Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2019

News provided by

Stellus Capital Investment Corporation

Mar 03, 2020, 06:00 ET

HOUSTON, March 3, 2020 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE: SCM) ("Stellus" or "the Company") today announced financial results for its fourth fiscal quarter and year ended December 31, 2019.

In describing the Company's 2019 activities, Robert T. Ladd, Chairman and Chief Executive Officer, stated, "Upon completion of our seventh full year of operations, we are pleased to report a strong year in which we covered our dividend from realized earnings, grew the portfolio by $124 million (at fair value), increased net asset value, secured a second SBIC license, and generated net realized gains of $19.6 million. Approximately 60% of the 2019 dividends were characterized as long term capital gains on our shareholders' Form 1099. Finally, our credit facility was increased from a total commitment of $180 million to $220 million during the year positioning, us for continued growth in 2020."

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



	Q4-19		YTD-19		Q4-18		YTD-18
	Amount	Per Share	Amount	Per Share	Amount	Per Share	Amount	Per Share

Net investment income	$6.89	$0.36	$22.44	$1.23	$7.82	$0.49	$22.64	$1.42

Core net investment income⁽¹⁾	$6.08	0.32	24.14	1.32	6.73	0.42	22.99	1.44

Net realized gains on investments	0.42	0.02	19.57	1.07	0.09	0.01	5.27	0.33

Total realized income⁽²⁾	7.31	0.38	42.00	2.30	7.91	0.50	27.91	1.75

Distributions	(6.45)	(0.34)	(25.04)	(1.36)	(5.42)	(0.34)	(21.69)	(1.36)

Net unrealized appreciation
(depreciation) on investments	(5.45)	(0.29)	(15.50)	(0.85)	(5.52)	(0.35)	(1.65)	(0.10)

Provision for taxes on unrealized gains on investments in taxable subsidiaries	(0.03)	(0.00)	(0.07)	(0.00)	(0.03)	(0.00)	(0.07)	0.00

Net increase in net assets resulting from operations	$1.83	0.10	26.44	1.45	2.36	0.15	26.19	1.64

Weighted average shares outstanding	18,926,817		18,275,696		15,953,810		15,953,571


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

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


	As of	As of
	12/31/2019	12/31/2018
Investments at fair value	$628.9	$504.5
Total assets	$648.5	$526.3
Net assets	$270.6	$224.8
Shares outstanding	19,131,746	15,953,810
Net asset value per share	$14.14	$14.09




	Q4-19	YTD-19	Q4-18	YTD-18

New investments	$73.6	$246.5	$74.6	$272.9
Repayments of investments	(26.6)	(128.2)	(44.7)	(147.6)
Net activity	$47.0	$118.3	$29.9	$125.3


			As of	As of
			12/31/2019	12/31/2018

Number of portfolio company investments			63	57
Number of debt investments			51	44

Weighted average yield of debt and other income producing investments ⁽¹⁾
Cash			8.7%	10.2%
PIK			0.0%	0.1%
Fee amortization			0.5%	0.6%
Total			9.2%	10.9%

Weighted average yield on total investments ⁽²⁾
Cash			8.3%	9.7%
PIK			0.0%	0.1%
Fee amortization			0.5%	0.5%
Total			8.8%	10.3%

(1)

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

(2)

The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

Results of Operations

Investment income for the years ended December 31, 2019 and 2018 totaled $58.9 million and $53.3 million, respectively, most of which was made up of interest income from portfolio investments.

Operating expenses for the years ended December 31, 2019 and 2018, totaled $36.5 million and $30.6 million, respectively. For the same respective periods, base management fees totaled $9.7 million and $8.2 million, income incentive fees totaled $5.8 million and $5.5 million, capital gains incentive fees totaled $0.8 million and $0.1 million, fees and expenses related to our borrowings totaled $15.0 million and $12.3 million (including interest and amortization of deferred financing costs), administrative expenses totaled $1.7 million and $1.4 million, income tax totaled $0.9 million and $0.3 million, and other expenses totaled $2.6 million and $2.8 million, respectively.

For the years ended December 31, 2019 and 2018, net investment income was $22.4 million and $22.6 million, or $1.23 and $1.42 per common share based on weighted average common shares outstanding of 18,275,696 and 15,953,571, respectively.

The capital gains incentive fee of $0.8 million and $0.1 million for the years ended December 31, 2019 and 2018, respectively, was accrued for U.S. GAAP purposes due to the increase in realized and unrealized gains over the years. There can be no assurance that unrealized appreciation or depreciation will be realized in the future. Accordingly, such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $0.9 million and $0.3 million for the year ended December 31, 2019 and 2018, respectively, was accrued based on estimates of undistributed taxable income, which was generated largely from capital gains. Excluding these accruals, net investment income for the year ended December 31, 2019 would be $24.14 million, or $1.32 per share; and for the year ended December 31, 2018, net investment income would have been $ 22.99 million, or $1.44 per share.

The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the years ended December 31, 2019 and 2018, of ($15.5) million and ($1.6) million, respectively. For the years ended December 31, 2019 and 2018, the Company had realized gains of $19.6 million and $5.5 million, respectively.

For the years ended December 31, 2019 and 2018, net increase in net assets resulting from operations totaled $26.4 million and $26.2 million, or $1.45 per common share and $1.64 per common share, based on weighted average common shares outstanding of 18,275,696 and 15,953,571, respectively.

Liquidity and Capital Resources

As of December 31, 2019 and 2018, our credit facility provided for borrowings in an aggregate amount up to $220.0 and $180.0 million, respectively, on a committed basis. As of December 31, 2019, our credit facility had an accordion feature which allowed for potential future expansion of the facility size to $250.0 million. As of December 31, 2019 and December 31, 2018, we had $161.6 million and $99.6 million in outstanding borrowings under the credit facility, respectively.

For the for the year ended December 31, 2019, our operating activities used cash of ($93.3) million primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments. For the same period, our financing activities provided cash of $92.0 million, primarily made up of proceeds from the issuance of common stock, proceeds from SBA-guaranteed debentures and net borrowings on our credit facility.

For the year ended December 31, 2018, our operating activities used cash of ($102.4) million, primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments, and our financing activities provided cash of $94.8 million, primarily related to the repayments under our credit facility and distributions to stockholders, offset by an issuance of common stock

Distributions

During the three and twelve months ended December 31, 2019, we declared aggregate distributions for of $0.34 per share and $1.36 ($6.5 million and $25.0 million, respectively). During the three and twelve months ended December 31, 2018, we declared aggregate distributions of $0.34 and $1.36 per share ($5.4 million and $21.7 million, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. None of these distributions are expected to include a return of capital.

Equity Offerings

The Company issued 2,952,149 shares during the year ended December 31, 2019 in a secondary offering on March 15, 2019 and the underwriters' exercise of their overallotment option on April 11, 2019. Gross proceeds resulting from the secondary offering totaled $42,599,510 and underwriting and other expenses totaled $1,296,803. The per share offering price for the secondary offering was $14.43. The Company issued 225,787 shares under the At-the-Market ("ATM") Program in 2019, for gross proceeds of $3,262,729 and underwriting and other expenses of $240,040. The average per share offering price of shares issued in the ATM Program during 2019 was $14.45.

Recent Portfolio Activity

For the quarter ended December 31, 2019, we funded $73.6 million in six new and five existing portfolio companies and received $26.6 million from four repayments, twenty-three pay downs, including amounts received from equity investments. The new investment transactions and repayments that occurred during the quarter are summarized as follows:

On October 1, 2019, we converted Wise Holding Corporation's first lien term loan into common equity of the restructured company and all existing debt obligations were extinguished, and related claims were released as part of the restructuring.

On October 2, 2019, we received full repayment on the first lien term loan of Good Source Solutions, Inc. for total proceeds of $18.9 million, including a $0.4 million prepayment fee.

On October 18, 2019, we invested $13.3 million in the first lien term loan of GS HVAM Intermediate, LLC., previously Good Source Solutions, Inc., a marketer and distributor of food products to the corrections, education and other institutional foodservice markets. Additionally, we committed $1.6 million in the unfunded delayed draw term loan and $2.7 million in the unfunded revolver. We also invested $0.6 million in the equity of the company.

On October 18, 2019, we invested $17.5 million in the first lien term loan of Intuitive Health, LLC, an operator of freestanding urgent care/emergency room combination facilities.

On November 1, we invested $10.0 million in the first lien term loan of DRS Holdings III, Inc., a provider of a wide variety of products across the insole, custom fit orthotic and foot care category. Additionally, we committed to $0.9 million in the unfunded revolver.

On November 5, we invested $19.5 million in the second lien term loan of Bromford Industries Ltd, a supplier of complex, mission critical engine components, fabrications and assemblies for the global aerospace and power generation industries. We also invested $1.0 million in the equity of the company.

On November 22, we invested $5 million in the first lien term loan of Pioneer Transformers, L.P., an engineer and manufacturer of a broad range of specialty liquid-filled and dry-type transformers for niche applications in the utility, industrial, commercial, and backup power markets.

On November 22, we invested $3 million in the first lien term loan of Advanced Barrier Extrusions, LLC, an existing portfolio company.

On December 2, we invested $1.7 million in the first lien term loan of Premiere Digital Services, Inc., an existing portfolio company.

On December 12, we recognized a loss of $0.2 million in full realization on the equity of Dream II Holdings, LLC.

On December 24, we received $2 million in the full realization on the equity of RecordXTechnologies Holdings, LLC, resulting in a realized gain of $1.2 million.

On December 26, we committed an additional $0.6 million in the unfunded revolver of BFC Solmetex, LLC, an existing portfolio company.

On December 27, we invested $0.1 million in the equity of USAF Blocker III, LLC, and existing portfolio company.

Events Subsequent to December 31, 2019

On January 3, we received full repayment on the first lien term loan of APG Intermediate Sub 2 Corp. for total proceeds of $10 million, including a $0.1 million prepayment fee. We also received $2.4 million in full realization on the equity of the company, resulting in a $1.3 million gain.

On January 7, 2020, we invested $14.4 million in the first lien term loan Sales Benchmark, LLC, $1.3 million in the unfunded revolver, and $3.3 million in the unfunded delayed draw term loan of Sales Benchmark, LLC, a provider of revenue growth management consulting services for private equity-owned and large enterprise clients. Additionally, we invested $0.7 million in the preferred equity of the company.

On January 15, 2020, Apex Environmental Resources Holdings, LLC was merged with a provider of non-hazardous waste management, collection, and recycling services, creating Interstate Waste Services, Inc. Our common and preferred ownership positions in Apex Environmental Resources Holdings, LLC was rolled into the combined entity.

On January 31, 2020, we invested $18.9 million in the first lien term loan and $2.7 million in the unfunded revolver of Elliott Aviation, LLC, a provider of maintenance, repair, and overhaul and fixed-base operator services to the business aviation sector. Additionally, we invested $0.9 million in the preferred equity of the company.

ATM Program

Since December 31, 2019, we issued 332,591 shares under the At-the-Market ("ATM") Program, for gross proceeds of $4.8 million. The average per share offering price of shares issued in the ATM Program was $14.42.

Credit Facility

The outstanding balance under the credit facility as of February 25, 2020 was $175.3 million.

SBA-guaranteed Debentures

The outstanding balance of SBA-guaranteed Debentures as of February 25, 2020 was $161.0 million.

Dividend Declared

On January 10, 2020, the Company's board of directors declared a regular monthly dividend for each of January, February and March 2020 as follows:


Declared	Ex-Dividend Date	Record Date	Payment Date	Amount per Share
1/10/2020	1/30/2020	1/31/2020	2/14/2020	$	0.1133
1/10/2020	2/27/2020	2/28/2020	3/13/2020	$	0.1133
1/10/2020	3/30/2020	3/31/2020	4/15/2020	$	0.1133

Please refer to the website for regarding the U.S. federal income tax characteristics of our 2019 dividends. The information is posted on the website under Tax Information" (http://www.stelluscapital.com/cgi-bin/credit/corporation/tax.pl).

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Tuesday, March 3, 2020 at 10:00 AM, Central Standard Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W. Todd Huskinson, Chief Financial Officer, Chief Compliance Officer, Treasurer, and Secretary.

For those wishing to participate by telephone, please dial 800-367-2403 (domestic). Use passcode 9015965. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Wednesday, March 11, 2020 by dialing (888) 203-1112 and entering passcode 9015965. The replay will also be available on the Company's website.

Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, (713) 292-5414
Chief Financial Officer
[email protected]

PART I — FINANCIAL INFORMATION

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


			December 31,		December 31,
			2019		2018
ASSETS

	Non-controlled, affiliated investments, at fair value (amortized cost of $0 and $52,185, respectively)		$	—	$	50,000
	Non-controlled, non-affiliated investments, at fair value(amortized cost of $642,707,824 and $502,691,464,respectively)			628,948,077		504,433,668
	Cash and cash equivalents			16,133,315		17,467,146
	Receivable for sales and repayments of investments			123,409		99,213
	Interest receivable			2,914,710		3,788,684
	Other receivables			25,495		85,246
	Deferred offering costs			—		18,673
	Prepaid expenses			368,221		344,621
		Total Assets	$	648,513,227	$	526,287,251
LIABILITIES
	Notes payable		$	47,974,202	$	47,641,797
	Credit facility payable			160,510,633		98,237,227
	SBA-guaranteed debentures			157,543,853		146,387,802
	Dividends payable			2,167,630		1,807,570
	Management fees payable			2,695,780		2,183,975
	Income incentive fees payable			1,618,509		1,936,538
	Capital gains incentive fees payable			880,913		81,038
	Interest payable			2,322,314		1,863,566
	Unearned revenue			559,768		410,593
	Administrative services payable			413,278		392,191
	Deferred tax liability			134,713		67,953
	Income tax payable			917,000		316,092
	Other accrued expenses and liabilities			203,461		115,902
		Total Liabilities	$	377,942,054	$	301,442,244
Commitments and contingencies (Note 7)
		Net Assets	$	270,571,173	$	224,845,007
NET ASSETS
	Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,131,746 and 15,953,810 issued and outstanding, respectively)		$	19,132	$	15,954
	Paid-in capital			272,117,091		228,160,491
	Accumulated undistributed deficit			(1,565,050)		(3,331,438)
		Net Assets	$	270,571,173	$	224,845,007
		Total Liabilities and Net Assets	$	648,513,227	$	526,287,251
		Net Asset Value Per Share	$	14.14	$	14.09

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

				For the		For the		For the
				year		year		year
				ended		ended		ended
				December 31,		December 31,		December 31,
				2019		2018		2017
INVESTMENT INCOME
	Interest income			$	56,895,990	$	51,463,033		38,071,449
	Other income				2,015,899		1,803,305		1,576,744
		Total Investment Income		$	58,911,889	$	53,266,338	$	39,648,193
OPERATING EXPENSES
	Management fees			$	9,703,706	$	8,154,842		6,255,911
	Valuation fees				265,103		307,838		336,300
	Administrative services expenses				1,691,764		1,390,375		1,245,727
	Income incentive fees				5,809,672		5,529,376		2,911,392
	Capital gains incentive fees				799,876		81,038		—
	Professional fees				1,040,011		1,189,071		1,274,066
	Directors' fees				383,000		317,000		331,000
	Insurance expense				352,382		348,500		429,897
	Interest expense and other fees				14,976,024		12,338,755		7,855,211
	Income tax expense				903,905		275,106		—
	Other general and administrative expenses				547,637		697,900		621,204
		Total Operating Expenses		$	36,473,080	$	30,629,801	$	21,260,708
		Loss on extinguishment of debt			—		—		416,725
		Net Investment Income		$	22,438,809	$	22,636,537	$	17,970,760
		Net realized gain on non-controlled, non-affiliated investments		$	19,565,903	$	5,540,518		4,655,976
		Tax provision on realized gain on investments			—		(267,975)		—
		Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments		$	(15,501,951)	$	(1,706,549)		40,113
		Net change in unrealized appreciation (depreciation) on non-controlled, affiliated investments			2,185		60,000		(62,185)
		Benefit (provision) for taxes on net unrealized gain on investments in taxable subsidiaries			(66,760)		(67,953)		8,593
		Net Increase in Net Assets Resulting from Operations		$	26,438,186	$	26,194,578	$	22,613,257
		Net Investment Income Per Share		$	1.23	$	1.42	$	1.21
		Net Increase in Net Assets Resulting from Operations
			Per Share	$	1.45	$	1.64	$	1.52
		Weighted Average Shares of Common Stock Outstanding			18,275,696		15,953,571		14,870,981
		Distributions Per Share		$	1.36	$	1.36	$	1.36

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

		For the year		For the year		For the year
		ended		ended		ended
		December 31,		December 31,		December 31,
		2019		2018		2017
Increase in Net Assets Resulting from Operations
Net investment income		$	22,438,809	$	22,636,537		17,970,760
Net realized gain on non-controlled, non-affiliated investments			19,565,903		5,540,518		4,655,976
Tax provision on realized gain on investments			—		(267,975)		—
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments			(15,501,951)		(1,706,549)		40,113
Net change in unrealized appreciation (depreciation) on non-controlled, affiliated investments			2,185		60,000		(62,185)
Benefit (provision) for taxes on unrealized appreciation on investments			(66,760)		(67,953)		8,593
Net Increase in Net Assets Resulting from Operations		$	26,438,186	$	26,194,578	$	22,613,257
Stockholder Distributions From:
	Net investment income	$	(10,000,000)	$	(16,418,007)	$	(17,970,760)
	Net realized capital gains		(15,038,173)		(5,272,543)		(2,352,545)
Total Distributions		$	(25,038,173)	$	(21,690,550)	$	(20,323,305)
Capital Share Transactions
	Issuance of common stock	$	45,862,239	$	94,788	$	48,741,549
	Sales load		(1,015,127)		—		(1,358,880)
	Offering costs		(521,715)		—		(307,022)
	Partial share transactions		755		(1,051)		(142)
Net Increase in Net Assets Resulting From
	Capital Share Transactions	$	44,326,153	$	93,737	$	47,075,505
Total Increase in Net Assets		$	45,726,166	$	4,597,765	$	49,365,457
	Net Assets at Beginning of Period	$	224,845,007	$	220,247,242	$	170,881,785
Net Assets at End of Period		$	270,571,173	$	224,845,007	$	220,247,242

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


		For the year		For the year		For the year
		ended		ended		ended
		December 31,		December 31,		December 31,
		2019		2018		2017
Cash flows from operating activities
Net Increase in net assets resulting from operations		$	26,438,186	$	26,194,578	$	22,613,257
Adjustments to reconcile net increase in net assets resulting from
	operations to net cash used in operating activities:
	Purchases of investments		(246,438,384)		(272,927,459)		(172,171,246)
	Proceeds from sales and repayments of investments		128,206,318		147,528,448		172,260,541
	Net change in unrealized depreciation (appreciation) on investments		15,499,766		1,646,549		22,072
	Increase in investments due to PIK		(415,933)		(1,869,905)		(499,595)
	Amortization of premium and accretion of discount, net		(1,774,469)		(1,553,333)		(1,196,566)
	Deferred tax provision		66,760		67,953		(8,593)
	Amortization of loan structure fees		519,995		456,151		455,893
	Amortization of deferred financing costs		332,407		335,309		251,826
	Amortization of loan fees on SBA-guaranteed debentures		623,900		623,989		333,027
	Net realized gain on investments		(19,565,903)		(5,540,518)		(4,655,976)
	Loss on extinguishment of debt		-		-		416,725
Changes in other assets and liabilities
	Decrease (increase) in interest receivable		873,974		(866,480)		1,679,538
	Decrease (increase) in other receivable		59,751		(85,246)		748
	Decrease (increase) in prepaid expenses		(23,600)		16,649		94,949
	Increase in management fees payable		511,805		562,383		13,297
	Increase (decrease) in incentive fees payable		(318,029)		1,564,891		(981,624)
	Increase in capital gains incentive fees payable		799,875		81,038		-
	Increase in administrative services payable		21,087		65,158		54,522
	Increase in interest payable		458,748		842,393		47,361
	Increase in unearned revenue		149,175		271,289		119,349
	Increase in income tax payable		600,908		316,092		-
	Increase (decrease) in other accrued expenses and liabilities		87,559		(152,511)		1,022
Net Cash Provided by (Used in) Operating Activities		$	(93,286,104)	$	(102,422,582)	$	18,850,527
Cash flows from Financing Activities
	Proceeds from the issuance of common stock	$	45,862,239	$	-	$	48,741,549
	Sales load for common stock issued		(1,015,127)		-		(1,358,880)
	Offering costs paid for common stock		(503,042)		(18,673)		(307,022)
	Proceeds from notes issued		-		-		48,875,000
	Financing costs paid for Notes issued		-		-		(1,688,961)
	Repayments on Notes issued		-		-		(25,000,000)
	Stockholder distributions paid		(24,678,113)		(21,594,863)		(19,930,616)
	Proceeds from SBA Debentures		11,000,000		60,000,000		25,000,000
	Financing costs paid on SBA Debentures		(467,850)		(2,055,000)		(856,250)
	Borrowings under Credit Facility		245,750,000		246,300,000		194,250,000
	Repayments of Credit Facility		(183,750,000)		(187,500,000)		(269,500,000)
	Financing costs paid on Credit Facility		(246,589)		(351,403)		(1,158,616)
	Partial share transactions		755		(1,051)		(142)
Net Cash Provided by (Used in) Financing Activities		$	91,952,273	$	94,779,010	$	(2,933,938)
Net Increase (Decrease) in Cash and Cash Equivalents		$	(1,333,831)	$	(7,643,572)	$	15,916,589
	Cash and cash equivalents balance at beginning of period		17,467,146		25,110,718		9,194,129
Cash and Cash Equivalents Balance at End of Period		$	16,133,315	$	17,467,146	$	25,110,718
Supplemental and Non-Cash Activities
	Cash paid for interest expense	$	13,035,976	$	10,075,913	$	6,762,104
	Excise tax paid		280,000		27,717		37,648
	Shares issued pursuant to Dividend Reinvestment Plan		-		94,788		-
	Increase in distribution payable		360,060		899		392,689
	Increase (decrease) in deferred offering costs		(18,673)		18,673		-

Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S GAAP. A reconciliation of net investment income in accordance with U.S GAAP to core net investment income is presented in the table below the financial statements.

Reconciliation of Core Net Investment Income
(Unaudited)

		Year	Quarter
		ended	ended
		December 31, 2019	December 31, 2019
Net investment income		$22,438,809	$6,891,091
	Capital gains incentive fee	$799,876	$(1,011,657)
	Income tax expense	$903,905	$198,228
Core net investment income		$24,142,590	$6,077,662

Per share amounts:
Net investment income per share		$1.23	$0.36
Core net investment income per share		$1.32	$0.32