##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2011
 OR
 o
    
    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 820
Evanston, Illinois, 60201  (Address and zip code of principal executive offices)
 (847) 859-3940  (Registrants telephone number, including area code)
 o þ
 o o
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o
 o þ




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##### 



FIDUS INVESTMENT CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    2Consolidated Statements of Assets and Liabilities  June 30, 2011 (unaudited) and December 31, 2010
    
    
    2Consolidated Statements of Operations  Three and Six Months Ended June 30, 2011 (unaudited) and 2010 (unaudited)
    
    
    3Consolidated Statements of Changes in Net Assets Six Months Ended June 30, 2011 (unaudited) and 2010 (unaudited)
    
    
    4Consolidated Statements of Cash Flows  Six Months Ended June 30, 2011 (unaudited) and 2010 (unaudited)
    
    
    5Consolidated Schedule of Investments  June 30, 2011 (unaudited) and December 31, 2010
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    10Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. [Removed and Reserved]
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    31Signatures
    
    
    32Exhibit List
    
    
    33EX-31.1EX-31.2EX-32.1
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 FIDUS INVESTMENT CORPORATION
Consolidated Statements of Assets and Liabilities
 June 30,2011
    
    
    December 31,(unaudited)
    
    
    2010ASSETSInvestments, at fair valueControl investments (cost: $28,240,386 and $26,985,897, respectively)
    
    $
    35,069,872
    
    
    $
    29,419,402Affiliate investments (cost: $29,684,777 and $24,413,389, respectively)
    
    
    30,947,477
    
    
    
    26,860,320Non-control/non-affiliate investments (cost: $96,359,928 and $93,907,155, respectively)
    
    
    94,688,439
    
    
    
    85,061,756Total investments at fair value (cost: $154,285,091 and $145,306,441, respectively)
    
    
    160,705,788
    
    
    
    141,341,478Cash and cash equivalents
    
    
    62,253,391
    
    
    
    1,757,139Interest receivable
    
    
    2,467,612
    
    
    
    1,141,357Deferred financing costs (net of accumulated amortization of $952,457 and $812,118, respectively)
    
    
    2,693,731
    
    
    
    2,795,257Prepaid expenses and other assets
    
    
    631,780
    
    
    
    341,558Total assets
    
    $
    228,752,302
    
    
    $
    147,376,789LIABILITIESSBA debentures
    
    $
    96,750,000
    
    
    $
    93,500,000Accrued interest payable
    
    
    1,690,960
    
    
    
    1,638,862Due to affiliates
    
    
    92,641
    
    
    
    958Accounts payable and other liabilities
    
    
    859,472
    
    
    
    232,305Total liabilities
    
    
    99,393,073
    
    
    
    95,372,125NET ASSETSPartners capital
    
    
    
    
    
    
    52,004,664Common stock, $0.001 par value (100,000,000 shares authorized; 8,726,521 and
0 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)
    
    
    8,727
    
    
    
    Additional paid-in capital
    
    
    128,937,940
    
    
    
    Accumulated net investment income
    
    
    412,562
    
    
    
    Total net assets
    
    
    129,359,229
    
    
    
    52,004,664Total liabilities and net assets
    
    $
    228,752,302
    
    
    $
    147,376,789Net asset value per share
    
    $
    14.82
    
    
    
    n/a
 See Notes to Consolidated Financial Statements (unaudited).
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##### Table of Contents



FIDUS INVESTMENT CORPORATION
Consolidated Statements of Operations (unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Investment Income:Interest and fee incomeControl investments
    
    $
    853,890
    
    
    $
    762,283
    
    
    $
    1,673,388
    
    
    $
    1,498,500Affiliate investments
    
    
    1,057,828
    
    
    
    519,168
    
    
    
    1,924,688
    
    
    
    1,027,530Non-control/non-affiliate investments
    
    
    3,271,050
    
    
    
    3,143,026
    
    
    
    6,246,134
    
    
    
    5,853,782Total interest and fee income
    
    
    5,182,768
    
    
    
    4,424,477
    
    
    
    9,844,210
    
    
    
    8,379,812Dividend incomeControl investments
    
    
    120,300
    
    
    
    108,838
    
    
    
    236,376
    
    
    
    213,853Non-control/non-affiliate investments
    
    
    
    
    
    
    64,222
    
    
    
    
    
    
    
    208,148Total dividend income
    
    
    120,300
    
    
    
    173,060
    
    
    
    236,376
    
    
    
    422,001Interest on idle funds and other income
    
    
    16,219
    
    
    
    18,207
    
    
    
    32,464
    
    
    
    35,847Total investment income
    
    
    5,319,287
    
    
    
    4,615,744
    
    
    
    10,113,050
    
    
    
    8,837,660Expenses:Base management fee
    
    
    999,190
    
    
    
    1,036,213
    
    
    
    2,035,403
    
    
    
    2,072,120Less: management fee offset
    
    
    (430,208
    )
    
    
    (10,000
    )
    
    
    (430,208
    )
    
    
    (290,000
    )Administrative service expenses
    
    
    22,173
    
    
    
    
    
    
    
    22,173
    
    
    
    Interest expense
    
    
    1,394,767
    
    
    
    1,249,259
    
    
    
    2,719,052
    
    
    
    2,337,604Professional fees
    
    
    90,677
    
    
    
    18,550
    
    
    
    170,350
    
    
    
    50,684Other general and administrative expenses
    
    
    82,759
    
    
    
    351,882
    
    
    
    106,121
    
    
    
    371,962Total expenses
    
    
    2,159,358
    
    
    
    2,645,904
    
    
    
    4,622,891
    
    
    
    4,542,370Net investment income
    
    
    3,159,929
    
    
    
    1,969,840
    
    
    
    5,490,159
    
    
    
    4,295,290Net realized and unrealized gains (losses) on
investments:Realized loss on non-control/non-affiliate
investments
    
    
    
    
    
    
    
    
    
    
    (7,935,430
    )
    
    
    (2,307
    )Net change in unrealized appreciation
(depreciation) on investments
    
    
    1,437,313
    
    
    
    (3,709,146
    )
    
    
    10,385,661
    
    
    
    (9,453,306
    )Net gain (loss) on investments
    
    
    1,437,313
    
    
    
    (3,709,146
    )
    
    
    2,450,231
    
    
    
    (9,455,613
    )Net increase (decrease) in net assets resulting
from operations
    
    $
    4,597,242
    
    
    $
    (1,739,306
    )
    
    $
    7,940,390
    
    
    $
    (5,160,323
    )Net investment income per share-basic and diluted
    
    $
    0.36
    
    
    
    n/a
    
    
    $
    0.63
    
    
    
    n/aNet increase in net assets resulting from operations
per share-basic and diluted
    
    $
    0.53
    
    
    
    n/a
    
    
    $
    0.91
    
    
    
    n/aWeighted average number of shares outstanding-basic
and diluted
    
    
    8,726,521
    
    
    
    n/a
    
    
    
    8,726,521
    
    
    
    n/a
 See Notes to Consolidated Financial Statements (unaudited).
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FIDUS INVESTMENT CORPORATION
Consolidated Statements of Changes in Net Assets (unaudited)
 AccumulatedCommon Stock
    
    
    Additional
    
    
    Net
    
    
    TotalGeneral
    
    
    Limited
    
    
    Number
    
    
    Par
    
    
    Paid In
    
    
    Investment
    
    
    NetPartner
    
    
    Partners
    
    
    Of Shares
    
    
    Value
    
    
    Capital
    
    
    Income
    
    
    AssetsBalances at December 31,
2009
    
    $
    4,504,972
    
    
    $
    43,975,979
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    48,480,951Capital distributions
    
    
    (130,805
    )
    
    
    (1,369,195
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,500,000
    )Net investment income
    
    
    529,970
    
    
    
    3,765,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,295,290Realized loss on
investments
    
    
    (201
    )
    
    
    (2,106
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,307
    )Net change in unrealized
depreciation on
investments
    
    
    (824,361
    )
    
    
    (8,628,945
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,453,306
    )Balances at June 30, 2010
    
    $
    4,079,575
    
    
    $
    37,741,053
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    41,820,628Balances at December 31,
2010
    
    $
    5,111,894
    
    
    $
    46,892,770
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,004,664Capital contributions
    
    
    610,424
    
    
    
    6,389,576
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000,000Capital distributions
    
    
    (130,805
    )
    
    
    (1,369,195
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,500,000
    )Net investment income
through June 20, 2011
    
    
    572,009
    
    
    
    4,505,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,077,597Realized loss on
investments through June
20, 2011
    
    
    (691,997
    )
    
    
    (7,243,433
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,935,430
    )Net change in unrealized
appreciation on
investments through June
20, 2011
    
    
    905,665
    
    
    
    9,479,996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,385,661Formation transactions
    
    
    (6,377,190
    )
    
    
    (58,655,302
    )
    
    
    4,056,521
    
    
    
    4,057
    
    
    
    65,028,435
    
    
    
    
    
    
    
    Public offering of common
stock, net of expenses
    
    
    
    
    
    
    
    
    
    
    4,670,000
    
    
    
    4,670
    
    
    
    63,909,505
    
    
    
    
    
    
    
    63,914,175Net investment income
June 21 to June 30, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    412,562
    
    
    
    412,562Balances at June 30, 2011
    
    $
    
    
    
    $
    
    
    
    
    8,726,521
    
    
    $
    8,727
    
    
    $
    128,937,940
    
    
    $
    412,562
    
    
    $
    129,359,229
 See Notes to Consolidated Financial Statements (unaudited).
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##### Table of Contents



FIDUS INVESTMENT CORPORATION
Consolidated Statements of Cash Flows (unaudited)
 Six Months Ended June 30,2011
    
    
    2010Cash Flows from Operating ActivitiesNet increase (decrease) in net assets resulting from operations
    
    $
    7,940,390
    
    
    $
    (5,160,323
    )Adjustments to reconcile net increase (decrease) in net assets
resulting from operations to net cash used in operating activities:Net change in unrealized depreciation (appreciation) on investments
    
    
    (10,385,661
    )
    
    
    9,453,306Realized loss on investments
    
    
    7,935,430
    
    
    
    2,307Interest and dividend income paid-in-kind
    
    
    (2,084,385
    )
    
    
    (2,216,454
    )Accretion of original issue discount
    
    
    (304,877
    )
    
    
    (348,292
    )Amortization of deferred financing costs
    
    
    180,339
    
    
    
    170,578Purchase of investments
    
    
    (19,591,858
    )
    
    
    (12,752,307
    )Principal payments received on debt securities
    
    
    5,035,791
    
    
    
    1,050,000Proceeds from loan origination fees
    
    
    31,250
    
    
    
    Changes in operating assets and liabilities:Interest receivable
    
    
    (1,326,255
    )
    
    
    (473,501
    )Prepaid expenses and other assets
    
    
    (290,222
    )
    
    
    (15,857
    )Accrued interest payable
    
    
    52,098
    
    
    
    219,495Due to affiliates
    
    
    91,683
    
    
    
    (182,251
    )Accounts payable and other liabilities
    
    
    627,167
    
    
    
    (32,004
    )Net cash used in operating activities
    
    
    (12,089,110
    )
    
    
    (10,285,303
    )Cash Flows from Financing ActivitiesProceeds from initial public offering, net of expenses
    
    
    63,914,175
    
    
    
    Proceeds from SBA debentures
    
    
    3,250,000
    
    
    
    12,500,000Payment of deferred financing costs
    
    
    (78,813
    )
    
    
    (603,125
    )Capital contributions
    
    
    7,000,000
    
    
    
    Capital distributions
    
    
    (1,500,000
    )
    
    
    (1,500,000
    )Net cash provided by financing activities
    
    
    72,585,362
    
    
    
    10,396,875Net increase in cash and cash equivalents
    
    
    60,496,252
    
    
    
    111,572Cash and cash equivalents:Beginning of year
    
    
    1,757,139
    
    
    
    2,671,884End of period
    
    $
    62,253,391
    
    
    $
    2,783,456Supplemental Disclosure of Cash Flow InformationCash payments for interest
    
    $
    2,486,616
    
    
    $
    1,947,531
 See Notes to Consolidated Financial Statements (unaudited).
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##### Table of Contents



FIDUS INVESTMENT CORPORATION
 Consolidated Schedule of Investments  June 30, 2011 (unaudited)
 Portfolio Company / Type of
    
    
    
    Rate(4)
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    
    
    
    
    Percent of NetInvestment(1)(2)(3)
    
    Industry
    
    Cash/PIK
    
    
    Maturity
    
    
    Amount
    
    
    Cost
    
    
    Fair Value
    
    
    AssetsControl Investments(5)Connect-Air International, Inc.
    
    Specialty DistributionSubordinated Note
    
    
    
    
    12.5%/3.0
    %
    
    
    9/6/2013
    
    
    $
    4,380,297
    
    
    $
    4,380,297
    
    
    $
    4,380,297Preferred Interest(6)
    
    
    
    
    0.0%/10.0
    %
    
    
    9/3/2014
    
    
    
    
    
    
    
    4,879,401
    
    
    
    4,879,401Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,259,698
    
    
    
    9,259,698
    
    
    
    7
    %Worldwide Express Operations, LLC
    
    Transportation ServicesSubordinated Note
    
    
    
    
    11.0%/3.0
    %
    
    
    2/1/2014
    
    
    
    8,553,298
    
    
    
    8,553,298
    
    
    
    8,553,298Subordinated Note
    
    
    
    
    0.0%/14.0
    %
    
    
    2/1/2014
    
    
    
    10,450,276
    
    
    
    10,157,000
    
    
    
    10,450,276Warrant (213,381 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,699,200Common Units (51,946 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    270,390
    
    
    
    1,107,400Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,980,688
    
    
    
    25,810,174
    
    
    
    20
    %Total Control Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,240,386
    
    
    
    35,069,872
    
    
    
    27
    %Affiliate Investments(5)Avrio Technology Group, LLC
    
    Electronic ControlSubordinated Note
    
    Supplier
    
    
    13.0%/3.0
    %
    
    
    10/15/2015
    
    
    
    8,246,197
    
    
    
    8,246,197
    
    
    
    8,246,197Common Units (1,000 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    1,000,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,246,197
    
    
    
    9,246,197
    
    
    
    7
    %Medsurant Holdings, LLC
    
    Healthcare ServicesSenior Secured Loan
    
    
    
    
    14.0%/0.0
    %
    
    
    4/12/2016
    
    
    
    4.250,000
    
    
    
    3,190,675
    
    
    
    3,190,675Preferred Units (40,750 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    500,000Warrant (110,050 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,100,500
    
    
    
    1,100,500Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,791,175
    
    
    
    4,791,175
    
    
    
    4
    %Paramount Building Solutions, LLC
    
    Retail CleaningSubordinated Note
    
    
    
    
    12.0%/4.0
    %
    
    
    2/15/2014
    
    
    
    6,114,584
    
    
    
    6,114,584
    
    
    
    6,114,584Common Units (107,143 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500,000
    
    
    
    3,050,800Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,614,584
    
    
    
    9,165,384
    
    
    
    7
    %Westminster Cracker Company, Inc.
    
    Specialty CrackerSubordinated Note
    
    Manufacturer
    
    
    14.0%/4.0
    %
    
    
    11/17/2014
    
    
    
    6,932,821
    
    
    
    6,932,821
    
    
    
    6,932,821Common Units (1,100,000 units)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,100,000
    
    
    
    811,900Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,032,821
    
    
    
    7,744,721
    
    
    
    6
    %Total Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,684,777
    
    
    
    30,947,477
    
    
    
    24
    %Non-Control/Non-Affiliate
Investments(5)Brook & Whittle Limited
    
    Specialty PrintingSubordinated Note
    
    
    
    
    12.0%/4.8
    %
    
    
    2/9/2014
    
    
    
    6,166,848
    
    
    
    6,166,848
    
    
    
    6,166,848Subordinated Note
    
    
    
    
    12.0%/2.0
    %
    
    
    2/9/2014
    
    
    
    2,097,792
    
    
    
    1,943,661
    
    
    
    2,097,792Warrant (1,011 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285,000
    
    
    
    630,700Common Shares (148 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,374
    
    
    
    110,374Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,505,883
    
    
    
    9,005,714
    
    
    
    7
    %Caldwell & Gregory, LLC
    
    Laundry ServicesSubordinated Note
    
    
    
    
    12.5%/1.5
    %
    
    
    4/23/2015
    
    
    
    3,439,814
    
    
    
    3,439,814
    
    
    
    3,439,814Preferred Units (11,628 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162,786
    
    
    
    1,432,098Common Units (4,464 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,464
    
    
    
    258,600Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,607,064
    
    
    
    5,130,512
    
    
    
    4
    %
 6




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##### Table of Contents



FIDUS INVESTMENT CORPORATION
 Consolidated Schedule of Investments (unaudited)  (Continued)
June 30, 2011
 Portfolio Company / Type of
    
    
    
    
    
    Rate(4)
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    
    
    
    
    Percent of NetInvestment(1)(2)(3)
    
    Industry
    
    
    Cash/PIK
    
    
    Maturity
    
    
    Amount
    
    
    Cost
    
    
    Fair Value
    
    
    AssetsCasino Signs & Graphics, LLC
    
    Niche ManufacturingSenior Secured Loan
    
    
    
    
    
    
    2.0%/0.0
    %
    
    
    12/31/2016
    
    
    $
    4,500,000
    
    
    $
    4,500,000
    
    
    $
    359,637
    
    
    
    0
    %Fairchild Industrial Products Company
    
    Industrial ProductsSubordinated Note
    
    
    
    
    
    
    12.0%/0.0
    %
    
    
    7/24/2014
    
    
    
    650,000
    
    
    
    650,000
    
    
    
    650,000Subordinated Note
    
    
    
    
    
    
    13.0%/3.0
    %
    
    
    7/24/2014
    
    
    
    8,500,000
    
    
    
    8,500,000
    
    
    
    8,500,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,150,000
    
    
    
    9,150,000
    
    
    
    7
    %Goodrich Quality Theaters, Inc.
    
    Movie TheatersSubordinated Note
    
    
    
    
    
    
    12.8%/0.0
    %
    
    
    3/31/2015
    
    
    
    12,500,000
    
    
    
    11,933,172
    
    
    
    12,500,000Warrant (71 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000
    
    
    
    2,002,200Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,683,172
    
    
    
    14,502,200
    
    
    
    11
    %Innovative Product Achievements, LLC
    
    Healthcare ProductsSubordinated Note
    
    
    
    
    
    
    13.0%/2.5
    %
    
    
    12/21/2016
    
    
    
    6,253,906
    
    
    
    6,222,797
    
    
    
    6,222,797
    
    
    
    5
    %Interactive Technology Solutions, LLC
    
    Government IT ServicesSubordinated Note
    
    
    
    
    
    
    12.0%/3.0
    %
    
    
    12/31/2015
    
    
    
    5,103,617
    
    
    
    5,103,617
    
    
    
    5,103,617Common Units (499 units)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    366,100Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,603,617
    
    
    
    5,469,717
    
    
    
    4
    %Jan-Pro Holdings, LLC
    
    Commercial CleaningSubordinated Note
    
    
    
    
    
    
    12.5%/2.5
    %
    
    
    3/18/2015
    
    
    
    7,386,391
    
    
    
    7,432,556
    
    
    
    7,432,556Preferred Equity (750,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000
    
    
    
    608,600Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,182,556
    
    
    
    8,041,156
    
    
    
    6
    %K2 Industrial Services, Inc.
    
    Industrial Cleaning &Subordinated Note
    
    Coatings
    
    
    14.0%/1.5
    %
    
    
    2/27/2014
    
    
    
    8,000,000
    
    
    
    8,000,000
    
    
    
    8,240,000
    
    
    
    6
    %Nobles Manufacturing, Inc.
    
    Aerospace & DefenseSubordinated Note
    
    Manufacturing
    
    
    13.0%/3.0
    %
    
    
    4/6/2016
    
    
    
    6,825,000
    
    
    
    6,825,000
    
    
    
    6,825,000Preferred Equity (1,300,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,300,000
    
    
    
    1,300,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,125,000
    
    
    
    8,125,000
    
    
    
    6
    %Simplex Manufacturing Co.
    
    Aerospace & DefenseSenior Secured Loan
    
    Manufacturing
    
    
    13.0%/0.0
    %
    
    
    10/31/2013
    
    
    
    4,550,000
    
    
    
    4,244,154
    
    
    
    4,262,200Warrant (24 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    710,000
    
    
    
    187,700Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,954,154
    
    
    
    4,449,900
    
    
    
    3
    %TBG Anesthesia Management, LLC
    
    Healthcare ServicesSenior Secured Loan
    
    
    
    
    
    
    13.5%/0.0
    %
    
    
    11/10/2014
    
    
    
    11,000,000
    
    
    
    10,813,354
    
    
    
    11,000,000Warrant (263 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    276,070
    
    
    
    317,600Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,089,424
    
    
    
    11,317,600
    
    
    
    9
    %Tulsa Inspection Resources, Inc.
    
    Oil & Gas ServicesSubordinated Note
    
    
    
    
    
    
    14.0%/0.0
    %
    
    
    3/12/2014
    
    
    
    4,000,000
    
    
    
    3,894,355
    
    
    
    3,832,300Subordinated Note
    
    
    
    
    
    
    17.5%/0.0
    %
    
    
    3/12/2014
    
    
    
    648,471
    
    
    
    648,471
    
    
    
    648,471Warrant (6 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193,435
    
    
    
    193,435Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,736,261
    
    
    
    4,674,206
    
    
    
    4
    %Total Non-Control/Non-Affiliate
Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,359,928
    
    
    
    94,688,439
    
    
    
    73
    %Total Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    154,285,091
    
    
    $
    160,705,788
    
    
    
    124
    %
 
 (1)
    
    All debt investments are income producing. Equity investments are non-income producing unless otherwise noted.(2)
    
    See Note 3 to the Consolidated Financial Statements for portfolio composition by geographic location.(3)
    
    Equity ownership may be held in shares or units of companies related to the portfolio companies.(4)
    
    Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any.(5)
    
    See Note 2  Significant Accounting Policies, Investment Classification for definitions of Control and Affiliate classifications.(6)
    
    Income producing.(7)
    
    Investment is held by a wholly-owned subsidiary of the Company. See Notes to Consolidated Financial Statements (unaudited).
 7




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##### Table of Contents



FIDUS INVESTMENT CORPORATION
 Consolidated Schedule of Investments
December 31, 2010
 Portfolio Company / Type of
    
    
    
    
    
    Rate(4)
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    
    
    
    
    Percent of NetInvestment(1)(2)(3)
    
    Industry
    
    
    Cash/PIK
    
    
    Maturity
    
    
    Amount
    
    
    Cost
    
    
    Fair Value
    
    
    AssetsControl Investments(5)Connect-Air International, Inc.
    
    Specialty DistributionSubordinated Note
    
    
    
    
    
    
    12.5%/3.0
    %
    
    
    9/6/2013
    
    
    $
    4,314,967
    
    
    $
    4,314,967
    
    
    $
    4,314,967Preferred Interest(6)
    
    
    
    
    
    
    0.0%/10.0
    %
    
    
    9/3/2014
    
    
    
    
    
    
    
    4,643,025
    
    
    
    4,643,026Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,957,993
    
    
    
    8,957,993
    
    
    
    17
    %Worldwide Express Operations, LLC
    
    Transportation ServicesSubordinated Note
    
    
    
    
    
    
    0.0%/14.0
    %
    
    
    2/1/2014
    
    
    
    8,348,609
    
    
    
    8,348,609
    
    
    
    8,348,609Subordinated Note
    
    
    
    
    
    
    0.0%/14.0
    %
    
    
    2/1/2014
    
    
    
    9,757,158
    
    
    
    9,408,905
    
    
    
    9,757,159Warrant (213,381 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,022,010Common Units (51,946 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    270,390
    
    
    
    333,631Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,027,905
    
    
    
    20,461,409
    
    
    
    39
    %Total Control Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,985,897
    
    
    
    29,419,402
    
    
    
    57
    %Affiliate Investments(5)Avrio Technology Group, LLC
    
    Electronic ControlSubordinated Note
    
    Supplier
    
    
    13.0%/3.0
    %
    
    
    10/15/2015
    
    
    
    8,124,876
    
    
    
    8,124,876
    
    
    
    8,124,876Common Units (1,000 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    1,000,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,124,876
    
    
    
    9,124,876
    
    
    
    18
    %Paramount Building Solutions, LLC
    
    Retail CleaningSubordinated Note
    
    
    
    
    
    
    12.0%/4.0
    %
    
    
    2/15/2014
    
    
    
    5,993,043
    
    
    
    5,993,043
    
    
    
    6,052,975Common Units (107,143 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500,000
    
    
    
    3,887,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,493,043
    
    
    
    9,939,975
    
    
    
    19
    %Westminster Cracker Company, Inc.
    
    Specialty CrackerSubordinated Note
    
    Manufacturer
    
    
    14.0%/4.0
    %
    
    
    11/17/2014
    
    
    
    6,795,470
    
    
    
    6,795,470
    
    
    
    6,795,470Common Units (1,000,000 units)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    1,000,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,795,470
    
    
    
    7,795,470
    
    
    
    15
    %Total Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,413,389
    
    
    
    26,860,320
    
    
    
    52
    %Non-Control/Non-Affiliate
Investments(5)Brook & Whittle Limited
    
    Specialty PrintingSubordinated Note
    
    
    
    
    
    
    12.0%/4.8
    %
    
    
    2/9/2014
    
    
    
    6,020,894
    
    
    
    6,020,894
    
    
    
    6,020,894Subordinated Note
    
    
    
    
    
    
    12.0%/2.0
    %
    
    
    2/9/2014
    
    
    
    2,076,936
    
    
    
    1,894,690
    
    
    
    2,076,938Warrant (1,011 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285,000
    
    
    
    384,700Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,200,583
    
    
    
    8,482,532
    
    
    
    16
    %Caldwell & Gregory, LLC
    
    Laundry ServicesSubordinated Note
    
    
    
    
    
    
    12.5%/1.5
    %
    
    
    4/23/2015
    
    
    
    8,059,822
    
    
    
    8,059,822
    
    
    
    8,059,822Preferred Units (11,628 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162,786
    
    
    
    1,376,490Common Units (4,464 units)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,464
    
    
    
    219,400Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,227,072
    
    
    
    9,655,712
    
    
    
    19
    %Casino Signs & Graphics, LLC
    
    Niche ManufacturingSenior Secured Loan
    
    
    
    
    
    
    2.0%/0.0
    %
    
    
    12/31/2016
    
    
    
    4,500,000
    
    
    
    4,500,000
    
    
    
    1,163,828
    
    
    
    2
    %Fairchild Industrial Products Company
    
    Industrial ProductsSubordinated Note
    
    
    
    
    
    
    13.0%/0.0
    %
    
    
    7/24/2014
    
    
    
    650,000
    
    
    
    650,000
    
    
    
    650,000Subordinated Note
    
    
    
    
    
    
    13.0%/4.0
    %
    
    
    7/24/2014
    
    
    
    8,500,000
    
    
    
    8,500,000
    
    
    
    8,500,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,150,000
    
    
    
    9,150,000
    
    
    
    18
    %
 8




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##### Table of Contents



FIDUS INVESTMENT CORPORATION
 Consolidated Schedule of Investments  (Continued)
December 31, 2010
 Portfolio Company / Type of
    
    
    
    
    
    Rate(4)
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    
    
    
    
    Percent of NetInvestment(1)(2)(3)
    
    Industry
    
    
    Cash/PIK
    
    
    Maturity
    
    
    Amount
    
    
    Cost
    
    
    Fair Value
    
    
    AssetsGoodrich Quality Theaters, Inc.
    
    Movie TheatersSubordinated Note
    
    
    
    
    
    
    12.8%/0.0
    %
    
    
    3/31/2015
    
    
    $
    12,500,000
    
    
    $
    11,859,958
    
    
    $
    12,500,000Warrant (71 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000
    
    
    
    2,080,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,609,958
    
    
    
    14,580,000
    
    
    
    28
    %Interactive Technology Solutions, LLC
    
    Government IT ServicesSubordinated Note
    
    
    
    
    
    
    12.0%/3.0
    %
    
    
    12/31/2015
    
    
    
    5,027,500
    
    
    
    5,027,500
    
    
    
    5,027,500Common Units (499 units)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    500,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,527,500
    
    
    
    5,527,500
    
    
    
    11
    %Jan-Pro Holdings, LLC
    
    Commercial CleaningSubordinated Note
    
    
    
    
    
    
    12.5%/2.5
    %
    
    
    3/18/2015
    
    
    
    7,340,513
    
    
    
    7,340,513
    
    
    
    7,340,513Preferred Equity (750,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000
    
    
    
    663,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,090,513
    
    
    
    8,003,513
    
    
    
    15
    %K2 Industrial Services, Inc.
    
    Industrial Cleaning &Subordinated Note
    
    Coatings
    
    
    14.0%/1.5
    %
    
    
    2/27/2014
    
    
    
    8,000,000
    
    
    
    8,000,000
    
    
    
    8,240,000
    
    
    
    16
    %Pure Earth, Inc.
    
    Environmental ServicesPreferred Equity (6,300 shares)(8)
    
    
    
    
    
    
    10.0%/4.0
    %
    
    
    3/3/2013
    
    
    
    
    
    
    
    6,104,575
    
    
    
    Preferred Equity (50,000 shares)(8)
    
    
    
    
    
    
    0.0%/15.0
    %
    
    
    N/A
    
    
    
    
    
    
    
    516,913
    
    
    
    Warrant (767,375 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,307,457
    
    
    
    Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,928,945
    
    
    
    
    
    
    
    0
    %Simplex Manufacturing Co.
    
    Aerospace ManufacturingSenior Secured Loan(9)
    
    
    
    
    
    
    N/A
    
    
    
    1/13/2011
    
    
    
    
    
    
    
    
    
    
    
    Senior Secured Loan
    
    
    
    
    
    
    14.0%/0.0
    %
    
    
    10/31/2013
    
    
    
    4,550,000
    
    
    
    4,182,280
    
    
    
    4,139,000Warrant (24 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    710,000
    
    
    
    150,000Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,892,280
    
    
    
    4,289,000
    
    
    
    8
    %TBG Anesthesia Management, LLC
    
    Healthcare ServicesSenior Secured Loan
    
    
    
    
    
    
    13.5%/0.0
    %
    
    
    11/10/2014
    
    
    
    11,000,000
    
    
    
    10,786,012
    
    
    
    11,000,000Warrant (263 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    276,070
    
    
    
    456,200Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,062,082
    
    
    
    11,456,200
    
    
    
    22
    %Tulsa Inspection Resources, Inc.
    
    Oil & Gas ServicesSubordinated Note
    
    
    
    
    
    
    14.0%/0.0
    %
    
    
    3/12/2014
    
    
    
    4,000,000
    
    
    
    3,876,315
    
    
    
    3,865,000Subordinated Note
    
    
    
    
    
    
    17.5%/0.0
    %
    
    
    3/12/2014
    
    
    
    648,471
    
    
    
    648,471
    
    
    
    648,471Warrant (6 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193,435
    
    
    
    Sub Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,718,221
    
    
    
    4,513,471
    
    
    
    9
    %Total Non-Control/Non-Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,907,155
    
    
    
    85,061,756
    
    
    
    164
    %Total Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    145,306,441
    
    
    $
    141,341,478
    
    
    
    272
    %
 
 (1)
    
    All debt investments are income producing. Equity investments are non-income producing unless otherwise noted.(2)
    
    See Note 3 to the Consolidated Financial Statements for portfolio composition by geographic location.(3)
    
    Equity ownership may be held in shares or units of companies related to the portfolio companies.(4)
    
    Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any.(5)
    
    See Note 2  Significant Accounting Policies, Investment Classification for definitions of Control and Affiliate classifications.(6)
    
    Income producing.(7)
    
    Investment is held by a wholly-owned subsidiary of the Company.(8)
    
    Investment was on non-accrual status at December 31, 2010.(9)
    
    The entire commitment was unfunded at December 31, 2010. As such, no interest is being earned on this investment. See Notes to Consolidated Financial Statements (unaudited).
 9




---



##### Table of Contents



FIDUS INVESTMENT CORPORATION
 
 Notes to Consolidated Financial Statements (unaudited)
 Note 1. Organization and Nature of Business
    
    
    FIC acquired 100% of the limited partnership interests in
the Fund through a merger of a wholly-owned subsidiary of
FIC with and into the Fund, in which the limited
partnership interests were exchanged for 3,702,778 shares
of common stock in FIC. The Fund became FICs wholly-owned
subsidiary, retained its SBIC license, and continues to
hold its existing investments and make new investments; and
    
    FIC acquired 100% of the equity interests in FMCGP, the
former general partner of the Fund, through the merger of
FMCGP with and into Fidus Investment GP, LLC, a
wholly-owned subsidiary of the Company in exchange for
353,743 shares of common stock in FIC.
   Note 2. Significant Accounting Policies
 Basis of presentation:
 Use of estimates:
 10




---



##### Table of Contents



Consolidation:
 Fair value of financial instruments: Fair Value Measurements and
Disclosures
 Investment classification:
 Segments: Segment Reporting
 Cash and cash equivalents:
 Deferred financing costs:
 Revenue recognition:
 Investments and related investment income .
 Interest, fee and dividend income
    11




---



##### Table of Contents



Non-accrual
 Income taxes:
  Accounting for Uncertainty in Income Taxes
 Allocations and distributions of the Fund:
  Dividends:
  12




---



##### Table of Contents



Earnings and net asset value per share:
 Recent accounting pronouncements: Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting
Standards (IFRSs)
 Note 3. Portfolio Company Investments
    13




---



##### Table of Contents



June 30, 2011
    
    
    December 31, 2010Cost:Senior secured loans
    
    $
    22,748,183
    
    
    
    14.7
    %
    
    $
    19,468,293
    
    
    
    13.4
    %Subordinated notes
    
    
    115,144,488
    
    
    
    74.7
    
    
    
    104,864,032
    
    
    
    72.2Equity
    
    
    13,077,415
    
    
    
    8.5
    
    
    
    17,452,154
    
    
    
    12.0Warrants
    
    
    3,315,005
    
    
    
    2.1
    
    
    
    3,521,962
    
    
    
    2.4Total
    
    $
    154,285,091
    
    
    
    100.0
    %
    
    $
    145,306,441
    
    
    
    100.0
    %Fair value:Senior secured loans
    
    $
    18,812,512
    
    
    
    11.7
    %
    
    $
    16,302,829
    
    
    
    11.6
    %Subordinated notes
    
    
    116,336,668
    
    
    
    72.4
    
    
    
    106,323,193
    
    
    
    75.2Equity
    
    
    15,425,273
    
    
    
    9.6
    
    
    
    13,622,546
    
    
    
    9.6Warrants
    
    
    10,131,335
    
    
    
    6.3
    
    
    
    5,092,910
    
    
    
    3.6Total
    
    $
    160,705,788
    
    
    
    100.0
    %
    
    $
    141,341,478
    
    
    
    100.0
    %
  June 30, 2011
    
    
    December 31, 2010Cost:Midwest
    
    $
    49,143,793
    
    
    
    31.9
    %
    
    $
    40,796,916
    
    
    
    28.1
    %Southwest
    
    
    31,331,533
    
    
    
    20.3
    
    
    
    30,239,168
    
    
    
    20.8Northeast
    
    
    22,142,321
    
    
    
    14.3
    
    
    
    29,452,499
    
    
    
    20.3Southeast
    
    
    28,162,417
    
    
    
    18.3
    
    
    
    26,467,585
    
    
    
    18.2West
    
    
    23,505,027
    
    
    
    15.2
    
    
    
    18,350,273
    
    
    
    12.6Total
    
    $
    154,285,091
    
    
    
    100.0
    %
    
    $
    145,306,441
    
    
    
    100.0
    %Fair value:Midwest
    
    $
    51,430,997
    
    
    
    32.0
    %
    
    $
    43,401,076
    
    
    
    30.7
    %Southwest
    
    
    39,649,764
    
    
    
    24.7
    
    
    
    34,914,855
    
    
    
    24.7Northeast
    
    
    22,220,152
    
    
    
    13.8
    
    
    
    21,805,502
    
    
    
    15.4Southeast
    
    
    28,544,465
    
    
    
    17.8
    
    
    
    26,809,225
    
    
    
    19.0West
    
    
    18,860,410
    
    
    
    11.7
    
    
    
    14,410,820
    
    
    
    10.2Total
    
    $
    160,705,788
    
    
    
    100.0
    %
    
    $
    141,341,478
    
    
    
    100.0
    %
   Note 4. Fair Value Measurements
   14




---



##### Table of Contents



Level 1
 Level 2
 Level 3
   
    
    the quarterly valuation process begins with each portfolio company or investment being initially
evaluated and rated by the investment professionals of the Companys investment advisor responsible for the
portfolio investment;
    
    preliminary valuation conclusions are then documented and discussed with the investment committee;
    
    the board of directors also engages one or more independent valuation firms to conduct
independent appraisals of our investments for which market quotations are not readily available.
The Company will consult with independent valuation firm(s) relative to each portfolio company at least
once in every calendar year, and for new portfolio companies, at least once in the twelve-month
period subsequent to the initial investment. As of June 30, 2011, the Board consulted with the
independent valuation firm in arriving at the Companys determination of fair value on eight of
its portfolio company investments representing 53.3% of the total portfolio investments at fair
value. As of December 31, 2010, the previous general partner consulted with the independent
valuation firm in arriving at the Companys determination of fair value on 16 of its portfolio
company investments representing 100.0% of the total portfolio investments at fair value;
    
    the audit committee of the board of directors reviews the preliminary valuations of the
investment advisor and of the independent valuation firms and responds and supplements the
valuation recommendations to reflect any comments; and
    
    the board of directors 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 firms and the audit committee.
     15




---



##### Table of Contents



SeniorSecured
    
    
    SubordinatedLoans
    
    
    Notes
    
    
    Equity
    
    
    Warrants
    
    
    TotalBalance, December 31, 2009
    
    $
    14,801,858
    
    
    $
    89,203,733
    
    
    $
    17,690,221
    
    
    $
    1,204,444
    
    
    $
    122,900,256Realized loss on investments
    
    
    
    
    
    
    
    
    
    
    (2,307
    )
    
    
    
    
    
    
    (2,307
    )Net unrealized appreciation (depreciation)
    
    
    (1,792,239
    )
    
    
    454,000
    
    
    
    (6,841,818
    )
    
    
    (1,273,249
    )
    
    
    (9,453,306
    )Purchases of investment securities
    
    
    250,000
    
    
    
    11,750,000
    
    
    
    2,307
    
    
    
    750,000
    
    
    
    12,752,307Repayments of investments received
    
    
    (200,000
    )
    
    
    (850,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,050,000
    )Interest and dividend income paid-in-kind
    
    
    
    
    
    
    1,922,244
    
    
    
    294,210
    
    
    
    
    
    
    
    2,216,454Accretion of original issue discount
    
    
    83,534
    
    
    
    136,963
    
    
    
    127,795
    
    
    
    
    
    
    
    348,292Balance, June 30, 2010
    
    $
    13,143,153
    
    
    $
    102,616,940
    
    
    $
    11,270,408
    
    
    $
    681,195
    
    
    $
    127,711,696Balance, December 31, 2010
    
    $
    16,302,829
    
    
    $
    106,323,193
    
    
    $
    13,622,546
    
    
    $
    5,092,910
    
    
    $
    141,341,478Realized loss on investments
    
    
    
    
    
    
    
    
    
    
    (6,627,973
    )
    
    
    (1,307,457
    )
    
    
    (7,935,430
    )Net unrealized appreciation (depreciation)
    
    
    (770,207
    )
    
    
    (266,981
    )
    
    
    6,177,467
    
    
    
    5,245,382
    
    
    
    10,385,661Purchases of investment securities
    
    
    3,399,500
    
    
    
    13,075,000
    
    
    
    2,016,858
    
    
    
    1,100,500
    
    
    
    19,591,858Repayments of investments received
    
    
    (250,000
    )
    
    
    (4,785,791
    )
    
    
    
    
    
    
    
    
    
    
    (5,035,791
    )Interest and dividend income paid-in-kind
    
    
    
    
    
    
    1,848,010
    
    
    
    236,375
    
    
    
    
    
    
    
    2,084,385Loan origination fees received
    
    
    
    
    
    
    (31,250
    )
    
    
    
    
    
    
    
    
    
    
    (31,250
    )Accretion of original issue discount
    
    
    130,390
    
    
    
    174,487
    
    
    
    
    
    
    
    
    
    
    
    304,877Balance, June 30, 2011
    
    $
    18,812,512
    
    
    $
    116,336,668
    
    
    $
    15,425,273
    
    
    $
    10,131,335
    
    
    $
    160,705,788
  Note 5. Related Party Transactions
 Prior management agreement:
 16




---



##### Table of Contents



New management and incentive fee agreement:
     
    
    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%;
    
    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.
  17




---



##### Table of Contents



Administration Agreement:
 Note 6. Debt
 Credit facility:
 SBA debentures:
 18




---



##### Table of Contents



Pooling
    
    Maturity
    
    
    Fixed
    
    
    June 30,
    
    
    December 31,Date(1)
    
    Date
    
    
    Interest Rate
    
    
    2011
    
    
    20103/26/2008
    
    
    3/1/2018
    
    
    
    6.188
    %
    
    $
    24,750,000
    
    
    $
    24,750,0009/24/2008
    
    
    9/1/2018
    
    
    
    6.442
    
    
    
    11,950,000
    
    
    
    11,950,0003/25/2009
    
    
    3/1/2019
    
    
    
    5.337
    
    
    
    19,750,000
    
    
    
    19,750,0009/23/2009
    
    
    9/1/2019
    
    
    
    4.950
    
    
    
    10,000,000
    
    
    
    10,000,0003/24/2010
    
    
    3/1/2020
    
    
    
    4.825
    
    
    
    13,000,000
    
    
    
    13,000,0009/22/2010
    
    
    9/1/2020
    
    
    
    3.932
    
    
    
    12,500,000
    
    
    
    12,500,0003/29/2011
    
    
    3/1/2021
    
    
    
    4.801
    
    
    
    1,550,000
    
    
    
    1,550,000(2)
    
    
    (2
    )
    
    
    (2
    )
    
    
    3,250,000
    
    
    
    $
    96,750,000
    
    
    $
    93,500,000
 
 (1)
    
    The SBA has two scheduled pooling dates for debentures (in March
and in September). Certain debentures drawn during the reporting
periods may not be pooled until the subsequent pooling date.(2)
    
    In April 2011, the Company issued $3,250,000 in SBA debentures
which will pool in September 2011, at which time the current
short-term interim interest rate will reset to a higher long-term
fixed interest rate.   June 30,
    
    
    December 31,2011
    
    
    2010SBA debenture commitment fees
    
    $
    1,300,000
    
    
    $
    1,300,000SBA debenture leverage fees
    
    
    2,346,188
    
    
    
    2,267,375Line of credit fees
    
    
    
    
    
    
    40,000Subtotal
    
    
    3,646,188
    
    
    
    3,607,375Accumulated amortization
    
    
    (952,457
    )
    
    
    (812,118
    )Net deferred financing costs
    
    $
    2,693,731
    
    
    $
    2,795,257
 Note 7. Commitments and Contingencies
 Commitments:
 Indemnifications:
 Legal proceedings:
 19




---



##### Table of Contents



Note 8. Financial Highlights
  Six Months Ended June 30,2011
    
    

2010(1)Per share data:Net asset
value at beginning of period(2)
    
    $
    13.28
    
    
    
    N/ANet investment income
    
    
    0.63
    
    
    
    N/ANet realized loss on investments
    
    
    (0.91
    )
    
    
    N/ANet unrealized appreciation on investments
    
    
    1.19
    
    
    
    N/ATotal increase from investment operations
    
    
    0.91
    
    
    
    N/ACapital contributions from partners
    
    
    0.80Capital distributions to partners
    
    
    (0.17
    )
    
    
    N/ANet asset value at end of period
    
    $
    14.82
    
    
    
    N/AMarket value at end of period
    
    $
    14.81
    
    
    
    N/AShares outstanding at end of period:
    
    
    8,726,521
    
    
    
    N/ARatio to average net assets (annualized)(2):Total expenses
    
    
    7.5
    %
    
    
    20.1
    %Net investment income
    
    
    8.9
    %
    
    
    19.0
    %Total return(3)
    
    
    (1.3
    )%
    
    
    (11.4
    )%
 
 (1)
    
    Per share data for the six months ended June 30, 2010 is not
presented as there were no shares of the Company outstanding
during the period.(2)
    
    Net asset value as of January 1, 2011 and average net assets for
the six months ended June 30, 2011 are presented as if the
Offering and Formation Transactions had occurred on January 1,
2011. See Note 2 for a further description of the basis of
presentation of the Companys financial statements.(3)
    
    The total return for the six months ended June 30, 2011 equals
the change in the ending market value of the Companys common
stock from the Offering price of $15.00 per share plus dividends
paid per share during the period, divided by the Offering price
and is not annualized. Total return for the six months ended June
30, 2010 equals the net increase (decrease) in net
asset resulting from operations during the period divided by
average net assets and is not annualized. Note 9. Subsequent Events
   20




---



##### 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 Mezzanine Capital, L.P.s consolidated financial
statements and related notes appearing in our prospectus dated June 20, 2011, filed with the SEC on
June 22, 2011. 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, and our refer to Fidus Mezzanine
Capital, L.P. and its consolidated subsidiaries for periods prior to the Formation Transactions on
June 20, 2011, and refer to Fidus Investment Corporation and its consolidated subsidiaries for
periods after the Formation Transactions.
 The information in this section contains forward-looking statements that involve risks and
uncertainties. Please see Risk Factors and Special Note Regarding Forward-Looking Statements
appearing in our prospectus dated June 20, 2011, filed with the SEC on June 22, 2011 for a
discussion of the uncertainties, risks and assumptions associated with these statements.
 Business Overview
    Portfolio Composition, Investment Activity and Yield
     21




---



##### Table of Contents



As of
    
    As ofJune 30, 2011
    
    December 31, 2010CostSenior secured loans
    
    
    14.7
    %
    
    
    13.4
    %Subordinated notes
    
    
    74.7
    
    
    
    72.2Equity
    
    
    8.5
    
    
    
    12.0Warrants
    
    
    2.1
    
    
    
    2.4Total
    
    
    100.0
    %
    
    
    100.0
    %Fair ValueSenior secured loans
    
    
    11.7
    %
    
    
    11.6
    %Subordinated notes
    
    
    72.4
    
    
    
    75.2Equity
    
    
    9.6
    
    
    
    9.6Warrants
    
    
    6.3
    
    
    
    3.6Total
    
    
    100.0
    %
    
    
    100.0
    %
  As of
    
    As ofJune 30, 2011
    
    December 31, 2010CostMidwest
    
    
    31.9
    %
    
    
    28.1
    %Southwest
    
    
    20.3
    
    
    
    20.8Northeast
    
    
    14.3
    
    
    
    20.3Southeast
    
    
    18.3
    
    
    
    18.2West
    
    
    15.2
    
    
    
    12.6Total
    
    
    100.0
    %
    
    
    100.0
    %Fair valueMidwest
    
    
    32.0
    %
    
    
    30.7
    %Southwest
    
    
    24.7
    
    
    
    24.7Northeast
    
    
    13.8
    
    
    
    15.4Southeast
    
    
    17.8
    
    
    
    19.0West
    
    
    11.7
    
    
    
    10.2Total
    
    
    100.0
    %
    
    
    100.0
    %
 22




---



##### Table of Contents



As of
    
    As ofJune 30, 2011
    
    December 31, 2010CostTransportation services
    
    
    12.4
    %
    
    
    12.4
    %Movie theaters
    
    
    8.2
    
    
    
    8.7Healthcare services
    
    
    10.3
    
    
    
    7.6Niche manufacturing
    
    
    2.9
    
    
    
    3.1Retail cleaning
    
    
    4.9
    
    
    
    5.1Laundry services
    
    
    3.0
    
    
    
    6.3Industrial products
    
    
    5.9
    
    
    
    6.3Electronic components supplier
    
    
    6.0
    
    
    
    6.3Specialty distribution
    
    
    6.0
    
    
    
    6.2Printing services
    
    
    5.5
    
    
    
    5.6Industrial cleaning & coatings
    
    
    5.2
    
    
    
    5.5Commercial cleaning
    
    
    5.3
    
    
    
    5.6Specialty cracker manufacturer
    
    
    5.2
    
    
    
    5.4Government information technology services
    
    
    3.6
    
    
    
    3.8Oil & gas services
    
    
    3.1
    
    
    
    3.2Aerospace & defense manufacturing
    
    
    8.5
    
    
    
    3.4Healthcare products
    
    
    4.0
    
    
    
    Environmental services
    
    
    
    
    
    
    5.5Total
    
    
    100.0
    %
    
    
    100.0
    %
 As of
    
    As ofJune 30, 2011
    
    December 31, 2010Fair ValueTransportation services
    
    
    16.0
    %
    
    
    14.5
    %Movie theaters
    
    
    9.0
    
    
    
    10.3Healthcare services
    
    
    10.0
    
    
    
    8.1Niche manufacturing
    
    
    0.2
    
    
    
    0.8Retail cleaning
    
    
    5.7
    
    
    
    7.0Laundry services
    
    
    3.2
    
    
    
    6.8Industrial products
    
    
    5.7
    
    
    
    6.5Electronic components supplier
    
    
    5.8
    
    
    
    6.5Specialty distribution
    
    
    5.8
    
    
    
    6.4Printing services
    
    
    5.6
    
    
    
    6.0Industrial cleaning & coatings
    
    
    5.1
    
    
    
    5.8Commercial cleaning
    
    
    5.0
    
    
    
    5.7Specialty cracker manufacturer
    
    
    4.8
    
    
    
    5.5Government information technology services
    
    
    3.4
    
    
    
    3.9Oil & gas services
    
    
    2.9
    
    
    
    3.2Aerospace & defense manufacturing
    
    
    7.9
    
    
    
    3.0Healthcare products
    
    
    3.9
    
    
    
    Environmental services
    
    
    
    
    
    
    Total
    
    
    100.0
    %
    
    
    100.0
    %
 23




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##### Table of Contents



Portfolio Asset Quality
   June 30, 2011
    
    
    December 31, 2010Investments at
    
    
    Percent of
    
    
    Investments at
    
    
    Percent ofInvestment Rating
    
    Fair Value
    
    
    Total Portfolio
    
    
    Fair Value
    
    
    Total Portfolio(Dollars in thousands)1
    
    $
    26,555
    
    
    
    16.5
    %
    
    $
    27,330
    
    
    
    19.3
    %2
    
    
    118,001
    
    
    
    73.5
    
    
    
    97,739
    
    
    
    69.23
    
    
    15,790
    
    
    
    9.8
    
    
    
    15,108
    
    
    
    10.74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    360
    
    
    
    0.2
    
    
    
    1,164
    
    
    
    0.8Totals
    
    $
    160,706
    
    
    
    100.0
    %
    
    $
    141,341
    
    
    
    100.0
    %
  Results of Operations
 Comparison of three months ended June 30, 2011 and June 30, 2010
 Investment Income
  Expenses
  Net Investment Income
  24




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##### Table of Contents



Net Increase in Net Assets Resulting From Operations
   Comparison of six months ended June 30, 2011 and June 30, 2010
 Investment Income
  Expenses
  Net Investment Income
  Net Increase in Net Assets Resulting From Operations
    Liquidity and Capital Resources
 Cash Flows
  25




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##### Table of Contents



Capital Resources
   Distributions
     Critical Accounting Policies and Use of Estimates
  26




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##### Table of Contents



Valuation of Portfolio Investments
    
    
    our quarterly valuation process begins with each portfolio company or investment being initially
evaluated and rated by the investment professionals of our investment advisor responsible for the
portfolio investment;
    
    preliminary valuation conclusions are then documented and discussed with the investment committee;
    
    our board of directors also engages one or more independent valuation firms to conduct
independent appraisals of our investments for which market quotations are not readily available.
We will consult with independent valuation firm(s) relative to each portfolio company at least
once in every calendar year, and for new portfolio companies, at least once in the twelve-month
period subsequent to the initial investment;
    
    the audit committee of our board of directors reviews the preliminary valuations of our
investment advisor and of the independent valuation firms and responds and supplements the
valuation recommendations to reflect any comments; and
    
    the board of directors discusses the valuations and determines the fair value of each investment
in our portfolio in good faith, based on the input of our investment advisor, the independent
valuation firms and the audit committee.
      27




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##### Table of Contents



Revenue Recognition
  Investments and related investment income.
 Interest, fee and dividend income.
     Non-accrual.
 Recently Issued Accounting Standards
 Fair Value Measurement (Topic 820):
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and
IFRSs
 28




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##### Table of Contents



Off-Balance Sheet Arrangements
  Related Party Transactions
  
    
    We entered into the Investment Advisory Agreement with Fidus
Investment Advisors, LLC to manage the day-to-day operating and
investing activity of the Company. Edward Ross, our chairman and
chief executive officer, Cary Schaefer, our chief financial officer
and chief compliance officer, and Thomas Lauer, one of our directors,
are all managers of Fidus Investment Advisors, LLC.
    
    We entered into the Administration Agreement with Fidus Investment
Advisors, LLC to provide us with the office facilities and
administrative services necessary to conduct day-to-day operations.
    
    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.
    
    Certain of our directors, management, and other parties affiliated
with us purchased an aggregate of 407,764 shares of common stock at
the initial public offering price per share of $15.00. We received the
proceeds from the sale of these shares, net of $56,551 in underwriting
commissions.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4. Controls and Procedures.
  29




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. [Removed and Reserved] .
 
 Item 5. Other Information.
  30




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##### Table of Contents



Item 6. Exhibits.
 Number
    
    Exhibit31.1
    
    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.
 31




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##### Table of Contents



SIGNATURES
  FIDUS INVESTMENT CORPORATIONDate: August 4, 2011
    

/s/ EDWARD H. ROSSEdward H. RossChairman and Chief Executive Officer
(Principal Executive Officer) Date: August 4, 2011
    

/s/
CARY L. SCHAEFERCary L. SchaeferChief Financial Officer
(Principal Financial and Accounting Officer) 32




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Exhibit31.1
    
    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.
 33