What changed in this filing

/stocks — the workspaceLOADING

Item 5. Other Information

2020-11-09 compared with 2020-08-07 · 167 added, 113 removed, 1034 unchanged (21% of the section changed)

26 unchanged sentences

333-227605) filed on June 18, 2019)

Custody Agreement, dated January 2, 2020, by and between the Registrant and U.S.

Bank National Association (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on May 11, 2020)

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

4 unchanged sentences

GREAT ELM CAPITAL CORP.

August 7, 2020

November 9, 2020

Chief Executive Officer

August 7, 2020

November 9, 2020

Chief Financial Officer

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Assets and Liabilities as of June 30, 2020 and December 31, 2019 (unaudited)

Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited)

Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2020 and 2019 (unaudited)

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)

Consolidated Schedule of Investments as of June 30, 2020 and December 31, 2019 (unaudited)

Consolidated Statements of Assets and Liabilities as of September 30, 2020 and December 31, 2019 (unaudited)

Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited)

Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2020 and 2019 (unaudited)

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)

Consolidated Schedule of Investments as of September 30, 2020 and December 31, 2019 (unaudited)

Notes to the Unaudited Consolidated Financial Statements

2 unchanged sentences

Dollar amounts in thousands (except per share amounts)

June 30, 2020

September 30, 2020

December 31, 2019

9 unchanged sentences

Cash and cash equivalents

Restricted cash

Receivable for investments sold

30 unchanged sentences

Dollar amounts in thousands (except per share amounts)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Investment Income:

29 unchanged sentences

Non-affiliated, non-controlled investments

Controlled investments

Repurchase of debt

14 unchanged sentences

Dollar amounts in thousands

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Increase (decrease) in net assets resulting from operations:

23 unchanged sentences

Dollar amounts in thousands

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities

28 unchanged sentences

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

Cash and cash equivalents and restricted cash, beginning of period

Cash and cash equivalents and restricted cash, end of period

Supplemental disclosure of non-cash financing activities:

4 unchanged sentences

Cash paid for interest

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:

September 30, 2020

December 31, 2019

Cash and cash equivalents

Restricted cash

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

September 30, 2019

December 31, 2018

Cash and cash equivalents

Restricted cash

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

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

June 30, 2020

September 30, 2020

Dollar amounts in thousands

35 unchanged sentences

California Pizza Kitchen, Inc.

Debtor in Possession Loan

1M L + 10.00%, 11.50% Floor (11.50%)

California Pizza Kitchen, Inc.

2nd Lien, Secured Loan

11 unchanged sentences

1st Lien, Secured Revolver - Unfunded

First Brands, Inc.

Transportation Equipment Manufacturing

1st Lien, Secured Loan

2M L + 7.50%, 8.50% Floor (8.50%)

The Finance Company

54 unchanged sentences

Specialty Finance

Prestige Capital Finance, LLC

Specialty Finance

Receivable - Unfunded

Prestige Capital Finance, LLC

Specialty Finance

Prestige Capital Finance, LLC

Specialty Finance

Receivable - Unfunded

Prestige Capital Finance, LLC

Specialty Finance

Prestige Capital Finance, LLC

Specialty Finance

Receivable - Unfunded

Prestige Capital Finance, LLC

Specialty Finance

Common Equity

10 unchanged sentences

6M L + 9.50%, 10.50% Floor (10.50%)

Shearer's Foods, LLC

Food & Staples

2nd Lien, Secured Loan

3M L + 6.75%, 7.75% Floor (7.75%)

Telecommunications Services

12 unchanged sentences

3M L + 4.75%, 5.75% Floor (5.75%)

Construction Materials Manufacturing

2nd Lien, Secured Loan

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

TRU (UK) Asia Limited

13 unchanged sentences

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 i s fixed.

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.

1 unchanged sentence

The one month (“1M”) LIBOR as of period end was 0.15%.

The three month (“3M”) LIB OR as of period end was 0.30% .

The two month (“2M”) LIBOR as of period end was 0.19%.

The three month (“3M”) LIBOR as of period end was 0.23%.

The six month (“6M”) LIBOR as of period end was 0.26%.

4 unchanged sentences

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

As of June 30, 2020, each of the Avanti Communications Group, plc secured bonds pay in kind (“PIK”) and the rates above reflect the PIK interest rates.

As of September 30, 2020, each of the Avanti Communications Group, plc secured bonds pay in kind (“PIK”) and the rates above reflect the PIK interest rates.

Non-income producing security.

11 unchanged sentences

the aggregate cost of securities for Federal income tax purposes was $271,851.

As of June 30, 2020, the Company’s investments consisted of the following:

As of September 30, 2020 , the Company’s investments consisted of the following:

Investment Type

2 unchanged sentences

Short-Term Investments

As of June 30, 2020 , the industry composition of the Company’s portfolio at fair value was as follows:

As of September 30, 2020, the industry composition of the Company’s portfolio at fair value was as follows:

Investments at

1 unchanged sentence

Wireless Telecommunications Services

Specialty Finance

Internet Media

Construction Materials Manufacturing

Food & Staples

Software Services

Construction Materials Manufacturing

Specialty Finance

Apparel & Textile Products

Radio Broadcasting

Apparel & Textile Products

Transportation Equipment Manufacturing

Hotel Operator

Communications Equipment

Metals & Mining

Communications Equipment

Real Estate Services

4 unchanged sentences

Short-Term Investments

As of June 30, 2020, the geographic composition of the Company’s portfolio at fair value was as follows:

As of September 30, 2020, the geographic composition of the Company’s portfolio at fair value was as follows:

Investments at

252 unchanged sentences

Discounts on the acquisition of corporate debt instruments are generally amortized using the effective-interest or constant-yield method assuming there are no material questions as to collectability.

Net Realized Gains (Losses) and Net Change in Unrealized Appr eciation (Depreciation) .

The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale of an investment and the amortized cost basis of the investment, without regard to unrealized appreciation or depr eciation previously recognized.

Realized gains and losses are computed using the specific identification method.

Net change in unrealized appreciation or depreciation reflects the net change in portfolio investment values and portfolio investment cost ba ses during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation) .

Realized gains and losses are computed using the specific identi fication method.

Net change in unrealized appreciation or depreciation reflects the net change in portfolio investment values and portfolio investment cost bases during the reporting period, including the reversal of previously recorded unrealized appreci ation or depreciation when gains or losses are realized.

Cash and Cash Equivalents .

Cash and cash equivalents typically consist of bank demand deposits.

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

Valuation of Portfolio Investments .

45 unchanged sentences

Rather, any tax liability related to income earned by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

If the Company does not distribute (or is not deemed to have distributed) each cal endar year the sum of (1) 98% of its net ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Minimum Distribution Amount”), the Company will generally be required to pay an excise tax equal to 4% of the amount by the which Minimum Distribution Amount exceeds the distributions for the year.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, the Company accrues excise taxes, if any, on estimated excess taxable income as taxable income is earned using an ann ual effective excise tax rate.

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

The Company has not accrued any excise tax expense for the three and six months ended June 30, 2020.

If the Company does not distribute (or is not deemed to have distributed) each calendar year the sum of (1) 98% of its net ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Minimum Distribution Amount”), the Company will generally be required to pay an excise tax equal to 4% of the amount by the which Minimum Distribution Amoun t exceeds the distributions for the year.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, the Company accrues exci se taxes, if any, on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate.

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

The Company has not accrued any excise tax expense for the three and nine months ended September 30, 2020.

The Company accrued $209 of excise tax expense for the year ended December 31, 2019.

25 unchanged sentences

Significant Subsidiaries In May 2020, the Securities and Exchange Commission (“SEC”) adopted amendments to improve financial disclosures about acquisitions and dispositions of businesses.

The rule established investment company-specific disclosure requirements in the event of a fund acquisition and tailored the definition of a significant subsidiary for investment companies.

The rule established investment company-specific disclosure requirements in the event of a fund acquisition and tailored the definition of a significant subsidiary for investment com panies.

The amendments will be effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date.

The Company adopted the amendments as of June 30, 2020.

Under the amended definition of a significant subsidiary, none of the Company’s investments are deemed to be significant subsidiaries.

Under the amended definition of a significant subsidiary, none o f the Company’s investments are deemed to be significant subsidiaries.

SIGNIFICANT AGREEMENTS AND RELATED PARTIES

11 unchanged sentences

Base management fees for any partial quarter are prorated.

For the three and six months ended June 30, 2020 management fees amounted to $591 and $1,289, respectively.

For the three and six months ended June 30, 2019 management fees amounted to $742 and $1,448, respectively.

As of June 30, 2020 and December 31, 2019, $592 and $746 remained payable, respectively.

For the three and nine months ended September 30, 2020 management fees amounted to $609 and $1,898, respectively.

For the three and nine months ended September 30, 2019 management fees amounted to $759 and $2,207, respectively.

As of September 30, 2020 and December 31, 2019, $609 and $746 remained payable, respectively.

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.

3 unchanged sentences

These calculations will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the then current quarter.

Pre-Incentive Fee Net Investment Income includes any accretion of original issue discount, market discount, payment-in-kind (“PIK”) interest, PIK dividends or other types of deferred or accrued income, including in connection with zero coupon securities, that the Company and its consolidated subsidiaries have recognized in accordance with GAAP, but have not yet received in cash (collectively, “Accrued Unpaid Income”).

Pre-Incentive Fee Net Investment Income includes any accretion of original issue discount, market discount, PIK interest, PIK dividends or other types of deferred or accrued income, including in connection with zero coupon securities, that the Company and its consolidated subsidiaries have recognized in accordance with GAAP, but have not yet received in cash (collectively, “Accrued Unpaid Income”).

Pre-Incentive Fee Net Investment Income does not include any realized capital gains or losses or unrealized capital appreciation or depreciation.

Accrued Unpaid Income as of June 30, 2020 was $23,759.

Accrued Unpaid Income includes capitalized PIK income of $14,207 on investments still held at June 30, 2020.

Accrued Unpaid Income as of September 30, 2020 was $25,001.

Accrued Unpaid Income includes capitalized PIK income of $14,048 on investments still held at September 30, 2020.

Accrued Unpaid Income as of December 31, 2019 was $23,495, which included capitalized PIK income of $12,279 on investments still held at December 31, 2019.

Any Income Incentive Fee otherwise payable with respect to Accrued Unpaid Income (collectively, the “Accrued Unpaid Income Incentive Fees”) is deferred, on a security by security basis, and becomes payable only if, as, when and to the e xtent cash is received by the Company or its consolidated subsidiaries in respect thereof.

Any Accrued Unpaid Income that is subsequently reversed in connection with a write-down, write-off, impairment or similar treatment of the investment giving rise to such Accrued Unpaid Income will, in the applicable period of reversal, (1) reduce Pre-Incentive Fee Net Investment Income and (2) reduce the amount of Accrued Unpaid Income Incentive Fees previously deferred.

Any Income Incentive Fee otherwise payable with respect to Accrued Unpaid Income (collectively, the “Accrued Unpaid Income Incentive Fees”) is deferred, on a security by security basis, and becomes payable only if, as, when and to the extent cash is received by the C ompany or its consolidated subsidiaries in respect thereof.

Any Accrued Unpaid Income that is subsequently reversed in connection with a write-down, write-off, impairment or similar treatment of the investment giving rise to such Accrued Unpaid Income wil l, in the applicable period of reversal, (1) reduce Pre-Incentive Fee Net Investment Income and (2) reduce the amount of Accrued Unpaid Income Incentive Fees previously deferred.

The Company will defer cash payment of any Income Incentive Fee otherwise payable to the investment adviser in any quarter (excluding Accrued Unpaid Income Incentive Fees with respect to such quarter) that exceeds (1) 20% of the Cumulative Pre‑Incentive Fee Net Return (as defined below) during the most recent twelve full calendar quarter period ending on or prior to the date such payment is to be made (the “Trailing Twelve Quarters”) less (2) the aggregate incentive fees that were previously paid to the investment adviser during such Trailing Twelve Quarters (excluding Accrued Unpaid Income Incentive Fees during such Trailing Twelve Quarters and not subsequently paid).

1 unchanged sentence

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.

For the six months ended June 30, 2020 and 2019, the Company incurred Income Incentive Fees of $328 and $1,445, respectively.

As of June 30, 2020 and December 31, 2019, $8,484 and $8,157 of Income Incentive Fees, respectively, remained payable and none was immediately payable after calculating the total return requirement.

For the nine months ended September 30, 2020 and 2019, the Company incurred Income Incentive Fees of $810 and $2,099, respectively.

As of September 30, 2020 and December 31, 2019, $8,967 and $8,157 of Income Incentive Fees, respectively, remained payable and none was immediately payable after calculating the total return requirement.

These payable amounts may include both Accrued Unpaid Income Incentive Fees and amounts deferred under the total return requirement and will become due upon meeting the criteria described above.

For the six months ended June 30, 2020 and the year ended December 31, 2019, the Company did not have any Capital Gains Incentive Fees accrual.

For the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company did not have any Capital Gains Incentive Fees accrual.

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’ fees and amounts reasonably paid in settlement) arising from the rendering of GECM’s services under the Investment Management Agreement or otherwise as an investment adviser of the Company.

4 unchanged sentences

The Administration Agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, GECM and its officers, managers, partners, 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’ 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 six months ended June 30, 2020 and 2019 , the Company incurred expenses under the Administration Agreement of $395 and $452 , respectively.

As of June 30, 2020 and December 31, 2019 , $254 and $176 remained payable, respectively.

For the nine months ended September 30, 2020 and 2019 , the Company incurred expenses under the Administration Agreement of $5 47 and $734 , respectively.

As of September 30, 2020 and December 31, 2019 , $2 2 2 and $176 remained payable, respectively.

FAIR VALUE MEASUREMENT

32 unchanged sentences

▪ Market yields implied by transactions of similar or related assets.

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, 2020 and December 31, 2019.

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of September 30, 2020 and December 31, 2019.

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 June 30, 2020:

The following summarizes the Company’s investment assets categorized within the fair value hierarchy as of September 30, 2020:

Short Term Investments

3 unchanged sentences

Total investment assets

The following is a reconciliation of Level 3 assets for the six months ended June 30, 2020 :

The following is a reconciliation of Level 3 assets for the nine months ended September 30, 2020 :

Beginning Balance as of January 1, 2020

6 unchanged sentences

Net Amortization of Premium/ Discount

Ending Balance as of June 30, 2020

Ending Balance as of September 30, 2020

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.

The net change in unrealized depreciation relating to Level 3 assets still held at June 30, 2020 totaled $(25,024) consisting of the following:

The net change in unrealized depreciation relating to Level 3 assets still held at September 30, 2020 totaled $(22,803) consisting of the following:

$(20,792) related to debt investments and $(2,011) related to equity.

1 unchanged sentence

$(6,661) related to debt investments and $(14,003) relating to equity/other.

One investment with a fair value of $(11,801) was transferred from Level 3 to Level 2 as a result of increased pricing transparency during the six months ended June 30, 2020.

Two investments with an aggregate fair value of $8,066 were transferred from Level 2 to Level 3 as a result of decreased pricing transparency during the six months ended June 30, 2020.

One investment with a fair value of $(11,801) was transferred from Level 3 to Level 2 as a result of increased pricing transparency during the nine months ended September 30, 2020.

Two investments with an aggregate fair value of $8,066 were transferred from Level 2 to Level 3 as a result of decreased pricing transparency during the nine months ended September 30, 2020.

One investment with a fair value of $2,353 was transferred from Level 1 to Level 3 during the year ended December 31, 2019 as a result of the shares being delisted from their primary exchange.

The following tables present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of June 30, 2020 and December 31, 2019, respectively.

The following tables present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of September 30, 2020 and December 31, 2019, 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 June 30, 2020

As of September 30, 2020

Investment Type

4 unchanged sentences

Earnings Multiple

3.50 - 9.50 (5.05)

Income Approach

Discount Rate

6.16% - 30.00% (16.00%)

Market Approach

Earnings Multiple

Income Approach

1 unchanged sentence

$1.83 - $32.60 ($30.06)

2.40 - 63.40 (50.50)

Market Approach

78 unchanged sentences

The Company may repurchase the Notes in accordance with the Investment Company Act and the rules promulgated thereunder.

During the six months ended June 30, 2020, the Company repurchased $1,976 in principal amount of the GECCL Notes, $788 in principal amount of the GECCM Notes and $1,727 in principal amount of the GECCN Notes.

Information about the Company’s senior securities (including debt securities and other indebtedness) is shown in the following table:

During the nine months ended September 30, 2020, the Company repurchased $2,338 in principal amount of the GECCL Notes, $788 in principal amount of the GECCM Notes and $2,178 in principal amount of the GECCN Notes.

Information about the Company’s senior securities (including debt securities and other indebtedness) is shown in the fo llowing table:

Outstanding (1)

9 unchanged sentences

December 31, 2019

June 30, 2020

September 30, 2020

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

5 unchanged sentences

These covenants are subject to limitations and exceptions that are described in the indenture.

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 June 30, 2020, the Company’s asset coverage ratio was approximately 144.5%.

As a result of falling below the Minimum ACR, the Company will be subject to certain limitations on its 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 and the indentures governing our outstanding notes, until such time the Company is above the Minimum ACR.

As of June 30, 2020 and December 31, 2019 the Company was in compliance with all covenants under the indentures.

For the three and six months ended June 30, 2020 and 2019 , the components of interest expense were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

As of September 30, 2020, the Company’s asset coverage ratio was approximately 150.9%.

As of September 30, 2020 and December 31, 2019, the Company was in compliance with all covenants under the indenture.

For the three and nine months ended September 30, 2020 and 2019 , the components of interest expense were as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Borrowing interest expense

4 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.

June 30, 2020

September 30, 2020

Unsecured Debt - GECCL Notes

7 unchanged sentences

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 June 30, 2020, the Company had approximately $36,785 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, 2020 are included in the Company’s Statement of Assets and Liabilities and the corresponding Schedule of Investments.

As of September 30, 2020, the Company had approximately $46,160 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 September 30, 2020 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.

1 unchanged sentence

From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company rights under contracts with the Company portfolio companies.

The Company is named as a defendant in a lawsuit filed on March 5, 2016, and captione d Intrepid Investments, LLC v.

T he Company is named as a defendant in a lawsuit filed on March 5, 2016, and captioned Intrepid Investments, LLC v.

London Bay Capital, which is pending in the Delaware Court of Chancery.

The plaintiff immediately agreed to stay the action in light of an ongoing mediation among parties other than the Company .

This lawsuit was brought by a member of Speedwell Holdings (formerly known as The Selling Source, LLC), one of the Company’s portfolio investments, against various members of and lenders to Speedwell Holdings.

The plaintiff asserts claims of aiding and abetting, breaches of fiduciary d uty, and tortious interference against the Company .

In June 2018, Intrepid Investments, LLC (“Intrepid”) sent notice to the court and defendants effectively lifting the stay and triggering defendants’ obligation to respond to the Intrepid complaint.

In Sep tember 2018, the Company joined the other defendants in a motion to dismiss on various grounds.

In February 2019, Intrepid filed a second amended complaint to which defendants filed a renewed motion to dismiss in March 2019.

The Company intend s to continue to monitor the matter and will assess the need to defend the matter further as necessary.

The plaintiff immediately agreed to stay the action in light of an on going mediation among parties other than the Company .

The plaintiff asserts claims of aiding and abetting, breaches of fiduciary duty, and tortious interference against the Company .

In June 2018, Intrepid Investments, LLC (“Intrepid”) sent notice to the court and defendants effectively lifting the sta y and triggering defendants’ obligation to respond to the Intrepid complaint.

In September 2018, the Company joined the other defendants in a motion to dismiss on various grounds.

In February 2019, Intrepid filed a second amended complaint to which defenda nts filed a renewed motion to dismiss in March 2019.

The Company intend s to defend the matter .

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.

14 unchanged sentences

In September 2019, the Company received a judgment in the Company’s favor from the District Court of Caldwell County, Texas.

On June 4, 2020, Dr.

Pumphrey, filed a Chapter 11 Bankruptcy Petition in the United States Bankruptcy Court for the Southern District of Texas.

The Company is pursuing claims against Dr.

Pumphrey in the Chapter 11 proceeding.

In September 2018, the Company (as successor by merger to Full Circle), the other lenders, and the lender trustee under PEAKS Trust 2009-11 (“PEAKS Trust”), were named as defendants in a claim brought by the Chapter 7 trustee in the ITT Educational Services bankruptcy.

4 unchanged sentences

On November 2, 2018, the trustee filed a motion seeking to stay the litigation in order to facilitate settlement.

Though the final settlement has not been entered into or approved, the Company estimates that its potential exposure to loss is approximately $250.

The Company is continuing to monitor these proceedings.

In September 2020, the Company paid its pro rata share of a settlement with the trustee in an amount of $201.

The settlement was approved by the bankruptcy court on October 21, 2020.

INDEMNIFICATION

5 unchanged sentences

Below is the schedule of financial highlights of the Company:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Per Share Data:

1 unchanged sentence

Net investment income

Net realized gains

Net realized gains (loss)

Net change in unrealized appreciation (depreciation)

20 unchanged sentences

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

For the six months ended June 30, 2020 and 2019 average net assets were $61,093 and $103,964, respectively.

For the nine months ended September 30, 2020 and 2019 average net assets were $56,318 and $101,665, respectively.

Annualized for periods less than one year.

1 unchanged sentence

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 June 30, 2020 represented 72% of the Company's net assets.

The aggregate fair value of non-controlled, affiliated investments at September 30, 2020 represented 65% 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 June 30, 2020 represented 16% of the Company's net assets.

Fair val ue as of June 30, 2020 along with transactions during the six months ended June 30, 2020 in these affiliated investments and controlled investments was as follows:

For the Six Months Ended June 30, 2020

The aggregate fair value of controlled investments at September 30, 2020 represented 33% of the Company's net assets.

Fair value as of September 30, 2020 along with transactions during the nine months ended September 30, 2020 in these affiliated investments and controlled investments was as follows:

For the Nine Months Ended September 30, 2020

Fair value at December 31, 2019

3 unchanged sentences

Appreciation (Depreciation)

Fair value at June 30, 2020

Fair value at September 30, 2020

Non-Controlled, Affiliated Investments

17 unchanged sentences

Equity (87% of class)

Prestige Capital Corporation

Prestige Capital Finance, LLC

Receivable - Unfunded

Equity (80% of class)

4 unchanged sentences

SUBSEQUENT EVENTS

On July 15, 2020, the Company distributed 164,614 shares in connection with the June 30, 2020 distribution.

In July 2020:

the Company purchased 800,000 preferred shares in Crestwood Equity Partners LP for approximately $5,000.

the Company purchased $3,000 in par value of First Brands Group, LLC 1 st lien term loan at 94% of par value.

the Company purchased $2,752 in par value of Tensar Corp.

2 nd lien term loan at 76% of par value.

On July 30, 2020, California Pizza Kitchen, Inc.

(“CPK”) filed for bankruptcy.

As of June 30, 2020, the Company held $9,897 in par value of CPK 1st lien secured loan and $4,300 in par value of CPK 2nd lien secured loan.

In connection with the bankruptcy filing, CPK has entered into a restructuring support agreement with certain of its lenders, including the Company.

In August 2020, the Company purchased $4,201 in par value of CPK debtor-in-possession term loan at 85% of par value.

The Board declared monthly distributions for the fourth quarter of 2020 at an annual rate of approximately 19.5% of the Company’s June 30, 2020 NAV, which equates to $0.083 per month.

All of the monthly distributions are from net investment income.

The schedule of distribution payments will be established by GECC pursuant to authority granted by the Board.

The distributions will be paid in cash or shares of the Company’s common stock at the election of shareholders, although the total amount of cash to be distributed to all shareholders will be limited to approximately 10% of the total distributions to be paid to all shareholders.

The remainder of the distributions (approximately 90%) will be paid in the form of shares of the Company’s common stock, in accordance with applicable law and the indentures governing the Company’s outstanding notes.

On October 1, 2020, the Company announced the final results of the Company’s 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 $2.95 per share.

In total, the Company sold 10,761,950 shares of the Company’s common stock for aggregate gross proceeds of approximately $31,747.

The Board set distributions for the quarter ending March 31, 2021 at a rate of $0.10 per quarter.

All of the distribution is from net investment income.

The schedule of distribution payment will be established by GECC pursuant to authority granted by the Board.

The distribution will be paid in cash.

In October 2020:

the Company purchased 43,993 preferred shares in Blueknight Energy Partners L.P.

(“Blueknight”) for approximately $260.

the Company purchased $1,000 in par value of Peninsula Pacific Entertainment, LLC (“Peninsula Pacific”) secured bonds at 100% of par value.

the Company sold $1,000 in par value of Peninsula Pacific secured bonds at approximately 103% of par value.

the Company purchased $2,000 in par value of Natural Resource Partners, L.P.

unsecured bonds at approximately 90% of par value.

$2,000 of par value of Viasat, Inc.

receivable was redeemed at 100% of par value.

the Company purchased $3,000 in par value of Viasat, Inc.

receivable at 90% of par value.

the Company purchased $1,000 in par value of Cars.com Inc.

secured bonds at 100% of par value.

the Company sold $1,000 in par value of Cars.com, Inc.

unsecured bonds at 100% of par value.

the Company purchased $230 in par value of California Pizza Kitchen, Inc.

second lien term loan at approximately 1% of par value.

the Company purchased $2,000 in par value of Par Petroleum, LLC secured bonds at approximately 81% of par value.

In November 2020:

the Company purchased 30,000 preferred shares in Blueknight for approximately $176.

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