What changed in this filing

/stocks — the workspaceLOADING

Item 5. Other Information

2022-08-04 compared with 2022-05-11 · 171 added, 172 removed, 1774 unchanged (16% of the section changed)

8 unchanged sentences

333-212817) filed on August 1, 2016)

Fourth Supplemental Indenture, dated as of June 23, 2021, between Great Elm Capital Corp.

and American Stock Transfer & Trust Company, LLC, as Trustee (incorporated by reference to Exhibit 4.1 to the 8-K filed on June 23, 2021)

Global Note (5.875% Note Due 2026) (incorporated by reference to Exhibit 4.2 to the 8-K filed on June 23, 2021)

Loan, Guarantee and Security Agreement, dated May 5, 2021, by and between Great Elm Capital Corp.

and City National Bank (incorporated by reference to Exhibit 10.1 of the 8-K filed on May 6, 2021)

Certification of the Registrant’s Chief Executive Officer (“CEO”)

4 unchanged sentences

GREAT ELM CAPITAL CORP.

August 4, 2022

/s/ Matt Kaplan

Chief Executive Officer

August 4, 2022

Chief Financial Officer

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Assets and Liabilities as of March 31, 2022 and December 31, 2021 (unaudited)

Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2022 and 2021 (unaudited)

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)

Consolidated Schedule of Investments as of March 31, 2022 and December 31, 2021 (unaudited)

Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 (unaudited)

Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)

Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2022 and 2021 (unaudited)

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)

Consolidated Schedule of Investments as of June 30, 2022 and December 31, 2021 (unaudited)

Notes to the Unaudited Consolidated Financial Statements

2 unchanged sentences

Dollar amounts in thousands (except per share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

34 unchanged sentences

Dollar amounts in thousands (except per share amounts)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Investment Income:

47 unchanged sentences

Dollar amounts in thousands

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Increase (decrease) in net assets resulting from operations:

26 unchanged sentences

Dollar amounts in thousands

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities

22 unchanged sentences

Cash flows from financing activities

Issuance of notes payable

Proceeds from issuance of common stock

Payments of deferred financing costs

5 unchanged sentences

Supplemental disclosure of non-cash financing activities:

Distributions declared, not yet paid

Common stock distributed

4 unchanged sentences

The following tables provide a reconciliation of cash and cash equivalents and restricted cash reported on the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts on the Consolidated Statements of Cash Flows:

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

Total cash and cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows

March 31, 2021

June 30, 2021

December 31, 2020

5 unchanged sentences

CONSOLIDATED SCHED ULE OF INVESTMENTS (unaudited)

March 31, 2022

June 30, 2022

Dollar amounts in thousands

9 unchanged sentences

1M L + 6.25%, 7.25% Floor (7.92%)

American Tower Corporation

116 Huntington Avenue

Boston, MA 02116

Wireless Telecommunications Services

Corporate Bond

4171 Essen Lane

1 unchanged sentence

1st Lien, Secured Bond

Avanti Communications Group PLC

Cobham House 20 Black Friars Lane London, UK EC4V 6EB

Wireless Telecommunications Services

1.125 Lien, Secured Loan

5, 6, 7, 9, 10, 11, 12

Avanti Communications Group PLC

Avanti Space Limited

Cobham House 20 Black Friars Lane London, UK EC4V 6EB

Wireless Telecommunications Services

1.25 Lien, Secured Loan

5, 6, 7, 9, 10, 11, 12

Avanti Communications Group PLC

Junior Priority E2 Notes

Avanti Space Limited

Cobham House 20 Black Friars Lane London, UK EC4V 6EB

Wireless Telecommunications Services

1.5 Lien, Secured Loan

5, 6, 7, 9, 10, 11, 12

Avanti Communications Group PLC

Junior Priority F Notes

Avanti Space Limited

Cobham House 20 Black Friars Lane London, UK EC4V 6EB

Wireless Telecommunications Services

2nd Lien, Secured Bond

5, 6, 7, 9, 10, 11

Avanti Communications Group PLC

Junior Priority G Notes

Avanti Space Limited

Cobham House 20 Black Friars Lane London, UK EC4V 6EB

28 unchanged sentences

Preferred Equity

FTAI Infrastructure Inc.

1345 Avenue of the Americas, 45th Floor

New York, NY 10105

1st Lien Secured Note

First Brands, Inc.

4 unchanged sentences

3M L + 8.50%, 9.50% Floor (9.74%)

Ford Motor Credit Co LLC

One American Road

Dearborn, MI 48126

Diversified Financial

Unsecured Note

Foresight Energy

4 unchanged sentences

3M L + 8.00%, 9.50% Floor (10.25%)

Forum Energy Technologies, Inc.

10344 Sam Houston Park Drive, Suite 300

Houston, TX 77064

Energy Services

Convertible Bond

GAC HoldCo Inc.

3 unchanged sentences

Corporate Bond

GAC HoldCo Inc.

Suite 1220, 407 - 2nd Street S.W.

Calgary, AB T2P 2Y3

Oil & Gas Exploration & Production

Greenway Health, LLC

19 unchanged sentences

Specialty Finance

Common Equity

Lenders Funding, LLC

Coronado, CA 92118

Specialty Finance

Subordinated Note

7 unchanged sentences

Revolver - Unfunded

Lenders Funding, LLC

Coronado, CA 92118

Specialty Finance

Common Equity

905 South Boulevard East

1 unchanged sentence

Specialty Finance

Lummus Technology Holdings

Sam Houston Parkway West, #600

Houston, TX 77086

Corporate Bond

Mad Engine Global, LLC

12 unchanged sentences

3M L + 7.50%, 8.50% Floor (9.07%)

Monitronics International, Inc.

1990 Wittington Place

Dallas, TX 75234

Home Security

1M L + 7.50%, 8.75% Floor (8.75%)

MicroStrategy Incorporated

1850 Towers Crescent Plaza

Tysons Corner, VA 22182

1st Lien Unsecured Note

Natural Resource Partners LP

3 unchanged sentences

Unsecured Notes

Newfold Digital Inc.

5335 Gate Parkway

Jacksonville, FL 32256

Internet Media

Unsecured Note

Par Petroleum, LLC

3 unchanged sentences

1st Lien, Secured Note

Par Petroleum, LLC

825 Town & Country Lane, Suite 1500

Houston, TX 77024

Oil & Gas Refining

1st Lien Secured Note

Perforce Software, Inc.

32 unchanged sentences

Common Equity

Quad/Graphics, Inc.

N61 W23044 Harry's Way

Sussex, WI 53089

Commercial Printing

Unsecured Bond

Research Now Group, Inc.

3 unchanged sentences

1st Lien, Secured Revolver

6M L + 4.50%, 4.50% Floor (5.97%)

Prime + 3.50%, 2.50% Floor (8.25%)

Research Now Group, Inc.

16 unchanged sentences

Maryville, TN 37804

SCIH Salt Holdings Inc.

1875 Century Park East

Los Angeles, CA 90067

Food & Staples

Corporate Bond

Sprint Communications

6200 Sprint Parkway

Overland Park, KS 66251

Wireless Telecommunications Services

Unsecured Note

Sprout Holdings, LLC

2 unchanged sentences

Sterling Commercial Credit, LLC

10153 Grand River Rd Brighton, MI 48116

10153 Grand River Rd

Brighton, MI 48116

Specialty Finance

Sterling Commercial Credit, LLC

10153 Grand River Rd Brighton, MI 48116

10153 Grand River Rd

Brighton, MI 48116

Specialty Finance

9 unchanged sentences

Corporate Bond

Tensar Corporation

2500 Northwinds Parkway, Suite 500

Alpharetta, GA 30009

Construction Materials Manufacturing

2nd Lien, Secured Loan

3M L + 12.00%, 13.00% Floor (13.00%)

TRU Taj Trust

15 unchanged sentences

3M L + 8.25%, 9.25% Floor (9.25%)

6155 El Camino Real

Carlsbad, CA 92009

Communications Equipment

6155 El Camino Real

Carlsbad, CA 92009

Communications Equipment

6155 El Camino Real

Carlsbad, CA 92009

Communications Equipment

W&T Offshore, Inc.

3 unchanged sentences

Corporate Bond

Wynden Stark LLC

295 Madison Ave, 12th Floor

New York, NY 10017

Specialty Finance

Wynden Stark LLC

295 Madison Ave, 12th Floor

New York, NY 10017

Specialty Finance

Receivable - Unfunded

Investments in Special Purpose Acquisition Companies (SPAC) & De-SPAC Companies

51 unchanged sentences

Columbia, MD 21046

Capital Of Texas Hwy B Suite 285

Austin, TX 78799 United States

Walnut Hill Ln #100

Irving, TX 75038

Cartesian Growth Corporation

116 unchanged sentences

Biotechnology

Gores Guggenheim, Inc.

6260 Lookout Road

Boulder, CO 80301

Special Purpose Acquisition Company

Gores Holdings VII, Inc.

14 unchanged sentences

Special Purpose Acquisition Company

Haymaker Acquisition Corp.

501 Madison Avenue, Floor 5

New York, NY 10022

Special Purpose Acquisition Company

Grove Collaborative Holdings, Inc.

1301 Sansome Street

San Francisco, CA 94111

Household & Personal Products

Hudson Executive Investment Corp.

9 unchanged sentences

Special Purpose Acquisition Company

Kismet Acquisition Three Corp.

Kismet Acquisition Two Corp.

850 Library Avenue, Suite 204

1 unchanged sentence

Special Purpose Acquisition Company

Kismet Acquisition Two Corp.

Kismet Acquisition Three Corp.

850 Library Avenue, Suite 204

89 unchanged sentences

Special Purpose Acquisition Company

Polestar Automotive Holding UK PLC

Assar Gabrielssons Väg 9

405 31 Göteborg, Sweden

Auto Manufacturer

Primavera Capital Acquisition Corporation

90 unchanged sentences

Special Purpose Acquisition Company

Virgin Group Acquisition Corp.

65 Bleecker Street, 6th Floor

New York, NY 10012

Special Purpose Acquisition Company

VPC Impact Acquisition Holdings II

16 unchanged sentences

Treasury Bill

GS Financial Square Treasury Obligations Fund

Short-Term Investments

Total Short-Term Investments (135.55% of Net Assets)

3 unchanged sentences

under the Securities Act.

(2) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to London Interbank Offered Rate (‘‘LIBOR”

or “L”) and which is reset daily, monthly, quarterly or semiannually.

(2) Certain of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to London Interbank Offered Rate (‘‘LIBOR”

or “L”) or prime rate (“Prime”) which are reset periodically.

For each debt investment, the Company has provided the interest rate in effect as of period end.

If no reference to LIBOR is made, the rate is fixed.

A floor is the minimum rate that will be applied in calculating an interest rate.

3 unchanged sentences

The six-month (“6M”) LIBOR as of period end was 2.94%.

The prime rate as of period end was 4.75%.

(3) Percentage of class held refers only to equity held, if any, calculated on a fully diluted basis.

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(7) Security pays, or has the option to pay, some or all of its interest in kind.

As of March 31, 2022, the Ruby Tuesday Operations, LLC secured loan and each of the Universal Fiber Systems term loans pay a portion of their interest in-kind and the rates above reflect the payment-in-kind ("PIK") interest rates.

As of March 31, 2022, each of the Avanti Communications Group, plc secured debt pay in kind and the rates above reflect the PIK interest rates, however, each position is on non-accrual.

As of March 31, 2022, Avation Capital SA secured bond has the option to pay in kind but currently pays cash and the rate above reflects the cash interest rate.

As of June 30, 2022, the Ruby Tuesday Operations, LLC secured loan and each of the Universal Fiber Systems term loans pay a portion of their interest in-kind and the rates above reflect the payment-in-kind ("PIK") interest rates.

As of June 30, 2022, each of the Avanti Space Limited secured debt pay in kind and the rates above reflect the PIK interest rates, however, each position is on non-accrual.

As of June 30, 2022, Avation Capital SA secured bond and Forum Energy Technologies, Inc have the option to pay in kind but currently pay cash and the rates above reflects the cash interest rates.

(8) Non-income producing security.

6 unchanged sentences

Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

(12) Under the terms of the credit agreement, this investment has an exit fee which requires the borrower to pay, in connection with each prepayment or other repayment a fee equal to 2.50% of the amount being repaid.

(12) As of period end, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $10,742;

3 unchanged sentences

* Represents less than 1%.

As of March 31, 2022, the Company’s investments consisted of the following:

As of June 30, 2022, the Company’s investments consisted of the following:

Investment Type

2 unchanged sentences

Short-Term Investments

As of March 31, 2022, the geographic composition of the Company’s portfolio at fair value was as follows:

As of June 30, 2022, the geographic composition of the Company’s portfolio at fair value was as follows:

Investments at

1 unchanged sentence

United States

As of March 31, 2022, the industry composition of the Company’s portfolio at fair value was as follows:

As of June 30, 2022, the industry composition of the Company’s portfolio at fair value was as follows:

Investments at

4 unchanged sentences

Internet Media

Construction Materials Manufacturing

Oil & Gas Exploration & Production

3 unchanged sentences

Food & Staples

Home Security

Commercial Printing

Wireless Telecommunications Services

Communications Equipment

Energy Services

Diversified Financial

Special Purpose Acquisition Company

Consumer Finance

Auto Manufacturer

Biotechnology

Household & Personal Products

Communications Equipment

Consumer Finance

Short-Term Investments

488 unchanged sentences

Cash and cash equivalents typically consist of bank demand deposits.

Restricted cash consists of collateral for unfunded positions held by counterparties.

Restricted cash generally consists of collateral for unfunded positions held by counterparties.

Valuation of Portfolio Investments .

56 unchanged sentences

The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income.

The Company has accrued $101 of excise tax expense for the three months ended March 31, 2022.

The Company has accrued $101 of excise tax expense for the six months ended June 30, 2022.

The Company accrued $48 of excise tax expense for the year ended December 31, 2021.

23 unchanged sentences

Base management fees for any partial quarter are prorated.

For the three months ended March 31, 2022 management fees amounted to $780.

For the three months ended March 31, 2021 management fees amounted to $660.

As of March 31, 2022 and December 31, 2021, $785 and $881 remained payable, respectively.

For the three and six months ended June 30, 2022 management fees amounted to $771 and $1,551, respectively.

For the three and six months ended June 30, 2021 management fees amounted to $765 and $1,425, respectively.

As of June 30, 2022 and December 31, 2021, $770 and $881, respectively, remained payable.

Incentive Fee The incentive fee consists of two components that are independent of each other with the result that one component may be payable even if the other is not.

13 unchanged sentences

Under the Capital Gains Incentive Fee, the Company is obligated to pay GECM at the end of each calendar year 20% of the aggregate cumulative realized capital gains from November 4, 2016 through the end of that year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees.

In March 2022, GECM indicated that it intends to waive all accrued and unpaid incentive fees as of March 31, 2022.

In March 2022, GECM waived all accrued and unpaid incentive fees as of March 31, 2022.

As of March 31, 2022, there were approximately $4.9 million of accrued fees.

In connection with the waiver, the Company recognized the reversal of these accrued fees during the period ending March 31, 2022, resulting in a corresponding increase in net income in that period.

For the three months ended March 31, 2022 and 2021, the Company incurred Income Incentive Fees of $(4,854), inclusive of the incentive fee waiver as of March 31, 2022,and $108, respectively.

As of March 31, 2022 there were no incentive fees payable.

The incentive fee waiver is not subject to recapture.

For the six months ended June 30, 2022 and 2021, the Company incurred Income Incentive Fees of $(4,854), inclusive of the incentive fee waiver as of March 31, 2022, and $506, respectively.

As of June 30, 2022 there were no incentive fees payable.

As of December 31, 2021, $4,854 of Income Incentive Fees remained payable and none was immediately payable after calculating the total return requirement.

These payable amounts included both Accrued Unpaid Income Incentive Fees and amounts deferred under the total return requirement and would have become due upon meeting the criteria described above had they not been waived by GECM as of March 31, 2022.

For the three months ended March 31, 2022 and the year ended December 31, 2021, the Company did not have any Capital Gains Incentive Fees accrual.

The Company intends to present a proposal to its stockholders at the next annual meeting to amend the Investment Management Agreement in order to reset the incentive fee total return hurdle, but GECM’s waiver of the incentive fee is not contingent upon such proposal being approved.

For the six months ended June 30, 2022 and the year ended December 31, 2021, the Company did not have any Capital Gains Incentive Fees accrual.

On August 1, 2022, the Company's stockholders approved a proposal to amend the Capital Gains Incentive Fee and mandatory deferral provisions in sections 4.4 and 4.5, respectively, of the Investment Management Agreement.

The amendment amended (i) section 4.4 of the Investment Management Agreement to provide that (x) the capital gains commencement date shall be April 1, 2022 and (y) for the year ending December 31, 2022, the Capital Gains Incentive Fee shall be calculated for the period beginning on the Capital Gains Commencement Date and ending on December 31, 2022 and (ii) section 4.5 of the Investment Management Agreement to provide that (x) the Trailing Twelve Quarters shall commence April 1, 2022 (the “Mandatory Deferral Commencement Date”) and (y) in the event the Trailing Twelve Quarters is less than twelve full calendar quarters, Trailing Twelve Quarters shall mean the period from the Mandatory Deferral Commencement Date through the quarter ending on or prior to the date such Income Incentive Fee payment is to be made.

The Investment Management Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, GECM and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’

7 unchanged sentences

fees and amounts reasonably paid in settlement) arising from the rendering of GECM’s services under the Administration Agreement or otherwise as administrator for the Company.

For the three months ended March 31, 2022 and 2021, the Company incurred expenses under the Administration Agreement of $221 and $156, respectively.

As of March 31, 2022 and December 31, 2021, $175 and $131 remained payable, respectively.

For the three and six months ended June 30, 2022, the Company incurred expenses under the Administration Agreement of $262 and $483, respectively.

For the three and six months ended June 30, 2021, the Company incurred expenses under the Administration Agreement of $180 and $336, respectively.

As of June 30, 2022 and December 31, 2021, $215 and $131 remained payable, respectively.

FAIR VALUE MEASUREMENT

24 unchanged sentences

When these are not available, the following valuation methodologies are used, as appropriate and available:

T ransactions in similar instruments;

Transactions in similar instruments;

Discounted cash flow techniques;

5 unchanged sentences

Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including:

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of March 31, 2022 and December 31, 2021.

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of June 30, 2022 and December 31, 2021.

The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments.

3 unchanged sentences

Increases or decreases in market multiples would result in an increase or decrease, respectively, in the fair value.

The following summarizes the Company’s investment assets categorized within the fair value hierarchy as of March 31, 2022:

The following summarizes the Company’s investment assets categorized within the fair value hierarchy as of June 30, 2022:

Short Term Investments

3 unchanged sentences

Total investment assets

The following is a reconciliation of Level 3 assets for the three months ended March 31, 2022:

The following is a reconciliation of Level 3 assets for the six months ended June 30, 2022:

Beginning Balance as of January 1, 2022

6 unchanged sentences

Net Amortization of Premium/ Discount

Ending Balance as of March 31, 2022

Ending Balance as of June 30, 2022

Total investment assets

12 unchanged sentences

Sales and Settlements may include scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities), and securities delivered in corporate actions and restructuring of investments.

(2) The net change in unrealized appreciation relating to Level 3 assets still held at March 31, 2022 totaled $(8,927) consisting of the following:

(2) The net change in unrealized appreciation relating to Level 3 assets still held at June 30, 2022 totaled $(8,717) consisting of the following:

$(8,135) related to debt investments and $(582) related to equity investments.

1 unchanged sentence

$(31,826) related to debt investments and $4,298 relating to equity/other.

Three investments with an aggregate fair value of $12,808 were transferred from Level 3 to Level 2 as a result of increased pricing transparency during the three months ended March 31, 2022.

Four investments with an aggregate fair value of $18,385 were transferred from Level 3 to Level 2 as a result of increased pricing transparency during the six months ended June 30, 2022.

There were no transfers into or out of Level 3 during the year ended December 31, 2021.

The following tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of March 31, 2022 and December 31, 2021, respectively.

The following tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of June 30, 2022 and December 31, 2021, respectively.

These ranges represent the significant unobservable inputs that were used in the valuation of each type of instrument, but they do not represent a range of values for any one instrument.

1 unchanged sentence

Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets.

As of March 31, 2022

As of June 30, 2022

Investment Type

5 unchanged sentences

9.48% - 22.57% (14.88%)

Market Approach

Earnings Multiple

2.70 - 4.00 (3.35)

Income Approach

4 unchanged sentences

1.30 - 5.00 (4.22)

Recent Transaction

Income Approach

1 unchanged sentence

4.18% - 12.92% (9.89%)

Asset Recovery/Liquidation

Income Approach

4 unchanged sentences

1.30 -5.00 (4.05)

Recent Transaction

Market Approach

Earnings Multiple

0.16 -8.00 (4.96)

Income Approach

1 unchanged sentence

11.51% - 17.79% (13.93%)

Broker Quotes

Discount Rate

Market Approach

Earnings Multiple

0.13 - 7.75 (3.15)

35 unchanged sentences

The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

(3) Comparable price may include broker quotes for the exact security or similar securities.

(3) Investments valued using the asset recovery or liquidation technique include investments for which valuation is based on current financial data without a discount rate applied.

3 unchanged sentences

The maturity date of the revolving line is May 5, 2024.

Borrowings under the revolving line bear interest at a rate equal to (i) the London Inter-bank Offered Rate plus 3.50%, (ii) a base rate plus 2.00% or (iii) a combination thereof, as determined by the Company.

As of March 31, 2022, there were no borrowings outstanding under the revolving line.

Borrowings under the revolving line bear interest at a rate equal to (i) the secured overnight financing rate ("SOFR") plus 3.50%, (ii) a base rate plus 2.00% or (iii) a combination thereof, as determined by the Company.

As of June 30, 2022, there were no borrowings outstanding under the revolving line.

Borrowings under the revolving line are secured by a first priority security interest in substantially all of the Company’s assets, subject to certain specified exceptions.

3 unchanged sentences

In May 2022, the Loan Agreement was amended to require an asset coverage equal to or greater than 150% as of the last day of each fiscal quarter except for the fiscal quarters ending March 31, 2022 and June 30, 2022.

In addition, the interest rate was amended to replace LIBOR with the secured overnight financing rate (SOFR").

In addition, the interest rate was amended to replace the London Interbank Offered Rate with SOFR.

Unsecured Notes

33 unchanged sentences

December 31, 2021

March 31, 2022

June 30, 2022

(1) Total amount of each class of senior securities outstanding at the end of the period presented.

7 unchanged sentences

The Investment Company Act limits, with certain exceptions, the Company’s borrowing such that its asset coverage ratio, as defined in the Investment Company Act, is at least 1.5 to 1 after such borrowing (the "Minimum ACR").

As of March 31, 2022, the Company’s asset coverage ratio was approximately 147.5%.

As a result of falling below the Minimum ACR, we will be subject to certain limitations on our ability to incur additional debt, make cash distributions on junior securities or repurchase junior securities, in each case, in accordance with the Investment Company Act of 1940, as amended and the indentures governing our outstanding notes, until such time we are above the Minimum ACR.

As of March 31, 2022 and December 31, 2021, the Company was in compliance with all covenants under the Indenture.

For the three months ended March 31, 2022 and 2021, the components of interest expense were as follows:

For the Three Months Ended March 31,

As of June 30, 2022, the Company’s asset coverage ratio was approximately 166.9%.

As of June 30, 2022 and December 31, 2021, the Company was in compliance with all covenants under the Indenture.

For the three and six months ended June 30, 2022 and 2021, the components of interest expense were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Borrowing interest expense

5 unchanged sentences

The fair value of the Company’s Notes is determined by utilizing market quotations at the measurement date as they are Level 1 securities.

March 31, 2022

June 30, 2022

Unsecured Debt - GECCM Notes

6 unchanged sentences

CAPITAL ACTIVITY

On February 3, 2022, the Company issued 117,117 shares of common stock (as adjusted for the reverse stock split described below) for $2,600 based on the most recently published net asset value.

This common stock was issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

On June 13, 2022, the Company completed a non-transferable rights offering, which entitled holders of rights to purchase one new share of common stock for each right held at a subscription price of $12.50 per share.

In total, the Company sold 3,000,567 shares of the Company's common stock for aggregate gross proceeds of approximately $37,507.

On February 28, 2022, the Company effected a 6-for-1 reverse stock split of the Company’s outstanding common stock.

2 unchanged sentences

Such fractional shares aggregated to the equivalent of four shares and were redeemed for $0.1 in aggregate.

On January 21, 2021, the Company distributed 1,720 shares of common stock as part of the fourth quarter 2020 distribution.

On February 3, 2022, the Company issued 117,117 shares of common stock (as adjusted for the reverse stock split described above) for $2,600 based on the most recently published net asset value.

This common stock was issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

On January 21, 2021, the Company distributed 79,797 shares of common stock (as adjusted for the reverse stock split described above) as part of the fourth quarter 2020 distribution.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time.

As of March 31, 2022, the Company had approximately $25,278 in unfunded loan commitments, subject to the Company’s approval in certain instances, to provide debt financing to certain of its portfolio companies.

To the degree applicable, unrealized gains or losses on these commitments as of March 31, 2022 are included in the Company’s Statements of Assets and Liabilities and the corresponding Schedule of Investments.

As of June 30, 2022, the Company had approximately $19,964 in unfunded loan commitments, subject to the Company’s approval in certain instances, to provide debt financing to certain of its portfolio companies.

To the degree applicable, unrealized gains or losses on these commitments as of June 30, 2022 are included in the Company’s Statements of Assets and Liabilities and the corresponding Schedule of Investments.

The Company believes that it had sufficient cash and other liquid assets on its balance sheet to satisfy the unfunded commitments.

12 unchanged sentences

The Company intends to defend the matter as necessary.

In July 2016, Full Circle filed suit in the District Court of Caldwell County, Texas against, among others, Willis Pumphrey for breach of a guaranty agreement arising from a loan transaction with Full Circle.

In July 2016, Full Circle Capital Corporation ("Full Circle") filed suit in the District Court of Caldwell County, Texas against, among others, Willis Pumphrey for breach of a guaranty agreement arising from a loan transaction with Full Circle.

Pumphrey, a personal guarantor of the loan made by Full Circle, the Company’s predecessor in interest, brought counterclaims in (i) the District Court of Caldwell County, Texas and (ii) the District Court of Harris County, Texas against, among others, Justin Bonner, an employee of GECM, in each case, alleging breach of a confidentiality agreement and tortious interference with Dr.

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On November 29, 2017, Dr.

Pumphrey refiled his claims in the District Court of Harris County, Texas naming Full Circle, MAST Capital, GECC and GECM as defendants.

Pumphrey refiled his claims in the District Court of Harris County, Texas naming Full Circle, MAST Capital Management, LLC, GECC and GECM as defendants.

Pumphrey is seeking between $2 million and $6 million in damages.

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Below is the schedule of financial highlights of the Company:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Per Share Data:

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(4) Average net assets used in ratio calculations is calculated using monthly ending net assets for the period presented.

For the three months ended March 31, 2022 and 2021 average net assets were $73,829 and $80,206, respectively.

For the six months ended June 30, 2022 and 2021 average net assets were $75,734 and $85,250, respectively.

(5) Annualized for periods less than one year.

(6) Ratio for the three months ended March 31, 2022 reflects the impact of the incentive fee waiver described in Note 3.

(6) Ratio for the three and six months ended June 30, 2022 reflects the impact of the incentive fee waiver described in Note 3.

AFFILIATED AND CONTROLLED INVESTMENTS

Affiliated investments are defined by the Investment Company Act, whereby the Company owns between 5% and 25% of the portfolio company's outstanding voting securities and the investments are not classified as controlled investments.

The aggregate fair value of non-controlled, affiliated investments at March 31, 2022 represented 5% of the Company's net assets.

The aggregate fair value of non-controlled, affiliated investments at June 30, 2022 represented 3% of the Company's net assets.

Controlled investments are defined by the Investment Company Act, whereby the Company owns more than 25% of the portfolio company's outstanding voting securities or maintains the ability to nominate greater than 50% of the board representation.

The aggregate fair value of controlled investments at March 31, 2022 represented 70% of the Company's net assets.

Fair value as of March 31, 2022 along with transactions during the three months ended March 31, 2022 in these affiliated investments and controlled investments was as follows:

For the Three Months Ended March 31, 2022

The aggregate fair value of controlled investments at June 30, 2022 represented 51% of the Company's net assets.

Fair value as of June 30, 2022 along with transactions during the six months ended June 30, 2022 in these affiliated investments and controlled investments was as follows:

For the Six Months Ended June 30, 2022

Fair value at December 31, 2021

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Appreciation (Depreciation)

Fair value at March 31, 2022

Fair value at June 30, 2022

Non-Controlled, Affiliated Investments

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SUBSEQUENT EVENTS

The Board authorized the distribution for the quarter ending September 30, 2022 at $0.45 per share, with the record and payment dates to be set by the officers of GECC pursuant to authority granted by the Board.

On April 19, 2022, GECC filed an amendment to its registration statement with the SEC in connection with a non-transferable rights offering to purchase shares of its common stock (the “Rights Offering”).

The Company's stockholders who fully exercise all rights issued to them in the Rights Offering are entitled to subscribe for additional shares that were not subscribed for by other stockholders of the Company.

The registration statement has not been declared effective by the SEC and the Rights Offering is subject to market and other conditions.

There can be no assurance as to whether or when the Rights Offering may be completed, if at all, or as to the actual size or terms of the Rights Offering.

Our Board set the distribution for the quarter ending December 31, 2022 at a rate of $0.45 per share.

The full amount of each distribution will be from distributable earnings.

The schedule of distribution payments will be established by us pursuant to authority granted by our Board.

The December distribution will be paid in cash, so long as our asset coverage ratio is 150% or greater at the time of the payment of such distribution.

As of June 30, 2022, our asset coverage ratio was approximately 166.9%.

On August 1, 2022, our stockholders approved an amendment to the Investment Management Agreement to eliminate $163.2 million of realized and unrealized losses incurred prior to April 1, 2022 from the calculation of future Capital Gains Incentive Fees and reset the Capital Gains Incentive Fee and Mandatory Deferral Periods in sections 4.4 and 4.5, respectively, of the Investment Management Agreement to begin on April 1, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 5. Other Information