Stellus Private Credit BDC Reports Results for its Third Fiscal Quarter Ended September 30, 2023

FINANCIAL HIGHLIGHTS

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

Three Months Ended

Nine Months Ended

September 30, 2023

September 30, 2023

Amount

Per Share

Amount

Per Share

Net investment income

$3.08

$0.47

$8.41

$1.39

Net unrealized gain included in earnings

1.05

0.16

2.81

0.47

Provision for taxes on net unrealized appreciation on investments

(0.05)

(0.01)

(0.06)

(0.01)

Net increase in net assets resulting from operations

$4.08

$0.62

11.16

1.85

Distributions

(3.19)

(0.48)

(8.22)

(1.36)

Other weighted average share adjustments⁽¹⁾

—

(0.02)

—

(0.03)

Net asset value

104.7

$15.10

104.7

$15.10

Weighted average shares outstanding

6,584,179

6,044,958

__________________________________

PORTFOLIO ACTIVITY

($ in millions)

As of

As of

September 30, 2023

December 31, 2022

Investments at fair value

$211.8

$157.5

Total assets

$214.7

$174.4

Net assets

$104.7

$80.3

Shares outstanding

6,935,054

5,483,433

Net asset value per share

$15.10

$14.64

Three Months Ended

Nine Months Ended

September 30, 2023

September 30, 2023

New investments

$27.1

$68.5

Repayments of investments

(4.8)

(17.4)

Net activity

$22.3

$51.1

As of

As of

September 30, 2023

December 31, 2022

Number of portfolio company investments

37

25

Number of debt investments

36

24

Weight average yield of debt and other income producing investments ⁽²⁾

Cash

12.0 %

11.0 %

Fee amortization

0.5 %

0.4 %

Total

12.5 %

11.4 %

Weighted average yield on total investments ⁽³⁾

Cash

11.5 %

10.7 %

Fee amortization

0.5 %

0.4 %

Total

12.0 %

11.1 %

_________________________

(2)

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.

(3)

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.

Activity Type

Date

Company Name

Company Description

 Instrument Type

New Investment

July 7, 2023

Madison Logic, Inc.*

Provider of B2B account based marketing services

$

461,351

Equity

New Investment

July 31, 2023

EHI Buyer, Inc

Provider of design, engineering, installation, and
maintenance services for building management

systems

$

2,820,685

Senior Secured – First Lien

$

1,410,343

Delayed Draw Term Loan Commitment

$

3,149,231

Revolver Commitment

$

492,017

Equity

New Investment

August 2, 2023

Compost 360 Acquisition, LLC

Organic waste recycler and producer of compost,
mulch, and engineered soils

$

5,915,156

Senior Secured – First Lien

$

2,609,627

Delayed Draw Term Loan Commitment

$

2,919,023

Revolver Commitment

$

208,069

Equity

New Investment

August 3, 2023

Morgan Electrical Group
Intermediate Holdings, Inc

Provider of commercial electrical services

$

2,022,258

Senior Secured – First Lien

$

1,304,682

Delayed Draw Term Loan Commitment

$

717,227

Revolver Commitment

$

194,900

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

$

4,783,836

Senior Secured – First Lien

$

1,679,360

Revolver Commitment

$

264,885

Equity

New Investment

August 8, 2023

Green Intermediateco II, Inc

Cyber-security focused value-added reseller and
associated service provider

$

6,361,759

Senior Secured – First Lien

$

2,002,253

Delayed Draw Term Loan Commitment

$

194,512

Equity

___________________________

*

Existing portfolio company

Activity Type

Date

Company Name

Company Description

Investment Amount

Instrument Type

Add-On Investment

October 11, 2023

Impact Home Services LLC*

Provides of garage door, electrical, and plumbing
residential services

$

237,583

Senior Secured – First Lien

$

7,582

Equity

Add-On Investment

October 16, 2023

Equine Network, LLC*

Provider of content, information, tech-enabled
services, and hosts competitions for the U.S.
equine industry

$

420,616

Senior Secured – First Lien

Add-On Investment

October 31, 2023

2X LLC*

Provider of outsourced digital B2B marketing-
as-a-service

$

659,771

Senior Secured – First Lien

__________________________

*

Existing portfolio company

STELLUS PRIVATE CREDIT BDC
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)

September 30, 2023

(unaudited)

December 31, 2022

ASSETS

Non-controlled, non-affiliated investments, at fair value (amortized cost of
$209,482,572 and $158,022,677, respectively)

$

211,762,646

$

157,504,755

Cash and cash equivalents

1,089,671

15,469,823

Interest receivable

1,502,820

1,030,274

Expense reimbursement receivable from the Advisor (Note 2)

82,743

165,638

Deferred offering costs

65,439

54,394

Related party receivable

136,566

9,620

Prepaid expenses

25,423

133,004

Receivable for sales and repayments of investments

28,108

26,996

Total Assets

$

214,693,416

$

174,394,504

LIABILITIES

Credit Facilities payable

$

104,722,903

$

79,448,134

Short-term loan payable

—

11,250,000

Dividends payable

3,190,125

1,809,533

Unearned revenue

864,150

539,634

Income incentive fee payable

353,142

328,196

Capital gains incentive fee payable

224,532

—

Interest payable

286,594

563,241

Administrative services payable

101,331

66,064

Income tax payable

19,814

7,471

Deferred tax liability

56,622

—

Other accrued expenses and liabilities

124,552

119,274

Total Liabilities

$

109,943,765

$

94,131,547

Commitments and contingencies (Note 7)

Net Assets

$

104,749,651

$

80,262,957

NET ASSETS

Common shares of beneficial interest, par value $0.01 per share (unlimited shares
authorized; 6,935,054 and 5,483,433 issued and outstanding, respectively)

$

69,351

$

54,834

Paid-in capital

102,478,935

80,950,845

Total distributable earnings (loss)

2,201,365

(742,722)

Net Assets

$

104,749,651

$

80,262,957

Total Liabilities and Net Assets

$

214,693,416

$

174,394,504

Net Asset Value Per Share

$

15.10

$

14.64

STELLUS PRIVATE CREDIT BDC

CONSOLIDATED STATEMENTS OF ASSETS AND OPERATIONS (unaudited)

Three Months Ended

Nine Months Ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

INVESTMENT INCOME

Interest income

$

6,042,784

$

2,583,194

$

15,933,509

$

4,189,423

Other income

96,972

46,509

335,525

87,860

Total Investment Income

$

6,139,756

$

2,629,703

$

16,269,034

$

4,277,283

OPERATING EXPENSES

Management fees

$

763,066

$

396,989

$

2,031,626

$

788,354

Income incentive fees

529,714

168,479

1,437,391

246,156

Capital gains incentive fee

99,640

—

224,532

—

Professional fees

142,356

92,630

522,867

317,694

Organization costs

—

—

1,000

90,184

Amortization of deferred offering costs

25,108

67,151

123,837

164,982

Administrative services expenses

103,415

48,843

298,089

157,242

Trustees' fees

40,000

40,000

120,000

118,000

Insurance expense

20,530

20,530

60,921

61,326

Valuation fees

20,572

—

38,846

—

Interest expense and other fees

2,312,758

699,425

5,838,668

1,050,096

Income tax expense

3,953

—

20,643

—

Other general and administrative expenses

22,386

32,607

103,409

80,976

Total Operating Expenses

$

4,083,498

$

1,566,654

$

10,821,829

$

3,075,010

Expenses reimbursed/fees waived by
Investment Advisor (Note 2)

$

(1,022,379)

$

(476,464)

$

(2,952,608)

$

(1,113,186)

Net Operating Expenses

$

3,061,119

$

1,090,190

$

7,869,221

$

1,961,824

Net Investment Income

$

3,078,637

$

1,539,513

$

8,399,813

$

2,315,459

Net realized gain on foreign currency translation

$

8,599

$

2,146

$

19,920

$

2,146

Net change in unrealized appreciation (depreciation) on
non-controlled, non-affiliated investments

1,054,344

(522,403)

2,801,721

(713,013)

Net change in unrealized depreciation on foreign
currency translations

(9,918)

(105,040)

(3,725)

(104,461)

Provision for taxes on net unrealized gain on
investments

(56,622)

—

$

(56,622)

$

—

Net Increase in Net Assets Resulting from
Operations

$

4,075,040

$

914,216

$

11,161,107

$

1,500,131

Net Investment Income Per Share – basic and
diluted

$

0.47

$

0.37

$

1.39

$

0.70

Net Increase in Net Assets Resulting from
Operations Per Share – basic and diluted

$

0.62

$

0.22

$

1.85

$

0.45

Weighted Average Common Shares of
Beneficial Interest Outstanding – basic and
diluted

6,584,179

4,165,010

6,044,958

3,311,178

Distributions Per Share – basic and diluted

$

0.48

$

0.19

$

1.36

$

0.23

STELLUS PRIVATE CREDITBDC

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

Common Shares of

Beneficial Interest

Total

Number of

Par

Paid-in

distributable

shares

value

capital

(loss) gain

Net Assets

Balances at December 31, 2021

—

$

—

$

—

$

(532,845)

$

(532,845)

Net investment income

—

—

—

76,851

76,851

Net change in unrealized depreciation on non-controlled, non-affiliated
investments

—

—

—

(108,048)

(108,048)

Issuance of common shares of beneficial interest

2,333,334

23,333

34,976,667

—

35,000,000

Balances at March 31, 2022

2,333,334

$

23,333

$

34,976,667

$

(564,042)

$

34,435,958

Net investment income

—

—

—

699,095

699,095

Net change in unrealized depreciation on non-controlled, non-affiliated
investments

—

—

—

(82,562)

(82,562)

Net change in unrealized appreciation on foreign currency translation

—

—

—

579

579

Issuance of common shares of beneficial interest

1,355,013

13,550

19,986,450

—

20,000,000

Balances at June 30, 2022

3,688,347

$

36,883

$

54,963,117

$

53,070

$

55,053,070

Net investment income

—

—

—

1,539,513

1,539,513

Net realized gain on foreign currency translation

—

—

—

2,146

2,146

Net change in unrealized depreciation on non-controlled, non-affiliated
investments

—

—

—

(522,403)

(522,403)

Net change in unrealized depreciation on foreign currency translation

—

—

—

(105,040)

(105,040)

Distributions from net investment income

—

—

—

(774,553)

(774,553)

Issuance of common shares of beneficial interest

1,450,393

14,504

21,339,823

—

21,354,327

Balances at September 30, 2022

5,138,740

$

51,387

$

76,302,940

$

192,733

$

76,547,060

Balances at December 31, 2022

5,483,433

$

54,834

$

80,950,845

$

(742,722)

$

80,262,957

Net investment income

—

—

—

2,637,999

2,637,999

Net realized gain on foreign currency translation

—

—

—

3,475

3,475

Net change in unrealized depreciation on non-controlled, non-affiliated
investments

—

—

—

(72,026)

(72,026)

Net change in unrealized appreciation on foreign currency translations

—

—

—

6,220

6,220

Distributions from net investment income

—

—

—

(2,306,409)

(2,306,409)

Issuance of common shares of beneficial interest

349,546

3,496

5,115,958

—

5,119,454

Balances at March 31, 2023

5,832,979

$

58,330

$

86,066,803

$

(473,463)

$

85,651,670

Net investment income

—

—

—

2,683,177

2,683,177

Net realized gain on foreign currency translation

—

—

—

7,846

7,846

Net change in unrealized appreciation on non-controlled, non-affiliated
investments

—

—

—

1,819,403

1,819,403

Net change in unrealized depreciation on foreign currency translations

—

—

—

(27)

(27)

Distributions from net investment income

—

—

—

(2,720,486)

(2,720,486)

Issuance of common shares of beneficial interest

349,945

3,499

5,152,116

—

5,155,615

Balances at June 30, 2023

6,182,924

$

61,829

$

91,218,919

$

1,316,450

$

92,597,198

Net investment income

—

—

—

3,078,637

3,078,637

Net realized gain on foreign currency translation

—

—

—

8,599

8,599

Net change in unrealized appreciation on non-controlled, non-affiliated
investments

—

—

—

1,054,344

1,054,344

Net change in unrealized depreciation on foreign currency translations

—

—

—

(9,918)

(9,918)

Provision for taxes on net unrealized gain on investments

(56,622)

(56,622)

Distributions from net investment income

—

—

—

(3,190,125)

(3,190,125)

Issuance of common shares of beneficial interest

752,130

7,522

11,260,016

—

11,267,538

Balances at September 30, 2023

6,935,054

$

69,351

$

102,478,935

$

2,201,365

$

104,749,651

STELLUS PRIVATE CREDITBDC

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Nine Months Ended

September 30, 2023

September 30, 2022

Cash Flows from Operating Activities

Net increase in net assets resulting from operations

$

11,161,107

$

1,500,131

Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:

Purchases of investments

(68,472,583)

(135,023,930)

Proceeds from sales and repayments of investments

17,370,805

6,925,278

Net change in unrealized (appreciation) depreciation on investments

(2,801,721)

713,013

Net change in unrealized depreciation foreign currency translations

3,725

104,461

Increase in investments due to PIK

(217)

—

Amortization of premium and accretion of discount, net

(359,012)

(114,567)

Deferred tax provision

56,622

—

Amortization of loan structure fees

442,513

277,541

Amortization of deferred offering costs

123,837

164,982

Changes in other assets and liabilities

Increase in interest receivable

(472,546)

(861,191)

Increase in other receivable

—

(1,246,743)

Increase in related party receivable

(126,946)

(43,105)

Decrease (increase) in expense reimbursements receivable from the Advisor

82,895

(324,831)

Decrease in prepaid expenses

107,581

50,650

Decrease in due to affiliate

—

(460,085)

Decrease in trustees' fees payable

—

(42,000)

Increase in administrative services payable

35,267

106,190

(Decrease) increase in interest payable

(276,647)

233,971

Increase in income incentive fees payable

24,946

246,156

Increase in capital gains incentive fees payable

224,532

—

Increase in unearned revenue

324,516

498,153

Increase in income tax payable

12,343

—

Increase (decrease) in other accrued expenses and liabilities

5,278

(173,855)

Net Cash Used in Operating Activities

$

(42,533,705)

$

(127,469,781)

Cash Flows from Financing Activities

Proceeds from issuance of common shares of beneficial interest

$

21,542,607

$

76,354,327

Offering costs paid for common shares of beneficial interest issued

(134,882)

(139,542)

Stockholder distributions paid

(6,836,428)

(774,553)

Borrowings under Credit Facilities

96,600,000

90,290,000

Repayments of Credit Facilities

(71,415,000)

(34,890,000)

Financing costs paid on Credit Facilities

(352,744)

(1,236,457)

Short-term loan (repayments) borrowings

(11,250,000)

9,000,000

Net Cash Provided by Financing Activities

$

28,153,553

$

138,603,775

Net (Decrease) Increase in Cash and Cash Equivalents

$

(14,380,152)

$

11,133,994

Cash and Cash Equivalents Balance at Beginning of Period

15,469,823

—

Cash and Cash Equivalents Balance at End of Period

$

1,089,671

$

11,133,994

Supplemental and Non-Cash Activities

Cash paid for interest expense

$

5,672,802

$

539,122

Increase in deferred offering costs

11,045

4,328

Income and excise tax paid

8,300

—

Value of common shares of beneficial interest issued pursuant to Dividend Reinvestment Plan

442,606

—

Increase in dividends payable

1,380,592

—