Forward Looking Statements and Performance and Risk Disclosures

FORWARD LOOKING STATEMENTS


Any reproduction of information provided on this website, in whole or in part, or the disclosure of any of its contents, without the prior consent of Capitala, is prohibited. The information contained on this website are neither an offer to sell, nor a solicitation of an offer to purchase, an interest in a fund or any other security sponsored by Capitala.


Any website information, and the summaries contained herein, do not purport to be complete and no obligation to update or otherwise revise such information is being assumed. Nothing shall be relied upon as a promise or representation as to the future performance of a fund or any other security sponsored by Capitala.


Past performance is not a guarantee of future results. Future returns are not guaranteed and may be higher or lower than those presented herein. The performances of individual companies in which investment vehicles managed by Capitala have invested do not necessarily represent the performance of the investment vehicles themselves. Due to various risks and uncertainties, including but not limited to the effects of market and/or economic conditions, or political, legal, environmental, or regulatory developments, actual performance may differ materially from the anticipated performance shown herein. An investment could result in partial or total loss for a fund. Portfolio holdings will vary. Investors should not assume they will participate in the investments discussed on this website or similar investments. Information regarding portfolio holdings and other characteristics are presented to illustrate examples of the types of investments that Capitala and the funds under its management (directly or indirectly) may have made as of a particular date. It may not be representative of any current or future investments. The performance of these investments is not necessarily indicative of the overall performance of other investments made by Capitala. Depending on market conditions and opportunities, the actual investments to be made by Capitala going forward may differ substantially from the examples included herein.


Performance data and returns represent past performance, are based on management estimates, may not necessarily be audited, and are not guaranteed. Information with respect to past performance contained herein has ultimately been derived from financial statements and other documents provided by the portfolio companies and/or the third-party manager of such portfolio companies unless otherwise stated. Capitala has determined the estimated value of the investments described herein in good faith based on information believed by Capitala to be reliable as of June 30, 2022, but there can be no assurance that such estimated value accurately reflects the fair value of such investments. Capitala is under no obligation to update such information as of any subsequent date and neither the delivery of any materials or information at a subsequent date nor the issuance of any interest in any product sponsored by Capitala shall create any implication that the information contained herein or in any other materials and information is correct as of any subsequent date.


Statements included herein (including projections, forecasts, targeted returns, illustrative returns, estimates, beliefs and similar information) may constitute “forward-looking statements,” which relate to future events or our future performance or financial condition. Words such as “believe”, “intend”, “expect”, “project”, “anticipate” and “future” or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties and are based on numerous assumptions, in each case whether or not identified herein. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including as a result of factors beyond the control of Capitala. Capitala undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.


PERFORMANCE AND RISK DISCLOSURES


Fund Performance:
Information included on this website is intended for Capitala’s SBIC investment strategy. As such, performance presented on this website is limited to Capitala’s Legacy SBIC Funds. Performance of other non-SBIC vehicles can be made available upon request.


Investment Return Calculations:
References herein to the “Asset-Level Return” or “Asset-Level IRR” is calculated as the internal rate of return for the applicable investment, calculated on an aggregate, combined or pooled basis as of a specific date and expressed as a percentage of the aggregate amount invested in such investments. References herein to “Asset-Level MOIC” are to the gross multiple of capital invested for the applicable investment, calculated on a gross, aggregate, combined or pooled basis as of a specific date and expressed as a multiple capital invested. Asset-Level IRR and Asset-Level MOIC include the recognized benefit from, and unamortized impact of all placement fees received by Capitala at the close of each investment.


All Asset-Level IRR calculations are made only with respect to the specific investments referenced herein and do not measure actual returns realized by investors in the Legacy SBIC Fund. Accordingly, the Asset-Level IRR calculations do not take into account management fees, interest and other expenses associated with leverage used by the Legacy SBIC Funds, carried interest or other performance compensation payable to the Legacy SBIC Funds’ general partners and managers and any other costs and expenses to be borne by investors in the Legacy SBIC Funds, all of which will reduce returns realized by investors and in the aggregate are expected to be substantial. Please see Section IV – Summary Fund Terms and the Partnership Agreement for a description of such fees, carried interest and expenses expected to be charged to the Fund. In the case of portfolios of realized and unrealized investments, the “Asset-Level IRRs” are based on realizations and internal valuations of Capitala as of the applicable date.


Gross Return Calculations for Legacy SBIC Funds:
References herein to the “Gross IRR” of a Legacy SBIC Fund are to the internal rate of return for capital contributed to the Legacy SBIC Fund by its investors (inclusive of the general partner), distributions made by the Legacy SBIC to its investors, and the Legacy SBIC Fund’s net asset value, calculated as of a specific date and expressed as a percentage return on capital invested in the Legacy SBIC Fund. For purposes of calculating Gross IRR, carried interest payments have been added back to the return in the quarter incurred and any accrued unpaid carried interest has been included in the period-end net asset value. No other expenses, including management fees and interest expense incurred by the Legacy SBIC Fund, have been added back for purposes of calculating Gross IRR. Such gross calculations include all capital invested, including capital provided by investors in the Legacy SBIC Funds, leverage used by the Legacy SBIC Funds, and permitted reinvestments by the Legacy SBIC Funds of realized investment proceeds.


Net Return Calculations for Legacy SBIC Funds:
References herein to Net IRR for a Legacy SBIC Fund are to the net internal rate of return for capital contributed to the Legacy SBIC Fund by its limited partners and distributions made by the Legacy SBIC to its limited partners and the limited partners allocated share of net asset value, calculated as of a specific date and expressed as a percentage return on capital invested in the Legacy SBIC Fund. References herein to Net MOIC for a Legacy SBIC Fund are to the sum of the distributions made by the Legacy SBIC Fund to its limited partners and the limited partners allocated share of net asset value, calculated as of a specific date and expressed as a multiple of capital contributed to the Legacy SBIC Fund by its investors.


All net return calculations for the Legacy SBIC Funds are made as of a specific date net of and after deduction for the payment of management fees required to be paid by the Legacy SBIC Fund as of such date (other than any management fees irrevocably waived by the Legacy SBIC Fund), interest and other expense incurred by the Legacy SBIC Fund in its audited financial statements, carried interest distributions made as of such date to the Legacy SBIC Fund’s general partner, unpaid carried interest accrued as of such date, and transaction costs and other expenses incurred by the Legacy SBIC Fund in its audited financial statements. The net return calculations for the Legacy SBIC Funds’ investments do not include any deduction for the irrevocable waiver of $11 million of management fees by the Legacy SBIC Funds between 2007 and 2011, which had the effect of increasing the Net IRR and the Net MOIC for each of the Legacy SBIC Funds. Capitala does not expect to waive or defer any management fees for the Fund. Additionally, all net return calculations for the Legacy SBIC Fund’s investments are net of interest and other expenses associated with leverage obtained by the Legacy SBIC Fund. Some of the Legacy SBIC Funds have had access to, and have obtained, leverage under the SBIC program to finance at least some of their investments.


At the time of Capitala Finance Corp.’s (NASDAQ: CPTA) Initial Public Offering (“IPO”) on September 30, 2013, the partners of SBIC Fund II and SBIC Fund III exchanged their respective interests, based on the fair market value of the assets at the time of transfer, for shares of CPTA. Net IRR and Net MOIC for SBIC Fund II and SBIC Fund III are calculated from the inception of each fund through the exchange of partnership interests for CPTA stock on September 30, 2013. As part of the IPO, SBIC Fund I sold its assets at fair market value in exchange for shares of CPTA. Net IRR and Net MOIC for SBIC Fund I is calculated from the inception of the fund through the asset sale for CPTA stock on September 30, 2013.


Return Calculations – Timing Factors:
Gross and Net IRR calculations take into account the timing of cash flows and the dollar amount invested at any given time. Gross IRR calculations for each of the Legacy SBIC Funds are based upon the actual dates of such cash flows, with net asset value, management fees and carried interest assumed to be incurred at the end of each quarter. Net IRR calculations for each of the Legacy SBIC Funds are made using the actual dates of contributions made by and distributions made to the limited partners in such Legacy SBIC Fund. Net MOIC calculations do not take into account such timing factors.


Return Calculations - Treatment of Unrealized Portion of Investments:
The Asset-Level IRR, Gross IRR, Net IRR and Net MOIC calculations for each Legacy SBIC Fund and its investors include an estimated valuation of the unrealized portion of such Legacy SBIC Fund’s investments as of the measurement date. Amounts ultimately realized or paid by a Legacy SBIC Fund and its investors at a future time with respect to the unrealized portion of its investments in each case and in the aggregate may differ materially and substantially from its estimated valuations made from time to time. For purposes of calculating Asset-Level IRR, Gross IRR, Net IRR and Net MOIC for the Legacy SBIC Funds, Capitala has valued such unrealized portions of investments at the fair values determined by it in its most recent valuation of that Legacy SBIC Fund’s investments. The fair values of each Legacy SBIC Fund’s investments are determined by Capitala in accordance with GAAP and a methodology that is consistent with the valuation method of the Fund described in the Partnership Agreement.


At the time of Capitala Finance Corp.’s (NASDAQ: CPTA) Initial Public Offering (“IPO”) on September 30, 2013, the partners of SBIC Fund II and SBIC Fund III exchanged their respective interests, based on the fair market value of the assets at the time of transfer, for shares of CPTA. Net IRR and Net MOIC for SBIC Fund II and SBIC Fund III are calculated from the inception of each fund through the exchange of partnership interests for CPTA stock on September 30, 2013. As part of the IPO, SBIC Fund I sold its assets at fair market value in exchange for shares of CPTA. Net IRR and Net MOIC for SBIC Fund I is calculated from the inception of SBIC Fund I through the asset sale for CPTA stock on September 30, 2013.


Specific Calculations May Be Further Qualified: Specific references herein to Gross IRR, Gross MOIC, Net IRR and Net MOIC calculations may be further qualified as to the manner in which they are calculated as may be specifically noted herein. “Investment Information” in Section X – Risk Factors explains further various risks associated with the manner in which investment results and returns are calculated and presented.


In the United Kingdom, this communication is only being distributed to and is only directed at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), (ii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order, or (iii) any other person to whom it may lawfully communicated, (all such persons together being referred to as “relevant persons”). Any investment to which this communication relates is only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such investments will be engaged only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Transmission of this information to any other person in the U.K. is unauthorized and may contravene the Financial Services and Markets act of 2000.


Fund IV Revenue and EBITDA Growth Figures:
Data shown for investments from date of financials at initial investment to exit or March 31, 2022. The average hold period for such realized investments is 2.6 years. The total Fund IV calculation excludes from consideration the investment in Hale and Hearty Holdings, LLC. For additional information, please contact Capitala.


Capitala Finance Corp:
Capitala Finance Corp. was a publicly listed company (NASDAQ:CPTA) managed by Capitala from September 30, 2013 to June 30, 2021. All performance data for CPTA investors is publicly available via CPTA’s SEC filings.

Please acknowledge that you understand that all private fund investments involve risk, including loss of investment. Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any targeted projections can and may differ from actual investment results had the strategies been deployed in actual fund portfolio accounts. Please refer to our disclosures available on this website for more detailed explanations of the risks of investing in private securities. Prospective investors should consult their own financial and legal advisors about risks associated with private fund investments and the suitability of investing in such assets.