an administration agreement (the Administration Agreement) with the
Investment Advisor. On June 4, 2020, the Board approved the renewal of the Administration Agreement through June 20, 2021. Under the Administration Agreement, the Investment Advisor furnishes the Company with office facilities and
equipment, provides clerical, bookkeeping, and record keeping services at such facilities and provides the Company with other administrative services necessary to conduct its
day-to-day operations. The Company reimburses the Investment Advisor for the allocable portion of overhead expenses incurred in performing its obligations under the
Administration Agreement, including rent and the Companys allocable portion of the cost of its chief financial officer and chief compliance officer and their respective staffs. Under the Administration Agreement, the Investment Advisor also
provides managerial assistance to those portfolio companies to which the Company is required to provide such assistance and the Company reimburses the Investment Advisor for fees and expenses incurred with providing such services. In addition, the
Company reimburses the Investment Advisor for fees and expenses incurred while performing due diligence on the Companys prospective portfolio companies, including dead deal expenses. Under the Administration Agreement,
administrative service expenses for the three and six months ended June 30, 2020 were $364 and $830, respectively, and $378 and $777 for the three and six months ended June 30, 2019. As of June 30, 2020 and December 31, 2019, the
accrued administrative service expense was $506 and $528, respectively.  29




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Fidus Equity Fund I, L.P.:On February 25, 2020, the Company entered into
a Limited Partnership Agreement (the Agreement) with Fidus Equity Fund I, L.P. (FEF I). Pursuant to the Agreement, the Company will serve as the General Partner of FEF I. Owned by third-party investors, FEF I was formed
to purchase 50% of select equity investments from the Company. On February 25, 2020, the Company sold 50% of its equity investments in 20 portfolio companies to FEF I and received net proceeds of $35,903, resulting in a realized gain, net of
estimated taxes, of $20,404. The Company will not receive any fees from FEF I for any services provided in its capacity as the General Partner of FEF I. Note 6. Debt Revolving Credit
Facility: On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the Credit Facility) with ING Capital LLC (ING), as the administrative agent, collateral agent, and lender. The Credit
Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by the Funds are not collateral for the Credit Facility. On April 24, 2019, the Company entered into an Amended & Restated Senior
Secured Revolving Credit Agreement (the Amended Credit Agreement) among the Company, as borrower, the lenders party thereto, and ING Capital LLC, as administrative agent. The Amended Credit Agreement amends, restates, and replaces the
Credit Facility. On June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were unchanged. Among other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including
to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on June 30, 2020, 2.00 to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020,
and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter. Under the Amended Credit Agreement,
(i) revolving commitments by lenders were increased from $90,000 to $100,000, with an accordion feature that allows for an increase in total commitments up to $250,000, subject to satisfaction of certain conditions at the time of any such
future increase, (ii) the maturity date of the Credit Facility was extended from June 16, 2019 to April 24, 2023, and (iii) borrowings under the credit facility bear interest, at our election, at a rate per annum equal to
(a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first
lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater
than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%,
(C) three month LIBOR plus 1.0%, and (D) zero. The Company pays a commitment fee that varies depending on the size of the unused portion of the Credit Facility: 3.00% per annum on the unused portion of the credit facility at or below 35%
of the commitments and 0.50% per annum on any remaining unused portion of the Credit Facility between the total commitments and the 35% minimum utilization. The Amended Credit Agreement also modifies certain covenants in the credit facility,
including to provide for a minimum asset coverage ratio of 2.00 to 1 (on a regulatory basis). The Credit Facility is secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries. Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to
certain investments held by the Company, excluding investments held by the Funds. The Company is subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector
concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow. The Company has made customary representations and warranties and is required to comply with various covenants, reporting requirements and
other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of June 30, 2020 and December 31,
2019, the Company was in compliance in all material respect with the terms of the Credit Facility. SBA debentures: The Company
uses debenture leverage provided through the SBA to fund a portion of its investment purchases. Under the SBA debenture program, the SBA
commits to purchase debentures issued by SBICs; such debentures have 10-year terms with the entire principal balance due at maturity and are guaranteed by the SBA. Interest on SBA debentures is payable
semi-annually on March 1 and September 1. As of June 30, 2020 and December 31, 2019, approved and unused SBA debenture commitments were $11,500 and $17,500, respectively. The SBA may limit the amount that may be drawn each year
under these commitments, and each issuance of leverage is conditioned on the Companys full compliance, as determined by the SBA, with the terms and conditions set forth in the SBIC Act.  30




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  As of June 30, 2020 and December 31, 2019, the Companys issued and
outstanding SBA debentures mature as follows:  PoolingDate (1)

MaturityDate

FixedInterestRate


June 30,2020


December 31,20199/24/2014

9/1/2024


3.775
%

$



$
1,0003/25/2015

3/1/2025


3.277



22,500



22,5009/23/2015

9/1/2025


3.571



16,700



16,7003/23/2016

3/1/2026


3.267



1,500



1,5003/23/2016

3/1/2026


3.249



21,800



21,8009/21/2016

9/1/2026


2.793



500



5003/29/2017

3/1/2027


3.587



10,000



10,0009/20/2017

9/1/2027


3.260



1,000



1,0009/20/2017

9/1/2027


3.190



33,000



33,0003/21/2018

3/1/2028


3.859



16,000



16,0003/21/2018

3/1/2028


3.534



10,500



15,5009/19/2018

9/1/2028


3.895



9,500



9,5009/19/2018

9/1/2028


4.220







1,0009/25/2019

9/1/2029


2.377



7,500



7,5003/25/2020

3/1/2030


2.172



6,000



Total outstanding SBA debentures





$
156,500


$
157,500  (1)
The SBA has two scheduled pooling dates for debentures (in March and in September). Certain debentures funded
during the reporting periods may not be pooled until the subsequent pooling date. Public Notes:On
February 2, 2018, the Company closed the public offering of approximately $43,478 in aggregate principal amount of its 5.875% notes due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to
purchase an additional $6,522 in aggregate principal of the 2023 Notes. The total net proceeds to the Company from the 2023 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $1,500 and
offering expenses of $438, were approximately $48,062. The 2023 Notes mature on February 1, 2023 and bear interest at a rate of
5.875%. The 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after February 1, 2020. Interest on the 2023 Notes is payable quarterly on February 1, May 1, August 1
and November 1 of each year. The 2023 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSL. On February 8, 2019, the Company closed the public offering of approximately $60,000 in aggregate principal amount of its 6.000% notes
due 2024, or the February 2024 Notes. On February 19, 2019, the underwriters exercised their option to purchase an additional $9,000 in aggregate principal of the February 2024 Notes. The total net proceeds to the Company from the
February 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $2,070 and offering expenses of $409, were approximately $66,521. The February 2024 Notes mature on February 15, 2024 and bear interest at a rate of 6.000%. The February 2024 Notes may be redeemed in
whole or in part at any time or from time to time at the Companys option on or after February 15, 2021. Interest on the February 2024 Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each
year, beginning May 15, 2019. The February 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ. On October 16, 2019, the Company closed the public offering of approximately $55,000 in aggregate principal amount of its 5.375% notes
due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and February 2024 Notes, the Public Notes). On October 23, 2019, the underwriters exercised their option to purchase an additional $8,250 in
aggregate principal of the November 2024 Notes. The total net proceeds to the Company from the November 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $1,898 and offering
expenses of $300, were approximately $61,053.  31




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  The November 2024 Notes will mature on November 1, 2024 and bear interest at a rate of
5.375%. The November 2024 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after November 1, 2021. Interest on the November 2024 Notes is payable quarterly on February 1,
May 1, August 1 and November 1 of each year, beginning February 1, 2020. The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG. The Public Notes are unsecured obligations of the Company and rank pari passu with the Companys future unsecured indebtedness;
effectively subordinated to all of the Companys existing and future secured indebtedness; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar
facilities the Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities. As of June 30, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $225,250, for which our asset
coverage was 267.0%. The SBA-guaranteed debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective June 30, 2014. The
asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities
representing indebtedness. Interest and Financing Expenses Interest and fees related to the Companys debt for the three and six months ended June 30, 2020 and 2019 which are
included in interest and financing expenses on the consolidated statements of operations, were as follows:  Three Months Ended June 30, 2020


Three Months Ended June 30, 2019SBAdebentures


CreditFacility


PublicNotes


Total


SBAdebentures


CreditFacility


PublicNotes


TotalStated interest expense

$
1,301


$
395


$
2,619


$
4,315


$
1,438


$
402


$
1,769


$
3,609Amortization of deferred financing costs


139



83



326



548



150



75



218



443Total interest and financing expenses

$
1,440


$
478


$
2,945


$
4,863


$
1,588


$
477


$
1,987


$
4,052Six Months Ended June 30, 2020


Six Months Ended June 30, 2019SBAdebentures


CreditFacility


PublicNotes


Total


SBAdebentures


CreditFacility


PublicNotes


TotalStated interest expense

$
2,633


$
854


$
5,238


$
8,725


$
2,960


$
875


$
3,083


$
6,918Amortization of deferred financing costs


280



166



652



1,098



309



167



382



858Total interest and financing expenses

$
2,913


$
1,020


$
5,890


$
9,823


$
3,269


$
1,042


$
3,465


$
7,776Weighted average stated interest rate, period end


3.333
%


3.315
%


5.749
%


4.484
%


3.369
%


5.438
%


5.947
%


4.519
%Unused commitment fee rate, period end


N/A



0.500
%


N/A



0.500
%


N/A



0.695
%


N/A



0.695
% Realized Losses on Extinguishment of Debt During the six months ended June 30, 2020 and 2019, the Company prepaid $7,000 and $19,750 of SBA debentures, respectively, which were
scheduled to mature on dates ranging from 2024 to 2028 and 2021 to 2025, respectively. As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of $125 and $189, respectively, equal to the write-off of the related unamortized deferred financing costs, during the six months ended June 30, 2020 and 2019. Deferred Financing Costs Deferred
financing costs are amortized into interest and financing expenses on the consolidated statements of operations, using the effective interest method, over the term of the respective financing instrument. Deferred financing costs related to the
Credit Facility, SBA debentures, and Public Notes as of June 30, 2020 and December 31, 2019 were as follows:  June 30, 2020


December 31, 2019SBAdebentures


CreditFacility


PublicNotes


Total


SBAdebentures


CreditFacility


PublicNotes


TotalSBA debenture commitment fees

$
1,750


$



$



$
1,750


$
1,750


$



$



$
1,750SBA debenture leverage fees


3,966











3,966



3,820











3,820Credit Facility upfront fees






3,244







3,244







2,894







2,894Public Notes underwriting discounts










5,468



5,468











5,468



5,468Public Notes debt issue costs










1,147



1,147











1,147



1,147Total deferred financing costs


5,716



3,244



6,615



15,575



5,570



2,894



6,615



15,079Less: accumulated amortization


(2,277
)


(1,959
)


(1,918
)


(6,154
)


(1,872
)


(1,793
)


(1,266
)


(4,931
)Unamortized deferred financing costs

$
3,439


$
1,285


$
4,697


$
9,421


$
3,698


$
1,101


$
5,349


$
10,148  32




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Unamortized deferred financing costs are presented as a direct offset to the SBA debentures,
Credit Facility and Public Notes liabilities on the consolidated statements of assets and liabilities. The following table summarizes the outstanding debt net of unamortized deferred financing costs as of June 30, 2020 and December 31,
2019:  June 30, 2020


December 31, 2019SBAdebentures


CreditFacility


PublicNotes


Total


SBAdebentures


CreditFacility


PublicNotes


TotalOutstanding debt

$
156,500


$
43,000


$
182,250


$
381,750


$
157,500


$
25,000


$
182,250


$
364,750Less: unamortized deferred financing costs


(3,439
)


(1,285
)


(4,697
)


(9,421
)


(3,698
)


(1,101
)


(5,349
)


(10,148
)Debt, net of deferred financing costs

$
153,061


$
41,715


$
177,553


$
372,329


$
153,802


$
23,899


$
176,901


$
354,602 As of June 30, 2020, the Companys debt liabilities are scheduled to mature as follows (1):  Year

SBAdebentures


CreditFacility


PublicNotes


Total2020

$



$



$



$
2021














2022














2023






43,000



50,000



93,0002024










132,250



132,250Thereafter


156,500











156,500Total

$
156,500


$
43,000


$
182,250


$
381,750  (1)
The table above presents scheduled maturities of the Companys outstanding debt liabilities as of a point
in time pursuant to the terms of those instruments. The timing of actual repayments of outstanding debt liabilities may not ultimately correspond with the scheduled maturity dates depending on the terms of the underlying instruments and the
potential for earlier prepayments. Note 7. Commitments and Contingencies Commitments: The Company had outstanding commitments to portfolio companies to fund various undrawn revolving loans, other debt
investments and capital commitments totaling $4,857 and $4,757 as of June 30, 2020 and December 31, 2019, respectively. Such outstanding commitments are summarized in the following table:  June 30, 2020


December 31, 2019Portfolio Company - Investment

TotalCommitment


UnfundedCommitment


TotalCommitment


UnfundedCommitmentCombined Systems, Inc. - Revolving Loan

$
4,000


$
100


$



$
FDS Avionics Corp. (dba Flight Display Systems) - Revolving Loan


250



30



250



30French Transit, LLC - Revolving Loan


1,000



1,000



1,000



1,000Rhino Assembly Company, LLC - Delayed Draw Commitment


875



875



875



875Safety Products Group, LLC - Common Equity (Units)


2,852
(1)


2,852
(1)


2,852
(1)


2,852
(1)Total

$
8,977


$
4,857


$
4,977


$
4,757  (1)
Portfolio company was no longer held at period end. The commitment represents the Companys maximum
potential liability related to certain guaranteed obligations stemming from the prior sale of the portfolio companys underlying operations. Additional detail for each of the commitments above is provided in the Companys consolidated schedules of investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with financial and nonfinancial covenants.
Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of
representations and warranties that provide indemnifications under certain circumstances. In addition, in connection with the disposition of an investment in a portfolio company, the Company may be required to make representations about the business
and financial affairs of such portfolio company typical of those made in connection with the sale of a business. The Company may also be required to indemnify the purchasers of such investment to the extent that any such representations are
inaccurate. The Companys maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects the risk of future obligation under these
indemnifications to be remote.  33




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Legal proceedings: In the normal course of business, the Company may be subject to
legal and regulatory proceedings that are generally incidental to its ongoing operations. While the outcome of any such legal proceedings cannot be predicted with certainty, the Company does not believe any such legal proceedings will have a
material adverse effect on the Companys consolidated financial statements. Note 8. Common Stock Public Offerings of Common Stock The
following table summarizes the cumulative total shares issued, net proceeds received, and weighted average offering price in public offerings of the Companys common stock since the IPO.  Period

CumulativeNumber of Shares


Cumulative GrossProceeds


Cumulative Underwriting Fees andCommissions and Offering Costs 
(1)


Weighted AverageOffering PriceCumulative since IPO


14,388,414


$
236,597


$
8,989


$
16.44  (1)
Fidus Investment Advisors, LLC agreed to bear a cumulative of $1,925 of underwriting fees and commissions and
offering costs associated with these offerings (such amounts are not included in the number reported above). All such payments made by Fidus Investment Advisors, LLC are not subject to reimbursement by the Company. Common Stock ATM Program On
August 21, 2014, the Company entered into an equity distribution agreement with Raymond James & Associates, Inc. and Robert W. Baird & Co. Incorporated through which the Company could sell, by means of at-the-market offerings from time to time, shares of the Companys common stock having an aggregate offering price of up to $50,000 (the ATM Program). There
were no issuances of common stock under the ATM program during the last two fiscal years and for the six months ended June 30, 2020. Stock
Repurchase Program As described in Note 2, the Company has a Stock Repurchase Program under which the Company may acquire up to $5,000
of its outstanding common stock. During the three and six months ended June 30, 2020, the Company repurchased 0 and 25,719 shares of common stock, respectively, on the open market for zero and $268, respectively. The Company did not make any
repurchases of common stock during the three and six months ended June 30, 2019. The Companys NAV per share increased by approximately zero and $0.01 for the three and six months ended June 30, 2020, as a result of the share
repurchases. The following table summarizes the Companys share repurchases under the Stock Repurchase Program for the three and six months ended June 30, 2020 and 2019:  Three Months Ended June 30,


Six Months Ended June 30,Repurchases of Common Stock

2020


2019


2020


2019Number of shares repurchased










25,719



Cost of shares repurchased, including commissions

$



$



$
268


$
Weighted average price per share

$



$



$
10.37


$
Net asset value per share at prior quarter end

$



$



$
16.85


$
Weighted average discount to net asset value at quarter end prior to repurchases


N/A



N/A



38.5
%


N/A Refer to Note 9 for additional information regarding the issuance of shares under the DRIP. The Company had 24,437,400 and 24,463,119 shares of common stock outstanding as of June 30, 2020 and December 31, 2019,
respectively.  34




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Note 9. Dividends and Distributions The Companys dividends and distributions are recorded on the record date. The following table summarizes the dividends paid during the
last two fiscal years and for the six months ended June 30, 2020.  Date

Record


Payment


Amount


Total


Cash


DRIPShares


DRIP


DRIPShareDeclared

Date


Date


Per Share


Distribution


Distribution


Value


Shares


Issue PriceFiscal Year Ended December 31, 2018:2/13/2018


3/9/2018



3/23/2018


$
0.39


$
9,558


$
9,558


$

(2)



(2)


4/30/2018


6/8/2018



6/22/2018



0.39



9,541



9,541




(2)



(2)


7/30/2018


9/7/2018



9/21/2018



0.39



9,540



9,540




(2)



(2)


10/30/2018


12/7/2018



12/21/2018



0.39



9,541



9,541




(2)



(2)


10/30/2018(1)


12/7/2018



12/21/2018



0.04



978



978




(2)



(2)


$
1.60


$
39,158


$
39,158


$




Fiscal Year Ended December 31, 2019:1/31/2019


3/8/2019



3/22/2019


$
0.39


$
9,541


$
9,541


$

(2)



(2)


4/29/2019


6/7/2019



6/21/2019



0.39



9,540



9,540




(2)



(2)


7/29/2019


9/6/2019



9/20/2019



0.39



9,541



9,541




(2)



(2)


10/29/2019


12/6/2019



12/20/2019



0.39



9,541



9,541




(2)



(2)


10/29/2019(1)


12/6/2019



12/20/2019



0.04



978



978




(2)



(2)


$
1.60


$
39,141


$
39,141


$




Six Months Ended June 30, 2020:2/14/2020


3/13/2020



3/27/2020


$
0.39


$
9,537


$
9,537


$

(2)



(2)


4/29/2020


6/12/2020



6/26/2020



0.30



7,331



7,331




(2)



(2)


$
0.69


$
16,868


$
16,868


$




  (1)
Special dividend. (2)
During the six months ended June 30, 2020 and the years ended December 31, 2019 and 2018, the Company directed
the DRIP program plan administrator to repurchase shares on the open market in order to satisfy the DRIP obligation to deliver shares of common stock in lieu of issuing new shares. Accordingly, the Company purchased and reissued shares to satisfy
the DRIP obligation as follows:  Fiscal Year Ended December 31, 2018:

Number ofSharesPurchasedand Reissued


AveragePrice PaidPer Share


TotalAmount PaidJanuary 1, 2018 through March 31, 2018


16,503


$
12.97


$
214April 1, 2018 through June 30, 2018


16,216



14.48



235July 1, 2018 through September 30, 2018


16,207



14.83



240October 1, 2018 through December 31, 2018


29,152



11.85



346Total


78,078


$
13.25


$
1,035Fiscal Year Ended December 31, 2019:

Number ofSharesPurchasedand Reissued


AveragePrice PaidPer Share


TotalAmount PaidJanuary 1, 2019 through March 31, 2019


21,855


$
15.25


$
333April 1, 2019 through June 30, 2019


14,067



16.23



228July 1, 2019 through September 30, 2019


15,289



15.35



235October 1, 2019 through December 31, 2019


17,525



15.27



268Total


68,736


$
15.48


$
1,064  35




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  Six Months Ended June 30, 2020:

Number ofSharesPurchasedand Reissued


AveragePrice PaidPer Share


TotalAmount PaidJanuary 1, 2020 through March 31, 2020


31,586


$
7.58


$
239April 1, 2020 through June 30, 2020


21,904



9.04



198Total


53,490


$
8.18


$
437 Note 10. Financial Highlights The following is a schedule of financial highlights for the six months ended June 30, 2020 and 2019:  Six Months Ended June 30,2020


2019Per share data:Net asset value at beginning of period

$
16.85


$
16.47Net investment income(1)


1.09



0.79Net realized gain (loss) on investments, net of tax (provision)(1)


1.25



(0.08
)Net unrealized appreciation (depreciation) on investments(1)


(3.11
)


(0.10
)Realized losses on extinguishment of debt
(1)


(0.01
)


(0.01
)Total increase from investment
operations(1)


(0.78
)


0.60Accretive (dilutive) effect of share issuances and repurchases


0.01



Dividends to stockholders


(0.69
)


(0.78
)Other(2)






Net asset value at end of period

$
15.39


$
16.29Market value at end of period

$
9.07


$
15.95Shares outstanding at end of period


24,437,400



24,463,119Weighted average shares outstanding during the period


24,447,517



24,463,119Net assets at end of period

$
376,176


$
398,478Average net assets(7)

$
388,007


$
402,093Ratios to average net assets:Total expenses(3)(5)(12)


7.1
%


9.5
%Net investment income(3)(6)


13.7
%


9.6
%Total return based on market
value(4)


(33.5
%)


40.7
%Total return based on net asset value
(9)


(4.6
%)


3.6
%Portfolio turnover ratio (10)


20.6
%


22.4
%Supplemental Data:Average debt outstanding (8)

$
373,417


$
295,833Average debt per share(1)

$
15.27


$
12.09  (1)
Weighted average per share data. (2)
Represents the impact of different share amounts used in calculating per share data as a result of calculating
certain per share data based on weighted average shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date, or other rounding. (3)
Annualized with the exception of the Income Incentive Fee Waiver. (4)
Total return based on market value equals the change in the market value of the Companys common stock per
share during the period divided by the market value per share at the beginning of the period, and assumes reinvestment of dividends at prices obtained by our dividend reinvestment plan during the period. The return does not reflect any sales load
that may be paid by an investor. (5)
The total expenses to average net assets ratio is calculated using the total expenses before income incentive
fee waiver caption as presented on the consolidated statements of operations, which includes incentive fee and excludes the income tax provision.  36




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##### Table of Contents

FIDUS INVESTMENT CORPORATION Notes to Consolidated Financial Statements (unaudited) (in thousands, except shares and per share data)  (6)
The net investment income to average net assets ratio is calculated using the net investment income caption as
presented on the consolidated statements of operations, which includes incentive fee. (7)
Average net assets is calculated as the average of the net asset balances as of each quarter end during the
fiscal year and the prior year end. (8)
Average debt outstanding is calculated as the average of the outstanding debt balances as of each quarter end
during the fiscal year and the prior year end. (9)
Total return based on net asset value per share equals the change in net asset value per share during the
period, plus dividends paid per share during the period, less other non-operating changes during the period, and divided by beginning net asset value per share for the period.
Non-operating changes include any items that affect net asset value per share other than increase from investment operations, such as the effects of share issuances and repurchases and other miscellaneous
items. (10)
Annualized. (11)
The ratio of waived incentive fees to average net assets was (0.11%) and zero for the six months ended
June 30, 2020 and 2019, respectively. (12)
The following is a schedule of supplemental expense ratios to average net assets:  Six Months Ended June 30,Ratio to average net assets:

2020


2019Expenses other than incentive fee
(3)


9.9
%


8.1
%Incentive fee, net of incentive fee waiver
(3)(11)


(2.8
%)


1.4
%Total expenses (3)(5)


7.1
%


9.5
% Note 11. Subsequent Events On July 2, 2020, the Company exited its debt investment in Hoonuit, LLC. The Company received payment in full of $7,308 on its first lien
debt, which includes a prepayment penalty. On July 24, 2020, we exited our debt and equity investments in Microbiology Research
Associates, Inc. We received payment in full of $8,997 on our subordinated debt investment. We sold our common equity investment for a realized gain of approximately $1,366. On August 3, 2020, the Board declared a regular quarterly dividend of $0.30 per share payable on September 25, 2020 to stockholders
of record as of September 11, 2020. COVID-19 Subsequent to June 30, 2020, the global outbreak of the coronavirus (COVID-19)
pandemic, and the related effect on the U.S. and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies. 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.  37




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##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with Fidus Investment Corporations consolidated financial statements and related notes appearing in our annual report on Form 10-K for the year ended December 31, 2019, filed with the
SEC on February 27, 2020. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. Except as otherwise specified, references to we, us,
our, Fidus and FIC refer to Fidus Investment Corporation and its consolidated subsidiaries. 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 Fidus Investment Corporation, 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 statements as to:  

our future operating results and the impact of the COVID-19 pandemic
thereon;  

our business prospects and the prospects of our portfolio companies, including our and their ability to achieve
our respective objectives as a result of the current COVID-19 pandemic;  

the impact of investments that we expect to make;  

pandemics or other serious public health events, such as the recent global outbreak of COVID-19;  

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
and the impact of the COVID-19 pandemic thereon;  

the ability of our portfolio companies to achieve their objectives;  

our expected financing and investments;  

the adequacy of our cash resources and working capital;  

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19 pandemic thereon; and  

the ability of the Investment Advisor to locate suitable investments for us and to monitor and administer our
investments and the impacts of the COVID-19 pandemic thereon. 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, including as a result of the current COVID-19
pandemic, 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;  

a contraction of available credit and/or an inability to access the equity markets, including as a result of the COVID-19 pandemic, could impair our lending and investment activities;  

interest rate volatility could adversely affect our results, particularly because we use leverage as part of our
investment strategy;  

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to
the extent that we receive payments denominated in foreign currency rather than the U.S. dollars; and  

the risks, uncertainties and other factors we identify in Item 1A.  Risk Factors contained in our
Annual Report on Form 10-K for the year ended December 31, 2019, elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of
those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new debt investments, certain margins and
levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this 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 Item 1.A  Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020. 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.  38




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##### Table of Contents

Overview General and Corporate Structure We provide customized debt and equity financing solutions to lower middle-market companies, which we define as U.S. based companies having
revenues between $10.0 million and $150.0 million. Our investment objective is to provide attractive risk-adjusted returns by generating both current income from our debt investments and capital appreciation from our equity related
investments. Our investment strategy includes partnering with business owners, management teams and financial sponsors by providing customized financing for ownership transactions, recapitalizations, strategic acquisitions, business expansion and
other growth initiatives. We seek to maintain a diversified portfolio of investments in order to help mitigate the potential effects of adverse economic events related to particular companies, regions or industries. FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. FIC has
elected to be treated as business development company, or BDC, under the 1940 Act and our investment activities are managed by Fidus Investment Advisors, our investment advisor, and supervised by the Board, a majority of whom are independent of us.
On March 29, 2013, we commenced operations of a wholly-owned subsidiary, Fund II. On April 18, 2018, we commenced operations of another wholly-owned subsidiary, Fund III. Fund II and Fund III are collectively referred to as the
Funds. Fund II and Fund III received their SBIC licenses on May 28, 2013, and March 21, 2019, respectively. We plan
to continue to operate the Funds as SBICs, subject to SBA approval, and to utilize the proceeds of the sale of SBA-guaranteed debentures to enhance returns to our stockholders. We have also made, and continue
to make, investments directly through FIC. We believe that utilizing FIC and the Funds as investment vehicles provides us with access to a broader array of investment opportunities. We have certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of our
portfolio investments listed on the consolidated schedules of investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that our consolidated financial statements reflect our investment in the portfolio company
investments owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit us to hold equity investments in portfolio companies that are taxed as partnerships for U.S. federal income tax purposes (such as entities organized
as limited liability companies (LLCs) or other forms of pass through entities) while complying with the source-of-income requirements contained
in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with us for U.S. federal corporate income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal corporate income tax on its taxable income. Any such income
or expense is reflected in the consolidated statements of operations. COVID-19 Update On March 11, 2020, the World Health Organization declared the novel coronavirus, or COVID-19, as a
pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has, and continues, to severely
impact global economic activity and cause significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting
quarantines, mandating business and school closures and restricting travel. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic
and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19.
Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of the Companys portfolio companies, the Companys business, financial condition, results of
operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the character of dividends in order to preserve liquidity, increased costs of operations, changes in law
and/or regulation, and uncertainty regarding government and regulatory policy. We have evaluated subsequent events from July 1, 2020
through August 6, 2020. However, as the discussion in this Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations relates to the Companys financial statements for the quarter-ended June 30,
2020, the analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic. In that regard, for example, as of June 30, 2020, the Company valued its portfolio investments in
conformity with GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has
caused, any valuations conducted now or in the future in conformity with GAAP could result in a lower fair value of our portfolio. The potential impact to our results going forward will depend to a large extent on future developments and new
information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are beyond our
control. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.  39




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##### Table of Contents

Investments We seek to create a diversified investment portfolio that primarily includes debt investments and, to a lesser extent, equity securities. Our
investments typically range between $5.0 million to $35.0 million per portfolio company, although this investment size may vary proportionately with the size of our capital base. Our investment objective is to provide attractive
risk-adjusted returns by generating both current income from our debt investments and capital appreciation from our equity related investments. We may invest in the equity securities of our portfolio companies, such as preferred stock, common stock,
warrants and other equity interests, either directly or in conjunction with our debt investments. Second Lien Debt. The majority
of our debt investments take the form of second lien debt, which includes senior subordinated notes. Second lien debt investments obtain security interests in the assets of the portfolio company as collateral in support of the repayment of such
loans. Second lien debt typically is senior on a lien basis to other liabilities in the issuers capital structure and has the benefit of a security interest over assets of the issuer, though ranking junior to first lien debt secured by those
assets. First lien lenders and second lien lenders typically have separate liens on the collateral, and an intercreditor agreement provides the first lien lenders with priority over the second lien lenders liens on the collateral. These loans
typically provide for no contractual loan amortization, with all amortization deferred until loan maturity, and may include payment-in-kind (PIK) interest,
which increases the principal balance over the term and, coupled with the deferred principal payment provision, increases credit risk exposure over the life of the loan. Subordinated Debt. These investments are typically structured as unsecured, subordinated notes. Structurally, subordinated debt usually
ranks subordinate in priority of payment to first lien and second lien debt and may not have the benefit of financial covenants common in first lien and second lien debt. Subordinated debt may rank junior as it relates to proceeds in certain
liquidations where it does not have the benefit of a lien in specific collateral held by creditors (typically first lien and/or second lien) who have a perfected security interest in such collateral. However, subordinated debt ranks senior to common
and preferred equity in an issuers capital structure. These loans typically have relatively higher fixed interest rates (often representing a combination of cash pay and PIK interest) and amortization of principal deferred to maturity. The PIK
feature (meaning a feature allowing for the payment of interest in the form of additional principal amount of the loan instead of in cash), which effectively operates as negative amortization of loan principal, coupled with the deferred principal
payment provision, increases credit risk exposure over the life of the loan. First Lien Debt. To a lesser extent, we also
structure some of our debt investments as senior secured or first lien debt investments. First lien debt investments are secured by a first priority lien on existing and future assets of the borrower and may take the form of term loans or revolving
lines of credit. First lien debt is typically senior on a lien basis to other liabilities in the issuers capital structure and has the benefit of a first-priority security interest in assets of the issuer. The security interest ranks above the
security interest of any second lien lenders in those assets. Our first lien debt may include stand-alone first lien loans, last out first lien loans, or unitranche loans. Stand-alone first lien loans are traditional first
lien loans. All lenders in the facility have equal rights to the collateral that is subject to the first-priority security interest. Last out first lien loans have a secondary priority behind super-senior first out first lien
loans in the collateral securing the loans in certain circumstances. The arrangements for a last out first lien loan are set forth in an agreement among lenders, which provides lenders with first out and
last out payment streams based on a single lien on the collateral. Since the first out lenders generally have priority over the last out lenders for receiving payment under certain specified events of default, or
upon the occurrence of other triggering events under intercreditor agreements or agreements among lenders, the last out lenders bear a greater risk and, in exchange, receive a higher effective interest rate, through arrangements among
the lenders, than the first out lenders or lenders in stand-alone first lien loans. Agreements among lenders also typically provide greater voting rights to the last out lenders than the intercreditor agreements to which
second lien lenders often are subject. Many of our debt investments also include excess cash flow sweep features, whereby principal
repayment may be required before maturity if the portfolio company achieves certain defined operating targets. Additionally, our debt investments typically have principal prepayment penalties in the early years of the debt investment. The majority
of our debt investments provide for a fixed interest rate. Equity Securities. Our equity securities typically consist of either a
direct minority equity investment in common or preferred stock or membership/partnership interests of a portfolio company, or we may receive warrants to buy a minority equity interest in a portfolio company in connection with a debt investment.
Warrants we receive with our debt investments typically require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. Our equity investments are
typically not control-oriented investments, and in many cases, we acquire equity securities as part of a group of private equity investors in which we are not the lead investor. We may structure such equity investments to include provisions
protecting our rights as a minority-interest holder, as well as a put, or right to sell such securities back to the issuer, upon the occurrence of specified events. In many cases, we may also seek to obtain registration rights in
connection with these equity interests, which may include demand and piggyback registration rights. Our equity investments typically are made in connection with debt investments to the same portfolio companies.  40




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##### Table of Contents

Revenues: We generate revenue in the form of interest and fee income on debt
investments and dividends, if any, on equity investments. Our debt investments, whether in the form of second lien, subordinated or first lien loans, typically have terms of five to seven years and most bear interest at a fixed rate, but some bear
interest at a floating rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we may receive repayments of some of our debt investments prior to their scheduled
maturity dates, which may include prepayment penalties. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity may reflect the proceeds of sales of securities. In some cases, our
investments provide for deferred interest payments or PIK interest. The principal amount of debt investments and any accrued but unpaid interest generally become due at the maturity date. In addition, we may generate revenue in the form of
commitment, origination, amendment, or structuring fees and fees for providing managerial assistance. Debt investment origination fees, OID and market discount or premium, if any, are capitalized, and we accrete or amortize such amounts into
interest income. We record prepayment penalties on debt investments as fee income when earned. Interest and dividend income is recorded on the accrual basis to the extent that we expect to collect such amounts. Interest is accrued daily based on the
outstanding principal amount and the contractual terms of the debt investment. Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to make a distribution, and is generally recognized
when received. Distributions of earnings from portfolio companies are evaluated to determine if the distribution is a distribution of earnings or a return of capital. Distributions of earnings are included in dividend income while a return of
capital is recorded as a reduction in the cost basis of the investment. Estimates are adjusted as necessary after the relevant tax forms are received from the portfolio company. Debt investments or preferred equity investments (for which we are
accruing PIK dividends) are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or
dividends will be collected. Interest and dividend payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on
managements judgment. Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain
current. See Critical Accounting Policies and Use of Estimates  Revenue Recognition. We recognize realized gains or
losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment, without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of
investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations. Expenses: All investment professionals of the Investment Advisor and/or its affiliates, when and to the extent engaged in providing
investment advisory and management services to us, and the compensation and routine overhead expenses allocable to personnel who provide these services to us, are provided and paid for by the Investment Advisor and not by us. We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to:  
organization;  
calculating our net asset value (including the cost and expenses of any independent valuation firm);  
fees and expenses incurred by the Investment Advisor under the Investment Advisory Agreement or payable to
third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or
associated with, evaluating and making investments, including dead deal costs;  
interest payable on debt, if any, incurred to finance our investments;  
offerings of our common stock and other securities;  
investment advisory fees and management fees;  
administration fees and expenses, if any, payable under the Administration Agreement (including payments under
the Administration Agreement between us and the Investment Advisor based upon our allocable portion of the Investment Advisors overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion
of the cost of our officers, including our chief compliance officer, our chief financial officer, and their respective staffs);  
transfer agent, dividend agent and custodial fees and expenses;  
federal and state registration fees;  
all costs of registration and listing our shares on any securities exchange;  
U.S. federal, state and local taxes;  
Independent Directors fees and expenses;  
costs of preparing and filing reports or other documents required by the SEC or other regulators including
printing costs;  
costs of any reports, proxy statements or other notices to stockholders, including printing and mailing costs;  
our allocable portion of any fidelity bond, directors and officers/errors and omissions liability insurance,
and any other insurance premiums;  
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying,
secretarial and other staff, independent auditors and outside legal costs;  
proxy voting expenses; and  
all other expenses reasonably incurred by us or the Investment Advisor in connection with administering our
business.  41




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##### Table of Contents

Portfolio Composition, Investment Activity and Yield During the six months ended June 30, 2020 and 2019, we invested $85.1 million and $128.5 million, respectively, in debt and
equity investments including five and nine new portfolio companies, respectively. During the six months ended June 30, 2020 and 2019, we received proceeds from sales or repayments, including principal, return of capital dividends and net
realized gains (losses), of $76.3 million and $75.3 million, respectively, including exits of one and four portfolio companies, respectively. The following table summarizes investment purchases and sales and repayments of investments by
type for the six months ended June 30, 2020 and 2019 (dollars in millions).  Purchases of Investments


Sales and Repayments of InvestmentsSix Months Ended June 30,2020


2019


2020


2019Second Lien Debt

$
21.0



24.7
%

$
35.6



27.7
%

$
12.8



16.7
%

$
35.1



46.5
%Subordinated Debt


13.5



15.9



47.8



37.2



1.5



2.0



26.7



35.5First Lien Debt


49.2



57.8



39.2



30.5



15.3



20.1



12.4



16.5Equity


1.4



1.6



5.9



4.6



42.2



55.3



1.1



1.5Warrants


















4.5



5.9







Royalty Rights






























Total

$
85.1



100.0
%

$
128.5



100.0
%

$
76.3



100.0
%

$
75.3



100.0
% As of June 30, 2020, the fair value of our investment portfolio totaled $732.6 million and consisted
of 64 active portfolio companies and three portfolio companies that have sold their underlying operations. As of June 30, 2020, 20 portfolio companies debt investments bore interest at a variable rate, which represented
$210.3 million, or 32.0%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments. Overall, the portfolio had net unrealized depreciation of $(13.7)
million as of June 30, 2020. As of June 30, 2020, our average active portfolio company investment at amortized cost was $11.6 million, which excludes investments in the three portfolio companies that have sold their underlying
operations. As of December 31, 2019, the fair value of our investment portfolio totaled $766.9 million and consisted of 61
active portfolio companies and three portfolio companies that have sold their underlying operations. As of December 31, 2019, 17 portfolio companies debt investments bore interest at a variable rate, which represented $181.3 million,
or 28.7%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed rate investments. Overall, the portfolio had net unrealized appreciation of $62.4 million as of
December 31, 2019. As of December 31, 2019, our average active portfolio company investment at amortized cost was $11.5 million, which excludes investments in the three portfolio companies that have sold their underlying operations. The weighted average yield on debt investments as of both June 30, 2020 and December 31, 2019 was 12.0%. The weighted average
yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries fees and
expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost as of June 30, 2020 and December 31, 2019, respectively, including the accretion of OID and debt investment origination
fees, but excluding investments on non-accrual status, if any.  42




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##### Table of Contents

The following table shows the portfolio composition by investment type at fair value and
cost and as a percentage of total investments (dollars in millions):  Fair Value


CostJune 30,2020


December 31,2019


June 30,2020


December 31,2019Second Lien Debt

$
366.5



50.0
%

$
383.1



49.9
%

$
402.5



53.9
%

$
392.2



55.7
%Subordinated Debt


151.6



20.7



140.8



18.4



152.7



20.5



140.7



20.0First Lien Debt


139.7



19.1



108.3



14.1



141.0



18.9



107.7



15.3Equity


72.3



9.9



126.6



16.5



46.9



6.3



58.1



8.2Warrants


2.5



0.3



8.1



1.1



3.2



0.4



5.8



0.8Royalty Rights






























Total

$
732.6



100.0
%

$
766.9



100.0
%

$
746.3



100.0
%

$
704.5



100.0
% All investments made by us as of June 30, 2020 and December 31, 2019 were made in portfolio
companies headquartered in the U.S. The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments (dollars in millions). The geographic composition is determined by the location
of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio companys business.  Fair Value


CostJune 30,2020


December 31,2019


June 30,2020


December 31,2019Midwest

$
211.0



28.8
%

$
208.2



27.1
%

$
196.2



26.3
%

$
181.3



25.7
%Southeast


148.7



20.3



160.0



20.9



141.3



18.9



138.1



19.6Northeast


148.5



20.3



154.7



20.2



154.3



20.7



142.1



20.2West


83.8



11.4



76.3



9.9



88.6



11.9



76.6



10.9Southwest


140.6



19.2



167.7



21.9



165.9



22.2



166.4



23.6Total

$
732.6



100.0
%

$
766.9



100.0
%

$
746.3



100.0
%

$
704.5



100.0
%  43




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##### Table of Contents

The following table shows the detailed industry composition of our portfolio at fair value
and cost as a percentage of total investments:  Fair Value


CostJune 30,2020


December 31,2019


June 30,2020


December 31,2019Specialty Distribution


17.5
%


16.9
%


17.5
%


18.3
%Information Technology Services


14.1



11.8



13.3



11.9Business Services


13.5



12.1



13.5



13.0Healthcare Products


7.7



8.6



5.2



5.7Component Manufacturing


7.0



5.2



7.4



6.2Healthcare Services


4.5



5.6



4.7



5.8Consumer Products


3.9



2.8



4.0



3.4Aerospace & Defense Manufacturing


3.5



4.5



3.8



3.8Retail


3.5



3.8



4.1



4.2Promotional Products


3.1



3.5



3.4



3.6Building Products Manufacturing


3.0



2.7



3.4



3.3Oil & Gas Services


2.9



4.3



0.8



0.8Transportation Services


2.9



3.4



2.9



3.3Environmental Industries


2.5



2.4



2.4



2.6Utilities: Services


2.4



2.4



2.5



2.6Vending Equipment Manufacturing


2.2



4.3



4.8



5.1Packaging


2.1



2.0



2.0



2.1Industrial Cleaning & Coatings


1.6



2.0



1.7



2.2Oil & Gas Distribution


1.4



0.8



1.4



0.8Utility Equipment Manufacturing


0.7



0.9



1.1



1.2Restaurants


0.0
(1)


0.0
(1)


0.1



0.1Specialty Chemicals


0.0
(1)


0.0
(1)


0.0
(1)


0.0
(1)Total


100.0
%


100.0
%


100.0
%


100.0
%  (1)
Percentage is less than 0.1% of respective total. Portfolio Asset Quality In addition to
various risk management and monitoring tools, the Investment Advisor uses an internally developed investment rating system to characterize and monitor the credit profile and our expected level of returns on each investment in our portfolio. We use a
five-level numeric rating scale. The following is a description of the conditions associated with each investment rating:  

Investment Rating 1 is used for investments that involve the least amount of risk in our portfolio. The portfolio
company is performing above expectations, the debt investment is expected to be paid in the near term and the trends and risk factors are favorable, and may include an expected capital gain on the equity investment.  

Investment Rating 2 is used for investments that involve a level of risk similar to the risk at the time of
origination. The portfolio company is performing substantially within our expectations and the risk factors are neutral or favorable. Each new portfolio investment enters our portfolio with Investment Rating 2.  

Investment Rating 3 is used for investments performing below expectations and indicates the investments
risk has increased somewhat since origination. The portfolio company requires closer monitoring, but we expect a full return of principal and collection of all interest and/or dividends.  

Investment Rating 4 is used for investments performing materially below expectations and the risk has increased
materially since origination. The investment has the potential for some loss of investment return, but we expect no loss of principal.  

Investment Rating 5 is used for investments performing substantially below our expectations and the risks have
increased substantially since origination. We expect some loss of principal.  44




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##### Table of Contents

The following table shows the distribution of our investments on the 1 to 5 investment
rating scale at fair value and cost as of June 30, 2020 and December 31, 2019 (dollars in millions):  Fair Value


CostInvestment Rating

June 30,2020


December 31,2019


June 30,2020


December 31,20191

$
88.6



12.0
%

$
100.1



13.1
%

$
50.2



6.7
%

$
29.0



4.2
%2


484.2



66.1



580.5



75.7



484.4



64.9



570.1



80.93


143.3



19.6



84.6



11.0



162.7



21.8



96.7



13.74


16.5



2.3



1.7



0.2



40.1



5.4



5.8



0.85


















8.9



1.2



2.9



0.4Total

$
732.6



100.0
%

$
766.9



100.0
%

$
746.3



100.0
%

$
704.5



100.0
% Based on our investment rating system, the weighted average rating of our portfolio as of June 30, 2020
and December 31, 2019 was 2.1 and 2.0, respectively, on a fair value basis and 2.3 and 2.1, respectively, on a cost basis. Non-Accrual As of June 30, 2020 and December 31, 2019, we had debt investments in two and
one portfolio companies on non-accrual status, respectively (dollars in millions):  June 30,2020


December 31,2019Portfolio Company

FairValue


Cost


FairValue


CostAccent Food Services, LLC

$
16.1


$
35.3


$
33.1


$
35.3Mirage Trailers LLC


5.3
(1)


6.3
(1)



(2)



(2)Total

$
21.4


$
41.6


$
33.1


$
35.3  (1)
Portfolio company was on PIK-only on
non-accrual status at period end, meaning the Company has ceased recognizing PIK interest income on the investment. (2)
Portfolio company debt investments were not on non-accrual status at
period end. Discussion and Analysis of Results of Operations Comparison of three and six months ended June 30, 2020 and 2019 Investment Income Below
is a summary of the changes in total investment income for the three months ended June 30, 2020 as compared to the same period in 2019 (dollars in millions):  Three Months EndedJune 30,2020


2019


$ Change


% Change (1)(2)Interest income

$
18.8


$
13.9


$
4.9



36.1
%Payment-in-kind interest
income


1.2



3.0



(1.8
)


(60.0
%)Dividend income






0.6



(0.6
)


(97.1
%)Fee income


0.2



0.6



(0.4
)


(59.9
%)Interest on idle funds and other income


0.2







0.2



NMTotal investment income

$
20.4


$
18.1


$
2.3



13.1
%  (1)
NM = Not meaningful (2)
Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
statements of operations. For the three months ended June 30, 2020, total investment income was
$20.4 million, an increase of $2.3 million or 13.1%, from the $18.1 million of total investment income for the three months ended June 30, 2019. As reflected in the table above, the decrease is primarily attributable to the
following:  

$3.1 million increase in total interest income (which includes a $1.8 million decrease in payment-in-kind interest income) resulting from higher average debt investment balances outstanding, during 2020 as compared to 2019.  45




---

##### Table of Contents



$(0.4) million decrease in fee income resulting from a a decrease in structuring fees due to a comparative
decrease in new investments, a decrease in prepayment fee income, partially offset by an increase in amendment fee income, during 2020 as compared to 2019.  

$(0.6) million decrease in dividend income, during 2020 as compared to 2019, due to decreased levels of
distributions received from equity investments. Below is a summary of the changes in total investment income for the
six months ended June 30, 2020 as compared to the same period in 2019 (dollars in millions):  Six Months EndedJune 30,2020


2019


$ Change


% Change (1)(2)Interest income

$
36.3


$
29.1


$
7.2



24.8
%Payment-in-kind interest
income


2.3



5.6



(3.3
)


(59.5
%)Dividend income


0.1



0.9



(0.8
)


(83.4
%)Fee income


1.5



2.7



(1.2
)


(43.6
%)Interest on idle funds and other income


0.2



0.1



0.1



94.3
%Total investment income

$
40.4


$
38.4


$
2.0



5.3
%  (1)
NM = Not meaningful (2)
Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
statements of operations. For the six months ended June 30, 2020, total investment income was $40.4 million,
an increase of $2.0 million or 5.3%, from the $38.4 million of total investment income for the six months ended June 30, 2019. As reflected in the table above, the increase is primarily attributable to the following:  

$3.9 million increase in total interest income (which includes a $3.3 million decrease in payment-in-kind interest income) resulting from higher average debt investment balances outstanding, during 2020 as compared to 2019.  

$(0.8) million decrease in dividend income, during 2020 as compared to 2019, due to decreased levels of
distributions received from equity investments.  

$(1.2) million decrease in fee income resulting from a decrease in prepayment fee income, a decrease in
structuring fees due to a comparative decrease in new investments, offset by an increase in amendment fee income, during 2020 as compared to 2019. Expenses Below is a
summary of the changes in total expenses, including income tax provision, for the three months ended June 30, 2020 as compared to the same period in 2019 (dollars in millions):  Three Months EndedJune 30,2020


2019


$ Change


% Change (1)(2)Interest and financing expenses

$
4.9


$
4.1


$
0.8



20.0
%Base management fee


3.2



3.0



0.2



5.9
%Incentive fee - income


2.1



1.3



0.8



62.7
%Incentive fee - capital gains


(0.3
)


(1.3
)


1.0



(79.6
%)Administrative service expenses


0.4



0.4







NMProfessional fees


0.6



0.4



0.2



61.1
%Other general and administrative expenses


0.5



0.5







NMTotal expenses, before income incentive fee waiver


11.4



8.4



3.0



36.5
%Incentive fee waiver - income


(0.4
)






(0.4
)


NMTotal expenses, before income tax provision


11.0



8.4



2.6



31.4
%Income tax provision (benefit)


0.1



0.1







NMTotal expenses, including income tax provision

$
11.1


$
8.5


$
2.6



32.2
%  (1)
NM = Not meaningful (2)
Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
statements of operations.  46




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##### Table of Contents

For the three months ended June 30, 2020, total expenses, including income tax
provision, were $11.1 million, an increase of $2.6 million or 32.2%, from the $8.5 million of total expenses for the three months ended June 30, 2019. As reflected in the table above, changes across periods were primarily
attributable to the following:  

$1.0 million increase in the capital gains incentive fee due to a $5.1 million decrease in net (loss)
on investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments, plus realized losses on extinguishment of debt) during 2020 as compared to the same period in 2019.  

$0.8 million increase in interest and financing expenses due to an increase in average borrowings
outstanding during 2020 as compared to 2019.  

$0.4 million net increase in the income incentive fee comprised of a $0.8 million increase in the
income incentive fee due to a $1.5 million increase in pre-incentive fee net investment income during 2020 offset by a one-time $0.4 income incentive fee
waiver, as compared to the same period in 2019.  

$0.2 million increase in base management fee due to higher average total assets during 2020 as compared to
2019.  

$0.2 million increase in professional fees due to increased legal, audit and tax compliance costs during
2020 as compared to 2019. Below is a summary of the changes in total expenses, including income tax provision for the
six months ended June 30, 2020 as compared to the same period in 2019 (dollars in millions):  Six Months EndedJune 30,2020


2019


$ Change


% Change (1)(2)Interest and financing expenses

$
9.8


$
7.8


$
2.0



26.3
%Base management fee


6.4



5.8



0.6



9.8
%Incentive fee - income


4.0



3.8



0.2



4.9
%Incentive fee - capital gains


(9.1
)


(0.9
)


(8.2
)


878.7
%Administrative service expenses


0.9



0.8



0.1



6.8
%Professional fees


1.2



1.0



0.2



21.2
%Other general and administrative expenses


0.8



0.8







NMTotal expenses, before income incentive fee waiver


14.0



19.1



(5.1
)


(26.8
%)Incentive fee waiver - income


(0.4
)






(0.4
)


NMTotal expenses, before income tax provision


13.6



19.1



(5.5
)


(29.0
%)Income tax provision (benefit)


0.1



0.1







NMTotal expenses, including income tax provision

$
13.7


$
19.2


$
(5.5
)


(28.4
%)  (1)
NM = Not meaningful (2)
Percent change calculated based on underlying dollar amounts in thousands as presented on the consolidated
statements of operations. For the six months ended June 30, 2020, total expenses, including income tax provision,
were $13.7 million, a decrease of $(5.5) million, or (28.4)%, from the $19.2 million of total expenses, including income tax provision, for the six months ended June 30, 2019. As reflected in the table above, the decrease is primarily
attributable to the following:  

$2.0 million increase in interest and financing expenses due to an increase in average borrowings
outstanding during 2020 as compared to 2019.  

$0.6 million increase in base management fee due to higher average total assets during 2020 as compared to
2019.  

$0.2 million increase in professional fees due to increased legal, audit and tax compliance costs during
2020 as compared to 2019.  

$(0.2) million net decrease in the income incentive fee comprised of a $0.2 increase in the income incentive fee
due to the Q2 2019 fee amount not exceeding the 2.5% hurdle rate, partially offset by a $(0.6) million decrease in pre-incentive fee net investment income and a
one-time $0.4 million incentive fee waiver during 2020 as compared to the same period in 2019.  47




---

##### Table of Contents



$(8.2) million decrease in the capital gains incentive fee due to a $(41.1) million increase in net
(loss) on investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments, plus realized losses on extinguishment of debt), as compared to the same period in 2019. Net Investment Income Net investment income decreased by $(0.3) million, or (3.7)%, to $9.3 million during the three months ended June 30, 2020 as compared
to the same period in 2019, as a result of the $2.6 million increase in total expenses, including incentive fee waiver and income tax provision, partially offset by the $2.3 increase in total investment income. Net investment income increased by $7.5 million, or 38.8%, to $26.7 million during the six months ended June 30, 2020 as
compared to the same period in 2019, as a result of the $2.0 million increase in total investment income and a decrease in total expenses, including incentive fee waiver and income tax provision, of $(5.5) million. Net Gain (Loss) on Investments For the three and six months ended June 30, 2020, the total net realized gain on investments, before income tax provision on realized
gains, was $0.2 million and $31.6 million, respectively. Income tax (provision) benefit from realized gains on investments was $(0) and $(1.1) for the three and six months ended June 30, 2020, respectively. Significant realized gains
(losses) for the three and six months ended June 30, 2020 are summarized below (dollars in millions):  Period Ended June 30, 2020Portfolio Company

Realization Event
(1)

ThreeMonths


SixMonthsPfanstiehl, Inc.

Sold 50% of equity investment

$



$
12.8Fiber Materials, Inc.

Sale of portfolio company






9.8Medsurant Holdings, LLC

Sold 50% of equity investment






1.7Revenue Management Solutions, LLC

Sold 50% of equity investment






1.5Worldwide Express Operations, LLC

Sold 50% of equity investment






1.1Gurobi Optimization, LLC

Sold 50% of equity investment






1.0Hub Acquisition Sub, LLC (dba Hub Pen)

Sold 50% of equity investment






0.6Midwest Transit Equipment, Inc.

Sold 50% of equity investment






0.5Pugh Lubricants, LLC

Sold 50% of equity investment






0.4Microbiology Research Associates, Inc.

Sold 50% of equity investment






0.4ControlScan, Inc.

Sold 50% of equity investment






0.3Alzheimers Research and Treatment Center, LLC

Sold 50% of equity investment






0.3BCM One Group Holdings, Inc.

Sold 50% of equity investment






0.2Software Technology, LLC

Sold 50% of equity investment






0.2LNG Indy, LLC (dba Kinetrex Energy)

Sold 50% of equity investment






0.2Wheel Pros, Inc.

Sold 50% of equity investment






0.1New Era Technology, Inc.

Escrow distribution


0.1



0.1Apex Microtechnology, Inc.

Escrow distribution


0.1



0.1Allied 100 Group, Inc.

Sold 50% of equity investment






0.1Restaurant Finance Co, LLC

Escrow distribution






0.1Other








0.1Palisade Company, LLC

Sale of portfolio company






(0.1
)Net realized gain (loss) on investments




0.2



31.6Income tax (provision) benefit from realized gains on investments






(1.1
)Net realized gain (loss), net of income tax provision, on investments

$
0.2


$
30.5  (1)
As it relates to realization events, we define an exit of a portfolio company as situations where
we have completely exited our position in all of the portfolio companys securities and no longer carry the portfolio company on our schedule of investments. We define a sale of a portfolio company, distinguished from an exit, as
situations where the underlying operations of a portfolio company have been sold, but where we retain a residual ownership interest in the legacy entity (we generally distinguish these residual portfolio company investments from active
portfolio company investments).  48




---

##### Table of Contents

For the three and six months ended June 30, 2019, the total net realized loss on
investments, before income tax provision on realized gains, was $(0.1) million and $(1.7) million, respectively. Income tax provision from realized gains on investments was $0.3 million and $0.3 million for the three and six months ended
June 30, 2019, respectively. Significant realized gains (losses) for the three and six months ended June 30, 2019 are summarized below (dollars in millions):  Period Ended June 30, 2019Portfolio Company

Realization Event
(1)

ThreeMonths


SixMonthsMalabar International

Escrow distribution


0.1



0.1Trantech Radiator Products, Inc.

Exit of portfolio company


(0.3
)


(0.3
)Consolidated Infrastructure Group Holdings, LP

Exit of portfolio company






(0.4
)K2 Industrial Services, Inc.

Exit of portfolio company






(1.3
)Other




0.1



0.2Net realized gain (loss) on investments




(0.1
)


(1.7
)Income tax provision from realized gains on investments


(0.3
)


(0.3
)Net realized gain (loss), net of income tax provision, on investments

$
(0.4
)

$
(2.0
)  (1)
As it relates to realization events, we define an exit of a portfolio company as situations where
we have completely exited our position in all of the portfolio companys securities and no longer carry the portfolio company on our schedule of investments. We define a sale of a portfolio company, distinguished from an exit, as
situations where the underlying operations of a portfolio company have been sold, but where we retain a residual ownership interest in the legacy entity (we generally distinguish these residual portfolio company investments from active
portfolio company investments). During the three and six months ended June 30, 2020 and 2019, we recorded a net
change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):  Three Months EndedJune 30,


Six Months EndedJune 30,Unrealized Appreciation (Depreciation)

2020


2019


2020


2019Exit, sale or restructuring of investments

$



$
0.3


$
(30.0
)

$
2.3Fair value adjustments to debt investments


(7.3
)


(11.3
)


(30.0
)


(13.7
)Fair value adjustments to equity investments


5.8



5.0



(16.1
)


8.9Net change in unrealized appreciation (depreciation)

$
(1.5
)

$
(6.0
)

$
(76.1
)

$
(2.5
) Net Increase in Net Assets Resulting From Operations Net increase (decrease) in net assets resulting from operations during the three months ended June 30, 2020 and 2019 was $8.0 million
and $3.2 million, respectively, as a result of the events described above. Net increase in net assets resulting from operations
during the six months ended June 30, 2020 and 2019 was $(19.0) million and $14.6 million, respectively, as a result of the events described above. Liquidity and Capital Resources As of June 30, 2020, we had $19.3 million in cash and cash equivalents and our net assets totaled $376.2 million. We believe
that our current cash and cash equivalents on hand, our Credit Facility, our continued access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital
resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the at-the-market program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a
short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the six months ended June 30, 2020, we repaid $7.0 million of SBA debentures which would
have matured during the period September 1, 2024 through September 1, 2028. Our remaining outstanding SBA debentures continue to mature in 2025 and subsequent years through 2030, which will require repayment on or before the respective
maturity dates. Cash Flows For the six months ended June 30, 2020, we experienced a net increase in cash and cash equivalents in the amount of $4.3 million.
During that period, $4.9 million of cash was provided by operating activities, which included the funding of $85.1 million of investments, which were offset by proceeds received from sales and repayments of investments of
$76.3 million. During the same period, we received net borrowings of $18.0 million under our Credit Facility, partially offset by cash dividends paid to stockholders of $16.9 million, net repayments of SBA debentures of
$1.0 million, payment of deferred financing costs related to our debt financings of $0.5 million, and repurchases of common stock under the Stock Repurchase Program of $0.3 million.  49




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##### Table of Contents

Capital Resources We anticipate that we will continue to fund our investment activities on a long-term basis through a combination of additional debt and equity
capital. SBA debentures The Funds are licensed SBICs, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the Small
Business Investment Act and the SBA rules applicable to SBICs, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. The SBA regulations currently limit the amount that is
available to be borrowed by any SBIC and guaranteed by the SBA to 300.0% of an SBICs regulatory capital or $175.0 million, whichever is less. For three or more SBICs under common control, the maximum amount of outstanding SBA debentures
cannot exceed $350.0 million. SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable
semi-annually. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. As of June 30, 2020, Fund II and Fund III had $143.0 million and
$13.5 million of outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval, Fund III may access up to $161.5 million of additional SBA debentures under the SBIC debenture program. For more information on
the SBA debentures, please refer to Note 6 to our consolidated financial statements. Credit Facility In June 2014, we entered into the Credit Facility to provide additional funding for our investment and operational activities. On
April 24, 2019, we entered into the Amended Credit Agreement, which amends, restates, and replaces the Credit Facility. On June 26, 2020, the Company amended the Amended Credit Agreement, however the material terms were unchanged. Among
other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending on June 30, 2020, 2.00
to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020, and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter. The Credit Facility is secured by substantially
all of our assets, excluding the assets of the Funds. Under the Amended Credit Agreement, (i) revolving commitments by lenders were
increased from $90.0 million to $100.0 million, with an accordion feature that allows for an increase in total commitments up to $250.0 million, subject to satisfaction of certain conditions at the time of any such future increase,
(ii) the maturity date of the credit facility was extended from June 16, 2019 to April 24, 2023, and (iii) borrowings under the Credit Facility bear interest, at our election, at a rate per annum equal to (a) 3.00% (or 2.75%
if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans is greater
than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien loans is greater than or equal to 60%) plus
the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus
1.0%, and (D) zero. We pay a commitment fee that varies depending on the size of the unused portion of the Credit Facility: 3.00% per annum on the unused portion of the Credit Facility at or below 35% of the commitments and 0.50% per annum on
any remaining unused portion of the Credit Facility between the total commitments and the 35% minimum utilization. The Amended Credit Agreement also modifies certain covenants in the Credit Facility, including to provide for a minimum asset coverage
ratio of 2.00 to 1 (on a regulatory basis). The Credit Facility is secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries. Amounts available to borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to
certain portfolio investments held by us, excluding investments held by the Funds. We are subject to limitations with respect to the investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan
size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow. We have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other
customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of June 30, 2020, we were in compliance with all
covenants of the Credit Facility. Public Notes On February 2, 2018, we closed the public offering of approximately $43.5 million in aggregate principal amount of our 5.875% notes
due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to purchase an additional $6.5 million in aggregate principal of the 2023 Notes. The total net proceeds to us from the 2023 Notes, including
the exercise of the underwriters option, after deducting underwriting discounts of approximately $1.5 million and offering expenses of $0.4 million, were approximately $48.1 million.  50




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The 2023 Notes will mature on February 1, 2023 and bear interest at a rate of 5.875%.
The 2023 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after February 1, 2020. Interest on the 2023 Notes is payable quarterly on February 1, May 1, August 1 and November 1 of
each year. The 2023 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSL. As of June 30, 2020, the outstanding principal balance of the 2023 Notes was $50.0 million. On February 8, 2019, we closed the public offering of approximately $60.0 million in aggregate principal amount of our 6.000% notes
due 2024, or the 2024 Notes. On February 19, 2019, the underwriters exercised their option to purchase an additional $9.0 million in aggregate principal of the 2024 Notes. The total net proceeds to us from the 2024 Notes,
including the exercise of the underwriters option, after deducting underwriting discounts of approximately $2.1 million and offering expenses of $0.4 million, were approximately $66.5 million. The 2024 Notes will mature on February 15, 2024 and bear interest at a rate of 6.000%. The 2024 Notes may be redeemed in whole or in part
at any time or from time to time at our option on or after February 15, 2021. Interest on the 2024 Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each year, beginning May 15, 2019. The
2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ. As of June 30, 2020, the outstanding principal balance of the 2024 Notes was $69.0 million. On October 16, 2019, we closed the public offering of approximately $55.0 million in aggregate principal amount of our 5.375% notes
due 2024, or the November 2024 Notes (and collectively with the 2023 Notes and the February 2024 Notes, the Public Notes). On October 23, 2019, the underwriters exercised their option to purchase an additional
$8.3 million in aggregate principal of the November 2024 Notes. The total net proceeds to us from the November 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately
$1.9 million and offering expenses of $0.3 million, were approximately $61.1 million. The November 2024 Notes will mature
on November 1, 2024 and bear interest at a rate of 5.375%. The November 2024 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after November 1, 2021. Interest on the November 2024 Notes is
payable quarterly on February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2020. The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG. As
of June 30, 2020, the outstanding principal balance of the November 2024 Notes was approximately $63.3 million. The Public
Notes are unsecured obligations and rank pari passu with our future unsecured indebtedness; effectively subordinated to all of our existing and future secured indebtedness; and structurally subordinated to all existing and future indebtedness and
other obligations of any of our subsidiaries, financing vehicles, or similar facilities we may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities. As of June 30, 2020, the weighted average stated interest rates for our SBA debentures, Public Notes, and the Credit Facility were
3.333%, 5.749%, and 3.315% respectively. As of June 30, 2020, we had $57.0 million of unutilized commitment under our Credit Facility, and we were subject to a 0.500% fee on such amount. As of June 30, 2020, the weighted average
stated interest rate on total debt outstanding was 4.484%. As a BDC, we are generally required to meet an asset coverage ratio of at
least 200.0% (or 150.0% on and after April 29, 2020) (defined as the ratio which the value of our consolidated total assets, less all consolidated liabilities and indebtedness not represented by senior securities, bears to the aggregate amount
of senior securities representing indebtedness), which includes borrowings and any preferred stock we may issue in the future. This requirement limits the amount that we may borrow. We have received exemptive relief from the SEC to allow us to
exclude any indebtedness guaranteed by the SBA and issued by the Funds from the 200.0% asset coverage requirements, which, in turn, will enable us to fund more investments with debt capital. Recent legislation, however, modifies the required minimum
asset coverage ratio from 200.0% to 150.0%, if certain requirements are met. Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present,
approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the legislation allows the majority of the Independent Directors to approve
an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval. On April 29, 2019, the Board, including a majority of the Independent Directors, approved a minimum asset coverage ratio of 150% under
Sections 18(a)(1) and 18(a)(2) of the 1940 Act. As a result, we became subject to the 150% asset coverage ratio effective as of April 29, 2020. At present time, we do not intend to seek stockholder approval to reduce our asset coverage
requirement. As of June 30, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $225.3 million, for which our asset coverage was 267.0%. The SBA-guaranteed
debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective March 27, 2012. The asset coverage ratio for a class of senior securities representing indebtedness
is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.  51




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As a BDC, we are generally not permitted to issue and sell our common stock at a price below
net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if the Board, including the Independent
Directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. On June 4, 2020, our stockholders voted to allow us to sell or otherwise issue common stock at a price below
net asset value per share for a period of one year ending on the earlier of June 4, 2021 or the date of our 2021 Annual Meeting of Stockholders. We expect to present to our stockholders a similar proposal at our 2021 Annual Meeting of
Stockholders. Our stockholders specified that the cumulative number of shares sold in each offering during the one-year period ending on the earlier of June 4, 2021 or the date of our 2021 Annual Meeting
of Stockholders may not exceed 25.0% of our outstanding common stock immediately prior to each such sale. Stock Repurchase Program We have an open market stock repurchase program (the Stock Repurchase Program) under which we may acquire up to
$5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the prohibitions under our
insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints. The timing, manner, price and
amount of any share repurchases will be determined by our management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate
considerations. On October 29, 2019, the Board extended the Stock Repurchase Program through December 31, 2020, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not require us
to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time. During the three
and six months ended June 30, 2020, we repurchased zero and 25,719 shares of common stock on the open market for zero and $0.3 million, respectively. We did not make any repurchases of common stock during the three and six months ended
June 30, 2019. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases. Critical
Accounting Policies and Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make
certain estimates and assumptions affecting amounts reported in the financial statements. We have identified investment valuation and revenue recognition as our most critical accounting estimates. We continuously evaluate our estimates, including
those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ
materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows. Valuation of
Portfolio Investments As a BDC, we report our assets and liabilities at fair value at all times consistent with GAAP and the 1940
Act. Accordingly, we are required to periodically determine the fair value of all of our portfolio investments. Our investments generally
consist of illiquid securities including debt and equity investments in lower middle-market companies. Investments for which market quotations are readily available are valued at such market quotations. Because we expect that there will not be a
readily available market for substantially all of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and consistently
applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have
been used had a readily available market value existed for such investments, and the difference could be material. With respect to
investments for which market quotations are not readily available, the Board undertakes a multi-step valuation process each quarter, as described below:  

our quarterly valuation process begins with each portfolio company or investment being initially evaluated and
rated by the investment professionals of the Investment Advisor responsible for the portfolio investment;  

preliminary valuation conclusions are then documented and discussed with the investment committee of the
Investment Advisor;  52




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

the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of
our portfolio investments for which market quotations are not readily available. Each portfolio company investment is generally appraised by the valuation firm(s) at least once every calendar year and each new portfolio company investment is
appraised at least once in the twelve-month period following the initial investment. In certain instances, we may determine that it is not cost-effective, and as a result it is not in our stockholders best interest, to request the independent
appraisal of certain portfolio company investments. Such instances include, but are not limited to, situations where we determine that the fair value of the portfolio company investment is relatively insignificant to the fair value of the total
portfolio. The Board consulted with the independent valuation firm(s) in arriving at our determination of fair value for 17 and 13 of our portfolio company investments representing 25.4% and 30.9% of the total portfolio investments at fair value
(exclusive of new portfolio company investments made during the three months ended June 30, 2020 and December 31, 2019, respectively) as of June 30, 2020 and December 31, 2019, respectively;  

the audit committee of the Board reviews the preliminary valuations of the Investment Advisor and of the
independent valuation firm(s) and responds and supplements the valuation recommendations to reflect any comments; and  

the Board discusses the valuations and determines the fair value of each investment in our portfolio in good
faith, based on the input of the Investment Advisor, the independent valuation firm(s) and the audit committee. In
making the good faith determination of the value of portfolio investments, we start with the cost basis of the security. The transaction price is typically the best estimate of fair value at inception. When evidence supports a subsequent change to
the carrying value from the original transaction price, adjustments are made to reflect the expected exit values. Consistent with the
policies and methodologies adopted by the Board, we perform detailed valuations of our debt and equity investments, including an analysis on the Companys unfunded debt investment commitments, using both the market and income approaches as
appropriate. Under the market approach, we typically use the enterprise value methodology to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise
value is generally best expressed as a range of values, from which we derive a single estimate of enterprise value. Under the income approach, we typically prepare and analyze discounted cash flow models to estimate the present value of future cash
flows of either an individual debt investment or of the underlying portfolio company itself. We evaluate investments in portfolio
companies using the most recent portfolio company financial statements and forecasts. We also consult with the portfolio companys senior management to obtain further updates on the portfolio companys performance, including information
such as industry trends, new product development and other operational issues. For our debt investments the primary valuation technique
used to estimate the fair value is the discounted cash flow method. However, if there is deterioration in credit quality or a debt investment is in workout status, we may consider other methods in determining the fair value, including the value
attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. Our discounted cash flow models estimate a range of fair values by applying an appropriate
discount rate to the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated debt investment agreements. We prepare a weighted average cost of capital for use in the discounted
cash flow model for each investment, based on factors including, but not limited to: current pricing and credit metrics for similar proposed or executed investment transactions of private companies; the portfolio companys historical financial
results and outlook; and the portfolio companys current leverage and credit quality as compared to leverage and credit quality as of the date the investment was made. We may also consider the following factors when determining the fair value
of debt investments: the portfolio companys ability to make future scheduled payments; prepayment penalties and other fees; estimated remaining life; the nature and realizable value of any collateral securing such debt investment; and changes
in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made. We estimate the remaining life of our debt investments to generally be the legal maturity date of the instrument,
as we generally intend to hold debt investments to maturity. However, if we have information available to us that the debt investment is expected to be repaid in the near term, we would use an estimated remaining life based on the expected repayment
date. For our equity investments, including equity securities and warrants, we generally use a market approach, including valuation
methodologies consistent with industry practice, to estimate the enterprise value of portfolio companies. Typically, the enterprise value of a private company is based on multiples of EBITDA, net income, revenues, or in limited cases, book value. In
estimating the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio companys historical and projected financial
results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial
ratios of peer companies that are public. We may also utilize an income approach when estimating the fair value of our equity securities,
either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the fair value ranges determined by the market approach. We typically prepare
and analyze discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company. We consider various factors, including but not limited to the portfolio companys projected financial results,
applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public.  53




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The fair value of our royalty rights are calculated based on projected future cash flows and
the specific provisions contained in the pertinent royalty agreement. The determination of the fair value of such royalty rights is not a significant component of our valuation process. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements
express the uncertainties with respect to the possible effect of such valuations, and any changes in such valuations, on the consolidated financial statements. Revenue Recognition Investments and related investment income. Realized gains or losses on investments are recorded upon the sale or disposition of a
portfolio investment and are calculated as the difference between the net proceeds from the sale or disposition and the cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in
unrealized appreciation or depreciation on the consolidated statements of operations includes changes in the fair value of investments from the prior period, as determined by the Board through the application of our valuation policy, as well as
reclassifications of any prior period unrealized appreciation or depreciation on exited investments to realized gains or losses on investments. Interest and dividend income. Interest and dividend income are recorded on the accrual basis to the extent that we expect to collect
such amounts. Interest is accrued daily based on the outstanding principal amount and the contractual terms of the debt. Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to make a
distribution, and is generally recognized when received. Distributions from portfolio companies are evaluated to determine if the distribution is a distribution of earnings or a return of capital. Distributions of earnings are included in dividend
income while a return of capital is recorded as a reduction in the cost basis of the investment. Estimates are adjusted as necessary after the relevant tax forms are received from the portfolio company. PIK income. Certain of our investments contain a PIK income provision. The PIK income, computed at the contractual rate specified in
the applicable investment agreement, is added to the principal balance of the investment, rather than being paid in cash, and recorded as interest or dividend income, as applicable, on the consolidated statements of operations. Generally, PIK can be
paid-in-kind or all in cash. We stop accruing PIK income when there is reasonable doubt that PIK income will be collected. PIK income that has been contractually
capitalized to the principal balance of the investment prior to the non-accrual designation date is not reserved against interest or dividend income, but rather is assessed through the valuation of the
investment (with corresponding adjustments to unrealized depreciation, as applicable). PIK income is included in our taxable income and, therefore, affects the amount we are required to pay to our stockholders in the form of dividends in order to
maintain our tax treatment as a RIC and to avoid paying corporate-level U.S. federal income tax, even though we have not yet collected the cash. Non-accrual. Debt investments or preferred equity investments (for which we are accruing PIK
dividends) are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be
collected. Any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on full non-accrual status. Interest and dividend payments received on non-accrual investments may be recognized as interest or dividend income or applied to the investment principal balance based on managements judgment. Non-accrual
investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, are likely to remain current. Warrants. In connection with our debt investments, we will sometimes receive warrants or other equity-related securities (Warrants). We
determine the cost basis of Warrants based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and Warrants received. Any resulting difference between the face amount of the debt and its
recorded fair value resulting from the assignment of value to the Warrants is treated as OID and accreted into interest income using the effective interest method over the term of the debt investment. Upon the prepayment of a debt investment, any
unaccreted OID is accelerated into interest income. Fee income. All transaction fees earned in connection with our investments are
recognized as fee income and are generally non-recurring. Such fees typically include fees for services, including structuring and advisory services, provided to portfolio companies. We recognize income from
fees for providing such structuring and advisory services when the services are rendered or the transactions are completed. Upon the prepayment of a debt investment, any prepayment penalties are recorded as fee income when earned. We also typically receive debt investment origination or closing fees in connection with investments. Such debt investment origination and
closing fees are capitalized as unearned income and offset against investment cost basis on our consolidated statements of assets and liabilities and accreted into interest income over the term of the investment. Upon the prepayment of a debt
investment, any unaccreted debt investment origination and closing fees are accelerated into interest income.  54




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Recently Issued Accounting Standards In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820) 
Changes to the Disclosure Requirements for Fair Value Measurement, which is intended to improve fair value disclosure requirements by removing disclosures that are not cost-beneficial, clarifying disclosures specific requirements, and
adding relevant disclosure requirements. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. We adopted the ASU effective January 1, 2020. No significant changes to the fair value
disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by
reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU
2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging
relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging
relationship. The Company is evaluating the potential impact that the adoption of ASU 2020-04 will have on the Companys consolidated financial statements. Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business
to meet the financial needs of our portfolio companies. We had off-balance sheet arrangements consisting of outstanding commitments to fund various undrawn revolving loans, other debt investments and capital
commitments totaling $4.9 and 4.8 million as of June 30, 2020 and December 31, 2019, respectively. Such outstanding commitments are summarized in the following table (dollars in millions):  June 30, 2020


December 31, 2019Portfolio Company - Investment

TotalCommitment


UnfundedCommitment


TotalCommitment


UnfundedCommitmentCombined Systems, Inc. - Revolving Loan

$
4.0


$
0.1


$



$
FDS Avionics Corp. (dba Flight Display Systems) - Revolving Loan


0.2







0.2



French Transit, LLC - Revolving Loan


1.0



1.0



1.0



1.0Rhino Assembly Company, LLC - Delayed Draw Commitment


0.9



0.9



0.9



0.9Safety Products Group, LLC - Common Equity (Units)


2.9
(1)


2.9
(1)


2.9
(1)


2.9
(1)Total

$
9.0


$
4.9


$
5.0


$
4.8  (1)
Portfolio company was no longer held at period end. The commitment represents our maximum potential liability
related to certain guaranteed obligations stemming from the prior sale of the portfolio companys underlying operations. Additional detail for each of the commitments above is provided in our consolidated schedules of investments. Related Party Transactions We have
entered into a number of business relationships with affiliated or related parties, including the following:  

We have entered into the Investment Advisory Agreement with Fidus Investment Advisors as our investment advisor.
Pursuant to the agreement, the Investment Advisor manages our day-to-day operating and investing activities. We pay the Investment Advisor a fee for its services under
the Investment Advisory Agreement consisting of two components  a base management fee and an incentive fee. See Note 5 to our consolidated financial statements.  

Edward H. Ross, our Chairman and Chief Executive Officer, and Thomas C. Lauer, our President, are managers of
Fidus Investment Advisors. In May 2015, Fidus Investment Advisors entered into a combination with Fidus Partners, LLC (the Combination), by which members of Fidus Investment Advisors and Fidus Partners, LLC (Partners)
contributed all of their respective membership interest in Fidus Investment Advisors and Partners to a newly formed limited liability company, Fidus Group Holdings, LLC (Holdings). As a result, Fidus Investment Advisors is a wholly-owned
subsidiary of Holdings, which is a limited liability company organized under the laws of Delaware.  

We entered into the Administration Agreement with Fidus Investment Advisors to provide us with the office
facilities and administrative services necessary to conduct day-to-day operations. See Note 5 to our consolidated financial statements.  55




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

We entered into a license agreement with Fidus Partners, LLC, pursuant to which Fidus Partners, LLC has granted
us a non-exclusive, royalty-free license to use the name Fidus.  

On February 25, 2020, the Company entered into a Limited Partnership Agreement (the Agreement)
with Fidus Equity Fund I, L.P. (FEF I). Pursuant to the Agreement, we will serve as the General Partner of FEF I. Owned by third-party investors, FEF I was formed to purchase 50% of select equity investments from us. On
February 25, 2020, we sold 50% of our equity investments in 20 portfolio companies to FEF I and received net proceeds of $35.9 million, resulting in a realized gain, net of estimated taxes, of approximately $20.4 million. We will not
receive any fees from FEF I for any services provided in our capacity as the General Partner of FEF I.  

The Investment Advisor, in consultation with the Board, agreed to voluntarily waive $0.4 of the income incentive
fee for the three and six months ended June 30, 2020. There was no income incentive fee waiver for the three and six months ended June 30, 2019. In connection with the IPO and our election to be regulated as a BDC, we applied for and received exemptive relief from the SEC on
March 27, 2012 to allow us to take certain actions that would otherwise be prohibited by the 1940 Act, as applicable to BDCs. Effective June 30, 2014, pursuant to separate exemptive relief from the SEC, any SBA debentures issued by Fund II
and Fund III are not considered senior securities for purposes of the asset coverage requirements. While we may co-invest with investment entities managed by the Investment Advisor or its affiliates, to the extent permitted by the 1940 Act and the rules and regulations thereunder, the 1940 Act imposes significant limits on co-investment. The SEC staff has granted us relief sought in an exemptive application that expands our ability to co-invest in portfolio companies with other funds managed by
the Investment Advisor or its affiliates (Affiliated Funds) in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to
compliance with certain conditions (the Order). Pursuant to the Order, we are permitted to co-invest with our affiliates if a required majority (as defined in Section 57(o) of the
1940 Act) or the Independent Directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid,
are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent
with our investment objective and strategies. In addition, we and the Investment Advisor have each adopted a joint code of ethics
pursuant to Rule 17j-1 under the 1940 Act that governs the conduct of our and the Investment Advisors officers, directors and employees. Additionally, the Investment Advisor has adopted a code
of ethics pursuant to rule 204A-1 under the Investment Advisers Act of 1940, as amended, and in accordance with Rule 17j-1(c) under the 1940 Act. We
have also adopted a code of business conduct that is applicable to all officers, directors and employees of Fidus and the Investment Advisor. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland
General Corporation Law. Recent Developments On July 2, 2020, the Company exited its debt investment in Hoonuit, LLC. The Company received payment in full of $7.3 million on its
first lien debt, which includes a prepayment penalty. On July 24, 2020, we exited our debt and equity investments in Microbiology
Research Associates, Inc. We received payment in full of $9.0 million on our subordinated debt investment. We sold our common equity investment for a realized gain of approximately $1.4 million. On August 3, 2020, the Board declared a regular quarterly dividend of $0.30 per share payable on September 25, 2020 to stockholders
of record as of September 11, 2020. Subsequent to June 30, 2020, the global outbreak of the
COVID-19 pandemic, and the related effect on the U.S. and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies. 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are subject to financial market risks, including changes in interest rates. Changes in interest rates affect both our cost of funding and
the valuation of our investment portfolio. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable
administrative and information systems and other policies and programs. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19
pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities held by us.  56




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In the future, our investment income may also be affected by changes in various interest
rates, including LIBOR and prime rates, to the extent of any debt investments that include floating interest rates. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks
have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a
corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate
liabilities tied to LIBOR. As of June 30, 2020 and December 31, 2019, 20 and 17 portfolio companys debt investments, respectively, bore interest at a variable rate, which represented $210.3 million and $181.3 million of our
portfolio on a fair value basis, respectively, and the remainder of our debt portfolio was comprised entirely of fixed rate investments. Our pooled SBA debentures and our Public Notes bear interest at fixed rates. Our Credit Facility bears interest,
at our election, at a rate per annum equal to (a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible
portfolio investments that are performing first lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out
loans, or performing second lien loans is greater than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate,
(B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus 1.0%, and (D) zero. Because we currently borrow, and plan
to borrow in the future, money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that
a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a
corresponding increase in interest income generated by our investment portfolio. The following table shows the approximate annualized
increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of June 30, 2020 (dollars in millions):  Basis Point Increase (Decrease)

Interest IncomeIncrease(Decrease) (1) (2)


Interest ExpenseIncrease(Decrease)


Net Increase(Decrease)


Net InvestmentIncome (3)(200)

$
(0.1
)

$
(0.1
)

$
(0.0
)

$
(150)


(0.1
)


(0.1
)


(0.0
)


(100)


(0.1
)


(0.1
)


(0.0
)


(50)


(0.1
)


(0.1
)


(0.0
)


50


0.1



0.2



(0.1
)


(0.1
)100


0.4



0.4



(0.0
)


150


0.7



0.6



0.1



0.1200


1.5



0.8



0.7



0.6250


2.6



1.0



1.6



1.3300


3.7



1.2



2.5



2.0  (1)
Certain of our variable rate debt investments have a LIBOR interest rate floor, which lessens the impact of
decreases in interest rates. (2)
Interest income calculated assuming three-month LIBOR rate as of June 30, 2020. (3)
Includes the impact of income incentive fee at 20.0% on net increase (decrease) in net interest. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that such information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act) as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and
procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective. It should be noted that any system of controls, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent
limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.  57




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Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the second quarter of 2020 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.  58




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PART II  OTHER INFORMATION Item 1. Legal Proceedings. We are not, and the Investment Advisor is not, currently subject to any material legal proceedings. Item 1A. Risk Factors. In addition to other information set forth in this report, including the risk factor below, you should carefully consider the Risk
Factors discussed in our Form 10-K for the year ended December 31, 2019 and filed with the SEC on February 27, 2020, which are incorporated herein by reference. These Risk Factors could
materially affect our business, financial condition and/or operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or
operating results. Legislation that took effect in 2018 would allow us to incur additional leverage. The 1940 Act generally prohibits the Company from incurring indebtedness unless immediately after such borrowing we have an asset coverage for
total borrowings of at least 200.0% (i.e., the amount of debt may not exceed 50.0% of the value of our assets). However, in March 2018, the Small Business Credit Availability Act (the SBCA) modified the 1940 Act by allowing a BDC
to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200.0% to an asset coverage ratio of 150.0%, if certain requirements are met. Under the SBCA, we are allowed to increase our leverage capacity if stockholders
representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such
approval. Alternatively, the SBCA allows the required majority of the Independent Directors, as defined in Section 57(o) of the 1940 Act, to approve an increase in our leverage capacity, and such approval would become effective
after the one-year anniversary of such proposal. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to
increase our leverage, our leverage capacity and usage, and risks related to leverage. On April 29, 2019, the Board, including a
majority of the Independent Directors, approved a minimum asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. As a result, we became subject to the 150% asset coverage ratio effective as of April 29, 2020. At
present time, we do not intend to seek stockholder approval to reduce our asset coverage requirement. Leverage magnifies the potential
for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, our stockholders will experience increased risks of investing in our securities. If the value of our assets
increases, then leveraging would cause the NAV attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause NAV to decline more sharply
than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage,
while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments, or other
payments related to our securities. Increased leverage may also cause a downgrade of our credit rating. Leverage is generally considered a speculative investment technique. Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities. The London Inter-bank Offered Rate (LIBOR), is the basic rate of interest used in lending transactions between banks
on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us
pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR. In the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers Association
(BBA) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivative
positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered
into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.  59




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Actions by the ICE Benchmark Administration, regulators or law enforcement agencies as a
result of these or future events, may result in changes to the manner in which LIBOR is determined. Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our
portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an
adverse impact on the market for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us. On July 27, 2017, the U.K. Financial Conduct Authority (the FCA), which regulates LIBOR, announced that it intends to stop
persuading or compelling banks to submit LIBOR rates after 2021. In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the
outbreak of COVID-19 has impacted the timing of many firms transition planning, and the FCA will continue to assess the impact of the COVID-19 pandemic on
transition timelines and update the marketplace as soon as possible. It is unclear if after 2021 LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. We have
exposure to LIBOR, including in financial instruments that mature after 2021. Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities. In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, in conjunction with the Alternative Reference Rates
Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities called the Secured
Overnight Financing Rate (SOFR). The Federal Reserve Bank of New York began publishing SOFR in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future
of LIBOR at this time is uncertain, including whether the COVID-19 pandemic will have further effect on LIBOR transition plans. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the
market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. If LIBOR ceases to exist, we
may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. Events outside of our control, including public health crises such as the ongoing COVID-19
pandemic, may negatively affect our results of operations and financial performance. Periods of market volatility have occurred
and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. For example,
in December 2019, a novel strain of coronavirus (known as COVID-19) surfaced in China and has since spread and continues to spread to other countries, including the United States This outbreak
has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is
likely to continue to result in, the following among other things: (i) government imposition of various forms of shelter-in-place orders and the closing of non-essential businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as
in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit;
(iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;
(iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or
actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market
businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general,
which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken
in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things. The Company and the Investment Advisor have taken and continue to take steps reasonably designed to ensure that they maintain normal business
operations, and that the Company, its portfolio and assets are protected. However, in the event of a pandemic or an outbreak, such as COVID-19, there can be no assurance that the Company, the Investment
Advisor and service providers, or the Companys portfolio companies, will be able to maintain normal business operations for an extended period of time or will not lose the services of key personnel on a temporary or long-term basis due to
illness or other reasons. A pandemic or disease could also impair the information technology and other operational systems upon which the Investment Advisor relies and could otherwise disrupt the ability of the Companys service providers to
perform essential tasks. As of the date of this 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last,
the effect any governmental actions will have or the full potential impact on us and our portfolio companies. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could
emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its
impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.  60




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If the economy is unable to substantially reopen, and high levels of unemployment continue
for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses
to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan
collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations. We will also be negatively affected if our operations and effectiveness or the operations and effectiveness of a portfolio company (or any of
the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted. Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new
epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments. These potential impacts, while uncertain, could adversely
affect our and our portfolio companies operating results. We are currently operating in a period of capital markets disruption and economic
uncertainty. The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019. The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure of
offices, businesses, schools, retail stores and other public venues. Businesses are also implementing similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, have created significant disruption in supply chains and economic activity. The impact of COVID- 19 has led to significant volatility and declines in the global public equity markets and it is uncertain
how long this volatility will continue. As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess.
Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between
the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial
condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These
events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments. Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and
may continue to have, a negative effect on the potential for liquidity events involving our investments. The illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we
could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital, and any required sale of all or a portion of our investments
as a result, could have a material adverse effect on our business, financial condition or results of operations. We may choose to pay dividends in
our own stock, in which case you may be required to pay tax in excess of the cash you receive. Under certain applicable provisions
of the Code and the Treasury regulations and a revenue procedure issued by the IRS, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire
distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive
their distributions in cash, we must allocate the cash available for distribution among the shareholders electing to receive cash (with the balance of the distribution paid in shares of our common stock). If we decide to make any distributions
consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof)
as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a
U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount
included in income with respect to the dividend, depending on the market price of our stock at the time of the sale.  61




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Furthermore, with respect to non-U.S. stockholders,
we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. If a significant number of our stockholders determine to sell shares of our stock in order to
pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. Due to the
COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and
maintain flexibility. As a BDC, we are not required to make any distributions to shareholders other than in connection with our
election to be taxed as a RIC under subchapter M of the Code. In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income
plus realized net short-term capital gains in excess of realized net long-term capital losses). If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income
and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders. We will be subject to a 4% US federal excise tax on undistributed earnings of a RIC
unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on
October 31 of the calendar year, and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax. Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we
pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal tax purposes as
if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid during the following taxable year that will allow us to maintain our
qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the
following year. For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021. If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution. Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take
certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility. For example, we anticipate that we will not be able to increase our dividends. In addition, we may reduce our dividends
and/or defer our dividends to the following taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S. federal excise tax on such amounts. To further preserve cash, we may
combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed above under We may choose to pay dividends in our own stock, in which case you may be required to pay tax in
excess of the cash you receive. Public health threats may affect the market for the 2023 Notes, the February 2024 Notes and the November 2024
Notes, impact the businesses in which we invest and affect our business, operating results and financial condition. Public health
threats, such as COVID-19 or any other illness, have and may continue to disrupt the operations of the businesses in which we invest. Such threats can create economic and political uncertainties and can
contribute to global economic instability. A public health threat poses the risk that our portfolio companies may have significantly reduced or be prevented from conducting business activities for an unknown period of time, including shutdowns that
may be requested or mandated by governmental authorities. We cannot estimate the impact that a public health threat could have on our portfolio companies, but it could disrupt their businesses and their ability to make interest
or dividend payments and decrease the overall value of our investments which adversely impact our business, financial condition or results of operations. Additionally, as a result of the volatile market conditions that may result from
public health threats, such as COVID-19 or any other illness, we cannot provide any assurance that the 2023 Notes, the February 2024 Notes and the November 2024 Notes will trade at a favorable price.  62




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Sales of Unregistered Securities None. Issuer Purchases of
Equity Securities We have an open market stock repurchase program (the Stock Repurchase Program) under which we may
acquire up to $5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the
prohibitions under our insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints. The timing,
manner, price and amount of any share repurchases will be determined by our management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements
and other corporate considerations. On October 29, 2019, the Board extended the Stock Repurchase Program through December 31, 2020, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program
does not require us to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any
time. During the three and six months ended June 30, 2020, we repurchased zero and 25,719 shares of common stock on the open market
for zero and $0.3 million under the Stock Repurchase Program. The following table provides information regarding such repurchases of our common stock (dollars in millions, except per share data):  Period

TotalNumber ofSharesPurchased (1)


AveragePrice PaidPer Share


Total Numberof SharesPurchased asPart of PubliclyAnnouncedPlans orPrograms


Maximum Number(or ApproximateDollar Value)of Shares that MayYet Be PurchasedUnder the
StockRepurchase ProgramJanuary 1, 2020 through January 31, 2020





$







$
4.4February 1, 2020 through February 29, 2020














4.4March 1, 2020 through March 31, 2020


25,719



10.37



25,719



4.1April 1, 2020 through April 30, 2020














4.1May 1, 2020 through May 31, 2020














4.1June 1, 2020 through June 30, 2020














4.1Total


25,719


$
10.37



25,719  (1)
Excludes shares purchased on the open market and reissued in order to satisfy the dividend reinvestment plan
(DRIP) obligation to deliver shares of common stock in lieu of issuing new shares. During the six months ended June 30, 2020, we purchased and reissued shares of common stock to satisfy the DRIP obligation as follows:  Period

Number ofSharesPurchasedand Reissued


AveragePrice PaidPer Share


TotalAmount PaidJanuary 1, 2020 through March 31, 2020


31,586


$
7.58


$
0.2April 1, 2020 through June 30, 2020


21,905



9.04



0.2Total


53,491


$
8.18


$
0.4 Refer to Note 8 to our consolidated financial statements for additional information concerning stock
repurchases under our Stock Repurchase Program.  63




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Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety
Disclosures. None. Item 5. Other Information. None.  64




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Item 6. Exhibits.  Number

Exhibit3.1

Articles of Amendment and Restatement of the Registrant (Filed as Exhibit (a)(1) toPre-Effective Amendment No. 2 to the Registrants Registration Statement on FormN-2 (File 
No.333-172550) filed with the U.S. Securities and Exchange Commission on April 29, 2011 and incorporated herein by reference).3.2

Bylaws of the Registrant (Filed as Exhibit (b)(1) to Pre-Effective Amendment No. 2 to the Registrants
 Registration Statement on Form N-2 (File No.333-172550) filed with the U.S. Securities and Exchange Commission on April 29, 2011 and incorporated herein by
reference).4.1

Form of Stock Certificate of the Registrant (Filed as Exhibit (d) toPre-Effective Amendment No. 2 to the Registrants Registration Statement on FormN-2 (File 
No.333-172550) filed with the U.S. Securities and Exchange Commission on April 29, 2011 and incorporated herein by reference).10.1

Amendment No. 1, dated June 26, 2020, to the Amended 
& Restated Senior Secured Revolving Credit Agreement dated April 
24, 2019, by and among the Company, as borrower, the subsidiary guarantors party thereto, ING Capital LLC, as administrative agent, and the lenders party thereto (Filed as Exhibit 10.1 to the Registrants current report on Form8-K filed with the U.S. Securities and Exchange Commission on June 29, 2020 and incorporated herein by reference).31.1

Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 
302 of the Sarbanes-Oxley Act of 2002.*31.2

Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 
302 of the Sarbanes-Oxley Act of 2002.*32.1

Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*  *
Filed herewith.  65




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.  FIDUS INVESTMENT CORPORATIONDate: August 6, 2020



/s/ EDWARD H. ROSSEdward H. RossChairman and Chief Executive Officer(Principal Executive Officer)Date: August 6, 2020



/s/ SHELBY E. SHERARDShelby E. SherardChief Financial Officer (Principal Financial
and Accounting Officer)  66