☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

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

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):

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

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

As of ~~August 2,~~November 1, 2022, the Registrant had outstanding 24,437,400 shares of common stock, $0.001 par value.


Portfolio Company (a)(b)		Variable Index	Rate (e)	Investment		Principal				Fair		Percent of				Variable Index	Rate (e)	Investment		Principal				Fair		Percent of
Investment Type (c)	Industry	Spread / Floor (d)	Cash/PIK	Date (f)	Maturity	Amount		Cost		Value (g)		Net Assets			Industry	Spread / Floor (d)	Cash/PIK	Date (f)	Maturity	Amount		Cost		Value (g)		Net Assets

Control Investments (t)
Hilco Plastics Holdings, LLC (dba Hilco Technologies) (n)	Component Manufacturing														Component Manufacturing
Common Equity (Units N/A) (j)				4/6/2021				$	—	$	—		0	%				4/6/2021				$	—	$	—		0	%

Mesa Line Services, LLC (n)	Utilities: Services														Utilities: Services
Common Equity (10 shares) (j)				4/22/2021					—		—		0	%
Common Equity (10 shares) (j)																		4/22/2021					—		—		0	%

US GreenFiber, LLC (n)	Building Products Manufacturing														Building Products Manufacturing
Second Lien Debt (j)(y)			10.00%/3.00%	7/3/2014	8/30/2024	$	5,226		5,223		—						10.00%/3.00%	7/3/2014	8/30/2024	$	5,226		5,223		—
Common Equity (2,522 units) (h)(j)				7/3/2014					586		—
Common Equity (425,508 units) (j)				8/30/2019					1		—
Common Equity (1,022,813 units) (h)(j)				7/1/2020					1,023		—
Common Equity (2,522 units) (h)(j)																		7/3/2014					586		—
Common Equity (425,508 units) (j)																		8/30/2019					1		—
Common Equity (1,022,813 units) (h)(j)																		7/1/2020					1,023		—
									6,833		—		0	%									6,833		—		0	%

Total Control Investments								$	6,833	$	—		0	%								$	6,833	$	—		0	%

Affiliate Investments (l)
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	Building Products Manufacturing														Building Products Manufacturing
Subordinated Debt (j)			10.00%/0.00%	12/31/2021	12/31/2027	$	9,602	$	9,602	$	9,602						10.00%/0.00%	12/31/2021	12/31/2027	$	9,602	$	9,602	$	9,602
Common Equity (5,690units) (h) (j)				12/31/2021					5,690.00		5,690.00
Common Equity (7,113 units) (h) (j)				12/31/2021					7,113.00		7,113.00
Common Equity (2,012units) (h) (j)				12/31/2021					-		-
Common Equity (5,690units) (h) (j)																		12/31/2021					5,690		5,341
Common Equity (7,113 units) (h) (j)																		12/31/2021					7,113		6,677
Common Equity (2,012units) (h) (j)																		12/31/2021					-		-
									22,405		22,405		4	%									22,405		21,620		4	%

FAR Research Inc. (n)	Specialty Chemicals														Specialty Chemicals
Common Equity (1,396 units)				3/31/2014					—		28		0	%
Common Equity (1,396 units)																		3/31/2014					—		28		0	%

Medsurant Holdings, LLC	Healthcare Services														Healthcare Services
Preferred Equity (84,997 units) (h)(j)				4/12/2011					716		743
Warrant (252,588 units) (h)(j)(m)				4/12/2011					2,258		2,493
Preferred Equity (84,997 units) (h)(j)																		4/12/2011					716		595
Warrant (252,588 units) (h)(j)(m)																		4/12/2011					2,258		1,947
									2,974		3,236		1	%									2,974		2,542		1	%
Mirage Trailers LLC (n)	Utility Equipment Manufacturing														Utility Equipment Manufacturing
Common Equity (2,500,000 shares)				11/25/2015					—		—		0	%
Common Equity (2,500,000 shares)																		11/25/2015					—		—		0	%

Pfanstiehl, Inc.	Healthcare Products														Healthcare Products
Common Equity (4,250 units) (j)				3/29/2013					425		61,274		13	%
Subordinated Debt (j)																	10.00%/0.00%	8/2/2022	8/2/2027		10,000	$	9,952	$	9,951
Common Equity (2,550 units) (j)																		3/29/2013					255		41,845
																							10,207		51,796		11	%

Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)	Aerospace & Defense Manufacturing														Aerospace & Defense Manufacturing
First Lien Debt (k)(ag)		(L + 5.50%) / (1.00%)	7.75%/0.00%	2/12/2021	2/11/2026		15,000		14,920		15,000					(L + 5.50%) / (1.00%)	9.17%/0.00%	2/12/2021	2/11/2026		15,000		14,926		15,000
Common Equity (41,290 units) (j)				2/12/2021					2,609		—
Common Equity (12,035 units) (j)				8/25/2021					1,204		945
Common Equity (41,290 units) (j)																		2/12/2021					2,609		—
Common Equity (12,035 units) (j)																		8/25/2021					1,204		456
Common Equity (3,810 units) (j)																		9/16/2022					386		365
Common Equity (1,111 units) (j)																		9/16/2022					112		107
									18,733		15,945		3	%									19,237		15,928		3	%
Steward Holding LLC (dba Steward Advanced Materials)	Aerospace & Defense Manufacturing														Aerospace & Defense Manufacturing
Common Equity (1,000,000 units)				11/12/2015					1,000		3,486		1	%
Common Equity (1,000,000 units)																		11/12/2015					1,000		3,661		1	%

Total Affiliate Investments								$	45,537	$	106,374		22	%								$	55,823	$	95,575		20	%

Non-control/Non-affiliate Investments
2KDirect, Inc. (dba iPromote)	Information Technology Services														Information Technology Services
First Lien Debt (k)(at)		(L + 6.75%) / (0.50%)	8.93%/0.00%	6/25/2021	6/25/2026	$	12,254	$	12,185	$	12,254					(L + 6.75%) / (0.50%)	10.35%/0.00%	6/25/2021	6/25/2026	$	11,655	$	11,590	$	11,655
First Lien Debt (j)(aa)		(L + 6.75%) / (0.50%)	5.68%/0.00%	7/30/2021	6/25/2026		3,770		3,770		3,771					(L + 6.75%) / (0.50%)	7.10%/0.00%	7/30/2021	6/25/2026		3,586		3,586		3,586
Common Equity (1,000,000 units)				6/25/2021					1,000		596
Common Equity (1,000,000 units)																		6/25/2021					1,000		544
									16,955		16,621		3	%									16,176		15,785		3	%
Acendre Midco, Inc.	Information Technology Services														Information Technology Services
First Lien Debt (j)		(L + 7.75%) / (0.50%)	8.72%/0.00%	10/6/2021	10/6/2026		5,500		5,486		5,500					(L + 7.75%) / (0.50%)	10.03%/0.00%	10/6/2021	10/6/2026		5,500		5,487		5,404
First Lien Debt (j)		(L + 7.75%) / (0.50%)	8.72%/0.00%	10/6/2021	10/6/2026		12,500		12,443		12,500					(L + 7.75%) / (0.50%)	10.03%/0.00%	10/6/2021	10/6/2026		12,500		12,446		12,243
Revolving Loan ($1,000 unfunded commitment) (j)(i)		(L + 7.50%) / (0.50%)		10/6/2021					—		—
Common Equity (500,000 shares) (j)				10/6/2021					371		557
Warrant (150,000 shares) (j)(m)				10/6/2021					129		167
Revolving Loan ($1,000 unfunded commitment) (j)(i)																(L + 7.50%) / (0.50%)		10/6/2021			—		—		—
Common Equity (500,000 shares) (j)																		10/6/2021					371		407
Warrant (150,000 shares) (j)(m)																		10/6/2021					129		122
Preferred Equity (77,016 shares) (j)																		9/26/2022					88		143
									18,429		18,724		4	%									18,521		18,319		4	%
Aeronix Inc.	Aerospace & Defense Manufacturing														Aerospace & Defense Manufacturing
First Lien Debt (ai)		(L + 5.88%) / (0.50%)	8.13%/0.00%	6/11/2021	6/11/2026		14,250		14,175		14,250					(L + 5.88%) / (0.50%)	9.55%/0.00%	6/11/2021	6/11/2026		14,250		14,179		14,250
Common Equity (549 units)				6/11/2021					593		902
Common Equity (549 units)																		6/11/2021					593		504
									14,768		15,152		3	%									14,772		14,754		3	%
Allredi, LLC (fka Marco Group International OpCo, LLC)	Industrial Cleaning & Coatings														Industrial Cleaning & Coatings
Second Lien Debt			10.50%/0.75%	3/2/2020	9/2/2026		10,345		10,281		8,129						10.50%/1.75%	3/2/2020	9/2/2026		10,384		10,324		7,972
Common Equity (570,636 units) (h)(j)				7/21/2017					637		—
Common Equity (39,443 units) (h)(j)				11/24/2021					22		42
Common Equity (570,636 units) (h)(j)																		7/21/2017					637		—
Common Equity (39,443 units) (h)(j)																		11/24/2021					22		37
									10,940		8,171		2	%									10,983		8,009		2	%
American AllWaste LLC (dba WasteWater Transport Services)	Environmental Industries														Environmental Industries
First Lien Debt (j)(p)		(L + 6.15%) / (1.00%)	7.15%/0.00%	6/28/2021	6/28/2026		20,500		20,305		20,500					(L + 6.15%) / (1.00%)	8.40%/0.00%	6/28/2021	6/28/2026		20,500		20,318		20,500
First Lien Debt (j)(o)		(L + 3.75%) / (1.00%)	4.75%/0.00%	6/28/2021	6/28/2026		330		330		330					(L + 3.75%) / (1.00%)	6.00%/0.00%	6/28/2021	6/28/2026		330		330		330
Preferred Equity (500 units) (h)(j)				5/31/2018					500		386
Preferred Equity (207 units) (h)(j)				8/6/2019					250		166
Preferred Equity (141 units) (h)(j)				11/2/2020					171		113
Preferred Equity (74 units) (h)(j)				12/29/2021					97		64
Preferred Equity (500 units) (h)(j)																		5/31/2018					500		393
Preferred Equity (207 units) (h)(j)																		8/6/2019					250		168
Preferred Equity (141 units) (h)(j)																		11/2/2020					171		115
Preferred Equity (74 units) (h)(j)																		12/29/2021					97		65
																							21,666		21,571		5	%
AmeriWater, LLC															Component Manufacturing
First Lien Debt (af)																(S + 6.25%) / (1.00%)	8.42%/0.00%	7/8/2022	7/8/2027		7,750		7,705		7,704
Subordinated Debt (j)																	7.00%/7.00%	7/8/2022	1/8/2028		2,033		2,023		2,023
Common Equity (1,000 units) (h)(j)																		7/8/2022					1,000		1,000
									21,653		21,559		4	%									10,728		10,727		2	%
AOM Intermediate Holdco, LLC (dba AllOver Media)	Information Technology Services														Information Technology Services
First Lien Debt (aq)		(S + 6.50%) / (0.75%)	7.40%/0.00%	2/1/2022	2/1/2027		10,000		9,931		9,931					(S + 6.50%) / (0.75%)	8.83%/0.00%	2/1/2022	2/1/2027		10,000		9,935		10,000
Common Equity (750 units) (h)(j)				2/1/2022					750		750
Common Equity (750 units) (h)(j)																		2/1/2022					750		799
									10,681		10,681		2	%									10,685		10,799		2	%
Applied Data Corporation	Information Technology Services														Information Technology Services
First Lien Debt (k)(v)		(L + 6.25%) / (1.50%)	7.75%/0.00%	11/6/2020	11/6/2025		11,500		11,448		11,500					(S + 6.25%) / (1.50%)	9.96%/0.00%	11/6/2020	11/6/2025		19,005		18,908		19,005
Common Equity (22 units)				11/6/2020					15		77
Preferred Equity (1,104,539 units)				11/6/2020					1,105		1,246
Common Equity (24 units)																		11/6/2020					66		458
Preferred Equity (1,184,711 units)																		11/6/2020					1,185		1,340
									12,568		12,823		3	%									20,159		20,803		5	%
Auto CRM LLC (dba Dealer Holdings)	Information Technology Services														Information Technology Services
First Lien Debt (au)		(P + 5.50%) / (3.25%)	10.25%/0.85%	10/1/2021	10/1/2026		7,548		7,485		7,549					(P + 5.50%) / (3.25%)	11.75%/0.85%	10/1/2021	10/1/2026		7,565		7,505		7,565
Subordinated Debt			0.00%/12.75%	10/1/2021	12/31/2026		550		546		550						0.00%/12.75%	10/1/2021	12/31/2026		569		565		569
Common Equity (500 units) (j)				10/1/2021					500		496
Common Equity (500 units) (j)																		10/1/2021					500		424
									8,531		8,595		2	%									8,570		8,558		2	%
AVC Investors, LLC (dba Auveco) (n)	Specialty Distribution														Specialty Distribution
Common Equity (5,000 units) (j)				1/3/2018					—		9		0	%
Common Equity (5,000 units) (j)																		1/3/2018					—		6		0	%

B&B Roadway and Security Solutions, LLC (n)	Component Manufacturing
Common Equity (50,000 units) (h)(j)				2/27/2018					—		—		0	%

Bandon Fitness (Texas), Inc.	Retail
Common Equity (545,810 units) (j)				8/9/2019					931		3,902		1	%

BCM One Group Holdings, Inc.	Information Technology Services
Subordinated Debt (j)			10.25%/0.00%	11/17/2021	11/17/2028		11,333		11,275		11,333		2	%

(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 the London Interbank Offered Rate (L or LIBOR), Prime (P) or the Secured Overnight Financing Rate (S or SOFR), which are reset monthly, bimonthly, quarterly, or semi-annually. Certain variable rate investments also include a LIBOR, Prime or SOFR interest rate floor. For each investment, the Company has provided the spread over the reference rate and the LIBOR, Prime or SOFR floor, if any, as of September 30, 2022.

(e) Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of September 30, 2022. 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) Except as otherwise noted, the Company’s investment portfolio is comprised 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.

(i) The disclosed commitment represents the unfunded amount as of September 30, 2022. 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) The Company sold a participating interest of approximately $0.3 million in aggregate principal amount of the portfolio company’s first lien senior secured term loan. As the transaction did not qualify as a “true sale” in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company recorded a corresponding secured borrowing in the Consolidated Statements of Assets and Liabilities.

(p) 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 3.86% 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.

(q) Warrant entitles the Company to purchase 4.79% 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 4.32% 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.

(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 2.37% 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) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional cash interest amount of 2.99% and PIK interest amount of 0.98% 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.

(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 3.11% 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 7.21% 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.

(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 2.76% 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 4.60% 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) The Company sold a participating interest of approximately $4.0 million in aggregate principal amount of the portfolio company’s first lien senior secured term loan. As the transaction did not qualify as a “true sale” in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company recorded a corresponding secured borrowing in the Consolidated Statements of Assets and Liabilities.

(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 2.07% 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 September 30, 2022. 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) The disclosed commitment represents the unfunded amount as of September 30, 2022. The Company is earning 2.00% interest on the unfunded balance of the commitment. The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.

(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 3.53% 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.

(af) 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 3.28% 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.

(ag) 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 4.64% 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.

(ah) 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 1.62% 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.

(ai) 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 4.71% 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.

(aj) 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 4.11% 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.

(ak) 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 4.83% 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.

(al) 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 2.85% 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.

(am) 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 6.13% 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.

(an) The Company sold a participating interest of approximately $13.5 million in aggregate principal amount of the portfolio company’s first lien senior secured term loan. As the transaction did not qualify as a “true sale” in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company recorded a corresponding secured borrowing in the Consolidated Statements of Assets and Liabilities.

(ao) The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company can not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2022, total non-qualifying assets at fair value represented 0.03% of the Company's total assets calculated in accordance with the 1940 Act.

(ap) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional cash interest amount of 0.80% 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.

(aq) 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 4.73% 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.

(ar) 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 2.74% 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.

(as) 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 4.80% 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.

(at) 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 2.27% 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.

(au) 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.

(av) 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 5.62% 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.

(aw) This investment is classified as a Level 1 investment. For further detail on the fair value measurements, see Note 4 to the consolidated financial statements.

(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) or Prime (P), which are reset monthly, bimonthly, quarterly, or semi-annually. Certain variable rate investments also include a LIBOR or Prime interest rate floor. For each investment, the Company has provided the spread over the reference rate and the LIBOR or Prime floor, if any, as of December 31, 2021.

(e) Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of December 31, 2021. 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.

(i) The disclosed commitment represents the unfunded amount as of December 31, 2021. 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.

(n) Investment in portfolio company that has sold its operations and is in the process of winding down.

(p) 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 4.07% 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.

(q) Warrant entitles the Company to purchase 4.79% 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 4.84% 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.

(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 2.64% 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.

(u) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional cash interest amount of 2.99% and PIK interest amount of 1.00% 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.

(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 7.56% 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 7.05% 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.

(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 2.81% 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) Investment was on PIK only non-accrual status as of December 31, 2021, meaning the Company has ceased recognizing PIK interest income on the investment.

(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 5.70% 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.

(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 3.43% 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 December 31, 2021. 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) 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 3.29% 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.

(af) 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 3.50% 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.

(ag) 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 5.60% 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.

(ah) 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 1.74% 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.

(ai) 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 4.86% 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.

(al) 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 3.46% 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.

(am) 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 7.54% 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.

(ao) The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company can not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of December 31, 2021, total non-qualifying assets at fair value represented 0.04% of the Company's total assets calculated in accordance with the 1940 Act.

(ap) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional cash interest amount of 2.25% and PIK interest amount of 1.87% 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.

(aq) This investment is classified as a Level 1 investment. For further detail on the fair value measurements, see Note 4 to the 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 primarily 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 or variable 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~~September 30, 2022, the Company had active investments in 7375 portfolio companies and residual investments in ~~twelve~~thirteen portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was ~~$810,520~~$856,914 and the weighted average effective yield on the Company’s debt investments was ~~11.9%~~12.9% as of such date. As of ~~June~~September 30, 2022, the Company held equity investments in ~~80.0%~~77.3% of its portfolio companies and the average fully diluted equity ownership in those portfolio companies was ~~3.7%~~3.7%.

As of December 31, 2021, the Company had active investments in 70 portfolio companies and residual investments in eight portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was ~~$719,124~~$719,124 and the weighted average effective yield on the Company’s debt investments was ~~12.3%~~12.3% as of such date. As of December 31, 2021, the Company held equity investments in ~~82.1%~~82.1% of its portfolio companies and the average fully diluted equity ownership in those portfolio companies was ~~4.7%~~4.7%.

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~~September 30, 2022 and December 31, 2021, including accretion of OID and debt investment origination fees, but excluding investments on non-accrual status and investments recorded as a secured borrowing, if any.

Purchases of debt and equity investments for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 totaled ~~$160,098~~$267,950 and ~~$167,349,~~$245,544, respectively. Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 totaled ~~$68,008~~$128,255 and ~~$191,560,~~$319,036, respectively.

Investments by type with corresponding percentage of total portfolio investments consisted of the following:


	Fair Value								Cost								Fair Value								Cost
	June 30,				December 31,				June 30,				December 31,				September 30,				December 31,				September 30,				December 31,
	2022				2021				2022				2021				2022				2021				2022				2021
First Lien Debt(1)	$	432,549	53.4	%	$	354,922	49.4	%	$	430,554	58.2	%	$	353,306	56.8	%	$	488,334	57.0	%	$	354,922	49.4	%	$	487,999	59.0	%	$	353,306	56.8	%
Second Lien Debt		168,547	20.8			158,815	22.1			182,167	24.6			168,573	27.1			177,222	20.7			158,815	22.1			200,028	24.2			168,573	27.1
Subordinated Debt		68,508	8.4			36,064	5.0			68,385	9.2			35,995	5.8			81,759	9.5			36,064	5.0			80,477	9.7			35,995	5.8
Equity		137,735	17.0			166,119	23.1			55,285	7.5			60,589	9.8			106,951	12.5			166,119	23.1			55,563	6.7			60,589	9.8
Warrants		3,181	0.4			3,204	0.4			3,323	0.5			3,323	0.5			2,648	0.3			3,204	0.4			3,323	0.4			3,323	0.5
Total	$	810,520	100.0	%	$	719,124	100.0	%	$	739,714	100.0	%	$	621,786	100.0	%	$	856,914	100.0	%	$	719,124	100.0	%	$	827,390	100.0	%	$	621,786	100.0	%

(1)

Includes unitranche investments, which account for ~~41.7%~~43.1% and ~~45.5%~~44.4% of our portfolio on a fair value and cost basis as of ~~June~~September 30, 2022, respectively. Includes unitranche investments, which account for ~~40.2%~~40.2% and ~~46.3%~~46.3% of our portfolio on a fair value and cost basis as of December 31, 2021, respectively.

All investments made by the Company as of ~~June~~September 30, 2022 and December 31, 2021 were made in portfolio companies headquartered in the ~~U.S.~~United States. 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								Cost								Fair Value								Cost
	June 30,				December 31,				June 30,				December 31,				September 30,				December 31,				September 30,				December 31,
	2022				2021				2022				2021				2022				2021				2022				2021
Midwest	$	189,858	23.4	%	$	157,222	21.9	%	$	124,377	16.8	%	$	89,865	14.5	%	$	185,994	21.7	%	$	157,222	21.9	%	$	140,728	17.0	%	$	89,865	14.5	%
Southeast		237,269	29.3			219,988	30.6			238,478	32.2			197,380	31.7			250,549	29.2			219,988	30.6			252,173	30.5			197,380	31.7
Northeast		133,516	16.5			126,569	17.6			133,162	18.0			127,809	20.6			123,890	14.5			126,569	17.6			128,203	15.5			127,809	20.6
West		119,820	14.8			105,918	14.7			121,869	16.5			100,098	16.1			154,927	18.1			105,918	14.7			160,958	19.4			100,098	16.1
Southwest		130,057	16.0			109,427	15.2			121,828	16.5			106,634	17.1			141,554	16.5			109,427	15.2			145,328	17.6			106,634	17.1
Total	$	810,520	100.0	%	$	719,124	100.0	%	$	739,714	100.0	%	$	621,786	100.0	%	$	856,914	100.0	%	$	719,124	100.0	%	$	827,390	100.0	%	$	621,786	100.0	%

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 Type							By Geographic Region							By Type							By Geographic Region
		June 30,			December 31,				June 30,			December 31,				September 30,			December 31,				September 30,			December 31,
		2022			2021				2022			2021				2022			2021				2022			2021
First Lien Debt			89.3	%		72.8	%	Midwest		39.2	%		32.2	%			102.9	%		72.8	%	Midwest		39.2	%		32.2	%
Second Lien Debt			34.8			32.6		Southeast		49.0			45.1				37.4			32.6		Southeast		52.8			45.1
Subordinated Debt			14.2			7.4		Northeast		27.6			26.0				17.2			7.4		Northeast		26.1			26.0
Equity			28.5			34.0		West		24.8			21.7				22.5			34.0		West		32.7			21.7
Warrants			0.7			0.6		Southwest		26.9			22.4				0.6			0.6		Southwest		29.8			22.4
Total			167.5	%		147.4	%	Total		167.5	%		147.4	%			180.6	%		147.4	%	Total		180.6	%		147.4	%

As of ~~June~~September 30, 2022 and December 31, 2021, 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~~September 30, 2022 and December 31, 2021, the Company's investment in Pfanstiehl, Inc. totaled ~~$61,274~~$51,796 and ~~$57,639~~$57,639 or ~~6.7%~~5.7% and ~~6.4%~~6.4% of total assets, respectively.

As of ~~June~~September 30, 2022, the Company had debt investments in three portfolio companies on non-accrual status. As of December 31, 2021, the Company had a debt investment in one portfolio company on non-accrual status.


	June 30, 2022				December 31, 2021						September 30, 2022				December 31, 2021
	Fair				Fair						Fair				Fair
Portfolio Company	Value		Cost		Value			Cost			Value		Cost		Value			Cost
EBL, LLC (EbLens)	$	5,588	$	9,337	$	—	(1)	$	—	(1)	$	2,427	$	9,333	$	—	(1)	$	—	(1)
US GreenFiber, LLC		—		5,223		—	(2)		5,223	(2)		—		5,223		—	(2)		5,223	(2)
K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.)		2,188		2,368		—	(1)		—	(1)		2,169		2,368		—	(1)		—	(1)
Total	$	7,776	$	16,928	$	—		$	5,223		$	4,596	$	16,924	$	—		$	5,223


(1)	Portfolio company debt investment was not on non-accrual status as of December 31, 2021.
(2)	Portfolio company was on PIK-only non-accrual status at December 31, 2021, meaning the Company has ceased recognizing PIK interest income on the investment.

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, 2021 and any additions and reductions made to such investments during the ~~six~~nine months ended ~~June~~September 30, 2022, the ending fair value as of ~~June~~September 30, 2022, and the total investment income earned on such investments during the period.


												Six Months Ended June 30, 2022																								Nine Months Ended September 30, 2022
Portfolio Company (1)	June 30, 2022 Principal Amount - Debt Investments		December 31, 2021 Fair Value		Gross Additions (2)		Gross Reductions (3)			June 30, 2022 Fair Value		Net Realized Gains (Losses) (4)		Net Change in Unrealized Appreciation (Depreciation)			Interest Income		Payment-in-kind Interest Income		Dividend Income		Fee Income		September 30, 2022 Principal Amount - Debt Investments		December 31, 2021 Fair Value		Gross Additions (2)		Gross Reductions (3)			September 30, 2022 Fair Value		Net Realized Gains (Losses) (4)			Net Change in Unrealized Appreciation (Depreciation)			Interest Income		Payment-in-kind Interest Income		Dividend Income		Fee Income
Control Investments
Hilco Plastics Holdings, LLC (dba Hilco Technologies)	$	—	$	—	$	-	$	-		$	—	$	—	$	—		$	-	$	—	$	-	$	—	$	—	$	—	$	—	$	—		$	—	$	—		$	—		$	—	$	—	$	—	$	—
Mesa Line Services, LLC		—		2,151		295		(2,446	)		-		296		(2,151	)		-		-		—		—		—		2,151		134		(2,285	)		—		135			(2,151	)		—		—		—		—
US GreenFiber, LLC		5,226		-		-		—			—		—		-			-		-		—		—		5,226		—		—		—			—		—			—			—		—		—		—
Total Control Investments	$	5,226	$	2,151	$	295	$	(2,446	)	$	-	$	296	$	(2,151	)	$	-	$	-	$	-	$	-	$	5,226	$	2,151	$	134	$	(2,285	)	$	—	$	135		$	(2,151	)	$	—	$	—	$	—	$	—
Affiliate Investments
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	$	9,602	$	22,405	$	12,803	$	(12,803	)	$	22,405	$	—	$	—		$	483	$	—	$	—	$	—	$	9,602	$	22,405	$	12,802	$	(13,587	)	$	21,620	$	—			(785	)	$	728	$	—	$	—	$	—
FAR Research Inc.		—		28		—		—			28		—		—			—		—		—		—		—		28		—		—			28		—			—			—		—		—		—
Medsurant Holdings, LLC		—		3,662		-		(426	)		3,236		—		(426	)		-		—		—		-		—		3,662		—		(1,120	)		2,542		—			(1,120	)		—		—		—		—
Mirage Trailers LLC		-		10,675		355		(11,030	)		-		324		(1,693	)		248		29		-		132		—		10,675		355		(11,030	)		—		324			(1,694	)		248		29		—		132
Pfanstiehl, Inc.		—		57,639		3,635		—			61,274		—		3,635			—		—		—		—		10,000		57,639		34,332		(40,175	)		51,796		24,330			(15,625	)		166		—		—		150
Pinnergy, Ltd. (5)		—		21,178		15,300		(36,478	)		-		15,300		(18,178	)		—		—		656		—		—		21,178		15,300		(36,478	)		—		15,300			(18,178	)		—		—		656		—
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)		15,000		18,359		2,010		(4,424	)		15,945		—		(4,414	)		810		—		—		165		15,000		18,359		2,627		(5,058	)		15,928		(114	)		(4,934	)		1,291		—		—		170
Steward Holding LLC (dba Steward Advanced Materials)		—		3,338		148		-			3,486		—		148			-		1		69		—		—		3,338		323		—			3,661		—			323			—		1		69		—
Total Affiliate Investments	$	24,602	$	137,284	$	34,251	$	(65,161	)	$	106,374	$	15,624	$	(20,928	)	$	1,541	$	30	$	725	$	297	$	34,602	$	137,284	$	65,739	$	(107,448	)	$	95,575	$	39,840		$	(42,013	)	$	2,433	$	30	$	725	$	452


(1)	The investment type, industry, ownership detail for equity investments, and ifinterest rate (if the investment is income ~~producing~~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 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~~nine months ended ~~June~~September 30, 2022.

2122

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

The table below represents the fair value of control and affiliate investments as of December 31, 2020 and any additions and reductions made to such investments during the year ended December 31, 2021, including the total investment income earned on such investments during the period.


												Year Ended Ended December 31, 2021
Portfolio Company (1)	December 31, 2021 Principal Amount - Debt Investments		December 31, 2020 Fair Value		Gross Additions (2)		Gross Reductions (3)			December 31, 2021 Fair Value		Net Realized Gains (Losses) (4)			Net Change in Unrealized Appreciation (Depreciation)			Interest Income		Payment-in-kind Interest Income		Dividend Income		Fee Income
Control Investments
Hilco Plastics Holdings, LLC (dba Hilco Technologies)(6)	$	—	$	—	$	1,577	$	(1,577	)	$	—	$	(881	)	$	—		$	308	$	—	$	568	$	—
Mesa Line Services, LLC (6)		—		—		32,708		(30,557	)		2,151		20,445			2,150			951		903		—		1,472
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)(5)		—		7,391		1,986		(9,377	)		—		957			1,028			90		—		—		400
US GreenFiber, LLC		5,226		20,862		5,214		(26,076	)		—		—			(3,144	)		2,386		1,214		—		—
Total Control Investments	$	5,226	$	28,253	$	41,485	$	(67,587	)	$	2,151	$	20,521		$	34		$	3,735	$	2,117	$	568	$	1,872
Affiliate Investments
Applegate Greenfiber Intermediate Inc. (fka US GreenFiber, LLC)	$	9,602	$	-	$	22,405	$	—		$	22,405	$	—		$	—		$	—	$	—	$	—	$	—
FAR Research Inc.		—		28		—		—			28		—			—			—		—		—		—
Fiber Materials, Inc.		—		41		94		(135	)		-		94			(42	)		—		—		—		—
Medsurant Holdings, LLC		—		10,960		733		(8,031	)		3,662		—			687			331		—		—		91
Mirage Trailers LLC		6,705		6,494		4,225		(44	)		10,675		—			3,871			761		338		110		—
Pfanstiehl, Inc.		—		33,505		24,134		—			57,639		—			24,135			—		—		1,062		—
Pinnergy, Ltd.		—		20,589		589		—			21,178		—			589			—		—		—		—
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)(5)		13,000		—		18,452		(93	)		18,359		—			1,626			1,142		—		—		294
Steward Holding LLC (dba Steward Advanced Materials)		—		9,777		1,373		(7,812	)		3,338		—			1,341			461		30		—		—
Total Affiliate Investments	$	29,307	$	81,394	$	72,005	$	(16,115	)	$	137,284	$	94		$	32,207		$	2,695	$	368	$	1,172	$	385


(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 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 Affiliate investments from Control investments during the year ended December 31, 2021.
(6)	Portfolio company was transferred to Control investments from Non-control/Non-affiliate investments during the year ended December 31, 2021.

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:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets as of the measurement date.

Level 2 — 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.

Level 3 — Inputs include those that are both unobservable and significant to the overall fair value measurement.

2223

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

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.~~available, with the exception of money market funds and one portfolio company, which are valued using Level 1 inputs as of September 30, 2022. Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the Board, using Level 3 ~~inputs.~~inputs, except for money market funds and one portfolio company that was valued using Level 1 inputs as of September 30, 2022. 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.

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.

2324

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

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~~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 following tables present fair value measurements of investments by major class according to the fair value hierarchy:


		September 30, 2022
		Level 1			Level 2			Level 3			Total
First Lien Debt	$		—	$		—	$		488,334	$		488,334
Second Lien Debt			—			—			177,222			177,222
Subordinated Debt			—			—			81,759			81,759
Equity			317			—			106,634			106,951
Warrants			—			—			2,648			2,648
Money Market Funds			30,184			—			-			30,184
Total	$		30,501	$		—	$		856,597	$		887,098


		December 31, 2021
		Level 1			Level 2			Level 3			Total
First Lien Debt	$		—	$		—	$		354,922	$		354,922
Second Lien Debt			—			—			158,815			158,815
Subordinated Debt			—			—			36,064			36,064
Equity			357			—			165,762			166,119
Warrants			—			—			3,204			3,204
Total	$		357	$		—	$		718,767	$		719,124

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~~nine months ended ~~June~~September 30, 2022 and 2021.

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~~nine months ended ~~June~~September 30, 2022 and 2021:


	First Lien			Second Lien			Subordinated												First Lien			Second Lien			Subordinated
	Debt			Debt			Debt			Equity			Warrants			Total			Debt			Debt			Debt			Equity			Warrants			Total
Balance, December 31, 2020	$	187,353		$	332,154		$	107,911		$	112,836		$	2,615		$	742,869		$	187,353		$	332,154		$	107,911		$	112,836		$	2,615		$	742,869
Net realized gains (losses) on investments		-			-			—			5,366			-			5,366			—			—			—			13,673			—			13,673
Net change in unrealized appreciation (depreciation) on investments		(2,387	)		(3,479	)		(125	)		21,876			799			16,684			(1,182	)		(1,213	)		(308	)		34,066			656			32,019
Purchase of investments		132,900			11,500			16,001			6,948			—			167,349			172,506			43,850			18,500			10,688			—			245,544
Proceeds from sales and repayments of investments		(32,568	)		(135,048	)		(24,039	)		95			—			(191,560	)		(61,008	)		(177,719	)		(57,039	)		(23,270	)		—			(319,036	)
Interest and dividend income paid-in-kind		40			1,974			58			105			—			2,177			109			3,142			81			105			—			3,437
Proceeds from loan origination fees		(1,038	)		(54	)		(79	)		—			—			(1,171	)		(1,765	)		(104	)		(80	)		—			—			(1,949	)
Accretion of loan origination fees		711			301			127			—			—			1,139			985			461			387			—			—			1,833
Accretion of original issue discount		-			605			—			—			—			605			—			734			—			—			—			734
Balance, June 30, 2021	$	285,011		$	207,953		$	99,854		$	147,226		$	3,414		$	743,458
Balance, September 30, 2021																			$	296,998		$	201,305		$	69,452		$	148,098		$	3,271		$	719,124
Balance, December 31, 2021	$	354,922		$	158,815		$	36,064		$	165,762		$	3,204		$	718,767		$	354,922		$	158,815		$	36,064		$	165,762		$	3,204		$	718,767
Net realized gains (losses) on investments		—			—			—			25,176			—			25,176			—			—			—			65,220			—			65,220
Net change in unrealized appreciation (depreciation) on investments		379			(3,862	)		54			(23,048	)		(23	)		(26,500	)		(1,281	)		(13,048	)		1,213			(54,102	)		(556	)		(67,774	)
Purchase of investments		91,247			31,895			32,471			4,485			—			160,098			166,279			49,498			44,469			7,704			—			267,950
Proceeds from sales and repayments of investments		(14,312	)		(18,731	)		-			(34,965	)		—			(68,008	)		(31,574	)		(18,731	)		—			(77,950	)		—			(128,255	)
Interest and dividend income paid-in-kind		366			409			139			-			—			914			481			573			273			—			—			1,327
Proceeds from loan origination fees		(669	)		(115	)		(239	)		—			—			(1,023	)		(1,454	)		(115	)		(300	)		—			—			(1,869	)
Accretion of loan origination fees		606			86			19			—			—			711			943			111			40			—			—			1,094
Accretion of original issue discount		10			50			—			—			—			60			18			119			—			—			—			137
Balance, June 30, 2022	$	432,549		$	168,547		$	68,508		$	137,410		$	3,181		$	810,195
Balance, September 30, 2022																			$	488,334		$	177,222		$	81,759		$	106,634		$	2,648		$	856,597

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

Net change in unrealized appreciation/(depreciation) of ~~$(5,656)~~$(36,403) and ~~(2,974)~~$(42,882) for the three and ~~six~~nine months ended ~~June~~September 30, 2022, was attributable to Level 3 investments held at ~~June~~September 30, 2022, respectively. Net change in unrealized appreciation/(depreciation) of ~~$14,214~~$17,067 and ~~16,349~~$33,223 for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, was attributable to Level 3 investments held at ~~June~~September 30, 2021.

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~~September 30, 2022 and December 31, 2021. 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

Range

June 30, 2022

Techniques

Inputs

(weighted average)(1)
Debt investments:

First Lien Debt

$
405,024

Discounted cash flow

Weighted average cost of capital

4.9% - 21.5% (12.6%)

11,000

Enterprise value

Asset Coverage

1.3x - 1.3x (1.3x)

16,525

Enterprise value

Revenue multiples

2.5x - 4.6x (3.4x)

Second Lien Debt

160,770

Discounted cash flow

Weighted average cost of capital

8.0% - 17.3% (12.1%)

5,589

Enterprise value

EBITDA multiples

3.8x - 3.8x (3.8x)

2,188

Enterprise value

Asset Coverage

0.9x - 0.9x (0.9x)

��

Subordinated Debt

68,508

Discounted cash flow

Weighted average cost of capital

7.3% - 13.5% (10.8%)

Equity investments:

Equity

127,959

Enterprise value

EBITDA multiples

3.3x - 16.0x (7.5x)

9,451

Enterprise value

Revenue multiples

3.5x - 8.8x (6.2x)

Warrants

3,014

Enterprise value

EBITDA multiples

4.5x - 6.0x (5.7x)

167

Enterprise value

Revenue multiples

4.5x - 4.5x (4.5x)


	Fair Value at		Valuation	Unobservable	Range
	September 30, 2022		Techniques	Inputs	(weighted average)(1)
Debt investments:
First Lien Debt	$	449,319	Discounted cash flow	Weighted average cost of capital	6.3% - 19.9% (13.7%)
		11,000	Enterprise value	Asset Coverage	1.1x - 1.1x (1.1x)
		15,000	Enterprise value	EBITDA multiples	8.8x - 8.8x (8.8x)
		13,015	Enterprise value	Revenue multiples	1.3x - 4.1x (2.5x)

Second Lien Debt		172,625	Discounted cash flow (2)	Weighted average cost of capital	10.2% - 22.0% (13.7%)
		2,428	Enterprise value	EBITDA multiples	5.0x - 5.0x (5.0x)
		2,169	Enterprise value	Asset Coverage	0.9x - 0.9x (0.9x)

Subordinated Debt		78,009	Discounted cash flow	Weighted average cost of capital	10.1% - 14.0% (11.1%)
		3,750	Enterprise value	EBITDA multiples	8.5x - 8.5x (8.5x)

Equity investments:
Equity		96,905	Enterprise value	EBITDA multiples	3.5x - 16.0x (7.2x)
		9,729	Enterprise value	Revenue multiples	3.0x - 7.8x (6.4x)

Warrants		2,525	Enterprise value	EBITDA multiples	5.0x - 6.0x (5.8x)
		123	Enterprise value	Revenue multiples	4.5x - 4.5x (4.5x)
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
(2) Includes $18.0 million of debt investments which were valued using a trading discount to par.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)


	Fair Value at		Valuation	Unobservable	Range
	December 31, 2021		Techniques	Inputs	(weighted average)(1)
Debt investments:
First Lien Debt	$	335,022	Discounted cash flow	Weighted average cost of capital	4.0% - 21.6% (12.2%)
		11,000	Enterprise value	Asset Coverage	1.2x - 1.2x (1.2x)
		8,900	Enterprise value	Revenue multiples	4.5x - 4.5x (4.5x)

Second Lien Debt		144,541	Discounted cash flow	Weighted average cost of capital	7.8% - 25.0% (14.4%)
		14,274	Enterprise value	Asset Coverage	1.0x - 1.4x (1.4x)

Subordinated Debt		36,064	Discounted cash flow	Weighted average cost of capital	10.0% - 13.5% (11.1%)

Equity investments:
Equity		162,681	Enterprise value	EBITDA multiples	3.5x - 23.8x (8.2x)
		3,081	Enterprise value	Revenue multiples	3.5x - 9.3x (6.2x)

Warrants		3,075	Enterprise value	EBITDA multiples	4.5x - 6.0x (5.9x)
		129	Enterprise value	Revenue multiples	4.5x - 4.5x (4.5x)

(1)

Unobservable inputs were weighted by the relative fair value of the instruments.

Fair Value at

Valuation

Unobservable

Range

December 31, 2021

Techniques

Inputs

(weighted average)(1)
Debt investments:

First Lien Debt

$
335,022

Discounted cash flow

Weighted average cost of capital

4.0% - 21.6% (12.2%)

11,000

Enterprise value

Asset Coverage

1.2x - 1.2x (1.2x)

8,900

Enterprise value

Revenue multiples

4.5x - 4.5x (4.5x)

Second Lien Debt

144,541

Discounted cash flow

Weighted average cost of capital

7.8% - 25.0% (14.4%)

14,274

Enterprise value

Asset Coverage

1.0x - 1.4x (1.4x)

Subordinated Debt

36,064

Discounted cash flow

Weighted average cost of capital

10.0% - 13.5% (11.1%)

Equity investments:

Equity

162,681

Enterprise value

EBITDA multiples

3.5x - 23.8x (8.2x)

3,081

Enterprise value

Revenue multiples

3.5x - 9.3x (6.2x)

Warrants

3,075

Enterprise value

EBITDA multiples

4.5x - 6.0x (5.9x)

129

Enterprise value

Revenue multiples

4.5x - 4.5x (4.5x)

~~(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.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

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), the SBA debentures, and the 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~~September 30, 2022 and December 31, 2021.


	June 30, 2022(5)				December 31, 2021(5)				September 30, 2022(5)				December 31, 2021(5)
	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value
SBA debentures (2)	$	128,500	$	128,500	$	107,000	$	107,000	$	133,000	$	133,000	$	107,000	$	107,000
Credit Facility borrowings (3)		—		—		—		—		—		—		—		—
January 2026 Notes (4)		125,000		125,230		125,000		125,258		125,000		125,218		125,000		125,258
November 2026 Notes (4)		125,000		125,155		125,000		125,171		125,000		125,147		125,000		125,171
Total	$	378,500	$	378,885	$	357,000	$	357,429	$	383,000	$	383,365	$	357,000	$	357,429

(1)

Carrying value represents the outstanding principal balance of the debt obligation.

(2)

The fair value of the 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 fair value of the January 2026 Notes (as defined in Note 6) and the November 2026 Notes (as defined in Note 6) are estimated by discounting the remaining payments using current market rates for similar instruments and considering such factors as the legal maturity date, which are Level 3 inputs under ASC Topic 820.

(5)

Totals exclude ~~$17,263~~$16,995 and ~~$17,637~~$17,637 of Secured Borrowings as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

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~~September 30, 2022 and December 31, 2021.


	Fair Value				Fair Value
	June 30,		December 31,		September 30,		December 31,
Valuation Inputs	2022		2021		2022		2021
Level 1	$	—	$	—	$	—	$	—
Level 2		—		—		—		—
Level 3		378,885		357,429		383,365		357,429
Total	$	378,885	$	357,429	$	383,365	$	357,429

Note 5. Related Party Transactions

Investment Advisory Agreement: The Company has entered into an Investment Advisory Agreement with the Investment Advisor. On June 9, 2022, the Board approved the renewal of the Investment Advisory Agreement for the period beginning June 20, 2022 through June 20, 2023. 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%~~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 Board of Directors accepted a voluntary, non-contractual, and unconditional waiver from the Investment Advisor to exclude any investments recorded as secured borrowings as defined under GAAP from the base management fee payable as of ~~June~~September 30, 2022. The base management fee is payable quarterly in arrears. The base management fee under the Investment Advisory Agreement was ~~$3,618~~$3,763 and ~~$6,961~~$10,724 for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, and ~~$3,215~~$3,270 and ~~$6,391~~$9,661 for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. The base management fee waiver was ~~$76~~$76 and ~~$152~~$228 for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The base management fee waiver was ~~$29~~$69 and ~~$29~~$98 for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, the base management fee payable (net of the base management fee waiver) was ~~$3,542~~$3,687 and ~~$3,135,~~$3,135, respectively.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

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, original issue 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%~~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:

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

•

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%~~2.0%;

•

~~100.0%~~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%~~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%~~2.5%) is referred to as the “catch-up” provision. The catch-up is meant to provide the Investment Advisor with ~~20.0%~~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%~~2.5% in any calendar quarter; and

•

~~20.0%~~20.0% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds ~~2.5%~~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 ~~$1,183~~$3,047 and ~~$2,236~~$5,283 for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, and ~~$2,550~~$2,425 and ~~$5,219~~$7,644 for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, the income incentive fee payable was ~~$1,183~~$3,047 and ~~$2,622,~~$2,622, respectively.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

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%~~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%~~20.0% of such amount, less the aggregate amount of any capital gains incentive fees paid in all prior years. As of ~~June~~September 30, 2022 and December 31, 2021, the capital gains incentive fee payable in cash was ~~$3,338~~$8,427 and ~~$6,136,~~$6,136, respectively (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~~September 30, 2022 was ~~$6,484.~~$6,484.

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%~~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~~nine months ended ~~June~~September 30, 2022 was ~~$(605)~~$(258) and ~~$(335)~~$(593), respectively, and ~~$3,883~~$4,664 and ~~$3,974~~$8,638 for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, the accrued capital gains incentive fee payable was ~~$22,756~~$22,498 and ~~$29,227,~~$29,227, 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.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

Administration Agreement: The Company also entered into an administration agreement (the “Administration Agreement”) with the Investment Advisor. On June 9, 2022, the Board approved the renewal of the Administration Agreement for the period beginning June 20, 2022 through June 20, 2023. 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 on the Company's behalf to those portfolio companies that have accepted the Company's offer 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~~.expenses. Under the Administration Agreement, administrative service expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2022 were ~~$510~~$480 and ~~$932,~~$1,412, respectively, and ~~$430~~$438 and ~~$843~~$1,281 for the three and ~~six~~nine months ended ~~June~~September 30, 2021. As of ~~June~~September 30, 2022 and December 31, 2021, the accrued administrative service expense payable was ~~$760~~$550 and ~~$634,~~$634, respectively.

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%~~50% of select equity investments from the Company. The Company will not receive any fees from FEF I for any services provided in its capacity as the General Partner of FEF I.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

Note 6. Debt

Revolving Credit ~~Facility~~:Facility: On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the "Credit Agreement" and the senior secured revolving credit facility, 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 Agreement.~~ On June 26, 2020, the Company ~~amended the Amended Credit Agreement, but the material terms were unchanged. Among other revisions, the~~entered into an amendment to the Amended Credit Agreement ~~modifies~~that, among other changes, modified certain ~~covenants therein, including to amend~~financial covenants. On August 17, 2022, the ~~minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter period ending~~Company entered into a second amendment 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 ("Second Amendment"). The Second Amendment, among other things: (i) ~~revolving commitments by lenders were increased~~changed the underlying benchmark used to compute interest under the Amended Credit Agreement to SOFR from ~~$90,000~~LIBOR; (ii) reduced the applicable margin from 3.00% to ~~$100,000,~~2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with ~~an accordion feature that allows~~commensurate reductions in the applicable margins 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)~~base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date ~~of the Credit Facility was extended~~to August 17, 2027 from ~~June 16, 2019 to~~ April 24, 2023; and ~~(iii) borrowings under~~(v) amended certain financial covenants, including (a) amending the ~~Credit Facility bear interest, at our election, at~~asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a ~~rate per annum equal~~regulatory basis); and (b) requiring the Company to ~~(a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x)~~maintain a senior asset coverage ratio of no ~~equity interests are included in the borrowing base, (y) the contribution~~less than 2.00 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. 1.00.

The Company pays a commitment fee that varies depending on the size of the unused portion of the Credit Facility: ~~3.00%~~2.500% to 2.675% per annum on the unused portion of the Credit Facility at or below ~~35%~~35% of the commitments and ~~0.50%~~0.50% per annum on any remaining unused portion of the Credit Facility between the total commitments and the ~~35%~~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 1.00 (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~~September 30, 2022 and December 31, 2021, 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.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

Under the SBA debenture program, the SBA commits to purchase debentures issued by SBICs; such debentures have ~~10-year~~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 1.1. As of ~~June~~September 30, 2022 and December 31, 2021, approved and unused SBA debenture commitments were ~~$71,500~~$57,000 and ~~$63,000,~~$63,000, 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 under SBA regulations.

As of ~~June~~September 30, 2022 and December 31, 2021, the Company’s issued and outstanding SBA debentures mature as follows:


Pooling	Maturity	Fixed			September 30,		December 31,
Date (1)	Date	Interest Rate			2022		2021
3/25/2015	3/1/2025		3.277	%	$	1,500	$	22,500
3/23/2016	3/1/2026		3.267			1,500		1,500
3/23/2016	3/1/2026		3.249			2,500		2,500
9/21/2016	9/1/2026		2.793			500		500
9/20/2017	9/1/2027		3.260			1,000		1,000
9/20/2017	9/1/2027		3.190			33,000		33,000
3/21/2018	3/1/2028		3.534			—		9,000
9/25/2019	9/1/2029		2.377			7,500		7,500
3/25/2020	3/1/2030		2.172			6,000		6,000
9/22/2021	9/1/2031		1.398			11,500		11,500
3/23/2022	3/1/2032		3.209			43,500		12,000
9/21/2022	9/1/2032		4.533			17,500		—
(2)	(2)	(2)				7,000		—
Total outstanding SBA debentures					$	133,000	$	107,000

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

Pooling

Maturity

Fixed

June 30,

December 31,

Date (1)

Date

Interest Rate

2022

2021

3/25/2015

3/1/2025

3.277

%
$
11,500

$
22,500

3/23/2016

3/1/2026

3.267

1,500

1,500

3/23/2016

3/1/2026

3.249

2,500

2,500

9/21/2016

9/1/2026

2.793

500

500

9/20/2017

9/1/2027

3.260

1,000

1,000

9/20/2017

9/1/2027

3.190

33,000

33,000

3/21/2018

3/1/2028

3.534

—

9,000

9/25/2019

9/1/2029

2.377

7,500

7,500

3/25/2020

3/1/2030

2.172

6,000

6,000

9/22/2021

9/1/2031

1.398

11,500

11,500

3/23/2022

3/1/2032

3.209

43,500

12,000

(2)

(2)

(2)

10,000

—

Total outstanding SBA debentures

$
128,500

$
107,000


(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.
(2)	The Company issued ~~$10,000~~$4,000 and $3,000 in SBA debentures which will pool in ~~September 2022.~~March 2023. Until the pooling date, the debentures bear interest at a fixed rate interim interest rate of ~~1.86%.~~4.855% and 4.757%, respectively. The Company expects the current interim interest rate will reset to a higher long-term fixed rate on the pooling date.

Notes: On February 2, 2018, the Company closed the public offering of approximately ~~$43,478~~$43,478 in aggregate principal amount of its ~~5.875%~~5.875% notes due 2023, or the “2023 Notes.” On February 22, 2018, the underwriters exercised their option to purchase an additional ~~$6,522~~$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~~$1,500 and offering expenses of ~~$438,~~$438, were approximately ~~$48,062.~~$48,062. On January 19, 2021, the Company redeemed ~~$50,000~~$50,000 in aggregate principal amount of the issued and outstanding 2023 Notes, resulting in a realized loss on extinguishment of debt of approximately ~~$794.~~$794.

On February 8, 2019, the Company closed the public offering of approximately ~~$60,000~~$60,000 in aggregate principal amount of its ~~6.000%~~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~~$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~~$2,070 and estimated offering expenses of ~~$409,~~$409, were approximately ~~$66,521.~~$66,521. On February 16, 2021, the Company redeemed ~~$50,000~~$50,000 of the ~~$69,000~~$69,000 aggregate principal amount on the February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately ~~$1,081.~~$1,081. On November 2, 2021, we fully redeemed the remaining ~~$19,000~~$19,000 in aggregate principal amount on the issued and outstanding February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately ~~$313.~~$313.

On October 16, 2019, the Company closed the public offering of approximately ~~$55,000~~$55,000 in aggregate principal amount of its ~~5.375%~~5.375% notes due 2024, or the “November 2024 Notes” (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 ~~$8,250~~$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~~$1,898 and estimated offering expenses of ~~$300,~~$300, were approximately ~~$61,053.~~$61,053. On November 2, 2021, we fully redeemed ~~$63,250~~$63,250 in aggregate principal amount on the issued and outstanding November 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately ~~$1,311.~~$1,311.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

On December 23, 2020, the Company closed the offering of ~~$125,000~~$125,000 in aggregate principal amount of its ~~4.75%~~4.75% notes due 2026, or the “January 2026 Notes”. The total net proceeds to the Company from the January 2026 Notes after deducting underwriting discounts of ~~$2,500~~$2,500 and estimated offering expenses of approximately ~~$400,~~$400, were approximately ~~$122,100.~~$122,100. The January 2026 Notes will mature on January 31, 2026 and bear interest at a rate of ~~4.75%~~4.75%. The January 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity and at par thereafter. Interest on the January 2026 Notes is payable on January 31 and July 31 of each year. The Company does not intend to list the January 2026 Notes on any securities exchange or automated dealer quotation system.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

On October 8, 2021, the Company closed the offering of ~~$125,000~~$125,000 in aggregate principal amount of its ~~3.50%~~3.50% notes due 2026, or the “November 2026 Notes” (collectively with the Public Notes and the January 2026 Notes, the “Notes”). The total net proceeds to the Company from the November 2026 Notes, based on a public offering price of ~~99.996%~~99.996% of par, after deducting underwriting discounts of ~~$2,505~~$2,505 and estimated offering expenses of approximately ~~$400,~~$400, were approximately ~~$122,095.~~$122,095. The November 2026 Notes will mature on November 15, 2026 and bear interest at a rate of ~~3.50%~~3.50%. The November 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity and at par thereafter. Interest on the November 2026 Notes is payable on May 15 and November 15 of each ~~year, beginning May 15, 2022.~~year. The Company does not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system.

Each of the Notes are unsecured obligations of the Company and rank pari passu with the Company’s existing and 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.

Secured Borrowing

As of ~~June~~September 30, 2022, the carrying value of secured borrowings totaled ~~$17,263~~$16,995 and the fair value of the associated loans included in investments was ~~$17,263.~~$16,910. As of December 31, 2021, the carrying value of secured borrowings totaled ~~$17,637~~$17,637 and the fair value of the associated loans included in investments was ~~$17,522.~~$17,522. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest.” As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately ~~5.1%~~6.4% and ~~4.4%~~4.4% as of ~~June~~September 30, 2022, and December 31, 2021, respectively.

As of ~~June~~September 30, 2022, and December 31, 2021, the aggregate amount outstanding of the senior securities (including secured borrowings) issued by the Company was ~~$267,263~~$266,995 and ~~$267,637,~~$267,637, respectively, for which our asset coverage was ~~281.1%~~277.7% and ~~282.2%~~282.2%, respectively. 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 on 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~~nine months ended ~~June~~September 30, 2022 and 2021 which are included in interest and financing expenses on the consolidated statements of operations, were as follows:


	Three Months Ended June 30, 2022										Three Months Ended June 30, 2021										Three Months Ended September 30, 2022										Three Months Ended September 30, 2021
	SBA		Credit		Secured						SBA		Credit		Secured						SBA		Credit		Secured						SBA		Credit		Secured
	debentures		Facility		Borrowings		Notes		Total		debentures		Facility		Borrowings		Notes		Total		debentures		Facility		Borrowings		Notes		Total		debentures		Facility		Borrowings		Notes		Total
Stated interest expense	$	911	$	387	$	229	$	2,578	$	4,105	$	1,038	$	371	$	-	$	2,619	$	4,028	$	933	$	356	$	289	$	2,578	$	4,156	$	931	$	368	$	222	$	2,603	$	4,124
Amortization of deferred financing costs		144		113		-		277		534		140		113		-		281		534		156		94		-		280		530		138		115		-		285		538
Total interest and financing expenses	$	1,055	$	500	$	229	$	2,855	$	4,639	$	1,178	$	484	$	-	$	2,900	$	4,562	$	1,089	$	450	$	289	$	2,858	$	4,686	$	1,069	$	483	$	222	$	2,888	$	4,662


	Six Months Ended June 30, 2022															Six Months Ended June 30, 2021														Nine Months Ended September 30, 2022															Nine Months Ended September 30, 2021
	SBA debentures			Credit Facility			Secured Borrowings			Notes			Total			SBA debentures			Credit Facility			Secured Borrowings		Notes			Total			SBA debentures			Credit Facility			Secured Borrowings			Notes			Total			SBA debentures			Credit Facility			Secured Borrowings			Notes			Total
Stated interest expense	$	1,650		$	750		$	437		$	5,156		$	7,993		$	2,171		$	733		$	-	$	5,735		$	8,639		$	2,583		$	1,106		$	726		$	7,734		$	12,149		$	3,102		$	1,101		$	222		$	8,338		$	12,763
Amortization of deferred financing costs		282			225			-			551			1,058			270			225			-		622			1,117			438			319			-			831			1,588			408			340			-			907			1,655
Total interest and financing expenses	$	1,932		$	975		$	437		$	5,707		$	9,051		$	2,441		$	958		$	-	$	6,357		$	9,756		$	3,021		$	1,425		$	726		$	8,565		$	13,737		$	3,510		$	1,441		$	222		$	9,245		$	14,418
Weighted average stated interest rate, period end		2.846	%	N/A				5.119	%		4.125	%		3.753	%		3.002	%		0.000	%	N/A			5.055	%		4.230	%		3.214	%	N/A				6.446	%		4.125	%		3.921	%		2.899	%		3.125	%		4.392	%		5.055	%		4.239	%
Unused commitment fee rate, period end	N/A				1.375	%	N/A			N/A				1.375	%	N/A				1.375	%	N/A		N/A				1.375	%	N/A				1.200	%	N/A			N/A				1.200	%	N/A				0.500	%	N/A			N/A				0.500	%

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

Realized Losses on Extinguishment of Debt

During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company prepaid ~~$20,000~~$30,000 and ~~$19,200~~$63,500 of SBA debentures, respectively, which were scheduled to mature on dates ranging from 2025 to 2028 and 2025 to 2028, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company redeemed ~~$50,000~~$50,000 and $50,000 of the issued and outstanding 2023 ~~Notes.~~Notes and 2024 Notes, respectively. As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of ~~$198~~$251 and ~~$2,180,~~$2,640, respectively, equal to the write-off of the related unamortized deferred financing costs, during the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

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 SBA debentures, the Credit Facility, and the Notes as of ~~June~~September 30, 2022 and December 31, 2021 were as follows:


	June 30, 2022												December 31, 2021												September 30, 2022												December 31, 2021
	SBA			Credit									SBA			Credit									SBA			Credit									SBA			Credit
	debentures			Facility			Notes			Total			debentures			Facility			Notes			Total			debentures			Facility			Notes			Total			debentures			Facility			Notes			Total
SBA debenture commitment fees	$	3,000		$	—		$	—		$	3,000		$	2,500		$	—		$	—		$	2,500		$	3,000		$	—		$	—		$	3,000		$	2,500		$	—		$	—		$	2,500
SBA debenture leverage fees		5,549			—			—			5,549			4,538			—			—			4,538			5,902			—			—			5,902			4,538			—			—			4,538
Credit Facility upfront fees		—			3,238			—			3,238			—			3,238			—			3,238			—			4,417			—			4,417			—			3,238			—			3,238
Notes underwriting discounts		—			—			5,005			5,005			—			—			5,005			5,005			—			—			5,005			5,005			—			—			5,005			5,005
Notes debt issue costs		—			—			685			685			—			—			685			685			—			—			685			685			—			—			685			685
Total deferred financing costs		8,549			3,238			5,690			17,477			7,038			3,238			5,690			15,966			8,902			4,417			5,690			19,009			7,038			3,238			5,690			15,966
Less: accumulated amortization		(4,496	)		(2,868	)		(1,257	)		(8,621	)		(4,016	)		(2,643	)		(706	)		(7,365	)		(4,705	)		(2,962	)		(1,537	)		(9,204	)		(4,016	)		(2,643	)		(706	)		(7,365	)
Unamortized deferred financing costs	$	4,053		$	370		$	4,433		$	8,856		$	3,022		$	595		$	4,984		$	8,601		$	4,197		$	1,455		$	4,153		$	9,805		$	3,022		$	595		$	4,984		$	8,601

Unamortized deferred financing costs are presented as a direct offset to the SBA debentures, the Credit Facility and the 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~~September 30, 2022 and December 31, 2021:


	June 30, 2022(1)												December 31, 2021(1)												September 30, 2022(1)												December 31, 2021(1)
	SBA			Credit									SBA			Credit									SBA			Credit									SBA			Credit
	debentures			Facility			Notes			Total			debentures			Facility			Notes			Total			debentures			Facility			Notes			Total			debentures			Facility			Notes			Total
Outstanding debt	$	128,500		$	—		$	250,000		$	378,500		$	107,000		$	—		$	250,000		$	357,000		$	133,000		$	—		$	250,000		$	383,000		$	107,000		$	—		$	250,000		$	357,000
Less: unamortized deferred financing costs		(4,053	)		(370	)		(4,433	)		(8,856	)		(3,022	)		(595	)		(4,984	)		(8,601	)		(4,197	)		(1,455	)		(4,153	)		(9,805	)		(3,022	)		(595	)		(4,984	)		(8,601	)
Debt, net of deferred financing costs	$	124,447		$	(370	)	$	245,567		$	369,644		$	103,978		$	(595	)	$	245,016		$	348,399		$	128,803		$	(1,455	)	$	245,847		$	373,195		$	103,978		$	(595	)	$	245,016		$	348,399

(1)

Total excludes ~~$17,263~~$16,995 and ~~$17,637~~$17,637 of Secured Borrowings as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

As of ~~June~~September 30, 2022, the Company’s debt liabilities are scheduled to mature as follows (1):


	SBA		Credit		Secured						SBA		Credit		Secured
Year	debentures		Facility (2)		Borrowings		Notes		Total		debentures		Facility (2)		Borrowings		Notes		Total
2022	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2023		—		—		—		—		—		—		—		—		—		—
2024		—		—		—		—		—		—		—		—		—		—
2025		11,500		—		—		—		11,500		1,500		—		—		—		1,500
2026		4,500		—		17,263		250,000		271,763		4,500		—		16,995		250,000		271,495
Thereafter		112,500		—		—		—		112,500		127,000		—		—		—		127,000
Total	$	128,500	$	—	$	17,263	$	250,000	$	395,763	$	133,000	$	—	$	16,995	$	250,000	$	399,995


(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.
(2)	The Credit Facility matures on ~~April 24, 2023.~~August 17, 2027.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

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 ~~$15,289~~$13,328 and ~~$8,170~~$8,170 as of ~~June~~September 30, 2022 and December 31, 2021, respectively. Such outstanding commitments are summarized in the following table:

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

June 30, 2022

December 31, 2021

Total

Unfunded

Total

Unfunded

Portfolio Company - Investment

Commitment

Commitment

Commitment

Commitment

Acendre Midco, Inc. - Revolving Loan

$
1,000

$
1,000

$
1,000

$
1,000

Combined Systems, Inc. - Revolving Loan

4,000

605

4,000

605

Elements Brands, LLC - Revolving Loan

3,000

1,500

3,000

838

Choice Technology Solutions, LLC (dba Choice Merchant Solutions, LLC) - Revolving Loan

1,000

1,000

—

—

Rhino Assembly Company, LLC - Delayed Draw Commitment

-

-

875

875

Safety Products Group, LLC - Common Equity (Units)

-

-

2,852

(1)

2,852

(1)
Tedia Company, LLC - Revolving Loan

4,000

3,500

—

—

Tedia Company, LLC - Delayed Draw Term Loan

3,000

3,000

—

—

Western's Smokehouse, LLC - Delayed Draw Term Loan

3,500

3,500

—

—

Wonderware Holdings, LLC (dba CORE Business Technologies) - Delayed Draw Term Loan

2,000

184

2,000

2,000

Zonkd, LLC - Delayed Draw Term Loan

1,000

1,000

—

—

Total

$
22,500

$
15,289

$
13,727

$
8,170


	September 30, 2022				December 31, 2021
	Total		Unfunded		Total			Unfunded
Portfolio Company - Investment	Commitment		Commitment		Commitment			Commitment
Acendre Midco, Inc. - Revolving Loan	$	1,000	$	1,000	$	1,000		$	1,000
Combined Systems, Inc. - Revolving Loan		4,000		605		4,000			605
Elements Brands, LLC - Revolving Loan		3,000		1,500		3,000			838
Choice Technology Solutions, LLC (dba Choice Merchant Solutions, LLC) - Revolving Loan		1,000		1,000		—			—
Rhino Assembly Company, LLC - Delayed Draw Commitment		—		—		875			875
Safety Products Group, LLC - Common Equity (Units)		—		—		2,852	(1)		2,852	(1)
Tedia Company, LLC - Revolving Loan		4,000		2,400		—			—
Tedia Company, LLC - Delayed Draw Term Loan		3,000		3,000		—			—
Western's Smokehouse, LLC - Delayed Draw Term Loan		3,500		2,823		—			—
Wonderware Holdings, LLC (dba CORE Business Technologies) - Delayed Draw Term Loan		—		—		2,000			2,000
Zonkd, LLC - Delayed Draw Term Loan		1,000		1,000		—			—
Total	$	20,500	$	13,328	$	13,727		$	8,170

(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.~~non-financial covenants, which may limit such borrower's ability to draw on a revolving loan or delayed draw loan. 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.

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 in June 2011.


Period	Cumulative Number of Shares		Cumulative Gross Proceeds		Cumulative Underwriting Fees and Commissions and Offering Costs (1)		Weighted Average Offering Price
Cumulative since IPO		14,388,414	$	236,597	$	8,989	$	16.44

(1) Fidus Investment Advisors, LLC agreed to bear a cumulative of ~~$1,925~~$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.

No shares have been issued for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

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~~$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~~nine months ended ~~June~~September 30, 2022.

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

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~~$5,000 of its outstanding common stock. The Company did ~~not~~not make any repurchases of common stock during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

Refer to Note 9 for additional information regarding the issuance of shares under the DRIP.

The Company had 24,437,400 shares of common stock outstanding as of ~~June~~September 30, 2022 and December 31, 2021.

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~~nine months ended ~~June~~September 30, 2022.


									DRIP						DRIP										DRIP						DRIP
Date	Record	Payment	Amount		Total		Cash		Shares			DRIP			Share		Record	Payment	Amount		Total		Cash		Shares			DRIP			Share
Declared	Date	Date	Per Share		Distribution		Distribution		Value			Shares			Issue Price		Date	Date	Per Share		Distribution		Distribution		Value			Shares			Issue Price
Year Ended December 31, 2020:
2/14/2020	3/13/2020	3/27/2020	$	0.39	$	9,537	$	9,537	$	—	(3)		—	(3)		—	3/13/2020	3/27/2020	$	0.39	$	9,537	$	9,537	$	—	(3)		—	(3)		—
4/29/2020	6/12/2020	6/26/2020		0.30		7,331		7,331		—	(3)		—	(3)		—	6/12/2020	6/26/2020		0.30		7,331		7,331		—	(3)		—	(3)		—
8/03/2020	9/11/2020	9/25/2020		0.30		7,331		7,331		—	(3)		—	(3)		—	9/11/2020	9/25/2020		0.30		7,331		7,331		—	(3)		—	(3)		—
10/26/2020	12/4/2020	12/18/2020		0.30		7,331		7,331		—	(3)		—	(3)		—	12/4/2020	12/18/2020		0.30		7,331		7,331		—	(3)		—	(3)		—
10/26/2020 (2)	12/4/2020	12/18/2020	0.04		978		978			—	(3)		—	(3)		—	12/4/2020	12/18/2020	0.04		978		978			—	(3)		—	(3)		—
			$	1.33	$	32,508	$	32,508	$	—			—						$	1.33	$	32,508	$	32,508	$	—			—
Year Ended December 31, 2021:
2/09/2021	3/12/2021	3/26/2021	$	0.31	$	7,575	$	7,575	$	—	(3)		—	(3)		—	3/12/2021	3/26/2021	$	0.31	$	7,575	$	7,575	$	—	(3)		—	(3)		—
2/09/2021 (2)	3/12/2021	3/26/2021		0.07		1,711		1,711		—	(3)		—	(3)		—	3/12/2021	3/26/2021		0.07		1,711		1,711		—	(3)		—	(3)		—
5/03/2021	6/14/2021	6/28/2021		0.31		7,576		7,576		—	(3)		—	(3)		—	6/14/2021	6/28/2021		0.31		7,576		7,576		—	(3)		—	(3)		—
5/03/2021 (2)	6/14/2021	6/28/2021		0.08		1,955		1,955		—	(3)		—	(3)		—	6/14/2021	6/28/2021		0.08		1,955		1,955		—	(3)		—	(3)		—
8/02/2021	9/14/2021	9/28/2021		0.32		7,820		7,820		—	(3)		—	(3)		—	9/14/2021	9/28/2021		0.32		7,820		7,820		—	(3)		—	(3)		—
8/02/2021 (2)	9/14/2021	9/28/2021		0.06		1,466		1,466		—	(3)		—	(3)		—	9/14/2021	9/28/2021		0.06		1,466		1,466		—	(3)		—	(3)		—
8/02/2021 (1)	9/14/2021	9/28/2021		0.04		977		977		—	(3)		—	(3)		—	9/14/2021	9/28/2021		0.04		977		977		—	(3)		—	(3)		—
11/01/2021	12/3/2021	12/17/2021		0.32		7,820		7,820		—	(3)		—	(3)		—	12/3/2021	12/17/2021		0.32		7,820		7,820		—	(3)		—	(3)		—
11/01/2021 (2)	12/3/2021	12/17/2021		0.04		978		978		—	(3)		—	(3)		—	12/3/2021	12/17/2021		0.04		978		978		—	(3)		—	(3)		—
11/01/2021 (1)	12/3/2021	12/17/2021	0.05		1222		1222			—	(3)		—	(3)		—	12/3/2021	12/17/2021	0.05			1,222		1,222		—	(3)		—	(3)		—
			$	1.60	$	39,100	$	39,100	$	—			—						$	1.60	$	39,100	$	39,100	$	—			—
Six months ended June 30, 2022:
Nine months ended September 30, 2022:
2/15/2022	3/11/2022	3/25/2022	$	0.36	$	8,797	$	8,797	$	—	(3)		—	(3)		—	3/11/2022	3/25/2022	$	0.36	$	8,797	$	8,797	$	—	(3)		—	(3)		—
2/15/2022 (2)	3/11/2022	3/25/2022		0.17		4,154		4,154		—	(3)		—	(3)		—	3/11/2022	3/25/2022		0.17		4,154		4,154		—	(3)		—	(3)		—
5/02/2022	6/10/2022	6/24/2022		0.36		8,797		8,797		—	(3)		—	(3)		—	6/10/2022	6/24/2022		0.36		8,797		8,797		—	(3)		—	(3)		—
5/02/2022 (2)	6/10/2022	6/24/2022		0.07		1,712		1,712		—	(3)		—	(3)		—	6/10/2022	6/24/2022		0.07		1,712		1,712		—	(3)		—	(3)		—
8/01/2022																	9/9/2022	9/23/2022		0.36		8,797		8,797		—	(3)		—	(3)		—
8/01/2022 (2)																	9/9/2022	9/23/2022		0.07		1,711		1,711		—	(3)		—	(3)		—
8/01/2022																	12/2/2022	12/16/2022		0.36		—		—		—	(3)		—	(3)		—
8/01/2022 (2)																	12/2/2022	12/16/2022		0.07		—		—		—	(3)		—	(3)		—
			$	0.96	$	23,460	$	23,460	$	—			—						$	1.82	$	33,968	$	33,968	$	—			—


(1)	Special dividend
(2)	Supplemental dividend
(3)	During the ~~six~~nine months ended ~~June~~September 30, 2022 and the years ended December 31, 2021 and 2020, the Company directed the DRIP 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:


	Number of
	Shares		Average
	Purchased		Price Paid		Total
Fiscal Year Ended December 31, 2020:	and Reissued		Per Share		Amount Paid
January 1, 2020 through March 31, 2020		31,586	$	7.58	$	239
April 1, 2020 through June 30, 2020		21,904		9.04		198
July 1, 2020 through September 30, 2020		28,871		10.18		294
October 1, 2020 through December 31, 2020		20,222		12.91		261
Total		102,583	$	9.67	$	992

Number of

Shares

Average

Purchased

Price Paid

Total

Year Ended December 31, 2021:

and Reissued

Per Share

Amount Paid

January 1, 2021 through March 31, 2021

15,562

$
15.62

$
243

April 1, 2021 through June 30, 2021

17,042

17.20

293

July 1, 2021 through September 30, 2021

18,201

17.82

324

October 1, 2021 through December 31, 2021

18,283

17.42

318

Total

69,088

$
17.05

$
1,178

3435

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)

Number of

Shares

Average

Purchased

Price Paid

Total

Six months ended June 30, 2022:

and Reissued

Per Share

Amount Paid

January 1, 2022 through March 31, 2022

20,380

$
20.51

$
418

April 1, 2022 through June 30, 2022

20,233

17.89

362

Total

40,613

$
19.21

$
780


	Number of
	Shares		Average
	Purchased		Price Paid		Total
Year Ended December 31, 2021:	and Reissued		Per Share		Amount Paid
January 1, 2021 through March 31, 2021		15,562	$	15.62	$	243
April 1, 2021 through June 30, 2021		17,042		17.20		293
July 1, 2021 through September 30, 2021		18,201		17.82		324
October 1, 2021 through December 31, 2021		18,283		17.42		318
Total		69,088	$	17.05	$	1,178


	Number of
	Shares		Average
	Purchased		Price Paid		Total
Nine months ended September 30, 2022:	and Reissued		Per Share		Amount Paid
January 1, 2022 through March 31, 2022		20,380	$	20.51	$	418
April 1, 2022 through June 30, 2022		20,233		17.89		362
July 1, 2022 through September 30, 2022		21,114		17.08		360
Total		61,727	$	18.47	$	1,140

Note 10. Financial Highlights

The following is a schedule of financial highlights for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:


	Six Months Ended June 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Per share data:
Net asset value at beginning of period	$	19.96		$	16.81		$	19.96		$	16.81
Net investment income (1)		0.87			0.72			1.39			0.93
Net realized gain (loss) on investments, net of tax (provision) (1)		1.03			0.22			2.67			0.57
Net unrealized appreciation (depreciation) on investments (1)		(1.09	)		0.68			(2.78	)		1.31
Realized losses on extinguishment of debt (1)		(0.01	)		(0.09	)		(0.01	)		(0.11	)
Total increase from investment operations (1)		0.80			1.53			1.27			2.70
Accretive (dilutive) effect of share issuances and repurchases		-		-				-			-
Dividends to stockholders		(0.96	)		(0.77	)
Dividends declared to stockholders								(1.82	)		(1.19	)
Distributions from capital gains		-			-			-			-
Taxes paid on deemed distributions		-			-			-			-
Other (11)		-			-			-			(0.01	)
Net asset value at end of period	$	19.80		$	17.57		$	19.41		$	18.31
Market value at end of period	$	17.45		$	17.00		$	17.18		$	17.44
Shares outstanding at end of period		24,437,400			24,437,400			24,437,400			24,437,400
Weighted average shares outstanding during the period		24,437,400			24,437,400			24,437,400			24,437,400
Net assets at end of period	$	483,975		$	429,367		$	474,387		$	447,545
Average net assets (6)	$	486,080		$	417,713		$	483,157		$	425,171
Ratios to average net assets:
Total expenses (2)(4)(10)		8.4	%		13.2	%		9.0	%		13.7	%
Net investment income (5)		8.8	%		8.4	%		9.4	%		7.1	%
Total return based on market value (3)		2.3	%		39.3	%		3.2	%		46.1	%
Total return based on net asset value (8)		4.0	%		9.1	%		6.4	%		16.0	%
Portfolio turnover ratio (9)		17.4	%		45.6	%		21.3	%		44.9	%
Supplemental Data:
Average debt outstanding (7)	$	388,781		$	390,117		$	391,585		$	382,587
Average debt per share (1)	$	15.91		$	15.96		$	16.02		$	15.66

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except shares and per share data)


(1)	Weighted average per share data.
(2)	Annualized with the exception of income tax (provision) benefit from realized gains on investments.
(3)	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.
(4)	The total expenses to average net assets ratio is calculated using (i) the “total expenses, net of base management waiver”, (ii) the “income tax provision (benefit)”, and (iii) the “income tax (provision) benefit from realized gains on investments” captions, as presented on the consolidated statements of operations.
(5)	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.
(6)	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.
(7)	Average debt outstanding is calculated as the average of the outstanding debt balances, including secured borrowings, as of each quarter end during the fiscal year and the prior year end.
(8)	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.
(9)	Annualized.
(10)	The following are schedules of supplemental expense ratios to average net assets:


	Nine Months Ended September 30,
Ratio to average net assets:	2022			2021
Expenses other than incentive fee (2)		7.7	%		8.6	%
Incentive fee (9)		1.3	%		5.1	%
Total expenses (2)(4)		9.0	%		13.7	%


	Nine Months Ended September 30,
Ratio to average net assets:	2022			2021
Total expenses, before base management fee waiver (2)		9.1	%		13.7	%
Base management fee waiver (9)		(0.1	%)		0.0	%
Total expenses (2)(4)		9.0	%		13.7	%

~~FIDUS INVESTMENT CORPORATION~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~(in thousands, except shares and per share data)~~

Six Months Ended June 30,

Ratio to average net assets:

2022

2021

Expenses other than incentive fee (2)

7.6
%

8.8
%
Incentive fee (9)

0.8
%

4.4
%
Total expenses (2)(4)

8.4
%

13.2
%

Six Months Ended June 30,

Ratio to average net assets:

2022

2021

Total expenses, before base management fee waiver (2)

8.5
%

13.2
%
Base management fee waiver (9)

(0.1
%)

0.0
%
Total expenses (2)(4)

8.4
%

13.2
%


(11)	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.

Note 11. Subsequent Events

On ~~July 6,~~October 3, 2022 ~~the Company issued an additional $7,500 in SBA debentures, which will pool in September 2022. Until the pooling date, the debentures bear interest at a fixed interim interest rate of 2.766%.~~

~~On July 8, 2022,~~, the Company invested ~~$7,750 in first lien debt, $2,000 in subordinated debt, and $1,000~~$1,000 in common equity of ~~AmeriWater,~~EBL, LLC, which was acquired under a ~~leading provider~~new holding company, FOM Eblens Holdings, LLC (dba Eblens), and became a controlled affiliate investment. In conjunction with the transaction, the Company amended the terms of ~~water purification systems~~its second lien debt investment and ~~aftermarket parts & consumables for healthcare and industrial applications.~~committed up to $375 in incremental common equity.

On ~~July 12,~~October 7, 2022, the Company exited its debt investment in UPG Company, LLC. The Company received payment in full of $16,986 on its first lien debt, which included a prepayment fee.

On October 17, 2022, the Company exited its debt and equity investment in ~~Palisade~~OMC Investors, LLC (dba Ohio Medical Corporation). The Company ~~LLC.~~received payment in full of $5,150 on its second lien debt, which included a prepayment fee. The Company received a distribution on its ~~common~~ equity investment for a realized gain of approximately ~~$1,936.~~$656.

On ~~July 18,~~October 31, 2022 ~~the Company made a commitment of $4,932 in second lien debt of Magenta Buyer, LLC (dba Trellix)~~, ~~a leading global cybersecurity company.~~

On July 27, 2022, the Company exited its equity investment in Bandon Fitness (Texas) Inc. The Company received a distribution on its common equity investment for a realized gain of approximately $3,176.

~~On July 29, 2022, the Company exited its debt investment in Bedford Precision Parts LLC. The Company received payment in full of $4,472 on its first lien debt.~~

~~On August 1, 2022, the Company received a distribution on its common equity investment in SES Investors, LLC (dba SES Foam), resulting in a realized gain of approximately $8,988.~~

~~On August 1, 2022, the Company exited its debt investment in Healthfuse, LLC. The Company received payment in full of $5,319 on its first lien debt, which includes a prepayment fee.~~

~~On August 1, 2022,~~ the Board declared ~~a regular quarterly~~an incremental supplemental dividend of ~~$0.36~~$0.08 per share and a ~~supplemental~~special dividend of ~~$0.07~~$0.10 per share for the fourth quarter, which are payable on ~~September 23,~~December 16, 2022, to stockholders of record as of ~~September 9, 2022.~~December 2, 2022.

On ~~August~~October 31, 2022, the Company invested $6,000 in second lien debt of Education Incites, LLC (dba Acceleration Academies), a leading provider of alternative education academies focused on high school dropout recovery throughout the United States.

On November 1, 2022, the ~~Board declared a regular quarterly dividend~~Company issued an additional $5,000 and $3,000 in SBA debentures, which will bear interest at fixed interim interest rates of ~~$0.36 per share~~5.221% and ~~a supplemental dividend of $0.07 per share payable on December 16, 2022, to stockholders of record as of December 2, 2022.~~5.123%, respectively, until the pooling date in March 2023.

On August 2, 2022, the Company sold a portion of its equity investment in Pfanstiehl, Inc. and realized a gain of approximately $24,330. In conjunction with the transaction, the Company invested $10,000 in subordinated debt.

~~On August 3, 2022, the Company made a commitment of $20,000 in first lien debt of BP Thrift Buyer LLC (dba Unique and Eco Thrift), an owner and operator of retail thrift stores.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations.

The following discussion and analysis of our financial condition andresults of operations should be read in conjunction with Fidus Investment Corporation’s consolidated financial statements and related notes appearingin our annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 3, 2022. Theinformation contained in this section should also be read in conjunction withour unaudited consolidated financial statements and related notes theretoappearing 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 uncertainties associated with the continued impact of the COVID-19 pandemic thereon;

•

changes in the financial and lending markets;

•

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~~ongoing COVID-19 pandemic;

•

the impact of investments that we expect to make;

•

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;

•

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;

•

the ability of our investment advisor to attract and retain highly talented professionals;

•

our regulatory structure and tax treatment;

•

our ability to operate as a BDC and a RIC and each of the Funds to operate as an SBIC;

•

the timing, form and amount of any dividend distributions;

•

the impact of interest rate volatility, including the decommissioning of LIBOR and rising interest rates, and the elevated level of inflation on our business and portfolio companies;

•

the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and

•

our ability to recover unrealized losses.

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, and significant disruptions to our portfolio companies, including supply chain disruptions and labor shortages, 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, including the decommissioning of LIBOR and rising interest rates, could adversely affect our results, particularly because we use leverage as part of our investment strategy;

•

the elevated level of inflation could adversely affect our business, results of operations and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies; 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, 2021, 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, 2021, filed with the SEC on March 3, 2022. 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.

~~Overview~~39

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. On June 20, 2011, FIC acquired all of the limited partnership interests of Fund I and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fund II. On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III.

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. As of September 9, 2019, Fund I completed a wind-down plan, relinquished its SBIC license, and can no longer issue additional SBA debentures. 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~~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 severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. We have been closely monitoring, and will continue to monitor, the impact of the COVID-19 pandemic, including the Delta and Omicron variants and any new variants, and its impact on all aspects of our business, including how it will impact our portfolio companies, employees, due diligence and underwriting processes, and financial markets. Given the fluidity of the pandemic, we cannot estimate the long-term impact of COVID-19 on our business, future results of operations, financial position or cash flows at this time. Further, the operational and financial performance of the portfolio companies in which we make investments may be significantly impacted by COVID-19, which may in turn impact the valuation of our investments. We believe our portfolio companies have taken, and continue to take, immediate actions to effectively and efficiently respond to the challenges posed by COVID-19 and related orders imposed by state and local governments and private businesses, including developing liquidity plans supported by internal cash reserves, and shareholder support. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns and cancellations of events, restrictions on travel, significant reduction in demand for certain goods and services, reductions in business activity and financial transactions, supply chain disruptions, labor difficulties and shortages, commodity inflation and elements of economic and financial market instability in the United States and globally. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.

~~Investments~~40

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.

First Lien ~~Debt~~.Debt. We structure some of our 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 variable interest rate, generally with a LIBOR floor.

Second Lien Debt. Some 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.

Equity ~~Securities~~.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.

~~Revenues~~:41

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 fixed or variable rates. 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~~: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.

Portfolio Composition, Investment Activity and Yield

During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we invested ~~$160.1~~$268.0 million and ~~$167.3~~$245.5 million, respectively, in debt and equity investments including ~~nine~~fifteen and ~~ten~~twelve new portfolio companies, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of ~~$68.0~~$128.3 million and ~~$191.6~~$319.0 million, respectively, including exits of ~~two~~five and ~~four~~six portfolio companies, respectively. The following table summarizes investment purchases and sales and repayments of investments by type for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (dollars in millions).


	Purchases of Investments								Sales and Repayments of Investments								Purchases of Investments								Sales and Repayments of Investments
	Six Months Ended June 30,																Nine Months Ended September 30,
	2022				2021				2022				2021				2022				2021				2022				2021
First Lien Debt(1)	$	91.2	57.0	%	$	132.9	79.4	%	$	14.3	21.0	%	$	32.6	17.0	%	$	166.3	62.1	%	$	172.5	70.3	%	$	31.5	24.5	%	$	61.0	19.1	%
Second Lien Debt		32.0	20.0			11.5	6.8			18.7	27.5			135.0	70.5			49.5	18.4			43.9	17.8			18.8	14.7			177.8	55.8
Subordinated Debt		32.5	20.3			16.0	9.6			—	—			24.0	12.5			44.5	16.6			18.4	7.5			—	—			56.8	17.8
Equity		4.4	2.7			6.9	4.2			35.0	51.5			—	—			7.7	2.9			10.7	4.4			78.0	60.8			23.4	7.3
Warrants		—	—			—	—			—	—			—	—			—	—			—	—			—	—			—	—
Total	$	160.1	100.0	%	$	167.3	100.0	%	$	68.0	100.0	%	$	191.6	100.0	%	$	268.0	100.0	%	$	245.5	100.0	%	$	128.3	100.0	%	$	319.0	100.0	%

(1) For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, includes unitranche securities, which account for ~~37.4%~~39.8% and ~~73.8%~~66.4% of purchases, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, includes unitranche securities, which account for ~~17.4%~~21.6% and ~~11.7%~~12.7% of repayments, respectively.

As of ~~June~~September 30, 2022, the fair value of our investment portfolio totaled ~~$810.5~~$856.9 million and consisted of 7375 active portfolio companies and ~~twelve~~thirteen portfolio companies that have sold their underlying operations. As of ~~June~~September 30, 2022, 3943 portfolio companies’ debt investments bore interest at a variable rate, which represented ~~$467.2~~$538.1 million, or ~~69.8%~~72.0%, 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 appreciation of ~~$70.8~~$29.5 million as of ~~June~~September 30, 2022. As of ~~June~~September 30, 2022, our average active portfolio company investment at amortized cost was ~~$10.1~~$11.0 million, which excludes investments in the ~~twelve~~thirteen portfolio companies that have sold their underlying operations.

As of December 31, 2021, the fair value of our investment portfolio totaled $719.1 million and consisted of 70 active portfolio companies and eight portfolio companies that have sold their underlying operations. As of December 31, 2021, 32 portfolio companies’ debt investments bore interest at a variable rate, which represented $376.0 million, or 68.4%, 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 $97.3 million as of December 31, 2021. As of December 31, 2021, our average active portfolio company investment at amortized cost was $8.8 million, which excludes investments in the eight portfolio companies that have sold their underlying operations.

The weighted average yield on debt investments as of ~~June~~September 30, 2022 and December 31, 2021 was ~~11.9%~~12.9% and 12.3%, respectively. 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 including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status, if any.

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								Cost								Fair Value								Cost
	June 30,				December 31,				June 30,				December 31,				September 30,				December 31,				September 30,				December 31,
	2022				2021				2022				2021				2022				2021				2022				2021
First Lien Debt(1)	$	432.6	53.4	%	$	354.9	49.4	%	$	430.5	58.2	%	$	353.3	56.8	%	$	488.3	57.0	%	$	354.9	49.4	%	$	488.0	59.0	%	$	353.3	56.8	%
Second Lien Debt		168.5	20.8			158.8	22.1			182.2	24.6			168.6	27.1			177.2	20.7			158.8	22.1			200.0	24.2			168.6	27.1
Subordinated Debt		68.5	8.4			36.1	5.0			68.4	9.2			36.0	5.8			81.8	9.5			36.1	5.0			80.5	9.7			36.0	5.8
Equity		137.7	17.0			166.1	23.1			55.3	7.5			60.6	9.8			107.0	12.5			166.1	23.1			55.6	6.7			60.6	9.8
Warrants		3.2	0.4			3.2	0.4			3.3	0.5			3.3	0.5			2.6	0.3			3.2	0.4			3.3	0.4			3.3	0.5
Total	$	810.5	100.0	%	$	719.1	100.0	%	$	739.7	100.0	%	$	621.8	100.0	%	$	856.9	100.0	%	$	719.1	100.0	%	$	827.4	100.0	%	$	621.8	100.0	%

(1) Includes unitranche investments, which account for ~~41.7%~~43.1% and ~~45.5%~~44.4% of our portfolio on a fair value and cost basis as of ~~June~~September 30, 2022, respectively. Includes unitranche investments, which account for 40.2% and 46.3% of our portfolio on a fair value and cost basis as of December 31, 2021, respectively.

All investments made by us as of ~~June~~September 30, 2022 and December 31, 2021 were made in portfolio companies headquartered in the United States. 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

Cost

June 30,

December 31,

June 30,

December 31,

2022

2021

2022

2021

Midwest

$
189.9

23.4
%

$
157.2

21.9
%

$
124.4

16.8
%

$
89.9

14.5
%

Southeast

237.3

29.3

220.0

30.6

238.5

32.2

197.4

31.7

Northeast

133.5

16.5

126.6

17.6

133.1

18.0

127.8

20.6

West

119.8

14.8

105.9

14.7

121.9

16.5

100.1

16.1

Southwest

130.0

16.0

109.4

15.2

121.8

16.5

106.6

17.1

Total

$
810.5

100.0
%

$
719.1

100.0
%

$
739.7

100.0
%

$
621.8

100.0
%


	Fair Value								Cost
	September 30,				December 31,				September 30,				December 31,
	2022				2021				2022				2021
Midwest	$	186.0	21.7	%	$	157.2	21.9	%	$	140.7	17.0	%	$	89.9	14.5	%
Southeast		250.5	29.2			220.0	30.6			252.2	30.5			197.4	31.7
Northeast		123.9	14.5			126.6	17.6			128.2	15.5			127.8	20.6
West		154.9	18.1			105.9	14.7			161.0	19.4			100.1	16.1
Southwest		141.6	16.5			109.4	15.2			145.3	17.6			106.6	17.1
Total	$	856.9	100.0	%	$	719.1	100.0	%	$	827.4	100.0	%	$	621.8	100.0	%

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


	Fair Value								Cost							Fair Value								Cost
	June 30,				December 31,				June 30,			December 31,				September 30,				December 31,				September 30,			December 31,
Name	2022				2021				2022			2021				2022				2021				2022			2021
Information Technology Services		30.2	%			27.0	%			32.9	%		30.6	%			34.4	%			27.0	%			36.4	%		30.6	%
Business Services																	11.3				13.3				11.5			14.3
Healthcare Products		12.8				11.2				5.7			3.6				11.3				11.2				6.4			3.6
Business Services		11.9				13.3				12.9			14.3
Component Manufacturing		8.4				4.1				9.0			4.0				8.6				4.1				8.8			4.0
Specialty Distribution		7.2				8.0				7.0			8.2				6.1				8.0				5.6			8.2
Aerospace & Defense Manufacturing		5.7				7.9				6.1			8.4				5.4				7.9				5.6			8.4
Transportation Services																	3.3				2.9				3.4			3.3
Promotional Products																	3.0				3.1				3.1			4.1
Retail																	2.7				1.6				3.7			1.8
Building Products Manufacturing		3.7				3.7				4.0			4.8				2.6				3.7				3.5			4.8
Healthcare Services		3.4				3.6				3.5			4.2				2.6				3.6				2.5			4.2
Promotional Products		3.1				3.1				3.4			4.1
Transportation Services		2.9				2.9				3.2			3.3
Environmental Industries		2.7				3.0				3.0			3.5				2.5				3.0				2.6			3.5
Consumer Products		2.2				2.6				2.4			3.0				1.9				2.6				2.0			3.0
Oil & Gas Services		1.8				2.9				2.0			0.5				1.7				2.9				1.8			0.5
Utilities: Services		1.4				1.9				1.5			1.8				1.4				1.9				1.4			1.8
Industrial Cleaning & Coatings		1.3				1.5				1.8			2.1				1.2				1.5				1.6			2.1
Retail		1.3				1.6				1.5			1.8
Restaurants		0.0		(1)		0.0		(1)		0.1			0.1				0.0		(1)		0.0		(1)		0.1			0.1
Specialty Chemicals		0.0		(1)		—				—			0.0		(1)		0.0		(1)		—				—			0.0		(1)
Utility Equipment Manufacturing		—				1.5				—			1.4				—				1.5				—			1.4
Vending Equipment Manufacturing		0.0		(1)		0.2				—			0.3				0.0		(1)		0.2				—			0.3
Total		100.0	%			100.0	%			100.0	%		100.0	%			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.

As the COVID-19 pandemic continues to evolve, we are maintaining close communications with our portfolio companies to proactively assess and manage risks across our investment portfolio. We have also increased oversight and analysis of credits in vulnerable industries in an attempt to improve performance and reduce credit risk.

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~~September 30, 2022 and December 31, 2021 (dollars in millions):


	Fair Value								Cost								Fair Value								Cost
	June 30,				December 31,				June 30,				December 31,				September 30,				December 31,				September 30,				December 31,
Investment Rating	2022				2021				2022				2021				2022				2021				2022				2021
1	$	123.5	15.2	%	$	119.8	16.7	%	$	35.2	4.7	%	$	19.1	3.1	%	$	95.1	11.1	%	$	119.8	16.7	%	$	38.9	4.7	%	$	19.1	3.1	%
2		638.7	78.8			566.7	78.8			631.5	85.4			556.1	89.4			674.9	78.7			566.7	78.8			664.9	80.4			556.1	89.4
3		45.7	5.7			31.7	4.4			59.2	8.0			40.4	6.5			74.8	8.7			31.7	4.4			91.0	11.0			40.4	6.5
4		0.2	—			0.9	0.1			1.3	0.2			3.0	0.5			7.4	0.9			0.9	0.1			10.7	1.3			3.0	0.5
5		2.4	0.3			—	—			12.5	1.7			3.2	0.5			4.7	0.6			—	—			21.9	2.6			3.2	0.5
Total	$	810.5	100.0	%	$	719.1	100.0	%	$	739.7	100.0	%	$	621.8	100.0	%	$	856.9	100.0	%	$	719.1	100.0	%	$	827.4	100.0	%	$	621.8	100.0	%

Based on our investment rating system, the weighted average rating of our portfolio as of ~~June~~September 30, 2022 and December 31, 2021 was ~~1.9~~2.0 and 1.9, respectively, on a fair value basis and ~~2.1~~2.2 and 2.1, respectively, on a cost basis.

Non-Accrual

As of ~~June~~September 30, 2022, we had debt investments in three portfolio companies on non-accrual status. As of December 31, 2021, we had a debt investment in one portfolio company on non-accrual status (dollars in millions).


	June 30, 2022				December 31, 2021						September 30, 2022				December 31, 2021
	Fair				Fair						Fair				Fair
Portfolio Company	Value		Cost		Value			Cost			Value		Cost		Value			Cost
EBL, LLC (EbLens)	$	5.6	$	9.3	$	—	(1)	$	—	(1)	$	2.4	$	9.3	$	—	(1)	$	—	(1)
US GreenFiber, LLC		—		5.2		—	(2)		5.2	(2)		—		5.2		—	(2)		5.2	(2)
K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.)		2.2		2.4		—	(1)		—	(1)		2.2		2.4		—	(1)		—	(1)
Total	$	7.8	$	16.9	$	—		$	5.2		$	4.6	$	16.9	$	—		$	5.2

(1) Portfolio company debt investment was not on non-accrual status at December 31, 2021.

(2) Portfolio company was on PIK-only non-accrual status at December 31, 2021, meaning we ceased recognizing PIK interest income on the investment.

Discussion and Analysis of Results of Operations

Comparison of three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021

Investment Income

Below is a summary of the changes in total investment income for the three months ended ~~June~~September 30, 2022 as compared to the same period in 2021 (dollars in millions, percent change calculated based on underlying dollar amounts in thousands):


	Three Months Ended June 30,										Three Months Ended September 30,
	2022		2021		$ Change			% Change (1)(2)			2022		2021		$ Change			% Change (1)(2)
Interest income	$	19.4	$	17.8	$	1.6			8.9	%	$	21.5	$	17.9	$	3.6			20.4	%
Payment-in-kind interest income		0.4		1.1		(0.7	)		(66.8	%)		0.4		1.2		(0.8	)		(67.2	%)
Dividend income		0.1		0.8		(0.7	)		(90.8	%)		0.7		0.5		0.2			41.1	%
Fee income		1.3		2.1		(0.8	)		(36.5	%)		2.4		1.6		0.8			46.6	%
Interest on idle funds and other income		—		—		—		NM				—		—		—		NM
Total investment income	$	21.2	$	21.8	$	(0.6	)		(3.1	%)	$	25.0	$	21.2	$	3.8			17.7	%

(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~~September 30, 2022, total investment income was ~~$21.2~~$25.0 million, ~~a decrease~~an increase of ~~$0.6~~$3.8 million or ~~(3.1%)~~17.7%, from the ~~$21.8~~$21.2 million of total investment income for the three months ended ~~June~~September 30, 2021. As reflected in the table above, the ~~decrease~~increase is primarily attributable to the following:

•

$~~0.9~~2.8 million increase in total interest income (which includes ~~payment-in-kind~~PIK interest income) resulting from an increase in average debt investment balances ~~partially offset by a lower~~and an increase in weighted average yield on debt investment balances outstanding, during 2022 as compared to 2021.

•

$~~0.7~~0.2 million ~~decrease~~increase in dividend income due to ~~a decrease~~an increase in distributions received from equity investments.

•

$0.8 million ~~decrease~~increase in fee income resulting from ~~a decrease~~an increase in ~~amendment~~origination and ~~origination~~amendment fees, partially offset by ~~an increase~~a decrease in prepayment fees, during 2022 as compared to 2021.

Below is a summary of the changes in total investment income for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the same period in 2021 (dollars in millions):


	Six Months Ended June 30,										Nine Months Ended September 30,
	2022		2021		$ Change			% Change (1)(2)			2022		2021		$ Change			% Change (1)(2)
Interest income	$	36.5	$	36.9	$	(0.4	)		(1.3	%)	$	58.0	$	54.8	$	3.2			5.8	%
Payment-in-kind interest income		0.9		2.1		(1.2	)		(55.9	%)		1.3		3.3		(2.0	)		(60.2	%)
Dividend income		0.8		0.9		(0.1	)		(16.8	%)		1.4		1.4		—		NM
Fee income		3.5		5.2		(1.7	)		(32.0	%)		6.0		6.8		(0.8	)		(13.0	%)
Interest on idle funds and other income		—		—		—		NM				—		—		—		NM
Total investment income	$	41.7	$	45.1	$	(3.4	)		(7.6	%)	$	66.7	$	66.3	$	0.4			0.5	%

(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~~nine months ended ~~June~~September 30, 2022, total investment income was ~~$41.7~~$66.7 million, ~~a decrease~~an increase of ~~$3.4~~$0.4 million or ~~(7.6%)~~0.5%, from the ~~$45.1~~$66.3 million of total investment income for the ~~six~~nine months ended ~~June~~September 30, 2021. As reflected in the table above, the ~~decrease~~increase is primarily attributable to the following:

•

$~~1.6~~1.2 million ~~decrease~~increase in total interest income (which includes a ~~$1.2~~$2.0 million decrease in ~~payment-in-kind interest ("PIK")~~PIK income) resulting from ~~a decrease~~an increase in average debt investment balances outstanding and an increase in weighted average yield on debt investment balances outstanding, partially offset by repayments of PIK debt investments and an increase in PIK investments on non-accrual, ~~partially offset by an increase in average debt investment balances outstanding,~~ during 2022 as compared to 2021.

•

$~~0.1 million decrease in dividend income due to a decrease in distributions received from equity investments.~~

•

~~$1.7~~0.8 million decrease in fee income resulting from a decrease in prepayment and amendment ~~and~~fees, partially offset by an increase in origination fees during 2022 as compared to 2021.

Expenses

Below is a summary of the changes in total expenses, including income tax provision, for the three months ended ~~June~~September 30, 2022 as compared to the same period in 2021 (dollars in millions, percent change calculated based on underlying dollar amounts in thousands):


	Three Months Ended June 30,											Three Months Ended September 30,
	2022			2021		$ Change			% Change (1)(2)			2022			2021			$ Change			% Change (1)(2)
Interest and financing expenses	$	4.7		$	4.6	$	0.1			1.7	%	$	4.7		$	4.7		$	—		NM
Base management fee		3.6			3.2		0.4			12.5	%		3.8			3.3			0.5			15.1	%
Incentive fee - income		1.2			2.5		(1.3	)		(53.6	%)		3.0			2.4			0.6			25.6	%
Incentive fee (reversal) - capital gains		(0.6	)		3.8		(4.4	)		(115.6	%)		(0.3	)		4.7			(5.0	)		(105.5	%)
Administrative service expenses		0.5			0.5		—		NM				0.5			0.4			0.1			9.6	%
Professional fees		0.3			0.3		—		NM				0.3			0.5			(0.2	)		(33.1	%)
Other general and administrative expenses		0.5			0.4		0.1			34.1	%		0.4			0.2			0.2			41.6	%
Total expenses, before base management and income incentive fee waivers		10.2			15.3		(5.1	)		(33.8	%)		12.4			16.2			(3.8	)		(23.6	%)
Base management and income incentive fee waivers		(0.1	)		—		(0.1	)	NM				(0.1	)		(0.1	)		—		NM
Total expenses, before income tax provision		10.1			15.3		(5.2	)		(34.1	%)		12.3			16.1			(3.8	)		(23.8	%)
Income tax provision (benefit)		—			—		—		NM				—			—			—		NM
Total expenses, including income tax provision	$	10.1		$	15.3	$	(5.2	)		(33.9	%)	$	12.3		$	16.1		$	(3.8	)		(23.8	%)

(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~~September 30, 2022, total expenses, including income tax provision, were ~~$10.1~~$12.3 million, a decrease of ~~$5.2~~$3.8 million or ~~(33.9%~~(23.8%), from the ~~$15.3~~$16.1 million of total expenses for the three months ended ~~June~~September 30, 2021. As reflected in the table above, changes across periods were primarily attributable to the following:

•

$0.1 million increase in interest and financing expenses due to an increase in average borrowings outstanding, partially offset by a decrease in the weighted average interest rate during 2022 as compared to 2021.

•

~~$0.3~~0.5 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2022 as compared to 2021.

•

$~~1.3~~0.6 million net ~~decrease~~increase in the income incentive fee due to ~~a decrease~~an increase in pre-incentive fee net investment income during 2022 as compared to 2021.

•

$~~4.4~~5.0 million decrease in the accrued capital gains incentive fee due to a ~~$22.4~~$24.6 million decrease in net gain on investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments) plus realized losses on extinguishment of debt, during 2022 as compared to the same period in 2021.

•

$0.2 million decrease in professional fees due to decreased legal, audit and tax compliance costs during 2022 as compared to 2021.

Below is a summary of the changes in total expenses, including income tax provision, for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the same period in 2021 (dollars in millions):


	Six Months Ended June 30,											Nine Months Ended September 30,
	2022			2021		$ Change			% Change (1)(2)			2022			2021			$ Change			% Change (1)(2)
Interest and financing expenses	$	9.1		$	9.7	$	(0.6	)		(7.2	%)	$	13.7		$	14.4		$	(0.7	)		(4.7	%)
Base management fee		7.0			6.3		0.7			8.9	%		10.7			9.7			1.0			11.0	%
Incentive fee - income		2.2			5.3		(3.1	)		(57.2	%)		5.3			7.6			(2.3	)		(30.9	%)
Incentive fee - capital gains		(0.3	)		4.0		(4.3	)		(108.4	%)		(0.6	)		8.6			(9.2	)		(106.9	%)
Administrative service expenses		0.9			0.8		0.1			10.6	%		1.4			1.3			0.1			10.2	%
Professional fees		0.8			0.7		0.1			26.8	%		1.5			1.5			—		NM
Other general and administrative expenses		0.8			0.7		0.1			10.4	%		0.8			0.6			0.2			16.9	%
Total expenses, before base management and income incentive fee waivers		20.5			27.5		(7.0	)		(25.7	%)		32.8			43.7			(10.9	)		(24.9	%)
Base management and income incentive fee waivers		(0.2	)		—		(0.2	)	NM				(0.2	)		(0.1	)		(0.1	)		132.7	%
Total expenses, before income tax provision		20.3			27.5		(7.2	)		(26.2	%)		32.6			43.6			(11.0	)		(25.3	%)
Income tax provision (benefit)		—			—		—		NM				—			0.1			(0.1	)		(106.3	%)
Total expenses, including income tax provision	$	20.3		$	27.5	$	(7.2	)		(26.3	%)	$	32.6		$	43.7		$	(11.1	)		(25.4	%)

(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~~nine months ended ~~June~~September 30, 2022, total expenses, including income tax provision, were ~~$20.3~~$32.6 million, a decrease of ~~$7.2~~$11.1 million or ~~(26.3%~~(25.4%), from the ~~$27.5~~$43.7 million of total expenses for the ~~six~~nine months ended ~~June~~September 30, 2021. As reflected in the table above, changes across periods were primarily attributable to the following:

•

$~~0.6~~0.7 million decrease in interest and financing expenses due to a decrease in weighted average interest rate, ~~and a decrease~~partially offset by an increase in average borrowings outstanding during 2022 as compared to 2021.

•

$~~0.5~~0.9 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2022 as compared to 2021.

•

$~~3.1~~2.3 million net decrease in the income incentive fee due to a decrease in pre-incentive fee net investment income during 2022 as compared to the same period in 2021.

•

$~~4.3~~9.2 million decrease in the accrued capital gains incentive fee due to a ~~$21.6~~$46.2 million decrease in net gain on investments (net realized gains (losses), plus net change in unrealized appreciation (depreciation) on investments), plus realized losses on extinguishment of debt during 2022 as compared to the same period in 2021.

•

~~$0.1 million increase in professional fees due to increased legal, audit and tax compliance costs during 2022 as compared to 2021.~~

Net Investment Income

Net investment income increased by ~~$4.5~~$7.6 million, or ~~70.1%~~148.5%, to ~~$11.0~~$12.7 million during the three months ended ~~June~~September 30, 2022 as compared to the same period in 2021, as a result of the ~~$5.2~~$3.8 million decrease in total expenses, including base management fee waivers and income tax provision, ~~partially offset by~~and the ~~$0.6 decrease~~$3.8 increase in total investment income.

Net investment income increased by ~~$3.8~~$11.5 million, or ~~21.6%~~50.3%, to ~~$21.3~~$34.1 million during the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the same period in 2021, as a result of the ~~$7.2~~$11.1 million decrease in total expenses, including base management ~~and incentive fee~~ waivers and income tax provision, ~~partially offset by~~and the ~~$3.4 decrease~~$0.4 increase in total investment income.

Net Gain (Loss) on Investments

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was ~~$18.3~~$40.0 million and ~~$25.2~~$65.2 million, respectively. Income tax (provision) benefit from realized gains on investments was ~~$(0.1) million~~zero and $(0.1) million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 are summarized below (dollars in millions):


		Period Ended June 30, 2022							Period Ended September 30, 2022
		Three			Six				Three			Nine
Portfolio Company	Realization Event (1)	Months			Months			Realization Event (1)	Months			Months
Software Technology, LLC	Escrow distribution	$	—		$	—
Frontline Food Services, LLC (f/k/a Accent Food Services, LLC)	Sale of portfolio company		—			0.2		Escrow distribution	$	—		$	0.2
Revenue Management Solutions, LLC	Escrow distribution		—			0.1		Exit of portfolio company		—			0.1
SpendMend LLC	Exit of portfolio company		0.1			6.3		Escrow distribution		—			6.3
FDS Avionics Corp.	Escrow distribution		—			(0.4	)	Escrow liability release		0.6			0.2
Mesa Line Services, LLC	Escrow liability release		(0.2	)		0.3		Sale of portfolio company		(0.2	)		0.1
Mirage Trailers LLC	Sale of portfolio company		—			0.3		Escrow distribution		—			0.3
Alzheimer's Research and Treatment Center, LLC	Escrow distribution		—			—
Allied 100 Group, Inc.	Escrow distribution		—			—
TransGo, LLC	Sale of portfolio company		1.9			1.9		Sale of portfolio company		—			1.9
AVC Investors, LLC (dba Auveco)	Sale of portfolio company		0.8			0.8		Sale of portfolio company		—			0.8
CRS Solutions Holdings, LLC (dba CRS Texas)	Sale of portfolio company		0.4			0.4		Sale of portfolio company		—			0.4
Pinnergy, Ltd.	Sale of portfolio company		15.3			15.3		Sale of portfolio company		—			15.3
Palisade Company, LLC								Exit of portfolio company		1.9			1.9
The Tranzonic Companies								Sale of portfolio company		1.4			1.4
Bandon Fitness (Texas), Inc.								Exit of portfolio company		3.2			3.2
SES Investors, LLC (dba SES Foam)								Sale of portfolio company		8.8			8.8
Pfanstiehl, Inc.								Partial sale of equity investment		24.3			24.3
Pool & Electrical Products, LLC								Escrow distribution		0.1			0.1
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)								Escrow distribution	$	(0.1	)	$	(0.1	)
Net realized gain (loss) on investments			18.3			25.2				40.0			65.2
Income tax (provision) benefit from realized gains on investments			(0.1	)		(0.1	)			—			(0.1	)
Net realized gain (loss), net of income tax provision, on investments		$	18.2		$	25.1			$	40.0		$	65.1

(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 consolidated 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).

For the three and ~~six~~nine months ended ~~June~~September 30, 2021, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was ~~$2.2~~$8.3 million and ~~$5.4~~$13.7 million, respectively. ~~There was no income~~Income tax (provision) benefit from realized ~~gains~~gains/(losses) on investments was $0.1 million and $0.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and ~~six~~nine months ended ~~June~~September 30, 2021 are summarized below (dollars in millions):


		Period Ended June 30, 2021					Period Ended September 30, 2021
		Three		Six			Three			Nine
Portfolio Company	Realization Event (1)	Months		Months		Realization Event (1)	Months			Months
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)						Sale of portfolio company	$	—		$	1.0
Software Technology, LLC						Exit of portfolio company		—			1.4
Rohrer Corporation						Exit of portfolio company		—			0.9
Wheel Pros, Inc.	Exit of portfolio company	$	2.1	$	2.1	Exit of portfolio company		(0.1	)		2.0
Software Technology, LLC	Exit of portfolio company		-		1.4
Spectra A&D Acquisition, Inc. (fka FDS Avionics Corp.)	Exit of portfolio company		-		1.0
Rohrer Corporation	Sale of portfolio company		-		0.9
Other			0.1		-
Hilco Plastics Holdings, LLC (dba Hilco Technologies)						Sale of portfolio company		(1.0	)		(1.0	)
Worldwide Express Operations, LLC						Sale of portfolio company		3.0			3.0
Pugh Lubricants, LLC						Exit of portfolio company		0.1			0.1
LNG Indy, LLC (dba Kinetrex Energy)						Sale of portfolio company		4.5			4.5
Allied 100 Group, Inc.						Exit of portfolio company		1.8			1.8
Net realized gain (loss) on investments			2.2		5.4			8.3			13.7
Income tax provision from realized gains on investments			-		-
Income tax (provision) benefit from realized gains on investments								0.1			0.1
Net realized gain (loss), net of income tax provision, on investments		$	2.2	$	5.4		$	8.4		$	13.8

(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 ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
Unrealized Appreciation (Depreciation)	2022			2021			2022			2021			2022			2021			2022			2021
Exit, sale or restructuring of investments	$	(17.5	)	$	(1.7	)	$	(23.9	)	$	(3.3	)	$	(37.3	)	$	(2.6	)	$	(61.2	)	$	(5.9	)
Fair value adjustments to debt investments		(5.4	)		0.7			(3.4	)		(4.5	)		(9.5	)		3.8			(12.9	)		(0.6	)
Fair value adjustments to equity investments		1.7			18.3			0.8			24.5			5.5			14.1			6.3			38.5
Net change in unrealized appreciation (depreciation)	$	(21.2	)	$	17.3		$	(26.5	)	$	16.7		$	(41.3	)	$	15.3		$	(67.8	)	$	32.0

Net Increase in Net Assets Resulting From Operations

Net increase (decrease) in net assets resulting from operations during the three months ended ~~June~~September 30, 2022 and 2021 was ~~$8.0~~$11.4 million and ~~$25.9~~$28.4 million, respectively, as a result of the events described above.

Net increase (decrease) in net assets resulting from operations during the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 was ~~$19.7~~$31.1 million and ~~$37.4~~$65.8 million, respectively, as a result of the events described above.

Liquidity and Capital Resources

As of ~~June~~September 30, 2022, we had ~~$72.5~~$40.4 million in cash and cash equivalents and our net assets totaled ~~$484.0~~$474.4 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~~nine months ended ~~June~~September 30, 2022, we repaid ~~$20.0~~$30.0 million of SBA debentures which would have matured during the period March 1, 2025 through March 1, 2028. Our remaining outstanding SBA debentures continue to mature in 2025 and subsequent years through ~~2032,~~2033, which will require repayment on or before the respective maturity dates. This “Liquidity and Capital Resources” section should be read in conjunction with the “COVID-19 Updates” section above.

Cash Flows

For the ~~six~~nine months ended ~~June~~September 30, 2022, we experienced a net decrease in cash and cash equivalents in the amount of ~~$97.0~~$129.0 million. During that period, we made payments of ~~$93.1~~$117.4 million of cash for operating activities, which included the funding of ~~$160.1~~$268.0 million of investments which was partially offset by proceeds received from sales and repayments of investments of ~~$68.0~~$128.3 million. During the same period, we received repayments of ~~$0.4~~$0.6 million on our secured borrowings, made repayments of SBA debentures of ~~$20.0 million;~~$30.0 million, which were offset by proceeds from the issuances of SBA debentures of ~~$41.5~~$56.0 million, paid cash dividends ~~paid~~ to stockholders of ~~$23.5~~$34.0 million, and made payment of deferred financing costs related to our debt financings of ~~$1.5~~$3.0 million.

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~~regulations 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 two 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 Notes 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~~September 30, 2022, Fund II and Fund III had ~~$50.0~~$40.0 million and ~~$78.5~~$93.0 million of outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval, Fund III may access up to ~~$96.5~~$82.0 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

In49

On June 16, 2014, we entered into a senior secured revolving credit agreement (the "Credit Agreement") and the senior secured revolving credit facility, ~~(the "Credit Facility"~~the “Credit Facility”) ~~to provide additional funding~~with ING Capital LLC (“ING”), as the administrative agent, collateral agent, and lender. The Credit Facility is secured by certain portfolio investments held by us, but portfolio investments held by the Funds are not collateral for ~~our investment and operational activities.~~the Credit Facility. On April 24, 2019, we entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among us, as borrower, the lenders party thereto, and ING, as administrative agent. On June 26, 2020, we entered into an amendment on the Amended Credit Agreement ~~which amends, restates, and replaces the Credit Agreement.~~that, among other changes, modified certain financial covenants. On ~~June 26, 2020,~~August 17, 2022, the Company ~~amended the Amended Credit Agreement, but the material terms were unchanged. Among other revisions, the~~entered into a second amendment to the Amended Credit Agreement ~~modifies certain covenants therein, including~~(“Second Amendment”). The Second Amendment, among other things: (i) changed the underlying benchmark used to ~~amend the minimum consolidated~~compute 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~~under the Amended Credit Agreement ~~(i) revolving commitments by lenders were increased~~to the Secured Overnight Financing Rate (SOFR) from ~~$90.0 million~~the London Interbank Offered Rate (LIBOR); (ii) reduced the applicable margin from 3.00% to ~~$100.0 million,~~2.675% on SOFR loans prior to satisfying certain step-down conditions, and from 2.675% to 2.50% after satisfying certain step-down conditions, with ~~an accordion feature that allows~~commensurate reductions in the applicable margins 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)~~base rate loans; (iii) provided for a loan commitment availability period ending on August 17, 2026; (iv) extended the maturity date ~~of the Credit Facility was extended~~to August 17, 2027 from ~~June 16, 2019 to~~ April 24, ~~2023,~~2023; and ~~(iii) borrowings under~~(v) amended certain financial covenants, including (a) amending the ~~Credit Facility bear interest, at our election, at~~asset coverage ratio to no less than 1.50 to 1.00 from no less than 2.00 to 1.00 (on a ~~rate per annum equal~~regulatory basis); and (b) requiring the Company to ~~(a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x)~~maintain a senior asset coverage ratio of no ~~equity interests are included in the borrowing base, (y) the contribution~~less than 2.00 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. 1.00.

We pay a commitment fee that varies depending on the size of the unused portion of the Credit Facility: ~~3.00%~~2.500% to 2.675% 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 1.00 (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 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 we 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~~September 30, 2022, we were in compliance with all covenants of the Credit Facility and there were no borrowings outstanding under the Credit Facility.

Notes

~~Notes~~

On February 2, 2018, we closed the public offering of approximately ~~$43.5~~$43.5 million in aggregate principal amount of our 5.875% notes due 2023, or the ~~“2023 Notes.~~“2023 Notes.” On February 22, 2018, the underwriters exercised their option to purchase an additional ~~$6.5~~$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. On January 19, 2021, we redeemed $50.0 million in the aggregate principal amount on the issued and outstanding 2023 Notes, resulting in a realized loss on extinguishment of debt of approximately $0.8 million.

On February 8, 2019, we closed the public offering of approximately ~~$60.0~~$60.0 million in aggregate principal amount of our 6.000% notes due 2024, or the ~~“February~~“February 2024 ~~Notes”~~Notes”. On February 19, 2019, the underwriters exercised their option to purchase an additional ~~$9.0~~$9.0 million in aggregate principal of the February 2024 Notes. The total net proceeds to us from the February 2024 Notes, including the exercise of the underwriters’ option, after deducting underwriting discounts of approximately $2.1 million and estimated offering expenses of $0.4 million, were approximately $66.5 million. On February 16, 2021, we redeemed $50.0 million of the $69.0 million in aggregate principal amount on the February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately $1.1 million. On November 2, 2021, we fully redeemed the remaining $19.0 million in aggregate principal amount on the issued and outstanding February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately $0.3 million.

On October 16, 2019, we closed the public offering of approximately ~~$55.0~~$55.0 million in aggregate principal amount of our 5.375% notes due 2024, or the ~~“November~~“November 2024 ~~Notes”~~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~~$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 estimated offering expenses of $0.3 million, were approximately $61.1 million. On November 2, 2021, we fully redeemed the $63.3 million in aggregate principal amount on the issued and outstanding November 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately $1.3 million.

On December 23, 2020, we closed the offering of ~~$125.0~~$125.0 million in aggregate principal amount of our 4.75% notes due 2026, or the ~~“January~~“January 2026 ~~Notes”~~Notes”. The total net proceeds to us from the January 2026 Notes after deducting underwriting discounts of $2.5 million and estimated offering expenses of approximately $0.4 million, were approximately $122.1 million. The January 2026 Notes will mature on January 31, 2026 and bear interest at a rate of 4.75%. The January 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity and at par thereafter. Interest on the January 2026 Notes is payable on January 31 and July 31 of each year. We do not intend to list the January 2026 Notes on any securities exchange or automated dealer quotation system. As of ~~June~~September 30, 2022, the outstanding principal balance of the January 2026 Notes was approximately $125.0 million.

On October 8, 2021, we closed the offering of ~~$125.0~~$125.0 million in aggregate principal amount of our 3.50% notes due 2026, or the ~~“November~~“November 2026 ~~Notes”~~Notes” (collectively with the Public Notes and the January 2026 Notes, the “Notes”). The total net proceeds to us from the November 2026 Notes, based on a public offering price of 99.996% of par, after deducting underwriting discounts of $2.5 million and estimated offering expenses of approximately $0.3 million, were approximately $122.2 million. The November 2026 Notes will mature on November 15, 2026 and bear interest at a rate of 3.50%. The November 2026 Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity and at par thereafter. Interest on the November 2026 Notes is payable on May 15 and November 15 of each ~~year, beginning May 15, 2022.~~year. We do not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system. As of ~~June~~September 30, 2022, the outstanding principal balance of the November 2026 Notes was approximately $125.0 million.

Each of the Notes are unsecured obligations and rank pari passu with our existing and 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.

Secured Borrowing

As of ~~June~~September 30, 2022, the carrying value of secured borrowings totaled ~~$17.3~~$17.0 million and the fair value of the associated loans included in investments was ~~$17.3~~$16.9 million. As of December 31, 2021, carrying value of secured borrowings totaled $17.6 million and the fair value of the associated loans included in investments was $17.5 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest.” As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately ~~5.119%~~6.446% and 4.392% as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

As of ~~June~~September 30, 2022, the weighted average stated interest rates for our SBA debentures and Notes were ~~2.846%~~3.214% and 4.125%, respectively. As of ~~June~~September 30, 2022, we had $100.0 million of unutilized commitment under our Credit Facility, and we were subject to a ~~1.375%~~1.200% fee on such amount. As of ~~June~~September 30, 2022, the weighted average stated interest rate on total debt outstanding was ~~3.753%~~3.921%.

As a BDC, we are generally required to meet an asset coverage ratio of at least 150.0% (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. On April 29, 2019, our Board, including a majority of the non-interested 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 are subject to the 150% asset coverage ratio effective as of April 29, 2020. We have received exemptive relief from the U.S. Securities and Exchange Commission (“SEC”) to allow us to exclude the senior securities issued by the Funds from the definition of senior securities in the 150% asset coverage requirement applicable to the Company under the 1940 Act, which, in turn, will enable us to fund more investments with debt capital.

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 29, 2022, 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 29, 2023 or the date of our 2023 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 29, 2023 or the date of our 2023 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 ~~November 1, 2021,~~October 31, 2022, the Board extended the Stock Repurchase Program through December 31, ~~2022,~~2023, 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. We did not make any repurchases of common stock during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021. 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, revenue recognition and transfers of financial assets as our most critical accounting policies and estimates. We continuously evaluate our policies and 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 our board of directors 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, our board of directors 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;

•

our board of directors 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. Our board of directors consulted with the independent valuation firm(s) in arriving at our determination of fair value for 1014 and 17 of our portfolio company investments representing ~~19.5%~~29.5% and 40.6% of the total portfolio investments at fair value (exclusive of new portfolio company investments made during the three months ended ~~June~~September 30, 2022 and December 31, 2021, respectively) as of ~~June~~September 30, 2022 and December 31, 2021, respectively;

•

the audit committee of our board of directors 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

•

our 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 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.

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~~.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.

Transfers of Financial Assets

Partial loan and equity sales. We follow the guidance in ASC 860, Transfers and Servicing, when accountingfor loan (debt investment) participations, equity assignments and other partial loan sales. Such guidance requires a participation, assignment or other partial loan or equity sale to meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations, assignments or other partial loan or equity sales which do not meet the definition of a participating interest should remain on our consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing until the definition is met.

Recently Issued Accounting Standard

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820),” which clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value. In addition, ASU No. 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. ASU No. 2022-03’s amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU No. 2022-03 on our consolidated financial statements.

SEC Regulation S-K Update

In November 2020, the SEC issued a final rule that modernized and simplifies Management’s Discussion and Analysis of Financial Condition and Results of Operations and certain financial disclosure requirements in Regulation S-K (the “Amendments”). Specifically, the Amendments: (i) eliminate Item 301 of Regulation S-K (Selected Financial Data); (ii) simplify Item 302 of Regulation S-K (Supplementary Financial Information); and (iii) amend certain aspects of Item 303 of Regulation S-K (Management's Discussion and Analysis of Financial Condition and Results of Operations). The Amendments became effective on February 10, 2021 and compliance was required for the registrant’s fiscal year ending on or after August 9, 2021. We adopted the Amendments on the effective date which did not have a material impact on our Consolidated Financial Statements.

Related Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

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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.

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Fidus Group Holdings, LLC (“Holdings”), a limited liability company organized under the laws of Delaware, is the parent company of Fidus Investment Advisors. Edward H. Ross, our Chairman and Chief Executive Officer, and Thomas C. Lauer, our President, are managers of Holdings.

•

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.

•

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. 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 $0.1 million and $0.2 million of the base management fees on any assets accounted for as secured borrowings as defined under GAAP for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, and ~~$0.0~~$0.1 million and $0.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

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 exemptive relief from the SEC, we are permitted to exclude the senior securities issued by Fund II and Fund III from the definition of senior securities in the asset coverage requirement applicable to the Company under the 1940 Act.

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. On January 4, 2017, the SEC staff has granted us relief sought in an exemptive order 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. However, neither we nor our affiliates are obligated to invest or co-invest when investment opportunities are referred to us or them.

In addition, we and our 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 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 our 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 6, 2022, we issued an additional $7.5 million in SBA debentures, which will pool in September 2022. Until the pooling date, the debentures bear interest at a fixed rate interim interest rate of 2.766%.

~~On July 8,~~October 3, 2022, we invested ~~$7.8~~$1.0 million ~~in first lien debt, $2.0 million in subordinated debt, and $1.0~~ in common equity of ~~AmeriWater,~~EBL, LLC, which was acquired under a ~~leading provider~~new holding company, FOM Eblens Holdings, LLC (dba Eblens), and became a controlled affiliate investment. In conjunction with the transaction, we amended the terms of ~~water purification systems~~our second lien debt investment and ~~aftermarket parts & consumables for healthcare and industrial applications.~~committed up to $0.4 million in incremental common equity.

On ~~July 12,~~October 7, 2022, we exited our debt investment in UPG Company, LLC. We received payment in full of $17.0 million on our first lien debt, which included a prepayment fee.

On October 17, 2022, we exited our debt and equity investment in ~~Palisade Company, LLC.~~OMC Investors, LLC (dba Ohio Medical Corporation). We received payment in full of $5.2 million on our second lien debt, which included a prepayment fee. We received a distribution on our ~~common~~ equity investment for a realized gain of approximately ~~$1.9~~$0.7 million.

On ~~July 18, 2022, we made a commitment of $4.9 million in second lien debt of Magenta Buyer, LLC, (dba Trellix), a leading global cybersecurity company.~~

~~On July 27, 2022, we exited our equity investment in Bandon Fitness (Texas) Inc. We received a distribution on our common equity investment for a realized gain of approximately $3.2 million.~~

~~On July 29, 2022, we exited our debt investment in Bedford Precision Parts LLC. We received payment in full of $4.5 million on our first lien debt.~~

~~On August 1, 2022, we received a distribution on our common equity investment in SES Investors, LLC (dba SES Foam), resulting in a realized gain of approximately $9.0 million.~~

~~On August 1, 2022, we exited our debt investment in Healthfuse, LLC. We received payment in full of $5.3 million on our first lien debt, which includes a prepayment fee.~~

~~On August 1,~~October 31, 2022, our Board declared ~~a regular quarterly~~an incremental supplemental dividend of ~~$0.36~~$0.08 per share and a ~~supplemental~~special dividend of ~~$0.07~~$0.10 per share ~~payable on September 23, 2022, to stockholders of record as of September 9, 2022.~~

~~On August 1, 2022, our Board declared a regular quarterly dividend of $0.36 per share and a supplemental dividend of $0.07 per share~~for the fourth quarter, which are payable on December 16, 2022, to stockholders of record as of December 2, 2022.

On ~~August 2,~~October 31, 2022, we ~~sold a portion of our equity investment in Pfanstiehl, Inc. and realized a gain of approximately $24.3 million. In conjunction with the transaction, we~~ invested ~~$10.0~~$6.0 million in ~~subordinated debt.~~

~~On August 3, 2022, we made a commitment of $20.0 million in first~~second lien debt of ~~BP Thrift Buyer~~Education Incites, LLC (dba ~~Unique~~Acceleration Academies), a leading provider of alternative education academies focused on high school dropout recovery throughout the United States.

On November 1, 2022, we issued an additional $5.0 million and ~~Eco Thrift)~~$3.0 million in SBA debentures, which will bear interest at fixed interim interest rates of 5.221% and 5.123%, ~~an owner and operator of retail thrift stores.~~respectively, until the pooling date in March 2023.

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. The prices of securities held by us may decline in response to certain events, including those directly involving the companies in which we invest and conditions affecting the general economy, including: the impact of COVID-19 and any new variants of COVID-19; overall market changes, including an increase in market volatility due to COVID-19; legislative reform; local, regional, national or global political, social or economic instability; and interest rate volatility, including the decommissioning of LIBOR and rising interest rates.

In the future, our investment income may also be affected by changes in various interest rates, including the decommissioning of LIBOR and changes in alternate rates 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 previously 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. Most recently, in March 2022, the Federal Reserve raised interest rates by 0.25%, the first increase since December 2018, and since then, has raised interest rates by an additional ~~2.00%~~2.75% and indicated that it would ~~raise rates at each remaining meeting~~consider additional rate hikes in ~~2022.~~response to ongoing inflation concerns. See Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2021, such as "Changes in interest rates will affect our cost of capital and net investment income”, “Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies”, and “Changes relating to the discontinuation LIBOR may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities”.

As of ~~June~~September 30, 2022 and December 31, 2021, 3943 and 32 portfolio ~~company’s~~companies’ debt investments, respectively, bore interest at a variable rate, which represented ~~$467.2~~$538.1 million and $376.0 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 Notes bear interest at fixed rates. Our Credit Facility bears interest, at our election, at a rate per annum equal to (a) ~~3.00%~~2.675% on SOFR loans prior

to satisfying certain step-down conditions (or ~~2.75% if~~2.50% after satisfying certain step-down conditions, ~~are satisfied, including if (x) no equity interests are included~~with commensurate reductions in the ~~borrowing~~applicable margins for base ~~(y)~~rate loans). We pay a commitment fee that varies depending on the ~~contribution~~size of the unused portion of the Credit Facility: 2.500% to 2.675% 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 credit agreement relating to the ~~borrowing base~~Credit Facility contains certain covenants, including a minimum asset coverage ratio of ~~eligible portfolio investments that are performing~~1.50 to 1.00 (on a regulatory basis) and a senior asset coverage ratio of no less than 2.00 to 1.00. The Credit Facility is secured by a first ~~lien bank loans is greater than or equal to 35%, and (z)~~priority security interest in all of our assets, excluding the ~~contribution to the borrowing base~~assets 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.our SBIC subsidiaries.

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~~September 30, 2022 (dollars in millions):

Interest Income

Interest Expense

Increase

Increase

Net Increase

Net Investment

Basis Point Increase (Decrease)

(Decrease) (1) (2)

(Decrease) (4)

(Decrease)

Income (3)

(200
)

$
(6.7
)

$
(0.3
)

$
(6.4
)

$
(5.1
)

(150
)

(6.2
)

(0.3
)

(5.9
)

(4.7
)

(100
)

(4.5
)

(0.2
)

(4.3
)

(3.4
)

(50
)

(2.3
)

(0.1
)

(2.2
)

(1.8
)

50

2.4

0.1

2.3

1.8

100

4.7

0.2

4.5

3.6

150

7.1

0.2

6.9

5.5

200

9.4

0.3

9.1

7.3

250

11.7

0.4

11.3

9.0

300

14.1

0.5

13.6

10.9


			Interest Income			Interest Expense
			Increase			Increase			Net Increase			Net Investment
Basis Point Increase (Decrease)			(Decrease) (1) (2)			(Decrease) (4)			(Decrease)			Income (3)
	(200	)	$	(10.9	)	$	(0.3	)	$	(10.6	)	$	(8.5	)
	(150	)		(8.2	)		(0.3	)		(7.9	)		(6.3	)
	(100	)		(5.5	)		(0.2	)		(5.3	)		(4.2	)
	(50	)		(2.7	)		(0.1	)		(2.6	)		(2.1	)
	50			2.7			0.1			2.6			2.1
	100			5.5			0.2			5.3			4.2
	150			8.2			0.3			7.9			6.3
	200			11.0			0.3			10.7			8.6
	250			13.7			0.4			13.3			10.6
	300			16.4			0.5			15.9			12.7

(1) Certain of our variable rate debt investments have a LIBOR, PRIME or SOFR interest rate floor, which lessens the impact of decreases in interest rates.

(2) Interest income calculated assuming three-month LIBOR, PRIME, and SOFR rate as of ~~June~~September 30, 2022.

(3) Includes the impact of income incentive fee at 20.0% on net increase (decrease) in net interest.

(4) As of ~~June~~September 30, 2022, we did not have any borrowings outstanding under our Credit Facility.

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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the ~~second~~third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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, you should carefully consider the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended December 31, 2021 ~~and~~ filed with the SEC on March 3, 2022, which are incorporated herein by reference. The risk factors therein 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety ~~Disclosures~~.Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.


Number		Exhibit
3.1		Articles of Amendment and Restatement of the Registrant (Filed as Exhibit (a)(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).

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) 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).

4.2		Agreement to Furnish Certain Instruments (Filed as Exhibit (f)(2) to Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-172550) filed with the U.S. Securities and Exchange Commission on May 26, 2011 and incorporated herein by reference).

4.3		Form of Indenture (Filed as Exhibit (d)(5) to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-202531) filed with the U.S. Securities and Exchange Commission on April 29, 2016 and incorporated herein by reference).

4.4		Fourth Supplemental Indenture dated as of December 23, 2020 between Fidus Investment Corporation and U.S. Bank National Association, as trustee (Filed as Exhibit 4.1 to the Registrant’s Current report on Form 8-K filed with the U.S. Securities and Exchange Commission on December 23, 2020 and incorporated herein by reference).

4.5		Form of Global Note with respect to the 4.75% Notes due 2026 (Filed as Exhibit 4.1 to the Registrant’s Current report on Form 8-K filed with the U.S. Securities and Exchange Commission on December 23, 2020 and incorporated herein by reference).

4.6		Fifth Supplemental Indenture dated as of October 8, 2021 between Fidus Investment Corporation and U.S. Bank National Association, as trustee (Filed as Exhibit 4.1 to the Registrant’s Current report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 8, 2021 and incorporated herein by reference).

4.7		Form of Global Note with respect to the 3.50% Notes due 2026 (Filed as Exhibit 4.1 to the Registrant’s Current report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 8, 2021 and incorporated herein by reference).

~~31.1~~10.1		Amendment No. 2, dated as of August 17, 2022, to the Amended and Restated Senior Secured Revolving Credit Agreement, by and among the Company, the Lenders, and ING Capital LLC, as administrative agent for the Lenders (Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on August 23, 2022 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.*

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*Filed herewith.

~~SIGNATURES~~60

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 CORPORATION

Date: ~~August 4,~~November 3, 2022	/s/ EDWARD H. ROSS
	Edward H. Ross
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

Date: ~~August 4,~~November 3, 2022	/s/ SHELBY E. SHERARD
	Shelby E. Sherard
	Chief Financial Officer (Principal Financial and Accounting Officer)

6061


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)


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


	June 30,						September 30,
	2022			December 31,			2022			December 31,
	(unaudited)			2021			(unaudited)			2021
ASSETS
Investments, at fair value:
Control investments (cost: $6,833 and $6,833, respectively)	$	—		$	2,151
Affiliate investments (cost: $45,537 and $55,519, respectively)		106,374			137,284
Non-control/non-affiliate investments (cost: $687,344 and $559,434, respectively)		704,146			579,689
Total investments, at fair value (cost: $739,714 and $621,786, respectively)		810,520			719,124
Control investments (cost: $6,833 and $6,833, respectively)							$	—		$	2,151
Affiliate investments (cost: $55,823 and $55,519, respectively)								95,575			137,284
Non-control/non-affiliate investments (cost: $764,734 and $559,434, respectively)								761,339			579,689
Total investments, at fair value (cost: $827,390 and $621,786, respectively)								856,914			719,124
Cash and cash equivalents		72,466			169,417			40,411			169,417
Interest receivable		13,109			8,231			11,643			8,231
Proceeds receivable from investments sold		11,895			—
Prepaid expenses and other assets		1,131			413			780			413
Total assets	$	909,121		$	897,185		$	909,748		$	897,185
LIABILITIES
SBA debentures, net of deferred financing costs (Note 6)	$	124,447		$	103,978		$	128,803		$	103,978
Notes, net of deferred financing costs (Note 6)		245,567			245,016			245,847			245,016
Borrowings under Credit Facility, net of deferred financing costs (Note 6)		(370	)		(595	)		(1,455	)		(595	)
Secured borrowings		17,263			17,637			16,995			17,637
Accrued interest and fees payable		4,492			4,668			3,043			4,668
Base management fee payable, net of base management fee waiver – due to affiliate		3,542			3,135			3,687			3,135
Income incentive fee payable – due to affiliate		1,183			2,622			3,047			2,622
Capital gains incentive fee payable – due to affiliate		22,756			29,227			22,498			29,227
Administration fee payable and other – due to affiliate		645			668			559			668
Dividends payable								10,508			—
Taxes (receivable) payable		343			2,410			315			2,410
Payables for investments purchased		2,773			-
Accounts payable and other liabilities		2,505			655			1,514			655
Total liabilities	$	425,146		$	409,421		$	435,361		$	409,421
Commitments and contingencies (Note 7)
NET ASSETS
Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,437,400 shares
issued and outstanding at June 30, 2022 and December 31, 2021, respectively)	$	24		$	24
Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,437,400 shares
issued and outstanding at September 30, 2022 and December 31, 2021, respectively)							$	24		$	24
Additional paid-in capital		361,807			361,807			361,807			361,807
Total distributable earnings		122,144			125,933			112,556			125,933
Total net assets		483,975			487,764			474,387			487,764
Total liabilities and net assets	$	909,121		$	897,185		$	909,748		$	897,185
Net asset value per common share	$	19.80		$	19.96		$	19.41		$	19.96


		Six Months Ended June 30,							Nine Months Ended September 30,
		2022			2021				2022			2021
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations		$	19,671		$	37,424			$	31,099		$	65,866
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:	Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:							Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Net change in unrealized (appreciation) depreciation on investments			26,532			(16,684	)			67,814			(32,019	)
Net realized (gain) loss on investments			(25,176	)		(5,366	)			(65,220	)		(13,672	)
Interest and dividend income paid-in-kind			(914	)		(2,177	)			(1,327	)		(3,437	)
Accretion of original issue discount			(60	)		(605	)			(137	)		(734	)
Accretion of loan origination fees			(711	)		(1,139	)			(1,094	)		(1,832	)
Purchase of investments			(160,098	)		(167,349	)			(267,950	)		(245,546	)
Proceeds from sales and repayments of investments			68,008			191,560				128,255			319,036
Proceeds from loan origination fees			1,023			1,171				1,869			1,949
Realized losses on extinguishment of debt			198			2,180				251			2,640
Amortization of deferred financing costs			1,058			1,117				1,588			1,655
Changes in operating assets and liabilities:
Interest receivable			(4,878	)		(219	)			(3,412	)		(698	)
Receivables from investments sold			(11,895	)		—
Prepaid expenses and other assets			(718	)		(1,164	)			(367	)		(504	)
Accrued interest and fees payable			(176	)		1,976				(1,625	)		(1,298	)
Base management fee payable, net of base management fee waiver – due to affiliate			407			(58	)			552			(43	)
Income incentive fee payable – due to affiliate			(1,439	)		(60	)			425			(185	)
Capital gains incentive fee (reversal) – due to (from) affiliate			(6,471	)		3,974				(6,729	)		8,638
Administration fee payable and other – due to affiliate			(23	)		(393	)			(109	)		(5	)
Payables for investments purchased			2,773			—
Taxes payable			(2,067	)		(700	)			(2,095	)		(1,158	)
Accounts payable and other liabilities			1,850			463				859			217
Net cash provided by (used for) operating activities			(93,106	)		43,951				(117,353	)		98,870
Cash Flows from Financing Activities:
Proceeds received from SBA debentures			41,500			11,500				56,000			11,500
Repayments of SBA debentures			(20,000	)		(19,200	)			(30,000	)		(63,500	)
Principal payments on Notes			—			(100,000	)			—			(100,000	)
Proceeds received from (repayments of) borrowings under Credit Facility, net			—			—				—			40,000
Proceeds received from (repayments of) Secured Borrowings, net			(374	)		13,500				(642	)		17,746
Payment of deferred financing costs			(1,511	)		(1,031	)			(3,043	)		(1,031	)
Dividends paid to stockholders, including expenses			(23,460	)		(18,817	)			(33,968	)		(29,081	)
Net cash provided by (used for) financing activities			(3,845	)		(114,048	)			(11,653	)		(124,366	)
Net increase (decrease) in cash and cash equivalents			(96,951	)		(70,097	)			(129,006	)		(25,496	)
Cash and cash equivalents:
Beginning of period			169,417			124,308				169,417			124,308
End of period		$	72,466		$	54,211			$	40,411		$	98,812
Supplemental disclosure of cash flow information:
Supplemental information and non-cash activities:
Cash payments for interest		$	8,169		$	6,663			$	13,774		$	14,061
Cash payments for taxes, net of tax refunds received		$	2,197		$	732			$	2,214		$	1,047
Dividends payable									$	10,508		$	-


Bedford Precision Parts LLC	Specialty Distribution
First Lien Debt (j)(s)		(L + 6.25%) / (1.00%)	7.92%/0.00%	3/12/2019	3/12/2024	4,472	4,459	4,472
Common Equity (500,000 units) (h)(j)				3/12/2019			488	403
							4,947	4,875	1	%
Cardback Intermediate, LLC (dba Chargeback Gurus)	Information Technology Services
First Lien Debt (j)(ah)		(L + 6.50%) / (0.75%)	7.47%/0.00%	8/10/2021	8/10/2026	13,144	13,080	13,144
Common Equity (495 shares) (j)				8/10/2021			125	13
Preferred Equity (495 shares) (j)				8/10/2021			125	268
							13,330	13,425	3	%
Cardboard Box LLC (dba Anthony's Coal Fired Pizza)	Restaurants
Common Equity (521,021 units) (j)(ao)				12/15/2015			521	42
Preferred Equity (1,043,133 units) (j)(ao)				12/6/2019			96	283
							617	325	0	%
Choice Technology Solutions, LLC (dba Choice Merchant Solutions, LLC)	Information Technology Services
First Lien Debt (j)		(S + 7.25%) / (1.00%)		4/1/2022	4/1/2027	8,500	8,455	8,455
Revolving Loan ($1,000 unfunded commitment) (i)(j)		(S + 6.25%) / (1.00%)		4/1/2022	4/1/2027	—	—	—
							8,455	8,455	2	%
CIH Intermediate, LLC	Business Services
Subordinated Debt (k)			10.00%/1.00%	3/3/2022	3/3/2028	13,682	13,552	13,552
Common Equity (563 shares) (j)				3/3/2022			400	400
Preferred Equity (563 shares) (j)				3/3/2022			400	400
							14,352	14,352	3	%
Combined Systems, Inc.	Aerospace & Defense Manufacturing
First Lien Debt		(L + 10.00%) / (2.00%)		1/31/2020	1/31/2025	6,991	6,961	7,061
Revolving Loan ($605 unfunded commitment) (j)(ac)		(L + 9.00%) / (2.00%)		1/31/2020	1/31/2025	3,395	3,382	3,395
							10,343	10,456	2	%
Comply365, LLC	Aerospace & Defense Manufacturing
Common Equity (1,000,000 units)				12/11/2020			627	1,024	0	%

CRS Solutions Holdings, LLC (dba CRS Texas)	Business Services
Common Equity (Class A Units) (574,929 units) (h)(j)				6/28/2022			272	499	0	%

Dataguise, Inc.	Information Technology Services
First Lien Debt (j)			11.00%/0.00%	12/31/2020	12/31/2023	19,750	19,700	19,256
Common Equity (909 shares) (j)				12/31/2020			1,500	1,123
							21,200	20,379	4	%
Diversified Search LLC	Business Services
First Lien Debt (k)(r)		(S + 6.50%) / (1.00%)	7.50%/0.00%	2/7/2019	2/7/2024	24,155	23,990	24,155
Common Equity (573 units) (h)(j)				2/7/2019			593	877
							24,583	25,032	5	%
EBL, LLC (EbLens)	Retail
Second Lien Debt (j)(y)			12.50%/1.50%	7/13/2017	1/13/2023	9,351	9,337	5,588
Common Equity (75,000 units) (j)				7/13/2017			750	—
							10,087	5,588	1	%
ECM Industries, LLC	Component Manufacturing
Common Equity (1,000,000 units) (h)(j)				4/30/2020			221	1,250	0	%

Elements Brands, LLC	Consumer Products
First Lien Debt			12.25%/0.00%	12/31/2020	12/31/2025	5,625	5,602	5,625
Revolving Loan ($1,500 unfunded commitment) (j)(i)			12.25%/0.00%	12/31/2020	12/31/2025	1,500	1,488	1,500
							7,090	7,125	2	%
Fishbowl Solutions, LLC	Information Technology Services
First Lien Debt (ar)		(S + 7.75%) / (1.00%)	8.75%/0.00%	3/25/2022	3/25/2027	14,500	14,397	14,397	3	%

Frontline Food Services, LLC (f/k/a Accent Food Services, LLC) (n)	Vending Equipment Manufacturing
Preferred Equity (Class A Units) (46 units) (j)				12/31/2020			—	—
Common Equity (Class B Units) (124 units) (j)				12/31/2020			—	27
Preferred Equity (Class C Units) (100 units) (j)				12/31/2020			—	158
							—	185	0	%
Global Plasma Solutions, Inc.	Component Manufacturing
Common Equity (947 shares) (j)				9/21/2018			52	551	0	%

GP&C Operations, LLC (dba Garlock Printing and Converting)	Component Manufacturing
First Lien Debt (w)		(L + 8.25%) / (1.00%)	9.85%/0.00%	1/22/2021	1/22/2026	11,000	10,882	11,000
Common Equity (515,625 units) (h)(j)				1/22/2021			516	197
							11,398	11,197	2	%
Green Cubes Technology, LLC (dba Green Cubes)	Information Technology Services
First Lien Debt (j)		(L + 13.00%) / (0.00%)	14.63%/0.00%	12/17/2021	12/17/2024	13,000	12,940	13,000	3	%

Gurobi Optimization, LLC	Information Technology Services
Common Equity (3 shares)				12/19/2017			605	2,122	0	%

Haematologic Technologies, Inc.	Healthcare Services
First Lien Debt (x)		(L + 8.25%) / (2.00%)	10.50%/0.00%	10/11/2019	10/11/2024	5,378	5,359	5,026
Common Equity (630 units) (h)(j)				10/11/2019			630	124
							5,989	5,150	1	%
Hallmark Health Care Solutions, Inc.	Healthcare Services
First Lien Debt (j)(ae)		(L + 7.25%) / (1.50%)	8.75%/0.00%	12/4/2020	12/4/2025	8,400	8,357	8,400
Common Equity (750,000 units) (j)				12/4/2020			750	3,905
							9,107	12,305	3	%
Healthfuse, LLC	Healthcare Services
First Lien Debt (af)		(L + 7.00%) / (1.00%)	8.00%/0.00%	11/13/2020	11/13/2025	5,219	5,192	5,350
Preferred Equity (197,980 units)				11/13/2020			748	1,311
							5,940	6,661	1	%
Hub Acquisition Sub, LLC (dba Hub Pen)	Promotional products
Second Lien Debt (k)			13.00%/0.00%	3/23/2016	3/31/2023	25,000	24,991	25,000
Common Equity (3,750 units)				3/23/2016			92	154
Preferred Equity (868 units) (j)				10/16/2020			148	190
							25,231	25,344	5	%
IBH Holdings, LLC (fka Inflexxion, Inc.)	Business Services
Common Equity (150,000 units)				6/20/2018			—	432	0	%

Ipro Tech, LLC	Information Technology Services
First Lien Debt (j)(u)		(L + 7.00%) / (1.00%)	9.25%/1.00%	6/30/2020	7/28/2025	19,575	18,752	19,575
Preferred Equity (j)				7/28/2021			682	1,023
							19,434	20,598	4	%
ISI PSG Holdings, LLC (dba Incentive Solutions, Inc.)	Business Services
First Lien Debt (j)(aj)		(L + 7.50%) / (0.50%)	8.47%/0.00%	4/5/2021	4/5/2026	12,333	12,253	12,333
First Lien Debt (j)(an)		(L + 7.50%) / (0.50%)	8.47%/0.00%	6/30/2021	4/5/2026	13,163	13,163	13,163
Common Equity (256,964 units) (h)(j)				4/5/2021			500	668
							25,916	26,164	5	%
K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)	Industrial Cleaning & Coatings
Second Lien Debt (j) (y)			0.00%/10.00%	1/28/2019	1/28/2023	2,368	2,368	2,188	0	%

The Kyjen Company, LLC (dba Outward Hound)	Consumer Products
Common Equity (855 shares) (j)				12/8/2017			933	978	0	%

Level Education Group, LLC (dba CE4Less)	Business Services
First Lien Debt (ak)		(L + 6.75%) / (0.50%)	7.72%/0.00%	4/1/2021	4/1/2026	5,234	5,203	5,234
Common Equity (1,000,000 units) (j)				4/1/2021			1,000	1,101
							6,203	6,335	1	%
LifeSpan Biosciences, Inc.	Healthcare Products
Subordinated Debt (j)			11.50%/0.00%	3/19/2021	9/19/2026	16,000	15,939	16,000
Common Equity (100 shares) (j)				3/19/2021			1,000	809


	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Statements of Assets and Liabilities — ~~June~~September 30, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Operations — three and ~~six~~nine months ended ~~June~~September 30, 2022 (unaudited) and 2021 (unaudited)	4
	Consolidated Statements of Changes in Net Assets — three and ~~six~~nine months ended ~~June~~September 30, 2022 (unaudited) and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows — three and ~~six~~nine months ended ~~June~~September 30, 2022, (unaudited) and 2021 (unaudited)	6
	Consolidated Schedules of Investments — ~~June~~September 30, 2022 (unaudited) and December 31, 2021	7
	Notes to Consolidated Financial Statements (unaudited)	1516
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3738
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	5556
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.	58
Item 1A.	Risk Factors.	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	58
Item 3.	Defaults Upon Senior Securities.	58
Item 4.	Mine Safety Disclosures.	58
Item 5.	Other Information.	58
Item 6.	Exhibits.	59
Signatures		6061
~~Exhibit Index~~


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Investment Income:
Interest income
Control investments	$	—		$	975		$	—		$	1,568		$	—		$	927		$	—		$	2,495
Affiliate investments		657			711			1,541			1,559			892			537			2,433			2,096
Non-control/non-affiliate investments		18,716			16,105			34,913			33,802			20,619			16,395			55,532			50,197
Total interest income		19,373			17,791			36,454			36,929			21,511			17,859			57,965			54,788
Payment-in-kind interest income
Control investments		—			596			—			937			—			724			—			1,661
Affiliate investments		—			84			30			195			—			86			30			281
Non-control/non-affiliate investments		367			424			884			940			413			450			1,297			1,390
Total payment-in-kind interest income		367			1,104			914			2,072			413			1,260			1,327			3,332
Dividend income
Control investments		—			568			—			568			—			—			—			568
Affiliate investments		69			110			725			110			—			—			725			110
Non-control/non-affiliate investments		7			149			40			242			645			457			685			699
Total dividend income		76			827			765			920			645			457			1,410			1,377
Fee income
Control investments		—			—			—			400			—			—			—			400
Affiliate investments		160			85			297			268			155			102			452			370
Non-control/non-affiliate investments		1,176			2,018			3,237			4,526			2,260			1,545			5,497			6,071
Total fee income		1,336			2,103			3,534			5,194			2,415			1,647			5,949			6,841
Interest on idle funds		1			1			4			1			8			6			12			7
Total investment income		21,153			21,826			41,671			45,116			24,992			21,229			66,663			66,345
Expenses:
Interest and financing expenses		4,639			4,562			9,051			9,756			4,686			4,662			13,737			14,418
Base management fee		3,618			3,215			6,961			6,391			3,763			3,270			10,724			9,661
Incentive fee - income		1,183			2,550			2,236			5,219			3,047			2,425			5,283			7,644
Incentive fee (reversal) - capital gains		(605	)		3,883			(335	)		3,974			(258	)		4,664			(593	)		8,638
Administrative service expenses		510			430			932			843			480			438			1,412			1,281
Professional fees		290			312			805			635			339			507			1,546			1,482
Other general and administrative expenses		531			396			818			741			303			214			719			615
Total expenses before base management fee waiver		10,166			15,348			20,468			27,559			12,360			16,180			32,828			43,739
Base management fee waiver		(76	)		(29	)		(152	)		(29	)		(76	)		(69	)		(228	)		(98	)
Total expenses, net of base management fee waiver		10,090			15,319			20,316			27,530			12,284			16,111			32,600			43,641
Net investment income before income taxes		11,063			6,507			21,355			17,586			12,708			5,118			34,063			22,704
Income tax provision (benefit)		55			34			9			32			(11	)		—			(2	)		32
Net investment income		11,008			6,473			21,346			17,554			12,719			5,118			34,065			22,672
Net realized and unrealized gains (losses) on investments:
Net realized gains (losses):
Control investments		(204	)		—			(65	)		957			407			(990	)		342			(33	)
Affiliate investments		15,300			—			15,624			—			24,216			30			39,840			30
Non-control/non-affiliate investments		3,212			2,150			9,617			4,409			15,421			9,266			25,038			13,675
Total net realized gain (loss) on investments		18,308			2,150			25,176			5,366			40,044			8,306			65,220			13,672
Income tax (provision) benefit from realized gains on investments		(122	)		—			(121	)		—			—			143			(121	)		143
Net change in unrealized appreciation (depreciation):
Control investments		(2,151	)		(6,877	)		(2,151	)		(5,985	)		—			1,096			(2,151	)		(4,889	)
Affiliate investments		(15,049	)		12,416			(20,928	)		16,368			(21,085	)		8,106			(42,013	)		24,474
Non-control/non-affiliate investments		(4,013	)		11,724			(3,453	)		6,301			(20,197	)		6,133			(23,650	)		12,434
Total net change in unrealized appreciation (depreciation) on investments		(21,213	)		17,263			(26,532	)		16,684			(41,282	)		15,335			(67,814	)		32,019
Net gain (loss) on investments		(3,027	)		19,413			(1,477	)		22,050			(1,238	)		23,784			(2,715	)		45,834
Realized losses on extinguishment of debt		—			—			(198	)		(2,180	)		(53	)		(460	)		(251	)		(2,640	)
Net increase (decrease) in net assets resulting from operations	$	7,981		$	25,886		$	19,671		$	37,424		$	11,428		$	28,442		$	31,099		$	65,866
Per common share data:
Net investment income per share-basic and diluted	$	0.45		$	0.26		$	0.87		$	0.72		$	0.52		$	0.21		$	1.39		$	0.93
Net increase in net assets resulting from operations per share — basic and diluted	$	0.33		$	1.06		$	0.80		$	1.53		$	0.47		$	1.16		$	1.27		$	2.70
Dividends declared per share	$	0.43		$	0.39		$	0.96		$	0.77		$	0.86		$	0.42		$	1.82		$	1.19
Weighted average number of shares outstanding — basic and diluted		24,437,400			24,437,400			24,437,400			24,437,400			24,437,400			24,437,400			24,437,400			24,437,400


	Common Stock				Additional		Total						Common Stock				Additional		Total
	Number of		Par		paid-in		distributable			Total net			Number of		Par		paid-in		distributable			Total net
	shares		value		capital		earnings			assets			shares		value		capital		earnings			assets
Balances at December 31, 2020		24,437,400	$	24	$	363,751	$	46,985		$	410,760			24,437,400	$	24	$	363,751	$	46,985		$	410,760
Net investment income		—		—		—		11,081			11,081			—		—		—		11,081			11,081
Net realized gain (loss) on investments, net of taxes		—		—		—		3,216			3,216			—		—		—		3,216			3,216
Net unrealized appreciation (depreciation) on investments		—		—		—		(579	)		(579	)		—		—		—		(579	)		(579	)
Realized losses on extinguishment of debt		—		—		—		(2,180	)		(2,180	)		—		—		—		(2,180	)		(2,180	)
Dividends declared		—		—		—		(9,286	)		(9,286	)		—		—		—		(9,286	)		(9,286	)
Balances at March 31, 2021		24,437,400	$	24	$	363,751	$	49,237		$	413,012			24,437,400	$	24	$	363,751	$	49,237		$	413,012
Net investment income		—		—		—		6,473			6,473			—		—		—		6,473			6,473
Net realized gain (loss) on investments, net of taxes		—		—		—		2,150			2,150			—		—		—		2,150			2,150
Net unrealized appreciation (depreciation) on investments		—		—		—		17,263			17,263			—		—		—		17,263			17,263
Realized losses on extinguishment of debt		—		—		—		—			—			—		—		—		—			—
Dividends declared		—		—		—		(9,531	)		(9,531	)		—		—		—		(9,531	)		(9,531	)
Balances at June 30, 2021		24,437,400	$	24	$	363,751	$	65,592		$	429,367			24,437,400	$	24	$	363,751	$	65,592		$	429,367
Net investment income														—		—		—		5,118			5,118
Net realized gain (loss) on investments, net of taxes														—		—		—		8,449			8,449
Net unrealized appreciation (depreciation) on investments														—		—		—		15,335			15,335
Realized losses on extinguishment of debt														—		—		—		(460	)		(460	)
Dividends declared														—		—		—		(10,264	)		(10,264	)
Balances at September 30, 2021														24,437,400	$	24	$	363,751	$	83,770		$	447,545
Balances at December 31, 2021		24,437,400	$	24	$	361,807	$	125,933		$	487,764			24,437,400	$	24	$	361,807	$	125,933		$	487,764
Net investment income		—		—		—		10,338			10,338			—		—		—		10,338			10,338
Net realized gain (loss) on investments, net of taxes		—		—		—		6,869			6,869			—		—		—		6,869			6,869
Net unrealized appreciation (depreciation) on investments		—		—		—		(5,319	)		(5,319	)		—		—		—		(5,319	)		(5,319	)
Realized losses on extinguishment of debt		—		—		—		(198	)		(198	)		—		—		—		(198	)		(198	)
Dividends declared		—		—		—		(12,952	)		(12,952	)		—		—		—		(12,952	)		(12,952	)
Balances at March 31, 2022		24,437,400	$	24	$	361,807	$	124,671		$	486,502			24,437,400	$	24	$	361,807	$	124,671		$	486,502
Net investment income		—		—		—		11,008			11,008			—		—		—		11,008			11,008
Net realized gain (loss) on investments, net of taxes		—		—		—		18,186			18,186			—		—		—		18,186			18,186
Net unrealized appreciation (depreciation) on investments		—		—		—		(21,213	)		(21,213	)		—		—		—		(21,213	)		(21,213	)
Realized losses on extinguishment of debt		—		—		—		—			—			—		—		—		—			—
Dividends declared		—		—		—		(10,508	)		(10,508	)		—		—		—		(10,508	)		(10,508	)
Balances at June 30, 2022		24,437,400	$	24	$	361,807	$	122,144		$	483,975			24,437,400	$	24	$	361,807	$	122,144		$	483,975
Net investment income														—		—		—		12,719			12,719
Net realized gain (loss) on investments, net of taxes														—		—		—		40,044			40,044
Net unrealized appreciation (depreciation) on investments														—		—		—		(41,282	)		(41,282	)
Realized losses on extinguishment of debt														—		—		—		(53	)		(53	)
Dividends declared														—		—		—		(21,016	)		(21,016	)
Balances at September 30, 2022														24,437,400	$	24	$	361,807	$	112,556		$	474,387


							16,939		16,809	4	%
Micronics Filtration Holdings, Inc. (dba Micronics Engineered Filtration Group, Inc.)	Component Manufacturing
First Lien Debt (k) (as)		(S + 5.50%) / (0.50%)	6.41%/0.00%	2/17/2022	2/17/2027	21,000	20,854		20,854
Common Equity (14,400 units) (j)				2/17/2022			1,440		1,440
							22,294		22,294	5	%
Midwest Transit Equipment, Inc.	Transportation services
Warrant (7,192 shares) (j)(m)				6/23/2017			180		250
Warrant (4.79% of Junior Subordinated Notes) (j)(q)				6/23/2017			190		271
							370		521	0	%
Mobilewalla, Inc.	Information Technology Services
First Lien Debt (j)		(L + 11.50%) / (0.50%)		12/17/2021	12/17/2024	5,715	5,691		5,715	1	%

Netbase Solutions, Inc. (dba Netbase Quid)	Information Technology Services
First Lien Debt (k)(ap)		(P + 4.00%) / (3.25%)	8.75%/0.00%	11/18/2021	11/18/2025	16,708	16,603		16,708	4	%

NGT Acquisition Holdings, LLC (dba Techniks Industries)	Component Manufacturing
Common Equity (378 units) (j)				5/24/2017			500		141	0	%

OMC Investors, LLC (dba Ohio Medical Corporation)	Healthcare Products
Second Lien Debt			13.00%/0.00%	1/26/2021	6/30/2024	5,000	4,971		5,000
Common Equity (5,000 units)				1/15/2016			195		627
							5,166		5,627	1	%
Palisade Company, LLC	Information Technology Services
Common Equity (50 shares) (j)				11/15/2018			500		2,229	1	%

Palmetto Moon, LLC	Retail
Common Equity (499 units) (j)				11/3/2016			265		636	0	%

Pinnergy, Ltd.	Oil & Gas Services
Subordinated Debt (j)			9.00%/0.00%	6/30/2022	6/30/2027	15,000	14,925		14,925	3	%

Pool & Electrical Products, LLC (n)	Specialty Distribution
Common Equity (15,000 units) (h)(j)				10/28/2020			549		4,466	1	%

Power Grid Components, Inc.	Specialty Distribution
Second Lien Debt (k)			11.00%/1.00%	4/12/2018	12/2/2025	17,659	17,606		17,659
Preferred Equity (392 shares) (j)				4/12/2018			392		593
Preferred Equity (48 shares) (j)				12/2/2019			48		73
Common Equity (10,622 shares) (j)				4/12/2018			462		442
							18,508		18,767	4	%
PowerGrid Services Acquisition, LLC	Utilities: Services
Second Lien Debt (j)		(L + 9.50%) / (1.00%)		9/21/2021	3/21/2029	10,831	10,782		10,831
Common Equity (5,341 units) (h)(j)				9/21/2021			534		532
							11,316		11,363	2	%
Prime AE Group, Inc.	Business Services
First Lien Debt (j)		(L + 6.25%) / (2.00%)	8.25%/0.00%	11/25/2019	11/25/2024	6,000	5,907		5,833
Preferred Equity (900,000 shares) (j)				11/25/2019			900		216
							6,807		6,049	1	%
Pugh Lubricants, LLC (n)	Specialty Distribution
Common Equity (3,062 units) (h)(j)				11/10/2016			—		—	0	%

Quest Software US Holdings Inc.	Information Technology Services
Second Lien Debt (j)		(S + 7.50%) / (0.50%)		3/1/2022	2/1/2030	18,000	17,560		17,560	4	%

Rhino Assembly Company, LLC	Specialty Distribution
Second Lien Debt (k)			11.50%/0.00%	8/11/2017	2/11/2026	14,851	14,835		14,851
Common Equity (Class A Units) (10,915 units) (h)(j)				8/11/2017			1,125		1,622
Preferred Equity (Units N/A) (h)(j)				12/10/2020			268		296
Common Equity (Class F Units) (710 units) (h)(j)				12/10/2020			—		—
							16,228		16,769	4	%
Road Safety Services, Inc.	Business Services
Second Lien Debt			11.25%/2.00%	9/18/2018	9/18/2025	15,682	15,643		15,682
Common Equity (779 units)				9/18/2018			1,121		1,269
							16,764		16,951	4	%
SES Investors, LLC (dba SES Foam)	Building Products Manufacturing
Common Equity (6,000 units) (h)(j)				9/8/2016			404		7,709	2	%

Suited Connector LLC	Information Technology Services
Second Lien Debt (j)			12.00%/0.00%	10/29/2021	6/1/2028	16,000	15,927		13,416
Common Equity (7,500 units) (h)(j)				12/1/2021			750		398
							16,677		13,814	3	%
Tedia Company, LLC	Healthcare Products
First Lien Debt (j)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	15,600	15,518		15,518
Revolving Loan ($3,500 unfunded commitment) (j)(i)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	500	479		479
Delayed Draw Commitment ($3,000 unfunded commitment) (j)(ac)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	—	(16	)	—
Subordinated Debt (j)			7.25%/7.25%	3/4/2022	9/4/2027	2,560	2,546		2,546
Preferred Equity (Series A) (1,000 units) (h)(j)				3/4/2022			1,000		1,000
							19,527		19,543	4	%
TransGo, LLC (n)	Component Manufacturing
Common Equity (500 units) (j)				2/28/2017			—		—	0	%

The Tranzonic Companies	Specialty Distribution
Preferred Equity (5,653 units) (j)				3/27/2018			565		841
Common Equity (1 units) (j)				3/27/2018			—		488
							565		1,329	0	%
UBEO, LLC	Business Services
Common Equity (705,000 units) (h)(j)				4/3/2018			645		893	0	%

United Biologics, LLC	Healthcare Services
Preferred Equity (98,377 units) (h)(j)				4/1/2012			1,008		—
Warrant (57,469 units) (j)(m)				3/5/2012			566		—
							1,574		—	0	%
UPG Company, LLC	Component Manufacturing
First Lien Debt (j)(al)		(S + 8.25%) / (0.50%)	10.07%/0.00%	6/21/2021	6/21/2024	16,700	16,614		16,700	4	%

Virginia Tile Company, LLC	Specialty Distribution
Common Equity (17 units) (j)				12/19/2014			342		1,153	0	%

Virtex Enterprises, LP	Component Manufacturing
Second Lien Debt		(S + 9.75%) / (1.00%)		4/13/2022		11,002	10,896		10,896	2	%

Western's Smokehouse, LLC	Consumer Products
First Lien Debt (j)(ab)		(L + 6.50%) / (1.25%)	8.75%/0.00%	2/28/2020	12/23/2024	9,616	9,538		9,616	2	%
Delayed Draw Commitment ($3,500 unfunded commitment) (j)		(L + 6.50%) / (1.25%)	8.75%/0.00%	6/29/2022	12/23/2024	—	—		—
							9,538		9,616	2	%

Winona Foods, Inc.	Specialty Distribution
First Lien Debt (j)(am)		(L + 12.00%) / (1.00%)	14.25%/0.00%	4/1/2021	4/1/2026	4,000	3,893		4,000
First Lien Debt		(L + 13.00%) / (1.00%)		4/1/2021	4/1/2026	7,000	6,961		7,000
							10,854		11,000	2	%
Wonderware Holdings, LLC (dba CORE Business Technologies)	Information Technology Services
First Lien Debt ($184 unfunded commitment) (i)(k)(z)		(L + 7.25%) / (1.00%)	8.94%/0.00%	2/10/2021	2/9/2026	8,316	8,273		8,316	2	%

Worldwide Express Operations, LLC	Transportation services


Second Lien Debt (j)		(L + 7.00%) / (0.75%)	8/2/2021	7/26/2029	22,500		21,747		21,747
Common Equity (795,000) (j)			7/21/2021				795		894
Common Equity (752,380 units) (h)(j)			7/26/2021				225		691
							22,767		23,332	5	%
Xeeva, Inc.	Information Technology Services
First Lien Debt (j)		(L + 10.50%) / (1.50%)	2/11/2021	2/11/2026	9,400		9,362		9,400	2	%

Zonkd, LLC	Component Manufacturing
First Lien Debt (j)		(L + 10.00%) / (1.00%)	3/18/2022	3/18/2027	5,000		4,784		4,784
Delayed Draw Commitment ($1,000 unfunded commitment) (j)(ad)		(L + 10.00%) / (1.00%)	3/18/2022	3/18/2027	—		—		—
Common Equity (4,987 units) (h)(j)			3/18/2022				169		169
							4,953		4,953	1	%

Total Non-control/Non-affiliate Investments						$	687,344	$	704,146	145	%

Total Investments						$	739,714	$	810,520	167	%


							6,170		6,426	1	%
LifeSpan Biosciences, Inc.	Healthcare Products
Subordinated Debt (j)			11.50%/0.00%	3/19/2021	9/19/2026	16,000	15,942		16,000
Common Equity (100 shares) (j)				3/19/2021			1,000		753
							16,942		16,753	4	%
Magenta Buyer LLC (dba Trellix)	Information Technology Services
Second Lien Debt (j)		(L + 8.25%) / (0.75%)		7/19/2022	7/27/2029	7,182	6,795		6,795	1	%

MBS Opco, LLC (dba Marketron)	Information Technology Services
First Lien Debt (j)		(S + 8.50%) / (1.50%)		9/29/2022	9/28/2026	27,000	26,865		26,865	6	%

Micronics Filtration Holdings, Inc. (dba Micronics Engineered Filtration Group, Inc.)	Component Manufacturing
First Lien Debt (k) (as)		(S + 5.50%) / (0.50%)	7.88%/0.00%	2/17/2022	2/17/2027	16,520	16,412		16,520
Common Equity (14,400 units) (j)				2/17/2022			1,440		2,689
							17,852		19,209	4	%
Midwest Transit Equipment, Inc.	Transportation services
Warrant (7,192 shares) (j)(m)				6/23/2017			180		302
Warrant (4.79% of Junior Subordinated Notes) (j)(q)				6/23/2017			190		277
							370		579	0	%
Mobilewalla, Inc.	Information Technology Services
First Lien Debt (j)		(L + 11.50%) / (0.50%)		12/17/2021	12/17/2024	5,715	5,694		5,715	1	%

Netbase Solutions, Inc. (dba Netbase Quid)	Information Technology Services
First Lien Debt (k)(ap)		(P + 4.00%) / (3.25%)	10.25%/0.00%	11/18/2021	11/18/2025	16,708	16,611		16,708	4	%

NGT Acquisition Holdings, LLC (dba Techniks Industries)	Component Manufacturing
Common Equity (378 units) (j)				5/24/2017			500		118	0	%

OMC Investors, LLC (dba Ohio Medical Corporation)	Healthcare Products
Second Lien Debt			13.00%/0.00%	1/26/2021	6/30/2024	5,000	4,974		5,000
Common Equity (5,000 units)				1/15/2016			187		591
							5,161		5,591	1	%
OnePath Systems, LLC	Information Technology Services
First Lien Debt (s)		(S + 7.50%) / (1.00%)	11.05%/0.00%	9/30/2022	9/30/2027	11,000	10,918		10,918
Common Equity (732,542 shares) (j)				9/30/2022			500		500
							11,418		11,418	2	%
Palmetto Moon, LLC	Retail
Common Equity (499 units) (j)				11/3/2016			265		512	0	%

Pinnergy, Ltd.	Oil & Gas Services
Subordinated Debt (j)			9.00%/0.00%	6/30/2022	6/30/2027	15,000	14,929		14,929	3	%

Pool & Electrical Products, LLC (n)	Specialty Distribution
Common Equity (15,000 units) (h)(j)				10/28/2020			549		4,362	1	%

Power Grid Components, Inc.	Specialty Distribution
Second Lien Debt (k)			11.00%/1.00%	4/12/2018	12/2/2025	17,704	17,655		17,704
Preferred Equity (392 shares) (j)				4/12/2018			392		608
Preferred Equity (48 shares) (j)				12/2/2019			48		75
Common Equity (10,622 shares) (j)				4/12/2018			462		895
							18,557		19,282	4	%
PowerGrid Services Acquisition, LLC	Utilities: Services
Second Lien Debt (j)		(L + 9.50%) / (1.00%)		9/21/2021	3/21/2029	10,831	10,784		10,831
Common Equity (5,341 units) (h)(j)				9/21/2021			534		956
							11,318		11,787	2	%
Prime AE Group, Inc.	Business Services
First Lien Debt (j)		(S + 6.75%) / (2.00%)	10.56%/0.00%	11/25/2019	11/25/2024	5,833	5,750		5,833
Preferred Equity (900,000 shares) (j)				11/25/2019			900		152
							6,650		5,985	1	%
Pugh Lubricants, LLC (n)	Specialty Distribution
Common Equity (3,062 units) (h)(j)				11/10/2016			—		—	0	%

Quest Software US Holdings Inc.	Information Technology Services
Second Lien Debt (j)		(S + 7.50%) / (0.50%)		3/1/2022	2/1/2030	20,000	19,338		18,004	4	%

Rhino Assembly Company, LLC	Specialty Distribution
Second Lien Debt (k)			11.50%/0.00%	8/11/2017	2/11/2026	14,851	14,836		14,851
Common Equity (Class A Units) (10,915 units) (h)(j)				8/11/2017			1,125		1,572
Preferred Equity (Units N/A) (h)(j)				12/10/2020			268		303
Common Equity (Class F Units) (710 units) (h)(j)				12/10/2020			—		—
							16,229		16,726	4	%
Road Safety Services, Inc.	Business Services
Second Lien Debt			11.25%/2.00%	9/18/2018	9/18/2025	15,762	15,726		15,347
Common Equity (779 units)				9/18/2018			1,121		1,507
							16,847		16,854	4	%
SES Investors, LLC (dba SES Foam) (n)	Building Products Manufacturing
Common Equity (6,000 units) (h)(j)				9/8/2016			—		104	0	%

Sonicwall US Holdings, Inc.	Information Technology Services
Second Lien Debt (j)		(L + 7.50%) / (0.00%)		9/6/2022	5/18/2026	4,774	4,489		4,489	1	%

Suited Connector LLC	Information Technology Services
Second Lien Debt (j)			12.00%/0.00%	10/29/2021	6/1/2028	16,000	15,930		11,637
Common Equity (7,500 units) (h)(j)				12/1/2021			750		84
							16,680		11,721	2	%
Tedia Company, LLC	Healthcare Products
First Lien Debt (j)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	15,600	15,523		15,600
Revolving Loan ($2,400 unfunded commitment) (j)(i)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	1,600	1,580		1,600
Delayed Draw Commitment ($3,000 unfunded commitment) (j)(ac)		(S + 7.75%) / (1.00%)		3/4/2022	3/4/2027	—	(15	)	—
Subordinated Debt (j)			7.25%/7.25%	3/4/2022	9/4/2027	2,608	2,594		3,750
Preferred Equity (Series A) (1,000 units) (h)(j)				3/4/2022			1,000		1,486
							20,682		22,436	5	%
TransGo, LLC (n)	Component Manufacturing
Common Equity (500 units) (j)				2/28/2017			—		—	0	%

The Tranzonic Companies (n)	Specialty Distribution
Preferred Equity (5,653 units) (j)				3/27/2018			—		—
Common Equity (1 units) (j)				3/27/2018			—		18
							—		18	0	%
UBEO, LLC	Business Services
Common Equity (705,000 units) (h)(j)				4/3/2018			655		1,158	0	%

United Biologics, LLC	Healthcare Services
Preferred Equity (98,377 units) (h)(j)				4/1/2012			1,008		—
Warrant (57,469 units) (j)(m)				3/5/2012			566		—
							1,574		—	0	%
UPG Company, LLC	Component Manufacturing
First Lien Debt (j)(al)		(S + 8.25%) / (0.50%)	10.07%/0.00%	6/21/2021	6/21/2024	16,700	16,625		16,990	4	%

Virginia Tile Company, LLC	Specialty Distribution
Common Equity (17 units) (j)				12/19/2014			—		683	0	%

Virtex Enterprises, LP	Component Manufacturing
Second Lien Debt		(S + 9.75%) / (1.00%)		4/13/2022		11,002	10,901		8,857	2	%

Western's Smokehouse, LLC	Consumer Products


First Lien Debt (j)(ab)		(S + 6.50%) / (1.50%)	10.18%/0.00%	2/28/2020	12/23/2024	9,616		9,546		9,616
Delayed Draw Commitment ($2,823 unfunded commitment) (j)		(S + 5.00%) / (1.50%)	8.68%/0.00%	6/29/2022	12/23/2024	677		669		677
								10,215		10,293	2	%

Winona Foods, Inc.	Specialty Distribution
First Lien Debt (j)(am)		(L + 12.00%) / (1.00%)	15.67%/0.00%	4/1/2021	4/1/2026	4,000		3,900		4,000
First Lien Debt		(L + 13.00%) / (1.00%)		4/1/2021	4/1/2026	7,000		6,963		7,000
								10,863		11,000	2	%
Wonderware Holdings, LLC (dba CORE Business Technologies)	Information Technology Services
First Lien Debt (k)(z)		(L + 7.25%) / (1.00%)	10.49%/0.00%	2/10/2021	2/9/2026	8,316		8,275		8,316	2	%

Worldwide Express Operations, LLC	Transportation services
Second Lien Debt (j)		(L + 7.00%) / (0.75%)		8/2/2021	7/26/2029	27,497		26,357		26,357
Common Equity (795,000) (j)				7/21/2021				795		973
Common Equity (752,380 units) (h)(j)				7/26/2021				225		747
								27,377		28,077	6	%
Xeeva, Inc.	Information Technology Services
First Lien Debt (j)		(L + 10.50%) / (1.50%)		2/11/2021	2/11/2026	9,400		9,365		7,166	2	%

Zonkd, LLC	Component Manufacturing
First Lien Debt (j)		(L + 10.00%) / (1.00%)		3/18/2022	3/18/2027	5,000		4,795		4,570
Delayed Draw Commitment ($1,000 unfunded commitment) (j)(ad)		(L + 10.00%) / (1.00%)		3/18/2022	3/18/2027	—		—		—
Common Equity (4,987 units) (h)(j)				3/18/2022				169		2
								4,964		4,572	1	%

Total Non-control/Non-affiliate Investments							$	764,734	$	761,339	160	%

Total Investments							$	827,390	$	856,914	181	%

Money market funds (included in cash and cash equivalents)
Goldman Sachs Financial Square Treasury Obligation Institution CUSIP (38141W323) (aw)							$	30,184	$	30,184	6	%
Total money market funds							$	30,184	$	30,184	6	%
Total Investments and Money Market Funds							$	857,574	$	887,098	187	%