News Releases

Waterside Capital Announces Financial Results for 2008

NORFOLK, VA, August 29, 2008: Waterside Capital Corp. (Nasdaq: WSCC), a Small Business Investment Company (SBIC), today reported financial results for the twelve months ended June 30, 2008.

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 $2,142,000 or $1.12 loss per share for the twelve months ended June 30, 2008, compared to a decrease of $5,359,000 or $2.80 loss per share for the twelve months ended June 30, 2007. The per share performance was calculated using weighted average shares outstanding of 1,915,548. The decrease in 2008 was primarily due to the following:

        1. Net operating losses of ($309,232) or ($0.16) per share for the year ended June 30, 2008 compared 

            to a net operating loss of ($1,352,575) or ($0.71) per share for the year ended June 30, 2007.
        2. Realized loss on investments recognized during the year of ($1,894,289). The majority of this is

            attributable to the partial write off of International Wood, LLC in the amount of $1,940,000.

At June 30, 2008, Waterside's loans and investments had a fair value of $20.9 million compared with $21.2 million reported at June 30, 2007. For the twelve months ended June 30, 2008, the Company originated new investments of $5.9 million and received proceeds from sale of investments, proceeds from collection of notes receivable, return of capital on equity securities and principal collected on debt securities of $5.2 million. This compared to the company's funding of $5.3 million in new investments for the twelve months ended June 30, 2007, and receiving proceeds from the sale of investments, principal collected on debt securities, and proceeds from collection of notes receivable of $10.5 million. The net asset value of the common shares decreased to $3.84 per share at June 30, 2008 from the $4.95 reported at June 30, 2007. The decrease in net asset value was due to the above mentioned $2,142,000 decrease in shareholders equity resulting from operations.

The Future is Bright
The Company prepaid $5.3 million of SBA debenture debt with an average interest rate of 8.4% in September 2007. In April 2008, SBA approved the Company’s refinancing of $16.1 million of outstanding debentures. The refinanced $16.1 million will take place in September 2008 and will mature September 1, 2018. The interest rate will be several basis points lower than the Company’s present obligations and will reduce interest expense and improve operating performance.

Waterside Capital continues to focus on three key areas to improve operations: profitability, refinancing of maturing SBA debentures, and additional new capital. Its early efforts have resulted in substantial improvement in operations, and many of those efforts are still working their way through Waterside's system and will take time to absorb.

Profitability- Waterside Capital has implemented expense controls including salary reductions and began building a robust business development effort to obtain additional risk appropriate investments in this very competitive business.

Refinance of maturing SBA debentures- During the year the Company curtailed its debt with the SBA by $5.3 million leaving a balance of $16.1 million maturing in 2009 through 2011. Waterside's success is dependent of the refinancing of this debt.

Additional new capital- The key to acceptable future earnings is additional capital which will allow for new risk appropriate investments. Waterside Capital has explored a variety of options all of which would be dilutive to existing shareholders, since any new equity dilutes the existing equity holders if the Company's stock continues trading at a substantial discount to book value. The Company cannot grow and reach acceptable operating levels without new capital. It is anticipated that an Investment Banker will be engaged to advise the Company on alternatives available to enhance and/or preserve shareholder value and assist in raising capital.

About Waterside Capital Corporation
Waterside Capital Corporation is a Small Business Investment Company (SBIC) headquartered in the Mid-Atlantic Region that specializes in venture capital, financing and small business loans. The capital investment firm serves small businesses in the Mid-Atlantic Region, Richmond, Hampton Roads, Virginia, Washington DC, North Carolina, and Maryland.

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

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