Press Release

Stellus Capital Investment Corporation Reports Results for its second fiscal quarter ended June 30, 2022

August 3, 2022 at 6:40 PM EDT

HOUSTON, Aug. 3, 2022 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE: SCM) ("Stellus" or "the Company") today announced financial results for its second fiscal quarter ended June 30, 2022.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report positive results for the second quarter, in which we more than covered our regular dividend with GAAP and Core net investment income, grew our portfolio to $852 million at fair value, upsized our bank credit facility to $265 million and maintained asset quality. We are benefitting from the rising interest rate environment as our loan portfolio's yield has now risen 80 basis points from the end of the first quarter. In July, in addition to our regular dividend of $0.28 per quarter in the aggregate, our Board of Directors declared an additional aggregate dividend of $0.06 for the third quarter. These dividends total $0.34 per share in the aggregate, payable in monthly increments, for the third quarter."

FINANCIAL HIGHLIGHTS

($ in millions, except data relating to per share amounts and shares outstanding)


	Quarter Ended		Six Months Ended
	June 30, 2022		June 30, 2022
	Amount	Per Share	Amount	Per Share
Net investment income	$6.17	$0.32	$11.69	$0.60
Core net investment income⁽¹⁾	5.62	0.29	11.37	0.58
Net realized gains on investments	(0.35)	(0.02)	3.11	0.16
Net realized loss on foreign currency	-	-	(0.01)	-
Total realized income⁽²⁾	5.82	0.30	14.79	0.76
Distributions	(6.64)	(0.34)	(12.11)	(0.62)
Net unrealized depreciation on investments	(4.29)	(0.22)	(8.01)	(0.41)
Net unrealized depreciation on foreign currency translation	(0.04)	-	(0.04)	-
Provision for taxes on unrealized appreciation on investments in taxable subsidiaries	(0.16)	(0.01)	(0.18)	(0.01)
Net increase in net assets resulting from operations	$1.34	0.07	$6.56	0.34
Weighted average shares outstanding		19,543,117		19,530,509


(1)	Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.
(2)	Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.

PORTFOLIO ACTIVITY

($ in millions, except data relating to per share amounts and number of portfolio companies)


	As of	As of
	June 30,	December 31,
	2022	2021
Investments at fair value	$852.00	$772.9
Total assets	$882.90	$821.3
Net assets	$279.90	$285.1
Shares outstanding	19,545,935	19,517,595
Net asset value per share	$14.32	$14.61

	Quarter Ended	Six Months Ended
	June 30,	June 30,
	2022	2022
New investments	$67.6	$142.1
Repayments of investments	(48.2)	(58.2)
Net activity	$19.4	$83.9

	As of	As of
	June 30,	December 31,
	2022	2021
Number of portfolio company investments	83	73
Number of debt investments	70	58

Weight average yield of debt and other income producing investments ⁽³⁾
Cash	7.9 %	7.4 %
Payment-in-kind ("PIK")	0.2 %	0.2 %
Fee amortization	0.4 %	0.4 %
Total	8.5 %	8.0 %

Weighted average yield on total investments ⁽⁴⁾
Cash	7.4 %	6.9 %
Payment-in-kind ("PIK")	0.2 %	0.2 %
Fee amortization	0.4 %	0.4 %
Total	8.0 %	7.5 %


(3)	The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.
(4)	The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

Results of Operations

Investment income for the three months ended June 30, 2022 and 2021 totaled $16.1 million and $15.1 million, respectively, most of which was interest income from portfolio investments.

Operating expenses for the three months ended June 30, 2022 and 2021, totaled $9.9 million and $9.6 million, respectively. For the same respective periods, base management fees totaled $3.7 million and $3.3 million, income incentive fees totaled $0.0 and $0.1 million, capital gains incentive fees (reversal) totaled ($1.0) million and $0.0 million, fees and expenses related to our borrowings totaled $5.5 million and $4.7 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.4 million and $0.3 million and other expenses totaled $0.8 million and $0.7 million.

Net investment income was $6.2 million and $5.5 million, or $0.32 and $0.28 per common share based on weighted average common shares outstanding for the three months ended June 30, 2022 and 2021 of 19,543,117 and 19,486,003, respectively.

The capital gains incentive fee had a reversal of ($1.0) million for the three months ended June 30, 2022 due to the decrease in net realized and unrealized gains over the quarter. Such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $0.4 million for the three months ended June 30, 2022 was accrued based on estimates of undistributed taxable income, which was generated largely from net income. Core net investment income, which is a non-U.S. GAAP measure that excludes these accruals, for the three months ended June 30, 2022 was $5.6 million, or $0.29 per share; and for the three months ended June 30, 2021 was $5.8 million, or $0.30 per share.

The Company's investment portfolio had a net change in unrealized (depreciation) appreciation for the three months ended June 30, 2022 and 2021, of ($4.3) million and $1.7 million, respectively. For the three months ended June 30, 2022 and 2021, the Company had realized losses of ($0.4) million and ($1.8) million, respectively.

Net increase in net assets resulting from operations totaled $1.3 million and $5.6 million, or $0.07 and $0.29 per common share, based on weighted average common shares outstanding for the three months ended June 30, 2022 and 2021 of 19,543,117 and 19,486,003, respectively.

Liquidity and Capital Resources

As of June 30, 2022, our amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $265.0 million on a committed basis. As of June 30, 2022 and 2021, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 million. As of June 30, 2022 and December 31, 2021, we had $203.6 million and $177.3 million in outstanding borrowings under the Credit Facility, respectively.

Distributions

During the three months ended June 30, 2022 and 2021, we declared aggregate distributions of $0.34 per share and $0.25 per share ($6.6 million and $4.9 million, respectively) for each quarter. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.

Recent Portfolio Activity

On April 1, 2022, we invested $0.1 million in the first lien term loan and committed $0.1 million in the revolver of International Designs Group LLC, a regional distributor, seller, and custom fabricator of high-end ceramic and stone tile products and accessories. Additionally, we invested $0.1 million in the equity of the company.

On April 1, 2022, we invested $0.1 million in the first lien term loan and committed $0.1 million in the revolver of Tilley Chemical Company, Inc., a distributor of specialty chemicals, oils, and lubricants into the food & beverage, lubricants, flavor and fragrances, personal care, and other chemicals end-markets.

On April 4, 2022, we invested $11.3 million in the first lien term loan and committed $0.1 million in the revolver of Microbe Formulas LLC, a provider of dietary supplements and other natural solutions for detox and gut health.

On April 7, 2022, we received $1.3 million in full realization on the equity of Energy Labs Holding Corp., resulting in a $0.7 million realized gain.

On April 15, 2022, we invested $6.6 million in the first lien term loan of Anne Lewis Strategies, LLC, an existing portfolio company.

On April 15, 2022, we invested $0.1 million in the equity of Pure TopCo, LLC, an existing portfolio company.

On April 25, 2022, we received full repayment on the first lien term loan of SQAD, LLC for total proceeds of $14.1 million. We also received $2.4 million in full realization on the equity of the company, resulting in a $2.1 million realized gain.

On April 29, 2022, we invested $10.0 million in the first lien term loan and committed $0.1 million in the revolver and $0.1 million in the delayed draw term loan of Florachem Holdings, LLC, a distiller and supplier of natural citrus, pine, and specialty inputs. Additionally, we invested $0.4 million in the equity of the company.

On May 17, 2022, we invested $0.1 million in the first lien term loan and committed $0.1 million in the revolver of AIP ATCO Buyer, LLC, a provider of quality assurance services for automotive OEMs and suppliers.

On May 20, 2022, we invested $0.1 million in the equity of TradePending Holdings, LLC, an existing portfolio company.

On May 24, 2022, we invested $0.1 million in the first lien term loan and committed €0.1 million euro in the revolver and €0.1 million euro in the delayed draw term loan of Monitorus Holding, LLC, a provider of media monitoring and evaluation services.

On June 1, 2022, we invested $0.1 million in the equity of PCP MT Aggregator Holdings, L.P., an existing portfolio company.

On June 6, 2022, we invested $13.8 million in the first lien term loan and committed $0.1 million in the revolver of Lightning Intermediate II, LLC, a vitamins, minerals, and supplements brand. Additionally, we invested $0.4 million in the equity of the company.

On June 15, 2022, we invested $0.3 million in the equity of ADS Group Topco, LLC, an existing portfolio company.

On June 15, 2022, we invested $0.9 million in the first lien term loan of SIB Holdings, LLC, an existing portfolio company.

On June 24, 2022, we received full repayment on the first lien term loans of Grupo HIMA San Pablo, Inc. for total proceeds of $0.7 million, resulting in a $3.9 million realized loss.

On June 27, 2022, we invested $0.3 million in the equity of HV GS Acquisition, LP, an existing portfolio company.

On June 30, 2022, we invested $0.1 million in the equity of HV Acquisition VI, LLC, an existing portfolio company.

On June 30, 2022, we invested $0.1 million in the equity of Tower Arch Infolinks Media, LP, an existing portfolio company.

Events Subsequent to June 30, 2022

On July 1, 2022, we invested $0.1 million in the first lien term loan and committed $0.1 million in the revolver of Heat Makes Sense Shared Services, LLC, a branded haircare platform. Additionally, we invested $0.1 million in the equity of the company.

On July 5, 2022, we invested $13.9 million in the first lien term loan Baker Manufacturing Company, LLC, a manufacturer of water well equipment, specialized filtration pumps, and custom castings. Additionally, we invested $0.7 million in the equity of the company.

On July 15, 2022, we received full repayment on the first lien term loan and revolver of International Designs Group, LLC for total proceeds of $0.1 million.

On July 15, 2022, we received full repayment on the first lien term loan of ASC Communications, LLC for total proceeds of $8.2 million. We also received $1.8 million in full realization on the equity of the company, resulting in a $1.8 million realized gain.

On July 15, 2022, we invested $1.0 million in the first lien term loan of Exacta Land Surveyors, LLC, an existing portfolio company. Additionally, we invested $0.1 million in the equity of the company.

On July 20, 2022, we invested $2.2 million in the first lien term loan of SIB Holdings, LLC, an existing portfolio company.

On July 28, 2022, we invested $0.1 million in the equity of USASF Blocker IV LLC, an existing portfolio company.

On July 29, 2022, we invested $13.0 million in the first lien term loan and committed $0.1 million in the revolver and $0.1 million in the delayed draw term loan of a provider of product testing and consumer insights. Additionally, we invested $0.7 million in the equity of the company.

Credit Facility

The outstanding balance under the credit facility as of August 3, 2022 was $198.2 million.

SBA-guaranteed Debentures

On July 1, 2022, the Company contributed $5.0 million in capital to its SBIC II subsidiary. To date, the Company has contributed $78.0 million of its $87.5 million regulatory capital commitment. The total balance of SBA-guaranteed debentures outstanding as of August 3, 2022 was $300.0 million.

Distributions Declared

On July 13, 2022, our board of directors declared a regular monthly distribution for each of July, August, and September 2022 as follows:


	Ex-Dividend	Record	Payment	Amount per
Declared	Date	Date	Date	Share
7/13/2022	7/28/2022	7/29/2022	8/15/2022	$	0.0933
7/13/2022	8/30/2022	8/31/2022	9/15/2022	$	0.0933
7/13/2022	9/29/2022	9/30/2022	10/14/2022	$	0.0933

On July 13, 2022, our board of directors declared an additional monthly distribution for each of July, August, and September 2022 as follows:


	Ex-Dividend	Record	Payment	Amount per
Declared	Date	Date	Date	Share
7/13/2022	7/28/2022	7/29/2022	8/15/2022	$	0.02
7/13/2022	8/30/2022	8/31/2022	9/15/2022	$	0.02
7/13/2022	9/29/2022	9/30/2022	10/14/2022	$	0.02

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Thursday, August 4, 2022 at 11:00 AM, Central Daylight Time. The conference call will be led by Robert T. Ladd, chief executive officer, and W. Todd Huskinson, chief financial officer, chief compliance officer, treasurer, and secretary.

For those wishing to participate by telephone, please dial (888) 394-8218. Use passcode 9390038. Starting approximately two hours after the conclusion of the call, a replay will be available through Friday, August 12, 2022 by dialing (888) 203-1112 and entering passcode 9390038. The replay will also be available on the company's website.

For those wishing to participate via Live Webcast, connect via the Public Company (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.

About Stellus Capital Investment Corporation

The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans, second lien loans and unsecured debt financing, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Capital Management. To learn more about Stellus Capital Investment Corporation, visit www.stelluscapital.com under the "Public (SCIC)" tab.

Forward-Looking Statements

Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release, including statements about COVID-19 and its impacts, may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

	June 30,
	2022		December 31,
	(unaudited)		2021
ASSETS
Non-controlled, non-affiliated investments, at fair value (amortized cost of $873,575,942 and $785,005,957, respectively)	$	852,000,318	$	772,873,326
Cash and cash equivalents		26,462,108		44,174,856
Receivable for sales and repayments of investments		770,998		536,105
Interest receivable		2,973,110		2,944,599
Other receivables		177,533		54,752
Deferred tax asset		—		151,278
Related party receivable		187,132		—
Deferred offering costs		89,158		14,888
Prepaid expenses		286,039		512,214
Total Assets	$	882,946,396	$	821,262,018
LIABILITIES
Notes payable	$	98,324,497	$	98,102,973
Credit Facility payable		201,845,293		175,451,116
SBA-guaranteed debentures		287,743,263		244,615,903
Dividends payable		2,214,557		1,171,059
Management fees payable		3,705,053		3,454,225
Income incentive fees payable		289,188		1,749,130
Capital gains incentive fees payable		2,362,360		3,388,151
Interest payable		3,953,225		3,693,662
Unearned revenue		510,842		529,726
Administrative services payable		399,741		386,368
Income tax payable		725,295		3,269,514
Deferred tax liability		30,535		—
Other accrued expenses and liabilities		976,429		338,958
Total Liabilities	$	603,080,278	$	536,150,785
Commitments and contingencies (Note 7)
Net Assets	$	279,866,118	$	285,111,233
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,545,935 and 19,517,595 issued and outstanding, respectively)	$	19,546	$	19,518
Paid-in capital		274,864,296		274,559,121
Accumulated undistributed surplus		4,982,276		10,532,594
Net Assets	$	279,866,118	$	285,111,233
Total Liabilities and Net Assets	$	882,946,396	$	821,262,018
Net Asset Value Per Share	$	14.32	$	14.61


STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	For the three months ended				For the three months ended			For the six months ended			For the six months ended
	June 30,				June 30,			June 30,			June 30,
	2022				2021			2022			2021
INVESTMENT INCOME
Interest income		$	15,658,018	$		14,846,398	$		30,774,969	$		28,359,175
Other income			451,027			257,976			828,480			733,063
Total Investment Income		$	16,109,045	$		15,104,374	$		31,603,449	$		29,092,238
OPERATING EXPENSES
Management fees		$	3,705,053	$		3,278,479	$		7,197,766	$		6,242,340
Valuation fees			30,029			20,082			169,617			148,435
Administrative services expenses			466,903			463,102			941,221			916,491
Income incentive fees			—			55,899			—			55,899
Capital gains incentive (reversal) fees			(983,575)			14,387			(1,025,792)			97,668
Professional fees			217,404			236,212			529,466			505,177
Directors' fees			74,500			74,500			171,000			166,000
Insurance expense			125,890			118,813			250,397			236,320
Interest expense and other fees			5,524,378			4,691,968			10,415,975			9,015,446
Income tax expense			426,236			286,276			705,653			526,257
Other general and administrative expenses			347,656			329,641			559,392			586,559
Total Operating Expenses		$	9,934,474	$		9,569,359	$		19,914,695	$		18,496,592
Net Investment Income		$	6,174,571	$		5,535,015	$		11,688,754	$		10,595,646
Net realized (loss) gain on non-controlled, non-affiliated investments		$	(352,723)	$		(1,781,665)	$		3,105,367	$		(1,319,437)
Net realized loss on foreign currency translation			—			—			(7,350)			—
Loss on debt extinguishment			—			—			—			(539,250)
Net change in unrealized (depreciation) appreciation on non-controlled, non-affiliated investments			(4,289,591)			1,665,877			(8,011,193)			1,787,860
Net change in unrealized depreciation on foreign currency translations			(35,754)			—			(35,754)			—
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments			(160,656)			187,721			(181,813)			19,917
Net Increase in Net Assets Resulting from Operations			1,335,847			5,606,948			6,558,011			10,544,736
Net Investment Income Per Share—basic and diluted		$	0.32	$		0.28	$		0.60	$		0.54
Net Increase in Net Assets Resulting from Operations Per Share—basic and diluted		$	0.07	$		0.29	$		0.34	$		0.54
Weighted Average Shares of Common Stock Outstanding—basic and diluted			19,543,117			19,486,003			19,530,509			19,486,003
Distributions Per Share—basic and diluted		$	0.34	$		0.25	$		0.62	$		0.50


STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

	Common Stock					Accumulated
	Number	Par		Paid-in		undistributed
	of shares	value		capital		surplus (deficit)		Net Assets
Balances at December 31, 2020	19,486,003	$	19,486	$	276,026,667	$	(2,685,504)	$	273,360,649
Net investment income	—		—		—		5,060,631		5,060,631
Net realized gain on non-controlled, non-affiliated investments	—		—		—		462,228		462,228
Loss on debt extinguishment							(539,250)		(539,250)
Net change in unrealized appreciation on non-controlled, non-affiliated investments	—		—		—		121,983		121,983
Provision for taxes on unrealized appreciation on investments	—		—		—		(167,804)		(167,804)
Distributions from net investment income	—		—		—		(4,869,552)		(4,869,552)
Balances at March 31, 2021	19,486,003	$	19,486	$	276,026,667	$	(2,617,268)	$	273,428,885
Net investment income	—		—		—		5,535,015		5,535,015
Net realized loss on non-controlled, non-affiliated investments	—		—		—		(1,781,665)		(1,781,665)
Net change in unrealized appreciation on non-controlled, non-affiliated investments	—		—		—		1,665,877		1,665,877
Benefit for taxes on unrealized depreciation on investments	—		—		—		187,721		187,721
Distributions from net investment income	—		—		—		(4,869,552)		(4,869,552)
Balances at June 30, 2021	19,486,003	$	19,486	$	276,026,667	$	(1,879,872)	$	274,166,281

Balances at December 31, 2021	19,517,595	$	19,518	$	274,559,121	$	10,532,594	$	285,111,233
Net investment income	—		—		—		5,514,183		5,514,183
Net realized gain on non-controlled, non-affiliated investments	—		—		—		3,458,090		3,458,090
Net realized loss on foreign currency translation	—		—		—		(7,350)		(7,350)
Net change in unrealized depreciation on non-controlled, non-affiliated investments	—		—		—		(3,721,602)		(3,721,602)
Provision for taxes on unrealized appreciation on investments	—		—		—		(21,157)		(21,157)
Distributions from net investment income	—		—		—		(5,464,666)		(5,464,666)
Issuance of common stock, net of offering costs	14,924		15		167,655		—		167,670
Balances at March 31, 2022	19,532,519	$	19,533	$	274,726,776	$	10,290,092	$	285,036,401
Net investment income	—		—		—		6,174,571		6,174,571
Net realized loss on non-controlled, non-affiliated investments	—		—		—		(352,723)		(352,723)
Net change in unrealized depreciation on non-controlled, non-affiliated investments	—		—		—		(4,289,591)		(4,289,591)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(35,754)		(35,754)
Provision for taxes on unrealized appreciation on investments	—		—		—		(160,656)		(160,656)
Distributions from net investment income	—		—		—		(6,643,663)		(6,643,663)
Issuance of common stock, net of offering costs	13,416		13		137,520		—		137,533
Balances at June 30, 2022	19,545,935	$	19,546	$	274,864,296	$	4,982,276	$	279,866,118

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	For the		For the
	six months ended		six months ended
	June 30,		June 30,
	2022		2021
Cash flows from operating activities
Net increase in net assets resulting from operations	$	6,558,011	$	10,544,736
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments		(142,053,995)		(182,822,853)
Proceeds from sales and repayments of investments		58,182,238		55,963,858
Net change in unrealized depreciation (appreciation) on investments		8,011,193		(1,787,860)
Net change in unrealized depreciation on foreign currency translations		35,754		—
Increase in investments due to PIK		(653,534)		(360,003)
Amortization of premium and accretion of discount, net		(1,174,220)		(1,107,347)
Deferred tax provision (benefit)		181,813		(19,917)
Amortization of loan structure fees		272,959		239,700
Amortization of deferred financing costs		221,524		233,846
Amortization of loan fees on SBA-guaranteed debentures		589,020		501,885
Net realized (gain) loss on investments		(3,105,367)		1,326,105
Loss on debt extinguishment		—		539,250
Changes in other assets and liabilities
Increase in interest receivable		(28,511)		(522,772)
Increase in other receivables		(122,781)		—
Increase in related party receivable		(187,132)		—
Decrease in prepaid expenses		226,175		186,172
Increase (decrease) in management fees payable		250,828		(546,843)
Decrease in income incentive fees payable		(1,459,942)		(503,262)
(Decrease) increase in capital gains incentive fees payable		(1,025,791)		97,668
Increase in administrative services payable		13,373		2,584
Increase in interest payable		259,771		2,390,424
Decrease in unearned revenue		(18,860)		(9,626)
Decrease in income tax payable		(2,544,219)		(361,788)
Increase in other accrued expenses and liabilities		637,471		1,474,936
Net Cash Used In Operating Activities	$	(76,934,222)	$	(114,541,107)
Cash flows from Financing Activities
Proceeds from the issuance of common stock	$	420,004	$	—
Sales load for commons stock issued		(5,957)		—
Offering costs paid for common stock issued		(183,114)		—
Stockholder distributions paid		(11,064,831)		(8,115,917)
Repayment of Notes		—		(48,875,000)
Proceeds from issuance of Notes		—		100,000,000
Financing costs paid on Notes		—		(2,237,835)
Proceeds from SBA-guaranteed debentures		43,600,000		57,500,000
Financing costs paid on SBA-guaranteed debentures		(1,061,660)		(2,200,125)
Repayments of Credit Facility		(131,768)		(4,843)
Borrowings under Credit Facility		89,588,800		161,800,000
Repayments of Credit Facility		(61,940,000)		(143,200,000)
Net Cash Provided by Financing Activities	$	59,221,474	$	114,666,280
Net (Decrease) Increase in Cash and Cash Equivalents	$	(17,712,748)	$	125,173
Cash and Cash Equivalents balance at beginning of period		44,174,856		18,477,602
Cash and Cash Equivalents Balance at End of Period	$	26,462,108	$	18,602,775
Supplemental and Non-Cash Activities
Cash paid for interest expense	$	9,072,909	$	5,649,592
Income and excise tax paid		3,132,755		870,000
Increase in dividends payable		1,043,498		1,623,187
Increase (decrease) in deferred offering costs		74,270		(90,000)
Gain on conversion of equity investment		—		6,668

Reconciliation of Core Net Investment Income⁽¹⁾ (Unaudited)

	Quarter	Quarter
	ended	ended
	March 31, 2022	March 31, 2021
Net investment income	$6,174,571	$5,535,015
Capital gains incentive fee	(983,575)	14,387
Income tax expense	426,236	286,276
Core net investment income	$5,617,232	$5,835,678

Per share amounts:
Net investment income per share	$0.32	$0.28
Core net investment income per share	$0.29	$0.30

Reconciliation of Realized Net Investment Income⁽²⁾ (Unaudited)

	Quarter	Quarter
	ended	ended
	March 31, 2022	March 31, 2021
Net investment income	$6,174,571	$5,535,015
Net realized gain on investments	(352,723)	(1,781,665)
Net realized gain on foreign currency translation	-	-
Total Realized Net Investment Income	$5,821,848	$3,753,350

Per share amounts:
Net investment income per share	$0.32	$0.28
Realized net investment income per share	$0.30	$0.19

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SOURCE Stellus Capital Investment Corporation