Filed Per Rule 497

This Prospectus relates to the Form N-2 (File No. 333-217222)

This prospectus relates to the resale from time to time of up to 7,000,268 shares (the “Secondary Shares”) of common stock, par value $0.01 per share, of Great Elm Capital Corp., a Maryland corporation, by the selling stockholders identified in this prospectus and any applicable prospectus supplement (the “Selling Stockholders”).

We are a specialty finance company that is a closed-end, non-diversified management investment company. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups (JOBS) Act (the “JOBS Act”). Our investment objective is to seek to generate both current income and capital appreciation, while seeking to protect against risk of capital loss, by investing predominantly in the debt instruments of middle-market companies, which we generally define as companies with enterprise values between $100.0 million and $2.0 billion. We are externally managed by Great Elm Capital Management, Inc. (“GECM”), who provides the administrative and other services necessary for us to operate.

Our common stock is traded on The Nasdaq Global Market (“Nasdaq”) under the symbol “GECC.” On October 8, 2018 the last reported sales price of our common stock on Nasdaq was $9.65 per share. The net asset value per share of our common stock at June 29, 2018 (the last date prior to the date of this prospectus on which we determined net asset value) was $11.79. Shares of closed-end investment companies, including BDCs, frequently trade at a discount from their net asset value. Our shares currently trade at a discount to our net asset value, and further discounts will increase the risk of loss for you.

We will not receive any of the proceeds from the sale of the Secondary Shares. The Selling Stockholders will pay all fees and expenses incurred in this offering and in disposing of the Secondary Shares, including all registration and filing fees, any other regulatory fees, printing and delivery expenses, listing fees and expenses, fees and expenses of counsel, independent certified public accountants, and any special experts retained by us, and any underwriting discounts and commissions and transfer taxes. The Selling Stockholders have reimbursed us for approximately $762,643 for fees and expenses invoiced to date in connection with the registration and disposition of the Secondary Shares. We have incurred, and estimate that we will incur, an additional $305,000 of fees and expenses for a total of approximately $1,072,790 of fees and expenses, all of which are required to be reimbursed by the Selling Stockholders under the amended and restated registration rights agreement, dated as of November 4, 2016 (the “Registration Rights Agreement”). Each of the Selling Stockholders or its pledgees, donees, assignees, transferees or other successors-in-interest, may offer and sell the Secondary Shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices.

This prospectus sets forth concisely important information you should know before investing in our common stock. Please read it and the documents we refer you to carefully in their entirety before you invest and keep it for future reference. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission (the “SEC”). We maintain a website at http://www.greatelmcc.com and we make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through our website. You may also obtain such information and make stockholder inquiries by contacting us at 800 South Street, Suite 230, Waltham, MA 02453, or by calling us collect at (617) 375-3006. The SEC maintains a website at http://www.sec.gov where such information is available without charge.

An investment in our common stock is subject to risks and involves a heightened risk of total loss of investment. In addition, the companies in which we invest are subject to special risks. For example, our debt investments either are, or if rated would be, rated below investment grade by independent rating agencies. Below investment grade securities, which are often referred to as “high yield” or “junk,” are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may be illiquid and difficult to value and typically do not require repayment of principal before maturity, which potentially heightens the risk that we may lose all or part of our investment. Further, our investment in Avanti Communications Group plc (“Avanti”), which represented approximately 21% of our investment portfolio (excluding cash and short-term investments) as of June 30, 2018 and 40% of our total investment income for the six months ended June 30, 2018, has resulted in significant payment-in-kind (“PIK”) interest, which significantly increases our exposure to the aforementioned risks. PIK income represented 34.9% of our total interest income for the six months ended June 30, 2018. Please see “Risk Factors—Risks Relating to Our Investments—We may lose all of our investment in Avanti.”

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 9 of this prospectus and any risk factors included in any accompanying prospectus supplement and in the documents incorporated by reference in this document, including the risk of leverage.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated October 15, 2018.

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	ii
PROSPECTUS SUMMARY	1
FEES AND EXPENSES	6
SELECTED FINANCIAL DATA	8
RISK FACTORS	9
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION	34
USE OF PROCEEDS	35
SELLING STOCKHOLDERS	36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
THE COMPANY	54
MANAGEMENT	77
RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS	86
CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS	87
DETERMINATION OF NET ASSET VALUE	89
DIVIDEND REINVESTMENT PLAN	90
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS	91
SENIOR SECURITIES	95
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	96
DESCRIPTION OF OUR COMMON STOCK	97
PLAN OF DISTRIBUTION	104
CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR	107
LEGAL MATTERS	107
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	107
AVAILABLE INFORMATION	107
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the SEC utilizing a “shelf” registration process. Under this shelf registration process, the Selling Stockholders may sell the Secondary Shares. This prospectus and the documents we incorporate by reference into this prospectus provide you with a general description of the securities under this shelf registration statement. We may provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Available Information” on page 107.

You should rely only on the information contained in this prospectus and any accompanying prospectus supplement. We and the Selling Stockholders have not authorized any other person to provide you with additional information, or with information different from that contained in this prospectus. If anyone provides you with different or additional information, you should not rely on it. We are not making offers to sell these securities in any jurisdiction where such offers or sales are not permitted. This prospectus and any accompanying prospectus supplement do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate. You should assume that the information in this prospectus is accurate only as of the date on the front of this prospectus and the information in any accompanying prospectus supplement is accurate only as of the date on the front of the accompanying prospectus supplement. Our business, financial condition, results of operations and prospects may have changed since that date. We will update this prospectus to reflect material changes to the information contained herein. We encourage you to consult your own counsel, accountant and other advisors for legal, tax, business, financial and related advice regarding an investment in our securities.

The terms “we,” “us,” “our,” “the Company” and “GECC” in this prospectus refer to Great Elm Capital Corp., a Maryland corporation, and its subsidiaries for the periods after our consummation of the formation transaction (as described under “The Company—Formation Transactions,” the “Formation Transactions”) and the merger of Full Circle Capital Corporation with and into us. We maintain a website located at http://www.greatelmcc.com. Information on our website is not incorporated into or a part of this prospectus.

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PROSPECTUS SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you should consider. You are urged to carefully read this entire document including the more detailed information set forth under “Risk Factors” beginning on page 9.

The Company

Great Elm Capital Corp. is a Maryland corporation that was formed in April 2016 and commenced operations on November 3, 2016 when Full Circle Capital Corporation, a Maryland corporation (“Full Circle”), was merged with and into us (the “Merger”). We operate as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act. In addition, for tax purposes, we elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our tax year starting October 1, 2016.

Our investment objective is to seek to generate both current income and capital appreciation, while seeking to protect against risk of capital loss, by investing predominantly in the debt instruments of middle-market companies, which we generally define as companies with enterprise values between $100.0 million and $2.0 billion.

To achieve our investment objectives, we primarily focus on investing in secured and senior unsecured debt instruments in middle-market companies that offer sufficient downside protection but with the opportunity to unlock substantial return potential (interest income plus capital appreciation and fees, if any) that appropriately recognizes potential investment risks.

We target investments that we perceive to be undervalued due to over-leveraging or which operate in industries experiencing cyclical declines and may trade at discounts to their original issue prices. We source these transactions in the secondary markets and occasionally directly with issuers.

We seek to protect against risk of loss by investing in borrowers with tangible and intangible assets, where GECM believes asset values are expected to, or do, exceed our investment and any debt that is senior to, or ranks in parity with, our investment. GECM’s investment process includes a focus on an investment’s contractual documents, as it seeks to identify rights that enhance an investment’s risk protection and avoid contracts that compromise potential returns or recoveries. Although we intend to focus on senior debt instruments of middle-market companies, we may make investments throughout a company’s capital structure, including subordinated debt, mezzanine debt, and equity or equity-linked securities.

Shares of closed-end investment companies, including BDCs, frequently trade at a discount to their net asset value. Our shares trade at a discount to our net asset value and further discounts will increase the risk of loss for purchasers in this offering.

We are generally unable to sell our common stock at a price below net asset value per share. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage. We may, however, sell our common stock at a price below net asset value per share: (1) in connection with a rights offering to our existing stockholders, (2) with the consent of the majority of our common stockholders or (3) under such other circumstances as the SEC may permit.

The Selling Stockholders are permitted to sell the Secondary Shares below net asset value because they are not subject to the restrictions on selling common shares below net asset value applicable to the Company under the Investment Company Act. This may negatively affect the market price of our common stock.

Before the Merger, we acquired a portfolio of fixed income securities (the “Initial GECC Portfolio”) from private investment funds (the “MAST Funds”) managed by MAST Capital Management, LLC, a Delaware limited liability company (“MAST Capital”), a 14 year-old Boston-based middle-market, credit-focused investment manager. The investments included in the Initial GECC Portfolio had a collective fair value of approximately $90.0 million as of June 30, 2016, which represented approximately 26.5%, 24.3% and 5.0% respectively, of the June 30, 2016 total assets of the three contributing MAST Funds. See “The Company—Formation Transactions.”

We may be required to hold higher levels of cash, money market funds, or other short-term securities in order to pay our expenses or make distributions to stockholders in the ordinary course of business given the relatively high percentage of our total investment income represented by PIK income. See “Risk Factors—Risks Relating to Our Investments—We may hold a significant portion of our portfolio assets in cash, cash equivalents, money market mutual funds, U.S. government securities, repurchase agreements and high quality debt instruments maturing in one year or less, which may have a negative impact on our business and operations.”

Our and GECM’s principal executive offices are currently located at 800 South Street, Suite 230, Waltham, MA 02453, and our telephone number is (617) 375-3006. We maintain a website located at http://www.greatelmcc.com. Information on our website is not incorporated into or a part of this prospectus.

We are and will remain an “emerging growth company” as defined in the JOBS Act until the earliest of (a) December 31, 2021, (b) the last day of the fiscal year (i) in which we have total annual gross revenue of at least $1.0 billion or (ii) in

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which we are deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700.0 million as of the end of the previous second fiscal quarter, and (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an “emerging growth company” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). We cannot predict if investors will find our securities less attractive because we will rely on some or all of these exemptions. If some investors find our securities less attractive as a result, there may be a less active and more volatile trading market for our securities.

Great Elm Capital Management, Inc.

We are managed by GECM, whose investment team has an aggregate of more than 100 years of experience in financing and investing in leveraged middle-market companies. GECM’s team is led by Peter A. Reed. Senior members of GECM’s investment team include Adam M. Kleinman, John S. Ehlinger and Adam W. Yates. The GECM investment team has deployed more than $17.0 billion into more than 550 issuers across 20+ jurisdictions over its 14-year history.

We entered into an investment management agreement with GECM, dated as of September 27, 2016 (the “Investment Management Agreement”), pursuant to which and subject to the overall supervision of our board of directors (our “Board”), GECM provides investment advisory services to GECC. For providing these services, GECM receives a fee from us, consisting of two components: (1) a base management fee and (2) an incentive fee.

The base management fee is calculated at an annual rate of 1.50% based on the average value of our total assets (determined in conformity with generally accepted accounting principles in the United States (“GAAP”) (other than cash or cash equivalents but including assets purchased with borrowed funds or other forms of leverage)) at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears.

The incentive fee has two parts. One part is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the quarter.

Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined under GAAP) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.75% per quarter (7.00% annualized). We pay GECM an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

• no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate;

• 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.1875%) as the “catch-up” provision. The catch-up is meant to provide GECM with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and

• 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).

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

Any income incentive fee otherwise payable with respect to accrued unpaid income (collectively, the “Accrued Unpaid Income Incentive Fees”) will be deferred, on a security-by-security basis, and will become payable only if, as, when and to the extent cash is received by us or our 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 deferred pursuant to the Investment Management Agreement. Subsequent payments of income incentive fees deferred pursuant to this paragraph do not reduce the amounts payable for any quarter pursuant to the other terms of the Investment Management Agreement.

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The following is a graphical representation of the calculation of the income related portion of the incentive fee:

Quarterly Incentive Fee Based on Net Investment Income

Pre-incentive fee net investment income

(expressed as a percentage of the value of net assets)

Percentage of pre-incentive fee net investment income

allocated to income related portion of incentive fee

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.

The second part of the incentive fee, or the “Capital Gains Fee,” is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date), commencing with the partial calendar year ended December 31, 2016, and is calculated at the end of each applicable year by subtracting (1) the sum of our and our consolidated subsidiaries’ cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) our and our consolidated subsidiaries’ cumulative aggregate realized capital gains, in each case calculated from November 4, 2016. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20% of such amount, less the aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year.

We will defer cash payment of any incentive fee otherwise payable to GECM 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 GECM during such Trailing Twelve Quarters (excluding Accrued Unpaid Income Incentive Fees during such Trailing Twelve Quarters and not subsequently paid). “Cumulative Pre-Incentive Fee Net Return” during the relevant Trailing Twelve Quarters means the sum of (a) pre-incentive fee net investment income in respect of such Trailing Twelve Quarters less (b) net realized capital losses and net unrealized capital depreciation, if any, in each case calculated in accordance with GAAP, in respect of such Trailing Twelve Quarters.

See “The Company—Investment Management Agreement—Examples of Quarterly Incentive Fee Calculation” for an example of these calculations.

Pursuant to a separate administration agreement with GECM, dated September 27, 2016 (the “Administration Agreement”), GECM furnishes us with administrative services and we pay GECM our allocable portion of overhead and other expenses incurred by GECM in performing its obligations under the Administration Agreement, including our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

Investment Portfolio

The following tables and graphs summarize information about our portfolio as of June 30, 2018 (dollar amounts in thousands).

Investment Type	Cost		Fair Value
1st Lien/Senior Secured Debt	$	198,369	$	185,418
Equity/Other		50,805		13,971
Total Long Term Investments	$	249,174	$	199,389

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Our investment in Avanti represents 100% of our Wireless Telecommunications Services investments as of June 30, 2018. Please see “Risk Factors—Risks Relating to Our Investments—We may lose all of our investment in Avanti.”

Risk Factors

Investment in our securities involves a number of significant risks relating to our investments and our business and structure that you should consider before investing in our securities.

As of June 30, 2018, Avanti is our largest investment (with a total exposure comprised of two different instruments), representing approximately 21% of our investment portfolio (excluding cash and short-term investments) and 40% of our total investment income for the six months ended June 30, 2018. In December 2017, we agreed to convert all accrued interest in the Avanti third lien senior secured notes (the “Existing Notes”) through March 31, 2018 into additional shares of Avanti common equity. As of March 31, 2018, we owned $54.1 million in principal amount of Existing Notes representing approximately 10% of our net asset value. The restructuring closed on April 26, 2018, and we now own approximately 9% of Avanti’s common shares. The conversion of our Existing Notes to Avanti common shares could result in a significant decrease in our net asset value if the market value of the Avanti common shares were to significantly decrease following the restructuring, a significant decrease in our total investment income and an increase in the risk of investing in our securities. These factors could also result in lower trading prices for our common stock and/or debt securities. Please see “Risk Factors—Risks Relating to Our Investments—We may lose all of our investment in Avanti.”

See Risk Factors and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our securities.

Conflicts of Interests

Certain of our executive officers and directors, and the members of the investment committee of GECM, serve or may serve as officers, directors or principals of entities that operate in the same or related lines of business as GECC or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities that may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. Further, we may not be given the opportunity to participate in certain investments made by investment funds managed by advisers affiliated with GECM and any advisers that may in the future become affiliated with Great Elm Capital Group, Inc. (“GEC”).

Although funds managed by GECM may have different primary investment objectives than us, they may from time to time invest in asset classes similar to those we target. GECM is not restricted from raising an investment fund with investment objectives similar to ours. Any such funds may also, from time to time, invest in asset classes similar to those we target. GECM will endeavor to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any duties owed to us and such other funds. Nevertheless, it is possible that we may not be given the opportunity to participate in investments made by investment funds managed by investment managers affiliated with GECM.

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We pay management and incentive fees to GECM, and reimburse GECM for certain expenses it incurs. In addition, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments.

GECM’s management fee is based on a percentage of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds and other forms of leverage) and GECM may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur indebtedness.

The part of the incentive fee payable by us that relates to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

The Investment Management Agreement renews for successive annual periods if approved by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons. However, we and GECM each have the right to terminate the agreement without penalty upon 60-days’ written notice to the other party. Moreover, conflicts of interest may arise if GECM seeks to change the terms of the Investment Management Agreement, including, for example, the terms for compensation. While any material change to the Investment Management Agreement must be submitted to our stockholders for approval under the Investment Company Act, we may from time to time decide it is appropriate to seek stockholder approval to change the terms of the agreement. For so long as MAST Funds and GEC collectively beneficially own 35% or more of our outstanding shares, the MAST Funds and GEC will vote on any proposed changes to the Investment Management Agreement in the same proportion as our unaffiliated stockholders.

As a result of the arrangements described above, there may be times when our management team has interests that differ from those of our stockholders, giving rise to a conflict.

Our stockholders may have conflicting investment, tax and other objectives with respect to their investments in us. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of our investments, the structure or the acquisition of our investments, and the timing of disposition of our investments. As a consequence, conflicts of interest may arise in connection with decisions we make, including with respect to the nature or structuring of our investments, that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders’ individual tax situations. In selecting and structuring investments appropriate for us, GECM will consider our investment and tax objectives and our stockholders, as a whole, not the investment, tax or other objectives of any stockholder individually.

We may also have conflicts of interest arising out of the investment advisory activities of GECM. GECM may in the future manage other investment funds, accounts or investment vehicles that invest or may invest in assets eligible for purchase by us. To the extent that we compete with entities managed by GECM or any of its affiliates for a particular investment opportunity, GECM will allocate investment opportunities across the entities for which such opportunities are appropriate, consistent with (1) its internal investment allocation policies, (2) the requirements of the Investment Advisers Act of 1940 as amended (the “Advisers Act”), and (3) restrictions under the Investment Company Act regarding co-investments with affiliates.

This Offering

The Secondary Shares offered hereby were offered and sold in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). We will not receive any proceeds from the sale of the Secondary Shares. See “Selling Stockholders” and “Plan of Distribution.”

Certain U.S. Federal Income Tax Considerations

We currently are a RIC under Subchapter M of the Code for U.S. federal income tax purposes and intend to continue to qualify each year as a RIC. In order to qualify for tax treatment as a RIC, we generally must satisfy certain source-of-income, asset diversification and distribution requirements. As long as we so qualify, we will not be subject to U.S. federal income tax to the extent that we distribute investment company taxable income and net capital gain on a timely basis. If for any taxable year we do not qualify as a RIC, all of our taxable income for that year (including our net capital gain) would be subject to tax at regular corporate rates without any deduction for distributions to stockholders, and such distributions would be taxable as ordinary dividends to the extent of our current and accumulated earnings and profits. See “Certain U.S. Federal Income Tax Considerations.”

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FEES AND EXPENSES

The following table is intended to assist you in understanding the costs and expenses that an investor in our common stock will bear, directly or indirectly, based on the assumptions set forth below. We caution you that some of the percentages indicated in the table below are estimates and may vary. Moreover, the information set forth below does not include any transaction costs and expenses that investors will indirectly incur in connection with each offering pursuant to this prospectus. As a result, you are urged to read the “Fees and Expenses” table contained in any corresponding prospectus supplement to fully understand the actual transaction costs and expenses you will incur in connection with each such offering. Except where the context suggests otherwise, whenever this prospectus contains a reference to our fees or expenses, we will pay such fees and expenses out of our net assets and, consequently, stockholders will indirectly bear such fees or expenses as investors in the Company.

Stockholder Transaction Expenses:
Sales load (as a percentage of offering price)		N/A	(1)
Offering expenses (as a percentage of offering price)		N/A	(2)
Dividend reinvestment plan expenses	$	15.00	(3)
Total Stockholder Transaction Expenses		None
Estimated Annual Expenses (as percentage of net assets attributable to common stock)
Base management fees		2.26	%(4)
Incentive fees payable under the Investment Management Agreement (20% of pre-incentive fee net income and capital gains)		2.27	%(5)
Interest payments on borrowed funds		4.52	%(6)
Acquired fund fees and expenses		0.04	%(7)
Other expenses		2.45	%(8)
Total annual expenses		11.54	%(9)

(1) Any underwriting fee related to the Secondary Shares will be paid by the Selling Stockholders.

(2) The related prospectus supplement, including each underwritten offering by the Selling Stockholders, will disclose the estimated amount of total offering expenses (which may include offering expenses borne by third parties on our behalf), the offering price and the offering expenses borne by us as a percentage of the offering price.

(3) The expenses of the dividend reinvestment plan are included in “Other expenses.” The plan administrator’s fees will be paid by us. There will be no brokerage charges or other charges to stockholders who participate in the plan except that, if a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus $0.03 per share brokerage commission from the proceeds for open market purchases. For additional information, see “Dividend Reinvestment Plan.”

(4) We are externally managed by GECM and our management fee will equal 1.50% of our total assets other than cash and cash equivalents (which includes assets purchased with borrowed amounts and other forms of leverage). Consequently, if we have borrowings outstanding, the management fee as a percentage of net assets attributable to common shares would be higher than if we did not utilize leverage.

(5) See “The Company—Investment Management Agreement.” The ratio of incentive fees payable under the Investment Management Agreement reflects a one-time reversal of certain incentive fees due to the uncertainty of income to be received as a result of the restructuring of our investment in Avanti, which is not expected to recur.

(6) Assumes borrowings representing approximately 61% of our average net assets at an annual interest expense to us of 7.37%, which is based on the weighted average interest rate expensed on our outstanding 6.50% notes due 2022 (“2022 notes”) and 6.75% notes due 2025 (“2025 notes”), as adjusted for unamortized costs associated with each offering. At our 2018 annual meeting of stockholders (the “Annual Meeting”), a majority of our stockholders approved the application of the recently modified minimum asset coverage requirements set forth in Section 61(a)(2) of the Investment Company Act. As a result of such approval, the asset coverage ratio test applicable to us was decreased from 200% to 150%, allowing us to double the amount of our previously permitted leverage. See “Risk Factors—Risks Relating to Our Business and Structure—Recently enacted legislation permits us to incur additional debt.” We intend to deploy this leverage prudently, in amounts and at times that we believe can best deliver risk-adjusted returns to our stockholders. We are currently evaluating opportunities to deploy additional leverage, and may do so in the near term. The amount of leverage that we may employ at any particular time will depend on, among other things, our Board’s and GECM’s assessment of market and other factors at the time of any proposed borrowing. The following table, which is presented for illustration purposes only, shows our estimated annual expenses (as percentage of net assets attributable to common stock) assuming incurrence of the maximum amount of leverage as permitted under the 150% asset coverage ratio requirement.

Base management fees	4.40	%
Incentive fees payable under the Investment Management Agreement (20% of pre-incentive fee net income and capital gains)	2.27	%
Interest payments on borrowed funds(1)	14.37	%
Acquired fund fees and expenses	0.04	%
Other expenses	2.45	%
Total annual expenses	23.50	%

(1) Assumes borrowings representing approximately 200% of our average net assets at an annual interest expense to us of 7.37%, which is based on the weighted average interest rate expensed on our outstanding 2022 notes and 2025 notes, as adjusted for unamortized costs associated with each offering.

(7) “Acquired fund fees and expenses” represents fees and expenses incurred directly by us as a result of investments in other investment companies including money market mutual funds.

(8) “Other expenses” are based on estimated amounts for the current fiscal year.

(9) “Total annual expenses” is different from the ratio of expenses to average net assets contained in the “Financial Highlights” included in our financial statements due to the fact that the “Financial Highlights” reflect only our operating expenses and do not include acquired fund fees and expenses.

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Example

The following example illustrates the projected dollar amount of total cumulative expenses that you would pay on a $1,000 hypothetical investment in our common stock, assuming (1) no sales load, (2) total annual expenses of 9.23% of net assets, excluding incentive fees, (first line) and total annual expenses of 10.23% of net assets, including incentive fees, (second line) attributable to common stock as set forth in the table above, and (3) a 5% annual return:

	1 Year		3 Years		5 Years		10 Years
Total Expenses Incurred*	$	90	$	260	$	415	$	750
Total Expenses Incurred**	$	100	$	284	$	449	$	792

* Assumes no incentive fees.

** Assumes annual returns resulting entirely from net realized capital gains (and therefore subject to the capital gains incentive fee).

This example and the expenses in the table above should not be considered a representation of our future expenses. Actual expenses may be greater or less than those assumed. The foregoing table is to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. Assuming a 5% annual return, the incentive fee under the Investment Management Agreement would not be earned or payable and is not included in the first row of the example. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher. The second row of the example therefore assumes the 5% return results entirely from net realized capital gains (and therefore is subject to the capital gains incentive fee) to demonstrate how the incentive fee could impact expenses. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by 95% of the market price per share of our common stock at the close of trading on the valuation date for the dividend. This applies where we are issuing new shares pursuant to our dividend reinvestment plan. We may also instruct the plan administrator to purchase shares of our common stock in the open market in connection with our implementation of the plan. If a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus $0.03 per share brokerage commission from the proceeds for open market purchases. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

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SELECTED FINANCIAL DATA

The following selected financial data for the year ended December 31, 2017 and for the period from inception through December 31, 2016 is derived from our consolidated financial statements which have been audited by Deloitte & Touche LLP, our independent registered public accounting firm. The following selected financial data for the six months ended June 30, 2018 and 2017 is derived from our unaudited financial data. Interim results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The selected financial data should be read in conjunction with our consolidated financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Senior Securities” as well as other disclosures included elsewhere in this prospectus.

	Six months ended June  30, 2018			Six months ended June  30, 2017			Year ended December 31, 2017			Period from inception through December 31, 2016
	(Dollar amounts in thousands, except per share data)
Statement of Operations Data:
Total Investment Income	$	14,660		$	13,552		$	29,728		$	5,831
Total Gross Expenses		4,716			5,980			12,153			5,906
Total Net Expenses		4,716			5,910			12,153			5,826
Net Investment Income		9,944			7,572			17,575			5
Net Increase (Decrease) in Net Assets Resulting from Operations		(1,391	)		912			(2,754	)		(17,874	)
Per Share Data(1):
Net Investment Income		0.93			0.61			1.52			0.28	(2)
Net Increase (Decrease) in Net Assets Resulting from Operations		(0.13	)		0.07			(0.24	)		(0.75	)(2)
Distributions Declared		(0.50	)		(0.50	)		1.20			0.17	(2)
Statement of Assets and Liabilities Data:
Total Assets	$	286,630		$	213,747		$	239,913		$	236,544
Total Liabilities	$	161,039		$	60,045		$	107,626		$	63,560
Total Net Assets	$	125,591		$	153,702		$	132,287		$	172,984
Other Data:
Per Share Market Value at the End of the Period	$	9.24		$	10.62		$	9.84		$	11.67
Total Return based on Market Value		(1.03	)%(3)		(4.78	)%(3)		(5.56	)%(3)		(2.03	)%(4)
Total Return based on Net Asset Value		(1.04	)%(3)		1.98	%(3)		0.69	%(3)		(5.30	)%(4)

(1) The per share data was derived by using the weighted average shares outstanding during the period.

(2) For the period from November 3, 2016 to December 31, 2016. November 3, 2016 is the date on which the Merger closed; November 4, 2016 is the date on which we began operating as the combined entity resulting from the Merger.

(3) Total return based on market value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of our common stock. Total return based on net asset value is calculated as the change in net asset value per share, assuming our distributions were reinvested through our dividend reinvestment plan. Total return based on market value is calculated as the change in market value per share, assuming our distributions were reinvested through our dividend reinvestment plan.

(4) Total return based on market value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of our common stock. Total return based on net asset value is calculated as the change in net asset value per share from November 4, 2016 through December 31, 2016, assuming our distributions were reinvested through our dividend reinvestment plan. Total return based on market value is calculated as the change in market value per share from November 4, 2016 through December 31, 2016, assuming our distributions were reinvested through our dividend reinvestment plan, and is assumed to have been $12.03 per share on November 4, 2016. $12.03 per share represents the closing price of Full Circle’s common stock on its last day of trading prior to the Merger, as adjusted by the exchange ratio in the Merger Agreement (as defined herein).

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RISK FACTORS

Investing in our securities involves a number of significant risks. Before you invest in our securities, you should be aware of various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this prospectus and any accompanying prospectus supplement, before you decide whether to make an investment in our securities. The risks set out below are the principal risks with respect to an investment in our securities generally and with respect to a BDC with investment objectives, investment policies, capital structures or trading markets similar to ours. However, they may not be the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. In such case, our net asset value and the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Relating to Our Investments

We may lose all of our investment in Avanti.

As of June 30, 2018, Avanti is our largest investment. Our investments in Avanti (with a total exposure comprised of two different instruments) represented approximately 21% of our investment portfolio (excluding cash and short-term investments) at June 30, 2018. As of June 30, 2018, we owned approximately 7.9% of Avanti’s outstanding debt and approximately 9% of Avanti’s outstanding common stock. We acquired our original position in Avanti as part of the Initial GECC Portfolio, which we purchased from the MAST Funds prior to the Merger.

On July 7, 2016, Avanti announced that under certain circumstances it may not have access to sufficient liquidity to meet its funding requirements through the second quarter of 2017. On July 11, 2016, Avanti announced the undertaking of a strategic review to consider all financial and strategic options, including a sale of the company pursuant to the City Code on Takeovers and Mergers (the “City Code”). Following these announcements, on July 14, 2016, Moody’s downgraded the Existing Notes.

On September 16, 2016, Avanti announced that it was launching a consent solicitation process to facilitate paying the October 1, 2016 coupon on the Existing Notes in kind in lieu of cash. In order to further support the strategic review process, Avanti also announced that it had entered into binding agreements with certain suppliers to defer approximately $39.0 million of capital expenditure payments to the third quarter of fiscal 2017.

On October 17, 2016, Avanti announced the completion of its consent solicitation process with respect to the Existing Notes, receiving consents from the holders of 89.5% of the Existing Notes to permit paying the interest due on October 1, 2016 with respect to consenting holders’ Existing Notes in the form of additional Existing Notes in lieu of cash. Because Avanti failed to obtain consent from at least 90% of the holders of the Existing Notes, it was required to pay $3.39 million of the October coupon in the form of cash rather than additional notes.

On December 20, 2016, Avanti announced the completion of its strategic review, which included termination of the formal sale process and the end of the offer period (in each case as defined under the City Code), as well as the launch of a consent solicitation, exchange offer and new money offer as part of a larger financial restructuring of the Existing Notes.

On January 6, 2017, Avanti announced that it had received consents from holders of 91.85% of the Existing Notes in connection with the consent solicitation to permit, among other things, the incurrence of up to $132.5 million in super- senior indebtedness and the payment of PIK interest on the Existing Notes in lieu of cash for certain future interest payments due on the Existing Notes.

On January 27, 2017, Avanti announced the completion of its previously announced refinancing, with the settlement of its (1) consent solicitation to permit, among other things, the incurrence of up to $132.5 million in super senior indebtedness and the payment of PIK interest on the Existing Notes in lieu of cash for certain future interest payments due on the Existing Notes, (2) offer to holders of Existing Notes the opportunity to purchase up to $132.5 million aggregate principal amount of the Avanti second lien senior secured notes (the “PIK Toggle Notes”) (the “New Money Offer”) and (3) offer to holders participating in the New Money Offer to exchange a portion of their Existing Notes for additional PIK Toggle Notes. Holders who elected to backstop the New Money Offer also received their pro rata share of additional common equity issued by Avanti in an aggregate amount equal to 9.09% of Avanti’s total outstanding shares.

Through completion of the consent solicitation and the New Money Offer, Avanti received $80.0 million of new cash funding, with an additional $50.0 million of funding available on a delayed draw basis, and had the ability to defer up to $112.0 million of future interest payments through April 2018.

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We took part in the refinancing, exchanging $22.9 million of Existing Notes for new PIK Toggle Notes and purchasing an additional $9.2 million of PIK Toggle Notes for $8.9 million of funded cash. At the completion of the refinancing, we continued to hold $47.2 million of Existing Notes and had committed to provide $5.6 million in additional financing, subject to certain conditions. Additionally, as part of the refinancing, our Chief Executive Officer and representatives of two other significant creditors joined Avanti’s board of directors.

In June 2017, Avanti announced that it had entered into a $100 million three year super senior facility with HPS Investment Partners, LLC. The proceeds of the super senior facility replaced an existing, undrawn $50 million debt facility, including the $5.6 million unfunded commitment held by us, and provided additional liquidity to fund the construction and launch of Avanti’s HYLAS 4 satellite. Following Avanti’s entry into this new super senior facility, our PIK Toggle Notes became third lien notes and the Existing Notes became second lien notes.

In August 2017, David Williams stepped down as chief executive officer of Avanti and was replaced by Alan Harper, a non-executive director of Avanti, on an interim basis. In April 2018, Kyle Whitehill joined Avanti as its new chief executive officer and Alan Harper resumed his prior role as non-executive director.

In December 2017, we and other holders of the PIK Toggle Notes and the Existing Notes entered into a restructuring agreement with Avanti. Under that agreement, among other things:

• the Existing Notes would be converted into common shares of Avanti. All of the outstanding Existing Notes, if converted, would represent approximately 92% of the pro forma common shares of Avanti, and our Existing Notes would represent approximately 9.1% of the pro forma common shares of Avanti; and

• the cash interest rate on the PIK Toggle Notes would be reduced from 10% to 9% and the PIK interest rate would be reduced from 15% to 9% on the PIK Toggle Notes, the maturity date would be extended by one year to October 1, 2022 and Avanti would be permitted to issue up to $30 million of indebtedness that ranks equal with or junior to the PIK Toggle Notes and would be provided with relaxed financial covenants, including the elimination of certain financial maintenance covenants.

The restructuring closed on April 26, 2018, and we now own approximately 9% of Avanti’s common shares. Completion of the restructuring was subject to a number of conditions, including approval of a scheme of arrangement by a United Kingdom court and a corresponding proceeding under Chapter 15 of the United States Bankruptcy Code. Aspects of the restructuring were subject to Avanti shareholder approval, including, among other things, the issuance of Avanti shares in the Existing Notes conversion, and Avanti bondholder approval. Holders of the Existing Notes considered and approved a scheme of arrangement on March 20, 2018, which was subsequently sanctioned by a United Kingdom court at a hearing on March 26, 2018. Avanti stockholders voted to approve of the issuance of Avanti shares in the conversion at a general company meeting in April 2018. Equity securities expose us to additional risks should Avanti default on its debt or need additional financing. Equity securities rank lower in the capital structure and would likely not pay current income or PIK income, which we had been receiving on our investment in Avanti. Please see, “—We are not in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments” and “—Our investments are very risky and highly speculative, and the lower middle-market companies we target may have difficulty accessing the capital markets to meet their future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.”

Following the restructuring, Avanti may seek to raise up to an additional $30 million from the sale of its common shares, additional PIK Toggle Notes or other securities that rank equal with or are junior to the PIK Toggle Notes.

Avanti is highly leveraged. If there is an event of default under the indenture governing the PIK Toggle Notes and the obligations under the PIK Toggle Notes are accelerated, Avanti likely will not have sufficient liquidity to pay the obligations under the PIK Toggle Notes. Under such circumstances, Avanti may consider other restructuring options, such as entering into an insolvency procedure under English law or by filing for Chapter 11 protection under the United States Bankruptcy Code, the consequences of which could include a reduction in the value of the assets available to satisfy the PIK Toggle Notes and the imposition of costs and other additional risks on holders of the PIK Toggle Notes, including a material reduction in the value of the PIK Toggle Notes. In such an event, we may lose all or part of our investment in Avanti.

The long-term impact of this refinancing transaction on Avanti’s financial condition is uncertain and cannot be predicted. The refinancing transaction did not materially change Avanti’s long term capital structure and it is unclear whether the refinancing transaction addresses the longer term sustainability of Avanti’s business model. We may sell at a loss all or a portion of our investment in Avanti from time to time in order to meet diversification requirements under the Code or as part of our portfolio management strategy.

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We are currently receiving PIK interest on our Avanti investment under the PIK Toggle Notes. As part of the restructuring, the PIK Toggle Notes became pay-if-you-can (PIYC) notes whereby Avanti is required to make interest payments in cash, subject to satisfying certain minimum cash thresholds. Otherwise, the interest will be paid as PIK interest. Such PIK interest exposes us to significant risks. Please see “—Risks Relating to Our Business and Structure—We may expose ourselves to risks associated with the inclusion of non-cash income prior to receipt of cash,” and “—Risks Relating to Our Business and Structure—We may have difficulty paying our required distributions under applicable tax rules if we recognize income before or without receiving cash representing such income.” Additionally, all accrued interest (through March 31, 2018) on our Existing Notes have been converted into additional shares of Avanti common equity and both the cash and PIK interest rates on the PIK Toggle Notes have been reduced. The December 2017 restructuring could result in a significant decrease in our net asset value if the market value of the Avanti common shares that we received in the restructuring significantly decreases following the restructuring, a significant decrease in our total investment income and an increase in the risk of investing in our securities. These factors could also result in lower trading prices for our common stock and/or debt securities. Notwithstanding the risks associated with the December 2017 restructuring, we believe the value of the Avanti common shares we received in exchange for the Existing Notes was substantially equal to the value of the Existing Notes (including accrued PIK interest) converted in the restructuring. There can be no certainty in this respect and a significant decrease in the market value of the Avanti common shares we received in the restructuring could ultimately have a material adverse effect on our net asset value and the trading prices of our securities, and increase the risks of investing in the shares offered hereby.

We face increasing competition for investment opportunities. Limited availability of attractive investment opportunities in the market could cause us to hold a larger percentage of our assets in liquid securities until market conditions improve.

We compete for investments with other BDCs and investment funds (including private equity funds, mezzanine funds and small business investment companies), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors have a lower cost of capital and access to funding sources that are not available to us, including from the Small Business Administration. In addition, increased competition for attractive investment opportunities allows debtors to demand more favorable terms and offer fewer contractual protections to creditors. Some of our competitors have higher risk tolerances or different risk assessments than we do. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage stems from the fact that the market for investments in lower middle-market companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of our competitors in this target market would force us to accept less attractive investment terms. GECM may, at its discretion, decide to pursue such opportunities if it believes that they are in our best interest; however, GECM may decline to pursue available investment opportunities that, although otherwise consistent with our investment policies and objectives, in GECM’s view present unacceptable risk/return profiles. Under such circumstances, we may hold a larger percentage of our assets in liquid securities until market conditions improve in order to avoid having assets remain uninvested. Furthermore, many of our competitors have greater experience operating under, or are not subject to, the regulatory restrictions that the Investment Company Act imposes on us as a BDC. We believe that competitors will make first and second lien loans with interest rates and returns that are lower than the rates and returns that we target. Therefore, we do not seek to compete solely on the interest rates and returns offered to potential portfolio companies.

Changes in the regulatory framework under which the wireless telecommunications industry operates and significant competition in the wireless telecommunications industry could adversely affect our business prospects or results of operations.

We hold a large position in Avanti. As a result of our stake in Avanti, we are exposed to risks associated with the wireless telecommunications sector.

For example, Avanti’s operations are regulated by various foreign governments and international bodies. These regulatory regimes restrict or impose conditions on Avanti’s ability to operate in designated areas and to provide specified products or services. In addition, new laws or regulations or changes to the existing regulatory framework

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could impose additional costs, impair revenue opportunities and potentially impede Avanti’s ability to provide services. The further regulation of Avanti’s activities could impact Avanti’s ability to compete in the marketplace and limit the return Avanti, and, as a result, we, can expect to achieve.

In addition, Avanti’s business may also be affected by the significant competition in the wireless telecommunications industry. There is rapid development of new technologies, services and products, which brings new competitors to the market. While these changes have enabled companies like Avanti to offer new types of products and services, they have also allowed other providers to broaden the scope of their own competitive offerings. Avanti’s ability to compete effectively will depend on, among other things, how successfully Avanti anticipates and responds to various factors affecting its industry, including new technologies and business models, changes in consumer preferences and demand for existing services, demographic trends and economic conditions. If Avanti is not able to respond successfully to these competitive challenges, Avanti may face challenges in meeting its required payments under its debt securities held by us, which could result in a material decrease in the fair value of such debt securities, and a corresponding material adverse change in our financial position and results of operations.

Our portfolio will be limited in diversification among portfolio companies which may subject us to a risk of significant loss if one or more of these companies defaults on its obligations under any of its debt instruments.

Our portfolio is likely to hold a limited number of portfolio companies. Beyond the asset diversification requirements associated with qualification as a RIC, we do not have fixed guidelines for diversification, and our investments are likely to be concentrated in relatively few companies. As our portfolio is less diversified than the portfolios of some funds, we are more susceptible to failure if a single investment fails. Similarly, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment.

Our portfolio will be concentrated in a limited number of industries, which subjects us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.

Our portfolio is likely to be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact our aggregate realized returns.

In addition, we may from time to time invest a relatively significant percentage of our portfolio in industries in which GECM does not necessarily have extensive historical research coverage. If an industry in which we have significant investments suffers from adverse business or economic conditions, as these industries have to varying degrees, a material portion of our investment portfolio could be affected adversely, which, in turn, could adversely affect our financial position and results of operations.

Any unrealized losses we experience in our portfolio may be an indication of future realized losses, which could reduce our income available for distribution.

As a BDC, we are required to carry our investments at fair value as determined in good faith by our Board. Decreases in the fair values of our investments are recorded as unrealized depreciation. Any unrealized losses in our portfolio could be an indication of a portfolio company’s inability to meet its repayment obligations to us with respect to the affected investments. This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our returns on equity.

We are subject to the risk that investments intended to be held over long periods are, instead, repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, repay debt or repurchase shares of our common stock, depending on expected future investment opportunities. These temporary investments will typically have substantially lower yields than the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elects to prepay amounts owed by them. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common stock.

We are not in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.

We generally do not hold controlling equity positions in our portfolio companies. As a result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/or

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stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments if we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.

Defaults by our portfolio companies may harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of our investments and foreclosure on our secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of financial covenants, with a defaulting portfolio company. If any of these occur, it could materially and adversely affect our operating results and cash flows.

By investing in companies that are experiencing significant financial or business difficulties, we will be exposed to distressed lending risks.

As part of our lending activities, we may purchase notes or loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financing may result in significant financial returns to us, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is unusually high. We cannot assure you that we will correctly evaluate the value of the assets collateralizing our investments or the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a portfolio company, we may lose all or part of the amounts advanced to the borrower or may be required to accept collateral with a value less than the amount of the investment advanced by us to the borrower.

As of June 30, 2018, we held approximately $16.0 million at par value of TRU Taj LLC (“TRU Taj”) senior secured notes due 2021 and $1.7 million at par value of TRU Taj debtor in possession notes, which represented approximately 4.9% of our total assets at market value as of such date. Toys “R” Us, Inc. (“Toys”), the parent company of TRU Taj, announced a plan of restructuring that includes store closures in the U.S., the winding down of certain subsidiary operations, and potential insolvency proceedings for certain subsidiaries of TRU Taj. TRU Taj has also announced that it has commenced a sale of substantially all of its assets. On August 6, 2018, TRU Taj filed cleansing materials providing additional information around the ongoing sale process of its equity interest in an Asia joint venture (the “Asia JV”). A credit bid submitted by an ad hoc group of noteholders in an amount of up to $760 million (net of any cash, debt and working capital adjustments) for the approximately 85% of the Asia JV owned by TRU Taj represented the highest bid received and met most closely Toys’ criteria for certainty of closing. At this time, no definitive agreement or plan has been entered into or settled. However, if consummated, such reorganization could have a material adverse impact on our net investment income.

Our investments are very risky and highly speculative, and the lower middle-market companies we target may have difficulty accessing the capital markets to meet their future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.

Senior Secured Loans and Notes. There is a risk that the collateral securing our loans and notes may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan or note. Consequently, the fact that a loan or note is secured does not guarantee that we will receive principal and interest payments according to the loan’s or note’s terms, or at all, or that we will be able to collect on the loan or note should we be forced to enforce our remedies.

Mezzanine Loans. Our mezzanine debt investments will be generally subordinated to senior loans and will be generally unsecured. As such, other creditors may rank senior to us in the event of an insolvency, which could likely result in a substantial or complete loss on such investment in the case of such insolvency. This may result in an above average amount of risk and loss of principal.

Unsecured Loans and Notes. We may invest in unsecured loans and notes. If the issuer defaults or has an event of insolvency, other creditors may rank senior, be structurally senior or have lien protection that effectively renders their claim superior to our rights under our unsecured notes or loans, which could likely result in a substantial or complete loss on such investment in the case of such insolvency. This may result in an above average amount of risk and loss of principal.

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Equity Investments. When we invest in senior secured loans or mezzanine loans, we may acquire equity securities, including warrants, as well. In addition, we may invest directly in the equity securities of portfolio companies. The equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

In addition, investing in middle-market companies involves a number of significant risks, including:

• these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;

• they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

• they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on you;

• they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and GECM may be named as defendants in litigation arising from our investments in the portfolio companies;

• they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity; and

• a portion of our income may be non-cash income, such as contractual PIK interest, which represents interest added to the debt balance and due at the end of the instrument’s term, in the case of loans, or issued as additional notes in the case of bonds. Instruments bearing PIK interest typically carry higher interest rates as a result of their payment deferral and increased credit risk. When we recognize income in connection with PIK interest, there is a risk that such income may become uncollectable if the borrower defaults.

Investing in middle-market companies involves a high degree of risk and our financial results may be affected adversely if one or more of our portfolio investments defaults on its loans or notes or fails to perform as we expect.

Our portfolio consists primarily of debt and equity investments in privately owned lower middle-market companies. Investing in lower middle-market companies involves a number of significant risks. Typically, the debt instruments in which we invest is not initially rated by any rating agency; however, we believe that if such investments were rated, they would be below investment grade, which are referred to as “junk bonds.” Compared to larger publicly owned companies, these middle-market companies may be in a weaker financial position and experience wider variations in their operating results, which may make them more vulnerable to economic downturns and other business disruptions. Typically, these companies need more capital to compete; however, their access to capital is limited and their cost of capital is often higher than that of their competitors. Our portfolio companies face intense competition from larger companies with greater financial, technical and marketing resources and their success typically depends on the managerial talents and efforts of an individual or a small group of persons. Therefore, the loss of any of their key employees could affect a portfolio company’s ability to compete effectively and harm its financial condition. Further, some of these companies conduct business in regulated industries that are susceptible to regulatory changes. These factors could impair the cash flow of our portfolio companies and result in other events, such as bankruptcy. These events could limit a portfolio company’s ability to repay its obligations to us. Deterioration in a borrower’s financial condition and prospects may be accompanied by deterioration in the value of the loan’s collateral and the fair market value of the loan.

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Most of the loans in which we invest are not structured to fully amortize during their lifetime. In order to create liquidity to pay the final principal payment, borrowers typically must raise additional capital or sell their assets, which could potentially result in the collateral being sold for less than its fair market value. If they are unable to raise sufficient funds to repay us, the loan will go into default, which will require us to foreclose on the borrower’s assets, even if the loan was otherwise performing prior to maturity. This will deprive us from immediately obtaining full recovery on the loan and prevent or delay the reinvestment of the loan proceeds in other, more profitable investments. Moreover, there are no assurances that any recovery on such loan will be obtained. Most of these companies cannot obtain financing from public capital markets or from traditional credit sources, such as commercial banks. Accordingly, loans made to these types of companies pose a higher default risk than loans made to companies that have access to traditional credit sources.

An investment strategy that includes privately held companies presents challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.

We will invest in privately held companies. Generally, little public information exists about these companies, and we are required to rely on GECM’s ability to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose money on our investments. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely affect our investment returns as compared to companies investing primarily in the securities of public companies.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or in some cases senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invested. Also, in insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

Even though we may have structured investments as secured investments, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior investment is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business or instances where we exercise control over the borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken in rendering managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

Second priority liens on collateral securing loans and notes that we invest in may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.

We may purchase loans or notes that are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender’s consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such cases, the senior lender will require us or the indenture trustee to enter into an “intercreditor agreement”

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prior to permitting the portfolio company to borrow. Typically the intercreditor agreements expressly subordinate our debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements we may enter, we may be unable to realize the proceeds of any collateral securing some of our loans and notes.

The reference rates for our loans may be manipulated or changed.

Concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association (the “BBA”) in connection with the calculation of the London Interbank Offered Rate (“LIBOR”) across a range of maturities and currencies may have been underreporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.

Central banks have engaged in quantitative easing, currency purchase programs and other activities that caused government borrowing rates and currencies to trade at prices different than those that would prevail in an unaffected market.

Actions by market participants, like the BBA, or by government agencies, like the Federal Reserve Board, may affect prevailing interest rates and the reference rates for loans to our portfolio companies. Actions by governments may create inflation in asset prices that over-state the value of our portfolio companies and their assets and drive cycles of capital market activities (like mergers and acquisitions) at a rate and at prices in excess of those that would prevail in an unaffected market.

We cannot assure you that actions by market participants, like the BBA, or by government agencies, like the Federal Reserve Board, will not materially adversely affect trading markets or our portfolio companies or us or our and our portfolio companies’ respective business, prospects, financial condition or results of operations.

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021. 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.

We may mismatch the interest rate and maturity exposure of our assets and liabilities.

Our net investment income depends, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. We cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds could increase, which could reduce our net investment income. We expect that our fixed-rate investments will be financed primarily with equity and/or long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the Investment Company Act. If we implement these techniques properly, we could experience losses on our hedging positions, which could be material.

If interest rates fall, our portfolio companies are likely to refinance their obligations to us at lower interest rates. Our proceeds from these refinancings are likely to be reinvested at lower interest rates than our refinanced loans resulting in a material decrease in our net investment income.

We may not realize gains from our equity investments.

Our portfolio may include warrants or other equity securities. We may take back equity securities in exchange for our debt investments in workouts of troubled investments. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. The equity interests we invest in may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do

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realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We may seek puts or similar rights to give it the right to sell our equity securities back to the portfolio company. We may be unable to exercise these put rights if the issuer is in financial distress or otherwise lacks sufficient liquidity to purchase the underlying equity investment.

Investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.

Our investment strategy contemplates investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Such investments will generally not represent “qualifying assets” under Section 55(a) of the Investment Company Act. Pursuant to the Investment Company Act, qualifying assets must represent at least 70% of our total assets at the time of acquisition of any additional non-qualifying assets. If we do not meet the 70% threshold, we will be limited to purchasing qualifying assets until such threshold is met. See “The Company—Regulation as a Business Development Company.”

Any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we offer no assurance that we will, in fact, hedge currency risk, or that if it does, such strategies will be effective.

We may hold a significant portion of our portfolio assets in cash, cash equivalents, money market mutual funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less, which may have a negative impact on our business and operations.

We may hold a significant portion of our portfolio assets in cash, cash equivalents, money market mutual funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less for many reasons, including, among others:

• as part of GECM’s strategy in order to take advantage of investment opportunities as they arise;

• when GECM believes that market conditions are unfavorable for profitable investing;

• when GECM is otherwise unable to locate attractive investment opportunities;

• as a defensive measure in response to adverse market or economic conditions; or

• to meet RIC qualification requirements.

We may also be required to hold higher levels of cash, money market mutual funds or other short-term securities in order to pay our expenses or make distributions to stockholders in the ordinary course of business given the relatively high percentage of our total investment income represented by PIK income. During periods when we maintain exposure to cash, money market mutual funds or short-term securities, we may not participate in market movements to the same extent that it would if we were fully invested, which may have a negative impact on our business and operations and, accordingly, our returns may be reduced.

Risks Relating to Our Business and Structure

GEC and the MAST Funds collectively own the majority of our outstanding common stock and may attempt to exert control over us in a manner that is adverse to your interests.

GEC and the MAST Funds collectively own the majority of the outstanding shares of our common stock and accordingly may control the results of matters submitted to the vote of our stockholders. GEC and the MAST Funds agreed to vote their shares proportionately to our other stockholders on certain matters until they collectively own less than 35% of the outstanding shares of our common stock. Although there is no agreement between GEC and the MAST Funds to act in concert with respect to the shares of our common stock they own, funds managed by MAST

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Capital (including some of the MAST Funds) are a significant stockholder of GEC and Peter A. Reed, our Chief Executive Officer, is Chief Executive Officer and a member of the board of directors of GEC. GEC and the MAST Funds may use their share ownership, ownership of GECM or otherwise exert control over us in a manner that is adverse to your interests.

Capital markets experience periods of disruption and instability. These market conditions have materially and adversely affected debt and equity capital markets in the United States and abroad, which had, and may in the future have, a negative impact on our business and operations.

The global capital markets are subject to disruption as evidenced by, among other things, a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the United States federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. We cannot provide any assurance that these conditions will not significantly worsen. Equity capital may be difficult to raise because, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value. In addition, our ability to incur indebtedness or issue preferred stock is limited by applicable regulations such that our asset coverage, as defined in the Investment Company Act, must equal at least 150% immediately after each time we incur indebtedness or issue preferred stock. The debt capital that may be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

Market conditions may in the future make it difficult to extend the maturity of or refinance our existing indebtedness, and any failure to do so could have a material adverse effect on our business. The expected illiquidity of our investments may make it difficult for us to sell such investments if required. As a result, we may realize significantly less than the value at which we have recorded our investments.

In addition, significant changes in the capital markets, including the recent extreme volatility and disruption, have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material adverse impact on our business, financial condition and results of operations.

You may not receive distributions or our distributions may not grow over time.

We intend to make distributions on a monthly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-over-year increases in cash distributions. In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. See “The Company—Regulation as a Business Development Company.”

We may borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing with us.

We have existing indebtedness and may in the future borrow additional money, each of which magnifies the potential for loss on amounts invested and may increase the risk of investing with us. Our ability to service our existing and potential future debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we could employ at any particular time will depend on GECM’s and our Board’s assessment of market and other factors at the time of any proposed borrowing.

Any GECC credit facility would impose financial and operating covenants that would restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under the Code. A failure to renew our credit facilities or to add new or replacement debt facilities could have a material adverse effect on our business, financial condition and results of operations.

Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. When a company issues debt, the issuer gives the debt holders a call right on the issuer’s business and assets. Holders of such debt securities would have fixed dollar claims on our consolidated assets that would be superior to the claims of our common stockholders or any preferred stockholders.

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If the value of our consolidated assets decreases while we have debt outstanding, leveraging would cause our net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any decrease in our consolidated income while we have debt outstanding would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock distributions. We cannot assure you that our leveraging strategy will be successful.

Illustration. The following tables illustrate the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The first table assumes the amount of senior securities outstanding as of June 30, 2018. The second table assumes the amount of senior securities outstanding as permitted under our asset coverage ratio of 150%. See “—Recently enacted legislation permits us to incur additional debt.” The calculations in the tables below are hypothetical and actual returns may be higher or lower than those appearing below.

Table 1

Assumed Return on Our Portfolio (net of expenses)	(10.00	)%	(5.00	)%	0.00	%	5.00	%	10.00	%
Corresponding net return to common stockholders(1)(2)	(20.51	)%	(12.57	)%	(4.64	)%	3.30	%	11.23	%

(1) Assumes $199.4 million in total portfolio assets as of June 30, 2018, $79.0 million in senior securities outstanding, $125.6 million in net assets as of June 30, 2018, and an average cost of funds of 7.37%. Actual interest payments may be different.

(2) In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our June 30, 2018 total portfolio assets of at least 2.92%.

Table 2

Assumed Return on Our Portfolio (net of expenses)	(10.00	)%	(5.00	)%	0.00	%	5.00	%	10.00	%
Corresponding net return to common stockholders(1)(2)	(43.45	)%	(28.91	)%	(14.37	)%	0.17	%	14.71	%

(1) Assumes $365.2 million in total portfolio assets as of June 30, 2018, $244.9 million in senior securities outstanding, $125.6 million in net assets as of June 30, 2018, and an average cost of funds of 7.37%. Actual interest payments may be different.

(2) In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our June 30, 2018 total portfolio assets of at least 4.95%.

We may experience fluctuations in our quarterly results.

Our quarterly operating results will fluctuate due to a number of factors, including the level of expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. Our quarterly operating results will also fluctuate due to a number of other factors, including the interest rates payable on the debt investments we make and the default rates on such investments. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Our success depends on the ability of our investment adviser to attract and retain qualified personnel in a competitive environment.

Our growth requires that GECM retain and attract new investment and administrative personnel in a competitive market. GECM’s ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors, including, but not limited to, its ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies, which compete for experienced personnel with GECM, have greater resources than GECM.

Our ability to grow depends on our ability to raise capital and/or access debt financing.

We intend to periodically access the capital markets to raise cash to fund new investments. We expect to continue to elect to be treated as a RIC and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. Among other things, in order to maintain our RIC status, we must distribute to our stockholders on a timely basis generally an amount equal to at least 90% of our investment company taxable income (as defined by the Code), and, as a result, such distributions will not be available to fund new investments. As a result, we must borrow from financial institutions or issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. There has been and will continue to be uncertainty in the financial markets in general. An inability to successfully access the capital or credit markets for either equity or debt could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings, if any.

If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratios imposed upon us by the Investment Company Act or our lenders. Any such failure, or a tightening or general disruption of the credit markets, would affect our ability to issue senior securities, including borrowings, and pay dividends or other distributions, which could materially impair our business.

In addition, with certain limited exceptions, effective as of May 4, 2018, we are only allowed to borrow or issue debt securities or preferred stock such that our asset coverage, as defined in the Investment Company Act, equals at least 150% immediately after such borrowing, which, in certain circumstances, may restrict our ability to borrow or issue debt securities or preferred stock.

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The amount of leverage that we may employ will depend on GECM’s and our Board’s assessments of market and other factors at the time of any proposed borrowing or issuance of debt securities or preferred stock. We cannot assure you that we will be able to obtain lines of credit at all or on terms acceptable to us.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

The economy is subject to periodic downturns that, from time to time, result in recessions or more serious adverse macroeconomic events. Our portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay loans or notes during these periods. Therefore, our non-performing assets may increase and the value of our portfolio may decrease during these periods as we are required to record the market value of our investments. Adverse economic conditions may also decrease the value of collateral securing some of our investments and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants in its agreements with us or other lenders could lead to defaults and, potentially, acceleration of the time when the debt obligations are due and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize the portfolio company’s ability to meet its obligations under the debt that we hold. We may incur additional expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided significant managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding and subordinate all or a portion of our claim to that of other creditors.

Uncertainty about the financial stability of the United States and of several countries in the European Union and China could have a significant adverse effect on our business, financial condition and results of operations.

Due to federal budget deficit concerns, S&P Global Ratings downgraded the federal government’s credit rating from AAA to AA+ for the first time in history on August 5, 2011. Further downgrades or warnings regarding further downgrades by S&P Global Ratings or other rating agencies, and the United States government’s credit and deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt portfolio and our ability to access the debt markets on favorable terms. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the value of our common stock.

Protectionism, other governmental causes of recessions and other negative economic factors may increase. Risks resulting from any future debt crisis in Europe or any similar crisis could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in these countries and the financial condition of European financial institutions. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and defaults on consumer debt and home prices, among other factors. We cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy. To the extent uncertainty regarding the United Kingdom or the European Union negatively impacts consumer confidence, market conditions and credit factors, our business, financial condition and results of operations could be materially adversely affected.

In October 2014, the Federal Reserve announced that it was concluding its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserve’s holdings of long-term securities. It is unclear what effect, if any, the conclusion of the Federal Reserve’s bond-buying program has had or will have on the value of our investments. However, it is possible that, without quantitative easing by the Federal Reserve, these developments, along with the United States government’s credit and deficit concerns and the European sovereign debt crisis, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. The target range for the federal funds rate may increase and cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In June 2018, the Federal Reserve increased the federal funds rate to 2.00% and indicated further increases in the future, subject to economic conditions.

In the second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from a continued sell-off of shares trading in Chinese markets. In August 2015, Chinese authorities sharply devalued China’s currency. These market and economic disruptions affected, and these or similar market and economic disruptions may in the future affect, the U.S. capital markets, which could adversely affect our business.

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In June 2016, the United Kingdom voted to leave the European Union. It is not possible to ascertain the precise impact these events may have on us from an economic, financial or regulatory perspective but any such impact could have material adverse consequences for us or our portfolio companies.

The U.S. Congress has passed, and the President signed into law on December 22, 2017, a tax reform bill that, among other things, significantly changed the taxation of business entities (including by significantly lowering corporate tax rates), the deductibility of interest expense, and the timing in which certain income items are recognized. Additionally, the Trump administration has called for significant change to U.S. trade, healthcare, immigration, foreign, and government regulatory policy. In this regard, there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy. To the extent the U.S. Congress or Trump administration implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Some particular areas identified as subject to potential change, amendment or repeal include the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including the Volcker Rule and various swaps and derivatives regulations, credit risk retention requirements and the authorities of the Federal Reserve, the Financial Stability Oversight Council and the SEC. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial condition, operating results and cash flows. Until we know what policy changes are made and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Changes in tax laws, including recently enacted U.S. tax reform legislation, could have a negative effect on us.

Recently enacted tax reform legislation has made substantial changes to U.S. tax law, including new tax rates, immediate expensing of certain capital expenses and significant limitations on deductibility of interest. This legislation could have significant effects on us and on an investment in our shares, some of which may be adverse. The magnitude of the net impact remains uncertain at this time and is subject to any other regulatory or administrative developments, including any regulations or other guidance promulgated by the Internal Revenue Service (the “IRS”).

We may acquire other funds, portfolios of assets or pools of debt, and those acquisitions may not be successful.

We may acquire other funds, portfolios of assets or pools of debt investments. Any such acquisition program has a number of risks, including, among others:

• management’s attention will be diverted from running our existing business by efforts to source, negotiate, close and integrate acquisitions;

• our due diligence investigation of potential acquisitions may not reveal risks inherent in the acquired business or assets;

• we may over-value potential acquisitions, resulting in dilution to you, incurrence of excessive indebtedness, asset write downs and negative perception of our common stock;

• your interest in GECC may be diluted by the issuance of additional shares of our common stock or preferred stock;

• we may borrow to finance acquisitions, and there are risks associated with borrowing as described in this prospectus;

• GECM has an incentive to increase our assets under management in order to increase its fee stream, which may not be aligned with your interests;

• we and GECM may not successfully integrate any acquired business or assets; and

• GECM may compensate the existing managers of any acquired business or assets in a manner that results in the combined company taking on excessive risk.

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Our failure to maintain our status as a BDC would reduce our operating flexibility.

We have elected to be regulated as a BDC under the Investment Company Act. The Investment Company Act imposes numerous constraints on the operations of BDCs and their external advisers. For example, BDCs are required to invest at least 70% of their gross assets in specified types of securities, primarily in private companies or illiquid U.S. public companies below a certain market capitalization, cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. Furthermore, any failure to comply with the requirements imposed on BDCs by the Investment Company Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, upon approval of a majority of our voting securities (as defined under the Investment Company Act), we may elect to withdraw our status as a BDC. If we decide to withdraw our BDC election, or if we otherwise fail to qualify, or to maintain our qualification, as a BDC, we may be subject to substantially greater regulation under the Investment Company Act as a closed-end management investment company. Compliance with such regulations would significantly decrease our operating flexibility and would significantly increase our costs of doing business.

Regulations governing our operations as a BDC affect our ability to raise additional capital and the way in which we do so. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, referred to collectively as “senior securities,” up to the maximum amount permitted under the Investment Company Act. Under the provisions of the Investment Company Act applicable to BDCs, we are permitted to issue senior securities (e.g., notes and preferred stock) in amounts such that our asset coverage ratio, as defined in the Investment Company Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

If we issued preferred stock, the preferred stock would rank “senior” to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights including, for example, the right to elect one or more of our directors, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest.

We are not generally able to issue and sell shares of our common stock at a price below net asset value per share. We may, however, sell shares of our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our Board determines that such sale is in our and our stockholders’ best interests. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, equals or closely approximates the market value of such securities (less any distributing commission or discount calculated). Certain sales of our common stock below net asset value per share also require approval by our stockholders in accordance with the Investment Company Act. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then our existing common stockholders’ percentage ownership at that time will decrease, and they will experience dilution.

Our common stock price may be volatile and may decrease substantially, and you may lose money in connection with an investment in our shares.

The trading price of our common stock will likely fluctuate substantially. The price of our common stock may increase or decrease, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:

• price and volume fluctuations in the overall stock market from time to time;

• investor demand for our shares;

• significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies;

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• exclusion of our common stock from certain indices, such as the Russell 2000 Financial Services Index, which could reduce the ability of certain investment funds to own our common stock and put short-term selling pressure on our common stock;

• changes in regulatory policies or tax guidelines with respect to RICs or BDCs;

• failure to qualify as a RIC, or the loss of RIC status;

• any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

• changes, or perceived changes, in the value of our portfolio investments;

• departures of GECM’s key personnel;

• operating performance of companies comparable to GECC; or

• general economic conditions and trends and other external factors.

If the price of shares of our common stock decreases, you may lose money if you were to sell your shares of our common stock.

In addition, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Due to the potential volatility of the price of our securities, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

Our Board may change our investment objectives, operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.

Our Board has the authority to modify or waive our investment objectives, current operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results, and value of our securities. However, the effects might be adverse, which could negatively impact our ability to pay our stockholders dividends or other distributions and cause you to lose all or part of your investment.

We may have difficulty paying our required distributions under applicable tax rules if we recognize income before or without receiving cash representing such income.

For U.S. federal income tax purposes, we may be required to include in income certain amounts before our receipt of the cash attributable to such amounts, such as original issue discount (“OID”), which may arise if we receive warrants in connection with the making of a loan or possibly in other circumstances, or PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. For example, such OID or increases in loan balances as a result of PIK interest will be included in income before we receive any corresponding cash payments. Also, we may be required to include in income other amounts that we will not receive in cash, including, for example, non-cash income from PIK securities, deferred payment securities and hedging and foreign currency transactions. In addition, we intend to seek debt investments in the secondary market that represent attractive risk-adjusted returns, taking into account both stated interest rates and current market discounts to par value. Such market discount may be included in income before we receive any corresponding cash payments.

Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the U.S. federal income tax requirement to distribute generally an amount equal to at least 90% of our investment company taxable income to maintain our status as a RIC. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify as a RIC and thus become subject to additional corporate-level taxes.

However, in order to satisfy the annual distribution requirement for a RIC, we may, but have no current intention to, declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes.

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We may expose ourselves to risks associated with the inclusion of non-cash income prior to receipt of cash.

To the extent we invest in OID instruments, including PIK loans, zero coupon bonds, and debt securities with attached warrants, investors will be exposed to the risks associated with the inclusion of such non-cash income in taxable and accounting income prior to receipt of cash.

The deferred nature of payments on PIK loans creates specific risks. Interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the deferred payments are due in cash at the maturity of the loan. Since the payment of PIK income does not result in cash payments to us, we may also have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations (and thus hold higher cash or cash equivalent balances, which could reduce returns) to pay our expenses or make distributions to stockholders in the ordinary course of business, even if such loans do not default. An election to defer PIK interest payments by adding them to principal increases our gross assets and, thus, increases future base management fees to GECM and, because interest payments will then be payable on a larger principal amount, the PIK election also increases GECM’s future income incentive fees at a compounding rate. The deferral of interest on a PIK loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan.

More generally, market prices of OID instruments are more volatile because they are impacted to a greater extent by interest rate changes than instruments that pay interest periodically in cash. Ordinarily, OID would also create the risk of non-refundable cash payments to GECM, based on non-cash accruals that may never be realized; however, this risk is mitigated since the Investment Management Agreement requires GECM to defer any incentive fees on accrued but unpaid income, the effect of which is that income incentive fees otherwise payable with respect to accrued unpaid income become payable only if, as, when and to the extent cash is received by us or our consolidated subsidiaries in respect thereof.

Additionally, we will be required under the tax laws to make distributions of non-cash income to stockholders without receiving any cash. Such required cash distributions may have to be paid from the sale of our assets without investors being given any notice of this fact. The required recognition of non-cash income, including PIK and OID interest, for U.S. federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of our taxable income that must, nevertheless, be distributed in cash to investors to avoid us being subject to corporate level taxation.

Further, our investment in Avanti, which represented approximately 21% of our investment portfolio (excluding cash and short-term investments) as of June 30, 2018 and 40% of our total investment income for the six months ended June 30, 2018, has resulted in significant PIK interest, which significantly increases our exposure to the aforementioned risks. The conversion of Avanti’s Existing Notes to equity has resulted in us owning more Avanti common shares which are not expected to generate cash dividends. Please see “—Risks Relating to Our Investments—We may lose all of our investment in Avanti.”

We may choose to pay distributions in our own stock, in which case you may be required to pay tax in excess of the cash you receive.

We may distribute a portion of our taxable distributions in the form of shares of our stock. Under applicable provisions of the Code, distributions payable in cash or in shares of stock at the election of stockholders may be treated as a taxable distribution. The IRS has issued guidance stating that this rule will apply even if the total amount of cash that may be distributed is limited to no more than 20% of the total distribution and certain other conditions are met. If we decide to make any distributions consistent with this guidance that are payable in part in our stock, taxable stockholders receiving such distribution will be required to include the full amount of the distribution (whether received in cash, stock or a combination thereof) as ordinary income (or as a long-term capital gain to the extent such distribution is properly designated as a capital gain dividend) to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such distribution in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distribution, including in respect to all or a portion of such distribution that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock, in order to pay taxes owed on distribution, such sales may put downward pressure on the trading price of our common stock.

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We may expose our self to risks if we engage in hedging transactions.

If we engage in hedging transactions, we may expose our self to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is generally anticipated because we may not be able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged.

Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.

We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under the Code.

No assurance can be given that we will be able to qualify for and maintain RIC tax treatment under the Code. To maintain RIC tax treatment under the Code, we must meet certain annual distribution, source of income and asset diversification requirements.

The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Because we may use debt financing, we may be subject to asset coverage ratio requirements under the Investment Company Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to make the required distributions, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.

The source of income requirement will be satisfied if we obtain at least 90% of our income for each year from dividends, interest, gains from the sale of stock or securities or similar sources.

The asset diversification requirement will be satisfied if we meet asset diversification requirements at the end of each quarter of our taxable year. We expect to satisfy the asset diversification requirements, but our business model calls for concentration in a relatively small number of portfolio companies. Failure to meet the asset diversification requirements could result in us having to dispose of investments quickly in order to prevent the loss of RIC status. Because most of our investments will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Further, the illiquidity of our investments may make them difficult or impossible to dispose of in a timely manner.

If we fail to qualify for RIC tax treatment for any reason and become subject to corporate U.S. federal income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, the amount of our distributions and the value of your GECC shares.

The incentive fee structure and the formula for calculating the management fee may incentivize GECM to pursue speculative investments, advise us to use leverage when it may be unwise to do so, or advise us to refrain from reducing debt levels when it would otherwise be appropriate to do so.

The incentive fee payable by us to GECM creates an incentive for GECM to pursue investments on our behalf that are riskier or more speculative than would be the case in the absence of such a compensation arrangement. The incentive fee payable to GECM is calculated based on a percentage of our return on invested capital. In addition, GECM’s base management fee is calculated on the basis of our gross assets, including assets acquired through the use of leverage. This may encourage GECM to use leverage to increase the aggregate amount of and the return on our investments, even when it may not be appropriate to do so, and to refrain from reducing debt levels when it would otherwise be appropriate to do so. The use of leverage increases our likelihood of default, which would impair the value of your shares. In addition, GECM will receive the incentive fee based, in part, upon net capital gains realized on our investments. Unlike that portion of the incentive fee based on income, there will be no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, GECM may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in us investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

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We may invest in the securities and instruments of other investment companies, including private funds, and we will bear our ratable share of any such investment company’s expenses, including management and performance fees. We will also remain obligated to pay management and incentive fees to GECM with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our stockholders will bear its share of the management and incentive fee payable to GECM, as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.

In addition, if we purchase our debt instruments and such purchase results in our recording a net gain on the extinguishment of debt for financial reporting and tax purposes, such net gain will be included in our pre-incentive fee net investment income for purposes of determining the income incentive fee payable to GECM under the Investment Management Agreement.

Finally, the incentive fee payable by us to GECM also may create an incentive for GECM to invest on our behalf in instruments that have a deferred interest feature, such as investments with PIK provisions. Under these investments, we would accrue the interest over the life of the investment but would typically not receive the cash income from the investment until the end of the term or upon the investment being called by the issuer. Our net investment income used to calculate the income portion of our incentive fee, however, includes accrued interest. The portion of the incentive fee that is attributable to deferred interest, such as PIK, will not be paid to GECM until we receive such interest in cash. Even though such portion of the incentive fee will be paid only when the accrued income is collected, the accrued income is capitalized and included in the calculation of the base management fee. In other words, when deferred interest income (such as PIK) is accrued, a corresponding income incentive fee (if any) is also accrued (but not paid) based on that income. After the accrual of such income, it is capitalized and added to the debt balance, which increases our total assets and thus the base management fee paid following such capitalization. If any such interest is reversed in connection with any write-off or similar treatment of the investment, we will reverse the income incentive fee accrual and an income incentive fee will not be payable with respect to such uncollected interest. If a portfolio company defaults on a loan, it is possible that accrued interest previously used in the calculation of whether GECM met the hurdle rate to earn the incentive fee will become uncollectible.

A general increase in interest rates will likely have the effect of making it easier for GECM to receive incentive fees, without necessarily resulting in an increase in our net earnings.

Given the structure of the Investment Management Agreement, any general increase in interest rates, which are currently near historic lows, will likely have the effect of making it easier for GECM to meet the quarterly hurdle rate for payment of income incentive fees under the Investment Management Agreement without any additional increase in relative performance on the part of GECM. In addition, in view of the catch-up provision applicable to income incentive fees under the Investment Management Agreement, GECM could potentially receive a significant portion of the increase in our investment income attributable to such a general increase in interest rates. If that were to occur, our increase in net earnings, if any, would likely be significantly smaller than the relative increase in GECM’s income incentive fee resulting from such a general increase in interest rates.

GECM has the right to resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

GECM has the right, under the Investment Management Agreement, to resign at any time upon not more than 60 days’ written notice, whether we have found a replacement or not. If GECM resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption; our financial condition, business and results of operations, as well as our ability to pay distributions, are likely to be adversely affected, and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by our investment adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective and current investment portfolio may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations and cause you to lose your investment.

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We incur significant costs as a result of being a publicly traded company.

As a publicly traded company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act, the Dodd-Frank Act and other rules implemented by our government.

Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.

We and our portfolio companies are subject to applicable local, state and federal laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and you, potentially with retroactive effect. Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail our self of new or different opportunities. Such changes could result in material differences to the strategies and plans and may result in our investment focus shifting from the areas of expertise of GECM to other types of investments in which the investment committee may have less expertise or little or no experience. Specifically, tax reform legislation could have an adverse impact on us, the credit markets and our portfolio companies, notwithstanding the reduction in corporate tax rates. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment in us.

In December 2015, the SEC proposed a new rule to regulate the use of derivatives by registered investment companies that applies to BDCs, including us. If the rule goes into effect, it could limit our ability to invest or remain invested in derivatives. In addition, other future regulatory developments may impact our ability to invest or remain invested in derivatives. Legislation or regulation may also change the way in which we are regulated. We cannot predict the effects of any new governmental regulation that may be implemented on our ability to use swaps or any other financial derivative product, and there can be no assurance that any new governmental regulation will not adversely affect our ability to achieve our investment objective.

Recently enacted legislation permits us to incur additional debt.

On March 23, 2018, the Consolidated Appropriations Act of 2018, which includes the Small Business Credit Availability Act (the “Act”), was signed into law. The Act amends the Investment Company Act to permit a BDC to reduce the required minimum asset coverage ratio applicable to it from 200% to 150%, subject to certain requirements described therein. This reduction significantly increases the amount of debt that BDCs may incur.

Prior to the enactment of the Act, BDCs were required to maintain an asset coverage ratio of at least 200% in order to incur debt or to issue other senior securities. Generally, for every $1.00 of debt incurred or in senior securities issued, a BDC was required to have at least $2.00 of assets immediately following such incurrence or issuance. For those BDCs that satisfy the Act’s disclosure and approval requirements, the minimum asset coverage ratio is reduced such that for every $1.00 of debt incurred or in senior securities issued, a BDC must now have at least $1.50 of assets.

At our Annual Meeting, which was held on May 3, 2018, a majority of our stockholders approved the application of the modified minimum asset coverage requirements set forth in Section 61(a)(2) of the Investment Company Act, to the Company. As a result of such approval, and subject to satisfying certain ongoing disclosure requirements, effective May 4, 2018 the asset coverage ratio test applicable to the Company was decreased from 200% to 150%, permitting us to incur additional leverage and thereby potentially increasing the risk of an investment in us.

Incurring additional indebtedness could increase the risk in investing in our Company.

Pursuant to the Act, at the Annual Meeting our stockholders approved of the reduction of our required minimum asset coverage ratio from 200% to 150%, permitting us to incur additional leverage. The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. If we incur such additional leverage, you may experience increased risks of investing in our common stock.

As of June 30, 2018, we had approximately $79.0 million of total outstanding indebtedness under two series of senior securities (unsecured senior notes)—the 2022 notes and the 2025 notes—and our asset coverage ratio was 255%. Holders of our 2022 notes and 2025 notes have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and such holders may seek to recover against our assets in the event of a default.

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If we are unable to meet the financial obligations under the 2022 notes or the 2025 notes, the holders of such indebtedness would have a superior claim to our assets over our common stockholders in the event of a default by us. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make distributions with respect to our common stock. Our ability to service any debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. Moreover, as the base management fee payable to GECM, our investment adviser, is payable based on the average value of our total assets, including those assets acquired through the use of leverage, GECM will have a financial incentive to incur leverage, which may not be consistent with our stockholders’ interests. In addition, our common stockholders bear the burden of any increase in our fees or expenses as a result of our use of leverage, including interest expenses and any increase in the base management fee payable to GECM.

If our asset coverage ratio falls below the required limit, we will not be able to incur additional debt until we are able to comply with the asset coverage ratio applicable to us. This could have a material adverse effect on our operations, and we may not be able to make distributions to stockholders. The actual amount of leverage that we employ will depend on GECM’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

Incurring additional leverage may magnify our exposure to risks associated with changes in interest rates, including fluctuations in interest rates which could adversely affect our profitability.

If we incur additional leverage, general interest rate fluctuations may have a more significant negative impact on our financial condition and results of operations than they would have absent such additional incurrence, and, accordingly, may have a material adverse effect on our investment objectives and rate of return on investment capital. A portion of our income will depend upon the difference between the rate at which we borrow funds and the interest rate on the debt securities in which we invest. Because we may borrow money to make investments and may issue debt securities, preferred stock or other securities, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities, preferred stock or other securities and the rate at which we invest these borrowed funds.

We expect that a majority of our investments in debt will continue to be at floating rates with a floor. As a result, a significant increase in market interest rates could result in an increase in our non-performing assets and a decrease in the value of our portfolio because our floating-rate loan portfolio companies may be unable to meet higher payment obligations. In periods of rising interest rates, our cost of funds would increase, resulting in a decrease in our net investment income. Incurring additional leverage will magnify the impact of an increase to our cost of funds. In addition, a decrease in interest rates may reduce net income, because new investments may be made at lower rates despite the increased demand for our capital that the decrease in interest rates may produce. To the extent our additional borrowings are in fixed-rate instruments, we may be required to invest in higher-yield securities in order to cover our interest expense and maintain our current level of return to stockholders, which may increase the risk of an investment in our securities.

There is, and will be, uncertainty as to the value of our portfolio investments.

Under the Investment Company Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us in accordance with our written valuation policy, with our Board having final responsibility for overseeing, reviewing and approving, in good faith, our estimate of fair value. Often, there will not be a public market for the securities of the privately held companies in which we invest. As a result, we will value these securities quarterly at fair value based on input from management, third-party independent valuation firms and our audit committee, with the oversight, review and approval of our Board. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments.”

The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are subjective and dependent on a valuation process approved and overseen by our Board. Factors that may be considered in determining the fair value of our investments include, among others, estimates of the collectability of the principal and interest on our debt investments and expected realization on our equity investments, as well as external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of private securities and private companies and small cap public companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. Our determinations of fair value may differ

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materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially misstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our securities based on an overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling securities during a period in which the net asset value understates the value of our investments will receive a lower price for their securities than the value of our investments might otherwise warrant.

Our financial condition and results of operations depend on our ability to effectively manage and deploy capital.

Our ability to achieve our investment objective depends on our ability to effectively manage and deploy capital, which depends, in turn, on GECM’s ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.

Accomplishing our investment objective on a cost-effective basis is largely a function of GECM’s handling of the investment process, its ability to provide competent, attentive and efficient services and its access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, GECM may also be called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment.

Even if we are able to grow and build out our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. Our results of operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions.

We may hold assets in cash or short-term treasury securities in situations where we or GECM expects downward pricing in the high yield market. Our strategic decision not to be fully invested may, from time to time, reduce funds available for distribution and cause downward pressure on the price of our common stock.

The failure of cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning, could impair our ability to conduct business effectively.

The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events anticipated or unanticipated in our disaster recovery systems, or a failure in externally provided data systems, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. Our ability to effectively conduct our business could be severely compromised. The financial markets we operate in are dependent upon third-party data systems to link buyers and sellers and provide pricing information.

We depend heavily upon computer systems to perform necessary business functions. Our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we will experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss, respectively.

Terrorist attacks, acts of war or natural disasters may affect the market for our common stock, impact the businesses in which we invest and harm our business, operating results and financial condition.

Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

Provisions of the Maryland General Corporation Law and our organizational documents could deter takeover attempts and have an adverse impact on the prices of our common stock.

The Maryland General Corporation Law and our organizational documents contain provisions that may discourage, delay or make more difficult a change in control of GECC or the removal of our directors. We are subject to the

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Maryland Business Combination Act and the Investment Company Act. If our Board does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer. Our Board could amend our bylaws to repeal our current exemption from the Control Share Acquisition Act; however, our Board will not amend our bylaws to repeal the current exemption from the Control Share Acquisition Act without a formal determination by the Board that doing so would be in the best interests of our stockholders and without first notifying the SEC staff. The Control Share Acquisition Act also may make it more difficult for a third party to obtain control of GECC and increase the difficulty of consummating such a transaction.

Our Board is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.

Under Maryland General Corporation Law and our organizational documents, our Board is authorized to classify and reclassify any authorized but unissued shares of stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series, our Board will be required by Maryland law and our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, our Board could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve premium prices for holders of our common stock or otherwise be in their best interest. The cost of any such reclassification would be borne by our common stockholders. Certain matters under the Investment Company Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote as a separate class from the holders of common stock on a proposal to cease operations as a BDC. In addition, the Investment Company Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. The issuance of preferred shares convertible into shares of common stock may also reduce the net income and net asset value per share of our common stock upon conversion. These effects, among others, could have an adverse effect on your investment in our common stock.

GECM may not be able to achieve the same or similar returns as those achieved by MAST Capital, including as a result of operating under the constraints imposed upon us as a BDC.

MAST Capital’s track record and achievements are not necessarily indicative of future results that will be achieved by GECM. We cannot assure you that we will be able to achieve the results realized by prior investment vehicles managed by MAST Capital.

While senior members of GECM’s investment team have significant experience investing in debt securities of middle-market companies, GECM is a new entity and has limited investment advisory experience managing a BDC. Therefore, GECM may not be able to successfully operate our business or achieve our investment objective. As a result, an investment in our shares entails more risk than the shares of a comparable company with a substantial operating history.

GECM’s lack of experience in managing a portfolio of assets under RIC, BDC and Investment Company Act constraints may hinder our ability to take advantage of attractive investment opportunities and, as a result, achieve our investment objective.

The Investment Company Act and the Code impose numerous constraints on the operations of registered investment companies, BDCs and RICs that do not apply to the other types of investment vehicles. Moreover, qualification for RIC tax treatment requires satisfaction of certain source-of-income, distribution and asset diversification requirements. The failure to comply with these provisions in a timely manner could prevent us from qualifying as a RIC or could force us to pay unexpected taxes and penalties, which could be material. GECM’s lack of experience in managing a portfolio of assets under such constraints may hinder our ability to take advantage of attractive investment opportunities and, as a result, achieve our investment objective.

We are a new company with limited operating history, and GECM has limited investment advisory experience managing a BDC.

We were formed on April 22, 2016 and commenced operations following the closing of the Merger on November 3, 2016. As a BDC, we are subject to the regulatory requirements of the SEC, in addition to the specific regulatory requirements applicable to BDCs under the Investment Company Act and RICs under the Code. GECM has not had any prior experience operating under this regulatory framework, and we may incur substantial additional costs, and expend significant time or other resources, to do so.

We have a limited operating history on which you can evaluate an investment in us or our prior performance. The results of any other funds or clients managed by affiliates of GECM, which have or have had an investment program that is

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similar to, or different from, our investment program is not indicative of the results that we may achieve. We expect to have a different investment portfolio and may employ different investment strategies and techniques from other funds and clients advised by affiliates of GECM. Accordingly, our results may differ from and are independent of the results obtained by such other funds and clients. Moreover, past performance is no assurance of future returns. We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective and that the value of our common stock could decline substantially or your investment in us could become worthless.

We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.

We are and will remain an “emerging growth company,” as defined in the JOBS Act, until the earliest of (a) December 31, 2021, (b) the last day of the fiscal year (i) in which we have total annual gross revenue of at least $1.0 billion or (ii) in which we are deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700.0 million as of the end of the previous second fiscal quarter, and (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an “emerging growth company” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our securities less attractive because we will rely on some or all of these exemptions. If some investors find our securities less attractive as a result, there may be a less active and more volatile trading market for our securities.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. To the extent we take advantage of the extended transition period for complying with new or revised accounting standards, it will be more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.

There are significant potential conflicts of interest that could impact our investment returns.

Certain of our executive officers and directors, and members of the investment committee of GECM, serve or may serve as officers, directors or principals of other entities and affiliates of GECM and investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders’ best interests or that may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. For example, Peter A. Reed, our President, Chief Executive Officer and chairman of our Board is GECM’s Chief Investment Officer and Chief Executive Officer of the second largest beneficial owner of our stock, GEC.

Although funds managed by GECM may have different primary investment objectives than we do, they may from time to time invest in asset classes similar to those targeted by us. GECM is not restricted from raising an investment fund with investment objectives similar to ours. Any such funds may also, from time to time, invest in asset classes similar to those targeted by us. It is possible that we may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers affiliated with GECM.

We will pay management and incentive fees to GECM, and will reimburse GECM for certain expenses it incurs. In addition, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments.

GECM’s management fee is based on a percentage of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and GECM may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur indebtedness.

The part of the incentive fee payable by us that relates to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan or note that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

The Investment Management Agreement renews for successive annual periods if approved by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a

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majority of our directors who are not interested persons. However, both we and GECM have the right to terminate the agreement without penalty upon 60 days’ written notice to the other party. Moreover, conflicts of interest may arise if GECM seeks to change the terms of the Investment Management Agreement, including, for example, the terms for compensation.

Pursuant to the Administration Agreement, we pay GECM our allocable portion of overhead and other expenses incurred by GECM in performing its obligations under the Administration Agreement, including our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

As a result of the arrangements described above, there may be times when our management team has interests that differ from those of our stockholders, giving rise to a conflict.

Our stockholders may have conflicting investment, tax and other objectives with respect to their investments in us. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of our investments, the structure or the acquisition of our investments, and the timing of disposition of our investments. As a consequence, conflicts of interest may arise in connection with decisions made by GECM, including with respect to the nature or structuring of our investments, that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders’ individual tax situations. In selecting and structuring investments appropriate for us, GECM will consider the investment and tax objectives of us and our stockholders, as a whole, not the investment, tax or other objectives of any stockholder individually.

Shares of closed-end investment companies, including BDCs, frequently trade at a discount from their net asset value.

Shares of closed-end investment companies, including BDCs, frequently trade at a discount from their net asset value. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share of common stock may decline.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our Board determines that such sale is in the best interests of GECC and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, equals the fair value of such securities (less any distributing commission or discount calculated). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then your percentage ownership at that time will decrease, and you may experience dilution.

You may not receive distributions or our distributions may not grow over time and a portion of our distributions may be a return of capital.

We intend to make distributions on a monthly basis to our stockholders out of assets legally available for distribution (i.e., not subject to any legal restrictions under Maryland law on the distribution thereof). We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this document. Due to the asset coverage test applicable to us under the Investment Company Act as a BDC, we may be limited in our ability to make distributions.

When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated earnings and profits. Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of an investor’s basis in our stock and, assuming that an investor holds our stock as a capital asset, thereafter as a capital gain. Stockholders who periodically receive the payment of a distribution consisting of a return of capital may be under the impression that they are receiving net profits when they are not. Stockholders should not assume that the source of a distribution from us is net profit.

We currently intend to distribute realized net capital gains (i.e., net long term capital gains in excess of short term capital losses), if any, at least annually, we may in the future decide to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated as if you had received an actual distribution of the capital gains we retain and reinvested the net after tax proceeds in GECC. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you.

Our current intention is to make any distributions in additional shares of our common stock under our dividend reinvestment plan out of assets legally available therefor, unless you elect to receive your distributions and/or long-term capital gains distributions in cash. If you hold shares in the name of a broker or financial intermediary, you should contact the broker or financial intermediary regarding your election to receive distributions in cash.

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We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the Investment Company Act or if distributions are limited by the terms of any of our borrowings.

Stockholders may experience dilution in their ownership percentage if they do not participate in our dividend reinvestment plan.

All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who receive distributions in shares of common stock may experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.

Existing stockholders may incur dilution if, in the future, we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock.

The Investment Company Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. Our shares might trade at premiums that are unsustainable or at discounts from net asset value.

Shares of BDCs like us may, during some periods, trade at prices higher than their net asset value per share and, during other periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net asset value per share. The perceived value of our investment portfolio may be affected by a number of factors including perceived prospects for individual companies we invest in, market conditions for common stock generally, for initial public offerings and other exit events for venture capital backed companies, and the mix of companies in our investment portfolio over time. Negative or unforeseen developments affecting the perceived value of companies in our investment portfolio could result in a decline in the trading price of our common stock relative to our net asset value per share.

The possibility that our shares will trade at a discount from net asset value or at premiums that are unsustainable are risks separate and distinct from the risk that our net asset value per share will decrease. The risk of purchasing shares of a BDC that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon changes in premium or discount levels than upon increases or decreases in net asset value per share.

Future offerings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which could dilute our existing stockholders and may be senior to our common stock for the purposes of distributions, may harm the value of our common stock.

In the future, we may attempt to increase our capital resources by making offerings of debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes and classes of preferred stock or common stock, subject to the restrictions of the Investment Company Act. Upon a liquidation of our company, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings by us may dilute the holdings of our existing stockholders or reduce the value of our common stock, or both. Any preferred stock we may issue would have a preference on distributions that could limit our ability to make distributions to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in us. In addition, proceeds from a sale of common stock will likely be used to increase our total assets or to pay down our borrowings, among other uses. This would increase our asset coverage ratio and permit us to incur additional leverage under rules pertaining to BDCs by increasing our borrowings or issuing senior securities such as preferred stock or additional debt securities.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Some of the statements in this prospectus (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or financial conditions. The forward-looking statements contained in this prospectus involve a number of risks and uncertainties, including statements concerning:

• our, or our portfolio companies’, future business, operations, operating results or prospects;

• the return or impact of current and future investments;

• the impact of a protracted decline in the liquidity of credit markets on our business;

• the impact of fluctuations in interest rates on our business;

• the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;

• our contractual arrangements and relationships with third parties;

• the general economy and its impact on the industries in which we invest;

• the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;

• our expected financings and investments;

• the adequacy of our financing resources and working capital;

• the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;

• the timing of cash flows, if any, from the operations of our portfolio companies;

• the timing, form and amount of any dividend distributions; and

• our ability to maintain our qualification as a RIC and as a BDC.

We use words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “could,” “may,” “plan” and similar words to identify forward-looking statements. The forward-looking statements contained in this prospectus involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth under “Risk Factors.”

We have based the forward-looking statements included in this prospectus on information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC.

You should understand that, under Sections 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with any offering of securities pursuant to this prospectus or in any report that we file under the Exchange Act.

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USE OF PROCEEDS

All of the Secondary Shares offered by the Selling Stockholders pursuant to this prospectus will be sold by the Selling Stockholders for their own account. We will not receive any of the proceeds from these sales. The Selling Stockholders have or will pay all fees and expenses incurred in connection with the registration and offering of the Secondary Shares pursuant to the Registration Rights Agreement, including all registration and filing fees, any other regulatory fees, printing and delivery expenses, listing fees and expenses, fees and expenses of counsel, independent certified public accountants, and any special experts retained by us, and any underwriting discounts and commissions and transfer taxes. The Selling Stockholders have reimbursed us for approximately $762,643 for fees and expenses invoiced to date in connection with the registration and disposition of the Secondary Shares. We have incurred, and estimate that we will incur, an additional $305,000 of fees and expenses for a total of approximately $1,072,790 of fees and expenses, all of which are required to be reimbursed by the Selling Stockholders under the Registration Rights Agreement.

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SELLING STOCKHOLDERS

This prospectus relates to the possible resale of up to 7,000,268 shares of our common stock that are currently issued and outstanding. All of such Secondary Shares are held by the Selling Stockholders as noted in the table and footnotes below. The Selling Stockholders acquired their shares from us in connection with our Formation Transactions. In connection with the Formation Transactions, we entered into the Registration Rights Agreement pursuant to which we granted these holders registration rights.

The following table sets forth:

• the name of the Selling Stockholders;

• the number and percent of shares of our common stock that each Selling Stockholder beneficially owned prior to the offering for resale of the Secondary Shares under this prospectus;

• the number of Secondary Shares that may be offered for resale for the account of each Selling Stockholder under this prospectus, some or all of which Secondary Shares may be sold pursuant to this prospectus and any prospectus supplement; and

• the number and percent of shares of our common stock to be beneficially owned by each Selling Stockholder after an offering under this prospectus (assuming all of the offered Secondary Shares are sold by each Selling Stockholder).

The number of shares in the column “Number of Shares Being Offered” represents all of the Secondary Shares that such Selling Stockholder may offer under this prospectus. We do not know how long each of the Selling Stockholders will hold the Secondary Shares before selling them or how many Secondary Shares it will sell and we currently have no agreements, arrangements or understandings with any of the Selling Stockholders regarding the sale of any of the Secondary Shares under this registration statement. The Secondary Shares offered by this prospectus may be offered from time to time by the applicable Selling Stockholder listed below.

This table is prepared solely based on information supplied to us by the listed Selling Stockholder and any public documents filed with the SEC, and assumes the sale of all of the Secondary Shares. The applicable percentages of beneficial ownership are based on an aggregate of 10,652,401 shares of our common stock issued and outstanding on October 8, 2018, adjusted as may be required by rules promulgated by the SEC.

Stockholder	Shares Beneficially Owned Prior to Offering					Number of Shares Being Offered		Shares Beneficially Owned After  Offering
	Number		Percent					Number		Percent
Great Elm Capital Group, Inc.(1)		1,966,667		18.46	%		1,966,667		—		—
MAST Credit Opportunities I Master Fund Limited(2)		2,276,279		21.37	%		2,276,279		—		—
MAST Select Opportunities Master Fund, L.P.(2)		2,543,418		23.88	%		2,543,418		—		—
MAST Admiral Master Fund, L.P.(2)		154,497		1.45	%		154,497		—		—
MAST Select Opportunities, L.P.(2)		13,959		0.13	%		13,959		—		—

(1) An affiliate of our investment adviser, GECM.

(2) Each are private funds managed by MAST Capital.

Shares of our common stock sold by any of the Selling Stockholders will generally be freely tradable. Sales of substantial amounts of our common stock, including by the Selling Stockholders, or the availability of such common stock for sale, whether or not sold, could adversely affect the prevailing market prices for our common stock.

Registration Rights

We entered into the Registration Rights Agreement with GEC, MAST Credit Opportunities I Master Fund Limited, MAST Admiral Master Fund, L.P. and MAST Select Opportunities Master Fund, L.P., pursuant to which we granted these holders (the “Holders”) certain registration rights.

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The Selling Stockholders have or will pay all fees and expenses incurred in connection with the registration and offering of the Secondary Shares pursuant to the Registration Rights Agreement, including all registration and filing fees, any other regulatory fees, printing and delivery expenses, listing fees and expenses, fees and expenses of counsel, independent certified public accountants, and any special experts retained by us, and any underwriting discounts and commissions and transfer taxes.

Shelf Registration Statement

We agreed to file a shelf registration statement on Form N-2 under the Securities Act providing for a public offering of all of the registerable securities held by the Holders (the “Mandatory Registration”), which was required to be a “shelf” registration pursuant to Rule 415 under the Securities Act if the Company was eligible to do so. The filing was to happen as promptly as practicable on or after the date of the Subscription Agreement (as defined herein), but in no event later than 60 days following the closing under the Subscription Agreement.

Demand Registration

Commencing on the first anniversary of the filing of the registration statement for the Mandatory Registration, a majority of Holders of registration rights have the right to require us to file a registration statement on Form N-2 for a public offering of all or part of the registrable securities held by such Holders (a “Demand Registration). Each such request shall specify the aggregate number of registrable securities proposed to be sold and we agreed to file the registration statement in respect of such demand within 45 days after receiving the demand request, but we are not obligated to cause a registration statement with respect to such demand to be declared effective within 90 days after the effective date of a previous Demand Registration.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this prospectus.

Overview

We are a BDC that seeks to generate both current income and capital appreciation through debt and equity investments. Our investment focus is on debt obligations of middle-market companies for which quotations are typically available in the credit markets. We invest primarily in the debt of middle-market companies as well as small businesses, generally in the form of senior secured and unsecured notes, as well as in senior secured loans, junior loans and mezzanine debt. We will from time to time make equity investments as part of restructuring credits and in rare instances reserve the right to make equity investments directly.

On September 27, 2016, we and GECM entered into the Investment Management Agreement and the Administration Agreement, and, upon closing the Merger, we began to accrue obligations to our external investment manager under those agreements.

We have elected to be treated as a RIC for U.S. federal income tax purposes. As a RIC, we will not be taxed on our income to the extent that we distribute such income each year and satisfy other applicable income tax requirements. To qualify as a RIC, we must, among other things, meet source-of-income and asset diversification requirements and annually distribute to our stockholders generally at least 90% of our investment company taxable income on a timely basis. If we qualify as a RIC, we generally will not have to pay corporate level taxes on any income that we distribute to our stockholders.

All dollar amounts stated in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, other than per share amounts, are disclosed in thousands unless otherwise noted.

Formation Transactions

On June 23, 2016, we entered into a subscription agreement with GEC and the MAST Funds, dated as of June 23, 2016 (the “Subscription Agreement”), under which:

• On June 23, 2016, GEC contributed $30,000 in exchange for 1,966,667 shares of our common stock.

• On September 27, 2016 before we elected to be a BDC, the MAST Funds contributed to us the Initial GECC Portfolio that we valued at $90,000 in exchange for 5,935,800 shares of our common stock.

For financial reporting purposes, we have accounted for the contribution of the Initial GECC Portfolio as an asset acquisition per Topic 805, Business Combinations, of the Accounting Standards Codification (the “ASC”). For tax purposes, we recorded our basis in the Initial GECC Portfolio at the fair market value of the Initial GECC Portfolio as of the date of contribution.

Under the Subscription Agreement, upon consummation of the Merger, we became obligated to reimburse the costs incurred by GEC and the MAST Funds in connection with the Merger and the transactions contemplated by the Subscription Agreement.

Following the closing of the Merger, we entered into the Registration Rights Agreement with GEC and the MAST Funds.

Full Circle Merger

On June 23, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Full Circle. Following approval on October 31, 2016 of the Merger by Full Circle’s stockholders, on November 3, 2016:

• Full Circle merged into us resulting in our acquisition by operation of the Merger of Full Circle’s portfolio that we valued at $74,658 at November 3, 2016;

• We became obligated to issue an aggregate of 4,986,585 shares of our common stock to former Full Circle stockholders; and

• Our exchange agent paid a $5,393 special cash dividend to former Full Circle stockholders.

We accounted for the Merger as a business combination under ASC Topic 805 and Regulation S-X’s purchase accounting guidance. GECC was designated as the acquirer for accounting purposes. The difference between the fair value of Full Circle’s net assets and the consideration was recorded as a purchase accounting loss because the fair value of the assets acquired and liabilities assumed, as of the date of the Merger, was less than that of the merger consideration paid.

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Investments

Our level of investment activity varies substantially from period to period depending on many factors, including, among others, the amount of debt and equity capital available to middle-market companies from other sources, the level of merger and acquisition activity, pricing in the high yield and leveraged loan credit markets, our expectations of future investment opportunities, the general economic environment and the competitive environment for the types of investments we make.

As a BDC, our investments and the composition of our portfolio are required to comply with regulatory requirements. See “The Company—Regulation as a Business Development Company” and “Certain U.S. Federal Income Tax Considerations.”

Revenues

We generate revenue primarily in the form of interest on the debt investments that we hold. We may also generate revenue from dividends on the equity investments, capital gains on the disposition of investments, and certain lease, fee, or other income. Our investments in fixed income instruments generally have an expected maturity of three to five years, although we have no lower or upper constraint on maturity. Our debt investments generally pay interest quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock investments may defer payments of cash interest or dividends or PIK. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, due diligence fees, end-of-term or exit fees, fees for providing significant managerial assistance, consulting fees and other investment-related income.

Expenses

Our primary operating expenses include the payment of a base management fee, administration fees (including the allocable portion of overhead under the Administration Agreement), and, depending on our operating results, an incentive fee. The base management fee and incentive fee remunerates GECM for work in identifying, evaluating, negotiating, closing and monitoring our investments. Our Administration Agreement provides for reimbursement of costs and expenses incurred for office space rental, office equipment and utilities allocable to us under the Administration Agreement, as well as certain costs and expenses incurred relating to non-investment advisory, administrative or operating services provided by GECM or its affiliates to us. We also bear all other costs and expenses of our operations and transactions. Our expenses include interest on our outstanding indebtedness.

Critical Accounting Policies

Valuation of Portfolio Investments

We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our Board. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (1) are independent of us; (2) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary); (3) are able to transact for the asset; and (4) are willing to transact for the asset (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. However, short term debt investments with remaining maturities within 90 days are generally valued at amortized cost, which approximates fair value.

Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value, are valued at fair value using a valuation process consistent with our Board-approved policy. Our Board approves in good faith the valuation of our portfolio as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may impact the market quotations used to value some of our investments.

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The valuation process approved by our 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 independent valuation firms approved by our Board;

• Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of GECM;

• The fair value of smaller investments comprising in the aggregate less than 5% of our total capitalization may be determined by GECM in good faith in accordance with our valuation policy without the employment of an independent valuation firm; and

• Our audit committee recommends, and our Board determines, the fair value of the investments in our portfolio in good faith based on the input of GECM, our independent valuation firms (to the extent applicable) and the business judgment of our audit committee and our Board, respectively.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral; the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables; and enterprise values.

We prefer the use of observable inputs and minimize the use of unobservable inputs in our valuation process. Inputs refer broadly to the assumptions that market participants would use in pricing an asset. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing an asset developed based on the best information available in the circumstances.

Investments are classified in accordance with GAAP into the three broad levels as follows:

Level 1	Investments valued using unadjusted quoted prices in active markets for identical assets.
Level 2	Investments valued using other unadjusted observable market inputs, e.g. quoted prices for our securities in markets that are not active or quotes for comparable instruments.
Level 3	Investments that are valued using quotes for our securities or comparable instruments and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

All Level 3 investments that comprise more than 5% of the investments of GECC are valued by independent third party valuation firms. Although, our Board remains ultimately and solely responsible for the valuation of each of our investments.

Revenue Recognition

Interest and dividend income, including PIK income, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including OID, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment if such fees are fixed in nature. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, and end-of-term or exit fees that have a contingency feature or are variable in nature are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

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We may purchase debt investments at a discount to their face value. Discounts on the acquisition of corporate debt instruments are generally amortized using the effective-interest or constant-yield method, unless there are material questions as to collectability. For debt instruments where we are amortizing OID, when principal payments on the debt instrument are received in an amount in excess of the debt instrument’s amortized cost, the excess principal payments are recorded as interest income.

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

We measure 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 first in first out method. Net change in unrealized appreciation or depreciation reflects the net change in portfolio investment fair value 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.

Portfolio and Investment Activity

The following is a summary of our investment activity since our inception in April 2016:

Time Period	Acquisitions(1)		Dispositions(2)			Weighted Average Interest Rate End of  Period(3)
Formation Transactions	$	90,494	$	—
Merger		74,658		—
November 4, 2016 through December 31, 2016		42,006		(41,738	)		10.00	%
For the period ended December 31, 2016		207,158		(41,738	)
Quarter ended March 31, 2017		75,852		(78,758	)		9.87	%
Quarter ended June 30, 2017		21,395		(37,570	)		9.59	%
Quarter ended September 30, 2017		49,467		(18,884	)		9.62	%
Quarter ended December 31, 2017		53,163		(39,772	)		11.17	%
For the year ended December 31, 2017		199,877		(174,984	)
Quarter ended March 31, 2018		63,220		(29,069	)		11.05	%
Quarter ended June 30, 2018		37,927		(27,729	)		9.94	%
For the period ended June 30, 2018		101,147		(56,798	)
Since inception	$	508,182	$	(273,520	)

(1) Includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and PIK income. Investments in short-term securities, including United States Treasury Bills and money market mutual funds, were excluded

(2) Includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Investments in short-term securities, including United States Treasury Bills and money market mutual funds, were excluded

(3) Weighted average interest rate is based upon the stated coupon rate and par value of outstanding debt securities at the measurement date. Debt securities on non-accrual status are included in the calculation and are treated as having 0% as their applicable interest rate for purposes of this calculation.

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Portfolio Reconciliation

The following is a reconciliation of the investment portfolio for the six months ended June 30, 2018, the year ended December 31, 2017 and the period from inception through December 31, 2016. Investments in short-term securities, including United States Treasury Bills and money market mutual funds, were excluded from the table below.

	For the six months ended June 30, 2018			For the year ended December  31, 2017			For the period from inception  through December 31, 2016
Beginning Investment Portfolio	$	164,870		$	154,677		$	—
Portfolio Investments acquired via the Formation Transactions and the Merger		—			—			165,152
Portfolio Investments acquired(1)		101,147			199,878			42,006
Amortization of premium and accretion of discount, net		1,409			5,627			2,438
Portfolio Investments repaid or sold(2)		(56,798	)		(174,983	)		(41,738	)
Net change in unrealized appreciation (depreciation) on investments		(12,456	)		(23,962	)		(13,455	)
Net realized gain (loss) on investments		1,131			3,633			274
Ending Investment Portfolio	$	199,303		$	164,870		$	154,677

(1) Includes new investments, additional fundings (inclusive of those on revolving credit facilities), refinancings, and capitalized PIK income.

(2) Includes scheduled principal payments, prepayments, sales, and repayments (inclusive of those on revolving credit facilities).

During the three and six months ended June 30, 2018, inclusive of short-term securities, we recorded net change in unrealized depreciation of $(4,240) and $(12,462), respectively, of which $(2,681) and $0, respectively, was related to valuation of PIK interest receivable.

Portfolio Classifications

The following table shows the fair value of our portfolio of investments by asset class as of June 30, 2018, and December 31, 2017 and 2016:

	June 30, 2018					December 31, 2017					December 31, 2016
	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
Investments:
Debt Instruments	$	185,418		93.0	%	$	164,521		99.8	%	$	154,176		99.7	%
Equity Investments		13,971		7.0	%		349		0.2	%		433		0.3	%
Total Investments at Fair Value	$	199,389		100.0	%	$	164,870		100.0	%	$	154,609		100.0	%

Investments in short-term securities, including United States Treasury Bills and money market mutual funds, were excluded.

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The following table shows the fair value of our portfolio of investments by industry, as of June 30, 2017:

	June 30, 2017
	Investments at Fair Value		Percentage of  Total Investment Portfolio
Wireless Telecommunications Services	$	47,226		35.9	%
Building Cleaning and Maintenance Services		17,493		13.3	%
Metals & Mining		12,655		9.6	%
Radio Broadcasting		9,133		6.9	%
Wireless Communications		8,950		6.8	%
Industrial Other		8,080		6.1	%
Real Estate Services		7,316		5.6	%
Consumer Discretionary		7,236		5.5	%
Information and Data Services		4,467		3.4	%
Consumer Finance		3,071		2.3	%
Maritime Security Services		2,220		1.7	%
Water Transport		1,737		1.3	%
Hotel Operator		1,306		1.0	%
Internet Advertising		666		0.5	%
Grain Mill Products		74		0.1	%
Energy Efficiency Services		-		0.0	%
Total	$	131,630		100.0	%

The following table shows the fair value of our portfolio of investments by industry, as of June 30, 2018:

	June 30, 2018
	Investments at Fair Value		Percentage of Net Assets
Wireless Telecommunication Services	$	41,950		33.40	%
Building Cleaning and Maintenance Services		18,766		14.94	%
Manufacturing		16,450		13.10	%
Industrial Conglomerates		14,138		11.26	%
Retail		13,685		10.90	%
Software Services		13,646		10.87	%
Technology Services		13,306		10.59	%
Gaming, Lodging & Restaurants		9,801		7.80	%
Chemicals		9,571		7.62	%
Radio Broadcasting		8,869		7.06	%
Real Estate Services		7,291		5.81	%
Business Services		7,291		5.81	%
Water Transport		6,206		4.94	%
Information and Data Services		4,841		3.85	%
Oil, Gas & Coal		4,611		3.67	%
Industrial Other		3,316		2.64	%
Hotel Operator		2,574		2.05	%
Consumer Finance		2,448		1.95	%
Wireless Communications		272		0.22	%
Grain Mill Products		237		0.19	%
Maritime Security Services		34		0.03	%
Short-Term Investments		79,190		63.05	%
Total	$	278,493		221.75	%

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Results of Operations

Total Investment Income

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2018				2017				2018				2017
	In Thousands		Per Share(1)		In Thousands		Per Share(2)		In Thousands		Per Share(1)		In Thousands		Per Share(2)
Total Investment Income	$	7,162	$	0.67	$	6,237	$	0.52	$	14,660	$	1.38	$	13,552	$	1.10
Interest income		6,982		0.66		6,138		0.51		14,347		1.35		12,964		1.05
Dividend income		49		0.00		85		0.01		155		0.01		131		0.01
Other income		131		0.01		14		0.00		158		0.01		457		0.04

(1) The per share amounts are based on a weighted average of 10,652,401 shares for each of the three months ended June 30, 2018 and the six months ended June 30, 2018.

(2) The per share amounts are based on a weighted average of 12,000,803 shares for the three months ended June 30, 2017 and a weighted average of 12,316,884 shares for the six months ended June 30, 2017.

Interest income included net accretion of OID and market discount of $458 and $1,409 for the three and six months ended June 30, 2018, respectively. Interest income also included accrued PIK income of $1,725 and $5,002 for the three and six months ended June 30, 2018, respectively.

Total investment income for the three and six months ended June 30, 2018 increased as compared to total investment income for the three and six months ended June 30, 2017 primarily due to increased interest income, as a result of the interest earning investment portfolio growing year over year.

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Period Ended December 31, 2016

	In Thousands		Per Share(1)
Total Investment Income(2)	$	5,831	$	0.45
Interest Income		5,313		0.41
Other Income		518		0.04
Net Operating Expenses		5,826		0.45
Management Fee		392		0.03
Incentive Fee		863		0.07
Total Advisory Fees		1,255		0.10
Total Costs Incurred Under Administration Agreement		224		0.02
Directors’ Fees		38		0.00
Interest Expenses		420		0.03
Professional Services Expense		186		0.01
Professional Services Expense related to the Merger and Formation transactions		3,471		0.27
Bank Fees		10		0.00
Other		214		0.02
Income tax expense, including excise tax		88		0.01
Fees Waivers and Expense Reimbursement		80		0.01
Net Investment Income	$	5	$	0.00

(1) The per share amounts are based on a weighted average of 12,852,758 shares for the period ended December 31, 2016, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements.

(2) Total investment income includes PIK income of $510 for the period from inception through December 31, 2016.

Year Ended December 31, 2017

	In Thousands			Per Share(1)
Total Investment Income(2)	$	29,728		$	2.55
Interest Income		28,924			2.48
Dividend Income		298			0.03
Other Income		506			0.04
Net Operating Expenses		12,153			1.03
Management fees		2,298			0.20
Incentive fees		4,394			0.38
Total Investment Management Fees		6,692			0.57
Administration fees		1,362			0.12
Directors’ fees		136			0.01
Interest expense		2,039			0.17
Professional services		1,013			0.09
Custody Fees		62			0.01
Other		655			0.06
Income Taxes		124			0.01
Fees Waivers and Expense Reimbursement		(70	)		(0.01	)
Net Investment Income	$	17,575		$	1.52

(1) The per share amounts are based on a weighted average of 11,655,370 shares for the year ended December 31, 2017, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements.

(2) Total investment income includes PIK income of $11,709 for the year ended December 31, 2017.

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Period Ended December 31, 2016

	In Thousands		Per Share(1)
Total Investment Income(2)	$	5,831	$	0.45
Interest Income		5,313		0.41
Other Income		518		0.04

(1) The per share figures are based on a weighted average of 12,852,758 shares for the period ended December 31, 2016.

(2) Total investment income includes PIK income of $510 for the period from inception through December 31, 2016.

Total Investment Income for the period from inception through December 31, 2016 was $5,831, which included $5,313 of interest income. Interest income included non-cash income of $2,438, which includes net accretion of OID and market discount. Of the accretion of OID and market discount, $1,374 was associated with our investment in Optima Specialty Steel which matured in December 2016.

We also generated $518 of fee income. Fee income was largely comprised of amendment fees on our loans to RiceBran Technologies Inc. and Pristine Environments, LLC.

Year Ended December 31, 2017

For the year ended December 31, 2017:

	In Thousands		Per Share (1)
Total Investment Income(2)	$	29,728	$	2.55
Interest Income		28,924		2.48
Dividend Income		298		0.03
Other Income		506		0.04

(1) The per share figures are based on a weighted average of 11,655,370 shares for the year ended December 31, 2017.

(2) Total investment income includes PIK income of $11,709 for the year ended December 31, 2017.

Total Investment Income for the year ended December 31, 2017 was $29,728, which included $28,924 of interest income. Interest income included non-cash income of $17,336, which includes net accretion of OID and market discount and PIK income. Of the PIK Income, $8,702 was associated with our investments in Avanti. At December 31, 2017, we had accrued $1,091 of interest income that was subject to future PIK toggle elections.

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We also generated $506 of fee income. Fee income was largely comprised of amendment fees on our loans to RiceBran Technologies Inc. and Pristine Environments, LLC and our Avanti bonds.

Total Investment Income increased for the year ended December 31, 2017 as compared to the period ended December 31, 2016 primarily due to increased interest income, related to the investment portfolio being held for a longer time period during the year ended December 31, 2017. Dividend income increased due to payments related to our short term investments in money market mutual funds, as our short term investments were held for a longer time period during the year ended December 31, 2017.

Expenses

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2018						2017				2018						2017
	In Thousands			Per Share(1)			In Thousands		Per Share(2)		In Thousands			Per Share(1)			In Thousands		Per Share(2)
Net Operating Expenses	$	1,084		$	0.10		$	2,759	$	0.24	$	4,716		$	0.44		$	5,980	$	0.49
Management fees		754			0.07			546		0.05		1,447		$	0.14			1,139		0.09
Incentive fees		(2,149	)		(0.20	)		871		0.07		(1,183	)	$	(0.10	)		1,894		0.15
Total advisory fees	$	(1,395	)	$	(0.13	)	$	1,417	$	0.12	$	264		$	0.02		$	3,033	$	0.25
Administration fees		487			0.05			272		0.02		797			0.07			767		0.06
Directors’ fees		50			0.00			21		0.00		99			0.01			48		0.00
Interest expense		1,456			0.14			631		0.05		2,731			0.26			1,262		0.10
Professional services		294			0.03			176		0.01		465			0.04			507		0.04
Custody fees		15			0.00			11		0.00		29			0.00			24		0.00
Other		177			0.02			156		0.01		331			0.03			269		0.02
Fee Waivers and Expense Reimbursement		—			—			75		0.01		—			—			70		0.01

(1) The per share amounts are based on a weighted average of 10,652,401 shares for each of the three months ended June 30, 2018 and the six months ended June 30, 2018.

(2) The per share amounts are based on a weighted average of 12,000,803 shares for the three months ended June 30, 2017 and a weighted average of 12,316,884 shares for the six months ended June 30, 2017.

Net expenses for the three and six months ended June 30, 2018 decreased as compared to net expenses for the three and six months ended June 30, 2017 primarily due to the reversal of $2,637 of incentive fees recorded in prior periods. Our largest investment, Avanti has generated significant non-cash income in the form of PIK interest. In connection with the recent restructuring of Avanti, which closed on April 26, 2018, our investment in the Existing Notes was converted into Avanti common equity. As a result of this debt-for-equity conversion, we have determined that the accrued incentive fees payable associated with the portion of such PIK interest generated by the Existing Notes should not at this time be recognized as a liability and as such we have reversed for prior periods. Notwithstanding this reversal, such incentive fees remain payable under the Investment Management Agreement (subject to achievement of return hurdles) and will be recognized as an expense to the extent that an exit or recovery results in gross proceeds to us in excess of our initial cost basis in the Existing Notes.

Excluding the impact of the incentive fee reversal described above, net expenses for the three and six months ended June 30, 2018 increased as compared to net expenses for the three and six months ended June 30, 2017 primarily due to increased interest expense, as a result of having a greater amount of debt outstanding compared to the prior year. The 2025 Notes (as defined herein) were newly issued in January 2018. See “—Liquidity and Capital Resources—Notes Payable” for further information.

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Period Ended December 31, 2016

	In Thousands		Per Share(1)
Net Operating Expenses	$	5,826	$	0.45
Management Fee		392		0.03
Incentive Fee		863		0.07
Total Advisory Fees		1,255		0.10
Total Costs Incurred Under Administration Agreement		224		0.02
Directors’ Fees		38		0.00
Interest Expenses		420		0.03
Professional Services Expense		186		0.01
Professional Services Expense related to the Merger and Formation transactions		3,471		0.27
Bank Fees		10		0.00
Other		214		0.02
Income tax expense, including excise tax		88		0.01
Fees Waivers and Expense Reimbursement		80		0.01

(1) The per share figures are based on a weighted average of 12,852,758 shares for the period ended December 31, 2016.

Total expenses for the period from inception through December 31, 2016 were $5,826, which included $3,471 of costs associated with the Formation Transactions and Merger, which are non-recurring.

Total advisory fees were $1,255, with $392 of management fees and $863 of incentive fees accrued during the period ended December 31, 2016. The incentive fees are currently expected to be deferred in accordance with our Investment Management Agreement.

Total administration fees were $224, which includes direct costs deemed reimbursable under our Administration Agreement and fees paid for sub-administration services. We accrued $80 as of December 31, 2016 under the reimbursement provision of the Administration Agreement, based on expenses accrued through December 31, 2016. The cap on costs was determined to be zero and $70 of this was reversed for the year ended December 31, 2017 with $10 due from our sub-administrator remaining waived.

Interest expense for the period ended December 31, 2016 was $420.

Year Ended December 31, 2017

	In Thousands			Per Share(1)
Net Operating Expenses	$	12,153		$	1.03
Management fees		2,298			0.20
Incentive fees		4,394			0.38
Total Investment Management Fees		6,692			0.57
Administration fees		1,362			0.12
Directors’ fees		136			0.01
Interest expense		2,039			0.17
Professional services		1,013			0.09
Custody Fees		62			0.01
Other		655			0.06
Income Taxes		124			0.01
Fees Waivers and Expense Reimbursement		(70	)		(0.01	)

(1) The per share figures are based on a weighted average of 11,655,370 shares for the year ended December 31, 2017.

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Total expenses for the year ended December 31, 2017 were $12,153.

Total advisory fees were $6,692, with $2,298 of management fees and $4,394 of incentive fees accrued during the year. The incentive fees are currently expected to be deferred in accordance with our Investment Management Agreement.

Total administration fees were $1,362 which includes direct costs deemed reimbursable under our Administration Agreement and fees paid for sub-administration services.

Interest expense for the year ended December 31, 2017 was $2,039.

Net Operating Expenses increased for the year ended December 31, 2017 as compared to the period ended December 31, 2016 primarily due to increased advisory fees, administration fees and interest expense, related to the Company being in operations for a longer time period during the year ended December 31, 2017. This was partially offset, by a reduction in professional fees related to the Merger and Formation Transactions, which were one-time expenses.

Net Investment Income

Net investment income for the six months ended June 30, 2017 was $7,572.

Net investment income for the six months ended June 30, 2018 was $9,944.

Net investment income for the period from inception through December 31, 2016 was $5, which included $3,471 of costs associated with the Formation Transactions and Merger, which are non-recurring.

Net investment income for the year ended December 31, 2017 was $17,575.

Net Realized Gains (Losses) on Investments

During the three months ended March 31, 2017, we recorded net realized gains of $1,980, primarily in connection with our disposition of our investment in JN Medical, which resulted in a $1,007 gain. We also realized gains of $281 on the sale of our Trilogy International bonds and $354 on the sale of a portion of our Everi Payments bonds.

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2018				2017				2018				2017
	In Thousands		Per Share(1)		In Thousands		Per Share(2)		In Thousands		Per Share(1)		In Thousands		Per Share(2)
Total Realized Gains	$	810	$	0.08	$	1,381	$	0.12	$	1,127	$	0.11	$	3,361	$	0.27

(1) The per share amounts are based on a weighted average of 10,652,401 shares for each of the three months ended June 30, 2018 and the six months ended June 30, 2018.

(2) The per share amounts are based on a weighted average of 12,000,803 shares for the three months ended June 30, 2017 and a weighted average of 12,316,884 shares for the six months ended June 30, 2017.

During the three months ended June 30, 2018, we recorded net realized gains of $810, primarily related to the realized gain on the sale of the PR Wireless, Inc. senior secured loan and a partial sale of NAAN Development Corp. senior secured bonds. Realized gains for the six months ended June 30, 2018 also include realized gains in connection with principal amortization of loans that were acquired at a discount and a partial repayment on our PE Facility Solutions, LLC Term B loan.

During the six months ended June 30, 2017 we recorded net realized gains of $3,361 primarily in connection with the disposition of several investments and the prepayment of a portion of our loan to Sonifi Solutions.

During the period from inception through December 31, 2016, we recorded net realized gains of $274, primarily in connection with our disposition of our debt investments in US Shale Solutions, LLC. We also realized a loss of $4,698 associated with the purchase accounting for the Merger. We have accounted for the Merger as a business combination under ASC Topic 805 and Regulation S-X’s purchase accounting guidance. GECC was designated as the acquirer for financial reporting purposes. The difference between the fair value of net assets of Full Circle and the consideration was recorded as a purchase accounting loss because the fair value of the assets acquired and liabilities assumed, as of the date of the Merger, was less than that of the merger consideration paid.

During the year ended December 31, 2017, we recorded net realized gains of $3,633, primarily in connection with the partial sale and repayments of our loan to Sonifi, which resulted in a $1,997 gain. We also realized gains of $1,134 on the sale of our Everi Payments bonds, $1,007 on our disposition of our investment in JN Medical, and a loss of $745 on the write off of our loan to Ads Direct Media.

Net Change in Unrealized Appreciation (Depreciation) on Investments

49

Net change in unrealized appreciation (depreciation) on investments was ($10,021) for the six months ended June 30, 2017. The following table summarizes the significant changes in unrealized appreciation (depreciation) of our investment portfolio, for the six months ended June 30, 2017 by portfolio company.

Dollar amounts in thousands				June 30, 2017							December 31, 2016
Portfolio Company	Change in Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)
Avanti Communications Group plc	$	(7,315	)	$	67,818	$	47,226	$	(20,592	)	$	55,298	$	42,021	$	(13,277	)
OPS Acquisitions Limited and Ocean Protection Services Limited		(2,051	)		4,240		2,220		(2,020	)		4,255		4,286		31
PE Facility Solutions, LLC		(2,009	)		19,502		17,493		(2,009	)		—		—		—
Sonifi Solutions, Inc.		1,152			5,302		7,236		1,934			5,933		6,715		782
Other(1)		202			132,185		131,396		(789	)		102,646		101,655		(991	)
Totals	$	(10,021	)	$	229,047	$	205,571	$	(23,476	)	$	168,132	$	154,677	$	(13,455	)

(1) Other represents all remaining investments.

Net change in unrealized appreciation (depreciation) on investments was $(12,462) for the six months ended June 30, 2018. The following table summarizes the significant changes in unrealized appreciation (depreciation) of our investment portfolio, excluding the impact of unrealized appreciation (depreciation) on short-term securities such as U.S. Treasury Bills and money market mutual funds, for the six months ended June 30, 2018.

Dollar amounts in thousands				June 30, 2018							December 31, 2017
Portfolio Company	Change in Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)
Avanti Communications Group plc(1)	$	(8,326	)	$	83,460	$	41,950	$	(41,510	)	$	75,461	$	42,277	$	(33,184	)
OPS Acquisitions Limited and Ocean Protection Services Limited		(1,736	)		4,240		34		(4,206	)		4,240		1,770		(2,470	)
Tru Taj, LLC		(2,900	)		17,049		13,685		(3,364	)		15,264		14,800		(464	)
Other(2)		506			144,425		143,634		(791	)		107,320		106,023		(1,297	)
Totals	$	(12,456	)	$	249,174	$	199,303	$	(49,871	)	$	202,285	$	164,870	$	(37,415	)

(1) Recognition of accretion of discount and capitalized PIK interest increased our cost basis during the period. We did not fund any incremental investment during the period.

(2) Other represents all remaining investments excluding short-term investments such as U.S. Treasury Bills and money market mutual funds.

Net change in unrealized appreciation (depreciation) for the six months ended June 30, 2017 was $(10,021). Net change in unrealized appreciation (depreciation) for the three months ended June 30, 2018 and June 30, 2017 was $(4,240) and $(7,326), respectively. In each of these periods, the change in unrealized appreciation (depreciation) is primarily driven by the performance of a few investments as noted in the table above.

Liquidity and Capital Resources

At June 30, 2018, we had approximately $3,942 of cash and cash equivalents, none of which was restricted in nature. At June 30, 2018, we also had $4,532 invested in a money market fund that is classified as an investment rather than cash and cash equivalents.

At June 30, 2018, we had investments in 29 debt instruments across 23 companies, totaling approximately $185,418 at fair value and equity investments in five companies, totaling approximately $13,971 at fair value.

In the normal course of business, we may enter into investment agreements under which we commit to make an investment in a portfolio company at some future date or over a specified period of time. As of June 30, 2018, we had approximately $17,572 in unfunded loan commitments, subject to our approval and satisfaction of certain conditions in the underlying loan documents in certain instances, to provide debt financing to certain of our portfolio companies. We had sufficient cash and other liquid assets on our June 30, 2018 balance sheet to satisfy the unfunded commitments.

For the six months ended June 30, 2018, net cash used for operating activities, consisting primarily of net purchases of investments and the items described in “—Results of Operations,” was approximately $(35,986), reflecting the purchases and repayments of investments, net investment income resulting from operations, offset by non-cash income related to OID and PIK income, changes in working capital and accrued interest receivable. Net cash used for purchases and sales of investments was approximately $(36,314), reflecting principal repayments and sales of $56,798, offset by additional investments of $(93,112). Such amounts included draws and repayments on revolving credit facilities. Our Board previously set our distribution rate at $0.083 per share per month and we intend to re-evaluate our dividend rate from time to time.

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Contractual Obligations

A summary of our significant contractual payment obligations as of June 30, 2018 is as follows:

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
2022 Notes	$	32,631	$	—	$	—	$	32,631	$	—
2025 Notes		46,398								46,398
Total	$	79,029	$	—	$	—	$	32,631	$	46,398

We have certain contracts under which we have material future commitments. Under the Investment Management Agreement, GECM provides investment advisory services to us. For providing these services, we pay GECM a fee, consisting of two components: (1) a base management fee based on the average value of our total assets and (2) an incentive fee based on our performance.

We are also party to the Administration Agreement with GECM. Under the Administration Agreement, GECM furnishes us with, or otherwise arranges for the provision of, office facilities, equipment, clerical, bookkeeping, finance, accounting, compliance and record keeping services at such office facilities and other such services as our administrator.

If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.

Both the Investment Management Agreement and the Administration Agreement may be terminated by either party without penalty upon no fewer than 60 days’ written notice to the other.

Stock Buyback Program

We implemented a stock buyback program pursuant to Rule 10b5 1 and Rule 10b-18 under the Exchange Act, to repurchase our shares in an aggregate amount of up to $15,000 through May 2018 at market prices at any time our shares trade below 90% of net asset value, subject to our compliance with our liquidity, covenant, leverage and regulatory requirements. Our Board previously increased the overall size of the stock buyback program to a total of $50,000 with $25,000 remaining available under the program.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented in our financial statements. However, from time to time, inflation may impact the operating results of our portfolio companies.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

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Notes Payable

On November 3, 2016, we assumed approximately $33,646 in aggregate principal amount of Full Circle’s 8.25% Notes due June 30, 2020 (the “2020 notes”). Interest on the 2020 notes was paid quarterly in arrears at a rate of 8.25% per annum. The 2020 notes had a maturity date of June 30, 2020. On October 20, 2017, we redeemed the 2020 notes completely at their par value plus accrued and unpaid interest.

On September 18, 2017, we sold $28,375 in aggregate principal amount of 6.50% notes due 2022. On September 29, 2017, we sold an additional $4,256 of the 2022 notes upon full exercise of the underwriters’ over-allotment option. As a result of the issuance of these notes, the aggregate principal balance of 2022 notes outstanding as of June 30, 2018 was $32,631.

The 2022 notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness. The 2022 notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries. We pay interest on the 2022 notes on January 31, April 30, July 31 and October 31 of each year. The 2022 notes will mature on September 18, 2022 and can be called on, or after, September 18, 2019. Holders of the 2022 notes do not have the option to have the 2022 notes repaid prior to the stated maturity date. The 2022 notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

On January 11, 2018, we sold $43,000 in aggregate principal amount of 6.75% notes due 2025. On January 19, 2018 and February 9, 2018, we sold an additional $1,898 and $1,500 of the 2025 notes upon partial exercise of the underwriters’ over-allotment option. As a result of the issuance of these notes, the aggregate principal balance of 2025 notes outstanding as of June 30, 2018 was $46,398.

The 2025 notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness. The 2025 notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries. We pay interest on the 2025 notes on March 31, June 30, September 30 and December 31 of each year. The 2025 notes will mature on January 31, 2025 and can be called on, or after, January 31, 2021. Holders of the 2025 notes do not have the option to have the 2025 notes repaid prior to the stated maturity date. The 2025 notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

Recent Developments

In July 2018, we purchased an additional $2,500 par value of Sungard Availability Services Capital, Inc. first lien senior secured term loan at a price of approximately 99% of par value.

In July 2018, we purchased an additional $2,000 par value of Commercial Barge Line Company first lien term loan at a price of approximately 72% of par value.

In July 2018, we purchased $478 par value of PFS Holdings Corp. first lien term loan at a price of approximately 60% of par value.

In July 2018, we exercised all of our RiceBran Technologies Corporation warrants at a price of $1.60 per share in a cashless exercise. This transaction resulted in GECC receiving 139,392 shares. We subsequently sold all of the shares at a weighted average price of $2.43 per share.

In July 2018, in connection with the sale of one of its businesses, DataX, Ltd., The Selling Source, LLC paid down $3,800 of its outstanding $5,689 first lien, senior secured holding. The remainder of the outstanding loan was restructured, with GECC receiving $1,250 of first out term loan bearing interest at a rate of 3-month LIBOR plus 5% which matures on January 13, 2020.

In August 2018, we purchased an additional $2,647 par value of SESAC Holdco II LLC second lien senior secured loan at a price of approximately 99% of par value.

In August 2018, we purchased $2,000 par value of California Pizza Kitchen, Inc. first lien term loan at a price of approximately 98% of par value.

In August 2018, we sold our position in Foresight Energy LP at a price of approximately 100% of par value.

In August 2018, we sold our position in Nana Development Corp. first lien senior secured bond at a price of approximately 100% of par value.

In August 2018, we purchased an additional $4,500 par value of True Taj LLC first lien, Debtor in Possession Note at a price of approximately 104% of par value.

In August 2018, we purchased an additional $8,750 par value of PFS Holdings Corp. first lien term loan at a price of approximately 60% of par value.

In August 2018, we sold $5,000 par value of Almonde, Inc. second lien senior secured loan at a price of approximately 98% of par value.

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On August 8, 2018, our Board declared the monthly distributions for the fourth quarter of 2018 at an annual rate of approximately 8.4% of our June 30, 2018 NAV, which equates to $0.083 per month. The schedule of distribution payments is as follows:

Month	Rate		Record Date	Payable Date
October	$	0.083	October 31, 2018	November 15, 2018
November	$	0.083	November 30, 2018	December 14, 2018
December	$	0.083	December 31, 2018	January 15, 2019

Reduction in Required Minimum Asset Coverage Ratio

On March 23, 2018, the Consolidated Appropriations Act of 2018, which includes the Act, was signed into law. The Act amends the Investment Company Act to permit a BDC to reduce the required minimum asset coverage ratio applicable to it from 200% to 150%, subject to certain requirements described therein. This reduction significantly increases the amount of debt that BDCs may incur.

Prior to the enactment of the Act, BDCs were required to maintain an asset coverage ratio of at least 200% in order to incur debt or to issue other senior securities. Generally, for every $1.00 of debt incurred or in senior securities issued, a BDC was required to have at least $2.00 of assets immediately following such incurrence or issuance. For those BDCs that satisfy the Act’s disclosure and approval requirements, the minimum asset coverage ratio is reduced such that for every $1.00 of debt incurred or in senior securities issued, a BDC must now have at least $1.50 of assets.

At our Annual Meeting, which was held on May 3, 2018, a majority of our stockholders approved the application of the modified minimum asset coverage requirements set forth in Section 61(a)(2) of the Investment Company Act, to the Company. As a result of such approval, and subject to satisfying certain ongoing disclosure requirements, effective May 4, 2018 the asset coverage ratio test applicable to the Company was decreased from 200% to 150%, permitting us to incur additional leverage.

As of June 30, 2018, we had approximately $79.0 million of total outstanding indebtedness under two series of senior securities (unsecured notes)—the 2022 notes and the 2025 notes—and our asset coverage ratio was 255%. For risks associated with the reduction in our required minimum asset coverage ratio from 200% to 150%, see “Risk Factors—Risks Relating to Our Business and Structure—Recently enacted legislation permits us to incur additional debt,” “Risk Factors—Risks Relating to Our Business and Structure—Incurring additional indebtedness could increase the risk of investing in our Company” and “Risk Factors—Risks Relating to Our Business and Structure—Incurring additional leverage may magnify your exposure to risks associated with changes in interest rates, including fluctuations in interest rates which could adversely affect our profitability.”

53

THE COMPANY

Overview

We are a Maryland corporation that was formed in April 2016 and commenced operations on November 3, 2016 when Full Circle merged with and into us. We operate as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act. In addition, for tax purposes, we elected to be treated as a RIC under the Code beginning with our tax year starting October 1, 2016.

Our investment objective is to seek to generate both current income and capital appreciation, while seeking to protect against loss of principal, by investing predominantly in the debt instruments of middle-market companies, which we generally define as companies with enterprise values between $100.0 million and $2.0 billion.

To achieve our investment objectives, we primarily focus on investing in secured and senior unsecured debt instruments in middle-market companies that offer sufficient downside protection but with the opportunity to unlock substantial return potential (interest income plus capital appreciation and fees, if any) that appropriately recognizes potential investment risks.

We target investments that we perceive to be undervalued due to over leveraging or which operate in industries experiencing cyclical declines and may trade at discounts to their original issue prices. We source these transactions in the secondary markets and occasionally directly with issuers.

We seek to protect against loss of principal by investing in borrowers with tangible and intangible assets, where GECM believes asset values are expected to, or do, exceed our investment and any debt that is senior to, or ranks in parity with, our investment. GECM’s investment process includes a focus on an investment’s contractual documents, as it seeks to identify rights that enhance an investment’s risk protection and avoid contracts that compromise potential returns or recoveries. Although we intend to focus on senior debt instruments of middle-market companies, we may make investments throughout a company’s capital structure, including subordinated debt, mezzanine debt, and equity or equity-linked securities.

Our Portfolio at June 30, 2018

The following table sets forth certain information as of June 30, 2018 regarding each portfolio company in which we have a debt or equity investment. For information regarding material portfolio transactions occurring after June 30, 2018, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments.” Additional information about the general terms of our loans and other investments are described above under “Risk Factors” and “—Overview.” We offer to make available significant managerial assistance to our portfolio companies. We may receive rights to observe the meetings of our portfolio companies’ boards of directors or equivalent governing bodies. Other than these investments and any additional relationships described below with respect to a particular portfolio company, our only relationships with our portfolio companies are the managerial assistance we may separately provide to our portfolio companies, which services would be ancillary to our investments.

Portfolio Company	Security	Industry	Interest (1)	% of Class	Maturity	Par Amount /Quantity		Cost		Fair Value		% of NAV
Investments at Fair Value -221.75% of Net Assets(2)
Controlled Investments - 16.25% of Net Assets(3)
PE Facility Solutions, LLC	1st Lien, Senior Secured Revolver(5),(15)	Building Cleaning and Maintenance Services	11.09% (L + 9.00%) (6)	†	02/27/2022		3,679	$	3,679	$	3,679		2.93	%
San Diego, CA	1st Lien, Senior Secured Revolver - Unfunded(5),(15)		11.09% (L + 9.00%) (6)	†	02/27/2022		2,321		—		—		—	%
	1st Lien, Senior Secured Loan A(5),(15)		13.09% (L + 11.00%) (6)	†	02/27/2022		9,900		9,900		9,900		7.88	%
	1st Lien, Senior Secured Loan B(5),(15)		16.09% (L + 14.00%) (6),(7)	†	02/27/2022		6,171		5,897		5,187		4.13	%
	Common Equity(5),(8),(15)			83%			1		—		—		—	%
									19,476		18,766		14.94	%

54

Portfolio Company	Security	Industry	Interest (1)	% of Class	Maturity	Par Amount /Quantity		Cost		Fair Value			% of NAV
The Finance Company	1st Lien, Senior Secured Revolver(5)	Consumer Finance	13.09% (L + 11.00%, 11.50% Floor)(6)	†	07/02/2020		535		535		535			0.43	%
Silver Springs, MD	1st Lien, Senior Secured Unfunded Loan(5)		13.09% (L + 11.00%, 11.50% Floor)(6)	†	07/02/2020		465		—		—			—	%
	2nd Lien Secured Term Loan B(5),(30)		13.09% (L + 11.00%, 11.50% Floor)(6)	†	07/02/2020		1,491		1,491		1,108			0.88	%
	Equity(5),(8),(30)			72%			288,000		—		—			—	%
									2,026		1,643			1.31	%
Total Controlled Investments									21,502		20,409			16.25	%
Affiliate Investments - 33.43% of Net Assets(4)
Avanti Communications Group PLC	2nd Lien, Senior Secured Bond(10),(11)	Wireless Telecommunications Services	9.00%	†	10/01/2022		37,126		32,800		28,216			22.47	%
London, UK	Common Equity(8),(10)			9%			196,086,410		50,660		13,734			10.93	%
									83,460		41,950			33.40	%
OPS Acquisitions Limited and Ocean Protection Services Limited	1st Lien, Senior Secured Loan(5),(10),(16)	Maritime Security Services	14.09% (L + 12.00%, 12.50% Floor)(6),(9)	†	06/01/2018		4,903		4,240		34			0.03	%
London, UK	Common Equity(5),(8),(10),(16)			19%			19		—		—			—	%
									4,240		34			0.03	%
Total Affiliate Investments									87,700		41,984			33.43	%
Non-Control, Non-Affiliate Investments- 109.01% of Net Assets
Almonde, Inc. Philadelphia, PA	2nd Lien, Senior Secured Loan(10),(17)	Software Services	9.59% (L + 7.25%, 8.25% floor)(13)	†	06/13/2025		10,000		9,953		9,616			7.66	%
Aptean Holdings, Inc. Alpharetta, GA	2nd Lien, Senior Secured Loan(5),(29)	Software Services	11.84% (L + 9.50%, 10.50% Floor)(13)	†	12/02/2023		4,010		4,054		4,030			3.21	%
Commercial Barge Line Company Jeffersonville, IN	1st Lien, Senior Secured Loan(18)	Water Transport	10.84% (L + 8.75%, 9.75% Floor)(6)	†	11/12/2020		9,000		7,544		6,206			4.94	%
Davidzon Radio, Inc. Brooklyn, NY	1st Lien, Senior Secured Loan(5),(16)	Radio Broadcasting	15.09% (L + 10.00%, 11.00% Floor)(6),(12)	†	03/31/2020		9,471		9,047		8,869			7.06	%
Foresight Energy LP Saint Louis, MO	1st Lien, Senior Secured Loan(27)	Oil, Gas & Coal	8.09% (L + 5.75%, 6.75% floor)(13)	†	03/28/2022		4,647		4,594		4,611			3.67	%
Full House Resorts, Inc. Las Vegas, NV	1st Lien Senior Secured Note(5),(25)	Gaming, Lodging & Restaurants	9.34% (L + 7.00%, 8.00% floor)(13)	†	02/02/2024		9,950		9,761		9,801			7.80	%
Geo Specialty Chemicals, Inc. Lafayette, Indiana	1st Lien, Senior Secured Revolver(5),(19)	Chemicals	6.84% (L + 4.75%, 5.75% Floor)(6)	†	04/30/2019		3,938		3,804		3,833			3.05	%
	1st Lien, Senior Secured Revolver - Unfunded(5),(19)		6.84% (L + 4.75%, 5.75% Floor)(6)	†	04/30/2019		438		—		(12	)		(0.01	)%
	1st Lien, Senior Secured Loan(5),(19)		6.84% (L + 4.75%, 5.75% Floor)(6)	†	04/30/2019		5,906		5,726		5,750			4.58	%
									9,530		9,571			7.62	%

55

Portfolio Company	Security	Industry	Interest (1)	% of Class	Maturity	Par Amount /Quantity		Cost		Fair Value			% of NAV
International Wire Group Inc Camden, NY	2nd Lien, Senior Secured Bond(11)	Manufacturing	10.75%	†	08/01/2021		17,500		16,476		16,450			13.10	%
Luling Lodging, LLC Luling, TX	1st Lien, Senior Secured Loan(5),(16)	Hotel Operator	19.09% (L + 12.00%, 12.25% Floor)(6),(9),(12)	†	12/18/2017		2,715		1,300		2,574			2.05	%
Michael Baker International, LLC Pittsburgh, PA	2nd Lien, Senior Secured Bond(11)	Industrial Conglomerates	8.75%	†	03/01/2023		14,500		14,044		14,138			11.26	%
NANA Development Corp. Anchorage, AK	1st Lien, Senior Secured Bond(11)	Industrial Other	9.50%	†	03/15/2019		3,308		3,284		3,316			2.64	%
PEAKS Trust 2009-1 Carmel, IN	1st Lien, Senior Secured Loan(5),(10),(16)	Consumer Finance	7.59% (L + 5.50%, 7.50% Floor)(6)	†	01/27/2020		1,242		942		805			0.64	%
PR Wireless, Inc.	1st Lien, Senior Secured Delayed Draw Loan(5),(20)	Wireless Communications	7.59% (L + 5.25%)(13)	†	06/29/2020		274		274		275			0.22	%
Guaynabo, PR	1st Lien, Senior Secured Unfunded Delayed Draw Loan(5),(20)		7.59% (L + 5.25%)(13)	†	06/29/2020		1,098		—		(3	)		(0.0	)%
									274		272			0.22	%
RiceBran Technologies Corporation Scottsdale, AZ	Warrants(5),(8),(16)	Grain Mill Products	$1.60 Strike Price	†	05/12/2020		300,000		145		237			0.19	%
SESAC Holdco II LLC Nashville, TN	2nd Lien, Senior Secured Loan(5),(21)	Business Services	9.34% (L + 7.25%)(6)	†	02/24/2025		7,295		7,244		7,291			5.81	%
Sungard Availability Services Capital, Inc.	1st Lien, Senior Secured Loan(22)	Technology Services	12.09% (L + 10.00%, 11.00% Floor)(6)	†	10/01/2022		8,880		8,565		8,729			6.95	%
Wayne, PA	1st Lien, Senior Secured Loan(5),(24)		9.09% (L + 7.00%, 8.00% Floor)(6)	†	9/30/2021		4,900		4,565		4,577			3.64	%
									13,130		13,306			10.59	%
Tallage Davis, LLC	1st Lien, Senior Secured Loan(5),(26)	Real Estate Services	11.00%	†	01/26/2023		3,100		3,100		3,083			2.45	%
Boston, MA	1st Lien, Senior Secured Loan – Unfunded(5),(26)		11.00%	†	01/26/2023		11,000		—		(61	)		(0.05	)%
									3,100		3,022			2.40	%
Tallage Lincoln, LLC	1st Lien, Senior Secured Loan(5),(16)	Real Estate Services	12.34% (L + 10.00%, 11.00% Floor)(13)	†	12/31/2019		4,298		4,299		4,279			3.41	%
Boston, MA	1st Lien, Senior Secured Loan – Unfunded(5),(16)		12.34% (L + 10.00%, 11.00% Floor)(13)	†	12/31/2019		2,250		—		(10	)		(0.01	)%
									4,299		4,269			3.40	%
The Selling Source, LLC Las Vegas, NV	1st Lien, Senior Secured Loan(5),(16),(23)	Information and Data Services	17.00% (9.00% PIK, 8.00% Cash)(7),(9)	†	12/31/2017		5,689		4,202		4,841			3.85	%
Tru Taj, LLC	1st Lien, Senior Secured Bond(11)	Retail	12.00%	†	08/15/2021		16,000		15,346		11,960			9.52	%
Wayne, NJ	1st Lien, Debtor in Possession Note(5),(28)		11.00%	†	01/22/2019		1,655		1,703		1,725			1.37	%
									17,049		13,685			10.90	%
Total Non-Control, Non-Affiliate Investments									139,972		136,910			109.01	%
Short-Term Investments – 63.06% of Net Assets

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Portfolio Company	Security	Industry	Interest (1)	% of Class	Maturity	Par Amount /Quantity		Cost		Fair Value			% of NAV
State Street Institutional
Treasury Money Market Fund	Premier Class			<1%			4,531,772		4,532		4,532			3.61	%
United States Treasury	Treasury Bill		1.90%		9/27/2018		75,000		74,666		74,658			59.45	%
Total Short-Term Investments									79,198		79,190			63.06	%
TOTAL INVESTMENTS(14) – 221.75% of Net Assets								$	328,372	$	278,493			221.75	%
Other Liabilities in Excess of Assets – (121.75)% of Net Assets										$	(152,902	)		(121.75	)%
NET ASSETS										$	125,591			100.00	%

(1) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of June 30, 2018. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

(2) The Company’s investments are generally acquired in private transactions exempt from registration under the Securities Act and, therefore, are generally subject to limitations on resale, and may be deemed to be “restricted securities’’ under the Securities Act. No unrestricted securities of the same issuer are outstanding.

(3) ‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in 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.

(4) ‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a 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.

(5) Investments classified as Level 3 whereby fair value was determined by the Company’s board of directors.

(6) The interest rate on these loans may be subject to the greater of a LIBOR floor, if any, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2018 was 2.09%.

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

(8) Non-income producing security.

(9) Investment was on non-accrual status as of June 30, 2018.

(10) Indicates assets that the Company believes do not represent ‘‘qualifying assets’’ under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 18.28% were non-qualifying assets as of June 30, 2018.

(11) Security exempt from registration pursuant to Rule 144A under the Securities Act. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

(12) The interest rate on these loans includes a default interest rate.

(13) The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2018 was 2.34%.

(14) As of June 30, 2018, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $1,691; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $52,345; the net unrealized depreciation was $50,884; the aggregate cost of securities for Federal income tax purposes was $329,337.

(15) Restricted security initially obtained on February 28, 2017.

(16) Restricted security initially obtained on November 3, 2016.

(17) Restricted security initially obtained on December 14, 2017.

(18) Restricted security initially obtained on May 17, 2017.

(19) Restricted security initially obtained on September 28, 2017.

(20) Restricted security initially obtained on November 15, 2017.

(21) Restricted security initially obtained on December 13, 2017.

(22) Restricted security initially obtained on December 20, 2017.

(23) Loan defaulted on January 1, 2018.

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(24) Restricted security initially obtained on January 24, 2018.

(25) Restricted security initially obtained on February 2, 2018.

(26) Restricted security initially obtained on March 20, 2018.

(27) Restricted security initially obtained on March 22, 2018.

(28) Restricted security initially obtained on March 26, 2018.

(29) Restricted security initially obtained on March 27, 2018.

(30) Restricted security initially obtained on June 8, 2018.

† Investment is a debt investment and thus the percentage of class held does not apply.

Dollar amounts in thousands

L = LIBOR

Set forth below is a brief description of each portfolio company in which the fair value of our investment represents greater than 5% of our total assets as of June 30, 2018.

Avanti Communications Group plc

Avanti, located in London, UK, is a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. Avanti’s network consists of: three high throughput satellites, HYLAS 1, HYLAS 2 and HYLAS 4; a multiband satellite, Artemis; one satellite that is not yet launched, HYLAS 3; and an international fiber network connecting data centers in several countries. Avanti’s satellites primarily operate in the Ka band frequency range. The Ka band allows for the delivery of greater capacity at faster speeds than Ku band capacity.

PE Facility Solutions, LLC

PE Facility Solutions, LLC (“PEFS”), located in San Diego, CA, provides facilities maintenance services to local and national commercial clients. PEFS manages, maintains and optimizes the performance of mission critical facilities for corporate real estate owners in nearly 100 million square feet of specialized buildings across North America. PEFS is headquartered in San Diego, California and has operations nationwide. Two members of our investment committee serve as members of the Board of Managers of PEFS.

International Wire Group, Inc.

International Wire Group, Inc. (“ITWG”) is headquartered in Camden, New York, and is the largest bare copper wire and copper wire products manufacturer in the United States with operations in Europe. ITWG’s products include a broad line of copper wire configurations and gauges with a variety of electrical and conductive characteristics, which are utilized by customers primarily in the industrial and energy, electronics and data communications, aerospace and defense, medical products, automotive, and consumer and appliance industries. In addition to its Camden headquarters, ITWG has multiple offices across the United States, as well as offices in France, Italy, and Poland.

Investment Manager and Administrator

GECM’s investment team has more than 100 years of experience in the aggregate financing and investing in leveraged middle-market companies. GECM’s team is led by Peter A. Reed, GECM’s Chief Investment Officer. Senior members of GECM’s team include Adam M. Kleinman, John S. Ehlinger and Adam W. Yates. The GECM investment team has deployed more than $17.0 billion into more than 550 issuers across 20+ jurisdictions during its prior and current experience together.

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Investment Selection

GECM employs a team of investment professionals with experience in leveraged finance. The sector-focused research team performs fundamental research at both the industry and company level. Through in-depth industry coverage, GECM’s investment team seeks to develop a thorough understanding of the fundamental market, sector drivers, mergers and acquisition activity, security pricing and trading and new issue trends. GECM’s investment team believes that understanding industry trends is an important element of investment success.

Idea Generation, Origination and Refinement

Idea generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, as well as current and former clients, portfolio companies and investors. GECM’s investment team is expected to supplement these lead sources by also utilizing broader research efforts, such as attendance at prospective borrower industry conferences and an active calling effort to brokers and investment bankers. GECM’s investment team focuses their idea generation and origination efforts on middle-market companies. In screening potential investments, GECM’s investment team utilizes a value-oriented investment philosophy with analysis and research focused on the preservation of capital. GECM has identified several criteria that it believes are important in identifying and investing in prospective portfolio companies. GECM’s process requires focus on the terms of the applicable contracts and instruments perfecting security interests. GECM’s criteria provide general guidelines for GECM’s investment committee’s decisions; however, not all of these criteria will be met by each prospective portfolio company in which they choose to invest.

Asset Based Investments. Debt issued by firms with negative free cash flow but where GECM’s investment thesis is based on the value of the collateral or the issuer’s assets. This type of investment focuses on expected realizable value of the issuer’s assets.

Enterprise Value Investments. Debt issued by firms whose business generates free cash flow to service the debt with a margin of safety and the enterprise value of the firm represents the opportunity for principal to be repaid by refinancing or in connection with a merger or acquisition transaction. These investments focus on the going concern value of the enterprise.

Other Debt Investments. The issuer has the ability to pay interest and principal of its debt out of expected free cash flow from its business. These investments focus on the sustainability and defensibility of cash flows from the business.

Due Diligence

GECM’s due diligence typically includes:

• analysis of the credit documents by GECM’s investment team (including the members of the team with legal training and years of professional experience). GECM will engage outside counsel when necessary as well;

• review of historical and prospective financial information;

• research relating to the company’s management, industry, markets, customers, products and services and competitors;

• verification of collateral;

• interviews with management, employees, customers and vendors of the potential portfolio company; and

• informal or formal background and reference checks.

Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the diligence process present the opportunity to GECM’s investment committee, which then determines whether to pursue the potential investment.

Approval of Investment Transactions

GECM’s procedures call for each new investment under consideration by the GECM analysts to be preliminarily reviewed at periodic meetings of GECM’s investment team. GECM’s investment team then prepares a summary of the investment, including a financial model and risk cases and a legal review checklist. GECM’s investment committee then will hold a formal review meeting and following approval of a specific investment, authorization is given to GECM’s traders, including execution guidelines.

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GECM’s investment analysts conduct periodic reviews of the positions for which they are responsible with members of GECM’s investment committee. On a quarterly basis, formal reviews of each position are conducted by GECM’s investment committee.

GECM’s investment analysts and members of the GECM investment committee will jointly decide when to sell a position. The sale decision will then be given to GECM’s traders, who will execute the trade in consultation with the analyst and the applicable member of GECM’s investment committee.

Ongoing Relationship with Portfolio Companies

As a BDC, we offer, and must provide upon request, significant managerial assistance to certain of our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance.

GECM’s investment team monitors our portfolio companies on an ongoing basis. They monitor the financial trends of each portfolio company and its respective industry to assess the appropriate course of action for each investment. GECM’s ongoing monitoring of a portfolio company will include both a qualitative and quantitative analysis of the company and its industry.

Valuation Procedures

We value our assets, an essential input in the determination of our net asset value, consistent with GAAP and as required by the Investment Company Act. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” for an extended discussion of our methodology.

Staffing

We do not currently have any employees. Mr. Reed is our Chief Executive Officer and President and GECM’s Chief Investment Officer. Under the Administration Agreement, GECM provides the services of John J. Woods, our Chief Financial Officer and Treasurer, and Adam M. Kleinman, our Secretary and Chief Compliance Officer.

Competition

We compete for investments with other BDCs and investment funds (including private equity funds, hedge funds, mutual funds, mezzanine funds and small business investment companies), as well as traditional financial services companies such as commercial banks, direct lending funds and other sources of funding. Additionally, because competition for investment opportunities generally has increased among alternative investment vehicles, those entities have begun to invest in areas they have not traditionally invested in, including making investments in the types of portfolio companies we target. Many of these entities have greater financial and managerial resources than we do.

Exemptive Relief

We intend to apply to the SEC for exemptive relief that will allow us to co-invest, together with other investment vehicles managed by GECM, in specific investment opportunities. We are unable to predict whether or not the SEC will grant the requested exemption. If the SEC does not provide the requested exemption, GECM will allocate investment opportunities to different investment vehicles in accordance with its allocation policies.

Formation Transactions

On June 23, 2016, we entered into the Merger Agreement with Full Circle that provided for the Merger. Concurrent with delivery of the Merger Agreement, we entered into the Subscription Agreement with GEC and the MAST Funds. Per the Subscription Agreement, GEC contributed $30.0 million to us. Prior to the Merger and our election to be regulated as a BDC under the Investment Company Act, per the Subscription Agreement, we acquired the Initial GECC Portfolio from the MAST Funds. As a result of the transactions contemplated by the Subscription Agreement, the MAST Funds owned approximately 75% of the pre-Merger outstanding shares of our common stock and GEC owned 25% of the pre-Merger outstanding shares of our common stock. The Merger was completed on November 3, 2016.

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Investment Management Agreement

Management Services

GECM serves as our investment adviser and is registered as an investment adviser under the Advisers Act. Subject to the overall supervision of our Board, GECM manages our day-to-day operations and provides investment advisory and management services to us. Under the terms of the Investment Management Agreement, GECM:

• determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

• identifies, evaluates and negotiates the structure of our investments (including performing due diligence on our prospective portfolio companies);

• closes and monitors our investments; and

• determines the securities and other assets that we purchase, retain or sell.

GECM was initially formed to provide investment advisory services to us. However, GECM’s services to us under the Investment Management Agreement are not exclusive, and GECM is free to furnish similar services to other entities.

Management & Incentive Fees

Under the Investment Management Agreement, GECM receives a fee from us, consisting of two components: (1) a base management fee and (2) an incentive fee.

The base management fee is calculated at an annual rate of 1.50% based on the average value of our total assets (determined under GAAP) (other than cash or cash equivalents but including assets purchased with borrowed funds or other forms of leverage) at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears.

The incentive fee has two parts. One part is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, diligence and consulting fees or other fees that we receive from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes any accretion of OID, market discount, PIK interest, PIK dividends or other types of deferred or accrued income, including in connection with zero coupon securities, that we and our 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 unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that we may pay an incentive fee in a quarter where we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, we will pay the applicable incentive fee even if we have incurred a loss in that quarter due to realized and unrealized capital losses.

Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined in accordance with GAAP) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.75% per quarter (7.00% annualized). If market interest rates rise, we may be able to invest in debt instruments that provide for a higher return, which would increase our pre-incentive fee net investment income and make it easier for GECM to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. Our pre-incentive fee net investment income used to calculate this part of the incentive fee is also included in the amount of our total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the 1.50% base management fee.

We pay the incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

• no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate;

• 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.1875%) as the “catch-up” provision. The catch-up is meant to provide GECM with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and

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• 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).

These calculations are adjusted for any share issuances or repurchases during the quarter. Any income incentive fee otherwise payable with respect to Accrued Unpaid Income (collectively, the “Accrued Unpaid Income Incentive Fees”) will be deferred, on a security-by-security basis, and will become payable only if, as, when and to the extent cash is received by us or our 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 deferred pursuant to the terms of the Investment Management Agreement. Subsequent payments of income incentive fees deferred pursuant to this paragraph do not reduce the amounts payable for any quarter pursuant to the other terms of the Investment Management Agreement.

The following is a graphical representation of the calculation of the income related portion of the incentive fee:

Quarterly Incentive Fee Based on Net Investment Income

Pre-incentive fee net investment income

(expressed as a percentage of the value of net assets)

Percentage of pre-incentive fee net investment income

allocated to income related portion of incentive fee

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.

The second part of the incentive fee, the Capital Gains Fee, is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date), commencing with the partial calendar year ended December 31, 2016, and is calculated at the end of each applicable year by subtracting (1) the sum of our and our consolidated subsidiaries’ cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) our and our consolidated subsidiaries’ cumulative aggregate realized capital gains, in each case calculated from November 4, 2016. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20% of such amount, less the aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year.

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in our portfolio when sold and (b) the accreted or amortized cost basis of such investment. The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (1) the net sales price of each investment in our portfolio when sold is less than (2) the accreted or amortized cost basis of such investment. The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the fair value of each investment in our portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.

We will defer cash payment of any incentive fee otherwise payable to GECM 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 during the most recent Trailing Twelve Quarters less (2) the aggregate incentive fees that were previously paid to GECM during such Trailing Twelve Quarters (excluding Accrued Unpaid Income Incentive Fees during such Trailing Twelve Quarters and not subsequently paid).

Examples of Quarterly Incentive Fee Calculation

The following hypothetical calculations illustrate the calculation of net investment income based incentive fees under the Investment Management Agreement.

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	Assumption 1			Assumption 2			Assumption 3
Investment income (including interest, dividends, fees, etc.)(1)		1.25	%		2.70	%		3.00	%
Hurdle rate(2)		1.75	%		1.75	%		1.75	%
Management fee(3)		0.38	%		0.38	%		0.38	%
Pre-incentive fee net income (net of management fee + other expenses)(4)		0.68	%		2.125	%		2.425	%
Incentive fee		0			0.38	%(5)(6)		0.485	%(6)(7)(8)

(1) The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.

(2) Represents 7.0% annualized hurdle rate.

(3) Represents 1.5% annualized management fee.

(4) Excludes organizational and offering expenses. Other Expenses are assumed to be 0.19% in the examples.

(5) 100% x pre-incentive fee net income, subject to the “catch up” is calculated as 100% x (2.125% – 1.75%)

(6) The “catch-up” provision is intended to provide GECM with an incentive fee of 20% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.1875% in any calendar quarter.

(7) The catch-up is calculated as 2.1875% – 1.75%= 0.4375%

(8) The incentive fee is calculated as (100% × 0.4375%) + (20% × (2.425% – 2.1875%)) = 0.475%. The total fee is the sum of 0.4375 (the catch-up) plus 0.0475% (20% of the excess over the hurdle rate).

The following hypothetical calculations illustrate the calculation of the Capital Gains Fee under the Investment Management Agreement.

	In millions
	Assumption 1			Assumption 2
Year 1 – Investment in Company A	$	20.00		$	20.00
Year 1 – Investment in Company B	$	30.00		$	30.00
Year 1 – Investment in Company C		—		$	25.00
Year 2 – Proceeds from sale of investment in Company A	$	50.00		$	50.00
Year 2 – Fair market value (FMV) of investment in Company B	$	32.00		$	25.00
Year 2 – FMV of investment in Company C		—		$	25.00
Year 3 – FMV of investment in Company B	$	25.00		$	24.00
Year 3 – Proceeds from sale of investment in Company C		—		$	30.00
Year 4 – Proceeds from sale of investment in Company B	$	31.00			—
Year 4 – FMV of investment in Company B		—		$	35.00
Year 5 – Proceeds from sale of investment in Company B		—		$	20.00
Capital gains portion of the incentive fee:
Year 1	$	0		$	0
Year 2	$	6.0	(1)	$	5.0	(4)
Year 3	$	0	(2)	$	0.8	(5)
Year 4	$	0.2	(3)	$	1.2	(6)
Year 5		—		$	0	(7)

(1) $30.0 million realized capital gain on sale of Investment A multiplied by 20%

(2) The greater of (i) zero and (ii) $5.0 million (20% multiplied by ($30.0 million cumulative capital gains less $5.0 million cumulative capital depreciation)) less $6.0 million (capital gain fee paid in Year 2)

(3) $6.2 million ($31.0 million cumulative realized capital gains multiplied by 20%) less $6.0 million (capital gain fee paid in Year 2)

(4) 20% multiplied by $25.0 million ($30.0 million realized capital gains on Investment A less $5.0 million unrealized capital depreciation on Investment B)

(5) $5.8 million (20% multiplied by $29.0 million ($35.0 million cumulative realized capital gains less $6.0 million unrealized capital depreciation)) less $5.0 million Capital Gains Fee paid in Year 2

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(6) $7.0 million (20% multiplied by $35.0 million ($35.0 million cumulative realized capital gains)) less $5.8 million cumulative Capital Gains Fee paid in Year 2 and Year 3

(7) Greater of (i) zero and (ii) $5.0 million (20% multiplied by $25 million (cumulative realized capital gains of $35.0 million less realized capital losses of $10.0 million)) less $7.0 million cumulative Capital Gains Fee paid in Year 2, Year 3, and Year 4

As illustrated in Year 3 of Assumption 1 above, if GECC were to be wound up on a date other than December 31 of any year, we may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if GECC had been wound up on December 31 of such year.

For the year ended December 31, 2017, we incurred $2.3 million in base management fees and $4.4 million in income based incentive fees accrued during the period. Accrued Unpaid Income Incentive Fees in the amount of $4.0 million were deferred in accordance with the Investment Management Agreement. There was no Capital Gains Fee earned by GECM as calculated under the Investment Management Agreement for the year ended December 31, 2017 because our cumulative net realized gains were offset by the realized losses due to purchase accounting in the Merger.

For the period ended December 31, 2016, we incurred $0.4 million in base management fees and $0.9 million in income based incentive fees accrued during the period. Accrued Unpaid Income Incentive Fees in the amount of $0.8 million were deferred in accordance with the Investment Management Agreement. There was no Capital Gains Fee earned by GECM as calculated under the Investment Management Agreement for the period ended December 31, 2016 because our cumulative net realized gains were offset by the realized losses due to purchase accounting in the Merger.

Payment of Expenses

The services of all investment professionals and staff of GECM, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by GECM. We bear all other costs and expenses of our operations and transactions, including (without limitation):

• our organizational expenses;

• fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to our investments, including, among others, professional fees (including the fees and expenses of counsel, consultants and experts) and fees and expenses relating to, or associated with, evaluating, monitoring, researching and performing due diligence on investments and prospective investments (including payments to third party vendors for financial information services);

• out-of-pocket fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to the provision of managerial assistance to our portfolio companies that we agree to provide such services to under the Investment Company Act (exclusive of the compensation of any investment professionals of GECM);

• interest or other costs associated with debt, if any, incurred to finance our business;

• fees and expenses incurred in connection with our membership in investment company organizations;

• brokers’ commissions;

• investment advisory and management fees;

• fees and expenses associated with calculating our net asset value (including the costs and expenses of any independent valuation firm);

• fees and expenses relating to offerings of our common stock and other securities;

• legal, auditing or accounting expenses;

• federal, state and local taxes and other governmental fees;

• the fees and expenses of GECM, in its role as the administrator, and any sub-administrator, our transfer agent or sub-transfer agent, and any other amounts payable under the Administration Agreement, or any similar administration agreement or sub-administration agreement to which we may become a party;

• the cost of preparing stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of our securities;

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• the expenses of and fees for registering or qualifying our shares for sale and of maintaining our registration and registering us as a broker or a dealer;

• the fees and expenses of our directors who are not interested persons (as defined in the Investment Company Act);

• the cost of preparing and distributing reports, proxy statements and notices to stockholders, the SEC and other governmental or regulatory authorities;

• costs of holding stockholders’ meetings;

• listing fees;

• the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by our charter or bylaws insofar as they govern agreements with any such custodian;

• any amounts payable under the Administration Agreement;

• our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• our allocable portion of the costs associated with maintaining any computer software, hardware or information technology services (including information systems, Bloomberg or similar terminals, cyber security and related consultants and email retention) that are used by us or by GECM or its respective affiliates on our behalf (which allocable portion shall exclude any such costs related to investment professionals of GECM providing services to us);

• direct costs and expenses incurred by us or GECM in connection with the performance of administrative services on our behalf, including printing, mailing, long distance telephone, cellular phone and data service, copying, secretarial and other staff, independent auditors and outside legal costs;

• all other expenses incurred by us or GECM in connection with administering our business (including payments under the Administration Agreement) based upon our allocable portion of GECM’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs (including reasonable travel expenses); and

• costs incurred by us in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business.

Pursuant to a reimbursement provision of the Administration Agreement, GECM agreed that the aggregate amount of expenses accrued for reimbursement that pertain to direct compensation costs of financial, compliance and accounting personnel that perform services for us, including the fees charged by any sub-administrator to provide such personnel to us for the twelve months ending November 3, 2017, when taken together with such expenses reimbursed or accrued for reimbursement by us pursuant to the Administration Agreement during such period, shall not exceed 0.50% of our average net asset value during such period. Our expenses did not exceed the cap for the period, and as such no reimbursement was required under the agreement.

Duration and Termination

Our Board approved the Investment Management Agreement on August 8, 2016, and our stockholders approved the Investment Management Agreement on August 8, 2016. Unless terminated earlier, the Investment Management Agreement will continue in effect until September 27, 2018, and will renew for successive annual periods thereafter if approved annually by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not “interested persons.” The Investment Management Agreement will automatically terminate if it is assigned. The Investment Management Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other.

Conflicts of interest may arise if GECM seeks to change the terms of the Investment Management Agreement, including, for example, the terms for compensation. Except in limited circumstances, any change to the Investment Management Agreement must be submitted to stockholders for approval under the Investment Company Act and we may from time to time decide it is appropriate to seek stockholder approval to change the terms of the Investment Management Agreement.

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Indemnification

We agreed to indemnify GECM, its stockholders and their respective officers, managers, partners, agents, employees, controlling persons, members and any other person affiliated with it, to the fullest extent permitted by law, 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, 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 our investment adviser.

Organization of the Investment Adviser

GECM is a Delaware corporation and is registered as an investment adviser under the Advisers Act. GECM’s principal executive offices are located at 800 South Street, Suite 230, Waltham, MA 02453.

Regulation as a Business Development Company

We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority of the outstanding voting securities, as required by the Investment Company Act. A majority of the outstanding voting securities of a company is defined under the Investment Company Act as the lesser of:

• 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or

• more than 50% of the outstanding voting securities of such company.

A majority of our directors must be persons who are not interested persons, as that term is defined in the Investment Company Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

We are required to meet a coverage ratio of the value of total assets to total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 150%. We may also be prohibited under the Investment Company Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.

We are generally unable to sell shares of our common stock at a price below net asset value per share. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage. We may, however, sell shares of our common stock at a price below net asset value per share:

• in connection with a rights offering to our existing stockholders,

• with the consent of the majority of our common stockholders, or

• under such other circumstances as the SEC may permit.

For example, we may sell shares of our common stock at a price below the then current net asset value of our common stock if our Board determines that such sale is in our and our stockholders’ best interests, and our stockholders approve our policy and practice of making such sales. In any such case, under such circumstances, the price at which shares of our common stock may be the fair value of such shares of common stock. We may be examined by the SEC for compliance with the Investment Company Act.

We may not acquire any assets other than “qualifying assets” unless, at the time we make such acquisition, the value of our qualifying assets represents at least 70% of the value of our total assets. The principal categories of qualifying assets relevant to our business are:

• securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;

• securities received in exchange for or distributed with respect to securities described in the bullet above or pursuant to the exercise of options, warrants or rights relating to such securities; and

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• cash, cash items, government securities or high quality debt securities (within the meaning of the Investment Company Act), maturing in one year or less from the time of investment.

An eligible portfolio company is generally a domestic company that is not an investment company (other than a small business investment company wholly owned by a BDC) and that:

• does not have a class of securities with respect to which a broker may extend margin credit at the time the acquisition is made;

• is controlled by the BDC and has an affiliate of the BDC on its board of directors;

• does not have any class of securities listed on a national securities exchange;

• is a public company that lists its securities on a national securities exchange with a market capitalization of less than $250.0 million; or

• meets such other criteria as may be established by the SEC.

Control, as defined by the Investment Company Act, is presumed to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the portfolio company.

In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in eligible portfolio companies, or in other securities that are consistent with its purpose as a BDC.

To include certain securities described above as qualifying assets for the purpose of the 70% test, a BDC must offer to the issuer of those securities managerial assistance such as providing guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company. We offer to provide managerial assistance to our portfolio companies.

Pending investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which are referred to, collectively, as temporary investments, so that 70% of our assets, as applicable, are qualifying assets. We make purchases that are consistent with our purpose of making investments in securities described in paragraphs 1 through 3 of Sec. 55(a) of the Investment Company Act. We will invest in U.S. Treasury bills or in repurchase agreements that are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our gross assets constitute repurchase agreements from a single counterparty, we would not meet the diversification tests in order to qualify as a RIC for federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit.

We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock, if our asset coverage, as defined in the Investment Company Act, is at least equal to 150% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of our common stock unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our gross assets for temporary purposes without regard to asset coverage.

We and GECM have each adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our or GECM’s personnel, respectively. Our and GECM’s codes of ethics generally do not permit investments by our or GECM’s employees, as applicable, in securities that may be purchased or held by us or GECM, as applicable. You may read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. In addition, each code of ethics is available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may also obtain copies of the codes of ethics, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

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Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to GECM. The Proxy Voting Policies and Procedures of GECM are set forth below. The guidelines are reviewed periodically by GECM and our non-interested directors, and, accordingly, are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, “we,” “our” and “us” refers to GECM.

Introduction

As an investment adviser registered under the Advisers Act, GECM has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, GECM recognizes that it must vote client securities in a timely manner free of conflicts of interest and in the best interests of its clients.

These policies and procedures for voting proxies for GECM’s investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Proxy Policies

GECM votes proxies relating to our portfolio securities in what it perceives to be the best interest of its clients. GECM reviews on a case-by-case basis each proposal submitted to a shareholder vote to determine its impact on the portfolio securities held by its clients. Although GECM generally votes against proposals that may have a negative impact on its clients’ portfolio securities, GECM may vote for such a proposal if there exists compelling long-term reasons to do so.

GECM proxy voting decisions are made by the senior officers who are responsible for monitoring each of its clients’ investments. To ensure that our vote is not the product of a conflict of interest, GECM requires that: (i) anyone involved in the decision-making process disclose to our Chief Compliance Officer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision-making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

Proxy Voting Records

You may obtain information about how GECM voted proxies by making a written request for proxy voting information to: Chief Compliance Officer, Great Elm Capital Corp., 800 South Street, Suite 230, Waltham, MA 02453.

Material Federal Income Tax Matters

We elected to be taxed as a RIC beginning with our tax year that began on October 1, 2016 and ended on December 31, 2016, and we intend to continue to qualify to be taxed as a RIC under the Code. To continue to qualify as a RIC, we must, among other things, (a) derive in each taxable year at least 90 percent of our gross income from dividends, interest (including tax-exempt interest), payments with respect to certain securities, loans, gains from the sale or other disposition of stock, securities or foreign currencies, other income (including but not limited to gain from options, futures and forward contracts) derived with respect to our business of investing in stock, securities or currencies, or net income derived from an interest in a “qualified publicly traded partnership” (a “QPTP”); and (b) diversify our holdings so that, at the end of each quarter of each taxable year (i) at least 50 percent of the market value of our total assets is represented by cash and cash items, U.S. Government securities, the securities of other RICs and other securities, with other securities limited, in respect of any one issuer, to an amount not greater than five percent of the value of our total assets and not more than 10 percent of the outstanding voting securities of such issuer (subject to the exception described below), and (ii) not more than 25 percent of the market value of our total assets is invested in the securities (other than U.S. Government securities and the securities of other RICs) (A) of any issuer, (B) of any two or more issuers that we control and that are determined to be engaged in the same business or similar or related trades or businesses, or (C) of one or more QPTPs. We may generate certain income that might not qualify as good income for purposes of the 90% annual gross income requirement described above. We will monitor our transactions to endeavor to prevent our disqualification as a RIC.

If we fail to satisfy the 90% annual gross income requirement or the asset diversification requirements discussed above in any taxable year, we may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis failures of the asset diversification requirements where we correct the failure within a specified period. If the applicable relief provisions are not available or cannot be met, all of our income would be subject to corporate-level U.S. federal income tax as described below. We cannot provide assurance that we would qualify for any such relief should we fail the 90% annual gross income requirement or the asset diversification requirements discussed above.

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As a RIC, in any taxable year with respect to which we timely distribute at least 90% of the sum of:

• our investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gain over net long-term capital loss and other taxable income (other than any net capital gain), reduced by deductible expenses) determined without regard to the deduction for dividends and distributions paid; and

• net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) (the “Annual Distribution Requirement”).

We (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gain (generally, net long-term capital gain in excess of short-term capital loss) that we distribute to our stockholders. We intend to distribute annually all or substantially all of such income on a timely basis.

To the extent that we retain our net capital gain for investment or any investment company taxable income, we will be subject to U.S. federal income tax at the regular corporate income tax rates. We may choose to retain our net capital gains for investment or any investment company taxable income, and pay the associated federal corporate income tax, including the federal excise tax described below.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible four percent U.S. federal excise tax payable by us. To avoid this tax, we must distribute (or be deemed to have distributed) during each calendar year an amount equal to the sum of:

• at least 98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

• at least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made by us to use our taxable year); and

• certain undistributed amounts from previous years on which we paid no U.S. federal income tax.

While we generally intend to distribute any income and capital gains in the manner necessary to minimize imposition of the four percent federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. For example, we may be required to recognize OID interest for U.S. federal income tax purposes, which may involve the recognition of distributable income without a corresponding receipt of cash (“phantom income”). Our Board may determine that it is in our stockholders’ best interest for us to pay tax on such phantom income rather that borrow or liquidate portfolio positions to fund a cash distribution to stockholders of such amounts to avoid imposition of the excise tax. In that event, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.

If, in any particular taxable year, we do not satisfy the Annual Distribution Requirement or were to fail to qualify as a RIC (for example, because we fail the 90% annual gross income requirement described above), and relief is not available as discussed above, all of our taxable income (including our net capital gains) will be subject to tax at regular corporate rates without any deduction for distributions to stockholders, and distributions generally will be taxable to the stockholders as ordinary dividends to the extent of our current and accumulated earnings and profits.

We may decide to be taxed as a regular corporation even if we would otherwise qualify as a RIC if we determine that treatment as a corporation for a particular year would be in our best interests.

If we realize a net capital loss, the excess of our net short-term capital loss over our net long-term capital gain is treated as a short-term capital loss arising on the first day of our next taxable year and the excess of our net long-term capital loss over our net short-term capital gain is treated as a long-term capital loss arising on the first day of our next taxable year. If future capital gain is offset by carried forward capital losses, such future capital gain is not subject to fund-level U.S. federal income tax, regardless of whether they are distributed to stockholders. Accordingly, we do not expect to distribute any such offsetting capital gain. A RIC cannot carry back or carry forward any net operating losses.

Our Investments

Certain of our investment practices are subject to special and complex U.S. federal income tax provisions that may, among other things:

• disallow, suspend or otherwise limit the allowance of certain losses or deductions, including the dividends received deduction;

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• convert lower taxed long-term capital gain and qualified dividend income into higher taxed short-term capital gain or ordinary income;

• convert ordinary loss or a deduction into capital loss (the deductibility of which is more limited);

• cause us to recognize income or gain without a corresponding receipt of cash;

• adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur;

• adversely alter the characterization of certain complex financial transactions; and

• produce income that will not qualify as “good income” for purposes of the 90% annual gross income requirement described above.

We will monitor our transactions and may make certain tax elections and may be required to borrow money or dispose of securities (even if it is not advantageous to dispose of such securities) to mitigate the effect of these rules and prevent disqualification of us as a RIC.

Investments we make in securities issued at a discount or providing for deferred interest or PIK interest are subject to special tax rules that will affect the amount, timing and character of distributions to stockholders. For example, with respect to securities issued at a discount, we will generally be required to accrue daily as income a portion of the discount and to distribute such income on a timely basis each year to maintain our qualification as a RIC and to avoid U.S. federal income and excise taxes. Since in certain circumstances we may recognize income before or without receiving cash representing such income, we may have difficulty making distributions in the amounts necessary to satisfy the requirements for maintaining RIC status and for avoiding U.S. federal income and excise taxes. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify as a RIC and thereby be subject to corporate-level U.S. federal income tax.

Furthermore, a portfolio company in which we invest may face financial difficulty that requires us to work out, modify or otherwise restructure our investment in the portfolio company. Any such restructuring may result in unusable capital losses and future non-cash income. Any such restructuring may also result in our recognition of a substantial amount of non-qualifying income for purposes of the 90% gross income requirement or our receiving assets that would not count toward the asset diversification requirements.

Gain or loss recognized by us from warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. Such gain or loss generally will be long-term or short-term, depending on how long we held a particular warrant.

If we invest in foreign securities, we may be subject to withholding and other foreign taxes with respect to those securities. Stockholders will generally not be entitled to claim a U.S. foreign tax credit or deduction with respect to foreign taxes paid by us.

If we acquire shares in a “passive foreign investment company” (a “PFIC”), we may be subject to U.S. federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by us to our stockholders. Additional charges in the nature of interest may be imposed on us in respect of deferred taxes arising from such distributions or gains. If we invest in a PFIC and elect to treat the PFIC as a “qualified electing fund” under the Code (a “QEF”), in lieu of the foregoing requirements, we will be required to include in income each year a portion of the ordinary earnings and net capital gain of the QEF, even if such income is not distributed to us. Alternatively, we can elect to mark-to-market at the end of each taxable year our shares in a PFIC; in this case, we will recognize as ordinary income any increase in the value of such shares, and as ordinary loss any decrease in such value to the extent it does not exceed prior increases included in income. Our ability to make either election will depend on factors beyond our control. Under either election, we may be required to recognize in a year income in excess of our distributions from PFICs and our proceeds from dispositions of PFIC stock during that year, and such income will nevertheless be subject to the Annual Distribution Requirement and will be taken into account for purposes of the 4% excise tax.

If we hold 10% or more of the shares in or the value of a foreign corporation that is treated as a controlled foreign corporation (“CFC”), we may be required to include in our gross income our pro rata share of such CFC’s “subpart F income” and “global intangible low-taxed income” whether or not the corporation makes an actual distribution during such year. In general, a foreign corporation will be classified as a CFC if more than 50% of the shares of the corporation, measured by reference to combined voting power or value, is owned (directly, indirectly or by attribution) by U.S.

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Stockholders. A U.S. Stockholder, for this purpose, is any U.S. person that possesses (actually or constructively) 10% or more of the combined voting power of all classes of shares of or 10% or more of the value of a corporation. If we are treated as receiving a deemed distribution from a CFC, we will be required to include such distribution in our investment company taxable income regardless of whether we receive any actual distributions from such CFC, and we must distribute such income to satisfy the Annual Distribution Requirement and the Excise Tax Avoidance Requirement.

Although the Code generally provides that income inclusions from QEFs and deemed distributions of subpart F income and global intangible low-taxed income from CFCs will be “good income” for purposes of the 90% gross income requirement to the extent such income is distributed to a RIC in the year it is included in the RIC’s income, the Code does not specifically provide whether income inclusions from a QEF or deemed distributions from a CFC during the RIC’s taxable year with respect to which no distribution is received would be “good income” for the 90% gross income requirement. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF and deemed distributions from a CFC included in a RIC’s income would constitute “good income” for purposes of the 90% gross income requirement. The Department of the Treasury, however, has proposed regulations that would treat such income as not being “good income” for purposes of the 90% gross income requirement. In its explanation accompanying the proposed regulations, the Department of the Treasury takes the position that, notwithstanding prior private letter rulings to the contrary, the current language of the Code would treat such income as not being “good income” for purposes of the 90% gross income requirement even in the absence of the proposed regulations. Accordingly, such income may not be treated as “good income” if the proposed regulations are finalized or if the Department of the Treasury’s interpretation of current law applies. In such a case, we may fail to qualify as a RIC if we realize a material amount of such income.

Our functional currency is the U.S. dollar for U.S. federal income tax purposes. Under Section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time we accrue income, expenses or other liabilities denominated in a foreign currency and the time we actually collect such income or pay such expenses or liabilities are generally treated as ordinary income or loss. Similarly, gains or losses on foreign currency forward contracts and the disposition of debt denominated in a foreign currency, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss.

If we borrow money, we may be prevented by loan covenants from declaring and paying dividends in certain circumstances. Limits on our payment of dividends may prevent us from meeting the Annual Distribution Requirement, and may, therefore, jeopardize our qualification for taxation as a RIC, or subject us to the 4% excise tax.

Even if we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements, under the Investment Company Act, we are not permitted to make distributions to our stockholders while our debt obligations and senior securities are outstanding unless certain “asset coverage” tests are met. This may also jeopardize our qualification for taxation as a RIC or subject us to the 4% excise tax.

Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and (2) other requirements relating to our status as a RIC, including the asset diversification requirements. If we dispose of assets to meet the Annual Distribution Requirement, the asset diversification requirements, or the 4% excise tax, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

Some of the income that we might otherwise earn, such as lease income, management fees, or income recognized in a work-out or restructuring of a portfolio investment, may not satisfy the 90% gross income requirement. To manage the risk that such income might disqualify us as a RIC for a failure to satisfy the 90% gross income requirement, one or more of our subsidiaries treated as U.S. corporations for U.S. federal income tax purposes may be employed to earn such income. Such corporations will be required to pay U.S. corporate income tax on their earnings, which ultimately will reduce the yield to our stockholders on such income and fees.

Failure to Qualify as a RIC

If we were unable to qualify for treatment as a RIC, and relief is not available as discussed above, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders nor would we be required to make distributions for tax purposes. Distributions would generally be taxable to our stockholders as ordinary dividend income eligible for reduced maximum rates for non-corporate stockholders to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate U.S. stockholders would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. If we were to fail to meet the RIC requirements for

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more than two consecutive years and then to seek to requalify as a RIC, we would be required to recognize gain to the extent of any unrealized appreciation in our assets unless we made a special election to pay corporate level tax on any such unrealized appreciation recognized during the succeeding five-year period.

Administration Agreement

Our Board approved the Administration Agreement on August 8, 2016. Pursuant to the Administration Agreement, GECM furnishes us with, or otherwise arranges for the provision of, office facilities, equipment, clerical, bookkeeping, finance, accounting, compliance and record-keeping services at such office facilities and other such services as the Administrator. Under the Administration Agreement, GECM will, from time to time, provide, or otherwise arrange for the provision of, other services GECM determines to be necessary or useful to perform its obligations under the Administration Agreement, including retaining the services of financial, compliance, accounting and administrative personnel that perform services on our behalf, including personnel to serve as our Chief Financial Officer and Chief Compliance Officer. Under the Administration Agreement, GECM also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, GECM assists us in determining and publishing our net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments made by us to GECM under the Administration Agreement are equal to an amount based upon our allocable portion of GECM’s overhead in performing its obligations under the Administration Agreement, including our allocable portion of the cost of our officers (including our Chief Compliance Officer, Chief Financial Officer, Secretary and Treasurer) and their respective staffs. Our Board reviews the methodology employed in determining how the expenses are allocated to us. Our Board assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our Board considers whether any third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our Board compares the total amount paid to GECM for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

We bear all costs and expenses that are incurred in our operation and transactions and not specifically assumed by GECM pursuant to the Investment Management Agreement. To the extent that GECM outsources any of its functions, we will reimburse GECM for the fees associated with such functions without profit or benefit to GECM. GECM agreed that the aggregate amount of expenses accrued for reimbursement that pertain to direct compensation costs of financial, compliance and accounting personnel that perform services for us, including the fees charged by any sub-administrator to provide such personnel to us for the twelve months ending November 4, 2017, when taken together with such expenses reimbursed or accrued for reimbursement by us pursuant to the Administration Agreement during such period, shall not exceed 0.50% of our average net asset value during such period.

The Administration Agreement provides that, to the fullest extent permitted by law, 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, its members and their respective officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from or otherwise based upon the rendering of GECM’s services under the Administration Agreement or otherwise as our administrator.

Great Elm License Agreement

We entered into a license agreement with GEC pursuant to which GEC granted us a non-exclusive, royalty-free license to use the name “Great Elm Capital Corp.” Under the license agreement, we have a right to use the Great Elm Capital Corp. name and the Great Elm Capital logo for so long as GECM, or an affiliate thereof, remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “Great Elm Capital Corp.” name. The license agreement may also be terminated by either party without penalty upon 60 days’ written notice to the other.

Brokerage Allocation and Other Practices

GECM does not expect to execute our transactions through any particular broker or dealer, but it plans to seek to obtain the best net results for us taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities. While GECM will generally seek reasonably competitive trade execution costs, we will

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not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, GECM may select a broker based partly upon brokerage or research services provided to GECM, us or GECM’s other clients. In return for such services, we may pay a higher commission than other brokers would charge if we or GECM determines in good faith that such commission is reasonable in relation to the services provided.

Properties

Our executive offices are located at 800 South Street, Suite 230, Waltham, MA 02453, and are provided by GECM in accordance with the terms of the Administration Agreement.

Legal Proceedings

From time to time, we, our investment adviser or administrator may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies.

We are named as a defendant in a lawsuit captioned Intrepid Investments, LLC v. London Bay Capital, which is pending in the Delaware Court of Chancery. This lawsuit was brought by a member of Selling Source, LLC, one of our portfolio investments, against various members of and lenders to Selling Source. The plaintiff asserts claims of aiding and abetting, breaches of fiduciary duty, and tortious interference against us. As of June 30 2018, we held $5.69 million in principal amount, or approximately 6%, of Selling Source’s outstanding senior bank debt. The lawsuit was filed on March 5, 2016 and the plaintiff immediately agreed to stay the action in light of an ongoing mediation among parties other than us. In June 2018, 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, we joined the other defendants in a motion to dismiss on various grounds. We intend to continue to monitor the matter and will assess the need to defend the matter further as necessary.

We were named in two related complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al, filed on September 23, 2016 (the “Saunders Action”), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the “Russell Action”), in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the “Circuit Court”), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the “Speiser Action”, and together with the Russell Action, the “State Court Actions”) (the State Court Actions, together with the Saunders Action, the “Actions”).

On October 24, 2016, we, along with Full Circle, GECC, MAST Capital, certain directors of Full Circle and the plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the “MOU”). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and GECC agreed to and did make the supplemental disclosures with respect to the Merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the “Stipulation”) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the merger agreement between GECC and Full Circle; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle’s stockholders. In March 2018, the Saunders Action was voluntarily dismissed by the plaintiff without prejudice. In August 2018, the State Court Actions were dismissed by the Circuit Court without prejudice for failure to prosecute.

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. Dr. Pumphrey, a personal guarantor of the loan made by Full Circle, our predecessor in interest, brought counterclaims in (i) the District Court of Caldwell County, Texas and (ii) the District Court of Harris County, Texas against, among others, Justin Bonner, an employee of GECM, in each case, alleging breach of a confidentiality agreement and tortious interference with Dr. Pumphrey’s attempted sale of a business in which he owned an interest. In August 2017, Dr. Pumphrey voluntarily withdrew his complaint against Mr. Bonner in the District Court of Harris County, Texas. In November 2016, Dr. Pumphrey voluntarily withdrew his complaint without prejudice against Full Circle in the District Court of Caldwell County, Texas. On November 29, 2017, Mr. Pumphrey refiled his claims in the District Court of Harris County, Texas naming Full Circle, MAST Capital, GECC and GECM as defendants. Dr. Pumphrey is seeking between $2 million and $6 million in damages. GECC believes Dr. Pumphrey’s claims to be frivolous and intends to vigorously defend them. Furthermore, we continue to pursue our initial claims against Dr. Pumphrey in the District Court of Caldwell County, Texas.

In September 2018, we, the other lenders, and the lender trustee under PEAKS Trust 2009-1, were named as defendants in a claim brought by the chapter 7 trustee in the ITT Educational Services bankruptcy. We are continuing to monitor this matter.

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Custodian and Transfer Agent

Our securities and a portion of our cash is held in safekeeping by State Street Bank and Trust Company located at 100 Huntington Avenue, Boston, MA 02116. American Stock Transfer & Trust Company, LLC acts as our transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 6201 15th Avenue, Brooklyn, NY 11219.

Our Common Stock

Our common stock is traded on Nasdaq under the symbol “GECC.” The following table sets forth the range of high and low sales prices of our common stock as reported on Nasdaq, our net asset value per share for each fiscal quarter since our shares began trading in the public markets on November 7, 2016 and the sales price as a premium (discount) to our net asset value per share as reported on Nasdaq. The last reported sales price of our common stock on October 8, 2018 was $9.65 per share. As of October 8, 2018, we had 12 stockholders of record.

			Price Range				High Sales Price			Low Sales Price
	NAV(1)		High		Low		Premium (Discount) to NAV(2)			Premium (Discount) to NAV(2)
Fiscal 2018
Fourth Quarter (through October 8, 2018)		*	$	9.75	$	9.42		*			*
Third quarter		*	$	10.07	$	9.18		*			*
Second quarter	$	11.79	$	9.70	$	9.11		(18	)%		(23	)%
First quarter	$	11.79	$	10.45	$	8.90		(11	)%		(25	)%
Fiscal 2017
Fourth quarter	$	12.42	$	10.48	$	8.76		(15	)%		(29	)%
Third quarter	$	12.38	$	11.30	$	10.46		(9	)%		(16	)%
Second quarter	$	13.29	$	11.55	$	10.25		7	%		(5	)%
First quarter	$	13.59	$	11.82	$	10.74		(13	)%		(21	)%
Fiscal 2016
Fourth quarter (beginning November 7, 2016)	$	13.52	$	11.90	$	10.35		(12	)%		(23	)%

(1) Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of the relevant quarter.

(2) Calculated by taking the respective high or low sales price, dividing it by net asset value (in each case, as of the end of the applicable quarter), and subtracting 1 from the result.

* Net asset value has not been calculated for this period.

Privacy Principles

We are committed to maintaining the privacy of our stockholders and to safeguarding their nonpublic personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

Generally, we do not receive any nonpublic personal information relating to our stockholders, although certain nonpublic personal information of our stockholders may become available to us. We do not disclose any nonpublic personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).

We restrict access to nonpublic personal information about our stockholders to employees of GECM and its affiliates with a legitimate business need for the information. We intend to maintain physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our stockholders.

Distributions

We offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we have any senior securities outstanding, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the Investment Company Act or if distributions are limited by the terms of any of our borrowings.

The following table lists the cash distributions, including dividends and returns of capital, if any, per share that we have declared since our formation on April 22, 2016.

Date Declared	Record Date	Payment Date	Per Share Amount
Fiscal 2018:
November 2, 2017	January 31, 2018	February 15, 2018	$	0.083
November 2, 2017	February 28, 2018	March 15, 2018		0.083
November 2, 2017	March 30, 2018	April 16, 2018		0.083
March 9, 2018	April 30, 2018	May 15, 2018		0.083
March 9, 2018	May 31, 2018	June 15, 2018		0.083
March 9, 2018	June 29, 2018	July 16, 2018		0.083
May 3, 2018	July 31, 2018	August 15, 2018		0.083
May 3, 2018	August 31, 2018	September 14, 2018		0.083
May 3, 2018	September 28, 2018	October 15, 2018		0.083
August 8, 2018	October 31, 2018	November 15, 2018		0.083
August 8, 2018	November 30, 2018	December 14, 2018		0.083
August 8, 2018	December 31, 2018	January 15, 2019		0.083
Total 2018			$	0.996

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Fiscal 2017:
December 22, 2016	January 31, 2017	February 16, 2017	$	0.083
December 22, 2016	February 28, 2017	March 15, 2017		0.083
December 22, 2016	March 31, 2017	April 17, 2017		0.083
March 22, 2017	April 28, 2017	May 15, 2017		0.083
March 22, 2017	May 31, 2017	June 15, 2017		0.083
March 22, 2017	June 30, 2017	July 14, 2017		0.083
May 11, 2017	July 31, 2017	August 15, 2017		0.083
May 11, 2017	August 31, 2017	September 15, 2017		0.083
May 11, 2017	September 29, 2017	October 13, 2017		0.083
August 8, 2017	October 31, 2017	November 15, 2017		0.083
August 8, 2017	November 30, 2017	December 15, 2017		0.083
August 8, 2017	December 29, 2017	January 16, 2018		0.083
December 26, 2017	December 29, 2017	January 30, 2018		0.200
Total 2017			$	1.196
Fiscal 2016:
December 22, 2016	December 30, 2016	January 16, 2017	$	0.166
Total 2016			$	0.166

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a taxable return of capital to our stockholders. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our taxable ordinary income or capital gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our taxable ordinary income or capital gains.

During the year ended December 31, 2017, our distributions were made primarily from undistributed net investment income. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a BDC under the Investment Company Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable RIC tax treatment.

Issuer Purchases of Shares

In the prospectus for the Merger, we announced that we would initiate a stock buyback program in an aggregate amount of $15.0 million. Our Board subsequently increased the overall size of the stock buyback program by a further $35.0 million. During the year ended December 31, 2017 we purchased an aggregate of 2,138,479 shares in a tender offer and through our stock buyback program at a weighted average price of $11.20 per share. As of June 30, 2018, we had cumulatively purchased 2,236,651 shares under the tender offer and stock buyback program at a weighted average price of $11.18 per share, resulting in $15.0 million of cumulative cash paid, under the program since November 4, 2016. Including the tender offer, we utilized $25.0 million under our stock buyback and tender program for repurchasing shares.

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Month	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans  or Program		Maximum Number (or Approximate Dollar Value) of Shares that May Yet  Be Purchased Under the Plans or Programs (Amounts in dollars)
January 2017		132,434	$	11.48		132,434	$	12,425,611
February 2017		72,678	$	11.26		72,678	$	11,607,509
March 2017		40,617	$	11.09		40,617	$	11,157,069
April 2017		16,846	$	11.38		16,846	$	10,965,351
May 2017(1)		944,535	$	11.44		944,535	$	10,158,772
June 2017		15,215	$	10.42		15,215	$	10,000,182
July 2017		47,961	$	10.73		47,961	$	9,485,725
August 2017		37,666	$	10.78		37,666	$	9,079,585
September 2017		753,097	$	11.00		753,097	$	792,735
October 2017		65,945	$	10.27		65,945	$	115,277
November 2017		11,485	$	10.04		11,485	$	—
Total 2017		2,138,479	$	11.20		2,138,479
November 2016		16,030	$	10.79		16,030	$	14,826,985
December 2016		82,142	$	10.72		82,142	$	13,946,200
Total 2016		98,172	$	10.73		98,172
Total		2,236,651	$	11.18		2,236,651	$	—

(1) Share amounts in this line include the repurchase of 869,565 shares on May 12, 2017 in the $10.0 million tender offer we announced on March 30, 2017 that expired on May 5, 2017.

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MANAGEMENT

Board of Directors

Our Board is divided into three classes. Directors are elected for staggered terms, with the term of office of only one of these three classes of directors expiring at each annual meeting of stockholders. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies. Our directors have been divided into two groups — interested directors and independent directors. An interested director is an “interested person” as defined in Section 2(a)(19) of the Investment Company Act.

The address for each of our directors is c/o Great Elm Capital Corp., 800 South Street, Suite 230, Waltham, MA 02453.

Name, Address and Age	Position(s) Held with GECC	Term of Office (Length of Time Served)	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Director(2)	Other Directorships Held by Director During Past 5 Years
Peter A. Reed (38)(1)	Chairman of the Board of Directors, President and Chief Executive Officer	Until 2019 (since inception)	President and Chief Executive Officer – GECC Chief Investment Officer – Great Elm Capital Management, Inc. Chief Executive Officer – Great Elm Capital Group, Inc. (“GEC”) Partner and Portfolio Manager – MAST Capital	3	GEC GECM GECC GP Corp. Great Elm FM Acquisition, Inc. Great Elm FM Holdings, Inc. Avanti Communications Group PLC International Wire Group Holdings Inc. Nebraska Book Holdings, Inc
Randall Revell Horsey (56)	Director	Until 2021 (since 2017)	Senior Vice President and Managing Director of North America – MEGA International Co-founder and President – HelloWallet	N/A	Acquicore, Inc.
John E. Stuart (52)(3)	Director	Until 2021 (since 2016)	Managing Director – A.L. Stuart Financial Services LLC Managing Member – Full Circle Private Investments, LLC Co-Chief Executive Officer – Full Circle Capital Corporation (“Full Circle”)	N/A	Full Circle
Mark Kuperschmid (56)	Director	Until 2020 (since inception)	Co-Head of Technology Investment Banking- Bank of America Securities	N/A	None.
Michael C. Speller (49)	Director	Until 2020 (since 2017)	Managing Director and Head of Debt Advisory, North America – Rothschild & Co. Managing Director in the Leveraged Finance Origination and Restructuring Group – Credit Suisse	N/A	None.

(1) Mr. Reed is an interested person as defined under 2(a)(19) of the Investment Company Act due to his position as our Chief Executive Officer and his position as Chief Investment Officer of GECM.

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(2) Mr. Reed is also a director of GECM. GECM is responsible for the day-to-day management of three separately managed amounts for an institutional investor.

(3) John E. Stuart is an interested person as defined under 2(a)(19) of the Investment Company Act due to his prior position as chief executive officer and directorship with Full Circle.

Peter A. Reed has been our President and Chief Executive Officer since inception and is the current Chairman of our Board. Mr. Reed is Chief Investment Officer of GECM, Chief Executive Officer of GEC and has served as one of GEC’s directors since May 2015. Mr. Reed is also currently a member of the board of directors of GECM, GECC GP Corp., Great Elm FM Acquisition, Inc., Great Elm FM Holdings, Inc. and Avanti, a UK-based satellite services provider. Previously, Mr. Reed served as a director of International Wire Group Holdings Inc., a wire products manufacturing company, and chairman of the board of Nebraska Book Holdings, Inc, a retailer in the college bookstore industry. Mr. Reed was also a Partner and Portfolio Manager of MAST Capital from 2004 to September 2017. Prior to joining MAST Capital in 2004, Mr. Reed was an investment banking analyst at Brown, Gibbons, Lang & Company where he worked on mergers and acquisitions, in-court and out-of-court financial restructurings, and debt and equity private placements for middle-market companies. Mr. Reed is an “interested person” of GECC as defined in the Investment Company Act due to his position as Chief Investment Officer of GECM, our investment adviser.

John E. Stuart was Full Circle’s chairman through November 2016. Mr. Stuart served as Full Circle’s chief executive officer from Full Circle’s formation until November 2013, and Full Circle’s co-chief executive officer from November 2013 through February 8, 2015. Since February 2017, Mr. Stuart has been a Managing Director of A.L. Stuart Financial Services LLC, the parent company of A.L. Stuart Investments, LLC, a registered investment advisor. In addition, Mr. Stuart is a managing member of Full Circle Private Investments, LLC. Mr. Stuart co-founded Full Circle Funding, LP in 2005 and is a managing partner. Prior to founding Full Circle Funding, LP, from 2002 to 2004, Mr. Stuart was managing member of Excess Capital LLC which provided financial advisory services and structured and funded equity and debt investments. Prior thereto he was co-founder and president of Titan Outdoor Holdings, a New York-based outdoor advertising company, between 1999 and 2002, and was a director until its sale in 2005. Prior thereto, Mr. Stuart was a managing director in the Corporate Finance Department of Prudential Securities Incorporated between 1996 and 1999. Mr. Stuart began his career at Oppenheimer & Co. Inc. where he was a member of the Mergers and Acquisitions Group and Corporate Finance Department from 1988 to 1996. Mr. Stuart is an “interested person” of GECC as defined in the Investment Company Act due to his prior positions with Full Circle.

Michael C. Speller is a Managing Director and Head of Debt Advisory, North America for Rothschild & Co. Mr. Speller has over 20 years of investment banking and leveraged finance experience which has involved a wide range of debt capital markets products and situations including leveraged loans, high yield bonds, acquisition finance commitments, exchange offers and restructuring. Before joining Rothschild in 2017, Mr. Speller was a Managing Director in the Leveraged Finance Origination and Restructuring Group at Credit Suisse where, from 2008, he led the firm’s leveraged finance origination activities for the Global Industrials Group. From 2005 to 2008, Mr. Speller was involved in a broader range of industry leveraged finance coverage, including the retail, real estate and media and telecom sectors. Prior to 2005, Mr. Speller was a member of the Media & Telecom investment banking groups at Credit Suisse First Boston and Donaldson, Lufkin & Jenrette and previously held positions at the GulfStar Group and NationsBank Corp. Mr. Speller holds a Master of Business Administration degree from Columbia Business School and a Bachelor of Business Administration degree from the University of Texas at Austin.

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Randall Revell Horsey has been Senior Vice President & Managing Director of North America for MEGA International, a global software firm helping companies manage enterprise complexity by giving them an interactive view of their operations, since 2017. Mr. Horsey has been a member of the board of directors of Acquicore, Inc., a private real-time energy and management software company since October 2014 and was its interim Chief Financial Officer until 2017. From August 2009 to March 2013, he was a co-founder, president and director of HelloWallet, a software as a service (SaaS) personal financial management company that was subsequently acquired by Morningstar in 2014. Horsey was also an executive at Bank of America, where he ran the Technology Corporate and Investment banking practice and, prior to that, the Equity Capital Markets group. He began his career with The First Boston Corporation and Alex, Brown & Sons.

Mark Kuperschmid is our Lead Independent Director. Mr. Kuperschmid has been a private investor/advisor during the past decade across a variety of industries, and has served in operating roles or provided strategic consulting services with respect to several investments. Mr. Kuperschmid has served as co-founder and partner of Benchmark Investments, LLC since 2005. He previously served as Co-Head of Technology Investment Banking for Banc of America Securities from 1995 to 2002 and ran Trammell Crow Company’s Northern California commercial real estate operation from 1988 to 1994. He began his career as a financial analyst with Morgan Stanley in New York.

Executive Officers

The address for each executive officer is c/o Great Elm Capital Corp., 800 South Street, Suite 230, Waltham, MA 02453.

Name, Address and Age	Position(s) Held with GECC	Term of Office (Length of Time Served)	Principal Occupation(s) During Past 5 Years
Peter A. Reed (38)	Chairman of the Board of Directors, President and Chief Executive Officer	Since inception	President and Chief Executive Officer – GECC Chief Investment Officer – GECM Chief Executive Officer – GEC Partner and Portfolio Manager – MAST Capital
John J. Woods (45)(1)	Chief Financial Officer and Treasurer	Since June 2018	Chief Financial Officer – GEC Chief Financial Officer – GECM Chief Financial Officer, Treasurer, and Corporate Controller – Providence Equity Partners LLC
Adam M. Kleinman (43)	Chief Compliance Officer and Secretary	Since October 2017	Chief Operating Officer, Chief Compliance Officer and General Counsel – GECM President and Chief Operating Officer – GEC Partner, Chief Operating Officer and General Counsel – MAST Capital

(1) Mr. Woods was appointed Chief Financial Officer and Treasurer after Michael J. Sell’s resignation in June 2018.

Peter A. Reed See “—Board of Directors” above.

John J. Woods has been our Chief Financial Officer and Treasurer since June 2018. Mr. Woods has also served as the Chief Financial Officer of GEC and GECM since September 2017. Previously, Mr. Woods held various positions at Providence Equity Partners LLC, a multi-strategy global asset management firm, including Corporate Controller and Treasurer and Chief Financial Officer of the capital markets division. Prior to joining Providence Equity Partners LLC, Mr. Woods was a Director of Finance at NewStar Financial, a publicly traded middle-market lender. Mr. Woods received a Master of Business Administration from Suffolk University, a Bachelor of Arts from Saint Anselm College and is a Certified Public Accountant.

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Adam M. Kleinman has been our Chief Compliance Officer and Secretary since October 2017. Mr. Kleinman has served as GEC’s President and Chief Operating Officer since March 2018, and as GECM’s Chief Operating Officer, Chief Compliance Officer and General Counsel since November 2016. Mr. Kleinman was a Partner, Chief Operating Officer and General Counsel of MAST Capital from 2009 to September 2017. Prior to joining MAST Capital, Mr. Kleinman was an associate in the Banking and Leverage Finance group at Bingham McCutchen LLP, where he represented financial institutions, hedge funds and corporate borrowers in a broad range of commercial finance transactions.

Corporate Governance

Code of Ethics

We have adopted a code of ethics which applies to, among others, our senior officers, including our Chief Executive Officer and its Chief Financial Officer. Our code of ethics can be accessed via our website at http://www.greatelmcc.com. We intend to disclose any amendments to or waivers of required provisions of the code by filing reports on Form 8-K.

Director Independence

In accordance with Nasdaq’s rules, our Board will annually determine each director’s independence. We will not consider a director independent unless the Board has determined that he or she has no material relationship with us or GECM. We will monitor the relationships of our directors and officers through a questionnaire each director will complete no less frequently than annually and update periodically as information provided in the most recent questionnaire changes.

In order to evaluate the materiality of any such relationship, the Board will use the definition in Nasdaq’s Rule 5605(a)(2), which provides that a director of a BDC shall be considered to be independent if he or she is not an “interested person” of the BDC, as defined in Section 2(a)(19) of the Investment Company Act.

Our Board determined that each of the directors is independent and has no relationship with us, except as a director and stockholder, with the exception of Messrs. Reed and Stuart.

Additional Information About Our Board and Its Leadership Structure

Our Board monitors and performs an oversight role with respect to our business and affairs, including with respect to investment practices and performance, compliance with regulatory requirements and the services, expenses and performance of service providers to us. Among other things, our Board considers the appointment of our investment manager, administrator and officers, and reviews and monitors the services and activities performed by our investment manager, administrator and officers and approves the engagement, and reviews the performance of, our independent public accounting firm.

Our Board may designate a chairman to preside over the meetings of the Board and meetings of the stockholders and to perform such other duties as may be assigned to her or him by the Board. We do not have a fixed policy as to whether the chairman of the Board should be an independent director. We maintain the flexibility to select the chairman and reorganize the leadership structure, from time to time, based on the criteria that are in the best interests of GECC and our stockholders at such times.

The members of our Board believe that each director’s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other directors lead to the conclusion that the directors possess the requisite experience, qualifications, attributes and skills to serve on the Board. Our Board believes that Mr. Reed’s history with MAST Capital, familiarity with our portfolio and GECM’s investment platform, and extensive knowledge of the financial services industry and the investment valuation process in particular qualify him to serve as the chairman of our Board.

Our Board does not have a formal diversity policy as it believes that a candidate’s overall experience and professional background are the most important factors in determining whether such candidate has the right qualifications to serve on our Board. In considering each individual for election as director, our Board took into account a variety of factors, including the candidate’s overall experience and professional background.

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The Investment Company Act requires that at least a majority of the members of our Board be independent directors. Currently, three of our five directors are independent directors. The Chairman of our Board is an interested person with respect to GECC. Mark Kuperschmid is currently serving as the Board’s lead independent director. As Lead Independent Director, Mr. Kuperschmid is responsible for coordinating the activities of the other independent directors and for such other duties as are assigned, from time to time, by our Board. Our Board has determined that its leadership structure, in which over 80% of the directors are not affiliated with GECM, is appropriate in light of the services that GECM and its affiliates provide to us and the potential conflicts of interest that could arise from these relationships.

Our corporate governance policies include regular meetings of the independent directors in executive session without the presence of interested directors and management, the establishment of audit, compensation, and nominating and corporate governance committees comprised solely of independent directors and the appointment of a Chief Compliance Officer, with whom the independent directors will meet regularly without the presence of interested directors and other members of management, for administering our compliance policies and procedures.

Our Board’s Role In Risk Oversight

Our Board performs its risk oversight function primarily through (1) its three standing committees, which report to the entire Board and are comprised solely of independent directors, (2) active monitoring of its Chief Compliance Officer and (3) our compliance policies and procedures.

As described below in more detail under “Committees of the Board of Directors,” the audit committee, the compensation committee and the nominating and corporate governance committee assist our Board in fulfilling its risk oversight responsibilities.

Our Board also performs its risk oversight responsibilities with the assistance of the Chief Compliance Officer. Our Board will annually review a written report from our Chief Compliance Officer discussing the adequacy and effectiveness of our and our service providers’ respective compliance policies and procedures. Our Chief Compliance Officer’s annual report will address, at a minimum:

• the operation of our and our service providers’ respective compliance policies and procedures since the last report;

• any material changes to such policies and procedures since the last report;

• any recommendations for material changes to such policies and procedures as a result of the Chief Compliance Officer’s annual review; and

• any compliance matter that has occurred since the date of the last report about which our Board would reasonably need to know to oversee our compliance activities and risks.

In addition, our Chief Compliance Officer meets separately in executive session with the independent directors at least once each year.

Our Board believes its role in risk oversight is effective, and appropriate given the extensive regulation to which it is already subject as a BDC. As a BDC, we are required to comply with regulatory requirements that control the levels of risk in our business and operations. For example, our ability to incur indebtedness is limited such that our asset coverage must equal at least 150% immediately after each time we incur indebtedness, we generally have to invest at least 70% of our gross assets in “qualifying assets” and are not generally permitted to invest in any portfolio company in which one of our affiliates currently has an investment.

Committees of the Board of Directors

GECC currently maintains an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. All directors who were directors during the fiscal year ended December 31, 2017 attended 100% of the aggregate number of meetings of our Board and of the respective committees on which they served. Other than Peter A. Reed, none of the members of the Board attended last year’s annual stockholders’ meeting.

We require each director to make a diligent effort to attend all Board and committee meetings, and encourage directors to attend the annual stockholders’ meeting.

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Audit Committee. Our audit committee operates pursuant to a charter, available on our website, which sets forth the responsibilities of the audit committee. Our audit committee’s responsibilities include establishing guidelines and making recommendations to our Board regarding the valuation of our loans and investments, selecting our independent registered public accounting firm, reviewing with such independent registered public accounting firm the planning, scope and results of their audit of our financial statements, pre-approving the fees for services performed, reviewing with the independent registered public accounting firm the adequacy of internal control systems, reviewing our annual financial statements and periodic filings and receiving our audit reports and financial statements. Our audit committee is composed of Messrs. Horsey, Kuperschmid, and Speller; all of whom are considered independent under Nasdaq’s rules and are not “interested persons” of GECC as that term is defined in Section 2(a)(19) of the Investment Company Act. Mr. Horsey serves as chairman of our audit committee. Our Board has determined that Mr. Horsey is an “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K, as promulgated under the Exchange Act. Each of Messrs. Horsey, Kuperschmid, and Speller meets the current independence and experience requirements of Rule 10A-3 under the Exchange Act. For the fiscal year ended December 31, 2017, the Board held seven audit committee meetings.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee operates pursuant to a charter, available on our website. The members of our nominating and corporate governance committee are Messrs. Horsey, Kuperschmid, and Speller; all of whom are considered independent under Nasdaq’s rules and are not “interested persons” of GECC as that term is defined in Section 2(a)(19) of the Investment Company Act. The nominating and corporate governance committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on our Board or a committee thereof, developing and recommending to our Board a set of corporate governance principles and overseeing the evaluation of our Board and management. Mr. Kuperschmid serves as chairman of the nominating and corporate governance committee. The nominating and corporate governance committee met three times during the fiscal year ended December 31, 2017.

The nominating and corporate governance committee will consider stockholder recommendations for possible nominees for election as directors when such recommendations are submitted in accordance with our bylaws, the nominating and corporate governance committee charter and any applicable law, rule or regulation regarding director nominations. Nominations should be sent to Corporate Secretary, Great Elm Capital Corp., 800 South Street, Suite 230, Waltham, MA 02453. To have a candidate considered by our nominating and corporate governance committee, a stockholder must submit the recommendation in writing and must include the following information:

• The name of the stockholder and evidence of the person’s ownership of our stock, including the number of shares owned and the length of time of the ownership;

• The name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director and the person’s consent to be named as a director if selected by the nominating and corporate governance committee and nominated to our Board; and

• If requested by the nominating and corporate governance committee, a completed and signed director’s and officer’s questionnaire in our customary form.

Criteria considered by the nominating and corporate governance committee in evaluating the qualifications of individuals for election as members of our Board include, to the extent required, compliance with the independence and other applicable requirements of the federal securities laws, the listing standards of Nasdaq, and any other applicable laws, rules, or regulations; the ability to contribute to the effective management of GECC, taking into account the ability to critically review, evaluate, question and discuss information provided to them, and to interact effectively with our management, service providers and counsel, in order to exercise effective business judgment in the performance of their duties; educational background, business, professional training or practice (e.g., medicine, accounting or law), public service or academic positions, experience from service as a board member (including our Board) or as an executive of investment funds, public companies or significant private or not-for-profit entities or other organizations, and/or other life experiences; and personal and professional integrity, character, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors that the nominating and corporate governance committee considers appropriate. Our Board also believes it is appropriate for members of our management to serve as a member of our Board. In addition, although our nominating and corporate governance committee not have a formal policy with regard to consideration of diversity in identifying director candidates, our nominating and corporate governance committee may consider whether a potential candidate’s professional experience, education, skills and other individual qualities and attributes, including gender, race or national origin, would provide beneficial diversity of skills, experience or perspective to our Board’s membership and collective attributes. Such considerations will vary based on our Board’s existing membership and other factors, such as the strength of a potential nominee’s overall qualifications relative to diversity considerations.

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Compensation Committee. Our compensation committee operates pursuant to a charter, available on our website. The charter sets forth the responsibilities of our compensation committee. Our compensation committee is responsible for annually reviewing and recommending for approval to our Board our Investment Management Agreement with our external manager. In addition, although we do not directly compensate our executive officers currently, to the extent that we did so in the future, the compensation committee would also be responsible for reviewing and evaluating their compensation and making recommendations to our Board regarding their compensation. Lastly, the compensation committee would produce a report on our executive compensation practices and policies for inclusion in our proxy statement if required by applicable proxy rules and regulations and, if applicable, make recommendations to our Board on our executive compensation practices and policies. The compensation committee has the authority to engage compensation consultants and to delegate their duties and responsibilities to a member or to a subcommittee of the compensation committee. Our compensation committee is comprised of Messrs. Horsey, Kuperschmid, and Speller; all of whom are considered independent under Nasdaq’s rules and are not “interested persons” of GECC as that term is defined in Section 2(a)(19) of the Investment Company Act. Mr. Speller serves as chairman of the compensation committee. The compensation committee met once during the fiscal year ended December 31, 2017.

Compensation of Directors

The following table sets forth compensation of our directors for the fiscal year ended December 31, 2017.

Name	Fees Earned or Paid in Cash		All Other Compensation(1)		Total
Interested Directors
Peter A. Reed		—		—		—
John E. Stuart		—		—		—
Independent Directors
Mark C. Biderman (2)	$	29,007		—	$	29,007
Randall Revell Horsey (3)	$	32,164		—	$	32,164
Mark Kuperschmid	$	58,172		—	$	58,172
Eugene I. Davis (4)	$	7,863		—	$	7,863
Michael C. Speller (5)	$	10,329		—	$	10,329

(1) In fiscal year 2017, we did not maintain a stock or option plan, non-equity incentive plan or pension plan for our directors.

(2) Mr. Biderman was not nominated to stand for re-election to the Board at our 2017 annual meeting of stockholders, which was held on November 2, 2017.

(3) Mr. Horsey became a director on May 30, 2017.

(4) Mr. Davis resigned from the Board on March 24, 2017.

(5) Mr. Speller became a director on November 2, 2017.

No compensation is paid by us to directors who are “interested persons.” Our independent directors each receive an annual fee of $45,000. They also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting and each committee meeting. In addition, the chairman of each of our Board’s standing committees receives an annual fee of $10,000 for his or her additional services in these capacities. Each member of these committees receives a $5,000 annual fee for serving on these committees. In addition, we purchased directors’ and officers’ liability insurance on behalf of our directors and officers. Independent directors also have the option to receive their directors’ fees paid in shares of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment.

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Compensation of Executive Officers

We do not provide direct compensation to our officers. Mr. Reed is indirectly entitled to a portion of any investment advisory fees paid by us to GECM under the Investment Management Agreement through his financial interests in affiliates of GECM. Mr. Woods, who serves as our Chief Financial Officer and Treasurer, and Mr. Kleinman, our Chief Compliance Officer and Secretary, are paid by GECM, subject to reimbursement by us of our allocable portion of such compensation under the Administration Agreement.

Our Portfolio Managers

GECM manages our portfolio. We consider Mr. Reed, who serves as our Chief Executive Officer, John Ehlinger, a portfolio manager at GECM, and Adam Yates, a portfolio manager at GECM, jointly to be our portfolio managers. Messrs. Reed, Ehlinger and Yates comprise a majority of GECM’s investment committee. GECM’s investment team does not receive any direct compensation from us in connection with the management of our portfolio. Mr. Reed, along with members of GECM’s investment team, through their financial interests in affiliates of GECM, are entitled to a portion of amounts received by GECM under the Investment Management Agreement, less expenses incurred by GECM in performing its services under the Investment Management Agreement. GECM’s investment personnel may be compensated through: (1) annual base salary; (2) cash bonuses; (3) equity in GEC and (4) profit sharing by virtue of ownership of debt or equity securities of affiliates of GECM.

John S. Ehlinger, 49 years old, is a Portfolio Manager of GECC and a Member of GECM’s Investment Committee. Prior to joining GECM, Mr. Ehlinger was the Chief Operating Officer and Chief Financial Officer of a medical device start-up doing business as Wellsense Technologies. Before joining Wellsense, Mr. Ehlinger was a Partner at MAST Capital from 2006 to 2011, focusing on distressed and special situations investments. Prior to joining MAST Capital, Mr. Ehlinger worked as a senior analyst and assistant high yield portfolio manager at DDJ Capital Management, LLC, a distressed and high yield debt-focused hedge fund. Before DDJ, Mr. Ehlinger worked as a senior credit analyst for AIG Global Investment Corporation and as an investment banker at Donaldson, Lufkin & Jenrette in Los Angeles. Mr. Ehlinger started his career in Morgan Stanley’s IT and Equity Research departments. Mr. Ehlinger is currently a member of the Board of Trustees and Treasurer of the Charles River School in Dover, MA. Mr. Ehlinger currently serves on the Board of Managers of PEFS.

Adam W. Yates, 35 years old, is a Portfolio Manager of GECC and a Member of GECM’s Investment Committee. Mr. Yates was a Partner and the Head Trader at MAST Capital until 2017. Mr. Yates managed MAST Capital’s trading responsibilities and, as a member of the Investment Committee, worked closely with the senior investment team in security selection and portfolio construction. Mr. Yates was also a member of MAST Capital’s Risk Committee and Best Execution Committee. Prior to joining MAST Capital in 2007, Mr. Yates was a New Business Coordinator at Appleton Partners, Inc. Mr. Yates currently serves on the Board of Managers of PEFS and the Board of Directors of Great Elm FM Holdings, Inc.

Compensation Committee Interlocks and Insider Participation

Currently, none of our executive officers are compensated by us, and as such, our Compensation Committee is not required to produce a report on executive officer compensation for inclusion herein.

During fiscal year 2017, Mr. Reed served on the board of directors (or a compensation committee thereof or other board committee performing equivalent functions) of an entity that had one or more executive officers serve on the compensation committee or on our Board. No current or past executive officers or employees of ours or our affiliates serve on our compensation committee.

Other Accounts Managed

As of September 27, 2018, GECM is primarily responsible for the day-to-day management of three separately managed accounts for an institutional investor.

Name of Investment Committee Voting Member	Type of Accounts	Total No. of Other Accounts Managed		Total Other Assets (in millions)		No. of Other Accounts where Advisory Fee is Based  on Performance		Total Assets in Other Accounts where Advisory Fee is Based  on Performance (in millions)
Peter A. Reed	Registered Investment Companies:		none		none		none		none
	Other Pooled Investment Vehicles:		3	$	33		3	$	33
	Other Accounts:		none		none		none		none

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Portfolio Managers’ Material Conflicts of Interest

Certain of our executive officers and directors, and the members of the investment committee of GECM, serve or may serve as officers, directors or principals of entities that operate in the same or related lines of business as GECC or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities that may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. Further, we may not be given the opportunity to participate in certain investments made by investment funds managed by advisers affiliated with GECM and any advisers that may in the future become affiliated with GEC.

Although funds managed by GECM may have different primary investment objectives than we do, they may from time to time invest in asset classes similar to those targeted by us. GECM is not restricted from raising an investment fund with investment objectives similar to ours. Any such funds may also, from time to time, invest in asset classes similar to those targeted by us. It is possible that we may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers affiliated with GECM.

We will pay management and incentive fees to GECM, and will reimburse GECM for certain expenses it incurs. In addition, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments.

GECM’s management fee is based on a percentage of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and GECM may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur indebtedness.

The part of the incentive fee payable by us that relates to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan or note that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

The Investment Management Agreement renews for successive annual periods if approved by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons. However, both we and GECM have the right to terminate the agreement without penalty upon 60 days’ written notice to the other party. Moreover, conflicts of interest may arise if GECM seeks to change the terms of the Investment Management Agreement, including, for example, the terms for compensation.

Pursuant to the Administration Agreement, we will pay GECM our allocable portion of overhead and other expenses incurred by GECM in performing its obligations under the Administration Agreement, including our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

As a result of the arrangements described above, there may be times when our management team has interests that differ from those of our stockholders, giving rise to a conflict.

Ownership of Securities

As of December 31, 2017, the dollar range of our equity securities beneficially owned by Mr. Reed was $10,001 - $50,000, the dollar range of our equity securities beneficially owned by Mr. Ehlinger was $50,001 - $100,000 and Mr. Yates owned none, in each case based on the closing price for our common stock of $9.84 on December 29, 2017.

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RELATED PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS

We are a party to the Investment Management Agreement and the Administration Agreement with GECM, which is wholly-owned by GEC. GECM initially hired all of the employees of MAST Capital, certain of whom for a time continued to be employees of MAST Capital. As of the date of this prospectus, GECM and MAST Capital do not share any employees. Affiliates of GECM entered into agreements with MAST Capital and the initial employees of GECM under which MAST Capital and such employees have indirect financial interests in GECM’s net cash flows from the Investment Management Agreement.

Funds managed by MAST Capital own approximately 9% of GEC. Mr. Reed serves as Chief Executive Officer and a member of the board of directors of GEC, in addition to being our Chief Executive Officer and Chief Investment Officer of GECM. Mr. Kleinman serves as President and Chief Operating Officer of GEC, in addition to being our Chief Compliance Officer and Secretary. GEC owns approximately 18% of our outstanding common stock. Mr. Reed, Mr. Kleinman and certain of GECM’s initial employees were employees of MAST Capital where they managed private investment funds, with investment objectives similar to ours.

Funds managed by MAST Capital own in excess of 10% of the outstanding common stock of Avanti. In addition, certain of our executive officers and directors and the members of GECM’s investment committee serve or may serve as officers, directors or principals of entities that operate in the same or related lines of business as GECC or of investment funds managed by our affiliates. Accordingly, we may not be given the opportunity to participate in certain investments made by investment funds managed by advisers affiliated with GECM and any advisers that may in the future become affiliated with GEC.

GECM entered into a consulting contract with FS Services LLC that retained Gregg Felton, Full Circle’s former chief executive officer, and John Stuart, Full Circle’s former chairman and a member of our Board.

We and GEC entered into the license agreement described in this prospectus.

As of June 30, 2018, we and certain MAST Funds held debt securities issued by Avanti. The Avanti securities held by us were contributed to us by the MAST Funds per the Subscription Agreement.

We have established a written policy to govern the review of potential related party transactions. GECM, our Chief Compliance Officer, and any other officers designated by us are required to review the facts and circumstances of transactions with certain affiliates, and to screen any such transactions, for potential compliance issues under Section 57(h) of the Investment Company Act.

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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

The following table lists, as of October 8, 2018, the beneficial ownership of each of our directors, executive officers, each person known to us to beneficially own 5% or more of the outstanding shares of our common stock, and our executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Ownership information for those persons who beneficially own 5% or more of our shares of common stock is based upon Schedule 13G and Schedule 13D filings by such persons with the SEC and other information obtained from such persons, if available. Unless otherwise indicated, we believe that each beneficial owner set forth in the table has sole voting and investment power and has the same address: Great Elm Capital Management, Inc., 800 South Street, Suite 230, Waltham, MA 02453.

Beneficial Owner	Shares Beneficially Owned(1)		Percent  of Class(2)
Interested Directors
Peter A. Reed		4,007			*
John E. Stuart		16,545			*
Independent Directors
Michael C. Speller		5,000			*
Randall Revell Horsey		—			*
Mark Kuperschmid		1,000			*
Executive Officers
John J. Woods		2,000			*
Adam M. Kleinman		—			*
Directors and executive officers as a group		28,552			*
5% Beneficial Owners
Great Elm Capital Group, Inc.		1,966,667		18.46	%
Entities affiliated with MAST Capital Management, LLC(3)		4,988,153		46.83	%

* Represents less than 1%

(1) Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act.

(2) Based on a total of 10,652,401 million shares of our common stock issued and outstanding on October 8, 2018.

(3) The principal address for MAST Capital is 31 St. James Street, 6th Floor, Boston, Massachusetts 02116. Represents shares held by the following for which MAST Capital reports that it has sole power to dispose:

• Mast Credit Opportunities I Master Fund Limited, for which MAST Capital is the investment manager, holds 2,276,279 shares of our common stock. David J. Steinberg reports the shares held indirectly by MAST Capital because, as the principal of MAST Capital at the time of purchase, he reports that he controlled the disposition and voting of the securities. MAST Capital reports that it has the right to an asset-based fee relating the above fund.

• Mast Select Opportunities Master Fund, L.P., for which MAST Capital is the investment manager, holds 2,543,418 shares of our common stock. David J. Steinberg reports the shares held indirectly by MAST Capital because, as the principal of MAST Capital at the time of purchase, he reports that he controlled the disposition and voting of the securities. MAST Capital reports that it has the right to an asset-based fee relating the above fund.

• Mast Admiral Master Fund, L.P., for which MAST Capital is the investment manager, holds 154,497 shares of our common stock. David J. Steinberg reports the shares held indirectly by MAST Capital because, as the principal of MAST Capital at the time of purchase, he reports that he controlled the disposition and voting of the securities. MAST Capital reports that it has the right to an asset-based fee relating the above fund.

• Mast Select Opportunities, L.P., for which MAST Capital is the investment manager, holds 13,959 shares of our common stock. David J. Steinberg reports the shares held indirectly by MAST Capital because, as the principal of MAST Capital at the time of purchase, he reports that he controlled the disposition and voting of the securities. MAST Capital reports that it has the right to an asset-based fee relating the above fund.

• David J. Steinberg, by virtue of his control of the disposition and voting of securities held by entities affiliated with MAST Capital, may be in a position to control the outcome of voting on matters as to which our common stockholders are entitled to vote.

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Set forth below is the dollar range of equity securities beneficially owned by each of our directors as of December 31, 2017. We are not part of a “family of investment companies,” as that term is defined in the Investment Company Act.

Name	Dollar Range of Equity  Securities Beneficially Owned(1)(2)
Interested Directors
Peter A. Reed		$10,001 – $50,000
John E. Stuart		Over $100,000
Independent Directors
Michael C. Speller		$10,001 – $50,000
Randall Revell Horsey		None
Mark Kuperschmid		$1 – $10,000

(1) Dollar ranges are as follows: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or Over $100,000.

(2) The dollar range of equity securities beneficially owned is based on the closing price for our common stock of $9.84 on December 29, 2017 on Nasdaq. Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) under the Exchange Act.

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DETERMINATION OF NET ASSET VALUE

We determine the net asset value of the Company each quarter by subtracting our total liabilities from the fair value of our gross assets.

We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our Board. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (1) are independent of us; (2) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary); (3) are able to transact for the asset; and (4) are willing to transact for the asset (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. However, short term debt investments with remaining maturities within ninety days are generally valued at amortized cost, which approximates fair value.

Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with our valuation policy that has been reviewed and approved by our Board, who also approves in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

Determinations in Connection with Offerings

Absent the approval by a majority of our common stockholders to allow us to issue common stock at a price below net asset value, our Board or an authorized committee thereof will be required to make the determination that we are not selling shares of our common stock at a price below the then current net asset value of our common stock at the time of any offering of our shares. Our Board or an authorized committee thereof consider the following factors, among others, in making such determination:

• the net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC;

• our management’s assessment of whether any material change in the net asset value of our common stock has occurred (including through the realization of gains on the sale of our portfolio securities) during the period beginning on the date of the most recently disclosed net asset value of our common stock and ending two days prior to the date of the sale of our common stock; and

• the magnitude of the difference between (1) a value that our Board or an authorized committee thereof has determined reflects the current net asset value of our common stock, which is generally based upon the net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC, as adjusted to reflect our management’s assessment of any material change in the net asset value of our common stock since the date of the most recently disclosed net asset value of our common stock, and (2) the offering price of the shares of our common stock in the proposed offering.

These processes and procedures are part of our compliance policies and procedures. Records will be made contemporaneously with all determinations described in this section and these records will be maintained with other records that we are required to maintain under the Investment Company Act.

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DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash as provided below. As a result, if our Board authorizes, and we declare, a cash distribution, our stockholders who have not opted out of our dividend reinvestment plan will have their cash distributions (net of any applicable withholding tax) automatically reinvested in additional shares of our common stock, rather than receiving the cash distributions.

No action will be required on the part of a registered stockholder to have his cash distribution reinvested in shares of our common stock. A registered stockholder may elect to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, LLC, the plan administrator and our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than the record date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the plan for each stockholder who has not elected to receive distributions in cash and hold such shares in non-certificated form. Upon request by a stockholder participating in the plan, received in writing not less than 10 days prior to each applicable record date, the plan administrator will, instead of crediting shares to the participant’s account, issue a certificate registered in the participant’s name for the number of whole shares of our common stock and a check for any fractional share.

Those stockholders whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker or other financial intermediary of their election.

We intend to use primarily newly issued shares to implement the plan to the extent our shares are trading at a premium to net asset value per share of the common stock. In the case that such newly issues shares of common stock are used to implement the plan, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by 95% of the market price per share of our common stock at the close of trading on the date fixed by the Board for such purposes. Market price per share on that date will be the closing price for such shares on the national securities exchange on which our shares are then listed or, if no sale is reported for such day, at the average of their electronically reported bid and asked prices. Notwithstanding the foregoing, we reserve the right to instruct the plan administrator to purchase shares of our common stock in the open market in connection with our implementation of the plan. Shares purchased in open market transactions by the plan administrator will be allocated to each stockholder who has not so elected to receive cash distributions in cash in the manner set forth above for issuance of new shares, substituting where applicable the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market in lieu of the market price per share. The number of shares of our common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.

The plan administrator’s fees under the plan will be paid by us. If a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a transaction fee of $15 plus a per share brokerage commission from the proceeds.

Stockholders who receive distributions in the form of stock are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash. A stockholder’s basis for determining gain or loss upon the sale of stock received in a distribution from us will be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a distribution will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder’s account.

We may terminate the plan upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any distribution by us. All correspondence concerning the plan should be directed to the plan administrator by mail at 6201 15th Avenue, Brooklyn, NY 11219 or by phone at (800) 937-5449.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain U.S. federal income tax considerations relevant to a stockholder who purchases our common stock pursuant to a future offering. This summary is subject to differing interpretation or change by legislative or administrative action, and any such differing interpretation or change may be retroactive. The discussion does not purport to deal with all of the U.S. federal income tax consequences applicable to us, or which may be important to particular stockholders in light of their individual investment circumstances or to some types of stockholders subject to special tax rules, including stockholders subject to the alternative minimum tax, financial institutions, broker-dealers, insurance companies, tax-exempt organizations, partnerships or other pass-through entities, persons holding our common stock in connection with a hedging, straddle, conversion or other integrated transaction, persons engaged in a trade or business in the United States or persons who have ceased to be U.S. citizens or to be taxed as resident aliens or stockholders who contribute assets to us in exchange for our shares. This discussion assumes that the stockholders hold their common stock as capital assets for U.S. federal income tax purposes (generally, assets held for investment). No attempt is made to present a detailed explanation of all U.S. federal income tax aspects affecting us and our stockholders, and the discussion set forth herein does not constitute tax advice. No ruling has been or will be sought from the IRS, regarding any matter discussed herein. Tax counsel has not rendered any legal opinion regarding any tax consequences relating to us or our stockholders. Stockholders are urged to consult their tax advisors to determine the U.S. federal, state, local and foreign tax consequences to them of investing in our shares.

The discussion set forth herein does not constitute tax advice and potential investors are urged to consult their tax advisors to determine the specific U.S. federal, state, local and foreign tax consequences to them of investing in us, including the tax consequences resulting from the recently enacted comprehensive U.S. tax reform legislation known as the Tax Cuts and JOBS Act.

Taxation of GECC

A discussion of taxation of GECC is included under “The Company—Certain U.S. Federal Income Tax Considerations.”

Taxation of U.S. stockholders

For purposes of this discussion, a “U.S. stockholder” (or in this section, a “stockholder”) is a holder or a beneficial holder of shares which is for U.S. federal income tax purposes (1) a person who is a citizen or resident of the United States, (2) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any State thereof, or the District of Columbia, (3) an estate whose income is subject to U.S. federal income tax regardless of its source, or (4) a trust if (a) a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (b) the trust has in effect a valid election to be treated as a domestic trust for U.S. federal income tax purposes. If a partnership or other entity or arrangement classified as a partnership for U.S. tax purposes holds the shares, the tax treatment of the partnership and each partner generally will depend on the activities of the partnership and the activities of the partner. Partnerships acquiring shares, and partners in such partnerships, should consult their tax advisors. Prospective investors that are not U.S. stockholders should refer to the section “Non-U.S. Stockholders” below and are urged to consult their tax advisors with respect to the U.S. federal income tax consequences of an investment in our shares, including the potential application of U.S. withholding taxes.

Distributions we pay to you from our ordinary income or from an excess of net short-term capital gain over net long-term capital loss (together referred to hereinafter as “ordinary income dividends”) are generally taxable to you as ordinary income to the extent of our earnings and profits. Due to our expected investments, in general, distributions will not be eligible for the dividends received deduction allowed to corporate stockholders and will not qualify for the reduced rates of tax for qualified dividend income allowed to individuals. Distributions made to you from an excess of net long-term capital gain over net short-term capital loss (“capital gain dividends”), including capital gain dividends credited to you but retained by us, are taxable to you as long-term capital gain if they have been properly designated by us, regardless of the length of time you have owned our shares. For non-corporate stockholders, capital gains dividends are currently taxed at preferential rates. Generally, you will be provided with a written notice designating the amount of any (i) ordinary income dividends no later than 30 days after the close of the taxable year, and (ii) capital gain dividends or other distributions no later than 60 days after the close of the taxable year. Distributions in excess of our earnings and profits will first reduce the adjusted tax basis of your shares and, after the adjusted tax basis is reduced to zero, will constitute capital gain to you (assuming the shares are held as a capital asset).

If we retain any net capital gain, we may designate the retained amounts as undistributed capital gain in a notice to our stockholders. If a designation is made, stockholders would include in income, as long-term capital gain, their

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proportionate share of the undistributed amounts, but would be allowed a credit or refund, as the case may be, for their proportionate share of the corporate tax paid by us. A stockholder that is not subject to U.S. federal income tax or otherwise is not required to file a U.S. federal income tax return would be required to file a U.S. federal income tax return on the appropriate form in order to claim a refund for the taxes we paid. In addition, the tax basis of shares owned by a stockholder would be increased by an amount equal to the difference between (i) the amount included in the stockholder’s income as long-term capital gain and (ii) the stockholder’s proportionate share of the corporate tax paid by us.

Dividends and other taxable distributions are taxable to you even though they are reinvested in additional shares of our common stock. We have the ability to declare a large portion of a dividend in shares of our stock. In August of 2017, the IRS promulgated guidance stating that as long as 20% of the dividend is paid in cash and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, our stockholders will be taxed on 100% of the dividend in the same manner as a cash dividend, even though most of the dividend was paid in shares of our stock.

If we pay you a dividend in January which was declared in the previous October, November or December to stockholders of record on a specified date in one of these months, then the dividend will be treated for tax purposes as being paid by us and received by you on December 31 of the year in which the dividend was declared.

A stockholder will recognize gain or loss on the sale or exchange of our common stock in an amount equal to the difference between the stockholder’s adjusted basis in the shares sold or exchanged and the amount realized on their disposition. Generally, gain recognized by a stockholder on the sale or other disposition of our common stock will result in capital gain or loss to you, and will be a long-term capital gain or loss if the shares have been held for more than one year at the time of sale. Any loss upon the sale or exchange of our shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends received (including amounts credited as an undistributed capital gain dividend) by you. A loss realized on a sale or exchange of our shares will be disallowed if other substantially identical shares are acquired (whether through the automatic reinvestment of dividends or otherwise) within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. In this case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Present law taxes both long-term and short-term capital gains of corporations at the rates applicable to ordinary income.

Non-corporate stockholders with income in excess of certain thresholds are, in general, subject to an additional tax on their “net investment income,” which ordinarily includes taxable distributions from us and taxable gain on the disposition of our common stock.

We may be required to withhold U.S. federal income tax (“backup withholding”), from all taxable distributions to any non-corporate stockholder (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual’s taxpayer identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the stockholder’s U.S. federal income tax liability and may entitle such stockholder to a refund, provided that proper information is timely provided to the IRS.

Withholding at a rate of 30% is required on dividends in respect of, and after December 31, 2018, withholding at a rate of 30% will be required on gross proceeds from the sale of shares of our common stock held by or through foreign accounts or foreign intermediaries if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. We will not pay any additional amounts in respect to any amounts withheld.

Under U.S. Treasury regulations, if a stockholder recognizes a loss with respect to shares of $2 million or more for a non-corporate stockholder or $10 million or more for a corporate stockholder in any single taxable year (or a greater loss over a combination of years), the stockholder must file with the IRS a disclosure statement on Form 8886. Direct stockholders of portfolio securities in many cases are excepted from this reporting requirement, but under current guidance, stockholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to stockholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Significant monetary penalties apply to a failure to comply with this reporting requirement. States may also have a similar reporting requirement. Stockholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

Stockholders should consult their tax advisors with respect to the U.S. federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in our shares.

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Taxation of non-U.S. stockholders

The following discussion only applies to non-U.S. stockholders. A “non-U.S. stockholder” is a holder, other than a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes), that is not a U.S. stockholder for U.S. federal income tax purposes. Whether an investment in the shares is appropriate for a non-U.S. stockholder will depend upon that stockholder’s particular circumstances. An investment in the shares by a non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax advisors before investing in our shares.

Distributions of ordinary income dividends to non-U.S. stockholders, subject to the discussion below, will generally be subject to withholding of U.S. federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits. Different tax consequences may result if the non-U.S. stockholder is engaged in a trade or business in the United States or, in the case of an individual, is present in the United States for 183 days or more during a taxable year and certain other conditions are met. Special certification requirements apply to a non-U.S. stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their tax advisors.

Actual or deemed distributions of our net capital gain to a non-U.S. stockholder, and gain recognized by a non-U.S. stockholder upon the sale of our common stock, generally will not be subject to U.S. federal withholding tax and will not be subject to U.S. federal income tax unless the distributions or gain, as the case may be, are effectively connected with a U.S. trade or business of the non-U.S. stockholder (and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. stockholder in the United States) or, in the case of an individual, is present in the United States for 183 days or more during a taxable year.

Under certain legislation, no U.S. source withholding taxes will be imposed on dividends paid by RICs to non-U.S. stockholders to the extent the dividends are designated as “interest-related dividends” or “short-term capital gain dividends.” Under this exemption, interest-related dividends and short-term capital gain dividends generally represent distributions of interest or short-term capital gain that would not have been subject to U.S. withholding tax at the source if they had been received directly by a non-U.S. stockholder, and that satisfy certain other requirements. No assurance can be given that we will distribute any interest-related or short-term capital gain dividends.

If we distribute our net capital gains in the form of deemed rather than actual distributions (which we may do in the future), a non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax we pay on the capital gains deemed to have been distributed. In order to obtain the refund, the non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a federal income tax return even if the non-U.S. stockholder is not otherwise required to obtain a U.S. taxpayer identification number or file a federal income tax return. For a corporate non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale of our common stock that are effectively connected with a U.S. trade or business (or, where an applicable treaty applies, are attributable to a permanent establishment in the United States) may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable tax treaty). Accordingly, investment in the shares may not be appropriate for certain non-U.S. stockholders.

Certain provisions of the Code referred to as “FATCA” require withholding at a rate of 30% on dividends in respect of, and, after December 31, 2018, gross proceeds from the sale of, our common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Treasury to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution to the extent such interests or accounts are held by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments. Accordingly, the entity through which our common stock is held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and, after December 31, 2018, gross proceeds from the sale of, our common stock held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exemptions will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to us that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners,” which we will in turn provide to the Secretary of the Treasury. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance, may modify these requirements. We will not pay any additional amounts to stockholders in respect of any amounts withheld. Stockholders are encouraged to consult their tax advisors regarding the possible implications of the legislation on their investment in our common stock.

A non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of federal income tax, may be subject to backup withholding of federal income tax on dividends unless the non-U.S. stockholder

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provides us or the dividend paying agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. stockholder or otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld from payments made to you may be refunded or credited against your U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS. Non-U.S. stockholders may also be subject to information reporting.

Failure to Qualify as a RIC

If we were unable to qualify for treatment as a RIC, and relief is not available as discussed above, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders nor would we be required to make distributions for tax purposes. Distributions would generally be taxable to our stockholders as ordinary dividend income eligible for reduced maximum rates for non-corporate stockholders to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate U.S. stockholders would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. If we were to fail to meet the RIC requirements for more than two consecutive years and then to seek to requalify as a RIC, we would be required to recognize gain to the extent of any unrealized appreciation in our assets unless we made a special election to pay corporate level tax on any such unrealized appreciation recognized during the succeeding five-year period.

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SENIOR SECURITIES

Information about our senior securities is shown in the following table. Dollar amounts are presented in thousands.

Year	Total Amount Outstanding(1)		Asset Coverage Ratio Per Unit(2)		Involuntary Liquidation Preference Per Unit(3)		Average Market Value Per Unit
December 31, 2016
2020 Notes	$	33,646	$	6.17		N/A	$	1.02
December 31, 2017
2022 Notes	$	32,631	$	5.01		N/A	$	1.02
June 30, 2018
2022 Notes	$	32,631	$	2.55		N/A	$	1.02
2025 Notes	$	46,398	$	2.55		N/A	$	1.00

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

(2) Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1 of indebtedness.

(3) The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.

(4) The average market value per unit for the notes is based on the average daily prices of such notes and is expressed per $1 of indebtedness for each period, and since November 4, 2016 for the period ended December 31, 2016.

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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. As of June 30, 2018, eight debt investments in our portfolio bore interest at a fixed rate, and the remaining 21 debt investments were at variable rates, representing approximately $83.7 million and $101.7 million in debt at fair value, respectively. The variable rates are based upon LIBOR.

To illustrate the potential impact of a change in the underlying interest rate on our net investment income, we have assumed a 1%, 2%, and 3% increase and 1%, 2%, and 3% decrease in the underlying LIBOR, and no other change in our portfolio as of June 30, 2018. We have also assumed that we have no outstanding floating rate borrowings. The below table illustrates the effect such assumed rate changes would have on an annual basis.

LIBOR Increase (Decrease)	Increase (decrease) of Net Investment  Income (in thousands)
3.00%	$	6,490
2.00%	$	4,327
1.00%	$	2,163
(1.00)%	$	(2,152	)
(2.00)%	$	(3,606	)
(3.00)%	$	(4,883	)

This analysis does not adjust for changes in the credit quality, size and composition of our portfolio, and other business developments that could affect the net increase in net assets resulting from operations. Accordingly, no assurances can be given that actual results would not differ materially from the results under this hypothetical analysis.

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates.

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DESCRIPTION OF OUR COMMON STOCK

The following description is based on relevant portions of the Maryland General Corporation Law and our charter and bylaws. This summary is not necessarily complete, and we refer you to the Maryland General Corporation Law and our charter and bylaws for a more detailed description of the provisions summarized below.

Our authorized stock consists of 100,000,000 shares of stock, par value $0.01 per share, all of which are initially designated as common stock. Our common stock is listed on Nasdaq under the ticker symbol “GECC.” There are no outstanding options or warrants to purchase shares of our common stock. No common stock has been authorized for issuance under any equity compensation plans. Our fiscal year-end is December 31. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

The following are our outstanding classes of securities as of October 8, 2018:

Title of Class	Amount Authorized		Amount Held by GECC or for GECC’s Account		Amount Outstanding Exclusive of Amounts Shown in the  Adjacent Column
Common Stock		100,000,000		—		10,652,401
2022 Notes		—		—	$	32.6 million
2025 Notes		—		—	$	46.4 million

Under our charter, our Board is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock without obtaining stockholder approval. As permitted by the Maryland General Corporation Law, our charter provides that a majority of the entire Board, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue.

Common Stock

All shares of our common stock have equal rights as to earnings, assets, voting, and dividends and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our Board and declared by us out of assets legally available therefor. Shares of our common stock have no preemptive, conversion, redemption or appraisal rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of shares of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock can elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.

Preferred Stock

Our charter authorizes our Board to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. The cost of any such reclassification would be borne by our existing common stockholders. Under the terms of our charter, our Board is authorized to issue shares of preferred stock in one or more classes or series without stockholder approval. Prior to issuance of shares of each class or series, the Board is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of shares of our common stock or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply with the requirements of the Investment Company Act. The Investment Company Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of our common stock is made, the aggregate involuntary liquidation preference of such preferred stock together with the aggregate involuntary liquidation preference or aggregate value of all other senior securities must not exceed an amount equal to 50% of our gross assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of

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shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two full years or more. Certain matters under the Investment Company Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote as a separate class from the holders of common stock on a proposal to cease operations as a BDC. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions. However, we do not currently have any plans to issue preferred stock. Our Board has the authority to amend, alter, or repeal the bylaws of the corporation.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

Maryland law permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment and that is material to the cause of action. Our charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act.

Our charter authorizes us, and our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to indemnify any present or former director or officer of GECC or any individual who, while a director or officer of GECC and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise as a director, officer, partner, member, manager or trustee, who is made, or threatened to be made, a party to, or witness in, a proceeding by reason of his or her service in such capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her status as such and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Our charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and any of our employees or agents or any employees or agents of our predecessor. In accordance with the Investment Company Act, we will not indemnify any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

Maryland law requires a corporation (unless its charter requires otherwise, which ours does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to or in which they may be made, or threatened to be made, a party or witness by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Under Maryland law, a Maryland corporation may not indemnify a director or officer in a suit by the corporation or in its right in which the director or officer was adjudged liable to the corporation or in a suit in which the director or officer was adjudged liable on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by the corporation or in its right, or for a judgment of liability on the basis that a personal benefit was improperly received, is limited to expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

Our insurance policy does not currently provide coverage for claims, liabilities and expenses that may arise out of activities that our present or former directors or officers have performed for another entity at our request. There is no assurance that such entities will in fact carry such insurance. However, in the event that our present or former directors or officers serve another entity as a director, officer, partner or trustee, we expect to obtain insurance providing coverage for such persons for any claims, liabilities or expenses that may arise out of their activities while serving in such capacities.

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Certain Provisions of the Maryland General Corporation Law and Our Charter and Bylaws

The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

Classified Board of Directors

Our Board is divided into three classes of directors serving staggered three-year terms. Upon expiration of their terms, directors of each class will be elected to serve for a term ending at the third annual meeting of stockholders following his or her election and until their successors are duly elected and qualify and each year one class of directors will be elected by the stockholders. A classified board may render a change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect a majority of a classified Board will help to ensure the continuity and stability of our management and policies.

Election of Directors

Our charter and bylaws provide that the affirmative vote of the holders of a plurality of the outstanding shares of stock entitled to vote in the election of directors cast at a meeting of stockholders duly called and at which a quorum is present will be required to elect a director. Our Board has the exclusive right to amend the bylaws to alter the vote required to elect directors.

Number of Directors; Vacancies; Removal

Our charter provides that the number of directors will be set only by the Board in accordance with our bylaws. Our bylaws provide that a majority of our entire Board may at any time increase or decrease the number of directors. However, unless our bylaws are amended, the number of directors may never be less than one nor more than nine. We have elected to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law regarding the filling of vacancies on the Board. Accordingly, except as may be provided by our Board in setting the terms of any class or series of preferred stock, any and all vacancies on our Board may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the Investment Company Act.

Our charter provides that, subject to the rights of holders of preferred stock, a director may be removed only for cause, as defined in our charter, and then only by the affirmative vote of at least a two-thirds of the votes entitled to be cast generally in the election of directors.

Action by Stockholders

Under the Maryland General Corporation Law, unless a corporation’s charter provides otherwise (which our charter does not), stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu of a meeting. These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to our Board and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by our Board or (3) by a stockholder who was a stockholder of record at the record date set by our Board for the purpose of determining stockholders entitled to vote at the meeting, at the time of giving notice as provided for in our bylaws and at the time of the meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated or on such other business and who has complied with the advance notice procedures of our bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the Board at a

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special meeting may be made only (1) by our Board or (2) provided that the Board has determined that directors will be elected at the meeting, by a stockholder who was a stockholder of record at the record date set by our Board for the purpose of determining stockholders entitled to vote at the meeting, at the time of giving notice as provided for in our bylaws and at the time of the meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions of the bylaws. The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our Board, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our Board any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed. They may also have had the effect of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

Calling of Special Meetings of Stockholders

Our bylaws provide that special meetings of stockholders may be called by our Board and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by the secretary of the corporation upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.

Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws

Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, convert to another form of entity, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter generally provides for approval of charter amendments and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter.

However, our charter provides that approval of the following matters requires the affirmative vote of stockholders entitled to cast at least 80% of the votes entitled to be cast on the matter:

• amendments to the provisions of our charter relating to the classification of our Board, the power of our Board to fix the number of directors and to fill vacancies on our Board, the vote required to elect or remove a director, the vote required to approve our dissolution, amendments to our charter and extraordinary transactions and our Board exclusive power to amend our bylaws;

• charter amendments that would convert us from a closed-end company to an open-end company or make our common stock a redeemable security (within the meaning of the Investment Company Act);

• our liquidation or dissolution or any amendment to our charter to effect any such liquidation or dissolution;

• any merger, consolidation, conversion, share exchange or sale or exchange of all or substantially all of our assets that the Maryland General Corporation Law requires be approved by our stockholders; or

• any transaction between us, on the one hand, and any person or group of persons acting together that is entitled to exercise or direct the exercise, or acquire the right to exercise or direct the exercise, directly or indirectly (other than solely by virtue of a revocable proxy), of one-tenth or more of the voting power in the election of our directors generally, or any person controlling, controlled by or under common control with, employed by or acting as an agent of, any such person or member of such group, or collectively, “Transacting Persons,” on the other hand.

However, if such amendment, proposal or transaction is approved by a majority of our continuing directors (in addition to approval by our Board), such amendment, proposal or transaction may be approved by a majority of the votes entitled to be cast on such a matter, except that any transaction including Transacting Persons that would not otherwise require stockholder approval under the Maryland General Corporation Law would not require further stockholder approval unless another provision of our charter requires such approval. In either event, in accordance with the

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requirements of the Investment Company Act, any such amendment, proposal or transaction that would have the effect of changing the nature of our business so as to cause us to cease to be, or to withdraw our election as, a BDC would be required to be approved by a majority of our outstanding voting securities, as defined under the Investment Company Act. The “continuing directors” are defined in our charter as (1) certain of our current directors named therein, (2) those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of our current directors then on the Board or (3) any successor directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of continuing directors or the successor continuing directors then in office.

Our charter and bylaws provide that the Board will have the exclusive power to make, alter, amend or repeal any provision of our bylaws.

No Appraisal Rights

Except with respect to appraisal rights arising in connection with the Maryland Control Acquisition Share Act discussed below, as permitted by the Maryland General Corporation Law, our charter provides that stockholders will not be entitled to exercise appraisal rights unless a majority of our entire Board determines that such rights shall apply.

Control Share Acquisitions

The Maryland Control Share Acquisition Act provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by the affirmative vote of stockholders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

• one-tenth or more but less than one-third;

• one-third or more but less than a majority; or

• a majority or more of all voting power.

The requisite stockholder approval must be obtained each time an acquirer crosses one of the thresholds of voting power set forth above. Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the Board of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations, including, as provided in our bylaws, compliance with the Investment Company Act. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or, if a meeting of stockholders at which the voting rights of the shares are considered and not approved is held, as of the date of such meeting. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The Maryland Control Share Acquisition Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our shares of stock. There can be no assurance that such provision will not be amended or eliminated at any time in the future. However, we will amend our bylaws to be subject to the Maryland

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Control Share Acquisition Act only if our Board determines that it would be in our best interests and if the SEC staff does not object to our determination that GECC’s being subject to the Maryland Control Share Acquisition Act does not conflict with the Investment Company Act.

Business Combinations

Under Maryland law, the Maryland Business Combination Act provides that certain “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

• any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or

• an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested stockholder under this statute if the Board approved in advance the transaction by which the stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the Board of the corporation and approved by the affirmative vote of at least:

• 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

• two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

The Maryland Business Combination Act permits various exemptions from its provisions, including business combinations that are exempted by the Board before the time that the interested stockholder becomes an interested stockholder. Our Board has adopted a resolution that any business combination between us and any other person is exempted from the provisions of the Business Combination Act, provided that the business combination is first approved by the Board, including a majority of the directors who are not interested persons as defined in the Investment Company Act. This resolution may be altered or repealed in whole or in part at any time; however, our Board will adopt resolutions so as to make us subject to the provisions of the Maryland Business Combination Act only if our Board determines that it would be in our best interests and if the SEC staff does not object to our determination that GECC being subject to the Business Combination Act does not conflict with the Investment Company Act. If this resolution is repealed, or the Board does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of GECC and increase the difficulty of consummating any offer.

Forum Selection Clause

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders, (c) any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the Maryland General Corporation Law or our charter or bylaws or (d) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine shall be, in each case, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division.

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Waiver of Corporate Opportunity Doctrine

Our charter provides that, we, by resolution of our Board, may renounce any interest or expectancy of ours in (or in being offered an opportunity to participate in) business opportunities that are presented to us or developed by or presented to one of more of our directors or officers.

Conflict with Investment Company Act

Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, including the Control Share Acquisition Act (if we amend our bylaws to be subject to such Act) and the Business Combination Act, or any provision of our charter or bylaws conflicts with any provision of the Investment Company Act, the applicable provision of the Investment Company Act will control.

Privacy Principles

We are committed to maintaining the privacy of our stockholders and to safeguarding their nonpublic personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

Generally, we do not receive any nonpublic personal information relating to our stockholders, although certain nonpublic personal information of our stockholders may become available to us. We do not disclose any nonpublic personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).

We restrict access to nonpublic personal information about our stockholders to employees of GECM and its affiliates with a legitimate business need for the information. We intend to maintain physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our stockholders.

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PLAN OF DISTRIBUTION

The Secondary Shares covered by this prospectus may be offered and sold from time to time by the Selling Stockholders. The term “Selling Stockholders” includes pledgees, donees, assignees, transferees or other successors-in-interest selling shares received after the date of this prospectus from any of the Selling Stockholders as a gift, pledge, partnership distribution or other non-sale related transfer. Each Selling Stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the then-current market price or in negotiated transactions. Each Selling Stockholder may sell its shares by one or more of, or a combination of, the following methods:

• an underwritten offering;

• purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus;

• ordinary brokerage transactions and transactions in which the broker solicits purchasers;

• block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• an over-the-counter distribution in accordance with the rules of Nasdaq;

• in privately negotiated transactions;

• in options transactions; and

• any other method permitted by applicable law.

In addition, any shares that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. If the Selling Stockholder uses one or more underwriters in the sale, such underwriter(s) will acquire the shares of our common stock covered by this prospectus for their own account. The underwriter(s) may resell the shares of our common stock in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale.

To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution, including the names of any underwriters, the purchase price and the proceeds a Selling Stockholder will receive from the sale, any underwriting discounts and other items constituting underwriters’ compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers, and any other information we believe to be material.

In connection with distributions of the shares or otherwise, one or more Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may engage in short sales of the common stock in the course of hedging the positions they assume with the applicable Selling Stockholder. A Selling Stockholder may also sell the common stock short and redeliver the shares to close out such short positions. A Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). A Selling Stockholder may also pledge shares to a broker-dealer or other financial institution, and, upon a default, such broker-dealer or other financial institution may effect sales of the pledged shares pursuant to this prospectus (as supplemented or amended to reflect such transaction).

In effecting sales, broker-dealers or agents engaged by one or more Selling Stockholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the Selling Stockholder in amounts to be negotiated immediately prior to the sale. In offering the shares covered by this prospectus, any broker-dealers who execute sales for the Selling Stockholder may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. The compensation of any broker-dealer may be deemed to be underwriting discounts and commissions. The specific terms of the lock-up provisions, if any, in respect of any given offering will be described in the applicable prospectus supplement.

In order to comply with the securities laws of certain states, if applicable, the shares must be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

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We advised the Selling Stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of such Selling Stockholder and its affiliates. In addition, we will make copies of this prospectus available to the Selling Stockholder for the purpose of satisfying the prospectus delivery requirements of the Securities Act. A Selling Stockholder may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

At the time a particular offer of shares is made, if required, a prospectus supplement will be distributed that will set forth the number of shares being offered, the method of distribution and the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter, any discount, commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public.

We agreed to indemnify the Selling Stockholders against certain liabilities, including certain liabilities under the Securities Act.

The Selling Stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares pursuant to the registration statement of which this prospectus forms a part. Upon our notification by the Selling Stockholders that any material arrangement has been entered into with an underwriter or broker-dealer for the sale of shares through a block trade, special offering, exchange distribution, secondary distribution or a purchase by an underwriter or broker-dealer pursuant to the registration statement of which this prospectus forms a part, we will file a supplement to this prospectus, if required, pursuant to Rule 497 under the Securities Act, disclosing certain material information, including:

• the name of the Selling Stockholder;

• the number of shares being offered;

• the terms of the offering;

• the names of the participating underwriters, broker-dealers or agents;

• any discounts, commissions or other compensation paid to underwriters or broker-dealers and any discounts, commissions or concessions allowed or reallowed or paid by any underwriters to dealers;

• the public offering price; and

• other material terms of the offering.

In addition, upon being notified by the Selling Stockholders that a donee, pledgee, transferee, or other successor-in-interest intends to sell shares, we will, to the extent required, promptly file a supplement to this prospectus to name specifically such person as a Selling Stockholder.

If underwriters are used in a firm commitment underwriting, the Selling Stockholders will execute an underwriting agreement with those underwriters relating to the shares of common stock that the Selling Stockholders will offer. Unless otherwise set forth in a prospectus supplement, the obligations of the underwriters to purchase the shares of common stock will be subject to conditions. The underwriters, if any, will purchase such shares on a firm commitment basis and will be obligated to purchase all of such shares.

The shares of common stock subject to the underwriting agreement will be acquired by the underwriters for their own account and may be resold by them from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may be deemed to have received compensation from the Selling Stockholders in the form of underwriting discounts or commissions and may also receive commissions from the purchasers of these shares of common stock for whom they may act as agent. Underwriters may sell these shares to or through dealers. These dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agent. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.

The Selling Stockholders may authorize underwriters to solicit offers by institutions to purchase the shares of common stock subject to the underwriting agreement from the Selling Stockholders at the public offering price stated in a

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prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. If the Selling Stockholders sell shares of common stock pursuant to these delayed delivery contracts, the prospectus supplement will state that as well as the conditions to which these delayed delivery contracts will be subject and the commissions payable for that solicitation.

The applicable prospectus supplement will set forth whether or not underwriters may over-allot or effect transactions that stabilize, maintain or otherwise affect the market price of the shares of common stock at levels above those that might otherwise prevail in the open market, including, for example, by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids. Underwriters are not required to engage in any of these activities, or to continue such activities if commenced.

The Selling Stockholders may also enter into hedging transactions with broker-dealers. In connection with such transactions, broker-dealers of other financial institutions may engage in short sales of our common stock in the course of hedging the positions they assume with the Selling Stockholders. The Selling Stockholders may also enter into options or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any underwriters, dealers or agents participating in a distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any profit on the sale of the shares by the Selling Stockholders and any commissions received by broker-dealers may be deemed to be underwriting commissions under the Securities Act.

In the ordinary course of their business activities, any underwriter, broker-dealer or agent and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and other instruments. Any underwriter, broker-dealer or agent and their respective affiliates may also engage in transactions with or perform services for us or provide other types of financing to us in the ordinary course of their business.

The Selling Stockholders will pay all fees and expenses incurred in connection with the registration and offering of the Secondary Shares pursuant to the Registration Rights Agreement, including all registration and filing fees, any other regulatory fees, printing and delivery expenses, listing fees and expenses, fees and expenses of counsel, independent certified public accountants, any special experts retained by us, and any underwriting discounts and commissions and transfer taxes. The Selling Stockholders have reimbursed us for approximately $762,643 for fees and expenses invoiced to date in connection with the registration and disposition of the Secondary Shares. We have incurred, and estimate that we will incur, an additional $305,000 of fees and expenses for a total of approximately $1,072,790 of fees and expenses, all of which are required to be reimbursed by the Selling Stockholders under the Registration Rights Agreement.

We and the Selling Stockholders each may agree to indemnify an underwriter, broker-dealer or agent against certain liabilities related to the sale by the Selling Stockholders of our common stock, including liabilities arising under the Securities Act.

To the extent required, this prospectus may be amended and/or supplemented from time to time to describe a specific plan of distribution. Instead of selling the Secondary Shares under this prospectus, the Selling Stockholders may sell Secondary Shares in compliance with Rule 144 under the Securities Act, if available, or pursuant to other available exemptions from the registration requirements of the Securities Act.

To comply with applicable state securities laws, the Secondary Shares will be sold, if necessary, in such jurisdictions only through registered or licensed brokers or dealers. In addition, the Secondary Shares may not be sold in some states absent registration or pursuant to an exemption from applicable state securities laws.

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CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

Our securities and cash are held in safekeeping by State Street Bank and Trust Company located at 100 Huntington Avenue, Boston, MA 02116. American Stock Transfer & Trust Company, LLC acts as our transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 6201 15th Avenue, Brooklyn, NY 11219.

LEGAL MATTERS

Certain legal matters regarding the securities offered by this prospectus will be passed upon for us by Venable LLP, Baltimore, MD.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our consolidated statement of assets and liabilities as of December 31, 2017 and December 31, 2016, and our related consolidated statement of operations, changes in net assets, cash flows and financial highlights for the year ended December 31, 2017 and for the period from April 22, 2016 (inception) to December 31, 2016, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the registration statement. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is 30 Rockefeller Plaza, 41st Floor, New York, NY 10112-0015.

The consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Full Circle and subsidiaries as of June 30, 2016 and 2015, and the related consolidated statements of operations, changes in net assets and cash flows for each of the two years in the period ended June 30, 2016 have been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the registration statement.

AVAILABLE INFORMATION

We have filed with the SEC a registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock being offered by this prospectus.

We are subject to the informational requirements of the Exchange Act. Accordingly, we must also file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Exchange Act. You can review and copy such information at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and the SEC’s Northeast Regional Office at 3 World Financial Center, Suite 400, New York, NY 10281. Such information is also available from the EDGAR database on the SEC’s web site at http://www.sec.gov. You also can obtain copies of such information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov or by writing the SEC’s Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at (800) SEC-0330.

We maintain a website at http://www.greatelmcc.com and make all of our annual, quarterly and current reports, proxy statements and other information available, free of charge, on or through our website. Information on our website is not incorporated into or part of this prospectus or any prospectus supplement and should not be relied upon as such. You may also obtain such information free of charge by contacting us in writing at 800 South Street, Suite 230, Waltham, MA 02453.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
GREAT ELM CAPITAL CORP.
Consolidated Statements of Assets and Liabilities as of June  30, 2018 and December 31, 2017 (unaudited)		F-2
Consolidated Statements of Operations for the three and six months ended June  30, 2018 and 2017 (unaudited)		F-3
Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2018 and 2017 (unaudited)		F-4
Consolidated Statements of Cash Flows for the six months ended June  30, 2018 and 2017 (unaudited)		F-5
Consolidated Schedule of Investments as of June  30, 2018 (unaudited) and December 31, 2017		F-6
Notes to the Consolidated Financial Statements (unaudited)		F-17
Report of Independent Registered Public Accounting  Firm		F-31
Consolidated Statements of Assets and Liabilities as of December  31, 2017 and December 31, 2016		F-32
Consolidated Statements of Operations for the year ended December  31, 2017 and the period from inception (April 22, 2016) through December 31, 2016		F-33
Consolidated Statements of Changes in Net Assets for the year ended December  31, 2017 and the period from inception (April 22, 2016) through December 31, 2016		F-34
Consolidated Statements of Cash Flows for the year ended December  31, 2017 and the period from inception (April 22, 2016) through December 31, 2016		F-35
Consolidated Schedules of Investments as of December  31, 2017 and December 31, 2016		F-36
Notes to Consolidated Financial Statements		F-46
	Page
FULL CIRCLE CAPITAL CORPORATION
Report of Independent Registered Public Accounting Firm		F-69
Consolidated Statements of Assets and Liabilities as of June  30, 2016 and June 30, 2015		F-71
Consolidated Statements of Operations for the years ended June  30, 2016 and June 30, 2015		F-72
Consolidated Statements of Changes in Net Assets for the years ended June  30, 2016 and June 30, 2015		F-73
Consolidated Statements of Cash Flows for the years ended June  30, 2016 and June 30, 2015		F-74
Consolidated Schedules of Investments as of June 30, 2016 and June  30, 2015		F-76
Notes to Consolidated Financial Statements		F-88

F-1

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)

Dollar amounts in thousands (except per share amounts)

	June 30, 2018 (unaudited)			December 31, 2017
Assets
Investments
Non-affiliated, non-controlled investments, at fair value (amortized cost of $139,972 and $179,558, respectively)	$	136,910		$	144,996
Non-affiliated, non-controlled short term investments, at fair value (amortized cost of $79,198 and $65,892, respectively)		79,190			65,890
Affiliated investments, at fair value (amortized cost of $87,700 and $4,240, respectively)		41,984			1,770
Controlled investments, at fair value (amortized cost of $21,502 and $18,487, respectively)		20,409			18,104
Total investments		278,493			230,760
Cash and cash equivalents		3,942			2,916
Receivable for investments sold		25			12
Interest receivable		3,458			5,027
Due from portfolio company		355			204
Due from affiliates		295			692
Prepaid expenses and other assets		62			302
Total assets	$	286,630		$	239,913
Liabilities
Notes payable 6.50% due September 18, 2022 (including unamortized discount of $1,290 and $1,435, respectively)	$	31,342		$	31,196
Notes payable 6.75% due January 31, 2025 (including unamortized discount of $1,826 and $0, respectively)		44,572			—
Payable for investments purchased		77,681			66,165
Interest payable		354			354
Distributions payable		884			3,015
Due to affiliates		5,290			6,193
Accrued expenses and other liabilities		916			703
Total liabilities	$	161,039		$	107,626
Commitments and contingencies (Note 6)	$	—		$	—
Net Assets
Common stock, par value $0.01 per share (100,000,000 shares authorized, 10,652,401 and 10,652,401 shares issued and outstanding, respectively)	$	107		$	107
Additional paid-in capital		198,426			198,426
Accumulated net realized losses		(32,201	)		(33,328	)
Undistributed net investment income		9,138			4,499
Net unrealized depreciation on investments		(49,879	)		(37,417	)
Total net assets	$	125,591		$	132,287
Total liabilities and net assets	$	286,630		$	239,913
Net asset value per share	$	11.79		$	12.42

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

F-2

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Dollar amounts in thousands (except per share amounts)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Investment Income:
Interest income from:
Non-affiliated, non-controlled investments	$	3,925		$	5,561		$	7,037		$	12,042
Non-affiliated, non-controlled investments (PIK)		—			—			—			—
Affiliated investments		777			(90	)		1,198			48
Affiliated investments (PIK)		1,514			—			4,567			—
Controlled investments		555			—			1,110			—
Controlled investments (PIK)		211			667			435			874
Total interest income		6,982			6,138			14,347			12,964
Dividend income from non-affiliated, non-controlled investments		49			85			155			131
Other income from:
Non-affiliated, non-controlled investments		29			14			42			457
Affiliated investments		87			—			90			—
Controlled investments		15			—			26			—
Total other income		131			14			158			457
Total investment income	$	7,162		$	6,237		$	14,660		$	13,552
Expenses:
Management fees	$	754		$	546		$	1,447		$	1,139
Incentive fees		(2,149	)		871			(1,183	)		1,894
Administration fees		487			272			797			767
Custody fees		15			11			29			24
Directors’ fees		50			21			99			48
Professional services		294			176			465			507
Interest expense		1,456			631			2,731			1,262
Other expenses		177			156			331			269
Total expenses		1,084			2,684			4,716			5,910
Accrued administration fee waiver		—			75			—			70
Net expenses	$	1,084		$	2,759		$	4,716		$	5,980
Net investment income	$	6,078		$	3,478		$	9,944		$	7,572
Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-affiliated, non-controlled investments	$	810		$	1,381		$	917		$	3,361
Affiliated investments		—			—			—			—
Controlled investments		—			—			210			—
Total net realized gain (loss)		810			1,381			1,127			3,361
Net change in unrealized appreciation (depreciation) from:
Non-affiliated, non-controlled investments		2,527			(5,247	)		(1,888	)		(5,990	)
Affiliated investments		(6,566	)		(429	)		(10,062	)		(2,020	)
Controlled investments		(201	)		(1,650	)		(512	)		(2,011	)
Total net change in unrealized appreciation (depreciation)		(4,240	)		(7,326	)		(12,462	)		(10,021	)
Net realized and unrealized gains (losses)	$	(3,430	)	$	(5,945	)	$	(11,335	)	$	(6,660	)
Net increase (decrease) in net assets resulting from operations	$	2,648		$	(2,467	)	$	(1,391	)	$	912
Net investment income per share (basic and diluted):	$	0.57		$	0.29		$	0.93		$	0.61
Earnings per share (basic and diluted):	$	0.25		$	(0.20	)	$	(0.13	)	$	0.07
Weighted average shares outstanding (basic and diluted):		10,652,401			12,000,803			10,652,401			12,316,884

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

F-3

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

Dollar amounts in thousands

	For the Six Months Ended June 30,
	2018			2017
Increase (decrease) in net assets resulting from operations:
Net investment income	$	9,944		$	7,572
Net realized gain (loss) on investments		1,127			3,361
Net change in unrealized appreciation (depreciation) on investments		(12,462	)		(10,021	)
Net increase (decrease) in net assets resulting from operations		(1,391	)		912
Distributions to stockholders from:
Net investment income		(5,305	)		(6,098	)
Total distributions to stockholders		(5,305	)		(6,098	)
Capital transactions:
Purchases of common stock		—			(14,096	)
Net increase (decrease) in net assets resulting from capital transactions		—			(14,096	)
Total increase (decrease) in net assets		(6,696	)		(19,282	)
Net assets at beginning of period	$	132,287		$	172,984
Net assets at end of period	$	125,591		$	153,702
Undistributed net investment income	$	9,138		$	2,809
Capital share activity
Shares outstanding at the beginning of the period		10,652,401			12,790,880
Shares purchased		—			(1,222,325	)
Shares outstanding at the end of the period		10,652,401			11,568,555

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

F-4

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Dollar amounts in thousands

	For the Six Months Ended June 30,
	2018			2017
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(1,391	)	$	912
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of investments		(93,112	)		(92,990	)
Increase (decrease) in payable for investments purchased		11,516			(1,864	)
Net change in short-term investments		(13,310	)		(73,943	)
Payment-in-kind income		(8,035	)		(4,256	)
Proceeds from sales of investments		49,425			53,244
(Increase) decrease in receivable for investments sold		(13	)		9,406
Proceeds from principal payments		7,373			63,085
Net realized (gain) loss on investments		(1,127	)		(3,361	)
Net change in unrealized (appreciation) depreciation on investments		12,462			10,021
Amortization of premium and accretion of discount, net		(1,409	)		(2,694	)
Amortization of discount (premium) on long term debt		270			(126	)
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in principal receivable		—			786
(Increase) decrease in interest receivable		1,569			1,386
(Increase) decrease in dividends receivable		—			(36	)
(Increase) decrease in deposit at broker		—			(47	)
(Increase) decrease in due from portfolio company		(151	)		230
(Increase) decrease in due from affiliates		397			80
(Increase) decrease in prepaid expenses and other assets		240			(27	)
Increase (decrease) in due to affiliates		(903	)		458
Increase (decrease) in accrued expenses and other liabilities		213			(820	)
Net cash provided by (used for) operating activities		(35,986	)		(40,556	)
Cash flows from financing activities
Purchases of common stock		—			(14,096	)
Issuance of GECCM Notes payable		44,448			—
Distributions paid		(7,436	)		(7,261	)
Net cash provided by (used for) financing activities		37,012			(21,357	)
Net increase (decrease) in cash		1,026			(61,913	)
Cash, beginning of period		2,916			66,782
Cash, end of period	$	3,942		$	4,869
Supplemental disclosure of non-cash financing activities :
Dividends declared, not yet paid	$	884		$	960
Supplemental disclosure of cash flow information:
Cash paid for excise tax	$	120		$	—
Cash paid for interest	$	2,461		$	1,388

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

F-5

GREAT ELM CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

June 30, 2018

Dollar amounts in thousands

Portfolio Company	Security	Industry	Interest (1)	Maturity		Par Amount /Quantity		Cost		Fair Value		% of NAV
Investments at Fair Value - 221.75% of Net Assets(2)
Controlled Investments - 16.25% of Net Assets(3)
PE Facility Solutions, LLC	1st Lien, Senior Secured Revolver(5),(15)	Building Cleaning and Maintenance Services	11.09% (L + 9.00%)(6)		02/27/2022		3,679	$	3,679	$	3,679		2.93	%
San Diego, CA	1st Lien, Senior Secured Revolver - Unfunded(5),(15)		11.09% (L + 9.00%)(6)		02/27/2022		2,321		—		—		—	%
	1st Lien, Senior Secured Loan A(5),(15)		13.09% (L + 11.00%)(6)		02/27/2022		9,900		9,900		9,900		7.88	%
	1st Lien, Senior Secured Loan B(5),(15)		16.09% (L + 14.00%)(6),(7)		02/27/2022		6,171		5,897		5,187		4.13	%
	Common Equity(5),(8),(15)						1		—		—		—	%
									19,476		18,766		14.94	%
The Finance Company	1st Lien, Senior Secured Revolver(5)	Consumer Finance	13.09% (L + 11.00%, 11.50% Floor)(6)		07/02/2020		535		535		535		0.43	%
Silver Springs, MD	1st Lien, Senior Secured Unfunded Loan(5)		13.09% (L + 11.00%, 11.50% Floor)(6)		07/02/2020		465		—		—		—	%
	2nd Lien Secured Term Loan B(5),(30)		13.09% (L + 11.00%, 11.50% Floor)(6)		07/02/2020		1,491		1,491		1,108		0.88	%
	Equity(5),(8),(30)						288,000		—		—		—	%
									2,026		1,643		1.31	%
Total Controlled Investments									21,502		20,409		16.25	%
Affiliate Investments - 33.43% of Net Assets(4)
Avanti Communications Group PLC	2nd Lien, Senior Secured Bond(10),(11)	Wireless Telecommunications Services	9.00%		10/01/2022		37,126		32,800		28,216		22.47	%
London, UK	Common Equity(8),(10)						196,086,410		50,660		13,734		10.93	%
									83,460		41,950		33.40	%
OPS Acquisitions Limited and Ocean Protection Services Limited	1st Lien, Senior Secured Loan(5),(10),(16)	Maritime Security Services	14.09% (L + 12.00%, 12.50% Floor)(6),(9)		06/01/2018		4,903		4,240		34		0.03	%
London, UK	Common Equity(5),(8),(10),(16)						19		—		—		—	%
									4,240		34		0.03	%
Total Affiliate Investments									87,700		41,984		33.43	%

F-6

Portfolio Company	Security	Industry	Interest (1)	Maturity		Par Amount /Quantity		Cost		Fair Value			% of NAV
Non-Affiliated, Non-Controlled Investments - 109.01% of Net Assets
Almonde, Inc.	2nd Lien, Senior Secured Loan(10),(17)	Software Services	9.59% (L + 7.25%, 8.25% floor)(13)		06/13/2025		10,000		9,953		9,616			7.66	%
Philadelphia, PA
Aptean Holdings, Inc.	2nd Lien, Senior Secured Loan(5),(29)	Software Services	11.84% (L + 9.50%, 10.50% Floor)(13)		12/02/2023		4,010		4,054		4,030			3.21	%
Alpharetta, GA
Commercial Barge Line Company	1st Lien, Senior Secured Loan(18)	Water Transport	10.84% (L + 8.75%, 9.75% Floor)(6)		11/12/2020		9,000		7,544		6,206			4.94	%
Jeffersonville, IN
Davidzon Radio, Inc.	1st Lien, Senior Secured Loan(5),(16)	Radio Broadcasting	15.09% (L + 10.00%, 11.00% Floor)(6),(12)		03/31/2020		9,471		9,047		8,869			7.06	%
Brooklyn, NY
Foresight Energy LP	1st Lien, Senior Secured Loan(27)	Oil, Gas & Coal	8.09% (L + 5.75%, 6.75% floor)(13)		03/28/2022		4,647		4,594		4,611			3.67	%
Saint Louis, MO
Full House Resorts, Inc.	1st Lien Senior Secured Note(5),(25)	Gaming, Lodging & Restaurants	9.34% (L + 7.00%, 8.00% floor)(13)		02/02/2024		9,950		9,761		9,801			7.80	%
Las Vegas, NV
Geo Specialty Chemicals, Inc.	1st Lien, Senior Secured Revolver(5),(19)	Chemicals	6.84% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		3,938		3,804		3,833			3.05	%
Lafayette, Indiana	1st Lien, Senior Secured Revolver - Unfunded(5),(19)		6.84% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		438		—		(12	)		(0.01	)%
	1st Lien, Senior Secured Loan(5),(19)		6.84% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		5,906		5,726		5,750			4.58	%
									9,530		9,571			7.62	%
International Wire Group Inc	2nd Lien, Senior Secured Bond(11)	Manufacturing	10.75%		08/01/2021		17,500		16,476		16,450			13.10	%
Camden, NY
Luling Lodging, LLC	1st Lien, Senior Secured Loan(5),(16)	Hotel Operator	19.09% (L + 12.00%, 12.25% Floor)(6),(9),(12)		12/18/2017		2,715		1,300		2,574			2.05	%
Luling, TX
Michael Baker International, LLC	2nd Lien, Senior Secured Bond(11)	Industrial Conglomerates	8.75%		03/01/2023		14,500		14,044		14,138			11.26	%
Pittsburgh, PA

F-7

Portfolio Company	Security	Industry	Interest (1)	Maturity		Par Amount /Quantity		Cost		Fair Value			% of NAV
NANA Development Corp.	1st Lien, Senior Secured Bond(11)	Industrial Other	9.50%		03/15/2019		3,308		3,284		3,316			2.64	%
Anchorage, AK
PEAKS Trust 2009-1	1st Lien, Senior Secured Loan(5),(10),(16)	Consumer Finance	7.59% (L + 5.50%, 7.50% Floor)(6)		01/27/2020		1,242		942		805			0.64	%
Carmel, IN
PR Wireless, Inc.	1st Lien, Senior Secured Delayed Draw Loan(5),(20)	Wireless Communications	7.59% (L + 5.25%)(13)		06/29/2020		274		274		275			0.22	%
Guaynabo, PR	1st Lien, Senior Secured Unfunded Delayed Draw Loan(5),(20)		7.59% (L + 5.25%)(13)		06/29/2020		1,098		—		(3	)		(0.0	)%
									274		272			0.22	%
RiceBran Technologies Corporation	Warrants(5),(8),(16)	Grain Mill Products	$1.60 Strike Price		05/12/2020		300,000		145		237			0.19	%
Scottsdale, AZ
SESAC Holdco II LLC	2nd Lien, Senior Secured Loan(5),(21)	Business Services	9.34% (L + 7.25%)(6)		02/24/2025		7,295		7,244		7,291			5.81	%
Nashville, TN
Sungard Availability Services Capital, Inc.	1st Lien, Senior Secured Loan(22)	Technology Services	12.09% (L + 10.00%, 11.00% Floor)(6)		10/01/2022		8,880		8,565		8,729			6.95	%
Wayne, PA	1st Lien, Senior Secured Loan(5),(24)		9.09% (L + 7.00%, 8.00% Floor)(6)		9/30/2021		4,900		4,565		4,577			3.64	%
									13,130		13,306			10.59	%
Tallage Davis, LLC	1st Lien, Senior Secured Loan(5),(26)	Real Estate Services	11.00%		01/26/2023		3,100		3,100		3,083			2.45	%
Boston, MA	1st Lien, Senior Secured Loan - Unfunded(5),(26)		11.00%		01/26/2023		11,000		—		(61	)		(0.05	)%
									3,100		3,022			2.40	%
Tallage Lincoln, LLC	1st Lien, Senior Secured Loan(5),(16)	Real Estate Services	12.34% (L + 10.00%, 11.00% Floor)(13)		12/31/2019		4,298		4,299		4,279			3.41	%
Boston, MA	1st Lien, Senior Secured Loan - Unfunded(5),(16)		12.34% (L + 10.00%, 11.00% Floor)(13)		12/31/2019		2,250		—		(10	)		(0.01	)%
									4,299		4,269			3.40	%
The Selling Source, LLC	1st Lien, Senior Secured Loan(5),(16),(23)	Information and Data Services	17.00% (9.00% PIK, 8.00% Cash)(7),(9)		12/31/2017		5,689		4,202		4,841			3.85	%
Las Vegas, NV

F-8

Portfolio Company	Security	Industry	Interest (1)	Maturity		Par Amount /Quantity		Cost		Fair Value			% of NAV
Tru Taj, LLC	1st Lien, Senior Secured Bond(11)	Retail	12.00%		08/15/2021		16,000		15,346		11,960			9.52	%
Wayne, NJ	1st Lien, Debtor in Possession Note(5),(28)		11.00%		01/22/2019		1,655		1,703		1,725			1.37	%
									17,049		13,685			10.90	%
Total Non-Affiliated, Non-Controlled Investments									139,972		136,910			109.01	%
Short-Term Investments - 63.06% of Net Assets
State Street Institutional Treasury Money Market Fund	Premier Class						4,531,772		4,532		4,532			3.61	%
United States Treasury	Treasury Bill		1.90%		9/27/2018		75,000		74,666		74,658			59.45	%
Total Short-Term Investments									79,198		79,190			63.06	%
TOTAL INVESTMENTS(14) - 221.75% of Net Assets								$	328,372	$	278,493			221.75	%
Other Liabilities in Excess of Assets - (121.75)% of Net Assets										$	(152,902	)		(121.75	)%
NET ASSETS										$	125,591			100.00	%

⁽¹⁾ A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (‘‘London Interbank Offered Rate’’) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of June 30, 2018. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

⁽²⁾ 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. No unrestricted securities of the same issuer are outstanding.

⁽³⁾ ‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in 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.

⁽⁴⁾ ‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a 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.

⁽⁵⁾ Investments classified as Level 3 whereby fair value was determined by the Company’s board of directors.

⁽⁶⁾ The interest rate on these loans may be subject to the greater of a LIBOR floor, if any, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2018 was 2.09%.

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

⁽⁸⁾ Non-income producing security.

⁽⁹⁾ Investment was on non-accrual status as of June 30, 2018.

⁽¹⁰⁾ Indicates assets that the Company believes do not represent ‘‘qualifying assets’’ under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 18.28% were non-qualifying assets as of June 30, 2018.

⁽¹¹⁾ Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

F-9

⁽¹²⁾ The interest rate on these loans includes a default interest rate.

⁽¹³⁾ The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2018 was 2.34%.

⁽¹⁴⁾ As of June 30, 2018, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $1,691; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $52,535; the net unrealized depreciation was $50,884; the aggregate cost of securities for Federal income tax purposes was $329,337.

⁽¹⁵⁾ Restricted security initially obtained on February 28, 2017.

⁽¹⁶⁾ Restricted security initially obtained on November 3, 2016.

⁽¹⁷⁾ Restricted security initially obtained on December 14, 2017.

⁽¹⁸⁾ Restricted security initially obtained on May 17, 2017.

⁽¹⁹⁾ Restricted security initially obtained on September 28, 2017.

⁽²⁰⁾ Restricted security initially obtained on November 15, 2017.

⁽²¹⁾ Restricted security initially obtained on December 13, 2017.

⁽²²⁾ Restricted security initially obtained on December 20, 2017.

⁽²³⁾ Loan defaulted on January 1, 2018.

⁽²⁴⁾ Restricted security initially obtained on January 24, 2018.

⁽²⁵⁾ Restricted security initially obtained on February 2, 2018.

⁽²⁶⁾ Restricted security initially obtained on March 20, 2018.

⁽²⁷⁾ Restricted security initially obtained on March 22, 2018.

⁽²⁸⁾ Restricted security initially obtained on March 26, 2018.

⁽²⁹⁾ Restricted security initially obtained on March 27, 2018.

⁽³⁰⁾ Restricted security initially obtained on June 8, 2018

L = LIBOR

F-10

As of June 30, 2018, the Company’s investments consisted of the following:

Investment Type	Investments at Fair Value		Percentage of Net Assets
Fixed Income	$	185,332		147.57	%
Equity/Other		13,971		11.13	%
Short-Term Investments		79,190		63.05	%
Total	$	278,493		221.75	%

As of June 30, 2018, the industry composition of the Company’s portfolio, excluding short-term investments, at fair value was as follows:

Industry	Investments at Fair Value		Percentage of Net Assets
Wireless Telecommunication Services	$	41,950		33.40	%
Building Cleaning and Maintenance Services		18,766		14.94	%
Manufacturing		16,450		13.10	%
Industrial Conglomerates		14,138		11.26	%
Retail		13,685		10.90	%
Software Services		13,646		10.87	%
Technology Services		13,306		10.59	%
Gaming, Lodging & Restaurants		9,801		7.80	%
Chemicals		9,571		7.62	%
Radio Broadcasting		8,869		7.06	%
Real Estate Services		7,291		5.81	%
Business Services		7,291		5.81	%
Water Transport		6,206		4.94	%
Information and Data Services		4,841		3.85	%
Oil, Gas & Coal		4,611		3.67	%
Industrial Other		3,316		2.64	%
Hotel Operator		2,574		2.05	%
Consumer Finance		2,448		1.95	%
Wireless Communications		272		0.22	%
Grain Mill Products		237		0.19	%
Maritime Security Services		34		0.03	%
Short-Term Investments		79,190		63.05	%
Total	$	278,493		221.75	%

As of June 30, 2018, the geographic composition of the Company’s portfolio at fair value was as follows:

Geography	Investments at Fair Value		Percentage of Net Assets
United States	$	236,509		188.32	%
United Kingdom		41,984		33.43	%
Total	$	278,493		221.75	%

F-11

GREAT ELM CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

Dollar amounts in thousands

Portfolio Company	Security	Industry	Interest(2)	Maturity		Par Amount / Quantity		Cost		Fair Value		% of NAV
Investments at Fair Value - 174.43% of Net Assets(1)
Controlled Investments - 13.68% of Net Assets(3)
PE Facility Solutions, LLC	1st Lien, Senior Secured Revolver(5),(15)	Building Cleaning and Maintenance Services	11.38% (L + 10.00%)(6)		02/27/2022		—	$	—	$	—		—
San Diego, CA	1st Lien, Senior Secured Revolver -Unfunded(5),(15)		11.38% (L + 10.00%)(6)		02/27/2022		3,000		—		—		—
	1st Lien, Senior Secured Loan A(5),(15)		12.38% (L + 11.00%)(6)		02/27/2022		9,900		9,900		9,900		7.48	%
	1st Lien, Senior Secured Loan B(5),(15)		15.38% (L + 14.00%)(6),(7)		02/27/2022		9,105		8,587		8,204		6.20	%
	Common Equity(5),(8),(15)						1		—		—		—
									18,487		18,104		13.68	%
Total Controlled Investments									18,487		18,104		13.68	%
Affiliate Investments - 1.34% of Net Assets(4)
OPS Acquisitions Limited and Ocean Protection Services Limited	1st Lien, Senior Secured Loan(5),(10),(16)	Maritime Security Services	16.38% (L + 12.00%, 12.50% Floor)(6),(7),(9)		06/01/2018		4,903		4,240		1,770		1.34	%
London, UK	Common Equity(5),(8),(10),(16)						19		—		—		—
									4,240		1,770		1.34	%
Total Affiliate Investments									4,240		1,770		1.34	%
Non-Affiliated, Non-Controlled Investments - 109.60% of Net Assets
Almonde, Inc.	2nd Lien, Senior Secured Loan(5),(10),(17)	Software Services	8.94% (L + 7.25%, 8.25% floor)(13)		06/13/2025		5,000		5,037		5,005		3.78	%
Philadelphia, PA
Avanti Communications Group PLC	2nd Lien, Senior Secured Bond(10),(11)	Wireless Telecommunications Services	12.50%		10/01/2021		34,917		30,427		28,807		21.78	%
London, UK	3rd Lien, Senior Secured Bond(10),(11)		14.50% (20.00% if PIK election is made)(7)		10/01/2023		54,113		45,011		13,257		10.02	%
	Common Equity(8),(10)						1,829,496		23		213		0.16	%
									75,461		42,277		31.96	%
Commercial Barge Line Company	1st Lien, Senior Secured Loan(5),(18)	Water Transport	10.32% (L + 8.75%, 9.75% Floor)(6)		11/12/2020		9,254		7,551		5,279		3.99	%
Jeffersonville, IN

F-12

Portfolio Company	Security	Industry	Interest(2)	Maturity		Par Amount / Quantity		Cost			Fair Value			% of NAV
Davidzon Radio, Inc.	1st Lien, Senior Secured Loan(5),(16)	Radio Broadcasting	14.38% (L + 10.00%, 11.00% Floor)(6),(14)		03/31/2020		9,685		9,144			8,876			6.71	%
Brooklyn, NY
Geo Specialty Chemicals, Inc.	1st Lien, Senior Secured Revolver(5),(19)	Chemicals	6.28% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		3,646		3,465			3,500			2.64	%
Lafayette, Indiana	1st Lien, Senior Secured Revolver - Unfunded(5),(19)		6.28% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		729		(29	)		(29	)		(0.02	%)
	1st Lien, Senior Secured Loan(5),(19)		6.28% (L + 4.75%, 5.75% Floor)(6)		04/30/2019		6,563		6,248			6,300			4.76	%
									9,684			9,771			7.38	%
International Wire Group Inc	2nd Lien, Senior Secured Bond(11)	Manufacturing	10.75%		08/01/2021		13,000		12,071			11,960			9.04	%
Camden, NY
Luling Lodging, LLC	1st Lien, Senior Secured Loan(5),(16)	Hotel Operator	18.38% (L + 12.00%, 12.25% Floor)(6),(9),(12)		12/18/2017		2,715		1,300			1,605			1.21	%
Luling, TX
Michael Baker International, LLC	2nd Lien, Senior Secured Bond(11)	Industrial Conglomerates	8.75%		03/01/2023		5,000		4,876			4,838			3.66	%
Pittsburgh, PA
NANA Development Corp.	1st Lien, Senior Secured Bond(11)	Industrial Other	9.50%		03/15/2019		7,000		6,902			7,070			5.34	%
Anchorage, AK
PEAKS Trust 2009-1	1st Lien, Senior Secured Loan(5),(10),(16)	Consumer Finance	7.50% (L + 5.50%, 7.50% Floor)(6)		01/27/2020		1,462		1,020			878			0.67	%
Carmel, IN
PR Wireless, Inc.	1st Lien, Senior Secured Loan(5),(16)	Wireless Communications	6.94% (L + 5.25%)(13)		06/29/2020		9,754		8,908			9,749			7.37	%
Guaynabo, PR	1st Lien, Senior Secured Delayed Draw Loan(5),(20)		8.75% (Prime Rate + 4.25%)(13)		06/29/2020		274		274			274			0.21	%
	1st Lien, Senior Secured Unfunded Delayed Draw Loan(5),(20)		8.75% (Prime Rate + 4.25%)(13)		06/29/2020		1,098		—			—
									9,182			10,023			7.58	%
RiceBran Technologies Corporation	Warrants(5),(8),(16)	Grain Mill Products	$1.60 Strike Price		05/12/2020		300,000		145			136			0.10	%
Scottsdale, AZ

F-13

Portfolio Company	Security	Industry	Interest(2)	Maturity		Par Amount / Quantity		Cost		Fair Value			% of NAV
SESAC Holdco II LLC	2nd Lien, Senior Secured Loan(5),(21)	Business Services	8.94% (L+7.25%)(13)		02/24/2025		4,150		4,103		4,156			3.14	%
Nashville, TN
Sungard Availability Services Capital, Inc.	1st Lien, Senior Secured Loan(5),(22)	Technology Services	11.69% (L+10.00%)(13)		10/01/2022		6,000		5,700		5,952			4.50	%
Wayne, PA
Tallage Lincoln, LLC.	1st Lien, Senior Secured Loan(5),(16)	Real Estate Services	11.69% (L + 10.00%, 11.00% Floor)(13)		12/31/2019		5,723		5,725		5,718			4.32	%
Boston, MA	1st Lien, Senior Secured Loan - Unfunded(5),(16)		11.69% (L + 10.00%, 11.00% Floor)(13)		12/31/2019		2,250		—		—			—
									5,725		5,718			4.32	%
The Finance Company	1st Lien, Senior Secured Loan(5),(16)	Consumer Finance	17.88% (L + 13.50%, 14.00% Floor)(6),(12)		03/31/2018		2,191		2,191		1,993			1.51	%
Silver Springs, MD	1st Lien, Senior Secured Unfunded Loan(5),(16)		17.88% (L + 13.50%, 14.00% Floor)(6),(12)		03/31/2018		709		—		—			—
									2,191		1,993			1.51	%
The Selling Source, LLC	1st Lien, Senior Secured Loan(5),(16),(23)	Information and Data Services	17.00% (9.00% PIK), (8.00% Cash)(7),(9)		12/31/2017		5,689		4,202		4,659			3.52	%
Las Vegas, NV
Tru Taj, LLC	1st Lien, Senior Secured Bond(11)	Retail	12.00%		08/15/2021		16,000		15,264		14,800			11.19	%
Wayne, NJ
Total Non-Affiliated, Non-Controlled Investments									179,558		144,996			109.60	%
Short-Term Investments - 49.81% of Net Assets
State Street Institutional Treasury Money Market Fund	Money Market Mutual Fund						16,052,817		16,053		16,053			12.13	%
United States Treasury	Treasury Bill				3/29/2018		50,000		49,839		49,837			37.67	%
Total Short-Term Investments									65,892		65,890			49.80	%
TOTAL INVESTMENTS(14) - 174.43% of Net Assets								$	268,177	$	230,760			174.43	%
Other Liabilities in Excess of Assets - (74.43)% of Net Assets										$	(98,473	)		(74.43	%)
NET ASSETS										$	132,287			100.00	%

(1) 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.

(2) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (‘‘London Interbank Offered Rate’’) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of December 31, 2017. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

(3) ‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in 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.

(4) ‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a 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.

F-14

(5) Investments classified as Level 3 whereby fair value was determined by the Company’s board of directors.

(6) The interest rate on these loans may be subject to the greater of a LIBOR floor, if any, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2017 was 1.56%.

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

(8) Non-income producing security.

(9) Investment was on non-accrual status as of December 31, 2017.

(10) Indicates assets that the Company believes do not represent ‘‘qualifying assets’’ under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 20.82% were non-qualifying assets as of December 31, 2017.

(11) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

(12) The interest rate on these loans includes a default interest rate.

(13) The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2017 was 1.69%.

(14) As of December 31, 2017, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $2,353; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $25,103; the net unrealized depreciation was $22,750; the aggregate cost of securities for Federal income tax purposes was $253,510.

(15) Restricted security initially obtained on February 28, 2017.

(16) Restricted security initially obtained on November 3, 2016.

(17) Restricted security initially obtained on December 14, 2017.

(18) Restricted security initially obtained on May 17, 2017.

(19) Restricted security initially obtained on September 28, 2017.

(20) Restricted security initially obtained on November 15, 2017.

(21) Restricted security initially obtained on December 13, 2017.

(22) Restricted security initially obtained on December 20, 2017.

(23) Loan defaulted on January 1, 2018.

L = LIBOR

F-15

As of December 31, 2017 the Company’s investments consisted of the following:

Investment Type	Investments at Fair Value		Percentage of Net Assets
1st Lien/Senior Secured Debt	$	164,521		124.36	%
Equity/Other		349		0.26	%
Short-term investments		65,890		49.81	%
Total Long Term Investments	$	230,760		174.43	%

As of December 31, 2017 the industry composition of the Company’s portfolio at fair value was as follows:

	Investments at Fair Value		Percentage of Net Assets
Wireless Telecommunications Services	$	42,277		31.96	%
Building Cleaning and Maintenance Services		18,104		13.68	%
Retail		14,800		11.19	%
Manufacturing		11,960		9.04	%
Wireless Communications		10,023		7.58	%
Chemicals		9,771		7.39	%
Radio Broadcasting		8,876		6.71	%
Industrial Other		7,070		5.34	%
Technology Services		5,952		4.50	%
Real Estate Services		5,718		4.32	%
Water Transport		5,279		3.99	%
Software Services		5,005		3.78	%
Industrial Conglomerates		4,838		3.66	%
Information and Data Services		4,659		3.52	%
Business Services		4,156		3.14	%
Consumer Finance		2,871		2.17	%
Maritime Security Services		1,770		1.34	%
Hotel Operator		1,605		1.21	%
Grain Mill Products		136		0.10	%
Short-term investments		65,890		49.81	%
Total	$	230,760		174.43	%

As of December 31, 2017 the geographic composition of the Company’s portfolio at fair value was as follows:

Geography	Investments at Fair Value		Percentage of Net Assets
United States	$	186,713		141.14	%
United Kingdom		44,047		33.29	%
Total	$	230,760		174.43	%

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

F-16

GREAT ELM CAPITAL CORP.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands, except share and per share amounts

1. ORGANIZATION

Great Elm Capital Corp. (the “Company”) was formed on April 22, 2016 as a Maryland corporation. 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 and Full Circle Capital Corporation, a Maryland corporation (“Full Circle”), entered into an Agreement and Plan of Merger, dated as of June 23, 2016 (the “Merger Agreement”). The Merger Agreement provided for the merger of Full Circle with and into the Company (the “Merger”). The Company agreed to provide indemnity to Full Circle’s directors and officers under certain circumstances. The Company has concluded that its indemnification obligation is remote as of the date of the accompanying financial statements. The Merger was completed on November 3, 2016 and the Company began operations on November 4, 2016. The Company accounted for the Merger as a business combination under Accounting Standards Codification (ASC) Topic 805, Business Combinations (“ASC 805”). The consideration for the Merger consisted of 4,986,585 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”).

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The Company’s functional currency is U.S. dollars and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X and Regulation S-K. The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services – Investment Companies.

Basis of Consolidation. Under the Investment Company Act, Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ Audit and Accounting Guide for Investment Companies, the Company is generally precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services and benefits to the Company. The accompanying consolidated financial statements include the Company’s accounts and the accounts of the Company’s wholly-owned, or previously wholly-owned, subsidiaries, TFC-SC Holdings, LLC, PE Facility Solutions, LLC and Double Deuce Lodging LLC. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

Revenue Recognition. Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments, are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment if such fees are fixed in nature. The Company currently has no investments with fixed exit fees. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, and end-of-term or exit fees that have a contingency feature or are variable in nature are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are generally included in interest income.

Interest Income received as payment-in-kind (“PIK”) is reported separately in the Statements of Operations. Income is included as PIK if the instrument solely provides for settlement in kind. In the event that the borrower can settle in kind or via cash payment, the income is not included as PIK until the borrower elects to pay in kind and the payment is received by the Company. In the event there is a lesser cash rate in a PIK toggle instrument, income is accrued at the lesser cash rate until the coupon is paid in kind and such larger payment is received by the Company.

F-17

Certain of the Company’s debt investments were purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. 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. For debt instruments where the Company received original issue discounts, when principal payments on the debt instrument are received in an amount in excess of the debt instrument’s amortized cost, the excess principal payments are recorded as interest income.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (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 depreciation previously recognized. Realized gains and losses are computed using the first-in, first-out 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.

Organization and Merger Related Costs. Organization and Merger-related costs, including costs relating to the formation and incorporation of the business, were deemed to be incurred by the Company only subsequent to the Merger being completed.

Cash and Cash Equivalents. Cash and cash equivalents typically consist of bank demand deposits.

Valuation of Portfolio Investments. The Company carries its investments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. 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 of Directors”).

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. See Note 4.

The Company values its portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by the Board of Directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (1) are independent of the Company, (2) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (3) are able to transact for the asset, and (4) are willing to transact for the asset (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. The Company generally obtains market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. Short term debt investments with remaining maturities within ninety days are generally valued at amortized cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is the case for many of the Company’s investments, or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with the Company’s documented valuation policy that has been reviewed and approved by the Board of Directors, who also approve in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that the Company may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of the Company’s investments than on the fair values of our investments for which market quotations are not readily available. 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 of Directors 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 of Directors;

• Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented, discussed, and iterated with senior management of GECM;

• The fair value of investments comprising in the aggregate less than 5% of the Company’s total capitalization may be determined by GECM in good faith in accordance with the Company’s valuation policy without the employment of an independent valuation firm.

F-18

The Company’s audit committee recommends, and the Board of Directors approves, the fair value of the investments in the Company’s portfolio in good faith based on the input of GECM, the respective independent valuation firms (to the extent applicable) and the inputs of each of the audit committee of the Board of Directors and the Board of Directors.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in determining the fair value of its investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, and enterprise values.

Foreign Currency Translation. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (1) investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates effective on the date of valuation; and (2) purchases and sales of investments and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates prevailing on the transaction dates. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.

U.S. Federal Income Taxes. From inception to September 30, 2016, the Company was a taxable association under Internal Revenue Code of 1986, as amended (the “Code”). The Company has elected to be taxed as a regulated investment company (“RIC”) under subchapter M of the Code for the partial taxable period beginning on October 1, 2016 and ending December 31, 2016. The Company intends to operate in a manner so as to qualify for the tax treatment applicable to RICs in that taxable year and all future taxable years. In order to qualify as a RIC, among other things, the Company will be required to timely distribute to its stockholders at least 90% of investment company taxable income (“ICTI”) including PIK interest, as defined by the Code, for each taxable year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed prior to the 15th day of the ninth month after the tax year-end. So long as the Company maintains its status as a RIC, it generally will not be subject to corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as distributions. 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 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 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 accrued $124 of excise tax expense in fiscal 2017 and has accrued $0 for fiscal 2018.

At December 31, 2017, the Company, for federal income tax purposes, had capital loss carryforwards of $46,984 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. The Modernization Act changed the capital loss carryforward rules as they relate to regulated investment companies. Capital losses generated in tax years beginning after the date of enactment may now be carried forward indefinitely, and retain the character of the original loss. Of the capital loss carryforwards at December 31, 2017, $46,984 are limited losses and available for use subject to annual limitation under Section 382. Of the capital losses at December 31, 2017, $16,815 are short-term and $30,169 are long term.

ASC 740 Accounting for Uncertainty in Income Taxes (“ASC 740”) provides guidance on the accounting for and disclosure of uncertainty in tax position. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Based on its analysis of its tax position for all open tax years (the current and prior years, as applicable), the Company has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax years remain subject to examination and adjustment by tax authorities.

F-19

Recent Accounting Developments

In March 2017, FASB issued ASU No. 2017-08; Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017-08 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The application of this guidance is not expected to have a material impact on the accompanying consolidated financial statements and related disclosures.

3. SIGNIFICANT AGREEMENTS AND RELATED PARTIES

Investment Management Agreement. On September 27, 2016, the Company entered into an investment management agreement (the “Investment Management Agreement”) with GECM. Beginning on November 4, 2016, the Company began accruing for GECM’s fees for its services under the Investment Management Agreement. This fee consists of two components: a base management fee and an incentive fee.

Management Fee The base management fee is calculated at an annual rate of 1.50% of the Company’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee will be payable quarterly in arrears. The base management fee is calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

For the three and six months ended June 30, 2018 management fees amounted to $754 and $1,447, respectively. For the three and six months ended June 30, 2017 management fees amounted to $546 and $1,139, respectively. As of June 30, 2018 and December 31, 2017, $754 and $612 remained payable, respectively.

Incentive Fee The incentive fee consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, the Company will pay GECM 20% of the amount by which the Company’s pre-incentive fee net investment income (the “Pre-Incentive Fee Net Investment Income”) for the quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the Company’s net assets at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision pursuant to which GECM receives all of such income in excess of the 1.75% level but less than 2.1875% (8.75% annualized) and subject to a total return requirement (described below). The effect of the “catch-up” provision is that, subject to the total return provision, if pre-incentive fee net investment income exceeds 2.1875% of the Company’s net assets at the end of the immediately preceding calendar quarter, in any calendar quarter, GECM will receive 20.0% of the Company’s pre-incentive fee net investment income as if the 1.75% hurdle rate did not apply. 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 interest, payment-in-kind 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, 2018 was $28,158. Accrued Unpaid Income includes PIK income of $8,035 capitalized during the six months ended June 30, 2018 and $5,002 of accrued interest income that is expected to PIK. Accrued Unpaid Income as of December 31, 2017 was $20,168. Accrued Unpaid Income as of December 31, 2017 includes PIK income of $11,709 capitalized during the year ended December 31, 2017 and $1,962 of accrued interest income that is expected to PIK under PIK toggle elections.

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, (A) reduce Pre-Incentive Fee Net Investment Income and (B) reduce the amount of Accrued Unpaid Income Incentive Fees previously deferred.

Under the capital gains component of the 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.

F-20

Payment of the income incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income will be payable except to the extent that 20% of the cumulative net increase in net assets resulting from operations from and after November 4, 2016 exceeds the cumulative incentive fees accrued and/or paid from and after November 4, 2016. For the purposes of this calculation, the “cumulative net increase in net assets resulting from operations” is the sum of the Company’s pre-incentive fee net investment income, realized gains and losses and unrealized appreciation and depreciation from and after November 4, 2016.

For the six months ended June 30, 2018 and 2017, the Company incurred income incentive fees of $(1,183) and $1,894, respectively. For the six months ended June 30, 2018, the income incentive fees incurred include an accrual of $1,454 offset by a reversal of $2,637 of income incentive fees previously accrued (discussed further below). As of June 30, 2018 and December 31, 2017, $4,075 and $5,257, respectively, remained payable and at both dates $0 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, 2018 and the year ended December 31, 2017, the Company accrued Incentive Fees based on capital gains of $0.

GECC’s largest investment, Avanti Communications Group plc (Avanti), has generated significant non-cash income in the form of payment-in-kind (PIK) interest. In connection with the recent restructuring of Avanti completed on April 26, 2018, GECC’s investment in Avanti’s third lien notes was converted into Avanti common equity. As a result of this debt-for-equity conversion, we have determined that the accrued incentives fees payable associated with the portion of such PIK interest generated by the third lien notes should not at this time be recognized as a liability and as such we have reversed for prior periods. Notwithstanding this reversal, such incentives fees remain payable under the investment management agreement (subject to achievement of return hurdles) and will be recognized as expense to the extent that an exit or recovery results in gross proceeds to us in excess of our initial cost basis in the third lien notes.

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.

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 financial officer is also the chief financial officer of GEC.

Administration Fees. On September 27, 2016, the Company entered into an administration agreement (the “Administration Agreement”) with GECM to provide administrative services, including furnishing the Company with office facilities, equipment, clerical, bookkeeping record keeping services and other administrative services. The Company will reimburse GECM for its allocable portion of overhead and other expenses of GECM in performing its obligations under the Administration Agreement.

GECM agreed that the aggregate amount of expenses accrued for reimbursement pursuant to the Administration Agreement that pertain to direct compensation costs of financial, compliance and accounting personnel that perform services for the Company, inclusive of the fees charged by any sub-administrator to provide such financial, compliance and/or accounting personnel to the Company (the “Compensation Expenses”), during the year ending November 4, 2017, when taken together with Compensation Expenses reimbursed or accrued for reimbursement by the Company pursuant to the Investment Management Agreement during such period, shall not exceed 0.50% of the Company’s average net asset value during such period. GECM’s expense cap was calculated retrospectively for the year ending November 4, 2017 and the cap on costs was determined to be $0 and $70 of the $80 accrued at December 31, 2016 was reversed for the year ended December 31, 2017 with $10 due from our sub-administrator remaining waived.

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, 2018 and 2017, the Company incurred expenses under the Administration Agreement of $797 and $767, respectively. As of June 30, 2018 and December 31, 2017, $356 and $257 remained payable, respectively.

F-21

4. FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

The fair value hierarchy under ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:

Basis of Fair Value Measurement

Level 1 - Investments valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.

Level 3 - Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 2 should be read in conjunction with the information outlined below.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 2 and Level 3 Instruments.

Level 2 Instruments Valuation Techniques and Significant Inputs

Bank Loans, Corporate Debt, and Other Debt Obligations The types of instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency may include commercial paper, most government agency obligations, certain corporate debt securities, certain mortgage-backed securities, certain bank loans, certain state and municipal obligations, certain money market instruments and certain loan commitments.   Valuations of Level 2 instruments can be verified to quoted prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g. indicative or firm) and the relationship of recent market activity to the prices provided from alternative pricing sources.

Level 3 Instruments Valuation Techniques and Significant Inputs

Bank Loans, Corporate Debt, and Other Debt Obligations

Valuations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on an analysis of market comparables, transactions in similar instruments and/or recovery and liquidation analyses.

Equity

Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available: •   Transactions in similar instruments; •   Discounted cash flow techniques; •   Third party appraisals; and •   Industry multiples and public comparables. Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including: •   Current financial performance as compared to projected performance; •   Capitalization rates and multiples; and •   Market yields implied by transactions of similar or related assets.

F-22

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, 2018 and December 31, 2017 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. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment (if any), call provisions and comparable company valuations. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market multiples would result in an increase or decrease, respectively, in the fair value.

The following is a summary of the Company’s investment assets categorized within the fair value hierarchy as of June 30, 2018:

Assets	Level 1		Level 2		Level 3		Total
Fixed Income	$	—	$	103,242	$	82,090	$	185,332
Equity/Other		13,734		—		237		13,971
Short Term Investments		79,190		—		—		79,190
Total investment assets	$	92,924	$	103,242	$	82,327	$	278,493

The following is a summary of the Company’s investment assets categorized within the fair value hierarchy as of December 31, 2017:

Assets	Level 1		Level 2		Level 3		Total
Fixed Income	$	—	$	80,732	$	83,789	$	164,521
Equity/Other		213		—		136		349
Short Term Investments		65,890		—		—		65,890
Total investment assets	$	66,103	$	80,732	$	83,925	$	230,760

The following is a reconciliation of Level 3 assets for the six months ended June 30, 2018:

Level 3	Beginning Balance as of January 1, 2018		Transfers Out			Purchases(1)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)(2)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Ending Balance as of June 30, 2018
Fixed Income	$	83,789	$	(16,237	)	$	62,591	$	1,054	$	(1,948	)	$	(47,695	)	$	536	$	82,090
Equity/Other		136		—			—		—		101			—			—		237
Total investment assets	$	83,925	$	(16,237	)	$	62,591	$	1,054	$	(1,847	)	$	(47,695	)	$	536	$	82,327

The following is a reconciliation of Level 3 assets for the year ended December 31, 2017:

Level 3	Beginning Balance as of January 1, 2017		Transfers Out		Purchases(1)		Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)(2)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Ending Balance as of December 31, 2017
Fixed Income	$	83,979	$	—	$	139,859	$	2,053		$	(2,854	)	$	(142,824	)	$	3,576	$	83,789
Equity/Other		501		—		2,137		(321	)		17			(2,198	)		—		136
Total investment assets	$	84,480	$	—	$	141,996	$	1,732		$	(2,837	)	$	(145,022	)	$	3,576	$	83,925

⁽¹⁾  Purchases may include PIK, securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

⁽²⁾  The net change in unrealized depreciation relating to assets still held at June 30, 2018 totaled $(1,204) consisting of the following: $(1,305) related to fixed income securities and $101 relating to equity/other. The net change in unrealized depreciation relating to assets still held at December 31, 2017 totaled $(3,315) consisting of the following: $(3,332) related to fixed income and $17 related to equity/other.

No securities were transferred into the Level 3 hierarchy and three securities with a fair value of $16,236 were transferred from Level 3 to Level 2 during the six months ended June 30, 2018 as a result of increased pricing transparency. There were no transfers into or out of Level 3 for the year ended December 31, 2017. Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur.

The following tables present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of June 30, 2018 and December 31, 2017, 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. For example, the lowest yield in 1st Lien/Senior Secured is appropriate for valuing that specific debt investment, but may not be appropriate for valuing any other debt investments in this asset class. 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.

F-23

June 30, 2018

Level 3 Instruments	Level 3 Assets as of June 30, 2018	Significant Unobservable Inputs by Valuation Techniques1	Range2 of Significant Unobservable Inputs (Weighted Average3) as of June 30, 2018
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured and Unsecured Debt	Discounted cash flows: •  Discount Rate Asset Recovery /Waterfall analysis:  •  Liquidation Value •  Uncertainty Discount	7.9% - 40.0% (13.7%) N/A 15%
Equity	Common Stock, LLC Units and Warrants on private stock	Liquidation Value	N/A
Equity	Warrants on publicly traded stock	Volatility	58.76
December 31, 2017
Level 3 Instruments	Level 3 Assets as of December 31, 2017	Significant Unobservable Inputs by Valuation Techniques1	Range2 of Significant Unobservable Inputs (Weighted Average3) as of December 31, 2017
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured and Unsecured Debt	Discounted cash flows: •  Discount Rate Comparable multiples: •  EV/EBITDA4 Liquidation/Waterfall analysis: •  EV/EBITDA4	7.69% - 38.75% (11.30%) 4.25 – 13.75 (6.68)
Equity	Common Stock, LLC Units and Warrants on private stock	Liquidation Value	N/A
Equity	Warrants on publicly traded stock	Volatility	67.99%

⁽¹⁾  The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

⁽²⁾  The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

⁽³⁾  Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

⁽⁴⁾  Enterprise value of portfolio company as a multiple of earnings before interest, taxes, depreciation and amortization.

5. DEBT

On November 3, 2016, the Company assumed $33,646 of Full Circle 8.25% Senior Notes due 2020 (the “2020 Notes”) in connection with the Merger by executing the second supplemental indenture dated November 3, 2016. The 2020 Notes had a maturity date of June 30, 2020 and on October 20, 2017 we redeemed them completely at their par value plus accrued and unpaid interest.

On September 13, 2017, we offered $28,375 in aggregate principal amount of 6.50% notes due 2022 (the “GECCL Notes”). On September 29, 2017, we sold to several underwriters an additional $4,256 of the GECCL Notes upon full exercise of the underwriters’ over-allotment option.

The GECCL Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness. The GECCL Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries. We pay interest on the GECCL Notes on January 31, April 30, July 31 and October 31 of each year. The GECCL Notes will mature on September 18, 2022 and can be called on, or after, September 18, 2019. Holders of the GECCL Notes do not have the option to have the GECCL Notes repaid prior to the stated maturity date. The GECCL Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

On January 11, 2018, we offered $43,000 in aggregate principal amount of 6.75% notes due 2025 (the “GECCM Notes”). On January 19, 2018 and February 9, 2018, we sold an additional $1,898 and $1,500 of the GECCM Notes upon partial exercise of the underwriters’ over-allotment option.

The GECCM Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness. The GECCM Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries. We pay interest on the GECCM Notes on March 31, June 30, September 30 and December 31 of each year. The GECCM Notes will mature on January 31, 2025 and can be called on, or after, January 31, 2021. Holders of the GECCM Notes do not have the option to have the GECCM Notes repaid prior to the stated maturity date. The GECCM Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

F-24

As part of the offerings, the Company incurred fees and costs, which are treated as a reduction of the carrying amount of the debt on our Statements of Assets and Liabilities. These deferred financing costs presented as a reduction to the Notes payable balance are being amortized into interest expense over the term of the Notes.

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 June 30, 2018, the Company’s outstanding borrowings were $79,029, and the Company’s asset coverage ratio was 2.55 to 1.

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

Year	Total Amount Outstanding(1)		Asset Coverage Ratio Per Unit(2)		Involuntary Liquidation Preference Per Unit(3)		Average Market Value Per Unit(4)
December 31, 2016
2020 Notes	$	33,646	$	6.17		N/A	$	1.02
December 31, 2017
GECCL Notes	$	32,631	$	5.01		N/A	$	1.02
June 30, 2018
GECCL Notes	$	32,631	$	2.55		N/A	$	1.02
GECCM Notes	$	46,398	$	2.55		N/A	$	1.00

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

⁽²⁾  Asset coverage per unit is the ratio of the carrying value of Great Elm’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1 of indebtedness.

⁽³⁾  The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.

⁽⁴⁾  The average market value per unit for the Notes is based on the average daily prices of such notes and is expressed per $1 of indebtedness for each period.

The indenture’s covenants, include compliance with (regardless of whether the Company is subject to) the 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. These covenants are subject to limitations and exceptions that are described in the Indenture. The Company may repurchase the Notes in accordance with the Investment Company Act and the rules promulgated thereunder. As of June 30, 2018, the Company had not repurchased any of the Notes. As of June 30, 2018 and December 31, 2017 the Company was in compliance with all covenants under the indentures.

For the three and six months ended June 30, 2018 and 2017, the components of interest expense were as follows:

	For the three months ended June 30, 2018			For the six months ended June 30, 2018			For the three months ended June 30, 2017 (1)			For the six months ended June 30, 2017 (1)
Borrowing interest expense	$	1,314		$	2,462		$	694		$	1,388
Amortization of acquisition premium		142			269			(63	)		(126	)
Total	$	1,456		$	2,731		$	631		$	1,262
Weighted average interest rate(2)		7.37	%		7.34	%		7.61	%		7.56	%
Average outstanding balance	$	79,029		$	74,389		$	33,646		$	33,646

⁽¹⁾ For the periods ended June 30, 2017, amounts include the 2020 Notes.

⁽²⁾ Annualized.

F-25

The fair value of the Company’s Notes are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. 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, 2018
Facility	Commitments		Borrowings Outstanding		Fair Value
Unsecured Debt - GECCL Notes	$	32,631	$	32,631	$	33,397
Unsecured Debt - GECCM Notes		46,398		46,398		46,491
Total	$	79,029	$	79,029	$	79,888

	December 31, 2017
Facility	Commitments		Borrowings Outstanding		Fair Value
Unsecured Debt - GECCL Notes	$	32,631	$	32,631	$	33,218
Total	$	32,631	$	32,631	$	33,218

6. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. As of June 30, 2018, the Company had approximately $17,572 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, 2018 are included in the Company’s Statement 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.

Two complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al., filed on September 23, 2016 (the “Saunders Action”), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the “Russell Action”), were filed in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the “Circuit Court”), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the “Speiser Action”, and together with the Saunders Action and the Russell Action, the “Actions”).

On October 24, 2016, the Company, Full Circle, Great Elm Capital Group, MAST Capital, certain directors of the Full Circle and plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the “MOU”). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and the Company agreed to and did make the supplemental disclosures with respect to the merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the “Stipulation”) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the Merger Agreement; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle’s stockholders. There can be no assurance that the settlement will be finalized or that the Circuit Court will approve the settlement.

7. INDEMNIFICATION

Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business the Company expects to enter into contracts that contain a variety of representations which provide general indemnifications. The Company’s maximum exposure under these agreements cannot be known; however, the Company expects any risk of loss to be remote.

F-26

8. CAPITAL TRANSACTIONS

Issuer Purchases of Equity Securities

During the year ended December 31, 2017, the Company purchased 2,138,479 shares under its tender offer and $15,000 stock buyback program at a weighted average price of $11.20 per share. As of June 30, 2018, the Company had cumulatively purchased 2,236,651 shares under its tender offer and stock buyback program at a weighted average price of $11.18 per share, resulting in $15,000 of cumulative cash paid, under the program since November 4, 2016. Including the tender offer, the Company utilized $25,000 under its stock buyback and tender program for repurchasing shares.

Month	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (Amounts in dollars)
November 2016		16,030	$	10.79		16,030	$	14,826,985
December 2016		82,142	$	10.72		82,142		13,946,200
Total 2016		98,172	$	10.73		98,172
January 2017		132,434	$	11.48		132,434		12,425,611
February 2017		72,678	$	11.26		72,678		11,607,509
March 2017		40,617	$	11.09		40,617		11,157,069
April 2017		16,846	$	11.38		16,846		10,965,351
May 2017 (1)		944,535	$	11.44		944,535		10,158,722
June 2017		15,215	$	10.42		15,215		10,000,182
July 2017		47,961	$	10.73		47,961		9,485,725
August 2017		37,666	$	10.78		37,666		9,079,585
September 2017		753,097	$	11.00		753,097		792,735
October 2017		65,945	$	10.27		65,945		115,277
November 2017		11,485	$	10.04		11,485		—
Total 2017		2,138,479	$	11.20		2,138,479
Total		2,236,651	$	11.18		2,236,651	$	—

⁽¹⁾  Share amounts in this line include the repurchase of 869,565 shares on May 12, 2017 in the $10,000 tender offer we announced on March 30, 2017 that expired on May 5, 2017.

9. EARNINGS PER SHARE

The following information sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2018 and June 30, 2017:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2018		2017			2018			2017
Numerator for basic and diluted earnings per share - increase in net assets resulting from operations	$	2,648	$	(2,467	)	$	(1,391	)	$	912
Denominator for basic and diluted earnings per share - weighted average shares outstanding		10,652,401		12,000,803			10,652,401			12,316,884
Basic and diluted earnings per share	$	0.25	$	(0.20	)	$	(0.13	)	$	0.07

Diluted earnings per share equals basic earnings per share because there were no common stock equivalents outstanding during the periods presented.

F-27

10. FINANCIAL HIGHLIGHTS

Below is the schedule of financial highlights of the Company for the six months ended June 30, 2018 and 2017, respectively:

	For the Six Months Ended June 30,
	2018			2017
Per Share Data:(1)
Net asset value, beginning of period	$	12.42		$	13.52
Net investment income		0.93			0.61
Net realized gains		0.11			0.27
Net change in unrealized appreciation (depreciation)		(1.17	)		(0.81	)
Net increase (decrease) in net assets resulting from operations		(0.13	)		0.07
Accretion from share buybacks		—			0.20
Distributions declared from net investment income(2)		(0.50	)		(0.50	)
Net decrease resulting from distributions to common stockholders		(0.50	)		(0.50	)
Net asset value, end of period	$	11.79		$	13.29
Per share market value, end of period	$	9.24		$	10.62
Shares outstanding, end of period		10,652,401			11,568,555
Total return based on net asset value(3)		(1.04	)%		1.98	%
Total return based on market value(3)		(1.03	)%		(4.78	)%
Ratio/Supplemental Data:
Net assets, end of period	$	125,591		$	153,702
Ratio of total expenses to average net assets before waiver(4),(5)		7.38	%		7.19	%
Ratio of total expenses to average net assets after waiver(4),(5)		7.38	%		7.27	%
Ratio of incentive fees to average net assets(4)		(1.85	)%		2.30	%
Ratio of net investment income to average net assets(4),(5)		15.55	%		9.21	%
Portfolio turnover		30	%		64	%

⁽¹⁾  The per share data was derived by using the weighted average shares outstanding during the period, except where such calculations deviate from those specified under the instructions to Form N-2.

⁽²⁾  The per share data for distributions declared reflects the actual amount of distributions of record per share for the period.

⁽³⁾  Total return based on net asset value is calculated as the change in net asset value per share, assuming the Company’s distributions were reinvested through its dividend reinvestment plan. Total return based on market value is calculated as the change in market value per share, assuming the Company’s distributions were reinvested through its dividend reinvestment plan. Total return does not include any estimate of a sales load or commission paid to acquire shares.

⁽⁴⁾  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, 2018 and 2017 average net assets were $128,924 and $165,822, respectively.

⁽⁵⁾  Annualized for periods less than one year.

F-28

11. AFFILIATED AND CONTROLLED INVESTMENTS

Affiliated investment as 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, 2018 represented 33% of the Company’s net assets.

Controlled investment as 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, 2018 represented 16% of the Company’s net assets.

As a result of restructurings during the second quarter of 2018, Avanti Communications Group PLC became an affiliated investment and The Finance Company became a controlled investment. Both investments were previously considered to be non-affiliated, non-controlled investments.

Fair value as of June 30, 2018 along with transactions during the six months ended June 30, 2018 in these affiliated investments and controlled investments was as follows:

	For the Six Months Ended June 30, 2018
Issue(1)	Fair value at December 31, 2017		Gross Additions(2)		Gross Reductions(3)		Net Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)			Fair value at June 30, 2018		Interest Income(4)		Fee Income		Dividend Income
Non-Controlled, Affiliated Investments
OPS Acquisitions Limited and Ocean Protection Services Limited
Term Loan	$	1,770	$	—	$	—	$	—	$	(1,736	)	$	34	$	—	$	—	$	—
Equity (19% of class)		—		—		—		—		—			—		—		—		—
		1,770		—		—		—		(1,736	)		34		—		—		—
Avanti Communications Group PLC
Senior Secured Bond, 2nd Lien		28,807		2,373		—		—		(2,964	)		28,216		2,101		87		—
Senior Secured Bond, 3rd Lien		13,257		5,626		50,637		—		31,754			—		3,664		3		—
Equity (9% of class)		213		50,637		—		—		(37,116	)		13,734		—		—		—
		42,277		58,636		50,637		—		(8,326	)		41,950		5,765		90		—
Totals	$	44,047	$	58,636	$	50,637	$	—	$	(10,062	)	$	41,984	$	5,765	$	90	$	—
Controlled Investments
PE Facility Solutions, LLC
Revolver	$	—	$	33,845	$	30,166	$	—	$	—		$	3,679	$	90	$	22	$	—
Term Loan A		9,900		—		—		—		—			9,900		636		—		—
Term Loan B		8,204		507		3,407		210		(327	)		5,187		621		—		—
Equity (83% of class)		—		—		—		—		—			—		—		—		—
		18,104		34,352		33,573		210		(327	)		18,766		1,347		22		—
The Finance Company
Senior Secured Bond		1,993		—		2,191		—		198			—		181		1		—
Revolver		—		900		365		—		—			535		5		3		—
Term Loan B		—		1,491		—		—		(383	)		1,108		12		—		—
Equity (72% of class)		—		—		—		—		—			—		—		—		—
		1,993		2,391		2,556		—		(185	)		1,643		198		4		—
Totals	$	20,097	$	36,743	$	36,129	$	210	$	(512	)	$	20,409	$	1,545	$	26	$	—

⁽¹⁾ Non-unitized equity investments are disclosed with percentage ownership in lieu of quantity.

⁽²⁾  Gross additions include increases resulting from new or additional portfolio investments, capitalized PIK interest, accretion of discounts and the exchange of one or more existing securities for one or more new securities.

⁽³⁾  Gross reductions include decreases resulting from principal collections related to investment repayments or sales and the exchange of one or more existing securities for one or more new securities.

⁽⁴⁾  Interest income includes accrued PIK interest.

F-29

In accordance with SEC Regulation S-X Rules 3-09 and 4-08(g), the Company must determine which of its unconsolidated controlled portfolio companies, if any, are considered to be “significant subsidiaries.” After performing this analysis, the Company determined that one portfolio company, PE Facility Solutions, LLC (“PEFS”), is a significant subsidiary for the six months ended June 30, 2018 under at least one of the significance conditions of Rule 4-08(g). Accordingly, unaudited financial information for the six months ended June 30, 2018 has been included as follows (in thousands):

Balance Sheet	As of June 30, 2018
Current assets	$	9,504
Noncurrent assets		11,932
Total Assets		21,436
Current liabilities		7,594
Noncurrent liabilities		20,704
Total Liabilities		28,298
Net Equity	$	(6,862	)
Statement of Operations	For the Six Months Ended June 30, 2018
Gross Revenues	$	29,833
Cost of Sales		(24,321	)
SG&A Expenses		(4,181	)
EBITDA	$	1,331
Net Loss from Continuing Operations	$	(1,170	)

12. SUBSEQUENT EVENTS

In July 2018, we purchased an additional $2,000 of par value of Commercial Barge Line Company first lien term loan at a price of approximately 72% of par value.

In July 2018, we purchased $478 of par value of PFS Holdings Corp. first lien term loan at a price of approximately 60% of par value.

In July 2018, we purchased an additional $2,500 of par value of Sungard Availability Services Capital, Inc. first lien senior secured term loan at a price of approximately 99% of par value.

In July 2018, we exercised all of our RiceBran Technologies Corporation warrants at a price of $1.60 per share in a cashless exercise. This transaction resulted in GECC receiving 139,392 shares. We subsequently sold all of the shares at a weighted average price of $2.43 per share.

In July 2018, in connection with the sale of one of its businesses, DataX, Ltd., The Selling Source, LLC paid down $3,800 of our outstanding $5,689 first lien, senior secured holding. The remainder of the investment was restructured, with GECC receiving $1,250 of first out term loan bearing interest at a rate of 3-month LIBOR plus 5%, which matures on January 13, 2020.

In August 2018, we purchased an additional $2,647 of par value of SESAC Holdco II LLC second lien senior secured loan at a price of approximately 99% of par value.

In August 2018, we purchased $2,000 of par value of California Pizza Kitchen, Inc. first lien term loan at a price of approximately 98% of par value.

In August 2018, we sold our position in Foresight Energy LP at a price of approximately 100% of par value.

Our Board declared the monthly distributions for the fourth quarter of 2018 at an annual rate of approximately 8.4% of our June 30, 2018 NAV, which equates to $0.083 per month. The schedule of distribution payments is as follows:

Month	Rate		Record Date	Payable Date
October	$	0.083	October 31, 2018	November 15, 2018
November	$	0.083	November 30, 2018	December 14, 2018
December	$	0.083	December 31, 2018	January 15, 2019

F-30

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Great Elm Capital Corp.

Waltham, Massachusetts

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying consolidated statement of assets and liabilities of Great Elm Capital Corp. (the “Company”), including the schedules of investments, as of December 31, 2017 and 2016, and the related consolidated statement of operations, changes in net assets, cash flows, and financial highlights (presented in Note 11) for the period from inception (April 22, 2016) to December 31, 2016 and for the year ended December 31, 2017, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations, changes in nets assets, cash flows, and financial highlights (presented in Note 11) for the period from inception (April 22, 2016) to December 31, 2016 and the year ended December 31, 2017, in conformity with principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2017 and 2016, by correspondence with the custodian, loan agents, and borrowers; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

McLean, Virginia

March 12, 2018

We have served as the Company’s auditor since 2016.

F-31

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

Dollar amounts in thousands (except per share amounts)

	December 31, 2017			December 31, 2016
Assets
Non-affiliated, non-controlled investments, at fair value (amortized cost of $179,558 and $163,809, respectively)	$	144,996		$	150,323
Non-affiliated, non-controlled short term investments, at fair value (amortized cost of $65,892 and $0, respectively)		65,890			—
Affiliated investments, at fair value (amortized cost of $4,240 and $4,255, respectively)		1,770			4,286
Controlled investments, at fair value (amortized cost of $18,487 and $68, respectively)		18,104			68
Total investments		230,760			154,677
Cash and cash equivalents		2,916			66,782
Receivable for investments sold		12			9,406
Interest receivable		5,027			4,338
Principal receivable		—			786
Due from portfolio company		204			312
Deposit at broker		—			56
Due from affiliates		692			80
Prepaid expenses and other assets		302			107
Total assets	$	239,913		$	236,544
Liabilities
Notes payable 8.25% due June 30, 2020 (including unamortized premium of $0 and $888 at December 31, 2017 and December 31, 2016, respectively)	$	—		$	34,534
Notes payable 6.50% due September 18, 2022 (including unamortized discount of $1,435 and $0 at December 31, 2017 and December 31, 2016, respectively)		31,196			—
Payable for investments purchased		66,165			21,817
Interest payable		354			—
Distributions payable		3,015			2,123
Due to affiliates		6,193			3,423
Accrued expenses and other liabilities		703			1,663
Total liabilities	$	107,626		$	63,560
Commitments and contingencies (Note 6)	$	—		$	—
Net Assets
Common stock, par value $0.01 per share (100,000,000 shares authorized, 10,652,401 and 12,790,880 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively)	$	107		$	128
Additional paid-in capital		198,426			219,317
Accumulated net realized losses		(33,328	)		(34,341	)
Undistributed net investment income		4,499			1,335
Net unrealized depreciation on investments		(37,417	)		(13,455	)
Total net assets	$	132,287		$	172,984
Total liabilities and net assets	$	239,913		$	236,544
Net asset value per share	$	12.42		$	13.52

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

F-32

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Dollar amounts in thousands (except per share amounts)

	For the Year Ended December 31, 2017			For the Period Ended December 31, 2016
Investment Income:
Interest income from:
Non-affiliated, non-controlled investments	$	15,830		$	5,211
Non-affiliated, non-controlled investments (PIK)		10,719			—
Affiliated investments		73			102
Controlled investments		1,312			—
Controlled investments (PIK)		990			—
Total interest income		28,924			5,313
Dividend income from non-affiliated, non-controlled investments		298			—
Other income from:
Non-affiliated, non-controlled investments		470			518
Controlled investments		36			—
Total other income		506			518
Total investment income		29,728			5,831
Expenses:
Management fees		2,298			392
Incentive fees		4,394			863
Administration fees		1,362			224
Custody fees		62			10
Directors’ fees		136			38
Professional services		1,013			186
Professional services related to the Merger and Formation transactions		—			3,471
Interest expense		2,039			420
Other expenses		655			214
Total expenses		11,959			5,818
Accrued administration fee waiver		(70	)		80
Net expenses		12,029			5,738
Net investment income before taxes		17,699			93
Excise tax		124			88
Net investment income		17,575			5
Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-affiliated, non-controlled investments		3,641			274
Affiliated investments		—			—
Controlled investments		(8	)		—
Purchase accounting		—			(4,698	)
Total net realized gain (loss)		3,633			(4,424	)
Net change in unrealized appreciation (depreciation) from:
Non-affiliated, non-controlled investments		(21,078	)		(13,487	)
Affiliated investments		(2,501	)		32
Controlled investments		(383	)		—
Total net change in unrealized appreciation (depreciation)		(23,962	)		(13,455	)
Net realized and unrealized gains (losses)		(20,329	)		(17,879	)
Net increase (decrease) in net assets resulting from operations	$	(2,754	)	$	(17,874	)
Net investment income per share (basic and diluted):	$	1.52		$	—	(1)
Earnings per share (basic and diluted):	$	(0.24	)	$	(1.39	)
Weighted average shares outstanding:		11,655,370			12,852,758

⁽¹⁾ Rounds to less than 0.005

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

F-33

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

Dollar amounts in thousands

	For the Year Ended December 31, 2017			For the Period Ended December 31, 2016
Increase (decrease) in net assets resulting from operations:
Net investment income	$	17,575		$	5
Net realized gain (loss) on investments		3,633			274
Purchase accounting loss		—			(4,698	)
Net change in unrealized appreciation (depreciation) on investments		(23,962	)		(13,455	)
Net decrease in net assets resulting from operations		(2,754	)		(17,874	)
Distributions to stockholders from:
Net investment income		(13,682	)		(2,123	)
Total distributions to stockholders		(13,682	)		(2,123	)
Capital transactions:
Cash contribution		—			30,000
Acquired assets in the formation transaction		—			90,494
Acquired assets in the merger		—			73,541
Purchases of common stock		(24,261	)		(1,054	)
Net increase (decrease) in net assets resulting from capital transactions		(24,261	)		192,981
Total increase (decrease) in net assets		(40,697	)		172,984
Net assets at beginning of period	$	172,984		$	—
Net assets at end of period	$	132,287		$	172,984
Undistributed net investment income	$	4,499		$	1,335
Capital share activity
Shares outstanding at the beginning of the period		12,790,880			—
Shares issued – cash contributions		—			1,966,667
Shares issued – formation transaction		—			5,935,800
Shares issued – merger		—			4,986,585
Shares purchased		(2,138,479	)		(98,172	)
Shares outstanding at the end of the period		10,652,401			12,790,880

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

F-34

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollar amounts in thousands

	For the Year Ended December 31, 2017			For the Period Ended December  31, 2016
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(2,754	)	$	(17,874	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of investments		(188,168	)		(42,516	)
Increase (decrease) in payable for investments purchased		44,348			21,817
Net change in short-term investments		(65,892	)		—
Payment-in-kind income		(11,709	)		510
Proceeds from sales of investments		54,332			10,640
(Increase) decrease in receivable for investments sold		9,394			(9,406	)
Proceeds from principal payments		120,652			31,098
Net realized (gain) loss on investments		(3,633	)		(274	)
Purchase Accounting Loss		—			4,698
Net change in unrealized (appreciation) depreciation on investments		23,962			13,455
Amortization of premium and accretion of discount, net		(5,627	)		(2,438	)
Amortization of discount (premium) on long term debt		(804	)		(40	)
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in principal receivable		786			434
(Increase) decrease in interest receivable		(689	)		(1,342	)
(Increase) decrease in deposit at broker		56			(56	)
(Increase) decrease in due from portfolio company		108			(224	)
(Increase) decrease in due from affiliates		(612	)		(80	)
(Increase) decrease in prepaid expenses and other assets		(195	)		174
Increase (decrease) in interest payable		354			77
Increase (decrease) in due to affiliates		2,770			890
Increase (decrease) in accrued expenses and other liabilities		(960	)		(816	)
Net cash provided by (used for) operating activities		(24,281	)		8,727
Cash flows from financing activities
Cash contributions		—			59,109
Purchases of common stock		(24,261	)		(1,054	)
Repayment of 2020 Notes payable		(33,645	)		—
Issuance of GECCL Notes payable		31,111			—
Distributions paid		(12,790	)		—
Net cash provided by (used for) financing activities		(39,585	)		58,055
Net increase (decrease) in cash		(63,866	)		66,782
Cash, beginning of period		66,782			—
Cash, end of period	$	2,916		$	66,782
Supplemental disclosure of non-cash financing activities :
Assets purchased for shares	$	—		$	169,738
Long term debt assumed in the merger	$	—		$	34,574
Short term debt assumed in the merger	$	—		$	2,558
Short term debt assumed in the formation	$	—		$	2,377
Dividends declared, not yet paid	$	3,015		$	2,123
Supplemental disclosure of cash flow information:
Cash paid for excise tax	$	88		$	0
Cash paid for interest	$	2,489		$	460

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

F-35

GREAT ELM CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2017

Dollar amounts in thousands

Portfolio Company	Security	Industry	Interest (2)	Maturity	Par Amount/Quantity		Cost		Fair Value		% of NAV
Investments at Fair Value - 174.43% of Net Assets (1)
Controlled Investments - 13.68% of Net Assets (3)
PE Facility Solutions, LLC	1st Lien, Senior Secured Revolver(5,15)	Building Cleaning and Maintenance Services	11.38% (L + 10.00%) (6)	02/27/2022		—	$	—	$	—		—
San Diego, CA	1st Lien, Senior Secured Revolver - Unfunded (5,15)		11.38% (L + 10.00%) (6)	02/27/2022		3,000		—		—		—
	1st Lien, Senior Secured Loan A (5,15)		12.38% (L + 11.00%) (6)	02/27/2022		9,900		9,900		9,900		7.48	%
	1st Lien, Senior Secured Loan B (5,15)		15.38% (L + 14.00%) (6,7)	02/27/2022		9,105		8,587		8,204		6.20	%
	Common Equity (5,8,15)					1		—		—		—	%
								18,487		18,104		13.68	%
Total Controlled Investments								18,487		18,104		13.68	%
Affiliate Investments - 1.34% of Net Assets (4)
OPS Acquisitions Limited and Ocean Protection Services Limited	1st Lien, Senior Secured Loan (5,10,16)	Maritime Security Services	16.38% (L + 12.00%, 12.50% Floor) (6,7,9)	06/01/2018		4,903		4,240		1,770		1.34	%
London, UK	Common Equity (5,8,10,16)					19		—		—		—	%
								4,240		1,770		1.34	%
Total Affiliate Investments								4,240		1,770		1.34	%
Non-Control, Non-Affiliate Investments - 109.60% of Net Assets
Almonde, Inc.	2nd Lien, Senior Secured Loan (5,10,17)	Software Services	8.94% (L + 7.25%, 8.25% floor) (13)	06/13/2025		5,000		5,037		5,005		3.78	%
Philadelphia, PA
Avanti Communications Group PLC	2nd Lien, Senior Secured Bond (10,11)	Wireless Telecommunications Services	12.50%	10/01/2021		34,917		30,427		28,807		21.78	%
London, UK	3rd Lien, Senior Secured Bond (10,11)		14.50% (20.00% if PIK election is made) (7)	10/01/2023		54,113		45,011		13,257		10.02	%
	Common Equity (8,10)					1,829,496		23		213		0.16	%
								75,461		42,277		31.96	%

F-36

Portfolio Company	Security	Industry	Interest (2)	Maturity	Par Amount/Quantity		Cost			Fair Value			% of NAV
Commercial Barge Line Company	1st Lien, Senior Secured Loan (5,18)	Water Transport	10.32% (L + 8.75%, 9.75% Floor) (6)	11/12/2020		9,254		7,551			5,279			3.99	%
Jeffersonville, IN
Davidzon Radio, Inc.	1st Lien, Senior Secured Loan (5,16)	Radio Broadcasting	14.38% (L + 10.00%, 11.00% Floor) (6,14)	03/31/2020		9,685		9,144			8,876			6.71	%
Brooklyn, NY
Geo Specialty Chemicals, Inc.	1st Lien, Senior Secured Revolver (5,19)	Chemicals	6.28% (L + 4.75%, 5.75% Floor) (6)	04/30/2019		3,646		3,465			3,500			2.64	%
Lafayette, Indiana	1st Lien, Senior Secured Revolver - Unfunded (5,19)		6.28% (L + 4.75%, 5.75% Floor) (6)	04/30/2019		729		(29	)		(29	)		(0.02	)%
	1st Lien, Senior Secured Loan (5,19)		6.28% (L + 4.75%, 5.75% Floor) (6)	04/30/2019		6,563		6,248			6,300			4.76	%
								9,684			9,771			7.38	%
International Wire Group Inc	2nd Lien, Senior Secured Bond (11)	Manufacturing	10.75%	08/01/2021		13,000		12,071			11,960			9.04	%
Camden, NY
Luling Lodging, LLC	1st Lien, Senior Secured Loan (5,16)	Hotel Operator	18.38% (L + 12.00%,12.25% Floor) (6,9,12)	12/18/2017		2,715		1,300			1,605			1.21	%
Luling, TX
Michael Baker International, LLC	2nd Lien, Senior Secured Bond (11)	Industrial Conglomerates	8.75%	03/01/2023		5,000		4,876			4,838			3.66	%
Pittsburgh, PA
NANA Development Corp.	1st Lien, Senior Secured Bond (11)	Industrial Other	9.50%	03/15/2019		7,000		6,902			7,070			5.34	%
Anchorage, AK
PEAKS Trust 2009-1	1st Lien, Senior Secured Loan (5,10,16)	Consumer Finance	7.50% (L + 5.50%, 7.50% Floor) (6)	01/27/2020		1,462		1,020			878			0.67	%
Carmel, IN
PR Wireless, Inc.	1st Lien, Senior Secured Loan (5,16)	Wireless Communications	6.94% (L + 5.25%) (13)	06/29/2020		9,754		8,908			9,749			7.37	%
Guaynabo, PR	1st Lien, Senior Secured Delayed Draw Loan (5,20)		8.75% (Prime Rate + 4.25%) (13)	06/29/2020		274		274			274			0.21	%
	1st Lien, Senior Secured Unfunded Delayed Draw Loan (5,20)		8.75% (Prime Rate + 4.25%) (13)	06/29/2020		1,098		—			—
								9,182			10,023			7.58	%

F-37

Portfolio Company	Security		Industry	Interest (2)	Maturity		Par Amount/Quantity		Cost		Fair Value			% of NAV
RiceBran Technologies Corporation		Warrants (5,8,16)	Grain Mill Products	$1.60 Strike Price		05/12/2020		300,000		145		136			0.10	%
Scottsdale, AZ
SESAC Holdco II LLC		2nd Lien, Senior Secured Loan (5,21)	Business Services	8.94% (L+7.25%) (13)		02/24/2025		4,150		4,103		4,156			3.14	%
Nashville, TN
Sungard Availability Services Capital, Inc.		1st Lien, Senior Secured Loan (5,22)	Technology Services	11.69% (L+10.00%) (13)		10/01/2022		6,000		5,700		5,952			4.50	%
Wayne, PA
Tallage Lincoln, LLC.		1st Lien, Senior Secured Loan (5,16)	Real Estate Services	11.69% (L + 10.00%, 11.00% Floor) (13)		12/31/2019		5,723		5,725		5,718			4.32	%
Boston, MA		1st Lien, Senior Secured Loan - Unfunded (5,16)		11.69% (L + 10.00%, 11.00% Floor) (13)		12/31/2019		2,250		—		—			—
										5,725		5,718			4.32	%
The Finance Company		1st Lien, Senior Secured Loan (5,16)	Consumer Finance	17.88% (L + 13.50%, 14.00% Floor) (6,12)		03/31/2018		2,191		2,191		1,993			1.51	%
Silver Springs, MD		1st Lien, Senior Secured Unfunded Loan (5,16)		17.88% (L + 13.50%, 14.00% Floor) (6,12)		03/31/2018		709		—		—			—
										2,191		1,993			1.51	%
The Selling Source, LLC		1st Lien, Senior Secured Loan (5,16,23)	Information and Data Services	17.00% (9.00% PIK, 8.00% Cash) (7,9)		12/31/2017		5,689		4,202		4,659			3.52	%
Las Vegas, NV
Tru Taj, LLC		1st Lien, Senior Secured Bond (11)	Retail	12.00%		08/15/2021		16,000		15,264		14,800			11.19	%
Wayne, NJ
Total Non-Control, Non- Affiliate Investments										179,558		144,996			109.60	%
Short-Term Investments - 49.81% of Net Assets
State Street Institutional Treasury Money Market Fund		Money Market Mutual Fund						16,052,817		16,053		16,053			12.13	%
United States Treasury		Treasury Bill				3/29/2018		50,000		49,839		49,837			37.67	%
Total Short-Term Investments										65,892		65,890			49.80	%
TOTAL INVESTMENTS (14) – 174.43% of Net Assets									$	268,177	$	230,760			174.43	%
Other Liabilities in Excess of Assets - (74.43)% of Net Assets											$	(98,473	)		(74.43	)%
NET ASSETS											$	132,287			100.00	%

(1) 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.

F-38

(2) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (‘‘London Interbank Offered Rate’’) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of December 31, 2017. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

(3) ‘‘Controlled Investments’’ are investments in those companies that are ‘‘Controlled Investments’’ of the Company, as defined in 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.

(4) ‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a 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.

(5) Investments classified as Level 3 whereby fair value was determined by the Company’s board of directors.

(6) The interest rate on these loans may be subject to the greater of a LIBOR floor, if any, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2017 was 1.56%.

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

(8) Non-income producing security.

(9) Investment was on non-accrual status as of December 31, 2017.

(10) Indicates assets that the Company believes do not represent ‘‘qualifying assets’’ under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 20.82% were non-qualifying assets as of December 31, 2017.

(11) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

(12) The interest rate on these loans includes a default interest rate.

(13) The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2017 was 1.69%.

(14) As of December 31, 2017, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $2,353; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $25,103; the net unrealized depreciation was $22,750; the aggregate cost of securities for Federal income tax purposes was $253,510.

(15) Restricted security initially obtained on February 28, 2017.

(16) Restricted security initially obtained on November 3, 2016.

(17) Restricted security initially obtained on December 14, 2017.

(18) Restricted security initially obtained on May 17, 2017.

(19) Restricted security initially obtained on September 28, 2017.

F-39

(20) Restricted security initially obtained on November 15, 2017.

(21) Restricted security initially obtained on December 13, 2017.

(22) Restricted security initially obtained on December 20, 2017.

(23) Loan defaulted on January 1, 2018.

L = LIBOR

As of December 31, 2017, the Company’s investments consisted of the following:

	December 31, 2017
Investment Type	Cost		Fair Value
1st Lien/Senior Secured Debt	$	202,117	$	164,521
Equity/Other		168		349
Total Long Term Investments	$	202,285	$	164,870

F-40

As of December 31, 2017, the industry composition of the Company’s portfolio at fair value was as follows:

	December 31, 2017
	Investments at Fair Value		Percentage of  Total Investment Portfolio
Wireless Telecommunications Services	$	42,277		25.6	%
Building Cleaning and Maintenance Services		18,104		11.0	%
Retail		14,800		9.0	%
Manufacturing		11,960		7.3	%
Wireless Communications		10,023		6.1	%
Chemicals		9,771		5.9	%
Radio Broadcasting		8,876		5.4	%
Industrial Other		7,070		4.3	%
Technology Services		5,952		3.6	%
Real Estate Services		5,718		3.5	%
Water Transport		5,279		3.2	%
Software Services		5,005		3.0	%
Industrial Conglomerates		4,838		2.9	%
Information and Data Services		4,659		2.8	%
Business Services		4,156		2.5	%
Consumer Finance		2,871		1.7	%
Maritime Security Services		1,770		1.1	%
Hotel Operator		1,605		1.0	%
Grain Mill Products		136		0.1	%
Total	$	164,870		100.0	%

As of December 31, 2017, the geographic composition of the Company’s portfolio at fair value was as follows:

Geographic	December 31, 2017
United States		73.3	%
United Kingdom		26.7	%
Total percentage of net assets		100.0	%

F-41

GREAT ELM CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2016

Dollar amounts in thousands

Portfolio Company	Industry		Interest		Maturity	Par Amount/Quantity		Cost		Fair Value		% of NAV
Investments at Fair Value - 89.42% (1)
Corporate Debt - 89.13% (2)
1st Lien/Senior Secured Debt - 82.10%
310E53RD, LLC(3) (4)		Real Estate Holding Company		10.77% (L + 10.00, 10.15% Floor, 16.00% Cap)	07/01/2017	$	6,000		5,982	$	5,982		3.46	%
Ads Direct Media, Inc. (3) (4) (5)		Internet Advertising		16.50% (L + 13.00%, 16.50% Floor)	05/02/2018		2,035		745		830		0.48	%
Avanti Communications Group PLC(6) (7) (8) (9)		Wireless Telecommunications Services		10.00%	10/01/2019		70,035		55,298		42,021		24.29	%
Chester Downs & Marina LLC / Chester Downs Finance Corp.(6)		Casinos and Gaming		9.25%	02/01/2020		6,000		5,801		5,760		3.33	%
Davidzon Radio, Inc. (3) (4)		Radio Broadcasting		11.00% (L + 10.00%, 11.00% Floor)	03/31/2020		10,127		9,358		9,297		5.37	%
JN Medical Corporation(3) (4) (5) (10)		Biological Products		16.77% (L + 16.00%, 11.25% Floor, 17.00% Cap)	06/30/2016		3,500		1,750		1,656		0.96	%
Luling Lodging, LLC(3) (4) (5)		Hotel Operator		17.77% (L + 17.00%, 12.25% Floor)	12/18/2017		4,500		3,578		3,578		2.07	%
OPS Acquisitions Limited and Ocean Protection Services Limited(3) (4) (7) (13)		Maritime Security Services		12.77% (L + 12.00%, 12.50% Floor)	06/01/2018		4,371		4,255		4,286		2.48	%
Optima Specialty Steel, Inc. (3) (6) (14)		Metals and Mining		12.50%	12/15/2016		15,100		15,100		13,854		8.01	%
PEAKS Trust 2009-1(3) (4) (7)		Consumer Financing		7.50% (L + 5.00%, 7.50% Floor)	01/27/2020		1,862		1,092		1,072		0.62	%
PR Wireless, Inc. (3) (14)		Wireless Communications		10.00% (L + 9.00%, 10.00% Floor)	06/27/2020		8,288		7,524		7,645		4.42	%
Pristine Environments, Inc., Revolver(3) (4) (11)		Building Cleaning and Maintenance Services		15.27% (L + 14.50%, 11.70% Floor)	03/31/2017		8,129		8,129		8,129		4.70	%
Pristine Environments, Inc., Term Loan A(3) (4) (11)		Building Cleaning and Maintenance Services		16.27% (L + 15.50%, 12.70% Floor)	03/31/2017		1,630		1,630		1,630		0.94	%
Pristine Environments, Inc., Term Loan B(3) (4) (11)		Building Cleaning and Maintenance Services		16.27% (L + 15.50%, 12.70% Floor)	03/31/2017		3,004		3,004		2,807		1.62	%
RiceBran Technologies Corporation(3) (4)		Grain Mill Products		11.52% (L + 10.75%, 11.50% Floor, 12.00% cap)	06/01/2018		1,384		1,384		1,362		0.79	%
RiceBran Technologies Corporation(3) (4)		Grain Mill Products		11.52% (L + 10.75%, 11.50% Floor, 12.00% cap)	06/01/2018		1,375		1,362		1,366		0.79	%
Sonifi Solutions, Inc. (3) (8)		Consumer Discretionary		8.00%	03/28/2018		11,577		5,933		6,715		3.88	%
Tallage Adams, LLC(3) (15)		Real Estate Services		11.00% (L + 10.00%, 11.00% Floor)	12/31/2017		1,505		1,507		1,504		0.87	%
Tallage Lincoln, LLC. (3) (15)		Real Estate Services		11.00% (L + 10.00%, 11.00% Floor)	12/31/2019		5,423		5,430		5,415		3.13	%
The Finance Company(3) (4)		Consumer Finance		14.02% (L + 13.25%, 13.75% Floor)	03/31/2018		2,697		2,697		2,650		1.53	%
The Selling Source, LLC(3) (5) (8)		Information and Data Services		17.00%	12/31/2017		5,155		4,444		4,201		2.43	%
Trilogy International Partners(6)		Wireless Telecommunications Services		13.38%	05/15/2019		10,000		10,005		10,250		5.93	%
Total 1st Lien/Senior Secured Debt									156,008		142,010		82.10	%
Unsecured Debt - 7.03%
Everi Payments, Inc.		Hardware		10.00%	01/15/2022		12,289		11,598		12,166		7.03	%
Modular Process Control, LLC(3) (5) (12)		Energy Efficiency Services		5.00%	04/01/2025		800		—		—		—	%
Total Unsecured Debt									11,598		12,166		7.03	%
Equity/Other - 0.29%
Infinite Aegis Group, LLC, Warrants(3) (12)		Healthcare Billing and Collections			08/01/2023		1		—		—		—	%
OPS Acquisitions Limited and Ocean Protection Services Limited, Common Stock(3) (7) (12)		Maritime Security Services					19		—		—		—	%
PR Wireless, Inc., Warrants(3) (12)		Wireless Communications			06/27/2024		101		313		314		0.18	%
RiceBran Technologies Corporation, Warrants(3) (12)		Grain Mill Products			05/12/2020		300,000		145		119		0.07	%
Texas Westchester Financial, LLC, Limited Liability Company Interests(3) (12) (16)		Consumer Financing					9,278		68		68		0.04	%
Total Equity/Other									526		501		0.29	%
TOTAL INVESTMENTS – 89.42%								$	168,132		154,677		89.42	%
Other Assets in Excess of Liabilities - 10.58%										$	18,307		10.58	%
NET ASSETS - 100.00%										$	172,984		100.00	%

⁽¹⁾ 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.

F-42

⁽²⁾ A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (‘‘London Interbank Offered Rate’’) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of December 31, 2016. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

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

⁽⁴⁾ The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2016 was 0.77%.

⁽⁵⁾ Investment was on non-accrual status as of December 31, 2016.

⁽⁶⁾ Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration.

⁽⁷⁾ Indicates assets that the Company believes do not represent ‘‘qualifying assets’’ under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 20.0% are non-qualifying assets.

⁽⁸⁾ Security pays all or a portion of its interest in kind.

⁽⁹⁾ On January 27, 2017, Avanti announced the completion of its previously announced refinancing, with the settlement of its (1) consent solicitation to permit, among other things, the incurrence of up to $132,500 in super senior indebtedness (the “PIK Toggle Notes”) and the payment of PIK interest on the Existing Notes in lieu of cash for certain future interest payments due on the Existing Notes, (2) the New Money Offer and (3) offer to holders participating in the New Money Offer to exchange a portion of their Existing Notes for additional PIK Toggle Notes. Holders who elected to backstop the New Money Offer also received their pro rata share of additional common equity issued by Avanti in an aggregate amount equal to 9.09% of Avanti’s total outstanding shares. Through completion of the consent solicitation and the New Money Offer, Avanti received $80,000 of new cash funding, with an additional $50,000 of funding available on a delayed draw basis, and will have the ability to defer up to $112,000 of future interest payments through April 2018. The Company took part in the refinancing, exchanging $22,900 of Existing Notes for new PIK Toggle Notes and purchasing an additional $9,200 of PIK Toggle Notes for $8,900 of funded cash. The Company continues to hold $47,200 of the Existing Notes.

⁽¹⁰⁾ In February 2017, the Company sold its loan to JNI Medical Corporation for total consideration, including payment for expenses due under the loan agreement of $3,000. The Company recognized approximately $1,000 of realized gain on the sale.

⁽¹¹⁾ In February 2016, the Pristine Environments, Inc. loans were refinanced at par plus accrued interest and fees, less approximately $500 of remaining principal on the Term Loan B.

⁽¹²⁾ Non-income producing security.

F-43

⁽¹³⁾ ‘‘Affiliate Investments’’ are investments in those companies that are ‘‘Affiliated Companies’’ of the Company, a defined in the Investment Company Act, which are not ‘‘Control 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.

⁽¹⁴⁾ In March 2017, the Optima Specialty Steel, Inc. note was refinanced at par plus accrued interest and fees.

⁽¹⁵⁾ The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2016 was 1.00%.

⁽¹⁶⁾ ‘‘Control Investments’’ are investments in those companies that are ‘‘Control Investments’’ of the Company, as defined in the Investment Company Act. A company is deemed to be a ‘‘Control Investment’’ of the Company if the Company owns more than 25% of the voting securities of such company.

L = LIBOR

As of December 31, 2016, the Company’s investments consisted of the following:

	Period Ended December 31, 2016
Investment Type	Cost		Fair Value
1st Lien/Senior Secured Debt	$	156,008	$	142,010
Unsecured Debt		11,598		12,166
Equity/Other		526		501
Total Investments	$	168,132	$	154,677

F-44

As of December 31, 2016, the industry composition of the Company’s portfolio at fair value was as follows:

Industry	December 31, 2016
Wireless Telecommunications Services		33.8	%
Metals & Mining		9.0
Building Cleaning and Maintenance Services		8.1
Hardware		7.9
Radio Broadcasting		6.0
Wireless Communications		5.2
Consumer Discretionary		4.3
Real Estate Holding Company		3.9
Casinos and Gaming		3.7
Real Estate Services		3.5
Maritime Security Services		2.8
Information and Data Services		2.7
Hotel Operator		2.3
Grain Mill Products		1.8
Enterprise Software Company		1.7
Biological Products		1.1
Real Estate Services		1.0
Consumer Financing		0.7
Internet Advertising		0.5
Total		100.0	%

As of December 31, 2016, the geographic composition of the Company’s portfolio at fair value was as follows:

Geographic	December 31, 2016
United States		70.1	%
United Kingdom		29.9	%
Total		100.0	%

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

F-45

GREAT ELM CAPITAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the year ended December 31, 2017 and

Dollar amounts in thousands, except share and per share amounts

1. ORGANIZATION

Great Elm Capital Corp. (the “Company”) was formed on April 22, 2016 as a Maryland corporation. 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 and Full Circle Capital Corporation, a Maryland corporation (“Full Circle”), entered into an Agreement and Plan of Merger, dated as of June 23, 2016 (the “Merger Agreement”). The Merger Agreement provided for the merger of Full Circle with and into the Company (the “Merger”). The Company agreed to provide indemnity to Full Circle’s directors and officers under certain circumstances. The Company has concluded that its indemnification obligation is remote as of the date of the accompanying financial statements. The Merger was completed on November 3, 2016 and the Company began operations on November 4, 2016. The Company accounted for the Merger as a business combination under Accounting Standards Codification (ASC) Topic 805, Business Combinations (“ASC 805”). The consideration for the Merger consisted of 4,986,585 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”).

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The Company’s functional currency is U.S. dollars and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X and Regulation S-K. The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services – Investment Companies.

The Company’s December 31, 2016 consolidated financial statements were reclassified in order to be consistent with the format used for the December 31, 2017 consolidated financial statements.

Prior to the Merger, the Company applied ASC Topic 915, Development Stage Entities (“ASC 915”) and accordingly had determined whether costs incurred were to be charged to expense when incurred or were to be capitalized or deferred. The Company concluded that costs incurred before the date of the Merger were contingent and these costs were charged to expense as permitted under ASC 915.

Basis of Consolidation. Under the Investment Company Act, Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ Audit and Accounting Guide for Investment Companies, the Company is generally precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services and benefits to the Company. The accompanying consolidated financial statements include the Company’s accounts and the accounts of the Company’s wholly-owned, or previously wholly-owned, subsidiaries TransAmerican Asset Servicing Group, Inc., PE Facility Solutions, LLC, Double Deuce Lodging LLC, and FC Shale Inc. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

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Revenue Recognition. Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments, are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment if such fees are fixed in nature. The Company currently has no investments with fixed exit fees. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, and end-of-term or exit fees that have a contingency feature or are variable in nature are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are generally included in interest income.

Interest Income received as paid-in-kind (“PIK”) is reported separately in the Statements of Operations. Income is included as PIK if the instrument solely provides for settlement in kind. In the event that the borrower can settle in kind or via cash payment, the income is not included as PIK until the borrower elects to pay in kind and the payment is received by the Company. In the event there is a lesser cash rate in a PIK toggle instrument, income is accrued at the lesser cash rate until the coupon is paid in kind and such larger payment is received by the Company.

Certain of the Company’s debt investments were purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. 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. For debt instruments where the Company received original issue discounts, when principal payments on the debt instrument are received in an amount in excess of the debt instrument’s amortized cost, the excess principal payments are recorded as interest income.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (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 depreciation previously recognized. Realized gains and losses are computed using the first-in first-out 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.

Organization and Merger Related Costs. Organization and Merger-related costs, including costs relating to the formation and incorporation of the business were deemed to be incurred by the Company only subsequent to the Merger being completed.

Cash and Cash Equivalents. Cash and cash equivalents typically consist of bank demand deposits.

Valuation of Portfolio Investments. The Company carries its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. 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 of Directors”).

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. See Note 4.

The Company values its portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by the Board of Directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (1) are independent of the Company, (2) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (3) are able to transact for the asset, and (4) are willing to transact for the asset (that is, they are motivated but not forced or otherwise compelled to do so).

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Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. The Company generally obtains market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. Short term debt investments with remaining maturities within ninety days are generally valued at amortized cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is the case for many of the Company’s investments, or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with the Company’s documented valuation policy that has been reviewed and approved by the Board of Directors, who also approve in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that the Company may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of the Company’s investments than on the fair values of our investments for which market quotations are not readily available. 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 of Directors 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 of Directors;

• Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented, discussed, and iterated with senior management of GECM;

• The fair value of investments comprising in the aggregate less than 5% of the Company’s total capitalization may be determined by GECM in good faith in accordance with the Company’s valuation policy without the employment of an independent valuation firm.

The Company’s audit committee recommends, and the Board of Directors approves, the fair value of the investments in the Company’s portfolio in good faith based on the input of GECM, the respective independent valuation firms (to the extent applicable) and the inputs of each of the audit committee of the Board of Directors and the Board of Directors.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in determining the fair value of its investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, and enterprise values.

Foreign Currency Translation. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (1) investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates effective on the date of valuation; and (2) purchases and sales of investments and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates prevailing on the transaction dates. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.

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U.S. Federal Income Taxes. From inception to September 30, 2016, the Company was a taxable association under Internal Revenue Code of 1986, as amended (the “Code”). The Company has elected to be taxed as a regulated investment company (“RIC”) under subchapter M of the Code for the partial taxable period beginning on October 1, 2016 and ending December 31, 2016. The Company intends to operate in a manner so as to qualify for the tax treatment applicable to RICs in that taxable year and all future taxable years. In order to qualify as a RIC, among other things, the Company will be required to timely distribute to its stockholders at least 90% of investment company taxable income (“ICTI”) including payment-in-kind (“PIK”) interest, as defined by the Code, for each taxable year in order to be eligible for tax treatment under subchapter M of the Code. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed prior to the 15th day of the ninth month after the tax year-end. So long as the Company maintains its status as a RIC, the Company generally will not be subject to corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as distributions. 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 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 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 accrued $124 of excise tax expense in fiscal 2017 and accrued $80 of excise tax expense in fiscal 2016.

At December 31, 2017, the Company, for federal income tax purposes, had capital loss carryforwards of $46,984 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. The Modernization Act changed the capital loss carryforward rules as they relate to regulated investment companies. Capital losses generated in tax years beginning after the date of enactment may now be carried forward indefinitely, and retain the character of the original loss. Of the capital loss carryforwards at December 31, 2017, $46,984 are limited losses and available for use subject to annual limitation under Section 382. Of the capital losses at December 31, 2017, $16,815 are short-term and $30,169 are long term.

ASC 740 Accounting for Uncertainty in Income Taxes (ASC 740) provides guidance on the accounting for and disclosure of uncertainty in tax position. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Based on its analysis of its tax position for all open tax years (the current and prior years, as applicable), the Company has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax years remain subject to examination and adjustment by tax authorities.

Recent Accounting Developments.

In March 2017, FASB issued ASU No. 2017-08; Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017-08 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The application of this guidance is not expected to have a material impact on the accompanying consolidated financial statements and related disclosures.

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3. SIGNIFICANT AGREEMENTS AND RELATED PARTIES

Investment Management Agreement. On September 27, 2016, the Company entered into an investment management agreement (the “Investment Management Agreement”) with GECM in connection with the transactions described in Note 8. Beginning on November 4, 2016, the Company began accruing for GECM’s fees for its services under the Investment Management Agreement. This fee consists of two components: a base management fee and an incentive fee.

Management Fee The base management fee is calculated at an annual rate of 1.50% of the Company’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee will be payable quarterly in arrears. The base management fee is calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

For the year ended December 31, 2017 and the period ended December 31, 2016, management fees amounted to $2,298 and $392, respectively. As of December 31, 2017 and December 31, 2016, $612 and $392 remained payable, respectively.

Incentive Fee The incentive fee consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, the Company will pay GECM 20% of the amount by which the Company’s pre-incentive fee net investment income (the “Pre-Incentive Fee Net Investment Income”) for the quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the Company’s net assets at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision pursuant to which GECM receives all of such income in excess of the 1.75% level but less than 2.1875% (8.75% annualized) and subject to a total return requirement (described below). The effect of the “catch-up” provision is that, subject to the total return provision, if pre-incentive fee net investment income exceeds 2.1875% of the Company’s net assets at the end of the immediately preceding calendar quarter, in any calendar quarter, GECM will receive 20.0% of the Company’s pre-incentive fee net investment income as if the 1.75% hurdle rate did not apply. 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 interest, payment-in-kind 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 December 31, 2017 was $20,168. Accrued Unpaid Income includes PIK income of $11,709 earned during the year ended December 31, 2017 and $1,962 of accrued interest income that is expected to PIK under PIK toggle elections. Accrued Unpaid Income as of December 31, 2016 was $4,199. Accrued Unpaid Income as of December 31, 2016 includes $1,128 of accrued interest income that is expected to PIK under PIK toggle elections.

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, (A) reduce Pre-Incentive Fee Net Investment Income and (B) reduce the amount of Accrued Unpaid Income Incentive Fees previously deferred.

Under the capital gains component of the 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.

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Payment of the incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income will be payable except to the extent that 20% of the cumulative net increase in net assets resulting from operations from and after November 4, 2016 exceeds the cumulative incentive fees accrued and/or paid from and after November 4, 2016. For the purposes of this calculation, the “cumulative net increase in net assets resulting from operations” is the sum of the Company’s pre-incentive fee net investment income, realized gains and losses and unrealized appreciation and depreciation from and after November 4, 2016.

For the year ended December 31, 2017 and the period ended December 31, 2016, the Company incurred Incentive Fees based on income of $4,394 and $863, respectively. As of December 31, 2017 and December 31, 2016, $5,257 and $863 remained payable of which $5,257 of the payable at December 31, 2017 and $863 of the payable at December 31, 2016 was Accrued Unpaid Income Incentive Fees and $0 was immediately payable after calculating the total return requirement. For the year ended December 31, 2017 and the period ended December 31, 2016, the Company accrued Incentive Fees based on capital gains of $0.

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.

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 an executive officer of GECM, and serves as GECM’s chief compliance officer.

Administration Fees. On September 27, 2016, the Company entered into an administration agreement (the “Administration Agreement”) with GECM to provide administrative services, including furnishing the Company with office facilities, equipment, clerical, bookkeeping record keeping services and other administrative services. The Company will reimburse GECM for its allocable portion of overhead and other expenses of GECM in performing its obligations under the Administration Agreement.

GECM agreed that the aggregate amount of expenses accrued for reimbursement pursuant to the Administration Agreement that pertain to direct compensation costs of financial, compliance and accounting personnel that perform services for the Company, inclusive of the fees charged by any sub-administrator to provide such financial, compliance and/or accounting personnel to the Company (the “Compensation Expenses”), during the year ending November 4, 2017, when taken together with Compensation Expenses reimbursed or accrued for reimbursement by the Company pursuant to the Investment Management Agreement during such period, shall not exceed 0.50% of the Company’s average net asset value during such period. GECM’s expense cap was calculated retrospectively for the year ending November 4, 2017 and the cap on costs was determined to be $0 and $70 of the $80 accrued at December 31, 2016 was reversed for the year ended December 31, 2017 with $10 due from our sub-administrator remaining waived.

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 year ended December 31, 2017 and the period ended December 31, 2016, the Company incurred expenses under the Administration Agreement of $1,362 and $224, respectively. As of December 31, 2017 and December 31, 2016, $257 and $138 remained payable, respectively.

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4. FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

The fair value hierarchy under ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:

Basis of Fair Value Measurement

Level 1 - Investments valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.

Level 3 - Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 2 should be read in conjunction with the information outlined below.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 2 Instruments.

Level 2 Instruments Valuation Techniques and Significant Inputs

Equity and Fixed Income

The types of instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency may include commercial paper, most government agency obligations, certain corporate debt securities, certain mortgage-backed securities, certain bank loans, less liquid publicly listed equities, certain state and municipal obligations, certain money market instruments and certain loan commitments.

Valuations of Level 2 Equity and Fixed Income instruments can be verified to quoted prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g. indicative or firm) and the relationship of recent market activity to the prices provided from alternative pricing sources.

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Level 3 Instruments Valuation Techniques and Significant Inputs

Bank Loans, Corporate Debt, and Other Debt Obligations

Valuations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on an analysis of market comparables, transactions in similar instruments and/or recovery and liquidation analyses.

Equity

Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available: •   Transactions in similar instruments; •   Discounted cash flow techniques; •   Third party appraisals; and •   Industry multiples and public comparables. Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including: •   Current financial performance as compared to projected performance; •   Capitalization rates and multiples; and •   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 December 31, 2016 and December 31, 2017. 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. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment (if any), call provisions and comparable company valuations. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market multiples would result in an increase or decrease, respectively, in the fair value.

The following is a summary of the Company’s investment assets categorized within the fair value hierarchy as of December 31, 2017:

Assets	Level 1		Level 2		Level 3		Total
Secured and Unsecured Debt	$	—	$	80,732	$	83,789	$	164,521
Equity/Other		213		—		136		349
Short Term Investments		65,890		—		—		65,890
Total investment assets	$	66,103	$	80,732	$	83,925	$	230,760

The following is a summary of the Company’s investment assets categorized within the fair value hierarchy as of December 31, 2016:

Assets	Level 1		Level 2		Level 3		Total
1st Lien/Senior Secured and Unsecured Debt	$	—	$	58,031	$	83,979	$	142,010
Equity/Other		—		—		501		501
Unsecured Debt		—		12,166		—		12,166
Total investment assets	$	—	$	70,197	$	84,480	$	154,677

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The following is a reconciliation of Level 3 assets for the year ended December 31, 2017:

Level 3	Beginning Balance as of January 1, 2017		Purchases(1)		Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Ending Balance as of December 31, 2017
Senior Secured and Unsecured Debt	$	83,979	$	139,859	$	2,053		$	(2,854	)	$	(142,824	)	$	3,576	$	83,789
Equity/Other		501		2,137		(321	)		17			(2,198	)		—		136
Total investment assets	$	84,480	$	141,996	$	1,732		$	(2,837	)	$	(145,022	)	$	3,576	$	83,925

The following is a reconciliation of Level 3 assets for the period from November 4, 2016 (commencement of operations as a BDC) through December 31, 2016:

Level 3	Beginning Balance as of November 3, 2016		Purchases(1)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)(2)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Ending Balance as of December 31, 2016
Senior Secured and Unsecured Debt	$	88,849	$	35,771	$	274	$	(926	)	$	(41,738	)	$	1,749	$	83,979
Equity/Other		526		—		—		(25	)		—			—		501
Total investment assets	$	89,375	$	35,771	$	274	$	(951	)	$	(41,738	)	$	1,749	$	84,480

⁽¹⁾  Purchases may include PIK, securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

⁽²⁾  Change in unrealized appreciation (depreciation) relating to assets still held at December 31, 2017 totaled $(3,315) consisting of the following: Senior Secured and Unsecured Debt $(3,332) and Equity/Other $17. Change in unrealized appreciation (depreciation) relating to assets still held at December 31, 2016 totaled $(951) consisting of the following: Senior Secured and Unsecured Debt $(926) and Equity/Other $(25).

No securities were transferred into the Level 3 hierarchy and no securities were transferred out of the Level 3 hierarchy during the period from November 4, 2016 through December 31, 2016 or for the year ended December 31, 2017. Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur.

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets and liabilities as of December 31, 2016 and December 31, 2017, 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. For example, the lowest yield in 1st Lien/Senior Secured is appropriate for valuing that specific debt investment, but may not be appropriate for valuing any other debt investments in this asset class. 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.

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December 31, 2017

Level 3 Instruments	Level 3 Assets as of December 31, 2017	Significant Unobservable Inputs by Valuation Techniques1	Range2 of Significant Unobservable Inputs (Weighted Average3) as of December 31, 2017
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured and Unsecured Debt $83,789	Discounted cash flows: •   Discount Rate Comparable multiples: •   EV/EBITDA4 Liquidation/Waterfall analysis: •   EV/EBITDA4	7.69% - 38.75% (11.30%) 4.25 - 13.75 (6.68)
Equity	Common Stock, LLC Units and Warrants on private stock $0	Liquidation Value	N/A
Equity	Warrants on publicly traded stock $136	Volatility:	67.99% - 67.99% (67.99%)

December 31, 2016

Level 3 Instruments	Level 3 Assets as of December 31, 2016	Significant Unobservable Inputs by Valuation Techniques1	Range2 of Significant Unobservable Inputs (Weighted Average3) as of December 31, 2016
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured and Unsecured Debt $83,979 Unsecured Debt $0	Discounted cash flows: •   Discount Rate Comparable multiples: •   EV/EBITDA4 Liquidation/Waterfall analysis: •   EV/EBITDA4 Liquidation Value	11.85% - 39.80% (16.33%) 3.50 - 6.35 (5.76) $0 - $0 ($0)
Equity	Common Stock, LLC Units and Warrants on private stock $314	Comparable multiples: •   EV/EBITDA4 Liquidation Value	3.50 - 6.00 (6.00) $68 - $68 ($68)
Equity	Warrants on publicly traded stock $119	Volatility:	71.10% - 71.10% (71.10%)

⁽¹⁾  The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

⁽²⁾  The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

⁽³⁾  Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

⁽⁴⁾  Enterprise value of portfolio company as a multiple of earnings before interest, taxes, depreciation and amortization.

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5. DEBT

On November 3, 2016, the Company assumed $33,646 of Full Circle 8.25% Senior Notes due 2020 (the “2020 Notes”) in connection with the Merger by executing the second supplemental indenture dated November 3, 2016. The 2020 Notes had a maturity date of June 30, 2020 and on October 20, 2017 we redeemed them completely at their par value plus accrued and unpaid interest.

On September 13, 2017, we offered $28,375 in aggregate principal amount of 6.50% notes due 2022 (the “GECCL Notes”). On September 29, 2017, we sold to several underwriters an additional $4,256 of the GECCL Notes upon full exercise of the underwriters’ over-allotment option. As a result of the issuance of these Notes, the aggregate principal balance of Notes outstanding is $32,631.

The GECCL Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness. The GECCL Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries. We pay interest on the GECCL Notes on January 31, April 30, July 31 and October 31 of each year. The GECCL Notes will mature on September 18, 2022 and can be called on, or after, September 18, 2019. Holders of the GECCL Notes do not have the option to have the GECCL Notes repaid prior to the stated maturity date. The GECCL Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

As part of the offering, the Company incurred fees and costs, which are treated as a reduction of the carrying amount of the debt on our Statements of Assets and Liabilities. These deferred financing costs presented as a reduction to the Notes payable balance are being amortized into interest expense over the term of the Notes.

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 2 to 1 after such borrowing. As of December 31, 2017, the Company’s outstanding borrowings were $32,631, and the Company’s asset coverage ratio was 5 to 1.

Information about the Company’s senior securities (including debt securities and other indebtedness) is shown in the following tables as of December 31, 2017 and December 31, 2016.

Year	Total Amount Outstanding(1)		Asset Coverage Ratio Per Unit(2)		Involuntary Liquidation Preference Per Unit(3)		Average Market Value Per Unit(4)
Unsecured Debt - GECCL Notes
December 31, 2017	$	32,631	$	5.01	$	N/A	$	1.017
Unsecured Debt - 2020 Notes
December 31, 2016	$	33,646	$	6.17	$	N/A	$	1.016

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

⁽²⁾  Asset coverage per unit is the ratio of the carrying value of Great Elm’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1 of indebtedness.

⁽³⁾  The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.

⁽⁴⁾  Not applicable for senior securities that are not registered for public trading. The average market value per unit for the Notes is based on the average daily prices of such notes and is expressed per $1 of indebtedness for each year and since November 4, 2016 for the period ended December 31, 2016.

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The indenture’s covenants, include compliance with (regardless of whether the Company is subject to) the 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. These covenants are subject to limitations and exceptions that are described in the Indenture. The Company may repurchase the Notes in accordance with the Investment Company Act and the rules promulgated thereunder. As of December 31, 2017, the Company had not repurchased any of the Notes. As of December 31, 2017 and December 31, 2016, the Company was in compliance with all covenants under the indentures.

	Period Ended December 31, 2016
Borrowing interest expense	$	460
Facility fees		—
Amortization of acquisition premium		(40	)
Total	$	420
Weighted average interest rate		7.86	%
Average outstanding balance	$	33,646

	As of December 31, 2016
Facility	Commitments		Borrowings Outstanding		Fair Value
Notes	$	33,646	$	33,646	$	34,184
Total	$	33,646	$	33,646	$	34,184

The fair value of the Company’s Notes are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company’s Notes is determined by utilizing market quotations at the measurement date as they are Level 1 securities.

The summary information of the 2020 Notes for the year ended December 31, 2017, is as follows:

	Twelve Months Ended December 31, 2017 (1)
Borrowing interest expense	$	2,236
Amortization of acquisition premium		(888	)
Total	$	1,348
Weighted average interest rate		4.99	%
Average outstanding balance	$	33,646

(1) The information presented for the 2020 Notes is for the period from January 1, 2017 through October 20, 2017, which represents the date the 2020 Notes were redeemed in full.

The summary information of the GECCL Notes for the year ended December 31, 2017, is as follows:

	Twelve Months Ended December 31, 2017 (2)
Borrowing interest expense	$	607
Amortization of acquisition premium		84
Total	$	691
Weighted average interest rate		7.36	%
Average outstanding balance	$	32,631

(2) The information presented for the GECCL Notes is for the period from September 19, 2017, which represents the date the GECCL Notes were issued, through December 31, 2017.

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	December 31, 2017
Facility	Commitments		Borrowings Outstanding		Fair Value
Unsecured Debt - GECCL Notes	$	32,631	$	32,631	$	33,218
Total	$	32,631	$	32,631	$	33,218

The fair value of the Company’s Notes are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company’s Notes is determined by utilizing market quotations at the measurement date as they are Level 1 securities.

6. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. As of December 31, 2017, the Company had approximately $7,786 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 December 31, 2017 are included in the Company’s Statement 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.

Two complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al., filed on September 23, 2016 (the “Saunders Action”), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the “Russell Action”), were filed in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the “Circuit Court”), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the “Speiser Action”, and together with the Saunders Action and the Russell Action, the “Actions”).

On October 24, 2016, the Company, Full Circle, Great Elm Capital Group, MAST Capital, certain directors of the Full Circle and plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the “MOU”). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and the Company agreed to and did make the supplemental disclosures with respect to the merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the “Stipulation”) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the Merger Agreement; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle’s stockholders. There can be no assurance that the settlement will be finalized or that the Circuit Court will approve the settlement.

7. INDEMFICATION

Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business the Company expects to enter into contracts that contain a variety of representations which provide general indemnifications. The Company’s maximum exposure under these agreements cannot be known; however, the Company expects any risk of loss to be remote.

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8. CAPITAL TRANSACTIONS

Formation Transaction

On June 23, 2016, Great Elm Capital Group contributed $30,000 to the Company and the Company issued 30 shares of Common Stock. Such shares were recapitalized into an aggregate of 1,966,667 shares of Common Stock upon the contribution of the Initial GECC Portfolio.

The Company, Great Elm Capital Group and funds managed by MAST Capital (the “MAST Funds”) entered into a Subscription Agreement, dated as of June 23, 2016 (the “Subscription Agreement”). The Subscription Agreement provided for (a) the $30,000 capital contribution by Great Elm Capital Group in exchange for 1,966,667 shares of Company Common Stock and (b) contribution by the MAST Funds of a portfolio of debt instruments (the “Initial GECC Portfolio”) to the Company in exchange for 5,935,800 shares of Common Stock.

On September 27, 2016, the MAST Funds conveyed the Initial GECC Portfolio to the Company and that transaction settled November 1, 2016. On November 1, 2016, the Company issued 5,935,800 shares of Common Stock in exchange for the Initial GECC Portfolio in settlement of the transaction. Under ASC 805, the Company accounted for the contribution of the Initial GECC Portfolio as an asset acquisition as of the settlement date. The cost amounts reflected in the following table are the price at which the assets were transferred, which is viewed as representative of fair value as of November 1, 2016, and the total is included in the accompanying consolidated statement of changes as “Shares issued – formation transactions.”

As of November 3, 2016, the Initial GECC Portfolio was comprised of:

Portfolio Company	Industry	Type of Investment	Interest			Maturity		Par Amount/ Quantity		Cost		Fair Value
Avanti Communications Group plc	Wireless Telecommunications Services	Sr. Secured Notes		10.00	%		10-1-19	$	70,035	$	54,629	$	53,577
Everi Payments Inc.	Hardware	Sr. Unsecured Notes		10.00	%		1-15-22	$	12,289		11,581		11,705
Optima Specialty Steel Inc.	Metals and Mining	Sr. Secured Notes		12.50	%		12-15-16	$	15,100		13,726		14,164
Tallage Lincoln, LLC	Real Estate Services	Sr. Secured Term Loan		10.00	%		5-21-18	$	372		372		372
Tallage Adams, LLC	Real Estate Services	Sr. Secured Term Loan		10.00	%		12-12-16	$	169		181		181
Trilogy International Partners	Wireless Telecommunications Services	Sr. Secured Notes		13.375	%		5-15-19	$	10,000		10,005		10,000
Total										$	90,494	$	89,999

In the Subscription Agreement, the Company agreed, to reimburse costs associated with the transactions contemplated by the Subscription Agreement and the Merger Agreement incurred by Great Elm Capital Group and the MAST Funds, if the transaction closed. See Note 6.

Merger

On June 23, 2016, the Company entered into the Merger Agreement with Full Circle. Following approval of the Merger on October 31, 2016 by Full Circle’s stockholders, on November 3, 2016:

• Full Circle merged into the Company resulting in the Company’s acquisition, by operation of the Merger, of Full Circle’s portfolio that we valued at $74,658 at November 3, 2016;

• The Company became obligated to issue an aggregate of 4,986,585 shares of Common Stock to former Full Circle stockholders; and

• The Company’s exchange agent paid a $5.4 million special cash dividend to former Full Circle stockholders.

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The Company has accounted for the Merger as a business combination under ASC Topic 805 and Regulation S-X’s purchase accounting guidance. The Company was designated as the accounting acquirer for accounting purposes. The difference between the fair value of Full Circle’s net assets and the consideration was recorded as a purchase accounting loss because the fair value of the assets acquired and liabilities assumed, as of the date of the Merger, was less than the fair value of the merger consideration paid by the Company. The calculation of the purchase accounting loss is detailed in the table below.

Consideration Paid:
Common stock issued	$	73,541
Assets acquired:
Cash and cash equivalents		29,109
Investments		74,658
Other assets		2,252
Liabilities assumed:
Notes payable		(34,574	)
Other liabilities		(2,600	)
Net assets acquired		68,845
Purchase accounting loss	$	4,698

The Company incurred approximately $3,471 of transaction-related expenses related to the Formation Transaction and Merger during the period ended December 31, 2016. Transaction-related expenses are comprised primarily of legal, accounting and other professional fees and third party costs.

The following table provides the pro forma consolidated operational data as if the Merger had occurred on January 1, 2016 and we were in operations for the full year. The pro forma consolidated operational data is based on assumptions and estimates; however, these pro forma results are not indicative of the results of operations that would have been obtained had the Merger occurred at the beginning of the period presented, nor do they purport to represent the consolidated results of operations for future periods. Information presented for the year ended December 31, 2015 represents Full Circle’s financial information for the period, unadjusted.

	Twelve Months Ended			Twelve Months Ended
(in thousands, except per share data)	December 31, 2016			December 31, 2015
Total Investment Income	$	17,125		$	18,320
Net Investment Income		5,853			9,204
Net Decrease in Net Assets Resulting from Operations	$	(12,383	)	$	(7,197	)
Weighted average common shares outstanding		6,953			4,957
Net Decrease in Net Assets Resulting from Operations per share, basic and diluted	$	(1.78	)	$	(1.45	)

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Issuer Purchases of Equity Securities

During the year ended December 31, 2017 the Company purchased 2,138,479 shares under its tender offer and $15,000 stock buyback program at a weighted average price of $11.20 per share. As of December 31, 2017, the Company had cumulatively purchased 2,236,651 shares under its tender offer and stock buyback program at a weighted average price of $11.18 per share, resulting in $14,995 of cumulative cash paid, under the program since November 4, 2016. Including the tender offer, the Company utilized $24,995 under its stock buyback and tender program for repurchasing shares.

Month	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (Amounts in dollars)
January 2017		132,434	$	11.48		132,434	$	12,425,611
February 2017		72,678	$	11.26		72,678	$	11,607,509
March 2017		40,617	$	11.09		40,617	$	11,157,069
April 2017		16,846	$	11.38		16,846	$	10,965,351
May 2017 (1)		944,535	$	11.44		944,535	$	10,158,722
June 2017		15,215	$	10.42		15,215	$	10,000,182
July 2017		47,961	$	10.73		47,961	$	9,485,725
August 2017		37,666	$	10.78		37,666	$	9,079,585
September 2017		753,097	$	11.00		753,097	$	792,735
October 2017		65,945	$	10.27		65,945	$	115,277
November 2017		11,485	$	10.04		11,485	$	—
Total 2017		2,138,479	$	11.20		2,138,479
November 2016		16,030	$	10.79		16,030	$	14,826,985
December 2016		82,142	$	10.72		82,142	$	13,946,200
Total 2016		98,172	$	10.73		98,172
Total		2,236,651	$	11.18		2,236,651	$	—

(1) Share amounts in this line include the repurchase of 869,565 shares on May 12, 2017 in the $10,000 tender offer we announced on March 30, 2017 that expired on May 5, 2017.

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9. EARNINGS PER SHARE

The following information sets forth the computation of basic and diluted earnings per share for the year ended December 31, 2017:

	For the Year Ended December 31,
	2017
Numerator for basic and diluted earnings per share - increase in net assets resulting from operations	$	(2,754	)
Denominator for basic and diluted earnings per share - weighted average shares outstanding		11,655,370
Basic and diluted earnings per share	$	(0.24	)

The following information sets forth the computation of basic and diluted earnings per share for the period ended December 31, 2016:

	Period Ended December 31, 2016
Numerator for basic and diluted earnings per share - decrease in net assets resulting from operations	$	(17,874	)
Denominator for basic and diluted earnings per share - weighted average shares outstanding		12,853
Basic and diluted earnings per share	$	(1.39	)

Weighted average shares outstanding represents the weighted average shares outstanding after giving effect to the Merger and Formation Transactions, and as such is calculated from November 3, 2016 through December 31, 2016 for the period ended December 31, 2016.

Diluted earnings per share equals basic earnings per share because there were no common stock equivalents outstanding during the periods presented.

10. TAX INFORMATION

The tax character of distributions during the year ended December 31, 2017 and the period ended December 31, 2016, were as follows:

	Year Ended		Period Ended
	December 31, 2017		December 31, 2016
Distributions paid from:
Ordinary Income	$	13,682	$	2,123
Net Long-Term Capital Gains		0		0
Total Taxable Distributions	$	13,682	$	2,123

The components of Distributable Earnings (Losses) on a tax basis were as follows:

	December 31, 2017			December 31, 2016
Undistributed Ordinary Income - net	$	3,488		$	1,781
Capital Loss Carryforwards	$	(46,984	)	$	(41,842	)
Total Undistributed Earnings	$	(43,496	)	$	(40,061	)
Unrealized Earnings (Losses) - net	$	(22,750	)	$	(6,402	)
Total Accumulated Earnings (Losses) - net	$	(66,246	)	$	(46,463	)

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The Company’s aggregate unrealized appreciation and depreciation on investments based on cost for U.S. federal income tax purposes were as follows:

	December 31, 2017			December 31, 2016
Tax cost	$	253,510		$	224,762
Gross unrealized appreciation	$	2,353		$	1,837
Gross unrealized depreciation	$	(25,103	)	$	(8,239	)
Net unrealized depreciation on investments	$	(22,750	)	$	(6,402	)

The difference between GAAP-basis and tax basis unrealized gains (losses) is attributable primarily to differences in the tax treatment of underlying fund investments.

In order to present certain components of the Company’s capital accounts on a tax-basis, certain reclassifications have been recorded to the Company’s accounts. These reclassifications have no impact on the net asset value of the Company’s and result primarily from dividend redesignations, certain non-deductible expenses, and differences in the tax treatment of paydown gains and losses.

	December 31, 2017			December 31, 2016
Paid-in capital in excess of par	$	3,349		$	26,464
Accumulated undistributed net investment income	$	(729	)	$	3,454
Accumulated net realized gain (loss)	$	(2,620	)	$	(29,918	)

At December 31, 2017, the Company, for federal income tax purposes, had capital loss carryforwards of $46,984 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. The Modernization Act changed the capital loss carryforward rules as they relate to regulated investment companies. Capital losses generated in tax years beginning after the date of enactment may now be carried forward indefinitely, and retain the character of the original loss. Of the capital loss carryforwards at December 31, 2017, $46,984 are limited losses and available for use subject to annual limitation under Section 382. Of the capital losses at December 31, 2017, $16,815 are short-term and $30,169 are long term.

ASC 740 Accounting for Uncertainty in Income Taxes (ASC 740) provides guidance on the accounting for and disclosure of uncertainty in tax position. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Based on its analysis of its tax position for all open tax years (the current and prior years, as applicable), the Company has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax years remain subject to examination and adjustment by tax authorities.

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11. FINANCIAL HIGHLIGHTS

Below is the schedule of financial highlights of the Company:

	For the Year Ended December 31,			November 3, 2016 (Commencement of Operations) to December 31,
	2017			2016 (5)
Per Share Data:(1)
Net asset value, beginning of period	$	13.52		$	14.41
Net investment income		1.52			0.28
Net realized gains		0.31			0.02
Net unrealized losses		(2.13	)		(1.05	)
Net decrease in net assets resulting from operations		(0.30	)		(0.75	)
Accretion from share buybacks		0.40			0.03
Distributions declared from net investment income(2)		(1.20	)		(0.17	)
Net decrease resulting from distributions to common stockholders		(1.20	)		(0.17	)
Net asset value, end of period	$	12.42		$	13.52
Shares outstanding, end of year/period		10,652,401			12,790,880
Total return based on net asset value(3)		0.69	%		(5.30	)%
Total return based on market value(3)		(5.56	)%		(2.03	)%
Ratio/Supplemental Data (all amounts in thousands except ratios):
Net assets, end of period	$	132,287		$	172,984
Average net assets	$	151,986		$	179,366
Ratio of expenses (without management fees, incentive fees and interest and credit facility expenses) to average net assets(4,6)		2.25	%		4.37	%
Ratio of management fees to average net assets(4)		1.51	%		1.38	%
Ratio of interest and credit facility expenses to average net assets(4)		1.34	%		1.48	%
Ratio of incentive fees to average net assets(4)		2.89	%		3.04	%
Ratio of total expenses to average net assets before waiver(4,6)		7.87	%		10.27	%
Ratio of total expenses to average net assets after waiver(4,6)		8.00	%		9.99	%
Ratio of net investment income to average net assets(4,6)		11.56	%		10.52	%
Portfolio turnover		116	%		27	%

⁽¹⁾  The per share data was derived by using the weighted average shares outstanding during the period, except where such calculations deviate from those specified under the instructions to Form N-2.

⁽²⁾  The per share data for distributions declared reflects the actual amount of distributions of record per share for the period.

⁽³⁾  Total return based on net asset value is calculated as the change in net asset value per share, assuming the Company’s distributions were reinvested through its dividend reinvestment plan. Total return based on market value is calculated as the change in market value per share, assuming the Company’s distributions were reinvested through its dividend reinvestment plan. Total return does not include any estimate of a sales load or commission paid to acquire shares. For the period ended December 31, 2016, total return based on net asset value is calculated as the change in net asset value per share from November 4, 2016 through December 31, 2016, assuming the Company’s distributions were reinvested through its dividend reinvestment plan. Total return based on market value is calculated as the change in market value per share from November 4, 2016 through December 31, 2016, assuming the Company’s distributions were reinvested through its dividend reinvestment plan, and is assumed to be $12.03 on November 4, 2016. $12.03 represents the closing price of Full Circle’s common stock on its last day of trading prior to the merger, as adjusted by the exchange ratio in the merger agreement.

⁽⁴⁾  Annualized.

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⁽⁵⁾  Net asset value at the beginning of the period is the net asset value per share as of the consummation of the Merger, as described further in Note 8. Management corrected this heading to correspond to the timing of the Merger. The heading was corrected to read “November 3, 2016 to December 31, 2016,” whereas it had previously been presented as “November 4, 2016 (commencement of operations) to December 31, 2016.” November 3, 2016 is the date on which the Merger closed; November 4, 2016 is the date on which the Company began operating as the combined entity resulting from the Merger. On November 3, 2016, the Company recognized approximately $3,444 of organization costs in connection with the Merger, which were included in calculating the beginning of the period net asset value, and amounted to ($0.27) per share, based on 12,889,104 shares issued and outstanding on November 3, 2016.

⁽⁶⁾  Management corrected the expense ratios to reflect $3,444 of one-time non-recurring organization costs incurred in connection with the merger/formation transaction in the applicable ratio. The ratio of expenses (without management fees, incentive fees and interest and credit facility expenses) to average net assets was corrected to 4.37% (an increase of 1.92 percentage points); the ratio of total expenses to average net assets before waiver was corrected to 10.27% (an increase of 1.92 percentage points), the ratio of total expenses to average net assets after waiver was corrected to 9.99% (an increase of 1.92 percentage points); and the ratio of net investment income to average net assets was corrected to 10.52% (a reduction of 1.92 percentage points).

12. AFFILIATED AND CONTROLLED INVESTMENTS

Affiliated investment as 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 December 31, 2017 represented 1.34% of the Company’s net assets. Fair value as of December 31, 2017 along with transactions during the year ended December 31, 2017 in these affiliated investments was as follows:

		For the twelve months ended December 31, 2017												For the twelve months ended December 31, 2017
Non-Controlled, Affiliated Investments	Issue (1)	Fair Value at December 31, 2016		Gross Additions (Cost)(2)		Gross Reductions (Cost) (3)			Net Unrealized Gain (Loss)			Fair Value at December  31, 2017		Net Realized Gain (Loss)		Change in Net Unrealized Gain (Loss)			Interest Income		Fee Income		Dividend Income
OPS Acquisitions Limited and Ocean Protection Services Limited	Term Loan	$	4,286	$	25	$	(40	)	$	(2,501	)	$	1,770	$	—	$	(2,470	)	$	73	$	—	$	—
OPS Acquisitions Limited and Ocean Protection Services Limited	Equity (19% of class)		—		—		—			—			—		—		—			—		—		—
Totals	Term Loan	$	4,286	$	25	$	(40	)	$	(2,501	)	$	1,770	$	—	$	(2,470	)	$	73	$	—	$	—

⁽¹⁾ Non-unitized equity investments are disclosed with percentage ownership in lieu of quantity.

⁽²⁾  Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

⁽³⁾  Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

F-65

Controlled investment as 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 December 31, 2017 represented 13.68% of the Company’s net assets. Fair value as of December 31, 2017 along with transactions during the year ended December 31, 2017 in these controlled investments was as follows:

			For the twelve months ended December 31, 2017												For the twelve months ended December 31, 2017
Controlled Investments	Issue (1)		Fair Value at December 31, 2016		Gross Additions (Cost)(2)		Gross Reductions (Cost) (3)			Net Unrealized Gain (Loss)			Fair Value at December 31, 2017		Net Realized Gain (Loss)			Change in Net Unrealized Gain (Loss)			Interest Income		Fee Income		Dividend Income
Texas Westchester Financial, LLC		Equity (100% of class)	$	68	$	—	$	(68	)	$	—		$	—	$	(8	)	$	—		$	—	$	—	$	—
PE Facility Solutions, LLC		Revolver		—		51,166		(51,166	)		—			—		—			—			58		36		—
		Term Loan A		—		10,000		(100	)		—			9,900		—			—			1,035		—		—
		Term Loan B		—		8,587		—			(383	)		8,204		—			(383	)		1,209		—		—
		Equity (83% of class)		—		—		—			—			—		—			—			—		—		—
Double Deuce Lodging, LLC		Equity (100% of class)		—		2,138		(2,138	)		—			—		—			—			—		—		—
Totals			$	68	$	71,891	$	(53,472	)	$	(383	)	$	18,104	$	(8	)	$	(383	)	$	2,302	$	36	$	—

⁽¹⁾ Non-unitized equity investments are disclosed with percentage ownership in lieu of quantity.

⁽²⁾  Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

⁽³⁾  Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

F-66

13. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following are the quarterly results of operations for the period ended December 31, 2016 and the year ended December 31, 2017. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Quarter Ended
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016(1)			September 30, 2016		June 30, 2016
Investment income	$	9,710		$	6,466		$	6,237		$	7,315		$	5,831		$	—	$	—
Net investment income		6,433			3,570			3,478			4,094			5			—		—
Net realized and unrealized losses		(1,367	)		(12,302	)		(5,945	)		(715	)		(17,879	)		—		—
Net decrease in net assets resulting from operations		5,066			(8,732	)		(2,467	)		3,379			(17,874	)		—		—
Basic and diluted earnings (losses) per common share		0.47			(0.77	)		(0.20	)		0.27			(1.39	)		—		—
Net asset value per common share at end of quarter	$	12.42		$	12.38		$	13.29		$	13.59		$	13.52		$	—	$	—

⁽¹⁾  Partial quarter for the period from November 4, 2016 through December 31, 2016.

F-67

14. SUBSEQUENT EVENTS

Subsequent events after the have been evaluated through March 12, 2018. Other than the items discussed below, the Company has concluded that there is no impact requiring adjustment or disclosure in the consolidated financial statements.

In January 2018, we sold our position in Almonde, Inc. at a price of approximately 101% of par value.

In January 2018, we sold a $2.0 million portion of our position in NANA Development Corp. at a price of approximately 101% of par value.

In January 2018, we purchased $5.0 million of par value of Sungard Availability Services, Inc. first lien term loan at a price of approximately 93% of par value. Such debt security bears interest at a rate of 3-Month LIBOR plus 7.00% and matures September 30, 2021.

In February 2018, we purchased $10.0 million of par value of Full House Resorts, Inc. senior secured first lien notes at an issuance price of approximately 98% of par value. Such debt security bears interest at a rate of 3 Month LIBOR plus 7.00% and matures February 2, 2024.

In February 2018, PE Facility Solutions, LLC prepaid approximately $1.0 million of its term loan B at par plus accrued interest.

In February 2018, we purchased an additional $4.4 million of par value of Michael Baker International, LLC second lien bonds at a price of approximately 98% of par value.

In February and March 2018, we purchased an additional $2.6 million of par value of SESAC Holdco II, LLC second lien loan at a price of approximately par.

In March 2018, the court in Caldwell County, Texas ruled in our favor in FCCC v. Pumphrey and awarded us damages of $3,850. This amount is in addition to amounts previously collected on our investment in Luling Lodging LLC. While these damages have been awarded to us, there are no guarantees as to their timing or collectability.

On January 19, 2018, we sold $44,898 in aggregate principal amount of 6.75% notes due 2025 (the “GECCM Notes”).

On February 13, 2018, we sold an additional $1,500 of the GECCM Notes upon partial exercise of the underwriters’ over-allotment option. As a result of the issuance of these Notes, the aggregate principal balance of Notes outstanding is $46,398.

Our Board declared the monthly distributions for the second quarter of 2018 at an annual rate of approximately 8.02% of our December 31, 2017 NAV, which equates to $0.083 per month. The schedule of distribution payments is as follows:

Month	Rate		Record Date	Payable Date
April	$	0.083	April 30, 2018	May 15, 2018
May	$	0.083	May 31, 2018	June 15, 2018
June	$	0.083	June 29, 2018	July 16, 2018

F-68

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Full Circle Capital Corporation and Subsidiaries

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Full Circle Capital Corporation and Subsidiaries (the Company) as of June 30, 2016 and 2015, and the related consolidated statements of operations, changes in net assets and cash flows for each of the two years in the period ended June 30, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of June 30, 2016, by correspondence with the custodians, management of the underlying investments, as applicable, or by other appropriate auditing procedures where replies from these parties, as applicable, were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Full Circle Capital Corporation and Subsidiaries as of June 30, 2016 and 2015, and the results of their operations and their cash flows for the years then ended, and the changes in net assets for each of the two years in the period then ended in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Full Circle Capital Corporation and Subsidiaries’ internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated September 28, 2016 expressed an unqualified opinion on the effectiveness of Full Circle Capital Corporation and Subsidiaries’ internal control over financial reporting.

/s/ RSM US LLP

New York, New York

September 28, 2016

F-69

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Full Circle Capital Corporation and Subsidiaries

We have audited Full Circle Capital Corporation and Subsidiaries’ internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Full Circle Capital Corporation and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Full Circle Capital Corporation and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of assets and liabilities of Full Circle Capital Corporation and Subsidiaries, including the consolidated schedules of investments, as of June 30, 2016 and 2015, and the related consolidated statements of operations, changes in net assets, and cash flows for each of the two years in the period ended June 30, 2016, and our report dated September 28, 2016 expressed an unqualified opinion.

/s/ RSM US LLP

New York, New York

September 28, 2016

F-70

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

			June 30, 2016			June 30, 2015
Assets
Control Investments at Fair Value (Cost of $314,312 and $11,409,596, respectively)			$	100,000		$	5,812,064
Affiliate Investments at Fair Value (Cost of $5,727,925 and $24,434,726, respectively)				313,355			16,019,272
Non-Control/Non-Affiliate Investments at Fair Value (Cost of $89,806,480 and $136,351,581, respectively)				80,708,860			130,282,423
Total Investments at Fair Value (Cost of $95,848,717 and $172,195,903, respectively)	(NOTE 9	)		81,122,215			152,113,759
Cash				33,390,695			3,736,563
Interest Receivable				993,965			1,903,606
Principal Receivable				126,448			23,287
Distributions Receivable				—			15,141
Due from Affiliates				—			605,749
Due from Portfolio Investments				93,450			180,300
Receivable on Open Swap Contract				—			1,081
Prepaid Expenses				66,149			66,105
Other Assets				15,286			1,483,578
Deferred Offering Expenses				—			328,168
Deferred Credit Facility Fees	(NOTE 8	)		51,486			267,645
Total Assets				115,859,694			160,724,982
Liabilities
Due to Affiliates	(NOTE 5	)		388,965			1,052,489
Accrued Liabilities				1,486,055			179,378
Deposit from Swap Counterparty				—			10,380,000
Payable for Investments Acquired				—			15,020,000
Distributions Payable				—			813,240
Interest Payable				3,889			57,605
Other Liabilities				204,313			305,957
Accrued Offering Expenses				—			7,258
Notes Payable 8.25% due June 30, 2020 (plus unamortized premium of $135,498 and $158,504 and less deferred debt issuance costs of $675,046 and $833,541, respectively)	(NOTE 8	)		33,105,977			32,970,488
Total Liabilities				35,189,199			60,786,415
Commitments and contingencies	(NOTE 13	)		—			—
Net Assets			$	80,670,495		$	99,938,567
Components of Net Assets
Common Stock, par value $0.01 per share (100,000,000 authorized; 22,472,243 and 23,235,430 issued and outstanding, respectively)			$	224,722		$	232,354
Paid-in Capital in Excess of Par				128,084,659			132,487,067
Distributions in Excess of Net Investment Income				(107,390	)		(119,318	)
Accumulated Net Realized Losses				(32,804,994	)		(12,579,392	)
Accumulated Net Unrealized Losses				(14,726,502	)		(20,082,144	)
Net Assets			$	80,670,495		$	99,938,567
Net Asset Value Per Share			$	3.59		$	4.30

See notes to consolidated financial statements.

F-71

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

			Year Ended June 30, 2016			Year Ended June 30, 2015
Investment Income
Interest Income from Non-Control/Non-Affiliate Investments			$	12,610,189		$	13,044,316
Interest Income from Affiliate Investments				1,093,451			2,445,713
Interest Income from Control Investments				464,244			1,465,069
Dividend Income from Control Investments				75,207			36,247
Other Income from Non-Control/Non-Affiliate Investments				2,070,241			542,164
Other Income from Affiliate Investments				4,314			98,671
Other Income from Control Investments				119,385			50,000
Other Income from Non-Investment Sources	(NOTE 5)			21,362			67,163
Total Investment Income				16,458,393			17,749,343
Operating Expenses
Management Fee				1,992,111			2,280,058
Incentive Fee				1,263,241			1,798,000
Total Advisory Fees	(NOTE 5	)		3,255,352			4,078,058
Allocation of Overhead Expenses				212,783			171,559
Sub-Administration Fees				246,268			256,236
Officers’ Compensation				305,226			303,652
Total Costs Incurred Under Administration Agreement	(NOTE 5	)		764,277			731,447
Directors’ Fees				168,000			182,196
Interest Expenses	(NOTE 8)			3,799,951			4,305,558
Professional Services Expense				2,564,170			700,324
Bank Fees				33,302			39,931
Other				549,864			519,600
Total Gross Operating Expenses				11,134,916			10,557,114
Fees Waiver and Expense Reimbursement	(NOTE 5)			(967,372	)		(1,420,843	)
Total Net Operating Expenses				10,167,544			9,136,271
Net Investment Income				6,290,849			8,613,072
Net Change in Unrealized Gain (Loss) on Investments				5,355,642			(6,237,328	)
Net Realized Gain (Loss) on:
Non-Control/Non-Affiliate Investments				(4,388,061	)		(4,055,309	)
Affiliate Investments				(9,593,394	)		321,394
Control Investments				(5,482,804	)		(3,842,390	)
Open Swap Contract				(1,882,293	)		1,081
Foreign Currency Transactions				(101	)		(1,248	)
Net Realized Gain (Loss)				(21,346,653	)		(7,576,472	)
Net Increase (Decrease) in Net Assets Resulting from Operations			$	(9,700,162	)	$	(5,200,728	)
Earnings (Loss) per Common Share Basic and Diluted	(NOTE 4)		$	(0.43	)	$	(0.35	)
Net Investment Income per Common Share Basic and Diluted			$	0.28		$	0.63
Weighted Average Shares of Common Stock Outstanding Basic and Diluted				22,662,947			14,803,637

See notes to consolidated financial statements.

F-72

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended June 30, 2016			Year Ended June 30, 2015
Increase (Decrease) in Net Assets Resulting from Operations:
Net Investment Income	$	6,290,849		$	8,613,072
Net Change in Unrealized Gain (Loss) on Investments		5,355,642			(6,237,328	)
Net Realized Gain (Loss) on:
Investments and Open Swap Contract		(21,346,552	)		(7,575,224	)
Foreign Currency Transactions		(101	)		(1,248	)
Net Realized Gain (Loss)		(21,346,653)			(7,576,472	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(9,700,162	)		(5,200,728	)
Dividends from Net Investment Income		(6,093,604	)		(8,613,072	)
Return of Capital		(1,051,922	)		(1,031,916	)
Net Decrease in Net Assets Resulting from Distributions		(7,145,526	)		(9,644,988	)
Capital Share Transactions:
Repurchase of Common Stock Under Share Repurchase Program		(2,422,384	)		—
Issuance of Common Stock		—			43,246,786
Less Offering Costs and Underwriting Fees		—			(1,442,780	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(2,422,384	)		41,804,006
Total Increase (Decrease) in Net Assets		(19,268,072	)		26,958,290
Net Assets at Beginning of Year		99,938,567			72,980,277
Net Assets at End of Year	$	80,670,495		$	99,938,567
Capital Share Activity:
Shares Repurchased Under Share Repurchase Program		(763,187	)		—
Shares Issued		—			11,792,396
Shares Outstanding at Beginning of Year		23,235,430			11,443,034
Shares Outstanding at End of Year		22,472,243			23,235,430

See notes to consolidated financial statements.

F-73

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended June 30, 2016			Year Ended June 30, 2015
Cash Flows from Operating Activities:
Net Increase (Decrease) in Net Assets Resulting from Operations	$	(9,700,162	)	$	(5,200,728	)
Adjustments to Reconcile Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities
Purchases of Investments		(96,437,681	)		(136,691,882	)
Increase in Investments Due to PIK		(291,992	)		(429,720	)
Proceeds from Sale or Refinancing of Investments and Open Swap Contract		153,241,487			122,880,572
Net Realized (Gain) Loss on:
Investments and Open Swap Contract		21,346,552			7,575,224
Foreign Currency Transactions		101			1,248
Net Change in Unrealized (Gain) Loss on Investments		(5,355,642	)		6,237,328
Amortization and Accretion of Fixed Income Premiums and Discounts		(1,511,281	)		(1,496,851	)
Amortization and Accretion of Deferred Debt Issuance Premiums and Costs		135,489			129,066
Amortization of Deferred Credit Facility Fees		282,278			274,826
Write-off of Deferred Operating Expenses		320,910			—
Change in Operating Assets and Liabilities
Deposit with Broker		—			2,525,000
Interest Receivable		909,641			(886,880	)
Principal Receivable		(103,161	)		183,946
Distributions Receivable		15,141			(15,141	)
Due from Affiliates		605,749			(601,476	)
Due from Portfolio Investments		86,850			(45,012	)
Receivable on Open Swap Contract		1,081			—
Prepaid Expenses		(44	)		(8,635	)
Other Assets		1,468,292			(733,252	)
Due to Affiliates		(663,524	)		160,523
Accrued Liabilities		1,306,677			(5,479	)
Deposit from Swap Counterparty		(10,380,000	)		10,380,000
Due to Broker		—			(25,000,221	)
Payable for Investments Acquired		(15,020,000	)		(9,880,172	)
Interest Payable		(53,716	)		12,351
Other Liabilities		(101,644	)		(770,843	)
Net Cash Provided by (Used in) Operating Activities		40,101,401			(31,406,208	)

See notes to consolidated financial statements.

F-74

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	Year Ended June 30, 2016			Year Ended June 30, 2015
Cash Flows from Financing Activities:
Bank Overdraft		—			(821,316	)
Borrowings Under Credit Facility		101,505,921			200,789,889
Payments Under Credit Facility		(101,505,921	)		(209,225,352	)
Distributions Paid to Shareholders		(7,958,766	)		(9,598,431	)
Deferred Credit Facility Fees		(66,119	)		(93,121	)
Payment of Offering Expenses and Underwriting Fees		—			(1,799,518	)
Payment of Distribution Notes		—			—
Proceeds from Notes Payable		—			12,643,834
Proceeds from Issuance of Common Stock		—			43,246,786
Payment for Repurchase of Common Stock Under Share Repurchase Program		(2,422,384	)		—
Net Cash (Used in) Provided by Financing Activities		(10,447,269	)		35,142,771
Total Increase (Decrease) in Cash		29,654,132			3,736,563
Cash Balance at Beginning of Year		3,736 ,563			—
Cash Balance at End of Year	$	33,390,695		$	3,736,563
Supplemental Disclosure of Non-Cash Operating Activities:
Exercise of General Cannabis Corp. Warrant into Common Stock	$	—		$	486,786
Supplemental Disclosures of Non-Cash Financing Activities:
Distributions Declared, Not Yet Paid	$	—		$	813,240
Accrued Offering Expenses	$	—		$	7,258
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for Interest	$	3,435,900		$	3,889,315

See notes to consolidated financial statements.

F-75

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2016

Description and Industry (1)	Type of Investment (2)	Par Amount/Quantity		Cost			Fair Value			% of Net Asset Value
Control Investments (3)
Texas Westchester Financial, LLC Consumer Financing	Limited Liability Company Interests ^		9,278	$	314,312		$	100,000			0.12	%
Total Control Investments					314,312			100,000			0.12	%
Affiliate Investments (4)
US Oilfield Company, LLC Oil and Gas Field Services	Senior Secured Revolving Loan, 12.47% (one month LIBOR plus 12.00%), 12/31/2017 (5)	$	186,624		186,624			10,137			0.01	%
	Senior Secured Term Loan A, 12.47% (one month LIBOR plus 12.00%), 12/31/2017 (5)	$	861,728		856,358			46,809			0.06	%
	Senior Secured Term Loan B, 12.47% (one month LIBOR plus 12.00%), 12/31/2017 (5)	$	4,720,391		4,684,943			256,409			0.32	%
	Warrant for 7.625% of the outstanding Class A voting LLC interests (strike price $0.01), expires 8/13/2024 ^		1		—			—			—	%
	Warrants for 4.788% of the outstanding Class B non-voting LLC interests (strike price $0.01), expire 8/13/2024 ^		4		—			—			—	%
					5,727,925			313,355			0.39	%
Total Affiliate Investments					5,727,925			313,355			0.39	%
Other Investments
310E53RD, LLC Real Estate Holding Company	Senior Secured Term Loan, 10.47% (one month LIBOR plus 10.00%, 10.15% floor, 16.00% cap) 7/1/2017	$	6,000,000		5,935,776			6,000,000			7.44	%
Ads Direct Media, Inc. Internet Advertising	Senior Secured Term Loan, 12.00% 5/2/2018, (5)	$	2,072,539		1,885,195			1,115,711			1.38	%
	Warrant for 3.25% of outstanding LLC interests (strike price $0.01) expires 10/9/2024 ^		1		—			—			—	%
					1,885,195			1,115,711			1.38	%
AP Gaming I, LLC Gambling Machine Manufacturer	Senior Secured Term Loan, 9.25% (one month LIBOR plus 8.25%, 9.25% floor) 12/20/2020	$	3,949,367		3,915,675			3,712,405			4.60	%
Aptean, Inc Enterprise Software Company	Unfunded Revolving Loan, 4.22% (one month LIBOR plus 3.75%) (purchased with an 11.00% netback), 2/26/2019 (6)	$	7,500,000		(696,402	)		(640,152	)		(0.79	)%
Attention Transit Advertising Systems, LLC Outdoor Advertising Services	Senior Secured Term Loan, 11.50%, 9/30/2016	$	1,683,179		1,683,179			1,784,058			2.21	%
Background Images, Inc. Equipment Rental Services	Senior Secured Term Loan – Term A, 14.97% (one month LIBOR plus 14.50%), 9/1/2016 (5)	$	121,127		121,127			146,128			0.18	%
	Senior Secured Term Loan – Term B, 16.72% (one month LIBOR plus 16.25%), 9/1/2016 (5)	$	446,465		446,465			471,467			0.59	%
					567,592			617,595			0.77	%

See notes to consolidated financial statements.

F-76

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2016

Description and Industry (1)	Type of Investment (2)	Par Amount/Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
Bioventus, LLC Specialty Pharmaceuticals	Subordinated Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 4/10/2020	$	6,000,000	$	5,954,883	$	6,000,000		7.44	%
Davidzon Radio, Inc. Radio Broadcasting	Senior Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 3/31/2020	$	10,334,155		8,809,981		9,650,035		11.96	%
GC Pivotal, LLC Data Connectivity Services Company	Unsecured Notes, 11.00%, 12/31/2020	$	3,164,000		3,170,905		3,096,712		3.84	%
Infinite Aegis Group, LLC Healthcare Billing and Collections	Warrant for 2.0% of the outstanding LLC interests (at a $0.01 strike price), expires 8/1/2023 ^		1		107,349		—		—	%
JN Medical Corporation Biological Products	Senior Secured Term Loan, 16.47%, (one month LIBOR plus 16.00%, 11.25% floor, 12.00% cap), 6/30/2016 (5),(9)	$	3,500,000		3,500,000		3,249,213		4.03	%
Luling Lodging, LLC Hotel Operator	Senior Secured Term Loan, 12.47% (one month LIBOR plus 12.00%, 12.25% floor), 12/17/2017 (8)	$	4,500,000		4,476,382		3,053,505		3.79	%
Modular Process Control, LLC Energy Efficiency Services	Unsecured Loan, 5.00%, 4/1/2025 (5)	$	800,000		800,000		—		—	%
OPS Acquisitions Limited and Ocean Protection Services Limited* Maritime Security Services	Senior Secured Term Loan, 12.50%, (one month LIBOR plus 12.00%, 12.50% floor), 3/4/2017	$	4,596,293		4,490,547		4,449,058		5.52	%
PEAKS Trust 2009-1* Consumer Financing	Senior Secured Term Loan, 7.50%, (one month LIBOR plus 5.50%, 7.50% floor), 1/27/2020 (10)	$	2,129,426		1,873,367		1,787,014		2.21	%
PR Wireless, Inc. Wireless Communications	Senior Secured Term Loan, 10.00%, (one month LIBOR plus 9.00%, 10.00% floor), 6/27/2020	$	8,330,000		7,756,435		7,497,000		9.29	%
	Warrant for 101 shares (at a $0.01 strike price), expires 6/27/2024 ^		1		634,145		209,844		0.26	%
					8,390,580		7,706,844		9.55	%
Pristine Environments, Inc. Building Cleaning and Maintenance Services	Senior Secured Revolving Loan, 14.97% (one month LIBOR plus 14.50%, 11.70% floor), 3/31/2017	$	5,990,807		5,990,807		5,990,807		7.42	%
	Senior Secured Term Loan A, 15.97% (one month LIBOR plus 15.50%, 12.70% floor), 3/31/2017	$	1,515,546		1,513,330		1,515,546		1.88	%
	Senior Secured Term Loan B, 15.97% (one month LIBOR plus 15.50%, 12.70% floor), 3/31/2017	$	2,848,423		2,828,824		2,845,575		3.53	%
					10,332,961		10,351,928		12.83	%

See notes to consolidated financial statements.

F-77

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2016

Description and Industry (1)	Type of Investment (2)	Par Amount/Quantity	Cost	Fair Value		% of Net Asset Value
Other Investments (continued)
RiceBran Technologies Corporation Grain Mill Products	Senior Secured Revolving Loan, 11.50% (one month LIBOR plus 10.75%, 11.50% floor, 12.00% cap), 6/1/2018	$1,958,382	$1,916,188	$	1,889,838		2.34	%
	Senior Secured Term Loan, 11.50% (one month LIBOR plus 10.75%, 11.50% floor, 12.00% cap), 6/1/2018	$1,500,000	1,435,956		1,452,500		1.80	%
	Warrants for 300,000 shares (at a $1.85 strike price), expire 5/12/2020 ^	300,000	39,368		110,905		0.14	%
			3,391,512		3,453,243		4.28	%
Sundberg America, LLC et al. Appliance Parts Distributor	Senior Secured Notes, 9.50%, 4/30/2020	$7,278,684	7,247,922		7,278,684		9.02	%
The Finance Company, LLC Consumer Financing	Senior Secured Revolving Loan, 13.25% (one month LIBOR plus 12.75%, 13.25% floor), 3/31/2018	$1,841,325	1,841,325		1,848,752		2.29	%
The Selling Source, LLC Information and Data Services	Senior Secured Term Loan, 17.00%, 12/31/2017**	$4,924,966	4,132,707		3,965,090		4.92	%
US Shale Solutions, Inc. Oil and Gas Field Services	Senior Secured Term Loan, 10.00%, 9/15/2018 **	$1,084,337	1,084,337		1,059,036		1.31	%
	Subordinated Secured Term Loan, 12.00%, 9/15/2019 **	$2,584,968	2,584,968		1,170,129		1.45	%
	Limited Liability Company Interests (7), ^	15,079	4,325,739		—		—	%
			7,995,044		2,229,165		2.76	%
Total Other Investments			89,806,480		80,708,860		100.05	%
Total Investments			$95,848,717	$	81,122,215		100.56	%

See notes to consolidated financial statements.

F-78

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2016

The following tables show the fair value of our portfolio of investments by geography and industry as of June 30, 2016.

	June 30, 2016
Geography	Investment at Fair Value (in millions)		Percentage of Net Assets
United States	$	76.7		95.04	%
United Kingdom		4.4		5.52
Total	$	81.1		100.56	%

	June 30, 2016
Industry	Investment at Fair Value (in millions)			Percentage of Net Assets
Building Cleaning and Maintenance Services	$	10.4			12.83	%
Radio Broadcasting		9.7			11.96
Wireless Communications		7.6			9.55
Appliance Parts Distributor		7.3			9.02
Real Estate Holding Company		6.0			7.44
Specialty Pharmaceuticals		6.0			7.44
Maritime Security Services		4.4			5.51
Information and Data Services		4.0			4.92
Consumer Financing		3.7			4.63
Gambling Machine Manufacturer		3.7			4.60
Grain Mill Products		3.5			4.28
Biological Products		3.2			4.03
Data Connectivity Service Company		3.1			3.84
Hotel Operator		3.1			3.79
Oil and Gas Field Services		2.5			3.15
Outdoor Advertising Services		1.8			2.21
Internet Advertising		1.1			1.38
Equipment Rental Services		0.6			0.77
Healthcare Billing and Collections		—			—
Energy Efficiency Services		—			—
Enterprise Software Company		(0.6	)		(0.79	)
Total	$	81.1			100.56	%

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

(2) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (“London Interbank Offered Rate”) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of June 30, 2016. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2016

(3) “Control Investments” are investments in those companies that are “Control Investments” of the Company, as defined in the Investment Company Act of 1940. A company is deemed to be a “Control Investment” of Full Circle Capital Corporation if Full Circle Capital Corporation owns more than 25% of the voting securities of such company.

(4) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the Investment Company Act of 1940, which are not “Control Investments.” A company is deemed to be an “Affiliate” of Full Circle Capital Corporation if Full Circle Capital Corporation owns 5% or more, but less than 25%, of the voting securities of such company.

(5) Investments were on non-accrual status as of June 30, 2016.

(6) The negative fair value is the result of the unfunded commitment being valued below par. These amounts may or may not be funded to the borrowing party now or in the future. The cost basis of the loan reflects the unamortized portion of the “netback” received on the settlement date when the Company acquired the commitment. The par value disclosure represents the size of the commitment.

(7) Full Circle Capital Corporation’s equity investment in US Shale Solutions, Inc. is held through its wholly owned subsidiary FC Shale Inc.

(8) Investment is on non-accrual status as of July 19, 2016.

(9) On August 17, 2016, the Company foreclosed on the commercial property underlying its loan to JN Medical Corporation (“JNI”). Subsequent to the foreclosure, on September 14, 2016 the Company entered into a forbearance agreement with JNI, which among other things, required JNI to enter into a triple net lease agreement with respect to the commercial property and to fund an initial payment of $730,723 to the Company in addition to resuming all other obligations under the loan agreement.

(10) The Company holds collateralized note obligations from PEAKS Trust 2009-1. ITT Educational Services Inc. (“ITT”) has guaranteed payment on these notes. On August 26, 2016, ITT announced that it would no longer be accepting new students for enrollment during the current academic year. Subsequently ITT terminated operations at its campuses and on September 16, 2016 ITT filed for Chapter 7 bankruptcy. To the degree that ITT has liabilities in excess of the proceeds resulting from the Chapter 7 proceedings, ITT may not be able to meet obligations under its guarantee, which could impair the value of the notes. At August 31, 2016, the Company valued the notes at 70.91% of par value as compared to 83.92% of par value at June 30, 2016. The Company is currently reviewing the situation, but does not expect a significant change in the value of the notes due to the status of ITT.

* Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. Of the Company’s total assets, 5.3% are non-qualifying assets.

** Security pays all or a portion of its interest in kind.

^ Security is a nonincome-producing security.

See notes to consolidated financial statements.

F-80

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2015

Description and Industry (1)	Type of Investment (2)	Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Control Investments (3)
Takoda Resources Inc.* Geophysical Surveying and Mapping Services	Senior Secured Term Loan, 16.00%, 4/1/2016 (9)	$	3,054,532	$	3,054,532	$	161,585		0.16	%
	Common Stock ^,(5)		749		—		—		—	%
					3,054,532		161,585		0.16	%
Texas Westchester Financial, LLC Consumer Financing	Limited Liability Company Interests ^		9,278		491,713		177,500		0.18	%
The Finance Company, LLC Consumer Financing	Senior Secured Term Loan, 15.00% (one month LIBOR plus 14.25%, 15.00% floor), 9/30/2015	$	4,195,915		4,187,977		4,204,167		4.21	%
	Limited Liability Company Interests		50		140,414		802,027		0.80	%
					4,328,391		5,006,194		5.01	%
TransAmerican Asset Servicing Group, LLC Asset Recovery Services	Senior Secured Revolving Loan, 12.00%, 7/25/2016 (9)	$	3,563,246		3,534,960		466,785		0.47	%
	Limited Liability Company Interests ^,(6)		75		—		—		—	%
					3,534,960		466,785		0.47	%
Total Control Investments					11,409,596		5,812,064		5.82	%
Affiliate Investments (4)
Modular Process Control, LLC Energy Efficiency Services	Senior Secured Revolving Loan, 14.50% (one month LIBOR plus 13.50%, 14.50% floor), 3/28/2017	$	1,297,884		1,294,200		1,175,320		1.18	%
	Senior Secured Term Loan, 15.50% (one month LIBOR plus 14.50%, 15.50% floor), 3/28/2017	$	4,900,000		4,743,125		2,296,957		2.30	%
	Senior Secured Term Loan – Tranche 2, 18.00% (one month LIBOR plus 17.00%, 18.00% floor), 3/28/2017**	$	953,143		953,143		191,550		0.19	%
	Warrant for 14.50% of the outstanding Class B LLC Interests (at a $0.01 strike price), expires 3/28/2023 ^		1		288,000		—		—	%
					7,278,468		3,663,827		3.67	%
ProGrade Ammo Group, LLC Munitions	Senior Secured Revolving Loan, 9.19% (one month LIBOR plus 9.00%, 9.19% floor), 3/30/2016 (9)	$	1,821,447		1,821,447		1,821,447		1.82	%
	Senior Secured Term Loan, 16.19% (one month LIBOR plus 16.00%, 16.19% floor), 3/30/2016 (9)	$	4,843,750		4,843,750		768,862		0.77	%
	Warrants for 19.9% of the outstanding LLC interests (at a $10.00 strike price), expire 8/2/2018 ^		181,240		176,770		—		—	%
					6,841,967		2,590,309		2.59	%

See notes to consolidated financial statements.

F-81

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

Description and Industry (1)	Type of Investment (2)	Par Amount/ Quantity		Cost			Fair Value			% of Net Asset Value
Affiliate Investments (4) (continued)
SOLEX Fine Foods, LLC; Catsmo, LLC Food Distributors and Wholesalers	Senior Secured Term Loan, 12.33% (one month LIBOR plus 12.14%), 12/28/2016	$	3,861,696	$	3,814,813		$	3,832,347			3.83	%
	Limited Liability Company Interests ^,(7)		1		290,284			—			—	%
	Warrants for 1.6% of the outstanding LLC interests (strike price $0.01), expire 12/31/2022 ^,(7)		1		58,055			—			—	%
					4,163,152			3,832,347			3.83	%
US Oilfield Company, LLC Oil and Gas Field Services	Senior Secured Revolving Loan, 12.69% (one month LIBOR plus 12.50%), 8/13/2017	$	545,118		545,118			545,118			0.55	%
	Senior Secured Term Loan A, 12.69% (one month LIBOR plus 12.50%), 8/13/2017	$	854,167		847,155			840,415			0.84	%
	Senior Secured Term Loan B, 12.69% (one month LIBOR plus 12.50%), 8/13/2017	$	4,368,132		4,328,366			4,297,805			4.30	%
	Warrant for 7.625% of the outstanding Class A voting LLC interests (strike price $0.01), expires 8/13/2024 ^		1		—			—			—	%
	Warrants for 1.824% of the outstanding Class B non-voting LLC interests (strike price $0.01), expires 8/13/2024 ^		2		—			—			—
					5,720,639			5,683,338			5.69	%
West World Media, LLC Information and Data Services	Limited Liability Company Interests ^,(8)		148,326		430,500			249,451			0.25	%
Total Affiliate Investments					24,434,726			16,019,272			16.03	%
Other Investments
Ads Direct Media, Inc. Internet Advertising	Senior Secured Term Loan, 13.50% (one month LIBOR plus 13.00%, 13.50% floor) 10/9/2017	$	2,406,250		2,387,763			2,392,294			2.39	%
	Warrant for 3.25% of outstanding LLC interests (strike price $0.01) expires 10/9/2024 ^		1		—			—			—	%
					2,387,763			2,392,294			2.39	%
AP Gaming I, LLC Gambling Machine Manufacturer	Unfunded Revolving Loan, 8.25%, 12/20/2018 (10)	$	—		(146,988	)		(146,988	)		(0.15	)%
	Senior Secured Term Loan, 9.25% (one month LIBOR plus 8.25%, 9.25% floor) 12/20/2020	$	3,989,873		3,950,167			3,950,167			3.95	%
					3,803,179			3,803,179			3.80	%
Attention Transit Advertising Systems, LLC Outdoor Advertising Services	Senior Secured Term Loan, 11.50%, 9/30/2016	$	1,915,341		1,915,341			1,979,058			1.98	%

See notes to consolidated financial statements.

F-82

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

Description and Industry (1)	Type of Investment (2)	Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
Background Images, Inc. Equipment Rental Services	Senior Secured Term Loan –Term A, 14.69% (one month LIBOR plus 14.50%), 7/31/2015	$	132,866	$	132,866	$	146,525		0.15	%
	Senior Secured Term Loan –Term B, 16.44% (one month LIBOR plus 16.25%), 7/31/2015	$	485,725		485,725		493,449		0.49	%
					618,591		639,974		0.64	%
Bioventus, LLC Specialty Pharmaceuticals	Subordinated Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 4/10/2020	$	6,000,000		5,944,426		5,970,000		5.97	%
Butler Burgher Group, LLC Real Estate Management Services	Senior Secured Revolving Loan, 13.50% (one month LIBOR plus 13.25%, 13.50% floor), 6/30/2017	$	750,000		745,237		800,000		0.80	%
	Senior Secured Term Loan, 13.50% (one month LIBOR plus 13.25%, 13.50% floor), 6/30/2017	$	7,349,264		7,302,515		7,716,728		7.72	%
					8,047,752		8,516,728		8.52	%
Davidzon Radio, Inc. Radio Broadcasting	Senior Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 3/31/2020	$	10,897,013		8,991,089		9,262,098		9.27	%
Fuse, LLC Television Programming	Senior Secured Note, 10.375%, 7/1/2019	$	7,000,000		7,041,962		5,775,000		5.78	%
GC Pivotal, LLC Data Connectivity Services Company	Unsecured Notes, 11.00%, 12/31/2020	$	3,164,000		3,171,910		3,171,910		3.17	%
General Cannabis Corp. Non-Residential Property Owner	Common Stock ^		654,409		515,094		1,308,818		1.31	%
GK Holdings Inc. IT and Business Skill Training	Subordinated Secured Term Loan, 10.50% (one month LIBOR plus 9.50%, 10.50% floor), 1/20/2022	$	2,000,000		1,962,074		1,980,000		1.98	%
Good Technology Corporation Mobile Device Management	Senior Secured Note, 5.00%, 10/1/2017	$	10,000,000		8,201,173		8,845,667		8.85	%
	Warrants for 203.252 shares (at a $4.92 strike price), expire 9/30/2018 ^		10,000		2,289,400		2,289,400		2.29	%
					10,490,573		11,135,067		11.14	%
Granite Ridge Energy, LLC Power Generation	Common Stock ^		60,000		12,975,000		12,975,000		12.98	%
GW Power, LLC and Greenwood Fuels WI, LLC Electric Services	Senior Secured Term Loan, 12.19% (one month LIBOR plus 12.00%, 12.16% floor), 3/31/2016	$	5,320,388		5,299,835		5,255,480		5.26	%
Infinite Aegis Group, LLC Healthcare Billing and Collections	Warrant for 2.0% of the outstanding LLC interests (at a $0.01 strike price), expires 8/1/2023 ^		1		107,349		—		—	%

See notes to consolidated financial statements.

F-83

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

Description and Industry (1)	Type of Investment (2)	Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
JN Medical Corporation Biological Products	Senior Secured Term Loan, 11.25%, (one month LIBOR plus 11.00%, 11.25% floor, 12.00% cap), 6/30/2016	$	3,500,000	$	3,481,766	$	3,449,367		3.45	%
Lee Enterprises, Incorporated Daily and Weekly Newspaper Publisher	Senior Secured Notes, 9.50%, 3/15/2022	$	2,000,000		2,045,000		2,045,000		2.05	%
Luling Lodging, LLC Hotel Operator	Senior Secured Term Loan, 12.25% (one month LIBOR plus 12.00%, 12.25% floor), 12/17/2017	$	4,500,000		4,463,119		4,303,650		4.31	%
Medinet Investments, LLC Medical Liability Claims Factoring	Senior Secured Revolving Loan, 13.50%, (one month LIBOR plus 13.00%, 13.50% floor), 7/23/2017	$	188,313		183,211		103,083		0.10	%
New Media West, LLC Cable TV/Broadband Services	Senior Secured Term Loan, 9.00%, 12/31/2017 (9)	$	3,811,681		3,811,681		—		—	%
OPS Acquisitions Limited and Ocean Protection Services Limited* Maritime Security Services	Senior Secured Term Loan, 12.50%, (one month LIBOR plus 12.00%, 12.50% floor), 3/4/2017	$	5,950,000		5,913,412		5,968,246		5.97	%
PEAKS Trust 2009-1* Consumer Financing	Senior Secured Term Loan, 7.50%, (one month LIBOR plus 5.50%, 7.50% floor), 1/27/2020	$	3,450,828		2,947,443		2,705,449		2.71	%
PR Wireless, Inc. Wireless Communications	Senior Secured Term Loan, 10.00%, (one month LIBOR plus 9.00%, 10.00% floor), 6/27/2020	$	8,415,000		7,618,897		7,573,500		7.58	%
	Warrant for 101 shares (at a $0.01 strike price), expires 6/27/2024 ^		1		634,145		378,675		0.38	%
					8,253,042		7,952,175		7.96	%
Pristine Environments, Inc. Building Cleaning and Maintenance Services	Senior Secured Revolving Loan, 11.70% (one month LIBOR plus 11.50%, 11.70% floor), 3/31/2017	$	5,614,310		5,614,310		5,863,211		5.87	%
	Senior Secured Term Loan A, 12.70% (one month LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	1,607,656		1,602,678		1,685,037		1.69	%
	Senior Secured Term Loan B, 12.70% (one month LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	3,026,563		2,979,285		3,172,039		3.17	%
					10,196,273		10,720,287		10.73	%
RiceBran Technologies Corporation Grain Mill Products	Senior Secured Revolving Loan, 11.50% (one month LIBOR plus 10.75%, 11.50% floor), 6/1/2018	$	1,000,000		939,362		939,362		0.94	%
	Senior Secured Term Loan, 11.50% (one month LIBOR plus 10.75%, 11.50% floor), 6/1/2018	$	2,500,000		2,348,330		2,348,330		2.35	%
	Warrants for 300,000 (at a $5.25 strike price), expires 5/12/2020 ^		300,000		39,368		27,000		0.03	%
					3,327,060		3,314,692		3.32	%

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

Description and Industry (1)	Type of Investment (2)	Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
Sundberg America, LLC et al. Appliance Parts Distributor	Senior Secured Notes, 9.50%, 4/30/2020	$	8,000,000	$	7,960,112	$	7,960,112		7.97	%
The Selling Source, LLC Information and Data Services	Senior Secured Term Loan, 15.00%, 12/31/2017**	$	3,869,881		3,855,453		3,140,666		3.14	%
US Shale Solutions, Inc. Oil and Gas Field Services	Senior Secured Note, 12.50%, 9/1/2017 (9)	$	9,000,000		6,641,957		4,455,000		4.46	%
	Warrants for 2.78 shares (at a $0.01 strike price), expire 9/1/2024 ^		9,000		114		90		0.00	%
					6,642,071		4,455,090		4.46	%
Total Other Investments					136,351,581		130,282,423		130.36	%
Total Investments				$	172,195,903	$	152,113,759		152.21	%

Counterparty	Instrument	# of Contracts		Notional		Cost		Fair Value		% of Net Asset Value
Open Swap Contract
Reef Road Master Fund, Ltd.	Total Return Swap, Pay Total Return on 60,000 shares of Granite Ridge Energy, LLC, Receive 3.00% Fixed Rate, expires June 29, 2016		1	$	12,975,000	$	—	$	—		—	%

See notes to consolidated financial statements.

F-85

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

The following tables show the fair value of our portfolio of investments by geography and industry as of June 30, 2015.

	June 30, 2015
Geography	Investment at Fair Value (in millions)		Percentage of Net Assets
United States	$	145.9		146.08	%
United Kingdom		6.0		5.97
Canada		0.2		0.16
Total	$	152.1		152.21	%

	June 30, 2015
Industry	Investment at Fair Value (in millions)		Percentage of Net Assets
Power Generation	$	13.0		12.98	%
Mobile Device Management		11.1		11.14
Building Cleaning and Maintenance Services		10.7		10.73
Oil and Gas Field Services		10.1		10.14
Radio Broadcasting		9.3		9.27
Real Estate Management Services		8.5		8.52
Appliance Parts Distributor		8.0		7.97
Wireless Communications		8.0		7.96
Consumer Financing		7.9		7.90
Specialty Pharmaceuticals		6.0		5.97
Maritime Security Services		6.0		5.97
Television Programming		5.8		5.78
Electric Services		5.2		5.26
Hotel Operator		4.3		4.31
Food Distributors and Wholesalers		3.8		3.83
Gambling Machine Manufacturer		3.8		3.81
Energy Efficiency Services		3.6		3.67
Biological Products		3.4		3.45
Information and Data Services		3.4		3.39
Grain Mill Products		3.3		3.32
Data Connectivity Service Company		3.2		3.17
Munitions		2.6		2.59
Internet Advertising		2.4		2.39
Daily and Weekly Newspaper Publisher		2.0		2.05
IT and Business Skill Training		2.0		1.98
Outdoor Advertising Services		2.0		1.98
Non-Residential Property Owner		1.3		1.31
Equipment Rental Services		0.6		0.64
Asset Recovery Services		0.5		0.47
Geophysical Surveying and Mapping Services		0.2		0.16
Medical Liability Claims Factoring		0.1		0.10
Cable TV/Broadband Services		—		—
Total	$	152.1		152.21	%

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

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

June 30, 2015

(2) A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (“London Interbank Offered Rate”) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semiannually. For each debt investment, the Company has provided the interest rate in effect as of June 30, 2015. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

(3) “Control Investments” are investments in those companies that are “Control Investments” of the Company, as defined in the Investment Company Act of 1940. A company is deemed to be a “Control Investment” of Full Circle Capital Corporation if Full Circle Capital Corporation owns more than 25% of the voting securities of such company.

(4) “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the Investment Company Act of 1940, which are not “Control Investments.” A company is deemed to be an “Affiliate” of Full Circle Capital Corporation if Full Circle Capital Corporation owns 5% or more, but less than 25%, of the voting securities of such company.

(5) Full Circle Capital Corporation’s equity investment in Takoda Resources Inc. is held through its wholly owned subsidiary FC Takoda Holdings, LLC.

(6) Full Circle Capital Corporation’s equity investment in TransAmerican Asset Servicing Group, LLC is held through its wholly owned subsidiary TransAmerican Asset Servicing Group, Inc.

(7) Full Circle Capital Corporation’s equity investments in SOLEX Fine Foods, LLC; Catsmo, LLC are held through its wholly owned subsidiary FC New Specialty Foods, Inc.

(8) A portion of Full Circle Capital Corporation’s investment in West World Media, LLC is held through its wholly owned subsidiary Full Circle West, Inc. The remainder of the LLC interests are held directly by Full Circle Capital Corporation.

(9) Investments were on non-accrual status as of June 30, 2015.

(10) The negative fair value is the result of the unfunded commitment being valued below par. These amounts may or may not be funded to the borrowing party now or in the future.

* Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets.

** Security pays all or a portion of its interest in kind.

^ Security is a nonincome-producing security.

See notes to consolidated financial statements.

F-87

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 1. Organization

References herein to “we”, “us” or “our” refer to Full Circle Capital Corporation and Subsidiaries (“Full Circle Capital” or the “Company”) unless the context specifically requires otherwise.

We were formed as Full Circle Capital Corporation, a Maryland corporation, on April 16, 2010 and were funded in an initial public offering, or IPO, completed on August 31, 2010. We are a non-diversified, closed-end investment company that has filed an election to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we have elected to be treated, and expect to continue to qualify annually, as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, which we refer to as the Code. We invest primarily in senior secured term debt issued by lower middle-market and middle-market companies. Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

Note 2. Significant Accounting Policies

Use of Estimates and Basis of Presentation

The preparation of the accompanying Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reporting period. Changes in the economic environment, financial markets, creditworthiness of our portfolio companies and any other parameters used in determining these estimates could cause actual results to differ materially.

Reclassifications

The June 30, 2015 Consolidated Financial Statements were reclassified in order to conform with the June 30, 2016 Consolidated Financial Statements.

Upon the adoption of Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) effective January 1, 2016, debt issuance costs associated with our borrowings, other than our revolving credit facilities, were reclassified as a direct deduction from the carrying amount of the related borrowing. In accordance with ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements-Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting , debt issuance costs associated with our revolving credit facilities remain classified as an asset, regardless of whether there are any outstanding borrowings on the facility.

Investment Classification

We are a non-diversified company within the meaning of the 1940 Act. We classify our investments by level of control. As defined in the 1940 Act, control investments are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of 25% or more of the voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist through the possession outright, or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities owned by another company or person.

Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Investments in other, non-security

F-88

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

financial instruments, such as limited partnerships or private companies, are recorded on the basis of subscription date or redemption date, as applicable. Amounts for investments recognized or derecognized but not yet settled are reported as receivables for investments sold and payables for investments acquired, respectively, in the Consolidated Statements of Assets and Liabilities.

Basis of Consolidation

Under the 1940 Act and the rules thereunder, the rules and regulations pursuant to Article 6 of Regulation S-X, the SEC’s Division of Investment Management’s consolidation guidance in IM Guidance Update No. 2014-11 issued in October 2014 and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies (“ASC 946”), we are precluded from consolidating any entity other than another investment company that acts as an extension of our investment operations and facilitates the execution of our investment strategy. An exception to this guidance occurs if we have an investment in a controlled operating company that provides substantially all of its services to us. Our Consolidated Financial Statements include our accounts and the accounts of Full Circle West, Inc., FC New Media, Inc., TransAmerican Asset Servicing Group, Inc., FC New Specialty Foods, Inc., FC Shale Inc., and FC Takoda Holdings, LLC, our currently wholly owned, or previously wholly owned, subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Valuation of Investments

In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are not considered to be the best estimate of fair value are valued at fair value as determined in good faith by the Company’s board of directors (the “Board”). Because the Company expects that there will not be a readily available market value for many of the investments in the Company’s portfolio, it is expected that many of the Company’s portfolio investments’ values will be determined in good faith by the Board in accordance with a documented valuation policy that has been reviewed and approved by the Board and in accordance with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

In determining fair value, the Board uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Board. Unobservable inputs reflect the Board’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Board or the Audit Committee of the Board (the “Audit Committee”), does not represent fair value, are valued as follows:

1. The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals at Full Circle Advisors, LLC (the “Adviser”) who are responsible for the portfolio investment;

F-89

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

2. Preliminary valuation conclusions are then documented and discussed with the Company’s senior management. Independent third-party valuation firms are engaged by, or on behalf of, the Audit Committee to conduct independent appraisals or review management’s preliminary valuations or make their own independent assessment, for certain assets;

3. The Audit Committee discusses valuations and recommends the fair value of each investment in the portfolio in good faith based on the input of the Company and, where appropriate, the independent valuation firms; and

4. The Board then discusses the recommended valuations and determines in good faith the fair value of each investment in the portfolio based upon input from the Company’s senior management, estimates from the independent valuation firms and the recommendations of the Audit Committee.

GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of valuation techniques and observable inputs can vary from investment to investment and is affected by a wide variety of factors, including the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Board in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause an investment to be reclassified to a lower level within the fair value hierarchy.

F-90

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

Valuation Techniques

Senior and Subordinated Loans

The Company’s portfolio consists primarily of private debt instruments such as senior and subordinated loans. Investments for which market quotations are readily available (“Level 2 Debt”) are generally valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers. For other debt investments (“Level 3 Debt”), market quotations are not available and other techniques are used to determine fair value. The Company considers its Level 3 Debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 Debt, the Board considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions, success and prepayment fees, and other relevant factors, both qualitative and quantitative. In the event that a Level 3 Debt instrument is not performing, as defined above, the Board may evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 Debt instrument.

This evaluation will be updated no less than quarterly for Level 3 Debt instruments that are not performing, and more frequently for time periods where there are significant changes in the investor base or significant changes in the perceived value of the underlying collateral. The collateral value will be analyzed on an ongoing basis using internal metrics, appraisals, third-party valuation agents and other data as may be acquired and analyzed by management and the Board.

Investments in Private Companies

The Board determines the fair value of its investments in private companies where no market quotations are readily available (“Level 3 Private Companies”) by incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, and performance multiples, among other factors, including work performed by third-party valuation agents. The Level 3 Private Companies investments can include limited liability company interests, common stock and other equity investments. These nonpublic investments are included in Level 3 of the fair value hierarchy.

Warrants

The Board ascribes value to warrants based on fair value analyses that can include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate.

Publicly Traded Common Stock

Publicly traded common stock in an active market (“Level 1 Common Stock”) is valued based on unadjusted quoted prices in active markets for identical Level 1 Common Stock that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 Common Stock.

Swap Contracts

Derivative financial instruments such as swap contracts are valued based on discounted cash flow models and options pricing models, as appropriate. Models use observable data to the extent practicable. However, areas such as credit risk (both our own and that of the counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of derivative financial instruments at the valuation date.

The Company’s accounting policy is to not offset fair value amounts recognized for derivative financial instruments. The related assets and liabilities are presented gross in the Consolidated Statements of Assets and Liabilities. Any cash collateral payables or receivables associated with these instruments are not added to or netted against the fair value amounts of the derivative financial instruments.

F-91

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

All derivative financial instruments are carried in assets when amounts are receivable by the Company and in liabilities when amounts are payable by the Company. During the period a contract is open, changes in the value of the contracts are recognized as unrealized appreciation or depreciation to reflect the fair value of the contract at the reporting date. When the contracts settle, mature, terminate, or are otherwise closed, the Company records realized gains or losses equal to the difference between the proceeds from (or cost of) the close-out of the contracts and the original contract price. Additionally, the Company records realized gains (losses) on open swap contracts when periodic payments are received or made at the end of each measurement period.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and accrued liabilities, approximate fair value due to their short-term nature. The carrying amounts and fair values of the Company’s long-term obligations are disclosed in Note 8.

Cash

The Company places its cash with Santander Bank, N.A. (“Santander Bank”) and, at times, cash held in such accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Company believes that Santander Bank is a high credit quality financial institution and that the risk of loss associated with any uninsured balances is remote. The Company may invest a portion of its cash in money market funds, within the limitations of the 1940 Act.

Revenue Recognition

Realized gain (loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs. Realized gains or losses on the sale of investments are calculated using the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with senior and subordinated secured loans are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a senior or subordinated secured loan, any unamortized loan origination, closing and/or commitment fees are recorded as interest income. Generally, when a payment default occurs on a loan in the portfolio, or if the Company otherwise believes that the issuer of the loan will not be able to make contractual interest payments, the Company may place the loan on non-accrual status and cease recognizing interest income on the loan until all principal and interest is current through payment, or until a restructuring occurs, and the interest income is deemed to be collectible. The Company may make exceptions to this policy if a loan has sufficient collateral value and is in the process of collection or is viewed to be able to pay all amounts due if the loan were to be collected on through an investment in or sale of the business, the sale of the assets of the business, or some portion or combination thereof.

Dividend income is recorded on the ex-dividend date.

Structuring fees, excess deal deposits, prepayment fees and similar fees are recognized as Other Income from Investments as earned, usually when received, and are non-recurring in nature. Other fee income, including administrative and unused line fees, is included in Other Income from Investments. Income from such sources was $2,193,940 and $727,082 for the years ended June 30, 2016 and 2015, respectively. Management fee income is included in Other Income from Non-Investment Sources. For the year ended June 30, 2016, the Company earned $36,758 and waived $15,396 of management fee income related to the services performed for FCCIP. For the year ended June 30, 2015, the Company earned $67,163 of management fee income related to the services performed for FCCIP.

F-92

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

Change in unrealized gain (loss) on investments

Net change in unrealized appreciation or depreciation recorded on investments is the net change in the fair value of our investment portfolio during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

From time to time, the Company may enter into a new transaction with a portfolio company as a result of the sale, merger, foreclosure, bankruptcy or other corporate event involving the portfolio company. In such cases, the Company may receive newly issued notes, securities and/or other consideration in exchange for, or resulting from, the cancellation of the instruments previously held by the Company with regard to that portfolio company. In such cases, the Company may experience a realized loss on the instrument being sold or cancelled, and, concurrently, an elimination of any previously recognized unrealized losses on the portfolio investment. Such elimination of unrealized loss is included on the Consolidated Statements of Operations as an increase in the Net Change in Unrealized Gain (Loss) on Investments.

Federal and State Income Taxes

The Company has elected to be treated as a Registered Investment Company (“RIC”) under subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) including payment-in-kind (“PIK”) interest, as defined by the Code, and net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under subchapter M of the Code. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed prior to the 15 ^th day of the ninth month after the tax year-end.

Permanent differences between ICTI and net investment income for financial reporting purposes are reclassified among capital accounts in the Consolidated Financial Statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. During the years ended June 30, 2016 and 2015, the Company reclassified for book purposes amounts arising from permanent book/tax differences related as follows:

	Year Ended June 30, 2016			Year Ended June 30, 2015
Capital in excess of par value	$	(1,987,656	)	$	(1,302,681	)
Accumulated undistributed net investment income		866,605			1,043,849
Accumulated net realized gain (loss) from investments	$	1,121,051		$	258,832

For income tax purposes, distributions paid to stockholders are reported as ordinary income, return of capital, long term capital gains or a combination thereof. The tax character of distributions paid for the years ended June 30, 2016 and 2015 were as follows:

	Year Ended June 30, 2016		Year Ended June 30, 2015
Ordinary income	$	6,093,604	$	8,342,307
Distributions of long-term capital gains		—		—
Return of capital		1,051,922		1,302,681
Distributions on a tax basis	$	7,145,526	$	9,644,988

F-93

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

For federal income tax purposes, the tax cost of investments owned at June 30, 2016 and 2015 was $99,533,983 and $176,255,797, respectively. The net unrealized depreciation on investments owned at June 30, 2016 and 2015 was $18,411,768 and $24,142,039, respectively.

At June 30, 2016 and 2015, the components of distributable earnings on a tax basis detailed below differ from the amounts reflected in the Company’s Consolidated Statements of Assets and Liabilities by temporary and other book/tax differences, primarily relating to the tax treatment of certain investments in partnerships and wholly-owned subsidiary corporations, fee income and organizational expenses, as follows:

	As of June 30, 2016			As of June 30, 2015
Accumulated capital losses	$	(29,119,726	)	$	(8,519,497	)
Unrealized depreciation		(18,411,768	)		(24,142,039	)
Components of distributable earnings at year end	$	(47,531,494	)	$	(32,661,536	)

For the years ended June 30, 2016 and 2015, the long-term net capital loss carryfowards were $28,528,499 and $8,519,497, respectively, which will not expire. For the year ended June 30, 2016, the short-term net capital loss carryforwards were $591,260 and for the year ended June 30, 2015, there were no short-term net capital loss carryforwards.

The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC 740”). ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in Consolidated Financial Statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations. There were no material uncertain income tax positions at June 30, 2015. Although we file federal and state tax returns, our major tax jurisdiction is federal. The Company remains subject to examination by the Internal Revenue Service for the first full tax year ending June 30, 2011 and all future years.

If we do not distribute (or are not deemed to have distributed) each calendar year sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our 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”), we 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 we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue 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.

Distributions

Distributions to common stockholders are recorded on the ex-dividend date. The amounts, if any, of our monthly distributions are approved by our Board each quarter and are generally based upon our management’s estimate of our earnings for the quarter. Net realized capital gains, if any, are distributed at least annually.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 2. Significant Accounting Policies – (continued)

Guarantees and Indemnification Agreements

We follow ASC Topic 460 — Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“ASC 460”). The application of ASC 460 elaborates on the disclosure requirements of a guarantor in its interim and annual Consolidated Financial Statements about its obligations under certain guarantees that it has issued. It also requires a guarantor to recognize, at the inception of a guarantee, for those guarantees that are covered by ASC 460, the fair value of the obligation undertaken in issuing certain guarantees. ASC 460 did not have a material effect on the Consolidated Financial Statements. Refer to Note 5 for further discussion of guarantees and indemnification agreements.

Per Share Information

Basic and diluted earnings (loss) per common share is calculated using the weighted average number of common shares outstanding for the period presented. For the years ended June 30, 2016 and 2015, basic and diluted earnings (loss) per share, were the same because there are no potentially dilutive securities outstanding.

Offering Costs

The Company complies with the requirements of ASC 340-10-S99-1, “Expenses of Offering”. Deferred offering costs consist principally of legal and audit costs incurred through the balance sheet date that are related to an offering of equity securities. Such costs are charged against the gross proceeds of the offering or will be charged to the Company’s operations if the offering is not completed. Offering expenses related to the Company’s July 14, 2014, March 30, 2015, and April 13, 2015 offerings were $1,442,780. Refer to Note 6. Previously deferred costs charged to the Company’s operations during the year ended June 30, 2016 were $320,910 and are included in Other in the Statement of Operations.

Recent Accounting Pronouncements

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (“ASU 2015-07”). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. ASU 2015-07 is effective for fiscal years beginning after December 15, 2015. The Company does not believe this standard will have an impact on its Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 affects accounting for equity investments and financial liabilities where the fair value option has been elected. ASU 2016-01 requires an entity to measure equity investments at fair value through net income. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact on the Consolidated Financial Statements.

Note 3. Concentration of Credit Risk and Liquidity Risk

In the normal course of business, the Company maintains its cash balances in financial institutions, which at times may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

The Company utilizes one financial institution to provide financing, which may be essential to its business. There are a number of other financial institutions available that could potentially provide the Company with financing. Management believes that such other financial institutions would likely be able to provide similar financing with generally comparable terms. However, a change in financial institutions at the present time could cause a delay in service provisioning or result in potential lost opportunities, which could adversely affect operating results.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 4. Earnings (Loss) per Common Share — Basic and Diluted

The following information sets forth the computation of basic and diluted earnings (loss) per common share for the years ended June 30, 2016 and 2015:

	Year Ended June 30, 2016			Year Ended June 30, 2015
Per Share Data (1) :
Net Increase (Decrease) in Net Assets Resulting from Operations	$	(9,700,162	)	$	(5,200,728	)
Weighted average shares outstanding for period basic and diluted		22,662,947			14,803,637
Basic and diluted earnings (loss) per common share	$	(0.43	)	$	(0.35	)

(1) Per share data is based on weighted average shares outstanding.

Note 5. Related Party Agreements and Transactions

Investment Advisory Agreement

On June 22, 2016, the Board re-approved the investment advisory agreement (the “Investment Advisory Agreement”) with the Adviser under which the Adviser, subject to the overall supervision of the Board, manages the day-to-day operations of, and provides investment advisory services to, us. Under the terms of the Investment Advisory Agreement, our Adviser: (i) determines the composition of the Company’s portfolio, the nature and timing of the changes to the Company’s portfolio and the manner of implementing such changes, (ii) identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and (iii) closes and monitors investments the Company makes.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired. For providing these services, the Adviser receives a fee from the Company consisting of two components, a base management fee and an incentive fee.

The base management fee is calculated at an annual rate of 1.75% of the Company’s gross assets, as adjusted. For services rendered under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of the Company’s gross assets, as adjusted, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter will be appropriately prorated.

The total base management fees earned by the Adviser for the years ended June 30, 2016 and 2015 were $1,992,111 and $2,280,058, respectively. The total base management fee payable to the Adviser as of June 30, 2016 and 2015 was $379,944 and $580,607, respectively, after reflecting payments of $2,192,774 and $2,175,046 for the years ended June 30, 2016 and 2015, respectively, and is included in the Consolidated Statements of Assets and Liabilities in Due to Affiliates.

The incentive fee has two parts. The first part of the incentive fee (the “Income incentive fee”) is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as prepayment fees, management fee income and similar fees that the

F-96

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 5. Related Party Agreements and Transactions – (continued)

Company receives from portfolio companies, including administrative and unused line fees accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to Full Circle Service Company (the “Administrator”), and any interest expenses and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include organizational costs or any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized). The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the 1.75% base management fee. The Company pays the Adviser an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

• no incentive fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle of 1.75%;

• 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar quarter (8.75% annualized). The Company refers to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide our investment adviser with 20% of the Company’s pre-incentive fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and

• 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to the Adviser (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive fee investment income thereafter is allocated to the Adviser).

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

Income incentive fees of $1,263,241 and $1,798,000 were earned by the Adviser for the years ended June 30, 2016 and 2015, respectively, and the total income incentive fee payable to the Adviser as of June 30, 2016 and 2015, was $0 and $462,350, respectively, after reflecting payment of $1,478,712 and $1,705,782 during the years ended June 30, 2016 and 2015, respectively, and is included in the Consolidated Statements of Assets and Liabilities in Due to Affiliates. The Adviser waived $246,879 of income incentive fees for the year ended June 30, 2016 which are included in fees waiver and expense reimbursement on the Consolidated Statements of Operations. Any such fees are not subject to reimbursement or recoupment by the Adviser.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and will equal 20% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio, provided that, the incentive fee determined as of December 31, 2010 was calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation from the inception of Full Circle Capital. There were no incentive fees earned on realized capital gains for the years ended June 30, 2016 and 2015.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 5. Related Party Agreements and Transactions – (continued)

The Adviser agreed to reimburse the Company for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.50% of our net assets, beginning with our fiscal quarter ended September 30, 2014 through the end of the Company’s fiscal year 2015. For the Company’s fiscal year 2016 and beyond, the Adviser had agreed to reimburse the Company for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.75% of our net assets; however, on February 11, 2016, the Board authorized the termination of the Adviser’s operating expense reimbursement obligations, effective as of January 1, 2016. The expense reimbursements from the Adviser for the years ended June 30, 2016 and 2015 were $506,364 and $989,818, respectively, and is included in the fees waiver and expense reimbursement line on the Consolidated Statements of Operations.

The Adviser had agreed to reimburse the Company for any operating expenses, excluding interest expenses, investment advisory and management fees, and organizational and offering expenses, in excess of 2% of our net assets for the first twelve months following the completion of the initial public offering, which occurred on August 31, 2010.

For the periods commencing on April 1, 2015 and ending on June 30, 2015, and commencing on July 1, 2015 and ending on June 30, 2016, Full Circle Advisors had agreed to waive the portion of the base management fees and incentive fees that Full Circle Advisors would otherwise be entitled to receive pursuant to our Investment Advisory Agreement to the extent required in order for the Company to earn net investment income sufficient to support the distribution payment on the shares of the Company’s common stock outstanding on the relevant record date for each monthly distribution as then declared by the Board; however, on February 11, 2016, the Board authorized the termination of the Adviser’s management fee and incentive fee waiver, effective as of January 1, 2016. Full Circle Advisors will not be entitled to recoup any amounts previously waived pursuant to this agreement. For the year to date period ending December 31, 2015, $214,129 of the base management fee waiver was accrued for and is included in the fees waiver and expense reimbursement line in the Consolidated Statements of Operations.

The Investment Advisory 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, the Adviser 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 the Adviser’s services under the Investment Advisory Agreement or otherwise as an investment adviser of the Company.

Administration Agreement

On June 22, 2016, the Board re-approved the Administration Agreement with the Administrator under which the Administrator, among other things, furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, the Administrator also performs, or oversees the performance of, the Company’s required administrative services, which include, among other things, being responsible for the financial records which the Company is required to maintain and preparing reports to its stockholders. In addition, the Administrator assists the Company in determining and publishing its net asset value, oversees the preparation and filing of the Company’s tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Payments under the Administration Agreement are equal to an amount based upon our

F-98

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 5. Related Party Agreements and Transactions – (continued)

allocable portion of Full Circle Service Company’s overhead in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and our allocable portion of the compensation of our chief financial officer and our allocable portion of the compensation of any administrative support staff employed by the Administrator, directly or indirectly. Under the Administration Agreement, the Administrator will also provide on our behalf managerial assistance to those portfolio companies that request such assistance. The Administration Agreement may be terminated by either party, without penalty, upon 60 days’ written notice to the other party.

The Administrator and Conifer Asset Solutions LLC (“Conifer” or the “Sub-Administrator”) may also provide administrative services to the Adviser to satisfy the Adviser’s obligation to us under the Investment Advisory Agreement. As a result, the Adviser also reimburses the Administrator and/or the Sub-Administrator for its allocable portion of the Administrator’s and/or Sub-Administrator’s overhead, including rent, the fees and expenses associated with performing compliance functions for Full Circle Advisors, and its allocable portion of the compensation of any administrative support staff. To the extent the Adviser or any of its affiliates manage other investment vehicles in the future, no portion of any administrative services provided by the Administrator to such other investment vehicles will be charged to the Company.

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, the Administrator and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from Full Circle Capital for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Administrator’s services under the Administration Agreement or otherwise as administrator for the Company.

Sub-Administration Agreement

The Administrator has engaged Conifer to provide certain administrative services to the Company on behalf of the Administrator. In exchange for providing such services, the Administrator pays Conifer an asset-based fee with a $200,000 annual minimum as adjusted for any reimbursement of expenses. This asset-based fee will be reimbursed to the Administrator by the Company and will vary depending upon the Company’s gross assets, as adjusted, as follows:

Gross Assets	Fee
first $150 million of gross assets	20 basis points (0.20%)
next $150 million of gross assets	15 basis points (0.15%)
next $200 million of gross assets	10 basis points (0.10%)
in excess of $500 million of gross assets	5 basis points (0.05%)

For the years ended June 30, 2016 and 2015, the Company incurred $764,277 and $731,447, respectively, of expenses under the Administration Agreement, $246,268 and $256,236, respectively, of which were earned by the Sub-Administrator and $305,226 and $303,652, respectively, were reimbursed for officers’ compensation. The remaining $212,783 and $171,559, respectively, were recorded as an Allocation of Overhead Expenses in the Consolidated Statements of Operations. For the year ended June 30, 2016, the Company reimbursed Full Circle Service Company $23,374 for travel expenses borne by related parties that were the responsibility of the Company. These amounts are included as Other in the Consolidated Statements of Operations.

FC Capital Investment Partners, LLC

On June 4, 2014, the Company formed FC Capital Investment Partners, LLC (“FCCIP”), a multiple series private fund, for which the Company serves as the managing member and investment adviser. FCCIP was formed as a Delaware limited liability company and operates under a Limited Liability Company

F-99

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 5. Related Party Agreements and Transactions – (continued)

Agreement dated June 13, 2014. FCCIP closed its first series on June 17, 2014, raising approximately $5.6 million in capital from investors. FCCIP closed its second series on September 25, 2014, raising approximately $10.0 million in capital from investors. On November 30, 2015, the second series ceased investing and was liquidated after full realization of proceeds from its investment strategy. The Company may co-invest in certain portfolio investments from time to time with one or more series issued by FCCIP where the Company determines that the aggregate available investment opportunity exceeds what it believes would be appropriate for the Company to acquire directly, subject to certain conditions. During the year ended June 30, 2016, the Company earned $36,758 and waived $15,396 of management fee income related to the services performed for FCCIP. During the year ended June 30, 2015, the Company earned $67,163 of management income related to services performed for FCCIP. Such amounts are included in Other Income from Non-Investment Sources on the Consolidated Statements of Operations.

Managerial Assistance

As a business development company, the Company offers, and must provide upon request, managerial assistance to certain of its portfolio companies. This assistance could involve, among other things, monitoring the operations of the Company’s portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. With regard to the Control Investment in Texas Westchester Financial, LLC, the Company has provided managerial assistance during the period for which no fees were charged. The Company’s Chairman, John Stuart, previously served as a director of The Finance Company, LLC, which was previously a Control Investment.

Houlihan Lokey

Houlihan Lokey, an affiliated entity of one of the Company’s directors, provided services to the Company during the period subject to an Engagement Letter approved by the Special Committee of the Board of Directors. The director affiliated with Houlihan Lokey did not participate in this decision making and selection process or any subsequent activities of the Special Committee. The amount of expenses incurred under this agreement were $500,000 and is included in the Consolidated Statements of Operations in Professional Services Expense.

Note 6. Equity Offerings, Related Expenses, and Other Stock Issuances

Equity offerings are included in the Company’s capital accounts on the date that the Company assumes the obligation to issue the shares. For purposes of the calculation of Net Asset Value Per Share, Earnings Per Share and Per Share Data, the related shares are treated as outstanding on the same date that the equity offering is included in the Company’s capital accounts.

F-100

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 6. Equity Offerings, Related Expenses, and Other Stock Issuances – (continued)

Offering expenses are generally charged against paid-in capital in excess of par. The proceeds raised, the related underwriting fees, the offering expenses, and the price at which common stock was issued, since inception, are detailed in the following table:

Issuances of Common Stock	Number of Shares Issued			Gross Proceeds Raised, Net Assets Acquired and Dividends Reinvested		Underwriting Fees			Offering Expenses		Gross Offering Price
April 16, 2010		100		$	1,500	$	—		$	—	$	15.00 per/share
August 31, 2010		4,191,415	(1)	$	42,425,564	$	—		$	—	$	10.13 per/share	(2)
August 31, 2010		2,000,000		$	18,000,000	$	1,350,000		$	1,052,067	$	9.00 per/share
November 27, 2012		1,350,000		$	10,665,000	$	533,250		$	153,330	$	7.90 per/share
January 14, 2014		1,892,300	(3)	$	13,492,099	$	539,684		$	261,994	$	7.13 per/share
February 27, 2014		630,000		$	4,920,300	$	—	(4)	$	47,236	$	7.81 per/share
June 19, 2014		1,351,352		$	10,000,005	$	—	(4)	$	44,826	$	7.40 per/share
July 14, 2014		506,000		$	3,744,400	$	—	(4)	$	37,775	$	7.40 per/share
March 30, 2015		11,205,921		$	39,220,723	$	952,214	(5)	$	449,446	$	3.50 per/share
April 13, 2015		80,475		$	281,663	$	—		$	3,345	$	3.50 per/share

(1)	Includes 403,662 shares that were issued on September 30, 2010 upon the expiration of the overallotment option granted to the underwriters in connection with our initial public offering. Such shares were deemed to be outstanding at August 31, 2010.
(2)	Based on weighted average price assigned to shares.
(3)	Includes 242,300 overallotment shares that were granted to the underwriters in connection with our January 14, 2014 follow-on offering. The underwriters exercised their option to purchase additional shares on January 27, 2014. Such shares were deemed to be outstanding at January 14, 2014.
(4)	This was a registered offering placed directly with investors.
(5)	Shares were issued pursuant to a rights offering. The dealer manager received $952,214 for services provided in connection with the rights offering.

On August 26, 2015, the Board authorized the purchase of an additional 1.0 million shares to increase and provide for the purchase of up to 2.0 million shares of the outstanding common stock as part of the share repurchase program. Under the repurchase program, the Company may, but is not obligated to, repurchase its outstanding common stock in the open market from time to time. The timing and number of shares to be repurchased in the open market will depend on a number of factors, including market conditions and alternative investment opportunities. In addition, any repurchases will be conducted in accordance with the 1940 Act. The number of shares repurchased, the repurchase price, cost and weighted average discount per share is summarized in the following table:

Repurchase of Common Stock	Number of Shares Repurchased		Average Repurchase Price		Total Cost		Weighted Average Discount Per Share
Three months ended September 30, 2015		472,407	$	3.19 per/share	$	1,504,819		25.9	% (1)
Three months ended December 31, 2015		290,780	$	3.16 per/share	$	917,566		21.1	% (2)

(1) The average discount rate per share, based upon the Net Asset Value per share at June 30, 2015, is weighted based upon the total shares repurchased during the period.

(2) The average discount rate per share, based upon the Net Asset Value per share at September 30, 2015, is weighted based upon the total shares repurchased during the period.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 6. Equity Offerings, Related Expenses, and Other Stock Issuances – (continued)

For the three months ended March 31, 2016 and June 30, 2016, the Company did not repurchase any shares under the share repurchase program. As of September 28, 2016, the Company has repurchased an aggregate of 763,187 shares under the share repurchase program at the weighted average price of $3.17 per share, resulting in $2.4 million of cash paid, under the program.

Note 7. Financial Highlights

	Year Ended June 30, 2016			Year Ended June 30, 2015			Year Ended June 30, 2014			Year Ended June 30, 2013			Year Ended June 30, 2012
Per Share Data (1) :
Net asset value at beginning of period	$	4.30		$	6.38		$	8.01		$	8.59		$	9.08
Accretion (dilution) from offering(s) (2)		—			(0.92	)		0.03			(0.18	)		—
Accretion from share repurchases (3)		0.03			—			—			—			—
Offering costs		—			(0.06	)		(0.04	)		(0.02	)		—
Net investment income (loss)		0.28			0.63			0.71			0.77			0.78
Net change in unrealized gain (loss)		0.24			(0.51	)		(1.36	)		0.37			(0.32	)
Net realized gain (loss)		(0.94	)		(0.51	)		(0.11	)		(0.60	)		(0.03	)
Dividends from net investment income		(0.28	)		(0.63	)		(0.69	)		(0.78	)		(0.80	)
Return of capital		(0.04	)		(0.08	)		(0.17	)		(0.14	)		(0.12	)
Net asset value at end of period	$	3.59		$	4.30		$	6.38		$	8.01		$	8.59
Per share market value at end of period	$	2.70		$	3.57		$	7.81		$	7.83		$	7.65
Total return based on market value (4)		(14.98	)%		(46.78	)%		11.51	%		15.12	%		8.71	%
Total return based on net asset value (4)		(6.15	)%		(21.53	)%		(11.00	)%		4.94	%		6.20	%
Shares outstanding at end of period		22,472,243			23,235,430			11,443,034			7,569,382			6,219,382
Weighted average shares outstanding for period		22,662,947			14,803,637			8,698,814			7,018,286			6,219,382
Ratio/Supplemental Data:
Net assets at end of period	$	80,670,495		$	99,938,567		$	72,980,277		$	60,644,039		$	53,442,785
Average net assets	$	90,618,873		$	78,137,174		$	64,360,541		$	57,842,601		$	55,531,518
Ratio of gross operating expenses to average net assets		12.29	%		13.51	%		12.11	%		11.52	%		9.56	%
Ratio of net operating expenses to average net assets		11.22	%		11.69	%		12.11	%		11.52	%		8.99	%
Ratio of net investment income (loss) to average net assets		6.94	%		11.02	%		9.37	%		9.30	%		8.70	%
Ratio of net operating expenses excluding management fees (net of waiver), incentive fees, and interest expense to average net assets		3.67	%		1.51	%		3.04	%		3.53	%		3.15	%
Portfolio Turnover		82	%		74	%		88	% (5)		73	% (5)		58	% (5)

(1) Financial highlights are based on weighted average shares outstanding.

(2) Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering.

(3) Accretion from share repurchases during the period is based on the net change in net asset value from the share repurchases.

(4) Total return based on market value is based on the change in market price per share and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. The total returns are not annualized.

(5) Unaudited

F-102

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 8. Long Term Liabilities

Line of Credit

On June 3, 2013, the Company entered into a credit facility (the “Credit Facility”) with Santander Bank. The facility size was originally $32.5 million and replaced the Company’s credit facility with FCC. LLC d/b/a First Capital. The Credit Facility was subsequently increased to $45.0 million on November 6, 2013. On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank to give the Company the option to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the Credit Facility. The Company did not exercise its option to expand the Credit Facility. On June 3, 2016, the Company entered into a further amendment to its credit facility with Santander Bank to, among other things, (i) reduce the size of the facility from $45.0 million to $5.0 million, (ii) extend the termination date until October 3, 2016 and (iii) limit the Company’s ability to make any dividends, distributions, redemptions or other acquisitions of securities or other equity interests in the Company in excess of $10.0 million in the aggregate through October 3, 2016.

The Credit Facility matures on October 3, 2016 and bears interest based on a tiered rate structure, depending upon utilization, ranging from LIBOR (one month, two month or three month, depending on the Company’s option) plus 3.25% to 4.00% per annum, or from Santander Bank’s prime rate plus 1.25% to 2.00% per annum, based on the Company’s election. As of June 30, 2016, one month LIBOR, two month LIBOR, and three month LIBOR were 0.47%, 0.55%, and 0.65%, respectively. As of June 30, 2016, the Prime Rate was 3.50%. In addition, a fee of 0.50% to 1.00% per annum, depending on utilization, is charged on unused amounts under the Credit Facility. The Credit Facility is secured by all of the Company’s assets. Under the Credit Facility, the Company has made certain customary representations and warranties, and is required to comply with various covenants, reporting requirements and other customary requirements, including a minimum balance sheet leverage ratio, for similar credit facilities. The Credit Facility includes usual and customary events of default for credit facilities of this nature.

The fees and expenses associated with opening and expanding the Credit Facility are being amortized over the term of the Credit Facility in accordance with ASC 470, Debt. In accordance with ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements-Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, debt issuance costs associated with our revolving credit facilities remain classified as an asset, regardless of whether there are any outstanding borrowings on the facility. As of June 30, 2016, of the total $830,104 of fees and expenses incurred, $51,486 remains to be amortized and is reflected as Deferred Credit Facility Fees on the Consolidated Statements of Assets and Liabilities.

At June 30, 2016 and June 30, 2015, the Company did not have any outstanding borrowings under the Credit Facility.

Notes Payable

On June 28, 2013, the Company issued $21.1 million in aggregate principal amount of 8.25% Notes due June 30, 2020 (the “Notes”) (including a partial exercise of the underwriters’ overallotment option in July 2013) for net proceeds of $20.0 million after deducting underwriting commissions of approximately $860,822 and offering expenses of $246,453.

On July 14, 2014, the Company closed an offering of $12.5 million in aggregate principal amount of the Notes. The Notes were sold at price of $25.375 per Note plus accrued interest from June 30, 2014, a premium to par value of $25.00 per Note for total gross proceeds of approximately $12.7 million. The Notes are a further issuance of rank, equally in right of payment with, and form a single series with the $21.1 million of currently outstanding Notes that will mature on June 30, 2020 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 30, 2016. The Notes are listed on the NASDAQ Global Market and trade under the trading symbol “FULLL”.

F-103

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 8. Long Term Liabilities – (continued)

The offering expenses and underwriting commissions are being amortized over the term of the Notes in accordance with ASC 470, Debt. Additionally, in accordance with ASU 2015-03, debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the Notes. As such, as of June 30, 2016, of the total $1,150,940 issuance costs incurred, $675,046 remains to be amortized and is included in, and offsets, the Notes Payable balance in the Consolidated Statements of Assets and Liabilities. Additionally, $135,498 of the $187,500 premium related to the July 14, 2014 issuance remains unamortized and is included in the Notes Payable balance in the Consolidated Statements of Assets and Liabilities.

As of June 30, 2015, of the total $1,150,940 issuance costs incurred, $833,541 remained to be amortized and is included in, and offsets, the Notes Payable balance in the Consolidated Statements of Assets and Liabilities. Additionally, $158,504 of the $187,500 premium related to the July 14, 2014 issuance remained unamortized and is included in the Notes Payable balance in the Consolidated Statements of Assets and Liabilities.

The Notes were issued pursuant to an indenture, dated June 3, 2013, as supplemented by the first supplemental indenture, dated June 28, 2013 (collectively, the “Indenture”), between the Company and U.S. Bank National Association (the “Trustee”). The Notes are unsecured obligations of the Company and rank senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that is later secured) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries or financing vehicles. Interest on the Notes is paid quarterly in arrears on March 30, June 30, September 30 and December 30, at a fixed rate of 8.25% per annum, beginning September 30, 2013. The Notes mature on June 30, 2020 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 30, 2016. The Notes are listed on the Nasdaq Global Market under the trading symbol “FULLL” with a par value of $25.00 per share.

The Indenture contains certain covenants, including covenants requiring compliance with (regardless of whether the Company is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 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. These covenants are subject to limitations and exceptions that are described in the Indenture. The Company may repurchase the Notes in accordance with the 1940 Act and the rules promulgated thereunder. Any Notes repurchased by the Company may, at the Company’s option, be surrendered to the Trustee for cancellation, but may not be reissued or resold by the Company. Any Notes surrendered for cancellation will be promptly cancelled and no longer outstanding under the Indenture. As of June 30, 2016, the Company had not repurchased any of the Notes in the open market.

At June 30, 2016 and June 30, 2015, the Company had a principal balance of $33,645,525 on the Notes, which is included in Notes Payable in the Consolidated Statements of Assets and Liabilities.

F-104

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 8. Long Term Liabilities – (continued)

The following shows a summary of the Long Term Liabilities as of June 30, 2016 and June 30, 2015:

As of June 30, 2016

Facility	Commitments		Borrowings Outstanding		Fair Value
Credit Facility (1)	$	5,000,000	$	—	$	—
Notes		33,645,525		33,645,525		34,264,603
Total	$	38,645,525	$	33,645,525	$	34,264,603

As of June 30, 2015

Facility	Commitments		Borrowings Outstanding		Fair Value
Credit Facility (1)	$	45,000,000	$	—	$	—
Notes		33,645,525		33,645,525		34,049,271
Total	$	78,645,525	$	33,645,525	$	34,049,271

(1) On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank to give the Company the option to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the credit facility. The Company did not exercise its option to expand the facility. On June 3, 2016, the Company entered into a further amendment to the Credit Facility with Santander Bank to, among other things, (i) reduce the size of the facility from $45.0 million to $5.0 million, (ii) extend the termination date until October 3, 2016 and (iii) limit the Company’s ability to make any dividends, distributions, redemptions or other acquisitions of securities or other equity interests in the Company in excess of $10.0 million in the aggregate through October 3, 2016.

The fair values of the Company’s Credit Facility and Notes are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company’s Notes is determined by utilizing market quotations at the measurement date.

Note 9. Fair Value Measurements

The Company’s assets recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”). See Note 2 for a discussion of the Company’s policies.

The following tables present information about the Company’s assets measured at fair value as of June 30, 2016 and June 30, 2015:

	As of June 30, 2016
	Level 1		Level 2		Level 3		Total
Assets
Senior and Subordinated Loans, at fair value	$	—	$	—	$	80,701,466	$	80,701,466
Limited Liability Company Interests, at fair value		—		—		100,000		100,000
Investments in Warrants, at fair value		—		—		320,749		320,749
Total Assets	$	—	$	—	$	81,122,215	$	81,122,215

F-105

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 9. Fair Value Measurements – (continued)

	As of June 30, 2015
	Level 1		Level 2		Level 3		Total
Assets
Senior and Subordinated Loans, at fair value	$	—	$	12,275,000	$	121,630,798	$	133,905,798
Limited Liability Company Interests, at fair value		—		—		1,228,978		1,228,978
Investments in Warrants, at fair value		—		90		2,695,075		2,695,165
Common Stock, at fair value		1,308,818		—		12,975,000		14,283,818
Open Swap Contract, at fair value		—		—		—		—
	$	1,308,818	$	12,275,090	$	138,529,851	$	152,113,759

During the year ended June 30, 2016, the senior secured term loan and warrants in US Shale Solutions, Inc. were transferred from Level 2 to Level 3. During the year ended June 30, 2015, a portion of the Level 3 General Cannabis Corp. warrant was converted into Level 1 Common Stock.

The following table presents additional information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the net unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

The tables below reflect the changes in Level 3 assets and liabilities measured at fair value for the years ended June 30, 2016 and 2015.

	Year Ended June 30, 2016
	Beginning Balance July 1, 2015		Amortization & Accretion of Fixed Income Premiums & Discounts		Realized & Unrealized Gains (Losses)			Transfers Into Level 3 (2)		Purchases (1)		Sales & Settlements			Ending Balance June 30, 2016		Change in Unrealized Gains (Losses) for Investments still held at June 30, 2016
Assets
Senior and Subordinated Loans, at fair value	$	121,630,798	$	1,553,243	$	(9,832,169	)	$	4,455,000	$	87,604,057	$	(124,709,463	)	$	80,701,466	$	(9,580,531	)
Limited Liability Company Interests, at fair value		1,228,978		—		(2,448,791	)		—		4,325,739		(3,005,926	)		100,000		(4,225,839	)
Warrants, at fair value		2,695,075		—		(2,374,416	)		90		—		—			320,749		(84,926	)
Common Stock, at fair value		12,975,000		—		2,145,000			—		—		(15,120,000	)		—		—
Total Assets		138,529,851		1,553,243		(12,510,376	)		4,455,090		91,929,796		(142,835,389	)		81,122,215		(13,891,296	)
Liabilities
Open Swap Contract, at fair value		—		—		(1,882,293	)		—		1,882,293		—			—		—
Net	$	138,529,851	$	1,553,243	$	(14,392,669	)	$	4,455,090	$	93,812,089	$	(142,835,389	)	$	81,122,215	$	(13,891,296	)

(1) Includes PIK interest.

(2) Represents the transfer of US Shale Solutions, Inc. into Level 3.

F-106

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 9. Fair Value Measurements – (continued)

	Year Ended June 30, 2015
	Beginning Balance July 1, 2014		Amortization & Accretion of Fixed Income Premiums & Discounts		Realized & Unrealized Gains (Losses)			Transfers out of Level 3 (2)			Purchases (1)		Sales & Settlements			Ending Balance June 30, 2015		Change in Unrealized Gains (Losses) for Investments still held at June 30, 2015
Assets
Senior and Subordinated Loans, at fair value	$	111,079,608	$	1,371,720	$	(6,728,531	)	$	—		$	113,149,706	$	(97,241,705	)	$	121,630,798	$	(7,918,295	)
Limited Liability Company Interests, at fair value		3,875,583		—		(2,474,886	)		—			—		(171,719	)		1,228,978		(1,171,144	)
Warrants, at fair value		3,060,421		—		(2,194,114	)		(486,786	)		2,328,768		(13,214	)		2,695,075		(337,902	)
Common Stock, at fair value		—		—		—			—			12,975,000		—			12,975,000		—
Open Swap Contract, at fair value		—		—		1,081			—			—		(1,081	)		—		—
	$	118,015,612	$	1,371,720	$	(11,396,450	)	$	(486,786	)	$	128,453,474	$	(97,427,719	)	$	138,529,851	$	(9,427,341	)

(1)  Includes PIK interest.

(2)  Represents the transfer of a portion of the General Cannabis Corp. warrant out of Level 3 into Level 1 Common Stock upon conversion.

Realized and unrealized gains and losses are included in net realized gain (loss) and net change in unrealized gain (loss) in the Consolidated Statements of Operations. The change in unrealized losses for Level 3 investments still held at June 30, 2016 of $13,891,296 is included in net change in unrealized gain (loss) in the Consolidated Statements of Operations for the year ended June 30, 2016. The change in unrealized losses for Level 3 investments still held at June 30, 2015 of $9,427,341 is included in net change in unrealized gain (loss) in the Consolidated Statements of Operations for the year ended June 30, 2015.

The following table provides quantitative information regarding Level 3 fair value measurements as of June 30, 2016:

Description	Fair Value		Valuation Technique	Unobservable Inputs	Range (Average) (1)
Senior and Subordinated Loans	$	67,666,509	Discounted cash flows (income approach)	Discount Rate	3.70% - 50.00% (13.12%)
		5,359,848	Precedent Transactions	Transaction Value	N/A
		7,675,109	Liquidation Value	Asset Value	N/A
Total		80,701,466
Limited Liability Interests and Warrants (Private Companies)		209,844	Market comparable companies (market approach)	EBITDA multiple	6.00x –6.00x (6.00x)
		100,000	Liquidation Value	Asset Value	N/A
Total		309,844
Warrant (Public Companies)		110,905	Option Pricing Model	Volatility	50.00% - 61.40% (55.70%)
Total Level 3 Investments	$	81,122,215

(1) The average values were determined using the weighted average of the fair value of the investments in each investment category.

F-107

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 9. Fair Value Measurements – (continued)

The following table provides quantitative information regarding Level 3 fair value measurements as of June 30, 2015:

Description	Fair Value		Valuation Technique		Unobservable Inputs	Range (Average)(1)
Senior and Subordinated Loans	$	91,569,415		Discounted cash flows (income approach)	Discount Rate	8.51% – 55.00%(16.27%)
		26,739,621		Precedent Transactions	Transaction Value	N/A
		3,321,762		Liquidation Value	Asset Value	N/A
Total		121,630,798
Limited Liability Interests, Warrants, and Common Stock (Private Companies)		3,719,553		Market comparable companies (market approach)	EBITDA multiple	4.00x – 7.25x (5.15x)
		12,975,000		Precedent Transactions	Transaction Value	N/A
		177,500		Liquidation Value	Asset Value	N/A
Total		16,872,053
Warrant (Public Companies)		27,000		Option Pricing Model	Volatility	32.588%
Open Swap Contract		—		Option Pricing Model	Broker Quotes	$212.50/share – $220.00/share ($216.50/share)
Total Level 3 Investments	$	138,529,851

(1) The average values were determined using the weighted average of the fair value of the investments in each investment category.

The primary significant unobservable input used in the fair value measurement of the Company’s debt securities (first lien debt, second lien debt and subordinated debt), including income-producing investments in funds, is the discount rate. Significant increases (decreases) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. In determining the discount rate, for the income, or yield, approach, the Company considers current market yields and multiples, portfolio company performance, leverage levels and credit quality, among other factors in its analysis. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate discount rate to use in the income approach.

The primary significant unobservable input used in the fair value measurement of the Company’s private equity and warrant investments is the EBITDA multiple, which is used to determine the Enterprise Value. Significant increases (decreases) in the Enterprise Value in isolation would result in a significantly higher (lower) fair value measurement. To determine the Enterprise Value for the market approach, the Company considers current market trading and/or transaction multiples, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate multiple to use in the market approach.

The primary unobservable inputs used in the fair value measurement of the Company’s warrant investments, when using an option pricing model, are the discount rate and volatility. Significant increases (decreases) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the volatility in isolation would result in a significantly higher (lower) fair value measurement. Changes in one or more factors can have a similar directional change on other factors in determining the appropriate discount rate or volatility to use in the valuation of a warrant using an option pricing model.

F-108

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 10. Derivative Financial Instruments

In the normal course of business, the Company may utilize derivative contracts in connection with its investment activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The derivative activities and exposure to derivative contracts primarily involve equity price risks. In addition to the primary underlying risk, additional counterparty risk exists due to the potential inability of counterparties to meet the terms of their contracts.

Warrants

The warrants provide exposure and potential gains upon equity appreciation of the portfolio company’s equity value.

The value of a warrant has two components: time value and intrinsic value. A warrant has a limited life and expires on a certain date. As a warrant’s expiration date approaches, the time value of the warrant will decline. In addition, if the stock underlying the warrant declines in price, the intrinsic value of an “in the money” warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless. As a result, there is the potential for the entire value of an investment in a warrant to be lost.

Counterparty risk exists from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty risk is the fair value of the contracts and the purchase price of the warrants. The Company’s Board of Directors considers the effects of counterparty risk when determining the fair value of its investments in warrants.

Swap contracts — general

The Company may enter into swap contracts, including interest rate swaps, total return swaps, and credit default swaps, as part of its investment strategy, to hedge against unfavorable changes in the value of investments and to protect against adverse movements in interest rates or credit performance with counterparties. Generally, a swap contract is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified notional amount of the underlying assets. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Payments are disclosed as realized gain (loss) on open swap contracts on the Consolidated Statements of Operations. If the payment is a receivable as of the end of the period, it is disclosed as receivable on open swap contract on the Consolidated Statements of Assets and Liabilities.

The fair value of open swaps reported in the Consolidated Statements of Assets and Liabilities may differ from that which would be realized in the event the Company terminated its position in the contract. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of counterparty is generally limited to the aggregate fair value of swap contracts in an unrealized gain position, as adjusted for any collateral posted to us by the counterparty or by us with the counterparty. Therefore, the Company considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in the fair value of the underlying investments.

Total return swaps

The Company is subject to market risk in the normal course of pursuing its investment objectives. The Company may enter into total return swaps either to manage its exposure to the market or certain sectors of the market, or to create exposure to certain investments to which it is otherwise not exposed.

Total return swap contracts involve the exchange by the Company and a counterparty of their respective commitments to pay or receive a net amount based on the change in the fair value of a particular security or index and a specified notional amount.

F-109

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 10. Derivative Financial Instruments – (continued)

During the year ended June 30, 2015, the Company funded one synthetic secured loan in the form of a total return swap. More specifically, the Company purchased 60,000 shares of Granite Ridge Holdings, LLC, a power generation company. The Company contemporaneously entered into a collateralized swap agreement with another private fund, which posted approximately $10.4 million of cash collateral, whereby the Company swapped the returns on the shares for a fixed rate of 15.0% on the net loan amount. Under the terms of the swap, the Company expected to receive periodic payments from the counterparty. These periodic payments were recorded as realized capital gains for accounting purposes in accordance with GAAP. The Company did not enter into any total return swaps during the year ended June 30, 2016.

During the year ended June 30, 2016, Granite Ridge Holdings, LLC was sold and the Company received proceeds for a redemption of the Company’s LLC interests, and the related holdback, of approximately $15.2 million, resulting in a realized gain of approximately $2.1 million. Concurrently, the total return swap was unwound and the Company realized a loss of approximately $2.1 million on the swap contract on that date. From the inception of the swap contract through its termination in the quarter ended March 31, 2016, the Company recognized realized losses of approximately $1.9 million, which when aggregated with the realized gain on the LLC interests in Granite Ridge Holdings, LLC, resulted in a total realized gain on the transactions of $262,707. The gains and losses on the transactions are disclosed separately in the Consolidated Statements of Operations as realized gain (loss) on investments and realized gain (loss) on open swap contracts.

Note 11. Strategic Transaction

On June 23, 2016, the Company and Great Elm Capital Corp., a Maryland corporation (“GECC”) entered into a definitive merger agreement (the “Merger Agreement”) under which the Company will merge with and into GECC, with GECC as the surviving corporation (the “Merger”). Concurrently with the execution of the Merger Agreement, GECC, Great Elm Capital Group, Inc. (“Great Elm”) and certain investment funds (the “Funds”) managed by MAST Capital Management, LLC (“MAST”) entered into a subscription agreement (the “Subscription Agreement”). Pursuant to the Subscription Agreement, (i) Great Elm has contributed $30 million in cash to GECC in exchange for shares of GECC’s common stock and (ii) the Funds have agreed to contribute an investment portfolio, presently valued at approximately $90 million, also in exchange for shares of GECC’s common stock. The contribution of the investment portfolio will occur prior to the closing of the Merger. When the Merger becomes effective, GECC, as the surviving corporation, will be externally managed by Great Elm Capital Management, Inc. (“GECM”), pursuant to a new investment advisory agreement. GECM will be owned by Great Elm. Great Elm has advised the Company that GECM will employ substantially all of the investment and back office personnel of MAST. The obligations of the parties to the Merger Agreement and the Subscription Agreement are subject to various conditions. The Company also entered into an agreement (the “Termination Agreement”) with Full Circle Advisors and Full Circle Service Company providing for the future termination of the Investment Advisory Agreement, dated July 13, 2010, and Administration Agreement, dated July 14, 2010, as required under the Merger Agreement.

The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) we will merge with and into GECC with GECC continuing as the surviving corporation. In the Merger, all of the Company’s outstanding shares of common stock will be converted into shares of GECC’s common stock. The amount of GECC’s common stock to be received by the Company’s stockholders will be derived from an exchange ratio (the “Exchange Ratio”), which will be calculated based on our net asset value as of the month-end preceding the date on which the definitive proxy statement relating to the Merger is mailed to the Company’s stockholders, subject to adjustments as described below.

Pursuant to the terms of the Merger Agreement, the Company’s Board of Directors intends to declare a special cash distribution to the Company’s stockholders of record as of the close of business on the day on which the Merger becomes legally effective.

F-110

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 11. Strategic Transaction – (continued)

The Merger Agreement provides that the Company’s Board of Directors will declare a special cash distribution, which will be payable after the Merger to the persons who are the record holders of shares of the Company’s common stock immediately before the effective time of the Merger, in an aggregate amount equal to the sum of:

• $5,000,000; and

• $408,763, the positive amount of the Company’s net investment income, calculated in accordance with generally accepted accounting principles in the United States GAAP, from March 31, 2016 through August 31, 2016; and

• the amount of net investment income paid or accrued on the Company’s investment portfolio and on its cash balances from August 31, 2016 through the effective time of the merger.

The amount of the special cash distribution is expected to be approximately $0.24 per share of the Company’s common stock. The special cash distribution will be paid by the exchange agent appointed to process exchanges of GECC share certificates for the Company’s share certificates upon delivery by the holders of the Company’s common stock of a letter of transmittal.

Neither the special cash distribution, nor any dividends or other distributions with respect to shares of GECC common stock will be paid to any former Full Circle stockholders who held their shares in certificated form and who have not surrendered their certificates to the exchange agent for shares of GECC common stock until those certificates are surrendered in accordance with the letter of transmittal. Following the surrender of any such certificates in accordance with the letter of transmittal, the record holders of such certificates will be entitled to receive, without interest, the special cash distribution and the amount of dividends or other distributions with a record date after the Effective Time payable with respect to shares of GECC common stock exchangeable for those certificates and not previously paid.

The Company expects that a significant part of the $5.0 million fixed portion of the special cash distribution will be a distribution in excess of Full Circle Capital’s current and accumulated earnings and profits and could be treated as a return of capital for U.S. federal income tax purposes.

The closing of the Merger is subject to the satisfaction of customary closing conditions, including, among others, the registration and listing of the shares of common stock of GECC that will be issued in the Merger and the approval of the Merger by the holders of a majority of the outstanding shares of the common stock of the Company (the “Company Stockholder Approval”).

The Merger Agreement contains customary representations, warranties and covenants of each party, including covenants providing for the Company and GECC (i) to conduct their respective businesses in all material respects in the ordinary course of business and in a manner consistent with past practice during the period between the execution of the Merger Agreement and the effective time of the Merger, (ii) not to engage in certain kinds of transactions during such period, and (iii) only with respect to the Company, to convene and hold a meeting of its stockholders to consider and vote upon the approval of the Merger.

The Merger Agreement contains a customary “no-shop” provision which prohibits the Company and its subsidiaries from engaging in certain actions with respect to any other offer or proposal relating to an acquisition, merger or business combination resulting in ownership of more than 25% of the Company or its assets (an “Acquisition Proposal”). Subject to certain exceptions, the Company may not: (i) initiate, solicit or knowingly encourage any inquiries with respect to any Acquisition Proposal; (ii) engage in negotiations or discussions that reasonably could be expected to lead to an Acquisition Proposal; (iii) approve, endorse or recommend any Acquisition Proposal; or (iv) execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or any similar agreement relating to any Acquisition Proposal.

F-111

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 11. Strategic Transaction – (continued)

The “no shop” provision is subject to a customary “fiduciary out” provision that allows the Company, under certain circumstances and in compliance with certain obligations, to provide non-public information and engage in discussions and negotiations with any third party making an Acquisition Proposal if the Company’s Board of Directors determines in good faith, after consultation with counsel and its financial advisor, that such third party is reasonably likely to submit a Superior Proposal. A “Superior Proposal” is a bona fide proposal in writing relating to an acquisition, merger or business combination resulting in ownership of more than 50% of the Company or its assets that is reasonably likely to be consummated and which has terms more favorable to the Company and its stockholders from a financial point of view than those set forth in the Merger Agreement and related documents.

At any time prior to obtaining the Company Stockholder Approval, subject to certain conditions, the Company’s Board of Directors may endorse the Superior Proposal and may change its recommendation regarding the Merger if the Company’s Board of Directors has determined in good faith (after consultation with counsel) that the failure to take action would be inconsistent with the directors’ fiduciary duties. Any such action can be taken only after giving three business days advance notice to GECC and during those three business days the Company must negotiate with GECC (if GECC wishes to negotiate) to adjust the terms and conditions of the Merger Agreement to make them at least as favorable to the Company’s stockholders as the Superior Proposal.

The Merger Agreement contains certain termination rights for both the Company and GECC, including if the Merger is not completed on or before October 31, 2016 (subject to extension under certain circumstances), or if the Company Stockholder Approval is not obtained. In the event of a termination of the Merger Agreement under certain circumstances, including termination of the Merger Agreement by the Company to enter into a definitive agreement with respect to a Superior Proposal or termination by GECC as a result of a change of recommendation by the Company’s Board of Directors, the Company will be required to pay GECC a termination fee of $3.0 million. Additionally, in the event that the Company Stockholder Approval is not obtained and a proposal for a business combination with a third party or an acquisition by a third party of 50% of more of the shares or assets of the Company (each, an “Alternative Transaction”) has been publicly announced and not withdrawn, upon termination of the Merger Agreement by us or GECC, the Company will be required to reimburse GECC for its out of pocket expenses, up to a maximum of $1.0 million (the “Expense Reimbursement”). If the Company enters into a definitive agreement for one or more Alternative Transactions within 12 months after termination of the Merger Agreement, the Company will be required to pay GECC a termination fee of $3.0 million, less the Expense Reimbursement.

Note 12. Subsequent Events

Recent Portfolio Activity

On July 8, 2016, the subordinated secured term loan to Bioventus, LLC was sold for total proceeds of approximately $6.0 million.

On August 17, 2016, the Company foreclosed on the commercial property underlying its loan to JN Medical Corporation (“JNI”). Subsequent to the foreclosure, on September 14, 2016 the Company entered into a forbearance agreement with JNI, which among other things, required JNI to enter into a triple net lease agreement with respect to the commercial property and to fund an initial payment of $730,723 to the Company in addition to resuming all other obligations under the loan agreement.

The Company holds collateralized note obligations from PEAKS Trust 2009-1. ITT Educational Services Inc. (“ITT”) has guaranteed payment on these notes. On August 26, 2016, ITT announced that it would no longer be accepting new students for enrollment during the current academic year. Subsequently ITT terminated operations at its campuses and on September 16, 2016 ITT filed for Chapter 7 bankruptcy. To the degree that ITT has liabilities in excess of the proceeds resulting from the Chapter 7 proceedings,

F-112

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note 12. Subsequent Events – (continued)

ITT may not be able to meet obligations under its guarantee, which could impair the value of the notes. At August 31, 2016, the Company valued the notes at 70.91% of par value as compared to 83.92% of par value at June 30, 2016. The Company is currently reviewing the situation, but does not expect a significant change in the value of the notes due to the status of ITT.

Note 13. Commitments and Contingencies

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. As of June 30, 2016, the Company had approximately $8.6 million in unfunded loan commitments, subject to the Company’s approval in certain instances, to provide debt financing to certain of its portfolio companies.

The Company is currently not subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Company. 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’s rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon its business, financial condition or results of operations.

F-113

Schedule 12 – 14

The table below represents the fair value of control and affiliate investments at June 30, 2015 and any amortization, purchases, sales, and realized and net unrealized gain (loss) made to such investments, as well as the ending fair value as of June 30, 2016.

Schedule of Investments in and Advances to Affiliates

Portfolio Company/ Type of Investment	Par Amount/ Quantity at June 30, 2016		Amount of Interest and Dividends Credited in Income		Fair Value at June 30, 2015		Accretion/ Amortization		Purchases		Sales			Realized and Unrealized Gains/ Losses			Fair Value at June 30, 2016
Control Investments
Takoda Resources Inc.
Senior Debt/Common Stock (1),(2)	$	—	$	—	$	161,585	$	—	$	—	$	(168,258	)	$	6,673		$	—
Texas Westchester Financial, LLC
Limited Liability Company Interests (1)		9,278		—		177,500		—		—		(60,000	)		(17,500	)		100,000
The Finance Company, LLC
Senior Debt (3) /Limited Liability Company Interests (2)	$	—		498,242		5,006,194		7,938		—		(4,997,942	)		(16,190	)		—
TransAmerican Asset Servicing Group, LLC
Senior Debt (2) /Limited Liability Company Interests (1),(2)	$	—		—		466,785		—		323,359		(717,576	)		(72,568	)		—
Total Control Investments			$	498,242	$	5,812,064	$	7,938	$	323,359	$	(5,943,776	)	$	(99,585	)	$	100,000
Affiliate Investments
Modular Process Control, LLC
Senior Debt (1),(2) /Warrant (1),(2)	$	—		287,601		3,663,827		17,082		1,306,664		(3,071,579	)		(1,915,994	)		—
ProGrade Ammo Group, LLC
Senior Debt (1),(2) /Warrants (1),(2)	$	—		—		2,590,309		—		147,121		(1,561,268	)		(1,176,162	)		—
SOLEX Fine Foods, LLC; Catsmo, LLC
Senior Debt/Limited Liability Company Interests (1),(2) /Warrant (1),(2)	$	—		284,512		3,832,347		46,883		—		(3,861,696	)		(17,534	)		—
US Oilfield Company, LLC
Senior Debt/Warrants (1)	$	5,768,743/5		521,338		5,683,338		12,799		6,315,061		(6,320,574	)		(5,377,269	)		313,355
West World Media, LLC
Limited Liability Company Interests (1),(2)		—		—		249,451		—		—		(2,143,900	)		1,894,449			—
Total Affiliate Investments			$	1,093,451	$	16,019,272	$	76,764	$	7,768,846	$	(16,959,017	)	$	(6,592,510	)	$	313,355

(1) Nonincome-producing security.

(2) Investment is no longer held as of June 30, 2016.

(3) Investment is no longer a control investment at June 30, 2016. The Company sold the LLC interest in The Finance Company, LLC on March 15, 2016.

F-114

Schedule 12 – 14

The table below represents the fair value of control and affiliate investments at June 30, 2014 and any amortization, purchases, sales, and realized and net unrealized gain (loss) made to such investments, as well as the ending fair value as of June 30, 2015.

Schedule of Investments in and Advances to Affiliates

Portfolio Company/ Type of Investment	Par Amount/ Quantity at June 30, 2015		Amount of Interest and Dividends Credited in Income		Fair Value at June 30, 2014		Accretion/ Amortization		Purchases		Sales			Realized and Unrealized Gains/ Losses			Transfer from Control to Non-Control/ Non-Affiliate Investment			Fair Value at June 30, 2015
Control Investments
New Media West, LLC (2)
Senior Debt/Limited Liability Company Interests (4)	$	3,811,681	$	318,461	$	5,666,679	$	—	$	—	$	(1,015,030	)	$	(4,651,649	)	$	—		$	—
Takoda Resources Inc.
Senior Debt/Common Stock (1)	$	3,054,532/749		118,703		2,557,379		—		453,272		(91,568	)		(2,757,498	)		—			161,585
Texas Westchester Financial, LLC
Limited Liability Company Interests (1)		9,278		—		540,037		—		—		(171,717	)		(190,820	)		—			177,500
The Finance Company, LLC
Senior Debt/Limited Liability Company Interests	$	4,195,915/50		881,110		7,214,905		38,386		—		(967,632	)		(1,279,465	)		—			5,006,194
TransAmerican Asset Servicing Group, LLC
Senior Debt/Limited Liability Company Interests (1)	$	3,563,246/75		183,042		1,560,057		9,714		1,532,467		(977,374	)		(1,658,079	)		—			466,785
Total Control Investments			$	1,501,316	$	17,539,057	$	48,100	$	1,985,739	$	(3,223,321	)	$	(10,537,511	)	$	—		$	5,812,064
Affiliate Investments
General Cannabis Corp. (3)
Common Stock/Warrant (1),(4)		654,409		—		2,356,212		—		113,214		(377,639	)		(600,986	)		(1,490,801	)		—
Modular Process Control, LLC
Senior Debt/Warrant (1)	$	7,151,027/1		1,205,914		3,971,110		99,410		2,282,926		(1,911,704	)		(777,915	)		—			3,663,827
ProGrade Ammo Group, LLC
Senior Debt/Warrants (1)	$	6,665,197/181,240		4,594		4,133,284		4,594		877,441		(2,305,294	)		(119,716	)		—			2,590,309
SOLEX Fine Foods, LLC; Catsmo, LLC
Senior Debt/Limited Liability Company Interests (1) /Warrant (1)	$	3,861,696/1/1		512,253		3,888,914		27,904		110,000		(148,304	)		(46,167	)		—			3,832,347
US Oilfield Company, LLC
Senior Debt/Warrants (1)	$	5,767,417/3		722,952		—		38,812		18,396,291		(12,714,465	)		(37,300	)		—			5,683,338
West World Media, LLC
Limited Liability Company Interests (1)		148,326		—		238,897		—		—		—			10,554			—			249,451
Total Affiliate Investments			$	2,445,713	$	14,588,417	$	170,720	$	21,779,872	$	(17,457,406	)	$	(1,571,530	)	$	(1,490,801	)	$	16,019,272

(1) Nonincome-producing security.

(2) On June 30, 2015, New Media West, LLC transferred from a Control Investment to a Non-Control/Non-Affiliate Investment.

(3) As of May 13, 2015, General Cannabis Corp. transferred from an Affiliate Investment to a Non-Control/Non-Affiliate Investment. All purchases and sales after May 13, 2015 have been excluded from the purchase and sales columns in the above table. Realized and unrealized gains/losses have been prorated and only the realized and unrealized gains/losses which are attributable to the investment as an Affiliate Investment have been included.

(4) Investment no longer held as of June 30, 2015.

F-115

7,000,268 Shares

Common Stock

PROSPECTUS

October 15, 2018