Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

This section of this Form 10-K generally discusses 2025 and 2024 items and year to year comparisons between 2025 and 2024. For the discussion of 2024 compared to 2023, see "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024, which specific discussion is incorporated herein by reference. The information contained in this section should be read in conjunction with the financial statements and notes thereto in Part II, Item 8 of this Form 10-K, "Financial Statements and Supplementary Data." This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K, "Risk Factors." Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" appearing elsewhere in this Form 10-K.

Overview

On April 23, 2024, we contributed investments in certain CLOs and formed a joint venture, the CLO Formation JV, LLC (the "CLO JV") to facilitate the creation of CLOs. The CLO JV invests primarily in the subordinated note securities in CLOs (colloquially referred to as "CLO equity"), as well as loan accumulation facilities (colloquially referred to as "CLO warehouses"). CLO subordinated note securities are entitled to recurring distributions which are generally equal to the residual cash flow of payments received from underlying securities after contractual payments to more senior CLO mezzanine debt holders and fund expenses.

On September 1, 2023, we contributed investments in certain of our operating company subsidiaries and other specialty finance assets to our formerly wholly owned subsidiary, GESF in exchange for equity and subordinated indebtedness in GESF. In connection with this contribution, a strategic investor purchased approximately 12.5% of the equity interests and subordinated indebtedness in GESF. Through its subsidiaries, GESF provides a variety of financing options along a "continuum of lending" to middle-market borrowers including, receivables factoring, asset-based and asset-backed lending, lender finance, and equipment financing. GESF expects to generate both revenue and cost synergies across its specialty finance company subsidiaries.

On September 27, 2016, we and GECM, our external investment manager, entered into the Investment Management Agreement and the Administration Agreement, and we began to accrue obligations to our external investment manager. On August 1, 2022, upon receiving our stockholders' approval, we and GECM entered into the Amendment to reset the Capital Gains Incentive Fee to begin on April 1, 2022, which eliminated $163.2 million of realized and unrealized losses incurred prior to April 1, 2022 in calculating future incentive fees. In addition, the Income Incentive Fee was amended to reset the mandatory deferral commencement date used in calculating deferred incentive fees to April 1, 2022. The Investment Management Agreement renews for successive annual periods, subject to requisite approvals from our Board and/or stockholders.

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.

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including, among others, the amount of debt and equity capital available from other sources to middle-market companies, 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 as well as 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 "The Company-Certain U.S. Federal Income Tax Matters."

Revenues

We generate revenue primarily from interest on the debt investments that we hold. We may also generate revenue from dividends on the equity investments that we hold, capital gains on the disposition of investments, and lease, fee, and 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. The 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. In addition, our expenses include interest on our outstanding indebtedness.

Critical Accounting Policies and Estimates

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. 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.

GECM, as the Board's valuation designee, 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.

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 and 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, and 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.

Both observable and unobservable inputs are subject to some level of uncertainty and assumptions used bear the risk of change in the future. We utilize the best information available to us, including the factors listed above, in preparing the fair valuations. In determining the fair value of any individual investment, we may use multiple inputs or utilize more than one approach to calculate the fair value to assess the sensitivity to change and determine a reasonable range of fair value. In addition, our valuation procedures include an assessment of the current valuation as compared to the previous valuation for each investment and where differences are material understanding the primary drivers of those changes, incorporating updates to our current valuation inputs and approaches as appropriate.

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.

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.

We assess the outstanding accrued income receivables for collectability at least quarterly, or more frequently if there is an event that indicates the underlying portfolio company may not be able to make the expected payments. If it is determined that amounts are not likely to be paid we may establish a reserve against or reverse the income and put the investment on non-accrual status.

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 specific identification method.

Net change in unrealized appreciation or depreciation reflects the net change in portfolio investment fair 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.

Portfolio and Investment Activity

The following is a summary of our investment activity for the years ended December 31, 2025 and 2024:

Portfolio Reconciliation

The following is a reconciliation of the investment portfolio for the years ended December 31, 2025 and 2024. Investments in short-term securities, including U.S. Treasury Bills and money market mutual funds, are excluded from the table below.

Portfolio Classification

The following table shows the fair value of our portfolio of investments by industry as of December 31, 2025 and 2024 (in thousands):

Results of Operations

Investment Income

Investment income consists of interest income, including net amortization of premium and accretion of discount on loans and debt securities, dividend income and other income, which primarily consists of amendment fees, commitment fees and funding fees on loans. For the years ended December 31, 2025 and 2024, income includes non-cash PIK income of $3.3 million and $3.0 million, respectively. PIK income was 6.5% of total investment income for the year ended December 31, 2025 as compared to 7.7% for the year ended December 31, 2024. The aggregate amount of PIK income increased during the year ended December 31, 2025 as the number of investments with a PIK component increased during the year, however the PIK income share of total investment income declined.

Interest income increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to an increase in the average debt investment portfolio size, partially offset by lower average coupon rates driven by a decrease in SOFR throughout the year.

Dividend income increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to the investment in CLO Formation JV, LLC, which was formed in the prior year and pays periodic dividends to its equity holders.

Other commitment fees decreased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 due to the termination of revolver commitments and associated commitment fees. Other income increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to non-refundable carry fees and amendment fees on new and amended debt positions.

Expenses

Expenses are largely comprised of advisory fees and administration fees paid to GECM and interest expense on our outstanding notes payable. See "-Liquidity and Capital Resources." Advisory fees include management fees and incentive fees calculated in accordance with the Investment Management Agreement, and administration fees include direct costs reimbursable to GECM under the Administration Agreement and fees paid for sub-administration services.

Overall expenses for the year ended December 31, 2025 increased as compared to the year ended December 31, 2024 primarily due to interest expense as a result of the issuance of $57.5 million in aggregate principal amount of 7.75% notes due 2030 (the "GECCG Notes") in September and October 2025, partially offset by the redemption of $18.5 million in aggregate principal amount of 5.875% notes due 2026 ("GECCO Notes") in December 2025.

Management fees increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 due to increases in the underlying management fee assets which primarily consists of the fair value of the portfolio of investments.

Incentive fees increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 due to higher pre-incentive net investment income during the year ended December 31, 2025, primarily attributable to the increase in dividend income as compared to the year ended December 31, 2024.

The increase in administration fees for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is attributable to an increase in underlying costs allocated under the administrative agreement with GECM.

Professional services costs increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to increased legal expenses associated with specific transaction matters, as well as general rate increases for professional services including valuation and accounting costs.

Realized Gains (Losses)

Realized gain for the year ended December 31, 2025 includes $4.6 million in gains from distributions from our investment in CW Opportunity 2 LP and $4.2 million in gains from the sale of our investment in Nice-PAK promissory note and warrants. Realized loss for the year ended December 31, 2025 includes $12.3 million on the sale of our investments in Dynata second out term loan and common equity as well as $1.4 million in realized loss from the partial sale of our investment in First Brands Group, LLC ("First Brands") Junior DIP loan.

Realized gain for the year ended December 31, 2024 includes $0.8 million in gains from the partial sale of our investment in American Coastal Insurance Corp ("ACIC") unsecured bond and $0.7 million in gains from the partial sale of our investment in Blackstone Secured Lending Fund common equity. Realized loss for the year ended December 31, 2024 includes $0.6 million on the realization of our investment in PFS Holdings Corp. term loan and $0.5 million in loss from the realization of our investment in Blue Ribbon, LLC term loan.

Change in Unrealized Appreciation (Depreciation) on Investments

The following table summarizes the significant unrealized appreciation (depreciation) of our investment portfolio.

For the year ended December 31, 2025, unrealized appreciation primarily consisted of $10.1 million attributable to the reversal of previously recognized unrealized depreciation in connection with the sale of our investment in Dynata, a $1.1 million increase in the fair value of our investment in Stone Ridge, and a $0.5 million increase in the fair value of our investment in Trouvaille.

Unrealized depreciation for the year ended December 31, 2025 was primarily attributable to decreases in the fair value of certain portfolio investments. These decreases included approximately $16.9 million related to our investments in First Brands, approximately $11.3 million related to our investment in CLO JV, approximately $5.2 million related to our investments in Del Monte Foods Corp., approximately $4.1 million related to our investment in Maverick Gaming LLC, and approximately $4.5 million related to our investment in Flexsys Holdings.

The decrease in the fair value of our investments in First Brands reflects the impact of alleged fraudulent activity identified at the company and the resulting uncertainty regarding its financial condition and future prospects. CLO JV, which holds underlying investments in First Brands, also experienced a decline in fair value due to broader market pressures affecting CLO equity valuations, including asset spread tightening and increased dispersion in the broadly syndicated loan market. The decrease in the fair value of Del Monte Foods Corp. reflects the company's filing for bankruptcy and an extended Section 363 auction process which increased uncertainty regarding ultimate recoverability of the pre-petition term loan and junior roll-up DIP loan. The decrease in the fair value of Flexsys Holdings reflects a weaker outlook for domestic tire production and its anticipated impact on operating performance.

For the year ended December 31, 2024 , unrealized appreciation was primarily driven by an increase in the fair value of our investment in Nice-Pak Products warrants of approximately $2.0 million and in our investment in CW Opportunity 2 LP of approximately $1.2 million.

Unrealized depreciation for the year ended December 31, 2024 was primarily driven by a decrease in fair value of approximately $5.8 million in our investments in Dynata, LLC (f/k/a Research Now Group, Inc.) and approximately $4.0 million in our investment in GESF common equity. The mark downs on our investments in Dynata were due to a slowdown in the demand for their services from a weak mergers and acquisitions environment leading to a bankruptcy filing in May 2024. The decrease in fair value on GESF was attributable to weaker than planned new deal originations.

Liquidity and Capital Resources

We generate liquidity through our operations with cash received from investment income and sales and paydowns on investments. Such proceeds are generally reinvested in new investment opportunities, distributed to shareholders in the form of dividends, or used to pay operating expenses. We also receive proceeds from our issuances of notes payable and our revolving credit facility and from time to time may raise additional equity capital. See "-Revolver" and "-Notes Payable" below for more information regarding our outstanding credit facility and notes.

As of December 31, 2025, we had approximately $3.1 million of money market fund investments at fair value. As of December 31, 2025, we had investments in 68 debt instruments across 53 companies, totaling approximately $203.5 million at fair value and 21 equity investments in 18 companies, with an aggregate fair value of approximately $94.8 million.

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 December 31, 2025, we had no unfunded commitments to provide financing to certain of our portfolio companies.

For the year ended December 31, 2025, net cash used in operating activities was approximately $2.8 million, reflecting the purchases and proceeds from sales of investments and principal repayments of investments offset by net investment income, including non-cash income related to accretion of discount and PIK income and proceeds from sales of investments and principal payments received. Net cash used in purchases and proceeds from sales of investments was approximately $22.0 million, reflecting payments for additional investments of $182.1 million, offset by proceeds from principal repayments and sales of $160.1 million.

For the year ended December 31, 2024, net cash used in operating activities was approximately $82.7 million, reflecting the purchases and proceeds from sales of investments and principal repayments of investments offset by net investment income, including non-cash income related to accretion of discount and PIK income and proceeds from sales of investments and principal payments received. Net cash used in purchases and proceeds from sales of investments was approximately $93.6 million, reflecting payments for additional investments of $335.0 million, offset by proceeds from principal repayments and sales of $241.4 million.

For the year ended December 31, 2025, cash provided by financing activities was $4.6 million, which consisted of $57.5 million in net proceeds from the issuance of the GECCG Notes and $27.3 million in issuances of common stock, which was partially offset by $58.7 million in net payments on the redemption of the GECCZ and GECCO Notes and $19.2 million in distributions to stockholders.

For the year ended December 31, 2024, cash provided by financing activities was $81.7 million, which consisted of $97.9 million in net proceeds from the issuance of the GECCI Notes and GECCH Notes and $48.7 million in issuances of common stock, which was partially offset by $45.6 million in payments on the redemption of the GECCM Notes and $15.1 million in distributions to stockholders.

We believe we have sufficient liquidity available to meet our short-term and long-term obligations for at least the next 12 months and for the foreseeable future thereafter.

Contractual Obligations and Cash Requirements

A summary of our material contractual payment obligations and other cash obligations as of December 31, 2025 is as follows:

See "-Revolver" and "-Notes Payable" below for more information regarding our outstanding credit facility and notes.

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. On August 1, 2022, our stockholders approved an amendment to the Investment Management Agreement to eliminate $163.2 million of realized and unrealized losses incurred prior to April 1, 2022 from the calculation of future capital gains incentive fees and reset the capital gain incentive fee and mandatory deferral periods in Sections 4.4 and 4.5, respectively, of the Investment Management Agreement to begin on April 1, 2022.

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.

Revolver

On May 5, 2021, we entered into the Loan Agreement with CNB. The Loan Agreement provides for a senior secured revolving line of credit of up to $25 million (subject to a borrowing base as defined in the Loan Agreement). In November 2023, the Company entered into an amendment to the Loan Agreement extending the maturity date of the revolving line to May 5, 2027. On August 13, 2025, the Company amended the Loan Agreement to increase the commitment of the revolving line of credit to up to $50 million (subject to a borrowing base as defined in the Loan Agreement). The amendment also allows the Company to request an increase of the Revolving Facility in an aggregate amount not to exceed $40 million (up to a revolving line of $90 million), which increase is subject to the sole discretion of CNB and updates the maturity date of the revolving line to the earlier of (i) May 5, 2027 and (ii) May 31, 2026 if the Company's 5.875% notes due 2026 have not been refinanced prior to such date. In addition, the amendment provides that borrowings under the Revolving Facility shall bear interest at a rate equal to (i) at all times when a minimum deposit test is met (a) SOFR plus 2.50% or (b) a base rate plus 1.50% and (ii) at all times when a minimum deposit test is not met (a) SOFR plus 3.50% or (b) a base rate plus 2.50%. The amendment also amended the financial covenant of minimum net assets requirement to be of not less than $80 million. As of December 31, 2025, there were no borrowings outstanding under the revolving line.

Borrowings under the revolving line are secured by a first priority security interest in substantially all of our assets, subject to certain specified exceptions. We have made customary representations and warranties and are required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar loan agreements. In addition, the Loan Agreement contains financial covenants requiring (i) net assets of not less than $80 million, (ii) asset coverage equal to or greater than 150% and (iii) bank asset coverage equal to or greater than 300%, in each case tested as of the last day of each fiscal quarter of the Company. Borrowings are also subject to the leverage restrictions contained in the Investment Company Act.

Interest Rate Risk

We are also subject to financial risks, including changes in market interest rates. As of December 31, 2025, approximately $159.8 million in principal amount of our debt investments bore interest at variable rates, which are generally based on SOFR or US prime rate, and many of which are subject to certain floors. Recently, interest rates have fallen. A prolonged decrease in interest rates would decrease our gross investment income and could result in a decrease in our net investment income if such decreases in interest rates are not offset by a corresponding increase in the spread over variable rates that we earn on any portfolio investments or a decrease in our operating expenses. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" for an analysis of the impact of hypothetical base rate changes in interest rates.

Recent Developments

Our Board set a distribution for the quarter ending March 31, 2026 at a rate of $0.30 per share. The full amount of the distribution will be from distributable earnings. The distribution will be payable on March 31, 2026 to stockholders of record as of March 16, 2026. The distribution will be paid in cash.

In February 2026, GECM waived all accrued and unpaid incentive fees through March 31, 2026. As of December 31, 2025, there were approximately $2.3 million of accrued incentive fees payable. We expect to recognize the reversal of these accrued incentive fees during the period ending March 31, 2026, resulting in a corresponding increase in net income in that period.

On February 27, 2026, we caused a notice to be issued to the holders of the GECCO Notes regarding the exercise of our option to redeem $20 million aggregate principal amount of the issued and outstanding GECCO Notes on March 31, 2026.

As of December 31, 2025, net assets were $112.9 million and net asset value per share was $8.07. Pro forma for the reversal of accrued incentive fees payable and the GECCO Notes redemption, net assets would be $115.1 million and net asset value per share would be $8.23.