10-Q 1 tm2118654d1_10q.htm FORM 10-Q

 

 

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

 

 

 

FORM 10-Q

 

 

 

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2021

 

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

 

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 ¨
Non-accelerated filer x   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 August 2, 2021 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, 2021 (unaudited) and December 31, 2020 2
  Consolidated Statements of Operations for the three and six-month periods ended June 30, 2021 and 2020 (unaudited) 3
  Consolidated Statements of Changes in Net Assets for the three and six-month periods ended June 30, 2021 and 2020 (unaudited) 4
  Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2021 and 2020 (unaudited) 5
  Consolidated Schedules of Investments as of June 30, 2021 (unaudited) and December 31, 2020 6
  Notes to Unaudited Consolidated Financial Statements 25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 58
Item 3. Quantitative and Qualitative Disclosures About Market Risk 77
Item 4. Controls and Procedures 78
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 79
Item 1A. Risk Factors 79
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 80
Item 3. Defaults Upon Senior Securities 80
Item 4. Mine Safety Disclosures 80
Item 5. Other Information 80
Item 6. Exhibits 81
SIGNATURES 82

 

i

 

 

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

 

   June 30,     
   2021   December 31, 
   (Unaudited)   2020 
ASSETS        
Non-controlled, non-affiliated investments, at fair value (amortized cost of $785,364,583 and $658,628,966, respectively)  $781,947,972   $653,424,495 
Cash and cash equivalents   18,602,775    18,477,602 
Receivable for sales and repayments of investments   480,552    215,929 
Interest receivable   2,712,220    2,189,448 
Other receivables   25,495    25,495 
Deferred offering costs   —    90,000 
Prepaid expenses   301,016    487,188 
Total Assets  $804,070,030   $674,910,157 
LIABILITIES          
Notes payable  $97,877,778   $48,307,518 
Credit facility payable   190,563,263    171,728,405 
SBA-guaranteed debentures   228,969,256    173,167,496 
Dividends payable   1,623,187    — 
Management fees payable   2,278,479    2,825,322 
Income incentive fees payable   178,398    681,660 
Capital gains incentive fees payable   618,689    521,021 
Interest payable   4,534,509    2,144,085 
Unearned revenue   513,798    523,424 
Administrative services payable   394,075    391,491 
Deferred tax liability   339,673    359,590 
Income tax payable   362,977    724,765 
Other accrued expenses and liabilities   1,649,667    174,731 
Total Liabilities  $529,903,749   $401,549,508 
Commitments and contingencies (Note 7)          
Net Assets  $274,166,281   $273,360,649 
NET ASSETS          
Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,486,003 and 19,486,003 issued and outstanding, respectively)   $ 19,486     $ 19,486  
Paid-in capital   276,026,667    276,026,667 
Accumulated undistributed deficit   (1,879,872)   (2,685,504)
Net Assets  $274,166,281   $273,360,649 
Total Liabilities and Net Assets  $804,070,030   $674,910,157 
Net Asset Value Per Share  $14.07   $14.03 

 

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, 
   2021   2020   2021   2020 
INVESTMENT INCOME                    
Interest income  $14,846,398   $13,635,480   $28,359,175   $28,485,068 
Other income   257,976    205,798    733,063    617,255 
Total Investment Income  $15,104,374   $13,841,278   $29,092,238   $29,102,323 
OPERATING EXPENSES                    
Management fees  $3,278,479   $2,743,195   $6,242,340   $5,462,249 
Valuation fees   20,082    19,001    148,435    128,834 
Administrative services expenses   463,102    436,594    916,491    903,529 
Income incentive fees   55,899    168,749    55,899    1,508,386 
Capital gains incentive fees (reversal)   14,387    -    97,668    (880,913)
Professional fees   236,212    150,514    505,177    537,228 
Directors' fees   74,500    110,566    166,000    242,816 
Insurance expense   118,813    93,071    236,320    186,142 
Interest expense and other fees   4,691,968    4,092,594    9,015,446    8,384,798 
Income tax expense   286,276    289,000    526,257    485,795 
Other general and administrative expenses   329,641    302,379    586,559    468,382 
Total Operating Expenses  $9,569,359   $8,405,663   $18,496,592   $17,427,246 
Net Investment Income  $5,535,015   $5,435,615   $10,595,646   $11,675,077 
Net realized loss on non-controlled, non-affiliated investments  $(1,781,665)  $(3,893,249)  $(1,319,437)  $(2,596,456)
Loss on debt extinguishment  $-   $-   $(539,250)  $- 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments  $1,665,877   $38,329,217   $1,787,860   $(13,175,729)
Benefit (provision) for taxes on net unrealized gain on investments  $187,721   $(58,909)  $19,917   $(29,950)
Net Increase (Decrease) in Net Assets Resulting from Operations  $5,606,948   $39,812,674   $10,544,736   $(4,127,058)
Net Investment Income Per Share  $0.28   $0.28   $0.54   $0.60 
Net Increase (Decrease) in Net Assets Resulting from Operations Per Share  $0.29   $2.04   $0.54   $(0.21)
Weighted Average Shares of Common Stock Outstanding   19,486,003    19,484,217    19,486,003    19,456,849 
Distributions Per Share  $0.25   $0.25   $0.50   $0.59 

 

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, 
   2021   2020   2021   2020 
Increase (Decrease) in Net Assets Resulting from Operations                    
Net investment income  $5,535,015   $5,435,615   $10,595,646   $11,675,077 
Net realized loss on non-controlled, non-affiliated investments   (1,781,665)   (3,893,249)   (1,319,437)   (2,596,456)
Loss on debt extinguishment   —    —    (539,250)     
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments   1,665,877    38,329,217    1,787,860    (13,175,729)
Benefit (provision) for taxes on unrealized appreciation on investments   187,721    (58,909)   19,917    (29,950)
Net Increase (Decrease) in Net Assets Resulting from Operations  $5,606,948   $39,812,674   $10,544,736   $(4,127,058)
Stockholder Distributions From:                    
Net investment income  $(4,869,552)  $(4,871,501)  $(9,739,104)  $(11,490,798)
Total Distributions  $(4,869,552)  $(4,871,501)  $(9,739,104)  $(11,490,798)
Capital Share Transactions                    
Issuance of common stock  $—   $93,470   $—   $5,023,937 
Sales load   —    —    —    (5,681)
Offering costs   —    —    —    (18,169)
Partial share transactions   —    —    —    (96)
Net Increase in Net Assets Resulting From Capital Share Transactions  $—   $93,470   $—   $4,999,991 
Total Increase (Decrease) in Net Assets  $737,396   $35,034,643   $805,632   $(10,617,865)
Net Assets at Beginning of Period  $273,428,885   $224,918,665   $273,360,649   $270,571,173 
Net Assets at End of Period  $274,166,281   $259,953,308   $274,166,281   $259,953,308 

 

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, 
   2021   2020 
Cash flows from operating activities          
Net increase (decrease) in net assets resulting from operations  $10,544,736   $(4,127,058)
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities:          
Purchases of investments   (182,822,853)   (68,247,468)
Proceeds from sales and repayments of investments   55,963,858    42,341,340 
Net change in unrealized (appreciation) depreciation on investments   (1,787,860)   13,175,729 
Increase in investments due to PIK   (360,003)   (552,245)
Amortization of premium and accretion of discount, net   (1,107,347)   (1,069,969)
Deferred tax (benefit) provision   (19,917)   29,951 
Amortization of loan structure fees   239,700    318,039 
Amortization of deferred financing costs   233,846    165,748 
Amortization of loan fees on SBA-guaranteed debentures   501,885    342,550 
Net realized loss on investments   1,326,105    2,596,456 
Loss on debt extinguishment   539,250    — 
Changes in other assets and liabilities          
(Increase) decrease in interest receivable   (522,772)   588,854 
Decrease in prepaid expenses   186,172    101,378 
(Decrease) increase in management fees payable   (546,843)   2,766,468 
(Decrease) increase in incentive fees payable   (503,262)   42,353 
Increase (decrease) in capital gains incentive fees payable   97,668    (880,913)
Increase in administrative services payable   2,584    383,490 
Increase (decrease) in interest payable   2,390,424    (155,230)
Increase in director fees payable   —    9,000 
(Decrease) increase in unearned revenue   (9,626)   86,232 
Decrease in income tax payable   (361,788)   (461,000)
Increase in other accrued expenses and liabilities   1,474,936    163,207 
Net Cash Used in Operating Activities  $(114,541,107)  $(12,383,088)
Cash flows from Financing Activities          
Proceeds from the issuance of common stock  $—   $4,794,994 
Sales load for commons stock issued   —    (5,681)
Offering costs paid for common stock issued   —    (18,169)
Stockholder distributions paid   (8,115,917)   (8,557,981)
Repayment of Notes Payable   (48,875,000)   — 
Proceeds from issuance of Notes   100,000,000    — 
Financing costs from bond issuance   (2,237,835)   — 
Proceeds from SBA Debentures   57,500,000    — 
Financing costs paid on SBA Debentures   (2,200,125)   — 
Financing costs paid on Credit facility   (4,843)   (203,353)
Borrowings under Credit Facility   161,800,000    86,450,000 
Repayments of Credit Facility   (143,200,000)   (63,000,000)
Partial Share Redemption   —    (96)
Net Cash Provided by Financing Activities  $114,666,280   $19,459,714 
Net Increase in Cash and Cash Equivalents  $125,173   $7,076,626 
Cash and cash equivalents balance at beginning of period   18,477,602    16,133,315 
Cash and Cash Equivalents Balance at End of Period  $18,602,775   $23,209,941 
Supplemental and Non-Cash Activities          
Cash paid for interest expense  $5,649,592   $7,713,693 
Excise tax paid   870,000    940,000 
Shares issued pursuant to Dividend Reinvestment Plan   —    228,943 
Increase in dividends payable   1,623,187    2,703,874 
Decrease in deferred offering costs for Notes Payable offering   (90,000)   — 
Gain on conversion of equity investment   6,668    — 

 

5

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

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		  $4,371,629   4,351,567   4,371,629  1.59%
Delayed Draw Term Loan  (35)  First Lien  1M L+7.00%   1.75%  8.75%      8/3/2018   6/30/2023     $144,329   144,329   144,329  0.05%
Total                                      $4,495,896  $4,515,958  1.64%
Ad.Net Acquisition, LLC                               Los Angeles, CA                
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.00%   1.00%  7.00%      5/7/2021   5/7/2026  Services: Business  $15,588,235   15,360,776   15,360,776  5.60%
Revolver  (19)(35)  First Lien  3M L+6.00%   1.00%  7.00%      5/7/2021   5/7/2026     $220,833   220,833   217,611  0.08%
Ad.Net Holdings, Inc. Series A Common Stock (SBIC II)  (4)(9)  Equity                  5/7/2021          7,794 shares   77,941   77,941  0.03%
Ad.Net Holdings, Inc. Series A Preferred Stock (SBIC II)  (4)(9)  Equity                  5/7/2021          7,015 shares   701,471   701,471  0.26%
Total                                      $16,361,021  $16,357,799  5.97%
ADS Group Opco, LLC                               Los Angeles, CA                
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.75%   1.00%  7.75%      6/4/2021   6/4/2026  Aerospace &
Defense		  $15,000,000   14,703,977   14,703,977  5.36%
Revolver  (33)(35)  First Lien  3M L+6.75%   1.00%  7.75%      6/4/2021   6/4/2026     $10,000   10,000   9,803  0.00%
Pluto Aggregator, LLC Class A Units  (4)  Equity                  6/4/2021          77,626 units   288,691   288,691  0.11%
Pluto Aggregator, LLC Class B Units  (4)  Equity                  6/4/2021          56,819 units   211,309   211,309  0.08%
Total                                      $15,213,977  $15,213,780  5.55%
Advanced Barrier Extrusions, LLC                               Rhinelander, WI                
Term Loan B (SBIC)  (2)(35)  First Lien  1M L+6.50%   1.00%  7.50%      11/30/2020   11/30/2026  Containers,
Packaging & Glass		  $17,412,500   17,091,339   17,151,313  6.27%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                  8/8/2018          644,737 units   700,000   860,000  0.31%
Total                                      $17,791,339  $18,011,313  6.58%
Anne Lewis Strategies, LLC  (20)                            Washington, D.C                
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.75%   1.00%  7.75%      3/5/2021   3/5/2026  Services: Business  $11,356,250   11,141,294   11,129,125  4.06%
SG AL Investment, LLC Common Units  (4)  Equity                  3/5/2021          1,000 units   978,371   1,200,000  0.44%
Total                                      $12,119,665  $12,329,125  4.50%
APE Holdings, LLC                               Deer Park, TX                
Class A Common Units  (4)  Equity                  9/5/2014      Chemicals, Plastics, 
& Rubber		   375,000 units   375,000   20,000  0.01%
Atmosphere Aggregator Holdings II, LP                                                
Common Units  (4)  Equity                  1/26/2016      Atlanta, GA
Services: Business		   254,250 units   0   1,530,000  0.56%
Stratose Aggregator Holdings, LP Common Units  (4)  Equity                  6/30/2015          750,000 units   0   4,530,000  1.65%
Total                                      $0  $6,060,000  2.21%

 

6

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

ASC Communications, LLC  (17)                            Chicago, IL                
Term Loan (SBIC)  (2)(35)  First Lien  1M L+5.00%   1.00%  6.00%      6/29/2017   6/29/2023  Healthcare & Pharmaceuticals  $3,672,839   3,663,803   3,617,746  1.32%
Term Loan  (35)  First Lien  1M L+5.00%   1.00%  6.00%      2/4/2019   6/29/2023     $6,243,827   6,205,268   6,150,170  2.24%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)   Equity                  6/29/2017          73,529 shares   38,841   610,000  0.22%
Total                                      $9,907,912  $10,377,916  3.78%
BW DME Acquisition, LLC                                                
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%  8.51%      8/24/2017   8/24/2022  Tempe, AZ
Healthcare & Pharmaceuticals		  $16,695,804   16,553,182   16,695,804  6.09%
BW DME Holdings, LLC, Term Loan  (6)  Unsecured  17.50%            17.50%  6/1/2018   6/30/2020     $425,736   425,736   425,736  0.16%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                  8/24/2017          1,000,000 shares   1,000,000   1,870,000  0.68%
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                  1/26/2018          937,261 shares   937,261   1,750,000  0.64%
Total                                      $18,916,179  $20,741,540  7.57%
Café Valley, Inc.                                                
Term Loan  (35)  First Lien  1M L+7.00%   1.25%  8.25%      8/28/2019   8/28/2024  Phoenix, AZ
Beverage,Food, &
Tobacco		  $15,989,286   15,772,132   15,509,607  5.66%
CF Topco LLC, Common Units  (4)  Equity                  8/28/2019          9,160 shares   916,015   740,000  0.27%
Total                                      $16,688,147  $16,249,607  5.93%
CEATI International, Inc.  (39)                            Montreal, Quebec                
Term Loan  (5)(35)  First Lien  3M L+6.50%   1.00%  7.50%      2/19/2021   2/19/2026  Services: Business  $13,466,250   13,211,101   13,196,925  4.81%
CEATI Holdings, LP, Class A Units  (4)(5)  Equity                  2/19/2021          250,000 shares   250,000   260,000  0.09%
Total                                      $13,461,101  $13,456,925  4.90%
Colford Capital Holdings, LLC                                                
 Preferred Units  (4)(5)  Equity                  8/20/2015      New York, NY
Finance		   38,893 units   195,036   20,000  0.01%
CommentSold, LLC  (8)                            Huntsville, AL                
Term Loan (SBIC)  (2)(35)  First Lien  1M L+6.00%   1.00%  7.00%      11/20/2020   11/20/2026  High Tech
Industries		  $12,437,500   12,208,387   12,250,938  4.47%
CompleteCase, LLC                               Seattle, WA                
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.50%   1.00%  7.50%      12/21/2020   12/21/2025  Services: Consumer  $11,420,870   11,211,425   11,192,453  4.08%
Revolver  (21)(35)  First Lien  3M L+6.50%   1.00%  7.50%      12/21/2020   12/21/2025     $33,333   33,333   32,666  0.01%
CompleteCase Holdings, Inc. Class A Common Units (SBIC II)  (4)(9)  Equity                  12/21/2020          417 units   5   0  0.00%
CompleteCase Holdings, Inc. Series A Preferred Units (SBIC II)  (4)(9)  Equity                  12/21/2020          522 units   521,734   620,000  0.23%
Total                                      $11,766,497  $11,845,119  4.32%
Convergence Technologies, Inc.                               Indianapolis, IN                
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.75%   1.50%  8.25%      8/31/2018   8/30/2024  Services: Business  $6,946,429   6,864,216   6,876,965  2.51%
Term Loan B (SBIC)  (2)(35)  First Lien  3M L+6.75%   1.50%  8.25%      8/14/2020   8/30/2024     $3,721,875   3,661,900   3,684,656  1.34%
Term Loan  (35)  First Lien  3M L+6.75%   1.50%  8.25%      2/28/2019   8/30/2024     $1,396,429   1,378,748   1,382,465  0.50%
Delayed Draw Term Loan  (35)  First Lien  3M L+6.75%   1.50%  8.25%      8/31/2018   8/30/2024     $5,223,214   5,223,214   5,170,982  1.89%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                  8/31/2018          5,583 units   588,813   790,000  0.29%
Total                                      $17,716,891  $17,905,068  6.53%

 

7

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

Data Centrum Communications, Inc.                             Montvale, NJ                   
Term Loan B  (35)  First Lien  3M L+5.50%  1.00%  6.50%      5/15/2019  5/15/2024  Media: Advertising, Printing & Publishing  $15,925,000    15,728,652    14,173,250   5.17%
Health Monitor Holdings, LLC Series A Preferred Units  (4)  Equity                 5/15/2019         1,000,000 shares    1,000,000    310,000   0.11%
Total                                     $16,728,652   $14,483,250   5.28%
Douglas Products Group, LP                             Liberty, MO                   
Class A Common Units  (4)  Equity                 12/27/2018     Chemicals, Plastics, & Rubber   322 shares    139,656    820,000   0.30%
Dresser Utility Solutions, LLC                             Bradford, PA                   
Term Loan (SBIC)  (2)(35)  Second Lien  1M L+8.50%  1.00%  9.50%      10/1/2018  -  Utilities: Oil & Gas  $10,000,000    9,892,808    9,850,000   3.59%
DRS Holdings III, Inc.  (10)                          St. Louis, MO                   
Term Loan  (35)  First Lien  1M  L+6.25%  1.00%  7.25%      11/1/2019  11/1/2025  Consumer Goods: Durable  $9,850,000    9,774,498    9,850,000   3.59%
                                                  
DTE Enterprises, LLC  (18)                          Roselle, IL                   
Term Loan  (6)(35)  First Lien  6M L+8.50%  1.50%  9.50%  0.50%  4/13/2018  4/13/2023  Energy: Oil & Gas  $9,344,688    9,266,913    8,550,390   3.12%
DTE Holding Company, LLC Common Shares, Class A-2  (4)  Equity                 4/13/2018         776,316 shares    466,204    190,000   0.07%
DTE Holding Company, LLC Preferred Shares, Class AA  (4)  Equity                 4/13/2018         723,684 shares    723,684    180,000   0.07%
Total                                     $10,456,801   $8,920,390   3.26%
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  $17,815,345    17,545,621    17,369,961   6.35%
Revolver  (3)(35)  First Lien  3M L+6.00%  1.75%  7.75%      1/31/2020  1/31/2025     $1,350,000    1,350,000    1,316,250   0.48%
SP EA Holdings, LLC Preferred Shares, Class A  (4)  Equity                 1/31/2020         900,000 shares    900,000    280,000   0.10%
Total                                     $19,795,621   $18,966,211   6.93%
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   0.36%
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   0.36%
Energy Labs Holding Corp.                             Houston, TX                   
 Common Stock  (4)  Equity                 9/29/2016     Energy: Oil & Gas   598 shares    598,182    620,000   0.23%
Exacta Land Surveyors, LLC  (23)(25)                          Cleveland, OH                   
Term Loan (SBIC)  (2)(35)  First Lien  3M L+7.75%  1.50%  9.25%      2/8/2019  2/8/2024  Services: Business  $16,629,375    16,436,462    16,296,788   5.94%
SP ELS Holdings LLC, Class A Common Units  (4)  Equity                 2/8/2019         1,069,143 shares    1,069,143    330,000   0.12%
Total                                     $17,505,605   $16,626,788   6.06%
EOS Fitness Holdings, LLC                             Phoenix, AZ                   
 Preferred Units  (4)  Equity                 12/30/2014     Hotel, Gaming, & Leisure   118 shares    0    40,000   0.01%
Class B Common Units  (4)  Equity                 12/30/2014         3,017 shares    0    0   0.00%
Total                                     $0   $40,000   0.01%
Fast Growing Trees, LLC  (16)                          Fort Mill, SC                   
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.75%  1.00%  7.75%      2/5/2018  2/5/2023  Retail  $14,992,490    14,882,227    14,992,490   5.47%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                 2/5/2018         1,000,000 shares    978,511    3,830,000   1.40%
Total                                     $15,860,738   $18,822,490   6.87%

 

8

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

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   $ 20,487,872       20,304,040       20,487,872     7.48 % 
Delayed Draw Term Loan (13)(22)   First Lien   6M L+6.35%   1.00 %   9.55 %         6/27/2018   4/24/2023       $ 1,123,340       1,123,340       1,123,340     0.41 %
Total                                                     $ 21,427,380     $ 21,611,212     7.89 %
General LED OPCO, LLC   (40)                                     San Antonio, TX                            
Term Loan   (35)   Second Lien   3M L+9.00%   1.50 %   0.00 %         5/1/2018   3/31/2026   Services: Business   $ 4,500,000       4,456,077       3,667,500     1.34  %
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   $ 12,830,377       12,739,981       12,830,377     4.68  %
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                         10/2/2019             1,796 shares       1,618,844       1,960,000     0.71  %
Total                                                     $ 14,623,977     $ 15,055,529     5.49 %
Grupo HIMA San Pablo, Inc., et al                                         San Juan, PR                              
Term Loan B   (27)(35)(41)   First Lien   3M L+7.00%   1.50 %   0.00 %         2/1/2013   1/31/2018   Healthcare & Pharmaceuticals   $ 4,503,720       4,503,720       2,161,786     0.79  %
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     $ 2,161,786     0.79 %
I2P Holdings, LLC                                         Cleveland, OH                            
Series A Preferred   (4)   Equity                         1/31/2018       Services: Business     750,000 shares       750,000       3,460,000     1.26 %
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   $ 6,958,133       6,839,579       6,958,133     2.54 %
EC Defense Holdings, LLC Class B Units (SBIC)   (2)(4)   Equity                         7/31/2020             20,054 shares       500,000       670,000     0.24 %
Total                                                     $ 7,339,579     $ 7,628,133     2.78 %
ICD Holdings, LLC                                         San Francisco, CA                            
 Class A Preferred   (4)(5)   Equity                         1/1/2018       Finance     9,962 shares       464,616       2,020,000     0.74 % 
Industry Dive, Inc.   (37)                                     Washington, D.C.                            
Term Loan  (SBIC)   (2)(35)   First Lien   1M L+6.25%   1.00 %   7.25 %         7/17/2020   8/30/2024   Services: Business   $ 6,980,586       6,868,475       6,945,683     2.53 %
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   $ 16,075,658       15,864,571       16,075,658     5.86 % 
Interstate Waste Services, Inc.                                         Amsterdam, OH                            
Common Units   (4)   Equity                         1/15/2020       Environmental Industries     21,925 shares       946,125       390,000     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   $ 5,910,000       5,826,103       5,910,000     2.16 %
Term Loan   (35)   First Lien   3M L+6.00%   1.50 %   7.50 %         10/18/2019   10/18/2024       $ 11,327,500       11,166,698       11,327,500     4.13 %
Legacy Parent, Inc. Class A Common Units   (4)   Equity                         10/30/2020             58 shares       125,000       170,000     0.06 % 

Total

                                                     $ 17,117,801     $ 17,407,500     6.35 %

 

9

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

Invincible Boat Company, LLC  (28)                          Opa Locka, FL                     
Term Loan  (35)  First Lien  3M L+6.50%  1.50%  8.00%      8/28/2019  8/28/2025  Consumer Goods: Durable  $5,925,636    5,785,962    5,896,008   2.15 %
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.50%  1.50%  8.00%      8/28/2019  8/28/2025     $5,469,818    5,388,217    5,442,469   1.99 %
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.50%  1.50%  8.00%      6/1/2021  8/28/2025     $1,216,012    1,192,089    1,209,932   0.44 %
Warbird Parent Holdco, LLC Class A Common Units  (4)  Equity                 8/28/2019         1,362,575 shares    1,310,554    1,410,000   0.51 %
Total                                     $13,676,822   $13,958,409   5.09 %
J.R. Watkins, LLC                             San Francisco, CA                     
Term Loan (SBIC)  (2)(6)  First Lien  10.00%      7.00%  3.00%  12/22/2017  12/22/2022  Consumer Goods: non-durable  $12,373,197    12,289,310    12,373,197   4.51 %
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                 12/22/2017         1,133 shares    1,132,576    730,000   0.27 %
Total                                     $13,421,886   $13,103,197   4.78 %
Jurassic Acquisiton Corp.                             Sparks, MD                     
Term Loan  (12)  First Lien  3M L+5.50%  0.00%  5.65%      12/28/2018  11/15/2024  Metals & Mining  $17,062,500    16,904,135    17,062,500   6.22 %
Kelleyamerit Holdings, Inc.                             Walnut Creek, CA                     
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.50%  1.00%  8.85%      12/24/2020  12/24/2025  Automotive  $9,750,000    9,573,150    9,555,000   3.49 %
Term Loan  (13)(22)  First Lien  3M L+6.50%  1.00%  8.85%      12/24/2020  12/24/2025     $1,500,000    1,472,792    1,470,000   0.54 %
Total                                     $11,045,942   $11,025,000   4.03 %
KidKraft, Inc.  (38)                          Dallas, TX                     
Term Loan  (22)(29)  First Lien  3M L+5.00%  1.00%  6.00%      9/30/2016  8/15/2022  Consumer Goods: Durable  $1,580,768    1,580,768    1,580,768   0.58 %
KidKraft Group Holdings, LLC Preferred B Units  (4)  Equity                 4/3/2020         4,000,000 shares    4,000,000    4,000,000   1.46 %
Total                                     $5,580,768   $5,580,768   2.04 %
Lynx FBO Operating, LLC                             Houston, TX                     
Term Loan  (35)  First Lien  3M L+5.75%  1.50%  7.25%      9/30/2019  9/30/2024  Aerospace & Defense  $13,554,675    13,363,700    13,554,675   4.94 %
Revolver  (31)(35)  First Lien  3M L+5.75%  1.50%  7.25%      9/30/2019  9/30/2024     $500,000    500,000    500,000   0.18  
Lynx FBO Investments, LLC Class A-1 Common Units  (4)  Equity                 9/30/2019         4,288 shares    593,480    720,000   0.26 %
Total                                     $14,457,180   $14,774,675   5.38 %
Madison Logic, Inc.                             New York, NY                     
Term Loan A (SBIC)  (2)(35)  First Lien  1M L+6.0%  1.00%  7.00%      2/4/2021  5/31/2023  Media: Broadcasting & Subscription  $3,803,747    3,787,878    3,803,747   1.39 %
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                 11/30/2016         5,000 shares    50,000    150,000   0.05 %
Madison Logic Holdings, Inc. Preferred Stock (SBIC)  (2)(4)  Equity                 11/30/2016         4,500 shares    450,000    1,330,000   0.49 %
Total                                     $4,287,878   $5,283,747   1.93 %
Mobile Acquisition Holdings, LP                             Santa Clara, CA                     
Class A Common Units  (4)  Equity                 11/1/2016     Software   750 units    455,385    2,550,000   0.93 %
MOM Enterprises, LLC  (43)                          Richmond, CA                     
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.25%  1.00%  7.25%      5/19/2021  5/19/2026  Healthcare & Pharmaceuticals  $16,466,667    16,141,847    16,141,847   5.89 %
Mbliss SPC Holdings, LLC Units  (4)  Equity                 5/19/2021         933,333 units    933,333    933,333   0.34 %
Total                                     $17,075,180   $17,075,180   6.23 %

 

10

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

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  $7,192,376    7,148,955    7,192,376   2.62%
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.25%  1.00%  7.25%      3/31/2021  4/11/2024     $4,000,000    3,925,780    4,000,000   1.46%
Term Loan  (35)  First Lien  3M L+6.25%  1.00%  7.25%      5/28/2021  4/11/2024     $1,152,875    1,130,404    1,152,875   0.42%
Delayed Draw Term Loan  (35)  First Lien  3M L+6.25%  1.00%  7.25%      4/11/2019  4/11/2024     $2,154,749    2,126,676    2,154,749   0.79%
Cool Supply Holdings, LLC Class A Common Units  (4)  Equity                 4/11/2019         500,000 units    486,516    770,000   0.28%
Total                                     $14,818,331   $15,270,000   5.57%
Naumann/Hobbs Material Handling Corporation II, Inc.  (32)                          Phoenix, AZ                   
Term Loan  (35)  First Lien  3M L+6.25%  1.50%  7.75%      8/30/2019  8/30/2024  Services: Business  $9,158,897    9,034,339    9,158,897   3.34%
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.25%  1.50%  7.75%      8/30/2019  8/30/2024     $5,775,634    5,697,088    5,775,634   2.11%
CGC NH, Inc. Common Units  (4)  Equity                 8/30/2019         123 shares    440,758    560,000   0.20%
Total                                     $15,172,185   $15,494,531   5.65%
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    7,503,067    7,462,700   2.72%
NS Group Holding Company, LLC Class A Common Units  (4)  Equity                 5/6/2019         750 shares    750,000    610,000   0.22%
Total                                     $8,253,067   $8,072,700   2.94%
NuMet Machining Techniques, LLC                             Birmingham, UK                   
Term Loan  (5)(35)  Second Lien  1M L+9.00%  2.00%  11.00%      11/5/2019  5/5/2026  Aerospace & Defense  $12,675,000    12,475,422    11,977,875   4.37%
Bromford Industries Limited Term Loan  (5)(35)  Second Lien  1M L+9.00%  2.00%  11.00%      11/5/2019  5/5/2026     $7,800,000    7,673,212    7,371,000   2.69%
Bromford Holdings, L.P. Class A Membership Units  (4)(5)  Equity                 11/5/2019         866,629 shares    866,629    90,000   0.03%
Bromford Holdings, L.P. Class D Membership Units  (4)(5)  Equity                 3/18/2021         280,078 shares    280,078    490,000   0.18%
Total                                     $21,295,341   $19,928,875   7.27%
NuSource Financial, LLC                             Eden Prairie, MN                   
Term Loan (SBIC II)  (9)(35)  First Lien  1M L+9.00%  1.00%  10.00%      1/29/2021  1/29/2026  Services: Business  $11,250,000    11,039,584    11,025,000   4.02%
NuSource Financial Acquisition, Inc. (SBIC II)  (9)  Unsecured  13.75%      4.00%  9.75%  1/29/2021  7/29/2026     $4,868,354    4,778,247    4,770,987   1.74%
NuSource Holdings, Inc., Warrants (SBIC II)  (4)(9)  Equity                 1/29/2021         54,966 shares    0    0   0.00%
Total                                     $15,817,831   $15,795,987   5.76%
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  $12,692,951    12,560,273    12,692,951   4.63%
Functional Aggregator, LLC Common Units  (4)  Equity                 11/15/2018         12,500 shares    1,250,000    1,380,000   0.50%
Total                                     $13,810,273   $14,072,951   5.13%
Onpoint Industrial Services, LLC                             Deer Park, TX                   
Term Loan (SBIC)  (2)(35)  First Lien  3M L+7.25%  1.00%  8.25%      3/15/2021  3/15/2026  Services: Business  $10,473,750    10,275,355    10,264,275   3.74%
Onpoint Parent Holdings, LLC, Class A Units  (4)  Equity                 3/15/2021         500,000 shares    500,000    500,000   0.18%
Total                                     $10,775,355   $10,764,275   3.92%
PCP MT Aggregator Holdings, L.P.                             Oak Brook, IL                   
Common LP Units  (4)  Equity                 3/29/2019     Finance   750,000 shares    0    1,940,000   0.71%
PCS Software, Inc.                             Shenandoah, TX                   
Term Loan  (35)  First Lien  3M L+5.75%  1.50%  7.25%      7/1/2019  7/1/2024  Transportation & Logistics  $14,283,113    14,096,723    14,283,113   5.21%

 

11

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

June 30, 2021

 

Term Loan (SBIC)  (2)(35)  First Lien  3M L+5.75%  1.50%  7.25%        7/1/2019  7/1/2024     $1,873,195    1,848,750    1,873,195   0.68%
Delayed Draw Term Loan  (35)  First Lien  3M L+5.75%  1.50%  7.25%