8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 8-K

 _______________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 10, 2018

_______________________________________

Great Elm Capital Corp.

(Exact name of registrant as specified in its charter)

_______________________________________

Maryland	814-01211	81-2621577
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

800 South Street, Suite 230, Waltham, MA	02453
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (617) 375-3006

(Former name or former address, if changed since last report.)

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On August 10, 2018, the registrant issued the press release and published a presentation furnished as exhibits 99.1 and 99.2, respectively, to this report.

The foregoing information (including the exhibits hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished with this report but shall not be deemed filed:

Exhibit Number	Description
99.1	Press release, dated August 10, 2018.
99.2	Presentation, dated August 10, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GREAT ELM CAPITAL CORP.
Date:  August 10, 2018	/s/ John J. Woods
	By:	John J. Woods
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

  Great Elm Capital Corp. Announces Second Quarter 2018 Financial Results; Net Investment Income of $0.57 Per Share; Board Declares Fourth Quarter 2018 Distribution of $0.25 Per Share ($0.083 Per Share Per Month)

Waltham, Mass., August 10, 2018 – Great Elm Capital Corp. (“we,” “us,” “our” or “GECC”), (NASDAQ: GECC), today announced its financial results for the quarter ended June 30, 2018 and filed its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission (“SEC”).

FINANCIAL HIGHLIGHTS⁽¹⁾

▪ Net investment income (“NII”) for the quarter ended June 30, 2018 was approximately $6.1 million, or $0.57 per share, which was in excess of our declared monthly base distribution of $0.083 per share (or approximately $0.25 per share for the quarter) for the same period and equated to a nearly 2.3x base distribution coverage.  

▪ On August 8, 2018, the Board of Directors (the “Board”) declared monthly distributions of $0.083 per share for the fourth quarter of 2018, representing a yield of approximately 8.4% of June 30, 2018 net asset value (“NAV”).  

▪ Net assets on June 30, 2018 were approximately $125.6 million. NAV per share on June 30, 2018 was $11.79, as compared to $11.79 per share on March 31, 2018.

▪ We had approximately $810 thousand of net realized gains on portfolio investments that were monetized during the quarter ended June 30, 2018, or approximately $0.08 per share, and net unrealized depreciation of investments of approximately ($4.2) million, or approximately ($0.40) per share.

▪ During the quarter ended June 30, 2018, we invested approximately $37.9 million across eight investments⁽²⁾, which were all existing portfolio investments. During the quarter ended June 30, 2018, we monetized approximately $27.7 million across 12 investments (in part or in full).⁽³⁾

“Our team delivered another solid quarter, with NII significantly covering our distribution. Additionally, I am encouraged by our team’s efforts in monetizing the legacy portfolio, as well as with the business momentum exhibited by Avanti Communications Group plc, our largest position,” said Peter A. Reed, GECC’s President and Chief Executive Officer.  

PORTFOLIO AND INVESTMENT ACTIVITY

As of June 30, 2018, we held 29 debt investments across 23 companies, totaling approximately $185.4 million and representing 85.4% of invested capital and 93.0% of the fair market value of investments.

1

First lien and / or senior secured debt investments comprised 100.0% of the fair market value of our debt investments as of the same date.

As of June 30, 2018, the weighted average current yield on our debt portfolio was 11.1% with approximately 54.8% of invested debt capital, as measured by fair value of investments at quarter end, in floating rate instruments.

During the quarter ended June 30, 2018, we deployed approximately $37.9 million⁽²⁾ into eight investments (all existing portfolio companies). The weighted average price of the new debt investments was 99% of par, carrying a weighted average current yield of 10.9%. All of these investments are first lien and / or senior secured investments.

During the quarter ended June 30, 2018, we monetized 12 investments, in part or in full, for approximately $27.7 million⁽³⁾, at a weighted average current yield of 10.4%. Our weighted average realization price was 100% of par.

LEGACY FULL CIRCLE PORTFOLIO

In the 21 months since the Full Circle Capital Corporation (“Full Circle”) merger closed, we have been working diligently to monetize the legacy portfolio. During that time, we have exited 23 positions across 15 portfolio companies realizing an aggregate total return of $4.4million on these positions, which represents 108% of NAV, a significant achievement given the market’s assessment of this portfolio.

Subsequent to quarter end, we received a significant paydown on our investment in The Selling Source, LLC (“Selling Source”), further reducing our exposure to the legacy Full Circle portfolio. Additionally, subsequent to the close of the quarter, we monetized our warrants in RiceBran Technologies Corporation (“Ricebran”), another legacy Full Circle position. Please refer to the updates below under: Recent Developments / Portfolio Investments. Including the paydown of the loan to Selling Source and the sale of the RiceBran warrants, the monetization of the legacy Full Circle portfolio is approximately 73% of the cost basis.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the quarter ended June 30, 2018 was approximately $7.2 million, or $0.67 per share. Net expenses for the quarter ended June 30, 2018 were approximately $1.1 million, or $0.10 per share.  

Net realized gains for the quarter ended June 30, 2018 were approximately $810 thousand, or $0.08 per share. Net unrealized depreciation from investments for the quarter ended June 30, 2018 was approximately ($4.2) million, or ($0.40) per share.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2018, available liquidity from cash and money market investments was approximately $8.5 million, exclusive of our holdings of United States Treasury Bills. Total debt outstanding as of June 30, 2018 was $79.0 million, comprised of our 6.50% senior notes due September 2022 (NASDAQ: GECCL) and our 6.75% senior notes due January 2025 (NASDAQ: GECCM).

RECENT DEVELOPMENTS

Distributions:

On August 8, 2018, our Board declared the monthly distributions for the fourth fiscal quarter of 2018 at $0.083 per share. 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

Our distribution policy has been designed to set an annual base distribution rate that is covered by NII. From time to time, as catalyst-driven investments are realized or when we out-earn our declared distributions, we intend to supplement monthly distributions with special distributions from NII generated in excess of the declared distributions.⁽⁴⁾  

Leverage:

As of June 30, 2018, we had approximately $79.0 million in par value of debt outstanding with an asset coverage ratio of 255% and debt to equity ratio of 0.63x.

Portfolio Investments:

▪ Avanti Communications Group plc (“Avanti”)

▪ In June 2018, Avanti announced the final award of up to $20.075 million from the arbitration proceedings against the Ministry of Defence of the Republic of Indonesia in recovering the sums payable under its lease agreement for its Artemis satellite. While Avanti was originally due to be paid by July 31, 2018, Avanti and the Republic of Indonesia agreed to extend the payment date to August 14, 2018.

▪ Also, in June 2018, Avanti announced that it had signed a $10 million contract with Viasat Inc. to provide Viasat with leased capacity on its newly launched HYLAS 4 satellite. This contract has an initial period of two years.

▪ Selling Source

▪ In July 2018, in connection with the sale of one of its businesses, DataX, Ltd., Selling Source paid down $3.8 million of our outstanding $5.7 million first lien, senior secured holding. The remainder of the outstanding investment was restructured with GECC receiving $1.25 million of first out term loan bearing interest at a rate of 3-month LIBOR plus 5%, which matures on January 13, 2020.

▪ RiceBran

▪ In July 2018, we exercised all of our RiceBran 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.

▪ Subsequent Investments / Monetizations⁽⁵⁾:

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

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

▪ In July 2018, we purchased an additional $2.5 million of par value of Sungard Availability Services Capital, Inc.’s first lien senior secured term loan at a price of approximately 99% of par value.

▪ In August 2018, we purchased an additional $2.65 million face value of SESAC HoldCo II LLC’s second lien loan in the secondary market at a price just below par.

▪ In August 2018, we sold our entire position in Foresight Energy LP’s first lien term loan at par.

▪ In August 2018, we acquired $2 million of California Pizza Kitchen, Inc.’s first lien term loan in the secondary market at a price of approximately 98% of par value. This first lien term loan matures in August of 2022 and bears interest at a rate of LIBOR + 600 basis points.

CONFERENCE CALL AND WEBCAST

Great Elm Capital Corp. will host a conference call and webcast on Friday, August 10, 2018 at 10:00 a.m. Eastern time to discuss its second quarter financial results. All interested parties are invited to participate in the conference call by dialing +1 (844) 820-8297; international callers should dial +1 (661) 378-9758. Participants should enter the Conference ID 3184429when asked. For a copy of the slide presentation that will be referenced during the course of our conference call, please visit: http://www.investor.greatelmcc.com/events-and-presentations/presentations.

The presentation will also be published before the opening of the financial markets on Friday, August 10, 2018.  Additionally, the conference call will be webcast simultaneously at: https://edge.media-server.com/m6/p/xaxebatk.

About Great Elm Capital Corp.

Great Elm Capital Corp. is an externally managed, specialty finance company focused on investing in debt instruments of middle market companies. GECC elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. GECC focuses on special situations and catalyst-driven investments as it seeks to generate attractive, risk-adjusted returns through both current income and capital appreciation.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this communication that are not historical facts are “forward-looking” statements within the meaning of the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “expect,” “anticipate,” “should,” “will,” “estimate,” “designed,” “seek,” “continue,” “upside,” “potential” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, the price of GECC common stock and the performance of GECC’s portfolio and investment manager. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the SEC. GECC assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this communication or to conform prior statements to actual results or revised expectations except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

This press release does not constitute an offer of any securities for sale.

Media & Investor Contact:

Meaghan K. Mahoney

Senior Vice President

+1 (617) 375-3006

investorrelations@greatelmcap.com

Endnotes:

⁽¹⁾ The per share figures are based on a weighted average of shares outstanding for the three months ended June 30, 2018, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements.

⁽²⁾ This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and PIK interest. Amounts included herein do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.

⁽³⁾ This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.

⁽⁴⁾ There can be no assurance that any such supplemental amounts will be received or realized, or even if received and realized, distributed or available for distribution. Past distributions are not indicative of future distributions. Distributions are declared by the Board out of the funds legally available therefor. Though GECC intends to pay distributions monthly, it is not obligated to do so.

⁽⁵⁾ This deployment and monetization activity does not include revolver draws or ordinary course amortization payments.

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 10,652,401shares 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.

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.

GREAT ELM CAPITAL CORP.

Per Share Data (unaudited)

	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

⁽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.

EX-99.2

Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended June 30, 2018 August 10, 2018 © 2018 Great Elm Capital Corp. Exhibit 99.2

© 2018 Great Elm Capital Corp. Disclaimer Statements in this communication that are not historical facts are “forward-looking” statements within the meaning of the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “target,” “opportunity,” “sustained,” “positioning,” “designed,” “create,” “seek,” “would,” “could”, “continue,” “ongoing,” “upside,” “increases,” and “potential,” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, the price of Great Elm Capital Corp. (“GECC”) common stock, and performance of GECC’s portfolio and investment manager. Additional information concerning these and other factors can be found in GECC’s Form 10-K and other reports filed with the Securities and Exchange Commission (the “SEC”). GECC assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this communication or to conform prior statements to actual results or revised expectations, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. You should consider the investment objective, risks, charges and expenses of GECC carefully before investing. GECC’s filings with the SEC contain this and other information about GECC and are available by contacting GECC at the phone number and address at the end of this presentation. The SEC also maintains a website that contains the aforementioned documents. The address of the SEC’s website is http://www.sec.gov. These documents should be read and considered carefully before investing.   The performance, distributions and financial data contained herein represent past performance, distributions and results and neither guarantees nor is indicative of future performance, distributions or results. Investment return and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than the original cost. GECC’s market price and net asset value will fluctuate with market conditions. Current performance may be lower or higher than the performance data quoted. All information and data, including portfolio holdings and performance characteristics, is as of June 30, 2018, unless otherwise noted, and is subject to change. This presentation does not constitute an offer of any securities for sale.

GECC Snapshot GECC Investment Objective Investment Strategy Externally managed, special situations-focused BDC Common stock trades as “GECC” and baby bonds as “GECCL” and “GECCM” on NASDAQ $0.083 per share monthly distribution1 Great Elm Capital Group, Inc., the parent company of Great Elm Capital Management, Inc. (“GECM”), owns approximately 18.5% of GECC’s common stock, creating a strong alignment of interest between the BDC and its external manager To generate both current income and capital appreciation, while seeking to protect against risk of capital loss To apply the key principles of value investing to the capital structures of predominantly middle-market companies Portfolio (as of 6/30/2018) $286.6 million of total assets; $199.3 million of portfolio fair value; $125.6 million of net asset value Weighted average current yield of 11.1%2 Invested in 24 companies across more than 20 industries and 34 investments (29 debt, five equity) (1) Based on distributions that have been declared through December 2018. Past distributions are not indicative of future distributions. Distributions are declared by the Board by the funds legally available therefor. Though GECC intends to pay distributions monthly, it is not obligated to do so. Please refer to “Distribution Policy & Declared Distributions” later in this presentation. (2) Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. © 2018 Great Elm Capital Corp.

© 2018 Great Elm Capital Corp. Financial & Portfolio Review (Quarter Ended 6/30/2018)

© 2018 Great Elm Capital Corp. Financial Highlights: Per Share Data Q2/20173 Q3/20173 Q4/20173 Q1/20183 Q2/20183 Earnings Per Share (“EPS”) $(0.20) ($0.77) $0.47 ($0.38) $0.25 Net Investment Income (“NII”) Per Share $0.29 $0.32 $0.60 $0.36 $0.57 Net Realized Gains / (Losses) Per Share $0.11 $0.01 $0.02 $0.03 $0.08 Net Unrealized Gains / (Losses) Per Share ($0.60) ($1.16) ($0.16) ($0.77) ($0.40) Net Asset Value Per Share at Period End $13.29 $12.38 $12.42 $11.79 $11.79 Distributions Paid / Declared Per Share $0.249 $0.249 $0.449 $0.249 $0.249 (3) The per share figures are based on a weighted average of outstanding shares for the preceding quarter, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements. Financial Highlights – Per Share Data

© 2018 Great Elm Capital Corp. Financial Highlights: Portfolio Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Capital Deployed $17.9 million $49.3 million $46.1 million $63.2 million $37.9 million Investments Monetized $37.6 million $18.9 million $39.7 million $29.1 million $27.7 million Total Fair Value of Investments at Period End4 $131.6 million $153.1 million $164.9 million $194.8 million $199.3 million Net Asset Value at Period End $153.7 million $132.8 million $132.3 million $125.6 million $125.6 million Total Assets at Period End $213.7 million $218.3 million $239.9 million $257.1 million $286.6 million Total Debt Outstanding at Period End (Par Value) $33.6 million $66.3 million5 $32.6 million $79.0 million $79.0 million Debt to Equity Ratio at Period End 0.22x 0.50x5 0.25x 0.63x 0.63x Cash and Money Market Investments at Period End4 $58.9 million $60.3 million $18.9 million $29.9 million $8.5 million (4) Cash and money market investments does not include our holdings in United States Treasury Bills. Total Fair Value of Investments does not include investments in short-term securities, including United States Treasury Bills and money market mutual funds. (5) Includes the legacy Full Circle notes (ticker: FULLL), which were redeemed on 10/20/2017 with the proceeds from the GECCL note issuance and cash on the balance sheet. Financial Highlights - Portfolio

© 2018 Great Elm Capital Corp. Financial Review Total investment income for the quarter ended June 30, 2018 was approximately $7.2 million, or $0.67 per share Net expenses for the quarter ended June 30, 2018 were approximately $1.1 million, or $0.10 per share Net investment income for the quarter ended June 30, 2018 was approximately $6.1 million, or $0.57 per share Net realized gains for the quarter ended June 30, 2018 were approximately $810 thousand, or $0.08 per share Net unrealized depreciation of investments for the quarter ended June 30, 2018 was approximately ($4.2) million, or ($0.40) per share The per share figures are based on a weighted average of shares outstanding for the quarter ended June 30, 2018, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements.

© 2018 Great Elm Capital Corp. Financial Review: Quarterly Operating Results (6) The per share figures are based on a weighted average of the shares outstanding for the preceding quarter, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements. (7) Total investment income includes PIK income and net accretion of OID and market discount. Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 ($ in Thousands) Per Share6 Per Share6 Per Share6 Per Share6 Per Share6 Total Investment Income7 $6,237 $0.52 $6,466 $0.58 $9,710 $0.92 $7,498 $0.70 $7,162 $0.67 Interest Income 6,138 0.51 6,347 0.57 9,613 0.91 7,365 0.69 6,982 0.66 Dividend & Other Income 99 0.01 119 0.01 97 0.01 133 0.01 180 0.01 Net Operating Expenses 2,759 0.24 2,896 0.26 3,277 0.32 3,632 0.34 1,084 $0.10 Management fees 546 0.05 547 0.05 612 0.06 693 0.07 754 0.07 Incentive fees 871 0.07 890 0.08 1,610 0.15 966 0.09 (2,149) (0.20) Total Investment Management fees 1,417 0.12 1,437 0.13 2,222 0.21 1,659 0.16 (1,395) (0.13) Administration fees 272 0.02 287 0.03 308 0.03 310 0.03 487 0.05 Directors’ fees 21 0.00 40 0.00 48 0.01 49 0.00 50 0.00 Interest expense 631 0.05 717 0.06 60 0.01 1,275 0.12 1,456 0.14 Professional services (incl. merger expenses) 176 0.01 212 0.02 294 0.03 171 0.02 294 0.03 Custody fees 11 0.00 10 0.00 28 0.00 14 0.00 15 0.00 Other 156 0.01 193 0.02 193 0.02 154 0.01 177 0.02 Fees Waivers and Expense Reimbursement 75 0.01 0 0.00 0 0.00 0 0.00 0 0.00 Income Tax, Including Excise Tax 0 0.00 0 0.00 124 0.01 0 0.00 0 0.00 Net Investment Income $3,478 $0.29 $3,570 $0.32 $6,433 $0.60 $3,866 $0.36 $6,078 $0.57

© 2018 Great Elm Capital Corp. Portfolio Highlights: Quarter Ended 6/30/2018 11.1% Weighted average current yield on portfolio8 93.0% Percentage of the portfolio (based on fair value of investments) invested in 1st lien and/or senior secured instruments $0.87 Weighted average dollar price of debt investments in the portfolio, representative of our special situations investment approach9 As of June 30, 2018, over 80%10 of the portfolio, as measured by fair value of investments, was invested in ideas that are representative of the manner in which GECM intends to manage the portfolio going forward (8) Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. (9) Weighted average dollar price is based on the stated par value and fair value of outstanding debt securities at the measurement date. (10) The balance of the portfolio remains in legacy Full Circle positions that were acquired in the merger with Full Circle.

© 2018 Great Elm Capital Corp. Portfolio Overview: Quarter Ended 6/30/2018 29 Debt Investments $185.4 million Fair Value Invested in Debt Instruments 54.8% in Floating Rate Instruments (Based on % of Fair Value) 11.1%11 Weighted Average Current Yield 85.4% Of Invested Capital in Debt Instruments (100% of fair value in first lien / senior secured) Five Equity Investments $14.0 million Fair Value Invested in Equity Instruments Debt Investments: Equity Investments: 14.6% Of Invested Capital in Equity Investments (11) Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. Amounts in the above tables do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.

© 2018 Great Elm Capital Corp. Portfolio Activity: Quarter Ended 6/30/2018 $37.9 million Capital deployed into eight investments with a weighted average dollar price of $0.99 and a weighted average current yield of 10.9%12 $27.7 million Monetized (in part or full) 12 investments at a weighted average dollar price of par and a weighted average current yield of 10.4%13 (12) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and PIK interest. Amounts included herein are exclusive of investments in short-term securities, including United States Treasury Bills and money market mutual funds. Weighted average dollar price is based upon the stated par value and fair value of outstanding debt securities at the measurement date. Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. (13) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein are exclusive of investments in short-term securities, including United States Treasury Bills and money market mutual funds. Weighted average dollar price is based upon the stated par value and fair value of outstanding debt securities at the measurement date. Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date.

Portfolio Activity: Additional Investments © 2018 Great Elm Capital Corp. Additional Investments During Q2/2018, we made investments in five companies (all existing portfolio companies), deploying approximately $13.8 million. A brief snapshot of these investments is as follows: This deployment activity does not include revolver draws or PIK interest. Aptean – acquired an additional $1.8 million face value of this second lien loan in the secondary market at a price of 101% of par value Michael Baker – acquired an additional $5 million face value of this second lien bond in the secondary market at a price of approximately 95% of par value SESAC – acquired an additional $500 thousand face value of this second lien loan in the secondary market at a price just below par Sungard – acquired an additional $3.0 million face value of this first lien loan of 2022 in the secondary market at a price of approximately 99% of par value Tallage Davis – funded $3.75 million of this originated first lien term loan at par

© 2018 Great Elm Capital Corp. Portfolio Activity Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Dollar Value of New Investments14 $17.9 million $49.3 million $49.1 million $63.2 million $37.9 million Weighted Average Price of New Debt Investments $0.99 $0.96 $0.97 $0.99 $0.99 Weighted Average Current Yield of New Debt Investments 11.1% 10.6% 11.4% 10.2% 10.9% % of New Debt Investments - 1st Lien / Senior Secured Instruments 100% 100% 100% 100% 100% Dollar Value of Monetized Investments15 $37.6 million $18.9 million $39.7 million $29.1 million $27.7 million Weighted Average Price of Monetized Debt Investments $1.02 $1.00 $1.00 $1.00 $1.00 Weighted Average Current Yield of Monetized Debt Investments 10.2% 11.2% 10.4% 11.1% 10.4% % of Monetized Debt Investments - 1st Lien / Senior Secured Instruments 77% 100% 100% 100% 100% (14) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and PIK interest. Amounts included herein are exclusive of investments in short-term securities, including United States Treasury Bills and money market mutual funds. Weighted average dollar price is based upon the stated par value and fair value of outstanding debt securities at the measurement date. Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. (15) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein are exclusive of investments in short-term securities, including United States Treasury Bills and money market mutual funds. Weighted average dollar price is based upon the stated par value and fair value of outstanding debt securities at the measurement date. Weighted average current yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. Portfolio Rotation: New Investments vs. Monetized Investments

Portfolio Breakdown: Asset Type and Interest Rate Type ($ in Thousands) Portfolio by Asset Type Portfolio by Interest Rate Type Investments:   Investments at Fair Value   % of Total Portfolio 1st Lien / Senior Secured Debt   $185,418 93.0% Unsecured Debt   - 0.0% Equity / Other   13,971 7.0% Total Investments at Fair Value   $199,389 100.0%     Count   Investments at Fair Value   % of Debt Holdings Fixed Rate   8 $83,729 45.2% Floating Rate   21 101,689 54.8%     29 $185,418 100.0% Weighted average fixed rate yield of 11.05%16 Weighted average floating rate yield of 11.15%16 (16) Weighted average fixed rate current yield is based upon the stated coupon rate and fair value of outstanding fixed rate debt securities at the measurement date. Amounts in the above tables do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds. © 2018 Great Elm Capital Corp.

© 2018 Great Elm Capital Corp. Portfolio Breakdown: Asset Type (End of Period Investments - % of FMV)

© 2018 Great Elm Capital Corp. Portfolio Breakdown: Interest Rate (End of Period Investments - % of FMV)

© 2018 Great Elm Capital Corp. Portfolio Breakdown: Industry Amounts in the above table do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.

Monetization of the Legacy Full Circle Assets © 2018 Great Elm Capital Corp. In the 21 months since the Full Circle merger closed, we have been working diligently to monetize what was largely viewed as a challenged legacy portfolio, as evidenced by the steep discount to NAV at which Full Circle’s shares were trading prior to and subsequent to the merger announcement. During that time, we have exited 23 positions across 15 portfolio companies realizing an aggregate total return of approximately $4.4 million on these positions, representing approximately 108% of NAV, a significant achievement given the market’s assessment of this portfolio Subsequent to quarter end, we received a significant paydown on our investment in The Selling Source, LLC, further reducing our exposure to the legacy Full Circle portfolio. Additionally, subsequent to the close of the quarter, we monetized our warrants in RiceBran Technologies Corporation, another legacy Full Circle position. Including the paydown and sale brings the monetization of the day one legacy portfolio to approximately 73% of the cost basis Company Name Initial Cost IRR17 Cash-on-Cash Return Pristine Environments $ 10,574 10.78% 1.02x PR Wireless, Inc. (Term Loan & Warrants) $ 9,348 18.62% 1.25x Aptean Inc $ 7,163 15.92% 1.02x Sundberg America LLC $ 6,493 21.01% 1.02x 310E53RD, LLC $ 5,976 10.44% 1.05x RiceBran Technologies $ 3,564 91.58% 1.08x GC Pivotal $ 3,116 25.61% 1.02x JN Medical Corporation $ 1,750 473.53% 1.58x Attention Transit Advertising Systems $ 1,736 24.03% 1.02x Ads Direct Media, Inc. $ 745 -100.00% 0.00x Background Images $ 563 39.44% 1.03x US Shale $ 386 303.21% 1.30x Texas Westchester Financial, LLC $ 68 -12.83% 0.88x Infinite Aegis Group, LLC $ - N/A N/A Modular Process Control, LLC $ - N/A N/A (17) All IRR information is presented at the issuer level.

Avanti: Update About Avanti: Avanti is a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. Avanti’s satellites utilize Ka-band frequencies, enabling higher speed and volume at lower cost. It is a carrier’s carrier, selling managed service wholesale to service providers in four markets: enterprise, government, carrier services, and consumer broadband GECC’s debt investment in Avanti is secured by a collateral package that consists of satellites in orbit (HYLAS 1, 2 and 4), one satellite under construction (HYLAS 3), ground earth stations, spectrum and orbital slots Recent Events: In June 2018, Avanti announced the final award of up to $20.075 million from the arbitration proceedings against the Ministry of Defence of the Republic of Indonesia in recovering the sums payable under its lease agreement for its Artemis satellite. While Avanti was originally due to be paid by July 31, 2018, they extended the payment date to August 14, 2018 Also, in June 2018, Avanti announced that it had signed a $10 million contract with Viasat Inc. to provide Viasat with leased capacity on its newly launched HYLAS 4 satellite. This contract has an initial period of two years © 2018 Great Elm Capital Corp.

Subsequent Events (through August 8, 2018) © 2018 Great Elm Capital Corp. In July 2018, we purchased an additional $2 million of par value of Commercial Barge Line Company’s first lien term loan at a price of approximately 72% of par value In July 2018, we purchased $478 thousand of par value of PFS Holdings Corp.’s first lien term loan at a price of approximately 60% of par value In July 2018, we purchased an additional $2.5 million of par value of Sungard Availability Services Capital, Inc.’s 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 $3.8 million of our outstanding $5.7 million first lien, senior secured holding. The remainder of the outstanding investment was restructured with GECC receiving $1.25 million of first out term loan bearing interest at a rate of 3-month LIBOR plus 5%, which matures on January 13, 2020 This deployment and monetization activity does not include revolver draws or ordinary course amortization payments.

Subsequent Events (through August 8, 2018) © 2018 Great Elm Capital Corp. In August 2018, we purchased an additional $2.65 million face value of SESAC HoldCo II LLC’s second lien loan in the secondary market at a price just below par In August 2018, we sold our entire position in Foresight Energy LP’s first lien term loan at par In August 2018, we acquired $2 million of California Pizza Kitchen, Inc.’s first lien term loan in the secondary market at a price of approximately 98% of par value. This first lien term loan matures in August of 2022 and bears interest at a rate of LIBOR + 600 basis points This deployment and monetization activity does not include revolver draws or ordinary course amortization payments.

© 2018 Great Elm Capital Corp. Capital Activity

© 2018 Great Elm Capital Corp. Distribution Policy & Declared Distributions (18) There can be no assurance that any such supplemental amounts will be received or realized, or even if received and realized, distributed or available for distribution. Past distributions are not indicative of future distributions. Distributions are declared by the Board out of the funds legally available therefor. Though GECC intends to pay distributions monthly, it is not obligated to do so. On May 3, 2018, we declared our monthly Q3/2018 distribution amount and schedule; we generated $0.57 in NII per share during the quarter, equating to a nearly 2.3x distribution coverage On August 8, 2018, we declared our monthly Q4/2018 distribution amount and schedule; this distribution rate of $0.083 per share per month represents an annual distribution of approximately 8.4% of 6/30/2018 NAV We intend to supplement these distributions with special distributions from NII in excess of the declared distribution and as catalyst-driven investments are realized18 Month Rate Record Date Payable Date July $0.083 July 31, 2018 August 15, 2018 August $0.083 August 31, 2018 September 14, 2018 September $0.083 September 28, 2018 October 15, 2018 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

© 2018 Great Elm Capital Corp. Appendix

Appendix: General Risks Debt instruments are subject to credit and interest rate risks.   Credit risk refers to the likelihood that an obligor will default in the payment of principal or interest on an instrument. Financial strength and solvency of an obligor are the primary factors influencing credit risk. In addition, lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument, and debt instruments that are rated by rating agencies are often reviewed and may be subject to downgrade. Our debt investments either are, or if rated would be, rated below investment grade by independent rating agencies. These “junk bonds” and “leveraged loans” 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.   Interest rate risk refers to the risks associated with market changes in interest rates. Interest rate changes may affect the value of a debt instrument indirectly (especially in the case of fixed rate obligations) or directly (especially in the case of an instrument whose rates are adjustable). In general, rising interest rates will negatively impact the price of a fixed rate debt instrument and falling interest rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among other factors).   GECC utilizes leverage to seek to enhance the yield and net asset value of its common stock. These objectives will not necessarily be achieved in all interest rate environments. The use of leverage involves risk, including the potential for higher volatility and greater declines of GECC’s net asset value, fluctuations of dividends and other distributions paid by GECC and the market price of GECC’s common stock, among others. The amount of leverage that GECC may employ at any particular time will depend on, among other things, our Board’s and our adviser’s assessment of market and other factors at the time of any proposed borrowing.   As part of our lending activities, we may purchase notes or make 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 financings 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. © 2018 Great Elm Capital Corp.

Appendix: Contact Information © 2018 Great Elm Capital Corp. Investor Relations Meaghan K. Mahoney Senior Vice President 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com