Stellus Capital Investment Corporation

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 001-35730
STELLUS CAPITAL INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Maryland
    
46-0937320
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4400 Post Oak Parkway, Suite 2200, Houston, TX
77027
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (713) 292-5400
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
    
Trading Symbol(s)
    
Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share
SCM
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ☐    No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ☐    No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).    Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
    Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.    ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ☐    No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2024 was $333,805,786.
The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of March 4, 2025 was 27,519,506.
Documents Incorporated by Reference
Portions of the registrant’s definitive Proxy Statement relating to the registrant’s 2025 Annual Meeting of Stockholders, to be filed with the Securities
and Exchange Commission within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual Report on
Form 10-K as indicated herein.

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
PART I.
ITEM 1.
BUSINESS
1
ITEM 1A.
RISK FACTORS
34
ITEM 1B.
UNRESOLVED STAFF COMMENTS
67
ITEM 1C.
CYBERSECURITY
68
ITEM 2.
PROPERTIES
68
ITEM 3.
LEGAL PROCEEDINGS
68
ITEM 4.
MINE SAFETY DISCLOSURES
68
PART II.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
69
ITEM 6.
[RESERVED]
72
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
73
ITEM 7A.
QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
93
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
94
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
167
ITEM 9A.
CONTROLS AND PROCEDURES
167
ITEM 9B.
OTHER INFORMATION
168
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
169
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
170
ITEM 11.
EXECUTIVE COMPENSATION
170
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
170
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
170
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
170
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
171
ITEM 16.
FORM 10-K SUMMARY
175
SIGNATURES
176

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1
PART I
Item 1.    Business
Except as otherwise indicated, the terms “we,” “us,” “our,” and the “Company” refer to Stellus Capital Investment
Corporation; and “Stellus Capital Management,” the “Advisor” or the “Administrator” refer to our investment adviser and
administrator, Stellus Capital Management, LLC.
General
We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as
a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We were
organized as a Maryland corporation on May 8, 2012, and formally commenced operations on November 7, 2012. We originate and
invest primarily in private lower middle-market companies (typically those with $5 million to $50 million of EBITDA (earnings
before interest, taxes, depreciation and amortization)) through first lien (including unitranche), second lien, and unsecured debt
financing, often with corresponding equity co-investments. Unitranche structures may combine characteristics of first lien senior
secured as well as second lien and/or subordinated loans, and our unitranche loans will expose us to the risks associated with second
lien and subordinated loans to the extent we invest in the “last-out” tranche. Unsecured debt includes senior unsecured and
subordinated loans.
Our investment activities are managed by our investment adviser, Stellus Capital Management, an investment advisory firm led
by Robert T. Ladd and its other senior investment professionals. We source investments primarily through the extensive network of
relationships that the senior investment professionals of Stellus Capital Management have developed with financial sponsor firms,
financial institutions, lower middle-market companies, management teams and other professional intermediaries. The companies in
which we invest are typically highly leveraged, and in most cases, our investments in such companies will not be rated by national
rating agencies. If such investments were rated, we believe that they would likely receive a rating that is often referred to as “junk.”
Our investment objective is to maximize the total return to our stockholders in the form of current income and capital
appreciation. We seek to achieve our investment objective by:
●
accessing the extensive origination channels established and developed by the Stellus Capital Management senior
investment professionals, which include long-standing relationships with private equity firms, commercial banks,
investment banks and other financial services firms;
●
investing in what we believe to be companies with strong business fundamentals, generally within our core lower middle-
market company focus;
●
focusing on a variety of industry sectors, including business services, general industrial, government services, healthcare,
software and specialty finance;
●
focusing primarily on directly originated transactions;
●
applying the disciplined underwriting standards that the Stellus Capital Management senior investment professionals have
developed over their extensive investing careers; and
●
capitalizing upon the experience and resources of the Stellus Capital Management investment team to monitor our
investments.
On May 9, 2022, we and certain of our affiliates received an exemptive order (the “Order”) from the Securities and Exchange
Commission (“SEC”) that superseded the prior co-investment exemptive relief orders granted to us by the SEC that permits us to co-
invest with additional types of private funds, other BDCs, and registered investment companies managed by Stellus Capital
Management or an adviser that is controlled, controlling, or under common

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control with Stellus Capital Management, subject to the conditions included therein. Pursuant to the Order, a “required majority” (as
defined in Section 57(o) of the 1940 Act) of our independent directors must make certain conclusions in connection with a co-
investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable
and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned,
(2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objectives and strategies,
(3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less
advantageous than that on which our affiliates are investing and (4) the proposed investment by us would not benefit the Advisor, the
other affiliated funds that are participating in the investment, or any affiliated person of any of them (other than parties to the
transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section
57(k) of the 1940 Act. We co-invest, subject to the conditions in the Order, with an affiliated private BDC and other private credit
funds managed by Stellus Capital Management that have an investment strategy that is similar or identical to our investment strategy,
and we may co-invest with other BDCs, registered investment companies and other private credit funds managed by Stellus Capital
Management or an adviser that is controlled, controlling, or under common control with Stellus Capital Management in the future.
We believe that such co-investments may afford us additional investment opportunities and an ability to achieve greater
diversification.
As a BDC, we are required to comply with certain regulatory requirements. For instance, as a BDC, we may not acquire any
assets other than “qualifying assets” as specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total
assets are qualifying assets. Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules,
the term “eligible portfolio company” includes any issuer that (i) is organized and with their principal of business in the United
States, (ii) is not an investment company (other than SBICs (as defined below) that are wholly owned subsidiaries of a BDC) or a
company that would be an investment company but for certain exclusions under the 1940 Act, and (iii) satisfies any one of the
following criteria: such company (a) has a market capitalization of less than $250 million or does not have a class of securities listed
on a national securities exchange, (b) is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a
controlling influence over the management or policies of the company, and, as a result thereof, the BDC has an affiliated person who
is a director of the company, or (c) is a small and solvent company having total assets of not more than $4 million and capital and
surplus of not less than $2 million.
We have elected and intend to qualify annually to be treated as a regulated investment company (“RIC”) under Subchapter M of
the Internal Revenue Code of 1986, as amended (the “Code”). To maintain our qualification as a RIC, we must, among other things,
meet certain source-of-income and asset diversification requirements. As a RIC, we generally will not be subject to U.S. federal
income tax on any income we timely distribute to our stockholders as dividends.
Under the provisions of the 1940 Act, we are permitted, as a BDC that has satisfied certain requirements, to issue senior securities
in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of our gross assets, less all liabilities
and indebtedness not represented by senior securities, after each issuance of senior securities. As of December 31, 2024, our asset
coverage ratio was 234%. The amount of leverage that we employ at any time depends on our assessment of the market and other
factors at the time of any proposed borrowing.
Our principal executive office is currently located at 4400 Post Oak Parkway, Suite 2200, Houston, TX 77027, and our telephone
number is (713) 292-5400. We maintain a website on the Internet at www.stelluscapital.com (under the “Public Investors” section).
Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K and you should not
consider information contained on our website to be part of this Annual Report on Form 10-K.
SBIC Licenses
Two of our wholly owned subsidiaries, Stellus Capital SBIC LP and Stellus Capital SBIC II LP (together, the “SBIC
subsidiaries” and individually, the “SBIC I subsidiary” and “SBIC II subsidiary,” respectively), hold licenses to operate as small
business investment companies (“SBICs”). Current U.S. Small Business Administration (“SBA”) regulations allow a single SBIC to
obtain leverage in the form of debentures guaranteed by the SBA up to a maximum of

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3
$175.0 million, subject to required capitalization of the SBIC subsidiary, SBA approval, and other requirements. The maximum
leverage available to a “family” of two or more SBIC funds under common control is $350.0 million, subject to SBA approval. SBA-
guaranteed debentures have fixed interest rates that equal the prevailing rate for 10-year U.S. Treasury Notes plus a market spread and
have a maturity of ten years, with interest payable semi-annually. The principal amount of the debentures is not required to be paid
before maturity but may be pre-paid at any time with no prepayment penalty. We believe that the SBA-guaranteed debentures are an
attractive source of debt capital.
We have obtained exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the SBIC
subsidiaries from the definition of senior securities in the asset coverage requirement applicable to us under the 1940 Act. The
exemptive relief provides us with increased flexibility under the asset coverage requirement by permitting us to borrow up to
$325.0 million more than we would otherwise be able to absent the receipt of this exemptive relief.
Summary Risk Factors
Investing in our securities involves a high degree of risk. You should carefully consider the information in “Item 1A. Risk
Factors”, including, but not limited to, the following risks:
●
The capital markets may experience periods of disruption and instability. Such market conditions may materially and
adversely affect debt and equity capital markets, which may have a negative impact on our business and operations.
●
We are dependent upon key personnel of Stellus Capital Management for our future success. If Stellus Capital Management
were to lose any of its key personnel, our ability to achieve our investment objective could be significantly harmed.
●
Our business model depends to a significant extent upon strong referral relationships. Any inability of Stellus Capital
Management to maintain or develop these relationships, or the failure of these relationships to generate investment
opportunities, could adversely affect our business.
●
Our incentive fee may induce Stellus Capital Management to make speculative investments.
●
We may be obligated to pay Stellus Capital Management incentive compensation even if we incur a loss and may pay more
than 20.0% of our net capital gains because we cannot recover payments made in previous years.
●
We will be subject to U.S. federal income tax imposed at corporate rates if we are unable to maintain our tax treatment as a
RIC under Subchapter M of the Code.
●
We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash
representing such income.
●
Because we finance our investments with borrowed money, the potential for gain or loss on amounts invested in us is
magnified and may increase the risk of investing in us.
●
Substantially all of our assets are subject to security interests under our amended and restated revolving credit agreement
with certain lenders party thereto and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended
from time to time, the “Credit Facility”), or claims of the SBA with respect to SBA-guaranteed debentures we may issue. If
we default on our obligations thereunder, we may suffer adverse consequences, including foreclosure on our assets.
●
Most of our portfolio investments are recorded at fair value as determined in good faith by our board of directors (the
“Board”) and, as a result, there may be uncertainty as to the value of our portfolio investments.

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4
●
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately
report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public
reporting, which would harm our business and the trading price of our common stock.
●
Any failure to comply with SBA regulations could have an adverse effect on our SBIC subsidiaries’ operations.
●
Because we intend to distribute substantially all of our income to our stockholders to obtain and maintain our status as a
RIC, we will continue to need additional capital to finance our growth. If additional funds are unavailable or not available on
favorable terms, our ability to grow may be impaired.
●
The time and resources that the investment professionals of Stellus Capital Management devote to us may be diverted, and
we may face additional competition due to the fact that Stellus Capital Management and its affiliates are not prohibited
from raising money for, or managing, another entity that makes the same types of investments that we target.
●
If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable
to BDCs or be precluded from investing according to our current business strategy.
●
The failure of cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and
management continuity planning, could impair our ability to conduct business effectively.
●
Our investments in private and lower middle-market portfolio companies are risky, and we could lose all or part of our
investment.
●
Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments,
reducing our net asset value through increased net unrealized depreciation.
●
Because we generally do not hold controlling equity interests in our portfolio companies, we may not be able to exercise
control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease
the value of our investments.
●
The interest rates of our floating-rate loans to our portfolio companies might be subject to change, and such fluctuations
could negatively impact our financial condition and results of operations.
Portfolio Composition
Our investments generally range in size from $5 million to $30 million, and we may also selectively invest in larger positions.
We generally expect that the size of our positions will increase in proportion to the size of our capital base. Pending such investments,
we may reduce our outstanding indebtedness or invest in cash, cash equivalents, U.S. government securities and other high-quality
debt investments with a maturity of one year or less. In the future, we may adjust opportunistically the percentage of our assets held in
various types of loans, our principal loan sources and the industries to which we have greatest exposure based on market conditions,
the credit cycle, available financing and our desired risk/return profile.

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The following table provides a summary of our portfolio investments as of December 31, 2024:
    
As of
 
December 31, 2024  
($ in millions)
 
Total number of portfolio company investments
 
 105
Fair value(a)
$
 953.5
Cost
$
 961.8
% of portfolio at fair value – first lien debt(b)
 
 89.8 %
% of portfolio at fair value – second lien debt
 
 1.2 %
% of portfolio at fair value – unsecured debt
 
 0.7 %
% of portfolio at fair value – equity
 
 8.3 %
Weighted-average annual yield(c)
 
 9.7 %
(a) As of December 31, 2024, $826.9 million of our debt investments at fair value were at floating interest rates, which represented
approximately 94.5% of our total portfolio of debt investments at fair value. As of December 31, 2024, $47.8 million of our debt
investments at fair value were at fixed interest rates, which represented approximately 5.5% of our total portfolio of debt
investments at fair value.
(b) Includes unitranche investments, which account for 2.0% of our portfolio at fair value.
(c) As of December 31, 2024, the weighted average yield on all of our debt investments, including those on non-accrual status, was
approximately 10.3%, of which approximately 9.5% was current cash interest. The weighted average yield on all of our
investments, including non-income producing equity positions and debt investments on non-accrual status, as of December 31,
2024 was approximately 9.7%. The weighted average yield of our debt investments is not the same as a return on investment for
our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and
our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates for all of our debt
investments, which represents the interest rate on our debt investments restated as an interest rate payable annually in arrears and
is computed including cash and payment-in-kind (“PIK”) interest, as well as accretion of original issue discount (“OID”). There
can be no assurance that the weighted average yield will remain at its current level.
Stellus Capital Management
Stellus Capital Management manages our investment activities and is responsible for analyzing investment opportunities,
conducting research and performing due diligence on potential investments, negotiating and structuring our investments, originating
prospective investments and monitoring our investments and portfolio companies on an ongoing basis.
The senior investment professionals of Stellus Capital Management have an average of over 36 years of investing, corporate
finance, restructuring, consulting and accounting experience and have worked together at several companies. The Stellus Capital
Management senior investment professionals have a wide range of experience in lower middle-market investing, including
originating, structuring and managing loans and debt securities through market cycles. The Stellus Capital Management senior
investment professionals continue to provide investment sub-advisory services to the D. E. Shaw & Co., L.P. and its associated
investment funds (the “D.E. Shaw group”).
In addition to serving as our investment adviser and the sub-advisor to the D. E. Shaw group as noted above, Stellus Capital
Management currently manages private credit funds, some of which have an investment strategy that is similar or identical to our
investment strategy. We received the Order from the SEC, which permits us to co-invest with investment funds managed by Stellus
Capital Management or an adviser that is controlled, controlling, or under common control with Stellus Capital Management, where
doing so is consistent with our investment strategy as well as applicable law (including the terms and conditions of the Order). We
believe that such co-investments may afford us additional investment opportunities and an ability to achieve greater diversification. In
addition, we will not co-invest with D.E. Shaw group funds.

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Stellus Capital Management is headquartered in Houston, Texas, and also maintains offices in the Washington, D.C. area and
Charlotte, North Carolina.
Market Opportunity
We originate and invest primarily in private lower middle-market companies through first lien (including unitranche), second
lien and unsecured debt financing, often with corresponding equity co-investments. We believe the environment for investing in
lower middle-market companies is attractive for several reasons, including:
Robust Demand for Debt Capital
We believe that private equity firms have significant committed but uncalled capital, a large portion of which is still available for
investment in the United States. We expect the large amount of uninvested capital commitments will drive buyout activity over the
next several years, which should, in turn, create lending opportunities for us.
Attractive Environment to Lend To Lower Middle-Market Companies
The current strength of the U.S. economy provides an attractive environment to lend to lower middle-market companies. The
U.S. services, healthcare, technology and consumer products sectors continue to show strong growth and profitability, allowing lower
middle-market companies to continue to service their debt and prudently borrow to support growth initiatives and mergers and
acquisitions activity. This dynamism, coupled with ample capital from private equity firms to support lower middle-market
companies, is creating a large population of credit worthy companies looking for debt capital.
Attractive Deal Pricing and Structures
We believe that the pricing of lower middle-market debt investments is higher, and the terms of such investments are more
conservative, compared to larger liquid, public debt financings, due to the more limited universe of lenders as well as the highly
negotiated nature of these financings. These transactions tend to offer stronger covenant packages, higher interest rates, lower
leverage levels and better call protection compared to larger financings. In addition, lower middle-market loans typically offer other
investor protections such as default penalties, lien protection, change of control provisions and information rights for lenders.
Specialized Lending Requirements
Lending to lower middle-market companies requires in-depth diligence, credit expertise, restructuring experience and active
portfolio management. We believe that several factors render many U.S. financial institutions ill-suited to lend to lower middle-
market companies. For example, based on the experience of Stellus Capital Management’s senior investment professionals, lending to
lower middle-market companies in the United States (a) is generally more labor intensive than lending to larger companies due to the
smaller size of each investment and the fragmented nature of the information available with respect to such companies, (b) requires
specialized due diligence and underwriting capabilities, and (c) may also require more extensive ongoing monitoring by the lender.
We believe that, through Stellus Capital Management, we have the experience and expertise to meet these specialized lending
requirements.
Competitive Strengths
We believe that the following competitive strengths will allow us to achieve positive returns for our investors:
Experienced Investment Team
Through our investment adviser, Stellus Capital Management, we have access to the experience and expertise of the Stellus
Capital Management senior investment professionals, including its senior investment professionals who have an average of over
36 years of investing, corporate finance, restructuring, consulting and accounting experience and have worked together at several
companies. The Stellus Capital Management investment professionals have a wide range of

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experience in lower middle-market investing, including originating, structuring and managing debt and equity securities through
market cycles. We believe the members of Stellus Capital Management’s senior investment team are proven and experienced, with
extensive capabilities in credit investing, having participated in these markets for the predominant portion of their careers. We believe
that these characteristics enhance the quantity and quality of investment opportunities available to us.
Established, Rigorous Investment and Monitoring Process
The Stellus Capital Management investment professionals have developed an extensive review and credit analysis process. Each
investment that is reviewed by Stellus Capital Management is brought through a structured, multi-stage approval process. In addition,
Stellus Capital Management takes an active approach in monitoring all investments, including reviews of financial performance on at
least a quarterly basis and regular discussions with management. We believe Stellus Capital Management’s investment and
monitoring process and the depth and experience of its investment professionals allow it to conduct the type of due diligence and
monitoring that enables it to identify and evaluate risks and opportunities.
Demonstrated Ability to Structure Investments Creatively
Stellus Capital Management has the expertise and ability to structure investments across all levels of a company’s capital
structure. Furthermore, we believe that current market conditions will allow us to structure attractively priced debt investments and
may allow us to incorporate other return-enhancing mechanisms such as commitment fees, OID, early redemption premiums, PIK
interest and various forms of equity securities.
Resources of Stellus Capital Management Platform
We have access to the resources and capabilities of Stellus Capital Management, which has 17 investment professionals,
including Robert T. Ladd, Dean D’Angelo, and Joshua T. Davis, who are supported by seven managing directors, three vice
presidents and four analysts. These individuals have developed long-term relationships with lower middle-market companies,
management teams, financial sponsors, lending institutions and deal intermediaries by providing flexible financing throughout the
capital structure. We believe that these relationships provide us with a competitive advantage in identifying investment opportunities
in our target market. We also expect to benefit from Stellus Capital Management’s due diligence, credit analysis, origination and
transaction execution experience and capabilities, including the support provided with respect to those functions by W.
Todd Huskinson, who serves as our Chief Financial Officer and Chief Compliance Officer, and his staff of nine finance and
operations professionals.
Investment Strategy
The Stellus Capital Management senior investment professionals employ an opportunistic and flexible investing approach,
combined with strong risk management processes, which we believe yields a highly diversified portfolio across companies,
geographies, industries, and investment types. We seek direct origination opportunities of first lien (including unitranche), second
lien, and unsecured debt financing, often with corresponding equity co-investments, in lower middle-market companies. We believe
that businesses in this size range often have limited access to public financial markets, and will benefit from Stellus Capital
Management’s reliable lending approach. Many financing providers have chosen to focus on large corporate clients and managing
capital markets transactions rather than lending to lower middle-market businesses. Further, many financial institutions and
traditional lenders are faced with constrained balance sheets and are requiring existing borrowers to reduce leverage.
With an average of over 36 years of investing, corporate finance, restructuring, consulting and accounting experience, the senior
investment professionals of Stellus Capital Management have demonstrated investment expertise throughout the balance sheet and in
a variety of situations, including financial sponsor buyouts, growth capital, debt refinancing, balance sheet recapitalizations, rescue
financings, distressed opportunities, and acquisition financings. Our investment philosophy emphasizes capital preservation through
superior credit selection and risk mitigation. We expect our portfolio to provide downside protection through conservative cash flow
and asset coverage requirements, priority in the capital structure and information requirements. We also anticipate benefiting from
equity participation through

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equity co-investments. This flexible approach enables us to respond to market conditions and offer customized lending solutions.
Stellus Capital Management invests across a wide range of industries with deep expertise in select verticals including, but not
limited to, business services, retail, general industrial, government services, healthcare, software and specialty finance. Our typical
transactions include providing financing for leveraged buyouts, acquisitions, recapitalizations and growth opportunities. We seek to
maintain a diversified portfolio of investments as a method to manage risk and capitalize on specific sector trends. In addition, we co-
invest with private credit funds and a private BDC managed by Stellus Capital Management or its affiliates that have a similar,
overlapping or identical investment strategy as us and where doing so is consistent with conditions of the Order, and we may co-
invest with other BDCs, registered investment companies, and private credit funds managed by Stellus Capital Management or an
adviser that is controlled, controlling, or under common control with Stellus Capital Management in the future.
Our objective is to act as the lead or largest investor in transactions, generally investing between $5 million and $30 million per
transaction. We expect the average investment holding period to be between two and four years, depending upon portfolio company
objectives and conditions in the capital markets.
We focus on lower middle-market companies with between $5 million and $50 million of EBITDA in a variety of industry
sectors with positive long-term dynamics and dependable cash flows. We seek businesses with management teams with demonstrated
track records and economic incentives in strong franchises and sustainable competitive advantages with dependable and predictable
cash flows.
We employ leverage prudently and within the limitations of the applicable laws and regulations for BDCs. Any decision on our
part to use leverage will depend upon our assessment of the attractiveness of available investment opportunities in relation to the costs
and perceived risks of such leverage.
Transaction Sourcing
As access to investment opportunities is highly relationship-driven, the senior investment team and other investment
professionals of Stellus Capital Management spend considerable time developing and maintaining contacts with key deal sources,
including private equity firms, investment banks and senior lenders. The senior investment team and other investment professionals of
Stellus Capital Management have been actively investing in the lower middle-market for more than a decade and have focused on
extensive calling and marketing efforts via speaking engagements, sponsorships, industry events and referrals to broaden their
relationship network. Existing relationships are constantly cultivated through transactional work and other personal contacts.
In addition to financial sponsors, Stellus Capital Management has developed a network of other deal sources, including:
●
management teams and entrepreneurs;
●
portfolio companies of private equity firms;
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other investment firms that have similar strategies to Stellus Capital Management and are seeking co-investors;
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placement agents and investment banks representing financial sponsors and issuers;
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corporate operating advisers and other financial advisers; and
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consultants, attorneys and other service providers to lower middle-market companies and financial sponsors.
We believe that Stellus Capital Management’s broad network of deal origination contacts will provide us with a continuous
source of investment opportunities.

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These origination relationships provide access not only to potential investment opportunities but also to market intelligence on
trends across the credit markets. Since inception, Stellus Capital Management has completed financing transactions with more than
190 equity sponsors and completed multiple financing transactions with more than 35 of those equity sponsors.
We believe that over the past decade, the senior investment team and other investment professionals of Stellus Capital
Management have built a reputation as a thoughtful and disciplined provider of capital to lower middle-market companies and a
preferred financing source for private equity sponsors and management teams. We believe these factors give Stellus Capital
Management a competitive advantage in sourcing investment opportunities, which are put to use for our benefit.
Investment Structuring
Stellus Capital Management believes that each investment has unique characteristics that must be considered, understood and
analyzed. Stellus Capital Management structures investment terms based on the business, the credit profile, the outlook for the
industry in which a potential portfolio company operates, the competitive landscape, the products or services which the company sells
and the management team and ownership of the company, among other factors. Stellus Capital Management relies upon the analysis
conducted and information gathered through the investment process to evaluate the appropriate structure for our investments.
We invest primarily in the debt securities of lower middle-market companies. Our investments typically carry a high level of cash
pay interest and may incorporate other return-enhancing mechanisms such as commitment fees, OID, early redemption premiums,
PIK interest and some form of equity participation, including preferred stock, common stock, warrants and other forms of equity
participation. We expect that a typical debt investment in which we invest will have a term at origination of between five and
seven years. We expect to hold most of our investments to maturity or repayment, but we may sell some of our investments earlier if a
liquidity event occurs, such as a sale or recapitalization, or upon the worsening of the credit quality of the portfolio company.
Stellus Capital Management negotiates covenants in connection with debt investments that provide protection for us but allow
appropriate flexibility for the portfolio company. Such covenants may include affirmative and negative covenants, default penalties,
lien protection and change of control provisions. Stellus Capital Management requires comprehensive information rights including
access to management, financial statements and budgets and, in some cases, membership on the portfolio company’s board of
directors or board observation rights. Additionally, Stellus Capital Management generally requires financial covenants and terms that
restrict an issuer’s use of leverage and limit asset sales and capital expenditures.
Secured Debt
Secured debt, including first lien (including unitranche) and second lien financing, has liens on the assets of the borrower that
serve as collateral in support of the repayment of such loans.
First Lien Debt First lien debt is structured with first-priority liens on the assets of the borrower that serve as collateral in
support of the repayment of such loans. First lien loans may provide for moderate loan amortization in the early years of the loan,
with the majority of the amortization deferred until loan maturity.
Unitranche Debt Unitranche debt typically is structured as first lien loans that combine both senior and junior debt, with
lenders agreeing separately to an order of priority among them. To the extent that we invest in the “last out” tranche of a unitranche
facility, our unitranche investments will have certain risk characteristics of second lien debt. Unitranche debt typically provides for
moderate loan amortization in the initial years of the debt, with the majority of the principal payment deferred until loan maturity.
Since unitranche debt generally allows the borrower to make a large lump sum payment of principal at the end of the loan term, there
is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In some cases, we will be the
sole lender, or we, together with our affiliates, will be the sole lender, of unitranche debt, which can provide us with more influence
interacting with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.

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Second Lien Debt Second lien debt is structured as junior, secured loans with second priority liens on an issuer’s assets. These
loans typically provide for moderate loan amortization in the initial years of the loan, with the majority of the amortization deferred
until loan maturity.
Unsecured Debt
Unsecured debt, including senior unsecured and subordinated loans, is not secured by any collateral and is effectively
subordinated to the borrower’s secured indebtedness (to the extent of the collateral securing such indebtedness), including pursuant to
one or more intercreditor agreements that we enter into with holders of a borrower’s senior debt.
Senior Unsecured Loans Senior unsecured loans are structured as loans that rank senior in right of payment to any of the
borrower’s unsecured indebtedness that is contractually subordinated to such loans. These loans generally provide for fixed interest
rates and amortize evenly over the term of the loan. Senior unsecured loans are generally less volatile than subordinated loans due to
their priority over subordinated loans.
Subordinated Loans Subordinated loans are structured as unsecured, subordinated loans that provide for relatively high, fixed
interest rates that provide us with significant current interest income. These loans typically have interest-only payments (often
representing a combination of cash pay and PIK interest) in the early years, with amortization of principal deferred to maturity.
Subordinated loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there
is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. Subordinated loans are
generally more volatile than secured loans and senior unsecured loans and may involve a greater risk of loss of principal as compared
to other types of loans. Subordinated loans often include a PIK feature, which effectively operates as negative amortization of loan
principal, thereby increasing credit risk exposure over the life of the loan.
Equity Securities
In connection with some of our debt investments, we may also invest in preferred or common stock or receive nominally priced
warrants or options to buy an equity interest in the portfolio company. As a result, as a portfolio company appreciates in value, we
may achieve additional investment return from this equity interest. We may structure such equity investments and warrants to include
provisions protecting our rights as a minority-interest holder, as well as a “put,” or right to sell such securities back to the issuer, upon
the occurrence of specified events. In many cases, we may also seek to obtain registration rights in connection with these equity
interests, which may include demand and “piggyback” registration rights.
Investment Process
Through the resources of Stellus Capital Management, we have access to significant research resources, experienced investment
professionals, internal information systems and a credit analysis framework and investment process. Stellus Capital Management has
designed a highly involved and interactive investment management process, which is the core of its culture and the basis for what we
believe is a strong track record of investment returns. The investment process seeks to select only those investments that the Advisor
believes have the most attractive risk/reward characteristics. The process involves several levels of review and is coordinated in an
effort to identify risks in potential investments. Stellus Capital Management applies its expertise to screen our investment
opportunities as described below. This rigorous process, combined with its broad origination capabilities, has allowed the Stellus
Capital Management team to be prudent in selecting opportunities in which to make an investment.
All potential investment opportunities undergo an initial informal review by Stellus Capital Management’s investment
professionals. Each potential investment opportunity that an investment professional determines merits consideration is presented and
evaluated at a weekly meeting during which Stellus Capital Management’s senior investment professionals discuss the merits and
risks of the potential investment opportunity as well as the due diligence process and the pricing and structure. If Stellus Capital
Management’s senior investment professionals believe an investment opportunity merits further review, the investment opportunity is
assigned a deal team and the deal team

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prepares and presents to the investment committee for initial review a prescreen memorandum that generally describes the potential
transaction and includes a description of the risks, due diligence process and proposed structure and pricing for the proposed
investment opportunity.
Prior to making an investment, Stellus Capital Management conducts rigorous diligence on each investment opportunity. In
connection with its due diligence on a potential investment opportunity, Stellus Capital Management utilizes its internal diligence
resources, which include its internally developed credit analytical framework, subscriptions to third party research resources,
discussions with industry experts, internal information sharing systems and the analytical expertise of its investment professionals.
Stellus Capital Management typically reviews the company’s historical financials, industry drivers and outlook, competitive threats,
customer concentration, asset coverage, projected financials and credit metrics, management background checks and, if applicable,
the track record and funding capabilities of the private equity sponsor.
Upon review of the prescreen memorandum, if the investment committee determines to proceed with the review of an investment
opportunity, the deal team continues its diligence and deal structuring plans and prepares a credit approval memorandum for review
by the investment committee. The credit approval memorandum updates the prescreen memorandum with more deal-specific detail,
including an update to the diligence process and any changes in the structure and pricing of the proposed investment.
Investment Committee
Each new investment opportunity must be unanimously approved by Stellus Capital Management’s investment committee.
Follow-on investments in existing portfolio companies also require the investment committee’s unanimous approval. Stellus Capital
Management’s Chief Investment Officer, Robert T. Ladd, reviews any amendments before finalizing and closing negotiations with
the prospective portfolio company. The purpose of Stellus Capital Management’s investment committee is to evaluate and approve all
of our investments, subject at all times to the oversight of our Board. The investment committee process is intended to bring the
diverse experience and perspectives of the committee’s members to the analysis and consideration of each investment. The investment
committee consists of Robert T. Ladd, Dean D’Angelo, Joshua T. Davis and W. Todd Huskinson. The investment committee serves to
provide investment consistency and adherence to our core investment philosophy and policies. The investment committee also
determines appropriate investment sizing and suggests ongoing monitoring requirements.
In addition to reviewing investments, investment committee meetings serve as a forum to discuss credit views and outlooks.
Potential transactions and deal flow are reviewed on a regular basis. Members of the investment team are encouraged to share
information and views on credits with the investment committee early in their analysis. We believe this process improves the quality
of the analysis and assists the deal team members to work more efficiently.
Each member of the investment committee performs a similar role for other accounts managed by Stellus Capital Management.
In certain instances, including in connection with co-investments under the Order, approval by our Board may also be required prior
to the making of an investment.
Monitoring Investments
In most cases, we do not have board influence over our portfolio companies. In some instances, Stellus Capital Management’s
senior investment professionals may obtain board representation or observation rights in conjunction with our investments. Stellus
Capital Management takes an active approach in monitoring all investments, including reviews of financial performance on at least a
quarterly basis and regular discussions with management. The monitoring process begins with structuring terms and conditions, which
require the timely delivery and access to critical financial and business information on portfolio companies.
Specifically, Stellus Capital Management’s monitoring system consists of the following activities:
Regular Investment Committee Updates Key portfolio company developments are discussed each week as part of the standard
investment committee meeting agenda.

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Written Reports The deal teams provide periodic written updates as appropriate for key events that impact portfolio company
performance or valuation. In addition, deal teams provide written updates following each portfolio company board meeting.
Quarterly Full Portfolio Review Stellus Capital Management’s investment committee performs a comprehensive review of
every portfolio company with the deal teams. This process includes a written performance and valuation update, and credit-specific
discussion on each of our portfolio companies. In addition, pursuant to our valuation policy, the valuation of each portfolio
investment for which a market quotation is not readily available is reviewed by our independent third-party valuation firm at least
twice annually. In addition, portfolio investments that are not publicly traded or for which market quotations are not readily available
are valued at fair value as determined in good faith by our Board based on the input of Stellus Capital Management’s investment
professionals and our Board’s audit committee.
As part of the monitoring process, Stellus Capital Management also tracks developments in the broader marketplace. Stellus
Capital Management’s investment professionals have a wealth of information on the competitive landscape, industry trends, relative
valuation metrics, and analyses that assist in the execution of our investment strategy. In addition, Stellus Capital Management’s
extensive communications with brokers and dealers allows its investment professionals to monitor market and industry trends that
could affect portfolio investments. Stellus Capital Management may provide ongoing strategic, financial and operational guidance to
some portfolio companies either directly or by recommending its investment professionals or other experienced representatives to
participate on the portfolio company’s board of directors. Stellus Capital Management maintains an extensive network of strategic
and operational advisers to call upon for industry expertise or to supplement existing management teams.
Asset Quality
In addition to various risk management and monitoring tools, Stellus Capital Management uses an investment ranking system to
characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment ranking
system uses a five-level numeric scale. The following is a description of the conditions associated with each investment category:
Investment Category 1 is used for investments that are performing above expectations, and whose risks remain favorable
compared to the expected risk at the time of the original investment.
Investment Category 2 is used for investments that are performing within expectations and whose risks remain neutral compared
to the expected risk at the time of the original investment. All new loans are initially rated 2.
Investment Category 3 is used for investments that are performing below expectations and that require closer monitoring, but
where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with financial
covenants.
Investment Category 4 is used for investments that are performing substantially below expectations and whose risks have
increased substantially since the original investment. These investments are often in work out. Investments with a rating of 4 are those
for which some loss of contractual return but no loss of principal is expected.
Investment Category 5 is used for investments that are performing substantially below expectations and whose risks have
increased substantially since the original investment. These investments are almost always in work out. Investments with a rating of 5
are those for which some loss of return and principal is expected.
In the event that Stellus Capital Management determines that an investment is underperforming, or circumstances suggest that
the risk associated with a particular investment has significantly increased, Stellus Capital Management will increase its monitoring
intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending
events and suggesting recommended actions. While the investment ranking system identifies the relative risk for each investment, the
ranking alone does not dictate the scope and/or frequency of any monitoring that is performed. The frequency of Stellus Capital
Management’s monitoring of an investment is

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determined by a number of factors, including, but not limited to, the trends in the financial performance of the portfolio company, the
investment structure and the type of collateral securing the investment.
Determination of Net Asset Value and Portfolio Valuation Process
The net asset value per share of our outstanding shares of common stock is determined quarterly by dividing the value of total
assets minus liabilities by the total number of shares outstanding.
Rule 2a-5 under the 1940 Act (“Rule 2a-5”) establishes requirements for determining fair value in good faith for purposes of the
1940 Act. Rule 2a-5 permits boards to designate certain parties to perform fair value determinations, subject to board oversight and
certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the
threshold for determining whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”)
regulates recordkeeping associated with fair value determinations. While our Board has not elected to designate a valuation designee,
we have adopted valuation policies and procedures that comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.
As a BDC, we will generally invest in illiquid loans and securities, including debt and equity securities of private lower middle-
market companies. Section 2(a)(41) of the 1940 Act requires that a BDC value its assets as follows: (i) the third party price for
securities for which a market quotation is readily available; and (ii) for all other securities and assets, fair value, as determined in good
faith by a BDC’s board (or valuation designee, as applicable).
In calculating the value of our total assets, investment transactions will be recorded on the trade date. Realized gains or losses will
be computed using the specific identification method.
Under procedures approved by our Board, we intend to value investments for which market quotations are readily available at
such market quotations. We will obtain these market values from an independent pricing service or at the midpoint of the bid and ask
prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer).
Debt and equity securities that are not publicly traded or whose market quotations are not readily available will be valued at fair value
as determined in good faith by our Board. Such determination of fair values may involve subjective judgments and estimates. We also
engage independent valuation providers to review the valuation of each portfolio investment that does not have a readily available
market quotation at least twice annually.
Debt and equity investments purchased within approximately 90 days of the valuation date will be valued at cost, plus accreted
discount or minus amortized premium, which approximates fair value. With respect to unquoted securities, our Board will value each
investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that
are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs,
the Board will use the pricing indicated by the external event to corroborate and/or assist in determining the valuation. Because we
expect that there will not be a readily available market quotation for many of the investments in our portfolio, we expect to value most
of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a
consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a
readily available market value, the fair value of our investments may differ significantly from the values that would have been used
had a readily available market value existed for such investments, and the differences could be material. In addition, changes in the
market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized
on these investments to be different from the valuations currently assigned.
We have adopted Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements and
Disclosures (“ASC 820”). ASC 820 requires us to assume that the portfolio investment is assumed to be sold in the principal market
to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market.
Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent,
knowledgeable, and willing and able to transact. In accordance with

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ASC 820, the market in which we can exit portfolio investments with the greatest volume and level activity is considered our
principal market.
With respect to investments for which market quotations are not readily available, our Board undertakes a multi-step valuation
process each quarter, as described below:
●
our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment
professionals of Stellus Capital Management responsible for the portfolio investment;
●
preliminary valuation conclusions are then documented and discussed with Stellus Capital Management’s senior investment
professionals;
●
at least twice annually, the valuation for each portfolio investment is reviewed by an independent valuation firm;
●
the audit committee of our Board then reviews these preliminary valuations and any valuation provided by an independent
valuation firm; and
●
the Board then discusses the valuations and determines the fair value of each investment in our portfolio in good faith, based
on the input of Stellus Capital Management’s investment professionals, the independent valuation firm and the audit
committee of the Board.
In following these approaches, the types of factors that are taken into account in fair value pricing our investments include, as
relevant, but are not limited to:
●
available current market data, including relevant and applicable market trading and transaction comparables;
●
applicable market yields and multiples;
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financial covenants;
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call protection provisions;
●
information rights;
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the nature and realizable value of any collateral;
●
the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does
business;
●
comparisons to financial ratios of peer companies that are public;
●
comparable merger and acquisition transactions; and
●
the principal market and enterprise values.
Realization of Investments
The potential exit scenarios of a portfolio company play an important role in evaluating investment decisions. Our debt
orientation provides for increased potential exit opportunities, including (a) the sale of investments in the private markets, (b) the
refinancing of investments, often due to maturity or recapitalizations, and (c) other liquidity events, including the sale or merger of the
portfolio company. Since we seek to maintain a debt orientation in our investments,

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we expect to receive interest income over the course of the investment period, resulting in a return on invested capital well in advance
of final exit.
Derivatives
We may utilize hedging techniques such as interest rate swaps to mitigate potential interest rate risk on our indebtedness. Such
interest rate swaps would principally be used to protect us against higher costs on our indebtedness resulting from increases in both
short-term and long-term interest rates. We also may use various hedging and other risk management strategies to seek to manage
various risks, including changes in currency exchange rates and market interest rates. Such hedging strategies would be utilized to
seek to protect the value of our portfolio investments, for example, against possible adverse changes in the market value of securities
held in our portfolio.
Rule 18f-4 under the 1940 Act (“Rule 18f-4”) requires BDCs that use derivatives to, among other things, comply with a value-
at-risk leverage limit, adopt a derivatives risk management program, and implement certain testing and board reporting procedures.
Rule 18f-4 exempts BDCs that qualify as “limited derivatives users” from the aforementioned requirements, provided that these
BDCs adopt written policies and procedures that are reasonably designed to manage the BDC’s derivatives risks and comply with
certain recordkeeping requirements. We currently qualify as a “limited derivatives user” and expect to continue to do so. We have
adopted a derivatives policy in compliance with Rule 18f-4 and comply with the recordkeeping requirements.
Managerial Assistance
As a BDC, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could
involve monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and
advising officers of portfolio companies and providing other organizational and financial guidance. Stellus Capital Management or an
affiliate of Stellus Capital Management provides such managerial assistance on our behalf to portfolio companies that request this
assistance. We may receive fees for these services and will reimburse Stellus Capital Management or an affiliate of Stellus Capital
Management, as applicable, for its allocated costs in providing such assistance, subject to the review by our Board, including our
independent directors.
Competition
Our primary competitors in providing financing to lower middle-market companies include public and private funds, other
BDCs, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of
financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial,
technical and marketing resources than we do. For example, we believe some competitors may have access to funding sources that
are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which
could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our
competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or to the distribution and other
requirements we must satisfy to maintain our qualification as a RIC.
We use the expertise of the investment professionals of Stellus Capital Management to which we have access to assess
investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we believe that the
relationships of the investment professionals of Stellus Capital Management enable us to learn about, and compete effectively for,
financing opportunities with attractive lower middle-market companies in the industries in which we invest.
Employees
We do not have any direct employees, and our day-to-day investment operations are managed by Stellus Capital Management.
We have a Chief Executive Officer and President and a Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary.
To the extent necessary, we may hire additional personnel going forward. Our officers are employees of Stellus Capital Management
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Chief Compliance Officer and his staff is paid by us pursuant to the Administration Agreement that we have entered into with Stellus
Capital Management (the “Administration Agreement”).
Management Agreements
Stellus Capital Management serves as our investment adviser and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”). In addition, Stellus Capital Management serves as our administrator.
Investment Advisory Agreement
Subject to the overall supervision of our Board and in accordance with the 1940 Act, Stellus Capital Management manages our
day-to-day operations and provides investment advisory services to us. Under the terms of the Investment Advisory Agreement (the
“Investment Advisory Agreement”), Stellus Capital Management:
●
determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of
implementing such changes;
●
identifies, evaluates and negotiates the structure of the investments we make;
●
executes, closes, services and monitors the investments we make;
●
determines the securities and other assets that we purchase, retain or sell;
●
performs due diligence on prospective portfolio companies; and
●
provides us with such other investment advisory, research and related services as we may, from time to time, reasonably
require for the investment of our funds.
Pursuant to the Investment Advisory Agreement, we have agreed to pay Stellus Capital Management a fee for investment
advisory and management services consisting of two components — a base management fee and an incentive fee. The cost of both the
base management fee and the incentive fee is borne by our stockholders.
Management Fee
The base management fee is calculated at an annual rate of 1.75% of our gross assets, including assets purchased with borrowed
funds or other forms of leverage (including preferred stock, public and private debt issuances, derivative instruments, repurchase
agreements and other similar instruments or arrangements) and excluding cash and cash equivalents. For services rendered under the
Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated
based on the average value of our gross assets, excluding cash and cash equivalents, at the end of the two most recently completed
calendar quarters. Base management fees for any partial month or quarter are appropriately prorated.
Incentive Fee
The incentive fee, which provides Stellus Capital Management with a share of the income that it generates for us, has two
components, ordinary income and capital gains, calculated as follows:
The ordinary income component is calculated and payable quarterly in arrears based on our pre-incentive fee net investment
income for the immediately preceding calendar quarter, subject to a total return requirement and deferral of non-cash amounts, and is
20.0% of the amount, if any, by which our pre-incentive fee net investment income, expressed as a rate of return on the value of our
net assets attributable to our common stock, for the immediately preceding calendar quarter, exceeds a 2.0% (which is 8.0%
annualized) hurdle rate and a “catch-up” provision, for the benefit of

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Stellus Capital Management, measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, Stellus
Capital Management receives no incentive fee until our pre-incentive fee net investment income equals the hurdle rate of 2.0%, but
then receives, as a “catch-up,” 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive
fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%.
The effect of the “catch-up” provision is that, subject to the total return provision discussed below, if pre-incentive fee net
investment income exceeds 2.5% in any calendar quarter, Stellus Capital Management receives 20.0% of our pre-incentive fee net
investment income as if a hurdle rate did not apply. For this purpose, pre-incentive fee net investment income means interest income,
dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial
assistance and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our
operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement, and
any interest expense and any distributions paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-
incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID, debt
instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash. The foregoing
incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive
fee net investment income will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from
operations over the then current and 11 preceding quarters exceeds the cumulative incentive fees accrued and/or paid for the 11
preceding quarters. In other words, any ordinary income incentive fee that is payable in a calendar quarter will be limited to the lesser
of (i) 20.0% of the amount by which our pre-incentive fee net investment income for such calendar quarter exceeds the 2.0% hurdle,
subject to the “catch-up” provision, and (ii) (x) 20.0% of the cumulative net increase in net assets resulting from operations for the
then current and 11 preceding calendar quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11 preceding
calendar quarters.
For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the amount, if positive, of the
sum of our pre-incentive fee net investment income, realized gains and losses and unrealized appreciation and depreciation for the
then current and 11 preceding calendar quarters. In addition, the portion of such incentive fee that is attributable to deferred interest
(such as PIK interest or OID) will be paid to Stellus Capital Management, without any interest thereon, only if and to the extent we
actually receive such interest in cash, and any accrual thereof will be reversed if and to the extent such interest is reversed in
connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual. Any reversal of such
amounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive
fees payable) and would result in a reduction and possible elimination of the incentive fees for such quarter. There is no accumulation
of amounts on the hurdle rate from quarter to quarter, and accordingly there is no clawback of amounts previously paid if subsequent
quarters are below the quarterly hurdle, and there is no delay of payment if prior quarters are below the quarterly hurdle. Stellus
Capital Management has agreed to permanently waive any interest accrued on the portion of the incentive fee attributable to deferred
interest (such as PIK interest or OID).
Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital
appreciation or depreciation. Because of the structure of the incentive fee, it is possible that we may pay an incentive fee in a quarter
where we incur a loss, subject to the total return requirement. For example, if we receive pre-incentive fee net investment income in
excess of the quarterly minimum hurdle rate, we will pay the applicable incentive fee even if we have incurred a loss in that quarter
due to realized and unrealized capital losses. Our net investment income used to calculate this component of the incentive fee is also
included in the amount of our gross assets used to calculate the 1.75% base management fee. These calculations are appropriately
prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

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The following is a graphical representation of the calculation of the income-related portion of the incentive fee:
Quarterly Incentive Fee Based on Net Investment Income
Pre-Incentive Fee Net Investment Income
(expressed as a percentage of the value of net assets)
Percentage of Pre-incentive Fee Net Investment Income
Allocated to Income-Related Portion of Incentive Fee
The capital gains component of the incentive fee is determined and payable in arrears as of the end of each calendar year (or
upon termination of the Investment Advisory Agreement, as of the termination date), and is equal to 20.0% of our cumulative
aggregate realized capital gains from inception through the end of that calendar year, computed net of our aggregate cumulative
realized capital losses and our aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate
amount of any previously paid capital gains incentive fees. If such amount is negative, then no capital gains incentive fee will be
payable for such year. Additionally, if the Investment Advisory Agreement is terminated as of a date that is not a calendar year end,
the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains
incentive fee.
Examples of Quarterly Incentive Fee Calculation
Example 1: Income Related Portion of Incentive Fee before Total Return Requirement Calculation:
Alternative 1
Assumptions
Investment income (including interest, dividends, fees, etc.) = 1.25%
Hurdle rate(1) = 2.0%
Management fee(2) = 0.4375%
Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%
Pre-incentive fee net investment income
(investment income — (management fee + other expenses)) = 0.6125%
Pre-incentive fee net investment income does not exceed hurdle rate, therefore there is no income-related incentive fee.
Alternative 2
Assumptions
Investment income (including interest, dividends, fees, etc.) = 2.9%
Hurdle rate(1) = 2.0%
Management fee(2) = 0.4375% 
Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%

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Pre-incentive fee net investment income
(investment income — (management fee + other expenses)) = 2.2625%
Incentive fee
= 100% × Pre-incentive fee net investment income (subject to “catch-
up”)(3)
= 100% × (2.2625% — 2.0%)
= 0.2625%
Pre-incentive fee net investment income exceeds the hurdle rate, but does not fully satisfy the “catch-up” provision, therefore the
income related portion of the incentive fee is 0.2625%.
Alternative 3
Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.5%
Hurdle rate(1) = 2.0%
Management fee(2) = 0.4375%
Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%
Pre-incentive fee net investment income
(investment income — (management fee + other expenses)) = 2.8625%
Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”)(3)
Incentive fee = 100% × “catch-up” + (20.0% × (Pre-Incentive Fee Net Investment Income — 2.5%))
“Catch-up”
= 2.5% — 2.0%
= 0.5%
Incentive fee
= (100% × 0.5%) + (20.0% × (2.8625% — 
2.5%))
= 0.5% + (20.0% × 0.3625%)
= 0.5% + 0.0725%
= 0.5725%
Pre-incentive fee net investment income exceeds the hurdle rate, and fully satisfies the “catch-up” provision, therefore the
income related portion of the incentive fee is 0.5725%.
(1) Represents 8.0% annualized hurdle rate.
(2) Represents 1.75% annualized base management fee.
(3) The “catch-up” provision is intended to provide Stellus Capital Management with an incentive fee of 20.0% on all pre-incentive
fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.5% in any fiscal quarter.
Example 2: Income Portion of Incentive Fee with Total Return Requirement Calculation:
Alternative 1:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.5%
Hurdle rate(1) = 2.0%
Management fee(2) = 0.4375%
Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%
Pre-incentive fee net investment income
(investment income — (management fee + other expenses) = 2.8625%
Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000

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20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters =
$8,000,000
Although our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% (as shown in Alternative 3 of Example 1
above), no incentive fee is payable because 20.0% of the cumulative net increase in net assets resulting from operations over the then
current and 11 preceding calendar quarters did not exceed the cumulative income and capital gains incentive fees accrued and/or paid
for the preceding 11 calendar quarters.
Alternative 2:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.5%
Hurdle rate(1) = 2.0%
Management fee(2) = 0.4375%
Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%
Pre-incentive fee net investment income
(investment income — (management fee + other expenses) = 2.8625%
Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000
20.0% of cumulative net increase in net assets resulting from operations over current and preceding
11 calendar quarters = $10,000,000
Because our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% and because 20.0% of the cumulative net
increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative
income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters, an incentive fee would be payable,
as shown in Alternative 3 of Example 1 above.
(1) Represents 8.0% annualized hurdle rate.
(2) Represents 1.75% annualized base management fee.
Example 3: Capital Gains Portion of Incentive Fee(*):
Alternative 1:
Assumptions
Year 1: $2.0 million investment made in Company A (“Investment A”), and $3.0 million investment made in Company B
(“Investment B”)
Year 2: Investment A sold for $5.0 million and fair market value (“FMV”) of Investment B determined to be $3.5 million
Year 3: FMV of Investment B determined to be $2.0 million
Year 4: Investment B sold for $3.25 million
The capital gains portion of the incentive fee would be:
Year 1: None
Year 2: Capital gains incentive fee of $0.6 million — ($3.0 million realized capital gains on sale of Investment A multiplied by
20.0%)

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21
Year 3: None — $0.4 million (20.0% multiplied by ($3.0 million cumulative capital gains less $1.0 million cumulative capital
depreciation)) less $0.6 million (previous capital gains fee paid in Year 2)
Year 4: Capital gains incentive fee of $50,000 — $0.65 million ($3.25 million cumulative realized capital gains multiplied by
20.0%) less $0.6 million (capital gains incentive fee taken in Year 2)
Alternative 2
Assumptions
Year 1: $2.0 million investment made in Company A (“Investment A”), $5.25 million investment made in Company B
(“Investment B”) and $4.5 million investment made in Company C (“Investment C”)
Year 2: Investment A sold for $4.5 million, FMV of Investment B determined to be $4.75 million and FMV of Investment C
determined to be $4.5 million
Year 3: FMV of Investment B determined to be $5.0 million and Investment C sold for $5.5 million
Year 4: FMV of Investment B determined to be $6.0 million
Year 5: Investment B sold for $4.0 million
The capital gains incentive fee, if any, would be:
Year 1: None
Year 2: $0.4 million capital gains incentive fee — 20.0% multiplied by $2.0 million ($2.5 million realized capital gains on
Investment A less $0.5 million unrealized capital depreciation on Investment B)
Year 3: $0.25 million capital gains incentive fee(1) — $0.65 million (20.0% multiplied by $3.25 million ($3.5 million cumulative
realized capital gains less $0.25 million unrealized capital depreciation)) less $0.4 million capital gains incentive fee received
in Year 2
Year 4: $0.05 million capital gains incentive fee — $0.7 million ($3.50 million cumulative realized capital gains multiplied by
20.0%) less $0.65 million cumulative capital gains incentive fee paid in Year 2 and Year 3
Year 5: None — $0.45 million (20.0% multiplied by $2.25 million (cumulative realized capital gains of $3.5 million less realized
capital losses of $1.25 million)) less $0.7 million cumulative capital gains incentive fee paid in Year 2, Year 3 and Year 4(2)
*
The hypothetical amounts of returns shown are based on a percentage of our total net assets and assume no leverage. There is no
guarantee that positive returns will be realized and actual returns may vary from those shown in this example.
(1)
As illustrated in Year 3 of Alternative 1 above, if a portfolio company were to be wound up on a date other than its fiscal year
end of any year, it may have paid aggregate capital gains incentive fees that are more than the amount of such fees that would be
payable if such portfolio company had been wound up on its fiscal year end of such year.
(2)
As noted above, it is possible that the cumulative aggregate capital gains fee received by Stellus Capital Management
($0.70 million) is effectively greater than $0.45 million (20.0% of cumulative aggregate realized capital gains less net realized
capital losses or net unrealized depreciation ($2.25 million)).

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Payment of Our Expenses
All investment professionals of Stellus Capital Management, when and to the extent engaged in providing investment advisory
and management services, and the compensation and routine overhead expenses of personnel allocable to these services to us, are
provided and paid for by Stellus Capital Management and not by us. We bear all other out-of-pocket costs and expenses of our
operations and transactions, including, without limitation, those relating to:
●
our organization and offering;
●
calculating our net asset value (including the cost and expenses of any independent valuation firm);
●
fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal
affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or
otherwise relating to, or associated with, evaluating and making investments;
●
interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio
acquisition efforts;
●
offerings of our common stock and other securities;
●
base management and incentive fees;
●
administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of
Stellus Capital Management’s overhead in performing its obligations under the Administration Agreement, including rent
and the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and his staff);
●
transfer agent, dividend agent and custodial fees and expenses;
●
U.S. federal and state registration fees;
●
all costs of registration and listing our shares on any securities exchange;
●
U.S. federal, state and local taxes;
●
independent directors’ fees and expenses;
●
costs of preparing and filing reports or other documents required by the SEC or other regulators;
●
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
●
costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any
other insurance premiums;
●
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and
other staff, independent auditors and outside legal costs;
●
proxy voting expenses; and
●
all other expenses incurred by us or Stellus Capital Management in connection with administering our business.

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Duration and Termination
Unless terminated earlier as described below, the Investment Advisory Agreement will continue in effect from year to year if
approved annually by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, and, in
either case, if also approved by a majority of the independent directors. The Investment Advisory Agreement automatically terminates
in the event of its assignment, as defined in the 1940 Act, by Stellus Capital Management and may be terminated by either party
without penalty upon 60 days’ written notice to the other. The holders of a majority of our outstanding voting securities may also
terminate the Investment Advisory Agreement without penalty upon 60 days’ written notice. See Item 1A. “Risk Factors — Risks
Related to our Operations” in this Annual Report on Form 10-K. We are dependent upon key personnel of Stellus Capital
Management for our future success. If Stellus Capital Management were to lose any of its key personnel, our ability to achieve our
investment objective could be significantly harmed.
Indemnification
The Investment Advisory Agreement provides that Stellus Capital Management and its officers, managers, partners, agents,
employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from us
for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement)
arising from the rendering of Stellus Capital Management’s services under the Investment Advisory Agreement or otherwise as our
investment adviser. Our obligation to provide indemnification under the Investment Advisory Agreement, however, is limited by the
1940 Act and Investment Company Act Release No. 11330, which, among other things, prohibit us from indemnifying any director,
officer or other individual from any liability resulting directly from the willful misconduct, bad faith, gross negligence in the
performance of duties or reckless disregard of applicable obligations and duties of the directors, officers or other individuals and
require us to set forth reasonable and fair means for determining whether indemnification shall be made.
Board Approval of the Investment Advisory Agreement
Our Board, including a majority of our independent directors, approved the Investment Advisory Agreement at its first meeting,
held on September 24, 2012, and approved the annual continuation of the Investment Advisory Agreement on January 6, 2025 by
virtual means in reliance on relief provided by the SEC in response to the COVID-19 pandemic. As a condition of the SEC's COVID-
19 relief, our Board will be required to ratify the re-approval of the Investment Advisory Agreement at its next in-person meeting. In
its consideration of the Investment Advisory Agreement, the Board focused on information it had received relating to, among other
things: (a) the nature, quality and extent of the advisory and other services to be provided to us by our investment adviser;
(b) comparative data with respect to advisory fees or similar expenses paid by other BDCs with similar investment objectives; (c) our
projected operating expenses and expense ratio compared to BDCs with similar investment objectives; (d) any existing and potential
sources of indirect income to our investment adviser from its relationships with us and the profitability of those relationships;
(e) information about the services to be performed and the personnel performing such services under the Investment Advisory
Agreement; (f) the organizational capability and financial condition of our investment adviser; and (g) various other factors.
In voting to approve the Investment Advisory Agreement, our Board, including all of the directors who are not “interested
persons” of the Company, made the following conclusions:
●
Nature, Extent and Quality of Services. Our Board considered the nature, extent and quality of the advisory and other
services to be provided by Stellus Capital Management, including the investment performance of Stellus Capital
Management’s investment team. Our Board also considered the investment selection process expected to be employed by
Stellus Capital Management, including the flow of transaction opportunities resulting from its investment team’s significant
experience in originating, structuring and managing loans and debt securities through market cycles, and the employment of
Stellus Capital Management’s investment strategy, rigorous due diligence process, investment structuring, and ongoing
relationships with and monitoring of portfolio companies, in light of our investment objective. Our Board also considered
Stellus Capital Management’s personnel and their prior experience in connection with the types of investments made by us,
including such

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personnel’s corporate relationships and relationships with private equity firms, investment banks, restructuring advisors, law
firms, boutique advisory firms and distressed/specialty lenders. In addition, our Board considered the other terms and
conditions of the Investment Advisory Agreement, including the fact that we have the ability to terminate the Investment
Advisory Agreement without penalty upon 60 days’ notice to Stellus Capital Management. As a result, our Board
determined that the substantive terms of the Investment Advisory Agreement (other than the fees payable thereunder, which
our Board reviewed separately), including the services to be provided, are similar to those of comparable externally
managed BDCs described in the available market data and in the best interests of our stockholders. Moreover, our Board
concluded that although the substantive terms of the Investment Advisory Agreement, including the services to be provided,
are generally the same as those of comparable externally managed BDCs described in the market data then available, it
would be difficult to obtain similar services from other third-party service providers in light of the nature, quality and extent
of the advisory and other services provided to us by Stellus Capital Management.
●
Projected Costs of the Services Provided to the Company. Our Board considered (i) comparative data based on publicly
available information with respect to services rendered and the advisory fees (including the base management fee and
incentive fees) of other externally managed BDCs that invest in similar securities, our total expenses, and expense ratios
compared to other externally managed BDCs of similar size and with similar investment objectives and (ii) the
administrative services that Stellus Capital Management will provide to us at cost pursuant to the Administration
Agreement. Based upon its review, our Board concluded that the fees to be paid under the Investment Advisory Agreement
are generally comparable to or more favorable than those payable under agreements of comparable externally managed
BDCs and reasonable in relation to the services expected to be provided by Stellus Capital Management.
●
Projected Profitability of Stellus Capital Management. Our Board considered information about Stellus Capital
Management, including the anticipated costs of the services to be provided by Stellus Capital Management and the
anticipated profits to be realized by it, including as a result of our investment performance, which would generally be equal
or similar to the profitability of investment advisers managing comparable BDCs. Our Board reviewed our investment
performance, as well as comparative data with respect to the investment performance of other externally managed BDCs, as
it relates to the management and incentive fees we pay Stellus Capital Management. As a result of this review, our Board
determined that our investment performance supported the renewal of the Investment Advisory Agreement.
●
Economies of Scale. Our Board considered the extent to which economies of scale would be realized as we grow, and
whether the fees payable under the Investment Advisory Agreement reflect these economies of scale for the benefit of our
stockholders. Taking into account such information, our Board determined that the advisory fee structure under the
Investment Advisory Agreement was reasonable with respect to any economies of scale that may be realized as we grow.
●
Limited Potential for Additional Benefits Derived by Stellus Capital Management. Our Board considered existing and
potential sources of indirect income Stellus Capital Management would receive as a result of the relationship with us, and
whether there would be potential for additional benefits to be derived by Stellus Capital Management as a result of our
relationship, and was advised any such potential would be limited.
●
Conclusions. In view of the wide variety of factors that our Board considered in connection with its evaluation of the
Investment Advisory Agreement, it is not practical to quantify, rank or otherwise assign relative weights to the specific
factors it considered in reaching its decision. The Board did not rank or otherwise assign relative weights to the specific
factors it considered in connection with its evaluation of the Investment Advisory Agreement, nor did it undertake to make
any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or
unfavorable to the ultimate decision made by our Board. Rather, the Board based its approval of the Investment Advisory
Agreement on the totality of information presented to it. In considering the factors discussed above, individual directors
may have given different weights to different factors.

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Based on the information reviewed and the discussions, the Board, including a majority of the independent directors, concluded
that the investment management fee rates and terms are reasonable in relation to the services to be provided and approved the
Investment Advisory Agreement as being in the best interests of our stockholders.
Administration Agreement
Under the Administration Agreement, Stellus Capital Management furnishes us with office facilities and equipment and provides
us with clerical, bookkeeping, recordkeeping and other administrative services at such facilities. Stellus Capital Management also
performs, or oversees the performance of, our required administrative services, which include being responsible for the financial and
other records that we are required to maintain and preparing reports to our stockholders and reports and other materials filed with the
SEC. In addition, Stellus Capital Management assists us in determining and publishing our net asset value, oversees the preparation
and filing of our tax returns and the printing and dissemination of reports and other materials to our stockholders, and generally
oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others.
Under the Administration Agreement, Stellus Capital Management also provides managerial assistance on our behalf to those
portfolio companies that have accepted our offer to provide such assistance.
Payments under the Administration Agreement are equal to an amount based upon our allocable portion (subject to the review of
our Board) of Stellus Capital Management’s overhead in performing its obligations under the Administration Agreement, including
rent, the fees and expenses associated with performing compliance functions and our allocable portion of the cost of our Chief
Financial Officer and Chief Compliance Officer and his staff. In addition, if requested to provide significant managerial assistance to
our portfolio companies, Stellus Capital Management will be paid an additional amount based on the services provided, which shall
not exceed the amount we receive from such portfolio companies for providing this assistance. The Administration Agreement had an
initial term of two years and may be renewed with the approval of our Board on an annual basis. The Board approved the annual
continuation of the Administration Agreement on January 6, 2025. The Administration Agreement may be terminated by either party
without penalty upon 60 days’ written notice to the other party. To the extent that Stellus Capital Management outsources any of its
functions under the Administration Agreement, we will pay the fees associated with such functions on a direct basis without any
incremental profit to Stellus Capital Management. Stockholder approval is not required to amend the Administration Agreement.
Indemnification
The Administration Agreement provides that Stellus Capital Management, its affiliates and their respective officers, managers,
partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to
indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably
paid in settlement) arising from the rendering of Stellus Capital Management’s services under the Administration Agreement or
otherwise as our administrator. Our obligation to provide indemnification under the Administration Agreement, however, is limited
by the 1940 Act and Investment Company Act Release No. 11330, which, among other things, prohibit us from indemnifying any
director, officer or other individual from any liability resulting directly from the willful misconduct, bad faith, gross negligence in the
performance of duties or reckless disregard of applicable obligations and duties of the directors, officers or other individuals and
require us to set forth reasonable and fair means for determining whether indemnification shall be made.
License Agreement
We have entered into a license agreement with Stellus Capital Management under which Stellus Capital Management has agreed
to grant us a non-exclusive, royalty-free license to use the name “Stellus Capital.” Under this agreement, we have a right to use the
“Stellus Capital” name for so long as Stellus Capital Management or one of its affiliates remains our investment adviser. Other than
with respect to this limited license, we have no legal right to the “Stellus Capital” name. This license agreement will remain in effect
for so long as the Investment Advisory Agreement with Stellus Capital Management is in effect.

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Exchange Act Reports
We maintain a website at www.stelluscapital.com (under the “Public Investors” section). The information on our website is not
incorporated by reference in this Annual Report on Form 10-K.
We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the
SEC in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These include our annual reports on
Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. We make this information available on our
website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.
Regulation as a Business Development Company
We are a BDC under the 1940 Act that has elected to be treated as a RIC under the Code. The 1940 Act contains prohibitions and
restrictions relating to transactions between BDCs and their affiliates (including any investment advisers), principal underwriters and
affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as
that term is defined in Section 2(a)(19) of the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our
business so as to cease to be, or to withdraw our election as, a BDC unless approved by the holders of a majority of our outstanding
voting securities.
We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. With
respect to such securities, we may, for the purpose of public resale, be deemed an “underwriter,” as that term is defined in the
Securities Act of 1933, as amended (the “Securities Act”). Our intention is to not write (sell) or buy put or call options to manage
risks associated with the publicly traded securities of our portfolio companies, except that we may enter into hedging transactions to
manage the risks associated with interest rate fluctuations. However, we may purchase or otherwise receive warrants to purchase the
common stock of our portfolio companies in connection with acquisition financing or other investments. Similarly, in connection with
an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase them under certain
circumstances. We also do not intend to acquire securities issued by any investment company that exceed the limits imposed by the
1940 Act. Under these limits, we generally cannot acquire more than 3% of the voting stock of any registered investment company,
invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value
of our total assets in the securities of more than one investment company. With regard to that portion of our portfolio invested in
securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional
expenses. None of these are policies fundamental and any of them may be changed without stockholder approval upon 60 days’ prior
written notice to stockholders.
Qualifying Assets
Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which
are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the
company’s total assets. The principal categories of qualifying assets relevant to our business are the following:
(1)
Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer
(subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the
preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such
rules as may be prescribed by the SEC. Under the 1940 Act and the rules thereunder, “eligible portfolio companies” include
any issuer that:
a.
is organized under the laws of, and has its principal place of business in, the United States;
b.
is not an investment company (other than an SBIC wholly owned by the BDC) or a company that would be an
investment company but for certain exclusions under the 1940 Act; and

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c.
satisfies any of the following:
i.
has an equity capitalization of less than $250 million or does not have any class of securities listed on a national
securities exchange;
ii.
is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling
influence over the management or policies of the eligible portfolio company, and, as a result thereof, the BDC has
an affiliated person who is a director of the eligible portfolio company; or
iii. is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less
than $2 million.
(2)
Securities of any eligible portfolio company which we control.
(3)
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated
person of the issuer, or in transactions incident to such a private transaction, if the issuer is in bankruptcy and subject to
reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they
came due without material assistance other than conventional lending or financing arrangements.
(4)
Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for
such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
(5)
Securities received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise
of warrants or rights relating to such securities.
(6)
Cash, cash equivalents, U.S. government securities or high-quality debt securities that mature in one year or less from the
date of investment.
The regulations defining qualifying assets may change over time. We may adjust our investment focus as needed to comply with
and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area.
Managerial Assistance to Portfolio Companies
In order to count portfolio securities as qualifying assets for the purpose of the 70% test, a BDC must either control the issuer of
the securities or must offer to make available to the issuer of the securities significant managerial assistance. However, when the BDC
purchases securities in conjunction with one or more other persons acting together, one of the other persons in the group may make
available such managerial assistance. Making available managerial assistance means any arrangement whereby the BDC, through its
directors, officers, employees or agents, offers to provide, and, if accepted, does so provide, significant guidance and counsel
concerning the management, operations or business objectives and policies of a portfolio company. With respect to an SBIC, making
available managerial assistance means the making of loans to a portfolio company. Stellus Capital Management will provide such
managerial assistance on our behalf to portfolio companies that request this assistance.
Temporary Investments
Pending investment in other types of qualifying assets, as described above, our investments may consist of cash, cash
equivalents, U.S. government securities, repurchase agreements and high-quality debt investments that mature in one year or less
from the date of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets
or temporary investments. Typically, we will invest in U.S. Treasury bills or in repurchase agreements, so long as the agreements are
fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase
by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon
future date and at a price that is

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greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the
proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets
constitute repurchase agreements from a single counterparty, we would not meet the diversification tests in order to maintain our
qualification as a RIC for U.S. federal income tax purposes. Accordingly, we do not intend to enter into repurchase agreements with a
single counterparty in excess of this limit. Stellus Capital Management will monitor the creditworthiness of the counterparties with
which we enter into repurchase agreement transactions.
Warrants and Options
Under the 1940 Act, a BDC is subject to restrictions on the amount of warrants, options, restricted stock or rights to purchase
shares of capital stock that it may have outstanding at any time. Under the 1940 Act, we may generally only offer warrants provided
that (i) the warrants expire by their terms within ten years, (ii) the exercise or conversion price is not less than the current market
value at the date of issuance, (iii) our stockholders authorize the proposal to issue such warrants, and our Board approves such
issuance on the basis that the issuance is in the best interests of us and our stockholders and (iv) if the warrants are accompanied by
other securities, the warrants are not separately transferable unless no class of such warrants and the securities accompanying them
have been publicly distributed. The 1940 Act also provides that the amount of our voting securities that would result from the
exercise of all outstanding warrants, as well as options and rights, at the time of issuance may not exceed 25% of our outstanding
voting securities. In particular, the amount of capital stock that would result from the conversion or exercise of all outstanding
warrants, options or rights to purchase capital stock cannot exceed 25% of the BDC’s total outstanding shares of capital stock.
Senior Securities
We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our
common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. We
may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset
coverage. For a discussion of the risks associated with leverage, see “Item 1A. Risk Factors — Risks Relating to our Business and
Structure — Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital. As
a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage” in this
Annual Report on Form 10-K.
Common Stock
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell
our common stock at a price below the current net asset value of the common stock if our Board determines that such sale is in our
and our stockholders’ best interests, and our stockholders approve such sale. In any such case, the price at which our securities are to
be issued and sold may not be less than a price which, in the determination of our Board, closely approximates the market value of
such securities (less any distributing commission or discount). We would need approval from our stockholders to issue shares below
the then current net asset value per share any time after the expiration of the current approval. We may also make rights offerings to
our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act.
Codes of Ethics
We and Stellus Capital Management have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule
206(4)-7 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain personal
securities transactions. Personnel subject to each such code may invest in securities for their personal investment accounts, including
securities that may be purchased or held by us, so long as such investments are made in accordance with such code’s requirements. In
addition, each code of ethics is available on the EDGAR database on the SEC’s website at www.sec.gov. You may also obtain copies
of each code of ethics, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.

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Proxy Voting Policies and Procedures
We have delegated our proxy voting responsibility to Stellus Capital Management. The proxy voting policies and procedures of
Stellus Capital Management are set out below. The guidelines will be reviewed periodically by Stellus Capital Management and our
independent directors and, accordingly, are subject to change.
Introduction. As an investment adviser registered under the Advisers Act, Stellus Capital Management has a fiduciary duty to
act solely in our best interests. As part of this duty, Stellus Capital Management recognizes that it must vote our securities in a timely
manner free of conflicts of interest and in our best interests. Stellus Capital Management’s policies and procedures for voting proxies
for its investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.
Proxy Policies. Stellus Capital Management votes proxies relating to our portfolio securities in what it perceives to be the best
interest of our stockholders. Stellus Capital Management reviews on a case-by-case basis each proposal submitted to a stockholder
vote to determine its effect on the portfolio securities we hold. In most cases, Stellus Capital Management will vote in favor of
proposals that Stellus Capital Management believes are likely to increase the value of the portfolio securities we hold. Although
Stellus Capital Management will generally vote against proposals that may have a negative effect on our portfolio securities, Stellus
Capital Management may vote for such a proposal if there exist compelling long-term reasons to do so.
To ensure that Stellus Capital Management’s vote is not the product of a conflict of interest, Stellus Capital Management
requires that anyone involved in the decision-making process disclose to our Chief Compliance Officer any potential conflict that he
or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote. Where conflicts of interest
may be present, Stellus Capital Management will disclose such conflicts to us, including our independent directors, and may request
guidance from us on how to vote such proxies.
Proxy Voting Records. You may obtain information about how Stellus Capital Management voted proxies by making a written
request for proxy voting information to: Stellus Capital Investment Corporation, Attention: Investor Relations, 4400 Post Oak
Parkway, Suite 2200, Houston, TX 77027, or by calling us collect at (713) 292-5414. The SEC also maintains a website at
www.sec.gov that contains this information.
Privacy Principles
We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public personal information. The
following information is provided to help you understand what personal information we collect, how we protect that information and
why, in certain cases, we may share information with select other parties.
Generally, we do not receive any non-public personal information relating to our stockholders, although certain non-public
personal information of our stockholders may become available to us. We do not disclose any non-public personal information about
our stockholders or former stockholders to anyone, except as required by law or as is necessary in order to service stockholder
accounts (for example, to a transfer agent or third-party administrator).
We restrict access to non-public personal information about our stockholders to employees of Stellus Capital Management and its
affiliates with a legitimate business need for the information. We maintain physical, electronic and procedural safeguards that are
designed to protect the non-public personal information of our stockholders.
Other
We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny
and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our
stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct
of such person’s office.

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We and Stellus Capital Management are each required to adopt and implement written policies and procedures reasonably
designed to prevent violation of relevant federal securities laws, review these policies and procedures annually for their adequacy and
the effectiveness of their implementation, and designate a Chief Compliance Officer to be responsible for administering the policies
and procedures.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) imposes a wide variety of regulatory requirements on publicly held
companies and their insiders. Many of these requirements affect us. For example:
●
pursuant to Rule 13a-14 under the Exchange Act, our principal executive officer and principal financial officer must certify
the accuracy of the financial statements contained in our periodic reports;
●
pursuant to Item 307 under Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of
our disclosure controls and procedures;
●
pursuant to Rule 13a-15 under the Exchange Act, our management must prepare an annual report regarding its assessment
of our internal control over financial reporting; and
●
pursuant to Item 308 of Regulation S-K and Rule 13a-15 under the Exchange Act, our periodic reports must disclose
whether there were significant changes in our internal controls over financial reporting or in other factors that could
significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Taxation as a Regulated Investment Company
As a BDC, we have elected to be treated and intend to qualify annually to be treated as a RIC under Subchapter M of the Code;
however, no assurance can be given that we will be able to maintain our RIC tax treatment. As a RIC, we generally will not be
subject to U.S. federal income tax on any net ordinary income or capital gains that we timely distribute to our stockholders as
dividends. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements
(as described below). In addition, we generally must timely distribute to our stockholders, for each taxable year, at least 90% of our
“investment company taxable income,” which is our ordinary income plus the excess of our realized net short-term capital gains over
our realized net long-term capital losses (the “Annual Distribution Requirement”).
For any taxable year in which we:
●
qualify as a RIC; and
●
satisfy the Annual Distribution Requirement;
we will not be subject to U.S. federal income tax on the portion of our income we timely distribute (or are deemed to distribute)
to stockholders. We will be subject to U.S. federal income tax imposed at corporate rates on any income or capital gains not
distributed (or deemed distributed) to our stockholders.
In addition, we will be subject to a 4% nondeductible U.S. federal excise tax on our undistributed income unless we distribute in
a timely manner an amount at least equal to the sum of (a) 98% of our net ordinary income for each calendar year, (b) 98.2% of the
amount by which our capital gain exceeds our capital loss (adjusted for certain ordinary losses) for the one-year period ending
October 31 in that calendar year, and (c) certain undistributed amounts from previous years on which we paid no U.S. federal income
tax (the “Excise Tax Avoidance Requirement”). In order to qualify as a RIC for U.S. federal income tax purposes, we must, among
other things:
●
continue to qualify as a BDC under the 1940 Act at all times during each year;

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●
derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale or other taxable disposition of stock or other securities or foreign currencies, or other
income derived with respect to our business of investing in such stock or securities, and net income from certain “qualified
publicly traded partnerships” (as defined in the Code) (the “90% Income Test”); and
●
diversify our holdings so that at the end of each quarter of the taxable year:
o
at least 50% of the value of our assets consists of cash, cash items, U.S. government securities, securities of other
RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of
our assets or more than 10% of the outstanding voting securities of the issuer; and
o
no more than 25% of the value of our assets is invested in (i) the securities, other than U.S. government securities
or securities of other RICs, of one issuer, (ii) the securities, other than securities of other RICs, of two or more
issuers that are controlled by us and that are engaged in the same or similar or related trades or businesses, or (iii)
the securities of one or more qualified publicly traded partnerships (the “Diversification Tests”).
We may invest in partnerships, including qualified publicly traded partnerships, which may result in our being subject to state,
local or foreign income, franchise or withholding tax liabilities.
We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt
obligations that are treated under applicable tax rules as having OID (such as debt instruments with PIK interest or, in certain cases,
with increasing interest rates or issued with warrants), we must include in income each year a portion of the OID that accrues over the
life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any
OID accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a
distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any
corresponding cash amount. If we are not able to obtain sufficient cash from other sources to satisfy the Annual Distribution
Requirement, we may fail to maintain our tax treatment as a RIC and become subject to U.S. federal income tax on all of our taxable
income without the benefit of the dividends-paid deduction.
Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy (i) the
Annual Distribution Requirement and to otherwise eliminate our liability for U.S. federal income and excise taxes and/or (ii) the
Diversification Tests. However, under the 1940 Act, we are not permitted in certain circumstances to make distributions to our
stockholders while our debt obligations and other senior securities are outstanding unless certain “asset coverage” tests are met. See
“Item 1. Business — Regulation as a Business Development Company — Senior Securities” in this Annual Report on Form 10-K.
Moreover, our ability to dispose of assets to meet the Annual Distribution Requirement, the Excise Tax Avoidance Requirement or
the Diversification Tests may be limited by (a) the illiquid nature of our portfolio and/or (b) other requirements relating to our
qualifications as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution
Requirement, the Excise Tax Avoidance Requirement or the Diversification Tests, we may make such dispositions at times that, from
an investment standpoint, are not advantageous.
In addition, we have formed and operate two SBIC subsidiaries, and are partially dependent on the SBIC subsidiaries for cash
distributions to enable us to meet the Annual Distribution Requirement. The SBIC subsidiaries may be limited by the Small Business
Investment Act of 1958, and SBA regulations governing SBICs, from making certain distributions to us that may be necessary to
maintain our tax treatment as a RIC. We may have to request a waiver of the SBA’s restrictions for the SBIC subsidiaries to make
certain distributions to maintain our RIC tax treatment. We cannot assure you that the SBA will grant such waiver. If the SBIC
subsidiaries are unable to obtain a waiver, compliance with the SBA regulations may cause us to fail to maintain our tax treatment as
a RIC, which would result in us becoming subject to U.S. federal income tax.

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Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among
other things, (a) treat dividends that would otherwise constitute qualified dividend income as non-qualified dividend income, (b) treat
dividends that would otherwise be eligible for the corporate dividends received deduction as ineligible for such treatment,
(c) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (d) convert lower-taxed long term capital gain
into higher-taxed short-term capital gain or ordinary income, (e) convert an ordinary loss or a deduction into a capital loss (the
deductibility of which is more limited), (f) cause us to recognize income or gain without a corresponding receipt of cash,
(g) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (h) adversely alter the
characterization of certain complex financial transactions and (i) produce income that will not be qualifying income for purposes of
the 90% Income Test. We intend to monitor our transactions and may make certain tax elections to mitigate the effect of these
provisions and prevent our disqualification as a RIC.
A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally,
ordinary income plus the excess of net short-term capital gains over net long-term capital losses). If our expenses in a given year
exceed investment company taxable income, we would experience a net operating loss for that year. However, a RIC is not permitted
to carry forward net operating losses to subsequent years. In addition, expenses can be used only to offset investment company taxable
income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital
gains) to offset the RIC’s investment company taxable income, but may carry forward such losses indefinitely and use them to offset
capital gains. Due to these limits on the deductibility of expenses, over the course of one or more taxable years we may have, for U.S.
federal income tax purposes, aggregate taxable income that we are required to distribute and that is taxable to our shareholders, even
if such income is greater than the aggregate net income we actually earned during those years. Such required distributions may be
made from our cash assets or by liquidation of investments, if necessary. We may realize gains or losses from such liquidations. In
the event we realize net capital gains from such transactions, a shareholder may receive a larger capital gain distribution than we
would have received in the absence of such transactions.
Gain or loss realized by us from warrants acquired by us as well as any loss attributable to the lapse of such warrants generally
will be treated as capital gain or loss. Such capital gain or loss generally will be long term or short term, depending on how long we
held a particular warrant. Some of the income and fees that we may recognize will not satisfy the 90% Income Test. In order to ensure
that such income and fees do not disqualify us as a RIC for a failure to satisfy the 90% Income Test, we may hold assets that generate
such income and provide services that generate such fees indirectly through one or more entities treated as corporations for U.S.
federal income tax purposes. Such corporations will be required to pay U.S. federal income tax at corporate rates on their earnings,
which ultimately will reduce our return on such income and fees.
A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public
offering within the meaning of Section 4 of the Securities Act, (ii) regularly traded on an established securities market or (iii) held by
at least 500 persons at all times during the taxable year. We currently expect to qualify as a publicly offered RIC, but there can be no
assurance that we will in fact so qualify for any of our taxable years. If we are not treated as a publicly offered RIC for any calendar
year, each U.S. stockholder that is an individual, trust or estate will be treated as having received a dividend from us in the amount of
such U.S. stockholder’s allocable share of the base management fee and incentive fees paid to our investment adviser and certain of
our other expenses for the calendar year, and these fees and expenses will be treated as miscellaneous itemized deductions of such
U.S. stockholder. For taxable years beginning before 2026, miscellaneous itemized deductions generally are not deductible by a U.S.
stockholder that is an individual, trust or estate. For taxable years beginning in 2026 or later, miscellaneous itemized deductions
generally are deductible by a U.S. stockholder that is an individual, trust or estate only to the extent that the aggregate of such U.S.
stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S. stockholder’s adjusted gross income for U.S. federal
income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject to the overall limitation on
itemized deductions under the Code.
If we are unable to qualify for tax treatment as a RIC, and certain relief provisions are unable to be satisfied, we would be subject
to U.S. federal income tax imposed at corporate rates on all of our taxable income regardless of whether we make any distributions to
our stockholders. Distributions would not be required, but if such distributions are paid, including distributions of net long-term
capital gain, they would be taxable to our stockholders as ordinary

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dividend income to the extent of our current and accumulated earnings and profits. Subject to certain holding period requirements and
other limitations under the Code, corporate stockholders would be eligible to claim a dividends received deduction with respect to
such dividend and non-corporate stockholders would generally be able to treat such dividend income as “qualified dividend income,”
which is subject to reduced rates of U.S. federal income tax. Distributions in excess of our current and accumulated earnings and
profits would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions
would be treated as a capital gain. If we fail to qualify as a RIC for a period greater than two taxable years, to requalify as a RIC in a
subsequent year we may be subject to U.S. federal income tax imposed at corporate rates on any net built-in gains with respect to
certain of our assets (i.e. the excess of the aggregate gains, including items of income, over aggregate losses that would have been
realized with respect to such assets if we had been liquidated) that we elect to recognize on requalification or when recognized over
the next five years.
NYSE Corporate Governance Regulations
NYSE has adopted corporate governance regulations that listed companies must comply with. We are in compliance with such
corporate governance listing standards applicable to BDCs.
Regulation as a Small Business Investment Company
Our wholly owned SBIC subsidiaries’ SBIC licenses allow them to incur leverage by issuing SBA-guaranteed debentures, subject
to SBA regulations. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and a
ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid
at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed at the time of issuance at a market-driven spread
over U.S. Treasury Notes with ten-year maturities.
SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs
may make loans to eligible small businesses and invest in the equity securities of small businesses. Under current SBA regulations,
eligible small businesses (together with their affiliates) include businesses that have a tangible net worth not exceeding $24.0 million
and have average annual net income after U.S federal income taxes not exceeding $8.0 million (average net income to be computed
without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment
activity to “smaller enterprises,” as defined by the SBA. A smaller enterprise is a business (together with its affiliates) that has a net
worth not exceeding $6.0 million and has average annual net income after U.S. federal income taxes not exceeding $2.0 million
(average net income to be computed without benefit of any carryover loss) for the two most recent fiscal years. SBA regulations also
provide alternative size standard criteria to determine eligibility of a small business or a smaller enterprise, which depend on the
industry in which the business is engaged and are based on such factors as the number of employees and gross sales of the business
and its affiliates.
The SBA generally prohibits an SBIC from providing financing to small businesses with certain characteristics, such as relenders
or businesses with the majority of their employees located outside the United States, and business engaged in certain prohibited
industries, such as project finance, real estate, farmland, financial intermediaries or certain “passive” (i.e. non-operating) businesses.
Without prior SBA approval, an SBIC may not provide financing or a commitment to a small business in an amount equal to more
than approximately 10.0% of the SBIC’s private capital in any one company and its affiliates.
SBA regulations currently limit the amount that an SBIC subsidiary may borrow to a maximum of $175.0 million with at least
$87.5 million in regulatory capital (as defined in the SBA regulations), subject to SBA approval. The maximum leverage available to
a “family” of two or more SBIC funds under common control is $350.0 million, subject to SBA approval. As of December 31, 2024,
our SBIC I subsidiary had $75.0 million in regulatory capital and $150.0 million in SBA-guaranteed debentures outstanding. As of
December 31, 2024, our SBIC II subsidiary had $87.5 million in regulatory capital and $175.0 million in SBA-guaranteed debentures
outstanding. As of December 31, 2024, the estimated fair value of the SBA-guaranteed debentures as prepared for disclosure
purposes was $312.0 million.

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We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of our SBIC
subsidiaries from the definition of senior securities in the asset coverage requirement applicable to us under the 1940 Act. This allows
us increased flexibility under the asset coverage requirement by permitting us to borrow up to $325.0 million more (subject to SBA
approval) than we would otherwise be able to absent the receipt of this exemptive relief.
Our SBIC subsidiaries are subject to regulation and oversight by the SBA, including, among other requirements, maintaining
certain minimum financial ratios and other covenants, routine examination by the SBA, and the performance of a financial audit by an
independent auditor. Additionally, the SBA restricts the ability of an SBIC to provide financing to an “associate,” as defined in the
SBA regulations, without prior written approval from the SBA. SBA regulations also prohibit, without prior SBA approval, a
“change of control” or “change in ownership” of an SBIC (as such terms are defined in the SBA regulations) and require that SBICs
invest idle funds in accordance with SBA regulations. Our SBIC subsidiaries also may be limited in their ability to make distributions
to us if they do not have sufficient capital, in accordance with SBA regulations.
Receipt of an SBIC license does not assure that our SBIC subsidiaries will receive SBA-guaranteed debenture funding, which is
dependent upon our SBIC subsidiaries continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will
have a superior claim to our SBIC subsidiaries’ assets over our stockholders in the event we liquidate one or both of our SBIC
subsidiaries or the SBA exercises its remedies under the SBA-guaranteed debentures issued by our SBIC subsidiaries upon an event
of default.
Item 1A.    Risk Factors
RISK FACTORS
Investing in our securities involves a number of significant risks. Before you invest in our securities, you should be aware of
various risks, including those described below. You should carefully consider these risk factors, together with all of the other
information included in this Annual Report on Form 10-K, before you decide whether to make an investment in our securities. The
risks set out below are the principal risks with respect to an investment in our securities generally and with respect to a BDC with
investment objectives, investment policies, capital structures or trading markets similar to ours. However, they may not be the only
risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair
our operations and performance. If any of the following events occur, our business, financial condition, results of operations and
cash flows could be materially and adversely affected. In such case, our net asset value and the trading price of our securities could
decline, and you may lose all or part of your investment.
Risks Relating to our Business and Structure
The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely
affect debt and equity capital markets, which may have a negative impact on our business and operations.
From time to time, capital markets may experience periods of disruption and instability, including during portions of the past
several fiscal years. In addition, between 2008 and 2009, the global capital markets were unstable, as evidenced by periodic
disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in
the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and
foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the
broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial
services firms in particular. There can be no assurance these market conditions will not continue or worsen in the future, including as
a result of inflation and fluctuating interest rates, the wars in Ukraine and Russia and the Middle East, and health epidemics and
pandemics.
Equity capital may be difficult to raise during such periods of adverse or volatile market conditions because, subject to some
limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset
value without first obtaining approval for such issuance from our stockholders and our independent directors.

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Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital.
The reappearance of market conditions similar to those experienced during portions of the past several fiscal years and from 2008
through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness
or obtain new indebtedness with similar terms, and any failure to do so could have a material adverse effect on our business. The debt
capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what
we have historically experienced. If we are unable to raise or refinance debt, then our equity investors may not benefit from the
potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to
fund existing commitments to our portfolio companies.
Significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments.
While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation
process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through
its maturity).
Significant changes in the capital markets may adversely affect the pace of our investment activity and economic activity
generally. The illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a
result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them
for liquidity purposes. An inability to raise or access capital, and any required sale of all or a portion of our investments as a result,
could have a material adverse effect on our business, financial condition or results of operations.
Any public health emergency, including any outbreak of other existing or new pandemics or epidemic diseases, or the threat
thereof, and the resulting financial and economic market uncertainty, could have a significant adverse impact on us and the fair
value of our investments and our portfolio companies. 
The extent of the impact of any public health emergency on our and our portfolio companies’ operational and financial
performance will depend on many factors, including the duration and scope of such public health emergency, the actions taken by
governmental authorities to contain its financial and economic impact, the extent of any related travel advisories and restrictions
implemented, the impact of such public health emergency on overall supply and demand, goods and services, investor liquidity,
consumer confidence and levels of economic activity and the extent of its disruption to important global, regional and local supply
chains and economic markets, all of which are highly uncertain and cannot be predicted. In addition, our and our portfolio
companies’ operations may be significantly impacted, or even temporarily or permanently halted, as a result of government
quarantine measures, voluntary and precautionary restrictions on travel or meetings and other factors related to a public health
emergency, including its potential adverse impact on the health of any of our or our portfolio companies’ personnel. This could create
widespread business continuity issues for us and our portfolio companies. These factors may also cause the valuation of our
investments to differ materially from the values that we may ultimately realize. Our valuations, and particularly valuations of private
investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on
estimates, comparisons and qualitative evaluations of private information.
Any public health emergency, pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the
resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our
investments and our portfolio companies.
We are exposed to risks associated with changes in interest rates.
General interest rate fluctuations may have a negative impact on our investments and our investment returns and, accordingly,
may have a material adverse effect on our investment objective and our net investment income.
Because we borrow money to make investments and may in the future issue additional senior securities, including preferred stock
and debt securities, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds
and the rate at which we invest those funds. As a result, we can offer no assurance that fluctuations in interest rates would not have a
material adverse effect on our net investment income in the event we use debt to finance our investments. From time to time, we may
also enter into certain hedging transactions to mitigate our exposure to changes in interest rates. In the past, we have entered into
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exposure to adverse fluctuations in interest rates, and we may do so again in the future. However, we cannot assure you that such
transactions will be successful in mitigating our exposure to interest rate risk. There can be no assurance that a significant change in
market interest rates will not have a material adverse effect on our net investment income.
Rising interest rates may increase the cost of debt for our underlying portfolio companies, which could adversely impact their
financial performance and ability to meet ongoing obligations to us. Also, an increase in interest rates available to investors could
make an investment in our common stock less attractive if we are not able to pay dividends at a level that provides a similar return,
which could reduce the value of our common stock.
Fluctuations in interest rates could have a material adverse effect on our business and that of our portfolio companies.
Fluctuations in interest rates could have a dampening effect on overall economic activity, the financial condition of our portfolio
companies and the financial condition of the end customers who ultimately create demand for the capital we supply, all of which
could negatively affect our business, financial condition or results of operations. The Federal Reserve decreased the federal funds rate
twice in 2024. Although the Federal Reserve has signaled the potential for additional federal funds rate cuts, there remains uncertainty
around the rate and timing of decreases, including as a result of the new U.S. presidential administration. Uncertainty surrounding
future Federal Reserve actions may have a material effect on our business making it particularly difficult for us to obtain financing at
attractive rates, impacting our ability to execute on our growth strategies or future acquisitions.
Inflation has adversely affected and may continue to adversely affect the business, results of operations and financial condition of
our portfolio companies.
Certain of our portfolio companies are in industries that have been impacted by inflation. Recent inflationary pressures have
increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our
portfolio companies’ operations. If such portfolio companies are unable to pass any increases in their costs of operations along to their
customers, it could adversely affect their operating results and impact their ability to pay interest and principal on our loans,
particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio companies’
operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our
investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.
We are subject to risks related to corporate social responsibility.
Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk
damage to our brand and reputation if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate
governance and transparency and considering ESG factors in our investment processes. Adverse incidents with respect to ESG
activities could impact the value of our brand and relationships with investors, all of which could adversely affect our business and
results of operations. Further, there can be no assurance that investors will determine that any of our ESG initiatives or commitments
are sufficiently robust. Additionally, new regulatory initiatives related to ESG could adversely affect us and our portfolio companies.
At the same time, there are various approaches to responsible investing activities and divergent views on the consideration of
ESG topics. These differing views increase the risk that any action or lack thereof with respect to our Adviser’s consideration of
responsible investing or ESG-related practices will be perceived negatively. “Anti-ESG” sentiment has gained momentum across the
U.S., with a growing number of states having enacted or proposed “anti-ESG” policies, legislation or issued related legal opinions.
Such scrutiny of ESG-related practices could expose the us and our portfolio companies to the risk of investigations or challenges by
federal authorities, result in reputational harm and discourage certain investors from investing in us.

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We are dependent upon key personnel of Stellus Capital Management for our future success. If Stellus Capital Management were
to lose any of its key personnel, our ability to achieve our investment objective could be significantly harmed. 
We depend on the diligence, skill and network of business contacts of the senior investment professionals of Stellus Capital
Management to achieve our investment objective. Stellus Capital Management’s team of investment professionals evaluates,
negotiates, structures, closes and monitors our investments in accordance with the terms of our Investment Advisory Agreement. We
can offer no assurance, however, that Stellus Capital Management’s investment professionals will continue to provide investment
advice to us.
Stellus Capital Management’s investment committee, which provides oversight over our investment activities, is provided to us
by Stellus Capital Management under the Investment Advisory Agreement. Stellus Capital Management’s investment committee
consists of four members, including Messrs. Ladd, and D’Angelo, each a member of our Board and a senior investment professional
of Stellus Capital Management, Mr. Huskinson, Chief Financial Officer and Chief Compliance Officer for us and Stellus Capital
Management, and Mr. Davis, a senior investment professional of Stellus Capital Management. The loss of one or more of the
members of Stellus Capital Management’s investment committee may limit our ability to achieve our investment objective and
operate our business. This could have a material adverse effect on our financial condition, results of operations and cash flows.
Our business model depends to a significant extent upon strong referral relationships. Any inability of Stellus Capital
Management to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities,
could adversely affect our business. 
We depend upon the investment professionals of Stellus Capital Management to maintain their relationships with private equity
sponsors, placement agents, investment banks, management groups and other financial institutions, and we rely to a significant extent
upon these relationships to provide us with potential investment opportunities. If the investment professionals of Stellus Capital
Management fail to maintain such relationships, or to develop new relationships with other sources of investment opportunities, we
will not be able to grow our investment portfolio. In addition, individuals with whom the investment professionals of Stellus Capital
Management have relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that
these relationships will generate investment opportunities for us in the future.
Our financial condition, results of operations and cash flows will depend on our ability to manage our business effectively. 
Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our investments
and earnings. This will depend, in turn, on Stellus Capital Management’s ability to identify, invest in and monitor portfolio companies
that meet our investment criteria. The achievement of our investment objective on a cost-effective basis will depend upon Stellus
Capital Management’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and,
to a lesser extent, our access to financing on acceptable terms. Stellus Capital Management’s senior investment professionals will
have substantial responsibilities in connection with the management of other investment funds, accounts and investment vehicles. The
personnel of Stellus Capital Management may be called upon to provide managerial assistance to our portfolio companies. These
activities may distract them from sourcing new investment opportunities for us or slow our rate of investment. Any failure to manage
our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
There are significant potential conflicts of interest that could negatively affect our investment returns. 
The members of Stellus Capital Management’s investment committee serve, or may serve, as officers, directors, members, or
principals of entities that operate in the same or a related line of business as we do, or of investment funds, accounts, or investment
vehicles managed by Stellus Capital Management. Similarly, Stellus Capital Management and its affiliates may have other clients
with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other
clients or investors in those entities, the fulfillment of which may

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not be in the best interests of us or our stockholders. For example, Stellus Capital Management and its affiliates currently manage 
several  private credit funds and another BDC that have investment strategies that are similar to, overlapping with and/or identical to 
our investment strategy, and with which we co-invest. Stellus Capital Management also provides sub-advisory services to the D. E. 
Shaw group with respect to a private investment fund and a strategy of a private multi-strategy investment fund to which the D. E. 
Shaw group serves as investment adviser that have an investment strategy similar to our investment strategy. 
In addition, there may be times when Stellus Capital Management, members of its investment committee or its other investment
professionals have interests that differ from those of our stockholders, giving rise to a conflict of interest. Although our investment
adviser will endeavor to handle these investment and other decisions in a fair and equitable manner, we and the holders of the shares
of our common stock could be adversely affected by these decisions. Moreover, given the subjective nature of the investment and
other decisions made by our investment adviser on our behalf, we are unable to monitor these potential conflicts of interest between
us and our investment adviser; however, our Board, including the independent directors, reviews conflicts of interest in connection
with its review of the performance of our investment adviser. As a BDC, we may also be prohibited under the 1940 Act from
knowingly participating in certain transactions with our affiliates, including our officers, directors, Stellus Capital Management,
principal underwriters and certain of their affiliates, without the prior approval of the members of our Board who are not interested
persons and, in some cases, prior approval by the SEC through an exemptive order (other than pursuant to current regulatory
guidance).
The senior investment professionals and other investment team members of Stellus Capital Management may, from time to time,
possess material non-public information, limiting our investment discretion. 
The senior investment professionals and other investment team members of Stellus Capital Management, including members of
Stellus Capital Management’s investment committee, may serve as directors of, or in a similar capacity with, portfolio companies in
which we invest, the securities of which are purchased or sold on our behalf. In the event that material non-public information is
obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those
companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the
securities of such companies, and this prohibition may have an adverse effect on us.
Our management and incentive fees may induce Stellus Capital Management to incur additional leverage. 
Generally, the management and incentive fees payable by us to Stellus Capital Management may create an incentive for Stellus
Capital Management to use any additional available leverage. For example, the fact that the base management fee that we pay to
Stellus Capital Management is payable based upon our gross assets (which includes any borrowings for investment purposes) may
encourage Stellus Capital Management to use leverage to make additional investments. Such a practice could result in our investing in
more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during
cyclical economic downturns. Under certain circumstances, the use of additional leverage may increase the likelihood of our default
on our borrowings, which would disfavor holders of our common stock.
In addition, because the incentive fee on net investment income is calculated as a percentage of our net assets subject to a hurdle,
having additional leverage available may encourage Stellus Capital Management to use leverage to increase the leveraged return on
our investment portfolio. To the extent additional leverage is available at favorable rates, Stellus Capital Management could use
leverage to increase the size of our investment portfolio to generate additional income, which may make it easier to meet the incentive
fee hurdle. As a result, the incentives for Stellus Capital Management to cause us to use additional leverage may be greater, which
could result in our investing in more speculative securities than would otherwise be the case, resulting in higher investment losses,
particularly during economic downturns.

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Our incentive fee may induce Stellus Capital Management to make speculative investments. 
We pay Stellus Capital Management an incentive fee based, in part, upon net capital gains realized on our investments. Unlike
that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net
capital gains. Additionally, under the incentive fee structure, Stellus Capital Management may benefit when capital gains are
recognized and, because Stellus Capital Management will determine when to sell a holding, Stellus Capital Management will control
the timing of the recognition of such capital gains. As a result, Stellus Capital Management may have a tendency to invest more
capital in investments that are likely to result in capital gains as compared to income-producing securities. Such a practice could result
in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses,
particularly during economic downturns.
We may be obligated to pay Stellus Capital Management incentive compensation even if we incur a loss and may pay more than
20.0% of our net capital gains because we cannot recover payments made in previous years. 
Stellus Capital Management is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the
excess of our investment income for that quarter (before deducting incentive compensation) above a threshold return for that quarter
and subject to a total return requirement. The general effect of this total return requirement is to prevent payment of the foregoing
incentive compensation except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the then
current and 11 preceding calendar quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding calendar
quarters. Consequently, we may pay an incentive fee if we incurred losses more than three years prior to the current calendar quarter
even if such losses have not yet been recovered in full. Thus, we may be required to pay Stellus Capital Management incentive
compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter. If we pay
an incentive fee of 20.0% of our realized capital gains (net of all realized capital losses and unrealized capital depreciation on a
cumulative basis) and thereafter experience additional realized capital losses or unrealized capital depreciation, we will not be able to
recover any portion of the incentive fee previously paid.
We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses. 
A number of entities compete with us to make the types of investments that we make. We compete with public and private funds,
commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing,
private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical
and marketing resources than we do. For example, we believe some of our competitors may have access to funding sources that are
not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could
allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors
are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source-of-income, asset diversification
and distribution requirements we must satisfy to maintain our RIC qualification. The competitive pressures we face may have a
material adverse effect on our business, financial condition, results of operations and cash flows. As a result of this competition, we
may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and
make investments that are consistent with our investment objective.
With respect to the investments we make, we do not seek to compete based primarily on the interest rates we offer, and we
believe that some of our competitors may make loans with interest rates that are lower than the rates we offer. With respect to all
investments, we may lose some investment opportunities if we do not match our competitors’ pricing, terms and structure. However,
if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income, lower yields and
increased risk of credit loss. We may also compete for investment opportunities with investment funds, accounts and investment
vehicles managed by Stellus Capital Management. Although Stellus Capital Management will allocate opportunities in accordance
with its policies and procedures, allocations to such investment funds, accounts and investment vehicles will reduce the amount and
frequency of opportunities available to us and may not be in the best interests of us and our stockholders.

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Our investments in the business services industry are subject to unique risks relating to technological developments, regulatory
changes and changes in customer preferences. 
Our investments in portfolio companies that operate in the business services industry represent 24.64% of our total portfolio as of
December 31, 2024. Our investments in portfolio companies in the business services sector include those that provide services related
to data and information, building, cleaning and maintenance services, and energy efficiency services. Portfolio companies in the
business services sector are subject to many risks, including the negative impact of regulation, changing technology, a competitive
marketplace and difficulty in obtaining financing. Portfolio companies in the business services industry must respond quickly to
technological changes and understand the impact of these changes on customers’ preferences. Adverse economic, business, or
regulatory developments affecting the business services sector could have a negative impact on the value of our investments in
portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations.
We will be subject to U.S. federal income tax if we are unable to maintain our tax treatment as a RIC under Subchapter M of the
Code. 
To maintain our tax treatment as a RIC under Subchapter M of the Code, we must meet certain source-of-income, asset
diversification and distribution requirements. The distribution requirement for a RIC generally is satisfied if we distribute at least 90%
of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an
annual basis. Because we incur debt, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial
covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to
maintain our tax treatment as a RIC. If we are unable to obtain cash from other sources, we may fail to maintain our tax treatment as a
RIC and, thus, may be subject to U.S. federal income tax. To maintain our tax treatment as a RIC, we must also meet certain asset
diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of
certain investments quickly in order to prevent the loss of our tax treatment as a RIC. Because most of our investments are in private
or thinly-traded public companies, any such dispositions may be made at disadvantageous prices and may result in substantial losses.
No certainty can be provided, that we will satisfy the asset diversification requirements or the other requirements necessary to
maintain our tax treatment as a RIC. If we fail to maintain our tax treatment as a RIC for any reason and become subject to U.S.
federal income tax, the resulting taxes could substantially reduce our net assets, the amount of income available for distributions to
our stockholders and the amount of funds available for new investments.
Legislative or regulatory tax changes could have an adverse impact on us and our stockholders.
Legislative or other actions relating to taxes could have a negative effect on us. Matters pertaining to with U.S. federal income
taxation are constantly under review by persons involved in the legislative process, and by the Internal Revenue Service, and the U.S.
Treasury Department. The Trump Administration has proposed significant changes to the Code and existing U.S federal income tax
regulations and there are a number of proposals in Congress that, if enacted, would similarly modify the Code. The likelihood of any
such legislation being enacted is uncertain, but new legislation and any U.S. Treasury regulations, administrative interpretations or
court decisions interpreting such legislation could have adverse consequences, including affecting our ability to qualify as a RIC or
otherwise impacting the U.S. federal income tax consequences applicable to us and our investors. Investors are urged to consult with
their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an
investment in our shares.
We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing
such income. 
For U.S. federal income tax purposes, we include in income certain amounts that we have not yet received in cash, such as the
accrual of OID. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through
contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such OID,
which could be significant relative to our overall investment activities, and increases in loan balances as a result of contracted PIK
arrangements are included in income before we receive any

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corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have
difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of
net long-term capital losses, if any, to maintain our tax treatment as a RIC. In such a case, we may have to sell some of our
investments at times we would not consider advantageous or raise additional debt or equity capital or reduce new investment
originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we may fail to maintain
our tax treatment as a RIC and thus be subject to U.S. federal income tax.
We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of
the cash you receive. 
We currently expect to be treated as a publicly offered RIC, although there can be no assurance that we will in fact so qualify for
any of our taxable years, and we may distribute taxable dividends that are payable in part in our common stock. In accordance with
certain applicable Treasury regulations and published guidance issued by the Internal Revenue Service, a publicly offered RIC may
treat a distribution of its own stock as fulfilling the RIC distribution requirements if each stockholder may elect to receive his or her
entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all
stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive cash, the cash
available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid
in stock). In no event will any stockholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution
such stockholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation
on cash available for distribution. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of
the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable stockholders
receiving such dividends will be required to include the amount of the dividends as ordinary income (or as long-term capital gain to
the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and
profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends
in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds
may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at
the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such
dividends, including in respect of all or a portion of such dividend that is payable in common stock. In addition, if a significant
number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put
downward pressure on the trading price of our common stock.
PIK interest payments we receive will increase our assets under management and, as a result, will increase the amount of base
management fees and incentive fees payable by us to Stellus Capital Management. 
Certain of our debt investments may contain provisions providing for the payment of PIK interest. Because PIK interest results in
an increase in the size of the loan balance of the underlying loan, the receipt by us of PIK interest will have the effect of increasing
our assets under management. As a result, because the base management fee that we pay to Stellus Capital Management is based on
the value of our gross assets, the receipt by us of PIK interest will result in an increase in the amount of the base management fee
payable by us. In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest
on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase
in incentive fees that are payable by us to Stellus Capital Management.

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Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital. As a BDC,
the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage. 
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer
to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we
are permitted as a BDC that has satisfied certain requirements to issue senior securities in amounts such that our asset coverage ratio,
as defined in the 1940 Act, equals at least 150% of our gross assets less all liabilities and indebtedness not represented by senior
securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that
happens, we would not be able to borrow additional funds until we were able to comply with the 150% asset coverage ratio applicable
to us under the 1940 Act. Also, any amounts that we use to service our indebtedness would not be available for distributions to our
common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an
increased risk of loss.
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell
our common stock, or warrants, options or rights to acquire our common stock, at a price below then-current net asset value per share
of our common stock if our Board determines that such sale is in our best interests, and if our stockholders approve such sale. A
proposal approved by our stockholders at our 2024 annual stockholders meeting authorizes us to sell shares equal to up to 25% of our
outstanding common stock below the then-current net asset value per share of our common stock in one or more offerings. This
approval will expire on the earlier of our 2025 annual stockholder meeting or June 20, 2025, the one-year anniversary of our 2024
annual stockholders meeting. The proposal approved by our stockholders did not specify a maximum discount below net asset value
at which we are able to issue our common stock, although the number of shares sold in each offering may not exceed 25% of our
outstanding common stock immediately prior to such sale. We would need similar future approval from our stockholders to issue
shares below the then current net asset value per share any time after the expiration of the current approval. In addition, we intend to
distribute between 90% and 100% of our taxable income to our stockholders in order to satisfy the requirements applicable to RICs
under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments, to make additional
investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. In
addition, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are
required to sell these investments, we may realize significantly less than their recorded value. In addition, we cannot issue shares of
our common stock below net asset value unless our Board determines that it would be in our and our stockholders’ best interests to do
so. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of
reducing our net asset value per share and may reduce our market price per share. In addition, continuous sales of common stock
below net asset value may have a negative impact on total returns and could have a negative impact on the market price of our shares
of common stock. If we raise additional funds by issuing common stock, then the percentage ownership of our stockholders at that
time will decrease, and you may experience dilution.
Because we finance our investments with borrowed money, the potential for gain or loss on amounts invested in us is magnified
and may increase the risk of investing in us. 
The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a
speculative investment technique and increases the risks associated with investing in our securities. If we continue to use leverage to
partially finance our investments through banks, insurance companies and other lenders, you will experience increased risks of
investing in our common stock. Lenders of these funds have fixed dollar claims on our assets that are superior to the claims of our
common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We, through
our SBIC subsidiaries, intend to issue debt securities guaranteed by the SBA and sold in the capital markets. Upon any such issuance
of debt securities and as a result of its guarantee of the debt securities, if any, the SBA would also have fixed dollar claims on the
assets of our SBIC subsidiaries that are superior to the claims of our common stockholders.
If we are unable to meet the financial obligations under our 4.875% Notes due 2026 (the “Notes Payable”), as issued on January
14, 2021, or the Credit Facility, the SBA, as a creditor, has a superior claim to the assets of our SBIC

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subsidiaries over our stockholders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a
default by us. In addition, under the terms of the Credit Facility and any borrowing facility or other debt instrument we may enter
into, we are likely to be required to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed
under such facility or instrument before applying such net proceeds to any other uses. If the value of our assets decreases, leveraging
would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or
eliminating our stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to
decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make
distributions with respect to our common stock. Our ability to service any debt depends largely on our financial performance and is
subject to prevailing economic conditions and competitive pressures. Moreover, as the base management fee payable to Stellus
Capital Management is payable based on the value of our gross assets, including those assets acquired through the use of leverage,
Stellus Capital Management will have a financial incentive to incur leverage, which may not be consistent with our stockholders’
interests. In addition, our common stockholders bear the burden of any increase in our expenses as a result of our use of leverage,
including interest expenses and any increase in the base management fee payable to Stellus Capital Management.
As a BDC that has satisfied certain requirements under the 1940 Act, we generally are required to meet a coverage ratio of total
assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue
in the future, of at least 150%. If this ratio declines below 150%, we will not be able to incur additional debt until we are able to
comply with the 150% asset coverage ratio applicable to us under the 1940 Act. This could have a material adverse effect on our
operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on Stellus Capital
Management’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure you
that we will be able to obtain credit at all or on terms acceptable to us.
We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of our SBIC
subsidiaries from the definition of senior securities in the asset coverage requirement applicable to us under the 1940 Act. This relief
allows us increased flexibility under the asset coverage requirement by allowing us to borrow up to $325.0 million more through our
SBIC subsidiaries than we would otherwise be able to borrow absent the receipt of this exemptive relief.
In addition, our debt facilities may impose financial and operating covenants that restrict our business activities, including
limitations that hinder our ability to finance additional loans and investments or to make the distributions required to maintain our
qualification as a RIC under the Code.
Substantially all of our assets are subject to security interests under the Credit Facility or claims of the SBA with respect to SBA-
guaranteed debentures we issue and, if we default on our obligations thereunder, we may suffer adverse consequences, including
foreclosure on our assets. 
As of December 31, 2024, substantially all of our assets were pledged as collateral under the Credit Facility or are subject to a
superior claim over the holders of our common stock by the SBA pursuant to the SBA-guaranteed debentures. If we default on our
obligations under the Credit Facility or the SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose
upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be
forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure, and these forced sales
may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly
impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be
forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our
stockholders.
In addition, if the lenders exercise their right to sell the assets pledged under the Credit Facility, such sales may be completed at
distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts
outstanding under the Credit Facility.

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Provisions in the Credit Facility or any other future borrowing facility may limit our discretion in operating our business. 
The Credit Facility is, and any future borrowing facility may be, backed by all or a portion of our loans and securities on which
the lenders will or, in the case of a future facility, may have a security interest. We may pledge up to 100% of our assets and may
grant a security interest in all of our assets under the terms of any debt instrument we enter into with lenders. We expect that any
security interests we grant will be set forth in a guarantee and security agreement and evidenced by the filing of financing statements
by the agent for the lenders. In addition, we expect that the custodian for our securities serving as collateral for such loan would
include in its electronic systems notices indicating the existence of such security interests and, following notice of occurrence of an
event of default, if any, and during its continuance, will only accept transfer instructions with respect to any such securities from the
lender or its designee. If we were to default under the terms of any debt instrument, the agent for the applicable lenders would be able
to assume control of the timing of disposition of any or all of our assets securing such debt, which would have a material adverse
effect on our business, financial condition, results of operations and cash flows.
In addition, any security interests as well as negative covenants under the Credit Facility or any other borrowing facility may
limit our ability to incur additional liens or debt and may make it difficult for us to restructure or refinance indebtedness at or prior to
maturity or obtain additional debt or equity financing. For example, under the terms of the Credit Facility, we have generally agreed
to not incur any additional secured indebtedness, other than certain indebtedness that we may incur, in accordance with the Credit
Facility, to allow us to purchase investments in U.S. Treasury Bills. In addition, we have agreed not to incur any additional
indebtedness that has a maturity date prior to the maturity date of the Credit Facility. Further, if our borrowing base under the Credit
Facility or any other borrowing facility were to decrease, we would be required to secure additional assets in an amount equal to any
borrowing base deficiency. In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be
required to repay advances under the Credit Facility or any other borrowing facility or make deposits to a collection account, either of
which could have a material adverse impact on our ability to fund future investments and to make stockholder distributions.
In addition, under the Credit Facility or any other borrowing facility, we may be subject to limitations as to how borrowed funds
may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status,
average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage which may affect the amount of
funding that may be obtained. There may also be certain requirements relating to portfolio performance, including required minimum
portfolio yield and limitations on delinquencies and charge-offs, a violation of which could limit further advances and, in some cases,
result in an event of default. Furthermore, we expect that the terms of the Credit Facility will contain a covenant requiring us to
maintain compliance with RIC provisions at all times, subject to certain remedial provisions. Thus, a failure to maintain compliance
with RIC provisions could result in an event of default under the Credit Facility. An event of default under the Credit Facility or any
other borrowing facility could result in an accelerated maturity date for all amounts outstanding thereunder, which could have a
material adverse effect on our business and financial condition. This could reduce our revenues and, by delaying any cash payment
allowed to us under the Credit Facility or any other borrowing facility until the lenders have been paid in full, reduce our liquidity and
cash flow and impair our ability to grow our business and maintain our qualification as a RIC.
Because we use debt to finance our investments and may in the future issue senior securities including preferred stock and debt
securities, if market interest rates were to increase, our cost of capital could increase, which could reduce our net investment
income.
Because we borrow money to make investments and may in the future issue additional senior securities including preferred stock
and debt securities, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds
and the rate at which we invests those funds. As a result, we can offer no assurance that a significant change in market interest rates
would not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods
of rising interest rates, our cost of funds would increase, which could reduce our net investment income. We may use interest rate risk
management techniques in an effort to limit our exposure to interest rate fluctuations. We may utilize instruments such as forward
contracts, currency options and

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interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from
changes in currency exchange rates and market interest rates to the extent permitted by the 1940 Act.
Adverse developments in the credit markets may impair our ability to enter into any other future borrowing facility. 
In past economic downturns and during other times of extreme market volatility, many commercial banks and other financial
institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their
exposure to segments of the economy deemed to be high risk, some financial institutions limited routine refinancing and loan
modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing
lending facilities. If these conditions recur, it may be difficult for us to obtain desired financing to finance the growth of our
investments on acceptable economic terms, or at all.
If we are unable to consummate credit facilities on commercially reasonable terms, our liquidity may be reduced significantly. If
we are unable to repay amounts outstanding under any facility we may enter into and are declared in default or are unable to renew or
refinance any such facility, it would limit our ability to initiate significant originations or to operate our business in the normal course.
These situations may arise due to circumstances that we may be unable to control, such as inaccessibility of the credit markets, a
severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us,
and could materially damage our business. Moreover, we are unable to predict when economic and market conditions may become
more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors
of the financial markets could adversely impact our business.
Most of our portfolio investments are recorded at fair value as determined in good faith by our Board and, as a result, there may
be uncertainty as to the value of our portfolio investments. 
Most of our portfolio investments will take the form of securities that are not publicly traded. The fair value of loans, securities
and other investments that are not publicly traded may not be readily determinable, and we value these investments at fair value as
determined in good faith by our Board, including to reflect significant events affecting the value of our investments. Most, if not all, of
our investments (other than cash and cash equivalents) are classified as Level 3 under ASC Topic 820. This means that our portfolio
valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or liability
in question. Inputs into the determination of fair value of our portfolio investments require significant management judgment or
estimation. Even if observable market data is available, such information may be the result of consensus pricing information or broker
quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature
of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We have
retained the services of independent service providers to review the valuation of these loans and securities. The types of factors that
Board may take into account in determining the fair value of our investments generally include, as appropriate, comparison to
publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio
company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and
discounted cash flow, the markets in which the portfolio company does business and other relevant factors. Because such valuations,
and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of
time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used
if a ready market for these loans and securities existed. Our net asset value could be adversely affected if our determinations regarding
the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such loans and
securities.
We may expose ourselves to risks if we engage in hedging transactions. 
We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to
hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest
rates. Use of these hedging instruments may expose us to counter-

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party credit risk. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in
the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other
positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such
hedging transactions may also limit the opportunity for gain if the values of the portfolio positions should increase. Moreover, it may
not be possible to hedge against an exchange rate or interest rate fluctuation that is generally anticipated at an acceptable price.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our
financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting,
which would harm our business and the trading price of our common stock.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with
adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved
controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any
testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act may reveal deficiencies in our internal controls
over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our
consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also
cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our
common stock.
We incur significant costs as a result of being a publicly traded company. 
As a publicly traded company, we incur legal, accounting, investor relations and other expenses, including costs associated with
corporate governance requirements, such as those under the Sarbanes-Oxley Act, other rules implemented by the SEC and the listing
standards of the NYSE. These costs may be significant, and thus may reduce the amount of funds we have available to deploy as
investments, reducing our efficiency and potentially hampering our business, financial condition, and results of operations.
We are obligated to maintain proper and effective internal control over financial reporting. We may not complete our analysis of
our internal control over financial reporting in a timely manner, or our internal controls may not be determined to be effective,
which may adversely affect investor confidence in our company and, as a result, the value of our securities. 
Complying with Section 404 of the Sarbanes-Oxley Act requires a rigorous compliance program as well as adequate time and
resources. We may not be able to complete our internal control evaluation, testing and any required remediation in a timely fashion.
Additionally, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to
assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective,
we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse
effect on the price of our securities.
We are required to disclose changes made in our internal control and procedures on a quarterly basis and our management is
required to assess the effectiveness of these controls annually. Undetected material weaknesses in our internal controls could lead to
financial statement restatements and require us to incur the expense of remediation.
As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act. 
We are a non-accelerated filer under the Exchange Act and, therefore, we are not required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act. Therefore, our internal controls over financial reporting will not receive
the level of review provided by the process relating to the auditor attestation included in annual reports of issuers that are subject to
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predict if investors will find our common stock less attractive because we are not required to comply with the auditor attestation
requirements. If some investors find our common stock less attractive as a result, there may be a less active trading market for our
common stock and trading price for our common stock may be negatively affected.
We and our portfolio companies may be subjected to potential adverse effects of new or modified laws or regulations.
We and our portfolio companies are subject to regulation at the local, state, federal and, in some cases, foreign levels. These laws
and regulations, as well as their interpretation, are likely to change from time to time, and new laws and regulations may be enacted.
Accordingly, any change in these laws or regulations, changes in their interpretation, or newly enacted laws or regulations, or any
failure by us or our portfolio companies to comply with these laws or regulations, could require changes to certain of the our or our
portfolio companies’ business practices, negatively impact our or our portfolio companies’ operations, cash flows or financial
condition, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our
portfolio companies. In addition to the legal, tax and regulatory changes that are expected to occur, there may be unanticipated
changes. The legal, tax and regulatory environment for BDCs, investment advisers and the instruments that they utilize (including
derivative instruments) is continuously evolving.
As a result of the 2024 U.S. election, one political party currently controls both the executive and legislative branches of
government, which increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S.
financial markets. Regulatory changes could result in greater competition from banks and other lenders with which we compete for
lending and other investment opportunities. The United States may also potentially withdraw from or renegotiate various trade
agreements and take other actions that would change current trade policies of the United States. In addition, in June 2024, the U.S.
Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory
agencies. As a result of this decision, we cannot be sure whether there will be increased challenges to existing agency regulations or
how lower courts will apply the decision in the context of other regulatory schemes without more specific guidance from the U.S.
Supreme Court. For example, the U.S. Supreme Court’s decision could significantly impact consumer protection, advertising, privacy,
artificial intelligence, anti-corruption and anti-money laundering practices and other regulatory regimes with which we are required to
comply. Any such regulatory developments could result in uncertainty about and changes in the ways such regulations apply to us,
and may require additional resources to ensure our continued compliance. We cannot predict which, if any, of these actions will be
taken or, if taken, their effect on the financial stability of the United States. Such actions could have a significant adverse effect on
our business, financial condition and results of operations.
Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the
traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation.
While it cannot be known at this time whether any regulation will be implemented or what form it will take, increased regulation of
non-bank credit extension could negatively impact the our operations, cash flows or financial condition, impose additional costs on 
us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.  
Any failure to comply with SBA regulations could have an adverse effect on our SBIC subsidiaries’ operations. 
On June 20, 2014 and August 14, 2019, our wholly owned subsidiaries, SBIC I subsidiary and SBIC II subsidiary, respectively,
received licenses from the SBA to operate as SBICs. The SBA places certain limitations on the financing terms of investments by
SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited
industries. Compliance with SBIC requirements may cause our SBIC subsidiaries to forgo attractive investment opportunities that are
not permitted under SBA regulations.
Further, SBA regulations require that an SBIC be examined by the SBA to determine its compliance with the relevant SBA
regulations at least every two years. The SBA prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers
that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of an SBIC. If
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applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit its use of debentures, declare
outstanding debentures immediately due and payable, and/or limit it from making new investments. In addition, the SBA can revoke
or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business
Investment Act of 1958, as amended, or any rule or regulation promulgated thereunder. These actions by the SBA would, in turn,
negatively affect us because our SBIC subsidiaries are our wholly owned subsidiaries.
Risks Related to Our Operations
Because we intend to distribute substantially all of our income to our stockholders to obtain and maintain our status as a RIC, we
will continue to need additional capital to finance our growth. If additional funds are unavailable or not available on favorable
terms, our ability to grow may be impaired. 
We will need additional capital to fund new investments and grow our portfolio of investments. We intend to access the capital
markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital.
Unfavorable economic conditions could increase our funding costs, limit our access to the capital markets or result in a decision by
lenders not to extend credit to us. A reduction in the availability of new capital could limit our ability to grow. In addition, we are
required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital
losses, if any, to our stockholders to maintain our qualification as a RIC. As a result, these earnings will not be available to fund new
investments. An inability on our part to access the capital markets successfully could limit our ability to grow our business and
execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect on the value of our
shares of common stock.
As a BDC that has satisfied certain conditions under the 1940 Act, we are required to meet a coverage ratio of total assets, less
liabilities and indebtedness not represented by senior securities and excluding SBA-guaranteed debentures as permitted by exemptive
relief obtained from the SEC, to total senior securities, which includes all of our borrowings with the exception of SBA-guaranteed
debentures, of at least 150%. This requirement limits the amount that we may borrow. Since we continue to need capital to grow our
investment portfolio, these limitations may prevent us from incurring debt and require us to raise additional equity at a time when it
may be disadvantageous to do so. While we expect that we will be able to borrow and to issue additional debt securities and expect
that we will be able to issue additional equity securities, which would in turn increase the equity capital available to us, we cannot
assure you that debt and equity financing will be available to us on favorable terms, or at all. In addition, as a BDC, we generally are
not permitted to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available
us, we may be forced to curtail or cease new investment activities, and our net asset value could decline.
Our wholly owned SBIC subsidiaries may be unable to make distributions to us that will enable us to maintain RIC tax treatment,
which could result in the imposition of U.S. federal income tax. 
In order for us to qualify as a RIC and to minimize the imposition of U.S. federal income tax, we are required to distribute
substantially all of our net ordinary income and net capital gain income, including income from certain of our subsidiaries that are
classified as partnerships or disregarded entities for U.S. federal income tax purposes, which includes the income from our SBIC
subsidiaries. We are partially dependent on our SBIC subsidiaries for cash distributions to enable us to meet the RIC distribution
requirements. Our SBIC subsidiaries may be limited by the Small Business Investment Act of 1958, as amended, and SBA
regulations governing SBICs, from making certain distributions to us that may be necessary to maintain our tax treatment as a RIC.
We may have to request a waiver of the SBA’s restrictions for our SBIC subsidiaries to make certain distributions to maintain our
RIC tax treatment. We cannot assure you that the SBA will grant such waiver and if our SBIC subsidiaries are unable to obtain a
waiver, compliance with the SBA regulations may result in loss of RIC tax treatment and a consequent imposition of U.S. federal
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Our ability to enter into certain transactions with our affiliates is restricted, which may limit the scope of investments available to
us. 
We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of
our independent directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5% or more of our outstanding
voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security
from or to such affiliate without the prior approval of our independent directors. The 1940 Act also prohibits certain “joint”
transactions with certain of our affiliates, which could include concurrent investments in the same portfolio company, without prior
approval of our independent directors and, in some cases, the SEC. We are prohibited from buying or selling any security from or to
any person that controls us or who owns more than 25% of our voting securities or certain of that person’s affiliates, or entering into
prohibited joint transactions with such persons, absent the prior approval of the SEC. As a result of these restrictions, we may be
prohibited from buying or selling any security (other than any security of which we are the issuer) from or to any portfolio company
of a private fund managed by Stellus Capital Management or its affiliates without the prior approval of the SEC, which may limit the
scope of investment opportunities that would otherwise be available to us.
The involvement of our interested directors in the valuation process may create conflicts of interest. 
We make many of our portfolio investments in the form of loans and securities that are not publicly traded and for which no
market quotation is readily available. As a result, our Board determines the fair value of these loans and securities in good faith as
described elsewhere in this Annual Report on Form 10-K. In connection with that determination, investment professionals from
Stellus Capital Management provide our Board with valuations based upon the most recent portfolio company financial statements
available and projected financial results of each portfolio company. While the valuation for each portfolio investment is reviewed by
an independent valuation firm at least twice annually, the ultimate determination of fair value is made by our Board, including our
interested directors, and not by such third-party valuation firm. In addition, Messrs. Ladd and D’Angelo, each an interested member
of our Board, have a direct pecuniary interest in Stellus Capital Management. The participation of Stellus Capital Management’s
investment professionals in our valuation process, and the pecuniary interest in Stellus Capital Management by certain members of
our Board, could result in a conflict of interest as Stellus Capital Management’s management fee is based, in part, on the value of our
gross assets, and incentive fees are based, in part, on realized gains and realized and unrealized losses.
There are conflicts related to other arrangements with Stellus Capital Management. 
We have entered into a license agreement with Stellus Capital Management under which Stellus Capital Management has agreed
to grant us a non-exclusive, royalty-free license to use the name “Stellus Capital.” In addition, we have entered into an Administration
Agreement with Stellus Capital Management, pursuant to which we are required to pay to Stellus Capital Management our allocable
portion of overhead and other expenses incurred by Stellus Capital Management in performing its obligations under such
Administration Agreement, such as rent and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance
Officer and his staff. This will create conflicts of interest that our Board will monitor. For example, under the terms of the license
agreement, we will be unable to preclude Stellus Capital Management from licensing or transferring the ownership of the “Stellus
Capital” name to third parties, some of whom may compete against us. Consequently, we will be unable to prevent any damage to
goodwill that may occur as a result of the activities of Stellus Capital Management or others. Furthermore, in the event the license
agreement is terminated, we will be required to change our name and cease using “Stellus Capital” as part of our name. Any of these
events could disrupt our recognition in the marketplace, damage any goodwill we may have generated and otherwise harm our
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The Investment Advisory Agreement and the Administration Agreement with Stellus Capital Management were not negotiated on
an arm’s length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party. 
The Investment Advisory Agreement and the Administration Agreement were negotiated between related parties. Consequently,
their terms, including fees payable to Stellus Capital Management, may not be as favorable to us as if they had been negotiated with
an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under
these agreements because of our desire to maintain our ongoing relationship with Stellus Capital Management and its affiliates. Any
such decision, however, would breach our fiduciary obligations to our stockholders.
The time and resources that Stellus Capital Management devote to us may be diverted, and we may face additional competition
due to the fact that Stellus Capital Management and its affiliates are not prohibited from raising money for, or managing, another
entity that makes the same types of investments that we target. 
Stellus Capital Management and some of its affiliates, including our officers and our interested directors, are not prohibited from
raising money for, or managing, another investment entity that makes the same types of investments as those we target. For example,
Stellus Capital Management and/or its affiliates currently manage a private BDC and other private credit funds that have investment
strategies that are similar, overlapping or identical to our investment strategy and with which we co-invest. In addition, pursuant to
sub-advisory arrangements, Stellus Capital Management provides non-discretionary advisory services to the D. E. Shaw group related
to a private investment fund and a strategy of a private multi-strategy investment fund to which the D. E. Shaw group serves as
investment adviser. As a result, the time and resources they could devote to us may be diverted. In addition, we may compete with any
such investment entity for the same investors and investment opportunities.
Our incentive fee arrangements with Stellus Capital Management may vary from those of other investment funds, account or
investment vehicles managed by Stellus Capital Management, which may create an incentive for Stellus Capital Management to
devote time and resources to a higher fee-paying fund. 
If Stellus Capital Management is paid a higher performance-based fee from any of its other funds, it may have an incentive to
devote more research and development or other activities, and/or recommend the allocation of investment opportunities, to such
higher fee-paying fund. For example, to the extent Stellus Capital Management’s incentive compensation is not subject to a hurdle or
total return requirement with respect to another fund, it may have an incentive to devote time and resources to such other fund. Any
such diversion of Stellus Capital Management's time and resources could negatively impact our business, financial condition, or
results.
Stellus Capital Management’s liability is limited under the Investment Advisory Agreement and we have agreed to indemnify
Stellus Capital Management against certain liabilities, which may lead Stellus Capital Management to act in a riskier manner on
our behalf than it would when acting for its own account. 
Under the Investment Advisory Agreement, Stellus Capital Management has not assumed any responsibility to us other than to
render the services called for under that agreement. It will not be responsible for any action of our Board in following or declining to
follow Stellus Capital Management’s advice or recommendations. Under the Investment Advisory Agreement, Stellus Capital
Management, its officers, members and personnel, and any person controlling or controlled by Stellus Capital Management will not
be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or
omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts
constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that Stellus Capital Management owes
to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to
indemnify Stellus Capital Management and each of its officers, directors, members, managers and employees from and against any
claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our
business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory
Agreement, except where attributable to gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties
under the Investment

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Advisory Agreement. These protections may lead Stellus Capital Management to act in a riskier manner when acting on our behalf
than it would when acting for its own account.
Stellus Capital Management can resign as our investment adviser or administrator upon 60 days’ notice and we may not be able to
find a suitable replacement within that time, or at all, resulting in a disruption in our operations that could adversely affect our
financial condition, business and results of operations. 
Stellus Capital Management has the right under the Investment Advisory Agreement to resign as our investment adviser at any
time upon 60 days’ written notice, whether we have found a replacement or not. Similarly, Stellus Capital Management has the right
under the Administration Agreement to resign at any time upon 60 days’ written notice, whether we have found a replacement or not.
If Stellus Capital Management was to resign, we may not be able to find a new investment adviser or administrator or hire internal
management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all.
If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of
operations as well as our ability to pay distributions to our stockholders are likely to be adversely affected and the market price of our
shares may decline. In addition, the coordination of our internal management and investment or administrative activities, as
applicable, is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives
having the expertise possessed by Stellus Capital Management. Even if we are able to retain comparable management, whether
internal or external, the integration of such management and their lack of familiarity with our investment objective may result in
additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.
If we fail to comply with the regulatory requirements applicable to BDCs, our business could be affected and our operating
flexibility could be significantly reduced. 
We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of
BDCs. For example, BDCs are required to invest at least 70% of their total assets in specified types of securities, primarily in private
companies or thinly traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt
investments that mature in one year or less. Failure to comply with the requirements imposed on BDCs by the 1940 Act could cause
the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, upon approval of a
majority of our stockholders, we may elect to withdraw their respective election as a BDC. If we decide to withdraw our election, we
may be required to register as an investment company under the 1940 Act and be subject to the substantially greater regulation under
the 1940 Act as a closed-end investment company. Compliance with those regulations would significantly decrease our operating
flexibility and could significantly increase our cost of doing business.
If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to
BDCs or be precluded from investing according to our current business strategy. 
As a BDC, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such
acquisition, at least 70% of our total assets are qualifying assets.
We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be
precluded from investing in what we believe to be attractive investments if such investments are not qualifying assets for purposes of
the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions
applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making
follow-on investments in existing portfolio companies (which could result in the dilution of our position).
If we do not maintain our election to be regulated as a BDC, we would be subject to regulation as a registered closed-end
investment company under the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more
regulatory restrictions under the 1940 Act which would significantly decrease our operating flexibility.

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We may experience fluctuations in our annual and quarterly operating results. 
We could experience fluctuations in our annual and quarterly operating results due to a number of factors, including the interest
rate payable on the loans and debt securities we acquire, the default rate on such loans and securities, the level of our expenses,
variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter
competition in our markets and general economic conditions. In light of these factors, results for any period should not be relied upon
as being indicative of performance in future periods.
Our Board may change our investment objective, operating policies and strategies without prior notice or stockholder approval. 
Our Board has the authority, except as otherwise provided in the 1940 Act, to modify or waive certain of our operating policies
and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the
nature of our business so as to cease to be, or withdraw our election as, a BDC. We cannot predict the effect any changes to our
current operating policies and strategies would have on our business, operating results and the market price of our common stock.
Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders.
Our Board is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which
could convey special rights and privileges to its owners. 
Under Maryland General Corporation Law and our charter, our Board is authorized to classify and reclassify any authorized but
unissued shares of stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series,
the Board will be required by Maryland law and our charter to set the terms, preferences, conversion or other rights, voting powers,
restrictions, limitations as to stockholder distributions, qualifications and terms or conditions of redemption for each class or series.
Thus, the Board could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of
delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common
stock or that otherwise might be in their best interest. The cost of any such reclassification would be borne by our common
stockholders. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred
stock. For example, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common
stock to elect two preferred stock directors. The issuance of preferred stock convertible into shares of common stock may also reduce
the net income and net asset value per share of our common stock upon conversion, provided, that we will only be permitted to issue
such convertible preferred stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including obtaining
common stockholder approval. These effects, among others, could have an adverse effect on your investment in our common stock.
Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an
adverse impact on the price of our common stock. 
The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more
difficult a change in control of Stellus Capital Investment Corporation or the removal of our directors. We are subject to the Maryland
Business Combination Act, subject to any applicable requirements of the 1940 Act. Our Board has adopted a resolution exempting
from the Business Combination Act any business combination between us and any other person, subject to prior approval of such
business combination by our Board, including approval by a majority of our independent directors. If the resolution exempting
business combinations is repealed or our Board does not approve a business combination, the Business Combination Act may
discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer. Our bylaws
exempt from the Maryland Control Share Acquisition Act acquisitions of our stock by any person. If we amend our bylaws to repeal
the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also may make it more difficult for a third
party to obtain control of us and increase the difficulty of consummating such a transaction.

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We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our
charter classifying our Board in three classes serving staggered three-year terms, and authorizing our Board to classify or reclassify
shares of our stock in one or more classes or series, to cause the issuance of additional shares of our stock, to amend our charter
without stockholder approval and to increase or decrease the number of shares of stock that we have authority to issue. These
provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that
might otherwise be in the best interests of our stockholders.
We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in
turn, negatively affect the market price of our common stock and our ability to make distributions to our stockholders. 
Our business is highly dependent on the communications and information systems of Stellus Capital Management. In addition,
certain of these systems are provided to Stellus Capital Management by third party service providers. Any failure or interruption of
such systems, including as a result of the termination of an agreement with any such third-party service provider, could cause delays
or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the
market price of our common stock and our ability to make distributions to our stockholders.
The failure of cybersecurity systems, as well as the occurrence of events unanticipated in our disaster recovery systems and
management continuity planning, could impair our ability to conduct business effectively. 
Cybersecurity incidents and cyber-attacks have been occurring globally at a more frequent and severe level, and will likely
continue to increase in frequency in the future. Cyber-attacks and other security threats could originate from a wide variety of sources,
including cyber criminals, nation state hackers, hacktivists and other outside parties. Additionally, cyber-attacks and other security
threats have become increasingly complex as a result of the emergence of new technologies, such as artificial intelligence, which are
able to identify and target new vulnerabilities in information technology systems.
The occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a
natural catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an
adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This
adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval
systems, or impact the availability, integrity, or confidentiality of our data.
We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of
security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and
unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering,
malware and computer virus attacks, or system failures and disruptions. If one or more of these events occurs, it could potentially
jeopardize the confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems
and networks. Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses,
litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of
damages and remediation.
Third parties with which we do business may also be sources of cybersecurity or other technological risks. We outsource certain
functions and these relationships allow for the storage and processing of our information, as well as customer, counterparty, employee
and borrower information. Cybersecurity failures or breaches by Stellus Capital Management and other service providers (including,
but not limited to, accountants, custodians, transfer agents and administrators), and the issuers of securities in which we invest, also
have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with our
ability to calculate its net asset value, impediments to trading, the inability of our stockholders to transact business, violations of
applicable privacy and other laws, regulatory fines, penalties, reputation damages, reimbursement of

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other compensation costs, or additional compliance costs. We cannot guarantee that third parties and infrastructure in our networks or
our partners’ networks have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach
of or disruption to our information technology systems or the third-party information technology systems that support our services.
Our ability to monitor these third parties’ information security practices is limited, and they may not have adequate information
security measures in place. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result
in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other
consequences, including those described above. In addition, substantial costs may be incurred in order to prevent any cyber incidents
in the future.
Privacy and information security laws and regulation changes, and compliance with those changes, may result in cost increases
due to system changes and the development of new administrative processes. In addition, we may be required to expend significant
additional resources to modify our protective measures and to investigate and remediate vulnerabilities or other exposures arising
from operational and security risks. We currently do not maintain insurance coverage relating to cybersecurity risks, and we may be
required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities
or other exposures, and we may be subject to litigation and financial losses that are not fully insured.
We, Stellus Capital Management and our portfolio companies are subject to risks associated with “phishing” and other cyber-
attacks.
Our business and the business of our portfolio companies relies upon secure information technology systems for data processing,
storage and reporting. Despite careful security and controls design, implementation and updating, our and our portfolio companies’
information technology systems could become subject to cyber-attacks. Cyber-attacks include, but are not limited to, gaining
unauthorized access to digital systems (e.g., through “hacking”, malicious software coding, social engineering or “phishing”
attempts) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-
attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service
attacks on websites (i.e., efforts to make network services unavailable to intended users). Stellus Capital Management’s employees
have been and expect to continue to be the target of fraudulent calls, emails and other forms of activities. The result of these incidents
may include disrupted operations, misstated or unreliable financial data, liability for stolen information, misappropriation of assets,
increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, regulatory fines or
penalties, or other adverse effects on our business, financial condition or results of operations. In addition, we may be required to
expend significant additional resources to modify its protective measures and to investigate and remediate vulnerabilities or other
exposures arising from operational and security risks related to cyber-attacks.
Stellus Capital Management’s and other service providers’ increased use of mobile and cloud technologies could heighten the
risk of a cyber-attack as well as other operational risks, as certain aspects of the security of such technologies may be complex,
unpredictable or beyond their control. These service providers’ reliance on mobile or cloud technology or any failure by mobile
technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt their operations
and result in misappropriation, corruption or loss of personal, confidential or proprietary information. In addition, there is a risk that
encryption and other protective measures against cyber-attacks may be circumvented, particularly to the extent that new computing
technologies increase the speed and computing power available.
Risks Related to Economic Conditions
Global economic, political and market conditions may adversely affect our business, financial condition and results of operations,
including our revenue growth and profitability.
The U.S. debt ceiling and budget deficit concerns have raised the possibility of additional credit-rating downgrades and economic
slowdowns in the United States and globally. Legislation passed in June 2023 suspended the debt ceiling through January 1, 2025. On
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during the suspension, $36.1 trillion. Downgrades by rating agencies to the U.S. government’s credit rating or concerns about its
credit and deficit levels in general could cause interest rates and borrowing costs to rise, which may negatively impact both the
perception of credit risk associated with our debt portfolio and our ability to access the debt markets on favorable terms. In addition, a
decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our
financial performance and the value of our common stock.
Deterioration in the economic conditions in the Eurozone and other regions or countries globally and the resulting instability in
global financial markets may pose a risk to our business. Financial markets have been affected at times by a number of global
macroeconomic events, including the following: large sovereign debts and fiscal deficits of several countries in Europe and in
emerging markets jurisdictions, levels of non-performing loans on the balance sheets of European banks, instability in the Chinese
capital markets and global health events, including pandemics. Global market and economic disruptions have affected, and may in the
future affect, the U.S. capital markets, which could adversely affect our business, financial condition or results of operations. We
cannot assure you that market disruptions in Europe and other regions or countries, including the increased cost of funding for certain
governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be
available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis. To the
extent uncertainty regarding any economic recovery in Europe negatively impacts consumer confidence and consumer credit factors,
our business, financial condition and results of operations could be significantly and adversely affected. Moreover, there is a risk of
both sector-specific and broad-based corrections and/or downturns in the equity and credit markets. Any of the foregoing could have
a significant impact on the markets in which we operate and could have a material adverse impact on our business prospects and
financial condition.
Various social and political circumstances in the U.S. and around the world (including wars and other forms of conflict,
including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in
the U.S. and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events
such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market
volatility and economic uncertainties or deterioration in the U.S. and worldwide. Specifically, the ongoing conflict between Russia
and Ukraine, and the resulting market volatility, could adversely affect our business, financial condition or results of operations. In
response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions
against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions,
could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the
market value of our common shares and/or debt securities to decline. These market and economic disruptions could also negatively
impact the operating results of our portfolio companies.
Additionally, the Federal Reserve may further decrease, or may announce its intention to further decrease, the federal funds rate
in 2025. These developments, along with the United States government’s credit and deficit concerns, global economic uncertainties
and market volatility, could cause interest rates to be volatile, which may negatively impact our ability to access the debt markets and
capital markets on favorable terms.
Increased geopolitical unrest, terrorist attacks, or acts of war may impact the businesses in which we invests, and harm our
business, operating results, and financial conditions.
Terrorist activity and the continued threat of terrorism and acts of civil or international hostility, both within the United States and
abroad, as well as ongoing military and other actions and heightened security measures in response to these types of threats, may
cause significant volatility and declines in the global markets, loss of life, property damage, disruptions to commerce and reduced
economic activity, which may negatively impact the businesses in which we invests directly or indirectly and, in turn, could have a
material adverse impact on the our business, operating results, and financial condition. Losses from terrorist attacks are generally
uninsurable.

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Risks Related to our Investments
Our business and our portfolio companies may be susceptible to economic slowdowns or recessions which would harm our
operating results.
Many of the portfolio companies in which we have invested or expect to make investments are likely to be susceptible to
economic slowdowns or recessions and may be unable to repay our loans during such periods. Therefore, the number of our non-
performing assets is likely to increase, and the value of our portfolio is likely to decrease during such periods. Adverse economic
conditions may decrease the value of collateral securing some of our loans and debt securities and the value of our equity
investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income
and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in
a decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and harm our
operating results.
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults
and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and
jeopardize our portfolio company’s ability to meet its obligations under the loans and debt securities that we hold. We may incur
expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In
addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in
the borrower’s business or exercise control over a borrower. It is possible that we could become subject to a lender’s liability claim,
including as a result of actions taken if we render significant managerial assistance to the borrower.
Furthermore, if one of our portfolio companies were to file for bankruptcy protection, a bankruptcy court might re-characterize
our debt holding and subordinate all or a portion of our claim to claims of other creditors, even though we may have structured our
investment as senior secured debt. The likelihood of such a re-characterization would depend on the facts and circumstances,
including the extent to which we provided managerial assistance to that portfolio company.
Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a
decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and harm business,
financial condition, operating results and prospects.
We may be subject to risks related to bank impairments or failures either directly or through our portfolio companies, which, in
turn, could indirectly impact our performance and results of operations.
The impairment or failure of one or more banks with whom we or any of our portfolio companies transact may inhibit our ability
or the ability of our portfolio companies to access depository accounts, including cash and cash equivalents, as well as investment
accounts, which, in turn, may directly or indirectly impact our performance and results of operations. In the event of a bank
impairment or failure we may be forced to delay or forgo investments, and affected portfolio companies may default on their debt
obligations to us, either of which would impact our performance. In the event of such a failure of a banking institution where one or
more of our portfolio companies holds depository accounts, access to such accounts could be restricted and FDIC protection may not
be available for balances in excess of amounts insured by the FDIC. In such instances, we or our affected portfolio companies would
not recover such excess, uninsured amounts, and they may not be able to cure any defaults. Additionally, unfavorable economic
conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend
credit to us. These events could prevent us from increasing our investments and harm business, financial condition, operating results
and prospects. We closely monitor activity in the banking sector as it relates to any of our borrowers and continually assess any
potential direct or indirect impact to us as a result of the same.
Our investments in leveraged portfolio companies may be risky, and we could lose all or part of our investment. 
Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have
limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold. Such
developments may be accompanied by a deterioration in the value of any collateral securing the

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investment and/or equity co-investments we hold and a reduction in the likelihood of our realizing any guarantees that we may have
obtained in connection with our investment. Smaller leveraged companies also may have less predictable operating results and may
require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.
We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of
such companies, enter into bankruptcy proceedings. 
Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of
significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings
and are beyond the control of the creditors. A bankruptcy filing by a portfolio company may adversely and permanently affect that
company. If the proceeding is converted to a liquidation, the value of the portfolio company may not equal the liquidation value that
was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a
creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes
effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the
debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our
influence with respect to the class of securities or other obligations we own may be lost by increases in the number and amount of
claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult
to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority
by law (for example, claims for taxes) may be substantial.
Our investments in private and lower middle-market portfolio companies are risky, and we could lose all or part of our
investment. 
Investment in private and lower middle-market companies involves a number of significant risks. Generally, little public
information exists about these companies, and we rely on the ability of Stellus Capital Management’s investment professionals to
obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all
material information about these companies, we may not make a fully informed investment decision, and we may lose money on our
investments. Lower middle-market companies may have limited financial resources and may be unable to meet their obligations
under their loans and debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a
reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our investment. In addition, such
companies typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which
tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.
Additionally, lower middle-market companies are more likely to depend on the management talents and efforts of a small group of
persons. Therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse
impact on one or more of the portfolio companies we invest in and, in turn, on us. Lower middle-market companies also may be
parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In
addition, our executive officers, directors and Stellus Capital Management may, in the ordinary course of business, be named as
defendants in litigation arising from our investments in portfolio companies, the commencement and duration of which could distract
from their roles or service to us and negatively impact our business.
The lack of liquidity in our investments may adversely affect our business. 
Most of our assets are invested in illiquid loans and securities, and a substantial portion of our investments in leveraged
companies are subject to legal and other restrictions on resale or are otherwise less liquid than more broadly traded public securities.
The illiquidity of these investments may make it difficult for us to sell such investments if the need arises. In addition, if we are
required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have
previously recorded our investments. Also, as noted above, we may be limited or prohibited in our ability to sell or otherwise exit
certain positions in our portfolio, as such a transaction could be considered a joint transaction prohibited by the 1940 Act.

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Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments,
reducing our net asset value through increased net unrealized depreciation.
As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as
determined in good faith by our Board. As part of the valuation process, our Board may take into account the following types of
factors, if relevant, in determining the fair value of our investments:
●
available current market data, including relevant and applicable market trading and transaction comparables;
●
applicable market yields and multiples;
●
security covenants;
●
call protection provisions;
●
information rights;
●
the nature and realizable value of any collateral;
●
the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does
business;
●
comparisons of financial ratios of peer companies that are public;
●
comparable merger and acquisition transactions; and
●
the principal market and enterprise values.
When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing
indicated by the external event to corroborate the valuation. We record decreases in the market values or fair values of our investments
as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized
depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our net asset value by increasing net
unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer
additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results
of operations and cash flows.
We are a non-diversified investment company within the meaning of the 1940 Act, and therefore, we are not limited with respect
to the proportion of our assets that may be invested in securities of a single issuer.
We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not
limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Beyond the
asset diversification requirements associated with our qualification as a RIC under the Code, we do not have fixed guidelines for
diversification. To the extent that we assume large positions in the securities of a small number of issuers or our investments are
concentrated in relatively few industries, our net asset value may fluctuate to a greater extent than that of a diversified investment
company as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible
to any single economic or regulatory occurrence than a diversified investment company.

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Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as
“follow-on” investments, in seeking to:
●
increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;
●
exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or
●
preserve or enhance the value of our investment.
We generally have discretion to make follow-on investments, subject to the availability of capital resources. Failure on our part
to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial
investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have
sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want
to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements
of the 1940 Act or the desire to maintain our qualification as a RIC. Our ability to make follow-on investments may also be limited by
our compliance with the conditions under the Order we received from the SEC related to co-investments with investment funds
managed by Stellus Capital Management (or an affiliate thereof) or Stellus Capital Management’s allocation policy.
Because we generally do not hold controlling equity interests in our portfolio companies, we may not be able to exercise control
over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of
our investments.
We hold equity controlling equity positions in one of the portfolio companies included in our portfolio and, although we may do
so in the future, we do not currently intend to hold additional controlling equity positions in our other portfolio companies. As a
result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and that the
management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due
to the lack of liquidity of the debt and equity investments that we hold in our portfolio companies, we may not be able to dispose of
our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of
our investments.
Defaults by our portfolio companies will harm our operating results.
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults
and, potentially, termination of its loans and foreclosure on its assets. This could trigger cross-defaults under other agreements and
jeopardize such portfolio company’s ability to meet its obligations under the loans or debt or equity securities that we hold. We may
incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of
certain financial covenants, with a defaulting portfolio company.
Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and ability to
make stockholder distributions and result in a decline in the market price of our shares.
We are subject to the risk that the debt investments we make in our portfolio companies may be repaid prior to maturity. We
expect that our investments will generally allow for repayment at any time subject to certain penalties. When this occurs, we intend to
generally reinvest these proceeds in temporary investments, pending their future investment in accordance with our investment
strategy. These temporary investments will typically have substantially lower yields than the debt being prepaid, and we could
experience significant delays in reinvesting these amounts. Any future investment may also be at lower yields than the debt that was
repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elects to
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Additionally, prepayments could negatively impact our ability to make, or the amount of, stockholder distributions with respect to our
common stock, which could result in a decline in the market price of our shares.
The effect of global climate change may impact the operations of our portfolio companies. 
Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate
change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity.
To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and
magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if
the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some
of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more
system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.
Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
We invest a portion of our capital in second lien and subordinated loans issued by our portfolio companies. The portfolio
companies usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the loans in which we invest.
By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before
the dates on which we are entitled to receive payments in respect of the loans in which we invest. Also, in the event of insolvency,
liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our
investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in
respect of our investment. After repaying senior creditors, a portfolio company may not have any remaining assets to use for
repaying its obligation to us. In the case of debt ranking equally with loans in which we invest, we would have to share any
distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency, liquidation,
dissolution, reorganization or bankruptcy of the relevant portfolio company.
Additionally, certain loans that we make to portfolio companies may be secured on a second priority basis by the same collateral
securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company’s
obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the
portfolio company under the agreements governing the loans. The holders of obligations secured by first priority liens on the
collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay
their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and
economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all
of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all
obligations secured by the first priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under
the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the
collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.
We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in
collateral of such companies. Liens on such portfolio companies’ collateral, if any, will secure the portfolio company’s obligations
under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under
its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled
to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such
collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors.
There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan
obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured
loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the
portfolio company’s remaining assets, if any.

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The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt
outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of
such senior debt. Under a typical intercreditor agreement, at any time that obligations that have the benefit of the first priority liens
are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the
obligations secured by the first priority liens:
●
the ability to cause the commencement of enforcement proceedings against the collateral;
●
the ability to control the conduct of such proceedings;
●
the approval of amendments to collateral documents;
●
releases of liens on the collateral; and
●
waivers of past defaults under collateral documents.
We may not have the ability to control or direct such actions, even if our rights are adversely affected.
We may be exposed to special risks associated with bankruptcy cases.
From time to time, one or more of our portfolio companies may be involved in bankruptcy or other reorganization or liquidation
proceedings. Many of the events within a bankruptcy case are adversarial and often beyond the control of the creditors. While
creditors generally are afforded an opportunity to object to significant actions, we cannot assure you that a bankruptcy court would
not approve actions that may be contrary to our interests. There also are instances where creditors can lose their ranking and priority
if they are considered to have taken over management of a borrower.
To the extent that portfolio companies in which we have invested through a unitranche facility are involved in bankruptcy
proceedings, the outcome of such proceedings may be uncertain. For example, it is unclear whether a bankruptcy court would enforce
an agreement among lenders which sets the priority of payments among unitranche lenders. In such a case, the “first out” lenders in
the unitranche facility may not receive the same degree of protection as they would if the agreement among lenders was enforced.
The reorganization of a company can involve substantial legal, professional and administrative costs to a lender and the
borrower. Bankruptcy and reorganization proceedings are frequently subject to unpredictable and lengthy delays, and during the
process, the debtor company’s competitive position may erode, key management may depart and the debtor company may not be able
to invest adequately. In some cases, the debtor company may not be able to reorganize and may be required to liquidate assets. The
debt of companies in financial reorganization will, in most cases, not pay current interest, may not accrue interest during
reorganization and may be adversely affected by an erosion of the issuer’s fundamental value.
In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the
borrower’s business or exercise control over the borrower. For example, we could become subject to a lender liability claim (alleging
that we misused our influence on the borrower for the benefit of its lenders), if, among other things, the borrower requests significant
managerial assistance from us and we provide that assistance. To the extent we and an affiliate both hold investments in the same
portfolio company that are of a different character, we may also face restrictions on our ability to become actively involved in the
event that portfolio company becomes distressed as a result of the restrictions imposed on transactions involving affiliates under the
1940 Act. In such cases, we may be unable to exercise rights we may otherwise have to protect our interests as security holders in
such portfolio company.

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If we make subordinated investments, the obligors or the portfolio companies may not generate sufficient cash flow to service their
debt obligations to us.
We may make subordinated investments that rank below other obligations of the obligor in right of payment. Subordinated
investments are subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the
obligor or economic conditions in general. If we make a subordinated investment in a portfolio company, the portfolio company may
be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate
sufficient cash flow to service all of its debt obligations.
The disposition of our investments may result in contingent liabilities.
Substantially all of our investments involve loans and private securities. In connection with the disposition of an investment in
loans and private securities, we may be required to make representations about the business and financial affairs of the portfolio
company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of
such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These
arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return
of distributions previously made to us.
We may not realize gains from our equity investments.
When we invest in loans and debt securities, we may acquire warrants or other equity securities of portfolio companies as well.
We may also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and
realize gains upon our disposition of them. However, the equity interests we receive may not appreciate in value and, may decline in
value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of
any equity interests may not be sufficient to offset any other losses we experience.
Our ability to enter transactions involving derivatives and financial commitment transactions may be limited.
Pursuant to SEC rules, BDCs that use derivatives are subject to a value-at-risk (“VaR”) leverage limit, certain other derivatives
risk management program and testing requirements and requirements related to board reporting. These requirements apply unless the
BDC qualified as a “limited derivatives user,” as defined in the SEC’s adopted rules. A BDC that enters into reverse repurchase
agreements or similar financing transactions may either comply with the asset coverage requirements of Section 18 of the 1940 Act
when engaging in reverse repurchase agreements or choose to treat such agreements as derivatives transactions under the adopted rule.
A BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide
financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have
sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as
it becomes due. If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives transaction subject to
the requirements of the SEC rules. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain
other financial contracts.
Risks Relating to Our Common Stock
There is a risk that you may not receive distributions or that our distributions may not grow over time and a portion of our
distributions may be a return of capital.
We intend to make distributions on a monthly basis to our stockholders out of assets legally available for distribution (i.e., not
subject to any legal restrictions under Maryland law on the distribution thereof). We cannot assure you that we will achieve
investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. All
distributions will be made at the discretion of our Board and will depend on our earnings, financial condition, maintenance of RIC
status, compliance with applicable BDC requirements and SBA regulations and such other factors as our Board may deem relative
from time to time. We cannot assure you that we will make distributions to our stockholders in the future.

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Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this
Annual Report on Form 10-K. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our
ability to make distributions. In addition, restrictions and provisions in our Credit Facility, the Notes Payable and any future credit
facilities, as well as in the terms of any debt securities we issue, may limit our ability to make distributions in certain circumstances.
When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or
accumulated earnings and profits. Distributions in excess of current and accumulated earnings and profits will be treated as a non-
taxable return of capital to the extent of an investor’s basis in our stock and, assuming that an investor holds our stock as a capital
asset, thereafter as a capital gain.
Stockholders may experience dilution in their ownership percentage if they do not participate in our dividend reinvestment plan.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally
automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment
plan may experience dilution over time. Stockholders who receive distributions in shares of common stock may experience accretion
to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The
level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in the
plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.
Our shares might trade at premiums that are unsustainable or at discounts from net asset value.
Shares of BDCs like us may, during some periods, trade at prices higher than their net asset value per share and, during other
periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net asset value per share. The
perceived value of our investment portfolio may be affected by a number of factors including perceived prospects for individual
companies we invest in, market conditions for common stock generally, for initial public offerings and other exit events for venture
capital backed companies, and the mix of companies in our investment portfolio over time. Negative or unforeseen developments
affecting the perceived value of companies in our investment portfolio could result in a decline in the trading price of our common
stock relative to our net asset value per share.
The possibility that our shares will trade at a discount from net asset value or at premiums that are unsustainable are risks
separate and distinct from the risk that our net asset value per share will decrease. The risk of purchasing shares of a BDC that might
trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period
of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon changes in
premium or discount levels than upon increases or decreases in net asset value per share.
Investing in our securities may involve an above average degree of risk.
The investments we make in accordance with our investment objective may result in a higher amount of risk, and higher volatility
or loss of principal, than alternative investment options. Our investments in portfolio companies may be speculative and, therefore, an
investment in our securities may not be suitable for someone with lower risk tolerance.
The market price of our securities may fluctuate significantly.
The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which
are beyond our control and may not be directly related to our operating performance. These factors include:
●
significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is
not necessarily related to the operating performance of these companies;

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●
changes in regulatory policies or tax guidelines, particularly with respect to RICs, BDCs and SBICs;
●
loss of our qualification as a RIC or BDC or the status of either of our SBIC subsidiaries as a SBIC;
●
changes in earnings or variations in operating results;
●
changes in the value of our portfolio of investments;
●
changes in accounting guidelines governing valuation of our investments;
●
any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;
●
departure of Stellus Capital Management’s key personnel;
●
operating performance of companies comparable to us; and
●
​general economic trends and other external factors.
Risks Relating to Our Debt Securities
The Notes Payable are unsecured and therefore are effectively subordinated to any secured indebtedness we have currently
incurred or may incur in the future and rank pari passu with, or equal to, all outstanding and future unsecured indebtedness
issued by and us and our general liabilities (total liabilities, less debt).
The Notes Payable are not and will not be secured by any of our assets or any of the assets of any of our subsidiaries. As a result,
the Notes Payable are effectively subordinated to any secured indebtedness we or our subsidiaries have incurred and may incur in the
future (or any indebtedness that is initially unsecured as to which we subsequently grant security) to the extent of the value of the
assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our
existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to
secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors,
including the holders of the Notes Payable. In addition, the Notes Payable rank pari passu with, or equal to, all outstanding and future
unsecured, unsubordinated indebtedness issued by us and our general liabilities (total liabilities, less debt). As of December 31, 2024,
we had $175.4 million in outstanding indebtedness under our Credit Facility. The indebtedness under the Credit Facility is effectively
senior to the Notes Payable to the extent of the value of the assets securing such indebtedness.
The Notes Payable are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The Notes Payable are obligations exclusively of Stellus Capital Investment Corporation, and not of any of our subsidiaries.
None of our subsidiaries are or will be a guarantor of the Notes Payable, and the Notes Payable are not required to be guaranteed by
any subsidiary we may acquire or create in the future. Any assets of our subsidiaries are not directly available to satisfy the claims of
our creditors, including holders of the Notes Payable. Except to the extent we are a creditor with recognized claims against our
subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the
claims of our creditors, including holders of the Notes Payable) with respect to the assets of such entities. Even if we are recognized
as a creditor of one or more of these entities, our claims would still be effectively subordinated to any security interests in the assets
of any such entity and to any indebtedness or other liabilities of any such entity senior to our claims. Consequently, the Notes Payable
are structurally subordinated to all indebtedness and other liabilities, including trade payables, of any of our existing or future
subsidiaries, including the SBIC subsidiaries. As of December 31, 2024, our subsidiaries had total indebtedness outstanding of 
$325.0 million. Certain of these entities (excluding our SBIC subsidiaries) currently serve as guarantors

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under our Credit Facility, and in the future our subsidiaries may incur substantial additional indebtedness, all of which is and would
be structurally senior to the Notes Payable.
The indenture under which the Notes Payable are issued contains limited protection for holders of the  Notes Payable.
The indenture under which the Notes Payable are issued offers limited protection to holders of the Notes Payable. The terms of
the indenture and the Notes Payable do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a
variety of corporate transactions, circumstances or events that could have a material adverse impact on an investment in the Notes
Payable. In particular, the terms of the indenture and the Notes Payable do not place any restrictions on our or our subsidiaries’ ability
to:
●
issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other
obligations that would be equal in right of payment to the Notes Payable, (2) any indebtedness or other obligations that
would be secured and therefore rank effectively senior in right of payment to the Notes Payable to the extent of the values of
the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which
therefore is structurally senior to the Notes Payable and (4) securities, indebtedness or obligations issued or incurred by our
subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes
Payable with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other
obligation that would cause a violation of Section 18(a)(1)(A) of the 1940 Act, as modified by Section 61(a)(2) of the 1940
Act, or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving
effect, in either case, to any exemptive relief granted to us by the SEC, which generally prohibit us from incurring additional
indebtedness, including through the issuance of additional debt securities, unless our asset coverage, as defined in the 1940
Act, equals at least 150% after such incurrence or issuance;
●
pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior
in right of payment to the Notes Payable, including subordinated indebtedness, except that we have agreed that, for the
period of time during which the Notes Payable are outstanding, we will not violate Section 18(a)(1)(B) of the 1940 Act, as
modified by (i) Section 61(a)(2) of the 1940 Act, or any successor provisions and after giving effect to any exemptive relief
granted to us by the SEC and (ii) the following two exceptions: (A) we will be permitted to declare a cash dividend or
distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) of the 1940 Act, as modified by Section 61(a)
(2) of the 1940 Act, or any successor provisions, but only up to such amount as is necessary for us to maintain our status as a
RIC under Subchapter M of the Code; and (B) this restriction will not be triggered unless and until such time as our asset
coverage has not been in compliance with the minimum asset coverage required by Section 18(a)(1)(B) of the 1940 Act, as
modified by Section 61(a)(2) of the 1940 Act, or any successor provisions (after giving effect to any exemptive relief
granted to us by the SEC) for more than six consecutive months. If Section 18(a)(1)(B) of the 1940 Act, as modified by
Section 61(a)(2) of the 1940 Act, were currently applicable to us in connection with this offering, these provisions would
generally prohibit us from declaring any cash dividend or distribution upon any class of our capital stock, or purchasing any
such capital stock if our asset coverage, as defined in the 1940 Act, were below 150% at the time of the declaration of the
dividend or distribution or the purchase and after deducting the amount of such dividend, distribution or purchase;
●
sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our
assets);
●
enter into transactions with affiliates;
●
create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
●
make investments; or

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●
create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Furthermore, the terms of the indenture and the Notes Payable do not protect holders of the Notes Payable in the event that we
experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as
they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues,
income, cash flow, or liquidity.
Our ability to recapitalize, incur additional debt (including additional debt that matures prior to the maturity of the Notes
Payable) and take a number of other actions that are not limited by the terms of the Notes Payable may have important consequences
for holders of the Notes Payable, including making it more difficult for us to satisfy our obligations with respect to the Notes Payable
or negatively affecting the market value of the Notes Payable.
Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes Payable,
including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could
affect the market for, trading levels, and prices of the Notes Payable.
There is no active trading market for the Notes Payable. If an active trading market does not develop for the Notes Payable, you
may not be able to sell them.
The Notes Payable are debt securities for which there currently is no trading market. We do not intend to list the Notes Payable
on any securities exchange or for quotation of the Notes Payable on any automated dealer quotation system. If the Notes Payable are
traded after their initial issuance, they may trade at a discount to their initial offering price depending on prevailing interest rates, the
market for similar securities, our credit ratings, our financial condition, performance and prospects, general economic conditions, or
other relevant factors. Although the underwriter has informed us that it intends to make a market in the Notes Payable, it is not
obligated to do so, and the underwriter may discontinue any market-making in the Notes Payable at any time at its sole discretion.
Accordingly, we cannot assure you that a liquid trading market will develop or be maintained for the Notes Payable, that you will be
able to sell your Notes Payable at a particular time or that the price you receive when you sell will be favorable. To the extent an
active trading market does not develop, the liquidity and trading price for the Notes Payable may be harmed. Accordingly, you may
be required to bear the financial risk of an investment in the Notes Payable for an indefinite period of time.
If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes Payable.
Any default under the agreements governing our indebtedness, including a default under the Credit Facility or other indebtedness
to which we may be a party, that is not waived by the required lenders or holders, and the remedies sought by the lenders or holders
of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes Payable and substantially
decrease the market value of the Notes Payable. If we are unable to generate sufficient cash flow and are otherwise unable to obtain
funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to
comply with the various covenants, including financial and operating covenants, as applicable, in the instruments governing our
indebtedness (including the Credit Facility), we could be in default under the terms of the agreements governing such indebtedness,
including the Notes Payable. In the event of such default, the holders of such indebtedness could elect to declare all the funds
borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other
debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure
proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may
in the future need to refinance or restructure our debt, including the Notes Payable, sell assets, reduce or delay capital investments,
seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or other debt that we may
incur in the future to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to
meet our payment obligations under the Notes Payable or our other debt. If we breach our covenants under the Credit Facility or our
other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders thereof. If this occurs, we
would be in default under the Credit Facility or other debt, the lenders or holders could exercise their rights as described above, and
we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured

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obligations, including the lenders under the Credit Facility, could proceed against the collateral securing the debt. Because the Credit
Facility has, the indenture governing the Notes Payable has, and any future credit facilities will likely have, customary cross-default
provisions, if the indebtedness under the Notes Payable, the Credit Facility or under any future credit facility is accelerated, we may
be unable to repay or finance the amounts due.
We may choose to redeem the Notes Payable when prevailing interest rates are relatively low.
The Notes Payable are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. We
may choose to redeem the Notes Payable from time to time, especially if prevailing interest rates are lower than the rate borne by the
Notes Payable. If prevailing rates are lower at the time of redemption, and we redeem the Notes Payable, you likely would not be
able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes
Payable being redeemed.
We may not be able to repurchase the Notes Payable upon a Change of Control Repurchase Event.
We may not be able to repurchase the Notes Payable upon a Change of Control Repurchase Event (as defined in the
supplemental indenture governing the Notes Payable) because we may not have sufficient funds. We would not be able to borrow
under our Credit Facility to finance such a repurchase of the Notes Payable, and we expect that any future credit facility would have
similar limitations. Upon a Change of Control Repurchase Event, holders of the Notes Payable may require us to repurchase for cash
some or all of the Notes Payable at a repurchase price equal to 100% of the aggregate principal amount of the Notes Payable being
repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. The terms of our Credit Facility provide that
certain change of control events will constitute an event of default thereunder entitling the lenders to accelerate any indebtedness
outstanding under our Credit Facility at that time and to terminate our Credit Facility. In addition, the occurrence of a Change of
Control Repurchase Event enabling the holders of the Notes Payable to require the mandatory purchase of the Notes Payable will
constitute an event of default under our Credit Facility, entitling the lenders to accelerate any indebtedness outstanding under our
Credit Facility at that time and to terminate our Credit Facility. Our and our subsidiaries’ future financing facilities may contain
similar restrictions and provisions. Our failure to purchase such tendered Notes Payable upon the occurrence of such Change of
Control Repurchase Event would cause an event of default under the indenture governing the Notes Payable and a cross-default under
the agreements governing the Credit Facility, which may result in the acceleration of such indebtedness requiring us to repay that
indebtedness immediately. If the holders of the Notes Payable exercise their right to require us to repurchase Notes Payable upon a
Change of Control Repurchase Event, the financial effect of this repurchase could cause a default under our current and future debt
instruments, and we may not have sufficient funds to repay any such accelerated indebtedness.
A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes Payable or change in
the debt markets could cause the liquidity or market value of the Notes Payable to decline significantly.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or
anticipated changes in our credit ratings will generally affect the market value of the Notes Payable. These credit ratings may not
reflect the potential impact of risks relating to the structure or marketing of the Notes Payable. Credit ratings are not a
recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole
discretion. Neither we nor the underwriter undertakes any obligation to maintain our credit ratings or to advise holders of Notes
Payable of any changes in our credit ratings. There can be no assurance that our credit ratings will remain for any given period of time
or that such credit ratings will not be lowered or withdrawn entirely by the rating agencies if in their judgment future circumstances
relating to the basis of the credit ratings, such as adverse changes in our Company, so warrant. The conditions of the financial markets
and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on
the market prices of the Notes Payable.
Item 1B.    Unresolved Staff Comments
Not applicable.

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Item 1C.    Cybersecurity
Risk Management and Strategy
We have processes in place for assessing, identifying, and managing material risks from potential unauthorized occurrences on
or through our electronic information systems that could negatively impact the confidentiality, integrity, or availability of our
information systems or the information held on such systems. These processes include controls, procedures, systems and tools that are
designed to prevent, detect, or mitigate data loss, theft, misuse, unauthorized access, or other security incidents or vulnerabilities
affecting the data. Such processes are set forth in our joint Cybersecurity Policy, Written Information Security Policy and Incident
Response Plan with Stellus Capital Management (collectively, the “Cybersecurity Policy”). The Cybersecurity Policy also sets forth
the role of our Chief Compliance Officer and our Information Security Team in preparing, implementing, and maintaining incident
response procedures.
Our Chief Compliance Officer and Information Security Team are responsible for the development and implementation of
policies and technical measures to reasonably prevent security incidents. At times we may also engage assessors, consultants, auditors
or other third parties to assist with assessing, identifying and managing cybersecurity risk. As part of our risk management process,
we conduct assessment and penetration testing, including regular trainings completed by employees of Stellus Capital Management
who provide services to us pursuant to the Administration Agreement.
Material Impact of Cybersecurity Risks
As of the date of this Annual Report on Form 10-K, we are not aware of any material risks from cybersecurity threats that have
materially affected, or are reasonably likely to materially affect, us, including our business strategy, results of operations, or financial
condition. However, future incidents could have a material impact on our business. Additional information about the cybersecurity
risks that we face is discussed in Item 1A of Part I, “Risk Factors,” in this Annual Report on Form 10-K under the heading “We,
Stellus Capital Management and our portfolio companies are subject to risks associated with “phishing” and other cyber-attacks.”
Oversight of Cybersecurity Risks
Our cybersecurity risks and associated mitigation strategies are evaluated by our management and the Information Security Team
as needed, but no less frequently than annually. On at least a quarterly basis, the Information Security Team reports to our Board on
developments to cybersecurity risks we face. Such reports include, among other things, an overview of the controls and procedures
related to assessing, identifying, and managing risks related to cybersecurity threats, oversight of third-party service providers and
related cybersecurity threats, and Information Security Team's evaluation of cybersecurity risks that are material to us.
Item 2.     Properties
We do not own any real estate or other physical properties materially important to our operation. Our headquarters are located at
4400 Post Oak Parkway, Suite 2200, Houston, Texas. We also maintain offices in Charlotte, North Carolina and in the Washington,
D.C. area. All locations are provided to us by Stellus Capital Management pursuant to the Administration Agreement. We believe that
our office facilities are suitable and adequate for our business as we contemplate conducting it.
Item 3.    Legal Proceedings
We, Stellus Capital Management or our subsidiaries are not currently subject to any material legal proceedings, nor, to our
knowledge, is any material legal proceeding threatened against us, Stellus Capital Management or our subsidiaries. From time to
time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the
enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be
predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of
operations.
Item 4.    Mine Safety Disclosures
Not applicable.

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69
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the NYSE under the symbol “SCM.” As of March 4, 2025, we had eight stockholders of record,
which did not include stockholders for whom shares are held in nominee or street name.
We generally intend to pay distributions to our stockholders out of assets legally available for distribution. Our distributions and
their frequency, if any, will be determined by our Board. For the period January 2022 through March 2022, we paid monthly
distributions of $0.0933 per share on our common shares. For the period April 2022 through December 2024, we paid monthly
distributions of $0.1333 per share on our common shares. Payment of dividends on our common shares is within the discretion of the
Board, and depends on, among other factors, net earnings, capital requirements and our financial condition. However, we intend to
continue to pay comparable dividends to stockholders in the future.
Recent Sales of Unregistered Securities
None.
Use of Proceeds from Recent Sales of Registered Securities
On November 16, 2021, we entered into an equity distribution agreement, as amended and restated on August 29, 2022 (the
“2021 Equity Distribution Agreement”) with Keefe Bruyette & Woods, Inc. and Raymond James & Associates, Inc., as sales agents
and/or principals thereunder. Under the 2021 Equity Distribution Agreement, we could issue and sell, from time to time, up to
$50,000,000 in aggregate offering price of shares of our common stock, par value $0.001 per share, with the intention to use the net
proceeds from this at-the-market sales program to repay certain outstanding indebtedness and make investments in portfolio
companies in accordance with our investment objective and strategies.
On August 11, 2023, we entered into an equity distribution agreement (the “2023 Equity Distribution Agreement” and together
with the 2021 Equity Distribution Agreement, the “Equity Distribution Agreements”) with Keefe Bruyette & Woods, Inc. and
Raymond James & Associates, Inc., as sales agents and/or principals thereunder. Under the 2023 Equity Distribution Agreement, we
may issue and sell, from time to time, up to $100,000,000 in aggregate offering price of shares of our common stock, par value
$0.001 per share, with the intention to use the net proceeds from this at-the-market sales program to repay certain outstanding
indebtedness and make investments in portfolio companies in accordance with our investment objective and strategies. Upon
execution of the 2023 Equity Distribution Agreement, we no longer sold any shares under the 2021 Equity Distribution Agreement.
We refers to the issuance and sale of shares under the Equity Distribution Agreements as the "ATM Program".
In March 2022, we sold 14,924 shares of common stock through the ATM Program for net proceeds of $205,870, which was
used to repay borrowings under the Credit Facility.
In April 2022, we sold 13,416 shares of common stock through the ATM Program for net proceeds of $185,144, which was used
to repay borrowings under the Credit Facility.
In November 2022, we sold 120,834 shares of common stock through the ATM Program for net proceeds of $1,648,854, which
was used to repay borrowings under the Credit Facility.
In January 2023, we sold 33,812 shares of common stock through the ATM Program for net proceeds of $459,187, which was
used to repay borrowings under the Credit Facility.
In March 2023, we sold 547,802 shares of common stock through the ATM Program for net proceeds of $7,832,670, which was
used to repay borrowings under the Credit Facility.

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70
In April 2023, we sold 587,363 shares of common stock through the ATM Program for net proceeds of $8,027,626, which was
used to repay borrowings under the Credit Facility.
In May 2023, we sold 730,424 shares of common stock through the ATM Program for net proceeds of $10,471,012, which was
used to repay borrowings under the Credit Facility.
In June 2023, we sold 991,734 shares of common stock through the ATM Program for net proceeds of $13,566,642, which was
used to repay borrowings under the Credit Facility.
In August 2023, we sold 294,993 shares of common stock through the ATM Program for net proceeds of $4,092,986, which was
used to repay borrowings under the Credit Facility.
In September 2023, we sold 1,272,745 shares of common stock through the ATM Program for net proceeds of $17,477,976,
which was used to repay borrowings under the Credit Facility.
In May 2024, we sold 1,154,611 shares of common stock through the ATM Program for net proceeds of $15,859,129, which was
used to repay borrowings under the Credit Facility.
In June 2024, we sold 700,745 shares of common stock through the ATM Program for net proceeds of $9,531,069, which was
used to repay borrowings under the Credit Facility.
In July 2024, we sold 1,150 shares of common stock through the ATM Program for net proceeds of $15,633, which was used to
repay borrowings under the Credit Facility.
In August 2024, we sold 707,610 shares of common stock through the ATM Program for net proceeds of $9,631,798, which was
used to repay borrowings under the Credit Facility.
In September 2024, we sold 349,606 shares of common stock through the ATM Program for net proceeds of $4,727,126, which
was used to repay borrowings under the Credit Facility.
 In October 2024, we sold 18,374 shares of common stock through the ATM Program for net proceeds of $247,994, which was 
used to repay borrowings under the Credit Facility.
In November 2024, we sold 183,199 shares of common stock through the ATM Program for net proceeds of $2,501,729, which
was used to repay borrowings under the Credit Facility.
In December 2024, we sold 240,181 shares of common stock through the ATM Program for net proceeds of $3,282,112, which
was used to repay borrowings under the Credit Facility.
Purchases of Equity Securities
Dividend Reinvestment Plan
During the year ended December 31, 2024, as a part of our distribution reinvestment plan ("DRIP"), we purchased 182,184
shares of our common stock for an average price per share of $13.68 in the open market in order to satisfy the

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71
reinvestment portion of our dividends. The following chart outlines such purchases of our common stock during the year ended
December 31, 2024:
    Total Number     Average Price
of Shares
Paid Per
Period
Purchased
Share
January 1, 2024 – January 31, 2024
 
 16,071
$
 12.87
February 1, 2024 – February 29, 2024
 
 15,969
 
 12.95
March 1, 2024 – March 31, 2024
 
 16,111
 
 13.09
April 1, 2024 – April 30, 2024
 
 15,830
 
 13.42
May 1, 2024 – May 31, 2024
 
 15,081
 
 14.21
June 1, 2024 – June 30, 2024
 
 15,767
 
 13.81
July 1, 2024 – July 31, 2024
 
 15,487
 
 14.36
August 1, 2024 – August 31, 2024
 
 15,260
 
 13.95
September 1, 2024 – September 30, 2024
 
 15,318
 
 13.71
October 1, 2024 – October 31, 2024
 
 14,209
 
 14.11
November 1, 2024 – November 30, 2024
 
 12,705
 
 13.95
December 1, 2024 – December 31, 2024
 
 14,376
 
 13.89
Total
 
 182,184
$
 13.68
Price Range of Common Stock
Our shares of common stock are traded on the NYSE under the symbol “SCM.” In connection with our initial public offering,
our shares of common stock began trading on November 8, 2012, and before that date, there was no established trading market for
shares of our common stock.
The following table sets forth, for each fiscal quarter of the three most recent fiscal years, the range of high and low closing
prices of our common stock as reported on the NYSE and the sales price as a percentage of our net asset value (“NAV”).
    
    
    Premium or    
Premium or  
Discount of
Discount of  
NAV Per
Closing Sales Price(2)
High Sales
Low Sales  
Fiscal Year Ended
Share(1)     
High
    
Low
    
NAV(3)
    
NAV(3)
 
December 31, 2024
 
   
   
   
   
  
Fourth quarter
$  13.46
$  14.33
$  13.14  
 6.46 %  
 (2.38)%
Third quarter
$  13.55
$  14.41
$  13.39  
 6.35 %  
 (1.18)%
Second quarter
$  13.36
$  14.35
$  12.97  
 7.41 %  
 (2.92)%
First quarter
$  13.41
$  13.48
$  12.56  
 0.52 %  
 (6.34)%
December 31, 2023
 
  
 
  
 
   
   
  
Fourth quarter
$  13.26
$  13.73
$  12.34  
 3.54 %  
 (6.94)%
Third quarter
$  13.19
$  15.27
$  13.60  
 15.77 %  
 3.11 %
Second quarter
$  13.67
$  15.00
$  13.64  
 9.73 %  
 (0.22)%
First quarter
$  13.87
$  15.97
$  13.14  
 15.14 %  
 (5.26)%
December 31, 2022
 
  
 
  
 
   
   
  
Fourth quarter
$  14.02
$  13.96
$  11.98  
 (0.43)%  
 (14.55)%
Third quarter
$  14.15
$  14.08
$  11.44  
 (0.49)%  
 (19.15)%
Second quarter
$  14.07
$  14.20
$  11.13  
 0.92 %  
 (20.90)%
First quarter
$  14.03
$  14.15
$  13.08  
 0.86 %  
 (6.77)%
(1) NAV is determined as of the last date in the relevant quarter and therefore may not reflect the NAV per share on the date of the
high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.
(2) Closing sales price is determined as the high or low closing sales price noted within the respective quarter, not adjusted for
dividends.
(3) Calculated as of the respective high or low sales price divided by the quarter-end NAV.

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72
On March 3 2025, the last reported closing sales price of our common stock on the NYSE was $15.50 per share, which
represented a premium of approximately 15.2% to the NAV per share reported by us as of December 31, 2024.
Shares of BDCs’ common stock may trade at a market price that is less than the value of the net assets attributable to those
shares of common stock. The possibility that our shares of common stock will trade at a discount from NAV or at premiums that are
unsustainable over the long term are separate and distinct from the risk that our NAV will decrease. Since our shares of common
stock began trading on November 8, 2012, in connection with our initial public offering, our shares of common stock have traded at
times at a discount to the NAV attributable to those shares of common stock.
Stock Performance Graph
This graph compares the return on our shares of common stock with that of the Standard & Poor’s 500 Stock Index, the Russell
2000 Financial Services Index, and the Raymond James BDC Index, for the period from inception through December 31, 2024. The
graph assumes that, at inception, a person invested $100 in each share of our common stock, the S&P 500 Index, the Russell 2000
Financial Services Index, and the Raymond James BDC Index. The graph measures total stockholder return, which takes into account
both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
The graph and other information furnished under this Part II, Item 5 of this Annual Report on Form 10-K shall not be deemed to
be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the
Exchange Act. The stock price performance included in the above graph is not necessarily indicative of future stock price
performance.
Item 6. [Reserved]

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73
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Some of the statements in this Annual Report on Form 10-K constitute forward-looking statements, which relate to future events
or our future performance or financial condition. The forward-looking statements contained in this Annual Report on Form 10-K
involve risks and uncertainties, including statements as to:
●
our future operating results;
●
our business prospects and the prospects of our portfolio companies;
●
the effect of investments that we expect to make;
●
our contractual arrangements and relationships with third parties;
●
actual and potential conflicts of interest with Stellus Capital Management;
●
the dependence of our future success on the general economy and its effect on the industries in which we invest;
●
the impact of interest rate volatility on our business and our portfolio companies;
●
the ability of our portfolio companies to achieve their objectives;
●
the use of borrowed money to finance a portion of our investments;
●
the adequacy of our financing sources and working capital;
●
the timing of cash flows, if any, from the operations of our portfolio companies;
●
the ability of Stellus Capital Management to locate suitable investments for us and to monitor and administer our
investments;
●
the ability of Stellus Capital Management to attract and retain highly talented professionals;
●
our ability to maintain our qualification as a RIC and as a BDC; and
●
the effect of future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory
authorities) and conditions in our operating areas, particularly with respect to BDCs or RICs.
Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,”
“might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,”
“plan” or similar words.
We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on
the date of this Annual Report on Form 10-K. Actual results could differ materially from those anticipated in our forward-looking
statements, and future results could differ materially from historical performance. We undertake no obligation to revise or update any
forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or
regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the
future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-
K.

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74
Overview
We were organized as a Maryland corporation on May 18, 2012 and formally commenced operations on November 7, 2012. Our
investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through
debt and related equity investments in lower middle-market companies.
We are an externally managed, non-diversified, closed-end investment company that has elected to be regulated as a BDC under
the 1940 Act. Our investment activities are managed by our investment adviser, Stellus Capital Management.
As a BDC, we are required to comply with certain regulatory requirements. For instance, as a BDC, we must not acquire any
assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total
assets are qualifying assets. Qualifying assets include investments in “eligible portfolio companies” (as defined in the 1940 Act).
Under the relevant SEC rules, the term “eligible portfolio company” includes any issuer that (i) is organized and with their principal
of business in the United States, (ii) is not an investment company (other than SBICs that are wholly owned subsidiaries of a BDC) or
a company that would be an investment company but for certain exclusions under the 1940 Act, and (iii) satisfies any one of the
following criteria: such company (a) has a market capitalization of less than $250 million or does not have a class of securities listed
on a national securities exchange, (b) is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a
controlling influence over the management or policies of the company, and, as a result thereof, the BDC has an affiliated person who
is a director of the company, or (c) is a small and solvent company having total assets of not more than $4 million and capital and
surplus of not less than $2 million.
We have elected to be treated, qualify, and intend to continue to qualify annually for tax purposes as a RIC under Subchapter M
of the Code. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset
diversification requirements. As of December 31, 2024, we were in compliance with the RIC requirements. As a RIC, we generally
will not be subject to U.S. federal income taxes on any income we distribute to our stockholders.
Under the 1940 Act, we are allowed to incur a maximum asset coverage ratio of 150% if certain requirements are met, including
the approval of a "required majority" (as such term is defined in Section 57(o) of the 1940 Act) the of Board and the approval of our
stockholders.
On April 4, 2018, the Board, including a “required majority” of the Board, approved the application of the modified asset
coverage requirements set forth in Section 61(a)(2) of the 1940 Act. At our 2018 annual meeting of stockholders, our stockholders
also approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result,
the asset coverage ratio applicable to us was decreased from 200% to 150%, effective June 29, 2018, which effectively increased the
amount of leverage we may incur. As of December 31, 2024, our asset coverage ratio was 234%. The amount of leverage that we
employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.
Economic Developments
Economic activity has continued to accelerate across sectors and regions. Nonetheless, we have observed and continue to observe
supply chain interruptions, labor resource shortages, commodity inflation, fluctuating interest rates, bank impairments and failures,
economic sanctions in response to international conflicts and instances of geopolitical, economic and financial market instability in
the United States and abroad. One or more of these factors may contribute to increased market volatility and may have long- and
short-term effects in the United States and worldwide financial markets.

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75
Portfolio Composition and Investment Activity
Portfolio Composition
We originate and invest primarily in privately held lower middle-market companies (typically those with $5.0 million to
$50.0 million of EBITDA) through first lien (including unitranche), second lien, and unsecured debt financing, often with a
corresponding equity investment.
As of December 31, 2024, we had $953.5 million (at fair value) invested in 105 companies. As of December 31, 2024, our
portfolio included approximately 90% of first lien debt (including unitranche investments), 1% of second lien debt, 1% of unsecured
debt and 8% of equity investments at fair value. The composition of our investments at cost and fair value as of December 31, 2024
was as follows:
    
Cost
    
Fair Value
Senior Secured – First Lien(1)
$  884,322,462
$  856,096,255
Senior Secured – Second Lien
 
 12,073,732
 11,948,850
Unsecured Debt
 
 6,755,866
 6,612,493
Equity
 
 58,636,646
 78,840,090
Total Investments at Fair Value
$  961,788,706
$  953,497,688
(1) Includes unitranche investments, which accounted for 2.0% of our portfolio at fair value. Unitranche structures may combine
characteristics of first lien senior secured as well as second lien and/or subordinated loans. Our unitranche loans will expose us to
the risks associated with second lien and subordinated loans to the extent we invest in the “last-out” tranche.
As of December 31, 2023, we had $874.5 million (at fair value) invested in 93 companies. As of December 31, 2023, our
portfolio included approximately 89% of first lien debt (including unitranche investments), 2% of second lien debt, 1% of unsecured
debt and 8% of equity investments at fair value. The composition of our investments at cost and fair value as of December 31, 2023
was as follows:
    
Cost
    
Fair Value
Senior Secured – First Lien(1)
$  793,819,152
$  774,789,320
Senior Secured – Second Lien
 
 42,269,568
 
 21,957,500
Unsecured Debt
 
 6,138,183
 
 5,956,280
Equity
 
 59,916,647
 
 71,757,583
Total Investments at Fair Value
$  902,143,550
$  874,460,683
(1) Includes unitranche investments, which accounted for 4.5% of our portfolio at fair value. Unitranche structures may combine
characteristics of first lien senior secured as well as second lien and/or subordinated loans. Our unitranche loans will expose us to
the risks associated with second lien and subordinated loans to the extent we invest in the “last-out” tranche.
Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to
provide funding when requested by portfolio companies in accordance with the terms and conditions of the underlying loan
agreements. As of December 31, 2024 and December 31, 2023, we had unfunded commitments of $41.3 million and $37.0 million,
respectively, to provide financing to 71 and 57 portfolio companies, respectively. As of December 31, 2024, we had sufficient
liquidity (through cash on hand and available borrowings under the Credit Facility) to fund such unfunded commitments should the
need arise.

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76
The following is a summary of geographical concentration of our investment portfolio as of December 31, 2024:
% of Total
 
Investments at
Cost
Fair Value
Fair Value
Texas
 $  159,028,754  $  154,041,942  
 16.15 %
California
 
 160,285,777  
 152,583,692  
 16.00 %
Florida
 
 108,434,730  
 104,718,969  
 10.98 %
Illinois
 
 66,486,029  
 56,591,435  
 5.94 %
Pennsylvania
 
 53,271,774  
 54,438,594  
 5.71 %
Arizona
 
 43,552,887  
 46,839,063  
 4.91 %
New York
 
 36,116,358  
 36,306,098  
 3.81 %
Ohio
 
 33,645,676  
 35,847,804  
 3.76 %
Canada
 
 32,107,256  
 32,375,749  
 3.40 %
Colorado
 
 31,283,806  
 28,218,186  
 2.96 %
Wisconsin
 
 27,935,159  
 23,352,084  
 2.45 %
District of Columbia
 
 22,711,852  
 26,654,283  
 2.80 %
Georgia
 
 12,391,680  
 23,345,077  
 2.45 %
North Carolina
 
 20,946,327  
 22,314,018  
 2.34 %
Tennessee
 
 20,490,429  
 20,703,772  
 2.17 %
Massachusetts
 
 19,965,590  
 20,559,398  
 2.16 %
Missouri
 
 18,590,476  
 18,712,569  
 1.96 %
Iowa
 
 13,486,486  
 13,486,486  
 1.41 %
Idaho
 
 11,763,648  
 11,830,192  
 1.24 %
New Jersey
 
 11,181,815  
 11,754,323  
 1.23 %
Michigan
 
 11,389,446  
 11,510,608  
 1.21 %
Louisiana
 
 9,216,389  
 9,371,830  
 0.98 %
Virginia
 
 9,293,896  
 9,373,367  
 0.98 %
Washington
 
 8,193,234  
 8,216,962  
 0.86 %
Maryland
 
 7,529,294  
 7,526,300  
 0.79 %
Minnesota
 
 6,448,091  
 6,452,144  
 0.68 %
South Carolina
 
 4,836,178  
 4,984,667  
 0.52 %
Indiana
 
 743,770  
 920,343  
 0.10 %
United Kingdom
 
 461,899  
 467,733  
 0.05 %
Total Investments
$  961,788,706
$  953,497,688  
 100.00 %

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77
The following is a summary of geographical concentration of our investment portfolio as of December 31, 2023:
    
    
    % of Total  
Investments  
Cost
Fair Value
at Fair Value  
Texas
 $  182,531,256  $  175,311,724  
 20.04 %
California
 
 175,207,692  
 167,713,589  
 19.18 %
Florida
 
 93,155,844  
 92,297,574  
 10.55 %
Pennsylvania
 
 49,939,315  
 50,188,102  
 5.74 %
Illinois
 
 58,633,617  
 49,834,429  
 5.70 %
Arizona
 
 42,136,322  
 44,558,279  
 5.10 %
Ohio
 
 31,805,370  
 34,370,277  
 3.93 %
Colorado
 
 31,525,420  
 30,971,079  
 3.54 %
Wisconsin
 
 27,452,444  
 26,190,771  
 3.00 %
Washington
 
 24,321,085  
 24,540,695  
 2.81 %
Georgia
 
 9,100,050  
 18,885,409  
 2.16 %
Maryland
 
 16,676,194  
 16,718,728  
 1.91 %
New York
 
 14,692,043  
 14,931,263  
 1.71 %
Indiana
 
 14,235,403  
 14,488,700  
 1.66 %
North Carolina
 
 13,891,930  
 14,532,532  
 1.66 %
District of Columbia
 
 13,030,899  
 14,006,563  
 1.60 %
New Jersey
 
 10,461,226  
 11,191,295  
 1.28 %
Michigan
 
 10,664,100  
 10,736,783  
 1.23 %
Massachusetts
 
 10,151,621  
 10,515,487  
 1.20 %
Tennessee
 
 9,390,657  
 9,379,311  
 1.07 %
Missouri
 
 8,862,512  
 8,850,162  
 1.01 %
Canada
 
 8,700,383  
 8,813,132  
 1.01 %
Idaho
 
 8,405,946  
 8,470,065  
 0.97 %
Minnesota
 
 5,976,818  
 5,907,639  
 0.68 %
Louisiana
 
 5,538,823  
 5,536,231  
 0.63 %
South Carolina
 
 4,946,375  
 5,083,862  
 0.58 %
United Kingdom
 
 20,710,205  
 437,002  
 0.05 %
Total Investments
$  902,143,550
$  874,460,683  
 100.00 %

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78
The following is a summary of industry concentration of our investment portfolio as of December 31, 2024:
% of Total
 
Investments at
Cost
Fair Value
Fair Value
 
Services: Business
$  219,665,133
$  234,908,112  
 24.64 %
High Tech Industries
 
 91,135,577
 93,468,792  
 9.81 %
Healthcare & Pharmaceuticals
 
 85,300,317
 85,478,418  
 8.97 %
Media: Advertising, Printing & Publishing
 
 71,318,416
 72,291,584  
 7.58 %
Beverage & Food
 
 64,052,951
 68,902,142  
 7.23 %
Consumer Goods: Non-Durable
 
 67,123,135
 54,473,282  
 5.71 %
Services: Consumer
 
 49,388,222
 46,066,301  
 4.83 %
Capital Equipment
 
 41,322,214
 43,647,466  
 4.58 %
Consumer Goods: Durable
 
 43,393,413
 42,094,390  
 4.41 %
Chemicals, Plastics, & Rubber
 
 36,693,101
 36,907,602  
 3.87 %
Construction & Building
 
 32,374,992
 32,979,859  
 3.46 %
Aerospace & Defense
 
 26,014,106
 21,624,091  
 2.27 %
Environmental Industries
 
 18,903,681
 18,282,056  
 1.92 %
Transportation & Logistics
 
 17,244,131
 17,532,488  
 1.84 %
Retail
 
 14,799,085
 14,723,620  
 1.54 %
Media: Broadcasting & Subscription
 
 12,170,577
 14,314,711  
 1.50 %
Containers, Packaging, & Glass
 
 18,007,571
 12,911,794  
 1.35 %
Energy: Oil & Gas
 
 11,353,959
 10,728,031  
 1.13 %
Hotel, Gaming, & Leisure
 
 7,113,661
 8,142,050  
 0.85 %
FIRE: Real Estate
 
 17,934,808
 7,652,436  
 0.80 %
Media: Diversified & Production
 
 5,822,637
 5,934,853  
 0.62 %
Education
 
 10,537,738
 5,341,151  
 0.56 %
Finance
 
 119,281
 5,092,459  
 0.53 %
Total Investments
$  961,788,706
$  953,497,688  
100.00 %

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79
The following is a summary of industry concentration of our investment portfolio as of December 31, 2023:
    
    
    % of Total  
Investments  
Cost
Fair Value
at Fair Value  
Services: Business
$  198,018,290
$  207,963,749  
 23.78 %
Healthcare & Pharmaceuticals
 
 100,724,952
 102,915,887  
 11.77 %
High Tech Industries
 
 90,795,799
 91,992,012  
 10.52 %
Media: Advertising, Printing & Publishing
 
 57,640,321
 58,741,061  
 6.72 %
Consumer Goods: Non-Durable
 
 63,145,301
 52,938,611  
 6.05 %
Beverage, Food, & Tobacco
 
 42,554,582
 45,074,817  
 5.15 %
Consumer Goods: Durable
 
 49,046,730
 43,725,324  
 5.00 %
Capital Equipment
 
 32,517,673
 33,879,801  
 3.87 %
Services: Consumer
 
 33,976,976
 33,260,111  
 3.80 %
Construction & Building
 
 30,319,119
 30,486,411  
 3.49 %
Aerospace & Defense
 
 46,745,104
 24,541,921  
 2.81 %
Environmental Industries
 
 24,219,811
 22,997,844  
 2.63 %
Media: Broadcasting & Subscription
 
 17,952,103
 20,760,920  
 2.37 %
Transportation & Logistics
 
 17,235,150
 17,661,859  
 2.02 %
Chemicals, Plastics, & Rubber
 
 18,338,366
 17,569,176  
 2.01 %
Metals & Mining
 
 16,580,562
 16,625,000  
 1.90 %
Containers, Packaging, & Glass
 
 17,432,252
 15,539,555  
 1.78 %
Utilities: Oil & Gas
 
 9,943,041
 10,000,000  
 1.14 %
Education
 
 10,251,179
 8,367,469  
 0.96 %
FIRE: Real Estate
 
 17,285,138
 6,175,994  
 0.71 %
Media: Diversified & Production
 
 5,662,174
 5,763,247  
 0.66 %
Finance
 
 569,039
 5,736,868  
 0.66 %
Hotel, Gaming, & Leisure
 
 —
 890,968  
 0.10 %
Energy: Oil & Gas
 
 1,189,888
 852,078  
 0.10 %
Total Investments
$  902,143,550
$  874,460,683  
 100.00 %
At December 31, 2024, our average portfolio company investment at amortized cost and fair value was approximately
$9.2 million and $9.2 million, respectively, and our largest portfolio company investment at amortized cost and fair value was
approximately $23.2 million and $21.2 million, respectively. At December 31, 2023, our average portfolio company investment at
amortized cost and fair value was approximately $9.7 million and $9.4 million, respectively, and our largest portfolio company
investment at amortized cost and fair value was approximately $21.7 million and $18.9 million, respectively.
At December 31, 2024, 94.5% of our debt investments bore interest based on floating rates (subject to interest rate floors), such
as the Secured Overnight Financing Rate (“SOFR”), and 5.5% bore interest at fixed rates. At December 31, 2023, 97.7% of our debt
investments bore interest based on floating rates (subject to interest rate floors), such as SOFR, and 2.3% bore interest at fixed rates.
The weighted average yield on all of our debt investments as of December 31, 2024 and December 31, 2023 was approximately
10.3% and 11.9%, respectively, including debt investments on non-accrual status. The weighted average yield on all of our
investments, including non-income producing equity positions and debt investments on non-accrual status, as of December 31, 2024
and December 31, 2023 was approximately 9.7% and 11.1%, respectively. The weighted average yield was computed using the
effective interest rates for all of our debt investments, including accretion of OID. The weighted average yield of our debt investments
is not the same as a return on investment for our stockholders, but rather relates to a portion of our investment portfolio and is
calculated before the payment of all of our subsidiaries’ fees and expenses.
As of December 31, 2024 and December 31, 2023, we had cash and cash equivalents of $20.1 million and $26.1 million,
respectively, the majority of which was held in our SBIC subsidiaries.

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80
Investment Activity
During the year ended December 31, 2024, we made $221.2 million of investments in 21 new portfolio companies and 29
existing portfolio companies. During the year ended December 31, 2024, we received an aggregate of $151.8 million in proceeds
from repayments of our investments.
During the year ended December 31, 2023, we made $190.9 million of investments in 18 new portfolio companies and 28
existing portfolio companies. During the year ended December 31, 2023, we received an aggregate of $141.3 million in proceeds
from repayments of our investments.
Our level of investment activity can vary substantially from period to period depending on many factors, including the amount of
debt and equity capital to lower middle-market companies, the level of merger and acquisition activity, the general economic
environment and the competitive environment for the types of investments we make.
Asset Quality
In addition to various risk management and monitoring tools, Stellus Capital Management uses an investment rating system to
characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating
system uses a five-level numeric scale. The following is a description of the conditions associated with each investment category:
●
Investment Category 1 is used for investments that are performing above expectations, and whose risks remain favorable
compared to the expected risk at the time of the original investment.
●
Investment Category 2 is used for investments that are performing within expectations and whose risks remain neutral
compared to the expected risk at the time of the original investment. All new loans are initially rated 2.
●
Investment Category 3 is used for investments that are performing below expectations and that require closer monitoring,
but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with
financial covenants.
●
Investment Category 4 is used for investments that are performing substantially below expectations and whose risks have
increased substantially since the original investment. These investments are often in work out. Investments with a rating of 4
are those for which some loss of return but no loss of principal is expected.
●
Investment Category 5 is used for investments that are performing substantially below expectations and whose risks have
increased substantially since the original investment. These investments are almost always in work out. Investments with a
rating of 5 are those for which some loss of return and principal is expected.

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81
The following is a summary of asset quality ratings of our investment portfolio as of December 31, 2024 and December 31,
2023:
    
As of December 31, 2024
As of December 31, 2023
(dollars in millions)
(dollars in millions)
    
    
Number of     
    
    
Number of
% of Total
Portfolio
% of Total
Portfolio
Investment Category
Fair Value
Portfolio
Companies(1)
Fair Value
Portfolio
Companies(1)
1
$
 227.2  
 24 %  
 24
$
 214.1  
 24 %  
 22
2
 
 564.5  
 59 %  
 61
 
 535.3  
 62 %  
 54
3
 
 112.0  
 12 %  
 11
 
 107.2  
 12 %  
 11
4
 
 41.3  
 4 %  
 5
 
 11.1  
 1 %  
 1
5
 
 8.5  
 1 %  
 5
 
 6.8  
 1 %  
 6
Total
$
 953.5  
 100 %  
 106
$
 874.5  
 100 %  
 94
(1) One portfolio company appears in two categories as of December 31, 2024 and as of December 31, 2023.
Loans and Debt Securities on Non-Accrual Status
We will not accrue interest on loans and debt securities if we have reason to doubt our ability to collect such interest. As of
December 31, 2024, we had loans to seven portfolio companies that were on non-accrual status, which represented approximately
8.3% of our loan portfolio at cost and 5.4% at fair value. As of December 31, 2023, we had loans to four portfolio companies that
were on non-accrual status, which represented approximately 4.2% of our loan portfolio at cost and 1.3% at fair value. As of
December 31, 2024 and December 31, 2023, $6.5 million and $7.5 million of income from investments on non-accrual had not been
accrued, respectively.
Results of Operations
An important measure of our financial performance is net increase (decrease) in net assets resulting from operations, which
includes net investment income (loss), net realized gain (loss) and net unrealized appreciation (depreciation). Net investment income
(loss) is the difference between our income from interest, dividends, fees and other investment income and our operating expenses
including interest on borrowed funds. Net realized gain (loss) on investments is the difference between the proceeds received from
dispositions of portfolio investments and their amortized cost. Net unrealized appreciation (depreciation) on investments is the net
change in the fair value of our investment portfolio.
Comparison of the Years Ended December 31, 2024, 2023, and 2022
Revenues
We generate revenue in the form of interest income on debt investments and capital gains and distributions, if any, on investment
securities that we may acquire in portfolio companies. Our debt investments typically have a term of five to seven years and bear
interest at primarily floating rates. Interest on our debt securities is generally payable quarterly. Payments of principal on our debt
investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some
cases, our debt investments may pay PIK interest. Any outstanding principal amount of our debt securities and any accrued but
unpaid interest will generally become due at the maturity date. The level of interest income we receive is directly related to the
balance of interest-bearing investments multiplied by the weighted average yield of our investments. We expect that the total dollar
amount of interest and any dividend income that we earn will increase as the size of our investment portfolio increases. In addition,
we may generate revenue in the form of prepayment fees, commitment, loan origination, structuring or due diligence fees, fees for
providing significant managerial assistance and consulting fees.

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82
The following shows the breakdown of investment income for the years ended December 31, 2024, 2023, and 2022 (in millions).
For the year ended
December 31, 2024
December 31, 2023
December 31, 2022
Interest income(1)
$
 95.4
$
 96.9
$
 70.8
PIK interest
 3.3
 3.8
 1.4
Miscellaneous fees(1)
 6.0  
 5.1  
 2.9
Total
$
 104.7
$
 105.8
$
 75.1
(1)
For the years ended December 31, 2024, 2023, and 2022, we recognized $2.5 million, $2.7 million and $1.2 million of non-
recurring income, respectively. Non-recurring income was related to early repayments, the recognition of previously reserved
income from a prior period, and amendments to specific loan positions.
The decrease in interest income from the year ended December 31, 2023 to the year ended December 31, 2024 was due primarily
to falling interest rates and increased loans on non-accrual, offset by growth in the overall investment portfolio. The increase in
interest income from the year ended December 31, 2022 to the year ended December 31, 2023 was due primarily to growth in the
overall investment portfolio and rising interest rates.
Expenses
Our primary operating expenses include the payment of fees to Stellus Capital Management under the Investment Advisory
Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described
below. We bear all other out-of-pocket costs and expenses of our operations and transactions, which may include:
●
organization and offering costs;
●
valuing our assets and calculating our net asset value (including the cost and expenses of any independent valuation firm);
●
fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal
affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or
otherwise relating to, or associated with, evaluating and making investments;
●
interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio
acquisition efforts;
●
base management and incentive fees;
●
offerings of our common stock and other securities;
●
administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of
Stellus Capital Management’s overhead in performing its obligations under the Administration Agreement, including rent
and the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and his respective staffs);
●
transfer agent, dividend agent and custodial fees and expenses;
●
U.S. federal and state registration fees;
●
all costs of registration and listing our securities on any securities exchange;

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83
●
U.S. federal, state and local taxes;
●
independent directors’ fees and expenses;
●
costs of preparing and filing reports or other documents required by the SEC or other regulators;
●
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
●
costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any
other insurance premiums;
●
direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, copying,
secretarial and other staff, independent auditors and outside legal costs;
●
proxy voting expenses; and
●
all other expenses incurred by us or Stellus Capital Management in connection with administering our business.
The following shows the breakdown of operating expenses for the years ended December 31, 2024, 2023, and 2022 (in millions).
For the year ended
December 31, 2024  December 31, 2023  December 31, 2022  
Operating Expenses
Management fees
   $
 15.7 $
 15.5 $
 14.8
Valuation fees
   
 0.4
 0.4
 0.3
Administrative services expenses
   
 1.9
 1.9
 1.8
Income incentive fees
   
 10.0
 10.2
 3.8
Capital gains incentive fee reversal
   
 —
 (0.6)
 (2.8)
Professional fees
   
 1.2
 1.4
 1.1
Directors’ fees
   
 0.4
 0.4
 0.3
Insurance expense
   
 0.5
 0.5
 0.5
Interest expense and other fees
   
 31.5
 32.0
 24.5
Income tax expense
   
 1.8
 1.3
 1.2
Other general and administrative expenses
   
 1.2
 0.9
 1.0
Total Operating Expenses
$
 64.6 $
 63.9 $
 46.5
Income incentive fee waiver
 (1.8)
 (0.3)
 —
Total Operating Expenses, net of fee waivers
$
 62.8 $
 63.6 $
 46.5
The decrease in operating expenses for the year ended December 31, 2024, as compared to the year ended December 31, 2023,
was due to higher income incentive fee waivers due to the total return limitation, offset in part by higher income tax expense due to
increase taxable spillover income. The increase in operating expenses for the year ended December 31, 2023, as compared to the year
ended December 31, 2022, was due to (1) higher interest expense as a result of higher outstanding balances on our SBA-guaranteed
debentures, as well as rising interest rates, (2) higher management fees due to a larger investment portfolio and (3) higher incentive
fees due to portfolio performance.
Net Investment Income
For the year ended December 31, 2024, net investment income was $41.9 million, or $1.64 per common share based on
25,596,593 weighted-average common shares outstanding. For the year ended December 31, 2023, net investment income was
$42.2 million, or $1.92 per common share based on 22,004,648 weighted-average common shares outstanding. For the year ended
December 31, 2022, net investment income was $28.6 million, or $1.46 per common share based on 19,552,931 weighted-average
common shares outstanding.

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84
Net investment income for the year ended December 31, 2024 was materially similar compared to the year ended December 31,
2023 as a result of decreased interest income as explained in the “Revenues” section above, offset by lower operating expenses as
explained in the “Expenses” section above.
Net investment income for the year ended December 31, 2023 increased compared to the year ended December 31, 2022 as a
result of growth in the overall investment portfolio and rising interest rates, offset by higher operating expenses as explained in the
“Expenses” section above.
Net Realized Gains and Losses
We measure realized gains or losses by the difference between the net proceeds from the repayment, sale or other disposition and
the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or
depreciation previously recognized.
Proceeds from repayments of investments and amortization of certain other investments for the year ended December 31, 2024
totaled $151.8 million, net realized losses on investments totaled ($15.7) million and net realized losses on foreign currency
translations of ($0.1) million. Net realized losses during the year ended December 31, 2024 resulted primarily from losses from the
realization of our debt investments in certain portfolio companies, partially offset from gains from the realization of certain equity
investments. Proceeds from repayments of investments and amortization of certain other investments for the year ended December
31, 2023 totaled $141.3 million resulting in net realized losses on investments totaling ($30.2) million and net realized losses on
foreign currency translations of ($0.1) million, primarily from losses from the realization of our debt investments in certain portfolio
companies, partially offset from gains from the realization of our equity investments. Proceeds from repayments of investments and
amortization of certain other investments for the year ended December 31, 2022 totaled $127.5 million resulting in net realized gains
totaling $3.7 million, primarily from gains from the realization of our equity investments in certain portfolio companies, offset by
dispositions of loans in our portfolio.
Net Change in Unrealized Appreciation (Depreciation) of Investments
Net change in unrealized appreciation (depreciation) primarily reflects the change in portfolio investment values during the
reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized.
Net change in unrealized appreciation (depreciation) on investments and cash equivalents, including foreign currency
translations, for the year ended December 31, 2024, 2023, and 2022 totaled $19.6 million, $2.8 million, and ($17.5) million,
respectively.
The change in unrealized appreciation in 2024 was primarily due to realizations on investments previously written down. The
change in unrealized appreciation in 2023 was primarily due to realizations on investments previously written down. The change in
unrealized depreciation in 2022 was primarily due to write downs on specific investments.
Benefit (Provision) for Taxes on Unrealized Depreciation(Appreciation) on Investments
We have direct wholly owned subsidiaries that have elected to be treated as corporations for U.S. federal income tax purposes
(the "Taxable Subsidiaries"), and as a result, the income of the Taxable Subsidiaries is subject to U.S. federal income tax imposed at
corporate rates. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are “pass through”
entities for U.S. federal income tax purposes and continue to comply with the “source income” requirements contained in RIC tax
provisions of the Code. The Taxable Subsidiaries are not consolidated with us for U.S. federal income tax purposes and may
independently generate income, gains, deductions or losses for U.S. federal income tax purposes as a result of their ownership of
certain portfolio investments. The U.S. federal income tax expense, or benefit, if any, and related tax assets and liabilities are reflected
in our Consolidated Financial Statements.

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For the years ended December 31, 2024, 2023 and 2022, we recognized a deferred tax benefit (provision) related to unrealized
depreciation (appreciation) on certain equity investments for income tax at our Taxable Subsidiaries of approximately $0.2 million,
($0.1) million, and ($0.2) million, respectively.
For the years ended December 31, 2024 and 2023, we recognized tax benefit related to losses realized on certain equity
investments held at our Taxable Subsidiaries of less than $0.1 million and $3.0 million, respectively. There was no such tax expense
for the year ended December 31, 2022. As of December 31, 2024 and 2023, a tax receivable related to the tax benefit on realized
losses of $1.3 million and $1.6 million, respectively, was included on the Consolidated Statements of Assets and Liabilities. As of
December 31, 2023, a deferred tax liability of $0.2 million was included in Consolidated Statements of Assets and Liabilities. As of
December 31, 2024, there was no such deferred tax liability included in Consolidated Statements of Assets and Liabilities.
Net Increase in Net Assets Resulting from Operations
Net increase in net assets resulting from operations totaled $45.8 million, or $1.79 per common share based on weighted-average
common shares of 25,596,593 outstanding for the year ended December 31, 2024.
Net increase in net assets resulting from operations totaled $17.5 million, or $0.80 per common share based on weighted-average
common shares of 22,004,648 outstanding for the year ended December 31, 2023.
Net increase in net assets resulting from operations totaled $14.5 million, or $0.74 per common share based on weighted-average
common shares of 19,552,931 outstanding for the year ended December 31, 2022.
The net increase in net assets resulting from operations for the year ended December 31, 2024 as compared to the year ended
December 31, 2023 was primarily due to a decrease in realized losses and increase on unrealized appreciation. The net increase in net
assets resulting from operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was
primarily due to an increase in net investment income, offset by realized losses.
Financial Condition, Liquidity and Capital Resources
Cash Flows from Operating and Financing Activities
Our operating activities used net cash of $28.6 million for the year ended December 31, 2024, primarily in connection with the
purchase of portfolio investments, offset by sales and repayments of portfolio investments. Our financing activities for the year ended
December 31, 2024 provided cash of $22.6 million primarily from our ATM Program and net borrowings on our Credit Facility,
offset by stockholder distributions.
Our operating activities used net cash of $17.3 million for the year ended December 31, 2023, primarily in connection with the
purchase of portfolio investments, offset by sales and repayments of portfolio investments. Our financing activities for the year ended
December 31, 2023 used cash of $4.7 million primarily from stockholder distributions and net payments on our Credit Facility, offset
by proceeds from our ATM Program.
Our operating activities used net cash of $56.3 million for the year ended December 31, 2022, primarily in connection with the
purchase of portfolio investments, offset by sales and repayments of portfolio investments. Our financing activities for the year ended
December 31, 2022 provided cash of $60.2 million primarily from proceeds from SBA-guaranteed debentures and net borrowings on
our Credit Facility.
Liquidity and Capital Resources
Our liquidity and capital resources are derived from the Credit Facility, Notes Payable, SBA-guaranteed debentures and cash
flows from operations, including investment sales and repayments, the ATM Program, and income earned. Our primary use of funds
from operations includes investments in portfolio companies and other operating expenses we incur, as well as the payment of
dividends to the holders of our common stock. We used, and expect to continue to use,

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86
these capital resources as well as proceeds from turnover within our portfolio and from public and private offerings of securities to
finance our investment activities. Although we expect to fund the growth of our investment portfolio through the net proceeds from
future public and private equity offerings and issuances of senior securities or future borrowings to the extent permitted by the 1940
Act, our plans to raise capital may not be successful. In this regard, if our common stock trades at a price below our then-current net
asset value per share, we may be limited in our ability to raise equity capital given that we cannot sell our common stock at a price
below net asset value per share unless our stockholders approve such a sale and our Board makes certain determinations in connection
therewith. A proposal approved by our stockholders at our 2024 annual stockholders meeting authorizes us to sell up to 25% of our
outstanding common stock at a price equal to or below the then-current net asset value per share in one or more offerings. This
authorization will expire on the earlier of June 20, 2025, the one-year anniversary of our 2024 annual stockholders meeting, or the
date of our 2025 annual stockholders meeting. We would need similar future approval from our stockholders to issue shares below
the then current net asset value per share any time after the expiration of the current approval. In addition, we intend to distribute
between 90% and 100% of our taxable income to our stockholders in order to satisfy the requirements applicable to RICs under
Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments, to make additional
investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. In
addition, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are
required to sell these investments, we may realize significantly less than their recorded value.
Also, as a BDC, we generally are required to meet an asset coverage ratio of total assets, less liabilities and indebtedness not
represented by senior securities, over the aggregate amount of our senior securities, which includes all of our borrowings and any
outstanding preferred stock, of at least 150% effective June 29, 2018 (at least 200% prior to June 29, 2018). This requirement limits
the amount that we may borrow. We have received exemptive relief from the SEC to permit us to exclude the debt of the SBIC
subsidiaries guaranteed by the SBA from the definition of senior securities in the asset coverage test under the 1940 Act. We were in
compliance with the asset coverage ratio requirement at all times. As of December 31, 2024 and December 31, 2023, our asset
coverage ratio was 234% and 223%, respectively. The amount of leverage that we employ will depend on our assessment of market
conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of the
proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings
within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to
make investments will exceed the cost of such borrowing. As of December 31, 2024 and December 31, 2023, we had cash and cash
equivalents of $20.1 million and $26.1 million, respectively.
Credit Facility
On October 11, 2017, we entered into a senior secured revolving credit agreement, as amended, dated as of October 10, 2017,
that was amended and restated on December 21, 2021, February 28, 2022, May 13, 2022, November 21, 2023, and October 30, 2024,
with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders.
The Credit Facility provides for borrowings up to a maximum of $315.0 million on a committed basis with an accordion feature
that allows us to increase the aggregate commitments up to $350.0 million, subject to new or existing lenders agreeing to participate in
the increase and other customary conditions.
Pursuant to the Fourth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, the Credit Facility
will bear interest, subject to our election, on a per annum basis equal to (i) term SOFR plus 2.50% (or 2.75% during certain periods in
which our asset coverage ratio is equal to or below 1.90 to 1.00) plus a SOFR credit spread adjustment (0.10% for one-month term
SOFR and 0.15% for three-month term SOFR), with a 0.25% SOFR floor, or (ii) 1.50% (or 1.75% during certain periods in which our
asset coverage ratio is equal to or below 1.90 to 1.00) plus an alternate base rate based on the highest of the prime rate (subject to a
3% floor), Federal Funds Rate plus 0.50% and one-month term SOFR plus 1.00%. We pay unused commitment fees of 0.50% per
annum on the unused lender commitments under the Credit Facility. Interest is payable monthly or quarterly in arrears. The
commitment to fund the revolver expires on November 21, 2027, after which we may no longer borrow under the Credit Facility and
must begin repaying principal equal to 1/12 of the aggregate amount outstanding under the Credit Facility each month. Any amounts
borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable,

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on November 21, 2028. Our obligations to the lenders are secured by a first priority security interest in our portfolio of securities and
cash not held at the SBIC subsidiaries, but excluding short term investments. The Credit Facility contains certain covenants,
including but not limited to: (i) maintaining a minimum liquidity test of at least $10.0 million, including cash, liquid investments and
undrawn availability, (ii) maintaining an asset coverage ratio of at least 1.67 to 1.00, (iii) maintaining a minimum stockholder’s
equity, and (iv) maintaining a minimum interest coverage ratio of at least 1.75 to 1.00. As of December 31, 2024, we were in
compliance with these covenants.
As of December 31, 2024 and December 31, 2023, the outstanding balance under the Credit Facility was $175.4 million and
$160.1 million, respectively. The carrying amount of the amount outstanding under the Credit Facility approximates its fair value.
The fair value of the Credit Facility is determined in accordance with ASC 820, which defines fair value in terms of the price that
would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current
market conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or
entities with similar credit risk, adjusted for nonperformance risk, if any. We have incurred costs of $7.3 million in connection with
the current Credit Facility, which were capitalized and are being amortized over the life of the facility. Additionally, $0.3 million of
costs from a prior credit facility will continue to be amortized over the remaining life of the Credit Facility. As of December 31, 2024
and 2023, $3.1 million and $3.5 million of such prepaid loan structure fees and administration fees had yet to be amortized,
respectively. These prepaid loan fees are presented on our Consolidated Statements of Assets and Liabilities as a deduction from the
debt liability attributable to the Credit Facility.
Interest on the Credit Facility is paid monthly or quarterly in arrears. The following table summarizes the interest expense and
amortized loan fees on the Credit Facility for the years ended December 31, 2024, 2023, and 2022 (dollars in millions):
For the year ended
December 31, 2024
December 31, 2023
December 31, 2022
Interest expense
$
 13.6
$
 14.7
$
 9.2
Loan fee amortization
 1.1  
 0.7  
 0.6  
Total interest and financing expenses
$
 14.7
$
 15.4
$
 9.8
Weighted average interest rate
 
 8.3 %   
 7.9 %   
 4.4 %  
Effective interest rate (including fee amortization)
 
 8.9 %   
 8.3 %   
 4.8 %  
Average debt outstanding
$
 164.3
$
 186.1
$
 204.3
Cash paid for interest and unused fees
$
 13.5
$
 14.5
$
 9.0
SBA-guaranteed debentures
Due to the SBIC subsidiaries’ status as licensed SBICs, we can issue debentures guaranteed by the SBA at favorable interest
rates. Under the regulations applicable to SBICs, a single licensee can have outstanding SBA-guaranteed debentures, subject to a
regulatory leverage limit, up to two times the amount of regulatory capital. As of both December 31, 2024 and 2023, the SBIC I
subsidiary had $75.0 million in “regulatory capital”, as such term is defined by the SBA, and $150 million of SBA-guaranteed
debentures outstanding. As of both December 31, 2024 and 2023, the SBIC II subsidiary had $87.5 million in regulatory capital and
$175 million of SBA-guaranteed debentures outstanding.
On August 12, 2014, we obtained exemptive relief from the SEC to permit us to exclude debt of the SBIC subsidiaries
guaranteed by the SBA for purposes of complying with 150% asset coverage test under the 1940 Act. The exemptive relief provides
us with increased flexibility under the 150% asset coverage test by permitting us to borrow up to $325.0 million more than we would
otherwise be able to absent the receipt of this exemptive relief.
On a stand-alone basis, the SBIC subsidiaries held $510.1 million and $485.2 million in assets at December 31, 2024 and 2023,
respectively, which accounted for approximately 52.0% and 53.4% of our total consolidated assets at December 31, 2024 and 2023,
respectively.
SBA-guaranteed debentures have fixed interest rates that equal the prevailing rate for 10-year U.S. Treasury Notes plus a market
spread and have a maturity of ten years with interest payable semi-annually. The principal amount

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of the SBA-guaranteed debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment
penalty. SBA-guaranteed debentures are also subject to certain fees payable by the SBIC subsidiaries calculated at the time such
debentures are drawn. As of both December 31, 2024 and 2023, the SBIC subsidiaries had $325.0 million of the SBA-guaranteed
debentures outstanding.
As of December 31, 2024 and 2023, the carrying amount of the SBA-guaranteed debentures was $321.3 million and $320.3
million, respectively. At the measurement date, the estimated fair value of the SBA-guaranteed debentures as prepared for disclosure
purposes was $312.0 million. As of December 31, 2023, the carrying amount of the SBA-guaranteed debentures approximated their
fair value. The fair value of the SBA-guaranteed debentures is determined in accordance with ASC 820, which defines fair value in
terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement
date under current market conditions. The fair value of the SBA-guaranteed debentures is estimated based upon market interest rates
for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. At December 31, 2024 and 2023,
the SBA-guaranteed debentures would be deemed to be Level 3, as defined in Note 6 to our Consolidated Financial Statements.
We have incurred $11.1 million in financing costs related to the SBA-guaranteed debentures since the SBIC subsidiaries
received their licenses, which were recorded as prepaid loan fees. As of December 31, 2024 and 2023, $3.7 million and $4.7 million
of prepaid financing costs had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated Statements
of Assets and Liabilities as a deduction from the debt liability.
The following table summarizes the interest expense and amortized fees on the SBA-guaranteed debentures for the years ended
December 31, 2024, 2023, and 2022 (dollars in millions):
For the year ended
December 31, 2024
December 31, 2023
December 31, 2022
Interest expense
$
 10.5
$
 10.0
$
 8.2
Debenture fee amortization
 1.0  
 1.3  
 1.2  
Total interest and financing expenses
$
 11.5
$
 11.3
$
 9.4
Weighted average interest rate
 
 3.2 %   
 3.2 %   
 2.8 %  
Effective interest rate (including fee amortization)
 
 3.5 %   
 3.5 %   
 3.3 %  
Average debt outstanding
$
 325.0
$
 318.8
$
 288.2
Cash paid for interest
$
 10.5
$
 9.6
$
 7.4
Notes Payable
On January 14, 2021, we issued $100.0 million in aggregate principal amount of the Notes Payable. The Notes Payable will
mature on March 30, 2026 and may be redeemed in whole or in part at any time or from time to time at our option on or after
December 31, 2025 at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest on the
Notes Payable is payable semi-annually beginning September 30, 2021.
We used the net proceeds from the Notes Payable offering to fully redeem the 5.75% fixed-rate notes due September 15, 2022
and repay a portion of the amount outstanding under the Credit Facility.
The Notes Payable are institutional, non-traded notes. As of December 31, 2024 and 2023, the carrying amount of the
Notes Payable was $99.4 million and $99.0 million, respectively. At the measurement date, the estimated fair value of the Notes
Payable as prepared for disclosure purposes was $96.6 million.
In connection with the issuance and maintenance of the Notes Payable, we have incurred $2.3 million of fees, which are being
amortized over the term of the Notes Payable. As of December 31, 2024 and December 31, 2023, $0.6 million and $1.0 million
remained to be amortized, respectively. These financing costs are presented on the Consolidated Statements of Assets and Liabilities
as a deduction from the debt liability.

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89
The following table summarizes the interest expense and deferred financing costs on the Notes Payable for the years ended
December 31, 2024, 2023, and 2022 (in millions):
    
For the years ended
 
December 31, 2024
December 31, 2023
December 31, 2022
 
Interest expense
$
 4.9
$
 4.9
$
 4.9
 
Deferred financing costs
 
 0.4  
 0.4  
 0.4
Total interest and financing expenses
$
 5.3
$
 5.3
$
 5.3
Weighted average interest rate
 
 4.9 %   
 4.9 %   
 4.9 %  
Effective interest rate (including fee amortization)
 
 5.3 %   
 5.3 %   
 5.3 %  
Average debt outstanding
$
 100.0
$
 100.0
$
 100.0
Cash paid for interest
$
 4.9
$
 4.9
$
 4.9
ATM Program
On November 16, 2021, we entered into the 2021 Equity Distribution Agreement with Keefe Bruyette & Woods, Inc. and
Raymond James & Associates, Inc., as sales agents and/or principals thereunder. Under the 2021 Equity Distribution Agreement, as
amended, we could issue and sell, from time to time, up to $50,000,000 in aggregate offering price of shares of our common stock,
par value $0.001 per share, with the intention to use the net proceeds from this at-the-market sales program to repay certain
outstanding indebtedness and make investments in portfolio companies in accordance with our investment objective and strategies.
On August 11, 2023, we entered into the 2023 Equity Distribution Agreement with Keefe Bruyette & Woods, Inc. and Raymond
James & Associates, Inc., as sales agents and/or principal thereunder. Under the 2023 Equity Distribution Agreement, we may issue
and sell, from time to time, up to $100,000,000 in aggregate offering price of shares of our common stock, par value $0.001 per
share, with the intention to use the net proceeds from this at-the-market sales program to repay certain outstanding indebtedness and
make investments in portfolio companies in accordance with its investment objective and strategies. We refer to our issuance and sale
of shares under the Equity Distribution Agreements as the “ATM Program.”
We issued 3,355,476 shares and 4,458,873 shares during the fiscal years ended December 31, 2024 and 2023 under the ATM
Program, respectively, for gross proceeds of $46.5 million and $62.9 million and underwriting fees and other expenses of $1.1 million
and $1.2 million, respectively. The average per share offering price of shares issued in the ATM Program during the fiscal years
ended December 31, 2024 and 2023 was $13.86 and $14.10, respectively. The Advisor agreed to reimburse us for underwriting fees
and expenses to the extent the per share price of the shares to the public, less underwriting fees, was less than then-net asset value per
share. For the fiscal year ended December 31, 2024, the Advisor was not required to reimburse underwriting fees as all shares were
issued at a premium to net asset value. For the fiscal year ended December 31, 2023, the Advisor reimbursed $0.5 million in such fees
and expenses.
Contractual Obligations
2030 and
    
Total
    
2025
    
2026
    
2027
    
2028
    
2029
    thereafter
(in millions)
Credit Facility payable
$  175.4  $
 —  $
 —
$
 —
$
 14.6  $  160.8  $
 —
Notes payable
 100.0  
 —  
 100.0  
 —
 —
 —  
 —
SBA-guaranteed debentures
 325.0  
 26.0  
 39.0  
 —
 82.5
 2.5
 175.0
Total
$  600.4
$
 26
$  139.0
$
 —
$
 97.1
$  163.3
$  175.0
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial
needs of our portfolio companies. As of December 31, 2024, our only off-balance sheet arrangements consisted

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of $41.0 million of unfunded commitments to provide debt financing to 70 existing portfolio companies and $0.3 million in unfunded
equity commitments to one existing portfolio company. As of December 31, 2023, our only off-balance sheet arrangements consisted
of $36.7 million of unfunded commitments to provide debt financing to 56 existing portfolio companies and $0.3 million in unfunded
equity commitments to one existing portfolio company. As of December 31, 2024, we had sufficient liquidity (through cash on hand
and available borrowings under the Credit Facility) to fund such unfunded commitments should the need arise.
RIC Status and Dividends
We have elected to be treated and intend to qualify annually as a RIC under Subchapter M of the Code. So long as we maintain
our qualification as a RIC, we will not be subject to U.S. federal income tax to the extent that we timely distribute our investment
company taxable income and realized net capital gains to stockholders as dividends.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences
in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation until realized.
Distributions declared and paid by us in a year may differ from taxable income for that year as such dividends may include the
distribution of current year taxable income or the distribution of prior year taxable income carried forward into and distributed in the
current year. Distributions also may include returns of capital.
To qualify for RIC tax treatment, we generally must, among other things, distribute, with respect to each taxable year, at least
90% of our investment company net taxable income (i.e., our net ordinary income and our realized net short-term capital gains in
excess of realized net long-term capital losses, if any). If we maintain our qualification as a RIC, we must also satisfy certain
distribution requirements each calendar year to avoid a U.S. federal excise tax on our undistributed earnings of a RIC. As of
December 31, 2024, we had $45.4 million of undistributed taxable income that will be carried forward toward distributions paid
during the year ending December 31, 2025. As of December 31, 2023, we had $37.0 million of undistributed taxable income that
was carried forward toward distributions paid during the year ending December 31, 2024.
We intend to distribute to our stockholders between 90% and 100% of our annual taxable income (which includes our taxable
interest and fee income). However, the covenants contained in the Credit Facility may prohibit us from making distributions to our
stockholders, and, as a result, could hinder our ability to satisfy the Annual Distribution Requirement. In addition, we may retain for
investment some or all our net taxable capital gains (i.e., realized net long-term capital gains in excess of realized net short-term
capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if
they received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in shares of our
common stock. Our stockholders also may be eligible to claim tax credits (or, in certain circumstances, tax refunds) equal to their
allocable share of the tax we paid on the capital gains deemed distributed to them. To the extent our taxable earnings for a fiscal
taxable year fall below the total amount of our dividends for that fiscal year, a portion of those dividend distributions may be deemed
a return of capital to our stockholders.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the
amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset
coverage test for borrowings applicable to us as a BDC under the 1940 Act and due to provisions in the Credit Facility. We cannot
assure stockholders that they will receive any distributions or distributions at a particular level.
In accordance with certain applicable U.S. Treasury regulations and private letter rulings issued by the Internal Revenue Service
(the “IRS”), a publicly offered RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each
stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the
aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many
stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance
of the distribution paid in shares of our common stock). In no event will any stockholder, electing to receive cash, receive less than
20% of his or her entire distribution in cash, except as described below.

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91
If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in shares
of our common stock will be equal to the amount of cash that could have been received instead of stock. We have no current intention
of paying dividends in shares of our common stock in accordance with these U.S. Treasury regulations or private letter rulings.
However, we continue to monitor the Company’s liquidity position and the overall economy and will continue to assess whether it
would be in our and our stockholders’ best interest to take advantage of the IRS rulings.
Recent Accounting Pronouncements
See Note 1 to our Consolidated Financial Statements contained herein for a description of recent accounting pronouncements, if
any, including the expected dates of adoption and the anticipated impact on the financial statements.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial
Statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation
of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used
in determining such estimates could cause actual results to differ materially.
For a description of our critical accounting policies, see Note 1 to our Consolidated Financial Statements included in this report.
We consider the most significant accounting policies to be those related to our valuation of portfolio investments and revenue
recognition.
Investment Portfolio Valuation
The most significant determination inherent in the preparation of our Consolidated Financial Statements is the valuation of our
investment portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a
critical accounting estimate, given the significant judgments and subjective measurements required. As of December 31, 2024 and
2023, our investment portfolio at fair value represented approximately 97.2% and 96.3% of our total assets, respectively. We are
required to report our investments for which market quotations are not readily available at fair value. We follow the provisions of
ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on
the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires
us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a
hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable
and willing and able to transact. See Note 1 to the Consolidated Financial Statements contained herein for a detailed discussion of our
investment portfolio valuation process and procedures.
Due to the inherent uncertainty in the valuation process, our Board’s determination of fair value for our investment portfolio may
differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes
in the market environment, portfolio company performance and other events that may occur over the lives of the investments may
cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Our
Board determines the fair value of each individual investment for which market quotations are not readily available and we record
changes in fair value as unrealized appreciation or depreciation.
We believe our investment portfolio as of December 31, 2024 and 2023 approximates fair value as of those dates based on the
markets in which we operate and other conditions in existence on those reporting dates.

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92
Subsequent Events
Investment Portfolio
We invested in the following portfolio companies subsequent to December 31, 2024:
Activity Type
  
Date
  
Company Name
  
Company Description
  Investment Amount  
 Instrument Type
New Investment
January 10, 2025 Pacific Shoring Products, LLC
Manufacturer of trench shoring and safety equipment sold to equipment rental companies
$
 8,500,000 Senior Secured – First Lien
$
 100,000 Revolver Commitment
$
 498,491 Equity
New Investment
January 15, 2025 Environmental Remedies, LLC
Residential asbestos abatement provider
$
 7,330,762 Senior Secured – First Lien
$
 2,681,986 Delayed Draw Term Loan Commitment
$
 100,000 Revolver Commitment
$
 163,109 Equity
New Investment
January 16, 2025 Plus Delta Partners, Inc.
Provider of fundraising training and tools for higher education institutions and other nonprofits $
 7,400,000 Senior Secured – First Lien
$
 3,753,955 Delayed Draw Term Loan Commitment
$
 100,000 Revolver Commitment
$
 325,764 Equity
New Investment
January 24, 2025 Strategus, LLC
Provider of connected TV advertising services
$
 7,801,439 Senior Secured – First Lien
$
 2,524,737 Delayed Draw Term Loan Commitment
$
 100,000 Revolver Commitment
$
 170,362 Equity
Add-On Investment February 10, 2025 Florachem Corporation*
Distiller and supplier of natural citrus, pine, and specialty inputs
$
 877,716 Senior Secured – First Lien
New Investment
February 28, 2025 Identity Theft Guard Solutions, Inc. Cyber breach response and monitoring services
$
 8,722,887 Senior Secured – First Lien
$
 100,000 Revolver Commitment
$
 352,915 Equity
New Investment
February 28, 2025 MoboTrex, LLC
Distributor and manufacturer of intelligent traffic solution equipment
$
 5,137,070 Senior Secured – First Lien
$
 109,312 Delayed Draw Term Loan Commitment
$
 100,000 Revolver Commitment
*
Existing portfolio company
Credit Facility
The outstanding balance of our the Credit Facility as of March 4, 2025 was $230.5 million.
SBA-guaranteed Debentures
On February 14, 2025, the SBIC I subsidiary prepaid all principal and accrued interest related to SBA-guaranteed debentures
maturing on March 1, 2025. The outstanding balance under SBA-guaranteed debentures as of March 4, 2025 was $308.8 million.
Dividend Declared
On January 9, 2025, our Board declared a regular monthly distribution for each of January, February and March 2025 as follows:
Ex-Dividend
Record
Payment
Amount per
Declared
    
Date
    
Date
    
Date
    
Share
1/9/2025
1/31/2025
1/31/2025
2/14/2025
$
 0.1333
1/9/2025
 
2/28/2025
2/28/2025
3/14/2025
$
 0.1333
1/9/2025
 
3/31/2025
3/31/2025
4/15/2025
$
 0.1333

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93
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. In March 2022, the Federal Reserve raised interest
rates for the first time since December 2018, and subsequently raised interest rates several times, most recently in July 2023, bringing
the target for the federal funds rate to 5.25% - 5.50%, the highest since January 2001. In September 2024, the Federal Reserve began
easing its policy, most recently lowering the federal funds rate to a target range of 4.25% - 4.50% in December 2024. As of
December 31, 2024 and December 31, 2023, 94.5% and 97.7% of the loans in our portfolio bore interest at floating rates,
respectively. These floating rate loans typically bear interest in reference to SOFR, which is indexed to 30-day or 90-day SOFR rates,
subject to an interest rate floor. As of December 31, 2024 and December 31, 2023, the weighted average interest rate floor on our
floating rate loans was 1.46% and 1.26%, respectively.
Assuming that the Consolidated Statements of Assets and Liabilities as of December 31, 2024 were to remain constant and no
actions were taken to alter the existing interest rate sensitivity, the following table shows the annual impact on net income of changes
in interest rates:
($ in millions)
    
Interest
    
Interest
    
Net Interest
Change in Basis Points(2)
Income
Expense(3)
Income(1)
Up 200 basis points
$
 16.3
$
 (3.5)
$
 12.8
Up 150 basis points
 
 12.2
 (2.6) 
 9.6
Up 100 basis points
 
 8.2
 (1.8) 
 6.4
Up 50 basis points
 4.1
 (0.9) 
 3.2
Down 50 basis points
 (4.1)
 0.9
 (3.2)
Down 100 basis points
 (8.2)
 1.8
 (6.4)
Down 150 basis points
 (12.2)
 2.6
 (9.6)
Down 200 basis points
 (16.3)
 3.5
 (12.8)
(1) Excludes the impact of incentive fees based on pre-incentive fee net investment income. See Note 2 to the Consolidated
Financial Statements contained herein for more information on the incentive fee.
(2) At December 31, 2024, the three-month SOFR rate was 430 basis points. This table assumes floating rates would not fall below
zero.
(3) Includes the impact of the 25 -basis point SOFR floor in place on the Credit Facility.
Although we believe that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential
changes in credit quality, size and composition of the assets on the balance sheet and other business developments that could affect
net increase in net assets resulting from operations. Accordingly, no assurances can be given that actual results would not differ
materially from the potential outcome simulated by this estimate. We may hedge against interest rate fluctuations by using standard
hedging instruments such as futures, options and forward contacts subject to the requirements of the 1940 Act. While hedging
activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of
lower interest rates with respect to our portfolio of investments. For the years ended December 31, 2024 and 2023, we did not engage
in interest rate hedging activities.

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94
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP, Houston, Texas, PCAOB ID Number
34 and Grant Thornton LLP, Dallas, Texas, PCAOB ID Number 248)
95
Statements of Assets and Liabilities as of December 31, 2024 and December 31, 2023
98
Statements of Operations for the years ended December 31, 2024, 2023, and 2022
99
Statements of Changes in Net Assets for the years ended December 31, 2024, 2023, and 2022
100
Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
101
Schedule of Investments as of December 31, 2024 and December 31, 2023
102
Notes to Financial Statements
131

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95
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Stellus Capital Investment Corporation
Opinion on the financial statements
We have audited the accompanying consolidated statement of assets and liabilities of Stellus Capital Investment Corporation and
subsidiaries (the “Company”), including the consolidated schedule of investments, as of December 31, 2024, the related consolidated
statements of operations, changes in net assets, and cash flows for the year ended December 31, 2024, the financial highlights (in
Note 8) for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2024, and the results of its operations, changes in its net assets, and its cash flows for the year ended December 31, 2024, and its
financial highlights for the year ended December 31, 2024 in conformity with accounting principles generally accepted in the United
States of America.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no
such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audit provides a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Fair Value – Level 3 Investments – Refer to Notes 1 and 6 to the financial statements
Critical Audit Matter Description
The Company held investments classified as Level 3 investments under accounting principles generally accepted in the United
States of America. These investments included debt and equity securities with unique contract terms and conditions and/or complexity
that considers a combination of multiple levels of market and asset specific inputs. The

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valuation techniques used in estimating the fair value of these investments vary and certain significant inputs used were unobservable.
We identified the valuation of Level 3 investments as a critical audit matter because of the judgments necessary for management
to select valuation techniques and to use significant unobservable inputs to estimate the fair value. This required a high degree of
auditor judgement and extensive audit effort to audit management’s estimate of fair value of Level 3 investments, including the need
to involve fair value specialists possessing relevant valuation experience to evaluate the appropriateness of the valuation techniques
and the significant unobservable inputs used in the valuation of certain investments.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value of certain Level 3 investments included the following, among others:
●
With the assistance of our fair value specialists, we compared management’s unobservable inputs to external sources, and
for a sample of the investments, we developed independent estimates of the fair value and compared our estimates to the
Company’s estimates.
●
We assessed the consistency by which management has applied significant unobservable valuation assumptions.
●
We evaluated management’s ability to estimate fair value by comparing management’s historical estimates to subsequent
transactions, taking into account changes in market or investment specific conditions, where applicable.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
March 4, 2025
We have served as the Company’s auditor since 2024.

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97
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Stellus Capital Investment Corporation
Opinion on the financial statements
We have audited the consolidated statement of assets and liabilities of Stellus Capital Investment Corporation (a Maryland
corporation) and subsidiaries (the “Company”), including the consolidated schedule of investments, as of December 31, 2023 the
related consolidated statements of operations, changes in net assets and cash flows for each of the two years in the period ended
December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in
conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no
such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our procedures included verification
by confirmation of securities as of December 31, 2023 and 2022, by correspondence with portfolio companies or agents, or by other
appropriate auditing procedures where replies were not received. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We served as the Company’s auditor from 2012 to 2024.
Dallas, Texas
March 4, 2024 (except for Note 14, as to which the date is March 4, 2025)

Table of Contents
98
PART I — FINANCIAL INFORMATION
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2024     December 31, 2023
ASSETS
   
Controlled investments at fair value (amortized cost of $17,934,808 and $17,285,138,
respectively)
$
7,652,436
$
6,175,994
Non-controlled, non-affiliated investments, at fair value (amortized cost of $943,853,898
and $884,858,412, respectively)
945,845,252
868,284,689
Cash and cash equivalents
 
20,058,594
 
26,125,741
Receivable for sales and repayments of investments
 
335,689
 
371,877
Interest receivable
 
4,947,765
 
4,882,338
Income tax receivable
1,301,965
1,588,708
Other receivables
 
87,995
 
42,995
Related party receivable
3,687
—
Deferred offering costs
 
—
 
7,312
Prepaid expenses
 
666,866
 
606,674
Total Assets
$
980,900,249
$
908,086,328
LIABILITIES
 
 
  
Notes Payable
$
99,444,355
$
98,996,412
Credit Facility payable
 
172,314,315
 
156,564,776
SBA-guaranteed debentures
 
321,251,939
 
320,273,358
Dividends payable
 
3,663,233
 
—
Management fees payable
 
4,034,109
 
2,918,536
Income incentive fees payable
 
3,109,560
 
2,885,180
Interest payable
 
5,281,343
 
5,241,164
Unearned revenue
 
548,626
 
397,725
Administrative services payable
 
393,513
 
402,151
Deferred tax liability
 
—
 
188,893
Other accrued expenses and liabilities
937,316
278,345
Total Liabilities
$
610,978,309
$
588,146,540
Commitments and contingencies (Note 7)
 
  
 
  
Net Assets
$
369,921,940
$
319,939,788
NET ASSETS
 
  
 
  
Common stock, par value $0.001 per share (100,000,000 shares authorized; 27,481,118
and 24,125,642 issued and outstanding, respectively)
$
27,481
$
24,125
Paid-in capital
 
379,549,272
 
335,918,984
Total distributable loss
 
(9,654,813)
 
(16,003,321)
Net Assets
$
369,921,940
$
319,939,788
Total Liabilities and Net Assets
$
980,900,249
$
908,086,328
Net Asset Value Per Share
$
13.46
$
13.26

Table of Contents
99
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended
December 31, 2024 December 31, 2023
December 31, 2022
INVESTMENT INCOME
   
   
  
From controlled investments:
Interest income
$
81,636 $
37,897 $
—
From non-controlled, non-affiliated investments
Interest income
99,804,184
101,978,891
72,964,999
Other income
 
4,850,313
3,830,780
2,147,577
Total Investment Income
$
104,736,133 $
105,847,568 $
75,112,576
OPERATING EXPENSES
 
   
   
  
Management fees
$
15,698,129 $
15,452,347 $
14,848,174
Valuation fees
 
380,239
373,628
351,752
Administrative services expenses
 
1,916,283
1,908,191
1,810,576
Income incentive fees
 
10,045,966
10,189,888
3,782,151
Capital gains incentive fee reversal
 
—
(569,528)
(2,818,623)
Professional fees
 
1,190,232
1,455,372
1,103,693
Directors’ fees
 
412,000
406,000
329,000
Insurance expense
 
499,913
492,596
503,907
Interest expense and other fees
 
31,506,068
32,011,317
24,469,285
Income tax expense
 
1,808,838
1,333,452
1,161,668
Other general and administrative expenses
 
1,175,765
891,170
984,309
Total Operating Expenses
$
64,633,433 $
63,944,433 $
46,525,892
Income incentive fee waiver
 
(1,826,893)
(307,442)
—
Total Operating Expenses, net of fee waivers
$
62,806,540 $
63,636,991 $
46,525,892
Net Investment Income
$
41,929,593 $
42,210,577 $
28,586,684
Net realized (loss) gain on non-controlled, non-affiliated investments
$
(15,737,004) $
(30,211,467) $
3,660,595
Net realized loss on foreign currency translations
(94,730)
(112,481)
(6,091)
Net change in unrealized appreciation (depreciation) on controlled
investments
826,772
(430,577)
—
Net change in unrealized appreciation (depreciation) on non-controlled, non-
affiliated investments
18,743,637
3,222,729
(17,542,230)
Net change in unrealized (depreciation) appreciation on foreign currency
translations
(14,755)
(6,504)
6,040
Benefit (provision) for taxes on net unrealized depreciation (appreciation) on
investments
188,893
(126,957)
(213,214)
Benefit for taxes on net realized loss on investments
2,221
2,987,847
—
Net Increase in Net Assets Resulting from Operations
$
45,844,627
17,533,167
14,491,784
Net Investment Income Per Share—basic and diluted
$
1.64 $
1.92 $
1.46
Net Increase in Net Assets Resulting from Operations Per Share – basic
and diluted
$
1.79 $
0.80 $
0.74
Weighted Average Shares of Common Stock Outstanding—basic and
diluted
 
25,596,593  
22,004,648  
19,552,931
Distributions Per Share—basic and diluted
$
1.61 $
1.61 $
1.30

Table of Contents
100
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Common Stock
Total
Number 
Par 
Paid-in 
distributable
    of shares     
value
    
capital
    (loss) earnings     
Net Assets
Balances as of December 31, 2021
 
19,517,595
$ 19,518
$ 274,559,121
$
10,532,594
$ 285,111,233
Net investment income
—
—
—
28,586,684
 
28,586,684
Net realized gain on investments
—
—
—
3,660,595
 
3,660,595
Net realized loss on foreign currency translation
—
—
—
(6,091)
 
(6,091)
Net change in unrealized depreciation on investments
—
—
—
(17,542,230)
 
(17,542,230)
Net change in unrealized appreciation on foreign currency translations
—
—
—
6,040
6,040
Provision for taxes on unrealized appreciation on investments
—
—
—
(213,214)
 
(213,214)
Return of capital and other tax related adjustments
 
—
—
(1,040,884)
1,040,884
 
—
Distributions from net investment income
—
—
—
(21,633,343)
 
(21,633,343)
Distributions from net realized capital gains
 
—
 
—
 
—
 
(3,789,693)
 
(3,789,693)
Issuance of common stock, net of offering costs(1)
 
149,174
 
149
 
1,596,483
 
—
 
1,596,632
Balances at December 31, 2022
19,666,769
$ 19,667
$ 275,114,720
$
642,226
$ 275,776,613
Net investment income
—
—
—
42,210,577
42,210,577
Net realized loss on investments
—
—
—
(30,211,467)
(30,211,467)
Net realized loss on foreign currency translation
—
—
—
(112,481)
(112,481)
Net change in unrealized appreciation on investments
—
—
—
2,792,152
2,792,152
Net change in unrealized depreciation on foreign currency translations
—
—
—
(6,504)
(6,504)
Provision for taxes on unrealized appreciation on investments
—
—
—
(126,957)
(126,957)
Benefit for taxes on realized loss on investments
 
—
 
—
 
—
2,987,847
2,987,847
Return of capital and other tax related adjustments
 
—
—
(1,348,766)
1,348,766
—
Distributions from net investment income
—
—
—
(35,080,734)
(35,080,734)
Distributions from net realized capital gains
 
—
 
—
 
—
 
(446,746)
 
(446,746)
Issuance of common stock, net of offering costs(1)
 
4,458,873
 
4,458
 
62,153,030
 
—
 
62,157,488
Balances at December 31, 2023
24,125,642
$ 24,125
$ 335,918,984
$
(16,003,321)
$ 319,939,788
Net investment income
—
—
—
41,929,593
41,929,593
Net realized loss on investments
—
—
—
(15,737,004)
(15,737,004)
Net realized loss on foreign currency translation
—
—
—
(94,730)
(94,730)
Net change in unrealized appreciation on investments
—
—
—
19,570,409
19,570,409
Net change in unrealized depreciation on foreign currency translations
—
—
—
(14,755)
(14,755)
Provision for taxes on unrealized appreciation on investments
—
—
—
188,893
188,893
Benefit for taxes on realized loss on investments
 
—
 
—
 
—
2,221
2,221
Return of capital and other tax related adjustments
 
—
—
(1,727,556)
1,727,556
—
Distributions from net investment income
—
—
—
(40,679,308)
(40,679,308)
Distributions from net realized capital gains
 
—
 
—
 
—
 
(544,367)
 
(544,367)
Issuance of common stock, net of offering costs(1)
 
3,355,476
 
3,356
 
45,357,844
 
—
 
45,361,200
Balances at December 31, 2024
 
27,481,118
$ 27,481
$ 379,549,272
$
(9,654,813)
$ 369,921,940
(1) See Note 4 to the Consolidated Financial Statements contained herein for more information on offering costs.

Table of Contents
101
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended
December 31, 2024 December 31, 2023 December 31, 2022
Cash flows from operating activities
   
   
  
Net increase in net assets resulting from operations
$
45,844,627 $
17,533,167 $
14,491,784
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:  
 
 
Purchases of investments
 
(221,154,933)
(183,858,762)
(211,010,869)
Proceeds from sales and repayments of investments
 
151,834,875
134,223,224
127,548,194
Net change in unrealized (appreciation) depreciation on investments
 
(19,570,409)
(2,792,152)
17,542,230
Net change in unrealized depreciation (appreciation) on foreign currency translations
14,755
6,360
(5,897)
Increase in investments due to PIK
 
(3,310,111)
(3,799,843)
(1,357,177)
Amortization of premium and accretion of discount, net
 
(2,715,802)
(2,749,543)
(2,519,462)
Deferred tax (benefit) provision
 
(188,893)
126,957
213,214
Amortization of loan structure fees
 
1,140,079
657,323
567,375
Amortization of deferred financing costs
 
447,943
446,720
446,719
Amortization of loan fees on SBA-guaranteed debentures
 
978,582
1,255,753
1,227,952
Net realized loss (gain) on investments
 
15,737,004
30,211,467
(3,660,595)
Changes in other assets and liabilities
 
 
 
Increase in interest receivable
 
(65,427)
(897,929)
(1,039,810)
Decrease (increase) in income tax receivable
 
286,743
(1,588,708)
—
(Increase) decrease in other receivables
 
(45,000)
(8,750)
20,507
Increase in related party receivables
(3,687)
—
—
(Increase) decrease in prepaid expenses
 
(60,192)
60,593
(155,053)
Increase (decrease) in management fees payable
 
1,115,573
(4,231,871)
3,696,182
Increase in income incentive fees payable
 
224,380
420,772
715,278
Decrease in capital gains incentive fees payable
 
—
(569,528)
(2,818,623)
(Decrease) increase in administrative services payable
 
(8,638)
45,232
(29,449)
Increase in interest payable
 
40,179
600,323
947,179
(Decrease) increase in related party payable
—
(1,060,321)
1,060,321
Increase (decrease) in unearned revenue
 
150,901
77,050
(209,051)
Decrease in income tax payable
 
—
(1,175,373)
(2,094,141)
Increase (decrease) in other accrued expenses and liabilities
 
658,971
(197,248)
136,635
Net Cash Used in Operating Activities
$
(28,648,480) $
(17,265,087) $
(56,286,557)
Cash flows from Financing Activities
 
   
   
  
Proceeds from the issuance of common stock
$
46,494,756 $
63,348,436 $
2,158,540
Sales load for common stock issued
 
(698,166)
(943,248)
(31,066)
Offering costs paid for common stock issued
 
(428,078)
(253,913)
(517,054)
Stockholder distributions paid
 
(37,560,442)
(35,527,480)
(26,594,095)
Proceeds from SBA-guaranteed debentures
 
—
11,400,000
63,600,000
Financing costs paid on SBA-guaranteed debentures
 
—
(277,590)
(1,548,660)
Financing costs paid on Credit Facility
 
(691,137)
(2,663,106)
(193,635)
Borrowings under Credit Facility
 
187,900,000
108,400,000
149,888,800
Repayments of Credit Facility
 
(172,435,600)
(148,135,600)
(126,607,800)
Net Cash Provided (Used) by Financing Activities
$
22,581,333 $
(4,652,501) $
60,155,030
Net Decrease in Cash and Cash Equivalents
$
(6,067,147) $
(21,917,588) $
3,868,473
Cash and Cash Equivalents Balance at Beginning of Period
 
26,125,741
48,043,329
44,174,856
Cash and Cash Equivalents Balance at End of Period
$
20,058,594 $
26,125,741 $
48,043,329
Supplemental and Non-Cash Activities
 
   
   
  
Cash paid for interest expense
$
28,899,285 $
29,051,198 $
21,280,060
Income and excise tax paid
 
1,808,838
2,508,825
3,255,809
(Decrease) increase in distributions payable
 
3,663,233
—
(1,171,059)
(Decrease) increase in deferred offering costs
 
(7,312)
6,212
(13,788)
Exchange of investments
 
8,256,411
3,610,846
—

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
102
Principal
% of  
  
  
  
  
  
  
  Investment  
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net   
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK(8)
Date
 Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Control investments (23)
  
  
  
  
  
EH Real Estate Services, LLC
Skokie, IL
Term Loan A-1
(16)
First Lien
15.00%
-
%
-
%
-
% 9/3/2021
9/3/2026
FIRE: Real Estate
$ 1,882,226
1,882,226
254,101
0.07 %
Term Loan A-2
(16)
First Lien
15.00%
-
%
-
%
-
% 4/3/2023
9/3/2026
650,943
650,943
87,877
0.02 %
Term Loan A-3
(16)
First Lien
15.00%
-
%
-
%
-
% 6/7/2023
9/3/2026
230,678
230,678
31,142
0.01 %
Term Loan A-4
(16)
First Lien
15.00%
-
%
-
%
-
% 7/12/2023
9/3/2026
1,505,537
1,505,537
1,505,537
0.41 %
Term Loan A-5
(16)
First Lien
15.00%
-
%
-
%
-
% 1/8/2024
9/3/2026
5,710,182
5,710,182
5,710,182
1.54 %
Revolver
(16)(22)
First Lien
15.00%
-
%
-
%
-
% 10/3/2023
9/3/2026
63,597
63,597
63,597
0.02 %
EH Holdco, LLC Common Units
Equity
10/3/2023
15,356
3
-
0.00 %
EH Holdco, LLC Series A Preferred Units
Equity
9/3/2021
7,892
7,891,642
-
0.00 %
Total
$ 17,934,808
$
7,652,436
2.07 %
Total Control investments
$ 17,934,808
$
7,652,436
2.07 %
Non-controlled, non-affiliated investments
(4)(5)
  
  
  
    
    
2X LLC
(9)
Berwyn, PA
Term Loan
(11)
First Lien
3M SOFR+ 5.00 % 2.00 % 9.33 %
6/5/2023
6/5/2028
Services: Business
$ 5,431,456
5,329,224
5,404,299
1.46 %
Term Loan
(11)
First Lien
3M SOFR+ 5.00 % 2.00 % 9.33 %
10/31/2023
6/5/2028
1,430,283
1,401,610
1,423,132
0.38 %
Term Loan
(11)
First Lien
3M SOFR+ 5.00 % 2.00 % 9.33 %
12/2/2024
6/5/2028
3,851,702
3,795,049
3,832,443
1.04 %
Revolver
(11)
First Lien
3M SOFR+ 5.00 % 2.00 % 9.33 %
6/5/2023
6/5/2028
12,500
12,500
12,438
0.00 %
2X Investors LP Class A Units
Equity
6/5/2023
  
58,949
589,496
779,253
0.21 %
Total
$ 11,127,879
$ 11,451,565
3.09 %
Ad.Net Acquisition, LLC
(9)
Los Angeles, CA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.00 % 1.00 % 10.59 %
5/7/2021
5/7/2026
Services: Business
$15,042,647
14,971,098
15,042,647
4.07 %
Revolver
(11)
First Lien
3M SOFR+ 6.00 % 1.00 % 10.59 %
5/7/2021
5/7/2026
854,217
854,217
854,217
0.23 %
Ad.Net Holdings, Inc. Series A Common Stock (SBIC II)
(5)
Equity
5/7/2021
7,794
77,941
68,620
0.02 %
Ad.Net Holdings, Inc. Series A Preferred Stock (SBIC II)
(5)
Equity
5/7/2021
7,015
701,471
617,581
0.17 %
Total
$ 16,604,727
$ 16,583,065
4.49 %
AdCellerant LLC
(9)
Denver, CO
Term A Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 6.00 % 2.00 % 10.38 %
12/12/2023 12/12/2028 Media: Advertising, Printing & Publishing
$ 9,900,000
9,734,838
9,850,500
2.66 %
AdCellerant Holdings, LLC Serires A Units
Equity
12/12/2023
728,710
728,710
633,353
0.17 %
Total
$ 10,463,548
$ 10,483,853
2.83 %
ADS Group Opco, LLC
Lakewood, CO
Term Loan (SBIC II)
(5)(25)
First Lien
5.00 %
-
%
-
%
-
% 6/4/2021
12/31/2027
Aerospace & Defense
$12,851,659
12,764,381
10,474,102
2.83 %
Revolver (SBIC II)
(5)(9)(25)
First Lien
5.00 %
-
%
-
%
-
% 9/30/2024
12/31/2027
9,260
9,260
7,547
0.00 %
ADS Group Topco, LLC Class A Units
Equity
6/4/2021
77,626
288,691
-
0.00 %
ADS Group Topco, LLC Class B Units
Equity
6/4/2021
56,819
211,309
-
0.00 %
ADS Group Topco, LLC Class D Units
Equity
9/30/2024
432
-
-
0.00 %
ADS Group Topco, LLC Class Y Units
(6)
Equity
4/11/2023
48,216
165,027
-
0.00 %
ADS Group Topco, LLC Class Z Units
Equity
6/15/2022
72,043
267,929
-
0.00 %
Total
$ 13,706,597
$ 10,481,649
2.83 %
Advanced Barrier Extrusions, LLC
Rhinelander, WI
Term Loan B (SBIC)
(4)(11)(13)
First Lien
1M SOFR+ 9.50 % 1.00 %
-
%
-
% 11/30/2020 11/30/2026
Containers, Packaging, & Glass
$16,843,750
16,718,372
12,464,374
3.38 %
Term Loan (SBIC)
(4)(13)
First Lien
15.00%
- %
-
%
-
% 12/6/2024
12/20/2024
604,622
604,622
447,420
0.13 %
GP ABX Holdings Partnership, L.P. Partner Interests
Equity
8/8/2018
644,737
528,395
-
0.00 %
GP ABX Holdings Partnership, L.P. Series B Preferred Interests
Equity
1/5/2023
1,562
156,182
-
0.00 %
Total
$ 18,007,571
$ 12,911,794
3.51 %
AGT Robotique Inc.
(7)(9)
Trois Rivieres, Canada
Term Loan
(11)
First Lien
3M SOFR+ 5.25 % 1.00 % 9.58 %
6/24/2024
6/22/2029
Capital Equipment
$10,673,296
10,476,264
10,513,197
2.84 %
Total
$ 10,476,264
$ 10,513,197
2.84 %
American Refrigeration, LLC
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.25 % 1.50 % 10.58 %
3/31/2023
3/31/2028
Capital Equipment
$ 8,130,853
7,985,352
8,130,853
2.20 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.50 % 10.58 %
3/31/2023
3/31/2028
99,250
98,216
99,250
0.03 %
AR-USA Holdings, LLC Class A Units
(6)
Equity
3/31/2023
141
135,778
193,132
0.05 %
Total
$
8,219,346
$
8,423,235
2.28 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
103
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
AMII Acquisition, LLC
(9)
Coral Gables, FL
Term Loan (SBIC II )
(5)(11)
First Lien
3M SOFR+ 4.75 % 1.50 % 9.08 %
12/4/2024
12/4/2029
Services: Consumer
$ 8,819,468
8,688,867
8,688,867
2.35 %
AMII Holdings, LP Class B Units
Equity
12/3/2024
14,246
142,460
142,460
0.04 %
Total
$
8,831,327
$
8,831,327
2.39 %
Amika OpCo LLC
(9)
Brooklyn, NY
Term Loan
(11)
First Lien
6M SOFR+ 5.25 % 0.75 % 9.65 %
7/1/2022
7/1/2029
Consumer Goods: Non-Durable
$
94,638
93,260
94,638
0.03 %
Term Loan
(11)
First Lien
6M SOFR+ 5.75 % 0.75 % 10.33 %
12/5/2023
7/1/2029
9,608,834
9,444,289
9,608,834
2.60 %
Ishtar Co-Invest-B LP Partnership Interests
(6)
Equity
7/1/2022
  
77,778
38,133
228,190
0.06 %
Oshun Co-Invest-B LP Partnership Interests
(6)
Equity
7/1/2022
  
22,222
21,141
65,196
0.02 %
Total
$
9,596,823
$
9,996,858
2.71 %
Anne Lewis Strategies, LLC
(9)
Washington, DC
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.00 % 2.00 % 10.33 %
3/5/2021
5/9/2028
Services: Business
$ 9,096,354
9,044,354
9,096,354
2.46 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.00 % 2.00 % 10.33 %
4/15/2022
5/9/2028
2,838,697
2,818,874
2,838,697
0.77 %
SG AL Investment, LLC Common Units
(6)
Equity
3/5/2021
1,000
416,800
3,794,487
1.03 %
SG AL Investment, LLC Common-A Units
Equity
12/22/2023
239
492,905
985,826
0.27 %
Total
$ 12,772,933
$ 16,715,364
4.53 %
APE Holdings, LLC
Deer Park, TX
Class A Units
Equity
9/5/2014
Chemicals, Plastics, & Rubber
375,000
375,000
25,745
0.01 %
Total
$
375,000
$
25,745
0.01 %
Atmosphere Aggregator Holdings II, L.P.
Atlanta, GA
Common Units
(6)
Equity
1/26/2016
Services: Business
254,250
-
2,779,048
0.75 %
Stratose Aggregator Holdings, L.P. Common Units
(6)
Equity
6/30/2015
750,000
-
8,197,783
2.22 %
Total
$
-
$ 10,976,831
2.97 %
ArborWorks, LLC
Oakhurst, CA
Term Loan
(11)(17)
First Lien
1M SOFR+ 6.50 % 1.00 %
-
%
- %
11/6/2023
11/6/2028
Environmental Industries
$ 3,461,538
3,461,538
3,288,461
0.89 %
Revolver
(9)(17)
First Lien
15.00%
-
%
-
%
- %
11/6/2023
11/6/2028
700,195
700,195
665,185
0.18 %
ArborWorks Intermediate Holdco, LLC Class A-1 Preferred Units
Equity
11/6/2023
  
16,037
3,610,847
2,750,612
0.74 %
ArborWorks Intermediate Holdco, LLC Class B-1 Preferred Units
Equity
11/6/2023
  
16,037
-
-
0.00 %
ArborWorks Intermediate Holdco, LLC Class A-1 Common Units
Equity
11/6/2023
  
1,923
-
-
0.00 %
Total
$
7,772,580
$
6,704,258
1.81 %
Axis Portable Air, LLC
(9)
Phoenix, AZ
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.75 % 2.00 % 10.23 %
3/22/2022
3/22/2028
Capital Equipment
$ 9,405,000
9,293,207
9,405,000
2.54 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.75 % 2.00 % 10.23 %
4/17/2023
3/22/2028
1,874,674
1,847,626
1,874,674
0.51 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 5.75 % 1.00 % 10.23 %
3/22/2022
3/22/2028
99,000
98,368
99,000
0.03 %
Axis Air Parent, LLC Preferred Units
Equity
3/22/2022
4,436
443,636
1,596,690
0.43 %
Total
$ 11,682,837
$ 12,975,364
3.51 %
Baker Manufacturing Company, LLC
Evansville, IN
BSC Blue Water Holdings, LLC Series A Units (SBIC II)
(5)
Equity
7/5/2022
Capital Equipment
743,770
743,770
920,343
0.25 %
Total
$
743,770
$
920,343
0.25 %
Bart & Associates, LLC
(9)
McLean, VA
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 5.25 % 1.00 % 9.58 %
8/16/2024
8/16/2030
High Tech Industries
$ 8,920,366
8,770,557
8,875,764
2.40 %
Revolver
(11)
First Lien
3M SOFR+ 5.25 % 1.00 % 9.58 %
8/16/2024
8/16/2030
104,668
104,668
104,145
0.03 %
B&A Partners Holding, LLC Series A Preferred Units
Equity
8/16/2024
418,671
418,671
393,458
0.11 %
Total
$
9,293,896
$
9,373,367
2.54 %
BL Products Parent, L.P.
Houston, TX
Class A Units
Equity
2/1/2022
Capital Equipment
879,060
983,608
1,443,497
0.39 %
Total
$
983,608
$
1,443,497
0.39 %
Café Valley, Inc.
Phoenix, AZ
Term Loan
(11)
First Lien
3M SOFR+ 7.24 % 2.00 % 11.57 %
8/28/2019
8/28/2026
Beverage & Food
$15,372,619
15,372,618
15,372,619
4.16 %
CF Topco LLC Units
Equity
8/28/2019
9,160
916,015
1,801,833
0.49 %
Total
$ 16,288,633
$ 17,174,452
4.65 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
104
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
Camp Profiles LLC
(9)
Boston, MA
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+5.25% 1.00 % 9.73 %
9/3/2021
9/3/2026
Media: Advertising, Printing & Publishing
$ 9,916,875
9,839,972
9,916,875
2.68 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+5.25% 1.00 % 9.73 %
12/3/2024
9/3/2026
2,250,000
2,217,644
2,250,000
0.61 %
CIVC VI-A 829 Blocker, LLC Units
Equity
9/3/2021
250
250,000
770,951
0.21 %
Total
$ 12,307,616
$ 12,937,826
3.50 %
Carolinas Buyer, Inc.
(9)
Charlotte, NC
Term Loan
(4)(11)
First Lien
3M SOFR+5.25% 1.50 % 9.60 %
12/20/2024
12/20/2030
Beverage & Food
$ 6,796,831
6,677,886
6,677,886
1.81 %
Carolinas Holdings, L.P. Class A Units
Equity
12/20/2024
466
465,637
465,633
0.13 %
Total
$
7,143,523
$
7,143,519
1.94 %
CEATI International Inc.
(7)(9)
Montreal, Canada
Term Loan
(11)
First Lien
3M SOFR+6.00% 1.00 % 10.33 %
2/19/2021
12/31/2027
Services: Business
$ 8,439,915
8,394,322
8,439,915
2.28 %
Term Loan
(11)
First Lien
3M SOFR+6.00% 1.00 % 10.35 %
12/20/2024
12/31/2027
3,200,000
3,171,714
3,200,000
0.87 %
CEATI Holdings, LP Class A Units
(6)
Equity
2/19/2021
250,000
132,919
272,853
0.07 %
Total
$ 11,698,955
$ 11,912,768
3.22 %
Cerebro Buyer, LLC
(9)
Columbia, SC
Term Loan
(11)
First Lien
1M SOFR+5.00% 1.00 % 9.36 %
3/15/2023
3/15/2029
Healthcare & Pharmaceuticals
$ 4,526,683
4,439,292
4,526,683
1.22 %
Cerebro Holdings Partnership, L.P. Series A Partner Interests
Equity
3/15/2023
62,961
62,961
71,365
0.02 %
Cerebro Holdings Partnership, L.P. Series B Partner Interests
(6)
Equity
3/15/2023
341,091
333,925
386,619
0.10 %
Total
$
4,836,178
$
4,984,667
1.34 %
CF Arch Holdings LLC
Houston, TX
Class A Units
Equity
8/10/2022
Services: Business
100,000
100,000
197,987
0.05 %
Total
$
100,000
$
197,987
0.05 %
CF512, Inc.
(9)
Blue Bell, PA
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+6.00% 1.00 % 10.69 %
9/1/2021
9/1/2026
Media: Advertising, Printing & Publishing
$13,360,125
13,256,520
13,293,324
3.59 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+6.00% 1.00 % 10.52 %
9/1/2021
9/1/2026
2,885,002
2,873,374
2,870,577
0.78 %
StellPen Holdings, LLC Membership Interests
Equity
9/1/2021
220,930
220,930
181,659
0.05 %
Total
$ 16,350,824
$ 16,345,560
4.42 %
Channel Partners Intermediateco, LLC
(9)
Tampa Bay, FL
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+7.00% 2.00 % 11.93 %
2/24/2022
2/7/2027
Retail
$13,117,995
13,054,902
12,986,815
3.51 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+7.00% 2.00 % 11.93 %
3/27/2023
2/7/2027
1,672,682
1,662,516
1,655,955
0.45 %
Revolver
(11)
First Lien
1M SOFR+7.00% 2.00 % 11.44 %
2/24/2022
2/7/2027
81,667
81,667
80,850
0.02 %
Total
$ 14,799,085
$ 14,723,620
3.98 %
CompleteCase, LLC
(9)
Seattle, WA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+6.50% 2.00 % 10.98 %
12/21/2020
12/21/2025
Services: Consumer
$ 6,584,450
6,553,762
6,551,528
1.77 %
CompleteCase Holdings, Inc. Class A Common Stock (SBIC II)
(5)
Equity
12/21/2020
417
5
1
0.00 %
CompleteCase Holdings, Inc. Series A Preferred Stock (SBIC II)
(5)
Equity
12/21/2020
522
521,734
137,569
0.04 %
CompleteCase Holdings, Inc. Class A Common Stock
Equity
4/27/2023
89
1
-
0.00 %
CompleteCase Holdings, Inc. Series C Preferred Stock
Equity
4/27/2023
111
111,408
29,376
0.01 %
Total
$
7,186,910
$
6,718,474
1.82 %
Compost 360 Acquisition, LLC
(9)
Tampa, FL
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+6.50% 2.00 % 10.83 %
8/2/2023
8/2/2028
Environmental Industries
$ 9,475,162
9,289,539
9,190,907
2.48 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+6.50% 2.00 % 10.83 %
8/2/2023
8/2/2028
1,037,841
1,024,868
1,006,706
0.27 %
Revolver
(11)
First Lien
3M SOFR+6.50% 2.00 % 10.83 %
8/2/2023
8/2/2028
86,000
86,000
83,420
0.02 %
Compost 360 Investments, LLC Class A Units
Equity
8/2/2023
3,124
300,041
222,957
0.06 %
Total
$ 10,700,448
$ 10,503,990
2.83 %
COPILOT Provider Support Services, LLC
(9)
Maitland, FL
Term Loan
(11)
First Lien
3M SOFR+6.50% 2.00 % 10.98 %
11/22/2022
11/22/2027
Healthcare & Pharmaceuticals
$ 4,887,500
4,823,845
4,863,063
1.31 %
Revolver
(11)
First Lien
3M SOFR+6.50% 2.00 % 10.98 %
11/22/2022
11/22/2027
28,333
28,333
28,191
0.01 %
QHP Project Captivate Blocker, Inc. Common Stock
Equity
11/22/2022
4
285,714
184,176
0.05 %
Total
$
5,137,892
$
5,075,430
1.37 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
105
Principal
% of  
  
  
  
  
  
  
  
Investment    
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Craftable Intermediate II Inc.
(9)
Dallas, TX
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+
6.50 % 1.50 % 10.83 %
6/30/2023
6/30/2028
High Tech Industries
$
9,982,878
9,830,912
9,982,878
2.70 %
Gauge Craftable LP Partnership Interests
Equity
6/30/2023
  
626,690
626,690
991,476
0.27 %
Total
$
10,457,602
$
10,974,354
2.97 %
Curion Holdings, LLC
(9)
Chicago, IL
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+
6.25 % 1.00 % 10.73 %
7/29/2022
7/29/2027
Services: Business
$ 12,766,151
12,619,342
12,702,320
3.43 %
Revolver
(11)
First Lien
3M SOFR+
6.25 % 1.00 % 10.73 %
7/29/2022
7/29/2027
86,211
86,211
85,780
0.02 %
SP CS Holdings LLC Class A Units
Equity
7/29/2022
  
739,999
739,999
795,702
0.22 %
Total
$
13,445,552
$
13,583,802
3.67 %
DRS Holdings III, Inc.
(9)
St. Louis, MO
Term Loan
(11)
First Lien
1M SOFR+
6.25 % 1.00 % 10.71 %
11/1/2019
11/1/2025
Consumer Goods: Durable
$
8,586,464
8,571,140
8,586,464
2.32 %
Total
$
8,571,140
$
8,586,464
2.32 %
DTE Holding Company, LLC
Roselle, IL
Class A-2 Units
Equity
4/13/2018
Energy: Oil & Gas
776,316
466,204
-
0.00 %
Class AA Units
Equity
4/13/2018
  
723,684
723,684
-
0.00 %
Total
$
1,189,888
$
-
0.00 %
EHI Buyer, Inc.
Grand Prarie, TX
EHI Group Holdings, L.P. Class A Units
(6)
Equity
7/31/2023
Environmental Industries
618
430,653
1,073,808
0.29 %
Total
$
430,653
$
1,073,808
0.29 %
Elliott Aviation, LLC
Moline, IL
Term Loan
(11)
First Lien
1M SOFR+
6.00 % 2.00 % 10.51 %
2.00 %
1/31/2020
6/30/2025
Aerospace & Defense
$
8,712,311
8,709,082
8,276,695
2.24 %
Term Loan
Unsecured
15.00 %
-
%
-
% 15.00 %
10/26/2023
1/31/2026
65,807
65,807
49,355
0.01 %
Revolver A
(11)
First Lien
1M SOFR+
6.00 % 2.00 % 10.51 %
2.00 %
1/31/2020
6/30/2025
1,439,463
1,439,463
1,367,490
0.37 %
Revolver B
(11)
First Lien
1M SOFR+
6.00 % 2.00 % 10.51 %
2.00 %
3/1/2023
6/30/2025
677,843
677,843
643,951
0.17 %
SP EA Holdings LLC Class A Units
Equity
1/31/2020
  
1,048,896
901,489
-
0.00 %
Total
$
11,793,684
$
10,337,491
2.79 %
EOS Fitness Holdings, LLC
Phoenix, AZ
Class A Preferred Units
Equity
12/30/2014
Hotel, Gaming, & Leisure
118
-
-
0.00 %
Class B Common Units
Equity
12/30/2014
3,017
-
889,366
0.24 %
Total
$
-
$
889,366
0.24 %
Equine Network, LLC
(9)
Boulder, CO
Term A Loan (SBIC)
(4)(11)
First Lien
3M SOFR+
6.50 % 1.00 % 11.28 %
5/22/2023
5/22/2028
Hotel, Gaming, & Leisure
$
7,020,201
6,881,178
7,020,201
1.90 %
Revolver
(11)
First Lien
1M SOFR+
6.50 % 1.00 % 10.97 %
5/22/2023
5/22/2028
133,333
133,333
133,333
0.04 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+
6.50 % 1.00 % 11.35 %
5/22/2023
5/22/2028
99,150
99,150
99,150
0.03 %
Total
$
7,113,661
$
7,252,684
1.97 %
Eskola LLC
(9)
Morristown, TN
Last Out Term Loan
(10)(12)
First Lien
3M SOFR+
5.00 % 1.50 %
9.96 %
12/19/2024
12/19/2029
Construction & Building
$
7,558,348
7,426,077
7,426,077
2.01 %
Last Out Delayed Draw Term Loan
(10)(12)
First Lien
3M SOFR+
5.00 % 1.50 %
9.94 %
12/19/2024
12/19/2029
2,798,784
2,777,793
2,749,805
0.74 %
Eskola Holdings, LLC Class A Units
Equity
12/19/2024
  
314
893,991
893,738
0.24 %
Total
$
11,097,861
$
11,069,620
2.99 %
evolv Consulting, LLC
(9)
Dallas, TX
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+
6.50 % 2.00 % 11.09 %
12/7/2023
12/7/2028
Services: Business
$
9,900,000
9,733,850
9,850,500
2.66 %
evolv Holdco, LLC Preferred Units
Equity
12/7/2023
  
473,485
473,485
430,948
0.12 %
Total
$
10,207,335
$
10,281,448
2.78 %
Evriholder Acquisition, Inc.
(9)
Anaheim, CA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+
6.75 % 1.50 % 11.23 %
1/23/2023
1/24/2028
Consumer Goods: Durable
$ 12,426,869
12,213,973
12,426,869
3.36 %
KEJ Holdings LP Class A Units
Equity
1/23/2023
873,333
873,333
1,376,994
0.37 %
Total
$
13,087,306
$
13,803,863
3.73 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
106
Principal
% of  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Exacta Land Surveyors, LLC
(20)
Cleveland, OH
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 5.75 % 1.50 % 10.23 % 1.00 %
2/8/2019
7/31/2025
Services: Business
$ 16,313,133
16,313,132
15,334,344
4.16 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 5..75% 1.50 % 10.23 % 1.00 %
7/15/2022
7/31/2025
991,945
991,945
932,428
0.25 %
Term Loan
Unsecured
15.00 %
4/22/2024
6/30/2026
100,211
100,211
80,169
0.02 %
SP ELS Holdings LLC Class A Units
Equity
2/8/2019
1,338,661
1,124,414
227,350
0.06 %
Total
$
18,529,702
$
16,574,291
4.49 %
Exigo, LLC
(9)
Dallas, TX
Term Loan
(11)
First Lien
1M SOFR+ 6.25 % 1.00 % 10.71 %
3/16/2022
3/16/2027
Services: Business
$ 8,721,980
8,657,351
8,678,370
2.36 %
Gauge Exigo Coinvest, LLC Common Units
Equity
3/16/2022
  
377,535
377,535
353,743
0.10 %
Total
$
9,034,886
$
9,032,113
2.46 %
FairWave Holdings, LLC
(9)
Kansas City, MO
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 1.50 % 10.83 %
4/1/2024
4/1/2029
Beverage & Food
$ 7,558,150
7,406,992
7,444,778
2.01 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 1.50 % 10.83 %
4/1/2024
4/1/2029
656,817
656,817
646,965
0.17 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 1.50 % 10.83 %
4/1/2024
4/1/2029
1,688,532
1,669,955
1,663,204
0.45 %
GRC Java Holdings, LLC Class A Units
Equity
4/1/2024
  
2,856
285,572
371,158
0.10 %
Total
$
10,019,336
$
10,126,105
2.73 %
FiscalNote Boards LLC
(7)(9)
Toronto, Canada
Term Loan
(11)
First Lien
1M SOFR+ 5.25 % 1.00 % 9.61 %
3/11/2024
3/12/2029
Services: Business
$ 4,279,247
4,204,427
4,193,662
1.13 %
FCP-Connect Holdings LLC Class A Common Shares
Equity
5/28/2024
284
-
-
0.00 %
FCP-Connect Holdings LLC Series A Preferred Shares
Equity
5/28/2024
284
190,382
218,894
0.06 %
Total
$
4,394,809
$
4,412,556
1.19 %
Florachem Corporation
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
4/29/2022
4/29/2028
Chemicals, Plastics, & Rubber
$ 9,750,000
9,630,079
9,750,000
2.64 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
4/29/2022
4/29/2028
66,667
66,667
66,667
0.02 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
4/29/2022
4/29/2028
53,213
53,213
53,213
0.01 %
SK FC Holdings, L.P. Class A Units
Equity
4/29/2022
362
362,434
613,507
0.17 %
Total
$
10,112,393
$
10,483,387
2.84 %
General LED OPCO, LLC
San Antonio, TX
Term Loan
(11)
Second Lien
3M SOFR+ 9.00 % 1.50 % 13.43 %
5/1/2018
3/31/2026
Services: Business
$ 4,500,000
4,484,133
4,410,000
1.19 %
Total
$
4,484,133
$
4,410,000
1.19 %
Green Intermediateco II, Inc.
Irvine, CA
Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 2.00 % 10.33 %
8/8/2023
8/8/2028
High Tech Industries
$ 11,030,624
10,814,754
10,920,318
2.95 %
Term Loan
(11)
First Lien
1M SOFR+ 6.00 % 2.00 % 10.36 %
11/6/2024
8/8/2028
1,296,750
1,271,726
1,283,783
0.35 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 2.00 % 10.33 %
8/8/2023
8/8/2028
404,046
399,952
400,006
0.11 %
Green Topco Holdings, LLC Class A Units
(6)
Equity
8/8/2023
271,401
219,664
362,217
0.10 %
Total
$
12,706,096
$
12,966,324
3.51 %
GS HVAM Intermediate, LLC
(9)
Carlsbad, CA
Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 11.24 %
10/18/2019
2/28/2026
Beverage & Food
$ 12,260,275
12,251,602
12,260,275
3.31 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 11.16 %
10/18/2019
2/28/2026
2,174,242
2,174,242
2,174,242
0.59 %
HV GS Acquisition, LP Class A Interests
(6)
Equity
10/2/2019
  
2,144
563,209
4,852,169
1.31 %
Total
$
14,989,053
$
19,286,686
5.21 %
Guidant Corp.
(9)
Erie, PA
Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 10.83 %
3/11/2024
3/12/2029
Energy: Oil & Gas
$ 9,954,000
9,648,493
9,954,000
2.69 %
Titan Meter Topco LP Class A Units
Equity
3/11/2024
515,578
515,578
774,031
0.21 %
Total
$
10,164,071
$
10,728,031
2.90 %
Heartland Business Systems, LLC
Little Chute, WI
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.73 %
8/26/2022
8/26/2027
Services: Business
$ 9,775,000
9,658,966
9,775,000
2.64 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.73 %
8/26/2022
8/26/2027
49,125
48,799
49,125
0.01 %
AMCO HBS Holdings, LP Class A Units
(6)
Equity
8/26/2022
2,861
219,823
616,165
0.17 %
Total
$
9,927,588
$
10,440,290
2.82 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
107
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net   
Investments
Footnotes Security(2)
Coupon
Floor
Cash PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Husk AcquireCo Inc.
Vaughan, Canada
Term Loan
(7)(11)
First Lien
6M SOFR+ 5.75 % 1.50 % 10.16 %
11/14/2024
11/15/2029
Beverage & Food
$ 5,317,225
5,239,463
5,239,463
1.42 %
SK Spectra Holdings LP Class A Units
Equity
11/15/2024
  
298
297,765
297,765
0.08 %
Total
$
5,537,228
$
5,537,228
1.50 %
HV Watterson Holdings, LLC
(9)
Schaumburg, IL
Term Loan
First Lien
12.00%
-
% 8.00 % 4.00% 12/17/2021
12/17/2026
Services: Business
$13,372,834
13,256,191
13,105,377
3.54 %
Revolver
First Lien
12.00%
-
% 8.00 % 4.00% 12/17/2021
12/17/2026
97,994
97,994
96,034
0.03 %
Delayed Draw Term Loan
First Lien
12.00%
-
% 8.00 % 4.00% 12/17/2021
12/17/2026
324,861
323,234
318,364
0.09 %
HV Watterson Parent, LLC Class A Units
Equity
12/17/2021
  
1,632
1,631,591
394,674
0.11 %
Total
$ 15,309,010
$ 13,914,449
3.77 %
I2P Holdings, LLC
Cleveland, OH
Series A Preferred Units
Equity
1/31/2018
Services: Business
750,000
-
3,618,142
0.98 %
Total
$
-
$
3,618,142
0.98 %
Impact Home Services LLC
(9)
Tampa, FL
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 10.83 %
4/28/2023
4/28/2028
Services: Consumer
$ 5,847,846
5,740,907
5,643,171
1.53 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 10.83 %
10/11/2023
4/28/2028
532,972
522,558
514,318
0.14 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 10.83 %
6/30/2023
4/28/2028
265,811
260,822
256,508
0.07 %
Revolver
(11)(27)
First Lien
3M SOFR+ 6.50 % 2.00 % 10.83 %
4/28/2023
4/28/2028
82,500
82,500
79,613
0.02 %
Impact Holdings Georgia LLC Class A Units
Equity
4/28/2023
  
375
375,156
-
0.00 %
Impact Holdings Georgia LLC Class A-1 Units
Equity
1/31/2024
  
38
37,962
23,001
0.01 %
Total
$
7,019,905
$
6,516,611
1.77 %
Infolinks Media Buyco, LLC
Ridgewood, NJ
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.83 %
11/1/2021
11/1/2026
Media: Advertising, Printing & Publishing
$ 7,168,033
7,107,521
7,168,033
1.94 %
Term Loan
(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.83 %
6/6/2024
11/1/2026
2,440,641
2,411,660
2,440,641
0.66 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.83 %
11/1/2021
11/1/2026
1,462,725
1,453,825
1,462,725
0.40 %
Tower Arch Infolinks Media, LP LP Interests
(6)(15)
Equity
10/28/2021
452,781
208,809
682,924
0.18 %
Total
$ 11,181,815
$ 11,754,323
3.18 %
Informativ, LLC
(9)
Fresno, CA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.98 %
7/30/2021
7/30/2026
High Tech Industries
$ 8,394,781
8,335,177
8,394,781
2.27 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.98 %
3/31/2022
7/30/2026
6,328,624
6,277,694
6,328,624
1.71 %
Credit Connection Holdings, LLC Series A Units
Equity
7/30/2021
804,384
804,384
1,456,662
0.39 %
Total
$ 15,417,255
$ 16,180,067
4.37 %
Inoapps Bidco, LLC
(9)
Houston, TX
Term Loan B
(11)
First Lien
3M SONIA+ 5.75 % 1.00 % 10.56 %
2/15/2022
2/15/2027
High Tech Industries
£ 9,750,000
$ 13,094,801
$ 12,114,950
3.28 %
Revolver
(11)
First Lien
1M SOFR+ 5.75 % 1.00 % 10.22 %
2/15/2022
2/15/2027
80,000
80,000
80,000
0.02 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 5.75 % 1.00 % 10.60 %
2/15/2022
2/15/2027
81,458
81,032
81,458
0.02 %
Inoapps Holdings, LLC Series A-1 Preferred Units
Equity
2/15/2022
  
739,844
783,756
1,001,613
0.27 %
Total
$ 14,039,589
$ 13,278,021
3.59 %
iNovex Information Systems Incorporated
(9)
Columbia, MD
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 5.25 % 1.00 % 9.63 %
12/17/2024
12/17/2030
Services: Business
$ 7,522,184
7,409,351
7,409,351
2.00 %
Revolver
(11)
First Lien
1M SOFR+ 5.25 % 1.00 % 9.61 %
12/17/2024
12/17/2030
28,000
28,000
27,580
0.01 %
Total
$
7,437,351
$
7,436,931
2.01 %
Invincible Boat Company LLC
Opa Locka, FL
Term Loan
(11)
First Lien
1M SOFR+ 7.50 % 1.50 % 12.01 %
8/28/2019
12/31/2026
Consumer Goods: Durable
$ 5,342,606
5,328,007
5,182,328
1.40 %
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 7.50 % 1.50 % 12.01 %
8/28/2019
12/31/2026
4,931,637
4,918,069
4,783,688
1.29 %
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 7.50 % 1.50 % 12.01 %
6/1/2021
12/31/2026
1,096,691
1,092,703
1,063,790
0.29 %
Revolver
(11)
First Lien
1M SOFR+ 7.50 % 1.50 % 12.01 %
8/28/2019
12/31/2026
1,063,830
1,063,830
1,031,915
0.28 %
Warbird Parent Holdco, LLC Class A Units
Equity
8/28/2019
1,362,575
1,299,691
367,676
0.10 %
Total
$ 13,702,300
$ 12,429,397
3.36 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
108
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net   
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
J.R. Watkins, LLC
San Francisco,CA
Term Loan (SBIC)
(4)(19)
First Lien
12.00%
-
%
-
%
-
% 12/22/2017
5/3/2026
Consumer Goods: Non-Durable
$13,597,208
13,597,207
2,855,414
0.77 %
Revolver (SBIC)
(4)(9)(19)
First Lien
5.00 %
-
%
-
%
-
%
5/3/2024
5/3/2026
1,125,000
1,125,000
236,250
0.06 %
J.R. Watkins Holdings, Inc. Class A Preferred Stock
Equity
12/22/2017
1,133
1,132,576
-
0.00 %
Total
$ 15,854,783
$
3,091,664
0.83 %
Ledge Lounger, Inc.
(9)
Katy, TX
Term Loan A (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 % 1.00 % 11/9/2021
11/9/2027
Consumer Goods: Durable
$ 7,439,791
7,376,964
7,030,602
1.90 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 % 1.00 % 11/9/2021
11/9/2027
58,443
58,443
55,229
0.01 %
SP L2 Holdings LLC Class A Units (SBIC)
(4)
Equity
11/9/2021
  
375,000
375,000
-
0.00 %
SP L2 Holdings LLC Class C Units (SBIC)
(4)
Equity
10/9/2024
  
140,834
34,504
-
0.00 %
Total
$
7,844,911
$
7,085,831
1.91 %
Lightning Intermediate II, LLC
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
First Lien
6M SOFR+ 6.50 % 1.00 % 11.03 %
6/6/2022
6/6/2027
Consumer Goods: Non-Durable
$12,899,115
12,758,237
12,834,619
3.47 %
Gauge Vimergy Coinvest, LLC Units
Equity
6/6/2022
  
399
391,274
125,618
0.03 %
Total
$ 13,149,511
$ 12,960,237
3.50 %
Luxium Solutions, LLC
Deerfield, OH
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
5/10/2024
12/1/2027
High Tech Industries
$ 8,252,261
8,147,122
8,211,000
2.22 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
5/10/2024
12/1/2027
1,194,249
1,186,357
1,188,278
0.32 %
Total
$
9,333,479
$
9,399,278
2.54 %
MacKenzie-Childs Acquisition, Inc.
(9)
Aurora, NY
Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 1.00 % 10.48 %
9/2/2022
9/2/2027
Consumer Goods: Durable
$
88,553
87,756
88,553
0.02 %
MacKenzie-Childs Investment, LP Partnership Interests
Equity
9/2/2022
  
100,000
100,000
100,282
0.03 %
Total
$
187,756
$
188,835
0.05 %
Madison Logic Holdings, Inc.
(9)
New York, NY
Term Loan
(11)
First Lien
1M SOFR+ 7.00 % 1.00 % 11.34 %
12/30/2022
12/30/2028
Media: Advertising, Printing & Publishing
$ 3,579,241
3,507,484
3,471,864
0.94 %
Term Loan
(11)
First Lien
1M SOFR+ 7.50 % 1.00 %
11.84 % 12/30/2022
12/30/2028
894,810
876,871
867,966
0.23 %
BC Partners Glengarry Co-Investment LP Class 1 Interests
(6)
Equity
7/7/2023
394,767
394,767
214,870
0.06 %
Total
$
4,779,122
$
4,554,700
1.23 %
MBH Management LLC
(9)
Washington, DC
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 5.25 % 1.50 % 9.61 %
11/15/2024
11/15/2029
Healthcare & Pharmaceuticals
$ 9,476,743
9,291,975
9,291,975
2.51 %
MBH Parent, LLC Common Units
Equity
11/15/2024
  
646,944
646,944
646,944
0.17 %
Total
$
9,938,919
$
9,938,919
2.68 %
MedLearning Group, LLC
(9)
New York, NY
Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
3/26/2024
12/30/2027
Healthcare & Pharmaceuticals
$ 4,306,952
4,234,800
4,242,348
1.15 %
Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
3/26/2024
12/30/2027
2,524,493
2,482,201
2,486,626
0.67 %
Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
3/26/2024
12/30/2027
2,061,314
2,026,873
2,030,394
0.55 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.58 %
3/26/2024
12/30/2027
489,038
484,148
481,702
0.13 %
Total
$
9,228,022
$
9,241,070
2.50 %
Michelli, LLC
(9)
New Orleans, LA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 5.75 % 2.00 % 10.08 %
12/21/2023
12/21/2028
Capital Equipment
$ 4,950,000
4,866,492
4,925,250
1.33 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 5.75 % 2.00 % 10.08 %
12/21/2023
12/21/2028
3,876,499
3,840,682
3,857,117
1.04 %
SP MWM Holdco LLC Class A Units
Equity
12/21/2023
  
509,215
509,215
589,463
0.16 %
Total
$
9,216,389
$
9,371,830
2.53 %
Microbe Formulas LLC
(9)
Meridian, ID
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 5.75 % 1.00 % 10.21 %
4/4/2022
4/3/2028
Consumer Goods: Non-Durable
$ 7,575,773
7,530,069
7,575,773
2.05 %
Term Loan (SBIC II)
(5)(11)
First Lien
1M SOFR+ 5.75 % 1.00 % 10.22 %
11/20/2024
4/3/2028
4,254,419
4,233,579
4,254,419
1.15 %
Total
$ 11,763,648
$ 11,830,192
3.20 %
MOM Enterprises, LLC
(9)
Richmond, CA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.48 % 2.00 % 10.81 %
5/19/2021
5/19/2026
Consumer Goods: Non-Durable
$15,890,333
15,787,537
15,810,880
4.27 %
Revolver
(11)
First Lien
3M SOFR+ 6.48 % 2.00 % 10.81 %
5/19/2021
5/19/2026
37,500
37,500
37,313
0.01 %
MBliss SPC Holdings, LLC Units
Equity
5/19/2021
933,333
933,333
746,138
0.20 %
Total
$ 16,758,370
$ 16,594,331
4.48 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
109
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   Amortized   
Fair 
  Net   
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Monarch Behavioral Therapy, LLC
(9)
Addison, TX
Term Loan (SBIC)
(4)(11)
First Lien
1M SOFR+5.00% 1.00 % 9.36 %
6/6/2024
6/6/2030
Healthcare & Pharmaceuticals
$ 6,730,812
6,605,639
6,663,504
1.80 %
Revolver
(11)
First Lien
1M SOFR+5.00% 1.00 % 9.34 %
6/6/2024
6/6/2030
36,136
36,136
35,775
0.01 %
Delayed Draw Term Loan
(11)
First Lien
1M SOFR+5.00% 1.00 % 9.36 %
6/6/2024
6/6/2030
382,715
378,952
378,888
0.10 %
BI Investors, LLC Class A Units
(6)
Equity
6/6/2024
  
4,286
424,738
434,111
0.12 %
Total
$
7,445,465
$
7,512,278
2.03 %
Monitorus Holding, LLC
(7)
London, UK
Term Loan
(11)
First Lien
3M SOFR+7.00% 1.00 % 11.59 %
5/24/2022
5/24/2027
Media: Diversified & Production
$ 106,248
105,711
105,186
0.03 %
Revolver
(11)
First Lien
3M SOFR+7.00% 1.00 % 11.59 %
5/24/2022
5/24/2027
€ 106,498
115,781
114,623
0.03 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+7.00% 1.00 % 11.59 %
5/24/2022
5/24/2027
€ 106,248
107,237
106,165
0.03 %
Sapphire Aggregator S.a r.l. Convertible Bonds
(14)
Unsecured
8.00%
-
%
-
% 8.00% 11/15/2023
3/31/2025
€
6,030
6,473
6,216
0.00 %
Sapphire Aggregator S.a r.l. Convertible Bonds
(14)
Unsecured
8.00%
-
%
-
% 8.00%
3/1/2024
6/30/2025
€
12,241
13,291
12,620
0.00 %
Sapphire Aggregator S.a r.l. Convertible Bonds
(14)
Unsecured
8.00%
-
%
-
% 8.00% 9/30/2024
12/21/2025
€
11,629
13,002
11,989
0.00 %
Sapphire Aggregator S.a r.l. Class A Shares
Equity
9/1/2022
557,689
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class B Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class C Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class D Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class E Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class F Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class G Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class H Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Sapphire Aggregator S.a r.l. Class I Shares
Equity
9/1/2022
557,682
11,156
12,326
0.00 %
Total
$
461,899
$
467,733
0.09 %
Morgan Electrical Group Intermediate Holdings, Inc.
(9)
Fremont, CA
Term Loan
(11)
First Lien
1M SOFR+6.25% 1.50 % 10.61 %
8/3/2023
8/3/2029
Construction & Building
$ 4,395,044
4,313,186
4,373,069
1.18 %
Delayed Draw Term Loan
(11)
First Lien
1M SOFR+6.25% 1.50 % 10.61 %
8/3/2023
8/3/2029
1,705,604
1,688,941
1,697,076
0.46 %
Morgan Electrical Group Holdings, LLC Series A-2 Preferred Units
Equity
8/3/2023
380
380,330
308,668
0.08 %
Total
$
6,382,457
$
6,378,813
1.72 %
Naumann/Hobbs Material Handling Corporation II, Inc.
Phoenix, AZ
Term Loan
(11)
First Lien
3M SOFR+6.75% 1.50 % 11.08 %
8/30/2019
8/30/2025
Services: Business
$ 8,125,763
8,116,850
8,044,505
2.17 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+6.75% 1.50 % 11.08 %
8/30/2019
8/30/2025
5,124,136
5,118,576
5,072,895
1.37 %
Revolver
(11)
First Lien
3M SOFR+6.75% 1.50 % 11.08 %
8/30/2019
8/30/2025
1,763,033
1,763,033
1,745,403
0.47 %
Naumann Hobbs Holdings, L.P. Class A-1 Units
Equity
9/29/2022
123
220,379
-
0.00 %
Naumann Hobbs Holdings, L.P. Class A-2 Units
Equity
9/29/2022
123
220,379
-
0.00 %
Naumann Hobbs Holdings, L.P. Class B Units
Equity
12/27/2024
142
142,200
937,078
0.25 %
Total
$ 15,581,417
$ 15,799,881
4.26 %
NINJIO, LLC
(9)
Westlake Village, CA
Term Loan
(11)
First Lien
3M SOFR+6.50% 1.50 % 11.08 %
10/12/2022
10/12/2027
Media: Diversified & Production
$ 4,962,500
4,900,478
4,962,500
1.34 %
Revolver
(11)
First Lien
3M SOFR+6.50% 1.50 % 11.08 %
10/12/2022
10/12/2027
33,333
33,333
33,333
0.01 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+6.50% 1.50 % 11.08 %
10/12/2022
10/12/2027
100,000
99,204
100,000
0.03 %
NINJIO Holdings, LLC Units
Equity
10/12/2022
184
313,253
314,702
0.09 %
Gauge NINJIO Blocker LLC Preferred Units
Equity
9/22/2023
14
14,470
56,585
0.02 %
Total
$
5,360,738
$
5,467,120
1.49 %
Norplex Micarta Acquisition, Inc.
(9)
Postville, IA
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+5.25% 1.50 % 9.84 %
10/31/2024
10/31/2029
Chemicals, Plastics, & Rubber
$13,000,000
12,746,682
12,746,682
3.45 %
Norplex Micarta Parent, LP Preferred Units
Equity
10/31/2024
739,804
739,804
739,804
0.20 %
Total
$ 13,486,486
$ 13,486,486
3.65 %
NS412, LLC
Dallas, TX
Term Loan
(11)
Second Lien
3M SOFR+8.75% 1.00 % 13.18 %
5/6/2019
5/6/2026
Services: Consumer
$ 7,615,000
7,589,599
7,538,850
2.04 %
NS Group Holding Company, LLC Class A Units
Equity
5/6/2019
782
795,002
598,221
0.16 %
Total
$
8,384,601
$
8,137,071
2.20 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
110
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
NuSource Financial Acquisition, Inc.
Eden Prairie, MN
Term Loan (SBIC II)
(5)
Unsecured
13.75%
-
% 8.00 % 5.75 %
1/29/2021
1/31/2027
Services: Business
$ 6,484,567
6,448,091
6,452,144
1.74 %
NuSource Holdings, Inc. Warrants (SBIC II)
(5)
Equity
1/29/2021
  
54,966
-
-
0.00 %
Total
$
6,448,091
$
6,452,144
1.74 %
Onpoint Industrial Services, LLC
Deer Park, TX
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 7.00 % 1.75 % 11.33 %
11/16/2022
11/16/2027
Services: Business
$12,351,615
12,190,355
12,351,615
3.34 %
Spearhead TopCo, LLC Class A Units
Equity
11/16/2022
606,742
606,742
986,938
0.27 %
Total
$ 12,797,097
$ 13,338,553
3.61 %
PCP MT Aggregator Holdings, L.P.
(7)
Oak Brook, IL
Common Units
Equity
3/29/2019
Finance
825,020
119,281
5,092,459
1.38 %
Total
$
119,281
$
5,092,459
1.38 %
PCS Software, Inc.
(9)
Shenandoah, TX
Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 1.50 % 10.48 %
7/1/2019
1/1/2026
Transportation & Logistics
$13,882,311
13,882,310
13,812,899
3.73 %
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.00 % 1.50 % 10.48 %
7/1/2019
1/1/2026
1,820,631
1,820,631
1,811,528
0.49 %
Revolver
(11)
First Lien
3M SOFR+ 6.00 % 1.50 % 10.48 %
7/1/2019
1/1/2026
571,195
571,195
568,339
0.15 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 1.50 % 10.48 %
7/1/2019
1/1/2026
960,000
960,000
955,200
0.26 %
PCS Software Parent, LLC Class A Common Units
Equity
9/16/2022
471,211
9,995
384,522
0.10 %
Total
$ 17,244,131
$ 17,532,488
4.73 %
Pearl Media Holdings, LLC
(24)
Garland, TX
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.25 % 2.00 % 10.73 %
8/31/2022
8/31/2027
Media: Advertising, Printing & Publishing
$ 8,680,556
8,577,517
8,593,750
2.32 %
Total
$
8,577,517
$
8,593,750
2.32 %
Peltram Group Holdings LLC
Auburn, WA
Class A Units
(6)
Equity
12/30/2021
Construction & Building
508,516
492,499
693,537
0.19 %
Total
$
492,499
$
693,537
0.19 %
Premiere Digital Services, Inc.
(9)
Los Angeles, CA
Term Loan
(11)
First Lien
1M SOFR+ 5.25 % 1.00 % 9.59 %
11/3/2021
11/3/2026
Media: Broadcasting & Subscription
$12,196,092
12,170,577
12,196,092
3.30 %
Premiere Digital Holdings, Inc. Common Stock
Equity
10/18/2018
5,000
-
2,118,619
0.57 %
Total
$ 12,170,577
$ 14,314,711
3.87 %
Red's All Natural, LLC
Franklin, TN
Last Out Term Loan (SBIC II)
(5)(10)(12)
First Lien
3M SOFR+ 4.50 % 1.50 % 9.88 %
1/31/2023
1/31/2029
Beverage & Food
$ 8,815,327
8,681,968
8,815,327
2.38 %
Centeotl Co-Invest B, LP Common Units
Equity
1/31/2023
710,600
710,600
818,825
0.22 %
Total
$
9,392,568
$
9,634,152
2.60 %
RIA Advisory Borrower, LLC
(9)
Coral Gables, FL
Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 11.22 %
5/1/2023
8/2/2027
High Tech Industries
$ 5,895,000
5,815,274
5,895,000
1.59 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 2.00 % 11.22 %
5/1/2023
8/2/2027
26,114
26,114
26,114
0.01 %
RIA Advisory Aggregator, LLC Class A Units
Equity
5/1/2023
104,425
165,078
127,378
0.03 %
RIA Products Aggregator, LLC Class A Units
Equity
5/1/2023
81,251
78,390
78,390
0.02 %
Total
$
6,084,856
$
6,126,882
1.65 %
Rogers Mechanical Contractors, LLC
(9)
Atlanta, GA
Term Loan
(11)
First Lien
6M SOFR+ 6.25 % 1.00 % 10.91 %
4/28/2021
9/28/2028
Construction & Building
$ 8,668,481
8,619,680
8,581,796
2.32 %
Total
$
8,619,680
$
8,581,796
2.32 %
Said Intermediate, LLC
(9)
Boston, MA
Term Loan
(11)
First Lien
1M SOFR+ 5.50 % 1.00 % 9.86 %
6/13/2024
6/13/2029
Media: Advertising, Printing & Publishing
$ 7,443,117
7,307,325
7,331,470
1.98 %
FCP-Said Holdings, LLC Class A Common Shares
Equity
6/13/2024
804
-
-
0.00 %
FCP-Said Holdings, LLC Series A Preferred Shares
Equity
6/13/2024
852
350,649
290,102
0.08 %
Total
$
7,657,974
$
7,621,572
2.06 %
Sales Benchmark Index, LLC
(9)
Dallas, TX
Term Loan
(11)
First Lien
3M SOFR+ 6.00 % 2.00 % 10.53 %
1/7/2020
7/7/2026
Services: Business
$12,148,958
12,144,103
12,148,958
3.28 %
SBI Holdings Investments LLC Class A Units
Equity
1/7/2020
66,573
665,730
627,734
0.17 %
Total
$ 12,809,833
$ 12,776,692
3.45 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
111
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  
Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
 
Service Minds Company, LLC
Bradenton, FL
Term Loan
(11)(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
2/7/2022
2/7/2028
Services: Consumer
$ 5,431,921
5,373,590
3,340,631
0.90 %
Revolver
(11)(18)
(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
2/7/2022
2/7/2028
83,533
83,533
51,373
0.01 %
Revolver
(11)(18)
(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
7/2/2024
2/7/2028
20,223
20,223
20,223
0.01 %
Revolver
(11)(18)
(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
9/13/2024
2/7/2028
20,000
20,000
20,000
0.01 %
Revolver
(11)(18)
(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
11/12/2024
2/7/2028
45,000
45,000
45,000
0.01 %
Delayed Draw Term Loan
(11)(26)
First Lien
PRIME+
7.50 %
1.00 %
-
%
-
%
2/7/2022
2/7/2028
99,116
98,498
60,956
0.02 %
Total
$
5,640,844
$
3,538,183
0.96 %
TAC LifePort Holdings, LLC
Woodland, WA
Common Units
(6)
Equity
3/1/2021
Aerospace & Defense
546,543
513,825
804,951
0.22 %
Total
$
513,825
$
804,951
0.22 %
Teckrez, LLC
(9)
Jacksonville, FL
Term Loan
(11)
First Lien
1M SOFR+ 6.75 %
2.00 % 11.21 %
5/24/2024
11/30/2028
Chemicals, Plastics, &
Rubber
$ 4,283,396
4,225,574
4,261,979
1.15 %
Revolver
(11)
First Lien
1M SOFR+ 6.75 %
2.00 % 11.21 %
5/24/2024
11/30/2028
721,110
721,110
717,504
0.19 %
HH-Teckrez Parent, LP Preferred Units
Equity
90,139
90,139
127,187
0.03 %
Total
$
5,036,823
$
5,106,670
1.37 %
The Hardenbergh Group, Inc.
(9)
Livonia, MI
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.50 %
2.00 % 10.93 %
8/7/2023
8/7/2028
Healthcare &
Pharmaceuticals
$ 10,370,624
10,168,144
10,370,624
2.80 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.50 %
2.00 % 10.93 %
9/30/2024
8/7/2028
802,021
786,798
802,021
0.22 %
BV HGI Holdings, L.P. Class A Units
Equity
8/7/2023
434,504
434,504
337,963
0.09 %
Total
$ 11,389,446
$ 11,510,608
3.11 %
Tiger 21, LLC
(9)
New York, NY
Term Loan
(11)
First Lien
3M SOFR+ 5.00 %
1.00 %
9.32 %
12/30/2024
12/30/2030
Services: Consumer
$ 12,000,000
11,760,000
11,760,000
3.18 %
Tiger 21 Blocker, Inc. Class A-3 Common
Stock
Equity
12/30/2024
565
564,635
564,635
0.15 %
Total
$ 12,324,635
$ 12,324,635
3.33 %
Tilley Distribution, Inc.
(9)
Baltimore, MD
Term Loan
(11)
First Lien
3M SOFR+ 6.00 %
1.00 % 10.48 %
4/1/2022
12/31/2026
Chemicals, Plastics, &
Rubber
$
92,610
91,943
89,369
0.02 %
Total
$
91,943
$
89,369
0.02 %
Trade Education Acquisition, L.L.C.
Austin, TX
Term Loan (SBIC)
(4)(28)
First Lien
-
%
1.00 %
-
%
12/28/2021
12/28/2027
Education
$ 9,944,460
9,836,078
5,320,286
1.44 %
Revolver
(9)(28)
First Lien
1M SOFR+ 9.25 %
1.00 %
-
%
12/28/2021
12/28/2027
39,000
39,000
20,865
0.01 %
Trade Education Holdings, L.L.C. Class A
Units
Equity
12/28/2021
662,660
662,660
-
0.00 %
Total
$ 10,537,738
$
5,341,151
1.45 %
TradePending OpCo Aggregator, LLC
(9)
Carrboro, NC
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.25 %
2.00 % 10.73 %
3/2/2021
3/2/2026
High Tech Industries
$ 9,527,778
9,473,791
9,527,778
2.58 %
Term Loan (SBIC II)
(5)(11)
First Lien
3M SOFR+ 6.25 %
2.00 % 10.73 %
8/4/2023
3/2/2026
2,436,128
2,411,250
2,436,128
0.66 %
Revolver
(11)
First Lien
3M SOFR+ 6.25 %
2.00 % 10.73 %
3/2/2021
3/2/2026
33,333
33,333
33,333
0.01 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.25 %
2.00 % 10.73 %
8/4/2023
3/2/2026
680,137
676,477
680,137
0.18 %
TradePending Holdings, LLC Series A Units
(6)
Equity
3/2/2021
908,333
947,699
1,973,113
0.53 %
TradePending Holdings, LLC Series A-1 Units
Equity
8/4/2023
132,783
260,254
520,010
0.14 %
Total
$ 13,802,804
$ 15,170,499
4.10 %
TriplePoint Acquisition Holdings LLC
(9)
Columbus, OH
Term Loan
(11)
First Lien
3M SOFR+ 5.50 %
1.00 %
9.83 %
5/31/2024
5/31/2029
Construction & Building
$ 5,329,708
5,232,677
5,303,059
1.43 %
TriplePoint Holdco LLC Class A Units
(6)
Equity
5/31/2024
557,968
549,818
953,034
0.26 %
Total
$
5,782,495
$
6,256,093
1.69 %
Unicat Catalyst Holdings, LLC
(21)
Alvin, TX
Term Loan
(11)
First Lien
1M SOFR+ 6.50 %
1.00 % 10.96 %
4/27/2021
4/27/2026
Chemicals, Plastics, &
Rubber
$ 6,843,750
6,801,773
6,843,750
1.85 %
Unicat Catalyst, LLC Class A Units
Equity
4/27/2021
7,500
750,000
819,105
0.22 %
Unicat Catalyst, LLC Class A-1 Units
Equity
12/13/2023
701
38,683
53,090
0.01 %
Total
$
7,590,456
$
7,715,945
2.08 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
112
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  
Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
 
U.S. Expediters, LLC
(9)
Stafford, TX
Term Loan
(11)
First Lien
3M SOFR+ 6.25 % 1.00 % 10.78 %
12/22/2021
12/22/2026
Healthcare & Pharmaceuticals
$ 14,460,123
14,331,044
14,315,522
3.87 %
Cathay Hypnos LLC Units
Equity
12/22/2021
1,737,087
1,353,155
975,688
0.26 %
Total
$
15,684,199
$
15,291,210
4.13 %
USDTL AcquisitionCo, Inc.
(9)
Des Plaines, IL
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 5.25 % 1.50 % 9.58 %
12/9/2024
12/9/2030
Healthcare & Pharmaceuticals
$ 6,000,000
5,881,196
5,881,196
1.59 %
Revolver
(11)
First Lien
3M SOFR+ 5.25 % 1.50 % 9.58 %
12/9/2024
12/9/2030
20,000
20,000
19,604
0.01 %
USDTL Holdings, LLC Preferred Units
Equity
12/9/2024
110
110,000
109,998
0.03 %
Total
$
6,011,196
$
6,010,798
1.63 %
Venbrook Buyer, LLC
Los Angeles, CA
Term Loan B (SBIC)
(4)(11)
First Lien
3M SOFR+ 8.50 % 1.50 % 5.48 % 7.50 %
3/13/2020
3/13/2026
Services: Business
$ 14,603,639
14,541,079
13,873,457
3.75 %
Term Loan B
(11)
First Lien
3M SOFR+ 8.50 % 1.50 % 5.48 % 7.50 %
3/13/2020
3/13/2026
166,160
165,448
157,852
0.04 %
Revolver
(11)
First Lien
3M SOFR+ 8.50 % 1.50 % 5.48 % 7.50 %
3/13/2020
3/13/2026
2,579,814
2,579,814
2,450,823
0.66 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 8.50 % 1.50 % 5.48 % 7.50 %
3/13/2020
3/13/2026
4,979,640
4,967,241
4,730,658
1.28 %
Venbrook Holdings, LLC Convertible Term Loan
(14)
Unsecured
10.00%
-
%
-
% 10.00 %
3/31/2022
12/20/2028
108,991
108,991
-
0.00 %
Venbrook Holdings, LLC Common Units
Equity
3/13/2020
822,758
819,262
-
0.00 %
Total
$
23,181,835
$
21,212,790
5.73 %
WER Holdings, LLC
(9)
Sugar Hill, GA
Term Loan (SBIC)
(4)(11)
First Lien
6M SOFR+ 5.50 % 1.00 % 9.95 %
4/11/2024
4/11/2030
Services: Business
$ 2,690,643
2,641,658
2,650,283
0.72 %
Revolver
(11)
First Lien
3M SOFR+ 5.50 % 1.00 % 9.83 %
4/11/2024
4/11/2030
133,870
133,870
131,862
0.04 %
Delayed Draw Term Loan
(11)
First Lien
1M SOFR+ 5.50 % 1.00 % 9.87 %
4/11/2024
4/11/2030
824,382
816,172
812,016
0.22 %
Blade Landscape Investments, LLC Class A Units
Equity
1,803
180,300
192,289
0.05 %
Total
$
3,772,000
$
3,786,450
1.03 %
Whisps Holdings LP
Elgin, IL
Class A Units
Equity
4/18/2019
Beverage & Food
500,000
500,000
-
0.00 %
Class A-1 Units
Equity
3/6/2023
182,610
182,610
-
0.00 %
Total
$
682,610
$
-
0.00 %
Xanitos, Inc.
(9)
Newtown Square, PA
Term Loan (SBIC)
(4)(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
6/25/2021
6/25/2026
Healthcare & Pharmaceuticals
$ 12,352,000
12,267,321
12,352,000
3.34 %
Revolver
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
6/25/2021
6/25/2026
140,000
140,000
140,000
0.04 %
Delayed Draw Term Loan
(11)
First Lien
3M SOFR+ 6.50 % 1.00 % 10.98 %
6/25/2021
6/25/2026
2,176,309
2,168,201
2,176,309
0.59 %
Pure TopCo, LLC Class A Units
Equity
442,133
1,053,478
1,245,129
0.34 %
Total
$
15,629,000
$
15,913,438
4.31 %
Total Non-control, non-affiliated investments
$
943,853,898
$
945,845,252
255.69 %
Total Investments
$
961,788,706
$
953,497,688
257.76 %
LIABILITIES IN EXCESS OF OTHER ASSETS
$
(583,575,748)
(157.76)%
NET ASSETS
$
369,921,940
100.00 %
(1) See Note 1 of the Notes to the Consolidated Financial Statements for a discussion of the methodologies used to value securities in the
portfolio.
(2) Debt investments are income producing and equity securities are non-income producing, unless otherwise noted.
(3) Par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments. Par amount
is denominated in U.S. Dollars (“$”) unless otherwise noted, Euro (“€”), or Great British Pound (“£”).
(4) Investments held by the SBIC subsidiary (as defined in Note 1), which include $16,925,317 of cash and $240,789,911 of investments (at
cost), are excluded from the obligations to the lenders of the Credit Facility (as defined in Note 9). Stellus Capital Investment
Corporation’s (the “Company’s”) obligations to the lenders of the Credit Facility are secured by a first priority security interest in all
investments and cash and cash equivalents, except for cash and investments held by the SBIC subsidiaries (as defined in Note 1).
(5) Investments held by the SBIC II subsidiary (as defined in Note 1), which include $2,793,535 of cash and $272,646,904 of investments (at
cost), are excluded from the obligations to the lenders of the Credit Facility. The Company’s obligations to the lenders of the Credit
Facility are secured by a first priority security interest in all investments and cash and cash equivalents, except for cash and investments
held by the SBIC subsidiaries.

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
113
(6) Security is income producing through dividends or distributions.
(7) The investment is not a “qualifying asset” under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company may
not acquire any non-qualifying assets unless, at the time of the acquisition, qualifying assets represent at least 70% of the Company’s
total assets. Qualifying assets represent approximately 95.2% of the Company’s total assets as of December 31, 2024.
(8) Represents a PIK interest security. At the option of the issuer, interest can be paid in cash or cash and PIK interest. The percentage of PIK
interest shown is the maximum PIK interest that can be elected by the issuer.
(9) At December 31, 2024, the Company had the following outstanding revolver and delayed draw term loan commitments:

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
114
    
    
    
Unused 
    
Unfunded 
Commitment 
Investments
Security
Commitment
Fee
Maturity
2X LLC
Revolver
$
87,500
0.50%
June 5, 2028
Ad.Net Acquisition, LLC
Revolver
444,803
0.50%
May 7, 2026
AdCellerant LLC
Revolver
875,995
0.50%
December 12, 2028
ADS Group Opco, LLC
Revolver
60,149
0.00%
December 31, 2027
AGT Robotique Inc.
Revolver
1,526,600
0.50%
June 22, 2029
American Refrigeration, LLC
Revolver
100,000
0.50%
March 31, 2028
AMII Acquisition, LLC
Revolver
500,000
0.50%
December 4, 2029
Amika OpCo LLC * 
Revolver
100,000
0.50%
July 1, 2028
Anne Lewis Strategies, LLC
Revolver
50,000
0.50%
May 9, 2028
ArborWorks, LLC
Revolver
1,325,032
0.00%
November 6, 2028
Axis Portable Air LLC
Revolver
100,000
0.50%
March 22, 2028
Bart & Associates, LLC
Revolver
942,010
0.50%
August 16, 2030
Bart & Associates, LLC
Delayed Draw Term Loan
1,733,387
1.00%
August 16, 2030
Camp Profiles LLC
Revolver
100,000
0.50%
September 3, 2026
Carolinas Buyer, Inc.
Delayed Draw Term Loan
2,216,358
1.00%
December 20, 2030
Carolinas Buyer, Inc.
Revolver
100,000
0.50%
December 20, 2030
CEATI International Inc.
Revolver
100,000
0.50%
December 31, 2027
Cerebro Buyer, LLC
Delayed Draw Term Loan
1,130,707
1.00%
March 15, 2029
Cerebro Buyer, LLC
Revolver
100,000
0.50%
March 15, 2029
CF512, Inc.
Revolver
100,000
0.50%
September 1, 2026
Channel Partners Intermediateco, LLC
Revolver
18,333
0.50%
February 7, 2027
CompleteCase, LLC
Revolver
166,667
0.50%
December 21, 2025
Compost 360 Acquisition, LLC
Revolver
14,000
0.50%
August 2, 2028
COPILOT Provider Support Services, LLC
Revolver
71,667
0.50%
November 22, 2027
Craftable Intermediate II Inc.
Revolver
100,000
0.50%
June 30, 2028
Curion Holdings, LLC
Revolver
35,499
0.50%
July 29, 2027
DRS Holdings III, Inc.
Revolver
909,091
0.50%
November 1, 2025
Equine Network, LLC
Revolver
33,333
0.50%
May 22, 2028
Eskola, LLC**
Delayed Draw Term Loan
3,918,298
1.00%
December 19, 2029
evolv Consulting, LLC
Revolver
1,363,636
0.50%
December 7, 2028
Evriholder Acquisition, Inc.
Revolver
100,000
0.50%
January 24, 2028
Exigo, LLC
Revolver
100,000
0.50%
March 16, 2027
FairWave Holdings, LLC
Delayed Draw Term Loan
976,811
0.50%
April 1, 2029
FairWave Holdings, LLC
Revolver
485,473
0.50%
April 1, 2029
FiscalNote Boards LLC
Delayed Draw Term Loan
627,139
1.00%
March 12, 2029
FiscalNote Boards LLC
Revolver
391,962
0.50%
March 12, 2029
Florachem Corporation
Revolver
33,333
0.50%
April 29, 2028
GS HVAM Intermediate, LLC
Revolver
477,273
0.50%
February 28, 2026
Guidant Corp.
Revolver
1,055,707
0.50%
March 12, 2029
HV Watterson Holdings, LLC
Revolver
2,006
0.50%
December 17, 2026
Impact Home Services LLC
Delayed Draw Term Loan
1,571,984
1.00%
April 28, 2028

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
115
    
    
    
Unused 
    
Unfunded 
Commitment 
Investments
Security
Commitment
Fee
Maturity
Informativ, LLC
Revolver
$
100,000
0.50%
July 30, 2026
Inoapps Bidco, LLC
Revolver
20,000
0.50%
February 15, 2027
iNovex Information Systems Incorporated
Revolver
72,000
0.50%
December 17, 2030
J.R. Watkins, LLC
Revolver
337,433
0.00%
May 3, 2026
Ledge Lounger, Inc.
Revolver
24,915
0.50%
November 9, 2027
Lightning Intermediate II, LLC
Revolver
100,000
0.50%
June 6, 2027
MacKenzie-Childs Acquisition, Inc.
Revolver
100,000
0.50%
September 2, 2027
Madison Logic Holdings, Inc.
Revolver
52,632
0.50%
December 30, 2027
MBH Management LLC
Delayed Draw Term Loan
500,000
1.00%
November 15, 2029
MBH Management LLC
Revolver
500,000
0.50%
November 15, 2029
MedLearning Group, LLC
Delayed Draw Term Loan
1,956,150
1.00%
December 30, 2027
Michelli, LLC
Revolver
1,296,076
0.50%
December 21, 2028
Microbe Formulas LLC
Revolver
100,000
0.50%
April 3, 2028
MOM Enterprises, LLC
Revolver
62,500
0.50%
May 19, 2026
Monarch Behavioral Therapy, LLC
Delayed Draw Term Loan
701,036
1.00%
June 6, 2030
Monarch Behavioral Therapy, LLC
Revolver
686,582
0.50%
June 6, 2030
Morgan Electrical Group Intermediate Holdings, Inc.
Delayed Draw Term Loan
1,145,662
1.00%
August 3, 2029
Morgan Electrical Group Intermediate Holdings, Inc.
Revolver
100,000
0.50%
August 3, 2029
NINJIO, LLC
Revolver
66,667
0.50%
October 12, 2027
Norplex Micarta Acquisition, Inc.
Revolver
500,000
0.50%
October 31, 2029
PCS Software, Inc.
Revolver
746,948
0.50%
January 1, 2026
Premiere Digital Services, Inc.
Revolver
576,923
0.50%
November 3, 2026
RIA Advisory Borrower, LLC
Revolver
73,886
0.50%
August 2, 2027
Rogers Mechanical Contractors, LLC
Revolver
83,333
0.50%
September 28, 2028
Said Intermediate, LLC
Revolver
1,168,831
0.50%
June 13, 2029
Sales Benchmark Index, LLC
Revolver
1,109,551
0.50%
July 26, 2026
Teckrez, LLC
Revolver
721,110
1.00%
November 30, 2028
The Hardenbergh Group, Inc.
Revolver
100,000
0.50%
August 6, 2028
Tiger 21, LLC
Revolver
100,000
0.50%
December 30, 2030
Tilley Distribution, Inc.
Revolver
100,000
0.50%
December 31, 2026
Trade Education Acquisition, L.L.C.
Revolver
41,000
0.50%
December 28,2027
TradePending OpCo Aggregator, LLC
Revolver
66,667
0.50%
March 2, 2026
TriplePoint Acquisition Holdings LLC
Delayed Draw Term Loan
1,339,123
1.00%
May 31, 2029
TriplePoint Acquisition Holdings LLC
Revolver
743,957
0.50%
May 31, 2029
U.S. Expediters, LLC
Revolver
30,000
0.50%
December 22, 2026
USDTL AcquisitionCo, Inc.
Delayed Draw Term Loan
500,000
1.00%
December 9, 2030
USDTL AcquisitionCo, Inc.
Revolver
80,000
0.50%
December 9, 2030
WER Holdings, LLC
Delayed Draw Term Loan
514,059
1.00%
April 11, 2030
WER Holdings, LLC***
Revolver
267,739
0.50%
April 11, 2030
Xanitos, Inc.
Revolver
60,000
0.50%
June 25, 2026
Total Unfunded Debt
Commitments
$
40,989,533

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
116
* Included in this investment is Line of Credit in the amount of $4,861, with Line of Credit rate of 5.25% and a maturity of July 1, 2028.
** This a last-out delayed draw term loan with contractual rates higher than the applicable rates.
*** Included in this investment is Line of Credit in the amount of $41,071, with Line of Credit rate of 5.50% and a maturity of April 11,
2030.
(10) This loan is a unitranche investment.
(11) These loans include an interest rate floor feature which is lower than the applicable rates; therefore, the floors are not in effect.
(12) These loans are last-out term loans with contractual rates higher than the applicable rates; therefore, the floors are not in effect.
(13) Investment has been on non-accrual since November 1, 2024.
(14) This loan is convertible to common units at maturity or at the majority of holders.
(15) Excluded from the investment is an uncalled capital commitment in an amount not to exceed $297,219.
(16) Investment has been on non-accrual since the later of January 1, 2023 or the investment date.
(17) Investment has been on non-accrual since November 6, 2023.
(18) The Company has full discretion to fund the revolver commitment, with an unfunded rate of 0.00% and a maturity of February 7, 2028.
As of December 31, 2024, there was no undrawn revolver commitment.
(19) Investment has been on non-accrual since January 1, 2024.
(20) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,500,000, with an unfunded rate of
0.00% and a maturity of July 31, 2025. The Company has full discretion to fund the revolver commitment.
(21) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $2,000,000, with an unfunded rate of
0.00% and a maturity of April 27, 2026. The Company has full discretion to fund the revolver commitment.
(22) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $2,200,821, with an unfunded rate of
0.00% and a maturity of September 3, 2026. The Company has full discretion to fund the revolver commitment.

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
117
(23) Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the
ability to nominate greater than 50% of the board representation is maintained.
Amount of
Interest
  
December 31, 2023
  Gross Additions
  Gross Reductions  
Amount of Realized
  Amount of Unrealized   December 31, 2024  
Credited to
Income
Investments
Security
Value
 
(a)
(b)
Gain (loss)
Gain (loss)
Value
(c)
EH Real Estate Services, LLC
Term Loan A-1
First Lien
$
-
$
1,882,226
$
-
$
-
$
(1,628,125)
$
254,101
-
Term Loan A-1 (SBIC)
First Lien
3,042,204
-
(5,255,564)
-
2,213,360
-
81,636
Term Loan A-2
First Lien
325,059
80,664
-
-
(317,846)
87,877
-
Term Loan A-2 (SBIC)
First Lien
650,118
-
(1,140,558)
-
490,440
-
-
Term Loan A-3
First Lien
111,979
34,223
-
-
(115,060)
31,142
-
Term Loan A-3 (SBIC)
First Lien
223,959
-
(392,910)
-
168,951
-
-
Term Loan A-4
First Lien
496,828
1,003,691
-
-
5,018
1,505,537
-
Term Loan A-4 (SBIC)
First Lien
993,654
-
(1,003,691)
-
10,037
-
-
Term Loan A-5
First Lien
-
5,710,182
-
-
-
5,710,182
-
Revolver
First Lien
332,190
68,434
(337,027)
-
-
63,597
-
EH Holdco, LLC Common Units
Equity
3
-
-
-
(3)
-
-
EH Holdco, LLC Series A Preferred Units
Equity
-
-
-
-
-
-
-
Total Control Investments
$
6,175,994
$
8,779,420
$
(8,129,750) $
-
$
826,772
$
7,652,436
81,636
(a) Gross additions include increases in the cost basis of investments resulting from new investments, follow-on investments, payment-in-kind interest or dividends, the
amortization of any unearned income or discounts on debt investments, as applicable.
(b) Gross reductions include decreases in the cost basis of investments resulting from principal repayments, sales and return of capital.
(c) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Control category.
(24) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $100,000, with an unfunded rate of 0.00%
and a maturity of August 31, 2027. The Company has full discretion to fund the revolver commitment.
(25) Investment has been on non-accrual since the later of September 1, 2024 or the investment date.
(26) Investment has been on non-accrual since the later of August 21, 2024 or the investment date.
(27) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $17,500 with an unfunded rate of 0.50%
and a maturity of April 28, 2028. The Company has full discretion to fund the revolver commitment.
(28) Investment has been on non-accrual since June 1, 2024.
Abbreviation Legend
BSBY —  Bloomberg Short-Term Bank Yield Index
PIK — Payment-In-Kind
SOFR —  Secured Overnight Financing Rate
SONIA — Sterling Overnight Index Average

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
118
Principal
% of  
  
  
  
  
  
  
  Investment  
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
 Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
Control investments (23)
(4)(5)
  
  
  
  
  
EH Real Estate Services, LLC
(22)
Skokie, IL
Term Loan A-1 (SBIC)
(4)(16)
1st Lien
10.00%
-
% - % 9/3/2021
9/3/2026
FIRE: Real Estate
$ 5,337,200
5,255,564
3,042,204
0.95 %
Term Loan A-2 (SBIC)
(4)(16)
1st Lien
10.00%
-
% - % 4/3/2023
9/3/2026
$ 1,140,558
1,140,558
650,118
0.20 %
Term Loan A-2
(16)
1st Lien
10.00%
-
% - % 4/3/2023
9/3/2026
$ 570,279
570,279
325,059
0.10 %
Term Loan A-3 (SBIC)
(4)(16)
1st Lien
10.00%
-
% - % 6/7/2023
9/3/2026
$ 392,910
392,910
223,959
0.07 %
Term Loan A-3
(16)
1st Lien
10.00%
-
% - % 6/7/2023
9/3/2026
$ 196,455
196,455
111,979
0.04 %
Term Loan A-4 (SBIC)
(4)(16)
1st Lien
10.00%
-
% - % 7/12/2023
9/3/2026
$ 1,003,691
1,003,691
993,654
0.31 %
Term Loan A-4
(16)
1st Lien
10.00%
-
% - % 7/12/2023
9/3/2026
$ 501,846
501,846
496,828
0.16 %
Revolver
(16)
1st Lien
10.00%
-
% - % 10/3/2023
9/3/2026
$ 332,190
332,190
332,190
0.10 %
EH Holdco, LLC Common Units
Equity
10/3/2023
15,356
3
3
0.00 %
EH Holdco, LLC Series A Preferred Units
Equity
9/3/2021
7,892
7,891,642
-
0.00 %
Total
$ 17,285,138
$
6,175,994
1.93 %
Total Control investments
$ 17,285,138
$
6,175,994
1.93 %
Non-control, non-affiliated investments
(4)(5)
  
  
  
  
  
2X LLC
(9)
Berwyn, PA
Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 11.85 %
6/5/2023
6/5/2028
Services: Business
$ 5,486,458
5,361,018
5,431,593
1.70 %
Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 11.85 %
10/31/2023
6/5/2028
$ 1,444,767
1,409,607
1,430,319
0.45 %
2X Investors LP Class A Units
Equity
6/5/2023
  
58,949
589,496
644,844
0.20 %
Total
$
7,360,121
$
7,506,756
2.35 %
Ad.Net Acquisition, LLC
(9)
Los Angeles, CA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.00 % 1.00 % 11.61 %
5/7/2021
5/7/2026
Services: Business
$15,198,529
15,079,548
15,198,529
4.75 %
Revolver
(11)
1st Lien
3M SOFR+ 6.00 % 1.00 % 11.61 %
5/7/2021
5/7/2026
$ 649,510
649,510
649,510
0.20 %
Ad.Net Holdings, Inc. Series A Common Stock (SBIC II)
(5)
Equity
5/7/2021
7,794
77,941
58,566
0.02 %
Ad.Net Holdings, Inc. Series A Preferred Stock (SBIC II)
(5)
Equity
5/7/2021
7,015
701,471
527,094
0.16 %
Total
$ 16,508,470
$ 16,433,699
5.13 %
AdCellerant LLC
(9)
Denver, CO
Term A Loan (SBIC II)
(5)(11)
1st Lien
1M SOFR+ 6.00 % 2.00 % 11.35 %
12/12/2023
12/12/2028
Media: Advertising, Printing & Publishing
$10,000,000
9,802,403
9,802,403
3.06 %
AdCellerant Holdings, LLC Series A Units
Equity
12/12/2023
728,710
728,710
728,710
0.23 %
Total
$ 10,531,113
$ 10,531,113
3.29 %
ADS Group Opco, LLC
Lakewood, CO
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.75 % 2.00 % 12.20 %
6/4/2021
6/4/2026
Aerospace & Defense
$14,250,000
14,095,019
14,178,750
4.43 %
Revolver
(11)
1st Lien
3M SOFR+ 6.75 % 2.00 % 12.20 %
6/4/2021
6/4/2026
$ 100,000
100,000
99,500
0.03 %
ADS Group Topco, LLC Class A Units
Equity
6/4/2021
77,626
288,691
-
0.00 %
ADS Group Topco, LLC Class B Units
Equity
6/4/2021
56,819
211,309
-
0.00 %
ADS Group Topco, LLC Class Y Units
Equity
4/11/2023
23,859
88,733
112,626
0.04 %
ADS Group Topco, LLC Class Z Units
Equity
6/15/2022
72,043
267,929
-
0.00 %
Total
$ 15,051,681
$ 14,390,876
4.50 %
Advanced Barrier Extrusions, LLC
Rhinelander, WI
Term Loan B (SBIC)
(4)(11)
1st Lien
1M SOFR+ 7.50 % 1.00 % 12.88 %
11/30/2020
11/30/2026
Containers, Packaging, & Glass
$16,975,000
16,789,930
15,447,250
4.83 %
GP ABX Holdings Partnership, L.P. Partner Interests
Equity
8/8/2018
644,737
528,395
-
0.00 %
GP ABX Holdings Partnership, L.P. Series B Preferred Interests
Equity
1/5/2023
1,139
113,927
92,305
0.03 %
Total
$ 17,432,252
$ 15,539,555
4.86 %
American Refrigeration, LLC
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.25 % 1.50 % 11.60 %
3/31/2023
3/31/2028
Services: Business
$ 8,213,610
8,031,788
8,213,610
2.57 %
AR-USA Holdings, LLC Class A Units
Equity
3/31/2023
141
141,261
220,296
0.07 %
Total
$
8,173,049
$
8,433,906
2.64 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
119
Principal
% of  
  
  
  
  
  
  
  Investment  
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
 Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
Amika OpCo LLC
(9)
Brooklyn, NY
Term Loan
(11)
1st Lien
6M SOFR+ 5.25 % 0.75 % 10.87 %
7/1/2022
7/1/2029
Consumer Goods: Non-Durable
$
94,638
93,031
93,218
0.03 %
Term Loan
(11)
1st Lien
6M SOFR+ 5.75 % 0.75 % 11.24 %
12/5/2023
7/1/2029
$ 9,705,893
9,513,799
9,560,305
2.99 %
Ishtar Co-Invest-B LP Partnership Interests
(6)
Equity
7/1/2022
  
77,778
42,813
200,675
0.06 %
Oshun Co-Invest-B LP Partnership Interests
Equity
7/1/2022
  
22,222
22,222
57,335
0.02 %
Total
$
9,671,865
$
9,911,533
3.10 %
Anne Lewis Strategies, LLC
(9)
Washington, DC
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 7.00 % 2.00 % 12.35 %
3/5/2021
5/9/2028
Services: Business
$ 9,189,074
9,098,232
9,005,293
2.81 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 7.00 % 2.00 % 12.35 %
4/15/2022
5/9/2028
$ 2,867,632
2,833,029
2,810,279
0.88 %
SG AL Investment, LLC Common Units
(6)
Equity
3/5/2021
1,000
606,733
1,205,165
0.38 %
SG AL Investment, LLC Common-A Units
Equity
12/22/2023
239
492,905
985,826
0.31 %
Total
$ 13,030,899
$ 14,006,563
4.38 %
APE Holdings, LLC
Deer Park, TX
Class A Units
Equity
9/5/2014
Chemicals, Plastics, & Rubber
375,000
375,000
49,816
0.02 %
Total
$
375,000
$
49,816
0.02 %
Atmosphere Aggregator Holdings II, L.P.
Atlanta, GA
Common Units
Equity
1/26/2016
Services: Business
254,250
-
2,471,396
0.77 %
Stratose Aggregator Holdings, L.P. Common Units
Equity
6/30/2015
750,000
-
7,290,252
2.28 %
Total
$
-
$
9,761,648
3.05 %
ArborWorks, LLC
(21)
Oakhurst, CA
Term Loan
(11)(17)
1st Lien
3M SOFR+ 6.50 % 1.00 %
-
% - % 11/6/2023
11/6/2028
Environmental Industries
$ 3,461,538
3,461,538
3,184,615
1.00 %
Revolver
(11)(17)
1st Lien
15.00%
-
% - % 11/6/2023
11/6/2028
$ 924,871
924,871
850,881
0.27 %
ArborWorks Intermediate Holdco, LLC Class A-1 Preferred Units
Equity
11/6/2023
  
16,037
3,610,847
2,695,747
0.84 %
ArborWorks Intermediate Holdco, LLC Class B-1 Preferred Units
Equity
11/6/2023
  
16,037
-
-
0.00 %
ArborWorks Intermediate Holdco, LLC Class A-1 Common Units
Equity
11/6/2023
  
1,923
-
-
0.00 %
Total
$
7,997,256
$
6,731,243
2.11 %
Archer Systems, LLC
Houston, TX
CF Arch Holdings LLC Class A Units
Equity
8/10/2022
Services: Business
100,000
100,000
151,447
0.05 %
Total
$
100,000
$
151,447
0.05 %
Axis Portable Air, LLC
(9)
Phoenix, AZ
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 5.75 % 2.00 % 11.25 %
3/22/2022
3/22/2028
Capital Equipment
$ 9,500,000
9,357,284
9,500,000
2.97 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 5.75 % 2.00 % 11.25 %
4/17/2023
3/22/2028
$ 1,893,610
1,859,720
1,893,610
0.59 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 5.75 % 1.00 % 11.25 %
3/22/2022
3/22/2028
$ 100,000
99,199
100,000
0.03 %
Axis Air Parent, LLC Preferred Units
Equity
3/22/2022
4,436
443,636
1,039,036
0.32 %
Total
$ 11,759,839
$ 12,532,646
3.91 %
Baker Manufacturing Company, LLC
Evansville, IN
Term Loan (SBIC II)
(5)(10)(12)
1st Lien
3M SOFR+ 5.25 % 1.00 % 11.42 %
7/5/2022
7/5/2027
Capital Equipment
$13,701,636
13,491,633
13,633,128
4.26 %
BSC Blue Water Holdings, LLC Series A Units (SBIC II)
(5)
Equity
7/5/2022
743,770
743,770
855,572
0.27 %
Total
$ 14,235,403
$ 14,488,700
4.53 %
BLP Buyer, Inc.
Houston, TX
BL Products Parent, L.P. Class A Units
Equity
2/1/2022
Capital Equipment
879,060
983,608
1,322,224
0.41 %
Total
$
983,608
$
1,322,224
0.41 %
Café Valley, Inc.
Phoenix, AZ
Term Loan
(11)
1st Lien
3M SOFR+ 7.24 % 2.00 % 12.59 %
8/28/2019
8/28/2025
Beverage, Food, & Tobacco
$15,548,810
15,499,968
15,548,810
4.86 %
CF Topco LLC Units
Equity
8/28/2019
9,160
916,015
1,148,854
0.36 %
Total
$ 16,415,983
$ 16,697,664
5.22 %
Camp Profiles LLC
(9)
Boston, MA
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 5.25 % 1.00 % 10.75 %
9/3/2021
9/3/2026
Media: Advertising, Printing & Publishing
$10,019,375
9,901,621
10,019,375
3.13 %
CIVC VI-A 829 Blocker, LLC Units
Equity
9/3/2021
250
250,000
496,112
0.16 %
Total
$ 10,151,621
$ 10,515,487
3.29 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
120
Principal
% of  
  
  
  
  
  
  
  Investment  
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
 Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
CEATI International Inc.
(7)(9)
Montreal, Canada
Term Loan
(11)
1st Lien
3M SOFR+6.00% 1.00 % 11.55 %
2/19/2021
2/19/2026
Services: Business
$ 8,532,718
8,450,383
8,532,718
2.67 %
CEATI Holdings, LP Class A Units
Equity
2/19/2021
250,000
250,000
280,414
0.09 %
Total
$
8,700,383
$
8,813,132
2.76 %
Cerebro Buyer, LLC
(9)
Columbia, SC
Term Loan
(11)
1st Lien
1M SOFR+6.75% 1.00 % 12.21 %
3/15/2023
3/15/2029
Healthcare & Pharmaceuticals
$ 4,647,205
4,542,323
4,647,205
1.45 %
Cerebro Holdings Partnership, L.P. Series A Partner Interests
Equity
3/15/2023
62,961
62,961
68,042
0.02 %
Cerebro Holdings Partnership, L.P. Series B Partner Interests
Equity
3/15/2023
341,091
341,091
368,615
0.12 %
Total
$
4,946,375
$
5,083,862
1.59 %
CF512, Inc.
(9)
Blue Bell, PA
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+6.00% 1.00 % 11.57 %
9/1/2021
9/1/2026
Media: Advertising, Printing & Publishing
$13,911,253
13,747,760
13,772,140
4.30 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+6.00% 1.00 % 11.54 %
9/1/2021
9/1/2026
$ 3,003,933
2,985,566
2,973,894
0.93 %
StellPen Holdings, LLC Membership Interests
Equity
9/1/2021
220,930
220,930
209,747
0.07 %
Total
$ 16,954,256
$ 16,955,781
5.30 %
Channel Partners Intermediateco, LLC
(9)
Tampa Bay, FL
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+7.00% 2.00 % 12.66 %
2/24/2022
2/7/2027
Services: Business
$13,253,232
13,163,476
13,054,434
4.08 %
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+7.00% 2.00 % 12.66 %
3/27/2023
2/7/2027
$ 1,689,882
1,675,663
1,664,534
0.52 %
Revolver
(11)
1st Lien
3M SOFR+7.00% 2.00 % 12.60 %
2/24/2022
2/7/2027
$
33,333
33,333
32,833
0.01 %
Total
$ 14,872,472
$ 14,751,801
4.61 %
CompleteCase, LLC
(9)
Seattle, WA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+6.50% 2.00 % 12.00 %
12/21/2020
12/21/2025
Services: Consumer
$ 6,676,113
6,616,263
6,642,732
2.08 %
Revolver
(11)
1st Lien
3M SOFR+6.50% 2.00 % 12.00 %
12/21/2020
12/21/2025
$
16,667
16,667
16,584
0.01 %
CompleteCase Holdings, Inc. Class A Common Stock (SBIC II)
(5)
Equity
12/21/2020
417
5
4
0.00 %
CompleteCase Holdings, Inc. Series A Preferred Stock (SBIC II)
(5)
Equity
12/21/2020
522
521,734
398,991
0.12 %
CompleteCase Holdings, Inc. Class A Common Stock
Equity
4/27/2023
89
1
1
0.00 %
CompleteCase Holdings, Inc. Series C Preferred Stock
Equity
4/27/2023
111
111,408
85,199
0.03 %
Total
$
7,266,078
$
7,143,511
2.24 %
Compost 360 Acquisition, LLC
(9)
Tampa, FL
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+6.50% 2.00 % 11.89 %
8/2/2023
8/2/2028
Environmental Industries
$ 9,595,100
9,369,680
9,403,198
2.94 %
Revolver
(11)
1st Lien
3M SOFR+6.50% 2.00 % 11.89 %
8/2/2023
8/2/2028
$
33,333
33,333
32,666
0.01 %
Compost 360 Investments, LLC Class A Units
Equity
8/2/2023
2,508
250,761
226,512
0.07 %
Total
$
9,653,774
$
9,662,376
3.02 %
COPILOT Provider Support Services, LLC
(9)
Maitland, FL
Term Loan
(11)
1st Lien
3M SOFR+6.50% 2.00 % 12.00 %
11/22/2022
11/22/2027
Healthcare & Pharmaceuticals
$ 4,937,500
4,855,637
4,937,500
1.54 %
Revolver
(11)
1st Lien
3M SOFR+6.50% 2.00 % 12.02 %
11/22/2022
11/22/2027
$
20,000
20,000
20,000
0.01 %
QHP Project Captivate Blocker, Inc. Common Stock
Equity
11/22/2022
4
285,714
282,009
0.09 %
Total
$
5,161,351
$
5,239,509
1.64 %
Craftable Intermediate II Inc.
(9)
Dallas, TX
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+6.50% 1.50 % 11.85 %
6/30/2023
6/30/2028
High Tech Industries
$10,083,715
9,897,128
9,982,878
3.12 %
Gauge Craftable LP Partnership Interests
Equity
6/30/2023
  
626,690
626,690
727,010
0.23 %
Total
$ 10,523,818
$ 10,709,888
3.35 %
Curion Holdings, LLC
Chicago, IL
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+6.75% 1.00 % 12.25 %
7/29/2022
7/29/2027
Services: Business
$12,896,751
12,700,039
12,703,300
3.97 %
Revolver
(11)
1st Lien
3M SOFR+6.75% 1.00 % 12.25 %
7/29/2022
7/29/2027
$ 100,000
100,000
98,500
0.03 %
SP CS Holdings LLC Class A Units
Equity
7/29/2022
  
739,999
739,999
901,644
0.28 %
Total
$ 13,540,038
$ 13,703,444
4.28 %
Dresser Utility Solutions, LLC
Bradford, PA
Term Loan (SBIC)
(4)(11)
2nd Lien
1M SOFR+8.50% 1.00 % 13.96 %
10/1/2018
4/1/2026
Utilities: Oil & Gas
$10,000,000
9,943,041
10,000,000
3.13 %
Total
$
9,943,041
$ 10,000,000
3.13 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
121
Principal
% of  
  
  
  
  
  
  
  Investment   
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  Net  
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
 
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
DRS Holdings III, Inc.
(9)
St. Louis, MO
Term Loan
(11)
1st Lien
1M SOFR+
6.25 % 1.00 % 11.71 %
11/1/2019
11/1/2025
Consumer Goods: Durable
$ 8,894,635
8,862,512
8,850,162
2.77 %
Total
$
8,862,512
$
8,850,162
2.77 %
DTE Enterprises, LLC
Roselle, IL
DTE Holding Company, LLC Class A-2 Units
Equity
4/13/2018
Energy: Oil & Gas
776,316
466,204
-
0.00 %
DTE Holding Company, LLC Class AA Units
Equity
4/13/2018
  
723,684
723,684
852,078
0.27 %
Total
$
1,189,888
$
852,078
0.27 %
EHI Buyer, Inc.
(9)
Grand Prarie, TX
Term A Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.50 % 1.50 % 11.85 %
7/31/2023
7/31/2029
Environmental Industries
$ 6,096,064
5,950,980
5,974,143
1.87 %
EHI Group Holdings, L.P. Class A Units
Equity
7/31/2023
618
617,801
630,082
0.20 %
Total
$
6,568,781
$
6,604,225
2.07 %
Elliott Aviation, LLC
(9)
Moline, IL
Term Loan
(11)
1st Lien
1M SOFR+
8.00 % 2.00 % 11.51 % 2.00 %
1/31/2020
6/30/2025
Aerospace & Defense
$ 8,536,150
8,495,851
8,023,981
2.51 %
Term Loan
Unsecured
15.00 %
-
%
-
% 15.00 % 10/26/2023
1/31/2026
$
56,794
56,794
42,596
0.01 %
Revolver A
(11)
1st Lien
1M SOFR+
8.00 % 2.00 % 11.51 % 2.00 %
1/31/2020
6/30/2025
$ 1,410,357
1,410,357
1,325,736
0.41 %
SP EA Holdings LLC Class A Units
Equity
1/31/2020
  
1,048,896
901,489
-
0.00 %
Total
$
10,864,491
$
9,392,313
2.93 %
EOS Fitness Holdings, LLC
Phoenix, AZ
Class A Preferred Units
Equity
12/30/2014
Hotel, Gaming, & Leisure
118
-
-
0.00 %
Class B Common Units
Equity
12/30/2014
3,017
-
890,968
0.28 %
Total
$
-
$
890,968
0.28 %
Equine Network, LLC
(9)
Boulder, CO
Term A Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.11 %
5/22/2023
5/22/2028
Services: Consumer
$ 5,936,305
5,799,443
5,906,623
1.85 %
Revolver
(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.11 %
5/22/2023
5/22/2028
$
83,333
83,333
82,916
0.03 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.11 %
5/22/2023
5/22/2028
$
59,850
59,850
59,551
0.02 %
Total
$
5,942,626
$
6,049,090
1.90 %
evolv Consulting, LLC
(9)
Dallas, TX
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.75 % 2.00 % 12.13 %
12/7/2023
12/7/2028
Services: Business
$ 10,000,000
9,802,352
9,802,352
3.06 %
evolv Holdco, LLC Preferred Units
Equity
12/7/2023
  
473,485
473,485
473,485
0.15 %
Total
$
10,275,837
$
10,275,837
3.21 %
Evriholder Acquisition, Inc.
(9)
Anaheim, CA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+
6.75 % 1.50 % 12.25 %
1/23/2023
1/24/2028
Consumer Goods: Durable
$ 12,756,250
12,482,481
12,756,250
3.99 %
KEJ Holdings LP Class A Units
Equity
1/23/2023
873,333
873,333
1,070,891
0.33 %
Total
$
13,355,814
$
13,827,141
4.32 %
Exacta Land Surveyors, LLC
(19)
Cleveland, OH
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.75 % 1.50 % 11.25 % 1.00 %
2/8/2019
2/8/2024
Services: Business
$ 16,316,361
16,303,438
15,174,216
4.74 %
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.75 % 1.50 % 11.25 % 1.00 %
7/15/2022
2/8/2024
$
991,806
989,698
922,380
0.29 %
SP ELS Holdings LLC Class A Units
Equity
2/8/2019
1,122,250
1,122,250
172,674
0.05 %
Total
$
18,415,386
$
16,269,270
5.08 %
Exigo, LLC
(9)
Dallas, TX
Term Loan
(11)
1st Lien
1M SOFR+
6.00 % 1.00 % 11.46 %
3/16/2022
3/16/2027
High Tech Industries
$ 8,811,898
8,720,761
8,811,898
2.75 %
Gauge Exigo Coinvest, LLC Common Units
Equity
3/16/2022
  
377,535
377,535
377,535
0.12 %
Total
$
9,098,296
$
9,189,433
2.87 %
Florachem Corporation
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.00 %
4/29/2022
4/29/2028
Chemicals, Plastics, & Rubber
$ 9,850,000
9,698,462
9,751,500
3.05 %
Revolver
(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.00 %
4/29/2022
4/29/2028
$
23,333
23,333
23,100
0.01 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.00 %
4/29/2022
4/29/2028
$
53,750
53,750
53,213
0.02 %
SK FC Holdings, L.P. Class A Units
Equity
4/29/2022
362
362,434
465,212
0.15 %
Total
$
10,137,979
$
10,293,025
3.23 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
122
   
Principal
% of  
  
  
  
  
  
  
  Investment   
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  Net  
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
 
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
General LED OPCO, LLC
San Antonio, TX
Term Loan
(11)
2nd Lien
3M SOFR+ 9.00% 1.50 % 14.45 %
5/1/2018
3/31/2026
Services: Business
$ 4,500,000
4,472,890
4,342,500
1.36 %
Total
$
4,472,890
$
4,342,500
1.36 %
Green Intermediateco II, Inc.
Irvine, CA
Term Loan
(11)
1st Lien
1M SOFR+ 6.75% 2.00 % 12.11 %
8/8/2023
8/8/2028
High Tech Industries
$ 11,142,326
10,880,445
10,919,479
3.41 %
Delayed Draw Term Loan
(11)
1st Lien
1M SOFR+ 6.75% 2.00 % 12.11 %
8/8/2023
8/8/2028
$
408,127
403,154
399,964
0.13 %
Green Topco Holdings, LLC Class A Units
Equity
8/8/2023
271,401
271,401
272,055
0.09 %
Total
$
11,555,000
$
11,591,498
3.63 %
GS HVAM Intermediate, LLC
(9)
Carlsbad, CA
Term Loan
(11)
1st Lien
1M SOFR+ 6.50% 1.00 % 11.96 %
10/18/2019
4/2/2025
Beverage, Food, & Tobacco
$ 12,394,128
12,370,361
12,394,128
3.87 %
Revolver
(11)
1st Lien
1M SOFR+ 6.50% 1.00 % 11.96 %
10/18/2019
4/2/2025
$ 1,803,030
1,803,030
1,803,030
0.56 %
HV GS Acquisition, LP Class A Interests
Equity
10/2/2019
  
2,144
1,967,133
4,703,284
1.47 %
Total
$
16,140,524
$
18,900,442
5.90 %
Health Monitor Holdings, LLC
Montvale, NJ
Series A Preferred Units
Equity
5/15/2019
Media: Advertising, Printing & Publishing
1,105,838
1,052,919
1,348,494
0.42 %
Total
$
1,052,919
$
1,348,494
0.42 %
Heartland Business Systems, LLC
(9)
Little Chute, WI
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.25% 1.00 % 11.75 %
8/26/2022
8/26/2027
High Tech Industries
$ 9,875,000
9,721,122
9,875,000
3.09 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 6.25% 1.00 % 11.75 %
8/26/2022
8/26/2027
$
49,625
49,197
49,625
0.02 %
AMCO HBS Holdings, LP Class A Units
(6)
Equity
8/26/2022
2,861
249,873
726,591
0.23 %
Total
$
10,020,192
$
10,651,216
3.34 %
HV Watterson Holdings, LLC
(9)
Schaumburg, IL
Term Loan
(11)
1st Lien
3M SOFR+ 6.00% 1.00 % 11.50 %
12/17/2021
12/17/2026
Services: Business
$ 13,167,870
12,998,250
13,036,191
4.07 %
Revolver
(11)
1st Lien
3M SOFR+ 6.00% 1.00 % 11.50 %
12/17/2021
12/17/2026
$
80,000
80,000
79,200
0.02 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 6.00% 1.00 % 11.50 %
12/17/2021
12/17/2026
$
319,869
317,522
316,670
0.10 %
HV Watterson Parent, LLC Class A Units
Equity
12/17/2021
  
1,632
1,631,591
2,154,608
0.67 %
Total
$
15,027,363
$
15,586,669
4.86 %
I2P Holdings, LLC
Cleveland, OH
Series A Preferred Units
Equity
1/31/2018
Services: Business
750,000
-
3,341,856
1.04 %
Total
$
-
$
3,341,856
1.04 %
ICD Holdings, LLC
(7)
San Francisco, CA
Class A Units
(6)
Equity
1/2/2018
Finance
9,962
449,758
1,710,337
0.53 %
Total
$
449,758
$
1,710,337
0.53 %
Impact Home Services LLC
(9)
Tampa, FL
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.50% 2.00 % 11.85 %
4/28/2023
4/28/2028
Services: Consumer
$ 5,907,215
5,774,440
5,818,607
1.82 %
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.50% 2.00 % 11.85 %
10/11/2023
4/28/2028
$
538,369
525,461
530,293
0.17 %
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.50% 2.00 % 11.85 %
6/30/2023
4/28/2028
$
268,510
262,321
264,482
0.08 %
Revolver
(11)
1st Lien
3M SOFR+ 6.50% 2.00 % 11.85 %
4/28/2023
4/28/2028
$
82,500
82,500
81,263
0.03 %
Impact Holdings Georgia LLC Class A Units
Equity
4/28/2023
  
324
324,242
213,311
0.07 %
Total
$
6,968,964
$
6,907,956
2.17 %
Infolinks Media Buyco, LLC
Ridgewood, NJ
Term Loan (SBIC II)
(5)(11)
1st Lien
1M SOFR+ 5.75% 1.00 % 11.21 %
11/1/2021
11/1/2026
Media: Advertising, Printing & Publishing
$ 7,613,871
7,519,532
7,613,871
2.38 %
Delayed Draw Term Loan
(11)
1st Lien
1M SOFR+ 5.75% 1.00 % 11.21 %
11/1/2021
11/1/2026
$ 1,477,575
1,464,619
1,477,575
0.46 %
Tower Arch Infolinks Media, LP LP Interests
(6)(15)
Equity
10/28/2021
451,688
424,156
751,355
0.23 %
Total
$
9,408,307
$
9,842,801
3.07 %
Informativ, LLC
(9)
Fresno, CA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 5.75% 1.00 % 11.25 %
7/30/2021
7/30/2026
High Tech Industries
$ 8,481,549
8,386,574
8,396,734
2.62 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 5.75% 1.00 % 11.25 %
3/31/2022
7/30/2026
$ 6,393,699
6,312,673
6,329,762
1.98 %
Credit Connection Holdings, LLC Series A Units
Equity
7/30/2021
804,384
804,384
1,044,566
0.33 %
Total
$
15,503,631
$
15,771,062
4.93 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
123
Principal
% of  
  
  
  
  
  
  
  Investment   
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  Net  
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
 
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
Inoapps Bidco, LLC
(9)
Houston, TX
Term Loan B
(11)
1st Lien
3M SONIA+ 5.75 % 1.00 % 11.12 %
2/15/2022
2/15/2027
High Tech Industries
£ 9,850,000
$ 13,176,385
$ 12,352,226
3.86 %
Revolver
(11)
1st Lien
1M SOFR+
5.75 % 1.00 % 11.22 %
2/15/2022
2/15/2027
$
40,000
40,000
39,800
0.01 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+
5.75 % 1.00 % 11.39 %
2/15/2022
2/15/2027
$
82,292
81,689
81,881
0.03 %
Inoapps Holdings, LLC Series A-1 Preferred Units
Equity
2/15/2022
  
739,844
783,756
928,462
0.29 %
Total
$ 14,081,830
$ 13,402,369
4.19 %
Integrated Oncology Network, LLC
Newport Beach, CA
Term Loan
(11)
1st Lien
3M SOFR+
6.00 % 1.00 % 11.54 %
7/17/2019
6/24/2025
Healthcare & Pharmaceuticals
$ 15,689,031
15,652,169
15,453,696
4.83 %
Term Loan
(11)
1st Lien
3M SOFR+
6.00 % 1.00 % 11.54 %
11/1/2021
6/24/2025
$ 1,086,000
1,081,580
1,069,710
0.33 %
Revolver
(11)
1st Lien
3M SOFR+
6.00 % 1.00 % 11.53 %
7/17/2019
6/24/2025
$
554,070
554,070
545,759
0.17 %
Total
$ 17,287,819
$ 17,069,165
5.33 %
Intuitive Health, LLC
Plano, TX
Term Loan (SBIC II)
(5)(10)(12)
1st Lien
3M SOFR+
5.50 % 1.50 % 12.19 %
10/18/2019
10/18/2027
Healthcare & Pharmaceuticals
$ 5,771,920
5,718,925
5,771,920
1.80 %
Term Loan
(10)(12)
1st Lien
3M SOFR+
5.50 % 1.50 % 12.19 %
10/18/2019
10/18/2027
$ 8,117,989
8,043,856
8,117,989
2.54 %
Term Loan (SBIC II)
(5)(10)(12)
1st Lien
3M SOFR+
5.50 % 1.50 % 12.19 %
8/31/2021
10/18/2027
$ 3,040,324
3,009,699
3,040,324
0.95 %
Legacy Parent, Inc. Class A Common Stock
Equity
10/30/2020
58
-
213,240
0.07 %
Total
$ 16,772,480
$ 17,143,473
5.36 %
Invincible Boat Company LLC
(9)
Opa Locka, FL
Term Loan
(11)
1st Lien
3M SOFR+
6.50 % 1.50 % 12.00 %
8/28/2019
8/28/2025
Consumer Goods: Durable
$ 5,356,627
5,321,375
5,303,061
1.66 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+
6.50 % 1.50 % 12.00 %
8/28/2019
8/28/2025
$ 4,944,579
4,911,947
4,895,133
1.53 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+
6.50 % 1.50 % 12.00 %
6/1/2021
8/28/2025
$ 1,099,244
1,089,662
1,088,252
0.34 %
Revolver
(11)
1st Lien
3M SOFR+
6.50 % 1.50 % 12.00 %
8/28/2019
8/28/2025
$
531,915
531,915
526,596
0.16 %
Warbird Parent Holdco, LLC Class A Units
Equity
8/28/2019
1,362,575
1,299,691
1,184,219
0.37 %
Total
$ 13,154,590
$ 12,997,261
4.06 %
J.R. Watkins, LLC
San Francisco, CA
Term Loan (SBIC)
(4)
1st Lien
12.00%
-
% 12.00 % 12/22/2017
3/31/2024
Consumer Goods: Non-Durable
$ 13,597,208
13,597,208
4,894,995
1.53 %
J.R. Watkins Holdings, Inc. Class A Preferred Stock
Equity
12/22/2017
1,133
1,132,576
-
0.00 %
Total
$ 14,729,784
$
4,894,995
1.53 %
Jurassic Acquisition Corp.
Sparks, MD
Term Loan
(11)
1st Lien
1M SOFR+
5.50 % 0.00 % 10.96 %
12/28/2018
11/15/2024
Metals & Mining
$ 16,625,000
16,580,562
16,625,000
5.20 %
Total
$ 16,580,562
$ 16,625,000
5.20 %
KidKraft, Inc.
Dallas, TX
Term Loan
(10)(12)(18)
1st Lien
PRIME+
6.50 %
-
%
-
%
4/3/2020
6/30/2024
Consumer Goods: Durable
$ 1,580,768
1,580,768
-
0.00 %
KidKraft Group Holdings, LLC Preferred B Units
Equity
4/3/2020
4,000,000
4,000,000
-
0.00 %
Total
$
5,580,768
$
-
0.00 %
Ledge Lounger, Inc.
(9)
Katy, TX
Term Loan A (SBIC)
(4)(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.00 %
11/9/2021
11/9/2026
Consumer Goods: Durable
$ 7,491,842
7,398,788
7,491,842
2.34 %
Revolver
(11)
1st Lien
3M SOFR+
6.50 % 1.00 % 12.00 %
11/9/2021
11/9/2026
$
75,000
75,000
75,000
0.02 %
SP L2 Holdings LLC Class A Units (SBIC)
(6)(4)
Equity
11/9/2021
  
375,000
375,000
242,696
0.08 %
Total
$
7,848,788
$
7,809,538
2.44 %
Lightning Intermediate II, LLC
(9)
Jacksonville, FL
Term Loan (SBIC)
(4)(11)
1st Lien
6M SOFR+
6.50 % 1.00 % 11.93 %
6/6/2022
6/6/2027
Consumer Goods: Non-Durable
$ 13,243,091
13,048,737
13,044,445
4.08 %
Revolver
(11)
1st Lien
1M SOFR+
6.50 % 1.00 % 11.96 %
6/6/2022
6/6/2027
$
30,000
30,000
29,550
0.01 %
Gauge Vimergy Coinvest, LLC Units
(6)
Equity
6/6/2022
  
399
391,274
128,766
0.04 %
Total
$ 13,470,011
$ 13,202,761
4.13 %
MacKenzie-Childs Acquisition, Inc.
(9)
Aurora, NY
Term Loan
(11)
1st Lien
3M SOFR+
6.00 % 1.00 % 11.50 %
9/2/2022
9/2/2027
Consumer Goods: Durable
$
98,750
97,591
98,256
0.03 %
Revolver
(11)
1st Lien
3M SOFR+
6.00 % 1.00 % 11.50 %
9/2/2022
9/2/2027
$
46,667
46,667
46,434
0.01 %
MacKenzie-Childs Investment, LP Partnership Interests
Equity
9/2/2022
  
100,000
100,000
96,532
0.03 %
Total
$
244,258
$
241,222
0.07 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
124
Principal
% of  
  
  
  
  
  
  
  Investment  
  
Headquarters/ 
  Amount/   Amortized   
Fair 
  Net  
Investments
Footnotes Security(2)
Coupon
Floor
Cash
PIK
Date
 Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
Madison Logic Holdings, Inc.
(9)
New York, NY
Term Loan
(11)
1st Lien
3M SOFR+ 7.00 % 1.00 % 12.35 %
12/30/2022
12/30/2028
Media: Broadcasting & Subscription
$ 4,495,248
4,381,153
4,450,296
1.39 %
BC Partners Glengarry Co-Investment LP Class 1 Interests
Equity
7/7/2023
394,767
394,767
328,212
0.10 %
Total
$
4,775,920
$
4,778,508
1.49 %
Michelli, LLC
(9)
New Orleans, LA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 5.75 % 2.00 % 11.12 %
12/21/2023
12/21/2028
Capital Equipment
$ 5,000,000
4,900,000
4,900,000
1.53 %
Revolver
(11)
1st Lien
3M SOFR+ 5.75 % 2.00 % 11.12 %
12/21/2023
12/21/2028
$ 129,608
129,608
127,016
0.04 %
SP MWM Holdco LLC Class A Units
Equity
12/21/2023
  
509,215
509,215
509,215
0.16 %
Total
$
5,538,823
$
5,536,231
1.73 %
Microbe Formulas LLC
(9)
Meridian, ID
Term Loan (SBIC II)
(5)(11)
1st Lien
1M SOFR+ 6.00 % 1.00 % 11.46 %
4/4/2022
4/3/2028
Consumer Goods: Non-Durable
$ 8,470,065
8,405,946
8,470,065
2.65 %
Total
$
8,405,946
$
8,470,065
2.65 %
MOM Enterprises, LLC
(9)
Richmond, CA
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.48 % 1.00 % 11.83 %
5/19/2021
5/19/2026
Consumer Goods: Non-Durable
$16,055,000
15,884,362
15,814,175
4.94 %
Revolver
(11)
1st Lien
3M SOFR+ 6.48 % 1.00 % 11.83 %
5/19/2021
5/19/2026
$
50,000
50,000
49,250
0.02 %
MBliss SPC Holdings, LLC Units
Equity
5/19/2021
933,333
933,333
595,832
0.19 %
Total
$ 16,867,695
$ 16,459,257
5.15 %
Monitorus Holding, LLC
(7)
London, UK
Term Loan
1st Lien
14.00%
10.00 % 4.00% 5/24/2022
5/24/2027
Media: Diversified & Production
$ 100,989
100,260
99,979
0.03 %
Revolver
1st Lien
14.00%
10.00 % 4.00% 5/24/2022
5/24/2027
€ 100,989
109,791
108,693
0.03 %
Delayed Draw Term Loan
1st Lien
14.00% 1.00 % 10.00 % 4.00% 5/24/2022
5/24/2027
€ 100,989
101,929
100,910
0.03 %
Sapphire Aggregator S.a r.l. Convertible Bonds
Unsecured
8.00 %
-
% 8.00% 11/15/2023
3/31/2025
$
5,532
5,938
6,045
0.00 %
Sapphire Aggregator S.a r.l. Class A Shares
Equity
9/1/2022
557,689
11,156
13,487
0.00 %
Sapphire Aggregator S.a r.l. Class B Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class C Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class D Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class E Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class F Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class G Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class H Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Sapphire Aggregator S.a r.l. Class I Shares
Equity
9/1/2022
557,682
11,156
13,486
0.00 %
Total
$
418,322
$
437,002
0.09 %
Morgan Electrical Group Intermediate Holdings, Inc.
(9)
Fremont, CA
Term Loan
(11)
1st Lien
1M SOFR+ 6.25 % 1.50 % 11.61 %
8/3/2023
8/3/2029
Construction & Building
$ 4,439,439
4,344,311
4,372,847
1.37 %
Morgan Electrical Group Holdings, LLC Series A-2 Preferred Units
Equity
8/3/2023
357
356,800
351,351
0.11 %
Total
$
4,701,111
$
4,724,198
1.48 %
Naumann/Hobbs Material Handling Corporation II, Inc.
(9)
Phoenix, AZ
Term Loan
(11)
1st Lien
3M SOFR+ 6.75 % 1.50 % 12.10 %
8/30/2019
8/30/2024
Services: Business
$ 8,317,483
8,291,166
8,275,896
2.59 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.75 % 1.50 % 12.10 %
8/30/2019
8/30/2024
$ 5,245,036
5,228,576
5,218,811
1.63 %
Naumann Hobbs Holdings, L.P. Class A-1 Units
Equity
9/29/2022
123
220,379
471,147
0.15 %
Naumann Hobbs Holdings, L.P. Class A-2 Units
Equity
9/29/2022
123
220,379
471,147
0.15 %
Total
$ 13,960,500
$ 14,437,001
4.52 %
NINJIO, LLC
(9)
Westlake Village, CA
Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 1.50 % 12.10 %
10/12/2022
10/12/2027
Media: Diversified & Production
$ 4,962,500
4,882,796
4,962,500
1.55 %
Revolver
(11)
1st Lien
3M SOFR+ 6.50 % 1.50 % 12.10 %
10/12/2022
10/12/2027
$
33,333
33,333
33,333
0.01 %
NINJIO Holdings, LLC Units
Equity
10/12/2022
184
313,253
226,849
0.07 %
Gauge NINJIO Blocker LLC Preferred Units
Equity
9/22/2023
14
14,470
103,563
0.03 %
Total
$
5,243,852
$
5,326,245
1.66 %
NS412, LLC
Dallas, TX
Term Loan
(11)
2nd Lien
3M SOFR+ 8.50 % 1.00 % 13.95 %
5/6/2019
11/6/2025
Services: Consumer
$ 7,615,000
7,561,754
7,615,000
2.38 %
NS Group Holding Company, LLC Class A Units
Equity
5/6/2019
782
795,002
879,589
0.27 %
Total
$
8,356,756
$
8,494,589
2.65 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
125
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  Net   
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
NuMet Machining Techniques, LLC
(7)
Birmingham, UK
Term Loan
(11)(13)
2nd Lien
PRIME+
8.00 %
-
%
-
%
11/5/2019
5/5/2026
Aerospace & Defense
$ 12,675,000
12,563,025
-
0.00 %
Bromford Industries Limited Term Loan
(11)(13)
2nd Lien
PRIME+
8.00 %
-
%
-
%
11/5/2019
5/5/2026
$ 7,800,000
7,728,858
-
0.00 %
Total
$ 20,291,883
$
-
0.00 %
NuSource Financial, LLC
Eden Prairie, MN
NuSource Financial Acquisition, Inc. (SBIC II)
(5)
Unsecured
13.75%
4.00 % 9.75 %
1/29/2021
7/29/2026
Services: Business
$ 6,028,203
5,976,818
5,907,639
1.85 %
NuSource Holdings, Inc. Warrants (SBIC II)
(5)
Equity
1/29/2021
  
54,966
-
-
0.00 %
Total
$
5,976,818
$
5,907,639
1.85 %
Nutritional Medicinals, LLC
(9)
Centerville, OH
Term Loan
(11)
1st Lien
3M SOFR+ 6.21 % 1.00 % 11.56 %
11/15/2018
11/15/2025
Healthcare & Pharmaceuticals
$ 8,793,840
8,753,238
8,793,840
2.75 %
Term Loan
(11)
1st Lien
3M SOFR+ 6.21 % 1.00 % 11.56 %
10/28/2021
11/15/2025
$ 3,692,025
3,663,943
3,692,025
1.15 %
Functional Aggregator, LLC Units
Equity
11/15/2018
12,500
972,803
2,273,286
0.71 %
Total
$ 13,389,984
$ 14,759,151
4.61 %
Onpoint Industrial Services, LLC
Deer Park, TX
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 7.00 % 1.75 % 12.35 %
11/16/2022
11/16/2027
Services: Business
$ 12,764,326
12,552,435
12,764,326
3.99 %
Spearhead TopCo, LLC Class A Units
Equity
11/16/2022
606,742
606,742
701,538
0.22 %
Total
$ 13,159,177
$ 13,465,864
4.21 %
PCP MT Aggregator Holdings, L.P.
(7)
Oak Brook, IL
Common Units
Equity
3/29/2019
Finance
825,020
119,281
4,026,531
1.26 %
Total
$
119,281
$
4,026,531
1.26 %
PCS Software, Inc.
(9)
Shenandoah, TX
Term Loan
(11)
1st Lien
3M SOFR+ 6.00 % 1.50 % 11.50 %
7/1/2019
7/1/2024
Transportation & Logistics
$ 13,918,747
13,880,996
13,918,747
4.35 %
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.00 % 1.50 % 11.50 %
7/1/2019
7/1/2024
$ 1,825,410
1,820,459
1,825,410
0.57 %
Revolver
(11)
1st Lien
3M SOFR+ 6.00 % 1.50 % 11.50 %
7/1/2019
7/1/2024
$
571,195
571,195
571,195
0.18 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 6.00 % 1.50 % 11.50 %
7/1/2019
7/1/2024
$
962,500
962,500
962,500
0.30 %
PCS Software Parent, LLC Class A Common Units
(6)
Equity
9/16/2022
461,216
-
384,007
0.12 %
Total
$ 17,235,150
$ 17,661,859
5.52 %
Pearl Media Holdings, LLC
(9)
Garland, TX
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.25 % 1.50 % 11.75 %
8/31/2022
8/31/2027
Media: Advertising, Printing & Publishing
$ 9,669,444
9,518,772
9,524,402
2.98 %
Revolver
(11)
1st Lien
3M SOFR+ 6.25 % 1.50 % 11.75 %
8/31/2022
8/31/2027
$
23,333
23,333
22,983
0.01 %
Total
$
9,542,105
$
9,547,385
2.99 %
Peltram Plumbing Holdings, LLC
(9)
Auburn, WA
Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 11.85 %
12/30/2021
12/30/2026
Construction & Building
$ 16,160,003
15,951,839
16,160,003
5.05 %
Revolver
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 11.85 %
12/30/2021
12/30/2026
$
60,000
60,000
60,000
0.02 %
Peltram Group Holdings LLC Class A Units
(6)
Equity
12/30/2021
508,516
506,119
418,449
0.13 %
Total
$ 16,517,958
$ 16,638,452
5.20 %
Premiere Digital Services, Inc.
(9)
Los Angeles, CA
Term Loan
(11)
1st Lien
1M SOFR+ 5.25 % 1.00 % 10.72 %
11/3/2021
11/3/2026
Media: Broadcasting & Subscription
$ 13,216,883
13,176,183
13,216,883
4.13 %
Premiere Digital Holdings, Inc. Common Stock
Equity
10/18/2018
5,000
-
2,765,529
0.86 %
Total
$ 13,176,183
$ 15,982,412
4.99 %
Red's All Natural, LLC
Franklin, TN
Term Loan (SBIC II)
(5)(10)(12)
1st Lien
3M SOFR+ 6.00 % 1.50 % 12.57 %
1/31/2023
1/31/2029
Beverage, Food, & Tobacco
$ 8,837,476
8,680,057
8,793,289
2.75 %
Centeotl Co-Invest B, LP Common Units
Equity
1/31/2023
710,600
710,600
586,022
0.18 %
Total
$
9,390,657
$
9,379,311
2.93 %
RIA Advisory Borrower, LLC
(9)
Coral Gables, FL
Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 12.03 %
5/1/2023
8/2/2027
High Tech Industries
$ 5,955,000
5,850,377
5,925,225
1.85 %
Revolver
(11)
1st Lien
3M SOFR+ 6.50 % 2.00 % 12.03 %
5/1/2023
8/2/2027
$
27,257
27,257
27,121
0.01 %
RIA Advisory Aggregator, LLC Class A Units
Equity
5/1/2023
104,425
165,078
113,278
0.04 %
RIA Products Aggregator, LLC Class A Units
Equity
5/1/2023
81,251
78,390
78,390
0.02 %
Total
$
6,121,102
$
6,144,014
1.92 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
126
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/
  
Amortized
  
Fair 
  Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets  
Rogers Mechanical Contractors, LLC
(9)
Atlanta, GA
Term Loan
(11)
1st Lien
6M SOFR+ 7.00% 1.00 % 12.71 %
4/28/2021
9/9/2025
Construction & Building
$ 9,123,801
9,054,460
9,078,182
2.84 %
Delayed Draw Term Loan
(11)
1st Lien
6M SOFR+ 7.00% 1.00 % 12.71 %
4/28/2021
9/9/2025
$
45,808
45,590
45,579
0.01 %
Total
$
9,100,050
$
9,123,761
2.85 %
Sales Benchmark Index, LLC
(9)
Dallas, TX
Term Loan
(11)
1st Lien
3M SOFR+ 6.00% 1.00 % 11.55 %
1/7/2020
1/7/2025
Services: Business
$ 12,148,958
12,088,362
12,088,213
3.78 %
SBI Holdings Investments LLC Class A Units
Equity
1/7/2020
66,573
665,730
394,609
0.12 %
Total
$
12,754,092
$
12,482,822
3.90 %
Service Minds Company, LLC
(9)
Bradenton, FL
Term Loan
(11)
1st Lien
6M SOFR+ 7.50% 1.00 % 11.19 % 2.00 %
2/7/2022
2/7/2028
Services: Consumer
$ 5,331,274
5,253,965
4,504,927
1.41 %
Revolver
(11)
1st Lien
6M SOFR+ 7.50% 1.00 % 11.04 % 2.00 %
2/7/2022
2/7/2028
$
90,266
90,266
76,275
0.02 %
Delayed Draw Term Loan
(11)
1st Lien
6M SOFR+ 7.50% 2.00 % 11.19 % 2.00 %
2/7/2022
2/7/2028
$
99,128
98,321
83,763
0.03 %
Total
$
5,442,552
$
4,664,965
1.46 %
TAC LifePort Holdings, LLC
Woodland, WA
Common Units
(6)
Equity
3/1/2021
Aerospace & Defense
546,543
537,049
758,732
0.24 %
Total
$
537,049
$
758,732
0.24 %
The Hardenbergh Group, Inc.
(9)
Livonia, MI
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.25% 2.00 % 11.70 %
8/7/2023
8/7/2028
Healthcare & Pharmaceuticals
$ 10,475,643
10,229,596
10,318,508
3.23 %
BV HGI Holdings, L.P. Class A Units
Equity
8/7/2023
434,504
434,504
418,275
0.13 %
Total
$
10,664,100
$
10,736,783
3.36 %
Tilley Distribution, Inc.
(9)
Baltimore, MD
Term Loan
(11)
1st Lien
3M SOFR+ 6.00% 1.00 % 11.50 %
4/1/2022
12/31/2026
Chemicals, Plastics, & Rubber
$
96,627
95,632
93,728
0.03 %
Total
$
95,632
$
93,728
0.03 %
Trade Education Acquisition, L.L.C.
Austin, TX
Term Loan (SBIC)
(4)(11)
1st Lien
1M SOFR+ 6.25% 1.00 % 11.71 %
12/28/2021
12/28/2027
Education
$ 9,727,847
9,588,519
8,365,948
2.61 %
Trade Education Holdings, L.L.C. Class A Units
Equity
12/28/2021
662,660
662,660
1,521
0.00 %
Total
$
10,251,179
$
8,367,469
2.61 %
TradePending OpCo Aggregator, LLC
(9)
Carrboro, NC
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.25% 2.00 % 11.75 %
3/2/2021
3/2/2026
High Tech Industries
$ 9,626,768
9,532,209
9,530,500
2.98 %
Term Loan (SBIC II)
(5)(11)
1st Lien
3M SOFR+ 6.25% 2.00 % 11.75 %
8/4/2023
3/2/2026
$ 2,460,860
2,418,287
2,436,251
0.76 %
Revolver
(11)
1st Lien
3M SOFR+ 6.25% 2.00 % 11.75 %
3/2/2021
3/2/2026
$
33,333
33,333
33,000
0.01 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 6.25% 2.00 % 11.75 %
8/4/2023
3/2/2026
$
687,007
680,733
680,137
0.21 %
TradePending Holdings, LLC Series A Units
(6)
Equity
3/2/2021
908,333
967,114
1,466,224
0.46 %
TradePending Holdings, LLC Series A-1 Units
Equity
8/4/2023
132,783
260,254
386,420
0.12 %
Total
$
13,891,930
$
14,532,532
4.54 %
Unicat Catalyst Holdings, LLC
(20)
Alvin, TX
Term Loan
(11)
1st Lien
1M SOFR+ 6.50% 1.00 % 11.96 %
4/27/2021
4/27/2026
Chemicals, Plastics, & Rubber
$ 7,031,250
6,958,652
6,750,000
2.11 %
Unicat Catalyst, LLC Class A Units
Equity
4/27/2021
7,500
750,000
361,345
0.11 %
Unicat Catalyst, LLC Class A-1 Units
Equity
12/13/2023
382
21,103
21,262
0.01 %
Total
$
7,729,755
$
7,132,607
2.23 %
U.S. Expediters, LLC
(9)
Stafford, TX
Term Loan
(11)
1st Lien
3M SOFR+ 6.25% 1.00 % 11.80 %
12/22/2021
12/22/2026
Healthcare & Pharmaceuticals
$ 15,706,527
15,504,206
15,627,994
4.88 %
Cathay Hypnos LLC Units
Equity
12/22/2021
1,372,932
1,316,740
1,530,385
0.48 %
Total
$
16,820,946
$
17,158,379
5.36 %

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
127
Principal
% of  
  
  
  
  
  
  
  Investment    
  
Headquarters/ 
  
Amount/   
Amortized
  
Fair 
  
Net  
 
Investments
Footnotes
Security(2)
Coupon
Floor
Cash
PIK
Date
Maturity
Industry
Shares(3)
Cost
Value(1)
Assets
 
Venbrook Buyer, LLC
Los Angeles, CA
Term Loan B (SBIC)
(4)(11)
1st Lien
3M SOFR+ 8.00 % 1.50 % 6.50 % 7.00 %
3/13/2020
3/13/2026
Services: Business
$ 13,686,954
13,577,731
11,976,085
3.74 %
Term Loan B
(11)
1st Lien
3M SOFR+ 8.00 % 1.50 % 6.50 % 7.00 %
3/13/2020
3/13/2026
$
155,730
154,487
136,264
0.04 %
Revolver
(11)
1st Lien
3M SOFR+ 8.00 % 1.50 % 6.50 % 7.00 %
3/13/2020
3/13/2026
$ 2,395,666
2,395,666
2,096,208
0.66 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 8.00 % 1.50 % 6.50 % 7.00 %
3/13/2020
3/13/2026
$ 4,666,672
4,645,016
4,083,338
1.28 %
Venbrook Holdings, LLC Convertible Term Loan
(14)
Unsecured
10.00%
-
% 10.00 %
3/31/2022
12/20/2028
$
98,633
98,633
-
0.00 %
Venbrook Holdings, LLC Common Units
Equity
3/13/2020
822,758
819,262
-
0.00 %
Total
$
21,690,795
$
18,291,895
5.72 %
Whisps Holdings LP
Elgin, IL
Class A Units
Equity
4/18/2019
Beverage, Food, & Tobacco
500,000
500,000
-
0.00 %
Class A-1 Units
Equity
3/6/2023
107,418
107,418
97,400
0.03 %
Total
$
607,418
$
97,400
0.03 %
Xanitos, Inc.
Newtown Square, PA
Term Loan (SBIC)
(4)(11)
1st Lien
3M SOFR+ 6.50 % 1.00 % 12.00 %
6/25/2021
6/25/2026
Healthcare & Pharmaceuticals
$ 12,480,000
12,342,824
12,417,600
3.88 %
Revolver
(11)
1st Lien
3M SOFR+ 6.50 % 1.50 % 12.00 %
6/25/2021
6/25/2026
$
100,000
100,000
99,500
0.03 %
Delayed Draw Term Loan
(11)
1st Lien
3M SOFR+ 6.50 % 1.00 % 12.00 %
6/25/2021
6/25/2026
$ 2,198,745
2,185,595
2,187,751
0.68 %
Pure TopCo, LLC Class A Units
Equity
6/25/2021
442,133
1,053,478
1,020,714
0.32 %
Total
$
15,681,897
$
15,725,565
4.91 %
Total Non-control, non-affiliated investments
$
884,858,412
$
868,284,689
271.39 %
Total Investments
$
902,143,550
$
874,460,683
273.32 %
LIABILITIES IN EXCESS OF OTHER ASSETS
$
(554,520,895)
(173.32)%
NET ASSETS
$
319,939,788
100.00 %
(1) See Note 1 of the Notes to the Consolidated Financial Statements for a discussion of the methodologies used to value securities in the
portfolio.
(2) Debt investments are income producing and equity securities are non-income producing, unless otherwise noted.
(3) Par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments. Par amount
is denominated in U.S. Dollars (“$”) unless otherwise noted, Euro (“€”), or Great British Pound (“£”).
(4) Investments held by the SBIC subsidiary (as defined in Note 1), which include $15,388,012 of cash and $220,454,298 of investments (at
cost), are excluded from the obligations to the lenders of the Credit Facility (as defined in Note 9). Stellus Capital Investment
Corporation’s (“the Company”) obligations to the lenders of the Credit Facility are secured by a first priority security interest in all
investments and cash and cash equivalents, except for cash and investments held by the SBIC subsidiaries (as defined in Note 1).
(5) Investments held by the SBIC II subsidiary (as defined in Note 1), which include $8,521,989 of cash and $256,172,138 of investments (at
cost), are excluded from the obligations to the lenders of the Credit Facility. The Company’s obligations to the lenders of the Credit
Facility are secured by a first priority security interest in all investments and cash and cash equivalents, except for cash and investments
held by the SBIC subsidiaries.
(6) Security is non-income producing.
(7) The investment is not a “qualifying asset” under the Investment Company Act of 1940, as amended. The Company may not acquire any
non-qualifying assets unless, at the time of the acquisition, qualifying assets represent at least 70% of the Company’s total assets.
Qualifying assets represent approximately 97.7% of the Company’s total assets as of December 31, 2023.
(8) Represents a PIK interest security. At the option of the issuer, interest can be paid in cash or cash and PIK interest. The percentage of PIK
interest shown is the maximum PIK interest that can be elected by the issuer.

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
128
(9) At December 31, 2023, the Company had the following outstanding revolver and delayed draw term loan commitments:
    
    
    
Unused 
    
Unfunded 
Commitment 
Investments
Security
Commitment
Fee
Maturity
2X LLC
Revolver
$
100,000
0.50%
June 5, 2028
Ad.Net Acquisition, LLC
Revolver
649,510
0.50%
May 7, 2026
AdCellerant LLC
Revolver
875,995
0.50%
December 12, 2028
American Refrigeration, LLC
Revolver
100,000
0.50%
March 31, 2028
American Refrigeration, LLC
Delayed Draw Term Loan
100,000
1.00%
March 31, 2028
Amika OpCo LLC
Revolver
100,000
0.50%
July 1, 2028
Anne Lewis Strategies, LLC
Revolver
50,000
0.50%
May 9, 2028
Axis Portable Air, LLC
Revolver
100,000
0.50%
March 22, 2028
Camp Profiles LLC
Revolver
100,000
0.50%
September 3, 2026
CEATI International Inc.
Revolver
100,000
0.50%
February 19, 2026
Cerebro Buyer, LLC
Revolver
100,000
0.50%
March 15, 2029
CF512, Inc.
Revolver
100,000
0.50%
September 1, 2026
Channel Partners Intermediateco, LLC
Revolver
66,667
0.50%
February 7, 2027
CompleteCase, LLC
Revolver
150,000
0.50%
December 21, 2025
Compost 360 Acquisition, LLC
Revolver
66,667
0.50%
August 2, 2028
Compost 360 Acquisition, LLC
Delayed Draw Term Loan
4,096,741
0.50%
August 2, 2028
COPILOT Provider Support Services, LLC
Revolver
80,000
0.50%
November 22, 2027
Craftable Intermediate II Inc.
Revolver
100,000
0.50%
June 30, 2028
DRS Holdings III, Inc.
Revolver
909,091
0.50%
November 1, 2025
EHI Buyer, Inc.
Revolver
100,000
0.50%
July 31, 2029
EHI Buyer, Inc.
Delayed Draw Term Loan
3,055,671
1.00%
July 31, 2029
Elliott Aviation, LLC
Revolver B
666,667
0.50%
June 30, 2025
Equine Network, LLC
Revolver
16,667
0.50%
May 22, 2028
Equine Network, LLC
Delayed Draw Term Loan
40,000
1.00%
May 22, 2028
evolv Consulting, LLC
Revolver
1,363,636
0.50%
December 7, 2028
Evriholder Acquisition, Inc.
Revolver
100,000
0.50%
January 24, 2028
Exigo, LLC
Revolver
100,000
0.50%
March 16, 2027
Florachem Corporation
Revolver
76,667
0.50%
April 29, 2028
GS HVAM Intermediate, LLC
Revolver
848,485
0.50%
April 2, 2025
Heartland Business Systems, LLC
Delayed Draw Term Loan
50,000
0.50%
August 26, 2027
HV Watterson Holdings, LLC
Revolver
20,000
0.50%
December 17, 2026
HV Watterson Holdings, LLC
Delayed Draw Term Loan
2,555,354
1.00%
December 17, 2026
Impact Home Services LLC
Revolver
17,500
0.50%
April 28, 2028
Informativ, LLC
Revolver
100,000
0.50%
July 30, 2026
Inoapps Bidco, LLC
Revolver
60,000
0.50%
February 15, 2027
Invincible Boat Company LLC
Revolver
531,915
0.50%
August 28, 2025

Table of Contents
STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
129
    
    
    
Unused 
    
Unfunded 
Commitment 
Investments
Security
Commitment
Fee
Maturity
Ledge Lounger, Inc.
Revolver
$
25,000
0.50%
November 9, 2026
Lightning Intermediate II, LLC
Revolver
70,000
0.50%
June 6, 2027
MacKenzie-Childs Acquisition, Inc.
Revolver
53,333
0.50%
September 2, 2027
Madison Logic Holdings, Inc.
Revolver
100,000
0.50%
December 30, 2027
Michelli, LLC
Revolver
1,166,469
0.50%
December 21, 2028
Michelli, LLC
Delayed Draw Term Loan
3,888,228
0.50%
December 21, 2028
Microbe Formulas LLC
Revolver
100,000
0.50%
April 3, 2028
MOM Enterprises, LLC
Revolver
50,000
0.50%
May 19, 2026
Morgan Electrical Group Intermediate Holdings, Inc.
Delayed Draw Term Loan
2,864,154
1.00%
August 3, 2029
Morgan Electrical Group Intermediate Holdings, Inc.
Revolver
100,000
0.50%
August 3, 2029
Naumann/Hobbs Material Handling Corporation II, Inc.
Revolver – Working Capital
1,763,033
0.50%
August 30, 2024
NINJIO, LLC
Delayed Draw Term Loan
100,000
1.00%
October 12, 2027
NINJIO, LLC
Revolver
66,667
0.50%
October 12, 2027
Nutritional Medicinals, LLC
Revolver
2,000,000
0.50%
November 15, 2025
PCS Software, Inc.
Revolver
746,948
0.50%
July 1, 2024
Pearl Media Holdings, LLC
Delayed Draw Term Loan
100,000
0.50%
August 31, 2027
Pearl Media Holdings, LLC
Revolver
76,667
0.50%
August 31, 2027
Peltram Plumbing Holdings, LLC
Revolver
40,000
0.50%
December 30, 2026
Premiere Digital Services, Inc.
Revolver
576,923
0.50%
November 3, 2026
RIA Advisory Borrower, LLC
Revolver
72,743
0.50%
August 2, 2027
Rogers Mechanical Contractors, LLC
Revolver
83,333
0.75%
September 9, 2025
Sales Benchmark Index, LLC
Revolver
1,331,461
0.50%
January 7, 2025
Service Minds Company, LLC
Revolver
10,000
0.50%
February 7, 2028
The Hardenbergh Group, Inc.
Revolver
100,000
0.50%
August 6, 2028
Tilley Distribution, Inc.
Revolver
100,000
0.50%
December 31, 2026
TradePending OpCo Aggregator, LLC
Revolver
66,667
0.50%
March 2, 2026
U.S. Expediters, LLC
Revolver
100,000
0.50%
December 22, 2026

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STELLUS CAPITAL INVESTMENT CORPORATION
CONOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
130
(10) This loan is a unitranche investment.
(11) These loans include an interest rate floor feature which is lower than the applicable rates; therefore, the floor is not in effect.
(12) These loans are last-out term loans with contractual rates higher than the applicable rates; therefore, the floor is not in effect.
(13) Investment has been on non-accrual since April 1, 2022.
(14) This loan is convertible to common units at maturity or at the election of the issuer.
(15) Excluded from the investment is an uncalled capital commitment in an amount not to exceed $298,312.
(16) Term Loan A-1, Term Loan A-2, Term Loan A-3, Term Loan A-4 and the Revolver have been on non-accrual since January 1, 2023,
April 3, 2023, June 7, 2023, July 12, 2023 and October 3, 2023, respectively.
(17) Investment has been on non-accrual since November 6, 2023.
(18) Investment has been on non-accrual since August 10, 2023.
(19) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,500,000, with an unfunded rate of
0.50% and a maturity of February 8, 2024. The Company has full discretion to fund the revolver commitment.
(20) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $2,000,000, with an unfunded rate of
0.50% and a maturity of April 27, 2026. The Company has full discretion to fund the revolver commitment.
(21) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,944,089, with an unfunded rate of
0.00% and a maturity of September 3, 2026. The Company has full discretion to fund the revolver commitment.
(22) Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,944,089, with an unfunded rate of
0.00% and a maturity of September 3, 2026. The Company has full discretion to fund the revolver commitment.
(23) Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the
ability to nominate greater than 50% of the board representation is maintained.
Abbreviation Legend
BSBY —  Bloomberg Short-Term Bank Yield Index
PIK — Payment-In-Kind
SOFR —  Secured Overnight Financing Rate
SONIA —  Sterling Overnight Index Average

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131
NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Stellus Capital Investment Corporation (“we”, “us”, “our” and the “Company”) was formed as a Maryland corporation on
May 18, 2012 (“Inception”) and is an externally managed, closed-end, non-diversified investment management company. The
Company is applying the guidance of Accounting Standards Codification (“ASC”) Topic 946, Financial Services Investment
Companies (“ASC Topic 946”). The Company has elected to be regulated as a business development company (“BDC”) under the
Investment Company Act of 1940, as amended (the “1940 Act”), and has elected to be treated, qualifies, and intends to qualify
annually to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as
amended (the “Code”), for U.S. federal income tax purposes. The Company’s investment activities are managed by its investment
adviser, Stellus Capital Management, LLC (“Stellus Capital” or the “Advisor”).
As of December 31, 2024, the Company had issued a total of 27,481,118 shares and raised $398,516,373 in gross proceeds since
Inception, incurring an aggregate of $12,177,679 in offering expenses and sales load fees. Additionally, the Company has received
$672,917 in offering expenses reimbursements from the Advisor for net proceeds from offerings of $387,011,611. The Company’s
shares are currently listed on the New York Stock Exchange under the symbol “SCM”. See Note 4 to the consolidated financial
statements contained herein for further details.
The Company has established the following wholly owned subsidiaries: SCIC — Consolidated Blocker, Inc., SCIC — Invincible
Blocker 1, Inc., SCIC — SKP Blocker 1, Inc., SCIC — APE Blocker 1, Inc., SCIC — Venbrook Blocker, Inc., SCIC — CC Blocker
1, Inc., SCIC — ERC Blocker 1, Inc., and SCIC — Hollander Blocker 1, Inc., which are structured as Delaware entities to hold equity
or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass-through
entities) (collectively, the “Taxable Subsidiaries”). The Taxable Subsidiaries are consolidated for U.S. generally accepted accounting
principles (“U.S. GAAP”) reporting purposes, and the portfolio investments held by them are included in the consolidated financial
statements.
On June 14, 2013, the Company formed Stellus Capital SBIC, LP (the “SBIC I subsidiary”), a Delaware limited partnership, and
its general partner, Stellus Capital SBIC GP, LLC, a Delaware limited liability company, as wholly owned subsidiaries of the
Company. On June 20, 2014, the SBIC I subsidiary received a license from the U.S. Small Business Administration (“SBA”) to
operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as
amended (the “SBIC Act”). The SBIC I subsidiary and its general partner are consolidated for U.S. GAAP reporting purposes, and the
portfolio investments held by it are included in the consolidated financial statements.
On November 29, 2018, the Company formed Stellus Capital SBIC II, LP (the “SBIC II subsidiary”, and together with the SBIC
I subsidiary, the “SBIC subsidiaries”), a Delaware limited partnership. On August 14, 2019, the SBIC II subsidiary received a license
from the SBA to operate as an SBIC under Section 301(c) of the SBIC Act. The SBIC II subsidiary and its general partner, Stellus
Capital SBIC GP, LLC, are consolidated for U.S. GAAP reporting purposes, and the portfolio investments held by it are included in
the consolidated financial statements.
The SBIC licenses allow the SBIC subsidiaries to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance
of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse, interest only
debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is
not required to be paid prior to maturity, but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed
debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a
creditor, will have a superior claim to the SBIC subsidiaries’ assets over the Company’s stockholders in the event the Company
liquidates one or both of the SBIC subsidiaries or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the
SBIC subsidiaries upon an event of default. For the SBIC I subsidiary, SBA regulations limit the amount that the SBIC I subsidiary
may borrow to a maximum of $150,000,000 when it has at least $75,000,000 in regulatory capital, as such term is defined by the
SBA. For the SBIC II subsidiary, SBA regulations limit the amounts that the SBIC II subsidiary may borrow to $175,000,000 when it
has at least $87,500,000 in regulatory capital, as such term is defined by the SBA. For two or more

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132
SBICs under common control, the maximum amount of outstanding SBA-guaranteed debentures cannot exceed $350,000,000.
As of both December 31, 2024 and 2023, the SBIC I subsidiary had $75,000,000 of regulatory capital and $150,000,000 of SBA-
guaranteed debentures outstanding.
As of both December 31, 2024 and 2023, the SBIC II subsidiary had $87,500,000 of regulatory capital and $175,000,000 of
SBA-guaranteed debentures outstanding.
See footnotes (4) and (5) of the Consolidated Schedule of Investments for additional information regarding the treatment of
investments in the SBIC subsidiaries with respect to the Credit Facility (as defined in Note 9).
Under the 1940 Act, the Company is allowed to incur a maximum asset coverage ratio of 150% if certain requirements are met,
including the approval of a "required majority" (as such term is defined in Section 57(o) of the 1940 Act) of the Company's Board of
Directors (the "Board") and the approval of the Company's stockholders. On April 4, 2018, the Board, including a “required majority”
of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. At
the Company’s 2018 annual meeting of stockholders, the Company’s stockholders also approved the application of the modified asset
coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the asset coverage ratio requirement applicable to the
Company was decreased from 200% to 150%, effective June 29, 2018. The amount of leverage that the Company employs at any
time depends on the Company’s assessment of the market and other factors at the time of any proposed borrowing. As of December
31, 2024, the Company’s asset coverage ratio was 234%.
The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital
appreciation through debt and related equity investments in lower middle-market companies. The Company seeks to achieve its
investment objective by originating and investing primarily in private U.S. lower 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, second
lien, unitranche and unsecured debt financing, often with corresponding equity co-investments. The Company sources investments
primarily through the extensive network of relationships that the principals of Stellus Capital have developed with financial sponsor
firms, financial institutions, lower middle-market companies, management teams and other professional intermediaries.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with
U.S. GAAP and pursuant to the requirements for reporting on Form 10-K and Article 10 of Regulation S-X under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, certain disclosures accompanying the annual financial
statements prepared in accordance with U.S. GAAP are omitted. The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries.
In the opinion of management, the consolidated financial results included herein contain all adjustments, consisting solely of
normal recurring accruals, considered necessary for the fair presentation of financial statements for the periods included herein.
Certain reclassifications have been made to certain prior period balances to conform with current presentation.
In accordance with Regulation S-X under the Exchange Act, the Company does not consolidate portfolio company investments.
The accounting records of the Company are maintained in U.S. dollars.

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133
Economic Developments
Economic activity has continued to accelerate across sectors and regions. Nonetheless, the Company has observed and continues
to observe supply chain interruptions, labor resource shortages, commodity inflation, fluctuating interest rates, bank impairments and
failures, economic sanctions in response to international conflicts and instances of geopolitical, economic and financial market
instability in the United States and abroad. One or more of these factors may contribute to increased market volatility and may have
long- and short-term effects in the United States and worldwide financial markets.
Portfolio Investment Classification
The Company classifies its portfolio investments in accordance with the requirements of the 1940 Act as follows: (a) “Control
Investments” are defined as investments in which the Company owns more than 25% of the voting securities or has rights to maintain
greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which the Company owns
between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and
(c) “Non-controlled, non-affiliate investments” are defined as investments that are neither Control Investments nor Affiliate
Investments.
Cash and Cash Equivalents
At December 31, 2024, cash balances totaling $44,739 did not exceed Federal Deposit Insurance Corporation ("FDIC") 
insurance protection levels of $250,000. In addition, as of  December 31, 2024, the Company held $20,013,567 in cash equivalents in
money market mutual funds, which are carried at net asset value, which is considered a Level 1 valuation technique. At December 31,
2024, the Company held foreign currency of $288 (acquisition cost of $288). All of the Company's cash deposits are held at large
established high credit quality financial institutions and management believes that risk of loss associated with any uninsured balances
is remote.
Cash consists of bank demand deposits. We deem certain money market mutual funds, U.S. Treasury Bills, and other high-
quality, short-term debt securities as cash equivalents.
Fair Value Measurements
The Company accounts for all of its financial instruments at fair value in accordance with ASC Topic 820, Fair Value
Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair
value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level
hierarchy based on the transparency of valuation inputs. ASC Topic 820 requires disclosure of the fair value of financial instruments
for which it is practical to estimate such value. The Company believes that the carrying amounts of its financial instruments related to
receivables and payables approximate the fair value of these items due to the short maturity of these instruments and are considered
level 2 in the fair value hierarchy.
The Credit Facility, SBA-guaranteed debentures, and Notes Payable (as defined in Note 11) are carried at amortized cost in the
Consolidated Statements of Assets and Liabilities. As of December 31, 2024, the estimated fair value of the Credit Facility
approximates the carrying value because the interest rates adjust to the current market interest rate (Level 3 classification). Valuation
techniques and significant inputs used to determine fair value include Company details; credit, market and liquidity risk and events;
financial health of the Company; place in the capital structure; interest rate; and terms and conditions of the Credit Facility. The
estimated fair value of the SBA-guaranteed debentures and Notes Payable was determined by discounting projected remaining
payments using market interest rates for borrowings of the Company and entities with similar credit risks at the measurement date. At
the measurement date, the estimated fair values of the SBA-guaranteed debentures and Notes Payable as prepared for disclosure
purposes was $312,011,555 (Level 3 classification) and $96,606,000 (Level 2 classification), respectively. See Note 6 to the
Consolidated Financial Statements contained herein for further discussion regarding the fair value measurements and hierarchy.

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Consolidation
As permitted under Regulation S-X under the Exchange Act and ASC Topic 946, the Company generally does not consolidate its
investment in a portfolio company other than an investment company subsidiary. Accordingly, the Company consolidated the results
of the SBIC subsidiaries and the Taxable Subsidiaries. All intercompany balances have been eliminated upon consolidation.
Use of Estimates
The preparation of the Statements of Assets and Liabilities in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements. Changes in the economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ materially. Additionally, as explained in Note 1 contained herein, the
Consolidated Financial Statements includes investments in the portfolio whose values have been estimated by the Company, pursuant
to procedures established by the Board, in the absence of readily ascertainable market values. Because of the inherent uncertainty of
the investment portfolio valuations, those estimated values may differ materially from the values that would have been determined
had a ready market for the securities existed.
Deferred Financing Costs
Deferred financing costs, prepaid loan fees on SBA-guaranteed debentures and prepaid loan structure fees consist of fees and
expenses paid in connection with the closing of the Company’s Credit Facility, Notes Payable, and SBA-guaranteed debentures and
are capitalized at the time of payment. These costs are amortized using the straight-line method over the term of the respective
instrument and presented as an offset to the corresponding debt on the Consolidated Statements of Assets and Liabilities.
Offering Costs
Deferred offering costs consist of fees and expenses incurred in connection with the offer and sale of the Company’s common
stock, including legal, accounting, printing fees and other related expenses, as well as costs incurred in connection with the filing of a
shelf registration statement and related prospectuses. These costs are capitalized when incurred and recognized as a reduction of
offering proceeds when the offering is consummated and shown on the Consolidated Statements of Changes in Net Assets and
Liabilities as a reduction to Paid-in Capital. During the year ended December 31, 2024, the Company incurred $435,390 of costs
related to the preparation of its shelf registration statement and related prospectuses, which were capitalized and treated as discussed
above as part of the Company’s ATM Program (as defined in Note 4) throughout various ATM Program offerings in 2024 and 2023.
As of December 31, 2024, no costs related to the preparation of a registration statement were capitalized and need to be treated as
discussed above in the event an offering is consummated. As of the year ended December 31, 2023, the Company capitalized $7,312
of costs related to the preparation of a registration statement, which were not capitalized until the related offering consummated
during May 2024.
Investments
Rule 2a-5 under the 1940 Act (“Rule 2a-5”) establishes requirements for determining fair value of a BDC’s investments in good
faith for purposes of the 1940 Act. Rule 2a-5 permits boards to designate certain parties to perform fair value determinations, subject
to board oversight and compliance with certain conditions. Rule 2a-5 also defines when market quotations are “readily available” for
purposes of the 1940 Act and the threshold for determining whether a board must determine the fair value of a security. Rule 31a-4
under the 1940 Act (“Rule 31a-4”), establishes additional recordkeeping requirements related to fair value determinations. While the
Board has not elected to designate the Advisor as the valuation designee, the Company has adopted certain revisions to its valuation
policies and procedures in order to comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.

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135
As a BDC, the Company will generally invest in illiquid loans and securities including debt and equity securities of private lower
middle-market companies. Section 2(a)(41) of the 1940 Act requires that a BDC value its assets as follows: (i) the third party price for
securities for which a quotation is readily available; and (ii) for all other securities and assets, fair value, as determined in good faith
under procedures adopted by a BDC's board or valuation designee, as applicable. Under procedures established by the Board, the
Company intends to value investments for which market quotations are readily available at such market quotations. The Company will
obtain these market values from an independent pricing service or at the midpoint of the bid and ask prices obtained from at least two
brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). Debt and equity securities that are
not publicly traded or whose market prices are not readily available will be valued at fair value as determined in good faith by the
Board. Such determination of fair values may involve subjective judgments and estimates. The Company also engages independent
valuation providers to review the valuation of each portfolio investment that does not have a readily available market quotation at
least twice annually.
Debt and equity investments purchased within approximately 90 days of the valuation date will be valued at cost plus accreted
discount, or minus amortized premium, which approximates fair value. With respect to unquoted securities, the Board will value each
investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that
are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs,
the Board will use the pricing indicated by the external event to corroborate and/or assist in the valuation. Because the Company
expects that there will not be a readily available market quotation for many of the investments in its portfolio, the Company expects to
value most of its portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and
a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have
a readily available market quotation, the fair value of the Company’s investments may differ significantly from the values that would
have been used had a readily available market value existed for such investments, and the differences could be material.
In following these approaches, the types of factors that will be taken into account in fair value pricing investments will include,
as relevant, but not be limited to:
●
available current market data, including relevant and applicable market trading and transaction comparables;
●
applicable market yields and multiples;
●
financial covenants;
●
call protection provisions;
●
information rights;
●
the nature and realizable value of any collateral;
●
the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does
business;
●
comparisons of financial ratios of peer companies that are public;
●
comparable merger and acquisition transactions; and
●
the principal market and enterprise values.

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136
Revenue Recognition
The Company records interest income on an accrual basis to the extent such interest is deemed collectible. Payment-in-kind
(“PIK”) interest represents contractual interest accrued and added to the loan balance that generally becomes due at maturity. The
Company will not accrue any form of interest on loans and debt securities if it has reason to doubt its ability to collect such interest.
Loan origination fees, original issue discount and market discount or premium are capitalized, and the Company then accretes or
amortizes such amounts using the effective interest method as interest income. Upon the prepayment of a loan or debt security, any
unamortized loan origination fee is recorded as interest income. The Company records prepayment premiums on loans and debt
securities as other income. Dividend income, if any, will be recognized on the ex-dividend date.
A presentation of the interest income the Company has earned from portfolio companies for the years ended December 31, 2024,
2023, and 2022 is as follows:
For the years ended
December 31, 2024   December 31, 2023   December 31, 2022
Loan interest
$
92,316,007 $
93,976,863 $
68,026,701
PIK income
 
3,310,111  
3,801,637  
1,357,177
Fee amortization income(1)
 
3,074,492  
2,954,512  
2,782,309
Fee income acceleration(2)
 
1,185,210  
1,283,776  
798,812
Total Interest Income
$
99,885,820 $
102,016,788 $
72,964,999
(1) Includes amortization of fees on unfunded commitments.
(2) Unamortized loan origination fees recognized upon full or partial realization of investment.
To maintain the Company’s treatment as a RIC, substantially all of this income must be paid to stockholders in the form of
distributions, even if the Company has not collected any cash.
Management considers portfolio company specific circumstances as well as other economic factors in determining collectability
of income. As of December 31, 2024, the Company had seven loans on non-accrual status, which represented approximately 8.3% of
the Company’s loan portfolio at cost and 5.4% at fair value. As of December 31, 2023, the Company had four loans on non-accrual
status, which represented approximately 4.2% of the Company’s loan portfolio at cost and 1.3% at fair value. As of December 31,
2024 and 2023, $6,509,852 and $7,545,775 of income from investments on non-accrual has not been accrued, respectively. If a loan
or debt security’s status significantly improves regarding the debtor’s ability to service the debt or other obligations, or if a loan or
debt security is sold or written off, the Company will remove it from non-accrual status.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
Realized gains or losses are measured by the difference between the net proceeds from the repayment, sale or disposition and the
amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in
unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any
reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
Foreign currency amounts are translated into US Dollars (USD) on the following basis:
●
fair value of investment securities, other assets and liabilities—at the spot exchange rate on the last business day of the
period; and
●
purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective
dates of such investment transactions, income or expenses.

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137
Investment Transaction Costs
Costs that are material and associated with an investment transaction, including legal expenses, are included in the cost basis of
purchases and deducted from the proceeds of sales unless such costs are reimbursed by the borrower.
Receivables and Payables for Unsettled Securities Transactions
The Company records all investments on a trade date basis.
U.S. Federal Income Taxes
The Company has elected and intends to qualify annually to be treated as a RIC under Subchapter M of the Code. To qualify as a
RIC, among other things, the Company generally is required to timely distribute to its stockholders at least 90% of investment
company taxable income, as defined by the Code, for each year. So long as the Company maintains its status as a RIC, it generally
will not be subject to U.S. federal income tax on any ordinary income or capital gains that it distributes at least annually to its
stockholders as dividends. Rather, any tax liability related to income earned by the Company represents obligations of the Company’s
investors and will not be reflected in the Consolidated Financial Statements of the Company.
To avoid a 4% U.S federal excise tax on undistributed earnings, the Company is required to distribute each calendar year the sum
of (i) 98% of its ordinary income for such calendar year, (ii) 98.2% the amount by which the Company’s capital gain exceeds its
capital loss (adjusted for certain ordinary losses) for the one-year period ending October 31 in that calendar year, and (iii) certain
undistributed amounts from previous years on which the Company paid no U.S. federal income tax, or the “Excise Tax Avoidance
Requirement”. For this purpose, however, any net ordinary income or capital gain net income retained by the Company that is subject
to U.S. federal income tax for the tax year ending in that calendar year will be considered to have been distributed by year end (or
earlier if estimated taxes are paid). The Company, at its discretion, may choose not to distribute all its taxable income for the
calendar year and pay a non-deductible 4% excise tax on this income. If the Company chooses to do so, all other things being equal,
this would increase expenses and reduce the amount of cash available to be distributed to stockholders. To the extent that the
Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend
distributions from such taxable income, the Company accrues excise taxes on estimated excess taxable income as taxable income is
earned. As of December 31, 2024, the Company had approximately $45,441,036 of undistributed taxable income that was carried
forward toward distributions to be paid in 2025.
Current income tax expense for the years ended December 31, 2024, 2023, and 2022 of $1,808,838, $1,333,452, and $1,161,668,
respectively, is related to federal and state income taxes and federal excise taxes.
The Company evaluates tax positions taken or expected to be taken while preparing its tax returns to determine whether the tax
positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-
than-not” threshold would be recorded as a tax benefit or expense in the applicable period.
As of December 31, 2024, the Company had not recorded a liability for any unrecognized tax positions. Management’s
evaluation of uncertain tax positions may be subject to review and adjustment at a later date based upon factors including, but not
limited to, an ongoing analysis of tax laws, regulations and interpretations thereof. The Company’s policy is to include interest and
penalties related to income taxes, if applicable, in general and administrative expenses. Any expenses for the years ended December
31, 2024, 2023, and 2022 were de minimis.
The Taxable Subsidiaries are direct wholly owned subsidiaries of the Company that have elected to be treated as corporations for
U.S. federal income tax purposes, and as a result, the income of Taxable Subsidiaries is subject to U.S. federal income tax at
corporate rates. The Taxable Subsidiaries permit the Company to hold equity investments in portfolio companies that are “pass
through” entities for tax purposes and continue to comply with the “source-of-income” requirements contained in RIC tax provisions
of the Code. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax
expense, benefit, and the related tax assets and

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liabilities, as a result of their ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax
assets and liabilities of the Taxable Subsidiaries are reflected in the Company’s Consolidated Financial Statements.
The Taxable Subsidiaries use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded
for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using
statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided
against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences
in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as
investment gains or losses are not included in taxable income until they are realized.
For the years ended December 31, 2024, 2023, and 2022, the Company recorded deferred income tax benefit (provision) of
$188,893, ($126,957), and ($213,214), respectively, related to the Taxable Subsidiaries. For the years ended December 31, 2024,
2023, and 2022, the Company recorded income tax benefit on net realized loss on investments of $2,221, $2,987,847, and $0,
respectively, related to the Taxable Subsidiaries. As of December 31, 2024 and 2023, the Company had a net deferred tax liability of
$0 and $188,893, respectively.
Earnings per Share
Basic per share calculations are computed utilizing the weighted average number of shares of the Company’s common stock
outstanding for the period. The Company has no common stock equivalents. As a result, there is no difference between diluted
earnings per share and basic per share amounts.
Paid In Capital
The Company records the proceeds from the sale of shares of its common stock on a net basis to (i) capital stock and (ii) paid in
capital in excess of par value, excluding all commissions and marketing support fees.
Distributable Loss
The components that make up distributable loss on the Consolidated Statements of Assets and Liabilities as of December 31,
2024 and 2023 were as follows:
    December 31, 2024
December 31, 2023
Accumulated net realized loss from investments, net of cumulative dividends of $30,352,761
for both periods
$
(41,267,707) $
(24,988,557)
Net realized loss on foreign currency translations
(213,301)
(118,571)
Net unrealized depreciation on non-controlled, non-affiliated investments and cash equivalents,
net of deferred tax liability of $0 and $188,893, respectively
 
(7,312,300)  
(27,071,601)
Net unrealized depreciation on foreign currency translations
(15,219)
(464)
Accumulated undistributed net investment income
 
39,153,714
 
36,175,872
Total distributable loss
$
(9,654,813) $
(16,003,321)
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments in this update
require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15,
2024. Early adoption is permitted; however, the Company has not elected to adopt this provision as of the date of the financial
statements contained in this annual report on Form 10-K. The Company is still assessing the impact of the new guidance. However, it
does not expect ASU 2023-09 to have a material impact on the Consolidated Financial Statements and the notes thereto.

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139
See Note 14 to the Consolidated Financial Statements contained herein for further discussion regarding recently issued
accounting standards.
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by
the Company as of the specified effective date. The Company believes the impact of the recently issued standards and any that are not
yet effective will not have a material impact on its consolidated financial statements upon adoption.
NOTE 2 — RELATED PARTY ARRANGEMENTS
Investment Advisory Agreement
The Company has entered into an Investment Advisory Agreement (the “Investment Advisory Agreement”) with Stellus Capital
pursuant to which Stellus Capital serves as its investment adviser. Pursuant to this agreement, the Company has agreed to pay to
Stellus Capital an annual base management fee of 1.75% of gross assets, including assets purchased with borrowed funds or other
forms of leverage and excluding cash and cash equivalents, and an incentive fee.
For the years ended December 31, 2024, 2023, and 2022, the Company recorded an expense for base management fees of
$15,698,129, $15,452,347, $14,848,174, respectively. As of December 31, 2024 and December 31, 2023, $4,034,109 and $2,918,536,
respectively, was payable to Stellus Capital.
The incentive fee has two components, the investment income incentive fee and the capital gains incentive fee, as follows:
Investment Income Incentive Fee
The investment income component of the incentive fee (“Income Incentive Fee”) is calculated, and payable to the Advisor,
quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter,
subject to a cumulative total return requirement and to deferral of non-cash amounts. The pre-incentive fee net investment income,
which is expressed as a rate of return on the value of the Company’s net assets attributable to the Company’s common stock, for the
immediately preceding calendar quarter, will have a 2.0% (which is 8.0% annualized) hurdle rate (also referred to as the “Hurdle”).
Pre-incentive fee net investment income means interest income, dividend income and any other income accrued during the calendar
quarter, minus the Company’s operating expenses for the quarter excluding the incentive fee. Pre-incentive fee net investment income
includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest
and zero coupon securities), accrued income that the Company has not yet received in cash. The Advisor receives no incentive fee for
any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the Hurdle. Subject to the
cumulative total return requirement described below, the Advisor receives 100% of the Company’s pre-incentive fee net investment
income for any calendar quarter with respect to that portion of the pre-incentive net investment income for such quarter, if any, that
exceeds the Hurdle but is less than 2.5% (which is 10.0% annualized) of net assets (also referred to as the “Catch-up”) and 20.0% of
the Company’s pre-incentive fee net investment income for such calendar quarter, if any, greater than 2.5% (10.0% annualized) of net
assets.
The foregoing Income Incentive Fee is subject to a total return requirement, which provides that no incentive fee in respect of the
Company’s pre-incentive fee net investment income is payable except to the extent 20.0% of the cumulative net increase in net assets
resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative incentive fees accrued
and/or paid for the 11 preceding quarters. In other words, any Income Incentive Fee that is payable in a calendar quarter is limited to
the lesser of (i) 20% of the amount by which the Company’s pre-incentive fee net investment income for such calendar quarter
exceeds the 2.0% hurdle, subject to the Catch-up, and (ii) (x) 20% of the cumulative net increase in net assets resulting from
operations for the then current and 11 preceding quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11
preceding calendar quarters. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the
amount, if positive, of the sum of pre-incentive fee net investment income, realized gains and losses and unrealized appreciation

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and depreciation of the Company for the then current and 11 preceding calendar quarters. In addition, the Advisor is not paid the
portion of such incentive fee that is attributable to deferred interest until the Company actually receives such interest in cash.
For the years ended December 31, 2024, 2023, and 2022, the Company incurred $10,045,966, $10,189,888, $3,782,151,
respectively, of Income Incentive Fees. As of December 31, 2024 and 2023, $3,109,560 and $2,885,180, respectively, of such
incentive fees were payable to the Advisor, of which $2,351,703 and $2,444,867, respectively, were currently payable (as explained
below). As of December 31, 2024 and 2023, $757,857 and $440,313, respectively, of Income Incentive Fees incurred but not paid by
the Company were generated from deferred interest (i.e. PIK, certain discount accretion and deferred interest) and are not payable
until such amounts are received in cash. For the years ended December 31, 2024 and 2023, $1,826,893 and $307,442, respectively, of
Income Incentive Fees accrued but not paid by the Company were permanently written off due to the Cumulative Pre-Incentive Fee
Net Return limitation.
Capital Gains Incentive Fee
The Company also pays the Advisor an incentive fee based on capital gains (the “Capital Gains Incentive Fee”). The Capital
Gains Incentive Fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment
management agreement, as of the termination date). The Capital Gains Incentive Fee is equal to 20.0% of the Company’s cumulative
aggregate realized capital gains from Inception through the end of that calendar year, computed net of the cumulative aggregate
realized capital losses and cumulative aggregate unrealized capital depreciation through the end of such year. The aggregate amount
of any previously paid Capital Gains Incentive Fees is subtracted from such Capital Gains Incentive Fee calculated.
U.S. GAAP requires that the Capital Gains Incentive Fee accrual considers the cumulative aggregate realized gains and losses
and unrealized capital appreciation or depreciation of investments and other financial instruments in the calculation, as an incentive
fee would be payable if such realized gains and losses and unrealized capital appreciation or depreciation were realized, even though
such unrealized capital appreciation or depreciation is not permitted to be considered in calculating the Capital Gains Incentive Fee
actually payable under the Investment Advisory Agreement. There can be no assurance that unrealized appreciation or depreciation
will be realized in the future. Accordingly, such fees, as calculated and accrued, may not necessarily be payable under the Investment
Advisory Agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. For the years ended
December 31, 2024, 2023, and 2022, the Company incurred (reversed) Capital Gains Incentive Fees of $0, ($569,528), and
($2,818,623), respectively. As of both December 31, 2024 and December 31, 2023, $0 of Capital Gains Incentive Fees were accrued
but not currently payable to the Advisor.
The following tables summarize the components of the incentive fees discussed above:
For the years ended
December 31, 2024  December 31, 2023  December 31, 2022
Investment income incentive fees incurred
$
10,045,966 $
10,189,888 $
3,782,151
Capital gains incentive fees reversed
 
—
(569,528)
(2,818,623)
Income incentive fee waiver
(1,826,893)
(307,442)
—
Incentive fees expense
$
8,219,073 $
9,312,918 $
963,528
    December 31, 2024
December 31, 2023
Investment income incentive fee currently payable
$
2,351,703 $
2,444,867
Investment income incentive fee deferred
 
757,857  
440,313
Incentive fee payable
$
3,109,560 $
2,885,180
Director Fees
For the years ended December 31, 2024, 2023, and 2022, the Company recorded an expense relating to director fees of
$412,000, $406,000, and $329,000, respectively. As of both December 31, 2024 and 2023, the Company owed its independent
directors no unpaid director fees.

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141
Co-Investments
On May 9, 2022, the Company received a new exemptive order (the “Order”) that superseded prior co-investment exemptive
relief orders and permits the Company to co-invest with additional types of private funds, other BDCs, and registered investment
companies managed by Stellus Capital or an adviser that is controlled, controlling, or under common control with Stellus Capital,
subject to the conditions included therein. Pursuant to the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of
the Company’s independent directors must make certain conclusions in connection with a co-investment transaction, including that
(1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its
stockholders and do not involve overreaching of the Company or its stockholders on the part of any person concerned; (2) the
transaction is consistent with the interests of the Company’s stockholders and is consistent with its investment objectives and
strategies; (3) the investment by the Company’s affiliates would not disadvantage the Company, and the Company’s participation
would not be on a basis different from or less advantageous than that on which the Company’s affiliates are investing and (4) the
proposed investment by the Company would not benefit the Advisor, the other affiliated funds that are participating in the investment,
or any affiliated person of any of them (other than parties to the transaction), except to the extent permitted by the exemptive relief
and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.
The Company co-invests, subject to the conditions in the Order, with a private BDC and private credit funds managed by Stellus
Capital or an affiliate thereof that have investment strategies that are similar or identical to the Company’s investment strategy, and
the Company may co-invest with other BDCs, registered investment companies and private credit funds managed by Stellus Capital
or an adviser that is controlled, controlling, or under common control with Stellus Capital in the future. The Company believes that
such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.
Administrative Agent
The Company serves as the administrative agent on certain investment transactions, including co-investments with its affiliates
under the Order. As of December 31, 2024 and 2023, there was no cash due to related parties or other investment funds related to
interest paid by a borrower to the Company as administrative agent.
License Agreement
The Company has entered into a license agreement with Stellus Capital under which Stellus Capital has agreed to grant the
Company a non-exclusive, royalty-free license to use the name “Stellus Capital.” Under this agreement, the Company has a right to
use the “Stellus Capital” name for so long as Stellus Capital or one of its affiliates remains its investment adviser. Other than with
respect to this limited license, the Company has no legal right to the “Stellus Capital” name. This license agreement will remain in
effect for so long as the Investment Advisory Agreement with Stellus Capital is in effect.
Administration Agreement
The Company has entered into an administration agreement (the "Administration Agreement") with Stellus Capital, pursuant to
which Stellus Capital furnishes the Company with office facilities and equipment and provides the Company with the clerical,
bookkeeping, recordkeeping and other administrative services necessary to conduct day-to-day operations. Under this Administration
Agreement, Stellus Capital performs, or oversees the performance of, its required administrative services, which includes, among
other things, being responsible for the financial records which it is required to maintain and preparing reports to its stockholders and
reports filed with the SEC.
For the years ended December 31, 2024, 2023, and 2022, the Company recorded expenses of $1,589,680, $1,561,394, and
$1,506,344, respectively, related to the Administration Agreement, which are included in administrative services expenses on the
Consolidated Statement of Operations. As of December 31, 2024 and December 31, 2023, $389,502 and $397,953, respectively,
remained payable to Stellus Capital relating to the Administration Agreement, which are included in administrative services payable
on the Consolidated Statements of Assets and Liabilities.

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Indemnification
The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of the reckless disregard of its duties and obligations under the Investment Advisory Agreement, Stellus
Capital and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity
affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including
reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Stellus Capital’s services under
the Investment Advisory Agreement or otherwise as the Company’s investment adviser.
The Company has also entered into indemnification agreements with its directors. The indemnification agreements are intended
to provide the Company’s directors the maximum indemnification permitted under Maryland law and the 1940 Act. Each
indemnification agreement provides that the Company shall indemnify the director who is a party to the agreement (an “Indemnitee”),
including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be,
made a party to or a witness in any threatened, pending, or completed proceeding, other than a proceeding by or in the right of the
Company.
NOTE 3 — DISTRIBUTIONS
Distributions are generally declared by the Company’s Board each calendar quarter and recognized as distribution liabilities on
the declaration date. The stockholder distributions, if any, are determined by the Board. Any distribution to stockholders will be
declared out of assets legally available for distribution. The Company has declared distributions of $16.55 per share on its common
stock from Inception through December 31, 2024.
The following table reflects the Company’s distributions declared and paid on its common stock since Inception:
Date Declared
    
Record Date
    
Payment Date
    
Per Share(1)
Fiscal 2012
$
0.18
Fiscal 2013
 
   
$
1.36
Fiscal 2014
 
   
$
1.42
Fiscal 2015
 
   
$
1.36
Fiscal 2016
 
   
$
1.36
Fiscal 2017
Various
$
1.36
Fiscal 2018
 
  
$
1.36
Fiscal 2019
 
  
$
1.36
Fiscal 2020
 
  
$
1.15
Fiscal 2021
 
  
$
1.14
Fiscal 2022
$
1.30
Fiscal 2023
$
1.60
Fiscal 2024
  
January 13, 2024
January 31, 2024
February 15, 2024
$
0.1333
January 13, 2024
February 29, 2024
March 15, 2024
$
0.1333
January 13, 2024
March 29, 2024
April 15, 2024
$
0.1333
April 3, 2024
April 30, 2024
May 15, 2024
$
0.1333
April 3, 2024
May 31, 2024
June 14, 2024
$
0.1333
April 3, 2024
June 28, 2024
July 15, 2024
$
0.1333
July 10, 2024
July 31, 2024
August 15, 2024
$
0.1333
July 10, 2024
 
August 30, 2024
September 13, 2024
$
0.1333
July 10, 2024
 
September 30, 2024
October 15, 2024
$
0.1333
October 10, 2024
October 31, 2024
November 15, 2024
$
0.1333
October 10, 2024
November 29, 2024
December 13, 2024
$
0.1333
October 10, 2024
December 31, 2024
January 15, 2025
$
0.1333
Total
  
$
16.55

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143
The Company has adopted an “opt out” dividend reinvestment plan (“DRIP”) pursuant to which a stockholder whose shares are
held in their own name will receive distributions in shares of the Company’s common stock under the Company’s DRIP unless they
elect to receive distributions in cash. Stockholders whose shares are held in the name of a broker or the nominee of a broker may have
distributions reinvested only if such service is provided by the broker or the nominee, or if the broker of the nominee permits
participation in the DRIP.
Although distributions paid in the form of additional shares of the Company’s common stock will generally be subject to U.S.
federal, state and local taxes in the same manner as cash distributions, investors participating in the Company’s DRIP will not receive
any corresponding cash distributions with which to pay any such applicable taxes. Any distributions reinvested through the issuance
of shares through the Company’s DRIP will increase the Company’s gross assets on which the base management fee and the
incentive fee are determined and paid to Stellus Capital. The Company did not issue any new shares in connection with the DRIP
during the years ended December 31, 2024 and December 31, 2023.
NOTE 4 — EQUITY OFFERINGS AND RELATED EXPENSES
The table below illustrates the number of common stock shares the Company issued since Inception through various equity
offerings and pursuant to the Company’s DRIP.
    
    
    
    
    
    Average
Number of     
Gross
    Underwriting    
Offering     Fees Covered     
Net
    Offering
Issuance of Common Stock
    
Shares
    Proceeds(1)(2)     
fees
    Expenses
by Advisor     
Proceeds(3)
    
Price
Year ended December 31, 2012
12,035,023
$ 180,522,093
$
4,959,720
$
835,500
$
—
$ 174,726,873
$
14.90
Year ended December 31, 2013
 
63,998
899,964
—
—
—
899,964
14.06
Year ended December 31, 2014
 
380,936
 
5,485,780
 
75,510
 
29,904
—
 
5,380,366
14.47
Year ended December 31, 2017
 
3,465,922
 
48,741,406
 
1,358,880
 
307,021
—
 
47,075,505
14.06
Year ended December 31, 2018
 
7,931
 
93,737
 
—
 
—
—
 
93,737
11.85
Year ended December 31, 2019
 
3,177,936
 
45,862,995
 
1,015,127
 
559,261
37,546
 
44,326,153
14.43
Year ended December 31, 2020
 
354,257
 
5,023,843
 
5,680
 
84,592
66,423
 
4,999,994
14.40
Year ended December 31, 2021
 
31,592
 
449,515
 
6,744
 
53,327
4,255
 
393,699
14.23
Year ended December 31, 2022
 
149,174
 
2,070,935
 
31,066
 
530,842
87,605
 
1,596,632
13.88
Year ended December 31, 2023
4,458,873
62,871,349
943,248
247,701
477,088
62,157,488
14.10
Year ended December 31, 2024
3,355,476
46,494,756
698,166
435,390
—
45,361,200
13.86
Total
 
27,481,118
$ 398,516,373
$
9,094,141
$ 3,083,538
$
672,917
$ 387,011,611
 
  
(1) Net of partial share redemptions. Such share redemptions impacted gross proceeds by $94, $757, ($1,051), ($142), ($31) and
($29) in 2020, 2019, 2018, 2017, 2016 and 2015, respectively.
(2) Includes common shares issued under the DRIP of $228,943 and $94,788 during the years ended December 31, 2020 and 2018,
respectively; $0 for the years ended December 31, 2024, 2023, 2022, 2021, 2019, 2017, 2016 and 2015, respectively; and
$390,505, $938,385, and $113,000 for the years ended December 31, 2014, 2013, and 2012, respectively.
(3) Net Proceeds per this equity table will differ from the Consolidated Statements of Assets and Liabilities as of December 31,
2024, 2023, and 2022 in the amount of $7,434,858, $5,707,301 and 3,317,652, respectively, which represents a tax
reclassification of stockholders’ equity in accordance with U.S. GAAP. This reclassification reduces paid-in capital and increases
distributable earnings (increasing accumulated undistributed net investment income).
On November 16, 2021, the Company entered into an equity distribution agreement, as amended and restated on August 29,
2022 (the “2021 Equity Distribution Agreement”) with Keefe Bruyette & Woods, Inc. and Raymond James & Associates, Inc., as
sales agents and/or principal thereunder. Under the 2021 Equity Distribution Agreement, the Company was permitted to issue and sell,
from time to time, up to $50,000,000 in aggregate offering price of shares of common stock, par value $0.001 per share, with the
intention to use the net proceeds from this at-the-market sales program to repay certain outstanding indebtedness and make
investments in portfolio companies in accordance with its investment objective and strategies.
On August 11, 2023, the Company entered into an equity distribution agreement (the “2023 Equity Distribution Agreement” and
together with the 2021 Equity Distribution Agreement, the “Equity Distribution Agreements”) with Keefe Bruyette & Woods, Inc.
and Raymond James & Associates, Inc., as sales agents and/or principal thereunder.

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Under the 2023 Equity Distribution Agreement, the Company may issue and sell, from time to time, up to $100,000,000 in aggregate
offering price of shares of common stock, par value $0.001 per share, with the intention to use the net proceeds from this at-the-
market sales program to repay certain outstanding indebtedness and make investments in portfolio companies in accordance with its
investment objective and strategies. Upon execution of the 2023 Equity Distribution Agreement, the Company no longer sold any
shares under the 2021 Equity Distribution Agreement. The Company refers to its issuance and sale of shares under the Equity
Distribution Agreements as the “ATM Program”.
The Company issued 3,355,476 shares during the year ended December 31, 2024 under the ATM Program, for gross proceeds of
$46,494,756 and underwriting fees and other expenses of $1,133,554. The average per share offering price of shares issued in the
ATM Program during 2024 was $13.86. The Company issued 4,458,873 shares during the year ended December 31, 2023 under the
ATM Program, for gross proceeds of $62,871,349 and underwriting fees and other expenses of $1,190,949. The average per share
offering price of shares issued in the ATM Program during 2023 was $14.10. The Advisor agreed to reimburse the Company for
underwriting fees and expenses incurred in connection with the ATM Program to the extent the per share price of the shares to the
public, less underwriting fees, was less than the then-current net asset value per share. For the years ended December 31, 2024 and
2023, the Advisor reimbursed the Company $0 and $477,088, respectively, of these underwriting fees and expenses, which resulted in
net proceeds of $45,361,200, or $13.65 per share and $62,157,488, or $14.00 per share, respectively, excluding the impact of offering
expenses.
The Company did not issue any new shares of common stock through the DRIP for the years ended December 31, 2024 and
2023.
NOTE 5 — NET INCREASE IN NET ASSETS PER COMMON SHARE
The following information sets forth the computation of net increase in net assets resulting from operations per common share
for the years ended December 31, 2024, 2023, and 2022.
For the years ended
December 31, 2024 December 31, 2023 December 31, 2022
Net increase in net assets resulting from operations
$
45,844,627 $
17,533,167 $
14,491,784
Weighted average common shares
25,596,593
22,004,648
19,552,931
Net increase in net assets resulting from operations per share
$
1.79 $
0.80 $
0.74
NOTE 6 — PORTFOLIO INVESTMENTS AND FAIR VALUE
In accordance with the authoritative guidance on fair value measurements and disclosures under U.S. GAAP, the Company
discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of the
fair value hierarchy as follows:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted
assets or liabilities;
Level 2 — Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are
observable, either directly or indirectly; and
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the
fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management.

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145
The Company considers whether the volume and level of activity for the asset or liability have significantly decreased and
identifies transactions that are not orderly in determining fair value. Accordingly, if the Company determines that either the volume
and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price
quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be
required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a
market approach in those circumstances.
At December 31, 2024, the Company had investments in 105 portfolio companies. The total cost and fair value of the
investments were $961,788,706 and $953,497,688, respectively. The composition of the Company’s investments as of December 31,
2024 is as follows:
    
Cost
    
Fair Value
Senior Secured – First Lien(1)
$
884,322,462
$
856,096,255
Senior Secured – Second Lien
 
12,073,732
11,948,850
Unsecured Debt
 
6,755,866
6,612,493
Equity
 
58,636,646
78,840,090
Total Investments
$
961,788,706
$
953,497,688
(1) Includes unitranche investments, which accounted for 2.0% of the Company’s portfolio at fair value. Unitranche structures may
combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. The Company’s unitranche
loans will expose it to the risks associated with the second lien and subordinated loans to the extent it invests in the “last-out”
tranche.
At December 31, 2023, the Company had investments in 93 portfolio companies. The total cost and fair value of the investments
were $902,143,550 and $874,460,683, respectively. The composition of the Company’s investments as of December 31, 2023 is as
follows:
    
Cost
    
Fair Value
Senior Secured – First Lien(1)
$
793,819,152
$
774,789,320
Senior Secured – Second Lien
 
42,269,568
21,957,500
Unsecured Debt
 
6,138,183
5,956,280
Equity
 
59,916,647
71,757,583
Total Investments
$
902,143,550
$
874,460,683
(1) Includes unitranche investments, which accounted for 4.5% of the Company’s portfolio at fair value. Unitranche structures may
combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. The Company’s unitranche
loans will expose it to the risks associated with second lien and subordinated loans to the extent it invests in the “last-out” tranche.
The Company’s investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which
require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan
agreements. As of December 31, 2024 and December 31, 2023, the Company had 71 and 57 such investments with aggregate
unfunded commitments of $41,286,752 and $37,021,242, respectively. The Company maintains sufficient liquidity (through cash on
hand and available borrowings under the Credit Facility) to fund such unfunded loan commitments should the need arise.

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146
The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest
level of significant input used in the valuation as of December 31, 2024 were as follows:
    Quoted Prices     
    
    
in Active
Markets
Significant Other
Significant
for Identical
Observable
Unobservable
Securities
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
Senior Secured – First Lien
$
—
$
—
$
856,096,255
$
856,096,255
Senior Secured – Second Lien
 
—
 
—
 
11,948,850
 
11,948,850
Unsecured Debt
 
—
 
—
 
6,612,493
 
6,612,493
Equity
 
—
 
—
 
78,840,090
 
78,840,090
Total Investments
$
—
$
—
$
953,497,688
$
953,497,688
The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest
level of significant input used in the valuation as of December 31, 2023 were as follows:
Quoted Prices
    
in Active
    
    
    
Markets
Significant Other
Significant
for Identical
Observable
Unobservable
Securities
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
Senior Secured – First Lien
$
—
$
—
$
774,789,320
$
774,789,320
Senior Secured – Second Lien
 
—  
—  
21,957,500  
21,957,500
Unsecured Debt
 
—  
—  
5,956,280  
5,956,280
Equity
 
—  
—  
71,757,583  
71,757,583
Total Investments
$
—
$
—
$
874,460,683
$
874,460,683
The aggregate values of Level 3 portfolio investments changed during the year ended December 31, 2024 as follows:
    
Senior Secured
    Senior Secured     
    
    
Loans-First
Loans-Second
Unsecured
 
Lien
Lien
Debt
Equity
Total
Fair value at beginning of period
$
774,789,320
$
21,957,500
$ 5,956,280
$
71,757,583
$
874,460,683
Purchases of investments
 
213,545,132
 
—
 
117,066
 
7,492,735
 
221,154,933
PIK interest
 
2,824,403
 
—
 
485,708
 
—
 
3,310,111
Sales and redemptions
 
(126,924,841)
 
(9,782,348)
 
—
 
(14,985,096)
 
(151,692,285)
Realized (losses) gains
 
(1,580,768)
 
(20,475,000)
 
—
 
6,212,362
 
(15,843,406)
Change in unrealized (depreciation)
appreciation included in earnings(1)
 
(9,026,597)
 
20,187,185
 
40,312
 
8,369,509
 
19,570,409
Change in unrealized depreciation on
foreign currency included in earnings
(169,778)
—
 
(1,778)
 
(7,003)
 
(178,559)
Amortization of premium and accretion
of discount, net
 
2,639,384
 
61,513
 
14,905
 
—
 
2,715,802
Fair value at end of period
$
856,096,255
$
11,948,850
$ 6,612,493
$
78,840,090
$
953,497,688
(1) Includes reversal of positions during the year ended December 31, 2024.
There were no Level 3 transfers during the year ended December 31, 2024.

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147
The aggregate values of Level 3 portfolio investments changed during the year ended December 31, 2023 as follows:
    
Senior Secured
    Senior Secured     
    
    
Loans-First
Loans-Second
Unsecured
Lien
Lien
Debt
Equity
Total
Fair value at beginning of period
$
735,555,508
$
45,304,300
$
4,823,898
$
59,049,932
$
844,733,638
Purchases of investments
 
174,156,432
 
—
 
62,086
 
13,251,090
 
187,469,608
PIK interest
 
3,185,845
 
—
 
613,998
 
—
 
3,799,843
Sales and redemptions
 
(125,442,776)
 
(9,882,105)
 
(211,627)
 
(2,280,087)
 
(137,816,595)
Realized losses
 
(11,200,184)
 
(17,979,749)
 
—
 
(702,093)
 
(29,882,026)
Change in unrealized (depreciation)
appreciation included in earnings(1)
 
(4,667,866)
 
4,373,111
 
651,997
 
2,434,910
 
2,792,152
Change in unrealized appreciation on
foreign currency included in earnings
610,523
—
 
166
 
3,831
 
614,520
Amortization of premium and accretion of
discount, net
 
2,591,838
 
141,943
 
15,762
 
—
 
2,749,543
Fair value at end of period
$
774,789,320
$
21,957,500
$
5,956,280
$
71,757,583
$
874,460,683
(1) Includes reversal of positions during the year ended December 31, 2023.
There were no Level 3 transfers during the year ended December 31, 2023.

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148
The following is a summary of geographical concentration of the Company’s investment portfolio as of December 31, 2024:
% of Total
 
Investments at
Cost
Fair Value
Fair Value
Texas
 $
159,028,754  $
154,041,942  
16.15 %
California
 
160,285,777  
152,583,692  
16.00 %
Florida
 
108,434,730  
104,718,969  
10.98 %
Illinois
 
66,486,029  
56,591,435  
5.94 %
Pennsylvania
 
53,271,774  
54,438,594  
5.71 %
Arizona
 
43,552,887  
46,839,063  
4.91 %
New York
 
36,116,358  
36,306,098  
3.81 %
Ohio
 
33,645,676  
35,847,804  
3.76 %
Canada
 
32,107,256  
32,375,749  
3.40 %
Colorado
 
31,283,806  
28,218,186  
2.96 %
Wisconsin
 
27,935,159  
23,352,084  
2.45 %
District of Columbia
 
22,711,852  
26,654,283  
2.80 %
Georgia
 
12,391,680  
23,345,077  
2.45 %
North Carolina
 
20,946,327  
22,314,018  
2.34 %
Tennessee
 
20,490,429  
20,703,772  
2.17 %
Massachusetts
 
19,965,590  
20,559,398  
2.16 %
Missouri
 
18,590,476  
18,712,569  
1.96 %
Iowa
 
13,486,486  
13,486,486  
1.41 %
Idaho
 
11,763,648  
11,830,192  
1.24 %
New Jersey
 
11,181,815  
11,754,323  
1.23 %
Michigan
 
11,389,446  
11,510,608  
1.21 %
Louisiana
 
9,216,389  
9,371,830  
0.98 %
Virginia
 
9,293,896  
9,373,367  
0.98 %
Washington
 
8,193,234  
8,216,962  
0.86 %
Maryland
 
7,529,294  
7,526,300  
0.79 %
Minnesota
 
6,448,091  
6,452,144  
0.68 %
South Carolina
 
4,836,178  
4,984,667  
0.52 %
Indiana
 
743,770  
920,343  
0.10 %
United Kingdom
 
461,899  
467,733  
0.05 %
Total Investments
$
961,788,706
$
953,497,688  
100.00 %

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149
The following is a summary of geographical concentration of the Company’s investment portfolio as of December 31, 2023:
    
    
    % of Total  
Investments  
Cost
Fair Value
at Fair Value  
Texas
 $
182,531,256  $
175,311,724  
20.04 %
California
 
175,207,692  
167,713,589  
19.18 %
Florida
 
93,155,844  
92,297,574  
10.55 %
Pennsylvania
 
49,939,315  
50,188,102  
5.74 %
Illinois
 
58,633,617  
49,834,429  
5.70 %
Arizona
 
42,136,322  
44,558,279  
5.10 %
Ohio
 
31,805,370  
34,370,277  
3.93 %
Colorado
 
31,525,420  
30,971,079  
3.54 %
Wisconsin
 
27,452,444  
26,190,771  
3.00 %
Washington
 
24,321,085  
24,540,695  
2.81 %
Georgia
 
9,100,050  
18,885,409  
2.16 %
Maryland
 
16,676,194  
16,718,728  
1.91 %
New York
 
14,692,043  
14,931,263  
1.71 %
Indiana
 
14,235,403  
14,488,700  
1.66 %
North Carolina
 
13,891,930  
14,532,532  
1.66 %
District of Columbia
 
13,030,899  
14,006,563  
1.60 %
New Jersey
 
10,461,226  
11,191,295  
1.28 %
Michigan
 
10,664,100  
10,736,783  
1.23 %
Massachusetts
 
10,151,621  
10,515,487  
1.20 %
Tennessee
 
9,390,657  
9,379,311  
1.07 %
Missouri
 
8,862,512  
8,850,162  
1.01 %
Canada
 
8,700,383  
8,813,132  
1.01 %
Idaho
 
8,405,946  
8,470,065  
0.97 %
Minnesota
 
5,976,818  
5,907,639  
0.68 %
Louisiana
 
5,538,823  
5,536,231  
0.63 %
South Carolina
 
4,946,375  
5,083,862  
0.58 %
United Kingdom
 
20,710,205  
437,002  
0.05 %
Total Investments
$
902,143,550
$
874,460,683  
100.00 %

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150
The following is a summary of industry concentration of the Company’s investment portfolio as of December 31, 2024:
% of Total
 
Investments at
Cost
Fair Value
Fair Value
 
Services: Business
$
219,665,133
$
234,908,112  
24.64 %
High Tech Industries
 
91,135,577
93,468,792  
9.81 %
Healthcare & Pharmaceuticals
 
85,300,317
85,478,418  
8.97 %
Media: Advertising, Printing & Publishing
 
71,318,416
72,291,584  
7.58 %
Beverage & Food
 
64,052,951
68,902,142  
7.23 %
Consumer Goods: Non-Durable
 
67,123,135
54,473,282  
5.71 %
Services: Consumer
 
49,388,222
46,066,301  
4.83 %
Capital Equipment
 
41,322,214
43,647,466  
4.58 %
Consumer Goods: Durable
 
43,393,413
42,094,390  
4.41 %
Chemicals, Plastics, & Rubber
 
36,693,101
36,907,602  
3.87 %
Construction & Building
 
32,374,992
32,979,859  
3.46 %
Aerospace & Defense
 
26,014,106
21,624,091  
2.27 %
Environmental Industries
 
18,903,681
18,282,056  
1.92 %
Transportation & Logistics
 
17,244,131
17,532,488  
1.84 %
Retail
 
14,799,085
14,723,620  
1.54 %
Media: Broadcasting & Subscription
 
12,170,577
14,314,711  
1.50 %
Containers, Packaging, & Glass
 
18,007,571
12,911,794  
1.35 %
Energy: Oil & Gas
 
11,353,959
10,728,031  
1.13 %
Hotel, Gaming, & Leisure
 
7,113,661
8,142,050  
0.85 %
FIRE: Real Estate
 
17,934,808
7,652,436  
0.80 %
Media: Diversified & Production
 
5,822,637
5,934,853  
0.62 %
Education
 
10,537,738
5,341,151  
0.56 %
Finance
 
119,281
5,092,459  
0.53 %
Total Investments
$
961,788,706
$
953,497,688  
100.00 %

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151
The following is a summary of industry concentration of the Company’s investment portfolio as of December 31, 2023:
    
    
    % of Total  
Investments  
Cost
Fair Value
at Fair Value  
Services: Business
$
198,018,290
$
207,963,749  
23.78 %
Healthcare & Pharmaceuticals
 
100,724,952
102,915,887  
11.77 %
High Tech Industries
 
90,795,799
91,992,012  
10.52 %
Media: Advertising, Printing & Publishing
 
57,640,321
58,741,061  
6.72 %
Consumer Goods: Non-Durable
 
63,145,301
52,938,611  
6.05 %
Beverage, Food, & Tobacco
 
42,554,582
45,074,817  
5.15 %
Consumer Goods: Durable
 
49,046,730
43,725,324  
5.00 %
Capital Equipment
 
32,517,673
33,879,801  
3.87 %
Services: Consumer
 
33,976,976
33,260,111  
3.80 %
Construction & Building
 
30,319,119
30,486,411  
3.49 %
Aerospace & Defense
 
46,745,104
24,541,921  
2.81 %
Environmental Industries
 
24,219,811
22,997,844  
2.63 %
Media: Broadcasting & Subscription
 
17,952,103
20,760,920  
2.37 %
Transportation & Logistics
 
17,235,150
17,661,859  
2.02 %
Chemicals, Plastics, & Rubber
 
18,338,366
17,569,176  
2.01 %
Metals & Mining
 
16,580,562
16,625,000  
1.90 %
Containers, Packaging, & Glass
 
17,432,252
15,539,555  
1.78 %
Utilities: Oil & Gas
 
9,943,041
10,000,000  
1.14 %
Education
 
10,251,179
8,367,469  
0.96 %
FIRE: Real Estate
 
17,285,138
6,175,994  
0.71 %
Media: Diversified & Production
 
5,662,174
5,763,247  
0.66 %
Finance
 
569,039
5,736,868  
0.66 %
Hotel, Gaming, & Leisure
 
—
890,968  
0.10 %
Energy: Oil & Gas
 
1,189,888
852,078  
0.10 %
Total Investments
$
902,143,550
$
874,460,683  
100.00 %

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152
The following provides quantitative information about Level 3 fair value measurements as of December 31, 2024:
Description:
    
Fair Value
    Valuation Technique     Unobservable Inputs     
Range (Average)(1)(3)
First lien debt
$
778,177,769  
Income approach(2)  
HY credit spreads
-3.39% to 8.32% (-0.54%)
 
 
Risk free rates
-1.18% to 2.44% (0.19%)
Market approach(2)  
Market multiples
4.6x to 26.3x (13.3x)(4)
$
77,918,486
Transaction value
Transaction price
N/A
Second lien debt
$
11,948,850
Income approach(2)  
HY credit spreads
-0.72% to -0.32% (-0.46%)
 
 
Risk free rates
-0.35% to 0.14% (-0.04%)
 
Market approach(2)  
Market multiples
5.3 to 11.8x (9.4x)(4)
Unsecured debt
$
6,581,668
Income approach(2)  
HY credit spreads
0.18% to 0.18% (0.18%)
 
 
Risk free rates
-0.18% to -0.18% (-0.18%)
$
30,825  
Transaction value
Transaction price
N/A
Equity investments
$
64,002,282  
Market approach(5)  
EBITDA multiple
3.5x to 18.3x (10.4x)
$
14,837,808
Transaction value
Transaction price
N/A
Total Long Term Level 3
Investments
$
953,497,688  
   
    
(1) Weighted average based on fair value as of December 31, 2024.
(2) Inclusive of but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income
approach, which is based on discounting future cash flows using an appropriate market yield.
(3) The Company calculates the price of the loan by discounting future cash flows, which include forecasted future BSBY, SOFR, or
SONIA rates based on the published forward curve at the valuation date, using an appropriate yield calculated as of the valuation
date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on:
changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an
estimated shadow rating). Significant movements in any of these factors would result in a significantly lower or higher fair value
measurement. As an example, the “Range (Average)” for a first lien debt instruments in the table above indicates that the change
in the HY spreads between the date a loan closed and the valuation date ranged from (3.39)% ((339) basis points) to 8.32% (832
basis points). The weighted average of all changes was (0.54)% ( (54) basis points).
(4) Median of LTM (last twelve months) EBITDA multiples of comparable companies.
(5) The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the
EBITDA multiple (the “Multiple”). Significant increases (decreases) in the Multiple in isolation would result in a significantly
higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current
market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer
companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional
change on other factors in determining the appropriate Multiple to use in the market approach.

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153
The following provides quantitative information about Level 3 fair value measurements as of December 31, 2023:
 
 
Description:
    
Fair Value
    Valuation Technique     
Unobservable Inputs
    
Range (Average)(1)(3)
First lien debt
$
774,789,320  
Income/Market
 
HY credit spreads
-3.00% to 8.11% (-0.23%)
 
approach(2)
 
Risk free rates
-1.62% to 2.03% (0.04%)
 
Market multiples
5.2x to 22.5x (11.0x)(4)
Second lien debt
$
21,957,500
Income/Market
 
HY credit spreads
-0.97% to -0.33% (-0.63%)
 
approach(2)
 
Risk free rates
-0.51% to 0.31% (-0.23%)
 
 
Market multiples
6.5x to 17.5x (10.9x)(4)
Unsecured debt
$
5,956,280
Income/Market
 
HY credit spreads
4.98% to 4.98% (4.98%)
 
approach(2)
 
Risk free rates
4.47% to 4.47% (4.47%)
 
 
Market multiples
9.5x to 9.5x (9.5x)(4)
Equity investments
$
71,757,583  
Market approach(5)  
Underwriting multiple/
 
EBITDA multiple
3.5x to 23.2x (12.1x)
Total Long Term Level 3
Investments
$
874,460,683  
   
    
(1) Weighted average based on fair value as of December 31, 2023.
(2) Inclusive of but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income
approach, which is based on discounting future cash flows using an appropriate market yield.
(3) The Company calculates the price of the loan by discounting future cash flows, which include forecasted future SOFR rates
based on the published forward SOFR curve at the valuation date, using an appropriate yield calculated as of the valuation date.
This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on:
changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an
estimated shadow rating). Significant movements in any of these factors would result in a significantly lower or higher fair value
measurement. As an example, the “Range (Average)” for a first lien debt instruments in the table above indicates that the change
in the HY spreads between the date a loan closed and the valuation date ranged from  (3.00)% ((300) basis points) to 8.11% (811
basis points). The average of all changes was (0.23)% ((23) basis points).
(4) Median of LTM (last twelve months) EBITDA multiples of comparable companies.
(5) The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the
Multiple. Significant increases (decreases) in the Multiple in isolation would result in a significantly higher (lower) fair value
measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or
transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage
levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in
determining the appropriate Multiple to use in the market approach.

Table of Contents
154
NOTE 7 — COMMITMENTS AND CONTINGENCIES
The Company is currently not subject to any material legal proceedings, nor, to its knowledge, is any material legal proceeding
threatened against it. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business,
including proceedings relating to the enforcement of its rights under contracts with its portfolio companies. While the outcome of
these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material
effect upon its business, financial condition or results of operations.
As of December 31, 2024, the Company had $40,989,533 in unfunded debt commitments and $297,219 in unfunded equity
commitments to 71 existing portfolio companies. As of December 31, 2023, the Company had $36,722,930 in unfunded debt
commitments and $298,312 in unfunded equity commitments to 57 existing portfolio companies. As of both December 31, 2024 and
2023, the Company did not record any fair value adjustments that resulted in any unrealized gains (losses) on these positions. As of
December 31, 2024, the Company had sufficient liquidity (through cash on hand and available borrowings under the Credit Facility)
to fund such unfunded loan commitments should the need arise.

Table of Contents
155
NOTE 8 — FINANCIAL HIGHLIGHTS
For the years ended
December 31, 
December 31, 
December 31, 
December 31, 
December 31, 
2024
2023
2022
    
2021
    
2020
Per Share Data:(1)
  
  
  
  
  
 
Net asset value at beginning of period
$
13.26
$
14.02
$
14.61
$
14.03
$
14.14
Net investment income
1.64
1.92
1.46
1.01
1.13
Change in unrealized appreciation (depreciation) on
investments
0.76  
0.13  
(0.90) 
(0.36) 
0.44  
Net realized (loss) gain
(0.62) 
(1.38) 
0.19  
1.22  
(0.52) 
Loss on debt extinguishment
—  
—  
—  
(0.03) 
—  
Benefit (provision) for taxes on net realized losses (gains) on
investments
—  
0.14  
—  
(0.15) 
—  
Benefit (provision) for taxes on net unrealized depreciation
(appreciation) on investments
0.01  
(0.01) 
(0.01) 
0.03  
(0.01) 
Total from operations
1.79  
0.80  
0.74  
1.72  
1.04  
Sales load
(0.03) 
(0.04) 
—  
—  
—  
Offering costs
(0.02) 
(0.01) 
(0.03) 
—  
—  
Stockholder distributions from:
Net investment income
(1.59) 
(1.59) 
(1.11) 
(1.09) 
(1.15) 
Net realized capital gains
(0.02) 
(0.02) 
(0.19) 
(0.05) 
—  
Accretive effect of stock offerings (issuing shares above net
asset value per share)
0.03
0.09  
—  
—  
—  
Other(3)
0.04  
0.01  
—  
—  
—  
Net asset value at end of period
$
13.46
$
13.26
$
14.02
$
14.61
$
14.03
Per share market value at end of period
$
13.76
$
12.85
$
13.26
$
13.02
$
10.88
Total return based on market value (4)
 
18.89 %   
8.72 %   
12.32 %   
30.78 %   
(13.73)%  
Weighted average shares outstanding for the period
 
25,596,593
 
22,004,648
 
19,552,931
 
19,489,750
 
19,471,500
Ratio/Supplemental Data:(1)
Net assets at end of period
$ 369,921,940
$ 319,939,788
$ 275,776,613
$ 285,111,233
$ 273,360,649
Weighted average net assets
$ 343,272,777
$ 301,285,626
$ 281,745,332
$ 274,188,692
$ 253,034,571
Annualized ratio of gross operating expenses to net assets (7)
(8)
 
18.77 %   
21.27 %   
16.59 %   
16.90 %   
13.75 %  
Annualized ratio of net operating expenses to net assets (7)(8)  
18.24 %  
21.16 %  
16.59 %  
16.90 %   
13.75 %  
Annualized ratio of interest expense and other fees to net
assets(2)
 
9.18 %   
10.62 %   
8.68 %   
6.83 %   
6.29 %  
Annualized ratio of net investment income before fee waiver
to net assets(7)
11.68 %  
13.91 %  
8.68 %  
6.83 %  
6.29 %  
Annualized ratio of net investment income to net assets (7)
 
12.21 %   
14.01 %   
10.15 %   
7.21 %   
8.58 %  
Portfolio Turnover(5)
 
16.82 %   
15.38 %   
15.26 %   
39.11 %   
21.27 %  
Notes payable
$ 100,000,000
$ 100,000,000
$ 100,000,000
$ 100,000,000
$
48,875,000
Credit Facility payable
$ 175,386,301
$ 160,085,705
$ 199,200,425
$ 177,340,000
$ 174,000,000
SBA-guaranteed debentures
$ 325,000,000
$ 325,000,000
$ 313,600,000
$ 250,000,000
$ 176,500,000
Asset coverage ratio(6)
 
2.34 x
 
2.23 x
 
1.92 x
 
2.03 x
 
2.23 x

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156
For the years ended
December 31, 
December 31, 
December 31, 
December 31, 
December 31, 
2019
2018
2017
    
2016
    
2015
Per Share Data:(1)
  
  
  
  
  
 
Net asset value at beginning of year/period
$
14.09
$
13.81
$
13.69
$
13.19
$
13.94
Net investment income
1.23
1.42
1.21
1.39
1.33
Change in unrealized (depreciation) appreciation on
investments
(0.85) 
(0.11) 
—  
1.49  
(0.74) 
Net realized gain (loss)
1.07  
0.35  
0.31  
(1.05) 
0.03  
(Provision) benefit for taxes on net unrealized (appreciation)
depreciation on investments
—  
(0.02) 
—  
0  
(0.01) 
Total from investment operations
1.45  
1.64  
1.52  
1.86  
0.61  
Sales Load
(0.06) 
—  
(0.09) 
—  
—  
Offering Costs
(0.03) 
—  
(0.02) 
—  
—  
Stockholder distributions from:
Net investment income
(0.54) 
(1.03) 
(1.20) 
(1.36) 
(1.33) 
Net realized capital gains
(0.82) 
(0.33) 
(0.16) 
—  
(0.03) 
Accretive effect of stock offerings (issuing shares above net
asset value per share)
0.05
—
—
—
—
Other(3)
—  
—  
0.07  
—  
—  
Net asset value at the end of year/period
$
14.14
$
14.09
$
13.81
$
13.69
$
13.19
Per share market value at end of year/period
$
14.23
$
12.95
$
13.14
$
12.06
$
9.64
Total return based on market value (4)
 
21.97 %   
8.68 %   
20.29 %   
42.83 %   
(7.76)%  
Weighted average shares outstanding for the period
 
18,275,696
 
15,953,571
 
14,870,981
 
12,479,959
 
12,479,961
Ratio/Supplemental Data:(1)
Net assets at end of period
$ 270,571,173
$ 224,845,007
$ 220,247,242
$ 170,881,785
$ 164,651,104
Weighted average net assets
$ 259,020,507
$ 223,750,302
$ 195,211,550
$ 165,189,142
$ 173,453,813
Annualized ratio of gross operating expenses to net assets (7)(8) 
14.11 %   
13.72 %   
11.10 %   
13.20 %   
11.16 %  
Annualized ratio of net operating expenses to net assets (7)(8)  
14.11 %   
13.72 %   
11.10 %   
13.20 %   
10.78 %  
Annualized ratio of interest expense and other fees to net
assets(2)
 
5.78 %   
5.51 %   
4.02 %   
4.84 %   
3.56 %  
Annualized ratio of net investment income before fee waiver
to net assets(7)
 
5.78 %   
10.09 %   
9.21 %   
10.71 %   
9.11 %  
Annualized ratio of net investment income to net assets (7)
 
8.64 %   
10.09 %   
9.21 %   
10.71 %   
9.49 %  
Portfolio Turnover(5)
 
23.17 %   
32.29 %   
48.31 %   
15.80 %   
28.54 %  
Notes payable
$
48,875,000
$
48,875,000
$
48,875,000
$
25,000,000
$
25,000,000
Credit Facility payable
$ 161,550,000
$
99,550,000
$
40,750,000
$ 116,000,000
$ 109,500,000
SBA-guaranteed debentures
$ 161,000,000
$ 150,000,000
$
90,000,000
$
65,000,000
$
65,000,000
Asset coverage ratio(6)
 
2.29 x
 
2.51 x
 
3.46 x
 
2.21 x
 
2.22 x
(1)
Based on weighted-average number of common shares outstanding for the period.
(2)
Excludes debt extinguishment costs of $539,250 and $416,725 for the years ended December 31, 2021 and 2017, respectively. Including these costs,
this ratio would be 7.02% and 4.24% for the years ended December 31, 2021 and 2017, respectively.
(3)
Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the
period and certain per share data based on shares outstanding as of the period end.
(4)
Total return on market value is based on the change in market price per share since the end of the prior quarter and includes dividends paid, which are
assumed to be reinvested. The total returns are not annualized.
(5)
Calculated as the lesser of purchases or paydowns divided by average fair value of investments for the period and is not annualized.
(6)
Asset coverage ratio is equal to total assets less all liabilities and indebtedness not represented by senior securities over the aggregate amount of the
senior securities. SBA-guaranteed debentures are excluded from the numerator and denominator.
(7)
These ratios include the impact of the benefit (provision) for income taxes related to net unrealized depreciation (appreciation) on certain investments of
$188,893, ($126,957), ($213,214), $510,868, ($224,877), ($66,760),  $373,131, and ($93,601) for the years ended December 31, 2024, 2023, 2022,
2021, 2020, 2019, 2016, and 2015, respectively, as well as $2,221, $2,987,847 and ($2,957,220) of benefit (provision) for taxes on realized gains on
investments for the year ended December 31, 2024, December 31, 2023 and 2021, respectively, which are not reflected in net investment income, gross
operating expenses or net operating expenses. The provision for income taxes related to net realized gain (loss) or unrealized depreciation (appreciation)
on investments at Taxable Subsidiaries to net assets for the years ended December 31, 2024, 2023, 2022, 2021, 2020, 2019, 2016, and 2015  is 0.05%,
(0.04%), (0.08%), (0.89%), (0.09%), (0.03%), (0.16%), and 0.05%, respectively. These ratios excludes debt extinguishment costs of ($539,250) and
($416,275) for the years ended December 31, 2021 and 2017, respectively.
(8)
Deferred offering costs of $261,761 for the year ended December 31, 2016 are not annualized.

Table of Contents
157
NOTE 9 — CREDIT FACILITY
On October 11, 2017, the Company entered into a senior secured revolving credit agreement, as amended, dated as of
October 10, 2017, that was amended and restated on December 21, 2021, February 28, 2022, May 13, 2022, November 21, 2023 and
October 30, 2024 with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the “Credit Facility”).
The Credit Facility provides for borrowings up to a maximum of $315,000,000 on a committed basis with an accordion feature
that allows the Company to increase the aggregate commitments up to $350,000,000, subject to new or existing lenders agreeing to
participate in the increase and other customary conditions.
Pursuant to the Fourth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, the Credit Facility
will bear interest, subject to the Company’s election, on a per annum basis equal to (i) term SOFR plus 2.50% (or 2.75% during
certain periods in which the Company’s asset coverage ratio is equal to or below 1.90 to 1.00) plus a SOFR credit spread adjustment
(0.10% for one-month term SOFR and 0.15% for three-month term SOFR), with a 0.25% SOFR floor, or (ii) 1.50% (or 1.75% during
certain periods in which the Company’s asset coverage ratio is equal to or below 1.90 to 1.00) plus an alternate base rate based on the
highest of the prime rate (subject to a 3% floor), Federal Funds Rate plus 0.50% and one-month term SOFR plus 1.00%. The
Company pays unused commitment fees of 0.50% per annum on the unused lender commitments under the Credit Facility. Interest is
payable monthly or quarterly in arrears. The commitment to fund the revolver expires on November 21, 2027, after which the
Company may no longer borrow under the Credit Facility and must begin repaying principal equal to 1/12 of the aggregate amount
outstanding under the Credit Facility each month. Any amounts borrowed under the Credit Facility will mature, and all accrued and
unpaid interest thereunder will be due and payable, on November 21, 2028.
The Company’s obligations to the lenders are secured by a first priority security interest in its portfolio of securities and cash not
held at the SBIC subsidiaries, but excluding short term investments. The Credit Facility contains certain covenants, including but not
limited to: (i) maintaining a minimum liquidity test of at least $10,000,000, including cash, liquid investments and undrawn
availability, (ii) maintaining an asset coverage ratio of at least 1.67 to 1.00, (iii) maintaining a minimum stockholder’s equity, and
(iv) maintaining a minimum interest coverage ratio of at least 1.75 to 1.00. As of December 31, 2024, the Company was in
compliance with these covenants.
As of December 31, 2024 and December 31, 2023, the outstanding balance under the Credit Facility was $175,386,301 and
$160,085,705, respectively. The carrying amount of the amount outstanding under the Credit Facility approximates its fair value. The
fair value of the Credit Facility is determined in accordance with ASC 820, which defines fair value in terms of the price that would
be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market
conditions. The fair value of the Credit Facility is estimated based upon market interest rates for our own borrowings or entities with
similar credit risk, adjusted for nonperformance risk, if any. The Company has incurred costs of $7,321,528 in connection with the
current Credit Facility, which are being amortized over the life of the facility. Additionally, $341,979 of costs from a prior credit
facility will continue to be amortized over the life of the Credit Facility. As of December 31, 2024 and 2023, $3,071,986 and
$3,520,929 of such prepaid loan structure fees and administration fees had yet to be amortized, respectively. These prepaid loan fees
are presented on our Consolidated Statements of Assets and Liabilities as a deduction from the debt liability.
The following is a summary of the Credit Facility, net of prepaid loan structure fees:
    December 31, 2024
December 31, 2023
Credit Facility payable
$
175,386,301
$
160,085,705
Prepaid loan structure fees
 
(3,071,986) 
(3,520,929)
Credit Facility payable, net of prepaid loan structure fees
$
172,314,315
$
156,564,776

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158
Interest is paid monthly or quarterly in arrears. The following table summarizes the interest expense and amortized loan fees on
the Credit Facility for the years ended December 31, 2024, 2023, and 2022:
For the year ended
December 31, 2024
December 31, 2023
December 31, 2022
Interest expense
$
13,561,089
$
14,723,463
$
9,190,425
Loan fee amortization
1,140,079  
657,323  
567,375  
Total interest and financing expenses
$
14,701,168
$
15,380,786
$
9,757,800
Weighted average interest rate
 
8.3 %   
7.9 %   
4.4 %  
Effective interest rate (including fee amortization)
 
8.9 %   
8.3 %   
4.8 %  
Average debt outstanding
$
164,265,069
$
186,144,622
$
204,276,134
Cash paid for interest and unused fees
$
13,548,076
$
14,523,350
$
9,034,765
NOTE 10 — SBA-GUARANTEED DEBENTURES
Due to the SBIC subsidiaries’ status as licensed SBICs, the Company has the ability to issue debentures guaranteed by the SBA
at favorable interest rates. Under the regulations applicable to SBIC funds, a single licensee can have outstanding debentures
guaranteed by the SBA subject to a regulatory leverage limit, up to two times the amount of the SBIC’s regulatory capital, as such
term is defined by the SBA’s regulations applicable to SBICs. SBA-guaranteed debentures have fixed interest rates that equal
prevailing 10 year U.S. Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semi-annually.
The principal amount of the SBA-guaranteed debentures is not required to be paid before maturity, but may be pre-paid at any time
with no prepayment penalty. SBA-guaranteed debentures are also subject to certain fees payable by the SBICs at the time such
debentures are drawn. SBA-guaranteed debentures drawn before October 1, 2019 incur upfront fees of 3.425%, which consists of a
1.00% commitment fee and a 2.425% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. SBA-
guaranteed debentures drawn after October 1, 2019 incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a
2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. Once pooled, which occurs in March
and September of each applicable year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10 year
treasury rate plus a spread at each pooling date.
As of both December 31, 2024 and 2023, the SBIC I subsidiary had $75,000,000 in regulatory capital and $150,000,000 of SBA-
guaranteed debentures outstanding. As of both December 31, 2024 and 2023, the SBIC II subsidiary had $87,500,000 in regulatory
capital and $175,000,000 of SBA-guaranteed debentures outstanding.
On August 12, 2014, the Company obtained exemptive relief from the SEC to permit it to exclude the SBA-guaranteed
debentures of the SBIC subsidiaries from the definition of senior securities in the asset coverage requirement applicable to the
Company under the 1940 Act. The exemptive relief provides the Company with increased flexibility under the asset coverage
requirement by permitting it to borrow up to $325,000,000 more than it would otherwise be able to absent the receipt of this
exemptive relief.
On a stand-alone basis, the SBIC subsidiaries collectively held $510,105,270 and $485,152,670 in assets at December 31, 2024
and 2023, respectively, which accounted for approximately 52.0% and 53.4% of the Company’s total consolidated assets at
December 31, 2024 and 2023, respectively.

Table of Contents
159
The following table summarizes the SBIC I subsidiary’s SBA-guaranteed debentures as of December 31, 2024:
Issuance Date
    Licensee    
Maturity Date
    Debenture Amount     Interest Rate    
SBA Annual Charge  
October 14, 2014
SBIC I
March 1, 2025
$
6,500,000  
2.52 %  
0.36 %
October 17, 2014
SBIC I
March 1, 2025
 
6,500,000  
2.52 %  
0.36 %
December 24, 2014
SBIC I
March 1, 2025
 
3,250,000  
2.52 %  
0.36 %
June 29, 2015
SBIC I
September 1, 2025
 
9,750,000  
2.83 %  
0.36 %
October 22, 2015
SBIC I
March 1, 2026
 
6,500,000  
2.51 %  
0.36 %
October 22, 2015
SBIC I
March 1, 2026
 
1,500,000  
2.51 %  
0.74 %
November 10, 2015
SBIC I
March 1, 2026
 
8,800,000  
2.51 %  
0.74 %
November 18, 2015
SBIC I
March 1, 2026
 
1,500,000  
2.51 %  
0.74 %
November 25, 2015
SBIC I
March 1, 2026
 
8,800,000  
2.51 %  
0.74 %
December 16, 2015
SBIC I
March 1, 2026
 
2,200,000  
2.51 %  
0.74 %
December 29, 2015
SBIC I
March 1, 2026
 
9,700,000  
2.51 %  
0.74 %
November 28, 2017
SBIC I
March 1, 2028
 
25,000,000  
3.19 %  
0.22 %
April 27, 2018
SBIC I
September 1, 2028
 
40,000,000  
3.55 %  
0.22 %
July 30, 2018
SBIC I
September 1, 2028
 
17,500,000  
3.55 %  
0.22 %
September 25, 2018
SBIC I
March 1, 2029
 
2,500,000  
3.11 %  
0.22 %
Total SBIC I Subsidiary SBA-
guaranteed Debentures
  
$
150,000,000  
   
  
The following table summarizes the SBIC II subsidiary’s SBA-guaranteed debentures as of December 31, 2024:
SBIC II SBA-guaranteed Debentures
Issuance Date
    Licensee     
Maturity Date
    Debenture Amount     Interest Rate    
SBA Annual Charge  
October 17, 2019
 SBIC II
March 1, 2030
$
6,000,000  
2.08 %  
0.09 %
November 15, 2019
 SBIC II
March 1, 2030
 
5,000,000  
2.08 %  
0.09 %
December 17, 2020
 SBIC II
March 1, 2031
 
9,000,000  
1.67 %  
0.09 %
December 17, 2020
 SBIC II
March 1, 2031
 
6,500,000  
1.67 %  
0.27 %
February 16, 2021
 SBIC II
March 1, 2031
 
13,500,000  
1.67 %  
0.27 %
February 26, 2021
 SBIC II
March 1, 2031
 
10,000,000  
1.67 %  
0.27 %
March 2, 2021
 SBIC II
March 1, 2031
 
10,000,000  
1.67 %  
0.27 %
April 21, 2021
 SBIC II
September 1, 2031
 
10,000,000  
1.30 %  
0.27 %
May 14, 2021
 SBIC II
September 1, 2031
 
6,700,000  
1.30 %  
0.27 %
May 28, 2021
 SBIC II
September 1, 2031
 
7,300,000  
1.30 %  
0.27 %
July 23, 2021
 SBIC II
September 1, 2031
 
16,000,000  
1.30 %  
0.27 %
February 25, 2022
SBIC II
March 1, 2032
10,000,000
2.94 %  
0.27 %
March 29, 2022
SBIC II
September 1, 2032
10,000,000
4.26 %  
0.27 %
April 1, 2022
SBIC II
September 1, 2032
6,670,000
4.26 %  
0.27 %
April 12, 2022
SBIC II
September 1, 2032
6,665,000
4.26 %  
0.27 %
April 21, 2022
SBIC II
September 1, 2032
6,665,000
4.26 %  
0.27 %
June 30, 2022
SBIC II
September 1, 2032
3,600,000
4.26 %  
0.27 %
July 28, 2022
SBIC II
September 1, 2032
6,400,000
4.26 %  
0.27 %
September 9, 2022
SBIC II
March 1, 2033
6,000,000
5.17 %  
0.27 %
November 9, 2022
SBIC II
March 1, 2033
7,600,000
5.17 %  
0.27 %
August 8, 2023
SBIC II
September 1, 2033
9,120,000
5.69 %  
0.27 %
September 19, 2023
SBIC II
March 1, 2034
2,280,000
5.04 %
0.27 %
Total SBIC II Subsidiary SBA-
guaranteed Debentures
  
$
175,000,000  
   
  
Total SBA-guaranteed Debentures
  
$
325,000,000  
 
  

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160
The fair values of the SBA-guaranteed debentures are determined in accordance with ASC 820, which defines fair value in terms
of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date
under current market conditions. The fair values of the SBA-guaranteed debentures are estimated based upon market interest rates for
our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. As of December 31, 2024, the
estimated fair values of the SBA-guaranteed debentures as prepared for disclosure purposes was $312,011,555. As of December 31,
2023, the carrying amount of the SBA-guaranteed debentures approximated their fair value. At December 31, 2024 and 2023, the
SBA-guaranteed debentures would be deemed to be Level 3, as defined in Note 6.
As of December 31, 2024, the Company has incurred $11,148,750 in financing costs related to the SBA-guaranteed debentures
since receiving its licenses, which were recorded as prepaid loan fees. As of December 31, 2024 and 2023, $3,748,061 and
$4,726,642 of prepaid financing costs had yet to be amortized, respectively. These prepaid loan fees are presented on the Consolidated
Statements of Assets and Liabilities as a deduction from the debt liability.
The following is a summary of the SBA-guaranteed debentures, net of prepaid loan fees:
December 31, 2024
December 31, 2023
SBA-guaranteed Debentures payable
$
325,000,000
$
325,000,000
Prepaid loan fees
(3,748,061)
(4,726,642)
SBA-guaranteed Debentures, net of prepaid loan fees
$
321,251,939
$
320,273,358
The following table summarizes the interest expense and amortized fees on the SBA-guaranteed debentures for the years ended
December 31, 2024, 2023, and 2022:
For the year ended
December 31, 2024
December 31, 2023
December 31, 2022
Interest expense
$
10,497,375
$
10,047,058
$
8,151,814
Debenture fee amortization
978,582  
1,255,753  
1,227,952  
Total interest and financing expenses
$
11,475,957
$
11,302,811
$
9,379,766
Weighted average interest rate
 
3.2 %   
3.2 %   
2.8 %  
Effective interest rate (including fee amortization)
 
3.5 %   
3.5 %   
3.3 %  
Average debt outstanding
$
325,000,000
$
318,847,123
$
288,167,082
Cash paid for interest
$
10,470,211
$
9,646,849
$
7,360,295
NOTE 11 — NOTES
On January 14, 2021, the Company issued $100,000,000 in aggregate principal amount of 4.875% fixed-rate notes due 2026 (the
“Notes Payable”). The Notes Payable will mature on March 30, 2026, and may be redeemed in whole or in part at any time or from
time to time at the Company’s option on or after December 31, 2025 at a redemption price equal to 100% of the outstanding principal,
plus accrued and unpaid interest. Interest on the Notes Payable is payable semi-annually beginning September 30, 2021.
The Company used the net proceeds from the Notes Payable offering to fully redeem the Company’s 5.75% fixed-rate notes due
September 15, 2022 (the “2022 Notes”) and repay a portion of the amount outstanding under the Credit Facility. As of December 31,
2024, the aggregate carrying amount of the Notes Payable was $99,444,355.
The Notes Payable are institutional, non-traded notes. The Notes Payable are carried at cost. At the measurement date, the
estimated fair value of the Notes Payable as prepared for disclosure purposes was $96,606,000. See Note 1 to the Consolidated
Financial Statements for further discussion regarding the fair value measurements and hierarchy.
In connection with the issuance and maintenance of the Notes Payable, the Company incurred $2,327,835 of fees, which are
being amortized over the term of the Notes Payable, of which $555,645 and $1,003,588 remains to be amortized as of December 31,
2024 and 2023, respectively. These financing costs are presented on the Consolidated Statements of Assets and Liabilities as a
deduction from the debt liability.

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161
The following is a summary of the Notes Payable, net of deferred financing costs:
    
December 31, 2024
December 31, 2023
Notes Payable
$
100,000,000
$
100,000,000
Deferred financing costs
 
(555,645)
 
(1,003,588)
Notes Payable, net of deferred financing costs
$
99,444,355
$
98,996,412
The following table summarizes the interest expense and deferred financing costs on the Notes Payable for the years ended
December 31, 2024, 2023, and 2022:
For the year ended
 
December 31, 2024
December 31, 2023
December 31, 2022  
Interest expense
$
4,881,000
$
4,881,000
$
4,885,000
Deferred financing costs
 
447,943
 
446,720
 
446,719
Total interest and financing expenses
$
5,328,943
$
5,327,720
$
5,331,719
Weighted average interest rate
 
4.9 % 
4.9 % 
4.9 %
Effective interest rate (including fee amortization)
 
5.3 % 
5.3 % 
5.3 %
Average debt outstanding
$
100,000,000
$
100,000,000
$
100,000,000
Cash paid for interest
$
4,881,000
$
4,881,000
$
4,885,000
The indenture and supplements thereto relating to the Notes Payable contain certain covenants, including but not limited to (i) a
requirement that the Company comply with the asset coverage requirements of the 1940 Act or any successor provisions, and (ii) a
requirement to provide financial information to the holders of the notes and the trustee under the indenture if the Company should no
longer be subject to the reporting requirements under the Exchange Act. As of December 31, 2024, the Company was in compliance
with these covenants.
NOTE 12 — INCOME TAXES
As of December 31, 2024 and December 31, 2023, the Company had $44,184,991 and $36,240,561, respectively, of
undistributed ordinary income.(1) Undistributed capital gains were $0 and $757,268 for the periods ended December 31, 2024 and
December 31, 2023, respectively. Undistributed qualified dividends were $1,256,046 and $0 for the periods ended December 31,
2024 and December 31, 2023, respectively. All of the undistributed ordinary income and capital gains as of December 31, 2024 will
have been distributed within the required period of time such that the Company will not be subject to U.S. federal income tax for
the year ended December 31, 2025. The Company will be subject to a 4% nondeductible U.S. federal excise tax on its undistributed
income to the extent it did not distribute an amount equal to at least 98% of its net ordinary income plus 98.2% of its capital gain net
income attributable to the period. The Company has accrued $1,743,964 and $1,399,689 of U.S. federal excise tax for the tax years
ended December 31, 2024 and December 31, 2023, respectively, independent of prior year adjustments. See Note 1 for further
discussion of tax expense in each year.

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162
Ordinary dividend distributions from a RIC do not qualify for the reduced maximum tax rate on qualified dividend income from
domestic corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic
corporations and qualified foreign corporations. The tax character(2) of distributions paid in the years ended December 31, 2024 and
2023 was as follows:
    
December 31, 2024
December 31, 2023
Ordinary income
$
40,674,964
$
35,032,563
Qualified dividends
 
4,344
 
48,171
Distributions of long-term capital gains(2)
 
544,367
 
446,746
Total distributions paid to common stockholders
$
41,223,675
$
35,527,480
(1) The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax
return for each year. Therefore, final taxable income earned in each period, and the undistributed ordinary income and capital
gains for each period carried forward for distribution in the following period, may be different than this estimate.
(2) Distributions of long-term capital gains of $544,367 and $446,746 as of December 31, 2024 and December 31, 2023,
respectively, may differ from distributions of net capital gains on the Consolidated Statement of Changes in Net Assets because
certain prepayment gains are characterized differently for tax reporting purposes. The qualified dividend amount in 2024 and
2023, respectively, represents the completion of a distribution of qualified dividends derived from qualified dividends received
by the Company from a portfolio company in 2023 and 2022, respectively, for tax purposes.
Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and total distributions
declared to common stockholders for the years ended December 31, 2024, 2023, and 2022:
    
2024
    
2023
    
2022
Net increase in net assets resulting from operations (includes net
investment income, realized gain (loss), unrealized appreciation
(depreciation) and taxes)
$
45,844,627
$
17,533,167
$
14,491,784
Net change in unrealized (appreciation) depreciation
 
(19,555,654)
 
(2,785,648)
 
17,536,190
Income tax provision
 
(191,114)
 
(2,860,890)
 
213,214
Pre-tax expense, loss reported at Taxable Subsidiaries, not consolidated for
tax purposes
 
1,810,914
 
20,172,550
 
1,392,247
Long term capital loss carryover
 
20,257,106
 
—
 
—
Book income and tax income differences, including debt origination,
interest accrual, income from pass-through investments, dividends,
realized gains (losses) and changes in estimates
 
1,501,004
 
11,860,086
 
(3,615,815)
Estimated taxable income
$
49,666,883
$
43,919,265
$
30,017,620
Taxable income earned in prior year and carried forward for distribution in
current year
 
36,997,828
 
28,606,043
 
24,011,459
Adjustment for cumulative effect of distributions carried forward
 
—
 
—
 
—
Taxable income earned prior to period end and carried forward
 
(49,104,269)
 
(36,997,828)
 
(28,606,043)
Distribution payable as of period end and paid in following period
 
3,663,233
 
—
 
—
Total distributions accrued or paid to common stockholders
$
41,223,675
$
35,527,480
$
25,423,036

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163
The aggregate gross unrealized appreciation and depreciation, the net unrealized appreciation, and the aggregate cost of the
Company’s portfolio company securities for U.S. federal income tax purposes as of December 31, 2024 and December 31, 2023 were
as follows:
    
December 31, 2024     
December 31, 2023
Aggregate cost of portfolio company securities
$
961,788,706
$
902,143,550
Gross unrealized appreciation of portfolio company securities
 
47,590,719
 
38,379,839
Gross unrealized depreciation of portfolio company securities
 
(54,903,019)
 
(65,262,547)
Gross unrealized appreciation on foreign currency translations of portfolio company
securities
3,973
11,142
Gross unrealized depreciation on foreign currency translations of portfolio company
securities
(982,691)
(811,301)
Aggregate fair value of portfolio company securities
$
953,497,688
$
874,460,683
As of December 31, 2024 and 2023, the Taxable Subsidiaries had unrealized losses in investments and net operating loss
(“NOL”) carryovers creating a deferred tax asset equal to $5,520,821 and $6,507,196, respectively, as reflected below. As of
December 31, 2024 and 2023, the Taxable Subsidiaries had unrealized gains creating a net deferred tax liability equal to $0 and
$188,893 respectively, also reflected below. As of December 31, 2024, for U.S. federal income tax purposes, the Taxable
Subsidiaries had net operating loss carryforwards totaling $10,108,882, of which $918,232 will expire during the tax years 2034
through 2037 if unused. Due to the nature of the Taxable Subsidiaries’ holdings, a valuation allowance was established as the
Company determined it is more likely than not that some of the deferred tax assets will not be realized prior to expiration. Although
the Company’s future projections indicate that it may be able to realize a portion of these deferred tax assets, due to the degree of
uncertainty of these projections, management has recorded a deferred tax asset valuation allowance of $5,520,821 and $6,507,196 as
of December 31, 2024 and 2023, respectively.
    
2024
    
2023
Deferred tax asset
$
5,520,821
$
6,507,196
Deferred tax liability
 
—
 
(188,893)
Total deferred tax asset before valuation allowance
$
5,520,821
$
6,318,303
Deferred tax valuation allowance
$
(5,520,821)
$
(6,507,196)
Net deferred tax liability
$
—
$
(188,893)
The Company has recorded a tax reclassification of stockholders’ equity in accordance with U.S. GAAP to reduce paid-in capital
and to increase distributable earnings (increasing accumulated undistributed investment income) for book to tax differences that it has
determined to be permanent. For the years ended December 31, 2024 and 2023, this reclassification was $1,727,556 and $1,348,766,
respectively. The total adjustment on the Consolidated Statements of Assets and Liabilities as of December 31, 2024 and 2023 was
$7,434,858 and $5,707,301, respectively.
The Company remains subject to examination by the IRS for tax years 2021 through 2023.

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164
NOTE 13 — SENIOR SECURITIES
Information about the Company’s senior securities is shown in the following table for the fiscal years ended December 31, 2012
through 2024.
    
Outstanding
    
    
Involuntary
    
Exclusive of
Asset
Liquidating
Average
Treasury
Coverage per
Preference
Market Value
Class and Year
    
Securities(1)
    
 Unit(2)
    
per Unit(3)
    
per Unit(4)
 
(In thousands, except per unit amounts)
SBA-guaranteed debentures
 
   
   
   
  
Fiscal 2014
$
16,250  
N/A  (6)
—  
N/A
Fiscal 2015
$
65,000  
N/A  (6)
—  
N/A
Fiscal 2016
$
65,000  
N/A  (6)
—  
N/A
Fiscal 2017
$
90,000  
N/A  (6)
—  
N/A
Fiscal 2018
$
150,000  
N/A  (6)
—  
N/A
Fiscal 2019
$
161,000  
N/A  (6)
—  
N/A
Fiscal 2020
$
176,500  
N/A  (6)
—  
N/A
Fiscal 2021
$
250,000  
N/A  (6)
—  
N/A
Fiscal 2022
$
313,600  
N/A  (6)
—  
N/A
Fiscal 2023
$
325,000
N/A  (6)
—  
N/A
Fiscal 2024
$
325,000  
N/A  (6)
—  
N/A
Original Credit Facility(7)
 
   
   
   
  
Fiscal 2012
$
38,000
$
3,090  
—  
N/A
Fiscal 2013
$
110,000
$
2,470  
—  
N/A
Fiscal 2014
$
106,500
$
2,320  (6)
—  
N/A
Fiscal 2015
$
109,500
$
2,220  (6)
—  
N/A
Fiscal 2016
$
116,000
$
2,210  (6)
—  
N/A
Credit Facility
 
  
 
   
   
  
Fiscal 2017
$
40,750
$
3,460  (6)
—  
N/A
Fiscal 2018
$
99,550
$
2,520  (6)
—  
N/A
Fiscal 2019
$
161,550
$
2,286  (6)
—  
N/A
Fiscal 2020
$
174,000
$
2,230  (6)
—  
N/A
Fiscal 2021
$
177,340
$
2,030  (6)
—  
N/A
Fiscal 2022
$
199,200
$
1,920  (6)
—  
N/A
Fiscal 2023
$
160,086
$
2,230  (6)
—  
N/A
Fiscal 2024
$
175,386
$
2,340  (6)
—  
N/A
Notes Payable
 
  
 
   
   
  
Fiscal 2021
$
100,000
$
2,030  (6)
—  
N/A
Fiscal 2022
$
100,000
$
1,920  (6)
—  
N/A
Fiscal 2023
$
100,000
$
2,230  (6)
—  
N/A
Fiscal 2024
$
100,000
$
2,340  (6)
—  
N/A
2022 Notes
 
  
 
   
   
  
Fiscal 2017
$
48,875
$
3,460  (6)
—
$
25.34
Fiscal 2018
$
48,875
$
2,520  (6)
—
$
25.18
Fiscal 2019
$
48,875
$
2,286  (6)
—
$
24.43
Fiscal 2020
$
48,875
$
2,230  (6)
—
$
23.64
6.50% Notes due 2019(8)
 
  
 
 
  
 
  
Fiscal 2014
$
25,000
$
2,320  (6)
—
$
25.41
Fiscal 2015
$
25,000
$
2,220  (6)
—
$
25.27
Fiscal 2016
$
25,000
$
2,210  (6)
—
$
25.11
Short-Term Loan(5)
 
  
 
   
  
 
  
Fiscal 2012
$
45,000
$
3,090  
—
 
N/A
Fiscal 2013
$
9,000
$
2,470  
—
 
N/A

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165
(1) Total amount of senior securities outstanding at the end of the period presented.
(2) Asset coverage per unit is the ratio of the carrying value of the Company’s total assets, less all liabilities and indebtedness not
represented by senior securities, in relation to the aggregate amount of senior securities representing indebtedness. Asset
coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
(3) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to
any security junior to it. The “—” indicates information which the SEC expressly does not require to be disclosed for certain
types of senior securities.
(4) Average market value per unit for the 2022 Notes and the 6.50% Notes due 2019 represents the average of the daily closing
prices as reported on the New York Stock Exchange during the period presented. Average market value per unit for the
Company’s SBA-guaranteed Debentures, the Original Credit Facility (as defined below), the Credit Facility, and the Notes
Payable are not applicable because these securities are not registered for public trading.
(5) Refers to short-term loans that the Company obtained from Raymond James & Associates, Inc. and repaid in full on January 2,
2013 and January 2, 2014, respectively.
(6) The Company has excluded its SBA-guaranteed debentures from the asset coverage calculation every year since exemptive relief
was granted by the SEC in August 2014 that permits it to exclude such SBA-guaranteed debentures from the definition of senior
securities in the 150% asset coverage ratio it is required to maintain under the 1940 Act.
(7) On November 13, 2012, the Company entered into a senior secured revolving credit agreement, by and among the Company, as
the borrower, SunTrust Bank, as the administrative agent, various lenders that are parties thereto from time to time (the “Original
Credit Facility”). The Company terminated the Original Credit Facility on October 11, 2017.
(8) On September 20, 2017, the Company redeemed all of the issued and outstanding 6.50% Notes due 2019.
(9) On February 12, 2021, the Company redeemed all of the issued and outstanding 2022 Notes.
NOTE 14 — REPORTABLE SEGMENTS
ASU 2023-07
In November 2023, the FASB issued ASU 2023-07, - Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances
the disclosures required for reportable segments on an annual and interim basis. ASU 2023-07 is effective on a retrospective basis for
annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.
The Company adopted FASB Accounting Standards Update 2023-07 as of December 31, 2024 and has applied ASU 2023-07
retrospectively for the years ended December 31, 2023 and 2022. The adoption of ASU 2023-07 impacted the financial statement
disclosures of the Company and did not impact the Company’s financial position or the results of its operations. An operating
segment is defined as a component of a public entity that engages in business activities from which it may recognize revenues and
incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to
make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. The Company operates under one operating segment and reporting unit, investment management. The CODM is the Chief
Executive Officer of the Company, who is responsible for determining the Company’s investment strategy, capital allocation, expense
structure, and significant transactions impacting the Company. The operating expenses as disclosed on the consolidated statement of
operations represent the significant expense categories that are provided to the CODM. Key metrics considered by the CODM in
making decisions on the allocation of invested capital include, but are not limited to, net investment income and net increase in net
assets resulting from operations that is reported on the Consolidated Statement of Operations, fair value of Investments as disclosed
on the Consolidated Schedule of Investments, as well as distributions made to the Company’s shareholders.

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166
NOTE 15 — SUBSEQUENT EVENTS
Investment Portfolio
The Company invested in the following portfolio companies subsequent to December 31, 2024:
Activity Type
  
Date
  
Company Name
  
Company Description
  
Investment Amount
  
Instrument Type
New Investment
January 10, 2025
Pacific Shoring Products, LLC
Manufacturer of trench shoring and safety equipment
sold to equipment rental companies
$
8,500,000
Senior Secured – First Lien
$
100,000
Revolver Commitment
$
498,491
Equity
New Investment
January 15, 2025
Environmental Remedies, LLC
Residential asbestos abatement provider
$
7,330,762
Senior Secured – First Lien
$
2,681,986
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
163,109
Equity
New Investment
January 16, 2025
Plus Delta Partners, Inc.
Provider of fundraising training and tools for higher
education institutions and other nonprofits
$
7,400,000
Senior Secured – First Lien
$
3,753,955
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
325,764
Equity
New Investment
January 24, 2025
Strategus, LLC
Provider of connected TV advertising services
$
7,801,439
Senior Secured – First Lien
$
2,524,737
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
170,362
Equity
Add-On Investment
February 10, 2025
Florachem Corporation*
Distiller and supplier of natural citrus, pine, and
specialty inputs
$
877,716
Senior Secured – First Lien
New Investment
February 28, 2025
Identity Theft Guard Solutions, Inc.
Cyber breach response and monitoring services
$
8,722,887
Senior Secured – First Lien
$
100,000
Revolver Commitment
$
352,915
Equity
New Investment
February 28, 2025
MoboTrex, LLC
Distributor and manufacturer of intelligent traffic
solution equipment
$
5,137,070
Senior Secured – First Lien
$
109,312
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
*
Existing portfolio company
Credit Facility
The outstanding balance under the Credit Facility as of March 4, 2025 was $230,828,500.
SBA-guaranteed debentures
On February 14, 2025, the SBIC I subsidiary prepaid all principal and accrued interest related to SBA-guaranteed debentures
maturing on March 1, 2025. The outstanding balance of SBA-guaranteed debentures as of March 4, 2025 was $308,750,000.
Distributions Declared
On January 9, 2025, the Company’s Board declared a regular monthly distribution for each of January, February and March 2025
as follows:
Ex-Dividend
Record
Payment
Amount per
Declared
    
Date
    
Date
    
Date
    
Share
1/9/2025
1/31/2025
1/31/2025
2/14/2025
$
0.1333
1/9/2025
 
2/28/2025
2/28/2025
3/14/2025
$
0.1333
1/9/2025
 
3/31/2025
3/31/2025
4/15/2025
$
0.1333

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167
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.  Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
As of December 31, 2024 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rule 13a-15(e) of the Exchange Act). Based on that evaluation, our management, including our Chief Executive Officer and Chief
Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that
information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f), and for performing an assessment of the effectiveness of internal control over financial
reporting as of December 31, 2024. Internal control over financial reporting is a process designed by, or under the supervision of, our
principal executive and principal financial officers, or persons performing similar functions, and effected by our Board, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures are being made only in accordance with authorizations; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation
and presentation.
Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31,
2024 based upon the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, management determined that our internal control over
financial reporting was effective as of December 31, 2024.
(c) Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financing reporting that occurred during the calendar year 2024 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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168
Item 9B.  Other Information.
Fees and Expenses
The following table is intended to assist you in understanding the various costs and expenses that an investor in our common
stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may
vary. The footnotes to the fee table state which items are estimates. The following table should not be considered a representation of
our future expenses; actual expenses may be greater or less than shown. Except where the context suggests otherwise, whenever this
Annual Report on Form 10-K contains a reference to fees or expenses paid by “you,” “us,” “the Company” or “Stellus,” or that “we”
will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.
Stockholder transaction expenses:
    
      
Sales load (as percentage of offering price)
 
 — (1)
Offering expenses born by us (as a percentage of offering price)
 
 — (2)
Dividend reinvestment plan expenses
 
 — (3)
Total stockholder transaction expenses paid by us (as a percentage of offering price)
 
 — (4)
Annual expenses (as a percentage of net assets attributable to common stock)(5):
 
  
Base management fee
 
 4.36 % (6)
Incentive fees payable under Investment Advisory Agreement
 
 2.63 % (7)
Interest expense on borrowed funds
 
 8.29 % (8)
Other expenses
 
 1.99 % (9)  
Total annual expenses
 
 17.27 % (10)
(1) In the event that securities are sold to or through underwriters, a corresponding prospectus supplement will disclose the
applicable sales load.
(2) In the event that we conduct an offering of any of our securities, a corresponding prospectus will disclose the estimated offering
expenses because they will be ultimately borne by the Company (and indirectly by our stockholders).
(3) The expenses of administering our DRIP are included in other expenses.
(4) Total stockholder transaction expenses may include a sales load and will be disclosed in a future prospectus supplement, if any.
(5) Net assets attributable to common stock equals average net assets, which is calculated as the average of the net assets balances as
of each quarter end during the year ended December 31, 2024 and the prior year end.
(6) Our base management fee is 1.75% of the average value of our total assets (other than cash and cash equivalents but including
assets purchased with borrowed amounts). This item represents actual base management fees incurred for the year ended
December 31, 2024. We may from time to time decide it is appropriate to change the terms of the Investment Advisory
Agreement. Under the 1940 Act, any material change to our Investment Advisory Agreement must be submitted to stockholders
for approval. The 4.36% reflected in the table is calculated on our net assets (rather than our total assets). See “Item 1. Business  
— Management and Other Agreements — Investment Advisory Agreement.”
(7) This item represents actual fees incurred on pre-incentive fee net investment income (income incentive fee) for the year ended
December 31, 2024. The incentive fee consists of two parts, please See “Item 1. Business — Management and Other
Agreements — Investment Advisory Agreement — Incentive Fee” for additional information on the ordinary income and capital
gains components of our incentive fee.
(8) As of March 4, 2025, we had outstanding SBA-guaranteed debentures of $308.8 million; we had $230.5 million of outstanding
balance under our Credit Facility, which has a total commitment of $315.0 million.
(9) Other expenses represent our estimated annual operating expenses, as a percentage of net assets attributable to common shares
estimated for the current year, including professional fees, directors’ fees, insurance costs, expenses of our dividend reinvestment
plan and payments under the Administration Agreement based on our allocable portion of overhead and other expenses incurred
by our administrator. See “Item 1. Business  — Management and Other Agreements — Administration Agreement.” Other
expenses exclude interest payments on borrowed funds, and if we issue debt securities or preferred stock, interest payments on
debt securities and distributions with respect to preferred stock. “Other expenses” are based on actual other expenses for the year
ended December 31, 2024.

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169
(10) “Total annual expenses” as a percentage of consolidated net assets attributable to common stock are higher than the total annual
expenses percentage would be for a company that is not leveraged. We borrow money to leverage our net assets and increase our
total assets. The SEC requires that the “total annual expenses” percentage be calculated as a percentage of net assets (defined as
total assets less total liabilities), rather than the total assets, including assets that have been purchased with borrowed amounts. If
the “total annual expenses” percentage were calculated instead as a percentage of average consolidated total assets, our “total
annual expenses” would be 6.51% of average consolidated total assets.
Example
The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect
to a hypothetical investment in us. In calculating the following expense amounts, we have assumed we would have no additional
leverage, that none of our assets are cash or cash equivalents and that our annual operating expenses would remain at the levels set
forth in the table above. Transaction expenses are not included in the following example.
    
1 year
    
3 years
    
5 years
    10 years
You would pay the following expenses on a $1,000 investment,
assuming a 5.0% annual return
$
 175
$
 438
$
 640
$
 965
You would pay the following expenses on a $1,000 investment,
assuming a 5.0% annual return resulting entirely from net realized capital
gains (all of which is subject to our incentive fee on capital gains)
$
 175
$
 438
$
 640
$
 965
The foregoing table is to assist you in understanding the various costs and expenses that an investor in our common stock will
bear directly or indirectly. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and
may result in a return greater or less than 5.0%. Assuming a 5.0% annual return, the incentive fee under the Investment Advisory
Agreement would either not be payable or have an insignificant impact on the expense amounts shown above. If we achieve
sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material
amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all
distributions at net asset value, if our Board authorizes and we declare a cash dividend, participants in our dividend reinvestment plan
who have not otherwise elected to receive cash will receive a number of shares of our common stock, determined by dividing the total
dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on
the valuation date for the distribution.
This example and the expenses in the table above should not be considered a representation of our future expenses, and actual
expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.
Rule 10b5-1 Trading Plans
During the fiscal year ended December 31, 2024, none of the our directors or executive officers adopted or terminated any
contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
We will file with the SEC a definitive Proxy Statement for our 2025 Annual Meeting of Stockholders, pursuant to
Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by

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170
Part III has been omitted under General Instruction G(3) to the Annual Report on Form 10-K. Only those sections of our definitive
Proxy Statement that specifically address the items set forth herein are incorporated by reference.
Item 10.   Directors, Executive Officers and Corporate Governance
The information required by Item 10 is hereby incorporated by reference from the Company’s definitive Proxy Statement
relating to our 2025 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of the Company’s
fiscal year.
We have adopted a code of business conduct and ethics that applies to our directors, officers and employees. This code of ethics
is published on our website at www.stelluscapital.com. We intend to disclose any future amendments to, or waivers from, this code of
conduct within four business days of the waiver or amendment through a website posting.
We have adopted an insider trading policy that applies to our directors and officers. This insider trading policy can be found as
Exhibit 19.1 to this Annual Report on Form 10-K.
Item 11.   Executive Compensation
The information required by Item 11 is hereby incorporated by reference from the Company’s definitive Proxy Statement
relating to the Company’s 2025 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of the
Company’s fiscal year.
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 is hereby incorporated by reference from the Company’s definitive Proxy Statement
relating to the Company’s 2025 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of the
Company’s fiscal year.
Item 13.   Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is hereby incorporated by reference from the Company’s definitive Proxy Statement
relating to the Company’s 2025 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of the
Company’s fiscal year.
Item 14.   Principal Accountant Fees and Services
The information required by Item 14 is hereby incorporated by reference from the Company’s definitive Proxy Statement
relating to the Company’s 2025 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of the
Company’s fiscal year.

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171
PART IV
Item 15.    Exhibits, Financial Statement Schedules
a. Documents Filed as Part of this Report
The following financial statements are set forth in Item 8:
Page
Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP, Houston, Texas, PCAOB ID Number
34 and Grant Thornton LLP, Dallas, Texas, PCAOB ID Number 248)
95
Statements of Assets and Liabilities as of December 31, 2024 and December 31, 2023
98
Statements of Operations for the years ended December 31, 2024, 2023, and 2022
99
Statements of Changes in Net Assets for the years ended December 31, 2024, 2023, and 2022
100
Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
101
Schedule of Investments as of December 31, 2024 and December 31, 2023
102
Notes to Financial Statements
131

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172
b. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the
SEC:
 3.1 
    Articles of Amendment and Restatement (Incorporated by reference to Exhibit (a)(1) to the Registrant’s Registration
Statement on Form N-2 (File No. 333-184195), filed on October 23, 2012).
 3.3 
Bylaws (Incorporated by reference to Exhibit (b)(1) to the Registrant’s Registration Statement on Form N-2 (File
No. 333-184195), filed on October 23, 2012).
 4.1 
Form of Stock Certificate (Incorporated by reference to Exhibit (d) to the Registrant’s Registration Statement on
Form N-2 (File No. 333-184195), filed on October 23, 2012).
 4.2 
Form of Indenture (Incorporated by reference to Exhibit (d)(2) to the Registrant’s Registration Statement on Form N-2
(File No. 333-189938), filed January 29, 2014).
 4.3 
Third Supplemental Indenture between the Registrant and U.S. Bank National Association, date January 14, 2021
(Incorporated by reference Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No 814-00971), filed on
January 14, 2021).
 4.4 
Form of Global Note with respect to the 4.875% Notes due 2026 (Incorporated by reference to Exhibit 4.5).
 4.5 
Description of Securities (Incorporated by reference to Exhibit 4.8 to the Registrant’s Annual Report on Form 10-K
(File No. 814-00971), filed on March 1, 2022).
10.1
Form of Investment Advisory Agreement between Registrant and Stellus Capital Management, LLC (Incorporated by
reference to Exhibit (g) to the Registrant’s Registration Statement on Form N-2 (File No. 333-184195), filed on
October 23, 2012).
10.2
Custody Agreement between Registrant and ZB, National Association (Incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K (File No. 814-00971), filed on November 7, 2017).
10.3
Administration Agreement between Registrant and Stellus Capital Management, LLC (Incorporated by reference to
Exhibit (k)(1) to the Registrant’s Registration Statement on Form N-2 (File No. 333-184195), filed on October 23,
2012).
10.4
Dividend Reinvestment Plan (Incorporated by reference to Exhibit (e) to the Registrant’s Registration Statement on
Form N-2 (File No. 333-184195), filed on October 23, 2012).
10.5
Form of License Agreement between the Registrant and Stellus Capital Management (Incorporated by reference to
Exhibit (k)(2) to the Registrant’s Registration Statement on Form N-2 (File No. 333-184195), filed on October 23,
2012).
10.6
Form of Indemnification Agreement between the Registrant and the directors (Incorporated by reference to Exhibit (k)
(3) to the Registrant’s Registration Statement on Form N-2 (File No. 333-184195), filed on October 23, 2012).
10.7
Form of Guarantee and Security Agreement, the Registrant, ZB, N.A., dba Amegy Bank, as administrative agent, and
ZB, N.A. dba Amegy Bank, as collateral agent (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current
Report on Form 8-K (File No. 814-00971), filed on October 13, 2017).

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173
10.8
Senior Secured Revolving Credit Agreement, dated October 10, 2017, between the Registrant, as a borrower, the
lenders party thereto and ZB, N.A. dba Amegy Bank, as administrative agent (Incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00971), filed on October 13, 2017).
10.9
Consent and Waiver, dated March 28, 2018, between the Registrant, as a borrower, the lenders party hereto and ZB,
N.A. dba Amegy Bank, as administrative agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q (File No. 814-00971), filed on May 8, 2018).
10.10
First Amendment to Senior Secured Revolving Credit Agreement and Commitment Increase, dated August 2, 2018,
between the Registrant, as a borrower, the lenders party thereto and ZB, N.A. dba Amegy Bank, as administrative
agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 814-
00971), filed on August 8, 2018).
10.11
Second Amendment to Senior Secured Revolving Credit Agreement and Commitment Increase, dated September 13,
2019, between the Registrant, as a borrower, the lenders party thereto and ZB, N.A. dba Amegy Bank, as
administrative agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File
No. 814-00971), filed on September 18, 2019).
10.12
Increase Agreement, dated December 27, 2019, between the Registrant, as a borrower, the lenders party thereto and
ZB, N.A. dba Amegy Bank, as administrative agent (Incorporated by reference to Exhibit 10.12 to the Registrant’s
Annual Report on Form 10-K (File No. 814-00971), filed on March 3, 2020).
10.13
Third Amendment to Senior Secured Revolving Credit Agreement and Commitment Increase, dated May 15, 2020,
between the Registrant, as a borrower, the lenders party thereto and ZB, N.A. dba Amegy Bank, as administrative
agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00971),
filed on May 18, 2020).
10.14
Amended and Restated Senior Secured Revolving Credit Agreement, dated September 18, 2020, between the
Registrant, as a borrower, the lenders party thereto and ZB, N.A. dba Amegy Bank, as administrative agent
(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00971), filed
on September 21, 2020).
10.15
First Amendment and Commitment Increase to Amended and Restated Senior Secured Revolving Credit Agreement,
dated December 22, 2021, between the Registrant, as a borrower, the lenders party thereto and ZB, N.A. dba Amegy
Bank, as administrative agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-
K (File No. 814-00971), filed on December 22, 2021).
10.16
Third Amendment and Commitment Increase to Amended and Restated Senior Secured Revolving Credit Agreement,
dated as of May 13, 2022, between the Registrant, as borrower, the lenders party thereto, and Zions Bancorporation,
N.A. dba Amegy Bank, as the administrative agent. (Incorporated by reference to Exhibit 10.1 to the Registrant's
Current Report on Form 8-K (File No. 814-00971), filed on May 19, 2022).
10.17
Amended and Restated Equity Distribution Agreement, dated August 29, 2022 between Registrant and sales agent
(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00971), filed
on August 29, 2022).  
10.18
Custody Agreement, dated November 2, 2022, by and among Stellus Capital SBIC LP and Frost Bank, as custodian.
(Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 814-00971),
filed on November 3, 2022).
10.19
Equity Distribution Agreement, dated August 11, 2023, by and among Stellus Capital Investment Corporation and
Stellus Capital Management, LLC, on the one hand, and Keefe, Bruyette & Woods, Inc. and Raymond James &
Associates, Inc. on the other hand (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File No. 814-00971), filed on August 14, 2023).

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174
10.20
Increase Agreement, dated October 30, 2024, between the Company, as a borrower, Zions Bancorporation, N.A. dba
Amegy Bank, as the administrative agent, and the lenders that are party thereto (Incorporated by reference to Exhibit
10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00971), filed on November 1, 2024).
14.1
Code of Ethics (Incorporated by reference to Exhibit (r)(1) to the Registrant’s Registration Statement on Form N-2
(File No. 333-184195), filed on October 23, 2012).
19.1*
Insider Trading Policy
21.1
Subsidiaries of the Registrant and jurisdiction of incorporation/organizations:
Stellus Capital SBIC, LP — Delaware
Stellus Capital SBIC GP, LLC — Delaware
Stellus Capital SBIC II, LP — Delaware
Stellus Capital SBIC III, LP — Delaware
SCIC-SKP Blocker 1, Inc. — Delaware
SCIC-ERC Blocker 1, Inc. — Delaware
SCIC-Consolidated Blocker, Inc. — Delaware
SCIC-CC Blocker 1, Inc. — Delaware
SCIC-APE Blocker 1, Inc. — Delaware
SCIC-Hollander Blocker 1, Inc. — Delaware
SCIC-Invincible Blocker 1, Inc. — Delaware
SCIC-Venbrook Blocker, Inc. — Delaware
23.1*
Consent of Deloitte & Touche LLP
23.2*
Consent of Grant Thornton LLP
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended.
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended.
32.1*
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Dodd-Frank Compensation Recoupment Policy (Incorporated by reference to Exhibit 97.1 to the Registrant’s Annual
Report on Form 10-K (File No. 814-00971), filed on March 4, 2024).
101.INS*
XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document

Table of Contents
175
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104
Cover Page Interactive Data File — The cover page interactive data file does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document
*
Filed herewith.
c. Financial statement schedules
No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been
presented in the aforementioned financial statements.
Item 16.    Form 10-K Summary
None.

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176
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
STELLUS CAPITAL INVESTMENT CORPORATION
Date: March 4, 2025
/s/ Robert T. Ladd
Robert T. Ladd
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacity and on the dates indicated.
Date: March 4, 2025
/s/ Robert T. Ladd
Robert T. Ladd
Chief Executive Officer, President and
Chairman of the Board of Directors
Date: March 4, 2025
/s/ W. Todd Huskinson
W. Todd Huskinson
Chief Financial Officer, Chief Compliance Officer
and Secretary
(Principal Accounting and Financial Officer)
Date: March 4, 2025
/s/ Dean D’Angelo
Dean D’Angelo
Director
Date: March 4, 2025
/s/ J. Tim Arnoult
J. Tim Arnoult
Director
Date: March 4, 2025
/s/ Bruce R. Bilger
Bruce R. Bilger
Director
Date: March 4, 2025
/s/ William C. Repko
William C. Repko
Director

EXHIBIT 19.1
STELLUS PRIVATE CREDIT BDC
AND
STELLUS CAPITAL INVESTMENT CORPORATION
STATEMENT OF POLICY
ON INSIDER TRADING
Introduction
It is illegal for any person, either personally or on behalf of others, to trade in securities on the basis
of material, non-public information.  It is also illegal to communicate (or “tip”) material, non-public
information to others who may trade in securities on the basis of that information.  These illegal activities
are commonly referred to as “insider trading.”
Potential penalties for each insider trading violation include imprisonment for up to 20 years, civil
fines of up to three times the profit gained or loss avoided by the trading, and criminal fines of up to $5
million.  In addition, a company whose director, officer or employee violates the insider trading prohibitions
may be liable for a civil fine of up to the greater of $1 million or three times the profit gained or loss avoided
as a result of the director, officer or employee’s insider trading violations.  Furthermore, engaging in short-
term trading or other speculative transactions involving the securities of Stellus Private Credit BDC and
Stellus Capital Investment Corporation (each a “Company” and collectively, the “Companies”) may subject
you to additional penalties.
Moreover, your failure to comply with the insider trading policy of the Company, as set forth herein,
may subject you to sanctions imposed by the Company, including dismissal for cause, whether or not your
failure to comply with this policy results in a violation of law.
This memorandum sets forth the Companies’ policy against insider trading.  The objective of this
policy is to protect both you and the Company from securities laws violations, or even the appearance
thereof.  All directors, officers and employees (including temporary employees) of the Companies, of each
of the Companies’ respective affiliates and subsidiaries, including the respective investment adviser, Stellus
Capital Management, LLC and Stellus Private BDC Advisor, LLC (collectively, the “ Adviser”), must
comply with this policy.
You are encouraged to ask questions and seek any follow-up information that you may require with
respect to the matters set forth in this policy.  Please direct any questions you may have to the Company’s
Chief Compliance Officer.

2
Statement of Policy
It is the policy of the Company that no director, officer or employee (including a temporary employee) of
the Company, or of any of its affiliates or subsidiaries, including the Adviser, and any other persons
designated by the Chief Compliance Officer, or this policy, as being subject to this policy (collectively, the
“Covered Persons”):
·
who is aware of material, non-public information relating to the Company, may, directly or indirectly
through family members or other persons or entities, (a) buy or sell securities of the Company (other
than pursuant to a pre-approved trading plan that complies with Rule 10b5-1 of the Securities
Exchange Act of 1934), or engage in any other action to take personal advantage of that information,
or (b) pass that information on to others outside of the Company, including family and friends;
·
who, in the course of working for or on behalf of the Company, learns of material, non-public
information about a company with which the Company does, or is proposing to do, business,
including a customer or supplier of the Company, may trade in that company’s securities until the
information becomes public or is no longer material; or
·
may engage in any transaction involving the Company’s securities (including any stock plan
transaction, gift, loan or pledge or hedge, contribution to a trust, or any other transfer) without first
obtaining pre-clearance approval of the transaction by emailing the Chief Compliance Officer.
As a Covered Person, you are subject to the foregoing restrictions and the other terms of this policy.
Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money
for an emergency expenditure) are not excepted from this policy.  The securities laws do not recognize such
mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided
to preserve the Company’s reputation for adhering to the highest standards of conduct.
What information is material?  All information that an investor might consider important in deciding
whether to buy, sell, or hold securities is considered material.  Information that is likely to affect the price of
a company’s securities is almost always material.  Examples of some types of material information are:
·
financial results or expectations for the quarter or the year;
·
financial forecasts;
·
changes in dividends;
·
possible mergers, acquisitions, joint ventures and other purchases and sales of companies and
investments in companies;
·
changes in customer relationships with significant customers;
·
obtaining or losing important contracts;

3
·
important product developments;
·
major financing developments;
·
major personnel changes;
·
major litigation developments; and
·
all materials pending investments and disclosures concerning portfolio companies.
What is non-public information?  Information is considered to be non-public unless it has been effectively
disclosed to the public.  Examples of such public disclosure include public filings with the Securities and
Exchange Commission (the “SEC”) and company press releases.  Not only must the information have been
publicly disclosed, but there must also have been adequate time for the market as a whole to digest the
information.  Although timing may vary depending upon the circumstances, a good rule of thumb is that
information is considered non-public until the third business day after public disclosure.
What transactions are prohibited?  When you know material, non-public information about the Company,
you, your spouse and members of your immediate family living in your household are prohibited from the
following activities:
·
trading in the Company’s securities (including trading in puts and calls for the Company’s
securities);
·
having others trade for you in the Company’s securities; and
·
disclosing the information to anyone else who might then trade.
Neither you nor anyone acting on your behalf nor anyone who learns the information from you (including
your spouse and family members) can trade.  This prohibition continues whenever and for as long as you
know material, non-public information, even following your termination of employment or other relationship
with the Company.
Although it is most likely that any material, non-public information you might learn would be about the
Company or its affiliates or subsidiaries, these prohibitions also apply to trading in the securities of any other
company, including any portfolio company or potential merger partner, about which you have material, non-
public information.
Transactions by Family Members.  As noted above, the Company’s insider trading policy applies to your
family members who reside with you, anyone else who lives in your household, and any family members
who do not live in your household but whose transactions in the Company’s securities are directed by you or
are subject to your influence or control (such as parents or children who consult with you before they trade in
the Company’s securities).  You are responsible for the transactions of these other persons and therefore
should make them aware of the need to confer with you before they trade in the Company’s securities.
What is a Rule 10b5-1 trading plan?  Notwithstanding the prohibition against insider trading, Rule 10b5-1
of the Securities Exchange Act of 1934 (“Rule 10b5-1”) and this policy permit a Covered Person to trade in
the Company’s securities regardless of his or her awareness of inside information if

4
the transaction is made pursuant to a pre-arranged trading plan that was entered into when the Covered
Person was not in possession of material, non-public information (a “10b5-1 Plan”). This policy requires
trading plans to be written and to specify the amount of, date on, and price at which the securities are to be
traded or establish a formula for determining such items.  A Covered Person who wishes to enter into a
trading plan must email the trading plan to the Chief Compliance Officer for his or her approval prior to the
adoption of the trading plan, or any amendment of a previously adopted plan.  Further, trading plans may not
be adopted when the Covered Person is in possession of material, non-public information about the
Company.  A Covered Person may adopt, amend or replace his or her trading plan only during periods when
trading is permitted in accordance with this policy.
In December 2022, the SEC adopted amendments to Rule 10b5-1, which went into effect February 27, 2023.
The amended Rule includes, among other changes, (1) implementation of a “cooling-off period” for trading
under 10b5-1 plans; (2) required certifications about knowledge of material, non-public information and
good faith; (3) changes to how 10b5-1 Plans may be used; and (4) new disclosure requirements for
registrants and individuals. A cooling-off period is an established amount of time between the adoption of a
10b5-1 Plan and when trading can begin.
Pursuant to the amended Rule 10b5-1, the cooling-off period for officers and directors of the Company will
be either 90 days following adoption or modification of a 10b5-1 Plan or two business days following the
disclosure of the Company’s financial results in a Form 10-Q or Form 10-K for the fiscal quarter in which
the 10b5-1 Plan was adopted, whichever is later (resulting in a mandatory cooling-off period of 90 to 120
days). For persons other than officers and directors of the Company, the cooling-off period is 30 days
following adoption or modification of a 10b5-1 Plan. Further, pursuant to the amended Rule 10b5-1, officers
and directors must certify at the time they enter into or modify a 10b5-1 plan that (1) they are not aware of
material nonpublic information about the issuer or its securities; and (2) they are adopting the contract,
instruction, or plan “in good faith and not as part of a plan or scheme to evade the prohibitions” of Rule 10b-
5. Further, an insider of the Company, is prohibited from having multiple overlapping 10b5-1 Plans in place.
Transactions Under Company Plans
Dividend Reinvestment Plan.  If you participate in the Company’s dividend reinvestment plan, this policy
does not apply to purchases of the Company’s securities under that dividend reinvestment plan resulting
from your automatic reinvestment of dividends paid on the Company’s securities.  However, your election to
participate in the dividend reinvestment plan, or to increase your level of participation in the plan, would be
subject to this policy, including its applicable black-out periods.  The policy also applies to your sale of any
securities of the Company purchased pursuant to the plan.

5
Additional Prohibited Transactions
The Company considers it improper and inappropriate for any Covered Person to engage in short-term or
speculative transactions in the Company’s securities.  It is therefore the Company’s policy that you may not
engage in any of the following transactions without strict compliance with the pre-clearance requirements set
forth below:
Short-Term Trading.  Short-term trading of the Company’s securities by a director, officer or
employee may be distracting to such person and may unduly focus such person on the Company’s
short-term performance instead of the Company’s long-term business objectives.  For these reasons,
if you purchase the Company’s securities in the open market, you may not sell any of the Company’s
securities of the same class during the six months following such purchase.  In addition, Section
16(b) of the Securities Exchange Act of 1934 imposes short-swing profit restrictions on the purchase
or sale of the Company’s securities by the Company’s officers and directors and certain other
persons.
Short Sales.  Short sales of the Company’s securities evidence an expectation on the part of the
seller that the securities will decline in value, and therefore signal to the market that the seller has no
confidence in the Company or its short-term prospects.  In addition, short sales may reduce the
seller’s incentive to improve the Company’s performance.  For these reasons, you may not engage in
short sales of the Company’s securities.  In addition, Section 16(c) of the Securities Exchange Act of
1934 prohibits officers and directors, and certain other persons, from engaging in short sales.
Publicly Traded Options.  A transaction in options, puts, calls or other derivative securities is, in
effect, a bet on the short-term movement of the Company’s stock and therefore creates the
appearance that a Covered Person is trading based on inside information.  Transactions of this sort
also may unduly focus such person on the Company’s short-term performance instead of the
Company’s long-term business objectives.  Accordingly, you may not enter into any transactions
involving options, puts, calls or other derivative securities of the Company’s securities, on an
exchange or in any other organized market.  (Option positions arising from certain types of hedging
transactions are governed by the section below captioned “Hedging Transactions.”)
Hedging Transactions.  Certain forms of hedging or monetization transactions, such as zero-cost
collars and forward sale contracts, allow a person to lock in much of the value of his or her stock
holdings, often in exchange for all or part of the potential for upside appreciation in the stock.  These
transactions allow the person to own the covered securities, but without the full risks and rewards of
ownership.  When that occurs, the person may no longer have the same objectives as other
shareholders.  Therefore, the Company strongly discourages any Covered Person from engaging in
such transactions with respect to the Company’s securities.  In this regard, any person wishing to
enter into such an arrangement must first pre-clear the proposed transaction with the Chief
Compliance Officer.  Such request for pre-clearance of a hedging or similar arrangement must be
received at least two weeks before the Covered Person

6
intends to execute the documents in connection with the proposed transaction and must set forth the
reason for the proposed transaction.
Margin Accounts and Pledges.  Securities held in a margin account may be sold by the broker
without the customer’s consent if the customer fails to meet a margin call.  Similarly, securities
pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults
on the loan.  Therefore, because a margin sale or foreclosure sale may occur at a time when you are
aware of material, non-public information or when you are otherwise not permitted to trade in the
Company’s securities, you are prohibited from holding the Company’s securities in a margin account
or pledging the Company’s securities as collateral for a loan.  An exception to this prohibition may
be granted where you wish to pledge the Company’s securities as collateral for a loan (not including
margin debt) and clearly demonstrate the financial capacity to repay the loan without resort to the
pledged securities.  In this regard, any person who wishes to pledge the Company’s securities as
collateral for a loan must email a request for approval to the Chief Compliance Officer at least two
weeks prior to the proposed execution of the documents evidencing the proposed pledge.
Post-Termination Transactions
The policy continues to apply to your transactions in the Company’s securities even after you have 
terminated employment or other relationship with the Company.  If you are in possession of material, non-
public information when your employment or other relationship with the Company terminates, you may not 
trade in the Company’s securities until that information has become public or is no longer material.
Unauthorized Disclosure
As discussed above, the disclosure of material, non-public information to others can lead to significant legal
difficulties.  Therefore, you should not discuss material, non-public information about the Company with
anyone, including other employees, except as required in the performance of your regular duties.
Also, it is important that only specifically designated representatives of the Company discuss the Company
with the news media, securities analysts, and investors.  Inquiries of this type received by any employee
should be referred to the Company’s investor relations contact.  Alternatively, such inquiries may be
referred to the Chief Compliance Officer.
Pre-Clearance Procedures
To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of
trading on inside information, Covered Persons, together with their immediate family members living in their
households, may not engage in any transaction involving the Company’s securities (including any stock plan
transaction, gift, loan or pledge or hedge, contribution to a trust, or any other transfer) without first obtaining
pre-clearance of the transaction from the Chief Compliance Officer.

7
A request for pre-clearance should be emailed to the Chief Compliance Officer at least two business days in
advance of the proposed transaction.  The Chief Compliance Officer is under no obligation to approve a
trade submitted for pre-clearance, and may determine not to permit the trade.
As noted above, any person subject to the pre-clearance requirements who wishes to implement a trading
plan under Rule 10b5-1 of the Securities Exchange Act of 1934, must first pre-clear the plan with the Chief
Compliance Officer.  As required by Rule 10b5-1, Covered Persons may enter into a trading plan only when
they are not in possession of material, non-public information.  In addition, Covered Persons may not enter
into a trading plan during a blackout period (as described below).  Transactions effected pursuant to a pre-
cleared trading plan will not require further pre-clearance at the time of the transaction if the plan specifies
the dates, prices and amounts of the contemplated trades, or establishes a formula for determining the dates,
prices and amounts, and follow all rules outlined above pursuant to Rule 10b5-1.
Blackout Periods
Quarterly Blackout Periods. The Company’s announcement of its quarterly financial results almost always
has the potential to have a material effect on the market for the Company’s securities.  Therefore, you can
anticipate that, to avoid even the appearance of trading while aware of material, non-public information,
Covered Persons will not be pre-cleared to trade in the Company’s securities during the period beginning
one week prior to the end of the Company’s fiscal quarter and ending after the second full business day
following the Company’s issuance of its quarterly earnings release or analyst conference call.  All Covered
Persons are subject to these quarterly blackout periods.
Event-specific Blackout Periods.  From time to time, an event may occur that is material to the Company
and is known by only a few Covered Persons.  So long as the event remains material and non-public, no
Covered Persons may trade in the Company’s securities.  This restriction applies regardless of whether such
persons have actual knowledge of the material event in question.  The existence of an event-specific blackout
will not be announced, other than to those who are aware of the event giving rise to the blackout.  If,
however, a person whose trades are subject to pre-clearance requests permission to trade in the Company’s
securities during an event-specific blackout, the Chief Compliance Officer will inform the requester of the
existence of a blackout period, without disclosing the reason for the blackout.  Any person made aware of
the existence of an event-specific blackout should not disclose the existence of the blackout to any other
person.  The failure of the Chief Compliance Officer to designate a person as being subject to an event-
specific blackout will not relieve that person of the obligation not to trade while aware of material, non-
public information.
Hardship Exceptions.  A person who is subject to a quarterly earnings blackout period and who has an
unexpected and urgent need to sell the Company’s stock in order to generate cash may, in appropriate
circumstances, be permitted to sell such stock even during the blackout period.  Hardship exceptions may be
granted only by the Chief Compliance Officer and must be requested at least two business days in advance of
the proposed trade.  A hardship exception may be granted only if the Chief Compliance Officer concludes
that the Company’s earnings information for the applicable quarter does not constitute material, non-public
information.  Under no circumstance will a hardship exception be granted during an event-specific blackout
period.

8
Questions about this Policy
Compliance by all Covered Persons with this policy is of the utmost importance both for you and for the
Company.  If you have any questions about the application of this policy to any particular case, please
immediately contact the Chief Compliance Officer.
Your failure to observe this policy could lead to significant legal problems, as well as other serious
consequences, including termination of your employment or other relationship with the Company.
Certifications
All Covered Persons must certify their understanding of, and intent to comply with, this policy.  A copy of
the certification that all such persons must sign is attached to this policy.

9
STELLUS PRIVATE CREDIT BDC AND STELLUS CAPITAL INVESTMENT CORPORATION
Insider Trading Policy Certification
This certification is to be signed and returned to the Chief Compliance Officer, and will be retained
as part of your permanent personnel file.
I hereby certify that I have received a copy of Stellus Private Credit BDC and Stellus Capital
Investment Corporation’s Insider Trading Policy, as applicable, read it, and understand that the Insider
Trading Policy contains the expectations of Stellus Private Credit BDC and Stellus Capital Investment
Corporation and its affiliated entities regarding my conduct.  Furthermore, I agree to comply with the Insider
Trading Policy.
Name (Printed)
Signature
Date
The failure to read and/or sign this acknowledgment in no way relieves you of the responsibility to comply
with Stellus Private Credit BDC and Stellus Capital Investment Corporation’s Insider Trading Policy.

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333- 265695 on Form N-2 of our report dated March
4, 2025, relating to the financial statements of Stellus Capital Investment Corporation in this Annual Report on Form 10-K for the
year ended December 31, 2024.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
March 4, 2025

Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated March 4, 2024 (except for Note 14, as to which the date is March 4, 2025) with respect to the
consolidated financial statements included in the Annual Report of Stellus Capital Investment Corporation on Form 10-K for the year
ended December 31, 2024. We consent to the incorporation by reference of said report in the Registration Statement of Stellus Capital
Investment Corporation on Form N-2 (File No. 333-265695).
/s/ GRANT THORNTON LLP
Houston, Texas
March 4, 2025

Exhibit 31.1
I, Robert T. Ladd, Chief Executive Officer of Stellus Capital Investment Corporation certify that:
1.
I have reviewed this Annual Report on Form 10-K of Stellus Capital Investment
Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules 13a-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation;
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated this 4th day of March 2025.
By: /s/ Robert T. Ladd
Robert T. Ladd
Chief Executive Officer

Exhibit 31.2
I, W. Todd Huskinson, Chief Financial Officer of Stellus Capital Investment Corporation certify that:
1.
I have reviewed this Annual Report on Form 10-K of Stellus Capital Investment
Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated this 4th day of March 2025.
By: /s/ W. Todd Huskinson
W. Todd Huskinson
Chief Financial Officer

Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with this Annual Report on Form 10-K (the “Report”) of Stellus Capital Investment Corporation (the
“Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Robert T. Ladd, the Chief Executive
Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Registrant.
/s/ Robert T. Ladd
Name: Robert T. Ladd
Date:  March 4, 2025

Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with this Annual Report on Form 10-K (the “Report”) of Stellus Capital Investment Corporation (the
“Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, W. Todd Huskinson, the Chief Financial
Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Registrant.
/s/ W. Todd Huskinson
Name: W. Todd Huskinson
Date: March 4, 2025