Great Elm Group (GEG) revenue jumps 70% but profit reverses on losses
Great Elm Group, Inc. (GEG) reports a sharp swing to a net loss of $36.9 million for the year ended June 30, 2026, versus net income of $15.6 million a year earlier. Revenue rose 70% to $27.8 million, driven mainly by Real Estate property sales and growth in the construction management business after the Greenfield CRE acquisition.
The loss stems largely from significant unrealized losses on three special purpose vehicles, a listed equity investment, and a private fund, reversing large unrealized gains in 2025. GEG manages about $770.6 million in assets across Alternative Credit and Industrial Outdoor Storage–focused real estate vehicles, and held $53.5 million in cash plus $32.6 million in investments at June 30, 2026, alongside $26.9 million of 7.25% notes due 2027 and $36.8 million of 5.0% Convertible Senior Notes due 2030. Management states it has sufficient liquidity for at least the next 12 months and highlights federal and state NOL carryforwards that may offset future taxable income.
Positive
- Revenue grew 70% to $27.8 million, driven by Real Estate property sales and expanding construction services, indicating traction in newer business lines.
- Operating cash flow improved by $24.7 million, from a $9.0 million use to $15.7 million provided, largely due to real estate sales and working-capital movements.
- Liquidity is solid with $53.5 million in cash and $32.6 million in investments at June 30, 2026, supporting ongoing operations and investment flexibility.
- Assets under management reached approximately $770.6 million, underscoring scale across credit and Industrial Outdoor Storage real estate platforms.
Negative
- Net results deteriorated from $15.6 million income to a $36.9 million loss, a material reversal in overall profitability.
- Net realized and unrealized gains swung to a large loss, driven by adverse valuation movements in special purpose vehicles, a listed equity, and a private fund.
- Real Estate segment posted a $6.4 million net loss despite higher revenues, reflecting high cost of property sales and increased personnel and overhead.
- Leverage includes $26.9 million of 7.25% notes due 2027 and $36.8 million of 5.0% convertible notes due 2030, creating refinancing and potential dilution risk.
Filing Explained
Existing holders face mixed equity mechanics: authorized repurchases may reduce shares, while convertible notes and warrants can add shares if exercised.
Great Elm Group’s Form 10-K is its audited annual report for the year ended
The company says the repurchase program does not require it to acquire a specific number of shares, so the remaining authorization is capacity rather than a completed transaction. It also discloses
All reported repurchases were open-market transactions, including
The relevant future state changes are shown by the repurchase table’s remaining authorization and by any later disclosure of common shares issued upon conversion or warrant exercise.
Key Figures
Key Terms
Industrial Outdoor Storage (IOS) financial
business development company (BDC) financial
net operating loss carryforwards financial
Rule 10b5-1 plan regulatory
Convertible Senior PIK Notes financial
Investment Company Act regulatory
FAQ
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AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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For the fiscal year ended
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Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
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.
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
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.
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Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The Nasdaq Global Select Market on December 31, 2025, was $
The number of shares of the Registrant’s common stock outstanding as of August 20, 2026 was
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the annual meeting of stockholders of the Registrant, to be filed with the Securities and Exchange Commission within 120 days of our fiscal year ended June 30, 2026, are incorporated by reference into Part III of this report.
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Business |
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Risk Factors |
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Properties |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Financial Statements and Supplementary Data |
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Directors, Executive Officers and Corporate Governance |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Unless the context otherwise requires, “we,” “us,” “our,” the “Company,” “Great Elm,” “GEG” and terms of similar import refer to Great Elm Group, Inc. and/or its subsidiaries.
Cautionary Statement Regarding Forward-Looking Information
This report and certain information incorporated herein by reference contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “seek,” “anticipate,” “intend,” “estimate,” “plan,” “target,” “project,” “forecast,” “envision” and other similar phrases. Although we believe the assumptions and expectations reflected in these forward-looking statements are reasonable, these assumptions and expectations may not prove to be correct, and we may not achieve the financial results or benefits anticipated. These forward-looking statements are not guarantees of actual results. Our actual results may differ materially from those suggested in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, including, without limitation:
These forward-looking statements speak only as of the time of filing of this report and we do not undertake to update or revise them as more information becomes available. You are cautioned not to place undue reliance on these forward-looking statements. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
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PART I
Item 1. Business.
Overview
GEG is a publicly-traded alternative asset management company focused on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies.
We decided to invest in the asset management business because of our assessment of its ability to generate recurring free cash flows, its growth prospects and our Board of Directors’ (our Board) and employees’ industry expertise. GECM, our wholly-owned registered investment adviser subsidiary, is an investment adviser providing investment management services to GECC, as well as other private funds. MCRE, another wholly-owned subsidiary, provides investment management services to Monomoy UpREIT. The combined assets under management of these entities at June 30, 2026 was approximately $770.6 million.
GECC was established in 2016 and it elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the Investment Company Act). We own approximately 9.8% of GECC’s shares as of June 30, 2026. We earn dividends from these shares and may sell them to redeploy our capital in higher yielding opportunities.
Monomoy UpREIT is the operating partnership of Monomoy Properties REIT, LLC. Monomoy Properties REIT, LLC was formed in 2014 with the purpose of building an industry-leading single-tenant Industrial Outdoor Storage (IOS) focused portfolio specializing in net leased assets, specifically Class B & C warehouse, distribution & light manufacturing assets. We acquired the investment management agreement of Monomoy UpREIT in May 2022. We own approximately 3.3% of Monomoy UpREIT and approximately 3.6% of Monomoy Properties REIT, LLC.
GECM and MCRE, our wholly-owned subsidiaries, earn revenue through investment management agreements with each investment vehicle that provide for management fees, property management fees, incentive fees and/or administration fees. These fees are generally based on assets under management, rent collected, investment performance and allocable expenses incurred in the administration of these investment vehicles.
Monomoy Construction Services, LLC (MCS), our wholly owned subsidiary, is an integrated, full-service construction business. MCS is dedicated to serving our various real estate businesses, as well as expanding its third-party consulting business.
As part of its build-to-suit development initiatives, Monomoy BTS Corporation (MBTS), our wholly owned subsidiary, purchases certain land parcels. Contemporaneously with the land purchases, MBTS enters into commercial lease agreements, as a lessor, in respect to the land parcels and build-to-suit improvements to be constructed thereon. The leases commence upon substantial completion of the build-to-suit developments. The Company intends to sell the land and improvements with the attached leases at, or subsequent to, the respective lease commencement date.
As of June 30, 2026, we had $13.4 million of net operating loss carryforwards for federal income tax purposes and $14.0 million of net operating loss carryforwards for state income tax purposes.
For additional information see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Acquisition Program
We continue to explore other investment management opportunities, as well as opportunities in other areas that we believe provide attractive risk-adjusted returns on invested capital.
Competition
We face competition from larger, well financed organizations (both domestic and foreign), including global asset managers, investment banks, commercial banks, private equity funds, sovereign wealth funds and state-owned enterprises. Government regulation is a key competitive factor for certain industries.
Employees
We had 52 employees as of June 30, 2026.
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Information about Great Elm on the Internet
We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with the SEC. Such reports and other information filed by us with the SEC are available free of charge on our website at https://www.greatelmgroup.com/investors/ when such reports are available on the SEC’s website. We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. Our stockholders may also obtain a printed copy of any of the above documents or reports by sending a request to Great Elm Group, Inc., 3801 PGA Blvd, Suite 603, Palm Beach Gardens, Florida 33410; Attention: Investor Relations, or by calling (617) 375-3006. We charge $0.50 per page to cover expenses of copying and mailing.
Our corporate headquarters is located at 3801 PGA Blvd, Suite 603, Palm Beach Gardens, Florida 33410. Our corporate website address is www.greatelmgroup.com.
The contents of the websites referred to above are not incorporated by reference into this filing.
Item 1A. Risk Factors.
Our business is subject to a number of risks. You should carefully consider the following risk factors, together with all of the other information included in this report, before you decide whether to invest in our securities. The following risks are not the only risks we face. If any of the following risks occurs or continues to occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the trading price of our common shares could decline, and you may lose all or part of your investment. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.
Risks Related to Our Business
Our growth strategy may not be successful. The process to identify potential investment opportunities and strategic transaction partners, to investigate and evaluate the future returns therefrom and business prospects thereof and negotiate definitive agreements with respect to such transactions on mutually acceptable terms can be time consuming and costly. We may fail to identify attractive opportunities or partners. Even if we do identify such opportunities, we are likely to encounter intense competition from other companies with similar business objectives to ours, including private equity and venture capital funds, sovereign wealth funds, special purpose acquisition companies (SPACs), investment firms with significantly greater financial and other resources and operating businesses competing for acquisitions. Many of these companies are well established, well financed and have extensive experience in identifying and effecting investment opportunities and strategic transactions. Moreover, we may fail to consummate identified opportunities because of regulatory or legal complexities, failure to obtain financing on attractive terms or at all or uncertainty and adverse developments in the U.S. or global economy, financial markets or geopolitical conditions. If we fail to identify attractive opportunities, or we fail to consummate identified investment opportunities, we may not be successful in growing our business and our business, results of operations, cash flows and financial condition could be adversely affected.
We continually evaluate our assets and investments relative to other market opportunities in order to seek to maximize shareholder value. As a result, we may purchase new assets or businesses or sell existing assets or businesses at any time. If such a purchase or sale is not successfully completed, integrated or managed effectively, or does not result in the benefits or cost savings we expect, our business, financial condition or results of operations may be adversely affected.
Because we will consider investments in different industries, you have no basis at this time to ascertain the merits or risks of any business that we may ultimately invest in or seek to acquire. We are not limited to acquisitions and/or investments in any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately invest or the target businesses in which we may ultimately invest or seek to acquire. We may not properly assess all of the significant risks present in that opportunity. Even if we properly assess those risks, some of them may be outside of our control or ability to affect. For example, as part of our investment management business we will direct investments in a wide variety of industries and vehicles, including SPACs, which may decline in value. Except as required under the Nasdaq Stock Market LLC (Nasdaq) rules and applicable law, we will not seek stockholder approval of any investment or acquisition that we may pursue, so you will most likely not be provided with an opportunity to evaluate the specific merits or risks of such a transaction before we become committed to the transaction. Our business, financial condition and results of operations are dependent upon our investments. Any material adverse change in one of our investments or in a particular industry in which we invest may cause material adverse changes to our business, financial condition and results of operations. Further, concentration of capital we devote to a particular investment or industry may increase the risk that such investment could significantly impact our financial condition and results of operations, possibly in a material adverse way.
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Subsequent to an investment, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment. Even if we conduct extensive due diligence on a target business that we invest in, we cannot assure you that this diligence will identify all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business or outside of our control will not later arise. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of our investments do not perform as we expect, our revenue, income and cash flow would decline because of the value of our assets under management would decrease. We may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate covenants under our debt agreements. Accordingly, you could suffer a significant reduction in the value of your shares.
We may not correctly assess the management teams of the businesses we invest in. The value of the businesses we invest in is driven by the quality of the leaders of those businesses. When evaluating the desirability of a prospective target business, our ability to assess the target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we expected. Should the target’s management not possess the necessary skills, qualifications or abilities, the operations and profitability of that business will be negatively impacted. In addition, we may acquire private, non-public companies, with unsophisticated accounting or compliance operations and personnel.
Our ability to successfully grow our business will be dependent upon the efforts of our key personnel. Our ability to successfully effect our growth strategy is dependent upon the efforts of our key personnel. The loss of our key personnel could severely negatively impact the operations and profitability of our business.
Increased competition may adversely affect our revenues, profitability and staffing. All aspects of our business are intensely competitive. We will compete directly with a number of BDCs, private equity and venture capital funds, financial investment firms and SPACs. There has been increasing competition from others offering financial services, including services based on technological innovations. Increased competition or an adverse change in our competitive position could lead to a reduction of business and therefore a reduction of revenues and profits.
Competition also extends to the hiring and retention of highly skilled management and employees. A competitor may be successful in hiring away employees, which may result in us losing business formerly serviced by such employees. Competition can also increase our costs of recruiting, hiring and retaining the employees we need to effectively operate our business.
Changing conditions in financial markets and the economy could impact us through decreased revenues, losses or other adverse consequences. Global or regional changes in the financial markets or economic conditions could adversely affect our business in many ways, including the following:
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Additionally, disruptions in the financial markets in recent years as a result of a variety of factors, including regional bank instability, high inflation and interest rates and tariffs and trade tensions, have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the financial markets, and led to general volatility in the financial markets, including with respect to market prices of publicly traded investments and asset valuations, higher construction costs, availability of construction financing, declining property values and weakened rental demand. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments. As a result, we may experience additional losses on our investments. Decreases in the market values of investments held within the underlying portfolios of managed funds could also lead to decreases in asset-based fee revenues.
If our tax filing positions were to be challenged by federal, state and local or foreign tax jurisdictions, we may not be wholly successful in defending our tax filing positions. We record reserves for unrecognized tax benefits based on our assessment of the probability of successfully sustaining tax filing positions. Management exercises significant judgment when assessing the probability of successfully sustaining tax filing positions, and in determining whether a contingent tax liability should be recorded and, if so, estimating the amount. If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts or we may be required to reduce the carrying amount of our net deferred tax asset, either of which result could be significant to our financial position, cash balances and results of operations.
We may issue notes or other debt securities, or otherwise incur substantial debt, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us. We may choose to incur substantial debt to finance our growth plans. For example, in June 2022, we raised $26.9 million through the issuance of 7.25% Notes due 2027. The incurrence of additional debt could have a variety of negative effects, including:
The financial services industry is subject to extensive regulation, including recent legislation and new or pending regulation, which may significantly affect our business. The financial services industry is subject to extensive laws, rules and regulations. In recent years in particular, there has been significant legislation and increased regulation affecting the financial services industry. These legislative and regulatory initiatives affect us, our competitors, our managed investment products and our customers. These changes could have an effect on our revenue and profitability, limit our ability to pursue business opportunities, impact the value of assets that we hold, require us to change certain business practices, impose additional costs on us, and otherwise adversely affect our business. Accordingly, we cannot provide assurance that legislation and regulation will not eventually have an adverse effect on our business, results of operations, cash flows and financial condition.
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Firms that engage in securities and derivatives trading and wealth and asset management must comply with the laws, rules and regulations imposed by national and state governments and regulatory and self-regulatory bodies with jurisdiction over such activities. Such laws, rules and regulations cover all aspects of the financial services business, including, but not limited to, sales and trading methods, trade practices, use and safekeeping of customers’ funds and securities, capital structure, anti-money laundering and anti-bribery and corruption efforts, record-keeping and the conduct of directors, officers and employees. Regulators will supervise our business activities to monitor compliance with laws, rules and regulations of the relevant jurisdiction. In addition, if there are instances in which our regulators question our compliance with laws, rules, and regulations, they may investigate the facts and circumstances to determine whether we have complied.
Operational risks may disrupt our business, result in regulatory action against us or limit our growth. Our businesses are highly dependent on our ability to process, on a daily basis, transactions across numerous and diverse markets and the transactions we process have become increasingly complex. If any of our financial, accounting or other data processing systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer an impairment to our liquidity, a financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage. These systems may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, including a disruption of electrical or communications services or our inability to occupy one or more of our buildings. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses.
Our financial and other data processing systems will rely on access to and the functionality of operating systems maintained by third parties. If the accounting, trading or other data processing systems on which we are dependent are unable to meet increasingly demanding standards for processing and security or if they fail or have other significant shortcomings, we could be adversely affected. Such consequences may include our inability to effect transactions and manage our exposure to risk.
We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us. The increased use of smartphones, tablets and other mobile devices as well as cloud computing may also heighten these and other operational risks. We and our third-party providers are or may be the subject of attempted unauthorized access, computer viruses and malware, and cyberattacks designed to disrupt or degrade service or cause other damage and denial of service. Cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being carried out by groups and individuals (including criminal hackers, hacktivists, state-sponsored actors, criminal and terrorist organizations, individuals or groups participating in organized crime and insiders), as well as agents powered by artificial intelligence, with a wide range of expertise and motives (including monetization of corporate, payment or other internal or personal data, theft of computing resources, financial fraud, operational disruption, theft of trade secrets and intellectual property for competitive advantage and leverage for political, social, economic and environmental reasons). Such cyberattacks and cyber incidents can take many forms including cyber extortion, denial of service, social engineering, such as impersonation attempts to fraudulently induce employees or others to disclose information or unwittingly provide access to systems or data, introduction of viruses or malware, such as ransomware through phishing emails, website defacement or theft of passwords and other credentials, unauthorized use of computing resources for digital currency mining and business email compromises. There can be no assurance that such unauthorized access or cyber incidents will not occur in the future, and they could occur more frequently and on a larger scale. Legal liability arising from such risks could be significant and may harm our business. Many aspects of our business involve substantial risks of liability. Any failure of our systems, including from cyberattacks, cyber incidents or other reasons, could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Our financial and operational controls may not be adequate. As we expand our business, there can be no assurance that financial controls, the level and knowledge of personnel, operational abilities, legal and compliance controls and other corporate support systems will be adequate to manage our business and growth. The ineffectiveness of any of these controls or systems could adversely affect our business and prospects. In addition, if we acquire new businesses and introduce new products, we face numerous risks and uncertainties integrating their controls and systems, including financial controls, accounting and data processing systems, management controls and other operations. A failure to integrate these systems and controls, and even an inefficient integration of these systems and controls, could adversely affect our business and prospects.
Losses not covered by insurance may be large, which could adversely impact our financial performance. We carry various insurance policies on our assets. These policies contain policy specifications, limits and deductibles that may mean that such policies do not provide coverage or sufficient coverage against all potential material losses. There are certain types of risk (generally of a catastrophic nature such as war or environmental contamination) which are either uninsurable or not economically insurable. Further, there are certain types of risk for which insurance coverage is not equal to the full replacement cost of the insured assets. Should any uninsured or underinsured loss occur, we could lose our investment in, and anticipated profits and cash flows from, one or more of our assets or operations.
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We also carry directors and officers liability insurance (D&O insurance) for losses or advancement of defense costs in the event a legal action is brought against the company’s directors, officers or employees for alleged wrongful acts in their capacity as directors, officers or employees. Our D&O insurance contains certain customary exclusions that may make it unavailable for the company in the event it is needed; and in any case our D&O insurance may not be adequate to fully protect the company against liability for the conduct of its directors, officers or employees.
We earn a significant portion of our revenue pursuant to our investment management agreements. We earn a significant portion of our revenue through the investment management agreements (IMAs) we have through GECM and MCRE with various pooled investment vehicles, such as GECC and Monomoy UpREIT. The IMAs may be cancelled at the applicable counterparty’s discretion upon certain notice or upon the occurrence of certain events. We do not control the boards of directors of such pooled investment vehicles, and they may cancel our respective IMAs at their discretion without making any termination payment to us. GECM and MCRE's investment performance is a key element of retaining this business. We have recorded an intangible asset attributable to the IMAs that is being amortized over a 15-year economic life even though the IMAs are cancellable by the respective counterparties.
Moreover, the revenue we earn from management, incentive and/or administration fees under the IMAs is driven in part by the value of the assets under management at our pooled investment vehicles. If the value of assets under management at any of our pooled investment vehicles declines for any reason, the amount of fees we earn would also decline, which would have an adverse impact on our business, results of operations, cash flows and financial condition. In addition, the pooled investment vehicles we manage may, at their direction, alter their investment strategies, asset allocations, or risk profiles, any of which could result in changes that consequently reduce the management fees, incentive fees, or other revenues we earn from those vehicles. The historical performance of our pooled investment vehicles should not be considered indicative of future results.
Difficult or changing market conditions can adversely affect our business in many ways, by reducing the value or performance of our funds (including our invested funds and funds invested by third parties) or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our income and cash flow and adversely affect our financial condition. A significant portion of our revenue is tied to the value of assets under management at our pooled investment vehicles and other investments that we make in businesses in a variety of industries. As a result, of our business is affected by conditions in the financial markets and economic conditions and events throughout the world, such as interest rates, availability of credit, inflation rates, tariffs, trade policy, economic uncertainty from any of the foregoing or otherwise, changes in laws and regulations, market perceptions and other factors.
Adverse changes could lead to a reduction in investment income, losses on our own capital invested and lower revenues from investment management fees. Such adverse changes may also lead to a decrease in new capital raised and may cause investors to withdraw their investments and commitments. Even in the absence of a market downturn, below-market investment performance by our funds and portfolio managers could reduce investment management revenues and assets under management and result in reputational damage that may make it more difficult to attract new investors or retain existing investors.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to execute our growth plans. If we are deemed to be an investment company under the Investment Company Act, we will be subject to additional regulatory requirements and our activities may be restricted, including:
Each of these may make it difficult for us to run our business. In addition, the Investment Company Act may impose upon us burdensome requirements, including:
7
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Though we do not believe that our principal activities will subject us to the Investment Company Act, if we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expense and attention from management for which we have not accounted and which would have a material adverse effect on our business, results of operations, cash flows and financial condition.
Our officers and directors may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us, subject to their fiduciary duties under applicable law.
We may engage in investment opportunities or other business with one or more target businesses that have relationships with our executive officers, directors or existing holders which may raise potential conflicts of interest. In light of the involvement of our executive officers and directors with other entities in the investment management business and otherwise, we may decide to invest in, acquire or do business with one or more businesses affiliated with our executive officers, directors or existing shareholders. Our directors also serve as officers and board members for other entities. Such entities may compete with us and potential conflicts of interest may exist. Nonetheless, we could pursue an affiliate transaction if we determined that such affiliated entity met our criteria for an investment or a business combination and such transaction was approved by a majority of our disinterested directors and our audit committee.
We have only recently entered the construction management business. In February 2025, we acquired certain assets of Greenfield CRE (Greenfield), a construction management company, which is a new business line for us. Although the Greenfield team became employees of our indirect wholly owned subsidiary, Monomoy Construction Services, LLC (MCS), in connection with the transaction, we do not have prior experience in the construction management industry and as a result, we may not be able to operate the business effectively.
We receive fees from construction management services we provide to our clients. Our revenue generated from this business line depends on the size of our projects and the number of projects we are able to manage. Many of our projects are small in size and therefore, the performance and results of the business also depends on our ability to manage a number of projects at one time and our ability to scale the business in terms of number and size of projects. Additionally, we face intense competition in this industry including from those competitors who possess more financial resources than us. As a result, we may not be able to continue to scale the business. If the number and size of our projects are less and/or smaller than our expectations or we are not able to scale the business effectively, our business, financial condition and results of operation would be adversely affected.
Furthermore, we engage trade partners in connection with the construction of our projects. We also subcontract portions of our contracts to subcontractors. An inability to contract with skilled trade partners at reasonable rates on a timely basis, or failures on the part of our subcontractors to perform as anticipated, could have an adverse impact on the results of operations of the business and in turn negatively affect our business, financial condition and results of operations as a whole.
Risks Relating to Our Common Stock
Our common stock is subject to transfer restrictions. We have net operating loss (NOL) carryforwards and other tax attributes, the amount and availability of which are subject to certain qualifications, limitations and uncertainties. In order to reduce the possibility that certain changes in ownership could result in limitations on the use of the tax attributes, our amended and restated certificate of incorporation contains provisions that generally restrict the ability of a person or entity from acquiring ownership (including through attribution under the tax law) of 4.99% or more of our common stock and the ability of persons or entities now owning 5% or more of our common shares from acquiring additional common shares. The restriction will remain until the earliest of (1) the repeal of Section 382 of the Internal Revenue Code of 1986, as amended or any successor statute if our Board determines that the restriction on transfer is no longer necessary or desirable for the preservation of tax benefits, (2) the close of business on the first day of a taxable year as to which our Board determines that no tax benefits may be carried forward, (3) such date as our Board may fix for expiration of transfer restrictions and (4) January 29, 2028. The restriction may be waived by our Board on a case-by-case basis. You are advised to carefully monitor your ownership of our common shares and consult your own legal advisors to determine whether your ownership of our common shares approaches the proscribed level.
8
We also have a Tax Benefits Preservation Agreement (the Tax Rights Plan) that would be triggered if any person acquires 4.99% or more of our common stock without prior approval by our Board. Holders of more than 4.99% of our common stock on the day the Tax Rights Plan was adopted were exempted from this limitation as to the number shares they held at the time of adoption of the Tax Rights Plan.
We may issue additional shares of common stock or shares of our preferred stock to obtain additional financial resources, as acquisition currency or under employee incentive plans. Any future issuances of our common stock would dilute the interest of our stockholders and likely present other risks. Our certificate of incorporation authorizes our Board to issue shares of our common stock or preferred stock from time to time in their business judgment up to the amount of our then authorized capitalization. We may issue a substantial number of additional shares of our common stock and may issue shares of our preferred stock. These issuances:
Anti-takeover provisions contained in our certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt. Our certificate of incorporation, bylaws and Delaware law contain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our Board. Our corporate governance documents include provisions:
These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
9
Our common stockholders may experience significant dilution upon the issuance of common stock upon conversion of our 5.0% Convertible Senior Notes due 2030 (the Convertible Notes). The issuance of common stock upon conversion of some or all of the Convertible Notes will dilute the ownership interests of existing holders of shares of our common stock, which could cause the price of our common stock to decline, and further concentrate ownership in certain related parties. Furthermore, the number of shares of common stock to be issued upon conversion of the Convertible Notes may be substantially greater if the conversion rate is adjusted in accordance with the terms of the Convertible Notes. Holders of the Convertible Notes have the right to convert all or any portion of such notes at any time prior to February 22, 2030 into shares of our common stock at a conversion price of $3.4722 per share. Upon conversion of any note, we will pay or deliver, as the case may be, to the noteholder, in respect of each $1,000 principal amount of notes being converted, shares of common stock equal to the conversion rate in effect on the conversion date, together with cash, if applicable, in lieu of delivering any fractional share of common stock. We cannot predict or accurately forecast the total amount of shares of common stock that ultimately may be issued under the Convertible Notes. Further, the perception of these sales or issuances, or the conversion of the Convertible Notes, could impair our ability to raise additional capital through the sale of our equity securities.
Our common stockholders may experience significant dilution upon the issuance of common stock on exercise of warrants. The issuance of common stock on exercise of warrants will dilute the ownership interests of existing holders of shares of our common stock, which could cause the price of our common stock to decline, and further concentrate ownership in certain related parties. The holder of the Series A warrant has the right to buy 1,000,000 shares of common stock at an exercise price of $3.50 per share any time on or after August 27, 2026. The holder of Series B warrant has the right to buy 1,000,000 shares of common stock at an exercise price of $5.00 per share any time on or after August 27, 2028. We cannot predict or accurately forecast the total amount of shares of common stock that ultimately may be issued under the warrants. Further, the perception of these sales or issuances, could impair our ability to raise additional capital through the sale of our equity securities.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Cybersecurity Processes and Risk Assessment
We rely on the cybersecurity program implemented by GECM. In order to assess,
GECM has implemented an information security policy governing cybersecurity risk, which is designed to facilitate the protection of sensitive or confidential business, client, investor and employee information that it stores or processes and the maintenance of critical services and systems. This program is based on recognized industry standards that we use to help us identify, assess and manage cybersecurity risks and is supported by both management and our Board. These processes and systems are designed to protect against unauthorized access of information, including by cyber-attacks. GECM's policies and processes include, as appropriate, encryption, data loss prevention technology, authentication technology, entitlement management, access control, anti-virus and anti-malware software, spam and phishing email filtering, and transmission of data over private networks. GECM’s processes and systems aim to prevent or mitigate two main types of cybersecurity risk: (1) cybersecurity risks associated with its physical and digital devices and infrastructure, and (2) cybersecurity risks associated with third parties, such as people and organizations who have access to its devices, infrastructure or confidential or sensitive information.
10
GECM also provides its employees with cybersecurity awareness training at onboarding and semiannually, as well as interim security reminders and alerts. GECM’s third-party consultants conduct regular phishing tests and provide additional training as appropriate.
In May 2024, the SEC adopted amendments to Regulation S-P, which, beginning in June 2026, requiring certain investment companies and SEC-registered investment advisers, including GECM, to adopt written policies and procedures for incident response programs to address unauthorized access to, or use of, customer information, including providing notice to certain individuals affected by any such incident. With the SEC particularly focused on cybersecurity, we expect increased scrutiny of our and GECM’s policies and systems designed to manage cybersecurity risks and related disclosures.
Governance and Oversight of Cybersecurity Risks
GECM’s cybersecurity program is managed by the IT Committee.
Impact of Cybersecurity Risks
Item 2. Properties.
We currently lease office space for our principal executive office in Palm Beach Gardens, Florida. We lease additional office space in Boston, Massachusetts, which is non-cancellable through November 2029, and Charleston, South Carolina, which has a lease expiration date in September 2029.
Item 3. Legal Proceedings.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
11
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “GEG”.
Record Holders
As of August 20, 2026, there were 51 record holders of our common stock.
Dividends
We do not currently intend to pay dividends on our common stock. The payment of dividends in the future is subject to legally available funds and the discretion of our Board and will depend upon general business conditions, legal and contractual restrictions on the payment of dividends and other factors that our Board may deem to be relevant.
Restrictions on Ownership
We have NOL carryforwards and other tax attributes, the amount and availability of which are subject to qualifications, limitations and uncertainties. In order to reduce the possibility that certain changes in ownership could result in limitations on the use of our tax attributes, our certificate of incorporation contains provisions which generally restrict the ability of a person or entity from acquiring ownership (including through attribution under the tax law) of 5% or more of the outstanding shares of common stock and the ability of persons or entities now owning 5% or more of the outstanding shares of common stock from acquiring additional common shares. We also have the Tax Rights Plan that restricts ownership of 4.99% or more of our outstanding shares of common stock. Persons that owned more than 4.99% of our common stock when the Tax Rights Plan was adopted were grandfathered as to their then-current holdings of our common stock. Our Board has granted limited waivers to certain investors to own more than 4.9% of our common stock, including funds managed by Northern Right Capital Management, L.P. (Northern Right), Imperial Capital Asset Management, LLC (ICAM), PC Elfun LLC (PC Elfun) and Woodstead Value Fund LP (Woodstead). As of August 20, 2026, Northern Right and its affiliates, ICAM and its affiliates, PC Elfun, and Woodstead own approximately 17.4%, 20.5%, 11.1%, and 15.7%, respectively, of the outstanding shares of our common stock. Ownership information is based on information in publicly available filings.
Stock Purchases
The following table summarizes common stock repurchases during the three months ended June 30, 2026:
Month |
|
Total Number of |
|
|
Average Price Paid |
|
|
Total Number of |
|
|
Maximum Number of |
|
||||
April 1-30, 2026 |
|
|
60,595 |
|
|
$ |
1.99 |
|
|
|
60,595 |
|
|
|
4,866,586 |
|
May 1-31, 2026 |
|
|
53,191 |
|
|
|
2.14 |
|
|
|
11,773 |
|
|
|
- |
|
June 1-30, 2026 |
|
|
150,994 |
|
|
|
2.23 |
|
|
|
- |
|
|
|
5,000,000 |
|
Total |
|
|
264,780 |
|
|
$ |
2.16 |
|
|
|
72,368 |
|
|
|
|
|
(1) All shares were purchased in open market transactions.
In July 2025, the Board authorized an increase in the Company’s stock repurchase plan from $20 million to $25 million. Such repurchases may be accomplished through a Rule 10b5-1 plan, which sets certain restrictions on the method, timing, price and volume of share repurchases. The repurchase program does not obligate the Company to acquire any specific number of shares.
In April 2026, the Board authorized an increase in the Company’s stock repurchase plan from $25 million to $40 million. Such repurchases may be accomplished through a Rule 10b5-1 plan, which sets certain restrictions on the method, timing, price and volume of share repurchases. The repurchase program does not obligate the Company to acquire any specific number of shares. As of August 24, 2026, approximately $24 million remained available to repurchase shares under the program.
In May 2026, the Company adopted a Rule 10b5-1 plan under the Exchange Act authorizing us to repurchase up to 5,000,000 shares of our common stock in open market transactions through the close of business on the second full trading day following the filing with the SEC of the Company's Form 10-K for the fiscal year ending June 30, 2026 unless extended or terminated by our Board.
12
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by Item 201(d) of Regulation S-K will be contained in our Proxy Statement and is hereby incorporated by reference thereto.
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations is a supplement to, and should be read in conjunction with, and is qualified entirely by, our consolidated financial statements (including Notes to the Consolidated Financial Statements) and the other consolidated financial information appearing elsewhere in this report. Some of the information in this discussion and analysis includes forward-looking statements that involve risk and uncertainties. Actual results and timing of events could differ from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
GEG is a publicly-traded alternative asset management company focused on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies. GEG and its subsidiaries currently manage GECC, a publicly-traded BDC, and Monomoy UpREIT, an Industrial Outdoor Storage (IOS) focused real estate investment trust, in addition to other investment vehicles. The combined assets under management of these entities at June 30, 2026 was approximately $770.6 million.
GEG continues to explore other investment management opportunities, as well as opportunities in other areas that it believes provide attractive risk-adjusted returns on invested capital. As of the date of this report, GEG had no unfunded binding commitments to make additional investments.
As part of its build-to-suit development initiatives, MBTS purchases certain land parcels. Contemporaneously with the land purchases, MBTS enters into commercial lease agreements, as a lessor, in respect to the land parcels and build-to-suit improvements to be constructed thereon. The leases commence upon substantial completion of the build-to-suit developments. The Company intends to sell the land and improvements with the attached leases at, or subsequent to, the respective lease commencement date. During the year ended June 30, 2026, GEG capitalized development costs of $6.5 million attributed to the cost of land and development and construction costs directly identifiable with the real estate projects.
On February 4, 2025, GEG acquired certain assets of Greenfield CRE (Greenfield), a construction management company and previous partner of MCRE (the Greenfield Acquisition). In connection with the acquisition, the Company formed Monomoy Construction Services, LLC (MCS), a wholly owned subsidiary of GEG, and combined Greenfield's assets with the assets of Monomoy BTS Construction Management, LLC (MCM) to launch an integrated, full-service construction business. MCS will be dedicated to serving the Company's various real estate businesses, as well as expanding its existing third-party consulting business. The financial results of MCS are included in the Company's consolidated results for the period beginning on February 4, 2025.
Change in Segments
During the first quarter of fiscal 2026, the Company realigned the information that the Chief Operating Decision Maker (CODM) regularly reviews to evaluate performance for operating decision-making purposes, including performance assessment and allocation of resources. As a result of this change in segment reporting, the Company retrospectively recast prior period results, by segment, to conform to the current period presentation. This structure includes two reportable segments: Alternative Credit and Real Estate. The structure is based on the Company’s various investment strategies.
As a result of the change noted above, effective for the quarter ended September 30, 2025, the Company began reporting the following business segments:
13
The Company has a corporate office that is included in “Corporate & Other”. The corporate office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance and human resources.
Results of Operations
The following table provides the consolidated results of our operations:
|
|
For the twelve months ended June 30, |
|
|||||||
(in thousands) |
|
2026 |
|
|
Percent Change |
|
2025 |
|
||
Revenues |
|
$ |
27,776 |
|
|
70% |
|
$ |
16,316 |
|
Cost of Revenues |
|
|
13,248 |
|
|
NM* |
|
|
1,082 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
||
Compensation and benefits |
|
|
19,582 |
|
|
27% |
|
|
15,478 |
|
Selling, general and administrative |
|
|
7,433 |
|
|
15% |
|
|
6,451 |
|
Depreciation and amortization |
|
|
1,299 |
|
|
4% |
|
|
1,249 |
|
Expenses of Consolidated Funds |
|
|
224 |
|
|
NM* |
|
|
59 |
|
Total operating costs and expenses |
|
|
28,538 |
|
|
|
|
|
23,237 |
|
Operating loss |
|
|
(14,010 |
) |
|
|
|
|
(8,003 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
||
Interest expense |
|
|
(4,106 |
) |
|
(1)% |
|
|
(4,157 |
) |
Other (expense) income, net |
|
|
(19,168 |
) |
|
NM* |
|
|
27,796 |
|
Total other (expense) income, net |
|
|
(23,274 |
) |
|
|
|
|
23,639 |
|
(Loss) income before income taxes |
|
|
(37,284 |
) |
|
|
|
|
15,636 |
|
Income tax benefit (expense) |
|
|
376 |
|
|
NM* |
|
|
(86 |
) |
Net (loss) income |
|
$ |
(36,908 |
) |
|
|
|
$ |
15,550 |
|
*NM - not meaningful
Revenues and Cost of Revenues
Revenues and cost of revenues for the year ended June 30, 2026 increased $11.5 million and $12.2 million, respectively, as compared to the year ended June 30, 2025, primarily due to an increase in Real Estate property sales revenues and related cost of revenues due to September 2025 and June 2026 property sales. The increase in revenues were partially offset by a reduction in incentive fees of $4.1 million and an increase in project management fees of $1.3 million compared to the prior year period.
Operating Costs and Expenses
Compensation and benefits expenses for the year ended June 30, 2026 increased $4.1 million as compared to the corresponding prior year period primarily driven by increased personnel due to the Greenfield Acquisition. Selling, general and administrative expenses for the year ended June 30, 2026 increased $1.0 million as compared to the corresponding prior year period, which was mainly attributable to an increase in accounting and tax consulting fees, along with an increase in selling, general and administrative expenses due to the Greenfield Acquisition.
Other Income (Expense)
Other income (expense), net includes dividend and interest income and net realized and unrealized gains and losses. For the year ended June 30, 2026, net realized and unrealized gains decreased $39.1 million to a net realized and unrealized loss as compared to the corresponding prior year period due to notable unrealized losses being recognized on our three special purpose vehicles in the current year period, as opposed to unrealized gains on these special purpose vehicles in the prior year period, along with a significant reduction in stock price for another one of our investments during the current year period, as opposed to an increase in stock price for this investment in the prior year period. Further, a notable unrealized loss was recognized on one of our investments in a private fund in the current year period as opposed to an unrealized gain on this investment in the prior year period. For the year ended June 30, 2026, interest income decreased $0.6 million as compared to the corresponding prior year period, due to changes in the investment portfolio shifting away from interest earning marketable securities into other strategic private investments. For the year ended June 30, 2026, dividend income decreased $0.7 million as compared to the corresponding prior year period, primarily driven by a decrease in the dividend rate per share held on one of our investments in the current period compared to the dividend rate per share held on one of our investments in the prior year period.
14
Income Taxes
The Company recognized an income tax benefit of $0.4 million for the year ended June 30, 2026 and an income tax expense of $0.1 million for the year ended June 30, 2025. The tax benefit for the year ended June 30, 2026 consists primarily of the release of uncertain tax positions related to a lapse of the statute of limitations and the reduction of the naked credit deferred tax liability. The expense for the year ended June 30, 2025 consists of the recognition of income tax expense related to the deferred tax liability with an indefinite reversal period. This is offset by the income tax benefit recognized from the reversal of the prior year's income tax expense, resulting from provision-to-return adjustments. As of June 30, 2026, we had $13.4 million of net operating loss carryforwards for federal income tax purposes, of which approximately $1.5 million will expire in fiscal years 2027 through 2038 and $11.9 million can be carried forward indefinitely. As of June 30, 2026, the Company also had $14.0 million of state NOL carryforwards, principally in Massachusetts, that will expire from 2037 to 2046.
Segment Analysis
We conduct our operations through two business segments: Alternative Credit and Real Estate.
Effective for the quarter ended September 30, 2025, we began reporting the following business segments.
The Company has a corporate office that is included in “Corporate & Other”. The corporate office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance and human resources.
The primary measure used by CODM in measuring performance and allocating resources to the segments is net income, as reported on our consolidated statements of operations, predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis when making decisions about internal operations, such as staffing and related compensation, and planning for future investments.
Alternative Credit Segment
The following table provides the results of our Alternative Credit segment:
|
|
For the twelve months ended June 30, |
|
|||||||
(in thousands) |
|
2026 |
|
|
Percent Change |
|
2025 |
|
||
Revenues |
|
$ |
6,071 |
|
|
(41)% |
|
$ |
10,323 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
||
Compensation and benefits |
|
|
5,316 |
|
|
(17)% |
|
|
6,383 |
|
Selling, general and administrative |
|
|
1,542 |
|
|
17% |
|
|
1,317 |
|
Depreciation and amortization |
|
|
177 |
|
|
(35)% |
|
|
273 |
|
Total operating costs and expenses |
|
|
7,035 |
|
|
|
|
|
7,973 |
|
Operating (loss) income |
|
|
(964 |
) |
|
|
|
|
2,350 |
|
Other income: |
|
|
|
|
|
|
|
|
||
Other income, net |
|
|
- |
|
|
(100)% |
|
|
1 |
|
Total other income, net |
|
|
- |
|
|
|
|
|
1 |
|
(Loss) income before income taxes |
|
|
(964 |
) |
|
|
|
|
2,351 |
|
Income tax expense |
|
|
- |
|
|
0% |
|
|
- |
|
Net (loss) income |
|
$ |
(964 |
) |
|
|
|
$ |
2,351 |
|
Alternative Credit Revenue
Alternative Credit revenues for the year ended June 30, 2026 decreased $4.3 million as compared to the year ended June 30, 2025 primarily due to a reduction in incentive fee revenue compared to the prior year period due to the incentive fee waiver provided to GECC.
15
Alternative Credit Expenses
Alternative Credit segment compensation and benefits expenses for the year ended June 30, 2026 decreased $1.1 million due to a reduction in bonus expense. Alternative Credit segment selling, general and administrative expenses for the year ended June 30, 2026 increased $0.2 million as compared to the year ended June 30, 2025 primarily driven by an increase in software expense and other miscellaneous general and administrative expenses.
Real Estate Segment
The following table provides the results of our Real Estate segment:
|
|
For the twelve months ended June 30, |
|
|||||||
(in thousands) |
|
2026 |
|
|
Percent Change |
|
2025 |
|
||
Revenues |
|
$ |
21,705 |
|
|
NM* |
|
$ |
5,993 |
|
Cost of Revenues |
|
|
13,248 |
|
|
NM* |
|
|
1,082 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
||
Compensation and benefits |
|
|
11,109 |
|
|
86% |
|
|
5,959 |
|
Selling, general and administrative |
|
|
2,513 |
|
|
44% |
|
|
1,744 |
|
Depreciation and amortization |
|
|
1,039 |
|
|
6% |
|
|
976 |
|
Total operating costs and expenses |
|
|
14,661 |
|
|
|
|
|
8,679 |
|
Operating loss |
|
|
(6,204 |
) |
|
|
|
|
(3,768 |
) |
Other income: |
|
|
|
|
|
|
|
|
||
Other income, net |
|
|
53 |
|
|
0% |
|
|
- |
|
Total other income, net |
|
|
53 |
|
|
|
|
|
- |
|
Loss before income taxes |
|
|
(6,151 |
) |
|
|
|
|
(3,768 |
) |
Income tax expense |
|
|
(212 |
) |
|
0% |
|
|
- |
|
Net loss |
|
$ |
(6,363 |
) |
|
|
|
$ |
(3,768 |
) |
*NM - not meaningful
Real Estate Revenue
Real Estate revenues for the year ended June 30, 2026 increased $15.7 million as compared to the year ended June 30, 2025 driven by property sales occurring in September 2025 and June 2026. Related costs of revenues for the year ended June 30, 2026 increased by $12.2 million compared to the year ended June 30, 2025 due to these sales. Further, $2.2 million of revenue was recognized in the year ended June 30, 2026 related to our construction business, compared to $0.9 million in the corresponding prior year period due to the growth in construction business from the Greenfield Acquisition that occurred in February 2025.
Real Estate Expenses
Real Estate segment compensation and benefits expenses for the year ended June 30, 2026 increased $5.2 million as compared to the corresponding prior year period driven by increased personnel expense due to the Greenfield Acquisition. Real Estate segment selling, general and administrative expenses increased $0.8 million for the year ended June 30, 2026 compared to the year ended June 30, 2025 primarily due to increased accounting, insurance, software and other expenses due to increased activity at these entities and the Greenfield Acquisition. Depreciation and amortization increased $0.1 million for the year ended June 30, 2026, as compared to the corresponding prior year period due to amortization of intangible assets related to the Greenfield Acquisition.
16
Corporate & Other
The following table provides the results of Corporate & Other:
|
|
For the twelve months ended June 30, |
|
|||||||
(in thousands) |
|
2026 |
|
|
Percent Change |
|
2025 |
|
||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
||
Compensation and benefits |
|
$ |
3,157 |
|
|
1% |
|
$ |
3,136 |
|
Selling, general and administrative |
|
|
3,378 |
|
|
(0)% |
|
|
3,390 |
|
Depreciation and amortization |
|
|
83 |
|
|
0% |
|
|
- |
|
Expenses of Consolidated Funds |
|
|
224 |
|
|
NM* |
|
|
59 |
|
Total operating costs and expenses |
|
|
6,842 |
|
|
|
|
|
6,585 |
|
Operating loss |
|
|
(6,842 |
) |
|
|
|
|
(6,585 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
||
Interest expense |
|
|
(4,106 |
) |
|
(1)% |
|
|
(4,157 |
) |
Other (expense) income, net |
|
|
(19,221 |
) |
|
NM* |
|
|
27,795 |
|
Total other (expense) income, net |
|
|
(23,327 |
) |
|
|
|
|
23,638 |
|
(Loss) income before income taxes |
|
|
(30,169 |
) |
|
|
|
|
17,053 |
|
Income tax benefit (expense) |
|
|
588 |
|
|
NM* |
|
|
(86 |
) |
Net (loss) income |
|
$ |
(29,581 |
) |
|
|
|
$ |
16,967 |
|
*NM - not meaningful
Corporate & Other Operating Costs and Expenses
Compensation and benefits expenses related to Corporate & Other for the year ended June 30, 2026 remained flat as compared to the corresponding prior year period.
Corporate & Other Expenses - Other Income and Expenses
For the year ended June 30, 2026, net realized and unrealized gains decreased $39.1 million to a net realized and unrealized loss as compared to the corresponding prior year period due to notable unrealized losses being recognized on our three special purpose vehicles in the current year period, as opposed to unrealized gains on these special purpose vehicles in the prior year period, along with a significant reduction in stock price for another one of our investments during the current year period, as opposed to an increase in stock price for this investment in the prior year period. Further, a notable unrealized loss was recognized on one of our investments in a private fund in the current year period as opposed to an unrealized gain on this investment in the prior year period. For the year ended June 30, 2026, interest income decreased $0.6 million as compared to the corresponding prior year period, due to changes in the investment portfolio shifting away from interest earning marketable securities into other strategic private investments. For the year ended June 30, 2026, dividend income decreased $0.7 million as compared to the corresponding prior year period, primarily driven by a decrease in the dividend rate per share held on one of our investments in the current period compared to prior year period.
Liquidity and Capital Resources
The following table presents selected financial information:
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Current assets |
|
$ |
99,634 |
|
|
$ |
137,897 |
|
Current liabilities |
|
|
7,729 |
|
|
|
9,614 |
|
Working capital |
|
$ |
91,905 |
|
|
$ |
128,283 |
|
Long-term liabilities |
|
$ |
65,146 |
|
|
$ |
63,657 |
|
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash provided by (used in) operating activities |
|
$ |
15,675 |
|
|
$ |
(9,006 |
) |
|
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
$ |
12,568 |
|
|
$ |
(1,336 |
) |
|
|
|
|
|
|
|
||
Net cash used in financing activities |
|
$ |
(5,372 |
) |
|
$ |
(8,773 |
) |
|
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
$ |
22,871 |
|
|
$ |
(19,115 |
) |
Net change in cash, cash equivalents and restricted cash |
|
$ |
22,871 |
|
|
$ |
(19,115 |
) |
17
As of June 30, 2026, we had an unrestricted cash balance of $53.5 million and investments with a fair value of $32.6 million, including 1,356,125 shares of GECC common stock with an estimated fair value of $7.4 million.
We could make acquisitions that will likely result in our investment of all of our liquid financial resources, the issuance of equity securities and the incurrence of indebtedness. If we are unsuccessful at raising additional capital resources, through either debt or equity, it is unlikely we will be able to execute our strategic growth plan. See “Item 1A. Risk Factors.”
Net cash from operating activities increased $24.7 million, from net cash used of $9.0 million for the year ended June 30, 2025 to net cash provided of $15.7 million for the year ended June 30, 2026, driven by proceeds from sale of real estate in September 2025 and June 2026 and changes in operating assets and liabilities period-over-period.
Net cash from investing activities increased $13.9 million, from net cash used of $1.3 million for the year ended June 30, 2025 to net cash provided of $12.6 million for the year ended June 30, 2026, driven by settlement of related party loan receivable and net sales of investments for the year ended June 30, 2026.
Net cash from financing activities increased $3.4 million, from net cash used of $8.8 million for the year ended June 30, 2025 to net cash used of $5.4 million for the year ended June 30, 2026, driven by distributions and redemptions of non-controlling interests in consolidated funds and stock repurchases during the year ended June 30, 2026. These were partially offset by proceeds from issuance of common stock during the year ended June 30, 2026.
We believe we have sufficient liquidity available to meet our short-term and long-term obligations for at least the next 12 months and the foreseeable future thereafter.
Borrowings
As of June 30, 2026, the Company had $26.9 million in outstanding aggregate principal of the GEGGL Notes. The GEGGL Notes are due on June 30, 2027, and interest is paid quarterly. The GEGGL Notes include covenants that limit additional indebtedness or the payment of dividends in the event that our net consolidated debt to equity ratio is, or would be on a pro forma basis, greater than 2 to 1. In addition, if our net consolidated debt to equity ratio is greater than 2 to 1 at the end of any calendar quarter, we must retain no less than 10% of our excess cash flow as cash and cash equivalents until such time as our net consolidated debt to equity ratio is less than 2 to 1 at the end of a calendar quarter.
As of June 30, 2026, the Company had $36.8 million principal balance in outstanding Convertible Notes (including cumulative interest paid in-kind) held by a consortium of investors, including related parties, that accrue interest at 5.0% per annum, payable semiannually in arrears on June 30 and December 31, in cash or in-kind at the option of the Company. The Convertible Notes are due on February 26, 2030, but are convertible at the option of the holders, subject to the terms therein, prior to maturity into shares of our common stock. Upon conversion of any note, the Company will pay or deliver, as the case may be, to the noteholder, in respect of each $1,000 principal amount of notes being converted, shares of common stock equal to the conversion rate in effect on the conversion date, together with cash, if applicable, in lieu of delivering any fractional share of common stock. To date, all interest on these instruments has been paid in-kind.
Critical Accounting Policies and Estimates
The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an on-going basis, the Company evaluates all of these estimates and assumptions. Actual results could be different from these estimates.
18
Business Combinations
Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses. Measurement period adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration if applicable, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary, in order to reduce deferred tax assets to the amounts more likely than not to be recovered.
The Company has established a valuation allowance for its deferred tax assets that are not recoverable from taxable temporary differences because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other deferred tax assets is more likely than not.
The calculation of the Company’s tax positions involves dealing with uncertainties in the application of complex tax regulations for federal and several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. GAAP provides guidance on the accounting for and disclosure of uncertainty in tax positions and requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more likely than not" of being sustained by the applicable taxing authority. The Company recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In making these assessments, the Company determines the accounting recognition based on the technical merits of the position and consults with external tax experts as appropriate. The Company does not recognize income tax benefits for positions that it takes on its income tax returns that do not meet the more likely than not standard on its technical merits.
New Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item appears beginning on page F-1 of this Annual Report on Form 10-K and is incorporated in this Item 8 by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Not applicable.
19
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
The Company’s management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective as of June 30, 2026.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for preparation of the accompanying consolidated financial statements in accordance with US GAAP.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13(a)-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting is supported by written policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2026 as required by the Exchange Act. In making this assessment, we used the criteria set forth in the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework, management concluded that our internal control over financial reporting was effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the fiscal year ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
20
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be contained in our definitive proxy statement (Proxy Statement) and is hereby incorporated by reference thereto.
Our board of directors has adopted a Code of Business Conduct applicable to all officers, directors, and employees, which is available on our website (https://www.greatelmgroup.com/investors/) under "Governance." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct by posting such information on the website address and location specified above.
Item 11. Executive Compensation.
The information required by this item will be contained in our Proxy Statement and is hereby incorporated by reference thereto.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be contained in our Proxy Statement and is hereby incorporated by reference thereto.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be contained in our Proxy Statement and is hereby incorporated by reference thereto.
Item 14. Principal Accountant Fees and Services.
The information required by this item will be contained in our Proxy Statement and is hereby incorporated by reference thereto.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
Financial Statements
The information required by this Item appears beginning on page F-1 of this Annual Report on Form 10-K and is incorporated in this Item 15 by reference.
Financial Statement Schedules
Schedules are omitted because they are not required or are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
Exhibits
The exhibit index attached hereto is incorporated by reference.
EXHIBIT INDEX
Unless otherwise indicated, all references are to filings by Great Elm Group, Inc. (the Registrant) with the Securities and Exchange Commission under File No. 001-39832
Exhibit No. |
|
Description |
3.1 |
|
Certificate of Incorporation of the Registrant, dated October 23, 2020 (incorporated by reference to the Exhibit 3.1 to the Form 8-K filed on December 29, 2020) |
|
|
|
3.2 |
|
Amended and Restated Bylaws of the Registrant, dated November 14, 2022 (incorporated by reference to the Exhibit 3.1 to the Form 8-K filed on November 14, 2022) |
|
|
|
4.1 |
|
Form of the Registrant’s Common Stock Certificate (incorporated by reference to the Exhibit 4.1 to the Form 8-K filed on December 29, 2020) |
|
|
|
21
4.2 |
|
Certificate of Designation of Series A Junior Participating Cumulative Preferred Stock of the Registrant, dated December 23, 2020 (incorporated by reference to the Exhibit 4.2 to the Form 8-K filed on December 29, 2020) |
|
|
|
4.3 |
|
Stockholders’ Rights Agreement, dated December 29, 2020, by and between the Registrant and Computershare Trust Company, N.A. (incorporated by reference to the Exhibit 4.3 to the Form 8-K filed on December 29, 2020) |
|
|
|
4.4 |
|
Form of 5.0% Convertible Senior PIK Notes due 2030 (incorporated by reference to the Exhibit 4.4 to the Form 8-K filed on December 29, 2020) |
|
|
|
4.5 |
|
Form of Amendment to 5.0% Convertible Senior PIK Notes due 2030 (incorporated by reference to the Exhibit 4.1 to the Form 10-Q filed on May 14, 2021) |
|
|
|
4.6 |
|
Registration Rights Agreement, dated as of February 26, 2020, by and between Great Elm Capital Group, Inc. and certain accredited investors party thereto (incorporated by reference to the Exhibit 4.5 to the Form 8-K filed on December 29, 2020) |
|
|
|
4.7 |
|
Description of Securities (incorporated by reference to the Exhibit 4.7 to the Form 10-K filed on September 12, 2022) |
|
|
|
4.8 |
|
Base Indenture, dated as of June 9, 2022, by and between the Registrant and American Stock and Transfer & Trust Company, LLC, as Trustee (incorporated by reference to the Exhibit 4.1 to the Form 8-K filed on June 9, 2022) |
|
|
|
4.9 |
|
First Supplemental Indenture, dated as of June 9, 2022, by and between the Registrant and American Stock and Transfer & Trust Company, LLC, as Trustee (incorporated by reference to the Exhibit 4.2 to the Form 8-K filed on June 9, 2022) |
|
|
|
4.10 |
|
Form of 7.25% Note Due 2027 (incorporated by reference to the Exhibit 4.3 to the Form 8-K filed on June 9, 2022) |
|
|
|
4.11 |
|
Amended and Restated Stockholders Agreement of Forest Investments, Inc., dated December 30, 2022, among Forest Investments, Inc., the Registrant and J.P. Morgan Broker-Dealer Holdings, Inc. (incorporated by reference to the Exhibit 4.2 to the Form 8-K filed on January 3, 2023) |
|
|
|
10.1+ |
|
Offer Letter, dated May 4, 2023, by and between the Registrant and Jason W. Reese (incorporated by reference to the Exhibit 10.3 to the Form 8-K filed on May 5, 2023) |
|
|
|
10.2+ |
|
Offer Letter, dated December 29, 2020 between Adam Kleinman and the Registrant (incorporated by reference to the Exhibit 10.2 to the Form 8-K filed on December 29, 2020) |
|
|
|
10.3+ |
|
Offer Letter, dated May 15, 2023, by and between the Registrant and Keri A. Davis (incorporated by reference to the Exhibit 10.2 to the Form 8-K filed on May 15, 2023) |
|
|
|
10.4+ |
|
Employment Letter, dated August 30, 2022, between Great Elm Capital Management, Inc. and Nichole Milz (incorporated by reference to the Exhibit 10.1 to the Form 8-K filed on September 6, 2022) |
|
|
|
10.5+ |
|
Compensation Plan Agreement, dated December 29, 2020, by and between Great Elm Capital Group, Inc. and the Registrant (incorporated by reference to the Exhibit 10.4 to the Form 8-K filed on December 29, 2020) |
|
|
|
10.6+ |
|
Form of Director and Officer Indemnification Agreement (incorporated by reference to the Exhibit 10.5 to the Form 8-K filed on December 29, 2020) |
|
|
|
10.7+ |
|
The Registrant's Amended and Restated 2016 Long-Term Incentive Compensation Plan (As Amended, Effective October 9, 2024) |
|
|
|
10.8+ |
|
2016 Employee Stock Purchase Plan (incorporated by reference to Annex E to the Proxy Statement filed on May 25, 2016 by Great Elm Capital Group, Inc. (File No. 001-16073)) |
|
|
|
10.9+ |
|
Form of Stock Option Award under the Registrant’s Amended and Restated 2016 Long-Term Incentive Compensation Plan (incorporated by reference to the Exhibit 10.12 to the Form 10-K filed on September 20, 2023) |
|
|
|
10.10+ |
|
Form of Restricted Stock Unit Award (Directors) under the Registrant’s Amended and Restated 2016 Long-Term Incentive Compensation Plan (incorporated by reference to the Exhibit 10.13 to the Form 10-K filed on September 20, 2023) |
|
|
|
10.11+ |
|
Form of Restricted Stock Unit Award (Employees) under the Registrant’s Amended and Restated 2016 Long-Term Incentive Compensation Plan (incorporated by reference to the Exhibit 10.14 to the Form 10-K filed on September 20, 2023) |
|
|
|
10.12+ |
|
Form of Restricted Stock Award (Directors) under the Registrant’s Amended and Restated 2016 Long-Term Incentive Compensation Plan (incorporated by reference to the Exhibit 10.15 to the Form 10-K filed on September 20, 2023) |
|
|
|
22
10.13+ |
|
Form of Restricted Stock Award (Employees) under the Registrant’s Amended and Restated 2016 Long-Term Incentive Compensation Plan (incorporated by reference to the Exhibit 10.16 to the Form 10-K filed on September 20, 2023) |
|
|
|
10.14+ |
|
Amended and Restated Great Elm Capital Management Performance Bonus Plan, dated February 6, 2019, (incorporated by reference to the Exhibit 10.1 to the Form 8-K filed on February 8, 2019 by Great Elm Capital Group, Inc. (File No. 001-16073)) |
|
|
|
10.15 |
|
2025 Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on December 5, 2025) |
|
|
|
10.16 |
|
Amended and Restated Investment Management Agreement (As Amended, Effective August 1, 2022), by and between Great Elm Capital Corp. and Great Elm Capital Management, Inc. (incorporated by reference to the Exhibit g to the Form N-2 filed on June 16, 2023 by Great Elm Capital Corp. (File No. 333-272790)) |
|
|
|
10.17 |
|
Administration Agreement, dated as of September 27, 2016, by and between Great Elm Capital Corp. and Great Elm Capital Management, Inc. (incorporated by reference to the Exhibit 10.2 to the Form 8-K filed on November 7, 2016 by Great Elm Capital Corp. (File No. 814-01211)) |
|
|
|
10.18 |
|
Voting Waiver Agreement, dated October 29, 2024, by and between Jason W. Reese and the Registrant (incorporated by reference to the Exhibit 10.1 to the Form 8-K filed on October 29, 2024) |
|
|
|
10.19 |
|
Stock Purchase Agreement, dated July 31, 2025, by and among the Registrant and the purchasers named therein |
|
|
|
10.20 |
|
Profits Interest Agreement, dated July 31, 2025, by and among Great Elm Real Estate Ventures, LLC, the Registrant and the entities named therein |
|
|
|
10.21 |
|
Securities Purchase Agreement, dated August 27, 2025, between the Registrant and Woodstead Value Fund, L.P. |
|
|
|
10.22 |
|
Series A Warrant Agreement, dated August 27, 2025, between the Registrant and Woodstead Value Fund, L.P. |
|
|
|
10.23 |
|
Series B Warrant Agreement, dated August 27, 2025, between the Registrant and Woodstead Value Fund, L.P. |
|
|
|
10.24 |
|
Amended Profits Interest Agreement, dated May 12, 2026, by and among Great Elm Real Estate Ventures, LLC, the Registrant and the entities named therein |
|
|
|
10.25 |
|
Third Amendment and Assignment to Lease Agreement, dated March 2, 2026, between the Registrant and REEP-OFC Financial Center FL |
|
|
|
14.1 |
|
Code of Conduct of the Registrant (incorporated by reference to the Exhibit 14.1 to the Form 8-K filed on September 20, 2023) |
|
|
|
19.1 |
|
The Registrant's Insider Trading Policy (incorporated by reference to the Exhibit 19.1 to the Form 10-K filed on September 2, 2025). |
|
|
|
21.1 |
|
Subsidiaries of the Registrant. |
|
|
|
23.1 |
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm |
|
|
|
31.1 |
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1 |
|
Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
97.1 |
|
Clawback Policy (incorporated by reference to Exhibit 97.1 to the Form 10-K filed on February 29, 2024) |
|
|
|
101 |
|
Materials from the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026, formatted in inline Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Equity and Contingently Redeemable Non-Controlling Interest, (iv) Consolidated Statements of Cash Flows, and (v) related Notes to the Consolidated Financial Statements, tagged in detail (furnished herewith). |
|
|
|
104 |
|
The cover page from the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026, formatted in inline XBRL (included as Exhibit 101). |
+ Indicates a management contract or compensatory plan or arrangement.
23
Item 16. Form 10-K Summary.
We have elected not to provide a Form 10-K summary.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 as of August 26, 2026.
|
GREAT ELM GROUP, INC. |
||
|
|
|
|
|
By: |
|
/s/ Jason W. Reese |
|
Name: |
|
Jason W. Reese |
|
Title: |
|
Chief Executive Officer & Chairman |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of August 26, 2026.
Signature |
|
Title |
|
|
|
/s/ Jason W. Reese |
|
Chief Executive Officer & Chairman |
Jason W. Reese |
|
(Principal Executive Officer) |
|
|
|
/s/ Keri A. Davis |
|
Chief Financial Officer & Chief Accounting Officer |
Keri A. Davis |
|
(Principal Financial and Accounting Officer) |
|
|
|
/s/ Matthew A. Drapkin |
|
Director |
Matthew A. Drapkin |
|
|
|
|
|
/s/ David Matter |
|
Director |
David Matter |
|
|
|
|
|
/s/ Lloyd Nathan |
|
Director |
Lloyd Nathan |
|
|
|
|
|
/s/ James P. Parmelee |
|
Director |
James P. Parmelee |
|
|
|
|
|
/s/ Eric J. Scheyer |
|
Director |
Eric J. Scheyer |
|
|
|
|
|
/s/ David Schwartz |
|
Director |
David Schwartz |
|
|
|
|
|
/s/ Booker Smith |
|
Director |
Booker Smith |
|
|
|
|
|
25
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
|
F-2 |
Consolidated Balance Sheets at June 30, 2026 and 2025 |
|
F-4 |
Consolidated Statements of Operations for the years ended June 30, 2026 and 2025 |
|
F-5 |
Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2026 and 2025 |
|
F-6 |
Consolidated Statements of Cash Flows for the years ended June 30, 2026 and 2025 |
|
F-7 |
Notes to the Consolidated Financial Statements |
|
F-9 |
F-1
Report of Independent Registered PUBLIC Accounting Firm
To the shareholders and the Board of Directors of Great Elm Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Great Elm Group, Inc. and subsidiaries (the "Company") as of June 30, 2026 and 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows, for the years ended June 30, 2026 and 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for the years ended June 30, 2026 and 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Investments at fair value - Fair Value Measurements — Refer to Note 6
Critical Audit Matter Description
Included within investments at fair value held by the Company are equity investments in three special purpose vehicles that do not have readily-available market prices. The valuations of such equity investments are based on discounted cash flow models which are complex valuation techniques that utilize unobservable inputs. Under accounting principles generally accepted in the United States of America, these investments are classified as Level 3 assets and are inherently subjective. As of June 30, 2026, the fair value of these Level 3 equity investments was $797,000. The Company recognized a $12,577,000 change in unrealized depreciation related to these investments in earnings during the year ended June 30, 2026.
F-2
Given management uses complex valuation techniques and unobservable inputs to estimate the fair value of these Level 3 equity investments, performing audit procedures to evaluate the appropriateness of these models and inputs required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists who possess significant quantitative and modeling expertise.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discounted cash flow models and unobservable inputs used by management to estimate the fair value of these Level 3 equity investments included the following, among others:
/s/
August 26, 2026
We have served as the Company's auditor since 2024.
F-3
GREAT ELM GROUP, INC.
CONSOLIDATED BALANCE SHEETS
Dollar amounts in thousands, except per share amounts
ASSETS |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Receivables from managed funds |
|
|
|
|
|
|
||
Investments, at fair value |
|
|
|
|
|
|
||
Prepaid and other current assets |
|
|
|
|
|
|
||
Real estate assets, net |
|
|
|
|
|
|
||
Related party loan receivable |
|
|
|
|
|
|
||
Assets of Consolidated Funds: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Investments, at fair value |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Identifiable intangible assets, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Right-of-use assets |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Current portion of related party payables |
|
|
|
|
|
|
||
Current portion of lease liabilities |
|
|
|
|
|
|
||
Liabilities of Consolidated Funds: |
|
|
|
|
|
|
||
Payable for securities purchased |
|
|
|
|
|
|
||
Accrued expenses and other liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Lease liabilities, net of current portion |
|
|
|
|
|
|
||
Long-term debt (face value $ |
|
|
|
|
|
|
||
Convertible notes (face value $ |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Commitments and contingencies (Note 19) |
|
|
|
|
|
|
||
Stockholders' equity |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
- |
|
|
|
- |
|
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in-capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total Great Elm Group, Inc. stockholders' equity |
|
|
|
|
|
|
||
Redeemable non-controlling interest in Consolidated Funds |
|
|
|
|
|
|
||
Total stockholders' equity |
|
|
|
|
|
|
||
Total liabilities and stockholders' equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
GREAT ELM GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Amounts in thousands, except per share data
|
|
For the twelve months ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenues |
|
$ |
|
|
$ |
|
||
Cost of revenues |
|
|
|
|
|
|
||
Operating costs and expenses: |
|
|
|
|
|
|
||
Compensation and benefits |
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Expenses of Consolidated Funds |
|
|
|
|
|
|
||
Total operating costs and expenses |
|
|
|
|
|
|
||
Operating loss |
|
|
( |
) |
|
|
( |
) |
Dividends and interest income |
|
|
|
|
|
|
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
Net realized and unrealized (loss) gain |
|
|
( |
) |
|
|
|
|
Net realized and unrealized (loss) gain on investments of Consolidated Funds |
|
|
( |
) |
|
|
|
|
Interest and other income of Consolidated Funds |
|
|
|
|
|
|
||
(Loss) income before income taxes |
|
|
( |
) |
|
|
|
|
Income tax benefit (expense) |
|
|
|
|
|
( |
) |
|
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Less: net (loss) income attributable to non-controlling interest in Consolidated Funds |
|
|
( |
) |
|
|
|
|
Net (loss) income attributable to Great Elm Group, Inc. stockholders |
|
$ |
( |
) |
|
$ |
|
|
Net (loss) income attributable to stockholders per share |
|
|
|
|
|
|
||
Basic |
|
$ |
( |
) |
|
$ |
|
|
Diluted |
|
|
( |
) |
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
GREAT ELM GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated |
|
|
|
Total Great Elm Group, Inc. Stockholders' |
|
|
Redeemable |
|
|
Total Stockholders' |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
|
Equity |
|
|
Consolidated Funds |
|
|
Equity |
|
|||||||
BALANCE, June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Issuance of common stock related to vesting of restricted stock |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Contributions to Consolidated Funds |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
||
Distributions from Consolidated Funds |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|||
BALANCE, June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net (loss) income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Issuance of common stock related to vesting of restricted stock |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Withholding tax payments related to restricted stock |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Issuance of common stock related to equity transactions, net |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|||||
Issuance of warrants |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Distributions from Consolidated Funds |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Redemptions of non-controlling interests in Consolidated Funds |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Stock repurchases |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|||||
BALANCE, June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
GREAT ELM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollar amounts in thousands
|
|
For the twelve months ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net (loss) income to net cash flows from operating activities: |
|
|
|
|
|
|
||
Proceeds from sale of real estate |
|
|
|
|
|
|
||
Gain on sale of real estate |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Unrealized loss (gain) on investments |
|
|
|
|
|
( |
) |
|
Realized gain on investments |
|
|
( |
) |
|
|
( |
) |
Realized gain on Convertible notes |
|
|
|
|
|
( |
) |
|
Non-cash interest and amortization of debt issuance costs |
|
|
|
|
|
|
||
Deferred tax (benefit) expense |
|
|
( |
) |
|
|
|
|
Change in fair value of contingent consideration |
|
|
|
|
|
( |
) |
|
Other non-cash expense, net |
|
|
|
|
|
|
||
Adjustments to reconcile net (loss) income to net cash flows from operating activities of Consolidated Funds: |
|
|
|
|
|
|
||
Purchase of investments |
|
|
( |
) |
|
|
( |
) |
Sales of investments |
|
|
|
|
|
|
||
Amortization of premium and accretion of discount, net |
|
|
( |
) |
|
|
( |
) |
Net realized and unrealized loss (gain) on investments |
|
|
|
|
|
( |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables from managed funds |
|
|
|
|
|
( |
) |
|
Prepaid and other assets |
|
|
|
|
|
( |
) |
|
Real estate under development |
|
|
( |
) |
|
|
( |
) |
Lease liabilities |
|
|
|
|
|
|
||
Related party payables |
|
|
( |
) |
|
|
( |
) |
Accounts payable, accrued expenses and other liabilities |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities of Consolidated Funds: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Other assets |
|
|
|
|
|
|
||
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash flows from operating activities |
|
|
|
|
|
( |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of investments in held-to-maturity securities |
|
|
|
|
|
( |
) |
|
Proceeds from settlement of held-to-maturity investments |
|
|
|
|
|
|
||
Proceeds from settlement of trading securities |
|
|
|
|
|
|
||
Sales of investments |
|
|
|
|
|
|
||
Purchases of investments |
|
|
( |
) |
|
|
|
|
Investments in portfolio funds |
|
|
|
|
|
( |
) |
|
Acquisition of business |
|
|
|
|
|
( |
) |
|
Related party loan receivable |
|
|
|
|
|
( |
) |
|
Redemption of investments |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
( |
) |
Net cash flows from investing activities |
|
|
|
|
|
( |
) |
|
F-7
GREAT ELM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Dollar amounts in thousands
|
|
For the twelve months ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from issuance of common stock |
|
|
|
|
|
|
||
Equity issuance costs |
|
|
( |
) |
|
|
|
|
Redemption of Convertible notes |
|
|
|
|
|
( |
) |
|
Stock repurchases |
|
|
( |
) |
|
|
( |
) |
Withholding tax payments related to restricted stock |
|
|
( |
) |
|
|
|
|
Redemptions of non-controlling interests in Consolidated Funds |
|
|
( |
) |
|
|
|
|
Contributions to non-controlling interests in Consolidated Funds |
|
|
|
|
|
|
||
Distributions from non-controlling interests in Consolidated Funds |
|
|
( |
) |
|
|
|
|
Net cash flows from financing activities |
|
|
( |
) |
|
|
( |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
|
|
|
|
|
||
Cash paid for taxes |
|
|
|
|
|
|
||
Supplemental non-cash financing transactions: |
|
|
|
|
|
|
||
Fair value of warrants issued |
|
|
|
|
|
|
||
Lease liabilities and right of use assets arising from operating leases |
|
|
|
|
|
|
||
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported on the Consolidated Balance Sheets to the total cash and cash equivalents and restricted cash on the Consolidated Statements of Cash Flows:
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
GREAT ELM GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Great Elm Group, Inc. (referred to as the Company or GEG) is an alternative asset management company incorporated in Delaware. The Company focuses on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including Great Elm Capital Management, LLC (GECM), Great Elm Opportunities GP, Inc. (GEO GP), Great Elm Capital GP, LLC (GEC GP), Great Elm Investments, LLC (GEI), Great Elm FM Acquisition, Inc. (FM Acquisition), Great Elm DME Holdings, Inc. (DME Holdings), Great Elm Real Estate Ventures, LLC (REV), Monomoy CRE, LLC (MCRE), Monomoy BTS Construction Management, LLC (MCM), Monomoy Construction Services, LLC (MCS), Monomoy BTS Corporation (MBTS) and Monomoy BTS Holdings, LLC (BTS). In addition, we have determined that the Company was the primary beneficiary of certain variable interest entities, and therefore the operations of those entities have been included in our consolidated results for the relevant periods.
Change in Segments
The Company continually monitors and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact its reportable segments. During the first quarter of fiscal 2026, in conjunction with an equity transaction entered into with Kennedy Lewis Investment Management LLC (KLIM) and the formation of REV (see Note 20 - Equity Transactions), the Company realigned the business and reportable segment information that the Chief Operating Decision Maker (CODM) regularly reviews to evaluate performance for operating decision-making purposes, including performance assessment and allocation of resources. As a result, the Company’s segment reporting structure is based on the Company’s various investment strategies.
As a result of the change in segments, effective during the quarter ended September 30, 2025, the Company has the following reportable segments:
2. Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an on-going basis, the Company evaluates all of these estimates and assumptions. The most important of these estimates and assumptions relate to revenue recognition, valuation allowance for deferred tax assets, estimates associated with accounting for business combinations, and fair value measurements, including stock-based compensation and investments in private entities. Although these and other estimates and assumptions are based on the best available information, actual results could be different from these estimates.
Certain prior period amounts have been reclassified to conform to current period presentation, including reclassifications made in the presentation of operating costs and expenses. Such reclassifications were not material and did not affect the reported net income (loss) for the periods presented.
F-9
Principles of Consolidation
The Company consolidates the assets, liabilities, and operating results of its wholly-owned subsidiaries, majority-owned subsidiaries, and subsidiaries in which we hold a controlling financial interest as of the financial statement date. All intercompany accounts and transactions have been eliminated in consolidation.
The Company evaluates entities it is involved with to determine whether it has a controlling financial interest in them and is required to consolidate. The Company consolidates those entities in which it has a direct or indirect controlling financial interest based on either a variable interest entity ("VIE") model or voting interest entity (“VOE”) model. As such, the Company consolidates (i) entities that the Company concludes are VIEs in which the Company has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which the Company is deemed to be the primary beneficiary and (ii) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity.
The Company determines whether an entity should be consolidated by first evaluating whether it holds a variable interest in the entity. Fees that are customary and commensurate with the level of services provided by the Company, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. The Company factors in all economic interests, including proportionate interests through related parties, to determine if fees are considered a variable interest. Entities that are not VIEs are further evaluated for consolidation under the VOE model.
Variable Interest Entities
The Company considers an entity to be a VIE if any of the following conditions exist: (i) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (ii) the holders of equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the expected losses or right to receive the expected residual returns; or (iii) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.
The Company consolidates VIEs for which it is the primary beneficiary. The Company determines it is the primary beneficiary when it has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE.
The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and continuously reconsiders the conclusion. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. The consolidation analysis is generally performed qualitatively, however, if the primary beneficiary is not readily determinable, a quantitative analysis may also be performed. This analysis requires judgment. These judgments include: (i) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support; (ii) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the success of the entity; (iii) determining whether two or more parties’ equity interests should be aggregated; (iv) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity; and (v) evaluating the nature of relationships and activities of the parties involved in determining which party within a related-party group is most closely associated with a VIE and hence would be deemed the primary beneficiary. VIEs are subject to specific disclosure requirements. See Note 7 - Variable Interest Entities for additional disclosures pertaining to the Company’s involvement with VIEs.
F-10
Voting Interest Entities
The Company has a controlling financial interest in a VOE when it owns a majority of the voting interests through which it can exert control over significant operating, financial, and investing decisions of the entity and no noncontrolling interest holder has stated rights that would overcome the presumption of consolidation by the majority voting interest.
Non-controlling interests
Redeemable non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity or outside of permanent equity for non-controlling interests that are contingently redeemable. Non-redeemable non-controlling interests consist of profits interest issued to KLIM in REV, see Note 20 - Equity Transactions. These profits interest are classified as non-redeemable non-controlling interests as a component of permanent equity as they are not subject to holder put rights. There was no activity to report related to the non-redeemable non-controlling interests within the consolidated financial statements. See Note 16 - Non-Controlling Interests. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations.
Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange-traded money market funds and the U.S. treasury bills. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.
The Company’s restricted cash consists of escrow accounts funded in connection with the sale of real estate assets. The escrows were part of the Company's performance obligation to the seller for construction completion.
Investments in Marketable Securities
Investments in marketable securities consist of debt securities, such as the U.S. treasury bills with original maturity exceeding 90 days. The Company classifies investments in debt securities as either trading, held-to-maturity, or available-for-sale. Securities are classified as trading if they are purchased and held principally for the purpose of selling in the near term and as held-to-maturity when the Company has both the positive intent and ability to hold the security to maturity. Held-to-maturity securities are measured at amortized cost. Investments in debt securities not classified as either trading or held-to-maturity are classified as available-for-sale securities. Trading securities are measured at fair value with unrealized gains and losses reported within net realized and unrealized gain (loss) on investments. Available-for-sale securities are measured at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss). As of June 30, 2026 and June 30, 2025, GEG had
Investments, at Fair Value
Investments, at fair value, consist of equity and equity-related securities carried at fair value, as well as investments in private funds measured using the net asset value (NAV) as reported by each fund’s investment manager. The private funds calculate NAV in a manner consistent with the measurement principles of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services – Investment Companies, as of the valuation date. Changes in the fair value and NAV are recorded within net realized and unrealized gain (loss) on investments. Dividends received are recorded within dividends and interest income on the consolidated statements of operations.
F-11
Real Estate Assets, net
Real estate assets are classified as follows: (i) real estate assets (current), which includes real estate development projects that are finished or in the process of being developed and expected to be completed and disposed of within one year of the balance sheet date; (ii) real estate assets (non-current), which includes real estate development projects that are finished or in the process of being developed and expected to be completed and disposed of more than one year from the balance sheet date; and (iii) real estate held for sale, which includes land and completed improvements thereon that meet all of the “held for sale” criteria. As of June 30, 2026 and 2025, there are no real estate assets which are non-current in nature.
Real estate under development is carried at cost less impairment, if applicable. We capitalize costs that are directly identifiable with the specific real estate projects, including pre-acquisition and pre-construction costs, development and construction costs, taxes, and insurance. We do not capitalize any general and administrative or overhead costs, regardless of whether the costs are internal or paid to third parties. Capitalization begins when the activities related to development have begun and ceases when activities are substantially complete and the asset is available for occupancy.
Goodwill and Identifiable Intangible Assets
Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in business combinations. Goodwill is not amortized for US GAAP purposes. Instead goodwill is reviewed for impairment at least annually as of the first business day of the fourth quarter or more frequently, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, after assessing qualitative factors, the Company believes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company will evaluate impairment quantitatively and record the amount of goodwill impairment as the excess of the carrying amount of the reporting unit over its fair value. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and assumptions about the Company’s strategic plans with regard to its operations. The Company performs annual impairment test on the first day of the fiscal fourth quarter, or as required when impairment triggering events are identified.
The Company's indefinite-lived intangible assets consist of investment management agreements, assembled workforce, customer-related intangibles and licenses. These intangible assets arise primarily from the determination of their respective fair market values at the date of acquisition. Amounts assigned to identifiable intangible assets, and their related useful lives, are derived from established valuation techniques and management estimates. Indefinite-lived intangible assets are tested for impairment annually as of the first business day of the fourth quarter or more frequently if events or changes in circumstances indicate that the asset might be impaired. If, after assessing qualitative factors, the Company believes that it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company will evaluate impairment quantitatively to determine and record the amount of impairment as the excess of the carrying amount of the indefinite-lived intangible asset over its fair value. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s strategic plans with regard to the indefinite-lived intangible assets.
The Company’s definite-lived intangible assets are amortized over their estimated useful lives based upon the pattern of future cash flows attributable to the asset or using the straight-line method as determined for each asset. The Company amortizes its definite-lived intangible assets over periods ranging from ten to
F-12
Impairment of Long-Lived Assets
Long-lived assets include real estate assets, property and equipment, definite-lived intangible assets, and lease right-of-use assets. The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable based on undiscounted cash flows. Impairment losses are recorded when undiscounted cash flows estimated to be generated by an asset are less than the asset’s carrying amount. The amount of the impairment loss, if any, is calculated as the excess of the asset’s carrying value over its fair value, which is determined using a discounted cash flow analysis, management estimates or market comparisons.
Revenue Recognition
The Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company’s revenue is based on contracts with a determinable transaction price and distinct performance obligations with probable collectability. Revenues are not recognized until the performance obligation(s) are satisfied.
Leases
The Company determines if an arrangement contains a lease at the inception of a contract considering all relevant facts and circumstances, which normally does not require significant judgment. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date of the lease based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company's leases is generally not readily determinable, the Company utilizes the incremental borrowing rate, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and are reduced by lease incentives.
Certain of the Company’s office leases contain options that permit extensions for additional periods. If the Company is not reasonably certain to exercise the option to extend at lease commencement, the respective extension period is not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability. Leases with an initial term of
The Company’s office leases typically require reimbursements to the lessor for real estate taxes, common area maintenance and other operating costs, which are expensed as incurred as variable lease costs. The Company accounts for lease and nonlease components as a single lease component.
See Note 11 - Lessee Operating Leases for additional information about the Company’s leases.
Stock-Based Compensation
The Company issues equity awards to eligible employees and directors, generally in the form of stock options, restricted stock awards and restricted stock units. The compensation cost for all equity awards is measured at their grant-date fair value. For the awards that do not contain performance or market conditions, the related compensation expense is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period, or the non-employee’s vesting period. For the awards that contain both performance and service conditions, the Company recognizes compensation expense over the requisite service period using the accelerated vesting attribution method when achievement of the performance condition is probable. For the awards that contain both market and service conditions, the Company recognizes compensation expense over the requisite service period using the accelerated vesting attribution method.
F-13
The grant-date fair value of stock options that do not contain market conditions is estimated using the Black-Scholes-Merton option pricing model, which requires management to make the following assumptions:
The Company estimates the grant-date fair value and requisite service period of stock options with market conditions using a combination of the Monte Carlo simulation and Black-Scholes-Merton option pricing models, applying the assumptions discussed above. The Company measures the grant-date fair value of restricted stock awards and restricted stock units using the Company’s stock price on the date of grant.
The Company accounts for forfeitures when they occur. The stock-based compensation expense is presented within compensation and benefits in the consolidated statements of operations. The Company records deferred tax assets or liabilities for equity awards based on deductions for income tax purposes of stock-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company is expected to receive a tax deduction. In addition, differences between the deferred tax assets recognized in accordance with GAAP and the actual tax deduction reported in the Company’s income tax returns are presented within income tax expense within the consolidated statements of operations.
Other Non-Cash Compensation
The Company issues compensation to certain employees in the form of Great Elm Capital Corp. (GECC) common shares, restricted membership interest rights in Monomoy REIT and Monomoy Properties II, LLC (MP II) to be settled with GECC common shares, Monomoy REIT and MP II restricted membership interest rights currently held by the Company, respectively. These awards generally have a three to
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common stock, among other conditions for equity classification. The warrants issued as part of Securities Purchase Agreement with Woodstead Value Fund LP are classified as equity under these conditions. The Company estimated the fair value of the Warrants using the Black-Scholes option pricing model on the grant date. See Note 20 - Equity transactions for further information.
Net Realized and Unrealized Gains/(Losses) on Investments
Realized gains (losses) may occur when the Company redeems all or a portion of its investment, when the Company receives dividends or distributions, or at the end of an investment’s life. Unrealized appreciation (depreciation) results from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized appreciation (depreciation) at the time an investment is realized. Realized and unrealized gains (losses) are presented together as net realized and unrealized gains on investments within the consolidated statements of operations.
F-14
Interest and Dividend Income
Interest and dividends are included within interest and dividend income. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected. Dividends are recorded when the right to receive payment is established.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary, in order to reduce deferred tax assets to the amounts more likely than not to be recovered.
The Company has established a valuation allowance for its deferred tax assets that are not recoverable from taxable temporary differences because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other deferred tax assets is more likely than not.
The calculation of the Company’s tax positions involves dealing with uncertainties in the application of complex tax regulations for federal and several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. GAAP provides guidance on the accounting for and disclosure of uncertainty in tax positions and requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more likely than not" of being sustained by the applicable taxing authority. The Company recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In making these assessments, the Company determines the accounting recognition based on the technical merits of the position and consults with external tax experts as appropriate. The Company does not recognize income tax benefits for positions that it takes on its income tax returns that do not meet the more likely than not standard on its technical merits. The Company’s accounting policy is to classify interest and related charges as a component of income tax expense.
Business Combinations
Business combinations are accounted for at fair value. Acquisition costs incurred in connection with a business combination are expensed as incurred. Measurement period adjustments are made in the period in which the amounts are determined up to one year after the acquisition date and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration if applicable, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets, or the recognition of additional consideration which would be expensed.
F-15
Earnings (loss) per share
The Company calculates basic and diluted earnings (loss) per share by dividing net income (loss) by its shares outstanding as outlined below. Basic earnings (loss) per share attributable to the Company’s stockholders is calculated by dividing “Net income (loss) attributable to controlling interests” by the weighted-average number of shares outstanding. Options, warrants, unvested share-based payment awards and convertible notes are excluded from the basic earnings (loss) per share calculation. Contingently issuable shares are included in the basic earnings (loss) per share only if all necessary conditions for issuance of such shares have been satisfied by the end of the period. Diluted earnings (loss) per share is similar to basic earnings (loss) per share, adjusted for the effect of potential shares of common stock unless they are antidilutive. For periods with a net loss, potential shares of common stock are considered antidilutive.
The Company considers two ways to measure dilution to earnings (loss) per share: (a) calculate the net number of shares that would be issued assuming any related proceeds are used to buy back outstanding shares (the treasury stock method), or (b) assume the gross number of shares are issued and calculate any related effects on net income (loss) available for stockholders (the if-converted or two-class method). As appropriate, the Company’s policy is to apply the more dilutive methodology upon issuance of such instruments.
Segment Reporting
The Company currently operates as
Concentration of Risk
The Company’s revenues are primarily attributable to the management of GECC and Monomoy UpREIT, LLC (Monomoy UpREIT) investment vehicles. See Note 5 - Related Party Transactions.
Recently Adopted Accounting Standards
Income Taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company
Recently Issued Accounting Standards
Income Statement. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to expand the disclosure requirements for certain costs and expenses. In January 2025, FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03 as periods beginning after December 15, 2026 for annual reporting, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of these ASUs will have on its consolidated financial statements.
Debt. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt - Debt with Conversion and Other Options. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of the annual reporting period for all entities that have adopted the amendments in Update 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The Company is evaluating the potential impact that the adoption of this ASU will have on its consolidated financial statements.
F-16
Interim Reporting. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) to improve the navigability of the guidance in ASC 270 and clarify when it applies. The amendments in this ASU are effective for public business entities for interim reporting periods within annual reporting periods beginning after December 31, 2027. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of this ASU will have on its consolidated financial statements and related disclosures.
The Company has considered all other newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the consolidated financial statements, including those that have not yet been adopted. The Company does not believe that any such guidance has or will have a material effect on its consolidated financial statements and related disclosures.
3. Acquisition
On
The aggregate cash purchase price was approximately $
The Company has made a preliminary estimate of the allocation of the purchase price of Greenfield to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as follows:
(in thousands) |
|
June 30, 2026 |
|
|
Goodwill |
|
$ |
|
|
Intangible assets: |
|
|
|
|
Customer related |
|
|
|
|
Licenses |
|
|
|
|
|
|
$ |
|
|
The excess of the purchase price over the estimated fair values of the net assets acquired, including identifiable intangible assets, is recorded as goodwill. Goodwill is primarily attributable to the assembled workforce and expected synergies from combining operations and is expected to be tax deductible.
The intangible assets acquired include customer-related intangibles and general contractor licenses, each with a weighted average estimated useful life of
F-17
4. Revenue
The Company's revenues are summarized in the following table:
|
For the twelve months ended June 30, |
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|||||
(in thousands) |
2026 |
|
|
2025 |
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||
Alternative Credit: |
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|
|
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||
Management fees |
$ |
|
|
$ |
|
||
Incentive fees |
|
|
|
|
|
||
Administration and service fees |
|
|
|
|
|
||
Total Alternative Credit revenues |
$ |
|
|
$ |
|
||
|
|
|
|
|
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||
Real Estate: |
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|
|
|
|
||
Management fees |
$ |
|
|
$ |
|
||
Property management fees |
|
|
|
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|
||
Administration and service fees |
|
|
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Real estate property sales |
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Project management fees |
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Real estate rental income |
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Total Real Estate revenues |
$ |
|
|
$ |
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||
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|
|
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||
Total revenues |
$ |
|
|
$ |
|
||
The Company recognizes revenue at amounts that reflect the consideration to which it expects to be entitled in exchange for providing services to its customers under agreements with each investment product, which may be terminated at any time by either party subject to the specific terms of each respective investment management agreement.
Management Fees
The Company earns management fees based on the investment management agreements between MCRE and Monomoy UpREIT as well as between GECM and GECC, and other private funds (collectively, the Funds). The performance obligation is satisfied and management fee revenue is recognized over time as the services are rendered, since the Funds simultaneously receive and consume the benefits provided as GECM and MCRE perform services. Management fee rates range from
Incentive Fees
The Company earns incentive fees based on the investment management agreements GECM has with GECC and other private funds managed by GECM, and MCRE has with MP II, a feeder fund Monomoy REIT. Where an investment management agreement includes both management fees and incentive fees, the performance obligation is considered to be a single obligation for both fees. Incentive fees are variable consideration associated with the investment management agreements recognized when the contractual performance criteria have been met and when it is determined that they are no longer probable of significant reversal. Each of the contracts with customers are evaluated on an individual basis to determine the timing of revenue recognition. Incentive fees typically arise from investment management services that began in prior reporting periods. Incentive fees are earned based on investment performance during the period, subject to the achievement of minimum return levels or high-water marks, in accordance with the terms of the respective investment management agreements. Incentive fees are typically
F-18
Administration and Service Fees
The Company earns administration fees based on the administration agreement GECM has with GECC whereby GECC reimburses GECM for costs incurred in performing certain administrative functions. In addition, the Company earns service fees based on the management agreement MCRE has with Monomoy UpREIT. This revenue is recognized over time as the services are performed. Administration fees are billed quarterly in arrears, which is consistent with the timing of the delivery of services and reflect agreed upon rates for the services provided. The services are accounted for as a single performance obligation for each investment vehicle that is a series of distinct services with substantially the same pattern of transfer as the services are provided on a daily basis. The Company presents administration and services fees and related costs incurred in performing these functions on a gross basis.
The Company also earns services fees based on a shared services agreement with Imperial Capital Asset Management, LLC (ICAM). This revenue is recognized over time as the services are performed. Service fees are billed quarterly in arrears, which is consistent with the timing of the delivery of services and reflects agreed-upon rates for the services provided. The services are accounted for as a single performance obligation that is a series of distinct services with substantially the same pattern of transfer as the services are provided on a daily basis.
Property Management Fees
Under the Monomoy UpREIT property management agreement, MCRE is entitled to
Real estate property sales
Real estate property sales occur periodically when development projects are completed and there is a sales contract with a customer for the real estate property. The performance obligation is real estate development activities that are performed together and deliver a real estate property to a customer. Sales revenue and cost of revenues are recognized when or as control of the asset is transferred to the buyer and the performance obligation is satisfied. The control of the asset may transfer over time or at a point in time depending on when the transfer of control of the real estate property occurs and the completion status of the real estate development activities on that date. See Note 10 - Real Estate for additional information regarding real estate under development.
Project Management Fees
MCM, a wholly owned subsidiary of MCRE, has entered into an owner’s representative agreement with respect to certain third party construction projects and earns project management fees for its services. MCS, a wholly-owned subsidiary of GEG, earns fees and is reimbursed certain expenses for providing construction management services. The performance obligation is satisfied, and project management fee revenue is recognized over time as the services are rendered. Given the project management fees are delivered during the construction period, recognition over time is determined using the percentage of completion method, which is based on construction costs incurred of the project relative to the total contractual costs. The Company presents the project management fees and associated costs related to such construction projects on a net basis as it is deemed to be the agent in the arrangement.
Real Estate Rental Income
The Company recognizes rental revenue in accordance with ASC 842, Leases, on a straight-line basis over the non-cancelable term of the lease. Under the terms of the lease, the Company may recover from the tenant certain expenses, including real estate taxes and other operating expenses. The recovery of these expenses is recognized in rental income in the accompanying consolidated statements of operations, in the same periods as the expenses are incurred. These expenses recognized in both revenue and expense may fluctuate from period to period based on actual expense amounts.
5. Related Party Transactions
Related party transactions are measured in part by the amount of consideration paid or received as established and agreed by the parties. Consideration paid for such services in each case is the negotiated value.
F-19
The following tables summarize activity and outstanding balances between the managed investment products and the Company:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net realized and unrealized (loss) gain on investments |
|
$ |
( |
) |
|
$ |
|
|
Net realized and unrealized (loss) gain on investments of Consolidated Funds |
|
|
( |
) |
|
|
|
|
Dividend income |
|
|
|
|
|
|
||
Interest income |
|
|
|
|
|
|
||
See Note 4 - Revenue for additional discussion of fees earned from managed investment products.
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Dividends receivable |
|
$ |
|
|
$ |
|
||
Investment management revenues receivable |
|
|
|
|
|
|
||
Administration and service fee receivable |
|
|
|
|
|
|
||
Receivable for reimbursable expenses paid |
|
|
|
|
|
|
||
Receivable for real estate property development |
|
|
|
|
|
|
||
Receivables from managed funds |
|
$ |
|
|
$ |
|
||
Investment Management
GECM has agreements to manage the investment portfolios for GECC and other investment products, as well as to provide administrative services. MCRE has agreements with Monomoy UpREIT to receive management fees based on the managed assets (other than cash and cash equivalents) and rent collected, incentive fees based on the performance of those assets, and administration and service fees. See Note 4 - Revenue for additional discussions of the fee arrangements.
Investments
As of June 30, 2026, the Company owns
The Company receives dividends from its investments in GECC, MP II, Monomoy REIT and Monomoy UpREIT and earns unrealized gains and losses based on the mark-to-market performance of those investments. See Note 6 - Fair Value Measurements.
In February 2024, the Company invested $
In June 2024, the Company invested $
In December 2024, the Company invested $
The investments in GESP, PPH and SGP are classified as Level 3 assets, as discussed in Note 6 - Fair Value Measurements.
F-20
Other Transactions
GECM has shared personnel and reimbursement agreements for back-office personnel with ICAM. Jason W. Reese, the Chief Executive Officer and Chairman of the Company’s Board of Directors, is the Chief Executive Officer of ICAM. Certain costs incurred under these agreements relate to human resources and other administrative services provided by ICAM employees, for the benefit of the Company and its subsidiaries, and are included in compensation and benefits and selling, general and administrative expenses in the consolidated statements of operations. For the years ended June 30, 2026 and 2025 such costs were $
On October 29, 2024, the Company and Mr. Reese entered into a voting waiver agreement (the Voting Waiver Agreement), pursuant to which Mr. Reese waived all voting rights associated with all outstanding shares (whether vested or unvested) of the Company’s common stock for voting purposes that have been granted or awarded, and all future shares of the Company’s common stock that may be granted or awarded, directly to Mr. Reese in his individual capacity by the Company in connection with his services as an officer, director or employee of the Company or its subsidiaries during the term of the Voting Waiver Agreement.
In May 2025, GECC and GECM entered into an equity distribution agreement with an investment bank (the Agent), under which the GECC may issue and sell through the Agent, from time to time, shares of its common stock. Such sales are made by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The sales price per share of the common stock sold in the offering, less the Agent’s commission, will not be less than the NAV per share of the common stock at the time of such sale. Consistent with the terms of the equity distribution agreement, GECM or an affiliate of GECM may, from time to time and in their sole discretion, contribute proceeds necessary to ensure that no sales are made at a price below the then-current NAV per share. During the year ended June 30, 2026, GECM contributed approximately $
See Note 14 - Convertible Notes for details on the Convertible Notes issued to related parties.
In January 2025, the Company issued a promissory note to Monomoy REIT for up to $
The Company’s subsidiaries may from time to time make payments to vendors that are related parties, including payments to procure construction supplies. The total purchases from vendors that are related parties were $
6. Fair Value Measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
F-21
GAAP provides a framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:
All financial assets or liabilities that are measured at fair value on a recurring and non-recurring basis have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.
The valuation techniques applied to investments held by the Company and by the Consolidated Fund (as defined below) vary depending on the nature of the investment. The financial assets and liabilities of the Consolidated Funds are presented in Note 7 - Variable Interest Entities.
Equity and equity-related securities
Securities traded on a national securities exchange are stated at the close price on the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level 1.
Equity investments that do not have readily-available market prices utilize valuation models or recent transactions to determine fair value and are classified as Level 3. As of June 30, 2026, the Company had equity investments in three special purpose vehicles that were valued using a discounted cash flows model with discount rates ranging from
Debt securities
Bank loans, corporate debt and other debt obligations traded on a national exchange are valued based on quoted market prices and classified as Level 2. Debt investments that are not actively traded are generally based on discounted cash flows and classified as Level 3. See Note 7 - Variable Interest Entities.
Investments in private funds
The Company values investments in private funds using NAV as reported by each fund’s investment manager. The private funds calculate NAV in a manner consistent with the measurement principles of FASB ASC Topic 946, Financial Services – Investment Companies, as of the valuation date. Investments valued using NAV as a practical expedient are not categorized within the fair value hierarchy.
As of June 30, 2026 and June 30, 2025, investments in private funds include investments in Monomoy UpREIT, Monomoy REIT and MP II, each of which are managed by wholly-owned subsidiaries of the Company, in addition to private funds managed by third-party investment managers. During the three months ended December 31, 2024, $
F-22
Contingent consideration
In conjunction with the acquisition of the Monomoy UpREIT investment and property management agreements in May 2022, the Company entered into a contingent consideration agreement that required the Company to pay up to $
See Note 13 - Long-Term Debt for additional discussion related to the fair value of our notes payable and other long-term debt. The carrying value of all other financial assets and liabilities approximate their fair values.
Investments at Fair Value, held by the Company
As of June 30, 2026 and 2025 the Company's cost of investments was $
The assets and liabilities measured at fair value on a recurring basis which are held by the Company are summarized in the tables below:
|
|
Fair Value as of June 3 |
|
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Total assets within the fair value hierarchy |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Investments valued at net asset value |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||
Total assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Fair Value as of June 30, 2025 |
|
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Total assets within the fair value hierarchy |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Investments valued at net asset value |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||
Total assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||
There were
The following is a reconciliation of changes in Level 3 assets:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Purchases |
|
|
|
|
|
|
||
Payments |
|
|
|
|
|
|
||
Change in fair value |
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
|
|
$ |
|
||
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date |
|
$ |
( |
) |
|
$ |
|
|
F-23
The following is a reconciliation of changes in Level 3 liabilities:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Payments |
|
|
|
|
|
( |
) |
|
Change in fair value |
|
|
|
|
|
( |
) |
|
Ending balance |
|
$ |
|
|
$ |
|
||
The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.
7. Variable Interest Entities
Through its wholly-owned subsidiaries GECM, MCRE and GEO GP, the Company serves as the investment manager, general partner, or managing member of certain private funds, in which it may also have a direct investment. For funds which are determined to be VIEs and where it is determined that the Company is the primary beneficiary, the criteria for consolidation are met. The Company monitors such funds and related criteria for consolidation on an ongoing basis. Funds that have historically been consolidated will be deconsolidated when the Company is no longer deemed to be the primary beneficiary and will then be treated as equity method investments.
The Company retains the specialized investment company accounting guidance under US GAAP with respect to the consolidated funds (collectively, the Consolidated Funds). As such, investments of the Consolidated Funds are included in the consolidated balance sheets at fair value and the net realized and unrealized gains or losses on those investments are included as a component of non-operating income on the consolidated statements of operations. Redeemable non-controlling interest in the Consolidated Funds is included in net (loss) income attributable to non-controlling interest in Consolidated Funds. The Company's risk with respect to the Consolidated Funds is limited to its beneficial interests in these funds. The assets of Consolidated Funds are not available to creditors of the Company. The creditors of Consolidated Funds do not have recourse to the Company other than to the assets of the respective Consolidated Funds.
The Company holds investments in certain funds that are VIEs but the Company is not deemed to be the primary beneficiary. Such investments are treated as equity method investments and the Company has elected the fair value option using NAV as a practical expedient with all changes in fair value reported in net realized and unrealized gain (loss) on investments on the consolidated statements of operations. The Company's maximum exposure to loss related to the VIEs that the Company is not deemed to be the primary beneficiary is limited to the fair value of its investments in these entities.
See Note 2 - Summary of Significant Accounting Policies for additional details.
Investments at Fair Value, Consolidated Funds
The assets of the Consolidated Funds measured at fair value on a recurring basis are summarized in the tables below:
|
|
Fair Value as of June 30, 2026 |
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets of Consolidated Funds: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets within the fair value hierarchy |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investments valued at net asset value |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Total assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
F-24
|
|
Fair Value as of June 30, 2025 |
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets of Consolidated Funds: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets within the fair value hierarchy |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investments valued at net asset value |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Total assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
The following is a reconciliation of changes in fair value of Level 3 assets of Consolidated Funds:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Transfers In(1) |
|
|
|
|
|
|
||
Transfers Out(1) |
|
|
( |
) |
|
|
( |
) |
Purchases |
|
|
|
|
|
|
||
Sales and Paydowns |
|
|
( |
) |
|
|
( |
) |
Net Accretion |
|
|
|
|
|
|
||
Change in fair value |
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
|
|
$ |
|
||
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date |
|
$ |
( |
) |
|
$ |
|
|
(1)
The following table below presents the ranges of significant unobservable inputs used to value Level 3 assets as of June 30, 2026 and June 30, 2025.
As of June 30, 2026 |
||||||||||
Investment Type |
|
Fair value |
|
|
Valuation Technique |
|
Unobservable Input |
|
Range (Weighted Average) |
|
Debt |
|
$ |
|
|
Income Approach |
|
Discount Rate |
|
||
Total Debt |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity/Other |
|
|
|
|
Market Approach |
|
Earnings Multiple |
|
||
Total Equity/Other |
|
$ |
|
|
|
|
|
|
|
|
As of June 30, 2025 |
||||||||||
Investment Type |
|
Fair value |
|
|
Valuation Technique |
|
Unobservable Input |
|
Range (Weighted Average) |
|
Debt |
|
$ |
|
|
Income Approach |
|
Discount Rate |
|
||
|
|
|
|
|
Recent Transaction |
|
|
|
|
|
Total Debt |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity/Other |
|
|
|
|
Recent Transaction |
|
|
|
|
|
Total Equity/Other |
|
$ |
|
|
|
|
|
|
|
|
F-25
8. Segment Reporting
During the first quarter of fiscal 2026, in conjunction with the equity transaction entered into with KLIM and the formation of REV (see Note 20 - Equity Transactions), the Company realigned the information that the CODM regularly reviews to evaluate performance for operating decision-making purposes, including performance assessment and allocation of resources. As a result of this change in segment reporting (see Note 1 - Organization), the Company retrospectively recast prior period results, by segment, to conform to the current period presentation. This structure includes
As a result of the change noted above, effective for the quarter ended September 30, 2025, the Company began reporting the following business segments:
The Company has a corporate office that is included in “Corporate & Other”. The corporate office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance and human resources.
Our CODM is our Chief Executive Officer and Chairman of the Company’s Board of Directors, Jason W. Reese.
The following table provides the operating financial results of our operating segments for the year ended June 30, 2026:
|
For the twelve months ended June 30, 2026 |
|
|||||||||||||||||
(in thousands) |
Alternative Credit |
|
|
Real Estate |
|
|
Total Segments |
|
|
Corporate & Other |
|
|
Total |
|
|||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-operating income/(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Dividends and interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net realized and unrealized loss |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net realized and unrealized loss on investments of Consolidated Funds |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Interest and other income of Consolidated Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss before income taxes |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax (expense) benefit |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Net loss |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
F-26
|
For the twelve months ended June 30, 2025 |
|
|||||||||||||||||
(in thousands) |
Alternative Credit |
|
|
Real Estate |
|
|
Total Segments |
|
|
Corporate & Other |
|
|
Total |
|
|||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-operating income/(expenses): |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Dividends and interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net realized and unrealized gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized and unrealized gain on investments of Consolidated Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest and other income of Consolidated Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Net income (loss) |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Selling, general and administrative includes expenses such as insurance, rent, professional fees and other expenses, along with expenses of the Consolidated Funds.
9. Identifiable Intangible Assets, Net
The following table is a summary of the Company’s intangible assets as of June 30, 2026 and 2025:
|
|
As of June 30, 2026 |
|
|
As of June 30, 2025 |
|
||||||||||||||||||
(in thousands) |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
||||||
Investment management agreements |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Assembled workforce |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Customer related |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Licenses |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Identifiable intangible assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
During the years ended June 30, 2026 and 2025, the Company recorded amortization expense of $
The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter:
(in thousands) |
|
Estimated Future Amortization Expense |
|
|
For the year ending June 30, 2027 |
|
|
|
|
For the year ending June 30, 2028 |
|
|
|
|
For the year ending June 30, 2029 |
|
|
|
|
For the year ending June 30, 2030 |
|
|
|
|
For the year ending June 30, 2031 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
F-27
10. Real Estate
As part of its build-to-suit development initiatives, MBTS purchases certain land parcels. Contemporaneously with the land purchases, MBTS enters into commercial lease agreements, as a lessor, in respect to the land parcels and build-to-suit improvements to be constructed thereon. The leases commence upon substantial completion of the build-to-suit developments. The Company intends to sell the land and improvements with the attached leases at, or subsequent to, the respective lease commencement date.
On June 18, 2024, MBTS sold one of its developments for consideration totaling $
In December 2024, a development was completed and the lease commenced. In September 2025, the Company completed the sale of this property for consideration totaling $
During the years ended June 30, 2026 and 2025, the Company capitalized costs of $
11. Lessee Operating Leases
The Company leases office spaces in Boston, Massachusetts and Charleston, South Carolina under operating leases. Through December 2024, the Company also leased office space in Waltham, Massachusetts.
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Variable lease cost |
|
|
|
|
|
|
||
Cash paid for operating leases |
|
|
|
|
|
|
||
The following table provides details on the leases presented in the consolidated balance sheets as of June 30, 2026 and 2025:
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Weighted-average remaining life |
|
|
|
|
||||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
F-28
The following table provides a maturity analysis of the Company's operating lease liabilities as of June 30, 2026:
(in thousands) |
|
June 30, 2026 |
|
|
For the year ending June 30, 2027 |
|
|
|
|
For the year ending June 30, 2028 |
|
|
|
|
For the year ending June 30, 2029 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
$ |
|
|
Imputed interest |
|
|
( |
) |
Total lease liabilities |
|
$ |
|
|
In March 2026, the Company signed a new office lease which commenced in
12. Accrued Expenses and Other Current Liabilities
As of June 30, 2026 and 2025, accrued expenses and other current liabilities consisted of the following:
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Payroll and other employee-related costs |
|
$ |
|
|
$ |
|
||
Construction business expenses |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
13. Long-Term Debt
On June 9, 2022, we issued $
The Company’s long-term debt is summarized in the following table:
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
GEGGL Notes |
|
$ |
|
|
$ |
|
||
Total principal |
|
$ |
|
|
$ |
|
||
Unamortized debt discounts and issuance costs |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
|
|
|
|
|
||
Deferred financing costs are amortized to interest expense on a straight-line basis over the
F-29
The GEGGL Notes include covenants that limit additional indebtedness or the payment of dividends subject to compliance with a net consolidated debt to equity ratio of
14. Convertible Notes
On February 26, 2020,
As of June 30, 2026, the total principal balance of Convertible Notes outstanding was $
In addition, a third party noteholder, PC Elfun, LLC (PC Elfun), was issued $
The Company may, subject to compliance with the terms of the Convertible Notes, effect the conversion of some or all of the Convertible Notes into shares of common stock, subject to certain liquidity and pricing requirements, as specified in the Convertible Notes.
The embedded conversion feature in the Convertible Notes qualifies for the scope exception to derivative accounting in FASB ASC Topic 815, Derivatives and Hedging, for certain contracts involving a reporting entity’s own equity. The Company incurred $
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Convertible Notes principal |
|
$ |
|
|
$ |
|
||
Unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Convertible Notes |
|
|
|
|
|
|
||
F-30
The Company incurred interest expense of $
15. Earnings per Share
The following table presents the calculation of basic and diluted net income (loss) per share:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands except per share amounts) |
|
2026 |
|
|
2025 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net (loss) income attributable to Great Elm Group, Inc. stockholders |
|
$ |
( |
) |
|
$ |
|
|
Effect of dilutive securities: |
|
|
|
|
|
|
||
Interest expense associated with Convertible Notes |
|
|
|
|
|
|
||
Numerator for diluted EPS - Net (loss) income attributable to Great Elm Group, Inc. stockholders after the effect of dilutive securities |
|
$ |
( |
) |
|
$ |
|
|
Denominator: |
|
|
|
|
|
|
||
Denominator for basic EPS - Weighted average shares of common stock outstanding |
|
|
|
|
|
|
||
Effect of dilutive securities: |
|
|
|
|
|
|
||
Restricted stock |
|
|
|
|
|
|
||
Convertible Notes |
|
|
|
|
|
|
||
Denominator for diluted EPS - Weighted average shares of common stock outstanding after the effect of dilutive securities |
|
|
|
|
|
|
||
Net (loss) income attributable to stockholders per share |
|
|
|
|
|
|
||
Basic |
|
$ |
( |
) |
|
$ |
|
|
Diluted |
|
|
( |
) |
|
|
|
|
The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive.
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Restricted stock |
|
|
|
|
|
|
||
Convertible Notes |
|
|
|
|
|
|
||
Total Anti-Dilutive Securities |
|
|
|
|
|
|
||
16. Non-Controlling Interests
Non-Controlling Interests
Holders of non-controlling interests in a subsidiary of the Company hold certain rights, which result in the classification of the securities as either liability, temporary equity, or permanent equity. The following table summarizes the non-controlling interest balances on the consolidated balance sheets:
(in thousands) |
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||
Consolidated Funds |
|
|
|
|
|
|
||
Permanent equity |
|
|
|
|
|
|
||
Total non-controlling interests |
|
$ |
|
|
$ |
|
||
F-31
The following table summarizes the net income (loss) attributable to the non-controlling interests on the consolidated statements of operations:
|
|
For the twelve months ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Consolidated Funds |
|
|
|
|
|
|
||
Permanent equity |
|
|
( |
) |
|
|
|
|
Net loss attributable to non-controlling interest |
|
$ |
( |
) |
|
$ |
|
|
Consolidated Fund – Non-controlling interest classified as permanent equity
17. Share-Based and Other Non-Cash Compensation
Tax Benefits Preservation Agreement
On December 29, 2020, the Board of Directors of the Company adopted a Tax Benefits Preservation Agreement, between the Company and Computershare Trust Company, N.A., as Rights Agent (the Rights Plan). The Rights Plan is designed to reduce the possibility that certain changes in ownership could result in limitations on the use of the tax attributes, by restricting the ability of a person or entity from acquiring ownership (including through attribution under the tax law) of
Pursuant to the terms of the Rights Plan, the Company’s Board of Directors declared a dividend distribution of
The Tax Rights are not exercisable until the Distribution Date and will expire at the earlier of (a) January 29, 2028; (b) the time when the Tax Rights are redeemed as provided therein; (c) the time when the Rights are exchanged as provided therein; (d) the repeal of Section 382 of the Code if the Independent Directors (as defined in the Rights Plan) determine that the Rights Plan is no longer necessary for the preservation of Tax Benefits (as defined in the Rights Planet); (e) the beginning of the taxable year of the Company to which the Company’s Board of Directors determines that no Tax Benefits may be carried forward, unless previously redeemed or exchanged by the Company.
Stock Plans
In June 2016, the Company’s stockholders approved the Great Elm Group, Inc. 2016 Long-Term Incentive Plan (the 2016 Long-Term Incentive Plan), as subsequently amended, and the Great Elm Group, Inc. 2016 Employee Stock Purchase Plan (the 2016 Employee Stock Purchase Plan). In November 2022, the Company’s stockholders approved an increase to the number of shares available for issuance under the 2016 Long-Term Incentive Plan by
F-32
The following table summarizes the number of common shares available for future issuance under the plans discussed above as of June 30, 2026:
Shares of Common Stock Available for Future Issuance |
|
Shares |
|
|
2016 Long-Term Incentive Plan |
|
|
|
|
2016 Employee Stock Purchase Plan |
|
|
|
|
2025 Long-Term Incentive Plan |
|
|
|
|
Total |
|
|
|
|
Restricted Stock Awards and Restricted Stock Units
The following table presents activity related to the Company’s restricted stock awards and restricted stock units for the year ended June 30, 2026:
Restricted Stock Awards and Restricted Stock Units |
|
Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Outstanding at June 30, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding at June 30, 2026 |
|
|
|
|
$ |
|
||
Restricted stock awards and restricted stock units have vesting terms between
Stock Options
The following table presents activity related to the Company’s stock options for the year ended June 30, 2026:
Stock Options |
|
Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding at June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
- |
|
|||
Forfeited, cancelled or expired |
|
|
( |
) |
|
|
|
|
|
- |
|
|
|
- |
|
|
Outstanding at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
- |
|
|||
Exercisable at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
- |
|
|||
There were
Stock-Based Compensation Expense
Stock-based compensation expense related to all restricted stock awards, restricted stock units, and stock options totaled $
F-33
Non-Employee Director Deferred Compensation Plan
In December 2020, the Company established the Great Elm Group, Inc. Non-Employee Directors Deferred Compensation Plan allowing non-employee directors to defer their cash and/or equity compensation under a non-revocable election for each calendar year. Such compensation is deferred until the earlier of
Other Non-Cash Compensation
During the years ended June 30, 2026 and June 30, 2025, the Company issued compensation to certain employees in the form of GECC common shares to be settled with GECC shares currently held by the Company. The total value of GECC shares awarded for the year ended June 30, 2026 was $
During the years ended June 30, 2026 and June 30, 2025, the Company issued compensation to certain employees in the form of restricted membership interest rights in MP II to be settled with the membership interest currently held by the Company. The total value of the MP II restricted membership interests awarded for the year ended June 30, 2026 was $
During the year ended June 30, 2025, the Company issued compensation to certain employees in the form of restricted membership interest rights in Monomoy REIT to be settled with the membership interest currently held by the Company. The total value of the Monomoy REIT restricted membership interests awarded for the year ended June 30, 2025 was $
18. Income Taxes
The Company had income (loss) before income taxes of $(
The provision for income taxes includes the following:
|
|
For the years ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Current |
|
$ |
( |
) |
|
$ |
( |
) |
Deferred |
|
|
( |
) |
|
|
|
|
Income tax (benefit) expense |
|
$ |
( |
) |
|
$ |
|
|
The Company recognized an income tax benefit of $
F-34
The following table reconciles the expected corporate federal income tax benefit, computed by multiplying the Company's income (loss) before income taxes by the statutory tax rate of
|
|
For the year ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|||||
US federal statutory income tax benefit |
|
$ |
( |
) |
|
|
% |
|
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Compensation |
|
|
|
|
|
- |
% |
|
Other |
|
|
|
|
|
% |
||
Cross-border tax effects |
|
|
|
|
|
- |
% |
|
Other reconciling items |
|
|
|
|
|
|
||
Investment in partnerships |
|
|
( |
) |
|
|
% |
|
Passthrough investment in REV |
|
|
|
|
|
- |
% |
|
Other |
|
|
( |
) |
|
|
% |
|
Change in valuation allowance |
|
|
|
|
|
- |
% |
|
State taxes net of federal impact |
|
|
|
|
|
- |
% |
|
Changes in uncertain tax benefits |
|
|
( |
) |
|
|
% |
|
Income tax benefit |
|
$ |
( |
) |
|
|
% |
|
The following table reconciles the expected corporate federal income tax expense, computed by multiplying the Company's income (loss) before income taxes by the statutory tax rate of
|
|
For the year ended June 30, |
|
|
(in thousands) |
|
2025 |
|
|
Federal tax expense (benefit) at statutory rate |
|
$ |
|
|
Change in valuation allowance |
|
|
( |
) |
State taxes net of federal impact |
|
|
|
|
Provision to return and other deferred tax |
|
|
( |
) |
Net operating loss and credit expirations |
|
|
|
|
Other |
|
|
|
|
Income tax expense |
|
$ |
|
|
|
|
As of June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Deferred Tax Assets: |
|
|
|
|
|
|
||
Net operating loss carryforwards |
|
$ |
|
|
$ |
|
||
Accruals and allowances not deductible for tax purposes |
|
|
|
|
|
|
||
Identifiable intangible assets |
|
|
|
|
|
|
||
Stock based and accrued compensation |
|
|
|
|
|
|
||
Unrealized loss on investments |
|
|
|
|
|
|
||
Investment in partnerships |
|
|
|
|
|
|
||
Interest expense carryforward |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred tax assets, gross |
|
$ |
|
|
$ |
|
||
Less: valuation allowance |
|
$ |
( |
) |
|
$ |
( |
) |
Total deferred tax assets, net |
|
$ |
|
|
$ |
|
||
Deferred Tax Liabilities: |
|
|
|
|
|
|
||
Unrealized gain on investment |
|
|
|
|
|
( |
) |
|
Other |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liabilities, gross |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Total deferred tax liabilities, net |
|
$ |
( |
) |
|
$ |
( |
) |
F-35
In light of the history of cumulative operating losses, the Company recorded a valuation allowance for all of its federal and state deferred tax assets, as it is presently unable to conclude that it is more likely than not that the federal and state deferred tax assets in excess of deferred tax liabilities will be realized. For the year ended June 30, 2026 the Company reflects a deferred tax liability in the amount of $
As of June 30, 2026, the Company had net operating loss (NOL) carryforwards for federal income tax purposes of approximately $
During the years ended June 30, 2026 and 2025, the total amount of gross unrecognized tax benefit activity was as follows:
(in thousands) |
|
|
|
|
Balance as of June 30, 2024 |
|
$ |
|
|
Lapse of statute of limitations |
|
|
( |
) |
Balance as of June 30, 2025 |
|
$ |
|
|
Lapse of statute of limitations |
|
|
( |
) |
Balance as of June 30, 2026 |
|
$ |
|
|
The Company’s policy is to include interest and penalties related to unrecognized tax benefits in tax expense on the Company’s consolidated statements of operations. As of June 30, 2026, the Company had
The Company files income tax returns in accordance with the tax laws of the jurisdictions in which it operates. Federal and state income tax returns are generally subject to examination for tax years ended June 30, 2022 through the present. To the extent the Company has tax attribute carryforwards, the tax years in which those attributes were generated may remain subject to adjustment upon examination by the Internal Revenue Service (IRS), with the exception of fiscal years 2009 and 2010, for which IRS examinations have been completed, or by state tax authorities, to the extent such attributes are utilized in a future period. The Company is not currently under examination by any tax authorities.
F-36
19. Commitments and Contingencies
From time to time, the Company is involved in lawsuits, claims, investigations and proceedings that arise in the ordinary course of business. The Company maintains insurance to mitigate losses related to certain risks. The Company is not a named party in any other pending or threatened litigation that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.
20. Equity Transactions
On July 31, 2025, the Company entered into a Stock Purchase Agreement (the Stock Purchase Agreement) with certain funds affiliated with KLIM, a Delaware limited liability company (such funds, the Purchasers), pursuant to which the Purchasers purchased, and the Company issued,
Profits Interest Agreement
In connection with the transaction described above, the Company formed a new holding company for its real estate business, REV, a Delaware limited liability company. The Company is the sole member of REV and owns all of its equity interests, including its preferred equity pursuant to which it is entitled to a cumulative preferred distribution of
Securities Purchase Agreement
On August 27, 2025, the Company entered into a Securities Purchase Agreement (the Securities Purchase Agreement) with Woodstead Value Fund LP, a Texas limited partnership (Woodstead), pursuant to which the Woodstead purchased, and the Company issued,
F-37
Warrants
Pursuant to the Securities Purchase Agreement, the Company also issued to Woodstead (i) a warrant to buy
The Series A Warrants are exercisable at any time on or after the
The Warrants include certain limited anti-dilution adjustments.
The Company determined the Warrants met the conditions for equity classification in accordance with U.S. GAAP and were included as a component of stockholders’ equity (deficit). The Company estimated the fair value of the Warrants using the Black-Scholes option pricing model on the grant date. The Warrants were valued at $
21. Subsequent Events
In July 2026, MBTS closed on a $
F-38