News Releases

Waterside Announces Financial Results for 2007 along with major operating changes

NORFOLK, VA – September 13, 2007 – Waterside Capital Corp. (Nasdaq: WSCC), a Small Business Investment Company (SBIC), today reported financial results for the full year and six months ended June 30, 2007, as well as major operating changes.

Fiscal 2007
The company’s net decrease in stockholders’ equity resulting from operations (which includes net operating income plus realized and unrealized gains or losses on investments) was $5,358,601 or $2.80 per share for the year ended June 30, 2007, compared to $2,668,000 or $1.74 per share for the year ended June 30, 2006.

The decreases for 2007 are primarily attributed to the following:

- Net operating losses of ($1,352,575) or ($0.71) per share for the year ended June 30, 2007 compared to a net operating loss of ($390,465) or ($0.25) per share for the year ended June 30, 2006. This increase was in large part due to attorney fees involved in various litigation matters.

- Realized loss on investments recognized during the year of $1,332,737. The majority is attributable to the complete write-off of Lakeview Technologies Solutions, Inc investment amounting to $2,337,794. This loss was partially offset by realized gains on six other investments.

- Unrealized investment valuation loss on the company’s investments of $2,673,289 due primarily to a write down in New Dominion Pictures, LLC of $3,647,758. This loss was partially offset by gains in other holdings.

At June 30, 2007, Waterside’s loans and investments had a fair value of $21.2 million compared with $30.2 million reported at June 30, 2006. The company originated new investments of $5.3 million for the year ended June 30, 2007, compared to $300 thousand for the year ended June 30, 2006. Proceeds received from the sales of investments, principal collected on debt securities, and proceeds from collection of notes receivable was $10.5 million. The net asset value of the common shares declined to $4.95 per share at June 30, 2007 from the $7.75 reported at June 30 2006. The decline in net asset value was due to the above mentioned $5.4 million decrease in shareholders equity resulting from operations.

Six Months 2007
The company reported a net decrease in stockholders’ equity resulting from operations of $3,651,315 or $1.91 per share for the six months ended June 30, 2007, compared to a decrease of $1,224,000 or $0.76 per share for the six months ended June 30, 2006.

New CEO Makes Bold Changes
Waterside Capital Corporation is in the process of transition in the areas of management and operations. Franklin (Lin) Earley, who joined the company in August 2006 as a business development officer, was chosen to lead Waterside as its CEO in April 2007. Earley, age 60, retired from Bank of America as regional president with 37 years experience in commercial lending, risk management, and capital markets.

Earley's first management move involved hiring a new CFO, Julie Stroh, in August 2007 to replace retiring CFO Gerald McDonald. Stroh is a CPA with seven years experience with the SBA and the SBIC program. She is an expert in the SBIC distribution process, accuracy and compliance, due diligence, financial statements, and analyzing prior investment track records and proposed investment strategies. During her final years at the SBA, she successfully managed all aspects of the distribution process for approximately 170 Participating Security venture capital funds (SBICs) licensed by the Federal Government. In FY06, Participating Security SBICs distributed $688 million.

On the management side, Earley and his team are focusing on expense control, harvesting investments, and ramping up business development activities to generate new, risk appropriate investments. Developments include:

- Subsequent to June 30, 2007 Waterside prepaid $5.3 million of SBA debenture debt which will reduce its interest expense and improve operating performance.

- Reduction in salary expenses.

- Litigation expense has been curtailed and should be greatly reduced for FYE 2008.

- Waterside has ample liquidity to fund the planned growth in investments for FYE 2008.

About Waterside Capital Corporation
Waterside Capital Corporation (www.watersidecapital.com) is a Small Business Investment Company (SBIC), headquartered in Norfolk, Virginia with a portfolio of approximately $21million of loans and investments in 20 companies located primarily in the Mid-Atlantic region. Waterside Capital’s individual investments range from $500,000 to over $3 million.

For more information contact:
Franklin (Lin) Earley, CEO, (757) 626-1111 x 307,

Julie Stroh, CFO, (757) 626-1111 x 301,