Financial Data and Key Metrics Changes - Fiscal 2025 was a record year for the company, with net income from continuing operations reaching $15.7 million in the fourth quarter, a significant improvement from a net loss of $0.6 million in the prior year period [20][4] - Book value per share increased by approximately 24% year over year to $2.65 as of June 30, with a pro forma book value of $2.58 after recent capital raises [7][21] - Revenue for the fourth quarter was $5.6 million, compared to $8.9 million in the prior year, but excluding a one-time property sale, revenue grew over 140% year over year [19][7] Business Line Data and Key Metrics Changes - The credit business, GECC, generated record investment income and incentive fees, with net investment income exceeding quarterly distributions, supporting a 6% increase in dividends to $0.37 per share [10][4] - Monomoy Construction Services (MCS) launched in February and contributed nearly $1 million in revenue in its initial months, with expectations to more than double its revenue in fiscal 2026 [12][5] - The Great Elm Credit Income Fund posted net returns of 21% for the six months ended June 30, driven by unrealized appreciation in CoreWeave-related investments [11][20] Market Data and Key Metrics Changes - Assets under management in fee-paying AUM totaled approximately $759 million, up 4% from the prior year [19] - The company closed the year with $31 million in cash, which is expected to exceed $40 million on a pro forma basis after recent capital raises [8][21] Company Strategy and Development Direction - The company entered a strategic partnership with Kennedy Lewis Investment Management, which includes a $100 million term loan to Monomoy REIT and a commitment of up to $150 million to accelerate real estate platform growth [15][16] - The launch of MCS is part of a broader strategy to create a fully integrated real estate platform, enhancing development timelines and tenant relationships [12][5] - The company aims to scale its real estate revenues significantly, targeting $1 billion in assets and a potential future IPO for Monomoy REIT [16] Management's Comments on Operating Environment and Future Outlook - Management views fiscal 2025 as an inflection point, with record results and new capital and partnerships positioning the company for continued growth [5][18] - The company expressed confidence in its ability to deliver sustained long-term value to shareholders, supported by a strong balance sheet and strategic initiatives [18][24] Other Important Information - The board expanded the stock purchase program by $5 million, bringing the total program size to $25 million, with $15.7 million remaining in capacity [8] - The company repurchased 5.1 million shares for $9.3 million at an average of $1.85 per share, contributing to the increase in book value [8][21] Q&A Session Summary Question: Are there any questions from participants? - There were no questions from participants during the Q&A session [23]

Financial Data and Key Metrics Changes - Fiscal 2025 was a record year for the company, with net income from continuing operations reaching $15.7 million in the fourth quarter, a significant improvement from a net loss of $0.6 million in the prior year period [4][18] - Book value per share increased by approximately 24% year over year to $2.65 as of June 30, with a pro forma value of $2.58 after two capital raises in July and August [6][19] - Revenue in the fourth quarter was $5.6 million, compared to $8.9 million in the prior year, but excluding a one-time property sale, revenue grew over 140% year over year [17] Business Line Data and Key Metrics Changes - The credit business, GECC, generated record investment income and incentive fees, with net investment income exceeding quarterly distributions, supporting a 6% increase in dividends to $0.37 per share [9] - Monomoy Construction Services (MCS) launched in February and contributed nearly $1 million in revenue in its initial months, with expectations to more than double its revenue in fiscal 2026 [11] - The Great Elm Credit Income Fund posted net returns of 21% for the six months ended June 30, driven by unrealized appreciation in CoreWeave-related investments [10] Market Data and Key Metrics Changes - Assets under management in fee-paying AUM totaled approximately $759 million, up 4% from the prior year [17] - The company completed over $100 million in capital raises across its credit and real estate platforms in July and August, enhancing its financial flexibility [4][9] Company Strategy and Development Direction - The company aims to scale its credit and real estate platforms, with a target of $1 billion in assets for Monomoy REIT and a potential future IPO [14] - Strategic partnerships, such as with Kennedy Lewis Investment Management, are expected to accelerate growth and provide significant new capital for expansion [13][15] - The integration of MCS is designed to enhance development timelines and deepen tenant relationships, contributing to long-term revenue growth [11] Management's Comments on Operating Environment and Future Outlook - Management views fiscal 2025 as an inflection point, with strong momentum and a solid foundation for future growth [5][16] - The company is well-positioned to drive meaningful growth and create lasting value for shareholders, supported by a strong balance sheet and strategic partnerships [6][16] Other Important Information - The board expanded the stock purchase program by $5 million, bringing the total to $25 million, with $15.7 million remaining in capacity [7] - The company reported significant unrealized gains from its CoreWeave-related investment, contributing over $11 million to earnings [8] Q&A Session Summary - There were no questions during the Q&A session, indicating a strong confidence in the company's performance and outlook [20]

Financial Data and Key Metrics Changes - Fiscal 2025 was a record year for the company, with net income from continuing operations reaching $15.7 million in the fourth quarter, a significant improvement from a net loss of $0.6 million in the prior year period [4][18] - Book value per share increased by approximately 24% year over year to $2.65 as of June 30, with a pro forma book value of $2.58 after two capital raises in July and August [6][19] - Adjusted EBITDA for the quarter was $1.5 million, compared to $1.2 million in the prior year period [18] Business Line Data and Key Metrics Changes - In the credit segment, GECC generated record investment income and incentive fees, raising over $75 million in new capital and increasing its dividend by 6% to $0.37 per share [4][9] - The Great Elm Credit Income Fund posted net returns of 21% for the six months ended June 30, driven by unrealized appreciation in CoreWeave-related investments [10] - The real estate segment launched Monomoy Construction Services, contributing nearly $1 million in revenue and expanding its project pipeline by over 50% [11] Market Data and Key Metrics Changes - Assets under management in fee-paying AUM totaled approximately $759 million, up 4% from the prior year quarter end [17] - The company completed significant capital raises, including a $100 million term loan to Monomoy REIT and a $15 million equity capital raise from GECC [13][16] Company Strategy and Development Direction - The company aims to scale its credit and real estate platforms, with a target of $1 billion in assets for Monomoy REIT and a potential future IPO [14] - Strategic partnerships, such as with Kennedy Lewis Investment Management, are expected to accelerate growth and enhance the company's real estate platform [12][14] Management's Comments on Operating Environment and Future Outlook - Management views fiscal 2025 as an inflection point, with strong momentum and a solid foundation for future growth [5][16] - The company is well positioned to drive meaningful growth and create lasting value for shareholders, supported by a strong balance sheet and strategic capital raises [6][16] Other Important Information - The company repurchased 5.1 million shares for $9.3 million at an average of $1.85 per share, with $15.7 million remaining in the stock purchase program [7] - Unrealized gains from the CoreWeave-related investment contributed over $11 million to earnings, highlighting the company's ability to capture unique investment opportunities [8] Q&A Session Summary - There were no questions during the Q&A session, indicating a strong presentation and clarity in the company's communication [20]

Financial Performance - Great Elm achieved record results in Fiscal Q4 2025, marking the best operating quarter and fiscal year in its history[6] - Fee-paying assets under management (FPAUM) grew by 5% year-over-year as of June 30, 2025[6] - Book value per share increased by 24% from the prior year, reaching $2.65[6] - Fiscal 4Q25 revenue was $5.6 million, with revenue growth over 140% excluding a prior-year BTS property sale[34] - Assets Under Management ("AUM") as of June 30, 2025, was $759 million, up 4% from June 30, 2024[40] - Fee-Paying AUM ("FPAUM") as of June 30, 2025, was $553 million, up 5% from June 30, 2024[42] Strategic Initiatives - Great Elm launched Monomoy Construction Services, LLC ("MCS") in February 2025, expanding its real estate platform[6] - A strategic partnership with Kennedy Lewis Investment Management ("KLIM") was announced in July 2025, providing up to $150 million in leverageable capital[6] - Woodstead Value Fund, L.P ("Woodstead") purchased 4 million shares of GEG at $2.25 per share for gross proceeds of $9 million in August 2025[6] - GECC sold 1.3 million shares to an affiliate of Booker Smith, or 9.9% of outstanding common stock, at $11.65 per share for gross proceeds of $15 million[6] Capital Allocation - The Board of Directors authorized an additional $5 million of stock repurchases, bringing the total stock repurchase program to $25 million[6]

[Form 8-K Cover Page](index=1&type=section&id=Form%208-K%20Cover%20Page) This section presents the cover page details for Great Elm Group, Inc.'s Form 8-K filing, including company identification - Great Elm Group, Inc. (GEG) filed a Current Report on Form 8-K with the SEC on July 31, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) Company Information | Category | Detail | | :--- | :--- | | **Company Name** | Great Elm Group, Inc. | | **Stock Ticker** | GEG (Common Stock), GEGGL (7.25% Notes due 2027) | | **Exchange** | The Nasdaq Stock Market LLC | | **Jurisdiction** | Delaware | | **Principal Executive Offices** | 3801 PGA Boulevard, Suite 603, Palm Beach Gardens, FL 33410 | [Item 1.01 Entry into a Material Definitive Agreement](index=2&type=section&id=Item%201.01%20Entry%20into%20a%20Material%20Definitive%20Agreement) This section details the company's entry into a material definitive agreement, including a stock purchase and a profits interest agreement [Stock Purchase Agreement](index=2&type=section&id=Stock%20Purchase%20Agreement) The company entered into a Stock Purchase Agreement with KLIM, issuing 1,353,885 common shares for approximately **$2.86 million** and granting registration rights and a board seat Private Placement Details | Metric | Value | | :--- | :--- | | **Purchasers** | Funds affiliated with Kennedy Lewis Investment Management LLC (KLIM) | | **Shares Issued** | 1,353,885 shares of Common Stock | | **Price per Share** | $2.1144 (20-day VWAP) | | **Aggregate Purchase Price** | $2,862,654.44 | - The company agreed to file a registration statement for the resale of the shares held by the purchasers within 120 days of the agreement[6](index=6&type=chunk) - As long as the purchasers meet certain ownership requirements (retaining profit interest and at least 50% of the shares), the company has agreed to appoint one person designated by the purchasers to its board of directors[7](index=7&type=chunk) [Profits Interest Agreement](index=2&type=section&id=Profits%20Interest%20Agreement) The company formed Great Elm Real Estate Ventures, LLC, granting KLIM-affiliated investors a **15% profit interest** in distributions, potentially increasing to **20%** based on loan agreement draws - The company formed a new holding company for its real estate business, Great Elm Real Estate Ventures, LLC, of which it is the sole member[9](index=9&type=chunk) - KLIM-affiliated investors will receive a pro rata portion of **15%** of aggregate distributions from Great Elm RE Ventures, with the potential to increase to a maximum of **20%** based on borrowings under a separate Loan Agreement[9](index=9&type=chunk) [Item 2.02 Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) This section notes the company's posting of preliminary and unaudited financial results in an investor presentation on its website - On July 31, 2025, the company posted an investor presentation to its website which included selected preliminary and unaudited financial results, furnished for SEC purposes[11](index=11&type=chunk)[12](index=12&type=chunk) [Item 3.02 Unregistered Sales of Equity Securities](index=3&type=section&id=Item%203.02%20Unregistered%20Sales%20of%20Equity%20Securities) This section references the private placement of common stock, exempt from registration under the Securities Act - This item incorporates by reference the information from Item 1.01 regarding the private placement of **1,353,885** shares of common stock, which was exempt from registration under Section 4(a)(2) and Rule 506(b) of the Securities Act[5](index=5&type=chunk)[13](index=13&type=chunk) [Item 5.02 Election of Directors](index=3&type=section&id=Item%205.02%20Departure%20of%20Directors%20or%20Certain%20Officers%3B%20Election%20of%20Directors%3B%20Appointment%20of%20Certain%20Officers%3B%20Compensatory%20Arrangements%20of%20Certain%20Officers) This section reports the election of Lloyd Nathan to the Board of Directors, fulfilling a covenant from the Stock Purchase Agreement - Effective July 31, 2025, Lloyd Nathan was elected to the Board of Directors, pursuant to the director appointment covenant in the Stock Purchase Agreement with KLIM[14](index=14&type=chunk) - Mr. Nathan possesses extensive real estate and construction expertise and qualifies as an independent director under Nasdaq listing rules[15](index=15&type=chunk) [Item 8.01 Other Events](index=3&type=section&id=Item%208.01%20Other%20Events) This section covers additional significant events, including a new loan agreement and the issuance of a press release [Loan Agreement](index=3&type=section&id=Loan%20Agreement) A company subsidiary, Monomoy Properties REIT, LLC, secured a term loan facility of up to **$150 million** from KLIM-managed lenders, with **$100 million** initially funded - A company-managed REIT entered into a Loan Agreement with KLIM-managed investment vehicles for term loans of up to **$150 million**, with **$100 million** funded at the initial closing[16](index=16&type=chunk) [Press Release](index=3&type=section&id=Press%20Release) The company issued a press release on July 31, 2025, announcing the stock issuance and the Profits Interest Agreement - A press release was issued on July 31, 2025, in connection with the private placement and the Profits Interest Agreement[17](index=17&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=4&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists the financial statements and exhibits filed as part of the Current Report on Form 8-K Exhibits Filed | Exhibit Number | Description | | :--- | :--- | | 99.1 | Press Release, dated July 31, 2025 | | 99.2 | Investor Presentation, dated August 1, 2025 | | 104 | Cover page from this Current Report on Form 8-K, formatted as inline XBRL |

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) GEG is an alternative asset management company with a diversified portfolio across credit, real estate, and specialty finance - GEG is an alternative asset management company with a diversified portfolio across credit, real estate, specialty finance, and other alternative strategies[15](index=15&type=chunk) - Combined assets under management (AUM) of GECM and MCRE was approximately **$758.5 million** as of June 30, 2025[16](index=16&type=chunk) - GEG owns approximately **12.4%** of Great Elm Capital Corp. (GECC) shares and approximately **5.1%** of Monomoy UpREIT as of June 30, 2025[17](index=17&type=chunk)[18](index=18&type=chunk) - In January 2023, Monomoy BTS Corporation (MBTS) began purchasing land parcels for build-to-suit developments, completing its third purchase in March 2025. One development was sold in June 2024, and a lease for another commenced in December 2024[20](index=20&type=chunk) - GEG sold its Durable Medical Equipment (DME) business on January 3, 2023[22](index=22&type=chunk) - GEG had **50 employees** as of June 30, 2025[25](index=25&type=chunk) [Risk Factors](index=6&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks in growth strategy, competition, market conditions, regulations, and potential stock dilution - Growth strategy may not be successful due to difficulties in identifying attractive opportunities, intense competition, and challenges in consummating transactions[30](index=30&type=chunk) - Investments may require write-downs or write-offs, restructuring, and impairment charges if they do not perform as expected, negatively impacting financial condition and share price[33](index=33&type=chunk) - The company faces intense competition from larger, well-financed organizations, including global asset managers, investment banks, and private equity funds[36](index=36&type=chunk) - Changing conditions in financial markets and the economy, such as illiquid credit markets, high inflation, and interest rates, could adversely affect revenues, profitability, and access to capital[38](index=38&type=chunk) - Incurring substantial debt, such as the **7.25% Notes due 2027**, may adversely affect leverage, financial condition, and ability to pay dividends[41](index=41&type=chunk)[44](index=44&type=chunk) - The financial services industry is subject to extensive regulation, which could impact revenue, profitability, and business opportunities[42](index=42&type=chunk) - Operational risks, including system failures and cyberattacks, may disrupt business, lead to regulatory action, or limit growth[45](index=45&type=chunk)[47](index=47&type=chunk) - Common stock is subject to transfer restrictions (generally **4.99%** or more) to reduce the possibility of limitations on the use of net operating loss (NOL) carryforwards[62](index=62&type=chunk) - Future issuances of common or preferred stock, or conversion of the **5.0% Convertible Senior Notes due 2030**, could significantly dilute existing equity interests[64](index=64&type=chunk)[68](index=68&type=chunk) [Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the Securities and Exchange Commission - There are **no unresolved staff comments**[69](index=69&type=chunk) [Cybersecurity](index=16&type=section&id=Item%201C.%20Cybersecurity) GEG relies on GECM's cybersecurity program, with third-party assessments and board oversight, reporting no material attacks - GECM has implemented a cybersecurity program focused on protecting confidentiality, maintaining system security, supporting compliance, documenting incidents, and communicating with relevant parties[70](index=70&type=chunk) - The program utilizes encryption, data loss prevention, authentication, access control, anti-virus, anti-malware, spam/phishing filtering, and private networks[71](index=71&type=chunk) - Cybersecurity processes are reviewed and assessed by third parties, including annual penetration testing, with vulnerabilities reviewed by Great Elm's IT Committee[72](index=72&type=chunk) - GECM provides cybersecurity awareness training to employees at onboarding and semiannually, along with interim security reminders and phishing tests[74](index=74&type=chunk) - The IT Committee manages the cybersecurity program and incident response framework, with oversight from the Audit Committee and the Board of Directors[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - As of the Form 10-K filing, **no cyber-attacks have materially affected the company's business strategy, results of operations, or financial condition**[78](index=78&type=chunk) [Properties](index=18&type=section&id=Item%202.%20Properties) The company leases its principal executive office in Florida and additional office spaces in Massachusetts and South Carolina - The principal executive office is leased in Palm Beach Gardens, Florida[79](index=79&type=chunk) - Additional office spaces are leased in Boston, Massachusetts (non-cancellable through November 2029) and Charleston, South Carolina (lease expiration September 2026)[79](index=79&type=chunk) [Legal Proceedings](index=18&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - There are **no material legal proceedings**[80](index=80&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is **not applicable**[81](index=81&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GEG common stock trades on Nasdaq, with ownership restrictions to preserve NOLs, and the company actively repurchases shares - Common stock is traded on the Nasdaq Global Select Market under the symbol 'GEG'[83](index=83&type=chunk) - As of August 26, 2025, there were **54 record holders** of common stock[84](index=84&type=chunk) - The company **does not currently intend to pay dividends** on its common stock[85](index=85&type=chunk) - Ownership is restricted (generally **4.99%** or more) to preserve NOL carryforwards. Waivers have been granted to Northern Right Capital Management, L.P. (**17.4%**), Imperial Capital Asset Management, LLC (**22.0%**), and PC Elfun LLC (**11.0%**)[86](index=86&type=chunk) Common Stock Repurchases (Three Months Ended June 30, 2025) | Month | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------- | :----------------------------- | :--------------------------- | | April 1-30, 2025 | 149,852 | $1.89 | | May 1-31, 2025 | 267,723 | $1.95 | | June 1-30, 2025 | 50,206 | $2.17 | | **Total** | **467,781** | **$1.97** | - In July 2025, the Board authorized an increase in the company's stock repurchase plan from **$20 million** to **$25 million**[90](index=90&type=chunk) [Reserved](index=19&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - **This item is reserved**[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes GEG's financial performance, liquidity, and capital resources, highlighting asset management and real estate [Overview](index=20&type=section&id=Overview) GEG is an alternative asset management company with **$758.5 million** AUM, expanding into real estate and construction - GEG is an alternative asset management company focused on growing a scalable and diversified portfolio across credit, real estate, specialty finance, and other alternative strategies[94](index=94&type=chunk) - Combined assets under management (AUM) was approximately **$758.5 million** at June 30, 2025[94](index=94&type=chunk) - In January 2023, MBTS began purchasing land parcels for build-to-suit developments, completing its third purchase in March 2025. One development was sold in June 2024, and a lease for another commenced in December 2024[96](index=96&type=chunk) - On February 4, 2025, GEG acquired Greenfield CRE, forming Monomoy Construction Services, LLC (MCS) to launch an integrated, full-service construction business[97](index=97&type=chunk) - The Durable Medical Equipment (DME) business was sold on January 3, 2023, and its historical results are presented as discontinued operations[99](index=99&type=chunk) [Critical Accounting Estimates](index=20&type=section&id=Critical%20Accounting%20Estimates) Financial statements require significant estimates for revenue, deferred taxes, business combinations, and fair value measurements - Preparation of financial statements requires significant estimates and assumptions, particularly for revenue recognition, valuation allowance for deferred tax assets, business combinations, and fair value measurements (including stock-based compensation and private entities)[98](index=98&type=chunk)[179](index=179&type=chunk) - Accounting for business combinations requires estimates and judgment regarding future cash flows of acquired businesses and allocation to identifiable intangible assets[100](index=100&type=chunk)[101](index=101&type=chunk) - Income taxes are accounted for under the asset and liability method, with valuation allowances established for deferred tax assets not likely to be recovered[102](index=102&type=chunk)[103](index=103&type=chunk) [Results of Operations (Continuing Operations)](index=22&type=section&id=Results%20of%20Operations) Revenues decreased due to lower real estate sales, offset by higher management fees, while other income significantly increased Consolidated Results of Continuing Operations (Years Ended June 30) | (in thousands) | 2025 | 2024 | Percent Change | | :------------------------------------------ | :----- | :----- | :------------- | | Revenues | $16,316 | $17,834 | (9)% | | Cost of Revenues | $1,082 | $5,526 | (80)% | | Investment management expenses, excluding non-cash compensation | $(13,079) | $(9,723) | 35% | | Non-cash compensation | $(3,450) | $(3,113) | 11% | | Other selling, general and administrative | $(5,459) | $(6,202) | (12)% | | Depreciation and amortization | $(1,249) | $(1,108) | 13% | | Total operating costs and expenses | $(23,237) | $(20,146) | 15% | | Operating loss | $(8,003) | $(7,838) | (2)% | | Interest expense | $(4,157) | $(4,334) | (4)% | | Other income (expense), net | $27,796 | $11,331 | 145% | | Total other income (expense), net | $23,639 | $6,997 | 238% | | (Loss) income before income taxes from continuing operations | $15,636 | $(841) | >1000% | | Income tax benefit (expense) | $(86) | $(101) | (15)% | | Net (loss) income from continuing operations | $15,550 | $(942) | >1000% | - Revenues decreased by **$1.5 million**, primarily due to a decrease in real estate property sales (**$1.2 million** in FY2025 vs. **$6.6 million** in FY2024). This was partially offset by a **$2.6 million** increase in management and incentive fees from GECC and **$0.9 million** in project management fees from the newly acquired construction business[107](index=107&type=chunk) - Operating costs and expenses increased by **$3.1 million**, mainly due to a **$3.4 million** increase in investment management expenses driven by higher personnel costs from the Greenfield Acquisition[108](index=108&type=chunk) - Other income (expense), net, increased by **$16.6 million**, primarily due to a **$14.6 million** increase in net realized and unrealized gains on investments, including a significant unrealized gain on a private fund due to a public offering announcement and a change in valuation technique for special purpose vehicles[109](index=109&type=chunk) - Income tax expense from continuing operations was **$0.1 million** for both FY2025 and FY2024[110](index=110&type=chunk) [Discontinued Operations](index=24&type=section&id=Discontinued%20Operations) No activity related to discontinued operations in FY2025, following the sale of the DME business in January 2023 - There was **no activity related to discontinued operations** during the year ended June 30, 2025[111](index=111&type=chunk) - Net income from discontinued operations was **$0.02 million** for the year ended June 30, 2024[111](index=111&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with **$30.6 million** cash and **$60.6 million** investments, managing debt obligations Selected Financial Information (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------------------------------- | :------------ | :------------ | | Current assets | $137,897 | $127,570 | | Current liabilities | $9,614 | $8,359 | | Working capital | $128,283 | $119,211 | | Long-term liabilities | $63,657 | $61,892 | | Net cash provided by (used in) operating activities - continuing operations | $(9,006) | $(15,555) | | Net cash provided by (used in) investing activities - continuing operations | $(1,336) | $3,217 | | Net cash provided by (used in) financing activities - continuing operations | $(8,773) | $2,838 | | Net increase (decrease) in cash and cash equivalents, including cash and cash equivalents classified within current assets held for sale | $(19,115) | $(10,447) | - As of June 30, 2025, the company had an unrestricted cash balance of **$30.6 million** and investments with a fair value of **$60.6 million**[112](index=112&type=chunk) - Cash flows used in operating activities of continuing operations improved to **$9.0 million** in FY2025 from **$15.6 million** in FY2024, primarily due to non-cash adjustments like a **$16.0 million** unrealized gain on investments[113](index=113&type=chunk) - Cash flows used in investing activities for continuing operations were **$1.3 million** in FY2025, including a **$8.0 million** related party loan receivable and **$2.5 million** for the Greenfield acquisition[115](index=115&type=chunk) - Cash flows used in financing activities for continuing operations were **$8.8 million** in FY2025, primarily due to increased stock repurchases and the repurchase of Convertible Notes[117](index=117&type=chunk) - The company believes it has **sufficient liquidity to meet its short-term and long-term obligations for at least the next 12 months and the foreseeable future**[118](index=118&type=chunk) - As of June 30, 2025, the company had **$26.9 million** in outstanding **7.25% Notes due 2027** (GEGGL Notes) and **$35.1 million** principal balance in **5.0% Convertible Notes due 2030**[119](index=119&type=chunk)[120](index=120&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - This item is **not applicable**[121](index=121&type=chunk) [Financial Statements and Supplementary Data](index=26&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Required financial statements and supplementary data are incorporated by reference from page F-1 - Financial statements and supplementary data are incorporated by reference from page F-1[122](index=122&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=26&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are **no changes in or disagreements with accountants on accounting and financial disclosure**[123](index=123&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of June 30, 2025 - Disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2025[124](index=124&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on the COSO 2013 framework[128](index=128&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during FY2025[129](index=129&type=chunk) [Other Information](index=27&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - None[130](index=130&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](index=27&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to the company - This item is **not applicable**[131](index=131&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=28&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the proxy statement - Information is incorporated by reference from the definitive proxy statement[133](index=133&type=chunk) - The Code of Business Conduct is available on the company's website[134](index=134&type=chunk) [Executive Compensation](index=28&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[135](index=135&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=28&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the proxy statement - Information is incorporated by reference from the definitive proxy statement[136](index=136&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=28&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the proxy statement - Information is incorporated by reference from the definitive proxy statement[137](index=137&type=chunk) [Principal Accountant Fees and Services](index=28&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the company's definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[138](index=138&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=28&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This item details financial statements and schedules, incorporated by reference, and provides a comprehensive exhibit index - Financial statements are incorporated by reference from page F-1 of the Annual Report[140](index=140&type=chunk) - Financial statement schedules are omitted as they are not required, not applicable, or the information is presented in the consolidated financial statements or notes[141](index=141&type=chunk) - An exhibit index is attached and incorporated by reference[142](index=142&type=chunk)[143](index=143&type=chunk) [Form 10-K Summary](index=31&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a Form 10-K summary - The company has **elected not to provide a Form 10-K summary**[147](index=147&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP)](index=34&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%3A%2034)) Deloitte & Touche LLP issued an unqualified opinion for FY2025, noting Level 3 equity investments as a critical audit matter - Deloitte & Touche LLP served as the Company's auditor since 2024[162](index=162&type=chunk) - Issued an **unqualified opinion** on the consolidated financial statements for the year ended June 30, 2025[155](index=155&type=chunk) - A critical audit matter was identified regarding the fair value measurements of Level 3 equity investments, due to complex valuation techniques and unobservable inputs, requiring a high degree of auditor judgment[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) [Report of Independent Registered Public Accounting Firm (Grant Thornton LLP)](index=36&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%3A%20248)) Grant Thornton LLP issued an unqualified opinion on consolidated financial statements for the year ended June 30, 2024 - Grant Thornton LLP served as the Company's auditor from 2019 to 2024[169](index=169&type=chunk) - Issued an **unqualified opinion** on the consolidated financial statements for the year ended June 30, 2024[165](index=165&type=chunk) [Consolidated Balance Sheets](index=37&type=section&id=Consolidated%20Balance%20Sheets) Balance sheets show increased total assets and stockholders' equity, driven by investments and real estate growth Consolidated Balance Sheet Highlights (in thousands) | ASSETS/LIABILITIES AND STOCKHOLDERS' EQUITY | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Total assets | $153,937 | $140,446 | | Total liabilities | $73,271 | $70,251 | | Total stockholders' equity | $80,666 | $70,195 | | Cash and cash equivalents | $30,603 | $48,147 | | Investments, at fair value | $60,614 | $44,585 | | Real estate assets, net | $9,085 | $5,769 | | Long-term debt (face value) | $26,945 | $26,945 | | Convertible notes (face value) | $35,063 | $35,494 | [Consolidated Statements of Operations](index=38&type=section&id=Consolidated%20Statements%20of%20Operations) Operations reflect a significant turnaround to net income in FY2025, driven by unrealized investment gains and stable operating loss Consolidated Statements of Operations Highlights (in thousands, except per share data) | | 2025 | 2024 | | :-------------------------------------------------- | :----- | :----- | | Revenues | $16,316 | $17,834 | | Cost of revenues | $1,082 | $5,526 | | Total operating costs and expenses | $23,237 | $20,146 | | Operating loss | $(8,003) | $(7,838) | | Net realized and unrealized gain | $16,854 | $2,212 | | Net (loss) income from continuing operations | $15,550 | $(942) | | Net (loss) income attributable to Great Elm Group, Inc. | $12,891 | $(1,388) | | Net (loss) income attributable to shareholders per share - Basic | $0.47 | $(0.05) | | Net (loss) income attributable to shareholders per share - Diluted | $0.38 | $(0.05) | [Consolidated Statements of Stockholders' Equity](index=39&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased in FY2025 due to net income and stock-based compensation, partially offset by repurchases Consolidated Statements of Stockholders' Equity Highlights (in thousands) | | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Total Great Elm Group, Inc. stockholders' equity | $70,318 | $62,714 | | Non-controlling interests | $10,348 | $7,481 | | **Total stockholders' equity** | **$80,666** | **$70,195** | | Net income (loss) attributable to Great Elm Group, Inc. (FY2025) | $12,891 | $(1,388) | | Stock repurchases (FY2025) | $(7,239) | $(2,104) | | Stock-based compensation (FY2025) | $1,952 | $2,364 | [Consolidated Statements of Cash Flows](index=40&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operations improved in FY2025, while investing and financing activities used cash, leading to an overall decrease Consolidated Statements of Cash Flows Highlights (in thousands) | | 2025 | 2024 | | :-------------------------------------------------- | :----- | :----- | | Net cash provided by (used in) operating activities - continuing operations | $(9,006) | $(15,555) | | Net cash provided by (used in) investing activities - continuing operations | $(1,336) | $3,217 | | Net cash provided by (used in) financing activities - continuing operations | $(8,773) | $2,838 | | Net increase (decrease) in cash and cash equivalents, including cash and cash equivalents classified within current assets held for sale | $(19,115) | $(10,447) | | Cash, cash equivalents and restricted cash at end of period | $30,603 | $49,718 | - Operating cash flows for continuing operations improved due to non-cash adjustments, including a **$15.991 million** unrealized gain on investments[174](index=174&type=chunk) - Investing activities in FY2025 included a **$8.0 million** related party loan receivable, **$7.4 million** in purchases of held-to-maturity securities (offset by **$17.5 million** proceeds), and **$2.5 million** for the Greenfield acquisition[174](index=174&type=chunk) - Financing activities in FY2025 were primarily impacted by **$7.239 million** in stock repurchases and **$1.757 million** in redemption of Convertible Notes[175](index=175&type=chunk) [Notes to the Consolidated Financial Statements](index=42&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes provide detailed disclosures on accounting policies, financial instruments, and significant transactions, including acquisitions [1. Organization](index=42&type=section&id=1.%20Organization) GEG is a Delaware-incorporated alternative asset management company, consolidating subsidiaries and variable interest entities - Great Elm Group, Inc. (GEG) is a Delaware-incorporated alternative asset management company[177](index=177&type=chunk) - The consolidated financial statements include GEG and its wholly-owned subsidiaries (e.g., GECM, MCRE, MCS, MBTS) and certain variable interest entities where GEG is the primary beneficiary[178](index=178&type=chunk)[181](index=181&type=chunk) [2. Summary of Significant Accounting Policies](index=42&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements adhere to GAAP, requiring estimates for revenue, taxes, business combinations, and fair value measurements - Financial statements are prepared in accordance with GAAP, requiring estimates for revenue recognition, deferred tax assets, business combinations, and fair value measurements[179](index=179&type=chunk) - The Durable Medical Equipment (DME) business is presented as discontinued operations for the year ended June 30, 2024[180](index=180&type=chunk) - The company consolidates wholly-owned subsidiaries, majority-owned subsidiaries, and variable interest entities where it holds a controlling financial interest[181](index=181&type=chunk) - Investments in marketable securities are classified as trading, held-to-maturity, or available-for-sale. Investments at fair value include equity and private funds measured using Net Asset Value (NAV)[186](index=186&type=chunk)[188](index=188&type=chunk) - Real estate assets are classified as current (development projects expected to be disposed of within one year) or held for sale (land and completed improvements meeting 'held for sale' criteria)[189](index=189&type=chunk)[191](index=191&type=chunk) - Goodwill is not amortized but reviewed for impairment annually. Definite-lived intangible assets (investment management agreements, assembled workforce, customer-related, licenses) are amortized over **10-15 years**[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Stock-based compensation expense for equity awards is measured at grant-date fair value and recognized over the requisite service period[201](index=201&type=chunk) - Income taxes are accounted for under the asset and liability method, with deferred tax assets and liabilities recognized for temporary differences and valuation allowances established when necessary[204](index=204&type=chunk)[205](index=205&type=chunk) [3. Acquisition](index=48&type=section&id=3.%20Acquisition) GEG acquired Greenfield CRE for **$2.5 million** in cash, forming MCS, which generated **$0.9 million** revenue in FY2025 - On February 4, 2025, GEG acquired certain assets of Greenfield CRE for approximately **$2.5 million** in cash, forming Monomoy Construction Services, LLC (MCS)[218](index=218&type=chunk)[219](index=219&type=chunk) Preliminary Purchase Price Allocation (in thousands) | (in thousands) | June 30, 2025 | | :------------- | :------------ | | Goodwill | $440 | | Intangible assets: | | | Customer related | $1,610 | | Licenses | $450 | | **Total** | **$2,500** | - Goodwill is primarily attributable to the assembled workforce and expected synergies. Identifiable intangible assets (customer-related and licenses) have a weighted average estimated useful life of **15 years**[221](index=221&type=chunk)[222](index=222&type=chunk) - From February 4, 2025, through June 30, 2025, MCS generated approximately **$0.9 million** in revenue and an operating loss of **$0.9 million**[223](index=223&type=chunk) [4. Revenue](index=50&type=section&id=4.%20Revenue) Revenues include management, incentive, administration, property management, real estate sales, and project management fees Revenues Summary (in thousands) | (in thousands) | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Management fees | $7,038 | $5,906 | | Incentive fees | $4,069 | $2,676 | | Administration and service fees | $1,514 | $1,405 | | Property management fees | $1,245 | $1,186 | | Real estate property sales | $1,192 | $6,586 | | Project management fees | $941 | $75 | | Real estate rental income | $317 | - | | **Total revenues** | **$16,316** | **$17,834** | - Management fees are based on assets under management and recognized over time as services are rendered[227](index=227&type=chunk) - Incentive fees are variable consideration recognized when contractual performance criteria are met and are no longer probable of significant reversal[228](index=228&type=chunk) - Real estate property sales revenue and cost of revenues are recognized when control of the asset is transferred to the buyer[233](index=233&type=chunk) - Project management fees from the construction business are recognized over time using the percentage of completion method[234](index=234&type=chunk) [5. Related Party Transactions](index=51&type=section&id=5.%20Related%20Party%20Transactions) Related party transactions include investment gains, dividend income, receivables, and a promissory note to Monomoy REIT Related Party Income (in thousands) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net realized and unrealized gain on investments | $4,692 | $71 | | Net realized and unrealized gain on investments of Consolidated Funds | $3,322 | $233 | | Dividend income | $3,448 | $4,412 | Receivables from Managed Funds (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Dividends receivable | $310 | $301 | | Investment management revenues receivable | $4,493 | $1,684 | | Receivable for reimbursable expenses paid | $1,642 | $274 | | Receivable for real estate property development | $1,886 | - | | **Receivables from managed funds** | **$8,331** | **$2,259** | - As of June 30, 2025, the Company owns **1,438,079 shares** of GECC, representing approximately **12.4%** of outstanding shares[244](index=244&type=chunk) - The Company holds investments in Great Elm Strategic Partnership I, LLC (GESP), Prosper Peak Holdings, LLC (PPH), and Summit Grove Partners, LLC (SGP), which are accounted for using the fair value option[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - GECM has shared personnel and reimbursement agreements with Imperial Capital Asset Management, LLC (ICAM), with costs of **$0.5 million** incurred in FY2025[250](index=250&type=chunk) - In January 2025, the Company issued an **$8.0 million** promissory note to Monomoy REIT, accruing interest at **8.0%** per annum, due January 2026[255](index=255&type=chunk) [6. Fair Value Measurements](index=54&type=section&id=6.%20Fair%20Value%20Measurements) Fair value measurements are categorized into a three-level hierarchy, with Level 3 equity investments showing unrealized gains - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[257](index=257&type=chunk)[260](index=260&type=chunk) - Equity investments without readily-available market prices are classified as Level 3 and valued using discounted cash flow models[261](index=261&type=chunk) - Investments in private funds are valued using Net Asset Value (NAV) as reported by each fund's investment manager and are not categorized within the fair value hierarchy[263](index=263&type=chunk) Investments at Fair Value, held by the Company (June 30, 2025, in thousands) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Equity investments | $15,427 | $- | $13,374 | $28,801 | | Investments valued at net asset value | | | | $31,813 | | **Total assets** | | | | **$60,614** | Investments at Fair Value, Consolidated Funds (June 30, 2025, in thousands) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Equity investments | $- | $- | $231 | $231 | | Debt securities | $- | $3,891 | $5,208 | $9,099 | | Investments valued at net asset value | | | | $4,997 | | **Total assets** | | | | **$14,327** | - For the year ended June 30, 2025, Level 3 assets held by the Company had an unrealized gain of **$4.7 million**[269](index=269&type=chunk) [7. Segment Reporting](index=59&type=section&id=7.%20Segment%20Reporting) The company operates as a single operating segment, with the CEO using net income for budgeting and variance analysis - The company manages its business activities on a consolidated basis and operates as a **single operating segment**[275](index=275&type=chunk) - The Chief Operating Decision Maker (CODM) is the Chief Executive Officer and Chairman, Jason W. Reese, who uses net income for annual budgeting and quarterly variance analysis[276](index=276&type=chunk) Operating Financial Results of Operating Segment (in thousands) | (in thousands) | 2025 | 2024 | | :-------------------------------------------------- | :----- | :----- | | Revenues | $16,316 | $17,834 | | Cost of revenues | $1,082 | $5,526 | | Interest income | $3,602 | $4,600 | | Other income | $4,018 | $4,302 | | Employee expenses | $14,474 | $12,522 | | Operating expenses | $6,506 | $6,340 | | Interest expense | $4,157 | $4,334 | | Depreciation and amortization | $1,249 | $1,108 | | Income tax expense | $86 | $101 | | Other expenses | $1,008 | $176 | | Net realized and unrealized gain | $16,854 | $2,212 | | Net realized and unrealized gain on investments of Consolidated Funds | $3,322 | $233 | | **Segment net income** | **$15,550** | **$(926)** | [8. Identifiable Intangible Assets, Net](index=60&type=section&id=8.%20Identifiable%20Intangible%20Assets%2C%20Net) Identifiable intangible assets include investment management agreements, assembled workforce, customer-related, and licenses Identifiable Intangible Assets, Net (in thousands) | (in thousands) | June 30, 2025 (Net Carrying Amount) | June 30, 2024 (Net Carrying Amount) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | | Investment management agreements | $9,533 | $10,483 | | Assembled workforce | $471 | $554 | | Customer related | $1,567 | $- | | Licenses | $438 | $- | | **Identifiable intangible assets, net** | **$12,009** | **$11,037** | - Amortization expense was **$1.1 million** for both the years ended June 30, 2025, and 2024[279](index=279&type=chunk) Estimated Future Amortization Expense (in thousands) | For the year ending June 30, | Estimated Future Amortization Expense | | :--------------------------- | :------------------------------------ | | 2026 | $1,130 | | 2027 | $1,096 | | 2028 | $1,068 | | 2029 | $1,045 | | 2030 | $1,027 | | Thereafter | $6,643 | | **Total** | **$12,009** | [9. Real Estate](index=60&type=section&id=9.%20Real%20Estate) MBTS completed land purchases for build-to-suit developments, with one sold and another generating lease income in FY2025 - MBTS completed its third land parcel purchase in Florida in March 2025 for build-to-suit developments[281](index=281&type=chunk) - Capitalized development and construction costs were **$3.4 million** in FY2025 and **$8.5 million** in FY2024[282](index=282&type=chunk) - A development sold in June 2024 generated **$1.2 million** in revenue in FY2025 from remaining construction activities[283](index=283&type=chunk) - A second development was completed in December 2024, with its lease commencing and generating **$0.3 million** in lease income for FY2025[284](index=284&type=chunk)[285](index=285&type=chunk) Total Base Rents for Remaining Lease Term (in thousands) | (in thousands) | June 30, 2025 | | :--------------------------- | :------------ | | For the year ending December 31, 2025 | $253 | | For the year ending December 31, 2026 | $516 | | For the year ending December 31, 2027 | $526 | | For the year ending December 31, 2028 | $537 | | Thereafter | $3,454 | | **Total base rent** | **$5,286** | [10. Lessee Operating Leases](index=61&type=section&id=10.%20Lessee%20Operating%20Leases) Operating lease costs and liabilities are detailed, with a weighted-average remaining life of **4.3 years** as of June 30, 2025 Operating and Variable Lease Costs (in thousands) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Operating lease cost | $492 | $399 | | Variable lease cost | $59 | $66 | | Cash paid for operating leases | $493 | $436 | Lease Details (June 30) | | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Weighted-average remaining life | 4.3 years | 1.9 years | | Weighted-average discount rate | 8.1% | 8.9% | Maturity Analysis of Operating Lease Liabilities (June 30, 2025, in thousands) | (in thousands) | June 30, 2025 | | :--------------------------- | :------------ | | For the year ending June 30, 2026 | $474 | | For the year ending June 30, 2027 | $421 | | For the year ending June 30, 2028 | $417 | | Thereafter | $569 | | **Total lease payments** | **$1,881** | | Imputed interest | $(266) | | **Total lease liabilities** | **$1,615** | [11. Accrued Expenses and Other Current Liabilities](index=62&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities primarily consist of payroll, employee-related costs, and construction expenses Accrued Expenses and Other Current Liabilities (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Payroll and other employee-related costs | $4,616 | $4,222 | | Construction business expenses | $2,591 | $2,425 | | Other | $500 | $362 | | **Accrued expenses and other current liabilities** | **$7,707** | **$7,009** | [12. Long-Term Debt](index=62&type=section&id=12.%20Long-Term%20Debt) The company has **$26.9 million** in **7.25% notes due 2027**, with a net consolidated debt to equity ratio of **0.45:1.00** - As of June 30, 2025, the company had **$26.9 million** in aggregate principal amount of **7.25% notes due June 30, 2027** (GEGGL Notes)[290](index=290&type=chunk)[291](index=291&type=chunk) - The GEGGL Notes are unsecured obligations, ranking pari passu with Convertible Notes and senior to subordinated indebtedness[290](index=290&type=chunk) - The net consolidated debt to equity ratio was **0.45:1.00** as of June 30, 2025, well below the **2:1** covenant limit[292](index=292&type=chunk) - Interest expense attributed to long-term debt was **$2.2 million** for both FY2025 and FY2024[291](index=291&type=chunk) [13. Convertible Notes](index=62&type=section&id=13.%20Convertible%20Notes) Outstanding **5.0% Convertible Notes** total **$35.1 million**, with **$17.0 million** held by related parties, and some repurchased - As of June 30, 2025, the total principal balance of **5.0% Convertible Notes** outstanding was **$35.1 million**, due February 26, 2030[293](index=293&type=chunk)[294](index=294&type=chunk)[296](index=296&type=chunk) - In June 2025, the company repurchased **$2.2 million** of principal for **$1.8 million**, resulting in a realized gain of **$0.5 million**[293](index=293&type=chunk) - Related parties hold **$17.0 million** of the Convertible Notes, including entities associated with Matthew A. Drapkin (**$7.8 million**), Jason W. Reese (**$8.3 million**), and Eric J. Scheyer (**$0.8 million**)[294](index=294&type=chunk) - Interest expense related to Convertible Notes was **$1.9 million** in FY2025 and **$2.1 million** in FY2024, with interest paid in-kind[296](index=296&type=chunk) [14. Non-Controlling Interests and Redeemable Preferred Stock of Subsidiaries](index=63&type=section&id=14.%20Non-Controlling%20Interests%20and%20Redeemable%20Preferred%20Stock%20of%20Subsidiaries) Non-controlling interests in consolidated funds totaled **$10.3 million** in FY2025, with attributable net income of **$2.6 million** Non-Controlling Interest Balances (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Consolidated Funds - Permanent equity | $10,348 | $7,481 | | **Total non-controlling interests** | **$10,348** | **$7,481** | Net Income (Loss) Attributable to Non-Controlling Interests (in thousands) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Consolidated Funds - Permanent equity | $2,659 | $462 | | **Net loss attributable to non-controlling interest** | **$2,659** | **$462** | - As of June 30, 2025, the Company held approximately **42%** of the capital in the Consolidated Fund[300](index=300&type=chunk) [15. Share-Based and Other Non-Cash Compensation](index=64&type=section&id=15.%20Share-Based%20and%20Other%20Non-Cash%20Compensation) The company uses a Rights Plan to preserve NOLs and offers equity awards under incentive plans, with **$2.0 million** expense in FY2025 - The company adopted a Tax Benefits Preservation Agreement (Rights Plan) on December 29, 2020, to restrict ownership changes (generally **4.99%** or more) and preserve NOL carryforwards[301](index=301&type=chunk) - The 2016 Long-Term Incentive Plan and 2016 Employee Stock Purchase Plan govern equity awards. As of June 30, 2025, **2,393,715 shares** were available for future issuance under these plans[304](index=304&type=chunk)[305](index=305&type=chunk) Restricted Stock Awards and Restricted Stock Units Activity (in thousands) | Restricted Stock Awards and Restricted Stock Units | Shares (in thousands) | Weighted Average Grant Date Fair Value | | :------------------------------------------------ | :-------------------- | :------------------------------------- | | Outstanding at June 30, 2024 | 1,597 | $1.96 | | Granted | 1,003 | $1.84 | | Vested | (1,279) | $1.90 | | Forfeited | (244) | $1.96 | | **Outstanding at June 30, 2025** | **1,077** | **$1.93** | Stock Options Activity (in thousands) | Stock Options | Shares (in thousands) | Weighted Average Exercise Price | | :-------------------------- | :-------------------- | :------------------------------ | | Outstanding at June 30, 2024 | 3,264 | $2.70 | | Forfeited, cancelled or expired | (258) | $4.20 | | **Outstanding at June 30, 2025** | **3,006** | **$2.57** | | Exercisable at June 30, 2025 | 1,006 | $3.60 | - Total stock-based compensation expense was **$2.0 million** in FY2025 and **$2.4 million** in FY2024[308](index=308&type=chunk) - Other non-cash compensation in FY2025 included **$1.3 million** in GECC common shares, **$0.8 million** in MP II restricted membership interests, and **$0.5 million** in Monomoy REIT restricted membership interests[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) [16. Income Taxes](index=66&type=section&id=16.%20Income%20Taxes) Income before taxes was **$15.6 million** in FY2025, with federal and state NOL carryforwards and a valuation allowance - Income before income taxes from continuing operations was **$15.6 million** in FY2025, compared to a loss of **$0.8 million** in FY2024[313](index=313&type=chunk) Provision for Income Taxes (in thousands) | (in thousands) | 2025 | 2024 | | :------------- | :----- | :----- | | Current | $(130) | $101 | | Deferred | $216 | - | | **Income tax expense** | **$86** | **$101** | - As of June 30, 2025, the company had federal net operating loss (NOL) carryforwards of **$7.7 million** (**$6.2 million** indefinite, **$1.5 million** expiring **2026-2038**) and state NOL carryforwards of **$7.9 million** (expiring **2037-2045**)[316](index=316&type=chunk) - A valuation allowance is established for deferred tax assets due to the inability to conclude that future utilization is more likely than not[315](index=315&type=chunk) - Unrecognized tax benefits, including interest and penalties, totaled **$0.3 million** as of June 30, 2025[318](index=318&type=chunk) [17. Commitments and Contingencies](index=68&type=section&id=17.%20Commitments%20and%20Contingencies) The company is involved in routine legal matters but expects no material adverse impact on its financial condition - The company is involved in routine lawsuits, claims, investigations, and proceedings but does not expect any material adverse impact on its business, results of operations, financial condition, or cash flows[322](index=322&type=chunk) [18. Discontinued Operations](index=68&type=section&id=18.%20Discontinued%20Operations) The DME business was sold in January 2023, with no activity in FY2025, and a **$0.02 million** gain recognized in FY2024 - The Durable Medical Equipment (DME) business was sold in January 2023[323](index=323&type=chunk) - There was **no activity related to discontinued operations** during the year ended June 30, 2025[323](index=323&type=chunk) - A gain of **$0.02 million** related to adjustments to payments was recognized in FY2024[323](index=323&type=chunk) [19. Subsequent Events](index=69&type=section&id=19.%20Subsequent%20Events) Subsequent events include stock sales to KLIM and Woodstead Value Fund LP, with associated warrants and board covenants - On July 31, 2025, the company sold **1,353,885 common shares** for **$2.9 million** to funds affiliated with Kennedy Lewis Investment Management LLC (KLIM)[324](index=324&type=chunk) - In connection with the KLIM transaction, Great Elm Real Estate Ventures, LLC was formed, granting KLIM affiliates a 'Profits Interest Percentage' in its real estate business, starting at **15%** and increasing with borrowings[327](index=327&type=chunk) - On August 27, 2025, the company sold **4,000,000 common shares** for **$9 million** to Woodstead Value Fund LP[329](index=329&type=chunk) - The company also issued Series A Warrants (**1,000,000 shares**, **$3.50** exercise price, **10-year** term, exercisable after one year) and Series B Warrants (**1,000,000 shares**, **$5.00** exercise price, **10-year** term, exercisable after three years) to Woodstead Value Fund LP[332](index=332&type=chunk)[333](index=333&type=chunk) - Both subsequent stock purchase agreements include registration rights and board appointment covenants for the purchasers[325](index=325&type=chunk)[326](index=326&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)

Core Insights - Great Elm Group, Inc. reported a record net income from continuing operations of $15.7 million for the fourth quarter of fiscal 2025, a significant improvement from a net loss of $0.6 million in the prior-year period [4] - The company's book value per share increased by 24% to $2.65 as of June 30, 2025, compared to the prior-year end [4] - Recent capital raises exceeding $100 million in credit and real estate products position the company for continued growth [4] Management Commentary - The CEO highlighted fiscal 2025 as the strongest operating year in the company's history, with substantial growth in fee revenue driven by management and incentive fees from Great Elm Capital Corp. (GECC) [2] - The launch of Monomoy Construction Services in February 2025 added a new revenue stream, enhancing the company's real estate platform [2] - A partnership with Kennedy Lewis Investment Management was announced, providing up to $150 million in leverageable capital to accelerate the expansion of the real estate platform [2][8] Financial Performance - For the fourth quarter, total revenue was $5.6 million, down from $8.9 million in the prior-year period, primarily due to a previous $6.6 million revenue from a property sale [4] - Excluding that transaction, revenue growth was over 140%, driven by record management and incentive fees from GECC, totaling $3.8 million, up approximately 253% from $1.1 million [4] - Adjusted EBITDA for the fourth quarter was $1.5 million, compared to $1.2 million in the prior-year period [4] Full Fiscal Year Highlights - Total revenue for fiscal 2025 was $16.3 million, compared to $17.8 million for fiscal 2024, with a 35% growth in revenue when excluding the previous year's property sale [6] - Management fee revenue grew 17% year-over-year to $8.4 million, while incentive fees increased by 52% to approximately $4.1 million [6] - As of June 30, 2025, fee-paying assets under management (FPAUM) totaled approximately $553 million, reflecting a 5% increase from the prior year [6] Strategic Partnerships and Investments - The partnership with Kennedy Lewis Investment Management included a purchase of 4.9% of Great Elm's common stock at $2.11 per share and the provision of term loans to Monomoy REIT [8] - In August 2025, Woodstead Value Fund invested $9 million in newly issued shares of GEG at $2.25 per share, aligning interests with shareholders [9] - Booker Smith joined the Board of Directors, bringing expertise in credit and real estate to support the company's growth [9][10] Operational Developments - The company completed the formation of Monomoy Construction Services, enhancing its end-to-end real estate platform [12] - GECC achieved record total investment income of $14.3 million for the quarter ended June 30, 2025, driven by cash flows from its growing CLO platform [12]

Core Insights - Great Elm Group, Inc. announced a strategic investment from Woodstead, an institutional investor, involving the purchase of 4.0 million shares of GEG's common stock at $2.25 per share, totaling $9.0 million [1][2] - Booker Smith has joined GEG's Board of Directors, bringing extensive experience in corporate credit and real estate investing, which will support GEG's strategic priorities [3][4] - The transaction aims to provide growth capital for GEG to expand its assets under management and enhance profitability, with long-term alignment between Woodstead and GEG shareholders through warrants [5][6] Transaction Details - Woodstead is purchasing 4.0 million shares at $2.25 per share, generating gross proceeds of $9.0 million, and will hold 10-year warrants for an additional 2.0 million shares at prices of $3.50 and $5.00 [2][7] - Separately, Great Elm Capital Corp. issued approximately 1.3 million shares to Poor Richard LLC, an affiliate of Booker Smith, at $11.65 per share, raising $15.0 million, which strengthens GECC's balance sheet [6][7] Strategic and Financial Impact - The investment is expected to provide new growth capital for GEG, facilitating the expansion of assets under management and profitability enhancement [5] - The capital raised by GECC is anticipated to generate incremental management fees for GEG once deployed, reflecting investor confidence in GECC's turnaround since March 2022 [6][7] Upcoming Events - GEG will release its fiscal 2025 earnings after market close on September 2, 2025, followed by a conference call on September 3, 2025, at 8:30 a.m. ET [1][8]

Summary of Great Elm Group (GEG) Conference Call Company Overview - **Company**: Great Elm Group (GEG) - **Event**: Conference call regarding Great Elm Real Estate Ventures - **Date**: August 1, 2025 Key Points Industry Insights - **Industrial Outdoor Storage (iOS)**: Identified as an underserved asset class with significant potential for innovation and growth [4][5] - **Macroeconomic Factors**: Reshoring of manufacturing, increasing tariffs, AI-driven data infrastructure, and energy transition initiatives are driving domestic demand for industrial real estate [12] Strategic Developments - **Partnership with Kennedy Lewis**: GEG entered a strategic partnership with Kennedy Lewis Investment Management, managing over $30 billion in assets [6] - **Investment Details**: Kennedy Lewis acquired 4.9% of GEG's common stock at approximately $2.11 per share and will invest up to $150 million in Monomoy Properties REIT [7][8] - **Debt Financing**: Includes a $100 million term loan to Monomoy Properties REIT with an option for an additional $50 million [8] Growth Objectives - **Revenue Targets**: Aiming to grow revenue from Monomoy platform companies from approximately $5 million in fiscal 2025 to $20 million in fiscal 2026, and $100 million by fiscal 2030 [12] - **Asset Growth Goal**: Targeting to grow real estate assets to $1 billion by 2030 [12] Operational Enhancements - **Integrated Real Estate Business**: GEG has developed a comprehensive real estate business with structural advantages and recurring revenue streams [5][6] - **New Services**: Launched Monomoy Construction Services to enhance in-house capabilities [5][10] Market Positioning - **Competitive Edge**: The partnership with Kennedy Lewis is expected to provide a seasoned approach to scaling and monetizing high-potential real estate platforms [10][11] - **Future IPO Potential**: The growth trajectory positions Monomoy REIT for a potential public listing [12] Financial Health - **Current Asset Base**: Monomoy REIT has approximately $400 million in assets across 150 properties in 29 states, servicing 49 unique tenants [9] Conclusion - **Long-term Vision**: The partnership and strategic initiatives are seen as a defining moment for GEG, aiming to deliver durable, compounding returns for shareholders [13] Additional Important Information - **Forward-Looking Statements**: The call included forward-looking statements, and participants were advised to refer to SEC filings for important factors that could cause actual results to differ [2][3] - **Call Structure**: The call included a question and answer session following the formal presentation [1][14]

Strategic Partnership - Great Elm Group (GEG) and Kennedy Lewis Investment Management (KLIM) have formed a strategic partnership to accelerate the growth of the Monomoy real estate platform[3] - KLIM is making a 4.9% investment in GEG's outstanding common stock at approximately $2.11 per share[4] - KLIM is providing a $100 million term loan to Monomoy Properties REIT, LLC, with an option for an additional $50 million[4] - KLIM will receive a 15% profits interest in the newly formed Great Elm Real Estate Ventures, LLC[4] Real Estate Platform - Great Elm Real Estate Ventures (GEREV) unifies GEG's vertically-integrated real estate platform[7] - Monomoy REIT has approximately $400 million in Assets Under Management (AUM) as of June 30, 2025[10, 11] - Monomoy REIT's portfolio consists of 150 properties across 29 states with 49 unique tenants[10] - The portfolio composition of Monomoy REIT is 58% Equipment Rental, 28% Oil Field & Energy Services, and 10% Construction Supply[10] Future Growth - The real estate platform is targeting revenue growth from approximately $5 million in fiscal year 2025 to $20 million in fiscal year 2026, and to over $100 million in fiscal year 2030[19] - The goal is to grow Monomoy REIT's assets to over $1 billion by 2030, targeting a potential IPO[20]