UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

(Mark One)  
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
COMMISSION FILE NUMBER: 1-35730

 

 


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, Texas 77027

(Address of Principal Executive Offices) (Zip Code)

 

(713) 292-5400

(Registrant’s Telephone Number, Including Area Code)

 

 

 

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
5.75% Notes Due 2022 SCA New York Stock Exchange

 

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 x 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 and post 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 definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨   Accelerated filer x
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

 

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of July 30, 2020 was 19,486,003.

 

 

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
Item 1. Financial Statements 2
  Consolidated Statements of Assets and Liabilities as of June 30, 2020 (unaudited) and December 31, 2019 2
  Consolidated Statements of Operations for the three and six-month periods ended June 30, 2020 and 2019 (unaudited) 3
  Consolidated Statements of Changes in Net Assets for the three and six-month periods ended June 30, 2020 and 2019 (unaudited) 4
  Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2020 and 2019 (unaudited) 5
  Consolidated Schedules of Investments as of June 30, 2020 (unaudited) and December 31, 2019 6
  Notes to Unaudited Consolidated Financial Statements 23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 54
Item 3. Quantitative and Qualitative Disclosures About Market Risk 72
Item 4. Controls and Procedures 73
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 74
Item 1A. Risk Factors 74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 79
Item 3. Defaults Upon Senior Securities 80
Item 4. Mine Safety Disclosures 80
Item 5. Other Information 80
Item 6. Exhibits 80
SIGNATURES 81

 

i

 

 

PART I — FINANCIAL INFORMATION

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

   June 30,      
   2020    December 31, 
   (Unaudited)    2019 
ASSETS        
Non-controlled, non-affiliated investments, at fair value (amortized cost of $667,649,307 and $642,707,824, respectively)  $640,713,831   $628,948,077 
Cash and cash equivalents   23,209,941    16,133,315 
Receivable for sales and repayments of investments   113,812    123,409 
Interest receivable   2,325,856    2,914,710 
Other receivables   25,495    25,495 
Prepaid expenses   266,843    368,221 
Total Assets  $666,655,778   $648,513,227 
LIABILITIES          
Notes payable  $48,139,950   $47,974,202 
Credit facility payable   184,075,319    160,510,633 
SBA-guaranteed debentures   157,886,403    157,543,853 
Dividends payable   4,871,504    2,167,630 
Management fees payable   5,462,248    2,695,780 
Income incentive fees payable   1,660,862    1,618,509 
Capital gains incentive fees payable       880,913 
Interest payable   2,167,084    2,322,314 
Director fees payable   9,000     
Unearned revenue   646,000    559,768 
Administrative services payable   796,768    413,278 
Deferred tax liability   164,664    134,713 
Income tax payable   456,000    917,000 
Other accrued expenses and liabilities   366,668    203,461 
Total Liabilities  $406,702,470   $377,942,054 
Commitments and contingencies (Note 7)          
Net Assets  $259,953,308   $270,571,173 
NET ASSETS          
Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,486,003 and 19,131,746 issued and outstanding, respectively)  $19,486   $19,132 
Paid-in capital   277,116,729    272,117,091 
Accumulated undistributed deficit   (17,182,907)   (1,565,050)
Net Assets  $259,953,308   $270,571,173 
Total Liabilities and Net Assets  $666,655,778   $648,513,227 
Net Asset Value Per Share  $13.34   $14.14 

 

2

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

 CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

                 
   For the   For the   For the   For the 
   three   three   six   six 
   months ended   months ended   months ended   months ended 
   June 30,   June 30,   June 30,   June 30, 
   2020   2019   2020   2019 
INVESTMENT INCOME                    
Interest income  $13,635,480   $13,605,861   $28,485,068   $27,231,260 
Other income   205,798    564,394    617,255    773,924 
Total Investment Income  $13,841,278   $14,170,255   $29,102,323   $28,005,184 
OPERATING EXPENSES                    
Management fees  $2,743,195   $2,304,362   $5,462,249   $4,527,007 
Valuation fees   19,001    21,628    128,834    128,950 
Administrative services expenses   436,594    415,506    903,529    820,905 
Income incentive fees   168,749    1,382,814    1,508,386    2,756,668 
Capital gains incentive (reversal) fees   -    115,856    (880,913)   1,277,613 
Professional fees   150,514    329,541    537,228    673,881 
Directors' fees   110,566    113,000    242,816    217,000 
Insurance expense   93,071    86,649    186,142    172,346 
Interest expense and other fees   4,092,594    3,359,270    8,384,798    7,034,057 
Income tax expense   289,000    342,384    485,795    355,128 
Other general and administrative expenses   302,379    283,845    468,382    292,570 
Total Operating Expenses  $8,405,663   $8,754,855   $17,427,246   $18,256,125 
Net Investment Income  $5,435,615   $5,415,400   $11,675,077   $9,749,059 
Net realized (loss) gain on non-controlled, non-affiliated investments  $(3,893,249)  $2,696,138   $(2,596,456)  $12,942,236 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments  $38,329,217   $(2,089,555)  $(13,175,729)  $(6,514,269)
Provision for taxes on net unrealized gain on investments  $(58,909)  $(27,300)  $(29,950)  $(39,901)
Net Increase (Decrease) in Net Assets Resulting from Operations  $39,812,674   $5,994,683   $(4,127,058)  $16,137,125 
Net Investment Income Per Share  $0.28   $0.29   $0.60   $0.55 
Net Increase (Decrease) in Net Assets Resulting from Operations Per Share  $2.04   $0.32   $(0.21)  $0.92 
Weighted Average Shares of Common Stock Outstanding   19,484,217    18,883,745    19,456,849    17,624,385 
Distributions Per Share  $0.25   $0.34   $0.59   $0.68 

 

3

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

 

   For the   For the   For the   For the 
   three   three   six   six 
   months ended   months ended   months ended   months ended 
   June 30,   June 30,   June 30,   June 30, 
   2020   2019   2020   2019 
Increase (Decrease) in Net Assets Resulting from Operations                    
Net investment income  $5,435,615   $5,415,400   $11,675,077   $9,749,059 
Net realized (loss) gain on non-controlled, non-affiliated investments   (3,893,249)   2,696,138    (2,596,456)   12,942,236 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments   38,329,217    (2,089,556)   (13,175,729)   (6,514,269)
Provision for taxes on unrealized appreciation on investments   (58,909)   (27,300)   (29,950)   (39,901)
Net Increase (Decrease) in Net Assets Resulting from Operations  $39,812,674   $5,994,682   $(4,127,058)  $16,137,125 
Stockholder Distributions From:                    
Net investment income  $(4,871,501)  $(6,426,108)  $(11,490,798)  $(12,160,358)
Total Distributions  $(4,871,501)  $(6,426,108)  $(11,490,798)  $(12,160,358)
Capital Share Transactions                    
Issuance of common stock  $93,470   $2,917,010   $5,023,937   $42,599,510 
Sales load       (68,731)   (5,681)   (1,003,731)
Offering costs       (90,181)   (18,169)   (293,072)
Partial share transactions       (253)   (96)   1,182 
Net Increase in Net Assets Resulting From Capital Share Transactions   $93,470   $2,757,845   $4,999,991   $41,303,888 
Total Increase (Decrease) in Net Assets  $35,034,643   $2,326,419   $(10,617,865)  $45,280,655 
Net Assets at Beginning of Period  $224,918,665   $267,799,244   $270,571,173   $224,845,007 
Net Assets at End of Period  $259,953,308   $270,125,663   $259,953,308   $270,125,663 

 

4

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

         
   For the   For the 
   six   six 
   months ended   months ended 
   June 30,   June 30, 
   2020   2019 
Cash flows from operating activities          
Net (decrease) increase in net assets resulting from operations  $(4,127,058)  $16,137,125 
Adjustments to reconcile net (decrease) increase in net assets from operations to net cash used in operating activities:          
Purchases of investments   (68,247,468)   (78,149,872)
Proceeds from sales and repayments of investments   42,341,340    58,832,731 
Net change in unrealized depreciation on investments   13,175,729    6,514,269 
Increase in investments due to PIK   (552,245)   (65,356)
Amortization of premium and accretion of discount, net   (1,069,969)   (817,309)
Deferred tax provision   29,951    39,901 
Amortization of loan structure fees   318,039    248,990 
Amortization of deferred financing costs   165,748    164,837 
Amortization of loan fees on SBA-guaranteed debentures   342,550    299,694 
Net realized loss (gain) on investments   2,596,456    (12,942,236)
Changes in other assets and liabilities          
Decrease in interest receivable   588,854    347,607 
Decrease in other receivable       59,751 
Decrease in prepaid expenses   101,378    122,506 
Increase (decrease) in management fees payable   2,766,468    (379,613)
Increase (decrease) in incentive fees payable   42,353    (318,368)
(Decrease) increase in capital gains incentive fees payable   (880,913)   1,277,613 
Increase in administrative services payable   383,490    71,943 
(Decrease) increase in interest payable   (155,230)   292,638 
Increase in director fees payable   9,000     
Increase (decrease) in unearned revenue   86,232    (82,649)
(Decrease) increase in income tax payable   (461,000)   63,908 
Increase in other accrued expenses and liabilities   163,207    342,876 
Net Cash Used in Operating Activities  $(12,383,088)  $(7,939,014)
Cash flows from Financing Activities          
Proceeds from the issuance of common stock  $4,794,994   $42,599,510 
Sales load for common stock issued   (5,681)   (1,003,731)
Offering costs paid for common stock   (18,169)   (330,909)
Stockholder distributions paid   (8,557,981)   (11,825,880)
Borrowings under Credit Facility   86,450,000    78,750,000 
Repayments of Credit Facility   (63,000,000)   (99,500,000)
Financing costs paid on Credit facility   (203,353)    
Partial share transactions   (96)   1,181 
Net Cash Provided by Financing Activities  $19,459,714   $8,690,171 
Net Increase in Cash and Cash Equivalents  $7,076,626   $751,157 
Cash and cash equivalents balance at beginning of period   16,133,315    17,467,146 
Cash and Cash Equivalents Balance at End of Period  $23,209,941   $18,218,303 
Supplemental and Non-Cash Activities          
Cash paid for interest expense  $7,713,693   $6,027,898 
Excise tax paid   940,000    280,000 
Shares issued pursuant to Dividend Reinvestment Plan   228,943     
Increase in dividends payable   2,703,874    334,478 
Increase in deferred offering costs       37,837 

 

5

 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2020

 

Investments  Footnotes  Security  Coupon  LIBOR floor   Cash   PIK   Investment Date  Maturity 

Headquarters/

Industry

  Principal Amount/ Shares   Amortized Cost  

Fair

Value (1)

   % of Net Assets 
Non-controlled, non-affiliated investments  (2)(9)                                                  
Adams Publishing Group, LLC                                Greenville, TN                    
Term Loan  (35)  First Lien  1M L+7.50%   1.75%   9.25%       8/3/2018  6/30/2023  Media: Advertising, Printing & Publishing  $5,365,080    5,329,660    5,284,603    2.03%
Delayed Draw Term Loan  (35)  First Lien  1M L+7.50%   1.75%   9.25%       8/3/2018  6/30/2023     $171,914    171,914    169,335    0.07%
Total                                        $5,501,574   $5,453,938    2.10%
Advanced Barrier Extrusions, LLC                                Rhinelander, WI                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+5.75%   1.00%   6.75%       8/8/2018  8/8/2023  Containers, Packaging & Glass  $13,404,736    13,214,599    13,404,736    5.16%
Revolver  (8)(35)  First Lien  3M L+5.75%   1.00%   6.75%       8/8/2018  8/8/2023     $1,000,000    1,000,000    1,000,000    0.38%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                    8/8/2018         250,000 units    250,000    320,000    0.12%
Total                                        $14,464,599   $14,724,736    5.66%
APE Holdings, LLC                                Deer Park, TX                    
Class A Common Units  (4)  Equity                    9/5/2014     Chemicals, Plastics, & Rubber   375,000 units    375,000    140,000    0.05%
Atmosphere Aggregator Holdings II, LP                                Atlanta, GA                    
Common Units  (4)  Equity                    1/26/2016     Services: Business   254,250 units    0    1,400,000    0.54%
Stratose Aggregator Holdings, LP Common Units  (4)  Equity                    6/30/2015         750,000 units    0    4,140,000    1.59%
Total                                        $0   $5,540,000    2.13%
ASC Communications, LLC                                Chicago, IL                    
Term Loan (SBIC)  (2)(35)  First Lien  1M L+5.25%   1.00%   6.25%       6/29/2017  6/29/2023  Healthcare & Pharmaceuticals  $4,320,988    4,301,279    4,212,963    1.62%
Term Loan  (35)  First Lien  1M L+5.25%   1.00%   6.25%       2/4/2019  6/29/2023     $7,345,679    7,280,065    7,162,037    2.76%
Revolver  (35)  First Lien  1M L+5.25%   1.00%   6.25%       6/29/2017  6/29/2022     $666,667    666,667    650,000    0.25%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                    6/29/2017         73,529 shares    88,797    560,000    0.22%
Total                                        $12,336,808   $12,585,000    4.85%
BFC Solmetex, LLC                                Nashville, TN                    
Revolver  (35)  First Lien  3M L+8.50%   1.00%   9.50%       4/2/2018  9/26/2023  Environmental Industries  $2,139,364    2,139,364    1,818,460    0.70%
Term Loan (SBIC)  (2)(35)  First Lien  3M L+8.50%   1.00%   9.50%       4/2/2018  9/26/2023     $11,533,710    11,426,264    9,803,654    3.77%
Bonded Filter Co. LLC, Term Loan (SBIC)  (2)(35)  First Lien  3M L+8.50%   1.00%   9.50%       4/2/2018  9/26/2023     $1,199,267    1,188,094    1,019,377    0.39%
Total                                        $14,753,722   $12,641,491    4.86%
BW DME Acquisition, LLC                                Tempe, AZ                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%   8.61%       8/24/2017  8/24/2022  Healthcare & Pharmaceuticals  $16,695,804    16,443,263    16,528,846    6.36%
BW DME Holdings, LLC, Term Loan  (6)  Unsecured  17.50%             17.50%  6/1/2018  6/30/2020     $358,802    358,802    355,214    0.14%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                    8/24/2017         1,000,000 shares    1,000,000    1,090,000    0.42%
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                    1/26/2018         937,261 shares    937,261    1,020,000    0.39%
Total                                        $18,739,326   $18,994,060    7.31%

 

6

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2020

 

Investments  Footnotes  Security  Coupon  LIBOR floor   Cash   PIK   Investment Date  Maturity 

Headquarters/

Industry

  Principal Amount/ Shares   Amortized Cost  

Fair

Value (1)

   % of Net Assets 
Café Valley, Inc.                                Phoenix, AZ                    
Term Loan  (35)  First Lien  3M L+6.00%   1.25%   7.25%       8/28/2019  8/28/2024  Beverage, Food, & Tobacco  $17,486,905    17,186,508    17,224,600    6.63%
CF Topco LLC, Common Units  (4)  Equity                    8/28/2019         8,810 shares    880,952    810,000    0.31%
Total                                        $18,067,460   $18,034,600    6.94%
C.A.R.S. Protection Plus, Inc.                                Murrysville, PA                    
Term Loan  (35)  First Lien  1M L+8.50%   0.50%   9.00%       12/31/2015  12/31/2020  Automotive  $94,003    93,773    94,003    0.04%
Term Loan (SBIC)  (2)(35)  First Lien  1M L+8.50%   0.50%   9.00%       12/31/2015  12/31/2020     $7,332,210    7,314,231    7,332,210    2.82%
CPP Holdings LLC Class A Common Units  (4)  Equity                    12/31/2015         149,828 shares    149,828    190,000    0.07%
Total                                        $7,557,832   $7,616,213    2.93%
Colford Capital Holdings, LLC                                New York, NY                    
 Preferred Units  (4)(5)  Equity                    8/20/2015     Finance   38,893 units    195,036    20,000    0.01%
Condor Borrower, LLC                                Clifton, NJ                    
Term Loan  (12)  Second Lien  3M L+8.75%   1.00%   10.53%       10/27/2017  4/27/2025  Software  $13,750,000    13,550,051    13,406,250    5.16%
Condor Top Holdco Limited Convertible Preferred Shares  (4)  Equity                    10/27/2017         500,000 shares    442,197    420,000    0.16%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                    10/27/2017         500,000 shares    57,804    50,000    0.02%
Total                                        $14,050,052   $13,876,250    5.34%
Convergence Technologies, Inc.                                Indianpolis, IN                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.75%   1.50%   8.25%       8/31/2018  8/30/2024  Services: Business  $7,017,857    6,912,955    7,017,857    2.70%
Term Loan  (35)  First Lien  3M L+6.75%   1.50%   8.25%       2/28/2019  8/30/2024     $1,410,714    1,388,158    1,410,714    0.54%
Delayed Draw Term Loan  (35)  First Lien  3M L+6.75%   1.50%   8.25%       8/31/2018  8/30/2024     $5,276,786    5,276,786    5,276,786    2.03%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                    8/31/2018         4,275 units    429,614    230,000    0.09%
Total                                        $14,007,513   $13,935,357    5.36%
Data Centrum Communications, Inc.                                Montvale, NJ                    
Term Loan  (35)  First Lien  3M L+5.50%   1.00%   6.50%       5/15/2019  5/15/2024  Media: Advertising, Printing & Publishing  $16,087,500    15,829,884    15,846,188    6.10%
Health Monitor Holdings, LLC Seires A Preferred Units  (4)  Equity                    5/15/2019         1,000,000 shares    1,000,000    690,000    0.27%
Total                                        $16,829,884   $16,536,188    6.37%
Douglas Products Group, LP                                Liberty, MO                    
Class A Common Units  (4)  Equity                    12/27/2018     Chemicals, Plastics, & Rubber   322 shares    139,656    680,000    0.26%
DRS Holdings III, Inc.                                St. Louis, MO                    
Term Loan  (35)  First Lien  3M  L+5.75%   1.00%   6.75%       11/1/2019  11/1/2025  Consumer Goods: Durable  $9,950,000    9,859,472    9,950,000    3.83%
Revolver  (10)(35)  First Lien  1M  L+5.75%   1.00%   6.75%       11/1/2019  11/1/2025     $363,636    363,636    363,636    0.14%
Total                                        $10,223,108   $10,313,636    3.97%
                                                      
DTE Enterprises, LLC  (18)                             Roselle, IL                    
Term Loan  (35)  First Lien  3M L+7.50%   1.50%   9.00%       4/13/2018  4/13/2023  Energy: Oil & Gas  $10,991,941    10,856,548    10,662,183    4.10%
DTE Holding Company, LLC Common Shares, Class A-2  (4)  Equity                    4/13/2018         776,316 shares    466,204    420,000    0.16%
DTE Holding Company, LLC Preferred Shares, Class AA  (4)  Equity                    4/13/2018         723,684 shares    723,684    660,000    0.25%
Total                                        $12,046,436   $11,742,183    4.51%
Elliott Aviation, LLC                                Moline, IL                    
Term Loan  (35)  First Lien  3M L+6.00%   1.75%   7.75%       1/31/2020  1/31/2025  Aerospace & Defense  $18,663,750    18,316,067    18,570,431    7.14%
Revolver  (3)(35)  First Lien  3M L+6.00%   1.75%   7.75%       1/31/2020  1/31/2025     $450,000    450,000    447,750    0.17%
SP EA Holdings, LLC Preferred Shares, Class A  (4)  Equity                    1/31/2020         900,000 shares    900,000    1,020,000    0.39%
Total                                        $19,666,067   $20,038,181    7.70%

 

7

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2020

 

Investments  Footnotes  Security  Coupon  LIBOR floor   Cash   PIK   Investment Date  Maturity 

Headquarters/

Industry

  Principal Amount/ Shares   Amortized Cost  

Fair

Value (1)

   % of Net Assets 
Empirix Holdings I, Inc.                                Billerica, MA                    
Common Shares, Class A  (4)  Equity                    11/1/2013     Software   1,304 shares    1,304,232    1,000,000    0.38%
Common Shares, Class B  (4)  Equity                    11/1/2013         1,317,406 shares    13,174    10,000    0.00%
Total                                        $1,317,406   $1,010,000    0.38%
Energy Labs Holding Corp.                                Houston, TX                    
 Common Stock  (4)  Equity                    9/29/2016     Energy: Oil & Gas   598 shares    598,182    1,010,000    0.39%
Exacta Land Surveyors, LLC  (25)                             Cleveland, OH                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+5.75%   1.50%   7.25%       2/8/2019  2/8/2024  Services: Business  $16,799,375    16,541,165    16,715,378    6.43%
Revolver  (35)  First Lien  3M L+5.75%   1.50%   7.25%       2/8/2019  2/8/2024     $1,500,000    1,500,000    1,492,500    0.57%
SP ELS Holdings LLC, Class A Common Units  (4)  Equity                    2/8/2019         1,069,143 shares    1,069,143    930,000    0.36%
Total                                        $19,110,308   $19,137,878    7.36%
EOS Fitness Holdings, LLC                                Phoenix, AZ                    
 Preferred Units  (4)  Equity                    12/30/2014     Hotel, Gaming, & Leisure   118 shares    0    280,000    0.11%
Class B Common Units  (4)  Equity                    12/30/2014         3,017 shares    0    10,000    0.00%
Total                                        $0   $290,000    0.11%
Fast Growing Trees, LLC  (16)                             Fort Mill, SC                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+7.75%   1.00%   8.75%       2/5/2018  02/05/23  Retail  $19,192,490    18,972,237    19,192,490    7.38%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                    2/5/2018         1,000,000 shares    1,000,000    2,240,000    0.86%
Total                                        $19,972,237   $21,432,490    8.24%
FB Topco, Inc.                                Camden, NJ                    
Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   9.52%       6/27/2018  4/24/2023  Education  $20,698,545    20,427,460    20,181,081    7.76%
Delayed Draw Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   9.55%       6/27/2018  4/24/2023     $1,134,832    1,134,832    1,106,461    0.43%
Total                                        $21,562,292   $21,287,542    8.19%
Furniture Factory Outlet, LLC                                Fort Smith, AR                    
Term Loan  (23)  First Lien  7.00%        0.00%       6/10/2016  6/10/2021  Consumer Goods: Durable  $13,286,875    13,211,685    4,384,669    1.69%
Furniture Factory Holdings, LLC Term Loan  (6)(29)  Unsecured  11.00%             0.00%  6/10/2016  2/3/2021     $163,423    163,423    0    0.00%
Furniture Factory Ultimate Holding, LP Common Units  (4)  Equity                    6/10/2016         13,445 shares    94,569    0    0.00%
Total                                        $13,469,677   $4,384,669    1.69%
GK Holdings, Inc.                                Cary, NC                    
Term Loan  (12)(33)  Second Lien  3M L+10.25%   1.00%   0.00%       1/30/2015  1/20/2022  Education  $5,000,000    4,970,328    3,650,000    1.40%
General LED OPCO, LLC                                San Antonio, TX                    
Term Loan  (35)  Second Lien  3M L+9.00%   1.50%   10.50%       5/1/2018  11/1/2023  Services: Business  $4,500,000    4,439,769    3,735,000    1.44%
GS HVAM Intermediate, LLC                                Carlsbad, CA                    
Term Loan  (35)  First Lien  1M L+5.75%   1.00%   6.75%       10/18/2019  10/2/2024  Beverage, Food, & Tobacco  $13,191,288    13,074,424    13,191,288    5.07%
Revolver  (35)  First Lien  1M L+5.75%   1.00%   6.75%       10/18/2019  10/2/2024     $2,651,515    2,651,515    2,651,515    1.02%
HV GS Acquisition, LP Class A Interests  (4)  Equity                    6/29/2018         1,796 shares    1,618,844    1,620,000    0.62%
Total                                        $17,344,783   $17,462,803    6.71%
Grupo HIMA San Pablo, Inc., et al                                San Juan, PR                    
Term Loan  (27)(35)  First Lien  3M L+7.00%   1.50%   8.50%       2/1/2013  1/31/2018  Healthcare & Pharmaceuticals  $4,503,720    4,503,720    2,589,639    1.00%
Term Loan  (15)(27)  Second Lien  13.75%        0.00%       2/1/2013  7/31/2018     $4,109,524    4,109,524    0    0.00%
Total                                        $8,613,244   $2,589,639    1.00%

 

8

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2020

 

Investments  Footnotes  Security  Coupon  LIBOR floor   Cash   PIK   Investment Date  Maturity 

Headquarters/

Industry

  Principal Amount/ Shares   Amortized Cost  

Fair

Value (1)

   % of Net Assets 
ICD Intermediate Holdco 2, LLC                                San Francisco, CA                    
Term Loan (SBIC)  (2)(5)(35)  Second Lien  3M L+9.00%   1.00%   10.00%       1/1/2018  7/1/2024  Finance  $10,000,000    9,861,505    10,000,000    3.85%
ICD Holdings, LLC, Class A Preferred  (4)(5)  Equity                    1/1/2018         9,962 shares    486,943    1,210,000    0.47%
Total                                        $10,348,448   $11,210,000    4.32%
Integrated Oncology Network, LLC  (30)                             Newport Beach, CA                    
Term Loan  (35)  First Lien  3M L+5.50%   1.50%   7.00%       7/17/2019  6/24/2024  Healthcare & Pharmaceuticals  $16,553,808    16,279,456    16,553,808    6.37%
Revolver  (35)  First Lien  3M L+5.50%   1.50%   7.00%       7/17/2019  6/24/2024     $553,517    553,517    553,517    0.21%
Total                                        $16,832,973   $17,107,325    6.58%
Interstate Waste Services, Inc.                                Amsterdam, OH                    
Common Units  (4)  Equity                    10/30/2015     Environmental Industries   21,925 shares    946,125    380,000    0.15%
Intuitive Health, LLC                                Plano, TX                    
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.00%   1.50%   7.50%       10/18/2019  10/18/2024  Healthcare & Pharmaceuticals  $5,970,000    5,863,912    5,880,450    2.26%
Term Loan  (35)  First Lien  3M L+6.00%   1.50%   7.50%       10/18/2019  10/18/2024     $11,442,500    11,239,164    11,270,863    4.34%
Total                                        $17,103,076   $17,151,313    6.60%
Invincible Boat Company, LLC                                Opa Locka, FL                    
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025  Consumer Goods: Durable  $5,887,500    5,782,780    5,887,500    2.26%
Term Loan  (35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025     $6,378,125    6,199,072    6,378,125    2.45%
Revolver  (28)(35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025     $284,091    284,091    284,091    0.11%
Invincible Parent Holdco, LLC Class A Common Units  (4)  Equity                    8/28/2019         1,000,000 shares    978,900    1,010,000    0.39%
Total                                        $13,244,843   $13,559,716    5.21%
J.R. Watkins, LLC                                San Francisco, CA                    
Term Loan (SBIC)  (2)  First Lien  7.00%        7.00%       12/22/2017  12/22/2022  Consumer Goods: non-durable  $12,250,000    12,114,971    10,535,000    4.05%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                    12/22/2017         1,133 shares    1,132,576    0    0.00%
Total                                        $13,247,547   $10,535,000    4.05%
Jurassic Acquisiton Corp.                                Sparks, MD                    
Term Loan  (12)  First Lien  3M L+5.50%   0.00%   5.81%       12/28/2018  11/15/2024  Metals & Mining  $17,237,500    17,036,363    16,978,938    6.53%
Kelleyamerit Holdings, Inc.                                Walnut Creek, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.50%   1.00%   9.04%       3/30/2018  3/30/2023  Automotive  $9,750,000    9,629,664    9,652,500    3.71%
KidKraft, Inc.                                Dallas, TX                    
Term Loan  (6)(13)(21)(22)  First Lien  3M L+6.00%        0.00%   0.00%  9/30/2016  8/15/2022  Consumer Goods: Durable  $1,500,000    1,500,000    67,500    0.03%
KidKraft Group Holdings, LLC Preferred B Units  (4)  Equity                    4/3/2020         4,000,000 shares    4,000,000    190,000    0.07%
Total                                        $5,500,000   $257,500    0.10%
Lynx FBO Operating, LLC  (31)                             Houston, TX                    
Term Loan  (35)  First Lien  3M L+5.75%   1.50%   7.25%       9/30/2019  9/30/2024  Aerospace & Defense  $13,646,875    13,408,051    13,646,875    5.25%
Lynx FBO Investments, LLC Class A-1 Common Units  (4)  Equity                    9/30/2019         3,704 shares    500,040    510,000    0.20%
Total                                        $13,908,091   $14,156,875    5.45%

 

9

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2020

 

Investments  Footnotes  Security  Coupon  LIBOR floor   Cash   PIK   Investment Date  Maturity 

Headquarters/

Industry

  Principal Amount/ Shares   Amortized Cost  

Fair

Value (1)

   % of Net Assets 
Madison Logic, Inc.                                New York, NY                    
Term Loan (SBIC)  (2)(12)  First Lien  1M L+7.50%   0.50%   8.50%       11/30/2016  11/30/2021  Media: Broadcasting & Subscription  $4,523,888    4,509,012    4,501,269    1.73%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                    11/30/2016         5,000 shares    50,000    50,000    0.02%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                    11/30/2016         4,500 shares    450,000    470,000    0.18%
Total                                        $5,009,012   $5,021,269    1.93%
Mobile Acquisition Holdings, LP                                Santa Clara, CA                    
Class A Common Units  (4)  Equity                    11/1/2016     Software   750 units    455,385    1,560,000    0.60%
Munch's Supply, LLC                                New Lenox, IL                    
Term Loan  (35)  First Lien  3M L+6.25%   1.00%   7.25%       4/11/2019  4/11/2024  Capital Equipment  $7,920,000    7,857,585    7,840,800    3.02%
Delayed Draw Term Loan  (20)(35)  First Lien  3M L+6.25%   1.00%   7.25%       4/11/2019  4/11/2024     $711,111    700,444    704,000    0.27%
Cool Supply Holdings, LLC Class A Common Units  (4)  Equity                    4/11/2019         500,000 units    496,362    440,000    0.17%
Total                                        $9,054,391   $8,984,800    3.46%
National Trench Safety, LLC, et al                                Houston, TX                    
Term Loan (SBIC)  (2)  Second Lien  11.50%        11.50%       3/31/2017  3/31/2022  Construction & Building  $10,000,000    9,926,628    10,000,000    3.85%
NTS Investors, LP Class A Common Units  (4)  Equity                    3/31/2017         2,335 units    500,000    570,000    0.22%
Total                                        $10,426,628   $10,570,000    4.07%
Naumann/Hobbs Material Handling Corporation II, Inc.  (32)(34)                             Phoenix, AZ                    
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.25%   1.50%   7.75%       8/30/2019  8/30/2024  Services: Business  $5,936,080    5,833,920    5,936,080    2.28%
Term Loan  (35)  First Lien  3M L+6.25%   1.50%   7.75%       8/30/2019  8/30/2024     $9,413,328    9,251,326    9,413,328    3.62%
Revolver  (35)  First Lien  3M L+6.25%   1.50%   7.75%       8/30/2019  8/30/2024     $881,517    881,517    881,517    0.34%
CGC NH, Inc. Common Units  (4)  Equity                    8/30/2019         123 shares    440,758    430,000    0.17%
Total                                        $16,407,521   $16,660,925    6.41%
NGS US Finco, LLC                                Bradford, PA