FDUS 10-K & 10-Q changes, risk factors and insider trading

Currently, the Company, the SBIC Funds, and Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P., and Fidus Equity Fund I, L.P. are the only investment vehicles managed by our investment advisor. The Investment Advisory Agreement does not limit our investment advisor’s ability to act as an investment advisor to other funds, including other BDCs, or other investment advisory clients. To the extent our investment advisor acts as an investment advisor to other funds or clients, including Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P., and Fidus Equity Fund I, L.P., we may have conflicts of interest with our investment advisor or its other clients that elect to invest in similar types of securities as those in which we invest. Members of our investment advisor’s investment committee serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds or other investment vehicles managed by our investment advisor. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. Our investment advisor will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with an allocation policy approved by our board of directors.

To the extent our investment advisor forms affiliates, including Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P., and Fidus Equity Fund I, L.P., we may co-invest on a concurrent basis with such affiliates, subject to compliance with applicable regulations and regulatory guidance and our allocation procedures. While we may co-invest with investment entities managed by our 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. Our investment advisor and its affiliates have received an exemptive order that expands our ability to co-invest in portfolio companies with certain of our affiliates managed by our investment advisor 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) of our 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. We intend to co-invest, subject to the conditions included in the Order. However, neither we nor our affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them.

We entered into a license agreement with Fidus Partners, LLC under which Fidus Partners, LLC granted us a non-exclusive (provided that there is not a change in control of Fidus Partners, LLC), royalty-free license to use the name “Fidus.” Some of the members of our investment advisor’s investment committee and the senior origination professionals of our investment advisor are members of Fidus Partners, LLC. See Item 1. “Business — Management and Other Agreements — License Agreement.” In addition, we rent office space from our investment advisor and pay to our investment advisor our allocable portion of overhead and other expenses incurred in performing its obligations under the Administration Agreement, such as our allocable portion of the cost of our chief financial officer and chief compliance officer.officer and their respective staffs. This creates conflicts of interest that our board of directors must monitor.

FollowingThe aFederal periodReserve has reduced its benchmark interest rate by 0.25% in each of elevatedSeptember 2025, October 2025 and December 2025 and held interest rates to address inflation concerns,steady in theFebruary third2026, quarter of 2024,bringing the Federalbenchmark Reserverate cut rates forto the first3.50% timeto since3.75% Marchrange. 2020 and, most recently, cut rates in the fourth quarter of 2024. TheWhile Federal Reserve has indicated that there may be additional rate cuts in the future;future, however,policymakers continue to emphasize their commitment to monitoring and addressing inflationary pressures. Given the evolving economic environment and policy considerations, there can be no assurance regarding the magnitude or timing of future reductionsfederal tofunds benchmarkrate ratesadjustments arein noteither certain.direction. Some of our debt investments bear interest at fixed rates and the value of these investments could be negatively affected by increases in market interest rates. In addition, because we have borrowed and to the extent that we borrow additional funds to make investments, an increase in interest rates would make it more expensive for us to use debt to finance our investments and adversely affect our performance if such increases cause our borrowing costs to rise at a rate in excess of the rate that our investments yield. As a result, a significant increase in market interest rates could both reduce the value of our portfolio investments and increase our cost of capital, which would reduce our net investment income. Rising borrowing costs may contribute to the difficulty of companies in servicing their debt obligations and may lead to increases in default rates. Certain changes in interest rates could have a material adverse effect on the Company and its investments. Moreover, changes in interest rates could have a material negative impact on the financial condition of borrowers, the valuations for loans, the unanticipated repayments of loans, and pressure to renegotiate terms on existing loans. Also, an increase in interest rates available to investors could make an investment in shares of our common stock less attractive if we are not able to increase our distribution rate, which could reduce the value of our common stock. It is possible that the Federal Reserve’s tightening cycle also could result in a recession in the United States. Conversely, a decrease in interest rates may have an adverse impact on our returns by requiring us to seek lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay the debt investments, resulting in the need to redeploy capital at potentially lower rates.

In 2020, the SEC adopted Rule 18f-4 under the 1940 Act, whichAct relates to the use of derivatives and other transactions that create future payment or delivery obligations by BDCs (and other funds that are registered investment companies). Under Rule 18f-4, BDCs that use derivatives are subject to a value-at-risk leverage limit, certain derivatives risk management program and testing requirements, and requirements related to board reporting. These requirements apply unless the BDC qualifies as a “limited derivatives user,” as defined in Rule 18f-4. A BDC that enters into reverse repurchase agreements or similar financing transactions could either (i) comply with the asset coverage requirements of Section 18, as modified by Section 61 of the 1940 Act, when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivative transactions under Rule 18f-4. In addition, under Rule 18f-4, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. If the BDC cannot meet this requirement, it is required to treat the unfunded commitment as a derivatives transaction subject to the aforementioned requirements of Rule 18f-4. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts. We qualify as a “limited derivatives user,” and as a result the requirements applicable to us under Rule 18f-4 may limit our ability to use derivatives and enter into certain other financial contracts. However, if we fail to qualify as a limited derivatives user and become subject to the additional requirements under Rule 18f-4, compliance with such requirements may increase cost of doing business, which could have a material adverse effect on our business, financial condition, results of operations and cash flow.

We and our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, could change from time to time, including as the result of interpretive guidance or other directives from the U.S. President and others in the executive branch, and new laws, regulations and interpretations could also come into effect. Following the November 2024 elections in the United States, the Republican Party controls the Presidency, the Senate and the House of Representatives. Any new or changed laws or regulations, executive orders, as well as changes in the positions of regulatory agencies, which may lead to changes in the level of oversight in the financial service industry, could have a material adverse effect on our business, and political uncertainty could increase regulatory uncertainty in the near term. The nature, timing and economic effects of any potential changes to the current legal and regulatory framework affecting the financial service industry remain uncertain.

Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation. WhileAlthough the current administration has signaled a more deregulatory approach with respect to the financial services industry it cannot be known at this time whether any regulation will be implemented or what form it will take,take. increasedChanges to the regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.

Actual and proposed changes to the complex system of laws and regulations governing the banking industry further pose risks to the success of our operations, cash flows or financial conditions. Increases to the asset threshold for designating financial institutions as “systemically important financial institutions,” as well as proposed changes to the Volcker Rule, are just two examples; theThe effect of these change and any further rules or regulations are and could be complex and far-reaching, and the changes and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.

We are currently operating in a period of significant capital markets disruption and economic uncertainty, which may have a negative impact on our business, financial condition and operations. An extended disruption in the capital markets and the credit markets could negatively affect our business.

From time to time, capital markets may experience periods of disruption and instability. TheUncertainty U.S.with capitalrespect marketsto, haveamong experiencedother extremethings, volatilityinflationary pressures, elevated interest rates, new tariffs and disruptiontrade followingbarriers, and geopolitical conditions, including the global outbreak of COVID-19 that began in December 2019, theongoing conflict between Russia and UkraineUkraine, thatongoing beganturmoil in late February 2022,Europe and the ongoingMiddle warEast introduced significant volatility in the Middlefinancial East.markets, Even afterand the COVID-19effect pandemicof subsided,this thevolatility U.S.has economy,materially asimpacted welland ascould most other major economies, have continuedcontinue to experiencematerially unpredictableimpact economicour conditions,market andrisks. weWe anticipate our businessesportfolio companies would be materially and adversely affected by any prolonged economic downturn or recession in the United States and other major markets. In addition, disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.

The current economic conditions have resulted in an adverse impact on the ability of lenders to originate loans, the volumevolume, type, and typequality of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things. The U.S. credit markets (in particular for middle-market loans), have experienced the following among other things: (i) increased draws by borrowers on revolving lines of credit and other financing instruments; (ii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans and increased uses of PIK features; and (iii) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues.

These conditions and future market disruptions and/or illiquidity could have an adverse effect on our (and our portfolio companies') business, financial condition, results of operations and cash flows. Ongoing unfavorable economic conditions may increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to our portfolio companies and/or us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments. We may have to access, if available, alternative markets for debt and equity capital, and a severe disruption in the global financial markets, deterioration in credit and financing conditions, continued increasefluctuations in interest rates or uncertainty regarding U.S. government spending and deficit levels or other global economic conditions could have a material adverse effect on our business, financial condition and results of operations.

While we intend to continue to source and invest in new loan transactions to U.S. middle market companies, we cannot be certain that we will be able to do so successfully or consistently. A lack of suitable investment opportunities may impair our ability to make new investments, and may negatively impact our earnings and result in decreased dividends to our shareholders.

If the current economic conditions continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income, which would have a material adverse effect on our business, financial condition or results of operations. We also continue to observe supply chain interruptions, labor difficulties, commodity inflation and elements of economic and financial market instability both globally and in the United States, which could adversely impact our results of operations and financial condition.

In addition, we generally are required to distribute at least 90% of our investmentnet companyordinary taxableincome income,and net short-term capital gains in excess of net long-term capital losses, if any, to our shareholders to qualify as a RICs.RIC. As a result, these earnings will not be available to fund new investments. An inability to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which may have a material adverse effect on our business, results of operations and financial performance.

We cannot be certain as to the duration or magnitude of the currentongoing economic condition in the markets conditionsin which we and our portfolio companies operate and corresponding declines in economic activity that may negatively impact the U.S. economy and the markets for the various types of goods and services provided by U.S. middle market companies. Depending on the duration, magnitude and severity of these conditions and their related economic and market impacts, certain of our portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default on their financial obligations to us and their other lenders. In consideration of these and related factors, we have downgraded our internal ratings with respect to certain portfolio companies and may make additional downgrades with respect to other portfolio companies in the future as conditions warrant and new information becomes available.

The financial markets have periodically encountered volatility associated with concerns about the balance sheets of banks, especially small and regional banks that mayhave haveexperienced significant losses associatedin connection with investmentsprevious thatevents makeof insolvency. In such distress events, it may be difficult for such banks to fund demands to withdraw deposits and other liquidity needs. Although the federal government previously announced measures to assist these banks and protect depositors, there is no assurance that similar measures will be implemented during future periods of volatility. Our business is dependent on bank relationships, including small and regional banks, and we are proactively monitoring the financial health of banks with which we (or our portfolio companies) do or may in the future do business. To the extent that our portfolio companies work with banks that are negatively impacted by the foregoing, such portfolio companies’ ability to access their own cash, cash equivalents and investments may be threatened. In addition, such affected portfolio companies may not be able to enter into new banking arrangements or credit facilities, or receive the benefits of their existing banking arrangements or facilities. Any such developments could harm our business, financial condition, and operating results, and prevent us from fully implementing our investment plan. ContinuedAny continued strain on the banking system may adversely impact our business, financial condition and results of operations.

We have elected to be treated and intend to qualify annually as a RIC; however, no assurance can be given that we will be able to maintain our RIC tax treatment. To maintain our tax treatment as a RIC and to avoid the imposition of U.S. federal income tax on income and gains distributed to our stockholders, we must meet certain requirements, including source-of-income, asset diversification and annual distribution requirements. In order to satisfy the source-of-income requirement, we must derive at least 90% of our gross income for each year from dividends, interest, gains from sale of stock or other securities or foreign currencies, other income derived with respect to our business of investing in such stock or securities or income form “qualified publicly traded partnerships.” To maintain our tax treatment as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests in any year in which we intend to be treated as a RIC may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. In addition, in order to satisfy the annualAnnual distributionDistribution requirementRequirement for a RIC ,RIC, we must timely distribute at least 90% of our “investment company taxable income,” which is generally our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. We will be subject to a nondeductible 4% nondeductible U.S. federal excise tax to the extent that we do not satisfy certain additional minimum distribution requirements on a calendar-year basis. We will be subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making annual distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to U.S. federal income tax on our entire taxable income without regard to any distributions made by us. If we fail to maintain our tax treatment as a RIC for any reason and become subject to U.S. federal income tax imposed at corporate rates, the resulting tax liability could substantially reduce our net assets, the amount of income available for distributions to stockholders and the amount of our distributions and the amount of funds available for new investments. Such a failure could have a material adverse effect on us and our stockholders.

We currently expect to be treated as a publicly offered RIC, although there can be no assurance that we will in fact so qualify for any of our taxable years, and we may distribute taxable dividends that are payable in part in our common stock. Under certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by the IRS, a publicly offered RIC may treat a distribution of its own stock as fulfilling itsthe RICAnnual distributionDistribution requirementsRequirement if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive their distributions in cash, we must allocate the cash available for distribution among the shareholders electing to receive cash (with the balance of the distribution paid in shares of our common stock). If we qualify as a publicly offered RIC and decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. The value of the shares received by a stockholder is treated as income for U.S. federal income tax purposes. A U.S. stockholder may have income from such dividend in excess of any cash received, and thus may be required to obtain cash from other sources to pay any applicable U.S. federal income tax. If a U.S. stockholder sells the stock it received as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale.

Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, referred to as "spillover dividends", the dividend will be treated for all U.S. federal income tax purposes as if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to as “spillback dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for U.S. federal income tax imposed at corporate rates. Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year. For example, we may defer distributions of income earned during 20242025 until as late as December 31, 2025.2026. If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution.

Since in certain cases we may be required to recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirementAnnual toDistribution distribute on an annual basis at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any,Requirement to maintain our tax treatment as a RIC. In such a case, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities to satisfy the annualAnnual distributionDistribution requirements.Requirement. In such circumstances, if we are unable to obtain such cash from other sources, we may fail to maintain our tax treatment as a RIC and thus be subject to U.S. federal income tax. See “We will be subject to U.S. federal income tax imposed at corporate rates if we are unable to maintain our tax treatment as a RIC under subchapter M of the Code.”

We have elected to be treated for U.S. federal income tax purposes as a RIC. If we continue to meet certain requirements, including source-of-income, asset diversification and distribution requirements, and if we continue to be regulated as a BDC, we will continue to qualify as a RIC and therefore will not have to pay U.S. federal income tax on income that we timely distribute (or are deemed to distribute) to our stockholders, allowing us to substantially reduce or eliminate our U.S. federal income tax liability. As a BDC, we are generally required to meet a coverage ratio of total assets to total senior securities, which includes all of our borrowings (other than the SBA guaranteed debentures) and any preferred stock we may issue in the future, of at least 150% at the time we issue any debt or preferred stock. This requirement limits the amount of our leverage. Because we will continue to need capital to grow our investment portfolio, this limitation may prevent us from incurring debt or issuing preferred stock and require us to raise additional equity at a time when it may be disadvantageous to do so.

Senior Securities. Currently we, through the SBIC Funds, issue debentures guaranteed by the SBA and have access to funds under a revolvingour credit facility. In the future, we may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities. As a result of issuing senior securities, we will be exposed to additional risks, including, but not limited to, the following:

Changes to U.S. tariff and import/export regulations may have a negative effect on the operation of our portfolio companies and, in turn, harmnegatively impact us.

ThereThe has been ongoing discussion and commentary regarding potential significant changes to U.S.foregoing trade policies,policy treaties and tariffs. The current U.S. presidential administration, along with the U.S. Congress,landscape has created significant uncertainty about the future relationship between the United States and certain other countries with respect to trade policies, treaties and new and increased tariffs. These developments, or the perceptioncontinued thatuncertainty anyrelating ofto themU.S. couldtrade occur,policies, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. The uncertainty relating to U.S. trade policies has increased market volatility. Any of these factors could depress economic activity and restrict our portfolio companies' access to suppliers or customerscustomers, orand increase costs, decrease margins, and reduce the costcompetitiveness of products and services offered by our portfolio companies. The foregoing may adversely affect the revenues and profitability of such goodsportfolio andcompanies haveand, ain materialturn, adversenegatively effectaffect on their business, financial condition andour results of operations, which incould turncause wouldthe negativelymarket impactvalue us.of our shares of common stock to decline.

Except in those instances where we have received prior exemptive relief from the SEC, we will be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Independent Directors. We,We and other funds managed by our investment advisor, the SBIC Funds, and Fidus Credit Opportunities, L.P.advisor received exemptive relief from the SEC under the 1940 Act, which permits us to co-invest with other funds managed by our investment advisor or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. In addition, any person that owns, directly or indirectly, 5% or more of our outstanding voting securities is deemed our affiliate for purposes of the 1940 Act and we are generally prohibited from buying or selling any security from or to such affiliate, absent the prior approval of our Independent Directors. The 1940 Act also prohibits “joint” transactions with an affiliate, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of our Independent Directors. If a person acquires more than 25% of our voting securities, we will be prohibited from buying or selling any security from or to such person, or entering into joint transactions with such person, absent the prior approval of the SEC. These restrictions could limit or prohibit us from making certain attractive investments that we might otherwise make absent such restrictions.

We, and others in our industry, are the targets of malicious cyber activity. A successful cyber-attack, whether perpetrated by criminal or state-sponsored actors, against us or our service providers, or an accidental disclosure of non-public information could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This adverse effect can becomecondition, particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data, especially personal and other confidential information. The rapid evolution and scale of artificial intelligence technologies may also increase the likelihood or effectiveness of a cyber-attack against us, our investment advisor or our third-party service providers. If a significant number of the members of our management were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

Third parties with which we do business (including vendors that provide us with services) are sources of cybersecurity or other technological risks. We outsource certain functions and these relationships allow for the storage and processing of our information, as well as counterparty, employee, and borrower information. Cybersecurity failures or breaches toby our investment advisor and other service providers (including, but not limited to, accountants, custodians, transfer agents and administrators), and the issuers of securities in which we invest, also have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with our ability to calculate its NAV, impediments to trading, the inability of our stockholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputation damages, reimbursement of other compensation costs, or additional compliance costs. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, acquisition, use, alteration or destruction of data, or other cybersecurity incidents that affects our data, resulting in increased costs and other consequences, as described above. The Company does not control the cybersecurity measures put in place by such third parties, and such third parties could have limited indemnification obligations to the Company and its affiliates. If such a third party fails to adopt or adhere to adequate cybersecurity procedures, or if despite such procedures its networks or systems are breached, information relating to investor transactions and/or personal information of investors may be lost or improperly accessed, used or disclosed. The Company, the Adviser and its affiliates have implemented processes, procedures and internal controls to mitigate cybersecurity risks and cyber intrusions, including in its vendors, but these measures, as well as the Company’s increased awareness of the nature and extent of a risk of a cyber-incident, may be ineffective and do not guarantee that a cyber-incident will not occur or that the Company’s financial results, operations or confidential information will not be negatively impacted by a cybersecurity or cyber intrusion incident. Substantial costs may be incurred in order to prevent any cyber incidents in the future.

Privacy and information security laws and regulatory changes (including regulations to report material cybersecurity incidents to the SEC), and compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes. For example, the SEC adopted rules requiring disclosure of material cybersecurity incidents and disclosure relating to cybersecurity risk management, and amendments to Regulation S-P governing policies and procedures designed to address unauthorized access to customer information. We may face increased costs to comply with any new or changing regulations. In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.

Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate governance and transparency and considering ESGenvironmental, social and governance factors in our investment processes. Adverse incidents with respect to ESGenvironmental, social and governance activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESGenvironmental, social and governance could adversely affect our business.

Portfolio investments may be affected by force majeure events (i.e., events beyond the control of the party claiming that the event has occurred, including, without limitation, acts of God, fire, flood, earthquakes, war, terrorism and labor strikes). Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Some force majeure events may adversely affect the ability of a party (including a portfolio company or a counterparty to us or a portfolio company) to perform its obligations until it is able to remedy the force majeure event. In addition, the cost to a portfolio company of repairing or replacing damaged assets resulting from such force majeure events could be considerable. Additionally, a major governmental intervention into industry, including the nationalization of an industry or the assertion of control over one or more companies or its assets, could result in a loss to us, including if its investment in such issuer is cancelled, unwound or acquired (which could be without what we consider to be adequate compensation). To the extent we are exposed to investments in portfolio companies that as a group are exposed to such force majeure events, the risks and potential losses to us are enhanced.

The continued threat of global terrorismterrorism, acts of war and the impact of military and other action will likely continue to cause volatility in the economies of certain countries, contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide and various aspects thereof, including in prices of commodities. Our portfolio investments may involve significant strategic assets having a national or regional profile. The nature of these assets could expose them to a greater risk of being the subject of a terrorist attack than other assets or businesses. Acts of war could similarly lead to such volatility. For example, in response to the ongoing conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. In addition, the recentongoing outbreak of hostilitiesturmoil in Europe and the Middle East and escalating tensions in the region may create volatility and disruption of global markets.

The ramifications of the hostilities and sanctions, however, may not be limited to RussiaRussia, Europe and the Middle East and RussianRussian, European and Middle Eastern companies, respectively, but may spill overextend to and negatively impact other regional and global economic markets (including Europe and the United States), companies in other countries (particularly those that have done business with Russia) and on various sectors, industries and markets for securities and commodities globally, such as oil and natural gas. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows, and results of operations, and could cause the market value of our common stock to decline. In addition, these market and economic disruptions could negatively impact the operating results of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies, and impact our business, operating resulting and financial condition. In addition, parties in such conflicts may take retaliatory actions, such as cyberattacks or espionage against other countries and companies around the world, and any such countermeasures could negatively impact such countries and/or the companies in which we invest. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on our performance and the value of an investment in us.

OnMost recently, on June 12,11, 2024,2025, our stockholders approved our ability to sell or otherwise issue shares of our common stock at a discount from net asset value per share, as long as the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale, for a period of one year ending on the earlier of June 12,11, 20252026 or the date of our 20252026 Annual Meeting of Stockholders. Our stockholders will be asked to vote on a similar proposal at our 20252026 Annual Meeting of Stockholders. If we sell or otherwise issue shares of our common stock at a discount to net asset value, it will pose a risk of dilution to our stockholders. In particular, stockholders who do not purchase additional shares at or below the discounted price in proportion to their current ownership will experience an immediate decrease in net asset value per share (as well as in the aggregate net asset value of their shares if they do not participate at all). These stockholders will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than the increase we experience in our assets, potential earning power and voting interests from such issuances or sale. In addition, such issuances or sales may adversely affect the price at which our common stock trades. For additional information and hypothetical examples of these risks, see “Sales of Common Stock Below Net Asset Value,” and for actual dilution illustrations specific to an offering, see the prospectus supplement pursuant to which such sale is made.

As of MarchFebruary 4,24, 2025,2026, we had 33,914,65237,954,364 shares of common stock outstanding. Sales of substantial amounts of our common stock, or the availability of shares for sale, could adversely affect the prevailing market price of our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of equity securities should we desire to do so.

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. OnWe commenced operations of Fund II, Fund III and Fund IV, each a wholly owned subsidiary, 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. Onand November 28, 2023, we commenced operations of a fourth wholly-owned subsidiary, Fund IV.respectively.

We have certain wholly-owned subsidiaries (the “Taxable Subsidiaries”), each of which generally holds one or more of our portfolio investments listed on the consolidated schedules of investments, and have elected to be treated as corporations for U.S. federal income tax purposes and are thus subject to U.S. federal income tax imposed at corporate rates. 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 areis to permit us to hold equity investments in portfolio companies that are classified 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 income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal income tax on its taxable income. Any such income or expense is reflected in the consolidated statements of operations.

During the years ended December 31, 20242025 and 2023,2024, we invested $394.5$498.2 million and $336.7$394.5 million, respectively, in debt and equity investments, including 1620 and 16 new portfolio companies, respectively. During the years ended December 31, 20242025 and 2023,2024, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $276.9$288.0 million and $258.8$276.9 million, respectively, including exits of teneight and twelveten portfolio companies, respectively. The following table summarizes investment purchases and sales and repayments of investments by type for the years ended December 31, 20242025 and 20232024 (dollars in millions).

As of December 31, 2024,2025, the fair value of our investment portfolio totaled $1.1$1.3 billion and consisted of 8797 active portfolio companies and foursix portfolio companies that have sold their underlying operations. As of December 31, 2024,2025, 5058 portfolio companies’ debt investments bore interest at a variable rate, which represented $704.0$890.1 million, or 74.5%,75.3%, 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 $15.3$25.5 million as of December 31, 2024.2025. As of December 31, 2024,2025, our average active portfolio company investment at amortized cost was $12.4$13.4 million, which excludes investments in foursix portfolio companies that have sold their underlying operations.

As of December 31, 2023,2024, the fair value of our investment portfolio totaled $957.9$1.1 millionbillion and consisted of 8187 active portfolio companies and onefour portfolio companycompanies that hashave sold itstheir underlying operations. As of December 31, 2023,2024, 4650 portfolio companies’ debt investments bore interest at a variable rate, which represented $629.3$704.0 million, or 75.6%,74.5%, 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 $21.3$15.3 million as of December 31, 2023.2024. As of December 31, 2023,2024, our average active portfolio company investment at amortized cost was $11.6$12.4 million, which excludes an investmentinvestments in the onefour portfolio companycompanies that hashave sold itstheir underlying operations.

The weighted average yield on debt investments as of December 31, 20242025 and 20232024 was 13.3%12.6% and 14.2%,13.3%, 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 as of December 31, 20242025 and 2023,2024, including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status.status and investments recorded as a secured borrowing.

We also have observed, and continue to observe, supply chain disruptions, labor and resource shortages, commodity inflation, elements of financial market instability (including elevated interest rates), changes to U.S. tariff and trade policies and uncertainty relating to such changes, an uncertain economic outlook for the United States (which may include a recession), and elements of geopolitical instability (including the ongoing war in Ukraine andUkraine, U.S. and China relations, and ongoing conflictconflicts in the Middle East). In the event that the U.S. economy enters into a protracted recession, it is possible that the results of certain U.S. middle market companies could experience deterioration. We are closely monitoring the effect of such market volatility may have on our portfolio companies and our investment activities. We also are maintaining close communications with our portfolio companies and have also increased oversight of credits in vulnerable industries to mitigate any decline in loan performance and reduce credit risk.

As of December 31, 20242025 and December 31, 2023,2024, we had debt investments in fourtwo and threefour portfolio companies, respectively on non-accrual status (dollars in millions):

(1) PortfolioThe companyCompany exited its debt investmentinvestments wasin such portfolio companies and did not heldhold such investments as of December 31, 2023.2025.

As of December 31, 2024,2025, we had $57.2$70.0 million in cash and cash equivalentsequivalents, $9.6 million in restricted cash, and our net assets totaled $655.7$741.9 million. We believe that our current cash and cash equivalents on hand, restricted cash, our SPV Credit Facility,Facility (as defined below), 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 debt and equity securities (including the ATM 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. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This "Financial Liquidity and Capital Resources" section should be read in conjunction with the notes of our consolidated financial statements.

For the year ended December 31, 2024,2025, we experienced a net decreaseincrease in cash andcash, cash equivalents inand therestricted amountcash of $62.0$22.4 million. During that period, we used $55.3$147.0 million of cash from operating activities, which included proceeds received from sales and repayments of investments of $276.9$288.0 million, which were offset by the funding of $394.5$498.2 million of investments. During the same period, we received net proceeds from the ATM Program of $66.3$79.3 millionmillion, proceeds from the issuance of the March 2030 Notes of $200.0 million, proceeds from the issuances of SBA debentures of $91.0 million, and net borrowings of $45.0$38.9 million under our Credit Facility,Facilities (as defined below), made repayments of SBA debentures of $35.0 million relating to Fund II,III of $28.5 million, fully redeemed the outstanding $125.0 million of our January 2026 Notes, paid cash dividends to stockholders of $78.4$75.5 million, received repayments of $2.2$1.7 million on our secured borrowings, and the payment ofpaid deferred financing costs related to our debt financings of $2.4$9.1 million.

For the year ended December 31, 2023,2024, we experienced a net increasedecrease in cash andcash, cash equivalents inand therestricted amountcash of $56.7$62.0 million. During that period, we used $29.5$55.3 million of cash from operating activities, which included proceeds received from sales and repayments of investments of $258.9$276.9 million, which were offset by the funding of $336.7$394.5 million of investments. During the same period, we received net proceeds from the ATM Program of $110.3$66.3 million and proceedsnet from the issuancesborrowings of SBA$45.0 debenturesmillion ofunder $62.0our million,Revolving whichCredit wereFacility, partially offset bymade repayments of SBA debentures relating to Fund II of $5.0$35.0 million, paid cash dividends paid to stockholders of $78.3$78.4 million, received repayments of $2.2 million on our secured borrowings, and the payment ofpaid deferred financing costs related to our debt financings of $1.8$2.4 million.

For the year ended December 31, 2022,2023, we experienced a net decreaseincrease in cash andcash, cash equivalents inand therestricted amountcash of $107.1$56.7 million. During that period, we used $105.5$29.5 million of cash from operating activities, which included proceeds received from sales and repayments of investments of $194.0$258.9 million, which were offset by the funding of $333.8$336.7 million of investments. During the same period, we received net proceeds from the ATM Program of $5.8$110.3 million and proceeds from the issuances of SBA debentures of $76.0$62.0 million, which wewas partially offset by repayments of SBA debentures of $30.0$5.0 million, paid cash dividends paid to stockholders of $49.1$78.3 million, and the payment ofpaid deferred financing costs related to our debt financings of $3.5$1.8 million.

Each ofBoth Fund III and Fund IV isare licensed to operate as an SBIC, and hashave the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, 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. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on SBIC's full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. Fund II has completed a wind-down plan, relinquished its SBIC license and can no longer issue additional SBA debentures, effective as of March 7, 2024. On September 30, 2024, Fund IV received a license to operate as a SBIC. As of December 31, 2024,2025, Fund III had a total leverage commitment from the SBA of $175.0 million, of which all are outstanding, and Fund IV had a$146.5 totalmillion leverageand commitment$91.0 frommillion theof outstanding SBA ofdebentures, $175.0 million, of which none is outstanding.respectively. Subject to SBA regulatory requirements and approval of SBA debenture commitments, weFund IV may access up to $175.0$84.0 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.

WeThe paytotal commitments available under the Revolving Credit Facility was $140.0 million. Under the Revolving Credit Agreement, we paid a commitment fee that variesvaried depending on the size of the unused portion of the Revolving Credit Facility: 2.500% to 2.675% per annum on the unused portion of the Revolving Credit Facility at or below 35% of the commitments and 0.50% per annum on any remaining unused portion of the Revolving Credit Facility between the total commitments and the 35% minimum utilization. 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 SPV 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 SBIC Funds.SPV. We are subject to limitations with respect to the investments securing the SPV 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.requirements. These covenants are subject to important limitations and exceptions that are described in the documents governing the SPV Credit Facility. As of December 31, 2024,2025, we were in compliance in all material respects with the terms of the Credit Agreement and there were no borrowings outstanding under theSPV Credit Facility.Agreement.

On October 8, 2021, we closed the offering of $125.0 million in aggregate principal amount of our 3.50% notes due 2026, or the “November 2026 Notes” (collectively with 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 offering expenses of $0.3 million, were $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 before August 15, 2026 (the date falling 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. We do not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system. As of December 31, 2024,2025, the outstanding principal balance of the November 2026 Notes was $125.0 million.

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. OnMost Octoberrecently, 28,on 2024,November 3, 2025, the Board extended the Stock Repurchase Program through December 31, 2025,2026, 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 years ended December 31, 2025, 2024, 2023, and 2022.2023. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases.

During the threesix months ended MarchJune 31,30, 2026 and 2025, we invested $118.6$216.7 million and $115.6$210.0 million, respectively, in debt and equity investments including twosix and seveneleven new portfolio companies, respectively. During the threesix months ended MarchJune 31,30, 2026 and 2025, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $73.1$112.2 million and $57.3$166.6 million, respectively, including an exit of one portfolio company and twofive portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the threesix months ended MarchJune 31,30, 2026 and 2025 (dollars in millions).

(1) For the threesix months ended MarchJune 31,30, 2026 and 2025, first lien debt includes unitranche securities, which account for 48.0%48.5% and 51.5%58.4% of purchases, respectively. For the threesix months ended MarchJune 31,30, 2026 and 2025, first lien debt includes unitranche securities, which account for 18.4%27.7% and 1.0%22.6% of repayments, respectively.

As of MarchJune 31,30, 2026, the fair value of our investment portfolio totaled $1.4 billion and consisted of 97100 active portfolio companies and seveneight portfolio companies that have sold their underlying operations. As of MarchJune 31,30, 2026, 5861 portfolio companies’ debt investments bore interest at a variable rate, which represented $884.0$930.6 million, or 72.5%,72.4%, 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 $33.1$28.5 million as of MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, our average active portfolio company investment at amortized cost was $13.8$14.0 million, which excludes investments in seveneight portfolio companies that have sold their underlying operations.

The weighted average yield on debt investments as of MarchJune 31,30, 2026 and December 31, 2025 was 12.5% and 12.6%, 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 as of MarchJune 31,30, 2026 and December 31, 2025, including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status and investments recorded as a secured borrowing.

(1) Includes unitranche investments, which account for 50.0%50.4% and 51.3%51.7% of our portfolio on a fair value and cost basis as of MarchJune 31,30, 2026, respectively. Includes unitranche investments, which account for 48.3% and 49.3% of our portfolio on a fair value and cost basis as of December 31, 2025, respectively.

The following table shows the distribution of our investments on the 1 to 5 investment rating scale at fair value and cost as of MarchJune 31,30, 2026 and December 31, 2025 (dollars in millions):

Based on our investment rating system, the weighted average rating of our portfolio as of MarchJune 31,30, 2026 and December 31, 2025 was 2.0 and 2.0, respectively, on a fair value basis and 2.1 and 2.2, respectively, on a cost basis.

As of MarchJune 31,30, 2026 and December 31, 2025, we had debt investments in one portfolio company and two portfolio companiescompanies, respectively, on non-accrual status (dollars in millions), respectively..

(1) The Company exited its debt investment in such portfolio company and did not hold such investment as of MarchJune 31,30, 2026.

Comparison of three and six months ended MarchJune 31,30, 2026 and 2025

Below is a summary of the changes in total investment income for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 (dollars in millions, percent change calculated based on underlying dollar amounts in thousands):

(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 MarchJune 31,30, 2026, total investment income was $47.5$43.5 million, an increase of $11.0$3.5 million or 30.2%,8.8%, from $36.5$40.0 million of total investment income for the three months ended MarchJune 31,30, 2025. As reflected in the table above, the increase is primarily attributable to the following:

$4.8$5.3 million increase in total interest income (which includes a $1.0 million increase in payment-in-kind (“"PIK”") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2026 as compared to the same period in 2025.

$0.9$0.3 million decreaseincrease in dividend income due to aan decreaseincrease in distributions received from equity investments,investments during 2026 as compared to the same period in 2025.

$0.3$1.8 million increasedecrease in interestfee on idle fundsincome resulting from ana increasedecrease in averageprepayment cashand balancesorigination outstandingfees during 2026 as compared to the same period in 2025.

Below is a summary of the changes in total expenses, including income tax provision, for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 (dollars in millions, percent change calculated based on underlying dollar amounts in thousands):

(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 MarchJune 31,30, 2026, total expenses, including the base management fee waiver and income tax provision, were $22.9$24.8 million, an increase of $4.6$3.5 million or 25.2%,16.2%, from the $18.3$21.3 million of total expenses, including the base management fee waiver and income tax provision, for the three months ended MarchJune 31,30, 2025. As reflected in the table above, changes across the periods were primarily attributable to the following:

$3.0$3.2 million increase in interest and financing expenses due to an increase in the weighted average interest rate of our debt outstanding and an increase in weighted average borrowings outstanding during 2026 as compared to the same period in 2025.

$1.0$1.1 million net increase in the base management fee, including the base management fee waiver, due to higher average total assets during 2026 as compared to the same period in 2025.

$1.2$0.2 million increasedecrease in the income incentive fee due to ana increasedecrease in pre-incentive fee net investment income during 2026 as compared to the same period in 2025.

$0.4$0.8 million increase in professional fees due to anincreased increaseproxy insolicitation fees, legal, accountingaudit and tax fees,compliance andexpenses theduring write2026 offas ofcompared unutilizedto equity offering costs associated with our previous shelf registration statement.2025.

Net investment income increased by $6.4$0.0 million, or 35.2%,0.3%, to $24.6$18.7 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, as a result of the $11.0$3.5 million increase in total investment incomeincome, andoffset by the $4.6$3.5 million increase in total expenses, including base management fee waiver and income tax provision.

For the three and six months ended MarchJune 31,30, 2026, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $6.4 million and $(12.25.8) million.million, respectively. Income tax (provision) benefit from realized gains on investments was $(0.10.3) million and $(0.4) million for the three and six months ended MarchJune 31,30, 2026. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Realized gains (losses) for the three and six months ended MarchJune 31,30, 2026 are summarized below (dollars in millions):

For the three and six months ended MarchJune 31,30, 2025, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $13.3$(7.6) million and $5.7 million. Income tax (provision) benefit from realized gains on investments was $(1.80.1) million and $(1.9) million for the three and six months ended MarchJune 31,30, 2025. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Realized gains (losses) for the three and six months ended MarchJune 31,30, 2025 are summarized below (dollars in millions):

During the three and six months ended MarchJune 31,30, 2026 and 2025, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Net increase (decrease) in net assets resulting from operations during the three months ended MarchJune 31,30, 2026 and 2025 was $19.9$20.0 million and $19.7$25.3 million, respectively, as a result of the events described above.

As of MarchJune 31,30, 2026, we had $49.7$37.6 million in cash and cash equivalents, $0.7$1.7 million in restricted cash, and our net assets totaled $742.0$738.5 million. We believe that our current cash and cash equivalents on hand, restricted cash, our SPV 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 debt and equity securities (including the ATM Program (as defined below)) 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 threesix months ended MarchJune 31,30, 2026, we repaid $7.0 million of SBA debentures relating to Fund III that would have matured during the period March 1, 2033 through September 1, 2033. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2036, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

For the threesix months ended MarchJune 31,30, 2026, we experienced a net decrease in cash, cash equivalents and restricted cash in the amount of $29.2$40.4 million. During that period, we made net payments of $32.6$74.5 million of cash for operating activities, which included the funding of $118.6$216.7 million of investments that was partially offset by proceeds received from sales and repayments of investments of $73.1$112.2 million. During the same period, we received gross proceeds from the issuance of the June 2029 Notes of $120.0 million, redeemed $125.0 million in aggregate principal amount of the November 2026 Notes, received proceeds from the issuances of SBA debentures of $30.0$65.5 million, we repaid SBA debentures of $7.0 million relating to Fund III,III of $7.0 million, received net proceeds of $1.3$28.8 million from our SPV Credit Facility, received repayments of $0.4$0.9 million on our secured borrowings, paid cash dividends to stockholders of $19.7$43.3 million, and made payment of deferred financing costs related to our debt financings of $0.8$4.0 million.

Both Fund III and Fund IV are licensed to operate as an SBIC, and have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the SBA regulations, an SBIC can have outstanding at any time debentures guaranteed by the SBA in an amount up to twice its regulatory capital. TheSubject to SBA approval, 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$250.0 million, whichever is less. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0$475.0 million.million, subject to SBA approval. The SBA may limit the amount that may be drawn each year under the SBA debenture commitments, and each issuance of leverage is conditioned on such SBIC Fund'sFund’s full compliance, as determined by the SBA, with the terms and conditions under SBA regulations. SBA debentures have fixed interest rates that approximate prevailing 10-year Treasury Note rates plus a spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the SBA debentures is not required to be paid before maturity but may be pre-paid at any time. As of MarchJune 31,30, 2026, Fund III and Fund IV had $139.5 million and $121.0$156.5 million in outstanding SBA debentures, respectively. Subject to SBA regulatory requirements and approval of SBA debenture commitments, FundFMC IV may access up to $54.0$93.5 million of additional SBA debentures under the SBIC debenture program. For more information on the SBA debentures, please refer to Note 6. Debt to our consolidated financial statements.

The total commitments available under the Revolving Credit Facility waswere $140.0 million. Under the Revolving Credit Agreement, we paid a commitment fee that varied depending on the size of the unused portion of the Revolving Credit Facility: 2.500% to 2.675% per annum on the unused portion of the Revolving Credit Facility at or below 35% of the commitments and 0.50% per annum on any remaining unused portion of the Revolving Credit Facility between the total commitments and the 35% minimum utilization.

Amounts available to borrow under the SPV Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by the SPV. WeThe areSPV is subject to limitations with respect to the investments securing the SPV 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 SPV Credit Facility is secured primarily by a pledge of 100% of the equity interest in the SPV held by us and the SPV’s assets, which consist of certain bank loans or securities.

We and the SPV have made customary representations and warranties and we are required to comply with various covenants, reporting requirements and other customary requirements. These covenants are subject to important limitations and exceptions that are described in the documents governing the SPV Credit Facility. As of MarchJune 31,30, 2026, we were in compliance in all material respects with the terms of the SPV Credit Agreement.

On October 8, 2021, we closed the offering of $125.0 million in aggregate principal amount of our 3.50% notes due 2026, or the “November 2026 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 offering expenses of $0.3 million, were $122.2 million. The maturity date of the November 2026 Notes will mature onwas November 15, 2026 and bearthe November 2026 Notes bore interest at a rate of 3.50%. TheOn NovemberJune 202629, Notes2026, maywe befully redeemed inthe whole$125.0 ormillion in part at any time or from time to time at our option subject to a make whole provision if redeemed before August 15, 2026 (the date falling 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. We do not intend to list the November 2026 Notes on any securities exchange or automated dealer quotation system. As of March 31, 2026, the outstandingaggregate principal balanceamount of the November 2026 NotesNotes, wasresulting $125.0in a realized loss on extinguishment of debt of $0.2 million.

As of MarchJune 31,30, 2026, the carrying value of secured borrowings totaled $11.6$11.1 million and the fair value of the associated loans included in investments was $11.6$11.1 million. As of December 31, 2025, the carrying value of secured borrowings totaled $12.0 million and the fair value of the associated loans included in investments was $12.0 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 defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales” to our consolidated financial statements for more information). 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 7.882%7.838% and 7.917% as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

As of MarchJune 31,30, 2026, the weighted average stated interest rates for our SBA debentures and the Notes were 4.441%4.463% and 5.500%,6.703%, respectively. As of MarchJune 31,30, 2026, we had $139.9$112.4 million of unutilized commitment under our SPV Credit Facility, and we were subject to a 0.500% fee on such amount. As of MarchJune 31,30, 2026, the weighted average stated interest rate on total debt outstanding was 5.234%.5.776%.

On November 10, 2022, the Company established the at-the-market program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through Raymond James & Associates, Inc. and B. Riley Securities, Inc., each as sales agents, shares of the Company'sCompany’s common stock having an aggregate offering price of up to $50.0 million. On August 11, 2023, the Company increased the maximum amount of shares to be sold through the ATM Program to $150.0 million from $50.0 million. On February 29, 2024, the Company increased the maximum amount of shares to be sold through the ATM Program to $300.0 million from $150.0 million. On March 2, 2026, the Company increased the maximum amount of shares to be sold through the ATM Program to $400.0 million from $300.0 million. Cumulative to MarchJune 31,30, 2026, the Company has sold 13,300,342 shares of common stock under the ATM Program at a weighted-average price of $19.94, raising $265.2 million of gross proceeds. Net proceeds were $261.8 million after commissions to the sales agents on salesshares sold. As of MarchJune 31,30, 2026, the Company had $134.8 million available under the ATM 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. Most recently, on November 3, 2025, the Board extended the Stock Repurchase Program through December 31, 2026, 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 months ended MarchJune 31,30, 2026 and 2025. Refer to Note 8. Common Stock to our consolidated financial statements for additional information concerning stock repurchases.