Stellus Capital Investment Corporation Reports Results for its Second Fiscal Quarter Ended June 30, 2023

HOUSTON, Aug. 9, 2023 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its second fiscal quarter ended June 30, 2023.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report strong operating results for the quarter ended June 30, 2023, in which U.S. GAAP net investment income of $0.49 per share and Core net investment income of $0.51 per share covered the regular dividend of $0.40 per share. Our portfolio grew by a net $4 million to $881 million at fair value and the loan portfolio is currently yielding 11.4%, on average."

FINANCIAL HIGHLIGHTS ($ in millions, except data relating to per share amounts and shares outstanding)
	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	Amount	Per Share		Amount	Per Share		Amount	Per Share		Amount	Per Share
Net investment income	$10.41	$0.49		$6.17	$0.32		$19.48	$0.95		$11.69	$0.60
Core net investment income(1)	10.79	0.51		5.62	0.29		19.66	0.96		11.37	0.58
Net realized loss on investments	(0.31)	(0.01)		(0.35)	(0.02)		(0.28)	(0.02)		3.11	0.16
Net realized loss on foreign currency translation	(0.01)	-		-	-		(0.05)	-		(0.01)	-
Total realized income(2)	$10.09	$0.48		$5.82	$0.30		$19.15	$0.93		$14.79	$0.76
Distributions	(8.66)	(0.41)		(6.64)	(0.34)		(16.61)	(0.81)		(12.11)	(0.62)
Net unrealized depreciation on investments	(6.30)	(0.31)		(4.29)	(0.22)		(10.54)	(0.51)		(8.01)	(0.41)
Net unrealized depreciation on foreign currency translation	(0.02)	-		(0.04)	-		(0.02)	-		(0.04)	-
Provision for taxes on unrealized appreciation on investments in taxable subsidiaries	(0.07)	-		(0.16)	(0.01)		(0.14)	(0.01)		(0.18)	(0.01)
Net increase in net assets resulting from operations	$3.71	0.17		$1.34	0.07		$8.45	0.41		$6.56	0.34
Weighted average shares outstanding		21,231,979			19,543,117			20,509,995			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. 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, 2023		December 31, 2022
Investments at fair value		$881.7		$844.7
Total assets		$901.8		$898.2
Net assets		$308.3		$275.8
Shares outstanding		22,557,904		19,666,769
Net asset value per share		$13.67		$14.02
		Three Months Ended		Six Months Ended
		June 30, 2023		June 30, 2023
New investments		$46.5		$87.7
Repayments of investments		(38.4)		(44.3)
Net activity		$8.1		$43.4
		As of		As of
		June 30, 2023		December 31, 2022
Number of portfolio company investments		93		85
Number of debt investments		79		73
Weight average yield of debt and other income producing investments (3)
Cash		10.9 %		10.3 %
Payment-in-kind ("PIK")		0.4 %		0.4 %
Fee amortization		0.4 %		0.4 %
Total		11.7 %		11.1 %
Weighted average yield on total investments (4)
Cash		10.3 %		9.7 %
Payment-in-kind ("PIK")		0.4 %		0.3 %
Fee amortization		0.3 %		0.4 %
Total		11.0 %		10.4 %

(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, 2023 and 2022 totaled $26.6 million and $16.1 million, respectively, most of which was interest income from portfolio investments.

Operating expenses for the three months ended June 30, 2023 and 2022, totaled $16.2 million and $9.9 million, respectively. For the same respective periods, base management fees totaled $3.9 million and $3.7 million, income incentive fees totaled $2.6 million and $0.0 million, capital gains incentive (reversal) fees totaled $0.0 million and ($1.0) million, fees and expenses related to our borrowings totaled $8.1 million and $5.5 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.4 for both periods and other expenses totaled $0.8 for both periods.

Net investment income was $10.4 million and $6.2 million, or $0.49 and $0.32 per common share based on weighted average common shares outstanding of 21,231,979 and 19,543,117 for the three months ended June 30, 2023 and 2022, 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, 2023 and 2022 was $10.8 million and $5.6 million, or $0.51 and $0.29 per share, respectively.

For the three months ended June 30, 2023 and 2022, the Company's investment portfolio had a net change in unrealized depreciation of ($6.3) million and ($4.3) million, respectively, and the Company had realized losses of ($0.3) million and ($0.4) million, respectively.

Net increase in net assets resulting from operations totaled $3.7 million and $1.3 million, or $0.17 and $0.07 per common share, based on weighted average common shares outstanding of 21,231,979 and 19,543,117 for the three months ended June 30, 2023 and 2022, respectively.

Liquidity and Capital Resources

As of June 30, 2023, 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, we had $171.5 million and $199.2 million in outstanding borrowings under the Credit Facility, respectively.

The Company issued 2,309,521 shares during the three months ended June 30, 2023 under the At-the-Market Program ("ATM Program"), for gross proceeds of $32.6 million. The average per share offering price of shares issued under the ATM Program during the three months ended June 30, 2023 was $14.10. 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 months ended June 30, 2023, the Advisor reimbursed the Company $0.4 million, which resulted in net proceeds of $32.5 million, or $14.38 per share, excluding the impact of offering expenses.

Distributions

During the three months ended June 30, 2023 and 2022, we declared aggregate distributions of $0.40 and $0.34 per share, respectively ($8.7 million and $6.6 million, 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, 2023:

Activity Type		Date		Company Name		Company Description		Investment Amount			Instrument Type
Add-On Investment		April 3, 2023		EH Real Estate Services, LLC*		Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers		$	570,279		Senior Secured – First Lien
Add-On Investment		April 13, 2023		ADS Group Opco, LLC*		Designer and supplier of impulse products and merchandising solutions to retailers.		$	88,733		Equity
Add-On Investment		April 13, 2023		Tower Arch Infolinks Media, LP*		Advertising placement partner for small to mid-sized publishers		$	1,093		Equity
Add-On Investment		April 14, 2023		BLP Buyer, Inc.*		Distributor of lifting solutions		$	1,729,958		Senior Secured – First Lien
								$	229,010		Equity
Add-On Investment		April 17, 2023		Axis Portable Air, LLC*		Air conditioning, heating, and air quality equipment rental company		$	1,893,610		Senior Secured – First Lien
Add-On Investment		April 27, 2023		CompleteCase, LLC*		Provider of online uncontested divorce solutions		$	66,667		Revolver Commitment
								$	111,409		Equity
New Investment		April 28, 2023		Impact Home Services LLC		Residential, garage door, electrical, and plumbing services provider		$	5,936,899		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	310,844		Equity
New Investment		May 1, 2023		RIA Advisory Borrower, LLC		Provider of Oracle software implementation services		$	6,000,000		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	243,467		Equity
Add-On Investment		May 11, 2023		Archer Systems, LLC*		Provider of mass tort settlement administrative solutions		$	3,500,000		Senior Secured – First Lien
Add-On Investment		May 15, 2023		ArborWorks Acquisition LLC*		A professional tree care firm		$	15,515		Equity
New Investment		May 22, 2023		Equine Network, LLC		Provider of content, information, tech-enabled services, and hosts competitions for the U.S. equine industry		$	5,008,219		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	100,000		Delayed Draw Term Loan Commitment
New Investment		June 5, 2023		2X LLC		Provider of outsourced digital B2B marketing-as-a-service		$	5,500,208		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	589,496		Equity
Add-On Investment		June 7, 2023		EH Real Estate Services, LLC*		Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers		$	589,365		Senior Secured – First Lien
New Investment		June 30, 2023		Craftable Intermediate II Inc.		Hospitality focused back-of-house management and automation software platform		$	10,083,715		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	626,690		Equity
Add-On Investment		June 30, 2023		Impact Home Services LLC*		Provides of garage door, electrical, and plumbing residential services		$	269,859		Senior Secured – First Lien
*      Existing portfolio company

 

The Company realized investments in the following portfolio companies during the three months ended June 30, 2023:

Activity Type		Date		Company Name		Proceeds Received			Instrument Type
Full Repayment		June 14, 2023		Data Centrum Communications, Inc.		$	15,679,110		Senior Secured – First Lien
Full Repayment		June 30, 2023		DTE Enterprises, LLC		$	5,134,219		Senior Secured – First Lien

 

Events Subsequent to June 30, 2023

The Company's management has evaluated subsequent events through August 9, 2023. 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, 2023:

Activity Type		Date		Company Name		Company Description		Investment Amount			Instrument Type
New Investment		July 7, 2023		Madison Logic, Inc.*		Provider of B2B account based marketing services		$	394,767		Equity
Add-On Investment		July 12, 2023		EH Real Estate Services, LLC*		Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers		$	501,846		Senior Secured – First Lien
New Investment		July 31, 2023		EHI Buyer, Inc.		Provider of design, engineering, installation, and maintenance services for building management systems		$	6,111,343		Senior Secured – First Lien
								$	3,055,671		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	617,801		Equity
New Investment		August 2, 2023		Compost 360 Acquisition, LLC		Organic waste recycler and producer of compost, mulch, and engineered soils		$	9,595,100		Senior Secured – First Lien
								$	4,096,741		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	250,761		Equity
New Investment		August 3, 2023		Morgan Electrical Group Intermediate Holdings, Inc.		Provider of commercial electrical services		$	4,439,439		Senior Secured – First Lien
								$	2,864,154		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	356,800		Equity
Add-On Investment		August 4, 2023		TradePending OpCo Aggregator, LLC*		Provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships		$	2,473,227		Senior Secured – First Lien
								$	687,007		Delayed Draw Term Loan Commitment
								$	325,379		Equity
New Investment		August 7, 2023		The Hardenbergh Group, Inc.		Provider of temporary professional staffing of Medical Services Professionals, external peer review, consulting and physician leadership solutions		$	10,501,898		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	434,504		Equity
New Investment		August 8, 2023		Green Intermediateco II, Inc.		Cyber-security focused value-added reseller and associated service provider		$	11,170,252		Senior Secured – First Lien
								$	500,000		Delayed Draw Term Loan Commitment
								$	271,401		Equity
*      Existing portfolio company

 

The Company realized the following portfolio company subsequent to June 30, 2023:

Activity Type		Date		Company Name		Company Description		Proceeds Received		Instrument Type
Full Repayment		July 31, 2023		NuSource Financial, LLC*		Provider of technology integration and installation of Automated Teller Machines/Integrated Teller Machines, maintenance services, and security solutions		$10,984,910		Senior Secured – First Lien
____________
*      Existing portfolio company

 

Effective July 1, 2023, the ArborWorks Acquisition, LLC term loan and revolver were placed on non-accrual status.

Credit Facility

The outstanding balance under the Credit Facility as of August 9, 2023 was $187.2 million.

SBA-guaranteed Debentures

The total balance of SBA-guaranteed debentures outstanding as of August 9, 2023 was $322.7 million.

Distributions Declared

On July 14, 2023, our Board of Directors declared a regular monthly distribution for each of July, August, and September 2023, as follows:

		Ex-Dividend		Record		Payment		Amount per
Declared		Date		Date		Date		Share
7/14/2023		7/28/2023		7/31/2023		8/15/2023		$	0.1333
7/14/2023		8/30/2023		8/31/2023		9/15/2023		$	0.1333
7/14/2023		9/28/2023		9/29/2023		10/13/2023		$	0.1333

 

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Thursday, August 10, 2023 at 10:00 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 810825. Starting approximately two hours after the conclusion of the call, a replay will be available through Thursday, August 24, 2023 by dialing (877) 481-4010 and entering passcode 48865. 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 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 (unaudited)
		June 30, 2023
		(unaudited)			December 31, 2022
ASSETS
Non-controlled, non-affiliated investments, at fair value (amortized cost of $922,796,573 and $875,823,177, respectively)		$	881,666,450		$	844,733,638
Cash and cash equivalents			14,924,382			48,043,329
Receivable for sales and repayments of investments			207,077			718,794
Interest receivable			4,638,649			3,984,409
Other receivables			25,369			34,245
Related party receivable			883			—
Deferred offering costs			—			1,100
Prepaid expenses			309,747			667,267
Total Assets		$	901,772,557		$	898,182,782
LIABILITIES
Notes payable		$	98,771,216		$	98,549,692
Credit Facility payable			170,229,321			197,685,281
SBA-guaranteed debentures			308,519,553			307,895,195
Dividends payable			3,006,969			—
Management fees payable			1,865,589			7,150,407
Income incentive fees payable			3,176,395			2,464,408
Capital gains incentive fees payable			—			569,528
Interest payable			4,783,098			4,640,841
Related party payable			775,794			1,060,321
Unearned revenue			221,711			320,675
Administrative services payable			407,265			356,919
Income tax payable			782,358			1,175,373
Deferred tax liability			206,049			61,936
Other accrued expenses and liabilities			702,211			475,593
Total Liabilities		$	593,447,529		$	622,406,169
Commitments and contingencies (Note 7)
Net Assets		$	308,325,028		$	275,776,613
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares authorized; 22,557,904 and 19,666,769 issued and outstanding, respectively)		$	22,558		$	19,667
Paid-in capital			315,823,482			275,114,720
Total distributable (loss) earnings			(7,521,012)			642,226
Net Assets		$	308,325,028		$	275,776,613
Total Liabilities and Net Assets		$	901,772,557		$	898,182,782
Net Asset Value Per Share		$	13.67		$	14.02

 

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
		For the three			For the three			For the six			For the six
		months ended			months ended			months ended			months ended
		June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
INVESTMENT INCOME
Interest income		$	25,662,895		$	15,658,018		$	49,071,499		$	30,774,969
Other income			922,122			451,027			1,588,865			828,480
Total Investment Income		$	26,585,017		$	16,109,045		$	50,660,364		$	31,603,449
OPERATING EXPENSES
Management fees		$	3,865,588		$	3,705,053		$	7,600,690		$	7,197,766
Valuation fees			46,422			30,029			193,495			169,617
Administrative services expenses			466,378			466,903			928,342			941,221
Income incentive fees			2,603,004			—			4,727,839			—
Capital gains incentive fee reversal			—			(983,575)			(569,528)			(1,025,792)
Professional fees			169,836			217,404			600,684			529,466
Directors' fees			93,250			74,500			210,500			171,000
Insurance expense			121,885			125,890			242,431			250,397
Interest expense and other fees			8,101,975			5,524,378			15,988,399			10,415,975
Income tax expense			371,786			426,236			746,549			705,653
Other general and administrative expenses			331,649			347,656			510,099			559,392
Total Operating Expenses		$	16,171,773		$	9,934,474		$	31,179,500		$	19,914,695
Net Investment Income		$	10,413,244		$	6,174,571		$	19,480,864		$	11,688,754
Net realized (loss) gain on non-controlled, non-affiliated investments		$	(310,588)		$	(352,723)		$	(275,621)		$	3,105,367
Net realized loss on foreign currency translation			(10,704)			—			(50,616)			(7,350)
Net change in unrealized depreciation on non-controlled, non-affiliated investments			(6,295,233)			(4,289,591)			(10,544,875)			(8,011,193)
Net change in unrealized depreciation on foreign currency translation			(20,323)			(35,754)			(18,449)			(35,754)
Provision for taxes on net unrealized appreciation on investments			(65,353)			(160,656)			(144,113)			(181,813)
Net Increase in Net Assets Resulting from Operations			3,711,043			1,335,847		$	8,447,190		$	6,558,011
Net Investment Income Per Share—basic and diluted		$	0.49		$	0.32		$	0.95		$	0.60
Net Increase in Net Assets Resulting from Operations Per Share – basic and diluted		$	0.17		$	0.07		$	0.41		$	0.34
Weighted Average Shares of Common Stock Outstanding—basic and diluted			21,231,979			19,543,117			20,509,995			19,530,509
Distributions Per Share—basic and diluted		$	0.41		$	0.34		$	0.81		$	0.62

 

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, 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(1)		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(1)		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
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 non-controlled, non-affiliated investments		—			—			—			34,967			34,967
Net realized loss on foreign currency translation		—			—			—			(39,912)			(39,912)
Net change in unrealized depreciation on non-controlled, non-affiliated 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

_______________________

(1) See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2023 for more information on offering costs.

 

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
		For the six			For the six
		months ended			months ended
		June 30, 2023			June 30, 2022
Cash flows from operating activities
Net increase in net assets resulting from operations		$	8,447,190		$	6,558,011
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments			(87,741,479)			(142,053,995)
Proceeds from sales and repayments of investments			44,269,661			58,182,238
Net change in unrealized depreciation on investments			10,544,875			8,011,193
Net change in unrealized depreciation on foreign currency translations			18,306			35,754
Increase in investments due to PIK			(1,904,853)			(653,534)
Amortization of premium and accretion of discount, net			(1,360,629)			(1,174,220)
Deferred tax provision			144,113			181,813
Amortization of loan structure fees			289,243			272,959
Amortization of deferred financing costs			221,524			221,524
Amortization of loan fees on SBA-guaranteed debentures			624,358			589,020
Net realized loss (gain) on investments			275,621			(3,105,367)
Changes in other assets and liabilities
Increase in interest receivable			(654,240)			(28,511)
Decrease (increase) in other receivable			8,876			(122,781)
Increase in related party receivable			(883)			(187,132)
Decrease in prepaid expenses			357,520			226,175
(Decrease) increase in management fees payable			(5,284,818)			250,828
Increase (decrease) in income incentive fees payable			711,987			(1,459,942)
Decrease in capital gains incentive fees payable			(569,528)			(1,025,791)
Increase in administrative services payable			50,346			13,373
Increase in interest payable			142,257			259,771
Decrease in related party payable			(284,527)			—
Decrease in unearned revenue			(98,964)			(18,860)
Decrease in income tax payable			(393,015)			(2,544,219)
Increase in other accrued expenses and liabilities			226,618			637,471
Net Cash Used in Operating Activities		$	(31,960,441)		$	(76,934,222)
Cash flows from Financing Activities
Proceeds from the issuance of common stock		$	41,448,945		$	420,004
Sales load for common stock issued			(614,721)			(5,957)
Offering costs paid for common stock issued			(121,471)			(183,114)
Stockholder distributions paid			(13,603,459)			(11,064,831)
Proceeds from SBA-guaranteed debentures			—			43,600,000
Financing costs paid on SBA-guaranteed debentures			—			(1,061,660)
Financing costs paid on Credit facility			—			(131,768)
Borrowings under Credit Facility			37,000,000			89,588,800
Repayments of Credit Facility			(65,267,800)			(61,940,000)
Net Cash (Used) Provided by Financing Activities		$	(1,158,506)		$	59,221,474
Net Decrease in Cash and Cash Equivalents		$	(33,118,947)		$	(17,712,748)
Cash and Cash Equivalents Balance at Beginning of Period		$	48,043,329		$	44,174,856
Cash and Cash Equivalents Balance at End of Period		$	14,924,382		$	26,462,108
Supplemental and Non-Cash Activities
Cash paid for interest expense		$	14,711,017		$	9,072,909
Income and excise tax paid			1,139,564			3,132,755
Increase in dividends payable			3,006,969			1,043,498
(Decrease) increase in deferred offering costs			(1,100)			74,270

 

Reconciliation of Core Net Investment Income (1) (Unaudited)
		Three Months Ended		Three Months Ended
		June 30, 2023		June 30, 2022
Net investment income		$10,413,244		$6,174,571
Capital gains incentive fee		-		(983,575)
Income tax expense		371,786		426,236
Core net investment income		$10,785,030		$5,617,232
Per share amounts:
Net investment income per share		$0.49		$0.32
Core net investment income per share		$0.51		$0.29

                                                               

Reconciliation of Realized Net Investment Income (2) (Unaudited)
		Three Months Ended		Three Months Ended
		June 30, 2023		June 30, 2022
Net investment income		$10,413,244		$6,174,571
Net realized loss on investments		(310,588)		(352,723)
Net realized loss on foreign currency translation		(10,704)		—
Total Realized Net Investment Income		$10,091,952		$5,821,848
Per share amounts:
Net investment income per share		$0.49		$0.32
Realized net investment income per share		$0.48		$0.30

 

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