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EX-32.2 - EXHIBIT 32.2 - Stellus Capital Investment Corptm2034115d1_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Stellus Capital Investment Corptm2034115d1_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Stellus Capital Investment Corptm2034115d1_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Stellus Capital Investment Corptm2034115d1_ex31-1.htm

 

 

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 September 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 October 29, 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 September 30, 2020 (unaudited) and December 31, 2019 2
    Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2020 and 2019 (unaudited) 3
    Consolidated Statements of Changes in Net Assets for the three and nine-month periods ended September 30, 2020 and 2019 (unaudited) 4
    Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2020 and 2019 (unaudited) 5
    Consolidated Schedules of Investments as of September 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 57
Item 3.     Quantitative and Qualitative Disclosures About Market Risk 74
Item 4.     Controls and Procedures 77
PART II. OTHER INFORMATION  
Item 1.     Legal Proceedings 78
Item 1A.   Risk Factors 78
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds 83
Item 3.    Defaults Upon Senior Securities 84
Item 4.    Mine Safety Disclosures 84
Item 5.    Other Information 84
Item 6.    Exhibits 84
SIGNATURES 85

 

i

 

 

PART I — FINANCIAL INFORMATION
               
STELLUS CAPITAL INVESTMENT CORPORATION
               
 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

   September 30,     
   2020   December 31, 
   (Unaudited)   2019 
ASSETS          
Non-controlled, non-affiliated investments, at fair value (amortized cost of $647,253,034 and $642,707,824, respectively)  $622,438,345   $628,948,077 
Cash and cash equivalents   38,617,969    16,133,315 
Receivable for sales and repayments of investments   145,359    123,409 
Interest receivable   1,870,260    2,914,710 
Other receivables   60,495    25,495 
Prepaid expenses   189,760    368,221 
Total Assets  $663,322,188   $648,513,227 
LIABILITIES          
Notes payable  $48,223,734   $47,974,202 
Credit facility payable   184,611,294    160,510,633 
SBA-guaranteed debentures   158,059,560    157,543,853 
Dividends payable   6,040,664    2,167,630 
Management fees payable   5,540,073    2,695,780 
Income incentive fees payable   584,881    1,618,509 
Capital gains incentive fees payable       880,913 
Interest payable   838,077    2,322,314 
Unearned revenue   594,066    559,768 
Administrative services payable   776,884    413,278 
Deferred tax liability   257,412    134,713 
Income tax payable   806,000    917,000 
Other accrued expenses and liabilities   439,716    203,461 
Total Liabilities  $406,772,361   $377,942,054 
Commitments and contingencies (Note 7)          
Net Assets  $256,549,827   $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   (20,586,388)   (1,565,050)
Net Assets  $256,549,827   $270,571,173 
Total Liabilities and Net Assets  $663,322,188   $648,513,227 
Net Asset Value Per Share  $13.17   $14.14 

 

2

 

 

STELLUS CAPITAL INVESTMENT CORPORATION
                             
 CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

   For the   For the   For the   For the 
   three   three   nine   nine 
   months ended   months ended   months ended   months ended 
   September 30,   September 30,   September 30,   September 30, 
   2020   2019   2020   2019 
INVESTMENT INCOME                    
Interest income  $13,707,343   $15,134,874   $42,192,411   $42,366,134 
Other income   309,406    380,353    926,661    1,154,277 
Total Investment Income  $14,016,749   $15,515,227   $43,119,072   $43,520,411 
OPERATING EXPENSES                    
Management fees  $2,796,878   $2,480,918   $8,259,127   $7,007,925 
Valuation fees   134,246    109,296    263,080    238,246 
Administrative services expenses   431,894    425,849    1,335,423    1,246,754 
Income incentive fees   461,590    1,583,145    1,969,976    4,339,813 
Capital gains incentive (reversal) fees   -    533,920    (880,913)   1,811,533 
Professional fees   224,517    166,802    761,745    840,683 
Directors' fees   77,500    83,000    320,316    300,000 
Insurance expense   94,094    87,601    280,236    259,947 
Interest expense and other fees   3,861,072    3,774,316    12,245,870    10,808,373 
Income tax expense   367,836    350,549    853,631    705,677 
Other general and administrative expenses   238,177    121,172    706,559    413,742 
Total Operating Expenses  $8,687,804   $9,716,568   $26,115,050   $27,972,693 
Net Investment Income  $5,328,945   $5,798,659   $17,004,022   $15,547,718 
Net realized gain (loss) on non-controlled, non-affiliated investments  $151,697   $6,200,367   $(2,444,759)  $19,142,603 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments  $2,120,787   $(3,534,972)  $(11,054,942)  $(10,049,241)
(Provision) benefit for taxes on net unrealized gain on investments  $(92,749)  $4,200   $(122,699)  $(35,701)
Net Increase in Net Assets Resulting from Operations  $7,508,680   $8,468,254   $3,381,622   $24,605,379 
Net Investment Income Per Share  $0.27   $0.31   $0.87   $0.86 
Net Increase in Net Assets Resulting from Operations Per Share  $0.39   $0.45   $0.17   $1.36 
Weighted Average Shares of Common Stock Outstanding   19,486,030    18,905,959    19,466,647    18,056,271 
Distributions Per Share  $0.56   $0.34   $1.15   $1.02 

 

3

 

 

STELLUS CAPITAL INVESTMENT CORPORATION
                           
 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

 

   For the   For the   For the   For the 
   three   three   nine   nine 
   months ended   months ended   months ended   months ended 
   September 30,   September 30,   September 30,   September 30, 
   2020   2019   2020   2019 
Increase in Net Assets Resulting from                    
Operations                    
Net investment income  $5,328,945   $5,798,659   $17,004,022   $15,547,718 
Net realized gain (loss) on non-controlled, non-affiliated investments   151,697    6,200,367    (2,444,759)   19,142,603 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments   2,120,787    (3,534,972)   (11,054,942)   (10,049,241)
(Provision) benefit for taxes on unrealized appreciation on investments   (92,749)   4,200    (122,699)   (35,701)
Net Increase in Net Assets Resulting from Operations  $7,508,680   $8,468,254   $3,381,622   $24,605,379 
Stockholder Distributions From:                    
Net investment income  $(10,912,161)  $(6,426,113)  $(22,402,959)  $(18,586,471)
Total Distributions  $(10,912,161)  $(6,426,113)  $(22,402,959)  $(18,586,471)
Capital Share Transactions                    
Issuance of common stock  $   $   $5,023,937   $42,599,510 
Sales load           (5,681)   (1,003,731)
Offering costs           (18,169)   (293,072)
Partial share transactions       (237)   (96)   945 
Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions  $   $(237)  $4,999,991   $41,303,652 
Total (Decrease) Increase in Net Assets  $(3,403,481)  $2,041,904   $(14,021,346)  $47,322,560 
Net Assets at Beginning of Period  $259,953,308   $270,125,663   $270,571,173   $224,845,007 
Net Assets at End of Period  $256,549,827   $272,167,567   $256,549,827   $272,167,567 

 

4

 

 

STELLUS CAPITAL INVESTMENT CORPORATION
       
 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

  

   For the   For the 
   nine   nine 
   months ended   months ended 
   September 30,   September 30, 
   2020   2019 
Cash flows from operating activities          
Net increase in net assets resulting from operations  $3,381,622   $24,605,379 
Adjustments to reconcile net increase in net assets          
from operations to net cash used in operating activities:          
Purchases of investments   (87,193,368)   (172,852,479)
Proceeds from sales and repayments of investments   82,360,666    101,491,694 
Net change in unrealized appreciation on investments   11,054,942    10,049,241 
Increase in investments due to PIK   (568,028)   (378,119)
Amortization of premium and accretion of discount, net   (1,611,189)   (1,273,680)
Deferred tax provision   122,699    35,701 
Amortization of loan structure fees   500,495    377,741 
Amortization of deferred financing costs   249,532    248,621 
Amortization of loan fees on SBA-guaranteed debentures   515,707    452,804 
Net realized loss (gain) on investments   2,444,759    (19,142,603)
Changes in other assets and liabilities          
Decrease in interest receivable   1,044,450    969,165 
(Increase) decrease in other receivable   (35,000)   59,751 
Decrease in prepaid expenses   178,461    257,265 
Increase in management fees payable   2,844,293    296,943 
Decrease in incentive fees payable   (1,033,628)   (134,195)
(Decrease) increase in capital gains incentive fees payable   (880,913)   1,811,532 
Increase in administrative services payable   363,606    10,169 
Decrease in interest payable   (1,484,237)   (1,011,486)
Increase in unearned revenue   34,298    102,157 
(Decrease) increase in income tax payable   (111,000)   400,908 
Increase in other accrued expenses and liabilities   236,255    99,798 
Net Cash Provided by (Used in) Operating Activities  $12,414,422   $(53,523,693)
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)   (485,209)
Stockholder distributions paid   (18,300,982)   (18,251,993)
Financing costs paid on SBA Debentures       (200,000)
Borrowings under Credit Facility   97,450,000    173,000,000 
Repayments of Credit Facility   (72,000,000)   (136,500,000)
Financing costs paid on Credit facility   (1,849,834)   (92,500)
Partial share transactions   (96)   945 
Net Cash Provided by Financing Activities  $10,070,232   $59,067,022 
Net Increase in Cash and Cash Equivalents  $22,484,654   $5,543,329 
Cash and cash equivalents balance at beginning of period   16,133,315    17,467,146 
Cash and Cash Equivalents Balance at End of Period  $38,617,969   $23,010,475 
Supplemental and Non-Cash Activities          
Cash paid for interest expense  $12,433,551   $10,735,379 
Excise tax paid   940,000    280,000 
Shares issued pursuant to Dividend Reinvestment Plan   228,943     
Increase in dividends payable   3,873,034    334,478 
Increase in deferred offering costs       192,137 

 

5

 

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 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+7.00%   1.75%  8.75%     8/3/2018  6/30/2023  Media: Advertising, Printing & Publishing  $5,177,580    5,145,918    5,151,692    2.01%
Delayed Draw Term Loan  (35)  First Lien  1M L+7.00%   1.75%  8.75%     8/3/2018  6/30/2023     $167,010    167,010    166,175    0.06%
Total                                     $5,312,928   $5,317,867    2.07%
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    13,228,077    13,404,736    5.23%
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    0.39%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                 8/8/2018         250,000 units    250,000    280,000    0.11%
Total                                     $14,478,077   $14,684,736    5.73%
APE Holdings, LLC                             Deer Park, TX                    
Class A Common Units  (4)  Equity                 9/5/2014     Chemicals, Plastics, & Rubber   375,000 units    375,000    110,000    0.04%
Atmosphere Aggregator Holdings II, LP                             Atlanta, GA                    
Common Units  (4)  Equity                 1/26/2016     Services: Business   254,250 units    0    1,310,000    0.51%
Stratose Aggregator Holdings, LP Common Units  (4)  Equity                 6/30/2015         750,000 units    0    3,880,000    1.51%
Total                                     $0   $5,190,000    2.02%
ASC Communications, LLC  (17)                          Chicago, IL                    
Term Loan (SBIC)  (2)(35)  First Lien  1M L+6.25%   1.00%  7.25%     6/29/2017  6/29/2023  Healthcare & Pharmaceuticals  $4,259,259    4,242,007    4,088,889    1.59%
Term Loan  (35)  First Lien  1M L+6.25%   1.00%  7.25%     2/4/2019  6/29/2023     $7,240,741    7,180,913    6,951,111    2.71%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                 6/29/2017         73,529 shares    79,813    340,000    0.13%
Total                                     $11,502,733   $11,380,000    4.43%
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    1,936,125    0.75%
Term Loan (SBIC)  (2)(35)  First Lien  3M L+8.50%   1.00%  9.50%     4/2/2018  9/26/2023     $11,504,156    11,405,535    10,411,262    4.06%
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     $1,196,363    1,186,107    1,082,709    0.42%
Total                                     $14,731,006   $13,430,096    5.23%
BW DME Acquisition, LLC                             Tempe, AZ                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%  8.60%     8/24/2017  8/24/2022  Healthcare & Pharmaceuticals  $16,695,804    16,469,741    16,695,804    6.51%
BW DME Holdings, LLC, Term Loan  (6)  Unsecured  17.50%         17.50%  6/1/2018  6/30/2020     $374,586    374,586    374,586    0.15%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                 8/24/2017         1,000,000 shares    1,000,000    1,500,000    0.58%
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                 1/26/2018         937,261 shares    937,261    1,410,000    0.55%
Total                                     $18,781,588   $19,980,390    7.79%
Café Valley, Inc.                             Phoenix, AZ                    
Term Loan  (35)  First Lien  1M L+7.00%   1.25%  8.25%     8/28/2019  8/28/2024  Beverage, Food, & Tobacco  $17,442,857    17,157,895    16,919,571    6.60%
CF Topco LLC, Common Units  (4)  Equity                 8/28/2019         8,810 shares    880,952    690,000    0.27%
Total                                     $18,038,847   $17,609,571    6.87%

 

6

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

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    93,887    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    7,323,114    7,332,210    2.86%
CPP Holdings LLC Class A Common Units  (4)  Equity                 12/31/2015         149,828 shares    149,828    410,000    0.16%
Total                                     $7,566,829   $7,836,213    3.06%
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 Top Holdco Limited                             Clifton, NJ                    
Convertible Preferred Shares  (4)  Equity                 10/27/2017         500,000 shares    442,197    1,240,000    0.48%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                 10/27/2017         500,000 shares    57,804    160,000    0.06%
Total                                     $500,001   $1,400,000    0.54%
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  $7,000,000    6,900,637    7,000,000    2.73%
Term Loan  (35)  First Lien  3M L+6.75%   1.50%  8.25%     2/28/2019  8/30/2024     $1,407,143    1,385,776    1,407,143    0.55%
Term Loan B (SBIC)  (2)(35)  First Lien  3M L+6.75%   1.50%  8.25%     8/14/2020  8/30/2024     $3,750,000    3,677,563    3,750,000    1.46%
Delayed Draw Term Loan  (35)  First Lien  3M L+6.75%   1.50%  8.25%     8/31/2018  8/30/2024     $5,263,393    5,263,393    5,263,393    2.05%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                 8/31/2018         5,282 units    547,795    620,000    0.24%
Total                                     $17,775,164   $18,040,536    7.03%
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  $16,046,875    15,804,305    15,485,234    6.04%
Health Monitor Holdings, LLC Seires A Preferred Units  (4)  Equity                 5/15/2019         1,000,000 shares    1,000,000    650,000    0.25%
Total                                     $16,804,305   $16,135,234    6.29%
Douglas Products Group, LP                             Liberty, MO                    
Class A Common Units  (4)  Equity                 12/27/2018     Chemicals, Plastics, & Rubber   322 shares    139,656    840,000    0.33%
DRS Holdings III, Inc.  (10)                          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  $9,925,000    9,838,163    9,925,000    3.87%
                                                   
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    10,867,089    10,662,183    4.16%
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    400,000    0.16%
Total                                     $12,056,977   $11,482,183    4.48%
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  $18,545,625    18,215,823    18,360,169    7.16%
Revolver  (3)(35)  First Lien  3M L+6.00%   1.75%  7.75%     1/31/2020  1/31/2025     $450,000    450,000    445,500    0.17%
SP EA Holdings, LLC Preferred Shares, Class A  (4)  Equity                 1/31/2020         900,000 shares    900,000    710,000    0.28%
Total                                     $19,565,823   $19,515,669    7.61%
Empirix Holdings I, Inc.                             Billerica, MA                    
Common Shares, Class A  (4)  Equity                 11/1/2013     Software   1,304 shares    1,304,232    1,280,000    0.50%
Common Shares, Class B  (4)  Equity                 11/1/2013         1,317,406 shares    13,174    10,000    0.00%
Total                                     $1,317,406   $1,290,000    0.50%

 

7

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

Energy Labs Holding Corp.                             Houston, TX                    
 Common Stock  (4)  Equity                 9/29/2016     Energy: Oil & Gas   598 shares    598,182    970,000    0.38%
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  $16,756,875    16,514,654    16,589,306    6.47%
Revolver  (35)  First Lien  3M L+5.75%   1.50%  7.25%     2/8/2019  2/8/2024     $1,500,000    1,500,000    1,485,000    0.58%
SP ELS Holdings LLC, Class A Common Units  (4)  Equity                 2/8/2019         1,069,143 shares    1,069,143    780,000    0.30%
Total                                     $19,083,797   $18,854,306    7.35%
EOS Fitness Holdings, LLC                             Phoenix, AZ                    
 Preferred Units  (4)  Equity                 12/30/2014     Hotel, Gaming, & Leisure   118 shares    0    110,000    0.04%
Class B Common Units  (4)  Equity                 12/30/2014         3,017 shares    0    0    0.00%
Total                                     $0   $110,000    0.04%
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  $15,092,490    14,934,306    15,092,490    5.88%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                 2/5/2018         1,000,000 shares    1,000,000    2,450,000    0.95%
Total                                     $15,934,306   $17,542,490    6.83%
FB Topco, Inc.                             Camden, NJ                    
Term Loan  (13)(22)  First Lien  6M L+6.35%   1.00%  9.52%     6/27/2018  4/24/2023  Education  $20,645,877    20,395,821    20,439,418    7.97%
Delayed Draw Term Loan  (13)(22)  First Lien  6M L+6.35%   1.00%  9.55%     6/27/2018  4/24/2023     $1,131,959    1,131,959    1,120,640    0.44%
Total                                     $21,527,780   $21,560,058    8.41%
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  $12,878,667    12,824,229    2,060,587    0.80%
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                                     $13,082,221   $2,060,587    0.80%
GK Holdings, Inc.                             Cary, NC                    
Term Loan  (33)(35)  Second Lien  3M L+10.25%   1.00%  0.00%     1/30/2015  1/20/2022  Education  $5,000,000    4,974,680    2,925,000    1.14%
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    4,443,680    3,667,500    1.43%
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  $13,158,144    13,047,385    13,158,144    5.13%
Revolver  (34)(35)  First Lien  1M L+5.75%   1.00%  6.75%     10/18/2019  10/2/2024     $265,152    265,152    265,152    0.10%
HV GS Acquisition, LP Class A Interests  (4)  Equity                 6/29/2018         1,796 shares    1,618,844    1,660,000    0.65%
Total                                     $14,931,381   $15,083,296    5.88%
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    1.01%
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    1.01%

 

8

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

I2P Holdings, LLC                             Cleveland, OH                    
Series A Preferred  (4)  Equity                 1/31/2018     Services: Business   750,000 shares    750,000    2,860,000    1.11%
Ian, Evan & Alexander Corporation  (36)                          Reston, VA                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+8.50%   1.00%  9.50%     7/31/2020  7/31/2025  Services: Business  $7,231,571    7,090,689    7,090,689    2.76%
EC Defense Holding, Class B Units  (2)(4)  Equity                 7/31/2020         20,054 shares    500,000    500,000    0.19%
Total                                     $7,590,689   $7,590,689    2.95%
ICD Holdings, LLC                             San Francisco, CA                    
 Class A Preferred  (4)(5)  Equity                 1/1/2018         9,962 shares    474,182    1,690,000    0.66%
Industry Dive, Inc.  (37)                          Washington, D.C.                    
Term Loan  (SBIC)  (2)(35)  First Lien  1M L+6.75%   1.00%  7.75%     7/17/2020  8/30/2024  Services: Business  $7,040,927    6,904,971    6,904,971    2.69%
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  $16,512,110    16,253,267    16,512,110    6.44%
Revolver  (35)  First Lien  3M L+5.50%   1.50%  7.00%     7/17/2019  6/24/2024     $553,517    553,517    553,517    0.22%
Total                                     $16,806,784   $17,065,627    6.66%
Interstate Waste Services, Inc.                             Amsterdam, OH                    
Common Units  (4)  Equity                 10/30/2015     Environmental Industries   21,925 shares    946,125    370,000    0.14%
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  $5,955,000    5,854,342    5,955,000    2.32%
Term Loan  (35)  First Lien  3M L+6.00%   1.50%  7.50%     10/18/2019  10/18/2024     $11,413,750    11,220,822    11,413,750    4.45%
Total                                     $17,075,164   $17,368,750    6.77%
Invincible Boat Company, LLC  (28)                          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  $5,850,000    5,750,011    5,850,000    2.28%
Term Loan  (35)  First Lien  3M L+6.50%   1.50%  8.00%     8/28/2019  8/28/2025     $6,337,500    6,166,490    6,337,500    2.47%
Invincible Parent Holdco, LLC Class A Common Units  (4)  Equity                 8/28/2019         1,000,000 shares    968,105    660,000    0.26%
Total                                     $12,884,606   $12,847,500    5.01%
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    12,127,262    11,270,000    4.39%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                 12/22/2017         1,133 shares    1,132,576    220,000    0.09%
Total                                     $13,259,838   $11,490,000    4.48%
Jurassic Acquisiton Corp.                             Sparks, MD                    
Term Loan  (12)  First Lien  3M L+5.50%   0.00%  5.72%     12/28/2018  11/15/2024  Metals & Mining  $17,193,750    17,003,162    16,935,844    6.60%
Kelleyamerit Holdings, Inc.                             Walnut Creek, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.50%   1.00%  9.02%     3/30/2018  3/30/2023  Automotive  $9,750,000    9,639,161    9,701,250    3.78%
KidKraft, Inc.                             Dallas, TX                    
Term Loan  (6)(21)(22)(38)  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    1,500,000    0.58%
KidKraft Group Holdings, LLC Preferred B Units  (4)  Equity                 4/3/2020         4,000,000 shares    4,000,000    0    0.00%
Total                                     $5,500,000   $1,500,000    0.58%

 

9

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

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  $13,612,500    13,385,555    13,612,500    5.31%
Lynx FBO Investments, LLC Class A-1 Common Units  (4)  Equity                 9/30/2019         3,704 shares    500,040    510,000    0.20%
Total                                     $13,885,595   $14,122,500    5.51%
Madison Logic, Inc.                             New York, NY                    
Term Loan (SBIC)  (2)(35)  First Lien  1M L+8.00%   0.50%  8.50%     11/30/2016  11/30/2021  Media: Broadcasting & Subscription  $4,495,060    4,482,757    4,495,060    1.75%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                 11/30/2016         5,000 shares    50,000    60,000    0.02%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                 11/30/2016         4,500 shares    450,000    540,000    0.21%
Total                                     $4,982,757   $5,095,060    1.98%
Mobile Acquisition Holdings, LP                             Santa Clara, CA                    
Class A Common Units  (4)  Equity                 11/1/2016     Software   750 units    455,385    2,010,000    0.78%
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  $7,247,478    7,193,610    7,247,478    2.82%
Delayed Draw Term Loan  (20)(35)  First Lien  3M L+6.25%   1.00%  7.25%     4/11/2019  4/11/2024     $650,744    641,423    650,744    0.25%
Cool Supply Holdings, LLC Class A Common Units  (4)  Equity                 4/11/2019         500,000 units    496,362    650,000    0.25%
Total                                     $8,331,395   $8,548,222    3.32%
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    9,936,197    10,000,000    3.90%
NTS Investors, LP Class A Common Units  (4)  Equity                 3/31/2017         2,335 units    500,000    580,000    0.23%
Total                                     $10,436,197   $10,580,000    4.13%
Naumann/Hobbs Material Handling Corporation II, Inc.  (32)                          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  $5,914,773    5,818,156    5,914,773    2.31%
Term Loan  (35)  First Lien  3M L+6.25%   1.50%  7.75%     8/30/2019  8/30/2024     $9,379,540    9,226,326    9,379,540    3.66%
CGC NH, Inc. Common Units  (4)  Equity                 8/30/2019         123 shares    440,758    490,000    0.19%
Total                                     $15,485,240   $15,784,313    6.16%
NGS US Finco, LLC                             Bradford, PA                    
Term Loan (SBIC)  (2)(35)  Second Lien  1M L+8.50%   1.00%  9.50%     10/1/2018  4/1/2026  Utilities: Oil & Gas  $10,000,000    9,879,974    9,850,000    3.84%
NS412, LLC                             Dallas, TX                    
Term Loan  (35)  Second Lien  3M L+8.50%   1.00%  9.50%     5/6/2019  11/6/2025  Services: Consumer  $7,615,000    7,488,106    7,424,625    2.89%
NS Group Holding Company, LLC Class A Common Units  (4)  Equity                 5/6/2019         750 shares    750,000    540,000    0.21%
Total                                     $8,238,106   $7,964,625    3.10%
NuMet Machining Techniques, LLC                             Birmingham, UK                    
Term Loan  (5)(35)  Second Lien  3M L+9.00%   2.00%  11.00%     11/5/2019  5/5/2026  Aerospace & Defense  $11,700,000    11,489,069    11,349,000    4.42%
Bromford Industries Limited Term Loan  (5)(35)  Second Lien  3M L+9.00%   2.00%  11.00%     11/5/2019  5/5/2026     $7,800,000    7,659,380    7,566,000    2.95%
Bromford Holdings, L.P. Class A Membership Units  (4)(5)  Equity                 11/5/2019         1,000,000 shares    1,000,000    400,000    0.16%
Total                                     $20,148,449   $19,315,000    7.53%

 

10

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

Nutritional Medicinals, LLC  (24)                          Centerville, OH                    
Term Loan  (35)  First Lien  3M L+6.00%   1.00%  7.00%     11/15/2018  11/15/2023  Healthcare & Pharmaceuticals  $13,847,951    13,663,324    13,847,951    5.40%
Functional Aggregator, LLC Common Units  (4)  Equity                 11/15/2018         12,500 shares    1,250,000    1,230,000    0.48%
Total                                     $14,913,324   $15,077,951    5.88%
PCP MT Aggregator Holdings, L.P.                             Oak Brook, IL                    
Common LP Units  (4)  Equity                 3/29/2019     Finance   750,000 shares    0    1,340,000    0.52%
PCS Software, Inc.                             Shenandoah, Tx                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+5.75%   1.50%  7.25%     7/1/2019  7/1/2024  Transportation & Logistics  $1,975,000    1,943,830    1,975,000    0.77%
Term Loan  (35)  First Lien  3M L+5.75%   1.50%  7.25%     7/1/2019  7/1/2024     $15,059,375    14,821,704    15,059,375    5.87%
Delayed Draw Term Loan  (35)  First Lien  3M L+5.75%   1.50%  7.25%     7/1/2019  7/1/2024     $995,000    995,000    995,000    0.39%
Revolver  (35)(11)  First Lien  3M L+5.75%   1.50%  7.25%     7/1/2019  7/1/2024     $241,660    241,660    241,660    0.09%
PCS Software Holdings, LLC Class A Preferred Units  (4)  Equity                 7/1/2019         325,000 shares    325,000    300,000    0.12%
Total                                     $18,327,194   $18,571,035    7.24%
Pioneer Transformers, L.P.                             Franklin, WI                    
Term Loan (SBIC II)  (9)(35)  First Lien  6M L+6.00%   1.50%  7.50%     11/22/2019  8/16/2024  Capital Equipment  $4,950,000    4,876,316    4,950,000    1.93%
Premiere Digital Services, Inc.                             Los Angeles, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+5.50%   1.50%  8.25%     10/18/2018  10/18/2023  Media: Broadcasting & Subscription  $9,992,518    9,793,223    9,992,518    3.89%
Term Loan  (13)(22)  First Lien  3M L+5.50%   1.50%  8.25%     10/18/2018  10/18/2023     $2,428,772    2,381,802    2,428,772    0.95%
Premiere Digital Holdings, Inc., Common Stock  (4)  Equity                 10/18/2018         5,000 shares    50,000    140,000    0.05%
Premiere Digital Holdings, Inc., Preferred Stock  (4)  Equity                 10/18/2018         4,500 shares    450,000    1,270,000    0.50%
Total                                     $12,675,025   $13,831,290    5.39%
Protect America, Inc.                             Austin TX                    
Term Loan (SBIC)  (2)(6)(26)(35)  Second Lien  3M L+7.75%   1.00%  0.00%     8/30/2017  10/30/2020  Services: Consumer  $17,979,749    17,966,447    2,876,760    1.12%
Sales Benchmark Index, LLC  (7)(14)                          Dallas, TX                    
Term Loan  (35)  First Lien  3M L+6.00%   1.75%  7.75%     1/7/2020  1/7/2025  Services: Business  $14,352,036    14,100,199    14,352,036    5.59%
SBI Holdings Investments, LLC Class A Preferred Units  (4)  Equity                 1/7/2020         66,573 units    665,730    670,000    0.26%
Total                                     $14,765,929   $15,022,036    5.85%
Skopos Financial, LLC                             Irving, TX                    
Term Loan  (5)  Unsecured  12.00%      12.00%     1/31/2014  1/31/2021  Finance  $15,500,000    15,500,000    14,415,000    5.62%
Skopos Financial Group, LLC Series A Preferred Units  (4)(5)  Equity                 1/31/2014         1,120,684 units    1,162,544    500,000    0.19%
Total                                     $16,662,544   $14,915,000    5.81%
SQAD, LLC                             Tarrytown, NY                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.50%   1.00%  7.50%     12/22/2017  12/22/2022  Media: Broadcasting & Subscription  $14,382,094    14,343,947    14,382,094    5.61%
SQAD Holdco, Inc. Preferred Shares, Series A (SBIC)  (2)(4)  Equity                 10/31/2013         5,624 shares    156,001    800,000    0.31%
SQAD Holdco, Inc. Common Shares (SBIC)  (2)(4)  Equity                 10/31/2013         5,800 shares    62,485    90,000    0.04%
Total                                     $14,562,433   $15,272,094    5.96%
TechInsights, Inc.                             Ottawa, Ontario                    
Term Loan  (5)(13)(22)  First Lien  3M L+6.00%   1.00%  8.33%     8/16/2017  10/2/2023  High Tech Industries  $21,540,925    21,288,231    21,433,220    8.35%
Time Manufacturing Acquisition, LLC                             Waco, TX                    
Term Loan  (6)  Unsecured  11.50%      10.75% 0.75%  2/3/2017  8/3/2023  Capital Equipment  $6,385,182    6,316,850    6,385,182    2.49%
Time Manufacturing Investments, LLC Class A Common  Units  (4)  Equity                 2/3/2017         5,000 units    500,000    700,000    0.27%
Total                                     $6,816,850   $7,085,182    2.76%

 

11

 

 

 Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2020

 

TFH Reliability, LLC                             Houston, TX                    
Term Loan (SBIC)  (2)(35)  Second Lien  3M L+10.75%   0.80%  11.55%     10/21/2016  9/30/2023  Chemicals, Plastics, & Rubber  $5,875,000    5,831,333    5,757,500    2.24%
TFH Reliability Group, LLC Class A-1 Units  (4)  Equity                 6/29/2020         27,129 shares    21,511    10,000    0.00%
TFH Reliability Group, LLC Class A Common Units  (4)  Equity               <