What changed in this filing

/stocks — the workspaceLOADING

Item 5. Other Information

2021-05-07 compared with 2020-11-09 · 293 added, 326 removed, 875 unchanged (41% of the section changed)

4 unchanged sentences

814-01211 with the Securities and Exchange Commission.

Agreement and Plan of Merger, dated as of June 23, 2016, by and between Full Circle Capital Corporation and the Registrant (incorporated by reference to the Rule 425 filing (File No.

814-00809) on June 27, 2016)

Subscription Agreement, dated as of June 23, 2016, by and among the Registrant, Great Elm Capital Group, Inc.

and the investment funds signatory thereto (incorporated by reference to the Rule 425 filing (File No.

814-00809) on June 27, 2016)

Amended and Restated Charter of the Registrant (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on November 7, 2016)

1 unchanged sentence

333-212817) filed on August 1, 2016)

Form of certificate for the Registrant’s common stock (incorporated by reference to Exhibit 5 to the Registration Statement on Form N-14 (File No.

333-212817) filed on August 1, 2016)

Indenture, dated as of September 18, 2017, by and between the Registrant and American Stock Transfer & Trust Company, LLC, as trustee (the “Trustee”) (incorporated by reference to Exhibit 4.1 to the Form 8-K/A filed on September 21, 2017)

First Supplemental Indenture, dated as of September 18, 2017, by and between the Registrant and the Trustee (incorporated by reference to Exhibit 4.2 to the Form 8-K/A filed on September 21, 2017)

Global Note, dated September 18, 2017 (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on September 19, 2017, as amended September 21, 2017)

Global Note, dated September 29, 2017 (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on September 29, 2017)

Second Supplemental Indenture, dated as of January 19, 2018, by and between the Registrant and the Trustee (incorporated by reference to Exhibit (d)(3) to the post-effective amendment to the Registration Statement on Form N-2 (File No.

333-221882) filed on January 19, 2018)

Global Note, dated January 19, 2018 (incorporated by reference to Exhibit (d)(1) to the post-effective amendment to the Registration Statement on Form N-2 (File No.

333-221882) filed on January 19, 2018)

Third Supplemental Indenture, dated as of June 18, 2019, by and between the Registrant and the Trustee (incorporated by reference to Exhibit (d)(3) to the post-effective amendment to the Registration Statement on Form N-2 (File No.

333-227605) filed on June 18, 2019 )

Global Note, dated June 18, 2019 (incorporated by reference to Exhibit (d)(1) to the post-effective amendment to the Registration Statement on Form N-2 (File No.

333-227605) filed on June 18, 2019)

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

4 unchanged sentences

GREAT ELM CAPITAL CORP.

November 9, 2020

Chief Executive Officer

November 9, 2020

Chief Financial Officer

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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)

Consolidated Statements of Assets and Liabilities as of March 31, 2021 and December 31, 2020 (unaudited)

Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2021 and 2020 (unaudited)

Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)

Consolidated Schedule of Investments as of March 31, 2021 and December 31, 2020 (unaudited)

Notes to the Unaudited Consolidated Financial Statements

2 unchanged sentences

Dollar amounts in thousands (except per share amounts)

September 30, 2020

March 31, 2021

December 31, 2020

Non-affiliated, non-controlled investments, at fair value

(amortized cost of $144,747 and $168,269, respectively)

Non-affiliated, non-controlled short-term investments, at fair value

(amortized cost of $74,983 and $85,733, respectively)

Affiliated investments, at fair value

(amortized cost of $107,256 and $102,704, respectively)

Controlled investments, at fair value

(amortized cost of $18,740 and $10,601, respectively)

Non-affiliated, non-controlled investments, at fair value (amortized cost of $169,052 and $147,494, respectively)

Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $139,997 and $74,997, respectively)

Affiliated investments, at fair value (amortized cost of $114,478 and $109,840, respectively)

Controlled investments, at fair value (amortized cost of $9,093 and $7,630, respectively)

Total investments

3 unchanged sentences

Interest receivable

Dividends receivable

Due from portfolio company

Due from affiliates

Prepaid expenses and other assets

25 unchanged sentences

Dollar amounts in thousands (except per share amounts)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Investment Income:

1 unchanged sentence

Non-affiliated, non-controlled investments

Non-affiliated, non-controlled investments (PIK)

Affiliated investments

1 unchanged sentence

Controlled investments

Controlled investments (PIK)

Total interest income

5 unchanged sentences

Non-affiliated, non-controlled investments

Affiliated investments

Affiliated investments (PIK)

15 unchanged sentences

Controlled investments

Repurchase of debt

Realized gain on repurchase of debt

Total net realized gain (loss)

13 unchanged sentences

Dollar amounts in thousands

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Increase (decrease) in net assets resulting from operations:

7 unchanged sentences

Capital transactions:

Purchases of common stock

Common stock distributed

5 unchanged sentences

Shares outstanding at the beginning of the period

Shares purchased

Common stock distributed

Shares outstanding at the end of the period

Distributions were from net investment income for each of the periods presented.

Distributions were from distributable earnings for each of the periods presented.

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

2 unchanged sentences

Dollar amounts in thousands

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities

15 unchanged sentences

(Increase) decrease in due from portfolio company

(Increase) decrease in due from affiliates

(Increase) decrease in prepaid expenses and other assets

4 unchanged sentences

Cash flows from financing activities

Purchases of common stock

Purchase of debt

Issuance of Notes payable

Distributions paid

10 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:

September 30, 2020

March 31, 2021

December 31, 2020

2 unchanged sentences

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

September 30, 2019

March 31, 2020

December 31, 2019

5 unchanged sentences

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

September 30, 2020

March 31, 2021

Dollar amounts in thousands

4 unchanged sentences

Investments at Fair Value

1st Lien, Secured Bond

ASP Chromaflo Technologies Corp.

2nd Lien, Secured Loan

ABB/Con-Cise Optical Group LLC

Wholesale-Apparel, Piece Goods & Notions

1st Lien, Secured Loan

3M L + 5.00%, 6.00% Floor (6.00%)

AgroFresh Inc.

1st Lien, Secured Loan

3M L + 6.25%, 7.25% Floor (7.25%)

1st Lien, Secured Bond

Avanti Communications Group PLC

Wireless Telecommunications Services

1.25 Lien, Secured Bond

1.125 Lien, Secured Loan

4, 5, 6, 10, 11, 12

1 unchanged sentence

Wireless Telecommunications Services

1.5 Lien, Secured Bond

1.25 Lien, Secured Loan

4, 5, 6, 10, 11, 12

1 unchanged sentence

Wireless Telecommunications Services

1.5 Lien, Secured Loan

4, 5, 6, 10, 11, 12

Avanti Communications Group PLC

Wireless Telecommunications Services

2nd Lien, Secured Bond

7 unchanged sentences

1M L + 12.00%, 12.25% Floor (0.00%)

Boardriders, Inc.

Apparel & Textile Products

1st Lien, Secured Loan

3M L + 6.50%, 7.50% Floor (7.50%)

Blueknight Energy Partners L.P.

Series A Preferred Units

California Pizza Kitchen, Inc.

2 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

1M L + 10.00%, 11.00% Floor (0.00%)

Common Equity

Crestwood Equity Partners LP

4 unchanged sentences

1M L + 10.00%, 11.00% Floor (0.00%)

Endurance International Group Holdings Inc

1st Lien, Secured Revolver

3M L+ 4.00%, 4.00% Floor (4.23%)

Endurance International Group Holdings Inc

1st Lien, Secured Revolver - Unfunded

First Brands, Inc.

Transportation Equipment Manufacturing

ECL Entertainment, LLC

Media & Entertainment

1st Lien, Secured Loan

3M L + 7.50%, 8.25% Floor (8.25%)

The Finance Company

Consumer Finance

1st Lien, Secured Revolver

1M L + 11.00%, 11.50% Floor (11.50%)

The Finance Company

Consumer Finance

1st Lien, Secured Loan B

1M L + 11.00%, 11.50% Floor (0.00%)

The Finance Company

Consumer Finance

Common Equity

Finastra Group Holdings, Ltd.

2 unchanged sentences

6M L + 7.25%, 8.25% Floor (8.25%)

First Brands, Inc.

Transportation Equipment Manufacturing

2nd Lien, Secured Loan

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

Gateway Casinos & Entertainment Limited

Casinos & Gaming

2nd Lien, Secured Note

The GEO Group, Inc.

Consumer Services

Greenway Health, LLC

3 unchanged sentences

1st Lien, Revolver - Unfunded

Martin Midstream Partners LP

2nd Lien, Secured Note

Mitchell International, Inc.

2 unchanged sentences

1M L + 7.25%, 7.25% Floor (7.36%)

National CineMedia, Inc.

Media & Entertainment

Natural Resource Partners LP

8 unchanged sentences

Common Equity

PE Facility Solutions, LLC

Building Cleaning and Maintenance Services

1st Lien, Secured Loan B

1M L + 14.00%, (0.00%)

PE Facility Solutions, LLC

Building Cleaning and Maintenance Services

Common Equity

PEAKS Trust 2009-1

Consumer Finance

Par Petroleum, LLC

1st Lien, Secured Note

1M L + 5.50%, 7.50% Floor (0.00%)

Perforce Software, Inc.

3 unchanged sentences

1st Lien, Secured Revolver - Unfunded

PetroChoice Holdings Inc.

Motor Vehicle Parts and Accessories

1st Lien, Secured Loan

3M L + 5.00%, 6.00% Floor (6.00%)

PFS Holdings Corp.

2 unchanged sentences

3M L + 7.00%, 8.00% Floor (8.00%)

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

PFS Holdings Corp.

Food & Staples

Common Equity

Prestige Capital Finance, LLC

6 unchanged sentences

Common Equity

Quad/Graphics, Inc.

Media & Entertainment

Unsecured Bond

Research Now Group, Inc.

9 unchanged sentences

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

Ruby Tuesday Operations LLC

1M L + 12.00%, 13.25% Floor (13.25%), (7.25% Cash + 6.00% PIK)

Ruby Tuesday Operations LLC

Telecommunications Services

3 unchanged sentences

1st Lien, Secured Revolver - Unfunded

Tallage Davis, LLC

Real Estate Services

1st Lien, Secured Loan

Tallage Davis, LLC

Real Estate Services

1st Lien, Secured Loan - Unfunded

Construction Materials Manufacturing

1st Lien, Secured Loan

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

Summit Midstream Holdings, LLC

Tensar Corporation

Construction Materials Manufacturing

5 unchanged sentences

Common Equity

Communications Equipment

Investments in Special Purpose Acquisition Companies

Accelerate Acquisition Corp.

Special Purpose Acquisition Company

Investment Units

Ares Acquisition Corporation

Special Purpose Acquisition Company

Common Equity

Ares Acquisition Corporation

Special Purpose Acquisition Company

Austerlitz Acquisition Corporation I

Special Purpose Acquisition Company

Investment Units

Austerlitz Acquisition Corporation II

Special Purpose Acquisition Company

Investment Units

GigCapital4, Inc.

Special Purpose Acquisition Company

Investment Units

Jaws Mustang Acquisition Corporation

Special Purpose Acquisition Company

Common Equity

Oyster Enterprises Acquisition Corp.

Special Purpose Acquisition Company

Common Equity

Soaring Eagle Acquisition Corp.

Special Purpose Acquisition Company

Investment Units

Spartan Acquisition Corp.

Special Purpose Acquisition Company

Investment Units

Virgin Group Acquisition Corp.

Special Purpose Acquisition Company

Investment Units

VPC Impact Acquisition Holdings II

Special Purpose Acquisition Company

Investment Units

VPC Impact Acquisition Holdings III

Special Purpose Acquisition Company

Investment Units

Miscellaneous

Special Purpose Acquisition Company

Total Investments in Special Purpose Acquisition Companies

Total Investments excluding Short-Term Investments (211.55% of Net Assets)

5 unchanged sentences

Other Liabilities in Excess of Assets (264.49% of Net Assets)

The Company’s investments are generally acquired in private transactions exempt from registration under the Securities Act of 1933 and, therefore, are generally subject to limitations on resale, and may be deemed to be “restricted securities’’ under the Securities Act of 1933.

Great Elm Capital Corp.’s (the “Company”) investments are generally acquired in private transactions exempt from registration under the Securities Act of 1933 and, therefore, are generally subject to limitations on resale, and may be deemed to be “restricted securities’’ under the Securities Act of 1933.

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.

7 unchanged sentences

The six month (“6M”) LIBOR as of period end was 0.21%.

‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in the Investment Company Act.

‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

A company is deemed to be a ‘‘Controlled Investment’’ of the Company if the Company owns more than 25% of the voting securities of such company.

‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, as defined in the Investment Company Act, which are not ‘‘Controlled Investments.’’ A company is deemed to be an ‘‘Affiliate’’ of the Company if the Company owns 5% or more, but less than 25%, of the voting securities of such company.

Investments classified as Level 3 whereby fair value was determined by the Company's board of directors.

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

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.

‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a s defined in the Investment Company Act, which are not ‘‘Controlled Investments.’’ A company is deemed to be an ‘‘Affiliate’’ of the Company if the Company owns 5% or more, but less than 25%, of the voting securities of such company.

Investments classified as Level 3 whereby fair value was determined by the Company's board of directors (the “Board”).

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

As of March 31, 2021, each of the Avanti Communications Group, plc secured debt pay in kind ("PIK") and the rates above reflect the PIK interest rates.

As of March 31, 2021, the Ruby Tuesday Operations, LLC secured loan pays a portion of its interest in kind as described above.

Non-income producing security.

11 unchanged sentences

the aggregate cost of securities for Federal income tax purposes was $440,290.

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

Represents previously undisclosed unrestricted securities, which the Company has held for less than one year.

As of March 31, 2021, the Company’s investments consisted of the following:

Investment Type

2 unchanged sentences

Short-Term Investments

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

As of March 31, 2021, 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

Specialty Finance

Special Purpose Acquisition Company

Construction Materials Manufacturing

Metals & Mining

Food & Staples

Media & Entertainment

Transportation Equipment Manufacturing

Software Services

Casinos & Gaming

Radio Broadcasting

Apparel & Textile Products

Transportation Equipment Manufacturing

Motor Vehicle Parts and Accessories

Wholesale-Apparel, Piece Goods & Notions

Consumer Services

Hotel Operator

Metals & Mining

Communications Equipment

Real Estate Services

Consumer Finance

Building Cleaning and Maintenance Services

Maritime Security Services

1 unchanged sentence

Short-Term Investments

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

As of March 31, 2021, the geographic composition of the Company’s portfolio at fair value was as follows:

Investments at

11 unchanged sentences

Investments at Fair Value

1st Lien, Secured Bond

ASP Chromaflo Technologies Corp.

2nd Lien Secured Loan

ABB/Con-Cise Optical Group LLC

Wholesale-Apparel, Piece Goods & Notions

1st Lien, Secured Loan

6M L + 5.00%, 6.00% Floor (6.00%)

1st Lien, Secured Bond

Avanti Communications Group PLC

4 unchanged sentences

Wireless Telecommunications Services

1.5 Lien, Secured Bond - Unfunded

1.5 Lien, Secured Bond

4, 5, 6, 10, 11, 12

9 unchanged sentences

1st Lien, Secured Loan

1ML + 12.00%, 12.25% Floor (0.00%)

1M L + 12.00%, 12.25% Floor (0.00%)

Blueknight Energy Partners L.P.

Series A Preferred Units

Boardriders, Inc.

8 unchanged sentences

3M L + 13.50%, 15.00% Floor (15.00%)

Commercial Barge Line Company

Water Transport

1st Lien, Secured Loan

3M L + 8.75%, 9.75% Floor (10.68%)

Cooke Omega Investments, Inc.

Food & Staples

California Pizza Kitchen, Inc.

Common Equity

Crestwood Equity Partners LP

Class A Preferred Equity Units

Davidzon Radio, Inc.

1 unchanged sentence

1st Lien, Secured Loan

1ML + 10.00%, 11.00% Floor (14.70%)

Duff & Phelps

1st Lien Revolver

1M L + 10.00%, 11.00% Floor (0.00%)

Duff & Phelps

1st Lien Revolver - Unfunded

1M L + 3.25%, 3.25% Floor (5.29%)

The Finance Company

Consumer Finance

Endurance International Group Holdings Inc

1st Lien, Secured Revolver

3M L+ 4.00%, 4.00% Floor (4.23%)

The Finance Company

Consumer Finance

Endurance International Group Holdings Inc

1st Lien, Secured Revolver - Unfunded

1M L + 11.00%, 11.50% Floor (13.09%)

The Finance Company

Consumer Finance

1st Lien Secured Loan B

Consumer Finance + 0.00%, 3, 5 (0.00%)

The Finance Company

Consumer Finance

Common Equity

Finastra Group Holdings, Ltd.

2 unchanged sentences

6M L + 7.25%, 8.25% Floor (8.25%)

Full House Resorts, Inc.

Gaming, Lodging & Restaurants

1st Lien, Secured Note

First Brands, Inc.

Transportation Equipment Manufacturing

1st Lien, Secured Loan

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

Gateway Casinos & Entertainment Limited

Casinos & Gaming

2nd Lien, Secured Note

Greenway Health, LLC

1st Lien, Revolver

3M L+ 3.75%, 3.75% Floor (4.17%)

Greenway Health, LLC

1st Lien, Revolver - Unfunded

Lenders' Funding, LLC

Specialty Finance

Lenders' Funding, LLC

Specialty Finance

Receivable - Unfunded

Martin Midstream Partners LP

2nd Lien, Secured Note

Mitchell International, Inc.

2 unchanged sentences

1M L + 7.25%, 7.25% Floor (7.40%)

Natural Resource Partners LP

Metals & Mining

Unsecured Notes

OPS Acquisitions Limited and Ocean Protection Services Limited

5 unchanged sentences

Common Equity

Par Petroleum, LLC

1st Lien, Secured Note

PE Facility Solutions, LLC

9 unchanged sentences

1M L + 5.50%, 7.50% Floor (0.00%)

Peninsula Pacific Entertainment, LLC

Gaming, Lodging & Restaurants

1st Lien, Secured Loan

Perforce Software, Inc.

1st Lien, Secured Revolver

3M L + 4.25%, 4.25% Floor (4.40%)

Perforce Software, Inc.

1st Lien, Secured Revolver - Unfunded

PFS Holdings Corp.

2 unchanged sentences

3M L + 7.00%, 8.00% Floor (8.00%)

Prestige Capital Finance, LLC (fka Prestige Capital Corporation)

PFS Holdings Corp.

Food & Staples

Common Equity

Prestige Capital Finance, LLC

Specialty Finance

7 unchanged sentences

1st Lien, Secured Revolver - Unfunded

3M L + 4.50%, 4.50% Floor (6.75%)

Research Now Group, Inc.

2 unchanged sentences

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

Shearer's Foods, LLC

Food & Staples

2nd Lien, Secured Loan

1M L + 6.75%, 7.75% Floor (8.55%)

Telecommunications Services

3 unchanged sentences

1st Lien, Secured Revolver - Unfunded

3M L + 5.00%, 5.00% Floor (6.91%)

Tallage Davis, LLC

4 unchanged sentences

1st Lien, Secured Loan - Unfunded

Tensar Corporation

Construction Materials Manufacturing

1st Lien, Secured Loan

2nd Lien, Secured Loan

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

3 unchanged sentences

Common Equity

Specialty Finance

Total Investments excluding Short-Term Investments (190.48% of Net Assets)

Short-Term Investments

State Street Institutional Treasury Money Market Fund

Premier Class

United States Treasury

10 unchanged sentences

The one month (“1M”) LIBOR as of period end was 0.14%.

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

The three month (“3M”) LIBOR as of period end was 0.24%.

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

‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in the Investment Company Act.

3 unchanged sentences

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

As of December 31, 2020, each of the Avanti Communications Group, plc secured bonds and California Pizza Kitchen, Inc.

pay in kind ("PIK") and the rates above reflect the PIK interest rates.

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.

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.

As of period end, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $28,019;

11 unchanged sentences

Wireless Telecommunications Services

Software Services

Food & Staples

Internet Media

Gaming, Lodging & Restaurants

Specialty Finance

Construction Materials Manufacturing

Food & Staples

Apparel & Textile Products

Water Transport

Software Services

Metals & Mining

Radio Broadcasting

Construction Materials Manufacturing

Specialty Finance

Transportation Equipment Manufacturing

Casinos & Gaming

Wholesale-Apparel, Piece Goods & Notions

Hotel Operator

Real Estate Services

Consumer Finance

Building Cleaning and Maintenance Services

Maritime Security Services

Consumer Finance

Telecommunications Services

12 unchanged sentences

The Company is structured as an externally managed, non-diversified closed-end management investment company.

The Company elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

The Company is managed by Great Elm Capital Management, Inc., a Delaware corporation (“GECM”), a subsidiary of Great Elm Capital Group, Inc., a Delaware corporation (“Great Elm Capital Group”).

The Company seeks to generate current income and capital appreciation through debt and equity investments.

The Company invests primarily in secured and senior unsecured debt instruments that it purchases in the secondary markets.

The Company elected to be regulated as a business development company (a “BDC”) under the Investment Company Act.

The Company is managed by Great Elm Capital Management, Inc., a Delaware corporation (“GECM”), a subsidiary of Great Elm Group, Inc., a Delaware corporation (“GEG”).

The Company seeks to generate current income and capital appreciation through debt and income generating equity investments.

The Company invests in secured and senior unsecured debt instruments, debt and equity securities of specialty finance companies and other equity investments that it sources directly from issuers or purchases in the secondary markets.

SIGNIFICANT ACCOUNTING POLICIES

26 unchanged sentences

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 depreciation previously recognized.

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.

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 bases during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Cash and Cash Equivalents .

4 unchanged sentences

Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations or alternative price sources.

In the absence of quoted market prices, broker or dealer quotations or alternative price sources, investments are measured at fair value as determined by the Company’s board of directors (the “Board”).

In the absence of quoted market prices, broker or dealer quotations or alternative price sources, investments are measured at fair value as determined by the Board.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material.

9 unchanged sentences

Market quotations may be deemed not to represent fair value in certain circumstances where the Company believes that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security cause current market quotations to not reflect the fair value of the security.

The valuation process approved by the Board with respect to investments for which mark et quotations are not readily available or for which market quotations are deemed not to represent fair value is as follows:

The valuation process approved by the Board with respect to investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value is as follows:

The investment professionals of GECM provide recent portfolio company financial statements and other reporting materials to an independent valuation firm (or firms) approved by the Board;

29 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 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.

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 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 income.

The Company has not accrued any excise tax expense for the three months ended March 31, 2021.

The Company accrued $17 of excise tax expense for the year ended December 31, 2020.

At December 31, 2019, the Company, for federal income tax purposes, had capital loss carryforwards of $45,137 which will reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Company of any liability for federal income tax.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) was signed by the President.

At December 31, 2020, the Company, for federal income tax purposes, had capital loss carryforwards of $54,887 which will reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to stockholders, which would otherwise be necessary to relieve the Company of any liability for federal income tax.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) was signed into law.

The Modernization Act changed the capital loss carryforward rules as they relate to regulated investment companies.

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Such open tax years remain subject to examination and adjustment by tax authorities.

Recent Accounting Developments

Fair Value Measurements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , resulting in various disclosures related to fair value measurements being eliminated, modified or supplemented.

ASU 2018-13 is effective for interim and annual periods beginning after December 15, 2019, with an option to early adopt any eliminated or modified disclosures, and to delay adoption of the additional disclosures, until the effective date.

On September 1, 2018, the Company early adopted the eliminated and modified disclosures of ASU 2018-13 and, as a result, updated its financial statement disclosures accordingly.

On January 1, 2020, the Company adopted the additional disclosures of ASU 2018-13 and there was no impact to the financial statement disclosures.

Reference Rate Reform In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of the London Interbank Offered Rate (“LIBOR”) by the end of 2021.

If LIBOR ceases to exist, the Company may need to renegotiate outstanding loans to our portfolio companies which extend beyond 2021, and that utilize LIBOR as a factor in determining the interest rate, to replace LIBOR with the new standard that is established.

There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate.

As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) , to facilitate the effects of reference rate reform on financial reporting.

The provisions provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform on financial reporting due to the cessation of LIBOR if certain criteria are met.

The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company adopted the amendments as of March 12, 2020 on a prospective basis and there was no impact to the accompanying financial statements and related disclosures.

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 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 o f the Company’s investments are deemed to be significant subsidiaries.

SIGNIFICANT AGREEMENTS AND RELATED PARTIES

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a base management fee and an incentive fee.

The Company’s Chief Executive Officer is also the chief investment officer of GECM, and the chief executive officer and a member of the board of directors of GEC.

The Company’s Chief Compliance Officer is also the chief operating officer, chief compliance officer and general counsel of GECM, and the president and chief operating officer of GEC.

The Company’s Chief Executive Officer is also the chief investment officer of GECM, and the chief executive officer and a member of the board of directors of GE G .

The Company’s Chief Compliance Officer is also the chief operating officer, chief compliance officer and general counsel of GECM, and the president and chief operating officer of GE G .

The Company’s Chief Financial Officer is also the chief financial officer of GECM.

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Base management fees for any partial quarter are prorated.

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.

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

For the three months ended March 31, 2020 management fees amounted to $698.

As of March 31, 2021 and December 31, 2020, $660 and $613 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.

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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 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 March 31, 2021 was $32,076.

Accrued Unpaid Income includes capitalized PIK income of $18,012 on investments still held at March 31, 2021.

Accrued Unpaid Income as of December 31, 2020 was $29,989, which included capitalized PIK income of $17,680 on investments still held at December 31, 2020.

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.

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 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.

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).

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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 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.

For the three months ended March 31, 2021 and 2020, the Company incurred Income Incentive Fees of $108 and $100, respectively.

As of March 31, 2021 and December 31, 2020, $9,284 and $9,176 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 nine months ended September 30, 2020 and the year ended December 31, 2019, the Company did not have any Capital Gains Incentive Fees accrual.

For the three months ended March 31, 2021 and the year ended December 31, 2020, 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.

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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 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.

For the three months ended March 31, 2021 and 2020, the Company incurred expenses under the Administration Agreement of $156 and $204, respectively.

As of March 31, 2021 and December 31, 2020, $116 and $151 remained payable, respectively.

FAIR VALUE MEASUREMENT

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

▪ Transactions in similar instruments;

▪ T ransactions in similar instruments;

▪ Discounted cash flow techniques;

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▪ 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 September 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 March 31, 2021 and December 31, 2020.

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.

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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 September 30, 2020:

The following summarizes the Company’s investment assets categorized within the fair value hierarchy as of March 31, 2021:

Short Term Investments

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Total investment assets

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

The following is a reconciliation of Level 3 assets for the three months ended March 31, 2021:

Beginning Balance as of January 1, 2021

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Net Amortization of Premium/ Discount

Ending Balance as of September 30, 2020

Ending Balance as of March 31, 2021

Total investment assets

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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 September 30, 2020 totaled $(22,803) consisting of the following:

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

The net change in unrealized appreciation relating to Level 3 assets still held at March 31, 2021 totaled $6,764 consisting of the following:

$3,670 related to debt investments and $3,094 related to equity investments.

The net change in unrealized depreciation relating to Level 3 assets still held at December 31, 2020 totaled $(45,879) consisting of the following:

$(24,452) related to debt investments and $(21,427) 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 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 September 30, 2020 and December 31, 2019, respectively.

There were no transfers into or out of Level 3 during the three months ended March 31, 2021.

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 year ended December 31, 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 year ended December 31, 2020.

The following tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of March 31, 2021 and December 31, 2020, 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.

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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 September 30, 2020

As of March 31, 2021

Investment Type

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16.50% - 30.00% (19.04%)

Market Approach

Earnings Multiple

Income Approach

Discount Rate

$1.83 - $32.60 ($30.06)

Market Approach

Earnings Multiple

4.50 - 6.25 (5.60)

Income Approach

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4.12% - 6.19% (4.60%)

Recent Transaction

Asset Recovery / Liquidation (4)

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Market Approach

EBITDA Multiple

Implied Yield

4.09% - 8.09% (7.03%)

Market Approach

Earnings Multiple

0.35 - 4.50 (3.15)

Income Approach

Discount Rate

16.25% - 30.00% (18.93%)

Income Approach

Discount Rate

Income Approach

Discount Rate

2.24% - 45.25% (14.75%)

Income Approach

Implied Yield

2.63% - 6.66% (4.86%)

Asset Recovery / Liquidation (4)

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Market Approach

Comparable Price (3)

Earnings Multiple

0.15 - 17.75 (6.44)

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

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:

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

Outstanding (1)

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December 31, 2019

September 30, 2020

December 31, 2020

March 31, 2021

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

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The average market value per unit for the Notes, as applicable, is based on the average daily prices of such Notes and is expressed per $1 of indebtedness.

The terms of the GECCL Notes, GECCM Notes and GECCN Notes are governed by a base indenture, dated as of September 18, 2017, by and between the Company and American Stock Transfer & Trust Company, LLC, as trustee (as supplemented with respect to each series of notes, the “Indenture”).

The Indenture’s covenants, include restrictions on certain activities in the event the Company falls below the minimum asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act, as well as covenants requiring the Company to provide financial information to the holders of the Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934.

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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.

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,

As of March 31, 2021, the Company’s asset coverage ratio was approximately 177.1%.

As of March 31, 2021 and December 31, 2020 , the Company was in compliance with all covenants under the I ndenture.

For the three months ended March 31, 2021 and 2020, the components of interest expense were as follows:

For the Three Months Ended March 31,

Borrowing interest expense

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

September 30, 2020

March 31, 2021

Unsecured Debt - GECCL Notes

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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 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.

As of March 31, 2021, the Company had approximately $31,352 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, 2021 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.

The Company has considered the net decreases in net assets and positive cash flows from operations and has concluded that it has the ability to meet its obligations in the ordinary course of business based upon an evaluation of its cash position and sources of liquidity.

The Company has considered the net increases in net assets and negative cash flows from operations and has concluded that it has the ability to meet its obligations in the ordinary course of business based upon an evaluation of its cash position and sources of liquidity.

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.

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

The 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 on going 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 Ho ldings.

The plaintiff immediately agreed to stay the action in light of an ongoing 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 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 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 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 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.

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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.

Full Circle purchased via assignment a portion of the PEAKS Trust senior secured facility from Deutsche Bank Trust Company Americas in December 2016.

The PEAKS Trust senior secured facility was supported by an underlying portfolio of student loans and guaranteed by ITT Educational Services, Inc.

In September 2016, ITT and its affiliates filed for relief under Chapter 7 of the Bankruptcy Code.

Following the Chapter 7 filing, a trustee was appointed who initiated a proceeding against certain Deutsche Bank entities and the investors in the PEAKS Trust, including GECC.

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

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.

The Company is conducting mediation with Dr.

Pumphrey and the other significant creditors in connection with the Chapter 11 proceeding.

INDEMNIFICATION

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Below is the schedule of financial highlights of the Company:

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Per Share Data:

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Net increase (decrease) in net assets resulting from operations

Accretion from share buybacks

Distributions declared from net investment income (2)

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

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

For the three months ended March 31, 2021 and 2020 average net assets were $80,206 and $72,446, respectively.

Annualized for periods less than one year.

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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 September 30, 2020 represented 65% of the Company's net assets.

The aggregate fair value of non-controlled, affiliated investments at March 31, 2021 represented 42% 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 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

The aggregate fair value of controlled investments at March 31, 2021 represented 13% of the Company's net assets.

Fair value as of March 31, 2021 along with transactions during the three months ended March 31, 2021 in these affiliated investments and controlled investments was as follows:

March 31, 2021

Fair value at December 31, 2020

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Appreciation (Depreciation)

Fair value at September 30, 2020

Fair value at March 31, 2021

Non-Controlled, Affiliated Investments

Avanti Communications Group PLC

1.25 Lien, Secured Bond

1.5 Lien, Secured Bond

1.5 Lien, Secured Bond - Unfunded

1.125 Lien, Secured Loan

1.25 Lien, Secured Loan

1.5 Lien, Secured Loan

2nd Lien, Secured Bond

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Controlled Investments

The Finance Company

1st Lien, Secured Revolver

1st Lien, Secured Revolver - Unfunded

1st Lien, Secured Term Loan B

Equity (72% of class)

PE Facility Solutions, LLC

2 unchanged sentences

Prestige Capital Finance, LLC

Receivable - Unfunded

Equity (80% of class)

4 unchanged sentences

SUBSEQUENT EVENTS

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 Board authorized the distribution for the quarter ending September 30, 2021 at $0.10 per share, with the record and payment dates to be set by the officers of GECC pursuant to authority granted by the Board.

On May 5, 2021, the Company entered into a Loan, Guarantee and Security Agreement (the “Loan Agreement”) with City National Bank (“CNB”).

The Loan Agreement provides for a senior secured revolving line of credit of up to $25 million (subject to a borrowing base as defined in the Loan Agreement).

The Company may request to increase the revolving line in an aggregate amount not to exceed $25 million, which increase is subject to the sole discretion of CNB.

The maturity date of the revolving line is the earlier of (i) May 5, 2024 and (ii) May 15, 2022 if the Company’s 6.50% notes due 2022 are not refinanced on or prior to such date.

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.

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.

The Company has made customary representations and warranties and is required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar loan agreements.

In addition, the Loan Agreement contains financial covenants requiring (i) net assets of not less than $65 million, (ii) asset coverage equal to or greater than 160% and (iii) bank asset coverage equal to or greater than 300%, in each case tested as of the last day of each fiscal quarter of the Company.

Borrowings are also subject to the leverage restrictions contained in the Investment Company Act of 1940, as amended.

In April 2021:

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.

the Company $2,992 in par value of PetroChoice Holdings, Inc.

first lien secured loan at approximately 97% of par value.

the Company sold 99,506 shares of Crestwood Equity Partners, LP class A preferred equity units for approximately $894.

the Company sold 100,000 shares of TRU (UK) Asia Limited common equity for approximately $988.

the Company sold 25,716 share of California Pizza Kitchen, Inc.

common equity for approximately $836.

the Company’s $10,000 Subcom, LLC 1 st lien secured revolver commitment was retired.

the Company sold approximately $289 of SPAC positions across 20 companies.

the Company purchased $3,000 in par value of W&T Offshore, Inc.

second lien secured bonds at approximately 89% of par value.

the Company purchased $1,000 in par value of Cleaver-Brooks, Inc.

secured bond at 100% of par value.

the Company sold approximately $46 of SPAC positions across five companies.

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