Press Release

Stellus Capital Investment Corporation Reports Results for its Second Fiscal Quarter Ended June 30, 2024

August 7, 2024 at 4:17 PM EDT

HOUSTON, Aug. 7, 2024 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its second fiscal quarter ended June 30, 2024.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended June 30, 2024, in which U.S. GAAP net investment income of $0.48 per share and core net investment income of $0.50 per share covered the regular dividend declared of $0.40 per share. Our loan portfolio is yielding 11.7%, as of June 30, 2024. We have completed over eleven years of operations, during which our investors have received a total of $262 million in distributions, equivalent to $15.75 per share."

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

	Three Months Ended				Six Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
	Amount	Per Share	Amount	Per Share	Amount	Per Share	Amount	Per Share
Net investment income	$11.79	$0.48	$10.41	$0.49	$22.03	$0.90	$19.48	$0.95
Core net investment income⁽¹⁾	12.37	0.50	10.79	0.51	22.97	0.94	19.66	0.96
Net realized gain (loss) on investments	1.99	0.07	(0.31)	(0.01)	(18.39)	(0.75)	(0.28)	(0.02)
Net realized loss on foreign currency translation	(0.03)	—	(0.01)	—	(0.05)	—	(0.05)	—
Total realized income⁽²⁾	$13.75	$0.55	$10.09	$0.48	$3.59	$0.15	$19.15	$0.93
Distributions	(10.05)	(0.41)	(8.66)	(0.41)	(19.70)	(0.81)	(16.61)	(0.81)
Net unrealized change in (depreciation) appreciation on investments	(5.58)	(0.22)	(6.30)	(0.31)	17.92	0.73	(10.54)	(0.51)
Net unrealized change in depreciation on foreign currency translation	(0.01)	—	(0.01)	—	(0.01)	—	(0.02)	—
Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments in taxable subsidiaries	0.38	0.02	(0.07)	—	0.19	0.01	(0.14)	(0.01)
Net increase in net assets resulting from operations	$8.54	$0.35	$3.71	$0.17	$21.69	$0.89	$8.45	$0.41
Weighted average shares outstanding		24,733,966		21,231,979		24,429,804		20,509,995

(1)

Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) 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. generally accepted accounting principles ("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, 2024	December 31, 2023
Investments at fair value	$899.7	$874.5
Total assets	$946.5	$908.1
Net assets	$347.2	$319.9
Shares outstanding	25,980,998	24,125,642
Net asset value per share	$13.36	$13.26

	Three Months Ended		Six Months Ended
	June 30, 2024	June 30, 2023	June 30, 2024	June 30, 2023
New investments	$66.3	$46.5	$94.9	$87.7
Repayments of investments	(40.7)	(38.4)	(71.8)	(44.3)
Net activity	$25.6	$8.1	$23.1	$43.4

	As of	As of
	June 30, 2024	December 31, 2023
Number of portfolio company investments	100	93
Number of debt investments	87	81

Weighted average yield of debt and other income producing investments ⁽³⁾
Cash	11.0 %	11.0 %
Payment-in-kind ("PIK")	0.3 %	0.5 %
Fee amortization	0.4 %	0.4 %
Total	11.7 %	11.9 %

Weighted average yield on total investments ⁽⁴⁾
Cash	10.2 %	10.3 %
Payment-in-kind ("PIK")	0.3 %	0.5 %
Fee amortization	0.4 %	0.3 %
Total	10.9 %	11.1 %

(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 in the Company's common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses 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 both the three months ended June 30, 2024 and 2023 totaled $26.6 million most of which was interest income from portfolio investments.

Gross operating expenses for the three months ended June 30, 2024 and 2023, totaled $16.5 million and $16.2 million, respectively. The increase was driven primarily by increased income tax expense. For the same respective periods, base management fees totaled $3.9 million for both periods, income incentive fees totaled $2.5 million and $2.6 million, fees and expenses related to our borrowings totaled $8.1 million for both periods (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.6 million and $0.4 million and other expenses totaled $0.9 million and $0.8 million. For the three months ended June 30, 2024, the Company waived income incentive fees totaling $1.6 million for net operating expenses of $14.8 million. No such income incentive fees were waived for the three months ended June 30, 2023.

Net investment income was $11.8 million and $10.4 million, or $0.48 and $0.49 per common share based on weighted average common shares outstanding of 24,733,966 and 21,231,979 for the three months ended June 30, 2024 and 2023, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee (reversal) and income tax expense accruals, for the three months ended June 30, 2024 and 2023 was $12.4 million and $10.8 million, or $0.50 and $0.51 per share, respectively.

For the three months ended June 30, 2024 and 2023, the Company's investment portfolio had a net change in unrealized depreciation of $5.6 million and $6.3 million, respectively, and the Company had net realized gains (losses) of $2.0 million and ($0.3) million, respectively.

Net increase in net assets resulting from operations totaled $8.5 million and $3.7 million, or $0.35 and $0.17 per common share, based on weighted average common shares outstanding of 24,733,966 and 21,231,979 for the three months ended June 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

As of June 30, 2024, the Company's amended 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 $260.0 million on a committed basis. As of June 30, 2024 and December 31, 2023, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size up to $350.0 million.

As of June 30, 2024 and December 31, 2023, the Company had $169.4 million and $160.1 million in outstanding borrowings under the Credit Facility, respectively.

The Company issued 1,855,356 shares during the three months ended June 30, 2024 under the At-the-Market Program ("ATM Program"), for gross proceeds of $25.8 million. The average per share offering price of shares issued under the ATM Program during the three months ended June 30, 2024 was $13.89. Stellus Capital Management, LLC, the Company's investment adviser (the "Advisor"), agreed to reimburse the Company for underwriting fees to the extent the per share price of the shares to the public, less underwriting fees, was less then net asset value per share. For the three and six months ended June 30, 2024, the Advisor was not required to reimburse underwriting fees as all shares were issued at a premium to net asset value.

Distributions

During the three months ended June 30, 2024 and 2023, the Company declared aggregate distributions of $0.40 per share for both periods ($10.0 million and $8.7 million in the aggregate, respectively). 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

The Company invested in the following portfolio companies during the three months ended June 30, 2024:


Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
New Investment	April 1, 2024	FairWave Holdings, LLC	Specialty coffee platform	$	7,615,265	Senior Secured – First Lien
				$	2,665,343	Delayed Draw Term Loan Commitment
				$	1,142,290	Revolver Commitment
				$	285,572	Equity
New Investment	April 11, 2024	WER Holdings, LLC	Regional provider of commercial landscaping services	$	2,704,164	Senior Secured – First Lien
				$	1,338,695	Delayed Draw Term Loan Commitment
				$	401,609	Revolver Commitment
				$	180,300	Equity
Add-On Investment	April 16, 2024	Impact Home Services LLC*	Residential garage door, electrical, and plumbing services provider	$	8,932	Equity
Add-On Investment	April 22, 2024	Exacta Land Surveyors, LLC*	Provider of land survey and field management services to facilitate real estate transactions	$	90,773	Unsecured
				$	2,164	Equity
New Investment	May 10, 2024	Luxium Solutions, LLC	Manufacturer and distributor of high-performance advanced materials and assemblies	$	8,293,730	Senior Secured – First Lien
				$	1,200,250	Delayed Draw Term Loan Commitment
Add-On Investment	May 16, 2024	Impact Home Services LLC*	Residential garage door, electrical, and plumbing services provider	$	4,466	Equity
New Investment	May 24, 2024	Teckrez, LLC	Distributor of tackifier resins and acrylic monomers	$	4,315,846	Senior Secured – First Lien
				$	1,442,221	Revolver Commitment
				$	90,139	Equity
Add-On Investment	May 24, 2024	ADS Group Opco, LLC*	Designer and supplier of impulse products and merchandising solutions to retailers.	$	90,582	Equity
New Investment	May 28, 2024	FiscalNote Boards LLC*	Facilitator of executive-level in-person events and remote peer-to-peer industry insights	$	190,382	Equity
New Investment	May 31, 2024	TriplePoint MEP Holdings, LLC	Provider of HVAC, plumbing, and other mechanical and industrial services	$	5,356,491	Senior Secured – First Lien
				$	1,339,123	Delayed Draw Term Loan Commitment
				$	743,957	Revolver Commitment
				$	557,968	Equity
New Investment	June 6, 2024	Monarch Behavioral Therapy, LLC	Provider of center-based applied behavioral analysis therapy services	$	6,764,635	Senior Secured – First Lien
				$	1,084,076	Delayed Draw Term Loan Commitment
				$	722,717	Revolver Commitment
				$	428,571	Equity
Add-On Investment	June 6, 2024	Infolinks Media Buyco, LLC*	Advertising placement partner for small to mid-sized publishers	$	2,558,672	Senior Secured – First Lien
Add-On Investment	June 6, 2024	Impact Home Services LLC*	Residential garage door, electrical, and plumbing services provider	$	2,233	Equity
Add-On Investment	June 10, 2024	U.S. Expediters, LLC*	Reseller of CPAP machines and accessories	$	36,415	Equity
Add-On Investment	June 12, 2024	Unicat Catalyst Holdings, LLC*	Global formulator and distributor of heterogeneous, consumable catalyst products primarily serving the refinery, petrochemical, and other end markets	$	10,547	Equity
New Investment	June 13, 2024	Said Differently Consulting, LLC	Digital transformation consulting firm	$	7,480,519	Senior Secured – First Lien
				$	1,168,831	Revolver Commitment
				$	350,649	Equity
New Investment	June 24, 2024	AGT Robotics, Inc.	Manufacturer of robotic welding solutions for metal fabrication industry	$	10,726,931	Senior Secured – First Lien
				$	1,526,600	Revolver Commitment

*Existing portfolio company

The Company realized investments in the following portfolio companies during the three months ended June 30, 2024:

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Gain

Instrument Type

Full Repayment

May 1, 2024

Nutritional Medicinals, LLC*

Manufacturer and distributor of
organic whole food, plant-based
feeding tube formulas and meal
replacement kits.

11,421,291

Senior Secured – First Lien

Full Realization

2,950,529

1,977,726

Equity

Full Repayment

June 4, 2024

Jurassic Acquisition Corp.*

Producer and distributor of air-float
kaolin and gel-grade attapulgite clays

16,581,250

Senior Secured – First Lien

*Existing portfolio company

Events Subsequent to June 30, 2024

The Company's management has evaluated subsequent events through August 7, 2024. There have been no subsequent events that require recognition or disclosure except for the following described below.

Investment Portfolio

The Company invested in the following portfolio companies subsequent to June 30, 2024:


Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
Add-On Investment	July 31, 2024	PCS Software, Inc.*	Provider of integrated transportation management software for the inland trucking industry	$	9,995	Equity


*Existing portfolio company

The Company realized investments in the following portfolio company subsequent to June 30, 2024:

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Gain

Instrument Type

Full Realization

August 1, 2024

ICD Holdings, LLC*

Financial company that connects
corporate treasury departments with
money market and short duration
bond funds

2,593,039

2,155,185

Equity

*Existing portfolio company

Credit Facility

The outstanding balance under the Credit Facility as of August 7, 2024 was $168.7 million.

Distributions Declared

On July 10, 2024, our Board of Directors declared a regular monthly distribution for each of July, August, and September 2024, as follows:


	Ex-Dividend	Record	Payment	Amount per
Declared	Date	Date	Date	Share
7/10/2024	7/31/2024	7/31/2024	8/15/2024	$	0.1333
7/10/2024	8/30/2024	8/30/2024	9/13/2024	$	0.1333
7/10/2024	9/30/2024	9/30/2024	10/15/2024	$	0.1333

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Thursday, August 8, 2024 at 11:00 AM, Central 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) 506-0062. Use passcode 302036. Starting approximately two hours after the conclusion of the call, a replay will be available through Thursday, August 22, 2024 by dialing (877) 481-4010 and entering passcode 51014. The replay will also be available on the Company's website.

For those wishing to participate via Live Webcast, connect via the Public (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 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 STATEMENTS OF ASSETS AND LIABILITIES

	June 30, 2024
	(unaudited)		December 31, 2023
ASSETS
Controlled investments at fair value (amortized cost of $17,934,808 and $17,285,138, respectively)	$	7,500,423	$	6,175,994
Non-controlled, non-affiliated investments, at fair value (amortized cost of $891,583,081 and $884,858,412, respectively)		892,178,026		868,284,689
Cash and cash equivalents		35,867,781		26,125,741
Receivable for sales and repayments of investments		574,015		371,877
Interest receivable		7,663,147		4,882,338
Income tax receivable		2,174,449		1,588,708
Other receivables		135,666		42,995
Deferred offering costs		—		7,312
Prepaid expenses		412,737		606,674
Total Assets	$	946,506,244	$	908,086,328
LIABILITIES
Notes Payable	$	99,219,159	$	98,996,412
Credit Facility payable		166,396,015		156,564,776
SBA-guaranteed debentures		320,823,417		320,273,358
Dividends payable		3,463,267		—
Management fees payable		852,233		2,918,536
Income incentive fees payable		1,435,084		2,885,180
Interest payable		5,248,420		5,241,164
Related party payable		337,500		—
Unearned revenue		572,243		397,725
Administrative services payable		426,174		402,151
Deferred tax liability		—		188,893
Other accrued expenses and liabilities		547,239		278,345
Total Liabilities	$	599,320,751	$	588,146,540
Commitments and contingencies (Note 7)
Net Assets	$	347,185,493	$	319,939,788
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares authorized; 25,980,998 and 24,125,642 issued and outstanding, respectively)	$	25,981	$	24,125
Paid-in capital		361,167,004		335,918,984
Total distributable loss		(14,007,492)		(16,003,321)
Net Assets	$	347,185,493	$	319,939,788
Total Liabilities and Net Assets	$	946,506,244	$	908,086,328
Net Asset Value Per Share	$	13.36	$	13.26

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	For the three months ended				For the six months ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
INVESTMENT INCOME
From controlled investments:
Interest income	$	—	$	—	$	81,636	$	—
From non-controlled, non-affiliated investments
Interest income		25,164,944		25,662,895		50,121,795		49,071,499
Other income		1,461,255		922,122		2,419,517		1,588,865
Total Investment Income	$	26,626,199	$	26,585,017	$	52,622,948	$	50,660,364
OPERATING EXPENSES
Management fees	$	3,852,233	$	3,865,588	$	7,704,466	$	7,600,690
Valuation fees		35,711		46,422		192,218		193,495
Administrative services expenses		481,261		466,378		972,162		928,342
Income incentive fees		2,542,530		2,603,004		5,051,640		4,727,839
Capital gains incentive fee		—		—		—		(569,528)
Professional fees		196,205		169,836		535,832		600,684
Directors' fees		114,250		93,250		222,500		210,500
Insurance expense		125,489		121,885		250,478		242,431
Interest expense and other fees		8,116,497		8,101,975		15,884,070		15,988,399
Income tax expense		574,037		371,786		944,756		746,549
Other general and administrative expenses		417,867		331,649		663,142		510,099
Total Operating Expenses	$	16,456,080	$	16,171,773	$	32,421,264	$	31,179,500
Income incentive fee waiver		(1,622,542)		—		(1,826,893)		—
Total Operating Expenses, net of fee waivers	$	14,833,538	$	16,171,773	$	30,594,371	$	31,179,500
Net Investment Income	$	11,792,661	$	10,413,244	$	22,028,577	$	19,480,864
Net realized gain (loss) on non-controlled, non-affiliated investments	$	1,992,482	$	(310,588)	$	(18,392,249)	$	(275,621)
Net realized loss on foreign currency translations		(29,789)		(10,704)		(54,895)		(50,616)
Net change in unrealized appreciation on controlled investments		138,189		—		674,759		—
Net change in unrealized (depreciation) appreciation on non-controlled, non-affiliated investments		(5,724,870)		(6,295,233)		17,257,150		(10,544,875)
Net change in unrealized depreciation on foreign currency translations		(5,887)		(20,323)		(9,489)		(18,449)
Benefit (provision) for taxes on net unrealized depreciation (appreciation) on investments		381,500		(65,353)		188,893		(144,113)
Net Increase in Net Assets Resulting from Operations	$	8,544,286	$	3,711,043	$	21,692,746	$	8,447,190
Net Investment Income Per Share—basic and diluted	$	0.48	$	0.49	$	0.90	$	0.95
Net Increase in Net Assets Resulting from Operations Per Share – basic and diluted	$	0.35	$	0.17	$	0.89	$	0.41
Weighted Average Shares of Common Stock Outstanding—basic and diluted		24,733,966		21,231,979		24,429,804		20,509,995
Distributions Per Share—basic and diluted	$	0.41	$	0.41	$	0.81	$	0.81

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

	Common Stock					Total
	Number	Par		Paid-in		distributable
	of shares	value		capital		earnings (loss)		Net Assets
Balances at December 31, 2022	19,666,769	$	19,667	$	275,114,720	$	642,226	$	275,776,613
Net investment income	—		—		—		9,067,620		9,067,620
Net realized gain on investments	—		—		—		34,967		34,967
Net realized loss on foreign currency translations	—		—		—		(39,912)		(39,912)
Net change in unrealized depreciation on investments	—		—		—		(4,249,642)		(4,249,642)
Net change in unrealized appreciation on foreign currency translations	—		—		—		1,874		1,874
Provision for taxes on unrealized appreciation on investments	—		—		—		(78,760)		(78,760)
Distributions from net investment income	—		—		—		(7,951,284)		(7,951,284)
Issuance of common stock, net of offering costs⁽¹⁾	581,614		581		8,289,988		—		8,290,569
Balances at March 31, 2023	20,248,383	$	20,248	$	283,404,708	$	(2,572,911)	$	280,852,045
Net investment income	—		—		—		10,413,244		10,413,244
Net realized loss on non-controlled, non-affiliated investments	—		—		—		(310,588)		(310,588)
Net realized loss on foreign currency translation	—		—		—		(10,704)		(10,704)
Net change in unrealized depreciation on non-controlled, non-affiliated investments	—		—		—		(6,295,233)		(6,295,233)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(20,323)		(20,323)
Provision for taxes on unrealized appreciation on investments	—		—		—		(65,353)		(65,353)
Distributions from net investment income	—		—		—		(8,659,144)		(8,659,144)
Issuance of common stock, net of offering costs⁽¹⁾	2,309,521		2,310		32,418,774		—		32,421,084
Balances at June 30, 2023	22,557,904	$	22,558	$	315,823,482	$	(7,521,012)	$	308,325,028

Balances at December 31, 2023	24,125,642	$	24,125	$	335,918,984	$	(16,003,321)	$	319,939,788
Net investment income	—		—		—		10,235,916		10,235,916
Net realized loss on investments	—		—		—		(20,384,731)		(20,384,731)
Net realized loss on foreign currency translations	—		—		—		(25,106)		(25,106)
Net change in unrealized appreciation on investments	—		—		—		23,518,590		23,518,590
Net change in unrealized depreciation on foreign currency translations	—		—		—		(3,602)		(3,602)
Provision for taxes on unrealized appreciation on investments	—		—		—		(192,607)		(192,607)
Distributions from net investment income	—		—		—		(9,647,844)		(9,647,844)
Balances at March 31, 2024	24,125,642	$	24,125	$	335,918,984	$	(12,502,705)	$	323,440,404
Net investment income	—		—		—		11,792,661		11,792,661
Net realized gain on investments	—		—		—		1,992,482		1,992,482
Net realized loss on foreign currency translations	—		—		—		(29,789)		(29,789)
Net change in unrealized depreciation on investments	—		—		—		(5,586,681)		(5,586,681)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(5,887)		(5,887)
Benefit for taxes on unrealized depreciation on investments	—		—		—		381,500		381,500
Distributions from net investment income	—		—		—		(10,049,073)		(10,049,073)
Issuance of common stock, net of offering costs⁽¹⁾	1,855,356		1,856		25,248,020		—		25,249,876
Balances at June 30, 2024	25,980,998	$	25,981	$	361,167,004	$	(14,007,492)	$	347,185,493



(1)	See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2024 for more information on offering costs.

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

	For six months ended
	June 30, 2024		June 30, 2023
Cash flows from operating activities
Net increase in net assets resulting from operations	$	21,692,746	$	8,447,190
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments		(94,854,139)		(87,741,479)
Proceeds from sales and repayments of investments		71,824,905		44,269,661
Net change in unrealized (appreciation) depreciation on investments		(17,931,909)		10,544,875
Net change in unrealized depreciation on foreign currency translations		9,490		18,306
Increase in investments due to PIK		(1,555,868)		(1,904,853)
Amortization of premium and accretion of discount, net		(1,383,624)		(1,360,629)
Deferred tax (benefit) provision		(188,893)		144,113
Amortization of loan structure fees		544,379		289,243
Amortization of deferred financing costs		222,747		221,524
Amortization of loan fees on SBA-guaranteed debentures		550,059		624,358
Net realized loss on investments		18,392,249		275,621
Changes in other assets and liabilities
Increase in interest receivable		(2,780,809)		(654,240)
Increase in income tax receivable		(585,741)		—
(Increase) decrease in other receivables		(92,671)		8,876
Increase in related party receivables		—		(883)
Decrease in prepaid expenses		193,937		357,520
Decrease in management fees payable		(2,066,303)		(5,284,818)
(Decrease) increase in income incentive fees payable		(1,450,096)		711,987
Decrease in capital gains incentive fees payable		—		(569,528)
Increase in administrative services payable		24,023		50,346
Increase in interest payable		7,256		142,257
Increase (decrease) in related party payable		337,500		(284,527)
Increase (decrease) in unearned revenue		174,518		(98,964)
Decrease in income tax payable		—		(393,015)
Increase in other accrued expenses and liabilities		268,894		226,618
Net Cash Used in Operating Activities	$	(8,647,350)	$	(31,960,441)
Cash flows from Financing Activities
Proceeds from the issuance of common stock	$	25,777,185	$	41,448,945
Sales load for common stock issued		(386,987)		(614,721)
Offering costs paid for common stock issued		(133,010)		(121,471)
Stockholder distributions paid		(16,233,650)		(13,603,459)
Financing costs paid on Credit Facility		(66,348)		—
Borrowings under Credit Facility		104,400,000		37,000,000
Repayments of Credit Facility		(94,967,800)		(65,267,800)
Net Cash Provided (Used) by Financing Activities	$	18,389,390	$	(1,158,506)
Net Increase (Decrease) in Cash and Cash Equivalents	$	9,742,040	$	(33,118,947)
Cash and Cash Equivalents Balance at Beginning of Period	$	26,125,741	$	48,043,329
Cash and Cash Equivalents Balance at End of Period	$	35,867,781	$	14,924,382
Supplemental and Non-Cash Activities
Cash paid for interest expense	$	14,559,629	$	14,711,017
Income and excise tax paid		1,530,497		1,139,564
Increase in distributions payable		3,463,267		3,006,969
Decrease in deferred offering costs		(7,312)		(1,100)

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

	Three Months Ended
	June 30, 2024	June 30, 2023
Net investment income	$11,792,661	$10,413,244
Income tax expense	574,037	371,786
Core net investment income	$12,366,698	$10,785,030

Per share amounts:
Net investment income per share	$0.48	$0.49
Core net investment income per share	$0.50	$0.51

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

	Three Months Ended
	June 30, 2024	June 30, 2023
Net investment income	$11,792,661	$10,413,244
Net realized gain (loss) on investments	1,992,482	(310,588)
Net realized loss on foreign currency translation	(29,789)	(10,704)
Total Realized Net Investment Income	$13,755,354	$10,091,952

Per share amounts:
Net investment income per share	$0.48	$0.49
Realized net investment income per share	$0.55	$0.48

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SOURCE Stellus Capital Investment Corporation