UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~June 30, ~~2018~~2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 814-00878

Garrison Capital Inc.

(Exact name of registrant as specified in its charter)

Delaware

90-0900145

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1290 Avenue of the Americas, Suite 914

New York, New York 10104

(Address of principal executive offices)

~~(212) 372-9590~~

(Registrant’s telephone number, including area code): (212) 372-9590

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	GARS	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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. ☒☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 2, 2018~~August 6, 2019 the Registrant had 16,049,352 shares of common stock, $0.001 par value, outstanding.

Table of Contents

		Page
Part I.	Financial Information

Item 1.	Financial Statements	1

	Consolidated Statements of Financial Condition as of ~~September~~June 30, ~~2018~~2019 (unaudited) and December 31, ~~2017~~2018	1

	Consolidated Schedules of Investments as of ~~September~~June 30, ~~2018~~2019 (unaudited) and December 31, ~~2017~~2018	2

	Consolidated Statements of Operations (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017~~2018	1719

	Consolidated Statements of Changes in Net Assets (unaudited) for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017~~2018	1820

	Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017~~2018	1921

	Notes to Consolidated Financial Statements (unaudited)	2022

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4849

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6465

Item 4.	Controls and Procedures	6465

Part II.	Other Information

Item 1.	Legal Proceedings	6566

Item 1A.	Risk Factors	6566

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6567

Item 3.	Defaults Upon Senior Securities	6567

Item 4.	Mine Safety Disclosures	6567

Item 5.	Other Information	6567

Item 6.	Exhibits	6667

Garrison Capital Inc. and Subsidiaries

Consolidated Statements of Financial Condition

($ in thousands, except share and per share amounts)

Part I. Financial Information

Item 1. Financial Statements

	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
	(unaudited)						(unaudited)
Assets
Cash	$	29,370		$	14,895		$	853		$	6,191
Restricted cash		25,651			4,621			29,131			39,531
Due from counterparties		1,337			4,560			2,219			58
Due from affiliates		—			509
Investments, at fair value
Non-control/non-affiliate investments (amortized cost of $386,202 and $395,683, respectively)		380,268			394,730
Non-control/affiliate investments (amortized cost of $4,112 and $0, respectively)		2,698			—
Non-control/non-affiliate investments (amortized cost of $481,492 and $466,500, respectively)								474,016			452,347
Non-control/affiliate investments (amortized cost of $3,685 and $3,715, respectively)								1,480			1,630
Control/affiliate investments (amortized cost of $11,209 and $0, respectively)								11,209			—
Accrued interest receivable		2,127			3,492			3,312			2,585
Other assets		1,331			1,389			1,465			1,624
Total assets	$	442,782		$	424,196		$	523,685		$	503,966

Liabilities
Due to counterparties	$	15,041		$	1,921		$	5,895		$	23,390
Management fee payable (Note 5)		1,504			100
Administrator fee payable (Note 5)		245			—
Senior secured revolving note (Note 4)		20,500			19,700			47,500			8,000
Senior secured term notes (Note 4)		164,668			164,511			241,240			241,149
SBIC borrowings (Note 4)		58,297			48,320			58,432			58,343
GLC Trust 2013-2 Class A note (Note 4)		—			—
Management fee payable (Note 5)								1,680			49
Incentive fee payable (Note 5)								620			271
Administrator fee payable (Note 5)								203			—
Accrued interest payable		1,231			1,308			2,169			3,040
Accrued expenses and other payables		761			678			613			812
Total liabilities	$	262,247		$	236,538		$	358,352		$	335,054

Commitments and contingencies (Note 9)

Net assets
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 16,758,779 shares issued and 16,049,352 shares outstanding as of both September 30, 2018 and December 31, 2017	$	17		$	17
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 16,758,779 shares issued and 16,049,352 shares outstanding as of both June 30, 2019 and December 31, 2018							$	17		$	17
Paid-in-capital in excess of par		249,124			249,124			249,124			249,124
Underdistributed net investment income		3,857			4,307
Accumulated net realized loss from investments		(65,107	)		(64,821	)
Net unrealized loss from investments		(7,356	)		(969	)
Total distributable earnings/(loss)								(83,808	)		(80,229	)
Total net assets		180,535			187,658			165,333			168,912
Total liabilities and net assets	$	442,782		$	424,196		$	523,685		$	503,966

Shares of common stock outstanding		16,049,352			16,049,352			16,049,352			16,049,352
Net asset value per share	$	11.25		$	11.69		$	10.30		$	10.52

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Common Equity

Building Products

Valterra Products Holdings, LLC, Class A

N/A

N/A

N/A

N/A

185,847

$
186

$
864

0.48
%
Valterra Products Holdings, LLC, Class B

N/A

N/A

N/A

N/A

20,650

21

96

0.05

207

960

0.53

Commercial Services and Supplies

Faraday Holdings, LLC, Common

N/A

N/A

N/A

N/A

2,752

140

734

0.41

140

734

0.41

Healthcare Equipment and Services

Juniper TGX Investment Partners, LLC, Common

N/A

N/A

N/A

N/A

3,146

671

1,477

0.82

671

1,477

0.82

Household Products and Durables

Oneida Group Inc., Common

N/A

N/A

N/A

N/A

844,557

3,919

2,948

1.63

3,919

2,948

1.63

Transportation Services

EZE Trucking, LLC, Common

N/A

N/A

N/A

N/A

2,898

268

—

—

268

—

—

Total Common Equity

$
5,205

$
6,119

3.39
%

Preferred Equity

Diversified Financial Services

Prosper Marketplace Series B Preferred Stock⁽¹⁾⁽²⁾

N/A

N/A

N/A

N/A

912,865

$
551

$
640

0.35
%

551

640

0.35

Total Preferred Equity

$
551

$
640

0.35
%

Debt Investments

Aerospace and Defense

Constellis Holdings, LLC, Term Loan*

2.39%

5.00%

7.39%

4/21/2024

997

$
995

$
985

0.55
%
Novetta Solutions, Term Loan*

2.25%

5.00%

7.25%

10/16/2022

1,990

1,944

1,920

1.06

Vertex Aerospace Services Corp., Term Loan*

2.24%

4.75%

6.99%

6/29/2025

1,825

1,816

1,841

1.02

4,755

4,746

2.63

Air Freight and Logistics

Gruden Acquisition, Inc., Term Loan (First Lien)*

2.39%

5.50%

7.89%

8/18/2022

2,471

2,448

2,487

1.38

2,448

2,487

1.38

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Equity Investments
Building Products
Valterra Products Holdings, LLC, Class A LLC Units	N/A	N/A	N/A	N/A		185,847	$	186	$	784		0.47	%
Valterra Products Holdings, LLC, Class B LLC Units	N/A	N/A	N/A	N/A		20,650		21		87		0.05
								207		871		0.52

Commercial Services and Supplies
Faraday Holdings, LLC, LLC Units	N/A	N/A	N/A	N/A		2,752		140		725		0.44
								140		725		0.44

Healthcare Equipment and Services
Juniper TGX Investment Partners, LLC, LLC Units	N/A	N/A	N/A	N/A		3,146		671		3,336		2.02
								671		3,336		2.02

Household Products and Durables
Oneida Group Inc., Common Stock	N/A	N/A	N/A	N/A		1,085,565		4,160		1,591		0.96
								4,160		1,591		0.96

Diversified Financial Services
Prosper Marketplace, Inc., Series B Preferred Stock⁽¹⁾⁽²⁾	N/A	N/A	N/A	N/A		912,865		551		640		0.39
								551		640		0.39

Total Equity Investments							$	5,729	$	7,163		4.33	%

Debt Investments
Aerospace and Defense
Constellis Holdings, LLC, Term Loan*	2.58%	5.00%	7.58%	4/22/2024		3,347	$	3,300	$	2,510		1.52	%
Novetta Solutions, Term Loan*	2.41%	5.00%	7.41%	10/17/2022		1,974		1,938		1,935		1.17
Vertex Aerospace Services Corp., Initial Term Loan*	2.40%	4.50%	6.90%	6/30/2025		1,811		1,803		1,815		1.10
								7,041		6,260		3.79

Air Freight and Logistics
Gruden Acquisition, Inc., Term Loan (First Lien)*	2.33%	5.50%	7.83%	8/18/2022		2,452		2,434		2,434		1.47
Kane is Able, Inc., Term Loan**	2.45%	7.00%	9.45%	3/13/2024		6,504		6,380		6,378		3.86
								8,814		8,812		5.33

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets			Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost			Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Investments - United States
Debt Investments (continued)
Auto Components
BBB Industries LLC (GC EOS Buyer), Term Loan*														2.40%	4.50%	6.90%	8/1/2025		3,474	$	3,466		$	3,456		2.09	%
Challenge Mfg. Company, LLC, Term Loan B*	2.25%	6.50%	8.75%	4/20/2022		8,001	$	7,929	$	7,925		4.39	%	2.41%	6.50%	8.91%	4/20/2022		7,677		7,621			7,638		4.62
FRAM Group Holdings Inc. (Autoparts Holdings), Term Loan*	2.24%	6.75%	8.99%	12/23/2021		7,333		7,239		7,370		4.08
								15,168		15,295		8.47
Holley Purchaser, Inc., Term Loan*														2.58%	5.00%	7.58%	10/24/2025		6,587		6,493			6,389		3.86
Shipston Equity Holdings, LLC, Term Loan*⁽⁴⁾														2.60%	6.94%	9.54%	9/28/2023		5,847		5,797			5,796		3.51
Winter Park Intermediate, Inc. (Wheel Pros), Term Loan*														2.40%	4.75%	7.15%	4/4/2025		2,638		2,612			2,612		1.58
																					25,989			25,891		15.66
Building Products
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Revolver	2.08%	8.25%	10.33%	2/15/2023		29		29		29		0.02
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Term Loan**	2.08%	8.25%	10.33%	2/15/2023		7,377		7,248		7,082		3.92		2.44%	8.25%	10.69%	2/15/2023		6,991		6,890			6,432		3.89
Janus International Group, LLC, Tranche B-2 Term Loan*														2.40%	4.50%	6.90%	2/12/2025		2,227		2,195			2,227		1.35
								7,277		7,111		3.94									9,085			8,659		5.24

Chemicals
Aristech Surfaces LLC, Term Loan B*	2.13%	7.00%	9.13%	10/17/2019		9,038		9,005		8,997		4.98		2.50%	7.00%	9.50%	10/17/2019		8,860		8,851			8,674		5.25
Profusion Industries, LLC, Term Loan*⁽⁵⁾	2.44%	12.25%	14.69%	6/19/2020		9,270		9,188		2,781		1.54
								18,193		11,778		6.52									8,851			8,674		5.25

Commercial Services and Supplies
Del Mar Recovery Solutions, Inc., Term Loan**	2.25%	8.50%	10.75%	6/27/2021		7,726		7,652		7,572		4.19		2.33%	8.50%	10.83%	6/28/2021		7,653		7,600			7,653		4.63
DMT Solutions Global Corporation (Pitney Bowes), Term Loan*	2.53%	7.00%	9.53%	7/2/2024		7,202		6,995		7,112		3.94		2.50%	7.00%	9.50%	7/2/2024		6,928		6,756			6,634		4.01
Interior Logic Group, Term Loan*	2.34%	4.00%	6.34%	5/31/2025		6,527		6,496		6,519		3.61		2.33%	4.00%	6.33%	5/30/2025		6,478		6,451			6,373		3.85
Staples, Inc., Term Loan*	2.34%	4.00%	6.34%	9/12/2024		2,995		2,944		2,995		1.66
Staples, Inc., 2019 Refinancing New Term B-1 Loan*														2.60%	5.00%	7.60%	4/16/2026		3,000		2,971			2,876		1.74
USAGM Holdco, LLC, Incremental Term Loan*														2.40%	4.25%	6.65%	7/28/2022		2,888		2,873			2,888		1.75
USAGM Holdco, LLC, Initial Term Loan (First Lien)*	2.39%	3.75%	6.14%	7/28/2022		995		986		979		0.54		2.40%	3.75%	6.15%	7/28/2022		987		980			987		0.60
VIP Cinema Holdings, Inc., Term Loan*	2.25%	6.00%	8.25%	3/1/2023		1,465		1,459		1,468		0.81		2.41%	6.00%	8.41%	3/1/2023		4,938		4,926			4,568		2.76
								26,532		26,645		14.75									32,557			31,979		19.34

Construction and Engineering
Brand Energy & Infrastructure Services, Inc., Term Loan*														2.54%	4.25%	6.79%	6/21/2024		1,988		1,920			1,919		1.16
GeoStabilization International, Term Loan*														2.33%	5.50%	7.83%	12/19/2025		3,340		3,309			3,332		2.02
QualTek USA, LLC, Term Loan*	2.24%	5.75%	7.99%	7/18/2025		4,516		4,438		4,449		2.46		2.58%	5.75%	8.33%	7/18/2025		5,885		5,785	��		5,731		3.47
								4,438		4,449		2.46									11,014			10,982		6.65

Containers and Packaging
Ball Metalpack Finco LLC, Term Loan*	2.24%	4.50%	6.74%	7/31/2025		550		547		555		0.31		2.52%	4.50%	7.02%	7/31/2025		546		543			537		0.32
Klockner Pentaplast of America, Inc., Term Loan*⁽¹⁾	2.24%	4.25%	6.49%	6/30/2022		2,641		2,566		2,563		1.42		2.40%	4.25%	6.65%	6/30/2022		4,606		4,491			4,070		2.46
								3,113		3,118		1.73									5,034			4,607		2.78

Diversified Financial Services
AIS Holdco, LLC, Term Loan*	2.31%	5.00%	7.31%	8/15/2025		2,715		2,702		2,701		1.50
Financial & Risk US Holdings, Inc. (Refinitiv), Term Loan*	2.26%	3.75%	6.01%	9/18/2025		2,205		2,200		2,199		1.22
PlanMember Financial Corporation, Term Loan*⁽¹⁾	3.00%	5.00%	8.00%	12/31/2020		1,607		1,594		1,598		0.89
								6,496		6,498		3.61

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Diversified Telecommunication Services

Fusion Connect, Inc., Tranche B Term Loan (First Lien)*⁽¹⁾

2.34%

7.50%

9.84%

5/4/2023

7,331

$
7,062

$
6,946

3.85
%
Onvoy, LLC, Term Loan*

2.39%

4.50%

6.89%

2/10/2024

2,992

2,983

2,924

1.62

U.S. Telepacific Corp., Term Loan B*

2.39%

5.00%

7.39%

5/2/2023

7,190

7,138

7,058

3.91

17,183

16,928

9.38

Electrical Equipment

Luminii LLC, Term Loan*

2.34%

6.25%

8.59%

4/11/2023

7,299

7,231

7,230

4.00

7,231

7,230

4.00

Energy Equipment and Services

NGS US FinCo, LLC, Term Loan*

2.21%

4.25%

6.46%

8/24/2025

2,715

2,702

2,728

1.51

2,702

2,728

1.51

Food Products

Diamond Crystal Brands, Inc., Term Loan**⁽⁴⁾

2.39%

9.75%

12.14%

7/29/2021

5,460

5,428

5,378

2.98

Gold Coast Bakeries, LLC, Revolver*

2.24%

5.75%

7.99%

9/27/2022

1,188

1,188

1,188

0.66

Gold Coast Bakeries, LLC, Term Loan**

2.24%

5.75%

7.99%

9/27/2022

9,402

9,309

8,932

4.95

Mother's Market & Kitchen, Inc, Term Loan**⁽⁴⁾

2.25%

5.83%

8.08%

7/26/2023

7,814

7,701

7,700

4.27

23,626

23,198

12.86

Healthcare Equipment and Services

AC Merger Sub, Inc. (Analogic), Term Loan*

2.21%

6.00%

8.21%

6/22/2024

8,582

8,500

8,499

4.71

ActivStyle, Inc., Term Loan***

2.38%

7.50%

9.88%

7/9/2020

10,447

10,380

10,447

5.79

Aurora Diagnostics, LLC, Delayed Draw Term Loan*

2.34%

7.13%

9.47%

7/31/2019

850

849

850

0.47

Aurora Diagnostics, LLC, Delayed Draw Term Loan B*

2.35%

7.13%

9.48%

7/31/2019

598

597

598

0.33

Aurora Diagnostics, LLC, Delayed Draw Term Loan C*

2.34%

7.13%

9.47%

7/31/2019

1,056

1,047

1,056

0.58

Aurora Diagnostics, LLC, Delayed Draw Term Loan D

2.34%

7.13%

9.47%

7/31/2019

173

173

173

0.10

Aurora Diagnostics, LLC, Revolver*

2.34%

7.13%

9.47%

7/31/2019

935

935

935

0.52

Aurora Diagnostics, LLC, Term Loan*

2.35%

7.13%

9.48%

��
7/31/2019

5,286

5,276

5,286

2.93

Community Care Health Network, LLC, Term Loan*

2.29%

4.75%

7.04%

2/16/2025

1,396

1,393

1,402

0.78

LifeScan Global Corp., Term Loan*

2.40%

6.00%

8.40%

10/1/2024

1,954

1,912

1,930

1.07

Maxor Acquisition, Inc., Term Loan*

2.37%

6.00%

8.37%

11/22/2023

8,967

8,890

8,888

4.92

Theragenics Corporation, Term Loan**

2.39%

12.00%

14.39%

12/23/2020

10,071

9,969

10,071

5.58

49,921

50,135

27.78

Hotels, Restaurants and Leisure

AP Gaming I, LLC, Term Loan B*

2.24%

4.25%

6.49%

2/15/2024

9,875

9,855

9,924

5.50

Bravo Brio Restaurant Group, Inc., Term Loan*⁽⁴⁾

2.25%

6.50%

8.75%

5/24/2023

8,302

8,187

8,185

4.53

CircusTrix Holdings, LLC, Term Loan B*

2.24%

5.50%

7.74%

12/16/2021

6,001

5,950

5,949

3.30

HRI Holding Corp. (Houlihans Restaurants), Term Loan*

2.39%

6.25%

8.64%

12/17/2020

6,343

6,284

6,026

3.34

30,276

30,084

16.67

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Diversified Financial Services
Acrisure, LLC, Term Loan*	2.52%	4.25%	6.77%	11/22/2023		1,489	$	1,479	$	1,480		0.90	%
AIS Holdco, LLC, Term Loan*	2.58%	5.00%	7.58%	8/15/2025		2,664		2,652		2,584		1.56
Financial & Risk US Holdings, Inc. (Refinitiv), Term Loan*	2.40%	3.75%	6.15%	10/1/2025		2,194		2,189		2,126		1.29
Integrity Marketing Acquisition, LLC, Delayed Draw Term Loan*	2.33%	4.25%	6.58%	11/28/2025		740		740		736		0.45
Integrity Marketing Acquisition, LLC, Term Loan*	2.33%	4.25%	6.58%	11/28/2025		5,253		5,229		5,227		3.16
PlanMember Financial Corporation, Term Loan*⁽¹⁾	3.00%	5.00%	8.00%	6/21/2024		1,600		1,591		1,596		0.97
								13,880		13,749		8.33
Diversified Telecommunication Services
Fusion Connect, Inc., DIP Loan*⁽¹⁾⁽³⁾	2.42%	10.00%	12.42% PIK	10/7/2019		249		246		245		0.15
Fusion Connect, Inc., Bridge Loan*⁽¹⁾⁽³⁾	5.50%	9.00%	14.50% PIK	10/7/2019		249		242		238		0.14
Fusion Connect, Inc., Tranche B Term Loan (First Lien)*⁽¹⁾⁽³⁾	5.50%	6.50%	12.00% PIK	5/4/2023		7,574		7,355		6,503		3.93
KORE Wireless Group Inc., Term B Loan*	2.33%	5.50%	7.83%	12/20/2024		8,219		8,144		8,142		4.92
Onvoy, LLC, Term Loan*	2.33%	4.50%	6.83%	2/12/2024		2,969		2,962		2,627		1.59
U.S. Telepacific Corp., Term Loan B*	2.33%	5.00%	7.33%	5/2/2023		7,190		7,147		6,829		4.13
								26,096		24,584		14.86

Electrical Equipment
Electrical Components International, Inc., Term Loan*	2.33%	4.25%	6.58%	6/26/2025		4,962		4,945		4,516		2.73
Luminii LLC, Term Loan*	2.59%	6.25%	8.84%	4/11/2023		7,244		7,188		7,226		4.37
Verifone Systems, Inc., Term Loan*	2.52%	4.00%	6.52%	8/20/2025		1,990		1,990		1,925		1.16
								14,123		13,667		8.26

Energy Equipment and Services
BJ Services, LLC, Term Loan*	2.59%	7.00%	9.59%	1/3/2023		6,697		6,637		6,636		4.01
NGS US FinCo, LLC, Term Loan*	2.40%	4.25%	6.65%	10/1/2025		2,701		2,689		2,695		1.63
								9,326		9,331		5.64

Food Products
Gold Coast Bakeries, LLC, Revolver*	2.40%	5.75%	8.15%	9/27/2022		2,771		2,771		2,771		1.68
Gold Coast Bakeries, LLC, Term Loan**	2.40%	5.75%	8.15%	9/27/2022		9,379		9,303		8,441		5.11
Mother's Market & Kitchen, Inc, Term Loan**⁽⁴⁾	2.41%	6.03%	8.44%	7/26/2023		7,814		7,719		7,715		4.67
Quirch Foods Holdings, LLC, Initial Term Loan*	2.40%	6.00%	8.40%	12/19/2025		4,556		4,513		4,533		2.74
US Salt, LLC, Initial Term Loan*⁽¹⁾	2.40%	4.75%	7.15%	1/16/2026		1,336		1,323		1,334		0.81
								25,629		24,794		15.01

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

��

Investments - United States

Debt Investments (continued)

Household Products and Durables

Brown Jordan International Inc., Term Loan*

2.24%

5.00%

7.24%

1/31/2023

5,772

$
5,739

$
5,750

3.19
%
CR Brands, Inc., Term Loan*⁽³⁾

2.11%

11.25%

13.36% PIK

12/31/2018

6,331

6,331

6,331

3.51

Innocor, Inc. (Comfort Holding, LLC), Term Loan*

2.24%

4.75%

6.99%

2/3/2024

1,992

1,938

1,918

1.06

NBG Acquisition Inc., Term Loan*

2.59%

5.50%

8.09%

4/26/2024

5,224

5,159

5,250

2.91

University Furnishings, L.P., Term Loan***⁽⁴⁾

2.08%

7.46%

9.54%

10/13/2022

9,500

9,396

9,500

5.26

28,563

28,749

15.93

Internet Software and Services

Aptos, Inc., Term Loan*

2.24%

5.50%

7.74%

7/23/2025

7,814

7,738

7,765

4.30

Corel Corporation, Term Loan*⁽¹⁾⁽⁴⁾

2.31%

5.00%

7.31%

6/4/2024

5,470

5,418

5,497

3.04

Emtec Global Services Holdings, LLC, Revolver⁽³⁾

2.07%

16.25%

18.32% PIK

11/30/2020

429

429

429

0.24

Emtec Global Services Holdings, LLC, Term Loan**⁽³⁾

2.07%

16.25%

18.32% PIK

11/30/2020

3,592

3,575

3,592

1.99

Exela Intermediate LLC, Term Loan*⁽¹⁾

2.33%

6.50%

8.83%

7/12/2023

5,424

5,344

5,488

3.04

Intermedia Holdings, Inc., Term Loan*

2.36%

6.00%

8.36%

7/19/2025

2,750

2,728

2,757

1.53

LANDesk Group, Inc., Term Loan*

2.08%

4.25%

6.33%

1/20/2024

2,707

2,694

2,726

1.51

Lionbridge Technologies, Inc., Term Loan*

2.24%

5.50%

7.74%

2/28/2024

3,228

3,227

3,230

1.79

Newscycle Solutions, Inc., Delayed Draw Term Loan

2.10%

7.00%

9.10%

12/29/2022

802

802

788

0.44

Newscycle Solutions, Inc., Revolver

2.23%

7.00%

9.23%

12/29/2022

329

329

323

0.18

Newscycle Solutions, Inc., Term Loan*

2.24%

7.00%

9.24%

12/29/2022

8,767

8,619

8,614

4.77

RA Outdoors LLC (Active Network), Term Loan*

2.17%

4.75%

6.92%

9/11/2024

7,903

7,833

7,832

4.34

Vero Parent, Inc. (fka Syncsort Incorporated), Initial Term Loan (First Lien)*

2.24%

5.00%

7.24%

8/16/2024

8,910

8,810

8,906

4.93

57,546

57,947

32.10

Leisure Products

Bass Pro Group, LLC, Initial Term Loan*

2.24%

5.00%

7.24%

9/25/2024

5,693

5,659

5,747

3.18

Confluence Outdoor, LLC, Delayed Draw Term Loan⁽³⁾

2.11%

10.75%

12.86% PIK

4/18/2019

968

967

872

0.48

Confluence Outdoor, LLC, Supplemental Loan⁽³⁾

2.12%

10.75%

12.87% PIK

11/29/2018

333

333

300

0.17

Confluence Outdoor, LLC, Term Loan⁽³⁾

2.11%

10.75%

12.86% PIK

4/18/2019

6,456

6,444

5,810

3.22

Playpower, Inc., Initial Term Loan (First Lien)*

2.39%

4.75%

7.14%

6/23/2021

1,392

1,389

1,399

0.77

14,792

14,128

7.82

Media

Project Sunshine IV Pty Ltd, 2017 Incremental Term Loan*⁽¹⁾

2.24%

7.00%

9.24%

8/22/2022

5,328

5,267

5,328

2.95

5,267

5,328

2.95

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Healthcare Equipment and Services
AC Merger Sub, Inc. (Analogic), Term Loan*	2.40%	6.00%	8.40%	6/24/2024		8,518	$	8,447	$	8,444		5.11	%
ActivStyle, Inc., Term Loan**	2.63%	7.50%	10.13%	7/9/2020		10,329		10,291		10,329		6.25
Community Care Health Network, LLC, Term Loan*	2.35%	4.75%	7.10%	2/18/2025		1,386		1,383		1,355		0.82
LifeScan Global Corp., Term Loan*	2.66%	6.00%	8.66%	10/1/2024		2,747		2,671		2,616		1.58
Maxor Acquisition, Inc., Term Loan*	2.33%	5.50%	7.83%	11/22/2023		8,899		8,834		8,830		5.34
SSC (Lux) Limited Sarl (Surgical Specialties), Term Loan*	2.55%	5.00%	7.55%	5/6/2025		4,408		4,365		4,363		2.64
Theragenics Corporation, Term Loan**	2.35%	8.00%	10.35%	5/31/2024		8,888		8,825		8,888		5.38
								44,816		44,825		27.12
Hotels, Restaurants and Leisure
Bravo Brio Restaurant Group, Inc., Term Loan*⁽⁴⁾	2.41%	6.74%	9.15%	5/24/2023		8,302		8,205		7,887		4.77
CircusTrix Holdings, LLC, Term Loan B*	2.40%	5.50%	7.90%	12/16/2021		5,955		5,917		5,915		3.58
HRI Holding Corp. (Houlihans Restaurants), Term Loan*	5.50%	7.25%	12.75%	12/17/2020		6,247		6,209		5,622		3.40
								20,331		19,424		11.75
Household Products and Durables
Brown Jordan International Inc., Term Loan*	2.35%	5.00%	7.35%	1/31/2023		5,728		5,701		5,413		3.27
Comfort Holding, LLC (Innocor, Inc.), Term Loan*	2.40%	4.75%	7.15%	2/5/2024		2,970		2,882		2,967		1.79
CR Brands, Inc., Term Loan⁽³⁾	2.44%	11.25%	13.69% PIK	7/10/2019		6,353		6,353		6,353		3.84
NBG Acquisition Inc., Term Loan*	2.33%	5.50%	7.83%	4/26/2024		5,714		5,656		5,442		3.29
University Furnishings, L.P., Term Loan***⁽⁴⁾	2.61%	9.33%	11.94%	10/13/2022		10,830		10,731		10,830		6.55
								31,323		31,005		18.74

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Pharmaceuticals

Akorn, Inc., Loan*

2.25%

4.75%

7.00%

4/16/2021

2,000

$
1,965

$
1,935

1.07
%
RiteDose Holdings I, Inc., Term Loan*

2.34%

6.75%

9.09%

9/13/2023

7,997

7,898

7,894

4.37

9,863

9,829

5.44

Professional Services

Censeo Health LLC (Chloe Ox Parent, LLC), Term Loan*

2.39%

4.50%

6.89%

12/21/2024

1,880

1,863

1,882

1.04

1,863

1,882

1.04

Semiconductors and Semiconductor Equipment

Ultra Clean Holdings, Inc., Term Loan*⁽¹⁾

2.24%

4.50%

6.74%

8/27/2025

2,715

2,674

2,678

1.48

2,674

2,678

1.48

Technology Hardware, Storage and Peripherals

Elo Touch Solutions, Inc., Term Loan B*

2.25%

6.00%

8.25%

10/31/2023

4,328

4,291

4,355

2.41

Table Top Media, LLC, Lease**

N/A

10.00%

10.00%

10/15/2019

1,590

1,586

1,589

0.88

5,877

5,944

3.29

Textiles, Apparel and Luxury Goods

Camuto Group LLC, Revolver*

5.00%

2.50%

7.50%

4/20/2019

8,900

8,724

8,945

4.95

Keeco Holdings, LLC, Term Loan*

2.17%

7.00%

9.17%

9/19/2023

4,385

4,342

4,342

2.41

Triangle Home Fashions, LLC, Term Loan**⁽⁴⁾

2.25%

6.75%

9.00%

3/9/2023

10,500

10,337

10,333

5.72

23,403

23,620

13.08

Trading Companies and Distributors

Sprint Industrial Holdings, LLC, Term Loan (First Lien)*

2.39%

5.75%

8.14%

5/14/2019

4,688

4,684

4,512

2.50

4,684

4,512

2.50

Transportation Services

Airxcel, Inc., Term Loan*

2.24%

4.50%

6.74%

4/27/2025

998

995

990

0.55

PS Holdco, LLC, Term Loan*

2.24%

4.75%

6.99%

3/13/2025

2,405

2,395

2,408

1.33

Sirva Worldwide, Term Loan*

2.24%

5.50%

7.74%

8/1/2025

2,654

2,635

2,654

1.47

6,025

6,052

3.35

Total Debt Investments

$
379,916

$
373,099

206.67
%

Financial Assets

Diversified Financial Services

GLC Trust 2013-2 Consumer Loan Pool⁽¹⁾⁽⁶⁾

N/A

N/A

N/A

N/A

577

$
577

$
536

0.30
%

577

536

0.30

Total Financial Assets

$
577

$
536

0.30
%

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Internet Software and Services
Aptos, Inc., Term Loan*	2.40%	5.50%	7.90%	7/23/2025		7,775	$	7,708	$	7,688		4.65	%
BMC Software Finance, Inc., Term Loan*	2.33%	4.25%	6.58%	10/2/2025		2,985		2,962		2,832		1.71
ConvergeOne Holdings, Inc., Initial Term Loan (First Lien)*	2.40%	5.00%	7.40%	1/4/2026		2,201		2,117		2,088		1.26
Corel Corporation, Term Loan*⁽¹⁾	2.52%	5.00%	7.52%	6/4/2024		11,406		11,196		11,252		6.81
Emtec Global Services Holdings, LLC, Revolver⁽³⁾⁽⁵⁾	2.43%	16.25%	18.68% PIK	11/30/2020		497		455		361		0.22
Emtec Global Services Holdings, LLC, Term Loan**⁽³⁾⁽⁵⁾	2.43%	16.25%	18.68% PIK	11/30/2020		4,157		3,810		3,060		1.85
Exela Intermediate LLC, Term Loan*⁽¹⁾	2.35%	6.50%	8.85%	7/12/2023		5,755		5,687		4,892		2.96
HDC/HW Intermediate Holdings, LLC, Revolver*	2.33%	7.50%	9.83%	12/21/2023		232		232		228		0.14
HDC/HW Intermediate Holdings, LLC, Term Loan*	2.33%	7.50%	9.83%	12/21/2023		6,664		6,548		6,535		3.95
Intermedia Holdings, Inc., Term Loan*	2.40%	6.00%	8.40%	7/21/2025		2,737		2,717		2,737		1.66
LANDesk Group, Inc., Term Loan*	2.42%	4.25%	6.67%	1/22/2024		3,680		3,660		3,666		2.22
Lionbridge Technologies, Inc., Term Loan*	2.40%	5.50%	7.90%	2/28/2024		3,178		3,177		3,178		1.92
Newscycle Solutions, Inc., Delayed Draw Term Loan*	2.44%	7.00%	9.44%	12/29/2022		771		771		760		0.46
Newscycle Solutions, Inc., Revolver	2.40%	7.00%	9.40%	12/29/2022		439		438		432		0.26
Newscycle Solutions, Inc., Term Loan*	2.40%	7.00%	9.40%	12/29/2022		8,431		8,313		8,305		5.02
Orbit Purchaser LLC (Orion), Delayed Draw Term Loan*	2.69%	4.50%	7.19%	10/21/2024		758		752		752		0.45
Orbit Purchaser LLC (Orion), Incremental Term Loan*	2.69%	4.50%	7.19%	10/21/2024		1,567		1,553		1,553		0.94
Orbit Purchaser LLC (Orion), Term Loan*	2.55%	4.50%	7.05%	10/21/2024		2,594		2,571		2,570		1.55
Perforce Software, Inc., Term Loan*	2.43%	4.50%	6.93%	12/27/2024		5,344		5,319		5,321		3.22
Quest Software US Holdings Inc., Term Loan*	2.58%	4.25%	6.83%	5/16/2025		2,266		2,250		2,226		1.35
RA Outdoors LLC (Active Network), Term Loan*	2.40%	4.75%	7.15%	9/11/2024		7,843		7,783		7,780		4.71
Travelport Finance (Luxembourg) S.Ã r.l., Term Loan*⁽¹⁾	2.54%	5.00%	7.54%	5/29/2026		2,648		2,597		2,485		1.50
Vero Parent, Inc. (fka Syncsort Incorporated), Initial Term Loan (First Lien)*	2.40%	4.50%	6.90%	8/16/2024		4,853		4,796		4,805		2.91
								87,412		85,506		51.72
Leisure Products
Bass Pro Group, LLC, Initial Term Loan*	2.40%	5.00%	7.40%	9/25/2024		7,138		7,103		6,806		4.12
Playpower, Inc., Initial Term Loan*	2.40%	5.50%	7.90%	5/8/2026		5,289		5,238		5,296		3.20
								12,341		12,102		7.32

Media
Project Sunshine IV Pty Ltd, 2017 Incremental Term Loan*⁽¹⁾	2.40%	7.00%	9.40%	8/22/2022		2,340		2,318		2,328		1.41
								2,318		2,328		1.41

Metals and Mining
Alchemy US Holdco 1, LLC (Kymera), Term Loan*	2.41%	5.50%	7.91%	10/10/2025		2,177		2,148		2,156		1.30
								2,148		2,156		1.30

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Unfunded Commitments

Building Products

Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Revolver

N/A

0.75%

0.75%

2/15/2023

21

$
—

$
—

—
%

—

—

—

Commercial Services and Supplies

Del Mar Recovery Solutions, Inc., Revolver

N/A

0.75%

0.75%

6/27/2021

990

(9
)

—

—

(9
)

—

—

Electrical Equipment

Luminii LLC, Revolver*⁽⁷⁾

N/A

0.50%

0.50%

4/11/2023

515

—

(5
)

—

—

(5
)

—

Food Products

Gold Coast Bakeries, LLC, Revolver*

N/A

0.50%

0.50%

9/27/2022

396

—

—

—

—

—

—

Healthcare Equipment and Services

AC Merger Sub, Inc. (Analogic), Revolver*⁽⁷⁾

N/A

0.50%

0.50%

6/22/2024

318

—

(3
)

—

Aurora Diagnostics, LLC, Delayed Draw Term Loan D

N/A

3.00%

3.00%

7/31/2019

504

(9
)

—

—

Aurora Diagnostics, LLC, Revolver*

N/A

0.38%

0.38%

7/31/2019

85

(2
)

—

—

Maxor Acquisition, Inc., Revolver*⁽⁷⁾

N/A

0.50%

0.50%

11/22/2022

585

(5
)

(5
)

—

(16
)

(8
)

—

Internet Software and Services

Emtec Global Services Holdings, LLC, Revolver

N/A

0.00%

0.00%

11/30/2020

179

(3
)

—

—

Newscycle Solutions, Inc., Revolver⁽⁷⁾

N/A

0.50%

0.50%

12/29/2022

356

(12
)

(6
)

—

(15
)

(6
)

—

Leisure Products

Confluence Outdoor, LLC, Supplemental Loan⁽⁷⁾

N/A

0.00%

0.00%

11/29/2018

999

—

(100
)

(0.06
)

—

(100
)

(0.06
)

Pharmaceuticals

RiteDose Holdings I, Inc., Revolver*⁽⁷⁾

N/A

0.50%

0.50%

9/13/2023

537

(7
)

(7
)

—

(7
)

(7
)

—

Total Unfunded Commitments

$
(47
)

$
(126
)

(0.06
%)

Total Non-Control/Non-Affiliate Investments

$
386,202

$
380,268

210.65
%

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Pharmaceuticals
Akorn, Inc., Loan*⁽¹⁾⁽³⁾	2.44%	6.25% Cash + 0.75% PIK	8.69% Cash + 0.75% PIK	4/16/2021		2,002	$	1,977	$	1,872		1.13	%
RiteDose Holdings I, Inc., Term Loan*	2.59%	6.50%	9.09%	9/13/2023		7,937		7,853		7,886		4.77
								9,830		9,758		5.90

Professional Services
Institutional Shareholder Services Inc., Initial Term Loan (First Lien)*	2.33%	4.50%	6.83%	3/5/2026		4,842		4,796		4,794		2.90
Signify Health, LLC (fka Chloe Ox Parent, LLC), Term Loan*	2.33%	4.50%	6.83%	12/23/2024		1,866		1,851		1,861		1.13
								6,647		6,655		4.03

Retail
Sundance Holdings Group, LLC, Term Loan*⁽⁴⁾	2.51%	6.48%	8.99%	5/1/2024		6,717		6,658		6,656		4.03
								6,658		6,656		4.03
Semiconductors and Semiconductor Equipment
Ultra Clean Holdings, Inc., Term Loan*⁽¹⁾	2.40%	4.50%	6.90%	8/27/2025		2,586		2,552		2,431		1.47
								2,552		2,431		1.47

Technology Hardware, Storage and Peripherals
Elo Touch Solutions, Inc., Term B Loan (First Lien)*	2.43%	6.50%	8.93%	12/15/2025		3,047		2,907		3,021		1.83
Table Top Media, LLC, Lease**	N/A	10.00%	10.00%	10/15/2019		255		254		255		0.15
								3,161		3,276		1.98
Textiles, Apparel and Luxury Goods
Centric Brands Inc., Term Loan*⁽¹⁾⁽⁴⁾	2.58%	6.00%	8.58%	10/27/2023		7,774		7,671		7,669		4.64
Champ Acquisition Corp., Initial Term Loan (First Lien)*⁽⁴⁾	2.33%	5.50%	7.83%	12/19/2025		3,110		3,024		3,071		1.86
Keeco Holdings, LLC, Term Loan*	2.39%	7.75%	10.14%	3/15/2024		5,747		5,682		5,682		3.44
Triangle Home Fashions, LLC, Term Loan**⁽⁴⁾	2.41%	6.88%	9.29%	3/9/2023		10,500		10,364		10,500		6.35
								26,741		26,922		16.29

Trading Companies and Distributors
Cook & Boardman Group LLC, The, Term Loan*	2.62%	5.75%	8.37%	10/17/2025		3,686		3,653		3,668		2.22
Sprint Industrial Holdings, LLC, Term Loan (First Lien)*⁽³⁾	2.33%	5.75% Cash + 1.00% PIK	8.08% Cash + 1.00% PIK	8/15/2019		4,722		4,721		4,722		2.86
								8,374		8,390		5.08

Transportation Services
Airxcel, Inc., Term Loan*	2.40%	4.50%	6.90%	4/28/2025		990		988		931		0.56
PS Holdco, LLC, Term Loan*	2.40%	4.75%	7.15%	3/13/2025		7,446		7,418		7,357		4.45
Sirva Worldwide, Term Loan*	2.45%	5.50%	7.95%	8/4/2025		5,372		5,313		5,207		3.15
								13,719		13,495		8.16

Total Debt Investments							$	475,810	$	466,918		282.44	%

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

~~September~~June 30, ~~2018~~2019 (unaudited)

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Affiliate Investments

Investments - United States

Common Equity

Oil, Gas and Consumable Fuels

Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.), Common

N/A

N/A

N/A

N/A

99

$
4,112

$
2,698

1.49
%

4,112

2,698

1.49

Total Common Equity

$
4,112

$
2,698

1.49
%

Total Non-Control/Affiliate Investments

$
4,112

$
2,698

1.49
%

Total Investments - United States

$
390,314

$
382,966

212.14
%

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost			Fair Value			% of Net Assets
Non-Control/Non-Affiliate Investments
Unfunded Commitments
Building Products
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Revolver	N/A	0.75%	0.75%	2/15/2023		43	$	—		$	—			—	%
								—			—			—

Commercial Services and Supplies
Del Mar Recovery Solutions, Inc., Revolver	N/A	0.75%	0.75%	6/28/2021		990		(7	)		—			—
								(7	)		—			—

Diversified Financial Services
Integrity Marketing Acquisition, LLC, Delayed Draw Term Loan*⁽⁶⁾	N/A	1.00%	1.00%	11/28/2025		242		(5	)		(1	)		—
								(5	)		(1	)		—

Diversified Telecommunication Services
Fusion Connect, Inc., DIP Loan*⁽⁶⁾	N/A	0.00%	0.00%	10/7/2019		243		(4	)		(5	)		—
								(4	)		(5	)		—

Electrical Equipment
Luminii LLC, Revolver*⁽⁶⁾	N/A	0.50%	0.50%	4/11/2023		515		—			(1	)		—
								—			(1	)		—

Healthcare Equipment and Services
AC Merger Sub, Inc. (Analogic), Revolver*⁽⁶⁾	N/A	0.50%	0.50%	6/22/2023		318		—			(3	)		—
Maxor Acquisition, Inc., Revolver*⁽⁶⁾	N/A	0.50%	0.50%	11/22/2022		585		(4	)		(5	)		—
								(4	)		(8	)		—

Internet Software and Services
Emtec Global Services Holdings, LLC, Revolver⁽⁶⁾	N/A	0.00%	0.00%	11/30/2020		159		—			(32	)		(0.02	)
HDC/HW Intermediate Holdings, LLC, Revolver*⁽⁶⁾	N/A	1.00%	1.00%	12/21/2023		438		(12	)		(8	)		—
Newscycle Solutions, Inc., Revolver⁽⁶⁾	N/A	0.50%	0.50%	12/29/2022		247		(9	)		(4	)		—
								(21	)		(44	)		(0.02	)

Pharmaceuticals
RiteDose Holdings I, Inc., Revolver*⁽⁶⁾	N/A	0.50%	0.50%	9/13/2023		537		(6	)		(6	)		—
								(6	)		(6	)		—

Total Unfunded Commitments							$	(47	)	$	(65	)	(0.02)%

Total Non-Control/Non-Affiliate Investments							$	481,492		$	474,016			286.75	%

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

June 30, 2019 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Affiliate Investments
Common Equity
Oil, Gas and Consumable Fuels
Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.), LLC Units	N/A	N/A	N/A	N/A		99	$	3,685	$	1,480		0.90	%
								3,685		1,480		0.90

Total Common Equity							$	3,685	$	1,480		0.90	%

Total Non-Control/Affiliate Investments							$	3,685	$	1,480		0.90	%

Control/Affiliate Company Investments
Common Equity
Leisure Products
GIG Co Holdings LLC (fka Confluence Outdoor, LLC)	N/A	N/A	N/A	N/A		11,209	$	11,209	$	11,209		6.78	%
								11,209		11,209		6.78

Total Common Equity							$	11,209	$	11,209		6.78	%

Total Control/Affiliate Company Investments							$	11,209	$	11,209		6.78	%

Total Investments							$	496,386	$	486,705		294.45	%

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

June 30, 2019 (unaudited)

($ in thousands, except share amounts)

*	Denotes that all or a portion of the investment is held as collateral by Garrison Funding ~~2016-2~~2018-2 Ltd.

**	Denotes that all or a portion of the loan is held as collateral by Garrison Capital SBIC LP.

***	Denotes that all or a portion of the loan is held as collateral by ~~both~~ Garrison Funding ~~2016-2~~2018-2 Ltd. and Garrison Capital SBIC LP.

Base Rate = Our floating rate investments bear interest at a base rate plus a spread. Generally, the borrower has an option to choose whether the base rate is referenced to the London Interbank Offered Rate (“LIBOR”) or the prime rate. The spread may change as a result of the borrower’s choice of base rate. In addition, the floating rate investments that are referenced to LIBOR are generally indexed to 30-day or 90-day U.S. Dollar LIBOR and subject to a minimum LIBOR Floor. The terms disclosed in the consolidated schedule of investments represent the actual base rate and spread in effect as of the reporting date.

All securities above were valued with significant unobservable inputs. Refer to Note 3 of our consolidated financial statements for additional disclosures regarding the unobservable inputs used in fair value measurement.

(1)

Not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, Garrison Capital Inc. (the “Company”) may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of ~~September~~June 30, ~~2018, 92.5%~~2019, 90.1% of the Company’s assets were qualifying assets.

(2)	Net of a profits interest payable to a third party upon any subsequent sales of Prosper Marketplace Series B Preferred Stock.

(3)	Interest is payable in cash, and/or payment-in-kind (“PIK”), or a combination thereof.

(4)

Investment is structured as a unitranche loan ~~where we hold~~in which the Company holds the last out component. As a result, in addition to the interest earned on the stated base rate and spread of this investment, the Company ~~may have~~ received additional interest during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~ 2019 due to an arrangement between the Company and certain other lenders to the portfolio company. The additional interest received during the quarter has been annualized and included in the spread disclosed for this investment.

(5)	Investment is currently not income producing and placed on non-accrual status.

(6)

GLC Trust 2013-2 includes 280 small balance consumer loans with an average par of $2,062, a weighted average rate of 15.88% and a weighted average maturity of March 30, 2019. See Note 3 for additional information. See Exhibit 99.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 for detail on underlying loans.

~~(7)~~

The negative fair value is the result of the unfunded commitments being valued below par. These amounts may or may not be funded to the borrowing party currently or in the future.

~~See accompanying notes to consolidated financial statements.~~

~~Garrison Capital Inc. and Subsidiaries~~

~~Consolidated Schedule of Investments - (continued)~~

~~September 30, 2018 (unaudited)~~

~~($ in thousands, except share amounts)~~

As required by the 1940 Act, investments are classified by level of control. “Control Investments” are investments in those companies that the Company is deemed to control as defined in the 1940 Act. “Affiliate Investments” are investments in those companies that are affiliated companies, as defined in the 1940 Act, other than Control Investments. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.

Generally, under the 1940 Act, the Company is deemed to control a company in which it has invested if it owns more than 25% of the voting securities of such company. The Company is deemed to be an affiliate of a company in which it has invested if it owns 5% or more of the voting securities of such company.

All debt investments were income producing as of ~~September~~June 30, ~~2018,~~2019, unless otherwise noted. Common and preferred equity investments are ~~not~~non income-producing unless otherwise noted.

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Common Equity

Building Products

Valterra Products Holdings, LLC, Class A

N/A

N/A

N/A

N/A

185,847

$
186

$
786

0.42
%
Valterra Products Holdings, LLC, Class B

N/A

N/A

N/A

N/A

20,650

21

87

0.05

207

873

0.47

Commercial Services and Supplies

Faraday Holdings, LLC, Common

N/A

N/A

N/A

N/A

2,752

140

320

0.17

140

320

0.17

Healthcare Equipment and Services

Juniper TGX Investment Partners, LLC, Common

N/A

N/A

N/A

N/A

3,146

671

1,394

0.74

671

1,394

0.74

Household Products and Durables

Oneida Group Inc. (fka Everyware Global, Inc.), Common

N/A

N/A

N/A

N/A

242,035

2,714

1,997

1.06

2,714

1,997

1.06

Transportation Services

EZE Trucking, LLC, Common

N/A

N/A

N/A

N/A

2,898

268

—

—

268

—

—

Total Common Equity

$
4,000

$
4,584

2.44
%

Preferred Equity

Diversified Financial Services

Prosper Marketplace Series B Preferred Stock⁽¹⁾⁽²⁾

N/A

N/A

N/A

N/A

912,865

$
551

$
640

0.34
%

551

640

0.34

Total Preferred Equity

$
551

$
640

0.34
%

Debt Investments

Aerospace and Defense

AbelConn, LLC (Atrenne Computing), Term Loan*

1.69%

8.50%

10.19%

7/17/2019

8,203

$
8,153

$
8,203

4.37
%

8,153

8,203

4.37

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Equity Investments
Building Products
Valterra Products Holdings, LLC, Class A LLC Units	N/A	N/A	N/A	N/A		185,847	$	186	$	784		0.46	%
Valterra Products Holdings, LLC, Class B LLC Units	N/A	N/A	N/A	N/A		20,650		21		87		0.05
								207		871		0.51

Commercial Services and Supplies
Faraday Holdings, LLC, LLC Units	N/A	N/A	N/A	N/A		2,752		140		742		0.44
								140		742		0.44

Healthcare Equipment and Services
Juniper TGX Investment Partners, LLC, LLC Units	N/A	N/A	N/A	N/A		3,146		671		3,119		1.85
								671		3,119		1.85

Household Products and Durables
Oneida Group Inc., Common Stock	N/A	N/A	N/A	N/A		844,557		3,919		1,350		0.80
								3,919		1,350		0.80
Diversified Financial Services
Prosper Marketplace Series B Preferred Stock⁽¹⁾⁽²⁾	N/A	N/A	N/A	N/A		912,865		551		640		0.38
								551		640		0.38

Total Equity Investments							$	5,488	$	6,722		3.98	%

Debt Investments
Aerospace and Defense
Constellis Holdings, LLC, Term Loan*	2.52%	5.00%	7.52%	4/22/2024		3,364	$	3,312	$	3,196		1.89	%
Novetta Solutions, Term Loan*	2.53%	5.00%	7.53%	10/17/2022		1,985		1,942		1,920		1.14
Vertex Aerospace Services Corp., Initial Term Loan*	2.52%	4.75%	7.27%	6/30/2025		1,820		1,812		1,798		1.06
								7,066		6,914		4.09

Air Freight and Logistics
Gruden Acquisition, Inc., Term Loan (First Lien)*	2.80%	5.50%	8.30%	8/18/2022		2,465		2,443		2,404		1.42
								2,443		2,404		1.42

Auto Components
BBB Industries LLC (GC EOS Buyer), Term Loan*	2.38%	4.50%	6.88%	8/1/2025		3,491		3,483		3,413		2.02
Challenge Mfg. Company, LLC, Term Loan B*	2.53%	6.50%	9.03%	4/20/2022		7,893		7,826		7,892		4.67
FRAM Group Holdings Inc. (Autoparts Holdings), Term Loan*	2.52%	6.75%	9.27%	12/23/2021		6,844		6,763		6,844		4.05
Shipston Equity Holdings, LLC, Term Loan*⁽⁴⁾	2.39%	6.94%	9.33%	9/28/2023		5,847		5,791		5,791		3.43
								23,863		23,940		14.17

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Air Freight and Logistics

Gruden Acquisition, Inc., Term Loan (First Lien)*

1.69%

5.50%

7.19%

8/18/2022

1,960

$
1,933

$
1,958

1.04
%
MXD Group, Inc. (fka Exel Direct Inc.), Term Loan*⁽³⁾

1.38%

14.00%

15.38% PIK

5/31/2018

16,932

16,836

17,049

9.09

Raymond Express International, LLC, Revolver*

1.75%

7.75%

9.50%

2/28/2018

40

40

40

0.02

Raymond Express International, LLC, Term Loan*

1.75%

7.75%

9.50%

2/28/2018

385

385

385

0.21

19,194

19,432

10.36

Auto Components

Challenge Mfg. Company, LLC, Term Loan B*

1.57%

7.00%

8.57%

4/20/2022

8,663

8,567

8,565

4.56

FRAM Group Holdings Inc. (Autoparts Holdings), Term Loan*

1.57%

6.75%

8.32%

12/23/2021

8,550

8,414

8,614

4.59

16,981

17,179

9.15

Building Products

ShelterLogic Corp., Term Loan*

1.36%

9.50%

10.86%

7/30/2019

9,356

9,297

9,356

4.99

9,297

9,356

4.99

Chemicals

Aristech Surfaces LLC, Term Loan B*

1.38%

7.00%

8.38%

10/17/2019

9,410

9,351

9,336

4.98

Profusion Industries, LLC, Term Loan*

1.63%

12.25%

13.88%

6/19/2020

9,270

9,179

8,621

4.59

��

18,530

17,957

9.57

Commercial Services and Supplies

Del Mar Recovery Solutions, Inc., Term Loan**

1.57%

8.50%

10.07%

6/27/2021

7,726

7,632

7,572

4.04

Interior Specialists, Inc., Term Loan*

1.38%

6.00%

7.38%

6/30/2021

9,832

9,734

9,832

5.24

VIP Cinema Holdings, Inc., Term Loan*

1.70%

6.00%

7.70%

3/1/2023

1,524

1,517

1,533

0.82

18,883

18,937

10.10

Construction and Engineering

QualTek USA, LLC, Term Loan**

1.37%

8.00%

9.37%

11/30/2020

9,287

9,129

9,128

4.86

9,129

9,128

4.86

Diversified Financial Services

PlanMember Financial Corporation, Term Loan*⁽¹⁾

1.50%

6.50%

8.00%

12/31/2020

1,079

1,068

1,079

0.58

1,068

1,079

0.58

Diversified Telecommunication Services

Onvoy, LLC, Term Loan*

1.69%

4.50%

6.19%

2/10/2024

3,014

3,005

2,547

1.36

U.S. Telepacific Corp., Term Loan B*

1.69%

5.00%

6.69%

5/2/2023

5,967

5,915

5,699

3.04

8,920

8,246

4.40

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Building Products
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Revolver	2.35%	8.25%	10.60%	2/15/2023		36	$	36	$	36		0.02	%
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Term Loan**	2.35%	8.25%	10.60%	2/15/2023		7,216		7,097		6,927		4.10
								7,133		6,963		4.12

Chemicals
AOC / Aliancys, Term Loan*⁽¹⁾	2.58%	4.25%	6.83%	8/1/2025		1,490		1,490		1,449		0.86
Aristech Surfaces LLC, Term Loan B*	2.38%	7.00%	9.38%	10/17/2019		8,979		8,954		8,790		5.20
Profusion Industries, LLC, Term Loan⁽⁵⁾	2.38%	12.25%	14.63%	6/19/2020		9,270		9,188		2,330		1.38
								19,632		12,569		7.44

Commercial Services and Supplies
Del Mar Recovery Solutions, Inc., Term Loan**	2.50%	8.50%	11.00%	6/28/2021		7,726		7,659		7,649		4.53
DMT Solutions Global Corporation (Pitney Bowes), Term Loan*	2.55%	7.00%	9.55%	7/2/2024		7,111		6,916		6,791		4.02
Interior Logic Group, Term Loan*	2.80%	4.00%	6.80%	5/30/2025		6,510		6,481		6,348		3.76
Staples, Inc., Term Loan*	2.54%	4.00%	6.54%	9/12/2024		5,541		5,487		5,301		3.14
USAGM Holdco, LLC, Incremental Term Loan*	2.52%	4.25%	6.77%	7/28/2022		2,903		2,886		2,765		1.64
USAGM Holdco, LLC, Initial Term Loan (First Lien)*	2.52%	3.75%	6.27%	7/28/2022		992		984		939		0.56
VIP Cinema Holdings, Inc., Term Loan*	2.53%	6.00%	8.53%	3/1/2023		5,077		5,063		4,963		2.94
								35,476		34,756		20.59

Construction and Engineering
Brand Energy & Infrastructure Services, Inc., Term Loan*	2.48%	4.25%	6.73%	6/21/2024		665		642		630		0.37
GeoStabilization International, Term Loan*	2.59%	5.50%	8.09%	12/19/2025		3,349		3,315		3,315		1.96
QualTek USA, LLC, Term Loan*	2.53%	5.75%	8.28%	7/18/2025		5,841		5,735		5,666		3.35
								9,692		9,611		5.68

Containers and Packaging
Ball Metalpack Finco LLC, Term Loan*	2.52%	4.50%	7.02%	7/31/2025		549		546		531		0.31
Klockner Pentaplast of America, Inc., Term Loan*⁽¹⁾	2.52%	4.25%	6.77%	6/30/2022		4,630		4,495		3,981		2.36
								5,041		4,512		2.67

Diversified Financial Services
Acrisure, LLC, Term Loan*	2.52%	4.25%	6.77%	11/22/2023		1,496		1,485		1,447		0.86
AIS Holdco, LLC, Term Loan*	2.80%	5.00%	7.80%	8/15/2025		2,698		2,685		2,631		1.56
Financial & Risk US Holdings, Inc. (Refinitiv), Term Loan*	2.52%	3.75%	6.27%	10/1/2025		2,205		2,200		2,062		1.22
Integrity Marketing Acquisition, LLC, Term Loan*	2.71%	4.25%	6.96%	11/28/2025		5,266		5,240		5,240		3.10
PlanMember Financial Corporation, Term Loan*⁽¹⁾	3.00%	5.00%	8.00%	12/31/2020		1,586		1,572		1,577		0.93
								13,182		12,957		7.67

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Food Products

Diamond Crystal Brands, Inc., Term Loan**⁽⁴⁾

1.70%

7.75%

9.45%

7/29/2021

5,460

$
5,419

$
5,460

2.91
%
Gold Coast Bakeries, LLC, Term Loan**⁽⁴⁾

1.57%

6.02%

7.59%

9/27/2022

6,729

6,618

6,617

3.53

Specialty Bakers LLC, Term Loan*⁽⁴⁾

1.37%

7.88%

9.25%

8/7/2019

9,539

9,473

9,443

5.03

21,510

21,520

11.47

Healthcare Equipment and Services

ActivStyle, Inc., Term Loan**

1.38%

9.00%

10.38%

7/9/2020

8,311

8,237

8,311

4.43

Aurora Diagnostics, LLC, Delayed Draw Term Loan*

1.39%

7.13%

8.52%

7/31/2019

850

848

850

0.45

Aurora Diagnostics, LLC, Delayed Draw Term Loan B*

1.39%

7.13%

8.52%

7/31/2019

598

596

598

0.32

Aurora Diagnostics, LLC, Delayed Draw Term Loan C*

1.47%

7.13%

8.60%

7/31/2019

610

610

610

0.33

Aurora Diagnostics, LLC, Revolver*

1.66%

7.13%

8.79%

7/31/2019

544

543

544

0.29

Aurora Diagnostics, LLC, Term Loan*

1.39%

7.13%

8.52%

7/31/2019

5,387

5,369

5,387

2.87

Maxor Acquisition, Inc., Revolver*

1.59%

6.00%

7.59%

11/22/2022

66

66

65

0.03

Maxor Acquisition, Inc., Term Loan*

1.66%

6.00%

7.66%

11/22/2023

9,035

8,946

8,946

4.77

RCS Management Corporation (SMS), Term Loan B**

1.49%

10.50%

11.99%

7/29/2018

9,500

9,446

9,445

5.03

Theragenics Corporation, Term Loan**

1.70%

12.00%

13.70%

12/23/2020

8,217

8,122

8,217

4.38

42,783

42,973

22.90

Hotels, Restaurants and Leisure

AP Gaming I, LLC, Term Loan B*

1.57%

5.50%

7.07%

2/15/2024

9,950

9,928

10,018

5.34

HRI Holding Corp. (Houlihans Restaurants), Term Loan*⁽⁴⁾

1.70%

7.54%

9.24%

12/17/2020

6,725

6,642

6,389

3.40

16,570

16,407

8.74

Household Products and Durables

Brown Jordan International Inc., Term Loan*

1.69%

5.00%

6.69%

1/31/2023

5,893

5,853

5,893

3.14

CR Brands, Inc., Term Loan*⁽³⁾

1.37%

11.25%

12.62% PIK

6/30/2018

9,635

9,635

9,634

5.13

Lexmark Carpet Mills, Inc., Term Loan*⁽³⁾

1.34%

10.00% Cash + 1.00% PIK

12.34%

12/19/2019

8,714

8,629

8,629

4.60

NBG Acquisition Inc., Term Loan*

1.69%

5.50%

7.19%

4/26/2024

5,325

5,249

5,365

2.86

University Furnishings, L.P., Term Loan***⁽⁴⁾

1.36%

7.70%

9.06%

10/13/2022

9,500

9,377

9,500

5.06

38,743

39,021

20.79

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Diversified Telecommunication Services
Fusion Connect, Inc., Tranche B Term Loan (First Lien)*⁽¹⁾	2.59%	7.50%	10.09%	5/4/2023		7,145	$	6,897	$	6,788		4.02	%
KORE Wireless Group Inc., Term Loan*	2.79%	5.50%	8.29%	12/20/2024		8,260		8,178		8,177		4.84
Onvoy, LLC, Term Loan*	2.80%	4.50%	7.30%	2/12/2024		2,984		2,976		2,646		1.57
U.S. Telepacific Corp., Term Loan B*	2.80%	5.00%	7.80%	5/2/2023		7,190		7,141		6,794		4.02
								25,192		24,405		14.45

Electrical Equipment
Electrical Components International, Inc., Term Loan*	2.80%	4.25%	7.05%	6/26/2025		4,987		4,969		4,813		2.85
Luminii LLC, Term Loan*	2.40%	5.75%	8.15%	4/11/2023		7,281		7,217		7,215		4.27
Verifone Systems, Inc., Term Loan*	2.64%	4.00%	6.64%	8/20/2025		2,000		2,000		1,928		1.14
								14,186		13,956		8.26

Energy Equipment and Services
NGS US FinCo, LLC, Term Loan*	2.51%	4.25%	6.76%	10/1/2025		2,715		2,702		2,695		1.60
								2,702		2,695		1.60

Food Products
Gold Coast Bakeries, LLC, Revolver*	2.52%	5.75%	8.27%	9/27/2022		1,583		1,583		1,583		0.94
Gold Coast Bakeries, LLC, Term Loan**	2.52%	5.75%	8.27%	9/27/2022		9,379		9,292		8,441		5.00
Mother's Market & Kitchen, Inc, Term Loan**⁽⁴⁾	2.53%	5.71%	8.24%	7/26/2023		7,814		7,707		7,705		4.56
								18,582		17,729		10.50

Healthcare Equipment and Services
AC Merger Sub, Inc. (Analogic), Term Loan*	2.52%	6.00%	8.52%	6/24/2024		8,561		8,483		8,481		5.02
ActivStyle, Inc., Term Loan***	2.44%	7.50%	9.94%	7/9/2020		10,421		10,364		10,421		6.17
Aurora Diagnostics, LLC, Delayed Draw Term Loan*	2.53%	7.13%	9.66%	7/31/2019		850		849		850		0.50
Aurora Diagnostics, LLC, Delayed Draw Term Loan B*	2.53%	7.13%	9.66%	7/31/2019		598		597		598		0.35
Aurora Diagnostics, LLC, Delayed Draw Term Loan C*	2.46%	7.13%	9.59%	7/31/2019		1,056		1,050		1,056		0.63
Aurora Diagnostics, LLC, Delayed Draw Term Loan D	2.46%	7.13%	9.59%	7/31/2019		173		171		173		0.10
Aurora Diagnostics, LLC, Revolver*	2.48%	7.13%	9.61%	7/31/2019		1,020		1,020		1,020		0.60
Aurora Diagnostics, LLC, Term Loan*	2.53%	7.13%	9.66%	7/31/2019		5,243		5,237		5,243		3.10
Community Care Health Network, LLC, Term Loan*	2.52%	4.75%	7.27%	2/18/2025		1,393		1,390		1,351		0.80
LifeScan Global Corp., Term Loan*	2.40%	6.00%	8.40%	10/1/2024		2,846		2,762		2,683		1.59
Maxor Acquisition, Inc., Term Loan*	2.82%	6.00%	8.82%	11/22/2023		8,945		8,872		8,869		5.25
Theragenics Corporation, Term Loan**	2.53%	12.00%	14.53%	12/23/2020		8,865		8,783		8,865		5.25
								49,578		49,610		29.36

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Internet Software and Services

Aptos, Inc., Term Loan B*⁽⁴⁾

1.69%

6.75%

8.44%

9/1/2022

8,854

$
8,716

$
8,721

4.65
%
ASG Technologies Group, Inc., Term Loan*

1.57%

4.75%

6.32%

7/31/2024

1,392

1,385

1,406

0.75

Dodge Data & Analytics LLC, Term Loan*

1.38%

8.75%

10.13%

10/31/2019

8,629

8,570

8,566

4.56

Emtec Global Services Holdings, LLC, Revolver⁽³⁾

1.35%

8.25% Cash + 4.00% PIK

13.60%

11/30/2020

353

353

353

0.19

Emtec Global Services Holdings, LLC, Term Loan**⁽³⁾

1.35%

8.25% Cash + 4.00% PIK

13.60%

11/30/2020

2,954

2,932

2,659

1.42

Exela Intermediate LLC, Term Loan*⁽¹⁾

1.36%

7.50%

8.86%

7/12/2023

5,132

5,038

4,972

2.65

Lionbridge Technologies, Inc., Term Loan*

1.57%

5.50%

7.07%

2/28/2024

1,419

1,412

1,414

0.75

Newscycle Solutions, Inc., Term Loan*

1.57%

7.00%

8.57%

12/29/2022

8,992

8,813

8,812

4.70

RA Outdoors LLC (Active Network), Term Loan*

1.46%

4.75%

6.21%

9/11/2024

7,963

7,883

7,884

4.20

Vero Parent, Inc. (fka Syncsort Incorporated), Initial Term Loan (First Lien)*

1.69%

5.00%

6.69%

8/16/2024

8,978

8,863

8,753

4.66

53,965

53,540

28.53

Leisure Products

Bass Pro Group, LLC, Initial Term Loan*

1.57%

5.00%

6.57%

9/25/2024

5,736

5,699

5,714

3.04

Confluence Outdoor, LLC, Delayed Draw Term Loan*

1.36%

8.75%

10.11%

4/18/2019

999

994

989

0.53

Confluence Outdoor, LLC, Term Loan*

1.36%

8.75%

10.11%

4/18/2019

6,657

6,627

6,590

3.51

Kranos Acquisition Corp., Term Loan*

1.38%

10.00%

11.38%

4/30/2018

7,506

7,525

7,408

3.95

Playpower, Inc., Initial Term Loan (First Lien)*

1.69%

4.75%

6.44%

6/23/2021

957

963

960

0.51

21,808

21,661

11.54

Machinery

Texas Hydraulics Holding, Inc., Term Loan**⁽⁴⁾

1.57%

9.34%

10.91%

2/17/2021

8,200

8,097

8,200

4.37

8,097

8,200

4.37

Media

Project Sunshine IV Pty Ltd, 2017 Incremental Term Loan*⁽¹⁾

1.57%

7.00%

8.57%

8/22/2022

8,568

8,469

8,569

4.57

8,469

8,569

4.57

Metals and Mining

Metal Services LLC (Phoenix), New Term Loans*

1.69%

7.50%

9.19%

6/30/2019

6,019

5,978

6,042

3.22

5,978

6,042

3.22

Retailing

Western Convenience Stores, Inc., Term Loan*

1.38%

11.00%

12.38%

9/1/2019

9,000

8,850

9,000

4.80

8,850

9,000

4.80

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Hotels, Restaurants and Leisure
AP Gaming I, LLC, Term Loan B*	2.52%	3.50%	6.02%	2/15/2024		6,637	$	6,639	$	6,488		3.84	%
Bravo Brio Restaurant Group, Inc., Term Loan*⁽⁴⁾	2.53%	6.65%	9.18%	5/24/2023		8,302		8,193		8,190		4.85
CircusTrix Holdings, LLC, Term Loan B*	2.52%	5.50%	8.02%	12/16/2021		5,985		5,939		5,938		3.52
HRI Holding Corp. (Houlihans Restaurants), Term Loan*	2.81%	6.25%	9.06%	12/17/2020		6,247		6,196		5,934		3.51
								26,967		26,550		15.72

Household Products and Durables
Brown Jordan International Inc., Term Loan*	2.52%	5.00%	7.52%	1/31/2023		5,757		5,726		5,556		3.29
CR Brands, Inc., Term Loan*⁽³⁾	2.35%	11.25%	13.60% PIK	3/29/2019		6,547		6,547		6,547		3.88
Innocor, Inc. (Comfort Holding, LLC), Term Loan*	2.52%	4.75%	7.27%	2/5/2024		2,985		2,884		2,795		1.65
NBG Acquisition Inc., Term Loan*	2.59%	5.50%	8.09%	4/26/2024		5,788		5,724		5,586		3.31
University Furnishings, L.P., Term Loan***⁽⁴⁾	2.44%	7.26%	9.70%	10/13/2022		10,830		10,713		10,830		6.41
								31,594		31,314		18.54

Internet Software and Services
Aptos, Inc., Term Loan*	2.52%	5.50%	8.02%	7/23/2025		7,814		7,741		7,726		4.57
BMC Software Finance, Inc., Term Loan*	2.80%	4.25%	7.05%	10/2/2025		3,000		2,975		2,887		1.71
Corel Corporation, Term Loan*⁽¹⁾⁽⁴⁾	2.71%	5.00%	7.71%	6/4/2024		8,652		8,587		8,544		5.06
Emtec Global Services Holdings, LLC, Revolver⁽³⁾	2.34%	16.25%	18.59% PIK	11/30/2020		450		450		450		0.27
Emtec Global Services Holdings, LLC, Term Loan**⁽³⁾	2.34%	16.25%	18.59% PIK	11/30/2020		3,769		3,754		3,769		2.23
Exela Intermediate LLC, Term Loan*⁽¹⁾	2.88%	6.50%	9.38%	7/12/2023		5,389		5,314		5,308		3.14
HDC/HW Intermediate Holdings, LLC, Term Loan*	2.81%	7.50%	10.31%	12/21/2023		6,697		6,564		6,563		3.89
Intermedia Holdings, Inc., Term Loan*	2.52%	6.00%	8.52%	7/21/2025		2,750		2,729		2,740		1.62
LANDesk Group, Inc., Term Loan*	2.35%	4.25%	6.60%	1/22/2024		3,698		3,676		3,522		2.09
Lionbridge Technologies, Inc., Term Loan*	2.52%	5.50%	8.02%	2/28/2024		3,220		3,219		3,192		1.89
Newscycle Solutions, Inc., Delayed Draw Term Loan	2.35%	7.00%	9.35%	12/29/2022		792		792		778		0.46
Newscycle Solutions, Inc., Term Loan*	2.52%	7.00%	9.52%	12/29/2022		8,655		8,517		8,511		5.04
Orbit Purchaser LLC (Orion), Term Loan*	2.67%	4.50%	7.17%	10/21/2024		2,594		2,569		2,568		1.52
Quest Software US Holdings Inc., Term Loan*	2.53%	4.25%	6.78%	5/16/2025		1,203		1,197		1,160		0.69
RA Outdoors LLC (Active Network), Term Loan*	2.52%	4.75%	7.27%	9/11/2024		7,883		7,816		7,815		4.63
Vero Parent, Inc. (fka Syncsort Incorporated), Initial Term Loan (First Lien)*	2.52%	4.50%	7.02%	8/16/2024		8,888		8,792		8,799		5.21
								74,692		74,332		44.02

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Oil, Gas and Consumable Fuels

Diversified Gas & Oil Corporation, Term Loan*⁽⁴⁾

1.57%

9.45%

11.02%

6/30/2020

5,799

$
5,784

$
5,735

3.06
%
Rooster Energy Ltd., Term Loan*⁽³⁾⁽⁴⁾⁽⁵⁾

1.50%

12.58% Cash + 8.00% PIK

22.08%

6/25/2018

5,474

4,988

4,112

2.19

10,772

9,847

5.25

Pharmaceuticals

RiteDose Holdings I, Inc., Term Loan*

1.34%

6.50%

7.84%

9/13/2023

8,058

7,943

7,941

4.23

7,943

7,941

4.23

Professional Services

Censeo Health LLC, Term Loan*

1.64%

5.00%

6.64%

12/21/2024

1,889

1,871

1,889

1.01

1,871

1,889

1.01

Technology Hardware, Storage and Peripherals

Elo Touch Solutions, Inc., Term Loan B*

1.44%

6.00%

7.44%

10/31/2023

6,333

6,272

6,266

3.34

Table Top Media, LLC, Lease**

N/A

10.00%

10.00%

10/15/2019

2,834

2,827

2,831

1.51

9,099

9,097

4.85

Textiles, Apparel and Luxury Goods

League Collegiate Holdings, LLC, Term Loan*

1.58%

8.00%

9.58%

6/28/2021

7,315

7,238

7,233

3.85

��

7,238

7,233

3.85

Trading Companies and Distributors

Sprint Industrial Holdings, LLC, Term Loan (First Lien)*

1.69%

5.75%

7.44%

5/14/2019

4,725

4,716

4,359

2.32

4,716

4,359

2.32

Transportation Services

Jack Cooper Holdings Corp., Term Loan

3.00%

7.00%

10.00%

10/18/2018

5,000

5,050

5,052

2.69

Sirva Worldwide, Term Loan*

1.49%

6.50%

7.99%

11/22/2022

5,659

5,544

5,687

3.03

10,594

10,739

5.72

Total Debt Investments

$
389,161

$
387,555

206.54
%

Financial Assets

Diversified Financial Services

GLC Trust 2013-2 Consumer Loan Pool⁽¹⁾⁽⁶⁾

N/A

N/A

N/A

N/A

2,165

$
2,165

$
2,026

1.08
%

2,165

2,026

1.08

Total Financial Assets

$
2,165

$
2,026

1.08
%

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Leisure Products
Bass Pro Group, LLC, Initial Term Loan*	2.52%	5.00%	7.52%	9/25/2024		7,174	$	7,135	$	6,848		4.05	%
Confluence Outdoor, LLC, Delayed Draw Term Loan⁽³⁾	2.35%	10.75%	13.10% PIK	4/18/2019		1,000		996		800		0.47
Confluence Outdoor, LLC, Supplemental Loan⁽³⁾	2.35%	10.75%	13.10% PIK	4/18/2019		2,990		3,050		2,256		1.34
Confluence Outdoor, LLC, Term Loan⁽³⁾	2.35%	10.75%	13.10% PIK	4/18/2019		6,668		6,641		5,334		3.16
Playpower, Inc., Initial Term Loan (First Lien)*	2.80%	4.75%	7.55%	6/23/2021		1,389		1,386		1,389		0.82
								19,208		16,627		9.84

Media
Project Sunshine IV Pty Ltd, 2017 Incremental Term Loan*⁽¹⁾	2.52%	7.00%	9.52%	8/22/2022		4,212		4,167		4,159		2.46
								4,167		4,159		2.46

Metals and Mining
Alchemy US Holdco 1, LLC (Kymera), Term Loan*	2.49%	5.50%	7.99%	10/10/2025		2,205		2,173		2,189		1.30
								2,173		2,189		1.30

Pharmaceuticals
Akorn, Inc., Loan*⁽¹⁾	2.56%	5.50%	8.06%	4/16/2021		2,000		1,968		1,613		0.95
RiteDose Holdings I, Inc., Term Loan*	2.40%	7.25%	9.65%	9/13/2023		7,977		7,883		7,879		4.66
								9,851		9,492		5.61

Professional Services
Signify Health, LLC (fka Chloe Ox Parent, LLC), Term Loan*	2.80%	4.50%	7.30%	12/23/2024		1,875		1,859		1,847		1.09
								1,859		1,847		1.09

Retail
Sundance Holdings Group, LLC, Term Loan*⁽⁴⁾	2.74%	6.11%	8.85%	5/1/2024		6,717		6,652		6,651		3.94
								6,652		6,651		3.94

Semiconductors and Semiconductor Equipment
Ultra Clean Holdings, Inc., Term Loan*⁽¹⁾	5.50%	3.50%	9.00%	8/27/2025		2,698		2,659		2,550		1.51
								2,659		2,550		1.51

Technology Hardware, Storage and Peripherals
Elo Touch Solutions, Inc., Term B Loan (First Lien)*	2.78%	6.50%	9.28%	12/15/2025		3,125		2,971		2,996		1.77
Table Top Media, LLC, Lease**	N/A	10.00%	10.00%	10/15/2019		1,155		1,152		1,154		0.68
								4,123		4,150		2.45

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description

Base Rate

Spread

All In Rate

Maturity

Par / Shares

Cost

Fair Value

% of Net Assets

Non-Control/Non-Affiliate Investments

Investments - United States

Debt Investments (continued)

Unfunded Commitments

Air Freight and Logistics

Raymond Express International, LLC, Revolver*

N/A

0.50%

0.50%

2/28/2018

175

$
—

$
—

—
%

—

—

—

Commercial Services and Supplies

Del Mar Recovery Solutions, Inc., Revolver

N/A

0.75%

0.75%

6/27/2021

990

(12
)

—

—

(12
)

—

—

Healthcare Equipment and Services

Aurora Diagnostics, LLC, Delayed Draw Term Loan C*

N/A

2.25%

2.25%

7/31/2019

446

(16
)

—

—

Aurora Diagnostics, LLC, Delayed Draw Term Loan D

N/A

3.00%

3.00%

12/12/2018

677

(16
)

—

—

Aurora Diagnostics, LLC, Revolver*

N/A

0.38%

0.38%

7/31/2019

476

(3
)

—

—

Maxor Acquisition, Inc., Revolver*⁽⁷⁾

N/A

0.50%

0.50%

11/22/2022

519

(6
)

(5
)

—

(41
)

(5
)

—

Internet Software and Services

Emtec Global Services Holdings, LLC, Revolver

N/A

0.00%

0.00%

11/30/2020

219

(4
)

—

—

Newscycle Solutions, Inc., Delayed Draw Term Loan⁽⁷⁾

N/A

2.00%

2.00%

12/29/2022

822

—

(16
)

(0.01
)
Newscycle Solutions, Inc., Revolver⁽⁷⁾

N/A

0.50%

0.50%

12/29/2022

685

(14
)

(14
)

(0.01
)

(18
)

(30
)

(0.02
)

Oil, Gas and Consumable Fuels

Diversified Gas & Oil Corporation, Term Loan*⁽⁷⁾

N/A

3.00%

3.00%

6/30/2020

792

(92
)

(7
)

—

Morrison Well Services, LLC, Revolver

N/A

0.00%

0.00%

1/31/2018

198

—

—

—

(92
)

(7
)

—

Pharmaceuticals

RiteDose Holdings I, Inc., Revolver*⁽⁷⁾

N/A

0.50%

0.50%

9/13/2023

537

(8
)

(8
)

—

(8
)

(8
)

—

Textiles, Apparel and Luxury Goods

League Collegiate Holdings, LLC, Revolver*⁽⁷⁾

N/A

0.75%

0.75%

6/28/2021

2,200

(23
)

(25
)

(0.01
)

(23
)

(25
)

(0.01
)

Total Unfunded Commitments

$
(194
)

$
(75
)

(0.03
)%

Total Non-Control/Non-Affiliate Investments

$
395,683

$
394,730

210.37
%

Total Investments - United States

$
395,683

$
394,730

210.37
%

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost			Fair Value			% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Textiles, Apparel and Luxury Goods
Centric Brands Inc., Term Loan*⁽¹⁾⁽⁴⁾	2.51%	6.00%	8.51%	10/27/2023		7,813	$	7,698		$	7,697			4.56	%
Champ Acquisition Corp., Initial Term Loan (First Lien)*⁽⁴⁾	2.48%	5.50%	7.98%	12/19/2025		3,125		3,032			3,036			1.80
Keeco Holdings, LLC, Term Loan*	2.47%	7.00%	9.47%	9/19/2023		4,358		4,317			4,316			2.56
Triangle Home Fashions, LLC, Term Loan**⁽⁴⁾	2.53%	6.61%	9.14%	3/9/2023		10,500		10,346			10,341			6.12
								25,393			25,390			15.04

Trading Companies and Distributors
Cook & Boardman Group LLC, The, Term Loan*	2.80%	5.75%	8.55%	10/17/2025		3,119		3,088			3,072			1.82
Sprint Industrial Holdings, LLC, Term Loan (First Lien)*	2.80%	5.75%	8.55%	5/14/2019		4,675		4,673			4,488			2.66
								7,761			7,560			4.48

Transportation Services
Airxcel, Inc., Term Loan*	2.52%	4.50%	7.02%	4/28/2025		995		993			935			0.55
PS Holdco, LLC, Term Loan*	2.53%	4.75%	7.28%	3/13/2025		6,416		6,391			6,224			3.68
Sirva Worldwide, Term Loan*	2.56%	5.50%	8.06%	8/4/2025		2,654		2,635			2,594			1.54
								10,019			9,753			5.77

Total Debt Investments							$	460,886		$	445,585			263.79	%

Financial Assets
Diversified Financial Services
Consumer Loan Pool⁽¹⁾⁽⁶⁾	N/A	N/A	N/A	N/A		244	$	244		$	232			0.14	%
								244			232			0.14

Total Financial Assets							$	244		$	232			0.14	%

Unfunded Commitments
Building Products
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Revolver	N/A	0.75%	0.75%	2/15/2023		14	$	—		$	—			—	%
								—			—			—

Commercial Services and Supplies
Del Mar Recovery Solutions, Inc., Revolver	N/A	0.75%	0.75%	6/28/2021		990		(8	)		—			—
								(8	)		—			—

Diversified Financial Services
Integrity Marketing Acquisition, LLC, Delayed Draw Term Loan*⁽⁷⁾	N/A	1.00%	1.00%	11/28/2025		984		(5	)		(5	)		—
								(5	)		(5	)		—

Electrical Equipment
Luminii LLC, Revolver*⁽⁷⁾	N/A	0.50%	0.50%	4/11/2023		515		—			(5	)		—
								—			(5	)		—

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, ~~2017~~2018

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost			Fair Value			% of Net Assets
Non-Control/Non-Affiliate Investments
Unfunded Commitments (continued)
Healthcare Equipment and Services
AC Merger Sub, Inc. (Analogic), Revolver*⁽⁷⁾	N/A	0.50%	0.50%	6/22/2023		318	$	—		$	(3	)		0.00	%
Maxor Acquisition, Inc., Revolver*⁽⁷⁾	N/A	0.50%	0.50%	11/22/2022		585		(5	)		(5	)		—
								(5	)		(8	)		—

Internet Software and Services
Emtec Global Services Holdings, LLC, Revolver	N/A	0.00%	0.00%	11/30/2020		159		(2	)		—			—
HDC/HW Intermediate Holdings, LLC, Revolver*⁽⁷⁾	N/A	1.00%	1.00%	12/21/2023		670		(13	)		(13	)		(0.01	)
Newscycle Solutions, Inc., Revolver⁽⁷⁾	N/A	0.50%	0.50%	12/29/2022		685		(11	)		(11	)		(0.01	)
Orbit Purchaser LLC (Orion), Delayed Draw Term Loan*⁽⁷⁾	N/A	0.00%	0.00%	10/21/2024		758		(7	)		(7	)		—
								(33	)		(31	)		(0.02	)

Leisure Products
Confluence Outdoor, LLC, Supplemental Loan⁽⁷⁾	N/A	0.00%	0.00%	4/18/2019		1,359		(61	)		(136	)		(0.08	)
								(61	)		(136	)		(0.08	)

Pharmaceuticals
RiteDose Holdings I, Inc., Revolver*⁽⁷⁾	N/A	0.50%	0.50%	9/13/2023		537		(6	)		(7	)		—
								(6	)		(7	)		—

Total Unfunded Commitments							$	(118	)	$	(192	)		(0.10	%)

Total Non-Control/Non-Affiliate Investments							$	466,500		$	452,347			267.81	%

Non-Control/Affiliate Investments
Common Equity
Oil, Gas and Consumable Fuels				��
Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.), Common	N/A	N/A	N/A	N/A		99	$	3,715		$	1,630			0.97	%
								3,715			1,630			0.97

Total Common Equity							$	3,715		$	1,630			0.97	%

Total Non-Control/Affiliate Investments							$	3,715		$	1,630			0.97	%

Total Investments - United States							$	470,215		$	453,977			268.78	%

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments – (continued)

December 31, 2018

($ in thousands, except share amounts)

*	Denotes that all or a portion of the investment is held as collateral by Garrison Funding ~~2016-2~~2018-2 Ltd.

**	Denotes that all or a portion of the loan is held as collateral by Garrison Capital SBIC LP.

***	Denotes that all or a portion of the investment is held as collateral by ~~both~~ Garrison Funding ~~2016-2~~2018-2 Ltd. and Garrison Capital SBIC LP.

Base Rate = Our floating rate investments bear interest at a base rate plus a spread. Generally, the borrower has an option to choose whether the base rate is referenced to LIBOR or the prime rate. The spread may change as a result of the borrower’s choice of base rate. In addition, the floating rate investments that are referenced to LIBOR are generally indexed to 30-day or 90-day U.S. Dollar LIBOR and subject to a minimum LIBOR Floor. The terms disclosed in the consolidated schedule of investments represent the actual base rate and spread in effect as of the reporting period date.

(1)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, ~~2017, 95.9%~~2018, 91.2% of the Company’s assets were qualifying assets.

(2)	Net of a profits interest payable to a third party upon any subsequent sales of Prosper Marketplace Series B Preferred Stock.

(3)	Interest is payable in cash, and/or PIK, or a combination thereof.

(4)

Investment is structured as a unitranche loan ~~where we hold~~in which the Company holds the last out component. As a result, in addition to the interest earned on the stated base rate and spread of this investment, the Company ~~may have~~ received additional interest for the year ended December 31, ~~2017~~2018 due to an arrangement between the Company and certain other lenders to the portfolio company. The additional interest received during the quarter has been annualized and included in the spread disclosed for this investment.

(5)	Investment is currently not income producing and placed on non-accrual status.

(6)

~~GLC Trust 2013-2~~Consumer Loan Pool includes ~~516~~186 small balance consumer loans, held within Garrison Capital PL Holdings LLC, with an average par of ~~$4,196,~~$1,313, a weighted average rate of ~~16.17%~~15.82% and a weighted average maturity of ~~February 19,~~April 11, 2019. See Note 3 for additional information. See Exhibit ~~99.2~~99.1 to the Company’s ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~September 30,~~December 31, 2018 for detail on underlying ~~loans.~~loans.

(7)	The negative fair value is the result of the unfunded commitments being valued below par. These amounts may or may not be funded to the borrowing party currently or in the future.

All debt investments were income producing as of December 31, ~~2017,~~2018, unless otherwise noted. Common and preferred equity investments are ~~not~~non income-producing unless otherwise noted.

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

($ in thousands, except share and per share amounts)

	Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017				June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Investment income													Investment income
From non-control/non-affiliate investments													From non-control/non-affiliate investments
Interest income													Interest income	$	9,796		$	8,832		$	19,522		$	17,192
Non-control/non-affiliate investments	$	8,184		$	7,835		$	25,377		$	24,120
Non-control/affiliate investments		—			—			—			148
Payment-in-kind		678			975			1,977			1,671		Payment-in-kind		791			80			1,030			1,299
Other income		450			93			1,868			992		Other income		117			776			381			1,418
Total investment income		9,312			8,903			29,222			26,931		Total investment income		10,704			9,688			20,933			19,909

Expenses													Expenses
Interest expense		2,981			2,220			8,285			6,483		Interest expense		3,860			2,750			7,588			5,304
Management fee		1,504			1,374			4,516			4,423		Management fee		1,680			1,519			3,303			3,011
Incentive fee		—			—			—			—		Incentive fee		543			—			832			—
Professional fees		326			255			918			596		Professional fees		308			298			705			592
Directors' fees		76			77			229			236		Directors' fees		77			76			159			153
Administrator expenses		341			305			932			893		Administrator expenses		329			293			700			591
Other expenses		363			482			1,310			1,612		Other expenses		433			360			925			946
Total expenses		5,591			4,713			16,190			14,243		Total expenses		7,230			5,296			14,212			10,597
Management fee waived		—			—			—			(310	)
Net expenses		5,591			4,713			16,190			13,933
Net investment income before excise taxes		3,721			4,190			13,032			12,998		Net investment income before excise taxes		3,474			4,392			6,721			9,312
Excise tax (benefit)/expense		(13	)		5			—			39
Excise tax expense													Excise tax expense		—			7			—			13
Net investment income		3,734			4,185			13,032			12,959		Net investment income		3,474			4,385			6,721			9,299

Realized and unrealized (loss)/gain on investments
Realized and unrealized (losses)/gains													Realized and unrealized (losses)/gains
Net realized (loss)/gain on investments													Net realized (loss)/gain on investments
Non-control/non-affiliate investments		(27	)		(30	)		(286	)		573		Non-control/non-affiliate investments		(2,365	)		318			(9,498	)		(259	)
Non-control/affiliate investments		—			—			—			—		Non-control/affiliate investments		—			—			—			—
Net change in unrealized (loss)/gain on investments
Control/affiliate investments													Control/affiliate investments		—			—			—			—
Net change in unrealized gain/(loss) on investments													Net change in unrealized gain/(loss) on investments
Non-control/non-affiliate investments		(2,218	)		267			(4,973	)		(7,772	)	Non-control/non-affiliate investments		284			(444	)		6,700			(2,755	)
Non-control/affiliate investments		—			—			(1,414	)		(3,251	)	Non-control/affiliate investments		—			(1,412	)		(120	)		(1,413	)
Net realized and unrealized (loss)/gain on investments		(2,245	)		237			(6,673	)		(10,450	)
Control/affiliate investments													Control/affiliate investments		—			—			—			—
Net realized and unrealized loss on investments													Net realized and unrealized loss on investments		(2,081	)		(1,538	)		(2,918	)		(4,427	)

Net increase in net assets resulting from operations	$	1,489		$	4,422		$	6,359		$	2,509		Net increase in net assets resulting from operations	$	1,393		$	2,847		$	3,803		$	4,872

Net investment income per common share	$	0.23		$	0.26		$	0.81		$	0.81		Net investment income per common share	$	0.22		$	0.27		$	0.42		$	0.58
Net increase in net assets resulting from operations per common share	$	0.09		$	0.27		$	0.40		$	0.16		Net increase in net assets resulting from operations per common share	$	0.09		$	0.18		$	0.24		$	0.31
Basic weighted average common shares outstanding		16,049,352			16,049,352			16,049,352			16,049,352		Basic weighted average common shares outstanding		16,049,352			16,049,352			16,049,352			16,049,352

Dividends and distributions declared per common share	$	0.28		$	0.28		$	0.84		$	0.84		Dividends and distributions declared per common share	$	0.23		$	0.28		$	0.46		$	0.56

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets (unaudited)

($ in thousands, except share and per share amounts)

	Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2018			September 30, 2017			June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018

Increase/(decrease) in net assets from operations:
Increase in net assets from operations:
Net investment income	$	13,032		$	12,959		$	3,474		$	4,385		$	6,721		$	9,299
Net realized (loss)/gain on investments		(286	)		573			(2,365	)		318			(9,498	)		(259	)
Net change in unrealized loss on investments		(6,387	)		(11,023	)
Net change in unrealized gain/(loss) on investments								284			(1,856	)		6,580			(4,168	)
Net increase in net assets resulting from operations		6,359			2,509			1,393			2,847			3,803			4,872

Dividends and distributions to stockholders:
From net investment income		(13,482	)		(13,482	)		(3,691	)		(4,494	)		(7,382	)		(8,988	)
Total dividends and distributions to stockholders		(13,482	)		(13,482	)		(3,691	)		(4,494	)		(7,382	)		(8,988	)

Total decrease in net assets		(7,123	)		(10,973	)		(2,298	)		(1,647	)		(3,579	)		(4,116	)
Net assets at beginning of period		187,658			199,408			167,631			185,189			168,912			187,658
Net assets at end of period	$	180,535		$	188,435		$	165,333		$	183,542		$	165,333		$	183,542
Net asset value per share	$	11.25		$	11.74		$	10.30		$	11.44		$	10.30		$	11.44
Shares of common stock outstanding at end of period		16,049,352			16,049,352			16,049,352			16,049,352			16,049,352			16,049,352

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

($ in thousands, except share and per share amounts)

	Nine Months Ended						Six Months Ended
	September 30, 2018			September 30, 2017			June 30, 2019			June 30, 2018
Cash flows from operating activities
Net increase in net assets resulting from operations	$	6,359		$	2,509		$	3,803		$	4,872
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in)/provided by operating activities:
Net accretion of discounts on investments		(975	)		(981	)		(627	)		(625	)
Net realized loss/(gain) on investments		286			(573	)
Payment-in-kind								(1,030	)		(564	)
Amortization of deferred debt issuance costs and discounts on notes payable		336			298			251			220
Net change in unrealized loss on investments		6,387			11,023
Payment-in-kind interest		(1,051	)		(1,671	)
Net realized loss on investments								9,498			259
Net change in unrealized (gain)/loss on investments								(6,580	)		4,168
Purchases of investments		(172,581	)		(105,053	)		(81,500	)		(121,912	)
Paydowns of investments		178,873			114,392			30,459			110,136
Sales of investments		825			419			17,052			1,395
Changes in operating assets and liabilities:
Decrease in due from counterparties		3,223			1,988
Increase in due from counterparties								(2,160	)		(266	)
Decrease in due from affiliates		509			—			—			509
Decrease in accrued interest receivable		1,365			651
Increase in other assets		(96	)		(77	)
Increase in due to counterparties		13,120			—
(Increase)/decrease in accrued interest receivable								(728	)		719
Decrease in other assets								88			384
(Decrease)/increase in due to counterparties								(17,495	)		18,726
Increase in payables to affiliates		1,649			1,546			2,183			822
Decrease in accrued interest payable		(77	)		(174	)
Increase/(decrease) in accrued expenses and other payables		82			(268	)
Net cash provided by operating activities		38,234			24,029
(Decrease)/increase in accrued interest payable								(871	)		326
Decrease in accrued expenses and other payables								(199	)		(107	)
Net cash (used in)/provided by operating activities								(47,856	)		19,062

Cash flows from financing activities
Distributions paid to stockholders		(13,482	)		(13,482	)		(7,382	)		(8,988	)
Payments for financing costs		(247	)		—			—			(247	)
Net proceeds from senior secured revolving note		800			—
Repayment of GLC Trust 2013-2 Class A note		—			(4,219	)
Net proceeds from/(repayments on) senior secured revolving note								39,500			(5,700	)
Proceeds from Garrison SBIC borrowings		10,200			—			—			10,200
Net cash used in financing activities		(2,729	)		(17,701	)
Net cash provided by/(used in) financing activities								32,118			(4,735	)

Net increase in cash and restricted cash		35,505			6,328
Net (decrease)/increase in cash and restricted cash								(15,738	)		14,327
Cash and restricted cash at beginning of period		19,516			22,946			45,722			19,516
Cash and restricted cash at end of period	$	55,021		$	29,274		$	29,984		$	33,843

Supplemental disclosure of cash flow information
Cash paid for interest expense	$	8,274		$	6,310		$	8,213		$	5,005
Supplemental disclosure of non-cash activities
Restructuring of portfolio investment	$	4,112		$	—
Non-cash restructuring of portfolio investment							$	10,211		$	4,112

See accompanying notes to consolidated financial statements.

1921

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

1. Organization

Garrison Capital Inc. (“GARS” and, collectively with its subsidiaries, the “Company”, “we” or “our”) is a Delaware corporation and is an externally managed, closed-end, non-diversified management investment company that has filed an election to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, GARS has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for the period beginning October 9, 2012 and intends to qualify annually thereafter. GARS’ shares trade on the Nasdaq Global Select Market under the symbol “GARS”.

Our investment objective is to generate current income and capital appreciation through direct loans and debt investments in U.S. based middle-market companies. Our loans and debt investments are primarily first lien senior secured loans (including "unitranche" loans, which are loans that combine the characteristics of both senior and subordinated debt, generally in a first lien position). We also may, to a lesser extent, invest in subordinated and mezzanine debt ~~unsecured consumer loans~~ and equity investments. Our goal is to generate attractive risk-adjusted returns by assembling a broad portfolio of investments.

The Company’s business and affairs are managed and controlled by the Company’s board of directors (the “Board”). The majority of the members of the Board are independent of the Company and its affiliates. Our investment activities and day-to-day operations are managed by Garrison Capital Advisers, LLC (our “Investment Adviser”), and Garrison Capital Administrator, LLC (the “GARS Administrator”) provides the Company with certain administrative services necessary to conduct our day-to-day operations. We are organized as a holding company and conduct our business primarily through our various subsidiaries.

2. Significant Accounting Policies and Recent Updates

Basis of Presentation

The Company is an investment company as defined in the accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC Topic 946”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications ~~which consist~~consisting solely of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.

2022

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

2. Significant Accounting Policies and Recent Updates – (continued)

Principles of Consolidation

The consolidated financial statements include the accounts of GARS and its ~~wholly-owned~~ subsidiaries. The accounts of the subsidiaries are prepared using consistent accounting policies and as of the same reporting period as GARS. Under ASC Topic 946, the Company is generally precluded from consolidating any entity other than another investment company. Accordingly, the Company consolidates any investment company when it owns 100% of its equity units or 100% of the economic equity interest. ASC Topic 946 also provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

As a result, as of ~~September~~June 30, ~~2018~~2019 GARS has consolidated the results of Garrison Funding ~~2016-2~~2018-2 Ltd. (“GF ~~2016-2”~~2018-2” formerly, Garrison Funding 2016-2 Ltd.), Garrison Funding 2018-2 LLC (formerly Garrison Funding 2016-2 LLC), Garrison Capital SBIC LP (“Garrison SBIC”~~), GLC Trust 2013-2 (“GLC Trust 2013-2”~~), Garrison Capital PL Holdings LLC, GIG Rooster Holdings I LLC and a series of limited liability companies that GARS created primarily to provide specific tax treatment for the minority equity and other investments held in these limited liability ~~companies.~~companies.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures in the consolidated financial statements, including the estimated fair values of investments and the amount of income and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, cash held in designated bank accounts with Deutsche Bank Trust Company Americas (the “Custodian”) was ~~$28.8~~$0.8 million and ~~$13.8~~$6.0 million, respectively. Cash held in designated bank accounts with other major financial institutions was ~~$0.6~~$0.1 million and ~~$1.1~~$0.1 million as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. At times, these balances may exceed federally insured limits and this potentially subjects the Company to a concentration of credit risk. The Company believes it is not exposed to any significant credit risk associated with the Custodian.

The Company defines cash equivalents as highly liquid financial instruments with original maturities of three months or less, including those held in overnight sweep bank deposit accounts. As of both ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company held no cash equivalents.

Cash and Cash Equivalents, Restricted

AsRestricted cash as of ~~both September~~June 30, ~~2018~~2019 and December 31, ~~2017, restricted~~2018 included cash ~~was~~of $29.1 million and $39.5 million, respectively, held by GF ~~2016-2~~2018-2 and Garrison SBIC in designated bank accounts with the Custodian. ~~GF 2016-2 is~~The CLOs, as defined in Note 4, are required to use a portion of ~~its~~their cash to pay interest expense, reduce borrowings at the end of the investment period and to pay other amounts in accordance with the terms of the indenture governing the ~~2016-2 CLO, as defined in Note 4.~~CLOs. Cash held with Garrison SBIC is typically restricted to eligible SBIC investments and the payment of U.S. Small Business Administration (“SBA”) debentures and interest expense. As a result, funds held by GF ~~2016-2~~2018-2 and Garrison SBIC are not available for general use by the Company.

As of both ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company held no restricted cash equivalents.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

2. Significant Accounting Policies and Recent Updates – (continued)

Revenue Recognition

In general, we generate revenue that primarily consists of interest income, fee income, dividend income and gains and losses on our investments.

Interest income: Interest income is comprised of cash interest, PIK interest, original issue discounts or premiums as well as any loan origination, facility and commitment fees. Cash and PIK interest income is accrued based on the outstanding principal amount and interest terms outlined in the respective contractual agreement that governs that investment. The Company accrues interest income if it expects that it ultimately will be able to collect such income. Loan origination fees and any original issue or purchase discounts or premiums received by the Company are initially capitalized and deferred and reduce or increase the cost basis of the investment. They are subsequently accreted into interest income over the stated term of the loan.

Similarly, commitment fees are based upon the undrawn portion committed by the Company and are accrued over the life of the loan. Upon the prepayment of a loan or debt security, any unamortized fees, discounts or premiums are recorded into income.

Fee and dividend income: Fee income is generally comprised of amendment, forbearance, prepayment, syndication, structuring, diligence, consulting and possible fees for providing managerial assistance to a portfolio company and may be received in the form of cash or PIK. Amendment and forbearance fees are generally received in connection with loan amendments or waivers and are recognized upon completion of the amendments or waivers, generally when such fees are receivable. We record prepayment premiums on loans and debt securities into income when we receive such amounts.

In addition, we may receive structuring, diligence fees, consulting and managerial assistance fees for periodically providing services to a portfolio or third party company. These fees are recognized when such services have been completed and the fees are generally receivable. Any such fee income received is recorded and classified as other income and included in investment income on the consolidated statements of operations. As these fees are generally paid and recognized in connection with specific loan event or the performance of a service, there may be significant fluctuations from period to period in the amount and size of such fees, and they are typically non-recurring in nature.

In addition, the Company may receive periodic dividends or distributions from our preferred or equity investments. Such amounts are recorded and classified as other income. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

To the extent distributions are received from a limited liability company or limited partnership investment, we will evaluate the distribution to determine if it should be recorded as income or return of capital. Generally, we will not record such distributions as income unless there is sufficient accumulated tax-basis earnings and profits prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Investment ~~Transactions~~gains and ~~Related~~losses: Realized gains and losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to any previously recognized unrealized changes in the investments’ fair value. Current period changes in the fair value of our investments, which are measured at fair value, are recognized and recorded as a component of the net change in unrealized gain / (loss) on investments on the consolidated statement of operations. Both realized and unrealized gains and losses are recorded using the specific identification method.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

2. Significant Accounting Policies and Recent Updates – (continued)

Non-accrual loans: The Company accrues interest income based on the contractual interest terms of its investments if it expects that it will ultimately be able to collect it. Generally, when management believes that the issuer of the loan will not be able to service the loan, the Investment ~~Income~~Adviser will place the loan on non-accrual status and ~~Expense~~the Company will cease recognizing interest income on that loan. However, the Company remains contractually entitled to this interest. The Company may restore an investment to accrual status when past due principal and interest payments are made or if the interest income is otherwise deemed to be collectible by the Investment Adviser. The Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. As of both June 30, 2019 and December 31, 2018, the Company had one investment on non-accrual status.

Investments, at Fair Value

The Company records its investment transactions on a trade date basis, which is the date when management has determined that all material legal terms have been contractually defined for the transactions. These transactions ~~may~~could possibly settle on a subsequent date depending on the transaction type. Any amounts related to purchase, sale and principal paydowns that have traded but not settled are reflected as either a due to ~~counterparty~~ or due from counterparty on our consolidated ~~statements~~statement of financial condition. All related revenue and expenses attributable to these transactions are reflected on the consolidated statements of operations commencing on the trade date unless otherwise specified by the transaction documents. ~~Realized gains and losses on investment transactions are recorded using the specific identification method.~~

The Company accrues interest income if it expects that ultimately it will be able to collect such income. Generally, when a payment default occurs on a loan in the portfolio, or if management otherwise believes that the issuer of the loan will not be able to make contractual interest payments or principal payments, the Investment Adviser will place the loan on non-accrual status and the Company will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible. However, the Company remains contractually entitled to this interest.

The Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. Accrued interest is written off when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. For consumer loans, any loan which is 120 days past due is considered defaulted and 100% of the principal is charged off with no expected recovery or sale of defaulted receivables. As of both September 30, 2018 and December 31, 2017, the Company had one investment that was on non-accrual status.

Any original issue discounts, as well as any other purchase discounts or premiums on debt investments, are accreted or amortized and included in interest income over the maturity periods of the investments. If a loan is placed on non-accrual status, the Company will cease recognizing amortization of original issue discount and other purchase discount until all principal and interest is current through payment or until a restructuring occurs, such that the income is deemed to be collectible.

Certain investments may have contractual PIK interest. PIK represents accrued interest that is added to the principal amount of the investment on the respective interest payment dates instead of being paid in cash and generally becomes due at maturity of the investment or upon the investment being called by the issuer.

~~Loan Origination, Facility, Commitment and Amendment Fees~~

The Company may receive loan origination, prepayment, facility, commitment, forbearance and amendment fees in addition to interest income during the life of the investment. The Company may receive origination fees upon the origination of an investment.

Origination fees received by the Company are initially deferred and reduced from the cost basis of the investment and subsequently accreted into interest income over the stated term of the loan. Upon the prepayment of a loan or debt security, any unamortized loan origination fees are recorded into income.

We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Facility fees, sometimes referred to as asset management fees, are accrued as a percentage periodic fee on the base amount (either the funded facility amount or the committed principal amount). Commitment fees are based upon the undrawn portion committed by the Company and are accrued over the life of the loan.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~2. Significant Accounting Policies and Recent Updates – (continued)~~

Amendment and forbearance fees are paid in connection with loan amendments and waivers and are recognized upon completion of the amendments or waivers, generally when such fees are receivable. Any such fees are recorded and classified as other income and included in investment income on the consolidated statements of operations. As these fees are paid and recognized in connection with specific loan amendments or forbearance, they are typically non-recurring in nature.

Fair Value Measurements

The Company values its investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. ASC Topic 820’s definition of fair value focuses on exit price in the principal, or most advantageous, market and prioritizes the use of market-based inputs over entity-specific inputs within a measurement of fair value.

ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:

Level 1 — Unadjusted quoted prices in active markets for identical investments as of the reporting date.

Level 2 — Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar instruments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.

Level 3 — Pricing inputs are unobservable and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation including, in certain instances, the Investment Adviser’s own assumptions about how market participants would price the financial instrument.

Our investments include debt investments (both funded and unfunded, “Debt Investments”), preferred and minority common equity investments of diversified companies (“Equity”) and a portfolio of unsecured small balance consumer loans (“Financial Assets”). Due to the nature of the Company’s strategy, the Company’s portfolio is primarily comprised of relatively illiquid investments that are privately held. Inputs into the determination of fair value of the Company’s portfolio investments require significant management judgment or estimation. This means that the Company’s portfolio valuations are based on unobservable inputs and the Investment Adviser’s own assumptions about how market participants would price the asset or liability in question. Valuations of privately held investments are inherently uncertain and they may fluctuate over short periods of time and may be based on estimates. The determination of fair value by the Board may differ materially from the values that would have been used if a ready market for these investments existed.

Net assets could be materially affected if the determinations regarding the fair value of the investments were materially higher or lower than the values that are ultimately realized upon the disposal of such investments.

2325

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

2. Significant Accounting Policies and Recent Updates – (continued)

Valuation Techniques

The following is a description of the ~~different~~various valuation techniques ~~utilized by~~ the ~~Company.~~

~~Debt Investments~~Company utilizes when valuing its investments.

Bid quotations –: Certain of the Company’s debt investments are publicly traded instruments for which quoted market prices are not readily available. The fair value of these investments may be determined based on bid quotations from unaffiliated market makers or independent third-party pricing services or the price activity of comparable instruments. The Company will generally supplement the bid quotations for these investments by also performing a comparable yield approach outlined below.

Comparable yield approach –: This valuation technique determines the fair value of an investment by assessing the expected market yield of other debt investments with similar credit structures, leverage statistics, interest rates and time to maturity. The Company generally uses this approach for its debt investments that have not been deemed to be credit-impaired and where a market rate of recovery is expected.

Market comparable companies –: This valuation technique determines the total enterprise value of a company by assessing the expected multiple that a market participant would apply to that company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue or other collateral that secures the investment. These valuation multiples are typically determined based on reviewing market comparable transactions or other comparable publicly traded companies, if any. The resulting enterprise value will dictate whether or not the Company’s debt investment has adequate enterprise value coverage. In instances where the enterprise value is inadequate, the market comparable companies approach may be used to estimate a recovery value for our credit-impaired debt ~~investments.~~

~~Equity Investments~~

~~Market comparable companies – This valuation technique determines~~investments and the ~~total enterprise~~fair value of ~~a company by assessing the expected multiple that a market participant would apply~~our equity investments. With respect to that company’s EBITDA, revenue or other collateral that secures the investment. These valuation multiples are typically determined based on reviewing market comparable transactions or other comparable publicly traded companies, if any. Whenequity investments, when an external event, such as a purchase transaction, public offering or subsequent sale of equity occurs, the pricing indicated by that external event iswill be utilized to corroborate our valuation.

Discounted cash flows –: This valuation technique determines the fair value of an investment by projecting the expected cash flows based on contractual terms calculating the present value of such cash flows as of the valuation date using a discount rate.

~~Financial Assets~~

Discounted cash flows – This valuation technique determines the fair value of an investment by projecting the expected cash flows based on contractual terms calculating the present value of such cash flows as of the valuation date using a discount rate.

2426

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

2. Significant Accounting Policies and Recent Updates – (continued)

Valuation Process

The Board is responsible for determining, within the meaning of the 1940 Act, in good faith the fair value of the Company’s assets ~~in good faith~~for which market quotations are not readily available, using a documented valuation policy and consistently applied valuation process. The valuation process is a multi-step process conducted at the end of each fiscal quarter as described ~~below:~~below:

The Company’s valuation process begins with each portfolio company or investment being initially valued by investment professionals of the Investment Adviser responsible for credit monitoring.

At least once annually, the valuation for each portfolio investment that does not have a readily available quotation is reviewed by an independent valuation firm, subject to the de minimis exception described below.

Preliminary valuation conclusions are then documented, compared to the range of prices provided by an independent valuation firm where applicable, and discussed with our senior management and the Investment Adviser.

The Investment Adviser submits these preliminary valuations to the Valuation Committee of the Board.

The Board discusses valuations and determines, within the meaning of the 1940 Act, the fair value of each investment in the Company’s portfolio for which market quotations are not readily available in good faith.

As noted above, the Board has retained several independent valuation firms to review the valuation of each portfolio investment that does not have a readily available market quotation at least once during each 12-month ~~period. To~~period provided, the Board reserves the right to have any investment within the portfolio valued by an independent valuation firm to the extent it determines such a valuation is warranted. To the extent a security is reviewed in a particular quarter, it is reviewed and valued by only one service ~~provider.~~provider.

However, the Board does not, and does not intend to have investments independently reviewed that (1) have closed within the two most recent quarters or (2) are de minimis investments ofthat are less than 0.5% of the Company’s total assets (up to an aggregate of 10.0% of the Company’s total assets) ~~independently reviewed.~~.

Interest Expense

Interest expense is recorded on an accrual basis and includes the amortization of deferred debt issuance costs and any original issue discounts.

Dividends and Distributions

Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

2527

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

2. Significant Accounting Policies and Recent Updates – (continued)

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“(“ASU 2018-13”). ASU 2018-13 will modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the impact ASU 2018-13 will have on the Company’s consolidated financial statements and ~~disclosures.~~disclosures.

~~In January 2017, the FASB issued ASU 2017-08,~~ ~~Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities~~ (“ASU 2017-08”). ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium. The amortization period will be shortened for the premium to the earliest call date. This new guidance is effective for annual and interim periods beginning on or after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2017-08 in the first quarter of 2018 and it did not have a material impact on our consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash,~~ (“ASU 2016-18”). ASU 2016-18 is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. We adopted ASU 2016-18 in the fourth quarter of 2017 and applied the guidance retrospectively to our prior period consolidated statement of cash flows.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”). ASU 2014-09 supersedes the accounting guidance for revenue recognition from contracts with customers. Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted ASU 2014-09 in the first quarter of 2018, and applied the guidance retrospectively to our prior period consolidated financial statements. The application of this guidance did not have a material impact on our consolidated financial statements.

2628

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

3. Investments

As of ~~September~~June 30, ~~2018,~~2019, we held 98119 investments across 77100 portfolio companies with a fair value of ~~$383.0~~$486.7 million. As of December 31, 2018, we held 118 investments across 93 portfolio companies with a fair value of $454.0 million.

The composition of the Company’s portfolio by industry at fair value as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 was as follows:

	Fair Value of Investments								Fair Value of Investments
Industry ($ in thousands)	As of September 30, 2018				As of December 31, 2017				As of June 30, 2019				As of December 31, 2018
Internet Software and Services	$	57,941	14.9	%	$	53,510	13.5	%	$	85,462	17.5	%	$	74,301	16.4	%
Healthcare Equipment and Services		51,604	13.5			44,362	11.2			48,153	9.9			52,721	11.6
Commercial Services and Supplies										32,704	6.7			35,498	7.8
Household Products and Durables		31,697	8.3			41,018	10.4			32,596	6.7			32,664	7.2
Hotels, Restaurants and Leisure		30,084	7.9			16,407	4.2
Commercial Services and Supplies		27,379	7.1			19,257	4.9
Textiles, Apparel and Luxury Goods		23,620	6.2			7,208	1.8			26,922	5.5			25,390	5.6
Auto Components										25,891	5.3			23,940	5.3
Food Products		23,198	6.1			21,520	5.5			24,794	5.1			17,729	3.9
Diversified Telecommunication Services		16,928	4.4			8,246	2.1			24,579	5.0			24,405	5.4
Auto Components		15,295	4.0			17,179	4.4
Leisure Products		14,028	3.7			21,661	5.5			23,311	4.8			16,491	3.6
Chemicals		11,778	3.1			17,957	4.5
Pharmaceuticals		9,822	2.6			7,933	2.0
Building Products		8,071	2.1			10,229	2.6
Hotels, Restaurants and Leisure										19,424	4.0			26,550	5.8
Diversified Financial Services		7,674	2.0			3,745	0.9			14,388	3.0			13,824	3.0
Electrical Equipment		7,225	1.9			-	-			13,666	2.8			13,951	3.1
Transportation Services		6,052	1.6			10,739	2.7			13,495	2.8			9,753	2.1
Construction and Engineering										10,982	2.3			9,611	2.1
Pharmaceuticals										9,752	2.0			9,485	2.1
Building Products										9,530	2.0			7,834	1.7
Energy Equipment and Services										9,331	1.9			2,695	0.6
Air Freight and Logistics										8,812	1.8			2,404	0.5
Chemicals										8,674	1.8			12,569	2.8
Trading Companies and Distributors										8,390	1.7			7,560	1.7
Retail										6,656	1.4			6,651	1.5
Professional Services										6,655	1.4			1,847	0.4
Aerospace and Defense										6,260	1.3			6,914	1.5
Containers and Packaging										4,607	0.9			4,512	1.0
Technology Hardware, Storage and Peripherals		5,944	1.6			9,097	2.3			3,276	0.7			4,150	0.9
Semiconductors and Semiconductor Equipment										2,431	0.5			2,550	0.6
Media		5,328	1.4			8,569	2.2			2,328	0.5			4,159	0.9
Aerospace and Defense		4,746	1.2			8,203	2.1
Trading Companies and Distributors		4,512	1.2			4,359	1.1
Construction and Engineering		4,449	1.2			9,128	2.3
Containers and Packaging		3,118	0.8			-	-
Energy Equipment and Services		2,728	0.7			-	-
Metals and Mining										2,156	0.4			2,189	0.5
Oil, Gas and Consumable Fuels		2,698	0.7			9,840	2.5			1,480	0.3			1,630	0.4
Semiconductors and Semiconductor Equipment		2,678	0.7			-	-
Air Freight and Logistics		2,487	0.6			19,432	4.9
Professional Services		1,882	0.5			1,889	0.5
Retailing		-	-			9,000	2.3
Machinery		-	-			8,200	2.1
Metals and Mining		-	-			6,042	1.5
	$	382,966	100.0	%	$	394,730	100.0	%	$	486,705	100.0	%	$	453,977	100.0	%

Refer to the consolidated schedules of investments for a detailed disaggregation of the Company’s investments by industry.

2729

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

3. Investments – (continued)

The following tables summarize the valuation of the Company’s investments measured at fair value based on the fair value hierarchy, as detailed in Note 2, as of ~~both September~~June 30, ~~2018~~2019 and December 31, ~~2017:~~2018:

As of September 30, 2018

($ in thousands)

Level 1

Level 2

Level 3

Total

Senior Secured Investments⁽¹⁾

$
—

$
—

$
372,973

$
372,973

Preferred Equity Investment

—

—

640

640

Common Equity Investments

—

—

8,817

8,817

Financial Assets

—

—

536

536

$
—

$
—

$
382,966

$
382,966

	As of June 30, 2019
($ in thousands)	Level 1		Level 2		Level 3		Total
Senior Secured Investments⁽¹⁾	$	—	$	—	$	466,853	$	466,853
Equity Investments⁽²⁾		—		—		19,852		19,852
	$	—	$	—	$	486,705	$	486,705

(1) Included in senior secured loans are loans structured as first lien last out loans. These loans may in certain cases be subordinated in payment priority to other senior secured lenders.

(2) Includes preferred and common equity investments.

~~(1)~~

~~Included in senior secured investments are loans structured as first lien, last out loans. These loans may in certain cases be subordinated in payment priority to other senior secured lenders.~~

	As of December 31, 2018
($ in thousands)	Level 1		Level 2		Level 3		Total
Senior Secured Investments⁽¹⁾	$	—	$	—	$	445,393	$	445,393
Equity Investments⁽²⁾		—		—		8,352		8,352
Financial Assets		—		—		232		232
	$	—	$	—	$	453,977	$	453,977

As of December 31, 2017

($ in thousands)

Level 1

Level 2

Level 3

Total

Senior Secured Investments⁽¹⁾

$
—

$
—

$
387,480

$
387,480

Preferred Equity Investment

—

—

640

640

Common Equity Investments

—

—

4,584

4,584

Financial Assets

—

—

2,026

2,026

$
—

$
—

$
394,730

$
394,730

(1) Included in senior secured loans are loans structured as first lien last out loans. These loans may in certain cases be subordinated in payment priority to other senior secured lenders.

~~(1)~~

(2) Includes preferred and common equity investments.

~~Included in senior secured investments are loans structured as first lien, last out loans. These loans may in certain cases be subordinated in payment priority to other senior secured lenders.~~

The net change in unrealized ~~loss~~gain/(loss) attributable to the Company’s Level 3 assets for the ~~nine~~six months ended ~~September~~June 30, 2019 and June 30, 2018 included in the net change in unrealized ~~loss~~gain/(loss) on investments in the Company’s consolidated ~~statement~~statements of operations was $6.4 million. The net change in unrealized loss attributable to the Company’s Level 3 assets for the nine months ended September 30, 2017 included in the net change in unrealized loss on investments in the Company’s consolidated statement of operations was $11.0 million.$6.6 million and $4.2 million, respectively.

2830

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

3. Investments – (continued)

The following table is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value for the ~~nine~~six months ended ~~September~~June 30, ~~2018:~~2019:

	Nine Months Ended September 30, 2018														Six Months Ended June 30, 2019
	Senior Secured			Preferred Equity		Common Equity			Financial						Senior Secured			Equity			Financial
($ in thousands)	Investments			Investments		Investments			Assets			Total			Investments			Investments⁽¹⁾			Assets			Total
Fair value, beginning of period	$	387,480		$	640	$	4,584		$	2,026		$	394,730		$	445,393		$	8,352		$	232		$	453,977
Total net realized and unrealized (loss)/gain on investments⁽¹⁾		(5,057	)		—		(1,084	)		38			(6,103	)
Total net realized and unrealized (loss)/gain on investments^⁽²⁾																(3,006	)		79			9			(2,918	)
Total net accretion of discounts on investments		975			—		—			—			975			627			—			—			627
Purchases/issuances⁽²⁾⁽³⁾		168,315			—		5,317			—			173,632			71,079			11,451			—			82,530
Paydowns⁽³⁾																(30,218	)		—			(241	)		(30,459	)
Sales		(1,395	)		—		—			—			(1,395	)		(17,022	)		(30	)		—			(17,052	)
Paydowns⁽²⁾		(177,345	)		—		—			(1,528	)		(178,873	)
Fair value, end of period	$	372,973		$	640	$	8,817		$	536		$	382,966		$	466,853		$	19,852		$	—		$	486,705

(1)	Includes preferred and common equity investments.

(2)

Net change in unrealized loss on investments attributable to our Level 3 assets still held ~~as of September~~at June 30, ~~2018~~2019 totaled ~~$6.6~~$3.0 million, ~~and consisted~~consisting of the following: Net unrealized losses on Senior Secured Investments and Common Equity Investments of $5.6 million and $1.1 million, respectively. These were offset by unrealized gains of $0.1 million on our portfolio of Financial Assets.

Senior Secured Investments of $3.1 million, offset by unrealized gains on Equity Investments of $0.1 million.

~~(2)~~(3)

Includes non-cash restructurings of portfolio investments of ~~$4.1~~$10.2 million. There were no transfers of investments between levels for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

The following table is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value for the ~~nine~~ six months ended ~~September~~June 30, ~~2017:~~2018:

	Nine Months Ended September 30, 2017														Six Months Ended June 30, 2018
	Senior Secured			Preferred Equity			Common Equity		Financial						Senior Secured			Equity			Financial
($ in thousands)	Investments			Investments			Investments		Assets			Total			Investments			Investments⁽¹⁾			Assets			Total
Fair value, beginning of period	$	363,960		$	2,086		$	3,902	$	6,756		$	376,704		$	387,480		$	5,224		$	2,026		$	394,730
Total net realized and unrealized (loss)/gain on investments⁽¹⁾		(9,198	)		(1,446	)		558		(170	)		(10,256	)
Total net realized and unrealized (loss) on investments^⁽²⁾																(3,386	)		(1,037	)		(4	)		(4,427	)
Total net accretion of discounts on investments		981			—			—		—			981			625			—			—			625
Purchases/issuances⁽²⁾⁽³⁾		106,724			—			—		—			106,724			118,364			4,112			—			122,476
Paydowns⁽³⁾																(109,053	)		—			(1,083	)		(110,136	)
Sales		(419	)		—			—		—			(419	)		(1,395	)		—			—			(1,395	)
Paydowns⁽²⁾		(110,776	)		—			—		(3,819	)		(114,595	)
Fair value, end of period	$	351,272		$	640		$	4,460	$	2,767		$	359,139		$	392,635		$	8,299		$	939		$	401,873

(1)	Includes preferred and common equity investments.

(2)

Net change in unrealized loss on investments attributable to our Level 3 assets still held at ~~September~~June 30, ~~2017~~2018 totaled ~~$10.5~~$4.4 million, consisting of the following: Senior Secured Investments of ~~$9.8~~$3.5 million, ~~Preferred~~ Equity Investments of ~~$1.4~~$1.0 million, offset by unrealized gains on ~~Common Equity Investments of $0.6 million and~~ Financial Assets of $0.1 million.

~~(2)~~(3)

~~There were no~~Includes non-cash ~~restructuring~~restructurings of portfolio investments orof $4.1 million. There were no transfers of investments between levels for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018.

2931

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

3. Investments – (continued)

The following table is a quantitative disclosure about significant unobservable inputs (Level 3) that were used in determining fair value ~~at September~~as of June 30, ~~2018:~~2019:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Valuation

Unobservable

Range

Weighted

($ in thousands)

September 30, 2018

Technique

Input

Low

High

Average

Senior Secured Investments

$

372,973

Comparable yield approach

Market rate⁽¹⁾

6.1
%

33.5
%

9.3
%

Market comparable companies

EBITDA multiple⁽⁴⁾

2.0
x

19.9
x

7.1
x

Equity Investments⁽²⁾

9,457

Market comparable companies

EBITDA multiple

6.0
x

10.0
x

7.3
x

Origination fees multiple

3.0
x

3.0
x

3.0
x

Recovery Rate

61.3
%

84.7
%

67.1
%

Discounted cash flows

Discount rate

10.0
%

15.0
%

12.1
%

Financial Assets⁽³⁾

536

Discounted cash flows

Interest rate

9.8
%

27.7
%

15.9
%

Conditional prepayment rate

0.0
%

16.7
%

15.7
%

Cumulative default rate

0.0
%

18.9
%

13.9
%

Discount rate

7.0
%

7.0
%

7.0
%
Total

$

382,966

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value as of		Valuation	Unobservable	Range						Weighted
($ in thousands)		June 30, 2019		Technique	Input	Low			High			Average
Senior Secured Investments⁽¹⁾	$		466,853	Comparable yield approach	Market rate^⁽²⁾		6.2	%		32.6	%		9.5	%
				Market comparable companies	EBITDA multiple		2.0	x		16.9	x		7.8	x

Equity Investments⁽³⁾			19,852	Market comparable companies	EBITDA multiple		6.4	x		9.0	x		7.2	x
					Origination fees multiple		3.5	x		3.5	x		3.5	x
				Discounted cash flows	Recovery Rate		40.8	%		40.8	%		40.8	%
					Discount rate		5.0	%		10.0	%		8.3	%

Total	$		486,705

(1)	Market rate is calculated based on the fair value of the investments and interest expected to be received using the current rate of interest at the balance sheet date to maturity, excluding the effects of future scheduled principal amortizations.

~~(2)~~

Includes ~~preferred and common equity.~~

~~(3)~~

~~Financial Assets are~~$13.2 million of first-lien debt investments which were valued by ~~the level~~performing a liquidation analysis of ~~risk associated with~~ the underlying loans measured by the estimated loss rate. The estimated loss rate is based on the historical performance of loans with similar characteristics, the borrower’s credit score obtained from an official credit reporting agency at origination, debt-to-income ratios at origination, information from the borrower’s credit report at origination,assets which serve as well as the borrower’s self-reported income range, occupation and employment status at origination. Financial Asset risk ratings are assigned on a scale from A through F, with A having the lowest level of risk and F having the highest level of risk. As of September 30, 2018, 10.8%, 40.1%, 37.7%, 10.3%, 1.1% and 0.0% of the total fair value of Financial Assets was comprised of A, B, C, D, E and F risk rated loans, respectively. See Exhibit 99.1 to the Company’s Quarterly Report on Form 10-Qcollateral for ~~the quarter ended September 30, 2018 for detail on the underlying~~those loans.

~~(4)~~

Excludes non-operating portfolio companies, which we define as being collateralized by proved developed producing (“PDP”) value, real estate or other hard assets. PDPs are proven commodity revenues that can be produced with existing wells. As of September 30, 2018, our portfolio included non-operating portfolio companies of $16.8 million and $16.9 million of par value and fair value, respectively, which were excluded.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~3. Investments – (continued)~~

~~The following table is a quantitative disclosure about significant unobservable inputs (Level 3) that were used in determining fair value at December 31, 2017:~~

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Valuation

Unobservable

Range

Weighted

($ in thousands)

December 31, 2017

Technique

Input

Low

High

Average

Senior Secured Investments⁽¹⁾

$

387,480

Comparable yield approach

Market rate⁽²⁾

6.1
%

18.1
%

9.8
%

Market comparable companies

EBITDA multiple⁽⁵⁾

2.0
x

13.8
x

7.2
x

Equity Investments⁽³⁾

5,224

Market comparable companies

EBITDA multiple

6.0
x

6.5
x

6.1
x

Origination fees multiple

3.6
x

3.6
x

3.6
x

Financial Assets⁽⁴⁾

2,026

Discounted cash flows

Interest rate

9.8
%

31.0
%

16.2
%

Conditional prepayment rate

0.0
%

16.7
%

15.6
%

Cumulative default rate

0.0
%

19.1
%

13.8
%

Discount rate

7.0
%

7.0
%

7.0
%
Total

$

394,730

~~(1)~~

~~Includes total unfunded commitments with a negative fair value of $0.1 million.~~

(2)	Market rate is calculated based on the fair value of the investments and interest expected to be received using the current rate of interest at the balance sheet date to maturity, excluding the effects of future scheduled principal amortizations.

(3)	Includes preferred and common equity.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

3. Investments – (continued)

The following table is a quantitative disclosure about significant unobservable inputs (Level 3) that were used in determining fair value as of December 31, 2018:

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value as of		Valuation	Unobservable	Range						Weighted
($ in thousands)		December 31, 2018		Technique	Input	Low			High			Average
Senior Secured Investments	$		445,393	Comparable yield approach	Market rate⁽¹⁾		6.5	%		38.1	%		10.0	%
				Market comparable companies	EBITDA multiple⁽²⁾		2.0	x		17.3	x		7.5	x

Equity Investments⁽³⁾			8,352	Market comparable companies	EBITDA multiple		6.5	x		9.0	x		8.9	x
					Origination fees multiple		3.4	x		3.4	x		3.4	x
				Discounted cash flows	Recovery Rate		43.9	%		43.9	%		43.9	%
					Discount rate		10.0	%		15.0	%		13.9	%
Financial Assets⁽⁴⁾			232	Discounted cash flows	Recovery Rate		94.8	%		94.8	%		94.8	%
Total	$		453,977

~~(4)~~(1)

~~Financial Assets are valued by the level of risk associated with the underlying loans measured by the estimated loss rate. The estimated loss~~Market rate is calculated based on the historical performance of loans with similar characteristics, the borrower’s credit score obtained from an official credit reporting agency at origination, debt-to-income ratios at origination, information from the borrower’s credit report at origination, as well as the borrower’s self-reported income range, occupation and employment status at origination. Financial Asset risk ratings are assigned on a scale from A through F, with A having the lowest level of risk and F having the highest level of risk. As of ~~December 31, 2017, 11.9%, 38.1%, 38.6%, 9.4%, 2.0% and 0.0%, of the total~~ fair value of ~~Financial Assets was comprised~~the investments and interest expected to be received using the current rate of ~~A, B, C, D, E and F risk rated loans, respectively. See Exhibit 99.2~~interest at the balance sheet date to maturity, excluding the ~~Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 for detail on the underlying loans.~~effects of future scheduled principal amortizations.

~~(5)~~(2)

Excludes non-operating portfolio companies, which we define as those loans collateralized by ~~PDP~~proved developed producing (“PDP”) value, real estate or other hard assets. PDPs are proven revenues that can be produced with existing wells. As of December 31, ~~2017,~~2018, non-operating portfolio companies with an aggregate of ~~$23.5~~$7.7 million of par value and ~~$22.1~~$7.7 million of fair value were excluded.

(3)	Includes preferred and common equity.

(4)	See Exhibit 99.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 for detail on the underlying loans.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

3. Investments – (continued)

Unobservable inputs used in the fair value measurement of the Company’s ~~Debt and Equity Investments~~investments include bid quotations obtained from independent third party services (“consensus pricing”), multiples of market comparable companies, and relative comparable yields. Significant decreases (increases) in consensus pricing or market comparables could result in lower (higher) fair value measurements. Significant increases (decreases) in comparable yields could result in lower (higher) fair value measurements. Generally, a change in the assumption used for relative comparable yields is accompanied by a directionally opposite change in the assumptions used for pricing.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~3. Investments – (continued)~~

Unobservable inputs used in the fair value measurement of Financial Assets include interest rate, conditional prepayment rate, cumulative default rate and discount rate. Significant decreases (increases) in interest rates or conditional prepayment rates could result in lower (higher) fair value measurements. Significant increases (decreases) in cumulative default rates or discount rates could result in significantly lower (higher) fair value measurements.

The terms of ~~the~~our Debt Investments may ~~provide for~~include provisions that require us to extend ~~to a borrower~~ additional credit or provide funding to a borrower for any unfunded portion of such Debt Investments at the request of the borrower. This exposes us to potential future liabilities that are not reflected on the consolidated statements of financial condition. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had ~~$5.5~~$4.3 million and ~~$8.7~~$7.6 million of unfunded commitments, respectively.

4. Financing

As of September 30, 2018, the total carrying value of the Company’s aggregate debt outstanding was $243.5 million with a weighted average effective interest rate of 4.8% and a weighted average stated maturity date of July 22, 2027.

The table below provides ~~additional~~ details, ~~of the Company’s outstanding debt by type and tranche of debt,~~ including maturity dates, the weighted average interest rates and the weighted average effective interest rates, inclusive of the effects of deferred debt issuance costs, of the Company’s outstanding debt as of ~~September~~June 30, ~~2018:~~2019:

September 30, 2018 ($ in thousands)		Amortized Carrying Value		Outstanding Principal at Par		Interest Rate	Effective Interest Rate	Rating⁽¹⁾	Stated Maturity⁽⁴⁾
2016-2 CLO Secured Notes:
Class A-1R Notes		$	20,500	$	20,500	LIBOR + 2.20%⁽²⁾	4.60%	AAA(sf)	9/29/2027
Class A-1F Notes			24,740		25,000	3.41%	3.55%	AAA(sf)	9/29/2027
Class A-1T Notes			87,119		88,150	LIBOR + 2.20%	4.68%	AAA(sf)	9/29/2027
Class A-2 Notes			20,390		20,700	LIBOR + 3.15%	5.69%	AA(sf)	9/29/2027
Class B Notes			20,981		21,450	LIBOR + 4.00%	6.65%	A (sf)	9/29/2027
Class C Notes			11,438		11,700	LIBOR + 6.00%	8.68%	BBB(sf)	9/29/2027
June 30, 2019 ($ in thousands)											Amortized Carrying Value		Outstanding Principal at Par		Interest Rate	Effective Interest Rate	Rating⁽¹⁾	Stated Maturity⁽⁴⁾
2018-2 CLO Secured Notes:										2018-2 CLO Secured Notes:
Class A-1R-R Notes											$	47,500	$	47,500	LIBOR + 1.58%⁽²⁾	4.22%	AAA(sf)	11/20/2029
Class A-1T-R Notes												168,694		170,400	LIBOR + 1.58%	4.22%	AAA(sf)	11/20/2029
Class A-2-R Notes												54,627		55,100	LIBOR + 2.45%	5.08%	AA (sf)	11/20/2029
Class B-R Notes												17,919		18,250	LIBOR + 3.17%	5.81%	A (sf)	11/20/2029
Subtotals / weighted averages			185,168		187,500	4.92%	5.11%		9/29/2027			288,740		291,250	4.36%	4.48%		11/20/2029
Garrison SBIC Borrowings:	Garrison SBIC Borrowings:									Garrison SBIC Borrowings:
SBIC 2018-10 A			22,257		23,000	3.53%⁽³⁾	3.95%	N/A	3/1/2028			22,308		23,000	3.53%⁽³⁾	3.95%	N/A	3/1/2028
SBIC 2017-10 A			6,781		6,980	3.47%⁽³⁾	3.87%	N/A	3/1/2027			6,796		6,980	3.47%⁽³⁾	3.87%	N/A	3/1/2027
SBIC 2016-10 B			3,227		3,320	2.79%⁽³⁾	3.19%	N/A	9/1/2026			3,235		3,320	2.79%⁽³⁾	3.19%	N/A	9/1/2026
SBIC 2016-10 A			12,371		12,700	3.25%⁽³⁾	3.65%	N/A	3/1/2026			12,400		12,700	3.25%⁽³⁾	3.65%	N/A	3/1/2026
SBIC 2015-10 B			13,661		14,000	3.57%⁽³⁾	3.97%	N/A	9/1/2025			13,693		14,000	3.57%⁽³⁾	3.97%	N/A	9/1/2025
Subtotals / weighted averages			58,297		60,000	3.43%	3.84%		12/16/2026			58,432		60,000	3.43%	3.84%		12/16/2026

Totals / weighted averages		$	243,465	$	247,500	4.56%	4.80%		7/22/2027		$	347,172	$	351,250	4.21%	4.37%		5/22/2029

(1)

Represents anratings from each of S&P ~~rating~~and DBRS for the Class A-1R-R Notes and the Class A-1T-R Notes and S&P ratings for the Class A-2-R Notes and Class B-R Notes as of the closing of GF ~~2016-2’s $300.0~~2018-2’s $420.0 million collateralized loan obligation (the ~~“2016-2~~“2018-2 CLO”). on October 18, 2018.

(2)	~~May bear interest at~~Interest may be indexed to either the CP Rate (as defined in the governing indenture) or 3 month USD LIBOR.

(3)	Represents the stated interest rate and annual charge of our debentures guaranteed by the ~~U.S. Small Business Administration (the “SBA”).~~SBA.

(4)	The indenture governing the ~~2016-2~~2018-2 CLO permits the repricing or refinancing of the secured notes issued as part of the ~~2016-2~~2018-2 CLO after November 20, 2022, which may result in the actual maturity of the existing notes occurring prior to their stated ~~maturity.~~maturity.

3234

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

4. Financing – (continued)

The table below provides ~~additional~~ details of ~~the Company’s~~our outstanding debt ~~by type and tranche of debt, including the weighted average interest rates and the weighted average effective interest rates, inclusive of the effects of deferred debt issuance costs,~~ as of December 31, ~~2017:~~2018:

December 31, 2017 ($ in thousands)

Amortized Carrying Value

Outstanding Principal at Par

Interest Rate

Effective Interest Rate

Rating⁽¹⁾

Stated
Maturity
2016-2 CLO Secured Notes:

Class A-1R Notes

$
19,700

$
19,700

LIBOR + 2.20%⁽²⁾

3.73%

AAA(sf)

9/29/2027
Class A-1F Notes

24,722

25,000

3.41%

3.55%

AAA(sf)

9/29/2027
Class A-1T Notes

87,046

88,150

LIBOR + 2.20%

3.79%

AAA(sf)

9/29/2027
Class A-2 Notes

20,369

20,700

LIBOR + 3.15%

4.79%

AA(sf)

9/29/2027
Class B Notes

20,951

21,450

LIBOR + 4.00%

5.75%

A (sf)

9/29/2027
Class C Notes

11,423

11,700

LIBOR + 6.00%

7.78%

BBB(sf)

9/29/2027
Subtotals / weighted averages

184,211

186,700

4.16%

4.34%

9/29/2027
Garrison SBIC Borrowings:

SBIC 2017-10 A

��
6,766

6,980

3.47%⁽³⁾

3.87%

N/A

3/1/2027
SBIC 2016-10 B

3,220

3,320

2.79%⁽³⁾

3.19%

N/A

9/1/2026
SBIC 2016-10 A

12,343

12,700

3.25%⁽³⁾

3.65%

N/A

3/1/2026
SBIC 2015-10 B

13,629

14,000

3.57%⁽³⁾

3.97%

N/A

9/1/2025
SBIC Interim Financing

12,362

12,800

LIBOR + 0.65%⁽⁴⁾

2.74%

N/A

3/21/2018
Subtotals / weighted averages

48,320

49,800

3.10%

3.51%

2/26/2024

Totals / weighted averages

$
232,531

$
236,500

3.93%

4.16%

12/27/2026

December 31, 2018 ($ in thousands)	Amortized Carrying Value		Outstanding Principal at Par		Interest Rate	Effective Interest Rate	Rating⁽¹⁾	Stated Maturity⁽⁴⁾
2018-2 CLO Secured Notes:
Class A-1R-R Notes	$	8,000	$	8,000	LIBOR + 1.58%⁽²⁾	4.23%	AAA(sf)	11/20/2029
Class A-1T-R Notes		168,630		170,400	LIBOR + 1.58%	4.22%	AAA(sf)	11/20/2029
Class A-2-R Notes		54,611		55,100	LIBOR + 2.45%	5.08%	AA (sf)	11/20/2029
Class B-R Notes		17,908		18,250	LIBOR + 3.17%	5.81%	A (sf)	11/20/2029
Subtotals / weighted averages		249,149		251,750	4.41%	4.52%		11/20/2029
Garrison SBIC Borrowings:
SBIC 2018-10 A		22,275		23,000	3.53%⁽³⁾	3.95%	N/A	3/1/2028
SBIC 2017-10 A		6,786		6,980	3.47%⁽³⁾	3.87%	N/A	3/1/2027
SBIC 2016-10 B		3,230		3,320	2.79%⁽³⁾	3.19%	N/A	9/1/2026
SBIC 2016-10 A		12,381		12,700	3.25%⁽³⁾	3.65%	N/A	3/1/2026
SBIC 2015-10 B		13,671		14,000	3.57%⁽³⁾	3.97%	N/A	9/1/2025
Subtotals / weighted averages		58,343		60,000	3.43%	3.84%		12/16/2026

Totals / weighted averages	$	307,492	$	311,750	4.22%	4.39%		5/22/2029

(1)	Represents anratings from each of S&P ~~rating~~and DBRS for the Class A-1R-R Notes and the Class A-1T-R Notes and S&P ratings for the Class A-2-R Notes and Class B-R Notes as of the closing of the ~~2016-2 CLO.~~2018-2 CLO on October 18, 2018.

(2)	~~May bear interest at~~Interest may be indexed to either the CP Rate (as defined in the governing indenture) or 3 month USD LIBOR.

(3)	Represents the stated interest rate and annual charge of our ~~SBA-guaranteed debentures.~~debentures guaranteed by the SBA.

(4)

~~These interim financings bore an interest rate~~The indenture governing the 2018-2 CLO permits the repricing or refinancing of ~~three month LIBOR + 0.65%,~~the secured notes issued as part of the 2018-2 CLO after November 20, 2022, which ~~was comprised~~may result in the actual maturity of ~~a weighted average annual charge of 0.35% and a spread of 0.30%~~the existing notes occurring prior to their stated maturity. ~~These interim financings had a maturity date of March 21, 2018, upon which they were pooled into ten year SBA-guaranteed debentures.~~

In accordance with the 1940 Act, with certain limited exceptions, prior to August ~~14,~~15, 2018 the Company was allowed to borrow up to amounts such that its asset coverage, as defined in the 1940 Act, was at least 200% after such borrowing excluding ~~SBA Debentures~~the SBA-guaranteed debentures of Garrison SBIC per the Company’s exemptive relief from the Securities and Exchange Commission (the “SEC”). ~~Effective~~On August 14, 2018, the Company’s stockholders approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act to the Company. Thus, effective August 15, 2018, the asset coverage requirements applicable to the Company under the 1940 Act were reduced to 150%. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company’s asset coverage for borrowed amounts was ~~196.3%~~156.8% and ~~200.5%~~167.1%, respectively. As of ~~September~~June 30, 2019 and December 31, 2018, the Company’s total leverage capacity of the Class ~~A-1R~~A-1R-R Notes under the ~~2016-2~~2018-2 CLO was ~~$25.0 million.~~$2.5 million and $42.0 million, respectively.

3335

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

4. Financing – (continued)

Collateralized Loan Obligation Financings

On ~~September 29, 2016, GF 2016-2~~October 18, 2018, the Company completed the ~~2016-2~~$420.0 million 2018-2 CLO. The notes offered in the 2018-2 CLO, collectively referred to as the “2018-2 Notes” and individually defined above in the table, were issued by GF 2018-2 (the “Issuer”) and Garrison Funding 2018-2 LLC (together with the Issuer, the “Co-Issuers”) and are backed by a diversified portfolio of primarily senior secured loans. The proceeds of ~~which~~the 2018-2 CLO were utilized, along with cash on hand, to refinance notes issued under ~~a previous collateralized loan obligation. The notes offered in~~ the 2016-2 CLO (the “2016-2 Notes”) were issued by GF 2016-2 through a private placement and were comprised of: (i) $25.00 million of AAA(sf) Class A-1R Senior Secured Revolving Floating Rate Notes (“Class A-1R Notes”); (ii) $88.15 million of AAA(sf) Class A-1T Senior Secured Floating Rate Notes (“Class A-1T Notes”); (iii) $25.00 million of AAA(sf) Class A-1F Senior Secured Fixed Rate Notes (“Class A-1F Notes”); (iv) $20.70 million of AA(sf) Class A-2 Senior Secured Floating Rate Notes (“Class A-2 Notes” and collectively with the Class A-1R Notes, the Class A-1T Notes and the Class A-2F Notes, the “Class A Notes”); (v) $21.45 million of A(sf) Class B Secured Deferrable Floating Rate Notes (“Class B Notes”); (vi) $11.70 million of BBB(sf) Class C Secured Deferrable Floating Rate Notes (“Class C Notes” and collectively, the Class A Notes, Class B Notes and Class C Notes are referred to as the “Secured Notes”); and (vii) $108.00(as defined below). The Company also retained $108.0 million of subordinated notes (“(the “2018-2 Subordinated Notes”)~~, which do not have~~ that were issued in the transaction and that are entitled to receive distributions to the extent funds are available for such purpose. As a ~~stated interest rate,~~result of the Company retaining the 2018-2 Subordinated Notes, it consolidates the accounts of the Co-Issuers into its financial statements. As a result of this consolidation, the amounts outstanding under the 2018-2 CLO are ~~not rated and were~~treated as the Company’s indebtedness. The Company also initially retained ~~by GARS.~~$18.3 million of the Class B-R Notes. The ~~2016-2~~2018-2 Notes ~~were~~are scheduled to mature on ~~September 29, 2027. The 2016-2~~November 20, 2029, however the 2018-2 Notes ~~were refinanced~~may be redeemed by the Co-Issuers on ~~October 18, 2018. See Note 11 – “Subsequent Events”.~~

As noted above, subject to the asset coverage limitations applicable to the Company under the 1940 Act, the Company had $4.5 million and $1.0 million of available leverage capacity in the Class A-1R Notes under the 2016-2 CLO as of September 30, 2018 and December 31, 2017, respectively. The fair value of the 2016-2 Notes approximated their carrying values on the consolidated statements of financial condition as of September 30, 2018 and December 31, 2017.

any business day after November 20, 2022. The indenture governing the ~~2016-2~~2018-2 Notes ~~provided~~provides that, to the extent cash ~~was~~is available from cash collections, the holders of the ~~2016-2~~2018-2 Notes ~~were~~are to receive quarterly interest payments on the 20th day or, if not a business day, the next succeeding business day of February, May, August and November of each year until the stated maturity.

On September 29, 2016, the Company completed a $300.0 million collateralized loan obligation (the “2016-2 CLO”). The notes offered in the 2016-2 CLO, collectively referred to as the “2016-2 Notes”, were issued by the Co-Issuers through a private placement. The proceeds of which were utilized, along with cash on hand, to refinance notes issued under a previous collateralized loan obligation. The Company retained all of the subordinated notes issued as part of the 2016-2 CLO. The 2016-2 Notes were refinanced by the 2018-2 CLO. The 2018-2 CLO and the 2016-2 CLO are collectively referred to as the “CLOs”.

As noted above, subject to the asset coverage limitations applicable to the Company under the 1940 Act, the Company had $2.5 million and $42.0 million of available leverage capacity in the Class A-1R-R Notes under the 2018-2 CLO as of June 30, 2019 and December 31, 2018, respectively. The fair value of the 2018-2 Notes approximated their carrying value on the consolidated statements of financial condition as of June 30, 2019 and December 31, 2018.

Collateralized Loan Obligation Financing Covenants

Under the documents governing the ~~2016-2~~2018-2 CLO, there were two coverage tests applicable to the ~~Secured Notes~~secured notes issued as part of the 2018-2 CLO (the “Secured Notes”) as of ~~September~~June 30, 2019 and December 31, 2018. The first test compared the amount of interest received on the collateral loans held by GF ~~2016-2~~2018-2 to the amount of interest payable on the Secured Notes under the ~~2016-2~~2018-2 CLO in respect of the amounts drawn and certain expenses. To meet this first test, at any time, the aggregate amount of interest received on the collateral loans must equal, after the payment of certain fees and expenses, at least 135.0% of the aggregate amount of interest payable on the Class AA-1R-R Notes, the Class A-1T-R Notes and the Class A-2-R Notes (collectively the Class A-R Notes) and 125.0% of the interest payable on the Class AA-R Notes and Class BB-R Notes, taken ~~together,~~together.

Garrison Capital Inc. and ~~115% of the interest payable on the Class A~~ Subsidiaries

Notes ~~Class B Notes and Class C Notes, taken together.~~to Consolidated Financial Statements (unaudited)

June 30, 2019

4. Financing – (continued)

Collateralized Loan Obligation Financing Covenants (continued)

The second test compared the aggregate principal amount of the collateral loans, as calculated in accordance with the indenture, to the aggregate outstanding principal amount of the 2018-2 CLO Secured Notes in respect of the amounts drawn. To meet this second test at any time, the aggregate principal amount of the collateral loans must equal at least ~~173.4%~~128.0% of the aggregate outstanding principal amount of the Class AA-R Notes ~~156.1%~~and 118.2% of the aggregate principal amount of the Class AA-R Notes and Class BB-R Notes, taken ~~together, and 148.1% of the aggregate outstanding principal amount of the Class A Notes, Class B Notes and Class C Notes, taken~~ together.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~4. Financing – (continued)~~

~~Collateralized Loan Obligation Financings (continued)~~

~~Collateralized Loan Obligation Financing Covenants (continued)~~

If the coverage tests ~~were~~are not satisfied with respect to a quarterly payment date, ~~GF 2016-2 was~~the 2018-2 CLO will be required to apply available amounts to the repayment of interest on and principal of the ~~2016-2~~2018-2 Notes to the extent necessary to satisfy the applicable coverage tests and, as a result, there may be reduced funds available for GF ~~2016-2~~2018-2 to make additional investments or to make distributions on the ~~Subordinated~~2018-2 Notes held by the Company. Additionally, compliance ~~was~~is measured on each day collateral loans are purchased, originated or sold and in connection with monthly reporting to the note holders.

Furthermore, if under the second coverage test the aggregated principal amount of the collateral loans ~~equaled~~equals 125.0% or less of the aggregate outstanding principal amount onof the Class ~~A-1T Notes~~A-1R-R and Class ~~A-1R~~A-1T-R Notes, taken together, ~~and~~ remained so for ten business days, an event of default ~~would~~will be deemed to have occurred. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the trustee for the ~~2016-2~~2018-2 CLO has asserted that all of the coverage tests were met.

Garrison SBIC Borrowings

On May 29, 2014, Garrison SBIC, which has an investment objective substantially similar to GARS, was formed in accordance with the SBA’s small business investment company (“SBIC”) regulations. Garrison SBIC received a license from the SBA on May 26, 2015. The SBIC license allows Garrison SBIC to obtain SBA-guaranteed debentures in an amount equal to twice its equity capitalization up to ~~$150.0~~$175.0 million of leverage, subject to the issuance of a capital commitments by the SBA and other customary procedures. ~~On June 16, 2015,~~Since receiving its SBIC license, the SBA has issued Garrison SBIC awith two commitment ~~to provide $35.0 million of leverage and on October 24, 2016 issued a second commitment~~letters to provide an ~~additional $35.0~~aggregate $70.0 million of ~~leverage.~~SBA debentures.

These SBA-guaranteed debentures are issued bi-annually on pooling dates in March and September of each year. The debentures are non-recourse, interest-only debentures with a 10 year stated maturity, but may be prepaid at any time without penalty. To the extent the debentures are prepaid, they are permanently extinguished and the Company can no longer access those debentures. The interest rate of the debentures is fixed at the time of issuance on each respective pooling date and is based on a coupon rate that equates to a spread over the ten year treasury rate based on market rates at the time of issuance. Interest on the debentures is payable on a semi-annual basis. The SBA issues interim financings to SBICs on non-pooling dates that carry a lower interest rate than the debentures and which mature on the next pooling date ~~to be~~when replaced by new SBA-guaranteed debentures.

The SBA, as a creditor, will have a ~~priority~~superior claim to Garrison SBIC’s assets ~~ahead of~~over GARS’ stockholders ~~to the extent~~if Garrison SBIC were to be liquidated, or if the SBA exercises its remedies under the SBA-guaranteed debentures issued toby Garrison SBIC upon an event of default.

As of ~~September~~June 30, ~~2018,~~2019, Garrison SBIC had regulatory capital of ~~$36.1~~$34.7 million and total SBIC borrowings outstanding of $60.0 million. The fair value of the SBIC borrowings approximated the carrying value on the consolidated statements of financial condition as of ~~both September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018. As of ~~September~~June 30, ~~2018,~~2019, the Company had $10.0 million of ~~remaining~~available SBIC leverage ~~capacity available.~~capacity.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

4. Financing – (continued)

~~GLC Trust 2013-2 Notes~~

Short-term Financing Facility

On ~~July 18, 2014,~~June 3, 2019, the Company ~~completed~~entered into a ~~$39.2 million~~master repurchase agreement with Natixis Securities Americas LLC (“Natixis”) to provide short term ~~debt securitization,~~borrowings which the Company intends to utilize from time-to-time to manage its working capital needs. The Company’s ability to draw down borrowings under the agreement is subject to 1940 Act leverage limitations and dependent on the notes offered thereby (the “GLC Trust 2013-2 Notes”) were collateralized by a consumer loan portfolio (the “Financial Assets”). The GLC Trust 2013-2 Notes consisted of $36.9 million of Class A Notes (“GLC Trust 2013-2 Class A Notes”) and $2.3 million of Class B Notes (“GLC Trust 2013-2 Class B Notes”). The GLC Trust 2013-2 Class A Notes bore interest at a rate of 3.00%.Company pledging eligible assets to Natixis as collateral. The Company ~~retained~~made customary representations and warranties in connection with entry into the ~~GLC Trust 2013-2 Class B Notes. The GLC Trust 2013-2 Notes~~agreement and will be required to comply with various customary covenants and other customary requirements. No commitment fees were ~~fully~~ paid ~~down~~ in ~~November 2017,~~connection with execution of the agreement. Pricing and tenor of the ~~GLC Trust entity was dissolved in~~borrowings will be determined once sufficient collateral assets have been pledged under the agreement. As of June ~~2018.~~30, 2019, there were no outstanding borrowings or assets pledged under the agreement.

Deferred Debt Issuance Costs and ~~Original Issue Discounts~~Other Fees

In connection with executing or refinancing its various debt facilities, the Company may incur debt issuance costs or issue debt at a price below par, referred to as an original issue discount. These debt issuance costs and discounts are generally included as a reduction to the carrying amount of the corresponding liability on the consolidated statements of financial condition. However, based on the nature of the debt facilities, costs associated with revolving credit facilities are recorded within the other assets line item on our consolidated statements of financial condition. The costs and discounts are then generally amortized over the stated maturity of the liability.

As of both ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company’s debt issuance costs and original issue discounts were generally incurred as a result of the ~~2016-2 CLO~~CLOs and the Company’s SBIC borrowings. The ~~2016-2~~ CLO costs typically ~~represented~~represent structuring and facility fees, rating agency fees and other legal costs ~~incurred when we refinanced a previous CLO.~~incurred. The costs associated with SBIC borrowings ~~carry fees that~~ consist of a 1.00% fee on the total commitments received, ~~and~~ a 2.00% leverage fee, a 0.375% underwriting fee and a 0.05% administrative fee on any SBA borrowings that are drawn.

As of ~~September~~June 30, 2019, $4.7 million of deferred debt issuance costs and discounts remained on our consolidated statements of financial condition. These costs were comprised of $3.0 million related to the 2018-2 CLO and $1.7 million related to the borrowings of Garrison SBIC. As of December 31, 2018, ~~$4.3~~$4.9 million of deferred debt issuance costs and discounts on our ~~notes payable remained on our~~ consolidated statements of financial ~~condition and was~~condition. These costs were comprised of ~~$2.5~~$3.1 million related to the ~~2016-2~~2018-2 CLO and $1.8 million related to the ~~Company’s SBIC borrowings. As~~borrowings of December 31, 2017, $4.4 million of deferred debt issuance costs and discounts on our notes payable remained on our consolidated statements of financial condition and was comprised of $2.7 million related toGarrison SBIC. For the ~~2016-2 CLO and $1.7 million related to the Company’s SBIC borrowings. During both the nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, interest expense on our consolidated statements of operations included $0.3 million and $0.2 million, respectively, of amortization related to the debt issuance costs and original issue discounts on our liabilities.

3638

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

5. Related Party Transactions and Other Agreements

Investment Advisory Agreement

The Investment Adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis subject to the supervision of the Board. The Investment Adviser was organized in November 2010 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended. The Investment Adviser is an affiliate of Garrison Investment Group LP (the “Investment Manager”), which is also the investment manager of various stockholders of the Company.

GARS entered into an investment advisory agreement with the Investment Adviser ~~most recently~~(as amended ~~and~~and/or restated ~~on August 14, 2018 (the “Fifth Amended and Restated Investment~~from time to time, the “Investment Advisory Agreement”), which entitles the Investment Adviser to a management fee and an incentive ~~fee, both~~fee. As of ~~which are described further below.~~

~~Advisory Fee Waivers~~

~~From October 1, 2016 through May 2, 2017,~~June 30, 2019, the Investment ~~Adviser, in consultation with the Board, irrevocably waived any fees payable to the Investment Adviser under the third~~Advisory Agreement had been most recently amended and restated investment advisory agreement, dated August 5, 2016, with respect to a calendar quarter in excess of the sum of (i) 0.375% per quarter (1.50% annualized) of the gross assets of the Company, excluding cash and cash equivalents but including assets purchased with borrowed funds, calculated based on the average carrying value of the gross assets of the Company at the end of the two most recently completed calendar quarters, (ii) 20% of pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, in excess of a “hurdle rate” of 1.75% per quarter (7.00% annualized) and (iii) in the case of the final calendar quarter of each year, the capital gains incentive fee.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~5. Related Party Transactions and Other Agreements – (continued)~~May 6, 2019.

Management Fee

~~The Fifth Amended and Restated~~Under the Investment Advisory Agreement, ~~which is effective as of~~beginning August 14, 2018, ~~modifies~~ the ~~base~~ management fee payable to the Adviser tois calculated at an annual rate of 1.50% of the Company's average gross assets, excluding cash or cash equivalents but including assets purchased with borrowed funds, at the end of each of the two most recently completed calendar quarters; provided, however, the ~~base~~ management fee ~~will be~~is calculated at an annual rate of 1.00% of the average value of the Company’s gross assets, excluding cash or cash equivalents but including assets purchased with borrowed funds, that exceeds the product of (i) 200% and (ii) the Company’s average net assets at the end of each of the two most recently completed calendar quarters. For the avoidance of doubt, the 200% ~~will be~~is calculated in accordance with the asset coverage limitation as defined in the 1940 Act and ~~will give~~gives effect to the Company’s exemptive relief with respect to our SBIC debentures.

From May 3, 2017 until August 13, 2018, the ~~base~~ management fee was calculated at an annual rate of 1.50% of the Company’s gross assets, excluding cash and cash equivalents but including assets purchased with borrowed funds, and was payable quarterly in arrears. ~~Prior to May 3, 2017,~~

For the ~~management fee was calculated at an annual rate of 1.75% of gross assets, excluding cash~~three and ~~cash equivalents, and cash equivalents, restricted, but including assets purchased with borrowed funds.~~

~~The following table details our~~six months ended June 30, 2019, the Company incurred aggregate management fee expenses ~~for~~of $1.7 million and $3.3 million, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, 2018, ~~and September 30, 2017:~~

Three Months Ended

Nine Months Ended

Management Fees ($ in thousands)

September 30,2018

September 30,2017

September 30,2018

September 30,2017

Management fee

$
1,504

$
1,374

$
4,516

$
4,423

Management fee waived

—

—

—

(310
)
Total management fees, net of waived fees

$
1,504

$
1,374

$
4,516

$
4,113

~~Management fees in~~ the ~~amount~~Company incurred aggregate management fee expenses of $1.5 million and ~~$0.1~~$3.0 million, ~~were payable as~~respectively. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the management fees in the amounts of $1.7 million and $0.1 million, respectively, were recorded as payable and ~~are~~ included in management fee payable on ~~the~~our consolidated statements of financial condition.

~~Incentive Fee Overview~~

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

5. Related Party Transactions and Other Agreements – (continued)

Under the ~~Fifth Amended and Restated~~ Investment Advisory Agreement, the Investment Adviser is entitled to an incentive fee consisting of two components and a cap and deferral mechanism. The ~~two~~first component is income-based and payable quarterly in arrears while the second component is capital gains-based and 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). The components are independent of each other, and certain instances may result in one component being payable even if the other is not. ~~There were no changes made to the calculation of the~~

Income-based incentive ~~fee in conjunction with executing the Fifth Amended and Restated Investment Advisory Agreement, effective August 14, 2018.~~fees

~~Effective May 3, 2017, the~~The first component, which is income-based and payable quarterly in arrears, equals 20.00% of the amount, if any, that the Company’s pre-incentive fee net investment income exceeds a 1.75% quarterly (7.00% annualized) hurdle rate (the “Hurdle Rate”), subject to a “catch-up” provision, measured at the end of each calendar quarter.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~5. Related Party Transactions and Other Agreements – (continued)~~

~~Incentive Fee Overview (continued)~~

~~The~~Effective January 1, 2019, the operation of the first component of the incentive fee under the Investment Advisory Agreement for each quarter is as follows:

no incentive fee ~~will be~~is payable to the Investment Adviser in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the Hurdle Rate of 1.75% (7.00% annualized);

50% of the Company’s pre-incentive fee net investment income, if any, that exceeds the 1.75% Hurdle Rate but is less than 2.9167% in any calendar quarter (11.67% annualized) is payable to the Investment Adviser. This portion of the Company’s income-based incentive fee component is referred to as the “catch-up” provision; and

20% of the Company’s pre-incentive fee net investment income, if any, that exceeds 2.9167% in any calendar quarter (11.67% annualized) is payable to the Investment Adviser.

Prior to January 1, 2019, the operation of the first component of the incentive fee under the Investment Advisory Agreement for each quarter was as follows:

no incentive fee was payable to the Investment Adviser for any calendar quarter in which the Company’s pre-incentive fee net investment income did not exceed the Hurdle Rate of 1.75% (7.00% annualized);

100% of the Company’s pre-incentive fee net investment income, ~~with respect to that portion of such pre-incentive fee net investment income,~~ if any, that exceeds the 1.75% Hurdle Rate but iswas less than 2.1875% in any calendar quarter (8.75% annualized) iswould have been payable to the Investment ~~Adviser. We refer to this portion~~Adviser; and

20% of the Company’s pre-incentive fee net investment income, ~~(which exceeds~~if any, that exceeded 2.1875% in any calendar quarter (8.75% annualized) would have been payable to the ~~Hurdle Rate but is less than 2.1875%) as the “catch-up.”~~ Investment Adviser.

The effect of the ~~“catch-up”~~catch-up provision is that, if ~~such~~the Company earns pre-incentive fee net investment income ~~exceeds 2.1875%~~ in any ~~calendar~~ quarter in excess of 2.1875% or 2.9167%, as applicable, the Investment Adviser ~~will~~would receive 20% of such pre-incentive fee net investment income as if the Hurdle Rate did not ~~apply;~~apply.

Garrison Capital Inc. and Subsidiaries

~~20% of the amount of such pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable~~Notes to ~~the Investment Adviser (once the Hurdle Rate is reached~~Consolidated Financial Statements (unaudited)

June 30, 2019

5. Related Party Transactions and ~~the catch-up is achieved).~~

Prior to May 3, 2017, the first component of the incentive fee equaled 20.00% of the amount, if any, that the Company’s pre-incentive fee net investment income exceeded a 2.00% quarterly (8.00% annualized) hurdle rate, subject to a “catch-up” provision measured at the end of each calendar quarter.Other Agreements – (continued)

The portion of such income-based incentive fee that is attributable to deferred interest (such as PIK ~~interest or original issue discount)~~interest) will be paid to the Investment Adviser, together with any other interest accrued on the loan from the date of deferral to the date of payment, only if and to the extent the Company actually receives such interest in ~~cash, and~~cash. Furthermore, any accrual ~~thereof~~that is attributable to deferred interest will be reversed if and to the extent such interest is reversed in connection with any write-off ~~or similar treatment~~ of the investment giving rise to any deferred interest accrual. Any reversal of such deferred interest amounts would reduce net income for the quarter by the net amount of the reversal, ~~(after~~after taking into account the ~~reversal of~~ incentive fees ~~payable) and~~associated with the deferred interest amount also being reversed. Such a write-off would result in a reduction and possible elimination of the incentive fees for such quarter. For the avoidance of doubt, no incentive fee will be paid to the Investment Adviser on amounts accrued and not ~~paid~~received in cash with respect ofto deferred interest.

Capital gains-based incentive fees

The second component, which is capital gains-based, is determined and payable in arrears as of the end of each calendar year (or upon termination of the ~~Fifth Amended and Restated~~ Investment Advisory Agreement, as of the termination date) and equals 20% of the Company’s cumulative aggregate realized capital gains through the end of such year, computed net of the Company’s aggregate cumulative realized capital losses and aggregate cumulative unrealized capital loss through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees and subject to the Incentive Fee Cap and Deferral Mechanism described below. The capital-gains component of the incentive fee excludes any portion of realized gains/(losses) that are associated with the reversal of any portion of unrealized gain/(loss) attributable to periods prior to April 1, 2013. The capital gains component of the incentive fee is not subject to any minimum return to stockholders.

In addition, under U.S. GAAP, we are required to accrue a capital gains incentive ~~fee~~fees, based upon the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital gain and loss on investments held at the end of each period. If such amount is positive at the end of a period, then the Company will record a capital gains incentive fee equal to 20% of such amount, less the aggregate amount of actual capital gains related incentive fees paid in all prior years. If such amount is negative, ~~then there is~~ no accrual will be recorded for such period. There were no ~~accrued~~ capital gains incentive fees ~~as of September~~accrued for the three and six months ended June 30, ~~2018~~2019 and ~~December 31, 2017.~~

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~5. Related Party Transactions and Other Agreements – (continued)~~2018.

The ~~Fifth Amended and Restated~~ Investment Advisory Agreement does not permit unrealized capital gains for purposes of calculating the amount payable to the Investment Adviser. Amounts due related to unrealized capital gains, if any, will not be paid to the Investment Adviser until realized under the terms of the ~~Fifth Amended and Restated~~ Investment Advisory Agreement (as described above).

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

5. Related Party Transactions and Other Agreements – (continued)

Incentive Fee Cap and Deferral Mechanism

We have structured the calculation of the incentive fees to include a fee limitation (the “Incentive Fee Cap and Deferral Mechanism”) such that no incentive fee will be paid to our Investment Adviser for any fiscal quarter if, after such payment, the cumulative incentive fees paid to our Investment Adviser for the period that includes such fiscal quarter and the 11 full preceding fiscal quarters (the “Incentive Fee Look-back Period”) would exceed 20.00% of our Cumulative Pre-Incentive Fee Net Return during the applicable Incentive Fee Look-back Period (the “Incentive Fee Cap”). To the extent that the payment of incentive fees is limited by the Incentive Fee Cap, the payment of such fees is deferred and paid in subsequent quarters up to three years after their date of deferment, subject to applicable limitations included in the Investment Advisory Agreement. However, beginning January 1, 2019, no deferred incentive fees will be paid to the Investment Adviser in an amount in excess of the sum of cumulative realized capital gains, cumulative realized capital losses, cumulative unrealized capital depreciation and cumulative unrealized capital appreciation during the applicable Incentive Fee Look-back Period. The “Cumulative Pre-Incentive Fee Net Return” is defined as the sum of (1) pre-incentive fee net investment income, (2) cumulative realized capital gains/(losses), and (3) cumulative unrealized capital gains/(losses) for the Incentive Fee Look-back Period. ~~Prior to April 1, 2016, the Incentive Fee Look-back Period consisted of fewer than 12 full fiscal quarters.~~

~~The following table provides a breakdown of our incentive fees for the three and nine months ended September 30, 2018 and September 30, 2017:~~

Three Months Ended

Nine Months Ended

Incentive Fees ($ in thousands)

September 30, 2018

September 30, 2017

September 30, 2018

September 30, 2017

Income-based incentive fees

$
522

$
837

$
2,382

$
1,955

Capital gains-based incentive fees

—

—

—

—

Incentive fees subject to cap & deferral mechanism⁽¹⁾

(522
)

(837
)

(2,382
)

(1,955
)
Total incentive fees

$
—

$
—

$
—

$
—

~~(1)~~

As of September 30, 2018, we had cumulative net realized and unrealized capital losses in excess of our Pre-Incentive Fee Net Investment Income, resulting in zero Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period. As a result, as of September 30, 2018, no aggregate incentive fees were payable to the Investment Adviser during the Incentive Fee Look-back Period. As of September 30, 2018, no incentive fees had been paid to the Investment Adviser during the Incentive Fee Look-back Period.

However, as noted above, no incentive fee will be paid to the Investment Adviser for any fiscal quarter if, after such payment, the cumulative incentive fees paid to our Investment Adviser for the Incentive Fee Look-back Period would exceed 20% of our Cumulative Pre-Incentive Fee Net Return during the applicable Incentive Fee Look-back Period. To the extent unrealized capital losses incurred as of September 30, 2018 are reversed within the applicable Incentive Fee Look-back Period, the corresponding increase in our Cumulative Pre-Incentive Fee Net Return may result in the Investment Adviser earning and being paid up to $9.9 million of income based incentive fees which are currently subject to the Incentive Fee Cap.

Realized and unrealized capital gains and losses and pre-incentive net investment income earned during the three months ended ~~September~~June 30, ~~2018~~2019 will cease to impact the Incentive Fee Cap and Deferral Mechanism after ~~September~~June 30, ~~2021.~~2022.

~~The Investment Adviser earned aggregate incentive fees~~As of ~~$0.5 million and $2.4 million for~~June 30, 2019, the ~~three and nine months ended September 30, 2018. The Investment Adviser earned aggregate incentive fees of $0.8 million and $2.0 million for~~Company’s Cumulative Pre-Incentive Fee Net Return during the ~~three and nine months ended September 30, 2017. However, none of the incentive fees earned for the three and nine months ended September 30, 2018 and September 30, 2017 were payable~~Incentive Fee Look-back Period was $11.7 million. As a result, due to the Incentive Fee ~~Cap. In addition, no~~Cap and Deferral Mechanism (and subject to the applicable limitations set forth in the Investment Advisory Agreement ), the Incentive Fee Cap as of June 30, 2019 was $2.3 million (i.e. 20% of the Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period).

As of June 30, 2019, the Investment Adviser had calculated an aggregate of $10.1 million of income-based incentive fees since July 1, 2016, of which $0.6 million is recorded as incentive fee payable on the consolidated statement of financial condition. As a result and to the extent unrealized capital losses incurred as of June 30, 2019 are reversed or cease to impact the Incentive Fee Cap within the applicable Incentive Fee Look-back Period, such that cumulative realized capital gains and cumulative unrealized capital appreciation exceed cumulative realized capital losses and cumulative unrealized capital depreciation during the applicable Incentive Fee Look-back Period, the Investment Adviser may be able to recoup up to $9.0 million of income-based incentive fees which are currently deferred under the Incentive Fee Cap.

The following table provides a breakdown of our incentive fees for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended					Six Months Ended
Incentive Fees ($ in thousands)	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Income-based incentive fees	$	543	$	877		$	832	$	1,860
Capital gains-based incentive fees		—		—			—		—
Incentive fees subject to cap & deferral mechanism⁽¹⁾		—		(877	)		—		(1,860	)
Total incentive fees	$	543	$	—		$	832	$	—

(1)	The Cumulative Pre-Incentive Fee Net Return for the Incentive Fee Look-back Period ending June 30, 2018 was negative due to realized and unrealized capital losses incurred, and therefore all income-based payments were subject to the Incentive Fee Cap and Deferral Mechanism.

As of June 30, 2019 and December 31, 2018, there was $0.6 million and $0.3 million of incentive fees earned that were recorded as payable on the consolidated statements of financial condition, ~~as of September 30, 2018 and December 31, 2017 due to the Incentive Fee Cap.~~respectively.

4042

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

5. Related Party Transactions and Other Agreements – (continued)

Administration Agreement

GARS entered into an administration agreement, which was effective as of October 9, 2012 (the “Administration Agreement”), with GARS Administrator. Under the Administration Agreement, the GARS Administrator provides the Company with office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as the GARS Administrator, subject to review by the Board, from time to time determines to be necessary or useful to perform its obligations under the Administration Agreement. The GARS Administrator is responsible for the financial and other records that the Company is required to maintain and prepares reports to stockholders, and reports and other materials filed with the SEC. The GARS Administrator provides on the Company’s behalf significant managerial assistance to those portfolio companies to which the Company is required to provide such assistance. No managerial assistance was provided to any portfolio companies during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017.~~2018.

In addition, the GARS Administrator assists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and the printing and dissemination of reports to stockholders of the Company, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. The Company reimburses the GARS Administrator for the costs and expenses incurred by the GARS Administrator in performing its obligations and providing personnel and ~~facilities as described.~~facilities.

Administrator charges for the three and ~~nine~~six months ended ~~September~~June 30, 2019 were $0.3 million and $0.7 million, respectively. Administrator charges for three and six months ended June 30, 2018 were $0.3 million and ~~$0.9 million, respectively. GARS Administrator charges for the three and nine months ended September 30, 2017 were $0.3 million and $0.9~~$0.6 million, respectively. No charges were waived by the GARS Administrator for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017.~~2018. As of ~~September~~June 30, ~~2018,~~2019, $0.2 million of administration fees were payable to the GARS Administrator. No administration fees were payable to the GARS Administrator as of December 31, ~~2017.~~2018.

Directors’ Fees

The Company’s independent directors each receive an annual fee of $75,000. They also receive $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each in-person Board meeting and receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each in-person committee meeting.

In addition, the chairman of the audit committee receives an annual fee of $10,000, the chairman of the valuation committee receives an annual fee of $10,000 and each chairman of any other committee receives an annual fee of $5,000 for their additional services in these capacities (all such fees and reimbursements collectively, “Directors’ Fees”). No compensation is paid to directors who are not independent of the Company and the Investment Adviser.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 independent directors earned Directors’ Fees of $0.1 million and $0.2 million, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, independent directors earned Directors’ Fees of $0.1 million and $0.2 million, respectively. No Directors’ Fees were payable as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

4143

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

5. Related Party Transactions and Other Agreements – (continued)

Affiliated Stockholders

As of both ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, Garrison Capital Fairchild I Ltd., Garrison Capital Fairchild II Ltd. and Garrison Capital Adviser Holdings MM LLC owned an aggregate of 789,910, or 4.9%, of the total outstanding shares of GARS common stock. As of ~~September~~June 30, ~~2018 and December 31, 2017,~~2019, the officers and directors of the Company owned an aggregate of approximately ~~238,500,~~298,000, or 1.9%, of the total outstanding shares of GARS common stock. As of December 31, 2018, the officers and directors of the Company owned an aggregate of approximately 239,000, or 1.5%, of the total outstanding shares of GARS common stock.

Other Agreements

Garrison Loan Agency Services LLC acts as the administrative and collateral agent for certain loans held by the Company. No fees were paid by the Company to Garrison Loan Agency Services LLC ~~for its services~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017.~~2018.

The Company may invest alongside other clients of the Investment Manager and its affiliates in certain circumstances where doing so is consistent with applicable law, SEC staff interpretations and the terms of our exemptive relief.

For certain expenses, the GARS Administrator facilitates payments by GARS to third parties through the Investment Adviser or other affiliate. Other than the amount of expenses paid to third parties and fees payable under the Investment Advisory Agreement, no additional charges or fees are assessed by the GARS Administrator, the Investment Adviser or other affiliates.

GARS entered into a custody agreement with Deutsche Bank Trust Company Americas to act as custodian for GARS. The Custodian ~~was~~is also the trustee of the ~~2016-2~~2018-2 CLO and is the custodian for Garrison SBIC.

4244

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

6. Financial Highlights

The following table represents financial highlights for the Company for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017:~~2018:

	Nine Months Ended
Per share data ($ in thousands, except share and per share amounts)	September 30, 2018			September 30, 2017			June 30, 2019			June 30, 2018
Net asset value per common share at beginning of period	$	11.69		$	12.42		$	10.52		$	11.69
Increase in net assets from operations:
Net investment income		0.81			0.81			0.42			0.58
Net realized (loss)/gain on investments		(0.02	)		0.04
Net unrealized loss on investments		(0.39	)		(0.69	)
Net realized loss on investments								(0.59	)		(0.02	)
Net unrealized gain/(loss) on investments								0.41			(0.25	)
Net increase in net assets resulting from operations		0.40			0.16			0.24			0.31
Stockholder transactions
Distributions from net investment income		(0.84	)		(0.84	)		(0.46	)		(0.56	)
Total stockholder transactions		(0.84	)		(0.84	)		(0.46	)		(0.56	)
Net asset value per common share at end of period	$	11.25		$	11.74		$	10.30		$	11.44

Per share market value at beginning of period	$	8.11		$	9.35		$	6.43		$	8.11
Per share market value at end of period	$	8.28		$	8.43		$	6.90		$	8.13
Total book return⁽¹⁾		3.42	%		1.29	%		2.28	%		2.65	%
Total market return⁽²⁾		12.88	%		(0.93	)%		14.40	%		7.25	%
Common shares outstanding at beginning of period		16,049,352			16,049,352			16,049,352			16,049,352
Common shares outstanding at end of period		16,049,352			16,049,352			16,049,352			16,049,352
Weighted average common shares outstanding		16,049,352			16,049,352			16,049,352			16,049,352
Net assets at beginning of period	$	187,658		$	199,408		$	168,912		$	187,658
Net assets at end of period	$	180,535		$	188,435		$	165,333		$	183,542
Average net assets⁽³⁾	$	184,556		$	191,194		$	167,914		$	185,207
Ratio of net expenses to average net assets⁽⁴⁾		11.70	%		9.74	%		16.93	%		11.46	%
Ratio of net investment income to average net assets⁽⁴⁾		9.41	%		9.04	%		8.01	%		10.04	%
Ratio of portfolio turnover to average investments at fair value⁽⁵⁾⁽⁴⁾		44.71	%		28.92	%		9.98	%		28.69	%
Asset coverage ratio⁽⁶⁾⁽⁵⁾		196.29	%		212.28	%		156.77	%		201.40	%
Average outstanding debt⁽⁷⁾⁽⁶⁾	$	235,316		$	202,790		$	338,066		$	232,024
Average debt per common share	$	14.66		$	12.64		$	21.06		$	14.46

(1)	Total book return equals the net increase of ending net asset value from operations plus the effect of repurchases of common stock over the net asset value per common share at the beginning of the period.

(2)	Based upon the change in market price per share during the period and takes into account distributions, if any, reinvested in accordance with our dividend reinvestment plan.

(3)	Calculated utilizing monthly net assets.

(4)

During the nine months ended September 30, 2018, $2.4 million of income-based incentive fees were capped as a result of the Incentive Fee Cap and Deferral Mechanism. Had these incentive fees been earned, the ratio of net investment income to average net assets and the ratio of net expenses to average net assets would have been 7.69% and 13.42%, respectively.

~~(5)~~

Calculated based on monthly average investments at fair value.

~~(6)~~(5)

Effective as of August ~~14,~~15, 2018, in accordance with the 1940 Act, the Company is ~~currently~~ allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such ~~borrowings.~~borrowing. Prior to August ~~14,~~15, 2018, the Company was allowed to borrow amounts such that its asset coverage iswas at least 200% after such borrowing. Based on the exemptive relief received from the SEC in 2015, Garrison SBIC’s SBA guaranteed debentures are excluded from the Company’s asset coverage test calculation.

~~(7)~~(6)

Calculated based on monthly average debt outstanding.

4345

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2018~~2019

7. Earnings per Share

The following table sets forth the computation of the net increase/(decrease) in net assets per share resulting from operations, pursuant to FASB ASC 260, Earnings per Share, for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017:~~ 2018:

	Nine Months Ended				Six Months Ended
($ in thousands, except per share data)	September 30, 2018		September 30, 2017		June 30, 2019		June 30, 2018
Net increase in net assets resulting from operations	$	6,359	$	2,509	$	3,803	$	4,872
Basic weighted average common shares outstanding		16,049,352		16,049,352		16,049,352		16,049,352
Basic earnings per share	$	0.40	$	0.16	$	0.24	$	0.31

8. Stockholders’ Equity

Distributions

The Company’s dividends and distributions are recorded on the ex-dividend date. The following table reflects the cash distributions declared on common stock for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017:~~ 2018:

Record Dates
($ in thousands except per share data)

Date Declared

Payment
Date

Distribution
Declared

Distribution Declared
per Share

Nine Months Ended September 30, 2018

September 7, 2018

July 31, 2018

September 21, 2018

$
4,494

$
0.28

June 8, 2018

May 1, 2018

June 22, 2018

4,494

0.28

March 23, 2018

February 28, 2018

March 29, 2018

4,494

0.28

$
13,482

$
0.84

Record Dates ($ in thousands except per share data)	Date Declared	Payment Date	Distribution Declared		Distribution Declared per Share
Six Months Ended June 30, 2019
June 7, 2019	April 30, 2019	June 21, 2019	$	3,691	$	0.23
March 22, 2019	March 5, 2019	March 29, 2019		3,691		0.23
			$	7,382	$	0.46

Record Dates
($ in thousands except per share data)

Date Declared

Payment
Date

Distribution
Declared

Distribution Declared
per Share

Nine Months Ended September 30, 2017

September 8, 2017

August 1, 2017

September 22, 2017

$
4,494

$
0.28

June 9, 2017

May 2, 2017

June 23, 2017

4,494

0.28

March 23, 2017

February 28, 2017

March 30, 2017

4,494

0.28

$
13,482

$
0.84

Record Dates ($ in thousands except per share data)	Date Declared	Payment Date	Distribution Declared		Distribution Declared per Share
Six Months Ended June 30, 2018
June 8, 2018	May 1, 2018	June 22, 2018	$	4,494	$	0.28
March 23, 2018	February 28, 2018	March 29, 2018		4,494		0.28
			$	8,988	$	0.56

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with U.S. GAAP.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

~~8. Stockholders’ Equity – (continued)~~

Dividend Reinvestment Plan

The Company 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 the Board declares a cash dividend or other distribution, then our stockholders who have not ‘opted out’ of our dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of our common stock, which may be newly issued shares or shares acquired by American Stock Transfer & Trust Company, LLC (“AST”), the transfer and dividend paying agent and registrar to GARS, through open-market purchases, rather than receiving the cash distribution. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, no new shares were issued pursuant to the dividend reinvestment plan.

No action is required on the part of a registered stockholder to have its cash dividend or other distribution reinvested in shares of our common stock. A registered stockholder may elect to receive an entire distribution in cash by notifying AST in writing so that such notice is received by AST no later than the record date for distributions to stockholders.

Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends and other distributions in cash by notifying their broker or other financial intermediary of their election.

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

9. Commitments and Contingencies

The Company had outstanding commitments to fund investments totaling ~~$5.5~~$4.3 million and ~~$8.7~~$7.6 million under various undrawn revolvers and other credit facilities as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

In the ordinary course of business, the Company may be named as a defendant or a plaintiff in various lawsuits and other legal proceedings. Such proceedings include actions brought against the Company and others with respect to transactions to which the Company may have been a party. The outcomes of such lawsuits are uncertain and, based on these lawsuits, the values of the investments to which they relate could decrease. Management does not believe that as a result of litigation there would be any material impact on the consolidated financial condition of the Company. The Company has had no outstanding litigation proceedings brought against it since the initial public offering on April 2, ~~2013.~~2013.

In the normal course of business, the Company enters into certain contracts that provide a variety of indemnifications. The Company’s maximum exposure under these indemnifications is unknown. However, no liabilities have arisen under these indemnifications in the past and, while there can be no assurances in this regard, there is no expectation that any will occur in the future. Therefore, the Company does not consider it necessary to record a liability for any indemnifications under U.S. GAAP.

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

10. Transactions with Control/Affiliate and Non-Control/Affiliate Investments

As required by the 1940 Act, investments are classified by level of control. “Control Investments” are those investments that we have been deemed to control as defined in the 1940 Act. According to the 1940 Act, control is defined as having an ownership interest of more than 25% of a company’s voting securities. ~~“Affiliate~~“Affiliate Investments”, according to the 1940 Act, are those investments in affiliate companies that are not Control Investments, but are investments that we have an ownership interest of 5% or more of a company’s voting securities. “Non-Control/Non-Affiliate Investments” are those investments that are neither Control Investments nor Affiliate Investments. Please refer the our consolidated schedule of investments for the disaggregated list of our investments including the type / classification of the investment, the principal and cost amounts, details of the investment’s interest rate and the maturity ~~date~~.date.

The following ~~tables show~~table shows the Control/Affiliate and Non-Control/Affiliate activity for ~~our non-control/affiliate investments:~~the six months ended June 30, 2019:

Nine Months Ended September 30, 2018

Portfolio Company ($ in thousands)

Fair value at December 31, 2017

Purchases
(cost)

Sales
(cost)

Transfer in/
(out) (cost)

Net unrealized losses

Fair value at September 30, 2018

Net realized losses

Interest and fee income

Dividend income⁽¹⁾

Non-control affiliate investments

Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.)

$
—

$
4,112

$
—

$
—

$
(1,414
)

$
2,698

$
—

$
—

$
84

Total non-control affiliate investments

$
—

$
4,112

$
—

$
—

$
(1,414
)

$
2,698

$
—

$
—

$
84

	Six Months Ended June 30, 2019
Portfolio Company ($ in thousands)	Fair value as of December 31, 2018		Purchases (cost)		Sales (cost)		Transfer in/ (out) (cost)		Net unrealized losses		Fair value as of June 30, 2019		Net realized losses		Interest and fee income		Dividend income
Control/affiliate investments
GIG Co Holdings LLC (fka Confluence Outdoors, LLC)	$	—	$	11,209	$	—	$	—	$	—	$	11,209	$	—	$	—	$	—
Total control/affiliate investments	$	—	$	11,209	$	—	$	—	$	—	$	11,209	$	—	$	—	$	—

	Six Months Ended June 30, 2019
Portfolio Company ($ in thousands)	Fair value as of December 31, 2018		Purchases (cost)		Sales (cost)			Transfer in/ (out) (cost)		Net unrealized losses			Fair value as of June 30, 2019		Net realized losses		Interest and fee income		Dividend income
Non-control/affiliate investments
Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.)	$	1,630	$	—	$	(30	)	$	—	$	(120	)	$	1,480	$	—	$	—	$	—
Total non-control/affiliate investments	$	1,630	$	—	$	(30	)	$	—	$	(120	)	$	1,480	$	—	$	—	$	—

Garrison Capital Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2019

10. Transactions with Control/Affiliate and Non-Control/Affiliate Investments – (continued)

The following table shows the Non-Control/Affiliate activity as of the six months ended June 30, 2018. There was no Control/Affiliate activity for the six months ended June 30, 2018:

	Six Months Ended June 30, 2018
Portfolio Company ($ in thousands)	Fair value as of December 31, 2017		Purchases (cost)		Sales (cost)		Transfer in/ (out) (cost)		Net unrealized losses			Fair value as of June 30, 2018		Net realized losses		Interest and fee income		Dividend income⁽¹⁾
Non-control/affiliate investments
Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.)	$	—	$	4,112	$	—	$	—	$	(1,414	)	$	2,698	$	—	$	—	$	77
Total non-control/affiliate investments	$	—	$	4,112	$	—	$	—	$	(1,414	)	$	2,698	$	—	$	—	$	77

(1)	Dividend ~~Income~~income is recorded and classified as other income and included in investment income on the consolidated statement of operations.

Nine Months Ended September 30, 2017

Portfolio Company ($ in thousands)

Fair value at December 31, 2016

Purchases
(cost)

Sales
(cost)

Transfer in/
(out) (cost)

Net unrealized losses

Fair value at September 30, 2017

Net realized losses

Interest and fee income

Dividend income

Non-control affiliate investments

Speed Commerce Operating Company LLC⁽¹⁾

$
3,103

$
148

$
—

$
—

$
(3,251
)

$
—

$
—

$
148

$
—

Total non-control affiliate investments

$
3,103

$
148

$
—

$
—

$
(3,251
)

$
—

$
—

$
148

$
—

~~(1)~~

~~Comprised of two investments, including the Closing Date Term Loan and Delayed Draw Term Loan.~~

~~Garrison Capital Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2018~~

11. Subsequent Events

~~Management has evaluated subsequent~~There have been no events ~~through the date of issuance of these financial statements. Other than the items discussed below, the Company has concluded~~since June 30, 2019 that ~~there is no impact requiring adjustment~~require recognition or disclosure in the consolidated financial statements.

~~CLO Refinancing~~

On October 18, 2018, the Company completed a $420.0 million collateralized loan obligation transaction. The notes offered in the collateralized loan obligation (the “2018-2 Notes”) were issued by Garrison Funding 2018-2 Ltd., formerly, GF 2016-2 (the “Issuer”), and Garrison Funding 2018-2 LLC, formerly, Garrison Funding 2016-2 LLC (together with the Issuer, the “Co-Issuers”), and are backed by a diversified portfolio of primarily senior secured loans. The transaction was executed through a private placement and was structured as follows:

As of the Closing Date:
October 18, 2018 ($ in thousands)

Commitment Amount

Outstanding Principal at Par

Interest Rate⁽¹⁾

Issue Price

Rating⁽²⁾

Stated
Maturity⁽³⁾
2018-2 CLO Notes

2018-2 Class A-1R Notes⁽⁴⁾

$
50,000

$
—

LIBOR + 1.58%
100.00%

AAA(sf)

11/29/2029
2018-2 Class A-1T Notes

170,400

170,400

LIBOR + 1.58%

100.00%

AAA(sf)

11/29/2029
2018-2 Class A-2 Notes

55,100

55,100

LIBOR + 2.45%

100.00%

AA(sf)

11/29/2029
2018-2 Class B Notes⁽⁵⁾

36,500

18,250

LIBOR + 3.17%

99.50%

A (sf)

11/29/2029

Totals / weighted averages

$
312,000

$
243,750

LIBOR + 1.74%

99.94%

11/29/2029

~~(1)~~

The 2018-2 Class A-1R Notes may bear interest at either 1) the CP Rate (as defined in the governing indenture) or LIBOR for the portion of notes that are funded or 2) 1.00% for the portion of the notes that are unfunded. The Weighted Average Interest Rate of LIBOR + 1.74% is based on the aggregated amount of notes outstanding as of the 2018-2 CLO closing date and would be LIBOR + 1.92% on a fully funded basis.

~~(2)~~

Represents S&P and DBRS ratings for the 2018-2 Class A-1R Notes and the 2018-2 Class A-1T Notes and S&P-only ratings for the 2018-2 Class A-2 Notes and 2018-2 Class B Notes as of the 2018-2 CLO closing date.

~~(3)~~

~~Represents the stated maturity date of the notes, however the 2018-2 Notes may be redeemed by the Co-Issuers on any business day after November 20, 2020.~~

~~(4)~~

No later than July 18, 2019, $25.00 million of the aggregate $50.00 million 2018-2 Class A-1R Notes, which are revolving notes, will convert to Term Notes with the remaining aggregate amount outstanding converting on or before November 20, 2022.

~~(5)~~

~~The Company has initially retained $18.25 million of the 2018-2 Class B Notes which may be sold at a later date.~~

The Company has also retained the $108.00 million of subordinated notes (the “2018-2 Subordinated Notes”) that were issued in the transaction and that are entitled to receive distributions to the extent funds are available for such purpose. As a result of the Company retaining the 2018-2 Subordinated Notes, it expects to consolidate the accounts of the Co-Issuers into its financial statements. As a result of this consolidation, the amounts outstanding under the collateralized loan obligation will be treated as the Company’s indebtedness. As a result of the refinancing transaction, the Company will incur a non-recurring charge that is expected to be recognized in the financial results for the quarter ending December 31, 2018. In connection with the issuance and sale of the 2018-2 Notes, the Co-Issuers made customary representations, warranties and covenants in the note purchase agreement, the indenture, dated September 29, 2016, and the supplemental indenture dated October 18, 2018 (collectively, the “Indenture”) that govern the 2018-2 Notes and the related transaction documents, and the Indenture includes customary covenants and events of default.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. References to the “Company,” "we," "us," "our,” “GARS” and "Garrison Capital" refer to Garrison Capital Inc. and its consolidated subsidiaries.

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, including statements as to:

our future operating results;

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes to the value of our assets;

our business prospects and the prospects of our current and prospective portfolio companies;

the impact of investments that we expect to make;

the impact of increased competition;

our contractual arrangements and relationships with third parties;

the dependence of our future success on the general economy, including general economic trends, and its impact on the industries in which we invest;

the ability of our portfolio companies to achieve their objectives;

the relative and absolute performance of Garrison Capital Advisers LLC, or our Investment Adviser, including in identifying suitable investments for us;

our expected financings and investments;

the adequacy of our cash resources and working capital;

our ability to make distributions to our stockholders;

the effects of applicable legislation and regulations and changes thereto;

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

the impact of future acquisitions and divestitures.

We use words such as “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “will,” “should,” “could,” “can,” “would,” “believe,” “estimate,” “anticipate,” “predict,” “potential” and similar words to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. 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 in the future may file with the Securities and Exchange Commission, or the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should understand that, under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or 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 this Quarterly Report on Form 10-Q or any periodic reports we file under the Exchange Act.

Overview

We are an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for tax purposes, we have elected to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code, and intend to qualify annually for such treatment. Our shares are currently listed on The Nasdaq Global Select Market under the symbol “GARS”.

Our investment activities are managed by our Investment Adviser. The ~~seven member~~ investment committee of our Investment Adviser is comprised of Joseph Tansey, Brian Chase, Mitch Drucker, Susan George, Robert Chimenti, Joshua Brandt, Allison Adornato and ~~Allison Adornato.~~Daniel Hahn. Our Investment Adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. Under an investment advisory agreement with the Investment Adviser, or the Investment Advisory Agreement, we pay a management fee and an incentive fee to our Investment Adviser for its services. Garrison Capital Administrator LLC, or the Administrator, provides certain administrative services and facilities necessary for us to operate, including office facilities and equipment and clerical, bookkeeping and record-keeping services, pursuant to an administration agreement, or the Administration Agreement. The Administrator oversees our financial reporting and prepares our reports to stockholders and reports required to be filed with the SEC.

The Administrator also manages the determination and publication of our net asset value, the preparation and filing of our tax returns and generally monitors the payment of our expenses and the performance of administrative and professional services rendered to us by others. The Administrator may retain third parties to assist in providing administrative services to us. To the extent that the Administrator outsources any of its functions, we pay the fees associated with such functions on a direct basis without any profit to the Administrator.

Recent Developments

On ~~October~~July 30, ~~2018~~2019, our board of directors, or the Board, declared a distribution in the amount of $3.7 million, or $0.23 a share, which will be paid on ~~December 21, 2018~~September 20, 2019 to stockholders of record as of ~~December 7, 2018.~~September 6, 2019.

On ~~October~~July 18, ~~2018,~~2019, $25.0 million of the ~~Company refinanced and upsized its~~aggregate $50.0 million Class A-1R-R Notes outstanding in our collateralized loan obligation, ~~financing vehicle. As a result~~or the 2018-2 CLO, converted to term notes. The remaining $25.0 million of the refinancing, the Company unlocked additional debt capacity of $120.0 million, reduced the weighted average effective cost of the vehicle of approximately 75 basis points as of the closing date and extended the reinvestment periodClass A-1R-R Notes will convert to term notes on or before November 20, 2022. ~~In addition, the Company expects to recognize a non-recurring charge of approximately $2.2 million, or $0.14 per share, in the financial results of the fourth quarter of 2018.~~

Revenues

In general, we generate revenue in the form of interest earned on the debt investments that we hold and capital gains and distributions, if any, to a lesser extent, on the equity interests or warrants held in portfolio companies. Our debt investments, whether in the form of senior secured, unitranche or mezzanine loans, typically have a term ~~of up~~that ranges from three to seven years and may generally bear interest at a fixed or floating rate. Interest is generally payable monthly or quarterly, and in some cases, loans may have contain a payment-in-kind (“PIK”) feature. The principal amount of the debt securities and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of loan origination, prepayment, facility, commitment, forbearance and amendment fees.

We also ~~may receive~~earn fee income which is generally comprised of amendment, forbearance, prepayment, syndication, structuring, or diligence, ~~fees,~~ consulting ~~fees~~ and ~~possibly~~possible fees for providing managerial assistance. Origination fees received by us are initially deferred and reduced from the cost basis of the investment and subsequently accreted into interest income over the remaining stated term of the loan.

~~Upon the prepayment of~~assistance to a loan or debt security, any unamortized loan origination fees are recorded into income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Facility fees, sometimes referred to as asset management fees, are accrued as a percentage periodic fee on the base amount (either the funded facility amount or the committed principal amount). Commitment fees are based upon the undrawn portion committed by us and are accrued over the life of the loan.

portfolio company. Amendment and forbearance fees are ~~paid~~generally received in connection with loan amendments ~~and~~or waivers and are recognized upon completion of the amendments or waivers, generally when such fees are receivable. We record prepayment premiums on loans and debt securities into income when we receive such amounts.

In addition, we may receive structuring, diligence fees, consulting and managerial assistance fees for periodically providing services to a portfolio or third party company. These fees are recognized when such services have been completed and the fees are generally receivable. Any such ~~fees are~~fee income received is recorded and classified as other income and included in investment income on the consolidated statements of operations. As these fees are generally paid and recognized in connection with specific loan ~~amendments~~event or ~~forbearance,~~the performance of a service, there may be significant fluctuations from period to period in the amount and size of such fee and they are typically non-recurring in nature.

Expenses

Our primary operating expenses include the payment of (1) the interest expense on our outstanding debt; (2) the management and incentive fees to the Investment Adviser under the Investment Advisory Agreement, if applicable; (3) the allocable portion of overhead to the Administrator under the Administration Agreement; and (4) our other operating costs, as detailed below. We bear all other costs and expenses of our operations and transactions, including:

our organization;

calculating our net asset value and net asset value per share (including the cost and expenses of any independent valuation firms);

fees and expenses, including travel expenses, incurred by the Investment Adviser or payable to third parties in performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights;

offerings of our common stock and other securities;

distributions on our shares;

transfer agent and custody fees and expenses;

amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments;

brokerage fees and commissions;

registration fees;

listing fees;

taxes;

•

~~registration fees;~~independent director fees and expenses;

~~listing fees;~~

~~taxes;~~

~~independent director fees and expenses;~~

costs associated with our reporting and compliance obligations under the 1940 Act and applicable U.S. federal and state securities laws;

the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

costs of holding stockholder meetings;

our fidelity bond;

directors and officers/errors and omissions liability insurance and any other insurance premiums;

litigation, indemnification and other non-recurring or extraordinary expenses;

direct costs and expenses of administration and operation, including audit and legal costs;

fees and expenses associated with marketing efforts;

dues, fees and charges of any trade association of which we are a member; and

all other expenses reasonably incurred by us or the Administrator in connection with administering our business, including rent and our allocable portion of the costs and expenses of our chief compliance officer, chief financial officer and their respective staffs.

Consolidated Results of Operations

The results of operations described below may not be indicative of the results we report in future periods. Net income can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized gains and losses. As a result, quarterly comparisons of net investment income may not be meaningful.

Consolidated operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017~~2018 are as follows:

	Three Months Ended						Three			Nine Months Ended						Nine			Three Months Ended						Three			Six Months Ended						Six
($ in thousands, except per share data)	September 30, 2018			September 30, 2017			Months Variance			September 30, 2018			September 30, 2017			Months Variance			June 30, 2019			June 30, 2018			Months Variance			June 30, 2019			June 30, 2018			Months Variance
Total investment income	$	9,312		$	8,903		$	409		$	29,222		$	26,931		$	2,291		$	10,704		$	9,688		$	1,016		$	20,933		$	19,909		$	1,024
Total expenses		5,578			4,718			860			16,190			13,972			2,218			7,230			5,303			1,927			14,212			10,610			3,602
Net investment income		3,734			4,185			(451	)		13,032			12,959			73			3,474			4,385			(911	)		6,721			9,299			(2,578	)
Net realized (loss)/gain on investments		(27	)		(30	)		3			(286	)		573			(859	)
Net change in unrealized (loss)/gain on investments		(2,218	)		267			(2,485	)		(6,387	)		(11,023	)		4,636
Net realized loss on investments																				(2,365	)		318			(2,683	)		(9,498	)		(259	)		(9,239	)
Net change in unrealized gain/(loss) on investments																				284			(1,856	)		2,140			6,580			(4,168	)		10,748
Net increase in net assets resulting from operations		1,489			4,422			(2,933	)		6,359			2,509			3,850			1,393			2,847			(1,454	)		3,803			4,872			(1,069	)

Net investment income per common share		0.23			0.26			(0.03	)		0.81			0.81			—			0.22			0.27			(0.05	)		0.42			0.58			(0.16	)
Net realized/unrealized (loss)/gain on investments per share		(0.14	)		0.01			(0.15	)		(0.41	)		(0.65	)		0.24
Net realized/unrealized loss on investments per share																				(0.13	)		(0.09	)		(0.04	)		(0.18	)		(0.27	)		0.09
Basic earnings per share		0.09			0.27			(0.18	)		0.40			0.16			0.24			0.09			0.18			(0.09	)		0.24			0.31			(0.07	)
Dividends and distributions declared per common share		0.28			0.28			—			0.84			0.84			—			0.23			0.28			(0.05	)		0.46			0.56			(0.10	)
Net asset value per share		11.25			11.74			(0.49	)		11.25			11.74			(0.49	)		10.30			11.44			(1.14	)		10.30			11.44			(1.14	)

Net Investment Income

Net investment income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 was ~~$3.7~~$3.5 million and ~~$13.0~~$6.7 million, respectively. Net investment income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$4.2~~$4.4 million and ~~$13.0~~$9.3 million, respectively. As described below under “Investment Income” and “Expenses”, net investment income decreased by ~~$0.5~~$0.9 million and $2.6 million for the three and six months ended ~~September~~June 30, ~~2018~~2019 from the three and six months ended ~~September 30, 2017, and remained unchanged at $13.0 million for the nine months ended September~~June 30, 2018, ~~and 2017.~~respectively.

Investment Income

Investment income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 was ~~$9.3~~$10.7 million and ~~$29.2~~$20.9 million, respectively. Investment income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$8.9~~$9.7 million and ~~$26.9~~$19.9 million, respectively. Investment income increased by ~~$0.4 million and $2.3~~$1.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 from the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively. The increase in interest income was~~2018 largely driven by $1.7 million and $2.0 million of higher interest income due to a higher average portfolio size which was partially offset by a decrease in the ~~resolution~~weighted average yield on the portfolio. This was further offset by a reduction of ~~non-performing assets resulting in a larger interest-bearing portfolio and higher~~ fee income ~~received~~of $0.7 million and $1.0 million due to lower prepayment activity during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019, respectively, as compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018.

Expenses

Total expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 were ~~$5.6~~$7.2 million and ~~$16.2~~$14.2 million, respectively. Total expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 were ~~$4.7~~$5.3 million and ~~$14.0~~$10.6 million, respectively.

The following table summarizes our expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~September~~June 30, ~~2017:~~2018:

	Three Months Ended				Three			Nine Months Ended				Nine			Three Months Ended				Three		Six Months Ended				Six
($ in thousands)	September 30, 2018		September 30, 2017		Months Variance			September 30, 2018		September 30, 2017		Months Variance			June 30, 2019		June 30, 2018		Months Variance		June 30, 2019		June 30, 2018		Months Variance
Interest expense	$	2,981	$	2,220	$	761		$	8,285	$	6,483	$	1,802		$	3,860	$	2,750	$	1,110	$	7,588	$	5,304	$	2,284
Management fee (net of waivers)		1,504		1,374		130			4,516		4,113		403
Management fee																1,680		1,519		161		3,303		3,011		292
Incentive fees		—		—		—			—		—		—			543		—		543		832		—		832
Professional fees		326		255		71			918		596		322			308		298		10		705		592		113
Directors' fees		76		77		(1	)		229		236		(7	)		77		76		1		159		153		6
Administrator expenses		341		305		36			932		893		39			329		293		36		700		591		109
Other expenses		350		487		(137	)		1,310		1,651		(341	)		433		367		66		925		959		(34	)
Total expenses	$	5,578	$	4,718	$	860		$	16,190	$	13,972	$	2,218		$	7,230	$	5,303	$	1,927	$	14,212	$	10,610	$	3,602

Interest expense increased ~~$0.8~~$1.1 million and ~~$1.8~~$2.3 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, from the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, primarily~~2018 due to a higher ~~average aggregate~~ debt ~~balance outstanding combined with an increase in~~balances resulting from the ~~weighted average effective interest rates on~~upsizing our ~~borrowings.~~collateralized loan obligation vehicle during the fourth quarter of 2018.

Management fees increased by $0.1 million and $0.4 million for the three and nine months ended September 30, 2018, respectively, from the three and nine months ended September 30, 2017, primarily due to higher average gross assets.

~~Professional fees increased by $0.1~~$0.2 million and $0.3 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, from the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, primarily due to higher ~~legal~~average gross assets during the three and ~~consulting fees.~~six months ended June 30, 2019 as compared to the three and six months ended June 30, 2018.

~~Other expenses decreased~~Incentive fees increased by ~~$0.1~~$0.5 million and ~~$0.3~~$0.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, from the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, as a result of incurring an incentive fee expense for the three and six months ended June 30, 2019 whereas no such expense was incurred for the three and six months ended June 30, 2018 as a result of being subject to the deferral under the Incentive Fee Cap and Deferral Mechanism.

Professional fees increased by $0.1 million for the six months ended June 30, 2019 from the six months ended June 30, 2018, primarily due to higher ~~transaction-related and insurance expenses incurred in 2017.~~audit related fees.

Administrator fees increased by $0.1 million for the six months ended June 30, 2019 from the six months ended June 30, 2018, primarily due to higher staffing overhead.

Net Realized (Loss)/Gain ~~and Unrealized (Loss)/Gain~~ on Investments

There were ~~no material~~net realized ~~gains or~~ losses on investments of $2.4 million and $9.5 million for the three and six months ended June 30, 2019, respectively.

The net realized loss on investments for the three months ended ~~September~~June 30, ~~2018.~~ 2019 was primarily driven by a $2.5 million loss in connection with the restructuring of our investment in Confluence Outdoor, LLC.

The net realized loss on investments for the six months ended June 30, 2019 was primarily driven by a $2.5 million loss in connection with the restructuring of our investment in Confluence Outdoor, LLC and a $6.9 million loss incurred upon the sale of our investment in Profusion Industries, LLC.

There was a net realized gain on investments of $0.3 million and a net realized loss on investments of $0.3 million for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018.~~2018, respectively.

The net realized gain on investments for the three months ended June 30, 2018 was primarily driven by the partial and full repayments of portfolio investments.

The net realized loss on investments for the ~~nine~~six months ended ~~September~~June 30, 2018 was primarily driven by a ~~$0.8~~$0.9 million loss in connection with the restructuring of our investment in Rooster Energy Ltd. This was offset by ~~$0.5~~$0.6 million of realized gains from repayments and sales of ~~various other~~ portfolio investments.

~~There were no material realized gains or losses~~Net Change in Unrealized (Loss)/Gain on Investments

For the three and six months ended June 30, 2019, the net change in unrealized gain on investments was $0.3 million and $6.6 million, respectively.

The net change in unrealized gain on investments for the three months ended ~~September~~June 30, ~~2017. There~~2019 of $0.3 million was primarily comprised of the $2.5 million reversal of a previous recorded unrealized loss in connection with the restructuring of our investment in Confluence Outdoor, LLC, offset by $2.2 million of net ~~realized~~negative market-related adjustments primarily from various syndicated investments.

The net change in unrealized gain on investments ~~of $0.6 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019 of $6.6 million was primarily comprised of the $6.9 million reversal of a previous recorded unrealized loss as a result of the sale of our investment in Profusion Industries, LLC and a $2.5 million reversal of a previous recorded unrealized loss connection with the restructuring of our investment in Confluence Outdoor, LLC, offset by $2.8 million of net negative market-related adjustments primarily from various syndicated investments.

For the three and ~~nine~~six months ended ~~September~~June 30, 2018, the net change in unrealized loss on investments was ~~$2.2~~$1.9 million and ~~$6.4~~$4.2 million, respectively.

The net change in unrealized loss on investments for the three months ended ~~September~~June 30, 2018 was driven primarily by a ~~$1.9~~negative $1.4 million ~~negative~~ credit-related adjustment on our investment in ~~Profusion Industries,~~Cochon-MWS Holdings LLC ~~and~~(fka Rooster Energy Ltd.), the reversal of prior period net unrealized gains ~~on various portfolio~~across nine investments in the amount of ~~$0.5 million. This was offset by~~$0.3 million and a net $0.2 million of ~~net~~ positive market-related ~~fair value~~ adjustments primarily on ~~the remaining portfolio.~~seven investments.

The net change in unrealized loss ~~on investments~~ for the ~~nine~~six months ended ~~September~~June 30, 2018 was driven primarily by $5.4 million of negative credit-related adjustments on our investments in Profusion Industries, LLC and Cochon-MWS Holdings LLC (fka Rooster Energy Ltd.) in the ~~amounts~~amount of ~~$5.8~~$4.0 million and $1.4 million, respectively. This was offset by an aggregate net $1.0 million of positive fair value adjustments across various portfolio investments and the reversal of prior period net unrealized losses in the amount of $0.2 million in connection with the partial and full repayments of certain of our portfolio investments, including $0.8 million associated with the restructuring of our investment in Rooster Energy Ltd.

For the three months ended September 30, 2017, the net change in unrealized gain on investments was $0.3 million. For the nine months ended September 30, 2017, the net change in unrealized loss on investments was $11.0 million.

~~The net change in unrealized gain on investments for the three months ended September 30, 2017 was primarily driven by~~ a positive fair value adjustment on our investment in Sprint Industrial Holdings of $0.5 million and the reversal of an unrealized loss of $0.3 million on our investment in Raymond Express International. This was offset by a negative fair value adjustment on our preferred equity investment in Prosper Marketplace of $0.6 million.

~~The net change in unrealized loss on investments for the nine months ended September 30, 2017 was driven primarily by~~ negative fair value adjustments on the investments in Walnut Hill Physicians Hospital, Speed Commerce Operating Company, Badlands Production Company and Prosper Marketplace investments in the amounts of $4.4 million, $3.3 million, $2.7 million and $1.4 million, respectively. These fair value adjustments were the result of decreases in our expected recoveries on these investments and were offset by an aggregate $0.8 million of positive fair value adjustments across our remaining portfolio.

Net Increase/(Decrease) in Net Assets Resulting from Operations

We had a net asset value per common share outstanding ~~on September~~as of June 30, 2019 and December 31, 2018 of ~~$11.25 as compared to a net asset value per common share outstanding on December 31, 2017 of $11.69.~~$10.30 and $10.52, respectively.

Based on basic weighted average shares outstanding of 16,049,352, the net increase in net assets from operations per share for the ~~nine~~three and six months ended ~~September~~June 30, ~~2018~~2019 was ~~$0.40. This increase was primarily~~$0.09 and $0.24, respectively. These increases were driven by net investment income of ~~$0.81~~$0.22 per share and $0.42 per share, partially offset by net realized and unrealized losses of ~~$0.41~~$0.13 per share and $0.18 per share incurred during the ~~nine~~three and six months ended ~~September~~June 30, ~~2018.~~2019, respectively.

Based on basic weighted average shares outstanding of 16,049,352, the net ~~decrease~~increase in net assets from operations per share for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2018 was ~~$0.16. This decrease was~~$0.18 and $0.31, respectively. These increases were primarily driven by net ~~change in~~investment income of $0.27 per share and $0.58 per share, partially offset by net realized and unrealized losses ~~on investments~~of $0.10 per share and $0.27 per share incurred during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~2018, respectively.

Liquidity and Capital Resources

As a business development company, we distribute substantially all of our net income to our stockholders and will have an ongoing need to raise additional capital for investment purposes. We ~~originally generated~~generate cash ~~primarily~~ from offerings of our debt and equity securities from time to time and also utilize any repayments of portfolio investments as ~~our current~~an ongoing source of cash. In addition, we generate liquidity from our cash flows from operations.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had cash of ~~$29.4~~$0.9 million and ~~$14.9~~$6.2 million, respectively. Also, as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had restricted cash of ~~$25.7~~$29.1 million and ~~$4.6~~$39.5 million, respectively.

Our primary ~~use of funds from operations includes investments in~~liquidity needs include providing capital to middle market portfolio companies, ~~cash distributions~~distributing our earnings to the holders of our common stock, servicing interest and principal payments ~~of interest~~ on our various debt financing facilities and ~~payments of~~paying the fees and other operating expenses we ~~incur.~~incur as a publicly-traded, externally managed business development company. We believe that our existing cash and cash equivalents, ~~and~~ available borrowings on our debt facilities and any cash received in the form of principal or interest payments from our investment portfolio as of ~~September~~June 30, ~~2018 will~~2019 would be sufficient to fund our anticipated ~~funding requirements~~liquidity needs through at least ~~September~~June 30, ~~2019.~~2020. In addition, we may, from time to time, amend or refinance our leverage facilities and borrowings, in order to, among other things, modify covenants or the interest rates payable and extend the reinvestment period or maturity date. ~~In addition~~However, our ability to access capital is subject to market conditions which may result in either capital not being available, or it may ~~not~~ be available but only on ~~favorable~~unfavorable terms. To the extent we are not able to raise additional capital, or otherwise generate sufficient liquidity or are at or near target leverage ratios, we may receive smaller allocations, if any, on new investment opportunities under the Investment Adviser’s allocation policy.

On ~~July 31, 2018~~April 30, 2019 the Board approved ~~a distribution in the amount of $4.5 million, or $0.28 a share, which was paid on September 21, 2018 to stockholders of record as of September 7, 2018.~~

~~On October 30, 2018 the Board declared~~ a distribution in the amount of $3.7 million, or $0.23 a share, which ~~will be~~was paid on ~~December~~June 21, ~~2018~~2019 to stockholders of record as of ~~December~~June 7, ~~2018.~~2019.

During the six months ended June 30, 2019, cash and restricted cash decreased by $15.7 million as a result of net cash used in operating activities of $47.8 million, offset by net cash provided by financing activities in the amount of $32.1 million.

During the ~~nine~~six months ended ~~September~~June 30, 2019, cash used in operating activities was mainly driven by the purchase of new investments totaling $81.5 million and the payment for investments that were previously purchased but had not yet settled of $17.5 million. These were offset by repayments and sales of investments in the amount of $47.5 million. Net cash provided by financing activities primarily came from resulted from the receipt of net borrowing proceeds from the senior secured revolving notes under our $420.0 million 2018-2 CLO that closed on October 18, 2018, in the amount of $39.5 million, offset by $7.4 million of cash distributions paid to our stockholders.

During the six months ended June 30, 2018, cash and restricted cash increased by ~~$35.5~~$14.3 million as a result of net cash provided by operating activities of ~~$38.2~~$19.0 million, offset by net cash used in financing activities in the amount of ~~$2.7~~$4.7 million.

During the ~~nine~~six months ended ~~September~~June 30, 2018, cash provided by operating activities resulted mainly from purchases of investments of ~~$172.6~~$121.9 million, offset by repayments and sales of investments in the amount of ~~$179.7~~$111.5 million, net realized and unrealized ~~loss~~gain on investments in the amount of ~~$6.7~~$4.4 million and a net increase in the due ~~to/~~to / from counterparties and affiliates of ~~$16.9~~$19.8 million. Net cash used in financing activities resulted from cash distributions in the amount of ~~$13.5~~$9.0 million ~~offset by $10.2~~and $5.7 million of ~~proceeds from borrowings by Garrison SBIC and $0.8 million~~repayments of ~~net proceeds from~~ the senior secured revolving notes of our $300.0 million collateralized loan obligation that closed on September 29, 2016, or the 2016-2 ~~CLO.~~

~~During the nine months ended September 30, 2017, cash and restricted cash increased by $6.3 million as a result of net cash used in financing activities in the amount of $17.7 million~~CLO, offset by ~~net cash provided~~$10.2 million of proceeds from borrowings by ~~operating activities of $24.0 million.~~

During the nine months ended September 30, 2017, cash provided by operating activities resulted mainly from purchases of investments of $105.1 million, offset by repayments and sales of investments in the amount of $114.8 million, net realized and unrealized gain on investments in the amount of $10.5 million and a decrease in the due from counterparties of $2.0 million. Net cash used in financing activities resulted from cash distributions in the amount of $13.5 million and repayments of the GLC Trust 2013-2 Class A Notes in the amount of $4.2 million.Garrison Capital SBIC LP, or Garrison SBIC.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$5.5~~$4.3 million and ~~$8.7~~$7.6 million, respectively, of unfunded commitments. These amounts may or may not be funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers as of, ~~September 30, 2018 and December 31, 2017,~~ respectively, subject to the terms of each loan’s respective credit agreement.

Subject to leverage and borrowing base restrictions, as of ~~September~~June 30, ~~2018,~~2019, we had approximately ~~$4.5~~$2.5 million available for additional borrowings under the 2018-2 CLO, $10.0 million of available SBIC leverage and access to borrowing under our ~~senior secured revolving notes~~master repurchase agreement with Natixis Securities Americas LLC. As of December 31, 2018, we had approximately $42.0 million available for additional borrowings under the ~~2016-2~~2018-2 CLO and $10.0 million of available SBIC leverage. As of December 31, 2017, we had approximately $1.0 million available for additional borrowings under our senior secured revolving notes of the 2016-2 CLO and $20.2 million of available SBIC borrowingsleverage subject to leverage and borrowing base restrictions.

~~Subsequent to September~~ As of both June 30, 2019 and December 31, 2018, we ~~refinanced~~retained all of the ~~2016-2~~subordinated notes and $18.3 million of the Class B-R Notes under the 2018-2 CLO. ~~See “Note 11 – Subsequent Events”~~The $18.3 million of Class B-R Notes remain available for us to ~~our consolidated financial statements for~~sell in order to generate additional liquidity to the ~~quarter ended September 30, 2018.~~

extent we determine market conditions would be favorable.

Portfolio Composition and Select Portfolio Information

As of ~~September~~June 30, ~~2018,~~2019, we held investments in 77100 portfolio companies with a fair value of ~~$383.0~~$486.7 million. As of ~~September~~June 30, ~~2018,~~2019, our portfolio had an average investment size of approximately ~~$4.6~~$4.5 million ~~a weighted average yield on debt investments and on the total portfolio measured at current fair value of 9.6% and 9.1%, respectively,~~ and a weighted average contractual maturity of 4953 months.

The following table shows select information of our portfolio for the periods from ~~September~~June 30, ~~2018~~2019 to ~~September~~June 30, ~~2017.~~2018:

Portfolio characteristics ($ in millions, % based on fair value)*	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
Total portfolio fair value	$	383.0		$	401.9		$	392.8		$	394.7		$	359.1
($ in millions, % based on fair value, unless otherwise noted)*																June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Portfolio Summary:
Total portfolio, at fair value																$	486.7		$	480.9		$	454.0		$	383.0		$	401.9
Total number of portfolio companies		77			71			62			62			61			100			99			93			77			71
Total number of investments																	119			119			118			98			92
Average size of debt investments	$	4.6		$	5.2		$	5.7		$	6.0		$	5.7		$	4.5		$	4.6		$	4.6		$	4.6		$	5.2
Weighted average yield on debt investments at amortized cost⁽¹⁾⁽²⁾		9.2	%		9.5	%		10.0	%		9.9	%		9.3	%
Weighted average yield on total portfolio at amortized cost⁽¹⁾⁽²⁾		8.7	%		9.1	%		9.5	%		9.7	%		8.9	%
Weighted average price of debt investments		97.2			97.8			98.1			98.6			92.3			97.1			97.0			95.7			97.2			97.8

Portfolio Yields:⁽¹⁾
Weighted average yield on debt investments at amortized cost⁽²⁾																	8.9	%		8.9	%		9.1	%		9.2	%		9.5	%
Weighted average yield on debt investments at fair value⁽²⁾																	9.6	%		9.4	%		10.2	%		9.6	%		9.7	%
Weighted average yield on total portfolio at amortized cost																	8.5	%		8.4	%		8.5	%		8.7	%		9.1	%
Weighted average yield on total portfolio at fair value																	9.3	%		9.1	%		9.9	%		9.1	%		9.3	%

Portfolio Structure:
First lien senior secured debt investments		97.6	%		97.9	%		97.2	%		98.2	%		97.8	%		96.1	%		98.4	%		98.3	%		97.6	%		97.9	%
Equity and other investments		2.4	%		2.1	%		2.8	%		1.8	%		2.2	%		3.9	%		1.6	%		1.7	%		2.4	%		2.1	%
Floating rate debt investments																	99.9	%		99.8	%		99.7	%		99.6	%		99.5	%
Fixed rate debt investments																	0.1	%		0.2	%		0.3	%		0.4	%		0.5	%

Portfolio Sourcing:
Originated⁽³⁾		29.9	%		34.9	%		43.8	%		45.1	%		48.6	%		23.1	%		24.9	%		25.3	%		29.9	%		34.9	%
Club⁽⁴⁾		26.4	%		26.6	%		23.6	%		24.3	%		20.0	%		39.1	%		41.3	%		37.8	%		35.0	%		32.2	%
Purchased⁽⁵⁾		43.7	%		38.5	%		32.6	%		30.6	%		31.4	%		37.8	%		33.8	%		36.9	%		35.1	%		32.9	%
Floating rate debt investments		99.6	%		99.5	%		99.4	%		99.3	%		99.1	%
Fixed rate debt investments		0.4	%		0.5	%		0.6	%		0.7	%		0.9	%

Portfolio Credit Quality:
Performing debt investments		99.3	%		98.8	%		98.8	%		98.9	%		96.7	%		99.3	%		97.1	%		99.5	%		99.3	%		98.8	%
Non-accrual debt investments		0.7	%		1.2	%		1.2	%		1.1	%		3.3	%		0.7	%		2.9	%		0.5	%		0.7	%		1.2	%
Weighted average debt/EBITDA of our portfolio companies⁽⁶⁾		3.7	x		3.7	x		3.8	x		3.7	x		3.8	x
Weighted average debt/EBITDA of our portfolio companies⁽²⁾⁽⁶⁾																	3.9	x		3.9	x		3.8	x		3.7	x		3.7	x
Weighted average risk rating of our debt investments		2.3			2.3			2.3			2.4			2.6			2.3			2.4			2.4			2.3			2.3

(1)

Weighted average yield ~~is calculated based on~~represents the portfolio’s return from the all-in interest rate plus the annualized accretion income from (i) any original issue discount or premium when calculating weighted average yield at amortized cost and (ii) any market discount or premium when calculating weighted average yield at fair value as of the balance sheet date to par at ~~the~~each investments contractual maturity date, excluding the effect of any scheduled principal amortization payments. For those investments valued based on an estimated recovery rate, the weighted average yield calculation is based on redeeming the investment at the current expected recovery rate rather than at par.

(2)	Calculation excludes consumer loan portfolio investment, unfunded revolvers, debt investments placed on non-accrual and equity ~~investments.~~investments.

(3)	Originated positions include investments where we have sourced and led the execution of the ~~deal.~~deal.

(4)	Club positions include debt investments with a total tranche size less than $250.0 million where we provide direct lending to a borrower with a small number of other lenders but ~~did~~do not lead the deal.

(5)

Purchased positions include debt investments with a total tranche size greater than $250.0 million that was sourced from a bank loan syndication or the secondary ~~market. Purchased deals include investments that were both broadly syndicated and those that were syndicated by a club partner to a smaller group of lenders.~~market.

(6)

~~Excludes consumer loan portfolio investment, unfunded revolvers,~~Includes first-lien debt investments ~~placed on non-accrual, equity investments and non-operating portfolio companies,~~ which ~~we define~~were valued by performing a liquidation analysis of the underlying assets which serve as collateral for those ~~investments collateralized by real estate, commodity reserves or other hard assets. As of September 30, 2018, $16.8 million of par value and $16.9 million of fair value was excluded.~~loans.

Table ~~as of each respective quarter end and~~ excludes investments with a fair value of zero from all figures except for the total number of portfolio companies and total number of investments. Debt investments in the table above exclude our investment in the consumer loan portfolio and all equity investments.

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.

LIBOR Transition

Our investment portfolio is comprised primarily of floating rate loans for which the borrower has an option to choose whether the base rate is referenced to LIBOR or the prime rate. In July 2017, the head of the United Kingdom Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.-dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities. If LIBOR ceases to exist, we may need to renegotiate with our portfolio companies the terms of certain credit agreements extending beyond 2021, which could have a material adverse effect on our business, financial condition and results of operations. No renegotiation of the terms of the 2018-2 CLO will be required in the event LIBOR ceases to exist because the indenture includes procedures for the selection of a replacement reference rate under such circumstances.

Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$5.5~~$4.3 million and ~~$8.7~~$7.6 million of outstanding commitments to fund such investments, respectively. ~~As of September 30, 2018 and December 31, 2017, we had $55.0 million and $19.5 million, respectively, of cash and restricted cash.~~

Ongoing Monitoring

We view active portfolio monitoring as a vital part of the investment process. Our Investment Adviser monitors the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company.

Our Investment Adviser uses several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

assessment of success in adhering to portfolio company’s business plan and compliance with covenants;

periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;

comparisons to other portfolio companies in the industry, if any;

attendance at and participation in board meetings; and

review of monthly and quarterly financial statements and financial projections for portfolio companies.

Our Investment Adviser assigns an internal rating for each of our portfolio companies. The rating scale is a numeric scale of 1 to 4 based on the credit attributes and prospects of the portfolio company’s business. In general, we use the ratings as follows:

a rating of 1 denotes a high quality investment with no loss of principal expected;

a rating of 2 denotes a moderate to high quality investment with no loss of principal expected;

a rating of 3 denotes a moderate quality investment with market rates of expected loss of principal and potential non-compliance with financial covenants; and

a rating of 4 denotes a low quality investment with an expected loss of principal. In the case of risk rating 4 loans, our Investment Adviser will assign a recovery value to the loan.

The following table shows the distribution of our investments on the 1 to 4 investment risk scale at fair value, excluding our interest in ~~GLC Trust 2013-2~~consumer loan portfolio and equity investments, as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017:~~2018:

	As of September 30, 2018					As of December 31, 2017					As of June 30, 2019					As of December 31, 2018
($ in thousands)	Investments at Fair Value		Percentage of Total Investments			Investments at Fair Value		Percentage of Total Investments			Investments at Fair Value		Percentage of Total Investments			Investments at Fair Value		Percentage of Total Investments
Risk Rating 1	$	24,197		6.5	%	$	33,643		8.7	%	$	12,740		2.7	%	$	26,431		5.9	%
Risk Rating 2		227,338		61.0			164,242		42.4			297,763		63.8			260,914		58.6
Risk Rating 3		118,657		31.8			185,484		47.8			152,967		32.8			147,463		33.1
Risk Rating 4		2,781		0.7			4,111		1.1			3,383		0.7			10,585		2.4
	$	372,973		100.0	%	$	387,480		100.0	%	$	466,853		100.0	%	$	445,393		100.0	%

The weighted average risk rating of the portfolio ~~decreased to~~was 2.3 ~~as of September 30, 2018 from~~and 2.4 as of June 30, 2019 and December 31, ~~2017 as a result of ordinary course portfolio activity.~~2018, respectively.

Contractual Obligations

A summary of our significant contractual payment obligations as of ~~September~~June 30, ~~2018~~2019 is as follows:

	Payments Due by Period										Payments Due by Period
($ in thousands)	Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years		Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years		Total
2016-2 CLO	$	—	$	—	$	—	$	187,500	$	187,500
2018-2 CLO											$	—	$	—	$	—	$	291,250	$	291,250
SBIC Borrowings		—		—		—		60,000		60,000		—		—		—		60,000		60,000
Total contractual obligations	$	—	$	—	$	—	$	247,500	$	247,500	$	—	$	—	$	—	$	351,250	$	351,250

We have certain contracts under which we have material future commitments. Under the Investment Advisory Agreement, the Investment Adviser provides us with investment advisory and management services. We have agreed to pay for these services (1) a management fee equal to a percentage of the average adjusted value of our gross assets and (2) an incentive fee based on our performance.

We entered into the Administration Agreement on October 9, 2012 with the Administrator. Under the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us clerical, bookkeeping and record keeping services and provides us with other administrative services necessary to conduct our day-to-day operations.

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 Advisory Agreement and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.

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

Related Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

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•

We are party to the Investment Advisory Agreement with the Investment Adviser, under which our Investment Adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis.

We are party to the Investment Advisory Agreement with Garrison Capital Advisers LLC, under which our Investment Adviser is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis.

The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement.

We have entered into the License Agreement with Garrison Investment Group pursuant to which Garrison Investment Group has agreed to grant us a non-exclusive, royalty-free license to use the name “Garrison.”

Under the Staffing Agreement, Garrison Investment Group provides the Investment Adviser with the resources necessary to fulfill these obligations. The Staffing Agreement provides that Garrison Investment Group will make available to the Investment Advisers experienced investment professionals and access to the senior investment personnel of Garrison Investment Group for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. The Staffing Agreement also includes a commitment that the members of the Investment Advisers’ investment committee serve in such capacity. The Staffing Agreement remains in effect until terminated and may be terminated by either party without penalty upon 60 days’ written notice to the other party. Services under the Staffing Agreement are provided to the Investment Adviser on a direct cost reimbursement basis, and such fees are not our obligation.

In connection with the 2016-2 CLO, we retained the Investment Adviser to furnish collateral management sub-management services to us pursuant to a sub-collateral management agreement. The Investment Adviser does not receive a fee for providing such services.

•

~~From October 1, 2016 through May 2, 2017,~~In connection with the 2018-2 CLO, we retained the Investment Adviser ~~in consultation with our board of directors agreed~~ to ~~irrevocably waive any fees payable~~furnish collateral management sub-management services to ~~the~~us pursuant to a sub-collateral management agreement. The Investment Adviser ~~under the Investment Advisory Agreement with respect to~~does not receive a calendar quarter in excess of the sum of (i) 0.375% per quarter (1.50% annualized) of our gross assets, excluding cash and cash equivalents but including assets purchased with borrowed funds, calculated based on the average carrying value of our gross assets at the end of the two most recently completed calendar quarters, (ii) 20% of 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, in excess of a “hurdle rate” of 1.75% per quarter (7.00% annualized) and (iii) in the case of the final calendar quarter of each year, the capital gains incentive fee.fee for providing such services.

From May 3, 2017 until August 13, 2018, the base management fee was calculated at an annual rate of 1.50% of the Company’s gross assets, excluding cash and cash equivalents but including the assets purchased with borrowed funds, and was payable quarterly in arrears.

On August 14, 2018, Garrison Capital Inc. (the “Company”) entered into the fifth amended and restated investment advisory agreement (the “Fifth Amended and Restated Investment Advisory Agreement”) with Garrison Capital Advisers LLC (the “Adviser”), as investment adviser. The Fifth Amended and Restated Investment Advisory Agreement, which is effective as of August 14, 2018, modifies the base management fee payable to the Adviser to an annual rate of 1.50% of the Company's average gross assets, excluding cash or cash equivalents but including assets purchased with borrowed funds, at the end of each of the two most recently completed calendar quarters; provided, however, the base management fee will be calculated at an annual rate of 1.00% of the average value of the Company’s gross assets, excluding cash or cash equivalents but including assets purchased with borrowed funds, that exceeds the product of (i) 200% and (ii) the Company’s average net assets at the end of each of the two most recently completed calendar quarters. For the avoidance of doubt, the 200% will be calculated in accordance with the 1940 Act and will give effect to the Company’s exemptive relief with respect to SBIC debentures.

We have adopted a joint code of ethics that governs the conduct of our and our Investment Adviser’s officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law.

Critical Accounting Policies

The preparation of our financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. We have identified the following as critical accounting policies.

Principles ~~for~~of Consolidation

The consolidated financial statements include the accounts of GARS and its ~~wholly-owned~~ subsidiaries. The accounts of the subsidiaries are prepared using consistent accounting policies and as of the same reporting period as GARS. Under ASC Topic 946, Financial Services – Investment Companies, or ASC Topic 946, the Company is generally precluded from consolidating any entity other than another investment company. Accordingly, the Company consolidates any investment company when it owns 100% of its equity units or 100% of the economic equity interest. ASC Topic 946 also provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

As a result, we have consolidated the results of Garrison Funding ~~2016-2~~2018-2 Ltd., Garrison Funding 2018-2 LLC, Garrison SBIC, ~~GLC Trust 2013-2,~~ Garrison Capital PL Holdings LLC, GIG Rooster Holdings I LLC and a series of limited liability companies that GARS created primarily to provide specific tax treatment for the minority equity and other investments held in these limited liability ~~companies.~~companies.

Revenue Recognition

In general, we generate revenue that primarily consists of interest income, fee income, dividend income and gains and losses on our investments.

Interest income: Interest income is comprised of cash interest, PIK interest, original issue discounts or premiums as well as any loan origination, facility and commitment fees. Cash and PIK interest income is accrued based on the outstanding principal amount and interest terms outlined in the respective contractual agreement that governs that investment. The Company accrues interest income if it expects that it ultimately will be able to collect such income. Loan origination fees and any original issue or purchase discounts or premiums received by the Company are initially capitalized, deferred and reduce or increase the cost basis of the investment and subsequently accreted into interest income over the stated term of the loan.

Investments, at Fair Value

The Company records its investment transactions on a trade date basis, which is the date when management has determined that all material legal terms have been contractually defined for the transactions. These transactions ~~may~~could possibly settle on a subsequent date depending on the transaction type. Any amounts related to purchase, sale and principal paydowns that have traded but not settled are reflected as either a due to ~~counterparty~~ or due from counterparty on our consolidated statement of financial condition. All related revenue and expenses attributable to these transactions are reflected on the consolidated statements of operations commencing on the trade date unless otherwise specified by the transaction documents. ~~Realized gains and losses on investment transactions are recorded using the specific identification method.~~

~~Loan Origination, Facility, Commitment and Amendment Fees~~

Fair Value Measurements

The Company values its investments in accordance with ~~FASB~~ ASC Topic 820, Fair Value Measurements and Disclosures,, or ASC Topic 820. ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. ASC Topic 820’s definition of fair value focuses on exit price in the principal, or most advantageous, market and prioritizes the use of market-based inputs over entity-specific inputs within a measurement of fair value.

ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:

Level 1 — Unadjusted quoted prices in active markets for identical investments as of the reporting date.

Level 2 — Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar ~~instruments~~investments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.

Level 3 — Pricing inputs are unobservable and ~~includes~~include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation including, in certain instances, the Investment Adviser’s own assumptions about how market participants would price the financial instrument.

Our investments include debt investments (both funded and ~~unfunded, “Debt Investments”)~~unfunded), preferred and minority common equity investments of diversified companies (“Equity”) and a portfolio of unsecured small balance consumer loans (“Financial Assets”). Due to the nature of the Company’s strategy, the Company’s portfolio is primarily comprised of relatively illiquid investments that are privately held. Inputs into the determination of fair value of the Company’s portfolio investments require significant management judgment or estimation. This means that the Company’s portfolio valuations are based on unobservable inputs and the Investment Adviser’s own assumptions about how market participants would price the asset or liability in question. Valuations of privately held investments are inherently uncertain and they may fluctuate over short periods of time and may be based on estimates. The determination of fair value by the Board may differ materially from the values that would have been used if a ready market for these investments existed.

Valuation Techniques

The following is a description of the ~~different~~various valuation techniques ~~utilized by~~ the ~~Company.~~Company utilizes when valuing its investments.

Debt Investments

Bid quotations – Certain ~~of the Company’s~~ debt investments of ours are publicly traded instruments for which quoted market prices are not readily available. The fair value of these investments may be determined based on bid quotations from unaffiliated market makers or independent third-party pricing services or the price activity of comparable instruments. ~~The Company~~We will generally supplement the bid quotations for these investments by also performing a comparable yield approach outlined below.

Comparable yield approach – This valuation technique determines the fair value of an investment by assessing the expected market yield of other debt investments with similar credit structures, leverage statistics, interest rates and time to maturity. ~~The Company~~We generally ~~uses~~use this approach for ~~its~~our debt investments that have not been deemed to be credit-impaired and where a market rate of recovery is expected.

Market comparable companies – This valuation technique determines the total enterprise value of a company by assessing the expected multiple that a market participant would apply to that company’s earnings before interest, taxes, depreciation and amortization, ~~(“EBITDA”),~~or EBITDA, revenue or other collateral that secures the investment. These valuation multiples are typically determined based on reviewing market comparable transactions or other comparable publicly traded companies, if any. The resulting enterprise value will dictate whether or not ~~the Company’s~~our debt investment has adequate enterprise value coverage. In instances where the enterprise value is inadequate, the market comparable companies approach may be used to estimate a recovery value for our credit-impaired debt investments.

Equity Investments

Market comparable companies – This valuation technique determines the total enterprise value of a company by assessing the expected multiple that a market participant would apply to that company’s EBITDA, revenue or other collateral that secures the investment. These valuation multiples are typically determined based on reviewing market comparable transactions or other comparable publicly traded companies, if any. When an external event, such as a purchase transaction, public offering or subsequent sale of equity occurs, the pricing indicated by that external event is utilized to corroborate our valuation.

~~Financial Assets~~

Valuation Process

The Board is responsible for determining, within the meaning of the 1940 Act, in good faith the fair value of the Company’s assets ~~in good faith~~for which market quotations are not readily available using a documented valuation policy and consistently applied valuation process. The valuation process is a multi-step process conducted at the end of each fiscal quarter as described below:

The Company’s valuation process begins with each portfolio company or investment being initially valued by investment professionals of the Investment Adviser responsible for credit monitoring.

The Investment Adviser submits these preliminary valuations to the Valuation Committee of the Board.

As noted above, ~~the Board~~our board of directors has retained several independent valuation firms to review the valuation of each portfolio investment that does not have a readily available market quotation at least once during each 12-month ~~period.~~period provided, the board of directors reserves the right to have any investment within the portfolio valued by an independent valuation firm to the extent it determines such a valuation was warranted. To the extent a security is reviewed in a particular quarter, it is reviewed and valued by only one service provider. However, ~~the Board~~our board of directors does not, and does not intend to, have investments independently reviewed that (1) have closed within the two most recent quarters or (2) are de minimis investments of less than 0.5% of ~~the Company’s~~our total assets (up to an aggregate of 10.0% of ~~the Company’s~~our total assets) ~~independently reviewed.~~.

Interest Expense

Interest expense is recorded on an accrual basis and ~~includes the~~is adjusted for amortization of deferred debt issuance costs and any original issue ~~discounts.~~discount.

Dividends and Distributions

Item 3: Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. During the period covered by our financial statements, the majority of the loans in our portfolio had floating interest rates, and we expect that our loans in the future will also have floating interest rates. As of June 30, 2019 and December 31, 2018, 99.9% and 99.7%, respectively, of the outstanding principal amount of our debt investments bore interest at floating rates. These loans usually have floating interest rates based on the London Interbank Offer Rate, or LIBOR, and typically have interest rate re-set provisions that adjust applicable LIBOR under such loans to current market rates on a regular basis. In addition, the ~~2016-2~~2018-2 CLO has a floating interest rate provision ~~on certain tranches~~ based on a cost of funds that approximates LIBOR and we expect that any other credit facilities into which we enter in the future may have floating interest rate provisions.

Assuming that the interim and unaudited consolidated statement of financial condition as of ~~September~~June 30, ~~2018~~2019 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.

	(Decrease)/increase			(Decrease)/increase			Net (decrease)/increase			(Decrease)/increase			(Decrease)/increase			Net (decrease)/increase
Change in interest rates ($ in thousands)	in interest income			in interest expense			in investment income			in interest income			in interest expense			in investment income
Down 50 basis points	$	(1,857	)	$	(813	)	$	(1,044	)	$	(2,373	)	$	(1,456	)	$	(917	)
Down 25 basis points		(928	)		(406	)		(522	)		(1,186	)		(728	)		(458	)
Up 25 basis points		928			406			522			1,186			728			458
Up 50 basis points		1,857			813			1,044			2,373			1,456			917
Up 100 basis points		3,730			1,625			2,105			4,762			2,913			1,849
Up 200 basis points		7,460			3,250			4,210			9,523			5,825			3,698

Although management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including indebtedness under ~~our collateralized loan obligation,~~the 2018-2 CLO, Garrison SBIC borrowings or additional borrowings, that could affect our net increase in net assets resulting from operations or net income. Accordingly, we cannot assure you that actual results would not differ materially from the statement ~~above.~~above.

~~Although we have currently not done so, we~~We may in the future hedge against currency and interest rate fluctuations by using standard hedging instruments such as futures, forward contracts, currency options and interest rate swaps, caps, collars and floors, including with respect to the obligations of ~~our collateralized loan obligation,~~the 2018-2 CLO, to the extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in currency exchange and 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. We and our Investment Adviser have not hedged any of the obligations of the 2018-2 CLO.

Item 4: Controls and Procedures

As of the end of the period covered by this report, we, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on our evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in our periodic SEC filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, are based upon certain assumptions about the likelihood of future events and can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There has not been any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II — Other Information

Item 1: Legal Proceedings

We, the Investment Adviser, the Administrator and our wholly-owned subsidiaries are not currently subject to any material legal proceedings.

Item 1A: Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors set forth below as well as in “Part I.1. Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March ~~6, 2018 and “Part II. Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018,~~5, 2019, which could materially affect our business, financial condition and/or operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.

Item 2: Unregistered Sales of ~~Equity~~Equity Securities and Use of Proceeds

None.

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

Item 5: Other Information

None.

Item 6: Exhibits

EXHIBIT INDEX

Number		Description

10.1		~~Fifth~~Sixth Amended and Restated Investment Advisory Agreement ~~dated as of August 14, 2018,~~ by and between ~~Garrison Capital Inc.~~the Registrant and Garrison Capital Advisers LLC (Incorporated by reference to Exhibit 10.1 to the ~~Registrant's~~Registrant’s Current Report on Form 8-K (File No. 814-00878), filed on ~~August 14, 2018)~~May 7, 2019).

31.1*		Certifications by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certifications by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1*		~~GLC Trust 2013-2 Schedule of Investments as of September 30, 2018.~~
99.1
~~99.2~~		~~GLC Trust 2013-2~~Garrison Capital PL Holdings LLC Schedule of Investments as of December 31, ~~2017~~2018 (Incorporated by reference to Exhibit 99.1 to the ~~Registrant's~~Registrant’s Annual Report on Form 10-K (File No. 814-00878), filed on March ~~6, 2018)~~5, 2019).

*	Filed herewith.

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 thereunto duly authorized.

	Garrison Capital Inc.

Dated: ~~November 6, 2018~~August 9, 2019	By	/s/ Joseph Tansey

	Joseph Tansey
	Chief Executive Officer
	(Principal Executive Officer)


Dated: ~~November 6, 2018~~August 9, 2019	By	/s/ Daniel Hahn

	Daniel Hahn
	Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

Dated: August 9, 2019	By	/s/ Brian Chase

	Brian Chase
	Chief ~~Financial~~Operating Officer and Director
	~~(Principal Financial and Accounting Officer)~~

6768

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at		Valuation	Unobservable	Range						Weighted
($ in thousands)		September 30, 2018		Technique	Input	Low			High			Average
Senior Secured Investments	$		372,973	Comparable yield approach	Market rate⁽¹⁾		6.1	%		33.5	%		9.3	%
				Market comparable companies	EBITDA multiple⁽⁴⁾		2.0	x		19.9	x		7.1	x

Equity Investments⁽²⁾			9,457	Market comparable companies	EBITDA multiple		6.0	x		10.0	x		7.3	x
					Origination fees multiple		3.0	x		3.0	x		3.0	x
					Recovery Rate		61.3	%		84.7	%		67.1	%
				Discounted cash flows	Discount rate		10.0	%		15.0	%		12.1	%

Financial Assets⁽³⁾			536	Discounted cash flows	Interest rate		9.8	%		27.7	%		15.9	%
					Conditional prepayment rate		0.0	%		16.7	%		15.7	%
					Cumulative default rate		0.0	%		18.9	%		13.9	%
					Discount rate		7.0	%		7.0	%		7.0	%
Total	$		382,966

December 31, 2017 ($ in thousands)	Amortized Carrying Value		Outstanding Principal at Par		Interest Rate	Effective Interest Rate	Rating⁽¹⁾	Stated Maturity
2016-2 CLO Secured Notes:
Class A-1R Notes	$	19,700	$	19,700	LIBOR + 2.20%⁽²⁾	3.73%	AAA(sf)	9/29/2027
Class A-1F Notes		24,722		25,000	3.41%	3.55%	AAA(sf)	9/29/2027
Class A-1T Notes		87,046		88,150	LIBOR + 2.20%	3.79%	AAA(sf)	9/29/2027
Class A-2 Notes		20,369		20,700	LIBOR + 3.15%	4.79%	AA(sf)	9/29/2027
Class B Notes		20,951		21,450	LIBOR + 4.00%	5.75%	A (sf)	9/29/2027
Class C Notes		11,423		11,700	LIBOR + 6.00%	7.78%	BBB(sf)	9/29/2027
Subtotals / weighted averages		184,211		186,700	4.16%	4.34%		9/29/2027
Garrison SBIC Borrowings:
SBIC 2017-10 A	��	6,766		6,980	3.47%⁽³⁾	3.87%	N/A	3/1/2027
SBIC 2016-10 B		3,220		3,320	2.79%⁽³⁾	3.19%	N/A	9/1/2026
SBIC 2016-10 A		12,343		12,700	3.25%⁽³⁾	3.65%	N/A	3/1/2026
SBIC 2015-10 B		13,629		14,000	3.57%⁽³⁾	3.97%	N/A	9/1/2025
SBIC Interim Financing		12,362		12,800	LIBOR + 0.65%⁽⁴⁾	2.74%	N/A	3/21/2018
Subtotals / weighted averages		48,320		49,800	3.10%	3.51%		2/26/2024

Totals / weighted averages	$	232,531	$	236,500	3.93%	4.16%		12/27/2026

	Three Months Ended				Nine Months Ended
Management Fees ($ in thousands)	September 30,2018		September 30,2017		September 30,2018		September 30,2017
Management fee	$	1,504	$	1,374	$	4,516	$	4,423
Management fee waived		—		—		—		(310	)
Total management fees, net of waived fees	$	1,504	$	1,374	$	4,516	$	4,113

	Nine Months Ended September 30, 2018
Portfolio Company ($ in thousands)	Fair value at December 31, 2017		Purchases (cost)		Sales (cost)		Transfer in/ (out) (cost)		Net unrealized losses			Fair value at September 30, 2018		Net realized losses		Interest and fee income		Dividend income⁽¹⁾
Non-control affiliate investments
Cochon – MWS Holdings LLC (fka Rooster Energy Ltd.)	$	—	$	4,112	$	—	$	—	$	(1,414	)	$	2,698	$	—	$	—	$	84
Total non-control affiliate investments	$	—	$	4,112	$	—	$	—	$	(1,414	)	$	2,698	$	—	$	—	$	84

	Nine Months Ended September 30, 2017
Portfolio Company ($ in thousands)	Fair value at December 31, 2016		Purchases (cost)		Sales (cost)		Transfer in/ (out) (cost)		Net unrealized losses			Fair value at September 30, 2017		Net realized losses		Interest and fee income		Dividend income
Non-control affiliate investments
Speed Commerce Operating Company LLC⁽¹⁾	$	3,103	$	148	$	—	$	—	$	(3,251	)	$	—	$	—	$	148	$	—
Total non-control affiliate investments	$	3,103	$	148	$	—	$	—	$	(3,251	)	$	—	$	—	$	148	$	—

As of the Closing Date: October 18, 2018 ($ in thousands)	Commitment Amount		Outstanding Principal at Par		Interest Rate⁽¹⁾	Issue Price	Rating⁽²⁾	Stated Maturity⁽³⁾
2018-2 CLO Notes
2018-2 Class A-1R Notes⁽⁴⁾	$	50,000	$	—	LIBOR + 1.58%	100.00%	AAA(sf)	11/29/2029
2018-2 Class A-1T Notes		170,400		170,400	LIBOR + 1.58%	100.00%	AAA(sf)	11/29/2029
2018-2 Class A-2 Notes		55,100		55,100	LIBOR + 2.45%	100.00%	AA(sf)	11/29/2029
2018-2 Class B Notes⁽⁵⁾		36,500		18,250	LIBOR + 3.17%	99.50%	A (sf)	11/29/2029

Totals / weighted averages	$	312,000	$	243,750	LIBOR + 1.74%	99.94%		11/29/2029

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company