10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended June 30, 2017

or

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

For the transition period from ______ to ________

Commission file number: 001-16073

GREAT ELM CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-3219054
State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
800 South Street, Suite 230, Waltham, MA	02453
(Address of principal executive offices)	(Zip Code)

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

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

Title of each class	Name of each exchange on which registered
Common stock, par value $0.001 per share	The Nasdaq Stock Market LLC
	(Nasdaq Global Select Market)

Securities registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐    No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ☐    No ☒

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒    No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ☐    No ☒

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

☐	Large accelerated filer		☒	Accelerated filer
☐	Non-accelerated filer	(Do not check if a smaller reporting company)	☐	Smaller reporting company

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

☐ Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

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

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $70.0 million as of December 31, 2016. Shares of common stock held by persons who are not directors or executive officers, including persons who own more than 5% of the outstanding shares of common stock, are included in that such persons are not deemed to be affiliates for purpose of this calculation.

As of September 1, 2017, there were 24,139,631 outstanding shares of the registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement (the “Proxy Statement”), which will be filed with the SEC within 120 days following June 30, 2017, in connection with the registrant’s 2017 annual meeting of stockholders, to be held on October 17, 2017, are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	4
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	13
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	26
Item 9A.	Controls and Procedures	26
Item 9B.	Other Information	30
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	30
Item 11.	Executive Compensation	30
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence	30
Item 14.	Principal Accounting Fees and Services	30
PART IV
Item 15.	Exhibits, Financial Statement Schedules	30
Item 16	Form 10-K Summary	30
Exhibit Index		31
Signatures		34
Index to Financial Statements		F-1

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PART I

Unless the context otherwise requires, “we” “us” “our” and terms of similar import refer to Great Elm Capital 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:

▪ our ability to profitably manage Great Elm Capital Corp. (NASDAQ: GECC);

▪ the dividend rate that GECC will pay;

▪ our ability to grow our investment management business;

▪ our ability to build a real estate business;

▪ our ability to raise capital to fund our business plan;

▪ our ability to create a merchant banking business;

▪ our ability to make acquisitions and manage any businesses we acquire;

▪ conditions in the equity capital markets and debt capital markets as well as the economy generally;

▪ our ability to maintain the security of electronic and other confidential information;

▪ serious disruptions and catastrophic events;

▪ competition;

▪ the transformation of our board and executive leadership;

▪ our ability to attract, assimilate and retain key personnel;

▪ compliance with laws, regulations and orders;

▪ changes in laws and regulations;

▪ outcomes of litigation and proceedings and the availability of insurance, indemnification and other third-party coverage of any losses suffered in connection therewith; and

▪ other factors described under “Risk Factors” or as set forth from time to time in our SEC filings.

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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Item 1.  Business.

Overview

Great Elm has undergone a significant transformation in the last year. We:

▪ changed our leadership;

▪ closed on our first investment management business opportunity; and

▪ explored a number of acquisition and investment opportunities.

Our goal is to build a holding company focused on return on investment and long-term value creation.  We will accomplish this principally through:

▪ continuous review of acquisitions of businesses, securities and assets that have the potential for significant long-term value creation;

▪ effective use of the skills of our team, our financial resources, including our tax assets, our willingness to create bespoke solutions and our ability to prudently assume risks; and

▪ evaluating the retention and disposition of our operations and holdings.

Our first investment for long-term value creation was in the investment management business.  In June 2016, we invested $30 million in GECC. On November 3, 2016, Full Circle Capital Corporation (Full Circle), a business development company (BDC), merged with and into GECC.  In this investment management business, we have the opportunity to:

▪ earn management and administrative fees;

▪ earn incentive fees if GECC meets financial targets; and

▪ hold our GECC shares to generate dividends or sell our GECC shares to redeploy our capital in higher yielding opportunities.

We continue to explore other opportunities in the investment management business including, but not limited to, transactions with other BDCs that trade at a discount to their net asset value, as well as the creation of closed-end investment vehicles.

As of June 30, 2017, we had $1.7 billion of net operating loss (NOL) carryforwards for Federal income tax purposes.

Our corporate headquarters is located at 800 South Street, Suite 230, Waltham, Massachusetts 02453 and our phone number is (617) 375-3006. Our corporate website address is www.greatelmcap.com. The information contained in, or accessible through, our corporate website does not constitute part of this report.  We are a Delaware corporation that was incorporated in 1994 and completed our initial public offering in 1999.

Our Divested Patent Business

On April 6, 2016, we entered into a purchase and sale agreement with Optis providing for the sale of the entities that conducted our patent licensing business (the Divestiture).  The Divestiture was completed on June 30, 2016.

In the Divestiture, we received $34.2 million in gross cash proceeds, inclusive of reimbursement of $4.2 million of agreed upon expenses, and may be entitled to up to an additional $10 million cash payment on June 30, 2018. Optis has claimed that it has losses indemnifiable under the purchase and sale agreement in excess of the $10 million contractual payment due on June 30, 2018.  As a result, we have not recognized any portion of the $10 million in the accompanying consolidated financial statements for the periods presented. Our legacy patent business is reflected in our financial statements as discontinued operations.

Great Elm Capital Corporation ― Our Business Development Company Investment

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’ industry expertise.

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On June 23, 2016, GECC entered into an agreement and plan of merger with Full Circle (the Merger Agreement) and entered into a subscription agreement (the Subscription Agreement) with us and private investment funds (the MASTFunds) managed by MAST Capital Management, LLC (MAST Capital).

We contributed $30 million in cash to GECC.  As of June 30, 2016, GECC was our wholly-owned subsidiary and it is consolidated in our June 30, 2016 financial statements.  On September 27, 2016, the MAST Funds contributed to GECC a portfolio of debt investments that had a November 3, 2016 fair value of approximately $90 million.  Following the MAST Funds contribution, GECC elected to be treated as a BDC under the Investment Company Act of 1940, as amended (the Investment Company Act).

On November 3, 2016:

▪ Full Circle merged with and into GECC (the Merger) in exchange for shares of GECC common stock, and GECC’s common stock became listed on the NASDAQ Global Market;

▪ Great Elm Capital Management, Inc., our wholly-owned registered investment adviser subsidiary (GECM), is the external investment adviser to GECC; and

▪ GECM hired all of the employees of MAST Capital and acquired all of the infrastructure used by our GECM team.

We have two opportunities to generate free cash flow from GECC.

Under the investment management agreement (IMA) with GECC that is an exhibit to this report, GECM will be entitled to:

▪ management fees measured by GECC’s gross assets (other than cash and cash equivalents, including investments in money market funds);

▪ an incentive fee if GECC’s net investment income exceeds a hurdle rate; and

▪ an incentive fee based on GECC’s capital gains.

We also earn an administration fee based on the reimbursement of the portion of GECM’s expenses allocable to GECC.

We own approximately 17% of GECC’s shares that we may hold to generate dividends or sell to redeploy our capital in higher yielding opportunities.  Our GECC shares are registered for re-sale; however, we agreed that we would not sell these shares until November 3, 2017, but we may finance these shares during that holding period to generate liquidity before our contractual holding period expires.

In September 2017, we entered into a Separation Agreement that separated our business from MAST Capital and restructured many of these arrangements.

Acquisition Program

GECM’s team also is developing an active acquisition program for us in the investment management business, in select real estate opportunities and in operating businesses.  In the fiscal year ended June 30, 2017, we evaluated a number of opportunities but were unwilling to pay the significant multiples that the sellers received from third parties.

Competition

We face competition from larger, well financed organizations (both domestic and foreign), including operating companies, global asset managers, investment banks, commercial banks, private equity funds, sovereign wealth funds and state owned enterprises.  Government regulation is a key competitive factor.

Employees

We had sixteen employees as of June 30, 2017; two in our parent company, seven in investment management and seven providing shared services.

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Information about Great Elm on the Internet

The following documents and reports are available on or through our website as soon as reasonably practicable after we electronically file such materials with, or furnish to, the SEC:

▪ Code of Ethics;

▪ Reportable waivers, if any, from our Code of Ethics by our executive officers;

▪ Charter of the audit committee of our board of directors (our Board);

▪ Charter of the nominating and corporate governance committee of our Board;

▪ Charter of the compensation committee of our Board;

▪ Annual reports on Form 10-K;

▪ Quarterly reports on Form 10-Q;

▪ Current reports on Form 8-K;

▪ Proxy or information statements we send to our stockholders; and

▪ Any amendments to the above-mentioned documents and reports.

Our stockholders may also obtain a printed copy of any of these documents or reports free of charge by sending a request to Great Elm Capital Group, Inc., 800 South Street, Suite 230, Waltham, MA 02453; Attention: Investor Relations, or by calling (617) 375-3006.

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 or incorporated by reference 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 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.

Risks Related to Our Business

We have a limited track record in the investment management business, and provide no assurance as to our acquisition and investment program. We entered the investment management business during fiscal 2017, so there is limited historical information about our performance in the investment management business on which to base your investment decision.

We have plans to make significant investments but cannot provide specificity as to our future investments or financing plans.

These and other factors, including the other risk factors described in this document, make it difficult for you and other market participants to value our company and our prospects. We are unaware of any comparable company that securities analysts can use to benchmark our performance and valuation. We cannot give any assurance that any of the uncertainties or risk factors in this document will be favorably resolved.

Our investment management agreement may be terminated by GECC in its discretion.  Our IMA may be cancelled by GECC on sixty days-notice for any reason or no reason.  We do not control the board of directors of GECC, and they may cancel our IMA at their discretion without making any termination payment to us.  GECM’s team investment performance is a key element of retaining this business.  We have recorded an intangible asset attributable to the IMA that is being amortized over a fifteen-year economic life even though the IMA is cancellable by GECC without penalty or termination fee and is renewable annually through a process mandated under the Investment Company Act.

Our growth strategy may not be successful. The process to identify potential investment opportunities and acquisition targets, to investigate and evaluate the future returns therefrom and business prospects thereof and to negotiate definitive agreements with respect to such transactions on mutually acceptable terms can be time consuming

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and costly. 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, 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 business combinations.

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. Our business strategy contemplates investment in one or more operating businesses. 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 with which we may ultimately invest. 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. Except as required under Nasdaq rules and applicable law, we will not seek stockholder approval of any investment 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.

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.

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. As a result of these factors, 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 us reporting losses. 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. 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 net worth or other covenants under our debt agreements. Accordingly, you could suffer a significant reduction in the value of your shares.

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:

▪ Adverse changes in the market could also lead to a reduction in investment management fees and investment income from managed funds and losses on our own capital invested in managed funds. Even in the absence of a market downturn, below-market investment performance by our funds and portfolio managers could reduce asset management revenues and assets under management and result in withdrawal of fee-generating assets under management and reputational damage that might make it more difficult to attract new investors.

▪ Limitations on the availability of credit, such as occurred during 2008, can affect our ability to borrow on a secured or unsecured basis, which may adversely affect our liquidity and results of operations. Global market and economic conditions have been disrupted and volatile in the last several years and may be in the future. Our cost and availability of funding could be affected by illiquid credit markets and wider credit spreads.

▪ New or increased taxes on compensation payments or financial transactions may adversely affect our profits, if earned. Should one of our customers, debtors or competitors fail, our business prospects and revenue could be negatively impacted due to negative market sentiment causing customers to cease doing business with us and our lenders to cease extending credit to us, which could adversely affect our business, funding and liquidity.

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Our common stock price may be volatile. The trading price of our common stock may fluctuate substantially, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:

▪ price and volume fluctuations in the overall stock market from time to time;

▪ significant volatility in the market price and trading volume of securities of our competitors;

▪ actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations or recommendations of securities analysts;

▪ material announcements by us or our competitors regarding business performance, financings, mergers and acquisitions or other transactions;

▪ general economic conditions and trends;

▪ legislative or regulatory changes affecting the businesses we invest in; or

▪ departures of key personnel.

Our business, financial condition and results of operations are dependent upon those of our individual businesses, and our aggregate investment in particular industries. We are a holding company that will make investments in businesses and assets in a number of industries. 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. 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. Our portfolio of investments will change from time to time.

Our ability to successfully grow our new business and to be successful thereafter will be totally dependent upon the efforts of our key personnel. The loss of key personnel could negatively impact the operations and profitability of our business. Our ability to successfully effect our growth strategy is dependent upon the efforts of our key personnel. Peter. A. Reed is Chief Executive Officer of GECC and in September 2017 became our Chief Executive Officer. Our key personnel realize their importance to our business and may demand increased compensation as a result. The loss of our key personnel could severely negatively impact the operations and profitability of our business. We compete with many other entities for skilled management and staff employees, including entities that operate in different market sectors than us. Delays in recruiting and costs to recruit and retain adequate personnel could materially adversely affect results of operations.

Difficult market conditions can adversely affect our asset management 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. The build-out of our asset management 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, economic uncertainty, changes in laws and regulations, market perceptions and other factors. In addition, we made a substantial investment in GECC that has resulted in an unrealized loss as of June 30, 2017 of approximately 30% of our investment. Adverse changes could lead to a reduction in investment income, losses on our own capital invested and lower revenues from asset 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 asset 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.

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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 such issuances would dilute the interest of our stockholders and likely present other risks. Our certificate of incorporation authorizes our board of directors to issue shares of our common stock or preferred stock from time to time in their business judgement 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:

▪ may significantly dilute your equity interests;

▪ may require you to make an additional investment in us or suffer dilution of your equity interest;

▪ may subordinate the rights of holders of shares of our common stock if shares of preferred stock are issued with rights senior to those afforded to our common stock;

▪ could cause a change in control if a substantial number of shares of our common stock are issued;

▪ may affect, among other things, our ability to use our net operating loss carry forwards and could result in the resignation or removal of our present officers and directors; and

▪ may adversely affect prevailing market prices for our common stock.

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. The incurrence of debt could have a variety of negative effects, including:

▪ default and foreclosure on our assets if our operating cash flows are insufficient to repay our debt obligations;

▪ acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach covenants that require the maintenance of financial ratios or reserves without a waiver or renegotiation of that covenant;

▪ our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;

▪ our inability to pay dividends on our common stock;

▪ using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock (if declared), expenses, capital expenditures, acquisitions and other general corporate purposes;

▪ limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

▪ increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

▪ limitation on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

If we are deemed to be an investment company under the Investment Company Act of 1940 (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. Under the Investment Company Act, our activities may be restricted, including:

▪ restrictions on the nature of our investments, and

▪ restrictions on the issuance of securities,

each of which may make it difficult for us to run our business. In addition, the law may impose upon us burdensome requirements, including:

▪ registration as an investment company;

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▪ adoption of a specific form of corporate structure; and

▪ reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

There are conflicts of interest involving MAST Capital and its affiliates, that own approximately 8.7% of the Company’s outstanding stock, and are participants in material transactions. These conflicts of interest, include, among others:

▪ Funds managed by MAST Capital are our largest stockholder and appointed two members of our board of directors, in addition to the prior appointment of Peter A. Reed, during the fiscal year ended June 30, 2017;

▪ Funds managed by MAST Capital owned all of our previously outstanding Senior Secured Notes which we settled in October 2016 for total cash payments of approximately $39.8 million;

▪ Peter A. Reed, was a partner in MAST Capital, became our Chief Executive Officer in September 2017, is a member of our board of directors, Chief Executive Officer of GECC and Chief Investment Officer of GECM;

▪ In connection with hiring the MAST Capital team, we took over a substantial portion of the operating expenses of MAST Capital and those transactions were restructured in September 2017;

▪ We assumed MAST Capital’s commercial contracts, leases and other obligations; and

▪ MAST Capital, its partners and employees will receive compensation in connection with GECC’s business, directly and through their equity ownership of GECC GP Corp (GP Corp) subsidiary and a note payable of GP Corp.

These conflicts of interest may result in arrangements that are not as favorable to us as those available on an arms-length basis. The significant ownership stake held by the MAST Funds may result in MAST Capital and its partners having undue influence over our affairs. These conflicts of interests may adversely affect the perception of our company, the value of our common stock or the willingness of new investors to invest in us.

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 a business combination with one or more target businesses that have relationships with the MAST Funds, 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 acquire or do business with one or more businesses affiliated with the MAST Funds or our executive officers and directors.

Our directors also serve as officers and board members for other entities. Such entities may compete with us. We could pursue an affiliate transaction if we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by a majority of our disinterested directors. Potential conflicts of interest may exist, and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.

We may not be able to generate sufficient taxable income to fully realize our deferred tax asset, which would also have to be reduced if U.S. federal income tax rates are lowered. At June 30, 2017, we had net operating loss carryforwards of approximately $1.7 billion. If we are unable to generate sufficient taxable income, we will not be able to fully realize the full amount of the net deferred tax asset. If we are unable to generate sufficient taxable income prior to the expiration of our U.S. federal net operating loss carryforwards, the net operating loss carryforwards would expire unused. Our projections of future taxable income required to fully realize the recorded amount of the gross deferred tax asset reflect numerous assumptions about our operating businesses and investments, and are subject to change as conditions change specific to our business units, investments or general economic conditions. Changes that are adverse to us could result in the need to increase the deferred tax asset valuation allowance resulting in a charge to results of operations and a decrease to stockholders’ equity. In addition, if U.S. federal income tax rates are lowered, we would be required to reduce our net deferred tax asset with a corresponding reduction to earnings during the period.

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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.

Catastrophic events (or combination of events), such as terrorism/sabotage, or fire, as well as deliberate cyber terrorism, could adversely impact our financial performance. Our assets under management could be exposed to effects of catastrophic events, such as severe weather conditions, natural disasters, major accidents, acts of malicious destruction, sabotage or terrorism, which could adversely impact our operations.

Additionally, the perceived threat of a terrorist attack could negatively impact us. Any damage or business interruption costs as a result of uninsured or underinsured acts of terrorism could result in a material cost to us and could adversely affect our business, financial condition or results of operation. Adequate terrorism insurance may not be available at rates we believe are reasonable in the future. All of the risks indicated in this paragraph could be heightened by foreign policy decisions of the U.S. and other influential countries or general geopolitical conditions.

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.

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 may invest in real estate. We may invest in commercial properties and are therefore exposed to certain risks inherent in the commercial property business. Commercial property investments are subject to varying degrees of risk depending on the nature of the property. These risks include changes in general economic conditions (such as the availability and cost of mortgage capital), local conditions (such as an oversupply of space or a reduction in demand for real estate in the markets in which we operate), the attractiveness of the properties to tenants, competition from other landlords and our ability to provide adequate maintenance at an economical cost.

Certain expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges, must be made whether or not a property is producing sufficient income to service these expenses. Commercial properties are typically subject to mortgages which require debt service payments. If we become unable or unwilling to meet mortgage payments on any property, losses could be sustained as a result of the mortgagee’s exercise of its rights of foreclosure or of sale.

Continuation of rental income is dependent on favorable leasing markets to ensure expiring leases are renewed and new tenants are found promptly to fill vacancies. It is possible that we may face a disproportionate amount of space expiring in any one year. Additionally, rental rates could decline, tenant bankruptcies could increase and tenant renewals may not be achieved, particularly in the event of an economic slowdown.

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Retail property operations are susceptible to any economic factors that have a negative impact on consumer spending. Lower consumer spending would have an unfavorable effect on the sales of our retail tenants, which could result in their inability or unwillingness to make all payments owing to us, and on our ability to keep existing tenants and attract new tenants. Significant expenditures associated with each equity investment in real estate assets, such as mortgage payments, property taxes and maintenance costs, are generally not reduced when there is a reduction in income from the investment, so our income and cash flow would be adversely affected by a decline in income from retail properties. In addition, low occupancy or sales at retail properties, as a result of competition or otherwise, could result in termination of or reduced rent payable under retail leases, which could adversely affect retail property revenues.

Hospitality and multifamily business are subject to a range of operating risks common to these industries. The profitability of our investments in these industries may be adversely affected by a number of factors, many of which are outside our control. Such factors could limit or reduce the demand for or the prices hospitality properties are able to obtain for their accommodations, or could increase costs and therefore reduce the profitability of hospitality businesses. There are numerous housing alternatives which compete with multifamily properties, including other multifamily properties as well as condominiums and single-family homes. This competitive environment could have a material adverse effect on our ability to lease our properties, as well as on the rents realized

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 business development companies, private equity funds, other financial institutions and special purpose acquisition companies. 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 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 hiring and retaining the employees we need to effectively operate our business. The financial services industry is subject to extensive laws, rules and regulations. Firms that engage in securities and derivatives trading, wealth and asset management and investment banking 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, recordkeeping 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.

At any moment in time, we may be subject to one or more such investigation or similar reviews. There can be no assurance that our operations will not violate such laws, rules, or regulations and such investigations and similar reviews will not result in adverse regulatory requirements, regulatory enforcement actions and/or fines.

We may incur losses if our risk management is not effective. We seek to monitor and control our risk exposure. Our risk management processes and procedures are designed to limit our exposure to acceptable levels as we conduct our business. We intend to develop and apply a comprehensive framework of limits on a variety of key metrics to constrain the risk profile of our business activities. The size of the limit reflects our risk tolerance for a certain activity. The framework is expected to include investment position and exposure limits on a gross and net basis, scenario analysis and stress tests, value-at-risk, sensitivities, exposure concentrations, aged inventory, amount of Level 3 assets, counterparty exposure, leverage, cash capital, and performance analysis. While we intend to employ various risk monitoring and risk mitigation techniques, those techniques and the judgments that accompany their application, including risk tolerance determinations, cannot anticipate every economic and financial outcome or the specifics and timing of such outcomes. As a result, we may incur losses notwithstanding our risk management processes and procedures.

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Operational risks may disrupt our business, result in regulatory action against us or limit our growth. Our businesses will be 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.

In addition, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services used by us or third parties with which we conduct business. Our operations will rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. Additionally, if a customer’s computer system, network or other technology is compromised by unauthorized access, we may face losses or other adverse consequences by unknowingly entering into unauthorized transactions. If one or more of such events occur, this potentially could jeopardize our, our customers’ or counterparties’ confidential and other information processed and stored in, and transmitted through, our computer systems and networks. Furthermore, such events may cause interruptions or malfunctions in our, our customers’, our counterparties’ or third parties’ operations, including the transmission and execution of unauthorized transactions.

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 the subject of attempted unauthorized access, computer viruses and malware, and cyber attacks designed to disrupt or degrade service or cause other damage and denial of service. Additional challenges are posed by external parties, including foreign state actors. 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 may harm our business. Many aspects of our business involve substantial risks of liability.

Recent legislation and new or pending regulation may significantly affect our business. In recent years, 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 its business. Significant tax reform is currently proposed and changes in the law could adversely affect the value of our NOLs and our ability to realize such value. 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.

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.

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We have identified multiple material weaknesses in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act.  As disclosed elsewhere in this report, as of June 30, 2017, we identified material weaknesses in our internal control over financial reporting primarily as a result of our finance staffing, the design and effectiveness of certain controls, and testing of the operation of our internal controls. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission in Internal Control—An Integrated Framework (2013). We are actively engaged in developing a remediation plan designed to address these material weaknesses. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.

Risks Relating to Our Common Stock

Our common stock is subject to transfer restrictions. We have significant net operating loss 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 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 (the Code) or any successor statute if our board of directors 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 of directors determines that no tax benefits may be carried forward, (3) such date as our board of directors may fix for expiration of transfer restrictions and (4) January 29, 2018. The restriction may be waived by our board of directors 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.

We also have a 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 of directors. Holders of more than 4.99% of our common stock on the day the rights plan was adopted were exempted from this limitation as to the number shares they held at the time of adoption of the rights plan.

Anti-takeover provisions contained in our certificate of incorporation and 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 of directors. Our corporate governance documents include provisions:

▪ authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock;

▪ limiting the liability of, and providing indemnification to, our directors and officers;

▪ limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;

▪ requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;

▪ controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;

▪ limiting the ability for persons to acquire 4.99% or more of our common stock;

▪ providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings;

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▪ limiting the determination of the number of directors on our board of directors and the filling of vacancies or newly created seats on the board to our board of directors then in office; and

▪ providing that directors may be removed by stockholders only for cause.

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 amended and restated 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.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We currently lease office space in Boston and Waltham, Massachusetts.  In December 2016, we terminated our Boston lease with an effective date of December 2017.  Our Waltham lease is non-cancellable through September 2024.

Item 3. Legal Proceedings.

We have been named in two related complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al., filed on September 23, 2016 (the Saunders Action), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the Russell Action), were filed in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the Circuit Court), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the Speiser Action, and together with the Saunders Action and the Russell Action, the Actions).  

On October 24, 2016, we, along with Full Circle, GECC, MAST Capital, certain directors of Full Circle and the plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the MOU). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and GECC agreed to and did make the supplemental disclosures with respect to the merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the Stipulation) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the Merger Agreement; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle's stockholders. There can be no assurance that the settlement will be finalized or that the Circuit Court will approve the settlement. We have determined there is a remote possibility the outcome of these complaints will have a material effect on our financial position, results of operations, or cash flows.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Record Holders

As of September 1, 2017, there were 169 record holders of our common stock.

Dividends

We did not pay dividends during the fiscal years ended June 30, 2017, 2016, or 2015. We do not currently intend to pay dividends.  The payment of dividends in the future is subject to the discretion of our board of directors and will depend upon general business conditions, legal and contractual restrictions on the payment of dividends and other factors that our board of directors may deem to be relevant.

Restrictions on Ownership

We have significant 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 five percent or more of the common shares and the ability of persons or entities now owning five percent or more of the common shares from acquiring additional common shares. We also have a tax benefits preservation rights plan that restricts ownership of 4.99% or more of our outstanding shares of common stock.  Our board of directors has granted a waiver for the MAST Funds to own up to 19.9% of our common stock (as of the date of this report, MAST Funds and affiliates own approximately 8.7% of outstanding shares of common stock). Persons that owned more than 4.99% of our common stock when the rights plan was adopted were grandfathered as to their then-current holdings of our common stock.

Trading Prices

Our common stock is traded on the Nasdaq Global Select Market.  Our common stock traded under the symbol “UPIP” until June 17, 2016 when it began trading under the symbol “GEC.” On January 5, 2016, we effected a one for twelve reverse stock split.  All share numbers in this report have been retroactively restated to give effect to the 1:12 reverse stock split.  The following table shows the high and low trading price during the applicable period as reported by Bloomberg LP.

Fiscal Period	Low		High
2017
Fourth quarter	$	3.10	$	3.70
Third quarter	$	2.95	$	3.85
Second quarter	$	3.45	$	4.79
First quarter	$	4.10	$	6.97
2016
Fourth quarter	$	5.45	$	10.10
Third quarter	$	8.44	$	11.31
Second quarter	$	8.11	$	12.96
First quarter	$	7.20	$	10.32

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Performance Graph

Based on $100 invested on June 30, 2012 in stock or index, including reinvestment of dividends through fiscal the fiscal year ended June 30, 2017.

Stock Purchases

None

Item 6. Selected Financial Data.

The following selected financial data should be read in conjunction with our consolidated financial statements and related notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.

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The following table sets forth selected consolidated statement of operations and consolidated balance sheet data, revised to reflect discontinued operations as of, and for the following fiscal years:

	Fiscal Year ended June 30,
Amounts in thousands (except per share data)	2017			2016			2015			2014			2013
Selected Consolidated Statements of Operations    Data:
Net revenues	$	4,927		$	—		$	—		$	—		$	—
Operating expenses		9,532			9,835			8,040			5,709			14,965
Operating income (loss) from continuing operations		(4,605	)		(9,835	)		(8,040	)		(5,709	)		(14,965	)
Interest expense		(6,321	)		(4,947	)		(4,332	)		(3,697	)		(34	)
Unrealized gain (loss) on investments		(9,114	)		—			—			—			—
Income (loss) from continuing operations		(17,440	)		(9,440	)		(12,196	)		(5,592	)		(15,153	)
Discontinued operations:
Income (loss) from discontinued operations, net    of tax		2,203			(5,830	)		(29,563	)		6,025			(24,676	)
Gain (loss) on sale of discontinued operations		—			24,692			—			—			(7,784	)
Total income (loss) from discontinued operations		2,203			18,862			(29,563	)		6,025			(32,460	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)	$	433		$	(47,613	)
Less: net loss attributable to non-controlling interest		(30	)		—			—			—			—
Net income (loss) attributable to Great Elm Capital Group	$	(15,207	)	$	9,422		$	(41,759	)	$	433		$	(47,613	)
Basic and diluted earnings (loss) per share
Continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)	$	(0.62	)	$	(2.00	)
Discontinued operations	$	0.13		$	2.00		$	(3.17	)	$	0.67		$	(4.29	)
Net income (loss) per share	$	(0.93	)	$	1.00		$	(4.48	)	$	0.05		$	(6.29	)
Shares used in computing basic and diluted    earnings (loss) per share:		16,433			9,412			9,332			8,999			7,570

	As of June 30,
	2017		2016		2015		2014		2013
Selected Consolidated Balance Sheets Data:
Cash and cash equivalents	$	45,894	$	80,711	$	73,755	$	93,877	$	47,613
Investment management fees receivable - related party	$	3,306	$	—	$	—	$	—	$	—
Investments (1)	$	20,886	$	—	$	11,713	$	51,813	$	10,793
Identifiable intangible assets, net	$	4,102	$	—	$	—	$	—	$	—
Total assets	$	76,694	$	80,897	$	88,884	$	150,441	$	78,238
Liabilities related to discontinued operations	$	3,608	$	7,354	$	30,067	$	53,603	$	—
Lease liabilities (2)	$	2,061	$	—	$	—	$	—	$	—
Related party note payable	$	3,174	$	33,786	$	29,874	$	25,693	$	22,096
Stockholders' equity	$	66,216	$	36,821	$	23,504	$	63,071	$	43,927

(1) Includes short and long-term investments.

(2) Includes short and long-term liabilities.  For US GAAP reporting purposes, we implemented the new lease standard utilizing practical expedients related to contracts containing leases in the periods prior June 30, 2017.  As a result, we were not required to retroactively adjust our balance sheet as of June 30, 2016.  Further, no adjustment has been made to the balance sheet data as presented as of June 30, 2015, 2014, and 2013 not presented in the accompanying consolidated financial statements.

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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 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

Until the fourth quarter of the fiscal year ended June 30, 2016, we conducted an intellectual property licensing business drawing upon a portfolio of approximately 2,500 patent assets with a goal of generating revenue by selling and licensing our patents. In 2013, we combined our legacy intellectual property assets together with over 2,000 patent assets acquired from Telefonaktiebolaget LM Ericsson and one of its subsidiaries (collectively, Ericsson).  Our patent licensing operations and holding of the underlying patents were conducted through our wholly-owned subsidiaries.

In April 2016, we entered into an agreement to divest our patent licensing operations. That transaction closed on June 30, 2016. We have presented our financial statements to account for the patent licensing component of our operations as discontinued operations.

Our goal is to build a diversified holding company focused on return on investment and long-term value creation. Our first investment in furtherance of this goal is our investment management business. We invested $30 million in GECC, which was our wholly owned subsidiary as of June 30, 2016 and was deconsolidated on November 1, 2016. Our GECM subsidiary is GECC's external investment advisor.

During the fiscal year ended June 30, 2017, our business significantly changed and we made a number of changes in financial reporting:

▪ On November 1, 2016, we deconsolidated GECC and thereafter accounted for our remaining 17% equity interest at fair value;

▪ Since September 27, 2016, we have been GECC’s investment manager through our wholly-owned subsidiary GECM, and on November 4, 2016 we began earning fees for providing services to GECC;

▪ On November 3, 2016, we hired, through GECM, all of the employees of MAST Capital and entered into a series of transactions with MAST Capital and its employees, including the issuance of a note payable;

▪ On November 3, 2016, we determined that our investment management business is a separate reportable segment;

▪ On October 18, 2016, we retired our 12.875% related party Senior Secured Notes;

▪ On December 30, 2016, we substantially completed a backstopped rights offering for approximately $45.0 million of proceeds, before deducting offering costs;

▪ We adopted new accounting standards with respect to leases, acquisitions and stock-based compensation.

In September 2017, we separated our business from MAST Capital, which restructured a number of the arrangements we entered into in November 2016.

Critical Accounting Policies

Deferred Tax Assets.

We have fully reserved our $1.7 billion of net operating loss carryforwards. As a result, the related deferred tax asset nets to zero in our financial statements.

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Investment in GECC.

We own approximately 17% of the outstanding shares of GECC, and our GECM subsidiary is GECC’s investment manager. As GECC’s investment manager, GECM has significant influence over GECC.  As permitted by GAAP, we have elected to mark-to-market our investment in GECC rather than using the equity method of accounting to record a pro-rata portion of GECC’s financial position, results of operations and cash flows.

Investment Management Assets Acquired.

On November 3, 2016, our GP Corp subsidiary issued a promissory note payable up to a maximum principal amount of $10.8 million (the GP Corp Note), that had an estimated fair value of approximately $3.4 million.  We also issued a warrant to purchase up to 54,733 shares of our common stock to acquire certain assets from MAST Capital.  The assets acquired and liabilities assumed include, among others, an investment management contract; immaterial office equipment; and the assumption of a lease and other liabilities necessary for our investment management operations.  As part of the acquisition, we have preliminarily allocated substantially all of the fair value of the consideration paid, as estimated through the utilization of discounted cash flow attribution, of approximately $3.9 million, to a single identifiable intangible asset with an estimated useful life on the date of acquisition of 15 years.  See “Risk Factors — Our investment management agreement may be terminated by GECC in its discretion.”

In September 2017, we entered into the Separation Agreement, which is an exhibit to this report, that significantly restructured many of these arrangements.

Contingent Asset.

In connection with the divestiture of our patent business, Optis, the purchaser of our patent business is obligated to make a deferred purchase price payment to us of up to $10 million.  Optis has claimed that it has indemnifiable losses in excess of $10 million as stated in the purchase and sale agreement.  We are currently unable to estimate how much, if any, of the deferred purchase price will be collected.  Accordingly, we have not reflected a contingent asset in respect of the deferred purchase price on our financial statements.

Revenue Recognition

Revenues from the investment management segment primarily consist of management fees, incentive fees and administrative fees.

The base management fee from GECC is calculated at an annual rate of 1.50% of GECC’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee is received quarterly in arrears. The base management fee is calculated based on the average value of GECC’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

The incentive fee from GECC consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, GECC will pay GECM 20% of the amount by which GECC’s pre-incentive fee net investment income (the Pre-Incentive Fee Net Investment Income) for the quarter exceeding a hurdle rate of 1.75% of GECC’s net assets at the end of the immediately preceding calendar quarter. These calculations will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the then current quarter.

Under the capital gains component of the incentive fee, GECC is obligated to pay us at the end of each calendar year 20% of the aggregate cumulative realized capital gains from November 4, 2016 through the end of that twelve-month fiscal period, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees.

Incentive fees are recorded on an accrual basis to the extent such amounts are contractually due. Accrued but unpaid incentive fees and deferred incentive fees as of the reporting date are recorded in related party investment management fees receivable in the accompanying consolidated balance sheets. Incentive fees are recognized at the end of a measurement period. Once realized, such fees are not subject to reversal.

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We have not provided any allowance for un-collectability of deferred management fees attributable to accrued but unpaid interest.

Intangible Assets

We have recognized separately identifiable intangible assets as part of the Acquisition.  We estimated the acquisition date fair value of our identifiable intangibles based on the expected future cash flows of the acquired assets.  The fair value of our identifiable intangible assets was determined using the income approach, utilizing the discounted cash flows over a twenty-five year period.

Our identifiable intangible assets are being amortized over 15 years based on the discounted cash flows, the period in which we expect to recover substantially all of our initial capital investment.  Various factors within, and beyond, our control could result in significant differences from our acquisition date estimates.

Performance Shares

We granted an aggregate of 1,058,694 shares (net of forfeitures through June 30, 2017) of restricted stock with both performance and services requirements in connection with the formation of our investment management business. The vesting of these awards is subject to a five-year service requirement and an IMA cumulative revenue collection target of $40 million.  In order to recognize compensation expense over the vesting period, we are required to estimate the probability of the performance target being met on an on-going basis.  Additionally, we have elected to recognize the financial impacts of award forfeitures in the period in which they incur.  In the period of forfeiture, all previously recognized compensation expense associated with unvested awards is reversed.  

Although these shares are considered outstanding and entitled to vote for legal purposes, they are not accounted for as issued and outstanding for financial reporting purposes since they do not vest, and are subject to forfeiture, until the performance and service requirements are met.

Operational Results

The following discussion is reflective of the reclassification of our divested patent business on June 30, 2016.  The results of our divested patent business have been reclassified to discontinued operations for all periods presented.  Additionally, the operations of our investment management segment commenced in November 2016.

Due to the strategic shifts in our business through June 30, 2017, the results of operations for the year ended June 30, 2017 are not comparative for the same periods ended June 30, 2016 and 2015.

Investment Management Business

The key metrics of our investment management business include:

▪ Assets under management ― which provides the basis on which our management fees and performance milestones for vesting of certain equity awards are based

▪ Investment Performance ― on which our incentive fees (if any) are based and on which we are measured against our competition

▪ EBITDA and adjusted EBITDA – which are (non-GAAP) measurements of our investment management operations

▪ Dividends and GECC share price ― which determine the return on our investment in GECC shares

▪ 90-day LIBOR ― which impacts the investment performance of GECC and determines the cost of GP Corp’s debt

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The following table provides the results of our investment management business since its commencement in November 2016:

Dollar amounts in thousands	November 3, 2016 to June 30, 2017
Revenue:
Investment management advisory fees	$	4,927
Operating costs and expenses:
General and administrative		(3,345	)
Stock based compensation		(1,434	)
Depreciation and amortization		(340	)
Total investment management operating expenses		(5,119	)

Investment Management Revenue.  For the period from November 3, 2016 through June 30, 2017, we recognized $1.5 million of investment management fees; and $2.8 million of incentive fees based on GECC’s results of operations, additionally, we recognized $0.6 million in administrative fees. Our quarterly management fees fluctuate based on the fair value of the non-cash and cash equivalent assets of GECC.  In order to receive incentive fees that are based on net investment income, GECC’s net investment income must exceed the 1.75% quarterly hurdle rate.  We also earn an incentive fee based on GECC’s net capital gains.  Our recognized incentive fees are not expected to be collected within the next twelve months.

Investment Management Costs and Expenses.  During the period for November 3, 2016 through June 30, 2017, our investment management business’ costs primarily consisted of payroll and related costs of $3.5 million (inclusive of stock based compensation); facilities and other administrative costs of $1.3 million; and the amortization of intangible assets acquired totaling $0.3 million.  We will continue to amortize the intangible assets associated with our investment management business over the remaining useful life of 14.3 years as of June 30, 2017.  As a result of the Separation Agreement, we did not record any receivable in the quarter ended June 30, 2017 for amounts that would have been payable by MAST Capital under the Cost Sharing Agreement.

General Corporate Expenses

The following table represents operating expenses for the 2017, 2016 and 2015 fiscal years, respectively (dollars in thousands):

	Year Ended June 30,
				Percent						Percent
	2017			Change			2016			Change			2015
Operating costs and expenses - general    corporate
General and administrative	$	4,413			-55	%	$	9,772			23	%	$	7,933
Other income (loss) - general corporate
Interest expense, net		(6,321	)		28	%		(4,947	)		14	%		(4,332	)
Other income, net		84			-64	%	233				-13	%		268

General and Administrative Expenses. General and administrative expenses consisted primarily of (1) salary and benefit expenses and travel expenses for employees, including our Chief Executive and Chief Financial Officer and (2) facility costs for our finance, legal, and information services functions. General and administrative expenses also include outside accounting and legal fees and public company costs.

$3.0 million of the reduction in general and administrative expenses for fiscal 2017 was the result of a one-time reimbursement of professional and other fees, that were recognized and expensed in fiscal 2016 and reimbursed in fiscal 2017, associated with the formation of GECC; and reductions in general corporate overhead undertaken by our interim management team. The increase in general and administrative expense during 2016 compared with the 2015 fiscal year is attributable to increases related to additional consulting expenses associated with our divestiture, additional legal fees, and consultant engagements.

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Dividends.  For the period November 3, 2016 to June 30, 2017, we earned $1.3 million of dividends on our investment in GECC.  In order to maintain its regulated investment company status for tax purposes and avoid excise taxes, GECC is required to distribute a significant portion of its net income to its stockholders. We record our pro rata share of such distributions if, as and when declared by GECC’s board of directors.

Unrealized Loss. We mark-to-market our investment in GECC by reference to the closing price of GECC common stock on Nasdaq (an observable Level 1 valuation input). For the period from November 1, 2016 (when we deconsolidated GECC) to June 30, 2017, we recognized $9.1 million of unrealized loss.  We may be required to record further losses related to our investment in GECC in the future.

Interest Expense, net. Net interest expense totaled $6.3 million, $4.9 million, and $4.3 million for the 2017, 2016, and 2015 fiscal years, respectively.

Total interest expense incurred during fiscal 2017 was $6.3 million; of which $0.3 million was incurred from the GP Corp note.  Interest expense related to the previously outstanding related party Senior Notes, totaling $6.0 million represents:  $2.0 million of premium paid on retirement of our Senior Notes; $2.8 million of non-cash write off of original issue discount and deferred issuance costs; and $1.2 million of interest on the Senior Notes from July 1, 2016 to the October 18, 2016 payoff date.

Interest expense for the fiscal years ended June 30, 2016 and 2015 was attributable to interest on our related party Senior Notes issued on June 28, 2013 and paid off on October 18, 2016. Interest expense on the Senior Notes during fiscal 2016 and 2015 consisted of in-kind payments and amortization of a discount and deferred issuance costs.  

Other Income, net. We did not recognize any individually significant transactions resulting in the recognition of other income for the fiscal years ended June 30, 2017, 2016, and 2015.  

Income Taxes

Although in the aggregate we expect to owe no Federal taxes for the year ended June 30, 2017, we are required to provide intra period taxes allocated between continuing operations and discontinued operations.  State and local taxes are immaterial for the fiscal year.

Summary of Discontinued Operations for the Fiscal Years ended June 30, 2017; 2016; and 2015

As a result of divestiture of the patent licensing component of our business, the results related to these activities have been reclassified to discontinued operations, inclusive of the recognized gain on the disposal, for all periods presented in the accompanying consolidated statements of operations.  The following table illustrates (in thousands) the material items of discontinued operations as reclassified in each fiscal year ended June 30:

	2017			2016			2015
Discontinued operations:
Net revenue	$	8,750		$	27,826		$	4,505
Patent licensing expenses (1)		(5,630	)		(30,780	)		(31,069	)
General and administrative expenses		—			(2,876	)		(2,989	)
Other non-significant expenses		—			—			(10	)
Gain (loss) from discontinued operations		3,120			(5,830	)		(29,563	)
Gain on sale of discontinued operations		—			29,795			—
Total pretax gain (loss) on discontinued    operations		3,120			23,965			(29,563	)
Income tax benefit (expense)		(917	)		(5,103	)		—
Net gain (loss) from discontinued    operations	$	2,203		$	18,862		$	(29,563	)

(1) Amount related to the fiscal year ended June 30, 2017 primarily consists of non-recurring fee split obligations associated with the Microsoft settlement as further discussed below.

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Net Revenues, Discontinued Operations

On June 30, 2016, we sold our patent licensing business.  During the year ended June 30, 2017, we reached a final settlement with Microsoft Corporation, related to an infringement judgment in our favor previously under appeal, for a one-time payment by Microsoft Corporation of $8.8 million.  The payment, received in October 2016, included reimbursement of litigation costs incurred of approximately $1.9 million.  Net of fee split obligations and additional professional fees incurred with the settlement, we recognized a gain from the Microsoft settlement in discontinued operations’ of approximately $3.1 million.

Our recognized revenues for the years ended June 30, 2016 and 2015, respectively, were substantially derived from licensing and selling of our intellectual property in two significant transactions with Lenovo that closed in April 2014. The fluctuations in net revenue year over year were the result of timing differences related to recognizing the individual accounting components associated with the Lenovo transaction.  During the fiscal year ended June 30, 2016, we recognized net revenue of $27.8 million, representing non-cash revenue equal to all of the remaining deferred revenue of the Lenovo contract, as a result of the divestiture of our intellectual property portfolio and corresponding performance obligations.

Patent Licensing Expense, Discontinued Operations

Patent licensing expenses included legal and consulting costs related to technical and economic evaluation, licensing, maintaining, and defending or asserting our patents, as well as salary and benefit expenses and travel expenses for our employees that were engaged in the activities on a full-time basis.  From mid calendar 2013 through the fourth quarter of our 2016 fiscal year, we incurred significant expenses associated with our patent licensing efforts, the majority of which related to enforcement litigation.

Throughout fiscal 2016 we experienced limited successes abroad resulting in the recognition of litigation fee reimbursements totaling approximately $3.0 million, which were immediately offset by rulings in favor of the defendants in trials in the United Kingdom totaling approximately $3.1 million.

General and Administrative Expenses, Discontinued Operations

General and administrative expenses of our discontinued operations consisted primarily of labor incurred by the divested subsidiary employees; facilities costs associated with the direct operations of the divested subsidiaries; other costs incurred by the divested subsidiaries not attributable to patent licensing; historical allocations of corporate employees directly related to the affairs of the divested subsidiaries; and other corporate costs associated with the operations of the divested subsidiaries.

General and administrative expenses associated with our discontinued operations during the year ended June 30, 2016 were relatively consistent compared to 2015, as a result of very little change in our activities attributable to our subsidiaries that conducted our patent licensing business.  

Liquidity and Capital Resources

The following table presents selected financial information and statistics as of June 30, 2017, 2016 and 2015, respectively (in thousands):

	As of June 30,
	2017		2016		2015
Current Assets	$	68,014	$	80,821	$	86,127
Current Liabilities		5,728		44,060		10,738
Working Capital	$	62,286	$	36,761	$	75,389
Long Term Liabilities	$	4,750	$	16	$	54,642

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	Fiscal Year end June 30,
	2017			2016			2015
Cash provided by (used in) operating activities	$	(10,491	)	$	(34,577	)	$	(59,973	)
Cash provided by (used in) investing activities		(30,135	)		41,675			39,970
Cash provided by (used in) financing activities		5,809			(142	)		(119	)
Net increase (decrease) in cash and cash equivalents	$	(34,817	)	$	6,956		$	(20,122	)

Working Capital and Cash Flows

As of June 30, 2017, we had a cash balance of $45.9 million.  We also own 1,966,667 shares of GECC common stock that we may not transfer to a person other than our subsidiaries or an affiliate of MAST Capital until November 3, 2017 with an estimated fair value of $20.9 million as of June 30, 2017.

We have a related party GP Corp Note due to MAST initially requiring maximum cash payments, without giving effect to certain incurred cost off-sets, of $10.8 million that accrues interest at a variable rate of LIBOR plus 3 percent, as adjusted for each 90-day period (at June 30, 2017 the effective rate was 4.26%) through maturity on November 3, 2026.  The GP Corp Note requires minimum annual principal payments of $0.3 million and quarterly interest only payments.  The note is secured by the profits generated by our management of GECC, with non-recourse to any of our other assets, entities, or operations.  The principal amount of this note, along with the minimum annual payment, was reduced to $3.3 million in September 2017.

We intend to make acquisitions that will likely result in our investment of all of our liquid financial resources, issuance of equity securities and incurring indebtedness.  If we are unsuccessful at raising additional capital resources, through either debt or equity, it is unlikely we will be able execute our strategic growth plan.   See “Risk Factors.”

Cash Provided by (Used in) Operating Activities. Cash provided by (used in) operating activities totaled ($10.5) million, ($34.6) million and ($60.0) million for the 2017, 2016 and, 2015 fiscal years, respectively.

Operating cash flows used in continuing operations (net of cash used in discontinued operations) for the year ended June 30, 2017, totaled $9.1 million.  The cash used in our continuing operations were primarily the result of settling significant portions of operating expenses as incurred; increases in receivables from our investment management fees and dividends due on our investment in GECC totaling $3.5 million; and the pay down our accounts payable and other accrued expenses by $1.5 million.  

Cash Provided by (Used in) Investing Activities.  Investing activities for the year ended June 30, 2017 consisted of $30.0 million that was classified as cash held in a wholly-owned subsidiary at June 30, 2016 and was reclassified as the cost basis of our investment in shares of GECC as a result of our deconsolidation of GECC and $0.1 million of cash used in the acquisition of GP Corp.

Cash Provided by Financing Activities.  Financing activities for the fiscal year ended June 30, 2017 primarily consisted of our rights offering that generated net cash proceeds of $42.6 million and the pay down of previously and currently outstanding debt totaling $36.8 million.

Related Party Notes Payable.  In October 2016, we called and retired the previously outstanding Senior Notes.  As part of the retirement, we made cash payments totaling approximately $39.8 million; consisting of interest payments of $1.2 million; call premiums totaling $2.0 million; and principal payments of $36.6 million.

In November 2016, we issued MAST Capital a note with an initial principal balance payable up to $10.8 million as part of the consideration for the assets acquired. The Note is secured by the profits generated by GECM’s management of GECC.   The GP Corp Note requires quarterly interest only payments and annual principal payments of at least $0.3 million, based on the Company’s fiscal year ending June 30.  Further, the GP Corp note does not have any recourse to any of our operations or net assets not related to GECM’s management of the investments assets held by GECC.  The GP Corp Note may be prepaid at any time with prior written notice to the Holders.  Additionally, GP Corp is required to prepay the GP Corp Note upon certain material liquidation transactions. In September 2017, the principal balance of the note was reduced to $3.3 million as part of the Separation Agreement.

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Contractual Obligations

Our contractual obligations as of June 30, 2017 are presented in the table below (dollars in thousands):

	Payments due by period
			Less than 1						More than 5
	Total		Year		1-3 years		3-5 years		years
GP Corp. Note (1)	$	15,393	$	721	$	1,473	$	1,513	$	11,686
Operating Lease Obligations		3,160		920		681		716		843
Total Contractual Obligations	$	18,553	$	1,641	$	2,154	$	2,229	$	12,529

(1) Includes estimated interest based on an interest rate of 4.26%, the average 90-day LIBOR rate plus 3%, as of June 30, 2017.  The payment amounts reflected do not give effect to certain cost offsets allowable under the applicable agreements and are therefore stated at the maximum contractual amounts.  The above table does not give effect to the September 2017 reduction of the principal amount of the GP Corp note to $3.3 million.

Non-GAAP Measurements

The SEC has adopted rules to regulate the use in filings with the SEC, and in public disclosures of financial measures, that are not in accordance with US GAAP, such as EBITDA and adjusted EBITDA, omission of non-recurring or infrequent items, and other omissions of non-cash items whether recurring or non-recurring. These measures are derived from methodologies other than in accordance with US GAAP.

We believe that earnings before taxes, depreciation, amortization and stock-based compensation (EBITDA), the non-cash adjustments listed below and adjusted EBITDA, are important measures in addition to US GAAP segment results to be used in evaluating our businesses. In addition, our management reviews EBITDA and adjusted EBITDA as they evaluate acquisition opportunities.

These Non-GAAP measurements have limitations as an analytical tool, and you should not consider these omissions either in isolation or as a substitute for analyzing our results as reported under US GAAP. Some of these limitations are:

▪ this measure does not reflect changes in, or cash requirements for, our working capital needs;

▪ this measure does not reflect the further issuance of equity and equity-linked instruments based on grant date fair values with continuing performance and service requirements;

▪ this measure does not reflect historical cash expenditures or future requirements for expenditures or contractual commitments.

▪ the recognition of impairment and similar non-cash charges.

Since we did not have material recurring revenue generating operations from our discontinued intellectual property business for the years ended June 30, 2016 and 2015, our management did not utilize EBITDA or adjusted EBITDA in evaluating the results or for planning purposes; correspondingly, those periods have not been presented.

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The following table reconciles US GAAP results to EBITDA, and adjusted EBITDA from our results of operations for the period ended June 30, 2017:

	For the Year Ended June 30, 2017
Dollar amounts in thousands	Investment Management			General Corporate			Total
Net loss - GAAP	$	(503	)	$	(14,734	)	$	(15,237	)
EBITDA:
Net loss - GAAP	$	(503	)	$	(14,734	)	$	(15,237	)
Interest		285			6,036			6,321
Taxes (1)		14			—			14
Depreciation and amortization		340			—			340
EBITDA:	$	136		$	(8,698	)	$	(8,562	)
Adjusted EBITDA:
EBITDA	$	136		$	(8,698	)	$	(8,562	)
Stock based compensation		1,434			529			1,963
Unrealized loss on investment in GECC		—			9,114			9,114
Re-measurement of warrant liability		(30	)		—			(30	)
Adjusted EBITDA	$	1,540		$	945		$	2,485

(1) For the fiscal year ended June 30, 2017, the Company incurred approximately $1.2 million of tax benefit from its loss on continuing operations, off-set by $1.2 million of tax expense from discontinued operations.

Off Balance Sheet Obligations

As of June 30, 2017, we did not invest in any off-balance sheet vehicles that provide financing, liquidity, market or credit risk support or engage in any leasing activities that expose us to any liability that is not reflected in our consolidated financial statements.

New Accounting Pronouncements

See Note 2 in the accompanying Notes to Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Our discontinued operations paid certain expenses in Euros and British Pounds. Any translation adjustments associated with those foreign currency transactions are reflected as discontinued operations. We no longer have any foreign currency exposures.

In the normal course of business, our financial position is subject to different types of risk, including market risk. Market risk is the risk that we will incur losses due to adverse changes in equity and bond prices, interest rates, credit events or currency exchange rates. Management is responsible for identifying, assessing and managing market and other risks.

In evaluating market risk, it is important to note that most of our revenue is based on the market value of assets under management. As noted in “Risk Factors,” declines in financial market values negatively impact our revenue and net income.

Our primary direct exposure to equity price risk arises from our investment in GECC shares. Equity price risk as it relates to this investment represents the potential future loss of value that would result from a decline in the net asset value of GECC or the fair value of the equity securities.

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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.

Per Rule 3-09 of Regulation S-X, the audited financial statements of GECC for the year ended December 31, 2016 included in GECC’s registration statement on Form N-2 (File No. 333-217222), as amended, filed with the SEC on June 30, 2017, are incorporated herein by reference.  We include the financial statements of GECC because our investment in GECC meets the test of significance under Rule 3-09 in Regulation S-X.  The management of GECC is responsible for the form and content of GECC’s financial statements.  Certain officers of GECC are also officers of GECM and Mr. Reed is Chief Executive Officer of GECC and GEC.  GECM serves as the investment advisor to GECC.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Our Audit Committee approved the appointment of Deloitte & Touche LLP (Deloitte) as our independent registered public accounting firm, effective May 30, 2017, as described further below. Accordingly, and in connection therewith, the we dismissed Grant Thornton LLP (Grant Thornton) as our independent registered public accounting firm effective as of that same date.

Grant Thornton’s audit reports for the fiscal years ended June 30, 2016 and 2015 on our consolidated financial statements did not contain an adverse opinion or a disclaimer of opinion, nor was any such report qualified or modified as to uncertainty, audit scope or accounting principles. However, as further described below, Grant Thornton’s audit report on the effectiveness of our internal control over financial reporting as of June 30, 2016 contained an adverse opinion. At no point during the fiscal years ended June 30, 2016 and 2015 and the subsequent interim period through May 30, 2017 were there any “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between us and Grant Thornton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Grant Thornton, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. The adverse opinion on our internal control over financial reporting described further below constituted the only “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K) that occurred during the fiscal years ended June 30, 2016 and 2015 and the subsequent interim period through May 30, 2017.

Our controls over the preparation and review of our income tax provision did not operate effectively such that we did not timely identify material errors in the provision for income taxes applicable to continuing operations and discontinued operations and the presentation thereof in the financial statements as of June 30, 2016 and for the year then ended. Accordingly, Grant Thornton’s audit report on the effectiveness of our internal control over financial reporting as of June 30, 2016 contained an adverse opinion on the internal control over financial reporting, which are described in Item 9A. Controls and Procedures of our Form 10-K for the fiscal year ended June 30, 2016.

Our Audit Committee engaged Deloitte as our new independent registered public accounting firm effective May 30, 2017 to perform independent audit services for the fiscal year ending June 30, 2017.  During the fiscal years ended June 30, 2016 and 2015 and the subsequent interim period through May 30, 2017, we did not consult Deloitte regarding either:

▪ the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to our consolidated financial statements in connection with which either a written report or oral advice was provided to us that Deloitte concluded was an important factor considered in reaching a decision as to the accounting, auditing or financial reporting issue; or

▪ any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K). 

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

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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 not effective.

Management’s Report on Internal Control Over Financial Reporting.

Our management is responsible for preparation of the accompanying financial statements in accordance with 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, 2017 as required by 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 (COSO).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As of June 30, 2017, we identified the following material weaknesses in its internal control over financial reporting:

▪ We had an insufficient number of personnel with an appropriate level of GAAP knowledge and experience commensurate with our financial reporting requirements.

▪ We did not have control activities that were designed and operating effectively.  Control activities did not adequately (i) address relevant risks, (ii) provide evidence of performance, (iii) provide appropriate segregation of duties, or (iv) operate at a level of precision to identify all potentially material errors.

▪ We did not maintain effective monitoring controls to ascertain whether the components of internal control are present and functioning.

Based on our evaluation under the framework in Internal Control-Integrated Framework (2013) issued by COSO, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of June 30, 2017, based on the material weaknesses described above.

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Remediation of Material Weaknesses

We have hired accounting personnel, are changing our controls and procedures and have engaged consultants to assist with the design and testing of our controls and procedures.

Changes in Internal Control Over Financial Reporting.

During the quarter ended June 30, 2017, we did not make material changes in or internal control over financial reporting.  Our business significantly changed during the fiscal year ended June 30, 2017, and we made a number of changes in financial reporting. During the implementation of our new business processes, we identified the material weaknesses as described above.  Our management is in the process of assessing, integrating, and improving internal controls over financial reporting for our new business. Additionally, in the ordinary course of business, we may routinely modify, upgrade and enhance our internal controls and procedures for financial reporting.

The effectiveness of our internal control over financial reporting as of June 30, 2017 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Great Elm Capital Group, Inc.

Waltham, Massachusetts

We have audited Great Elm Capital Group, Inc. and subsidiaries' (the "Company's") internal control over financial reporting as of June 30, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on that risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (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 receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment: (i) insufficient accounting resources, (ii) inadequate and ineffective control activities; including controls over significant transactions and the tax provision, and (iii) ineffective monitoring control activities. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended June 30, 2017, of the Company and this report does not affect our report on such financial statements.

In our opinion, because of the effect of the material weaknesses identified above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of June 30, 2017, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended June 30, 2017, of the Company and our report dated September 18, 2017 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

September 18, 2017

29

Item 9B. Other Information.

None

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance.

The information required by Items 401, 405, 406, and 407(c)(3), 407(d)(4) and 407(d)(5) of Regulation S-K will be contained in our Proxy Statement and is hereby incorporated by reference thereto.

Item 11. Executive Compensation.

The information required by Item 402 of Regulation S-K 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 Shareholder Matters.

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 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by Item 404 and Item 407(a) of Regulation S-K 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 Item 9(e) of Schedule 14A 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 8 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 financial statements or notes thereto.

Exhibits

The exhibit index attached hereto is incorporated by reference. We will furnish any exhibit upon request made to our Corporate Secretary, 800 South Street, Suite 235, Waltham, MA 02453. We charge $0.50 per page to cover expenses of copying and mailing.

Item 16. Form 10-K Summary

We have elected not to provide a Form 10-K summary.

30

EXHIBIT INDEX

Unless otherwise indicated, all references are to filings by Great Elm Capital Group, Inc., formerly known as Unwired Planet, Inc. (the Registrant) with the Securities and Exchange Commission under File No. 001-16073)

Exhibit No.	Description
2.1	Purchase and Sale Agreement, dated as of April 6, 2016, by and between the Registrant and Optis UP Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on April 7, 2016)
2.2	First Amendment to the Purchase and Sale Agreement, dated as of April 6, 2016, by and between the Registrant and Optis UP Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 25, 2016)
2.3	Asset Purchase Agreement, dated as of November 3, 2016, by and between GECC GP Corp. and MAST Capital Management LLC (incorporated by reference to Exhibit 10.4 to the Form 8-K filed on November 9, 2016)
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on November 15, 2013)
3.2	Certificate of Ownership and Merger merging Unwired Planet, Inc. with and into Openwave Systems Inc. (incorporated by reference to Exhibit 3.3 to the Form 10-Q filed on May 10, 2012)
3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on January 5, 2016)
3.4	Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on June 16, 2016)
3.5	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Form 8-K filed on November 15, 2015)
4.1	Form of the Registrant’s common stock certificate (incorporated by reference to Exhibit 4.1 to the Form 10-K filed on September 14, 2016)
4.2	Tax Benefits Preservation Agreement, dated as of January 20, 2015, between the Registrant and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Form 8-A filed on January 21, 2015)
4.3	Securities Purchase Agreement by and between the Registrant and Indaba Capital Fund, L.P., dated June 28, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on July 2, 2013)
10.1	Investment Management Agreement, dated as of September 27, 2016, by and between Great Elm Capital Corp. and Great Elm Capital Management, Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on November 7, 2016 by Great Elm Capital Corp (File No. 814-01211))
10.2	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 Exhibit 10.2 to the Form 8-K filed on November 7, 2016 by Great Elm Capital Corp (File No. 814-01211))
10.3	Cost Sharing Agreement, dated as of November 3, 2016, by and between Great Elm Capital Management, Inc. and MAST Capital Management, LLC (incorporated by reference to Exhibit 10.5 to the Form 8-K filed on November 9, 2016)
10.4	Profit Sharing Agreement, dated as of November 3, 2016, by and between Great Elm Capital Management, Inc. and GECC GP Corp. (incorporated by reference to Exhibit 10.6 to the Form 8-K filed on November 9, 2016)
10.5	Senior Secured Note, dated November 3, 2016, by GECC GP Corp. in favor of MAST Capital Management LLC (incorporated by reference to Exhibit 10.7 to the Form 8-K filed on November 9, 2016)
10.6	Form of Performance Stock Award (incorporated by reference to Exhibit 10.8 to the Form 8-K filed on November 9, 2016) (1)

31

Exhibit No.	Description
10.7	Subscription Agreement, dated as of June 23, 2016, by and among Great Elm Capital Corp., the Registrant, the investment funds signatory thereto, and MAST Capital Management LLC (incorporated by reference to the Pre-Commencement Solicitation filed on June 27, 2016 by Great Elm Capital Corp. (File No. 814-01211))
10.8	Amended and Restated Registration Rights Agreement, dated as of November 4, 2016, by and among Great Elm Capital Corp., the registrant, and the MAST Funds named therein (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on November 7, 2016 by Great Elm Capital Corp (File No. 814-01211))
10.9	Agreement and Plan of Merger, dated as of June 23, 2016 by and between Great Elm Capital Corp. and Full Circle Capital Corporation (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on June 26, 2016)
10.10	Form of Indemnity Agreement for Officers and Directors (incorporated by reference to Exhibit 10.16 to Form 10-K filed on September 28, 2001) (1)
10.11	Form of US Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed on May 12, 2004) (1)
10.12	Second Amended and Restated 2006 Stock Incentive Plan, amended and restated effective November 12, 2013 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on February 7, 2014) (1)
10.13	Form of 2006 Stock Incentive Plan Restricted Stock Unit Grant Notice 2011 (incorporated by reference to Exhibit 10.9 to the Form 10-Q filed on February 8, 2012) (1)
10.14	Second Amended and Restated 1999 Directors’ Equity Compensation Plan, amended and restated effective November 12, 2013 (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on February 7, 2014) (1)
10.15	Form of Notice of Stock Option Grant and Form of Stock Option Agreement under the Registrant’s Amended and Restated 1999 Directors’ Equity Compensation Plan (incorporated by reference to Exhibit 99.2 to the Form S-8 filed on December 4, 2009 (File No. 333-163480) (1)
10.16	Form of Notice of Restricted Stock Bonus Grant and Form of Restricted Stock Bonus Agreement under the Registrant’s Amended and Restated 1999 Directors’ Equity Compensation Plan (incorporated by reference to Exhibit 99.3 to the Form S-8 filed on December 4, 2009 (File No. 333-163480) (1)
10.17	2016 Long-Term Incentive Plan (incorporated by reference to Annex D to the Proxy Statement filed on May 25, 2016) (1)
10.18	2016 Employee Stock Purchase Plan (incorporated by reference to Annex E to the Proxy Statement filed on May 25, 2016) (1)
10.19	Employment Offer Letter dated October 30, 2015 between the Registrant and James D. Wheat (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on November 9, 2015) (1)
10.20	Amended Notice of Option Award to Boris Teksler (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on June 16, 2016) (1)
10.21	Letter agreement, dated July 5, 2016 between the Registrant and Boris Teksler (incorporated by reference to the Form 8-K filed on July 6, 2016) (1)
10.22	Letter agreement, dated July 5, 2016, between the Registrant and Boris Teksler (incorporated by reference to Exhibit 10.20 to the Form 10-K filed on September 14, 2016) (1)
10.23	Letter agreement, dated July 5, 2016, between the Registrant and Noah Mesel (incorporated by reference to Exhibit 10.21 to the Form 10-K filed on September 14, 2016) (1)
10.24	Offer letter, dated July 18, 2016, from the Registrant to Richard S. Chernicoff (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on July 20, 2016) (1)

32

Exhibit No.	Description
10.25	Option award, dated July 18, 2016 to Richard S. Chernicoff (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on July 20, 2016) (1)
10.26	Offer letter, dated November 3, 2016 to Peter A. Reed (incorporated by reference to Exhibit 10.9 to the Form 8-K filed on November 9, 2016) (1)
10.27	Amended and Restated Backstop Agreement, dated as of October 13, 2016, by and among the Registrant and the investors named therein (incorporated by reference to Exhibit 10.1 to the Form S-1 filed on October 14, 2016 (File No. 333-213620))
10.28	Registration Rights Agreement, dated as of September 14, 2016, by and among the Registrant and the holders named therein (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on September 13, 2016)
10.29*	Separation Agreement, dated as of September 18, 2017, by and among the Registrant, Great Elm Capital Management, Inc., GECC GP Corp., MAST Capital Management, MAST Capital Management IA Holdings, LLC, David Steinberg, Peter A. Reed and Adam M. Kleinman
14.1	Code of Ethics as of September 13, 2016 (incorporated by reference to Exhibit 14.1 to the Form 10-K filed on September 14, 2016)
21.1*	Subsidiaries of the Registrant.
23.1*	Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.
23.2*	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
23.3*	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 Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certifications of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Audited financial statements of Great Elm Capital Corp. (incorporated by reference to pages F-33 to F-63 to the Form N-2 (File No. 333-219574) filed on July 31, 2017 by Great Elm Capital Corp.)
101.1INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

(1) Indicates a management contract or compensatory plan or arrangement.

33

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of September 18, 2017.

GREAT ELM CAPITAL GROUP, INC.
By:	/s/ Peter A. Reed
Name:	Peter A. Reed
Title:	Chief Executive Officer

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities as of September 18, 2017.

Signature	Title
/s/ Peter A. Reed	Chief Executive Officer and Director
Peter A. Reed	(Principal Executive Officer)
/s/ James D. Wheat	Chief Financial Officer
James D. Wheat	(Principal Financial and Accounting Officer)
/s/ Richard S. Chernicoff	Director
Richard S. Chernicoff
/s/ Matthew A. Drapkin	Director
Matthew A. Drapkin
/s/ James P. Parmelee	Director
James P. Parmelee
/s/ Jeffrey S. Serota	Director
Jeffrey S. Serota
/s/ Mark A. Snell	Director
Mark A. Snell
/s/ Hugh Steven Wilson	Director
Hugh Steven Wilson

34

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets at June 30, 2017 and 2016	F-4
Consolidated Statements of Operations for the years ended June 30, 2017, 2016 and 2015	F-5
Consolidated Statements of Comprehensive Income for the years ended June 30, 2017, 2016 and 2015	F-6
Consolidated Statements of Stockholders’ Equity the years ended June 30, 2017, 2016 and 2015	F-7
Consolidated Statements of Cash Flows years ended June 30, 2017, 2016 and 2015	F-8
Notes to Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Great Elm Capital Group, Inc.

Waltham, Massachusetts

We have audited the accompanying consolidated balance sheet of Great Elm Capital Group, Inc. and subsidiaries (the “Company”) as of and for the year ended June 30, 2017, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the year ended June 30, 2017. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit. The consolidated financial statements of the Company for the year ended June 30, 2016, before the effects of the adjustments to retrospectively apply the change in accounting discussed in Note 2 to the consolidated financial statements, were audited by other auditors whose report, dated September 13, 2016, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Great Elm Capital Group, Inc. and subsidiaries, as of June 30, 2017, and the results of their operations and their cash flows for the year ended June 30, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited the adjustments to the 2016 consolidated financial statements to retrospectively apply the change in accounting for the presentation of debt issuance costs in 2017, as discussed in Note 2 to the consolidated financial statements. Our procedures included comparing the adjustment amount for debt issuance costs reclassified as a reduction in related party note payable to the amount reported in the corresponding line item of the consolidated balance sheet of the previously issued consolidated financial statements.  In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2016 consolidated financial statements of the Company other than with respect to the retrospective adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2016 consolidated financial statements taken as a whole.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2017, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 18, 2017 expressed an adverse opinion on the Company's internal control over financial reporting because of the material weaknesses identified.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

September 18, 2017

F-2

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Great Elm Capital Group, Inc.

We have audited the accompanying consolidated balance sheet of Great Elm Capital Group, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2016, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the two years in the period ended June 30, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Great Elm Capital Group, Inc. and subsidiaries as of June 30, 2016, and the results of their operations and their cash flows for each of the two years in the period ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Phoenix, Arizona

September 13, 2016

F-3

GREAT ELM CAPITAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

Dollar amounts in thousands, except per share amounts

	June 30,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	45,894		$	80,711
Investment management fees receivable - related party		549			—
Related party dividend receivable		163			—
Related party receivable		348			—
Investment in GECC (cost $30,000)		20,886			—
Prepaid and other current assets		174			110
Total current assets		68,014			80,821
Investment management fees receivable - related party, net of current portion		2,757
Property and equipment, net		41			—
Identifiable intangible assets, net		4,102			—
Right to use asset, net		1,688			—
Other assets, net		92			76
Total assets	$	76,694		$	80,897
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	52		$	521
Accrued liabilities		1,019			108
Accrued legal expense		164			1,787
Accrued compensation		214			520
Lease liabilities		421			—
Liabilities related to discontinued operations		3,608			7,338
Related party note payable		250			33,786
Total current liabilities		5,728			44,060
Related party note payable, net of current portion		2,924			—
Lease liabilities, net of current portion		1,640			—
Warrant liability		186			—
Other long-term liabilities related to discontinued operations		—			16
Total liabilities		10,478			44,076
Commitments and Contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.001 par value; 5,000 authorized and zero outstanding		—			—
Common stock, $0.001 par value; 350,000,000 shares authorized and 24,258,847    shares issued and 23,200,153 outstanding at June 30, 2017; and 9,466,670    shares issued and outstanding at June 30, 2016		23			9
Additional paid-in-capital		3,293,683			3,249,085
Accumulated deficit		(3,227,480	)		(3,212,273	)
Total Great Elm Capital Group, Inc. stockholders' equity		66,226			36,821
Non-controlling interest		(10	)		—
Total stockholders' equity		66,216			36,821
Total liabilities and stockholders' equity	$	76,694		$	80,897

The accompanying notes are an integral part of these consolidated financial statements.

F-4

GREAT ELM CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Dollar amounts in thousands, except per share data

	For the Years Ended June 30,
	2017			2016			2015
Revenue:
Investment management and administration fees	$	4,927		$	—		$	—
Operating costs and expenses:
Investment management expenses		4,779			—			—
Amortization and depreciation		340			63			107
General and administrative		4,413			9,772			7,933
Total operating costs and expenses		9,532			9,835			8,040
Operating loss		(4,605	)		(9,835	)		(8,040	)
Dividends and interest income		1,306			6			72
Unrealized loss on investment in GECC		(9,114	)		—			—
Interest expense		(6,321	)		(4,947	)		(4,332	)
Other income, net		84			233			268
Loss from continuing operations, before income taxes		(18,650	)		(14,543	)		(12,032	)
Provision for (benefit from) income taxes		(1,210	)		(5,103	)		164
Loss from continuing operations		(17,440	)		(9,440	)		(12,196	)
Discontinued operations:
Gain on sale of discontinued operations, net of tax		—			24,692			—
Income (loss) from discontinued operations, net of tax		2,203			(5,830	)		(29,563	)
Net income (loss) from discontinued operations, net of tax		2,203			18,862			(29,563	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Less: net loss attributable to non-controlling interest		(30	)		—			—
Net income (loss) attributable to Great Elm Capital Group	$	(15,207	)	$	9,422		$	(41,759	)
Basic and diluted earnings (loss) per share from:
Continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)
Discontinued operations		0.13			2.00			(3.17	)
Net income (loss)	$	(0.93	)	$	1.00		$	(4.48	)
Weighted average shares outstanding
Basic and diluted		16,433			9,412			9,332

The accompanying notes are an integral part of these consolidated financial statements.

F-5

GREAT ELM CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Dollar amounts in thousands

	For the Years Ended June 30,
	2017			2016			2015
Other comprehensive income (loss)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Change in unrealized gain loss on marketable securities		—			—			(21	)
Gain (loss) on foreign currency translation adjustment		—			(234	)		231
Total comprehensive income (loss)		(15,237	)		9,188			(41,549	)
Comprehensive income (loss) attributable to non-controlling    interest		(30	)		—			—
Total comprehensive income (loss) attributable to Great Elm Capital    Group	$	(15,207	)	$	9,188		$	(41,549	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

GREAT ELM CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Dollar amounts in thousands

																					Total
																					Great Elm
															Accumulated						Capital
	Common Stock					Treasury Stock						Additional Paid-in			other Comprehensive			Accumulated			Group Inc. Stockholders'			Non- controlling			Total Stockholders'
	Shares			Amount		Shares			Amount			Capital			Income (loss)			Deficit			Equity			Interest			Equity
BALANCE, June 30, 2014		9,343		$	9		(38	)	$	(884	)	$	3,243,858		$	24		$	(3,179,936	)	$	63,071		$	—		$	63,071
Net loss		—			—		—			—			—			—			(41,759	)		(41,759	)					(41,759	)
Issuance of common stock related to stock option    exercises and vesting of restricted stock units		5			—		—			—			92			—			—			92			—			92
Retirement of treasury stock		(45	)		—		45			1,001			(1,001	)		—						—			—			—
Purchase of treasury stock		—			—		(18	)		(210	)		—			—			—			(210	)		—			(210	)
Stock-based compensation		70			—		—			—			2,100			—			—			2,100			—			2,100
Other comprehensive income		—			—		—			—			—			210			—			210			—			210
BALANCE, June 30, 2015		9,373			9		(11	)		(93	)		3,245,049			234			(3,221,695	)		23,504			—			23,504
Net income		—			—		—			—			—			—			9,422			9,422			—			9,422
Other comprehensive loss		—			—		—			—			—			(234	)		—			(234	)		—			(234	)
Issuance of common stock related to vesting of    restricted stock units		122			—		—			—			(103	)		—			—			(103	)		—			(103	)
Retirement of treasury stock		(28	)		—		28			235			(235	)		—			—			—			—			—
Purchase of treasury stock		—			—		(17	)		(142	)		—			—			—			(142	)		—			(142	)
Stock-based compensation		—			—		—			—			4,374			—			—			4,374			—			4,374
BALANCE, June 30, 2016		9,467			9		—			—			3,249,085			—			(3,212,273	)		36,821			—			36,821
Net loss		—			—		—			—			—			—			(15,207	)		(15,207	)		(30	)		(15,237	)
Acquisition of GP Corp.		—			—		—			—			—			—			—			—		20				20
Issuance of common stock in rights offering, net    of issuance costs		13,701			12		—			—			42,635			—			—			42,647			—			42,647
Issuance of common stock related to vesting of    restricted stock units		32			2		—			—			—						—			2			—			2
Stock-based compensation		—			—		—			—			1,963			—			—			1,963			—			1,963
BALANCE, June 30, 2017		23,200		$	23		—		$	—		$	3,293,683		$	—		$	(3,227,480	)	$	66,226		$	(10	)	$	66,216

The accompanying notes are an integral part of these consolidated financial statements.

F-7

GREAT ELM CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollar amounts in thousands

	For the Years Ended June 30,
	2017			2016			2015
Cash flows from operating activities:
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
(Income) loss from discontinued operations		(2,203	)		5,830			29,563
Gain on sale of discontinued operations		—			(24,692	)		—
Adjustments to reconcile net income (loss) to net cash provided by (used in)    operating activities:
Depreciation and amortization		340			63			107
Stock-based compensation		1,963			2,029			765
Re-measurement of warrant liability		30			—			—
Unrealized loss on investment in GECC		9,114			—			—
Gain on foreign currency		—			(277	)		—
Loss on fixed asset disposal		—			82			—
Amortization of premiums/discounts on investments, net		—			3			79
In kind interest payments on note payable		—			4,355			3,837
Amortization of debt discount and issuance costs		2,802			592			495
Changes in operating assets and liabilities:
Investment management fees receivable		(3,306	)
Related party receivable		(348	)		—			—
Related party dividends receivable		(163	)		—			—
Prepaid assets, deposits, and other assets		(81	)		464			37
Accounts payable		(468	)		(157	)		(502	)
Accrued legal		(1,623	)		1,710			(174	)
Accrued liabilities		231			292			(89	)
Restricted cash		—			3			586
Net cash used in operating activities - continuing operations		(8,949	)		(281	)		(7,055	)
Net cash used in operating activities - discontinued operations		(1,542	)		(34,296	)		(52,918	)
Net cash used in operating activities		(10,491	)		(34,577	)		(59,973	)
Cash flows from investing activities:
Acquisition of subsidiary		(100	)		—			—
Purchases of property and equipment		(35	)		(35	)		(30	)
Proceeds from sale of discontinued operations, net		—			30,000			—
Deconsolidation of GECC into equity method investment		(30,000	)		—			—
Proceeds from sales and maturities of investments		—			11,710			40,000
Net cash provided by (used in) investing activities		(30,135	)		41,675			39,970
Cash flows from financing activities:
Proceeds from issuance of common stock in rights offering, gross		45,000
Principal payments on related party note payable		(36,838	)		—			91
Payment of equity issuance costs		(2,353	)		—			—
Purchase of treasury stock		—			(142	)		(210	)
Net cash provided by (used in) financing activities		5,809			(142	)		(119	)
Net increase (decrease) in cash and cash equivalents		(34,817	)		6,956			(20,122	)
Cash and cash equivalents at beginning of year		80,711			73,755			93,877
Cash and cash equivalents at end of year	$	45,894		$	80,711		$	73,755
Cash paid for income taxes	$	—		$	—		$	—
Cash paid for interest	$	3,535		$	—		$	—
Non-cash financing activities
Issuance of related party note payable in acquisition	$	3,424		$	—		$	—
Issuance of equity-linked instruments classified as warrant liability		216			—			—
Retirement of treasury stock		—			235			1,001
Unpaid debt and equity issuance costs		—			—			31

The accompanying notes are an integral part of these consolidated financial statements.

F-8

GREAT ELM CAPITAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Great Elm Capital Group, Inc. (referred to as the Company, formerly Unwired Planet, Inc.) is a holding company incorporated in Delaware.  The Company currently has two operating segments, investment management and corporate.  The Company is pursuing other acquisition opportunities, within investment management and other industries.

On September 27, 2016, the Company’s wholly-owned SEC-registered investment advisor subsidiary Great Elm Capital Management, Inc., a Delaware corporation (GECM), entered into an investment management agreement (the IMA) with Great Elm Capital Corp., a publicly-traded business development company incorporated in Maryland (GECC).  

On November 3, 2016, Full Circle Capital Corporation merged with and into GECC (the Merger), and GECM hired the employees of MAST Capital Management, LLC, a Delaware limited liability company (MAST Capital), to manage the assets of GECC.  Certain funds managed by MAST Capital own approximately 8.7% of the Company’s common stock.  Through the Company’s 80.1% owned subsidiary, GECC GP Corp. (GP Corp), the Company acquired assets and assumed related liabilities (collectively, the Acquisition) associated with the on-going operations of GECM.  Approximately 5% of the 19.9% non-controlling interest of GP Corp is owned by MAST Capital, and its affiliates and officers.

As of June 30, 2017, the Company owns approximately 17% of the outstanding shares of GECC with a cost basis of $30 million.  The Company agreed with GECC that it would not transfer or dispose of its GECC shares until November 3, 2017.

Prior to the divestiture on June 30, 2016, as described in Note 3, the Company’s wholly-owned subsidiaries, Unwired Planet IP Holdings, Inc. and Unwired Planet IP Manager, LLC, were engaged in patent licensing with a portfolio of mobile technology patents and patent applications.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company consolidates the assets, liabilities, and operating results of its wholly-owned subsidiaries; majority-owned subsidiaries; and subsidiaries that it has control over.  The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, GECM; and its majority-owned subsidiary, GP Corp.  All intercompany accounts and transactions have been eliminated in consolidation.

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and consolidated statements of comprehensive income (loss).

Investment in GECC

On November 1, 2016, the Company deconsolidated its investment in GECC upon the Company no longer having a controlling financial interest in GECC.  The Company determined that, by virtue of being GECC’s investment manager, the Company has significant influence over GECC.  Upon deconsolidation, the Company elected to account for its approximately 17% investment in GECC at fair value.In accordance with this election, unrealized gains and losses at each measurement date are recognized as a component of net loss in the accompanying consolidated statements of operations and dividends are recognized if, as and when declared by GECC’s board of directors.

F-9

Discontinued Operations

On June 30, 2016, the Company completed the Purchase and Sale Agreement (as amended, the PSA) with Optis UP Holdings, LLC (Optis), pursuant to which Optis acquired all of the outstanding membership interests of the Company’s wholly-owned subsidiary, Unwired Planet, LLC (UPLLC), which owns all of the outstanding shares of Unwired Planet International Limited, an Irish company.  Together, the disposed subsidiaries owned all of the Company’s patent assets.

As a result of the disposition of the Company’s intellectual property licensing business and underlying patent and patent applications, the Company has presented financial results for these businesses in discontinued operations.  The divesture of the intellectual property licensing component consisted of all patent licensing expenses as previously presented in the accompanying consolidated statements of operations; certain general and administrative costs incurred by the disposed subsidiaries; and certain liabilities of the divested subsidiaries.

Use of Estimates

The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segments

In November 2016, the Company changed its organizational structure in connection with the Acquisition. As a result, information that the Company’s chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed.  As of June 30, 2017, the Company has two reporting segments:  Investment Management; and General Corporate.  The Company’s chief operating decision maker did not allocate resources or assess performance on a segmented basis prior to the formation of the investment management business within the fiscal year ended June 30, 2017.

Revenue Recognition

The Company recognizes revenue on services at the time when services are performed, and the following conditions are met: persuasive evidence of an arrangement exists, the service is complete, the price is fixed and determinable, and collection of the proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.

The Company recognizes revenue from its investment management business at amounts that reflect the consideration to which it expects to be entitled in exchange for providing services to its customer.  Investment management revenue primarily consists of fees based on a percentage of assets under management; fees based on the performance of managed assets; and administrative fees; as follows:

Management Fees

The base management fee from GECC is calculated at an annual rate of 1.50% of GECC’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of GECC’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

F-10

Incentive Fees

The incentive fee from GECC consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, GECC will pay the Company 20% of the amount by which GECC’s pre-incentive fee net investment income (the Pre-Incentive Fee Net Investment Income) for the quarter exceeds a hurdle rate of 1.75% of GECC’s net assets at the end of the immediately preceding calendar quarter. This calculation will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the then current quarter.

Under the capital gains component of the incentive fee, GECC is obligated to pay the Company, at the end of each calendar year, 20% of the aggregate cumulative realized capital gains from November 4, 2016 through the end of the of such calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such calendar year, less the aggregate amount of any previously paid capital gains incentive fees.

Incentive fees are recorded based upon an assumed liquidation of GECC’s net assets on the reporting date and the distribution of the net proceeds in accordance with GECC’s income allocation provisions.   Incentive fees recorded may be subject to reversal to the extent the amount recorded exceeds the amount due to the Company based on negative investment performance after the reporting date.   Accrued but unpaid incentive fees and deferred incentive fees as of the reporting date are recorded in related party investment management fees receivable in the accompanying consolidated balance sheet. Incentive fees realized and collected are not subject to reversal.  As of June 30, 2017, approximately $1.7 million of incentive fees recognized in revenue were subject to reversal.  

Investment Management Expenses

The Company classifies all direct expenses of its investment management segment including: payroll, stock-compensation, and related taxes and benefits; facilities costs; and consulting; in investment management expenses in the accompanying consolidated statements of operations.  The Company has a three-year contractual arrangement with a third party to provide services in exchange for 26% of the fees earned from the management of GECC, excluding incentive fees.

Identifiable Intangible Assets

The Company amortizes its identifiable intangible assets over their estimated useful lives using a discounted cash flow attribution method.  The Company currently amortizes its identifiable intangible assets over a period of fifteen years.  The Company’s identifiable intangible assets relate to the investment management assets acquired during the year ended June 30, 2017.

Cash and Cash Equivalents

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. 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 by the FDIC or SIPC.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, generally one to five years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the lease term.

Long-lived Assets

Long-lived assets are recorded at cost and depreciated over their estimated useful lives. For purposes of determining whether there are any impairment losses, management evaluates the carrying value of the Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present, considering whether the undiscounted lowest identifiable cash flows are sufficient to recover the carrying amount of the applicable asset or asset

F-11

group.  If an impairment is indicated, the Company computes the impairment based on the fair value of the asset, as compared to the carrying value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate.

Stock-based Compensation

Stock-based compensation costs for eligible employees and directors are measured at fair value on the date of grant and are expensed over the requisite service period using a straight-line attribution method for the entire award that are subject to only service vesting conditions.  Awards with both performance and service requirements are expensed using a graded attribution method over the requisite service periods.

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 expected to be recovered.

The Company has provided a full valuation allowance against its deferred tax assets because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other 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 in 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. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns that do not meet the more likely than not standards.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), unrealized gains (losses) on available for sale securities and foreign currency translation adjustments for subsidiaries whose functional currency is not United States dollars. Tax effects of comprehensive loss are not material to periods presented. The Company reports the components of comprehensive income (loss) on its Consolidated Statements of Comprehensive Income (Loss).

Concentration of Risk

The Company has placed substantially all of its cash with a single well established financial institution, and its cash equivalents consist primarily of an exchange traded money market fund with the same institution. The Company is exposed to credit risk related to the potential inability to access liquidity in the financial institution where its cash and cash equivalents are concentrated.

The Company’s net revenue and receivables from continuing operations for the fiscal year ended June 30, 2017, were attributable to the management of one investment vehicle, GECC.

The Company has $30 million invested in shares of common stock of GECC.

F-12

Earnings (Loss) Per Share

The following table presents the calculation of basic and diluted earnings (loss) per share (in thousands except per share amounts):

	Fiscal Year Ended June 30,
	2017			2016			2015
Loss from continuing operations	$	(17,440	)	$	(9,440	)	$	(12,196	)
Income (loss) from discontinued operations, net of tax		2,203			18,862			(29,563	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Less: net loss attributable to non-controlling    interest		(30	)		—			—
Net income (loss) attributable to Great Elm    Capital Group	$	(15,207	)	$	9,422		$	(41,759	)
Weighted average shares basic and diluted:
Weighted average shares of common stock    outstanding		16,433			9,412			9,333
Weighted average shares of restricted stock subject    to repurchase		—			—			(1	)
Weighted average shares used in computing    earnings (loss) per share		16,433			9,412			9,332
Basic and diluted earnings (loss) per share from:
Income (loss) from continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)
Income (loss) from discontinued operations		0.13			2.00			(3.17	)
Net income (loss)	$	(0.93	)	$	1.00		$	(4.48	)

As of June 30, 2017, 2016, and 2015, the Company had 1,923,279; 32,638; and 306,000 potential shares of Company common stock, respectively, that are not included in the diluted net income (loss) per share calculation because to do so would be antidilutive.

As of June 30, 2017, the Company had an aggregate of 1,058,694 outstanding shares that are subject to repurchase by the Company at a nominal price if service and performance milestones are not met. The Company does not account for such shares as being outstanding for accounting purposes since they are unvested and subject to forfeiture.

Restrictions on Subsidiary Dividends

In the GP Corp Note Agreement, GP Corp agreed not to declare any dividends until the GP Corp note is satisfied.  As of June 30, 2017, GP Corp had an accumulated deficit not legally available for dividend.

Reclassifications

Due to the separate presentation of amortization and depreciation in the accompanying consolidated statements of operations, $0.1 million and $0.1 million of amortization and depreciation expense for the years ended June 30, 2016 and 2015, respectively, was reclassified from general and administrative expenses. These reclassifications did not have an impact on the Company’s previously presented net results of operations, financial position, or cash flows.

Recently Issued Accounting Standards

Financial Instruments. In January 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revised entities’ accounting related to: (1) the classification and measurement of investments in equity securities; and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2018 and requires a modified retrospective approach to adoption. Early

F-13

adoption is only permitted for the provision related to instrument-specific credit risk. The Company believes that adoption of ASU 2016-01 will have no material impact on the consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires the use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2020 and requires a modified-retrospective approach to adoption. Early adoption is permitted for the fiscal year beginning July 1, 2019. The Company believes that adopting ASU 2016-13 will have no material impact on the consolidated financial statements and related disclosures.

Customer Revenue. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606) Deferral of the Effective Date.  The Company is currently evaluating the adoption of ASU 2015-14 and related Topic 606 updates will have on its financial statements. Based on the on-going evaluation, the Company has determined that the recognition of its investment management incentive fees may be deferred upon the implementation of ASU 2015-14 and related guidance.  Other than the potential incentive fee impacts, the Company has not determined whether the adoption of ASU 2015-14 and related guidance, will have a material effect on the Company’s results of operations, financial position, cash flows or footnote disclosures.  The Company is continuing to evaluate the impact of this new guidance.

Stock-Based Compensation.  In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) to provide clarity and simplification to accounting for a change in the terms or conditions of a stock-based payment award.  The ASU defines several changes in the conditions that would not result in the modification of an award including: no changes in the fair value of the original and modified award prior to modification, or changes in the inputs for the valuation technique used; no changes in vesting conditions; and no change amongst equity or liability classification of the modified award.  The amendments contained in ASU 2017-09 are effective for annual and interim periods beginning after December 15, 2017 with early adoption permitted.  The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial statements.

Changes in Accounting Principles

Leases. In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company adopted ASU 2016-02 effective July 1, 2016.  On the adoption date, the Company elected the practical expedient to not reassess whether any expired contracts contained leases.  Additionally, the Company has elected to not apply the recognition standards of ASU 2016-02 to operating leases with effective terms of twelve months or less (Short-Term Leases).  For Short-Term Leases, the Company recognizes lease payments on a straight-line basis over the lease term in the period in which the obligation for those payments is incurred.

On the adoption date, all of the Company’s contracts containing leases were expired or were Short Term Leases. Accordingly, the adoption of ASU 2016-02 required no changes in the accompanying consolidated financial statements for any of the periods presented.

Presentation of Debt Issuance Costs. On July 1, 2016, the Company implemented ASU 2015-03 Interest – Imputation of Interest (Topic 830) – Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the nature of debt discounts and its implementation results in reclassification of the prior periods. In the accompanying consolidated balance sheet as of June 30, 2016, the reclassification of debt issuance costs resulted in a reduction of total assets of $0.9 million and a corresponding reduction in total liabilities of $0.9 million.  All of the Company’s debt issuance costs recognized prior to the adoption of ASU 2015-03 on July 1, 2016, have been fully amortized and expensed as of June 30, 2017.  

Stock-Based Compensation. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows. The new guidance is effective for the Company’s fiscal year that

F-14

begins on July 1, 2017 with early adoption permitted. The Company prospectively adopted ASU 2016-09 on July 1, 2016.  Upon adoption, the Company made an election to account for forfeitures of non-vested equity awards in the periods in which they occur.  The other provisions of ASU 2016-09 did not have a material impact on the accompanying consolidated financial statements for any of the periods presented.

Income Taxes.  In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires that the Company recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.  The Company adopted ASU 2016-16 prospectively on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Goodwill.  In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating the quantitative test (Step 2) for impairment for any reporting unit with a zero or negative carrying amount based on a qualitative assessment (Step 1).  The Company adopted ASU 2017-04 on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Business Combinations.  In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business. The Company adopted ASU 2017-01 on July 1, 2016 without material impact on the Company’s accompanying consolidated financial statements.

3. Discontinued Operations

On June 30, 2016, the Company sold two of its previously wholly-subsidiaries (the Divestiture) engaged in the patent licensing business for an aggregate purchase price of up to $40 million. The purchaser paid the Company $30 million, plus certain adjustments, upon the closing of the Divestiture, and has made claims that it has incurred indemnifiable losses in excess of the remaining $10 million due under the purchase and sale agreement.  As a result, the Company has not recognized any portion of the remaining $10 million purchase price.

The following table provides a reconciliation of the Company’s previous operations as reclassified for all of the periods presented:

	2017			2016			2015
Discontinued operations:
Net revenue	$	8,750		$	27,826		$	4,505
Patent licensing expenses (1)		(5,630	)		(30,780	)		(31,069	)
General and administrative expenses		—			(2,876	)		(2,989	)
Other non-significant expenses		—			—			(10	)
Gain (loss) from discontinued operations		3,120			(5,830	)		(29,563	)
Gain on sale of discontinued operations		—			29,795			—
Total pretax gain (loss) on discontinued    operations		3,120			23,965			(29,563	)
Income tax benefit (expense)		(917	)		(5,103	)		—
Net gain (loss) from discontinued operations	$	2,203		$	18,862		$	(29,563	)

(1) Amounts for the fiscal year ended June 30, 2017 primarily consist of non-recurring fee split obligations associated with the Microsoft settlement as further discussed below.

During the year ended June 30, 2017, the Company reached a final settlement with Microsoft Corporation for a one-time payment by Microsoft Corporation, related to an infringement judgment in our favor previously under appeal, of $8.8 million.  The payment, received in October 2016, included reimbursement of litigation costs incurred by the Company of approximately $1.9 million.  The settlement was paid to the Company as part of the Divesture and subject to fee split provisions.  During the year ended June 30, 2017, the Company paid $1.7 million with respect to its fee split obligations, all of which are classified as patent licensing expenses in the above table, with the purchaser of the divested subsidiaries.  As of June 30, 2017, the Company has recorded estimated remaining fee share obligations associated with the Divesture totaling $3.6 million.

F-15

The Company did not allocate interest expense to discontinued operations and no general corporate overhead expenses have been reclassified to discontinued operations.

4. Investments, at Fair Value

In November 2016, the Company ceased to have a controlling financial interest in its previously wholly-owned subsidiary, GECC.  On the cessation date, the Company deconsolidated its investment in GECC and made an election to recognize its remaining ownership position at fair value on a recurring basis.  On the date of deconsolidation, and based on the NASDAQ-listed market price of GECC (a Level 1 input in accordance with the US GAAP fair value hierarchy), the Company recorded an unrealized loss of $8.5 million on the value of its investment in GECC.  Subsequent to the deconsolidation, and through the year ended June 30, 2017, the Company recognized an additional unrealized loss on its investment in GECC totaling $0.6 million.  The total unrealized loss of $9.1 million for the year ended June 30, 2017 is recognized as a component of net loss, classified in other income in the accompanying consolidated statements of operations.  Additionally, dividends and interest from the Company’s investment in GECC, totaling $1.3 million for the year ended June 30, 2017, are reported separately in the accompanying consolidated statements of operations.

As of June 30, 2017, the Company owned approximately 17% of the outstanding shares of GECC.  The Company did not have any investments for which it made a fair value election as of June 30, 2016 and 2015.

5. Acquisition

In November 2016, the Company completed a series of transactions culminating in the creation of its investment management segment.  The transactions, some of which involved MAST Capital, a related party, and employees of MAST Capital, included: the formation of GECM; the acquisition of an 80.1% in GP Corp.; and GP Corp.’s acquisition of certain assets and liabilities of MAST Capital.

On November 3, 2016, the Company obtained an 80.1% controlling financial interest in GP Corp by purchasing shares of GP Corp common stock for a $0.08 million capital contribution to GP Corp.  GP Corp was initially formed and capitalized by MAST Capital and certain of its employees.

On November 3, 2016, subsequent to the Company’s acquisition of its interest in GP Corp, GP Corp. acquired certain assets and liabilities from MAST Capital (the Acquisition).  In consideration for the acquired assets and liabilities, GP Corp issued a senior secured note payable with a maximum amount due of approximately $10.8 million, and an estimated fair value of $3.4 million, after giving effect to estimated allowable cost off-sets to the maximum contractual balance due.  The GP Corp Note is due on November 3, 2026, bears interest at 3% over the 90-day LIBOR rate, requires mandatory repayments of $0.3 million per year, and may be repaid by GP Corp at its option at par plus accrued and unpaid interest and is secured by a first perfected security interest in the net profits generated by GECM related to its management of GECC.

The consideration for the acquisition also included the issuance of a warrant (the Warrant) to purchase 54,733 shares of Company common stock with an estimated grant date fair value of $0.2 million to MAST Capital.  The Warrant has a $0.01 exercise price per share, and the number of shares issuable thereunder is subject to reduction to the extent GECM’s cumulative revenue collected under the GECC Investment Management Agreement (IMA) is less than $40 million through November 3, 2021.  Since the shares issuable under the warrant agreement are variable based on the post-acquisition revenue generated by the IMA, the Company concluded the warrants are not indexed to its equity.  As a result of this determination, the Company classified the warrants as a liability in the accompanying consolidated balance sheets, and the changes in the fair value of the warrants through the date of settlement is recognized in other income, net in the accompanying consolidated statements of operations.  For the year ended June 30, 2017, the Company recognized a gain of $0.03 million on the change in the fair value of the liability included in other income, net in the accompanying consolidated statements of operations.

On the date of the Acquisition, the Company allocated the consideration given to the individual assets acquired and the liabilities assumed based on a preliminary estimate of their fair values. The assessment of fair value previously reported,

F-16

as of and for the interim periods ended December 31, 2016 and March 31, 2017, were preliminary as the Company had not finalized its fair value estimates and primarily reflected the maximum payment that may be due to MAST Capital.

During the quarter ended June 30, 2017, the Company obtained and considered additional information related to the assets acquired and liabilities assumed; including items impacting the fair value of the consideration due in the form of a note payable.  Upon consideration of this additional information and further analysis of the assets acquired, the Company determined that the $3.9 million fair value related to the IMA intangible asset represented substantially all the fair value of the assets acquired in the Acquisition.  This valuation reflects that the Company acquired the right to manage a single portfolio of assets in exchange for the consideration.  As a result, the Company concluded that the Acquisition should be accounted for as an acquisition of assets rather than an acquisition of a business as required by ASU 2017-01, Business Combinations (Topic 805)adopted by the Company on July 1, 2016 which clarifies the definition of a business.

The following table represents the preliminary fair value estimates as previously reported along with the adjustments made to the preliminary valuation in the fourth quarter of the year ended June 30, 2017 (in thousands):

	As of						As of
	November 3,						November 3,
	2016			Adjustment			2016
	As Previously Reported						As Adjusted
GP Corp note issued	$	10,824		$	(7,400	)	$	3,424
Warrants issued (classified as a liability)		216						216
Total consideration	$	11,040		$			$	3,640
Furniture and fixtures	$	22		$	—		$	22
Lease deposit		170			(170	)		—
Identifiable intangible assets		11,161			(6,735	)		4,426
Lease liability, net		(313	)		(495	)		(808	)
Net assets acquired	$	11,040		$			$	3,640

In addition to the adjustment to the fair value described above, the Company determined that the estimated useful life of the identifiable intangible assets acquired was fifteen years.  In its prior filings on Form 10-Q, as of and for the periods ended December 31, 2016 and March 31, 2017, the Company recognized amortization associated with its identifiable intangible assets based on their preliminary fair values over the contractual life.  As a result of the change in the estimated useful life of the identifiable intangible assets, the Company reversed approximately $2.3 million of amortization expense previously recognized through the nine-month period ended March 31, 2017 during the quarter ended June 30, 2017.

The following tables provide additional detail related to the Company’s acquired identifiable intangible assets (in thousands):

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (in years)
Amortized intangible assets:
Investment management agreement	$	3,900	$	(280	)	$	3,620		15
Assembled workforce		526		(44	)		482		15
Total	$	4,426	$	(324	)	$	4,102

F-17

Aggregate Amortization Expense:	Amount
For the year ended June 30, 2017	$	324
Estimated Amortization Expense:
For the year ended June 30, 2018	$	527
For the year ended June 30, 2019		621
For the year ended June 30, 2020		599
For the year ended June 30, 2021		456
For the year ended June 30, 2022		382

In September 2017, the Company entered into a Separation Agreement with MAST Capital and related entities.  As part of the Separation Agreement, the principal balance of the note was revised to be $3.3 million; the 54,733 warrants were cancelled and replaced with shares of common stock of the Company; and the cost-sharing agreement between the parties was cancelled.

6. Related Party Transactions

The Company has entered into several transactions, as further discussed below and in Note 5, with MAST Capital, entities controlled by MAST Capital, and its employees.  MAST Capital and its affiliates currently own approximately 8.7% of the Company’s outstanding common stock.

In conjunction with the acquisition of GP Corp, on November 3, 2016, GECM entered into a profit sharing agreement with GP Corp. (Profit Sharing Agreement).  Under the Profit Sharing Agreement, the profit from GECC is paid from GECM to GP Corp.  Since its inception in November 2016, GECM operated at a cumulative loss through June 30, 2017; correspondingly, no profits were available to GP Corp. under the Profit Sharing Agreement.

In conjunction with the commencement of GECC, GECM entered into two agreements with GECC, the IMA providing for GECM to manage GECC’s investment portfolio, and the Administrative Agreement, under which GECM provides administrative services to GECC.  Under these agreements, GECM receives an administrative fee, a management fee based on GECC’s assets (other than cash and cash equivalents), and incentive management fees if GECC has net capital gains, or if its net investment income exceeds a specified hurdle rate.  Fees under the agreements began to accrue on November 4, 2016.

Certain MAST Capital employees are employees of GECM.  In accordance with the terms of a cost-sharing agreement, employee and other operating costs incurred with the Company’s investment management business are based on direct management of each Company’s investment portfolio, or correlated to the percentages of assets under management as a total MAST’s and GECC’s asset portfolio. If GECM’s annual costs under the cost sharing agreement exceed $1.4 million, the excess for such year over $1.4 million may be set off dollar for dollar against the principal balance of the GP Corp Note.  

F-18

The following table illustrates the activity related to the operations of the acquisitions for the periods presented.  The Company did not engage in the operations and transactions noted below for the fiscal years June 30, 2016 and 2015, correspondingly, those periods have been omitted:

	Asof and for the Year ended June 30, 2017
Investment in GECC
Unrealized loss on investment in GECC	$	(9,114	)
GECC dividends and interest recognized for the    period	$	1,306
Managing GECC
Reimbursement of GECC formation expenses for the    period (1)	$	2,989
Investment management fees for the period	$	4,287
GECC administrative fees during the period	$	640
Net receivable due from GECC at the end of the    period	$	3,654
Cost Sharing with MAST
GECM costs charged to MAST Capital (2)	$	1,809
Net receivable due from MAST at the end of the    period	$	—
Profit Sharing with GP Corp
GP Corp Note balance at the end of the period	$	3,174
Interest accrued and paid on GP Corp Note during    the period	$	285
Principal payments made on GP Corp Note during    the period	$	250
GECM net profit paid to GP Corp (3)	$	—

(1) Recognized in general and administrative expenses in the accompanying consolidated statements of operations.

(2) Recognized in investment management expenses in the accompanying consolidated statements of operations.

(3) GECM did not generate a net profit as defined by the Profit Sharing Agreement with GP Corp.

7. Financial Instruments

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based upon the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

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:

▪ Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

▪ Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

▪ Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

F-19

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 assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized in the tables below (in thousands):

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Investment in GECC	$	20,886	$	—	$	—	$	20,886

The Company’s investment in GECC is classified within Level 1 of the fair value hierarchy using quoted market prices on a recurring basis.  The Company did not have any financial assets measured at fair value on a recurring basis as of June 30, 2016.

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability		—		—		186		186

The Company values its warrant liability using a Black-Scholes-Merton option pricing model with assumptions classified as unobservable inputs within Level 3 of the fair value hierarchy.  The assumptions used to value the warrant on a recurring basis consisted of:  expected volatilities between 65.7 to 66.6%; no expected dividend yields; a risk-free rate of 1.5%; and an expected term equal to the contractual term.  The warrant has an exercise price of $0.01 per share and a contractual term of ten (10) years from the date of issuance on November 3, 2016.  

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis (in thousands):

	As of  June 30,
	2017			2016
Beginning of year	$	—		$	—
Aggregate fair value of warrant issued		216			—
Re-measurement of warrant liability (gain)		(30	)		—
End of year	$	186		$	—

The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the fiscal year ended June 30, 2017, 2016 or 2015.  

The Company estimated the fair value of the related party notes payable outstanding as of June 30, 2017 and 2016, on a non-recurring basis, using Level 3 inputs.  The Level 3 inputs consisted of a discounted cash flow analysis, which incorporated spread and discount rate assumptions considering the Company’s financial status and risk, as well as indications from comparable publicly traded debt instruments.  As of June 30, 2017 and 2016, the carrying value of the notes approximated the fair value.  The fair value of the related party notes payable outstanding as of June 30, 2016 is presented net of unamortized discounts and debt issuance costs.   The carrying value of all other financial assets and liabilities approximate their fair values.

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8. Related Party Note Payable

The Company’s related party notes (Notes) are summarized below (in thousands):

	June 30,			June 30,
	2017			2016
Balance beginning of year	$	33,786		$	29,020
Issuance of GP Corp Note, at fair value		3,424			—
Issuance of in-kind notes		—			4,355
Amortization of discount issuance costs		2,802			411
Principal and interest payments		(36,838	)		—
Balance end of year	$	3,174		$	33,786
Current portion, end of year	$	250		$	33,786
Balance, net of current portion, end of year	$	2,924		$	—

For the years ended June 30, 2017, 2016, and 2015, the Company recognized interest expense of approximately $6.3,$4.9 million, and $4.3 million, respectively. In May of 2015, the Company’ previously outstanding Senior Secured Notes payable were purchased by MAST Capital Management, LLC as part of a private transaction.  MAST Capital Management, LLC is and was a significant stockholder of the Company. The sale of the Notes did not have any impact on the Company’s obligations under the original terms of the Notes.   In October 2016, the Company called and retired the previously outstanding Senior Secured Notes.  As part of the retirement, the Company made cash payments totaling $39.8 million; consisting of interest payments of $1.2 million; call premiums totaling $2.0 million classified as interest expense in the accompanying consolidated statements of operations; and principal payments of $36.6 million.

On November 3, 2016, GP Corp issued the GP Corp Note. The note calls for variable interest payments based on the ninety-day LIBOR plus 3%.  For the year ended June 30, 2017, the Company incurred interest expense totaling $0.3 million, based on an average interest rate of approximately 4.0% during the period.

The GP Corp Note is held by MAST Capital and is secured by the profits generated by GECM’s management of GECC.   The GP Corp Note requires quarterly interest only payments and annual principal payments of at least $0.3 million, based on the Company’s fiscal year ending June 30.   

The GP Corp Note does not have any recourse to any of the Company’s operations or net assets not related to GECM’s management of the investments assets held by GECC.  The GP Corp Note may be prepaid at any time with prior written notice to the holders of the GP Corp Note.  Additionally, GP Corp is required to prepay the GP Corp Note upon certain material liquidation transactions.

The following table summarizes the Company’s maximum obligations, and estimated cumulative off-sets allowed by the cost-sharing agreement, under the GP Corp Note as of June 30, 2017 (in thousands):

Year	Principal
2018	$	250
2019		250
2020		250
2021		250
2022		250
Thereafter		9,324
Total, maximum obligation	$	10,574
Estimated reduction from cost sharing agreement		(7,400	)
Estimated GP Corp Note, net	$	3,174

F-21

9. Commitments and Contingencies

In conjunction with the Divesture of its patent licensing business on June 30, 2016, the Company may receive additional proceeds of up to $10 million, subject to adjustment for indemnification or claims breach of representations, and warranties.  The purchaser has claimed that it has losses indemnifiable in excess of the $10 million contractual payment due on June 30, 2018.  As such, and as of June 30, 2017, the Company has determined the Holdback was not realizable or estimable. The Company expects to recognize the known or estimable portion of the Holdback consideration in the period it becomes realizable, not later than June 30, 2018.

The Company has been named in two related complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al., filed on September 23, 2016 (the Saunders Action), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the Russell Action), were filed in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the Circuit Court), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the Speiser Action, and together with the Saunders Action and the Russell Action, the Actions).  

On October 24, 2016, the Company, along with Full Circle, GECC, MAST Capital, certain directors of Full Circle and plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the MOU). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and GECC agreed to and did make the supplemental disclosures with respect to the merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the Stipulation) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the Merger Agreement; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle's stockholders. There can be no assurance that the settlement will be finalized or that the Circuit Court will approve the settlement. The Company has determined there is a remote possibility the outcome of these complaints will have a material effect on its financial position, results of operations, or cash flows.

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.

10. Operating Leases

The Company has obtained the right of use for two separate office space assets under operating lease agreements as follows:

Hancock Lease

The Company obtained the right of use of office space located in Boston, MA on November 3, 2016 in conjunction with the Acquisition transaction with MAST Capital that terminates onDecember 31, 2017.  

As of June 30, 2017, the remaining obligation under the Hancock lease was $0.7 million, inclusive of the remaining early termination payment, classified as current in the accompanying consolidated balance sheets.

Watermill Lease

On December 23, 2016, the commencement date, the Company obtained the right of use of office space located in Waltham, MA. On the commencement date of the lease, the non-cancellable term was for eighty-eight (88) months from the occupancy date of June 1, 2017 and contains an option to extend for an additional sixty (60) month period.  

F-22

The Company determined the expected term of the right of use of the office to be 88 months on the commencement and recognized the lease liability and corresponding right of use asset totaling $1.7 million using a discount rate of 10%.  The lease payments commence on October 1, 2017, four months after the Company began to occupy the space.  On an annual basis, the lease payments increase at an average rate of approximately 2.4% from $28 to $32 thousand per month.

As of June 30, 2017, the Company had a remaining right of use asset and lease liability of $1.7 million related to the Watermill lease in Waltham.

The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities as of June 30 (in thousands):

Year	Amount
2018	$	920
2019		337
2020		345
2021		353
2022		362
Thereafter		843
Total	$	3,160

The Company recognized rent expense totaling $0.7 million, $0.3 million, and $0.2 million for the fiscal years ended June 2017, 2016, and 2015, respectively.  

11. Stockholders' Equity

Rights Offering

In September 2016, the Company entered into a backstop investment agreement with a consortium of investors led by Gracie Investing LLC.  Members of the Company’s board of directors and a number of the Company’s employees were backstop investors. On October 2016, the Company and the backstop providers amended and restated the backstop investment agreement which contemplated up to a $36.6 million investment in shares of the Company’s common stock. In November 2016, the Company commenced a $45 million rights offering to its existing stockholders at a price of $3.285 per share. The Company sold an aggregate of 12,755,200 shares of its common stock for gross proceeds of $41.9 million, which after deducting expenses, totaling approximately $2.4 million, resulted in net proceeds of $39.5 million in the rights offering; and 945,333 shares of its common stock for gross proceeds of $3.1 million from the backstop providers.  The Company intends to use the proceeds of the offerings to make acquisitions of new businesses and working capital.

Tax Benefits Preservation Agreement

On January 20, 2015, 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) to replace the Company’s existing Tax Benefits Preservation Agreement, which expired on January 29, 2015, (the Expired Agreement). The Agreement is substantially the same as the Expired Agreement.  In December 2015, the Rights Plan was approved by the Company’s stockholders.

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 4.99% or more of the Company’s common stock and the ability of persons or entities now owning 5% or more of the outstanding common shares from acquiring additional common shares.

Pursuant to the terms of the Rights Plan, the Company’s Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (a Tax Right) for each outstanding share of common stock, par value $0.001 per share of the Company (the Common Stock), to stockholders of record as of the close of business on January 29, 2015 (the Record Date). In addition, one Tax Right will automatically attach to each share of Common Stock issued between the

F-23

Record Date and the Distribution Date (as defined in the Rights Plan). Each Tax Right entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share (a Unit) of Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company at a cash exercise price of $15.00 per Unit (the Exercise Price), subject to adjustment, under the conditions specified in the Rights Plan.

The Tax Rights are not exercisable until the Distribution Date and will expire at the earlier of (a) January 29, 2018; (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 November 2013, the Company’s stockholders approved the Amended and Restated 1999 Directors’ Equity Compensation Plan (the Directors’ Plan).  Options and awards granted to new or existing Outside Directors (as defined in the Directors’ Plan) under the Directors’ Plan vest ratably over a period of three years. The Directors’ Plan also provides for the acceleration of options upon the dismissal of an Outside Director from the Board of Directors of the Company upon or within 24 months following a change in control of the Company. The exercise price of options granted under the Directors’ Plan is equal to the fair market value of the Company’s common stock on the date of grant. Under the Directors’ Plan, stock option grants have a term of ten years. As of June 30, 2017, the Company had a total of 109,058 shares outstanding under the Directors’ Plan.

In November 2013, the Company’s stockholders approved the Amended and Restated 2006 Stock Incentive Plan (the 2006 Plan) to provide incentive stock options, non-statutory stock options, restricted stock purchase rights and stock appreciation rights to employees and consultants of the Company and its affiliates. The plan also provides restricted stock bonus, phantom stock units, restricted stock units, performance shares bonus and performance share units.  Each share of Company common stock issued pursuant to a stock award issued under this Plan shall reduce the Share Reserve by one share; provided, however that for each Full-Value Stock Award, the share reserve shall be reduced by one and one-half shares. The exercise price of options granted under the 2006 Plan approximates the fair market value of the Company’s common stock on the date of grant. Options issued under the 2006 Plan generally expire ten years from the date of grant. Vesting periods are determined by the plan administrator and generally provide for shares to vest ratably over a period of three to four years, with options for new employees generally including a one-year cliff period. As of June 30, 2017, the Company had a total of 438,981 shares outstanding under the 2006 Stock Plan.

In June 2016, the Company’s stockholders approved the Great Elm Capital Group, Inc. 2016 Long-Term Incentive Plan and the Great Elm Capital Group, Inc. 2016 Employee Stock Purchase Plan.  As of June 30, 2017, the Company had a total of 897,714 shares outstanding under the 2016 Long-Term Incentive Plan.

The following table summarizes the number of common shares reserved for issuance under the plans discussed above as of June 30, 2017:

Shares of Common Stock Reserved for Issuance
Director's Plan	—
2006 Plan	131,797
2016 Long-Term Incentive Plan	1,652,286
2016 Employee Stock Purchase Plan	944,000
Total	2,728,083

Stock-Based Compensation

The fair value of each option grant is estimated on the date of grant using the Black-Scholes-Merton option pricing model and assumptions noted in the following table. The Company estimates the expected term for new grants based upon actual historical experience. The Company’s expected volatility for the expected term of the option is based upon the historical volatility experienced in the Company’s stock price.  The risk-free rate for the expected term of the option

F-24

is based on the U.S. Treasury yield curve in effect at the time of grant. The Company determines the fair value of non-vested shares based on the Nasdaq closing stock price on the date of grant.

The ranges of assumptions used to value options granted were as follows:

	Fiscal Year Ended June 30,
	2017		2016		2015
Expected volatility	64.7 - 66.6	%	64.9 - 69.1	%	67.7		%
Expected dividends	—		—			—
Expected term (years)	6.25-7.25		5.88 - 9.88			6.18
Risk-free rate	1.5 - 2.00	%	1.73 - 2.05	%	1.77		%

A summary of option activity through June 30, 2017 is presented below (in thousands except per share and year amounts):

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
Options	Shares			Exercise Price		Term (years)		Intrinsic Value
Outstanding at June 30, 2016		610		$	9.60
Options granted		170			3.27
Exercised		—			—
Forfeited, cancelled or expired		(58	)		17.57
Outstanding at June 30, 2017		722		$	7.46		7.29	$	22
Exercisable at June 30, 2017		604		$	8.28		6.91	$	6
Vested and expected to vest as of June 30, 2017		722		$	7.46		7.29	$	22

The weighted average grant date fair value of options, per share, granted during the 2017, 2016, and 2015 fiscal years was $3.68, $5.62, and $5.04, respectively. During the year ended June 30, 2017, and 2016 there were no options exercised, and options exercised during the year ended June 30, 2015 had intrinsic value of approximately $0.02 million.

A summary of the activity of the Company’s restricted stock units through June 30, 2017 is presented below (in thousands except per share amounts):

				Weighted
				Average
	Restricted			Grant Date
Restricted Stock Units	Stock Units			Fair Value
Outstanding at June 30, 2016		32		$	13.30
Granted		1,168			3.92
Vested		(32	)		13.30
Forfeited		(21	)		3.95
Outstanding at June 30, 2017		1,147		$	3.88

During the year ended June 30, 2017, the Company granted an aggregate of 1,058,694 shares of restricted stock (net of forfeitures), included in the above table, with both performance and service requirements in connection with the formation of its investment management business.  The vesting of these awards is subject to a five-year service requirement and an investment management cumulative revenue collection target of $40 million.  In order to recognize compensation expense over the vesting period, the Company estimated the probability of the entire performance target being met on an on-going basis.  

The aggregate grant date fair value of RSUs granted during the 2017, 2016, and 2015 fiscal years was $4.5 million, $0.7 million and $1.9 million, respectively.

F-25

Stock-based compensation expense totaled $2.0 million, $4.4 million, and $2.1 million for the 2017, 2016, and 2015 fiscal years, respectively.  Stock-based compensation expense for the year ended June 30, 2016 included approximately $2.3 million related to modifications of awards primarily held by our former officers and directors.  The award modifications were the result of accelerated vesting of previously unvested awards upon termination, and the extension of the post termination exercise term from ninety days to one year.  In addition, approximately $2.3 million and $1.3 million of stock based compensation was included in discontinued operations for the fiscal years ended June 30, 2016 and 2015, respectively.

As of June 30, 2017, the Company had unrecognized compensation cost related to all unvested share awards and options totaling $3.4 million expected to be recognized as the shares vest over the next 3.8 years.

12. Income Taxes

Income (loss) from continuing operations before provision for income taxes is comprised of the following (in thousands):

	Fiscal Year ended June 30,
	2017				2016		2015
Domestic	$	(18,650	)	$	(14,543	)	$	(12,032	)
Foreign		—			—			—
Total	$	(18,650	)	$	(14,543	)	$	(12,032	)

The provision (benefit) for income taxes includes the following (in thousands):

	Fiscal Year ended June 30,
	2017			2016			2015
Current:
Domestic Income Tax	$	—		$	—		$	—
Foreign Income Tax		—			—			164
	$	—		$	—		$	164
Deferred:
Domestic Income Tax	$	(1,210	)	$	(5,103	)	$	—
Foreign Income Tax		—			—			—
	$	(1,210	)	$	(5,103	)	$	—
Total	$	(1,210	)	$	(5,103	)	$	164

The Company recognized an income tax (benefit) from continuing operations of $(1.2) million and $(5.1) million, respectively, for the years ended June 30, 2017 and 2016. For the year ended June 30, 2015, the Company recognized income tax expense of $0.2 million from continuing operations.

During 2017 and 2016, the Company provided for income tax with respect to discontinued operations of $1.2 million and $5.1 million, respectively, related to intraperiod allocations.  During 2017, income tax expense from discontinued operations totaled $0.9 million, net of the release of $0.3 million of accrued taxes for divested foreign subsidiaries and other for taxes previously accrued by the subsidiaries.  No intraperiod allocations were made in 2015.

F-26

The following table reconciles the expected corporate federal income tax expense (benefit), computed by multiplying the Company's income (loss) before income taxes by the statutory income tax rate of 35% (in thousands):

	Fiscal Year End June 30th,
	2017				2016		2015
Federal Benefit at Statutory Rate	$	(6,523	)	$	(5,090	)	$	(4,211	)
State taxes		(794	)		(12	)		(211	)
Effect of foreign corporations		—			(607	)		(139	)
Permanent adjustments		22			(208	)		3
Change in valuation allowance		6,244			(164	)		(3,320	)
Abandonment of state net operating losses		—			—			7,544
Stock compensation adjustment		—			924			794
Other		(159	)		54			(296	)
Total Tax Expense/(Benefit)	$	(1,210	)	$	(5,103	)	$	164

The tax effect of temporary differences that give rise to significant portions of the Company's deferred tax assets and liabilities are as follows (in thousands):

	Fiscal Year End June 30
	2017				2016			2015
Deferred Tax Assets:
Net operating loss carryforwards	$	612,378		$	623,221		$	617,331
Accruals and allowances not deductible for tax    purposes		141			278			(574	)
Research and development credit and other carry    -forwards		39,112			38,371			38,371
Stock based compensation		604			184			806
Unrealized loss on investment		3,575			—			—
Investment in Partnership		—			—			11,942
Total Deferred tax assets, gross	$	655,810		$	662,054		$	667,876
Less: valuation allowance	$	(655,810	)	$	(662,054	)	$	(667,876	)
Total deferred tax assets, net	$	—		$	—		$	—

In light of the Company's 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. The state deferred amounts reflected in the above table were calculated using the enacted tax rates. As a result of the sale of the product business, the Company does not have any foreign deferred tax assets as of June 30, 2017, 2016, and 2015.

F-27

As of June 30, 2017, the Company has net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $1.7 billion and $217 million, respectively. During the 2017 fiscal year, approximately $58 million of California net operating loss carryforwards expired. The Company has gross federal, California, and Massachusetts research and development credit carryforwards of approximately $30.0 million, $20.9 million, and $0.9 million, respectively. The federal NOL carryforwards and research and development credit carryforwards will expire from 2018 through 2036. The California research and development credits may be carried forward indefinitely. The Massachusetts research and development credit expires in 2025.  The federal NOLs can be carried forward for 20 years; California net operating loss carryforwards will expire from 2018 through 2037; and the Massachusetts net operating loss carryforwards will expire from 2031 to 2037.

The following table reflects federal NOL carryforwards that will expire beginning in 2018 (in thousands):

Fiscal Year of Expiration	Federal NOL carryforwards
2018	$	15,511
2019		59,062
2020		488,814
2021		190,624
2022		143,137
2023 through 2037		797,851
Total	$	1,694,999

Under Code Section 382, the utilization of a corporation's NOL carryforwards is limited following a change in ownership (as defined by the Code) of greater than 50% within a rolling three-year period.

During the 2015, 2016 and 2017 fiscal years, the total amount of gross unrecognized tax benefit activity was as follows (in thousands):

Balance as of June 30, 2014	$	13,290
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(152	)
Balance as of June 30, 2015		13,138
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(172	)
Balance as of June 30, 2016		12,966
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		(54	)
Lapse of statute of limitations		(176	)
Balance as of June 30, 2017	$	12,736

During the fiscal year ended June 30, 2017, the Company’s unrecognized tax benefits decreased by $0.2 million due to the expiration of certain statutes of limitations reflected in discontinued operations.

As of June 30, 2017 and June 30, 2016, the Company had approximately $12.7 million and $13.0 million, respectively of unrecognized tax benefits. All of the tax benefit realized during the 2017, 2016, and 2015 fiscal years were recorded as net income or expense from discontinued operations. The unrecognized tax benefits, if recognized, would impact the effective tax rate by $12.7 million and $13.0 million without considering the impact of the valuation allowance.  The unrecognized tax benefit at June 30, 2017 of $12.7 million, is offset against the deferred tax asset for federal and state research and development tax credits.

F-28

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, 2017, no amount is accrued for interest associated with tax liabilities.

Although timing of the resolution and/or closure on the Company's unrecognized tax benefits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.

The Company files U.S. federal, U.S. state and foreign tax returns. Because of NOL carryforwards, substantially all of the Company's tax years, from the 1995 through 2016 fiscal years, remain open to IRS examinations with the exception of the 2010 and 2009 fiscal years for which IRS examinations have been completed.  Substantially all of the Company’s tax years, from the 1995 through 2016 fiscal years, remain open to state tax examination with the exception of Alabama, Massachusetts, and Texas. Most of the Company's remaining foreign jurisdictions have three or four open tax years at any point in time.

13. Segment Information

Effective upon the closing of a series of transactions, as discussed in Note 5, culminating in the creation of the Company’s investment management business, the Company’s chief operating decision maker began to view where resources would be allocated to the investment management business based on performance of the investment management business relative to acquisition opportunities in other industries.  Prior to the Divestiture of the Company’s patent licensing business on June 30, 2016, the Company viewed all of its operations as a single integrated business.  The following table provides detail of each of the Company’s operating segments (in thousands):

	For the Years Ended June 30,
	2017			2016
Revenue:
Investment management	$	4,927		$	—
General corporate		—			—
Total revenue		4,927			—
Costs and Expenses:
Investment management	$	5,119		$	—
General corporate		4,413			9,835
Total operating costs and expenses		9,532			9,835
Operating income (loss):
Investment management	$	(489	)	$	—
General corporate		(18,161	)		(14,543	)
Total pre-tax income (loss) from continuing operations		(18,650	)		(14,543	)
Provision for (benefit from) income tax	$	(1,210	)	$	(5,103	)
Income (loss) from discontinued operations, net		2,203			18,862
Net income (loss)	$	(15,237	)	$	9,422
Less: net loss attributable to non-controlling interest		(30	)		—
Net loss attributable to Great Elm Capital Group	$	(15,207	)	$	9,422

	As of  June 30,
	2017		2016
Assets:
Investment management	$	9,619	$	—
General corporate		67,075		80,897
Total assets	$	76,694	$	80,897

F-29

14. Quarterly Financial Results (Unaudited)

The following table sets forth a summary of the Company’s unaudited quarterly operating results for each of the eight quarters in the period ended June 30, 2017. All quarters have been revised as necessary to reflect discontinued operations.  The information has been derived from the Company’s unaudited consolidated financial statements that, in management’s opinion, have been prepared on a basis consistent with the accompanying consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation.

	Fiscal Year Ended June 30, 2017												Fiscal Year Ended June 30, 2016
	Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
Net revenues	$	2,065		$	1,582		$	1,280		$	—		$	—		$	—		$	—		$	—
Operating costs and expenses		1,880			4,256			858			2,538			4,890			2,006			1,396			1,651
Operating loss from continuing operations	$	185		$	(2,674	)	$	422		$	(2,538	)	$	(4,890	)	$	(2,006	)	$	(1,396	)	$	(1,651	)
Loss from continuing operations	$	(786	)	$	(2,797	)	$	(8,344	)	$	(5,513	)	$	(902	)	$	(3,165	)	$	(2,537	)	$	(2,836	)
Income (loss) from discontinued operations		(105	)		—			210			2,098			43,003			(6,621	)		(10,139	)		(7,381	)
Net income (loss) attributable to Great Elm Capital    Group, Inc.	$	(1,305	)	$	(2,519	)	$	(7,968	)	$	(3,415	)	$	42,101		$	(9,786	)	$	(12,676	)	$	(10,217	)
Basic and diluted earnings (loss) per share from    continuing operations per share	$	(0.03	)	$	(0.11	)	$	(0.81	)	$	(0.58	)	$	(0.10	)	$	(0.34	)	$	(0.27	)	$	(0.30	)
Basic and diluted earnings (loss) from discontinued    operations per share	$	—		$	—		$	0.02		$	0.22		$	4.57		$	(0.70	)	$	(1.08	)	$	(0.79	)
Basic and diluted earnings (loss) per share	$	(0.03	)	$	(0.11	)	$	(0.79	)	$	(0.36	)	$	4.47		$	(1.04	)	$	(1.35	)	$	(1.09	)
Shares used in computing:
Basic and diluted earnings (loss) per share		23,200			23,187			10,073			9,467			9,412			9,432			9,408			9,366

(1) Net revenues for the second and third quarters of fiscal 2017 include the reclassification of $0.3 million and $0.5 million of dividends and interest income from net revenues to other operating income, respectively.  The reclassifications did not have an impact on the previously reporting losses from continuing operations or net loss for the applicable periods ended December 31, 2016 and March 31, 2017.

15. Subsequent Events

In September 2017, the Company and its subsidiaries, entered into a Separation Agreement with MAST Capital Management, LLC (MCM), certain funds and other entities controlled by MCM, David J. Steinberg (Steinberg), Peter A. Reed (Reed), our newly appointed Chief Executive Officer, and Adam M. Kleinman (Kleinman).  As part of the Separation Agreement, the GP Corp Note, with a maximum principal amount of $10.8 million on November 3, 2016, was amended and restated in an aggregate principal amount of $3.3 million.  In conjunction with the reduction in the principal amount of the GP Corp Note, the cost sharing agreement between MCM and GECM was cancelled upon payment of all amounts between the parties as of the effective date of the Separation Agreement.

As further part of the Separation Agreement, the Company cancelled the warrant to purchase 54,733 shares of common stock issued as part of the Acquisition consideration and replaced the warrant with 54,733 fully vested shares of common stock.  Additionally, Steinberg voluntarily agreed to resign from employment with GECM; correspondingly, Steinberg’s previously issued restricted stock award, totaling 220,923 shares, was forfeited.  The Company granted MCM a two-year warrant to purchase up to 420,000 shares of common stock at a price equal to the simple weighted average trading price for the ten (10) preceding the date notice of exercise is provided.

F-30

EX-10.29

Exhibit 10.29

SEPARATION AGREEMENT

SEPARATION AGREEMENT, dated as of September 18, 2017 (this “Agreement”), by and among Great Elm Capital Group, Inc., a Delaware corporation (“GEC”), Great Elm Capital Management, Inc., a Delaware corporation (“GECM”), GECC GP Corp., a Delaware corporation (“GP Corp”), MAST Capital Management, LLC, a Delaware limited liability company (“MCM”), MAST Capital Management IA Holdings, LLC, a Delaware limited liability company (“IA”), Mast Credit Opportunities I Master Fund Limited, a Cayman Islands corporation (“Credit Opportunities”), Mast OC I Master Fund L.P., a Cayman Islands exempted limited partnership (“OC”), Mast Select Opportunities Master Fund, L.P., a Cayman Islands exempted limited partnership (“Select”), Mast Admiral Master Fund, L.P., a Cayman Islands exempted limited partnership (“Admiral” and, together with Credit Opportunities, OC and Select, and each of their respective feeder funds, general partners, alternative investment vehicles, liquidating accounts and special purpose entities, collectively, the “Mast Funds”), David J. Steinberg, an individual (“Steinberg”), Peter A. Reed, an individual (“Reed”), and Adam M. Kleinman, an individual (“Kleinman”).

Recitals

The parties are entering into this Agreement to provide an organizational separation with respect to the entities and certain of the agreements listed in these recitals, and to provide releases with respect to known and unknown conduct or omissions prior to the date of this Agreement (the “Effective Date”), in each case, subject to the terms and conditions set forth herein.

GEC entered into a Securities Purchase Agreement, dated June 28, 2013, by and between GEC and Indaba Capital Fund, L.P. (“Indaba”). Indaba and the Mast Funds (as “Buyer”) entered into a Director Designation Right Assignment Agreement, dated as of May 21, 2015, by and among Indaba and the Mast Funds. GEC, the Mast Funds and Indaba entered into a Letter Agreement, dated May 29, 2015, by and among GEC, the Mast Funds and Indaba. The Mast Funds entered into a Director Designation Right Assignment Agreement, dated as of August 14, 2015, by and among Indaba and the Mast Funds, as Buyer. GEC and the Mast Funds entered into a Letter Agreement, dated August 14, 2015, by and among the GEC, the Mast Funds and Indaba.  The agreements listed in this recital are referred to as the “Indaba Agreements”.

GECM and MCM entered into a cost sharing agreement, dated as of November 3, 2016 (the “Cost Sharing Agreement”).

GEC and Steinberg entered into a performance share award agreement, dated November 3, 2016 (the “Performance Share Award”).

GP Corp, MCM and others entered into a subscription agreement, dated as of June 22, 2016 (the “Subscription Agreement”) and MCM assigned a portion of its rights thereunder to Steinberg.

GEC delivered to MCM a warrant, dated as of December 9, 2016 (the “Existing Warrant”).

GP Corp made a senior secured promissory note in favor of MCM, dated November 3, 2016 (the “Note”).

Steinberg and GECM entered into an employment agreement with as of November 3, 2016 (“Steinberg’s Employment Agreement”).

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Each of Reed and Kleinman amended the terms of their employment arrangements with MCM as of November 3, 2016 (each, an “Employment Agreement”).

Each of Reed and Kleinman entered into consulting agreements with IA dated as of November 3, 2016 (each, a “Consulting Agreement”).

Each of Steinberg, Reed and Kleinman entered into confidential information and inventions assignment agreements, dated as of November 3, 2016 (each a “CIIAA”).

Each of Reed and Kleinman are limited partners and/or shareholders in certain Mast Funds.

Agreement

In consideration of the foregoing and the promises and undertakings in this Agreement, the parties, intending to be legally bound, agree as follows:

1. The Note.

1.1 GP Corp and MCM shall amend and restate the Note and cancel all accrued interest thereon by delivery concurrent with the execution and delivery of this Agreement of an amended and restated note in an aggregate original principal amount of $3.3 million and in the form of Annex 1 (the “Amended Note”) against delivery by MCM of the original Note. GP Corp and MCM hereby agree that all references to “Note” under that certain Collateral Assignment of Profit Sharing Agreement, dated as of November 3, 2016, between GP Corp and MCM shall be amended to refer to the Amended Note, and the same is hereby acknowledged by GECM.

1.2 GP Corp shall deliver to MCM, as a condition the consummation of the transactions herein, a certificate of GP Corp executed by an authorized signatory of GP Corp attaching and certifying (a) the resolutions of GP Corp’s board of directors approving GP Corp’s entry into this Agreement and the Amended Note and the consummation of the transactions contemplated hereby and thereby, (b) a copy of GP Corp’s certificate of incorporation certified by the Secretary of State of the State of Delaware, (c) a copy of the by-laws of GP Corp, and (d) a certificate of good standing for GP Corp from the State of Delaware and each other jurisdiction where the Obligor conducts business.

1.3 GP Corp shall deliver to MCM, as a condition the consummation of the transactions herein, a certificate of GP Corp executed by an authorized signatory of GP Corp certifying that (a) the representations and warranties of GP Corp herein and in the Amended Note are true, correct and complete in all material respects as of the Effective Date, (b) no Event of Default (as defined in the Amended Note) exists or would result from the consummation of the transactions contemplated by this Agreement or the Amended Note, (c) no consents, licenses or approvals are required in connection with the consummation by GP Corp of the transactions contemplated by this Agreement or the Amended Note, and (d) other than the transactions contemplated by this Agreement, since November 3, 2016, there has been no event or circumstance that has had or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect (as defined in the Amended Note).

2. The Cost Sharing Agreement.

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2.1 Termination of the Cost Sharing Agreement. The Cost Sharing Agreement is hereby terminated by each of MCM and GECM as of the Effective Date.  MCM and GECM agree that (i) there has been no breach of the Cost Sharing Agreement or that any breach thereof has been properly cured or is hereby waived, (ii) all amounts due under the Cost Sharing Agreement as of or prior to the Effective Date have been paid in full or are hereby discharged in full, and (iii) no party thereto will have any obligation or liability on or after the Effective Date under the Cost Sharing Agreement.

2.2 Hold-Over Tenancy.

(a) As of the date hereof, MCM has vacated the premises at 200 Clarendon Street which are leased by GECM (the “Hancock Suite”).

(b) GECM shall pay all rent and termination payments owed to the landlord with respect to the Hancock Suite.  GECM acknowledges that MCM has paid the security deposit under the lease with respect to the Hancock Suite on January 23, 2013 and currently standing in the amount of $170,163 (the “Security Deposit”).  GECM shall permit MCM to seek return of the Security Deposit to MCM in full in accordance with the terms of the applicable lease requirements. To the extent the Security Deposit is not so returned, GECM shall have no liability with respect thereto; provided, that if the Security Deposit is paid to GECM, GECM shall pay such amount received over to MCM as soon as reasonably practical.  

2.3 Employment. MCM shall have the right to offer employment to Robert Wilson and Brian Henehan without interference by GEC, GECM, GP Corp, Reed or Kleinman.  Until the earlier of their employment by MCM or September 30, 2017 (the earlier of such dates, the “Transition Termination Date”), GECM will make such employees’ services available to MCM in exchange for payment by MCM, within ten days of invoice, of the cost of their compensation and benefits consistent with past practice under the Cost Sharing Agreement.  If prior to the Transition Termination Date, Messrs. Wilson or Henehan voluntarily terminate their employment with GECM or if either of such employees is in good faith terminated by GECM for cause, GECM shall have no liability to MCM under this Section 2.3.

2.4 Third Party Contracts. From the Effective Date through the Transition Termination Date, GECM shall use commercially reasonable efforts to assist MCM in connection with it entering into new agreements with any information system, trading platform or similar service vendors of GECM, on terms as close as are reasonably obtainable to the existing terms of such contracts taking into account that MCM will be the sole party to such new agreements.  In no event shall GECM be required to make any payment or suffer any increased cost or change in terms under its own contracts with such vendors.  

2.5 Operational De-Integration.  Each of GECM and MCM shall use reasonable best efforts to de-integrate their operations as soon as possible, but not later than the Transition Termination Date; provided, that neither party shall be required to incur any extraordinary expenses in connection therewith.  Each of GECM and MCM shall make all necessary filings in connection therewith (e.g. amended Form ADV).

3. Cancellation of Existing Warrant.  The Existing Warrant is hereby cancelled and replaced by an aggregate of 54,733 shares of common stock, par value $0.001 per share, of GEC (the “Common Stock“), registered in MCM’s name, per the irrevocable instruction to GEC’s transfer agent delivered concurrent with the execution and delivery of this Agreement in

3

the form of Annex 2 against delivery by MCM of the original Existing Warrant (or an Affidavit of Lost Warrant in lieu thereof).  In no event shall the shares of Common Stock issued under this Section 3 be deemed beneficially owned by a Buyer/Investor within the meaning of the Indaba Agreements, whether or not such shares have been transferred to a Mast Fund.

4. Performance Shares.  Steinberg and GEC agree (and the compensation committee of the board of directors of GEC (the “Board”) has approved) that the Performance Share Award is hereby cancelled and forfeited in full as of the Effective Date.

5. Resignation.  Steinberg hereby voluntarily resigns from employment with GECM as of the Effective Date.  Steinberg and GECM agree that Steinberg’s Employment Agreement and any CIIAA entered into between Steinberg and GECM are terminated as of the Effective Date.  However, Steinberg shall continue to be covered by any applicable indemnification, exculpation, contribution or advancement provisions contained in the constitutive documents of GECM and its affiliates, and, in each case, any indemnification, exculpation, contribution, or advancement rights for employees under applicable law.  From and after the Effective Date, Steinberg shall not have any liability, duty, or obligation under his Employment Agreements or CIAA; provided that any assignment of intellectual property by Steinberg to GECM arising prior to the Effective Date shall survive the terminations provided by this Section 5. As a result of the termination of employment provided by this Section 5, no intellectual property conceived of by Steinberg after the Effective Date shall be assigned by Steinberg to GECM.  Steinberg shall pay the cost of any post-employment health or dental benefits he elects to receive under COBRA or similar laws.

6. GP Shares.

6.1 Allocations.  GECM, GP Corp, MCM and Steinberg acknowledge and agree that as of the Effective Date the shares of common stock, par value $0.001 per share of GP Corp (“GP Corp Common Stock”) held by MCM are 983 shares and held by Steinberg are 3,970 shares.

6.2 Termination of Call Rights.  The Parties acknowledge that all GP Corp stockholders as of the Effective Date that are currently parties to the Subscription Agreement have amended the Subscription Agreement to, among other things, (a) terminate the rights and obligations in Section 4.3(a) and 4.3(d) of the Subscription Agreement with respect to MCM and Steinberg, (b) provide that neither Steinberg nor MCM shall have any obligations as a Terminating Purchaser (as defined in the Subscription Agreement) under the Subscription Agreement and (c) terminate Steinberg’s and MCM’s respective rights to purchase shares of GP Corp Common Stock from other Purchasers (as defined in the Subscription Agreement) under the Subscription Agreement.

6.3 Exchange Rights.  If the shares of GP Corp Common Stock beneficially owned by Reed and Kleinman are converted or exchanged into cash or other securities, GP Corp shall provide notice thereof, including the terms and conditions of such conversion or exchange, to MCM and Steinberg, and if requested by GP Corp or MCM or Steinberg, a proportionate number of the shares of GP Corp Common Stock beneficially owned by MCM and/or Steinberg, as applicable, shall be converted or exchanged for the same cash or securities per share as was received by Reed and Kleinman and on the same terms and conditions, including with respect to registration rights, as received by Reed and Kleinman (the “Exchange Rights”).  Each of MCM and Steinberg covenant that neither they nor their successors in interest shall

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assert appraisal rights in connection with the exercise by GP Corp of the Exchange Rights in accordance with this Section 6.3.  GP Corp agrees not to exercise the Exchange Rights in a manner that discriminates against either MCM or Steinberg relative to Reed or Kleinman with respect to any transaction or series of related transactions related to the exercise of the Exchange Rights; provided, that MCM and Steinberg shall not be required to provide, or be liable with respect to, any representations and warranties other than representations and warranties related to authority, ownership and the ability to convey unencumbered title to the shares of GP Corp Common Stock being transferred by MCM and Steinberg.

6.4 Financial Reporting.  For so long as MCM, the Mast Funds, Steinberg and/or their Affiliates remain shareholders of GP Corp, (i) as soon as practicable after the end of each fiscal year of GP Corp, and in any event within ninety (90) days thereafter, GP Corp will furnish MCM and Steinberg with a balance sheet of GP Corp, as at the end of such fiscal year, a statement of income, a statement of stockholders’ equity and a statement of cash flows of GP Corp for such year, all prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures of the previous fiscal year and (ii) GP Corp will furnish MCM and Steinberg as soon as practicable after the end of each fiscal quarter, and in any event within sixty (60) days thereafter, an unaudited balance sheet of GP Corp as of the end of such fiscal quarter, and unaudited statement of income and unaudited statement of cash flows of GP Corp for such fiscal quarter and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles consistently applied, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made.

6.5 Profit Sharing.  The Profit Sharing Agreement, dated as of November 3, 2016, by and between GECM and GP Corp shall be amended by the letter agreement in the form of Annex 3 on the Effective Date.

7. Additional Investment.  

7.1 New Warrant.  Notwithstanding the restrictions contained in Section 8.1, MCM (or one or more Mast Funds, as MCM’s designee) shall have the right to purchase up to 420,000 shares of Common Stock pursuant to the Warrant issued to MCM on the Effective Date (the “New Warrant”), the form of which is attached hereto as Annex 4.  In no event shall the shares of Common Stock issued under the New Warrant be deemed beneficially owned by a Buyer/Investor for purposes of the Indaba Agreements, whether or not such shares have been issued or transferred to a Mast Fund.

7.2 Registration Rights. GEC shall provide (i) demand registration rights which may be exercised on or after the first anniversary of the Effective Date if the New Warrant has been exercised and (ii) piggy-back registration rights, in each case, with respect to the shares of Common Stock issued or issuable pursuant to this Agreement, pursuant to a Registration Rights Agreement, entered into between GEC and MCM on the Effective Date (the “Registration Rights Agreement”), the form of which is attached hereto as Annex 5.  

7.3 Termination of Investment Right.  MCM’s rights under the New Warrant will terminate if MCM or Steinberg breach their obligations under Article ‎8 and such breach has not been cured within ten days following notice.

8. Standstill; Voting Agreement.

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8.1 Standstill.  During the Standstill Period (as defined in Section 8.2), none of MCM, Steinberg or the Mast Funds (the “Standstill Parties”) shall, and each shall cause their controlled Affiliates not to, directly or indirectly, in any manner, acting alone or in concert with others, take any of the following actions:

(a) submit any stockholder proposal (pursuant to Rule 14a-8 promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Exchange Act or otherwise) or any notice of nomination or other business for consideration, or nominate any candidate for election to the Board;

(b) (i) engage in any “solicitation” (as defined in Rule 14a-1 of Regulation 14A) of proxies (or written consents) or otherwise become a “participant in a solicitation” (as such term is defined in Instruction 3 of Schedule 14A of Regulation 14A under the Exchange Act) in opposition to the recommendation or proposal of the Board, or (ii) recommend, request, induce or attempt to induce or seek to advise, encourage or influence any other person with respect to the voting of Common Stock (including any withholding from voting) or grant a proxy with respect to the voting of Common Stock to any person other than to the Board or persons appointed as proxies by the Board, or publicly disclose how he intends to vote or act on any such matter; provided, however, that a Standstill Party may publicly disclose how such Standstill Party intends to vote in any proxy solicitation or referendum if and to the extent required by applicable subpoena, legal process, other legal requirement (except for such requirement that arises as a result of the actions of such Standstill Party otherwise in violation of this Section 8.1);

(c) seek to call, or to request the call of, a special meeting of GEC’s stockholders;

(d) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act (other than any such partnership, limited partnership syndicate or other group comprised solely of one or more of the Standstill Parties) with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement with the intent to effect or take any of the actions expressly prohibited by this Section 8.1 or otherwise take any action challenging the validity or enforceability of any provisions of this Section 8.1;

(e) other than per the Indaba Agreements, (i) seek election or appointment to, or representation on, the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to the Board or (ii) seek the removal of any member of the Board or a change in the size or composition of the Board or the committees thereof;

(f) other than per the Indaba Agreements, make any proposal or request that constitutes: (i) advising, controlling, changing or influencing (or in each case attempting to do so) the Board or management or policies of GEC, including any plans or proposals to change the number or term of directors or to fill any vacancies on the Board, (ii) any material change in the capitalization or dividend policy of GEC or (iii) any other material change in GEC’s executive management, business, corporate strategy or corporate structure;

(g) (i) acquire or agree, offer, seek or propose to acquire, or cause to be acquired, ownership (including beneficial ownership) of all or substantially all of the direct or indirect assets or

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business of GEC or any rights or options to acquire any such assets or business from any person or (ii) acquire or agree, offer, seek or propose to acquire, or cause to be acquired, ownership (including beneficial ownership) of Common Stock or rights or options to acquire Common Stock or engage in any swap or hedging transactions or other derivative agreements of any nature with respect to the Common Stock (other than cash-only settled swaps), other than (A) the acquisition of the shares of Common Stock contemplated by this Agreement, including the New Warrant, (B) transfers by a Standstill Party to another Standstill Party or to an Affiliate of a Standstill Party, and (C) participation in any rights offering of Common Stock conducted by GEC to all stockholders of GEC;

(h) disclose publicly, or privately in a manner that could reasonably be expected to become public, any intention, plan or arrangement inconsistent with the foregoing or request or advance any proposal to amend, modify or waive the terms of this Agreement;

(i) (i) institute, solicit, assist, facilitate or join any litigation, arbitration or other proceeding against or involving GEC or any of its current or former directors or officers (including derivative actions), (ii) make any requests for a list of GEC’s stockholders or any “books and records” demands against GEC or (iii) make application or demand to a court or other person for an inspection, investigation or examination of GEC or its subsidiaries or Affiliates (whether pursuant to Section 220 of the DGCL or otherwise), in each case, other than (i) as may be required pursuant to any legal requirement, including any applicable subpoena, (ii) as may be required to enforce the provisions of this Agreement, (iii) in connection with any counterclaims made by such Standstill Party or any of its Affiliates in any proceeding initiated by, or on behalf of, GEC, GECM or GP Corp against any Standstill Party or any Affiliate of a Standstill Party or (iv) in connection with any exercise of statutory appraisal rights; or

(j) enter into any negotiations, discussions, agreement, arrangement or understanding with any person concerning any of the foregoing (other than this Agreement) or advise, assist, encourage, seek to persuade or solicit any person to take any action with respect to any of the foregoing;

provided, that nothing in this Section 8.1 shall prohibit any Standstill Party from (i) exercising its rights under this Agreement, the Ancillary Agreements, or the Indaba Agreements, including actions or litigation to enforce such rights; or (ii) making any public or private statement or announcement with respect to any tender offer, exchange offer, merger, consolidation, acquisition, business combination, purchase of a division, purchase of substantially all of the assets, recapitalization, restructuring, liquidation, dissolution or similar extraordinary transaction involving GEC or any of its subsidiaries or its or their respective securities or assets in which they are the target that is publicly announced by GEC, GECM, GP Corp or a third party or (B) factual statement made to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the Standstill Party from whom information is sought.

8.2 Definitions. As used in this Agreement:

(a) the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule 12b-2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or the rules or regulations promulgated thereunder (the

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“Exchange Act”) and shall include all persons or entities that at any time during the term of this Agreement become Affiliates or Associates of any person or entity referred to in this Agreement;

(b) the term “Ancillary Agreement” shall mean the Amended Note, New Warrant and Registration Rights Agreement;

(c) the terms “beneficial owner,” “beneficial ownership” and “beneficially owned” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;

(d) the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature; and

(e) the term “Standstill Period” shall mean the period from the Effective Date until the earlier of (i) the two year anniversary of the Effective Date or (ii) termination pursuant to Section 8.4.  

8.3 Voting Agreement.  During the Standstill Period, on any matter submitted to the stockholders of GEC, MCM, Steinberg and the Mast Funds agree (and agree to cause their Affiliates, Associates or successors in interest) to vote all shares of GEC then owned of record, beneficially owned or as to which they otherwise have voting power to be voted in favor of (a) election of all directors on the Board who were nominated by GEC or the Board, (b) ratification of GEC’s registered independent accounting firm and (c) extension, renewal or replacement of GEC’s tax benefits preservation rights plan and transfer restrictions in GEC’s organizational documents.

8.4 Termination of Standstill.  The restrictions in this Section 8 shall terminate, as a non-exclusive remedy for any such breach, upon such date, if (i) GP Corp fails to deliver the Amended Note pursuant to Section 1, (ii) GEC fails to deliver the Common Stock as required under Section 3, (iii) GEC fails to deliver the Registration Rights Agreement under Section 7.2, (iv) GEC fails to deliver the New Warrant under Section 7.1, (iv) GEC breaches any of its covenants or representations under Section 8.5 or 8.6 which has not been cured within ten days following notice or (v) GP Corp fails to pay the principal amount of the Amended Note when due (subject to any grace periods therein), including after an acceleration thereunder.

8.5 Chairman.  During the Standstill Period, GEC covenants that Hugh Steven Wilson will not serve as chairman of the Board.  GEC represents that the Board has elected Jeffrey S. Serota as chairman of the Board as of the Effective Date.

8.6 Indaba Agreements.  GEC affirms its obligations and the rights of Buyer (as defined in the Indaba Agreements) under the Indaba Agreements. Each of the Mast Funds covenants not to remove or replace either James Parmelee or Matthew Drapkin as an “Initial Investor Director” or “Additional Investor Director”, in each case within the meaning of the Indaba Agreements, unless (i) the notice of  removal is prior to the time that the Board (or applicable committee) has resolved to nominate and recommend Mr. Parmelee or Mr. Drapkin for election as a director at a meeting of stockholders of GEC, and (ii) such removal is effective as of the conclusion of such meeting of stockholders. In addition, GEC and the Mast Funds agree that, for purposes of the Indaba Agreements, in the event shares of Common Stock issued under Section 3 or Section 7.1 are issued or transferred to a Mast Fund (i) such shares shall not be deemed beneficially owned by a Buyer/Investor within the

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meaning of the Indaba Agreements and (ii) any dispositions of shares of Common Stock by such Mast Fund shall be deemed to first be dispositions on a last-in, first-out basis of the shares of Common Stock issued under Section 3 or Section 7.1.  

9. Mast Employment

9.1 Termination

(a) Reed and MCM agree that Reed’s employment with MCM and Reed’s Employment Agreement are terminated as of the Effective Date.

(b) Kleinman and MCM agree that Kleinman’s employment with MCM and Kleinman’s Employment Agreement are terminated as of the Effective Date.

(c) Subject to the proviso to clause 9.1(i) below, Reed and MCM agree that Reed’s CIIAA is terminated as of the Effective Date.

(d) Subject to the proviso to clause 9.1(i) below, Kleinman and MCM agree that Kleinman’s CIIAA is terminated as of the Effective Date.

(e) Reed and IA agree that Reed’s Consulting Agreement is terminated as of the Effective Date.

(f) Kleinman and IA agree that Kleinman’s Consulting Agreement is terminated as of the Effective Date.

(g) Concurrent with the execution and delivery of this Agreement, (x) Reed and Kleinman shall be deemed to have resigned from all positions with or offices of MCM and (y) Kleinman shall deliver to MCM his resignation from the board of directors of Ezenia!, Inc.

(h) No severance shall be payable to Reed or Kleinman by MCM or its affiliates upon, or in connection with, the termination of their employment with MCM.

(i) From and after the Effective Date, neither Reed nor Kleinman shall have any liability, duty, or obligation under their respective Employment Agreements, Consulting Agreements or CIAAs, including (x) Section 10 of the Employment Agreements, and (y) any non-solicitation provisions under the CIIAAs; provided that any assignment of intellectual property by Reed or Kleinman to MCM or IA arising prior to the Effective Date shall survive the terminations provided by this Section 9.1 (other than any intellectual property covered by the ultimate sentence of Section 3(b) of the CIIAAs or the ultimate sentence of Section 7 of the Consulting Agreements). As a result of the terminations of employment provided by this Section ‎9.1, no intellectual property conceived of by Reed or Kleinman after the Effective Date shall be assigned by Reed or Kleinman to MCM or IA.

(j) From and after the Effective Date, neither MCM nor IA shall have any liability, duty, or obligation under the Employment Agreements or Consulting Agreements, including any obligation to pay any transaction bonus or bonus based on payments received by MCM in respect of the Note or the Amended Note (“Note Bonuses”), or any other payments of salary, wages, benefits, expense reimbursement, bonus or other compensation; provided, that, (x) on or prior to the Effective Date, MCM shall pay to Reed and Kleinman any unpaid Note Bonuses for periods prior to the Effective Date, (y) to the extent that MCM or IA was

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required to indemnify, exculpate, contribute to losses or advance expenses of Reed and Kleinman under the Employment Agreements or Consulting Agreement, such indemnification, exculpation, contribution and advancement rights shall survive the terminations provided for in this Section 9.1 in accordance with the terms thereof and (z) Reed and Kleinman shall continue to be covered by any applicable indemnification, exculpation, contribution or advancement provisions contained in the Fourth Amended and Restated Limited Liability Company Agreement of MCM, dated as of August 31, 2012 (the “MCM LLC Agreement”) and each other MCM constituent document, the Amended and Restated Limited Liability Company Agreement of IA, dated as of August 31, 2012 (the “IA LLC Agreement”) and each other IA constituent document, the governing document for the Mast Funds and their affiliates, and, in each case, any indemnification, exculpation, contribution, or advancement rights for officers, directors or employees under applicable law.

9.2 Releases.

(a) Each of Reed, Kleinman, GEC, GECM and GP Corp, on behalf of itself, its officers, directors, successors, assigns, members, stockholders, controlling persons and affiliates, hereby releases and forever discharges each of MCM, IA, the Mast Funds, Steinberg, and each of their respective officers, directors, successors, assigns, members, stockholders and controlling persons and affiliates, from any and all liability whatever, including all claims, demands and causes of action, of any kind, whether known or unknown including, any claims for breach of contract, breach of fiduciary duty, malpractice, declaratory relief, injunctive relief, misrepresentation, inequitable conduct, or any other claim, form of damage or theory of recovery whatsoever from the beginning of time until the Effective Date, arising out of, based upon or relating to actions or omissions occurring on or before the Effective Date.

(b) Each of MCM, IA, the Mast Funds, and Steinberg, on behalf of itself, its officers, directors, successors, assigns, members, stockholders, controlling persons and affiliates, hereby releases and forever discharges each of Reed, Kleinman, GEC, GECM and GP Corp, and each of their respective officers, directors, successors, assigns, members, stockholders, controlling persons and affiliates, from any and all liability whatever, including all claims, demands and causes of action, of any kind, whether known or unknown including, any claims for breach of contract, breach of fiduciary duty, malpractice, declaratory relief, injunctive relief, misrepresentation, inequitable conduct, or any other claim, form of damage or theory of recovery whatsoever from the beginning of time until the Effective Date, arising out of, based upon or relating to actions or omissions occurring on or before the Effective Date.

(c) With respect to the subjects above, each party providing a release hereunder, on behalf of itself, its officers, directors, successors, assigns, members, stockholders, controlling persons and affiliates (each, a “Releasing Party”) recognizes and understands that this release applies to and covers any and all claims and counterclaims that could have been litigated or arbitrated. Each Releasing Party (i) expressly waives any right to claim or assert hereafter that any claim, counterclaim, demand or cause of action has been omitted, through ignorance, oversight or error, from this Agreement; (ii) makes this waiver with the full knowledge of their respective rights and with specific intent to release both known and unknown claims and (iii) expressly waives any right to claim or assert hereafter that this Agreement was induced by fraud, misrepresentation or mistake or is otherwise void,

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voidable or unenforceable as against that Releasing Party. This release is intended to be a general release and to include all claims or counterclaims which each Releasing Party does not know or suspect to exist at the time of execution hereof, and this release extinguishes any such claims or counterclaims.

(d) The Releasing Parties each warrant, represent, and covenant not to sue or bring (or continue) any claim or proceeding against any of the other Releasing Parties with respect to the matters released pursuant to this Section 9.2, except to the extent necessary to enforce or comply with any term of, or obligation created by, this Agreement.  The remedy for breach of this covenant shall include, but not be limited to, the breaching Party’s payment of all attorneys’ fees and other expenses incurred by any of the Releasing Parties in connection with the defense of any such claim, cause of action, or proceeding.

(e) Each Releasing Party acknowledges and agrees that it has made an acceptable investigation of the facts pertaining to this settlement, this Agreement, the Ancillary Agreements and the matters pertaining hereto and thereto.  Each Releasing Party further acknowledges and agrees that no party to this Agreement has made representations outside of those contained in this Agreement and the Ancillary Agreements, and each Releasing Party expressly agrees and represents that it has not relied on any representation outside of this Agreement or the Ancillary Agreements.

(f) Nothing in this Section 9.2 shall be deemed to operate in contravention of applicable law, including the right to make claims under applicable whistleblower provisions.

(g) For the avoidance of doubt, nothing in this Section ‎9.2 shall (i) release or otherwise affect, impair or limit any claims of Reed or Kleinman as limited partners or shareholders in any of the Mast Funds, which (x) have resulted from the gross negligence, dishonesty, willful misconduct or bad faith of MCM, IA, the Mast Funds, Steinberg or their related Releasing Parties, or (y) are based on redemption requests that predate the Effective Date and challenge acts or omissions of MCM, IA, the Mast Funds, Steinberg or their related Releasing Parties that post-date the Effective Date, (ii) release or otherwise affect, impair or limit MCM’s, the Mast Funds’, or IA’s respective obligations to indemnify, exculpate, contribute to losses, or advance expenses of Reed or Kleinman under the MCM LLC Agreement and each other MCM constituent document, the IA LLC Agreement and each other IA constituent document, the governing documents of the Mast Funds and their affiliates, or any other applicable agreements or applicable law in accordance with the terms thereof, (iii) release or otherwise affect, impair or limit GECM’s obligations to indemnify, exculpate, contribute to losses, or advance expenses of Steinberg under each constituent document of GECM and its affiliates, or any other applicable agreements or applicable law in accordance with the terms thereof, (iv) affect the GP Corp interest owned by Kleinman or Reed or any GEC performance shares or interests held by Kleinman or Reed, (v) affect any Indaba Agreement, (vi) release any claim arising from or relating to, limit or impair any rights or recovery under or otherwise affect this Agreement or the Ancillary Agreements, or (vii) entitle Reed or Kleinman to seek reimbursement from any MCM or any Mast Fund of the legal fees and expenses of Boies, Schiller incurred through the Effective Date.

(h) Notwithstanding anything contained herein to the contrary, this Section 9.2 shall not serve of a release or discharge of or by any of Dyal Capital Partners (A), LP, Dyal Capital Partners (B), LP, or any of their respective officers, directors, successors, assigns, members, stockholders, controlling persons and affiliates.

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9.3 Non-Disparagement.  No Releasing Party will disparage the performance or otherwise take any action which could reasonably be expected to adversely affect another Releasing Party’s personal or professional reputation.

10. Representations and Warranties. Each party represents and warrants to each other party that, as of the Effective Date:

10.1 Consent under Certificate.  In accordance with Article XIV, Part III of its Amended and Restated Certificate of Incorporation (the “Certificate”), GEC has approved the acquisition by MCM (or its designee under the New Warrant) of any and all shares of Common Stock contemplated under this Agreement or the New Warrant (subject to the limitations set forth therein), and has waived any and all other conditions, notice requirements and other limitations found in Article XIV of the Certificate affecting the acquisition of such shares.  GEC has provided MCM a copy of the Board resolutions authorizing such waiver and approval.  

10.2 Consent under Tax Benefits Preservation Agreement.  In accordance with Section 29 of that certain Tax Benefits Preservation Agreement, dated as of January 20, 2015, by and between GEC (f/k/a Unwired Planet, Inc.) and Computershare Trust Company, N.A. (the “Rights Plan”), the Board has granted an exemption under the Rights Plan with respect to the acquisition by MCM (or its designee under the New Warrant) of any and all shares of Common Stock contemplated under this Agreement or the New Warrant (subject to the limitations set forth therein), and has waived any and all other conditions, notice requirements (including those regarding the submission of an Exemption Request, as such term is defined in the Rights Plan) and other limitations found in the Rights Plan affecting the acquisition of such shares, or that would otherwise cause any Rights (as defined in the Rights Plan) to become exercisable pursuant to the Rights Plan in relation thereto.  GEC has provided MCM a copy of the Board resolutions authorizing such exemption and waiver.

10.3 Organization; Authority. Each party that is an entity is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and fully perform its obligations hereunder and under the Ancillary Agreements. The execution and delivery of this Agreement and each Ancillary Agreement to which it is a party by such party and performance by such party of its obligations hereunder and thereunder have been duly authorized by all necessary action on the part of such party. This Agreement and each Ancillary Agreement to which it is a party has been duly executed by such party, and when delivered by such party in accordance with the terms hereof, will constitute the valid and legally binding obligation of such party, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. All necessary consents or other actions under family law and domestic relations orders has been obtained in connection with this Agreement and the Ancillary Agreements to which such party or its assets are bound.

10.4 No Conflicts. The execution, delivery and performance by such party of this Agreement and the Ancillary Agreement to which it is a party and the performance by such party of its obligations hereunder and thereunder will not (a) result in a violation of the organizational

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documents of such party, as applicable, (b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such party is a party, or (c) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such party, except in the case of clauses (b) and (c), for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such party to perform its obligations hereunder.

10.5 Legal Counsel.  Such party has been advised to seek legal counsel, engage a financial advisor, seek tax counsel and receive GAAP and tax advice from accountants in connection with this Agreement and the Ancillary Agreements.  Each party has relied on its own advisors and legal counsel and not on any other party to this Agreement in entering into this Agreement and the Ancillary Agreements.

11. Publicity Regarding Settlement: News Release.

11.1 Characterization of Separation. Each party agrees that in characterizing or describing the settlement and resolution of the matters contemplated hereby, including the terms and conditions of this Agreement, neither party will make any statements to third parties that such party has been successful, attained a victory or prevailed in any of these matters or make any characterization to that effect. Each party acknowledges that this Agreement is the product of a compromise, a good outcome for all parties and that none of them has attained a victory or prevailed in the matters described herein.

11.2 Press Release; SEC Filings. GEC shall within one business day following the Effective Date issue a press release substantially in the form attached hereto as Annex 6. GEC will file with the SEC an unredacted copy of this Agreement and the Ancillary Agreements in a Form 8-K.  GEC shall provide MCM with a reasonable opportunity to review and comment on such Form 8-K in advance of filing and shall accept any such reasonable and timely comments of MCM.  MCM and Steinberg will file with the SEC an unredacted copy of this Agreement and the applicable Ancillary Agreements in an amendment to Schedule 13D.  MCM shall provide GEC with a reasonable opportunity to review and comment on such amendment in advance of filing and shall accept any such reasonable and timely comments of GEC.  

12. Miscellaneous

12.1 Additional Assurances. Each party agrees to execute, acknowledge and deliver such further instruments, and to do such other acts, as may be reasonably necessary in order to carry out the intent and purposes of this Agreement.

12.2 Compromise and Settlement. This Agreement is entered into solely by way of compromise and settlement of all outstanding matters among the parties as of the Effective Date and is not and shall not be construed as an admission of liability, responsibility or fault by any party.

12.3 Expenses.  All costs and expenses incurred in connection with this Agreement and the separation contemplated hereby shall be paid by the party incurring such costs and expenses.

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12.4 Choice of Law.  This Agreement will be governed by the Laws of the State of Delaware that are applicable to contracts made in and performed solely in Delaware.

12.5 Enforcement.

(a) Any dispute arising under, related to or otherwise involving this Agreement or the transactions contemplated hereby will be litigated in the Court of Chancery of the State of Delaware. The parties agree to submit to the jurisdiction of the Court of Chancery of the State of Delaware, waive any objection on the basis of inconvenient forum or improper venue and waive trial by jury. The parties do not consent to mediate any disputes before the Court of Chancery.

(b) Notwithstanding the foregoing, if there is a determination that the Court of Chancery of the State of Delaware does not have subject matter jurisdiction over any dispute arising under this Agreement, the parties agree that: (i) such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Superior Court of Delaware of and for the County of New Castle; (ii) if the Superior Court of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Complex Commercial Litigation Division of the Superior Court of the State of Delaware of and for the County of New Castle; and (iii) if the Complex Commercial Litigation Division of the Superior Court of the State of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the United States District Court for the State of Delaware.

(c) Each of the parties irrevocably (i) consents to submit itself to the personal jurisdiction of the Delaware courts in connection with any dispute arising under this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for relief from the Delaware courts or any other court or governmental body and (iii) agrees that it will not bring any action arising under this Agreement in any court other than the Delaware courts. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(d) Process may be served in the manner specified in Section 12.6, such service will be deemed effective on the date of such notice, and each party irrevocably waives any defenses or objections it may have to service in such manner.

(e) The parties irrevocably stipulate that irreparable damage would occur if any of the provisions of this Agreement were not performed per their specific terms. Accordingly, each party will be entitled to specific performance of the terms hereof in addition to any other remedy to which it is entitled at law or in equity.

(f) The court shall award attorneys’ fees and expenses and costs to the substantially prevailing party in any action (including appeals) for the enforcement or interpretation of this Agreement. If there are cross claims in such action (including appeals), the court will determine which party is the substantially prevailing party as to the action as a whole and

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award fees, expenses and costs to such party.

12.6 Notices.  All notices and other communications hereunder will be in writing in the English language and will be deemed given when delivered personally or by an internationally recognized courier service, such as DHL, to the parties at the following addresses (or at such other address for a party as may be specified by like notice):

(a) If to GEC, GECM, GP Corp:c/o Great Elm Capital Group, Inc.

800 South Street, Suite 230

Waltham, MA 02453

Attention: General Counsel; with a copy

(which shall not constitute notice) to:Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, CA 94301

Attention: Michael J. Mies; and

(b) If to Reed or Kleinman:Adam M. Kleinman

Great Elm Capital Management, Inc.

800 South Street, Suite 230

Waltham, MA 02453; with a copy

(which shall not constitute notice) to:Boies, Schiller Flexner LLP

575 Lexington Avenue, 7^th Floor

New York, NY 10022

Attention: Eric Brenner; and

(c) if to Steinberg, any Mast Fund, MCM or IA:c/o MAST Capital Management, LLC

31 St. James Avenue, 6^th Floor

Boston, MA 02116

Attention: David J. Steinberg.

12.7 No Third Party Beneficiaries.  Except to the extent provided in Section 9.2, this Agreement is solely for the benefit of the parties. Except to the extent provided in Section 9.2, no other person will be entitled to rely on this Agreement or to anticipate the benefits of this Agreement as a third party beneficiary hereof.

12.8 Assignment.  Except as provided in this Section 12.8, no party may assign, delegate or otherwise transfer this Agreement or any rights or obligations under this Agreement in whole or in part (whether by operation of law or otherwise), without the prior written content of the other parties hereto. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. Any assignment in violation of this Section 12.8 will be null and void.

12.9 No Waiver.  No failure or delay in the exercise or assertion of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, or create an estoppel with respect to any breach of any representation, warranty or covenant herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies under this Agreement are cumulative to, and not

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exclusive of, any rights or remedies otherwise available.

12.10 Severability.  Any term or provision hereof that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the invalid, void or unenforceable term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares any term or provision hereof invalid, void or unenforceable, the court or other authority making such determination will have the power to and will, subject to the discretion of such body, reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

12.11 Amendment.  To be valid against any party, a waiver, extension, amendment, modification or supplement of this Agreement must be in an instrument in writing signed by such party.  

12.12 Entire Agreement.  This Agreement, the Ancillary Agreements and Indaba Agreements contain the entire agreement of the parties and supersedes all prior and contemporaneous agreements, negotiations, arrangements, representations and understandings, written, oral or otherwise, between the parties with respect to the subject matter hereof.

12.13 Counterparts.  This Agreement may be executed in one or more counterparts (whether delivered by electronic copy or otherwise), each of which will be considered one and the same agreement and will become effective when two or more counterparts have been signed by each of the parties and delivered to the other party. Each party need not sign the same counterpart.

12.14 Construction and Interpretation.  When a reference is made in this Agreement to a section or article, such reference will be to a section or article of this Agreement, unless otherwise clearly indicated to the contrary. Whenever the words “include,” “includes” or “including” are used in this Agreement they will be deemed to be followed by the words “without limitation”. The words “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article and section references are references to the articles and sections of this Agreement, unless otherwise specified. The plural of any defined term will have a meaning correlative to such defined term and words denoting any gender will include all genders and the neuter. Where a word or phrase is defined herein, each of its other grammatical forms will have a corresponding meaning. A reference to any legislation or to any provision of any legislation will include any modification, amendment, re-enactment thereof, any legislative provision substituted therefore and all rules, regulations and statutory instruments issued or related to such legislation. If any ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. No prior draft of this Agreement will be used in the interpretation or construction of this Agreement. Headings are used for convenience only and will not in any way affect the construction or interpretation of this Agreement.

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[SIGNATURE PAGES FOLLOW]

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This Agreement has been duly executed and delivered as of the date first written above.

Great Elm Capital Group, Inc.Great Elm Capital Management, Inc.

By:/s/ Richard S. ChernicoffBy:/s/ Richard S. Chernicoff

Name:Richard S. ChernicoffName:Richard S. Chernicoff

Title:Chief Executive OfficerTitle:Chief Executive Officer

GECC GP Corp.

By:/s/ Richard S. Chernicoff

Name:Richard S. Chernicoff

Title:Treasurer

MAST Capital Management LLCMAST CAPITAL MANAGEMENT IA Holdings LLC

By:/s/ David SteinbergBy:/s/ David Steinberg

Name:  David SteinbergName:  David Steinberg

Title:Managing MemberTitle:  Managing Member

mast credit opportunities IMast OC I Master Fund L.P.

master fund limited

By Mast Capital Management, LLC, By Mast Capital Management, LLC,

its investment managerits investment manager

By:/s/ David SteinbergBy:/s/ David Steinberg

Name:  David SteinbergName:  David Steinberg

Title:Managing MemberTitle:  Managing Member

Mast Select Opportunities Mast Admiral Master Fund, L.P.

Master Fund, L.P.

By Mast Capital Management, LLC, By Mast Capital Management, LLC,

its investment managerits investment manager

By:/s/ David SteinbergBy:/s/ David Steinberg

Name:  David SteinbergName:  David Steinberg

Title:Managing MemberTitle:  Managing Member

/s/ David J. Steinberg

David J. Steinberg

/s/ Peter A. Reed

Peter A. Reed

/s/ Adam M. Kleinman

Adam M. Kleinman

Annex 1

AMENDED AND RESTATED SENIOR SECURED NOTE

$3,300,000 September 18, 2017

FOR VALUE RECEIVED, GECC GP Corp, a Delaware corporation (“Obligor”), hereby unconditionally promise to pay to the order of MAST Capital Management, LLC, a Delaware limited liability company (“MAST”), and each other holder from time to time party hereto (together with MAST, each, a “Holder” and collectively, the “Holders”), the aggregate principal amount of THREE MILLION THREE HUNDRED THOUSAND DOLLARS AND NO/100s ($3,300,000), together with all accrued and unpaid interest, fees, expenses and costs at the rate and payable in the manner stated herein. Capitalized terms used herein without definition shall have the meanings given to such terms in this Senior Secured Note (as may be amended, restated, amended and restated, supplemented, or otherwise modified from time to time, this “Note”).

WHEREAS, Obligor and MAST entered into a Senior Secured Note, dated November 3, 2016 in an original aggregate principal amount of $10,824,000 (the “Original Note”).

WHEREAS, concurrent with the execution and delivery of this Note, Obligor, Holder and others are delivering a Separation Agreement (the “Separation Agreement”) that provides for, among other things, the amendment and restatement of the Original Note and cancellation of interest thereon for this Note.

NOW, THEREFORE, subject to the conditions set forth in this Agreement, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows

1.Definitions.  All capitalized terms used herein without definition shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Collateral Assignment” means, that certain Collateral Assignment of Profit Sharing Agreement, dated as of November 3, 2016, between Obligor and Holders, as amended by the Separation Agreement.

“Business Day” means any day other than a Saturday, a Sunday or a day on which Banks in New York City are authorized or obligated by applicable law or executive order to close.

“Change of Control” means an event or series of related events pursuant to which (a) Great Elm Capital Group, Inc. ceases to own and control legally and beneficially at least fifty eighty (80%) of the outstanding equity securities of Obligor entitled to vote for the board of directors or equivalent governing body of Obligor on a fully diluted basis or (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Obligor cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in

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clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

“Collateral” means all of the “Collateral” referred to in Section 11 of this Note and all other property that is intended under the terms of this Note to be subject to Liens in favor of the Holder to secure the Obligations.

“Dollars” and “$” means lawful money of the United States of America.

“Effective Date” has the meaning set forth in the Separation Agreement.

“Event of Default” means any event or condition referred to in Section 6.

“GECM” means Great Elm Capital Management, Inc., a Delaware corporation.

“LIBOR” means the ninety day British Bankers Association London Interbank Offered Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of each calendar quarter occurring between September 18, 2017 and the earlier of (i) repayment in full in cash of the Obligations and (ii) the Maturity Date, for Dollar deposits (for delivery on the first day of such 90 day period) with a term equivalent to such 90 day period.  If BBA LIBOR is no longer published then the parties shall select a spread over United States Treasury Notes that most closely represents BBA LIBOR from the Effective Date to the date BBA LIBOR is no longer published.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) of the Obligor; (b) a material impairment of the ability of Obligor to perform its obligations under this Note; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Obligor of the Note.

“Maturity Date” means November 3, 2026.

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, Obligor arising under this Note, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against Obligor or of any proceeding under any bankruptcy law naming Obligor as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“Profit Agreement” means that certain Profit Sharing Agreement, dated as of the date

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hereof, by and between GECM and Obligor, as may be amended, restated supplemented or otherwise modified in accordance with the terms hereof.

“Required Holders” means, at any time, Holders holding more than 50% of the aggregate outstanding principal amount of the Note.

2.The Note.

(a)The Obligor shall pay cash interest on the Note at the rate of LIBOR plus three percent per annum in advance on the first Business Day of each calendar quarter following the Effective Date.  All computations of interest and fees for the Note shall be made on the basis of a 360-day year and actual days elapsed.

(b)The entire principal balance of the Note, together with all accrued but unpaid interest, fees, expenses, costs and other Obligations, shall be due and payable on a pro rata basis to the Holders on the Maturity Date.

(c)The Obligor shall make all payments under this Note when due in immediately available funds in Dollars without setoff, recoupment or deduction and regardless of any counterclaim or other defense. Any amounts repaid or repaid in respect of the Note may not be reborrowed.

(d)Upon the occurrence and during the continuance of an Event of Default, the outstanding principal balance on the Note, all accrued interest thereon and all other Obligations shall bear interest at a rate equal to the rate otherwise applicable thereto plus two percent (the “Default Rate”).

(e)Upon receipt of any cash proceeds, insurance proceeds, condemnation awards or indemnity or other payments in connection with any of the following, the Obligor shall prepay the Note on a pro rata basis in an amount equal to 100% of such cash proceeds immediately upon receipt thereof: (1) dispositions of any material property or assets of Obligor, (2) the sale or issuance of any membership interests in the Obligor or any of its subsidiaries and (3) the incurrence or issuance by the Obligor of any indebtedness (other than the Note). Prepayments made under this Section 2(e) shall be applied: first, to any fees and expenses of Holders, second, to any accrued and unpaid interest on the Note, third, to the outstanding principal amount of the Note and fourth, to all other Obligations. Notwithstanding the foregoing, this Section 2(e) shall not apply to the Obligor’s receipt of proceeds under the Profit Agreement or the reinvestment thereof, subject to Section 5(c).

(f)The Obligor may, upon concurrent written notice to the Holders, at any time voluntarily prepay the Note on a pro rata basis in whole or in part in an amount equal to the outstanding principal amount of the Note then being repaid, together with any accrued and unpaid interest thereon to the prepayment date.

(g)The Obligor shall make a mandatory annual amortization payment on the outstanding principal amount of the Note on a pro rata basis within 30 days of each fiscal year end of Obligor in the aggregate amount of $76,000 per annum.

(h)All payments in respect of principal, interest or fees on the Note shall be made pro rata to the Holders in accordance with the outstanding principal amount of the Note held by each

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Holder.

(i)The Note and of all other Obligations shall be evidenced by one or more accounts or records maintained by Holders.  The accounts or records maintained by Holders shall be conclusive absent manifest error.

(j)Notwithstanding any provision in this Note, it is not the parties’ intent to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that the Obligor have actually paid to the Holders an amount of interest in excess of the amount that would have been payable if all of the Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by the Obligor shall be applied as follows: first, to the payment of Holders’ accrued interest, cost, expenses, professional fees and any other Obligations; second, to the payment of outstanding principal on the Note; and third, after all Obligations are repaid, the excess (if any) shall be refunded to the Obligor.

(k)Any and all payments by or on account of the Obligor under the Note shall be made in cash in Dollars and shall, to the extent permitted by applicable law, be made free and clear of and without reduction or withholding for any taxes.  If Obligor or the Holders shall be required by law to withhold or deduct any taxes, the sum payable by the Obligor shall be increased as necessary so that after any required withholding or deduction, the Holder receives an amount equal to the sum it would have otherwise received, unless such withholding is as a result of Holder not being a US Person for federal income tax purposes.  

3.Representations and Warranties.  The following representation and warranties of the Obligor shall be made on the Effective Date.

(a)The Obligor is a corporation duly organized, legally existing and in good standing under the laws of the State of Delaware.

(b)The execution, delivery and performance by the Obligor of the Note has been authorized by all necessary action and do not and will not (i) contravene the terms of the Obligor’s certificate of formation or operating agreement, (ii) conflict with or result in any breach or contravention of, or the creation of any contractual obligation or any order of any governmental authority or (iii) violate any law. The Note has been duly executed and delivered by Obligor. The Note will constitute the legal, valid, and binding obligation of Obligor, enforceable against Obligor in accordance with its terms, except that (x) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights and remedies generally and (y) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court or arbitrator before which any proceeding therefor may be brought.

(c)No approval, consent, exemption. authorization, or other action by, or notice to, or filing with any court, governmental authority or any other person or entity is required in connection with the execution, delivery and performance by the Obligor of the Note or the transactions contemplated hereby or of the exercise by any Holder of any of its rights and remedies under the Note or the conduct of its businesses.

(d)There are no actions, suits, proceedings, claims or disputes pending or, to the

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knowledge of the Obligor after due and diligent investigation, threatened or contemplated, at law (including environmental laws), in equity, in arbitration or before any governmental authority, by or against the Obligor or against any of its properties or revenues that either individually or in the aggregate, if determined adversely, could be expected to have a Material Adverse Effect.

(e)No Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Note.

(f)The Obligor has all licenses, permits and other governmental approvals required in order to operate its business as presently contemplated and no license, permit or other governmental approval has been revoked, suspended, expired or otherwise impaired or is subject to investigation or other inquiry.

(g)The property and assets of the Obligor are subject to no Liens other than Liens permitted under Section 5(a).

(h)The Obligor has incurred no indebtedness other than indebtedness permitted under Section 5(b).

(i)The Obligor has filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon it or its properties, income or assets otherwise due and payable.  

(j)The Obligor has disclosed to the Holders all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of Obligor in connection with the transactions contemplated hereby and the negotiation of this Note (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or material omissions of fact.

(k)Except as contemplated in the Separation Agreement, no event, circumstance or condition has occurred since November 6, 2016 that could have a Material Adverse Effect.

4.Affirmative Covenants.

(a)The Obligor shall, as soon as available, but in any event within 90 days after the end of each fiscal year of the Obligor, provide to the Holders, a copy of the balance sheet of Obligor as at the end of such year and the related statements of income.

(b)The Obligor shall, as soon as available, but in any event within 60 days after the end of each fiscal quarter of the Obligor, provide to the Holders (i) a reasonably detailed report showing all revenues received by Obligor from GECM pursuant to the Profit Agreement, and (ii) all expenses of Obligor, in each case, in respect of such calendar quarter.

(c)The Obligor shall promptly deliver to the Holder, in form and substance satisfactory to the Holders, copies of (i) any audit reports, management letters or recommendations submitted to Obligor by accountants in connection with the accounts or books of the Obligor, (ii) each annual report, financial statement, report or communication sent to any member or manager of the

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Obligor, and (iii) such additional information regarding the business, financial legal or corporate affairs of the Obligor that the Holder may request.

(d)The Obligor shall promptly notify the Holder of (i) the occurrence of any Event of Default, (ii) of any matter that could reasonably be expected to have a Material Adverse Effect, or (iii) the commencement of any actions, suits, proceedings, claims or disputes affecting the Obligor that could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section shall be made setting forth all reasonably requested detail requested by the Holder but the Obligor shall not be required to waive attorney client privilege or other evidentiary privilege in connection therewith.

(e)The Obligor shall promptly pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Obligor; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

(f)The Obligor shall preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the State of Delaware; (b) take all action to maintain all rights, privileges, permits and licenses necessary or desirable in the normal conduct of its business and (c) preserve or renew any of Obligors registered patents, trademarks, trade names and service marks.

(g)The Obligor shall comply in all respects with the requirements of all laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which such requirement of law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted.

(h)The Obligor shall maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Obligor.

(i)The Obligor shall permit representatives of the Holders to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and accountants, all at the expense of the Obligor and at such reasonable times during normal business hours and as often as may be reasonably desired.  The Obligor shall not be required to waive attorney client privilege or other evidentiary privilege in connection therewith.

(j)This Note has been extended by the Holders solely in connection with the transactions contemplated by the Separation Agreement and not in contravention of applicable law.

5.Negative Covenants.

(a)The Obligor shall not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than Liens pursuant this Note.

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(b)The Obligor shall not create, incur, assume or suffer to exist any indebtedness other than (i) indebtedness and other Obligations pursuant to the Note and (ii) indebtedness incurred in the ordinary course of the Obligor’s business that does not exceed $10,000 in the aggregate at any time.

(c)Without the prior consent of the Required Holders, the Obligor shall not make any investments other than (i) cash, (ii) certificates of deposits insured by FDIC, (iii) deposit accounts and money market accounts insured by FDIC, (iv) U.S. treasuries, (v) shares of common stock of Great Elm Capital Corp. and (vi) other investments approved by a majority of the independent directors of Great Elm Capital Group, Inc., including at least one director nominated pursuant to the Indaba Agreements (as defined in the Separation Agreement), if any.

(d)The Obligor shall not merge, dissolve, liquidate, consolidate with or into another entity, or dispose, sell or transfer (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any person or entity.

(e)The Obligor shall not change its legal name, jurisdiction of organization, entity type or place of business without the prior written consent of the Holder.

(f)The Obligor shall not dispose, sell or transfer any of its assets, other than investments (excluding, for the avoidance of doubt, the Profit Agreement) sold in the ordinary course of business.

(g)The Obligor shall not make, directly or indirectly, any payment, dividend or distribution to any of its stockholders, except to the extent that stockholders have tax obligations with respect to any income generated by Obligor or the Obligor’s business.

(h)The Obligor shall not issue or sell any shares to any person or entity without the prior written consent of the Required Holders and provided that the proceeds from such sale or issuance are applied to prepay the Note in accordance with Section 2(e).

(i)The Obligor shall not enter into any transaction of any kind with any Affiliate thereof, whether or not in the ordinary course of business, other than (i) the transactions contemplated by this Note, the Acquisition Agreement, the Separation Agreement and the Profit Agreement, (ii) a tax sharing agreement providing for the Obligor to pay to an Affiliate amounts in respect of taxes that would have been owed by the Obligor if the Obligor filed tax returns on a stand-alone basis and (iii) any other transaction that is on fair and reasonable terms substantially as favorable to Obligor as would be obtainable by Obligor in a comparable arm’s length transaction with an unrelated third party, as determined by the board of directors of Obligor.

(j)The Obligor shall not enter into any contractual obligation that prohibits the Obligor from creating, incurring, assuming or suffering to exist the indebtedness or Liens contemplated hereby.

(k)The Obligor shall not engage in any material line of business substantially different from the line of business contemplated by Obligor on the date hereof.

(l)The Obligor shall not amend the Profit Agreement or the Acquisition Agreement without the consent of the Required Holders.

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6.Events of Default.  Any of the following shall constitute an Event of Default:

(a)Obligor fails to pay (i) when and as required to be paid herein, any amount of principal of the Note, or (ii) within three days after the same becomes due, any interest on the Note,  any fee due hereunder, or any other amount payable hereunder.

(b)The Obligor fails to perform or observe any other term, covenant or agreement contained in this Note not specifically addressed in this Section 6 and such failure has not been cured within 30 calendar days of receipt by Obligor of written notice from Holder thereof.

(c)Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Obligor herein, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made.

(d)The termination of existence, dissolution, winding up or liquidation of Obligor.

(e)The Obligor institutes or consents to the institution of any proceeding under any bankruptcy law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of the Obligor and the appointment continues undischarged or unstayed for 30 calendar days; or any proceeding under any bankruptcy law relating to the Obligor or to all or any material part of its property is instituted without the consent of the Obligor and continues undismissed or unstayed for 30 calendar days, or an order for relief is entered in any such proceeding.

(f)The Obligor becomes unable or admits in writing its inability or fails generally to pay its debts as they become due.

(g)There is entered against the Obligor one or more final judgments or orders for the payment of money  or any one or more non-monetary final judgments that have, individually or in the aggregate, a Material Adverse Effect and, in either case, (i) enforcement proceedings are commenced by any creditor upon such judgment or order, or (ii) there is a period of 30 consecutive calendar days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect.

(h)Any material provision of this Note, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or Obligor or any other Person contests in any manner the validity or enforceability of any provision of this Note; or Obligor denies that it has any or further liability or obligation under this Note; or Obligor seeks to challenge or assert the invalidity of any Lien granted hereunder on the Collateral, or purports to revoke, terminate or rescind any provision of this Note.

(i)There occurs any Change of Control.

(j)There occurs a material breach by Obligor or GECM under the Acquisition Agreement or the Profit Agreement that has not been cured (to the extent capable of being cured) by Obligor or GECM, as applicable, within 10 business days written notice of such material breach from Holders to Obligor or GECM, as the case may be, or any of such agreements is terminated.

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7.Remedies.

(a)If any Event of Default occurs and is continuing, the Holders may, upon written notice to Obligor, take any or all of the following actions: (i) declare the unpaid principal amount of the Note, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder to be immediately due and payable, without presentment, demand, protest, notice or defense of any kind, all of which are hereby expressly waived by the Obligor; or (ii) exercise all rights and remedies available to the Holders under this Note and all rights and remedies under applicable law; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Obligor under any bankruptcy law, the unpaid principal amount of the Note and all interest and other amounts as aforesaid shall automatically become due and payable without any requirement of notice or other action by Holders.

(b)No failure by any Holder to exercise, and no delay by any Holder in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

8.Application of Funds.  After the exercise of remedies provided for in Section 7 (or after the Note has automatically become immediately due and payable as set forth in the proviso to Section 7(a)), any amounts received on account of the Obligations shall be applied by the Holders on a pro rata basis in the order that they shall determine in their sole discretion.

9.Application Amendments; Waivers.   No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Obligor or therefrom, shall be effective unless in writing signed by the Required Holders and the Obligor, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall, without the prior written consent of each Holder:

(i)extend the Maturity Date or postpone any date scheduled for payment of principal or interest of this Note, or any fee payable to any Holder;

(ii)reduce the principal amount of this Note or the rate of interest applicable to this Note owing to a Holder or reduce any fee payable to any Holder, without the prior written consent of such Holder (except that Required Holders may elect to waive or rescind any imposition of the Default Rate);

(iii)alter, amend or modify this Section 9; or alter the definition of “Required Holders”, in each case, without the prior written consent of all Holders;

(iv)alter, amend or modify any provision providing for the pro rata application of payments to the Holders;

(v)subordinate the Note in right of payment or lien priority; or

(vi)release all or substantially all of the Collateral.

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(b)Any such amendment or waiver shall apply equally to each Holder and shall be binding upon the Obligor, the Holders and all future holders of the Obligations.  In the case of any waiver, Obligor and Holders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.

(c)If the consent of any Holder is requested pursuant to this Section 9 and such consent is denied (a “Non-Consenting Holder”), then the Required Holders may elect to assign any Non-Consenting Holder’s interest in the Note pro rata to any other Holder who wishes to purchase such non-consenting Holder’s Note (collectively, “Participating Holders”) or to any other Person designated by the Required Holders (a “Designated Holder”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Non-Consenting Holder.  In the event the Required Holders elect to require any Non-Consenting Holder to assign its Note to Participating Holders or to the Designated Holder, Agent will so notify such Holder in writing within thirty (30) days following such Non-Consenting Holder’s denial, and such Non-Consenting Holder will assign its interest to Participating Holders or the Designated Holder no later than five (5) days following receipt of such notice pursuant to an Assignment Agreement executed by such Non-Consenting Holder, the Participating Holders or the Designated Holder, as applicable.

10.Assignment.  Any Holder may, without consent of the Obligor, at any time assign to any holder of its membership interests or sell participations to one or more persons or entities all or a portion of its rights under this Agreement (including all or a portion of its right of repayment of the Note and the other Obligations) pursuant to an assignment and assumption agreement in substantially the form of Exhibit A hereto.  If requested by any Holder, Obligor shall execute one or more new notes substantially in the form hereof to reflect any assignment of the Note in accordance with this Section 10.

11.Security Interest.

(a)All capitalized terms used in this Section 11 without definition shall have the meanings given to such terms under the Uniform Commercial Code of the State of Delaware (the “Code”).

(b)To secure the prompt and complete payment, performance and observance of all of the Obligations, Obligor hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to Holder, a Lien upon all of its right, title and interest in, to and under the Profit Agreement and all Proceeds thereof (the “Collateral”).

(c)Holders’ Rights; Limitations on Holders’ Obligations.  

(i)It is expressly agreed by Obligor that, anything herein to the contrary notwithstanding, Obligor shall remain liable under each of its Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder.  Holders shall not have any obligation or liability under any Contract by reason of or arising out of this Note or the granting herein of a Lien thereon or the receipt by Holders of any payment relating to any Contract pursuant hereto.  Holders shall not be required or obligated in any manner to perform or fulfill any of the obligations of Obligor under or pursuant to any Contract, or to make any payment, or to make

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any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(ii)Holders may at any time after an Event of Default has occurred and is continuing, notify GECM (or any assignee or successor thereto or other counterparty under the Profit Agreement) that Holders have a security interest in the Profit Agreement, and that payments thereunder shall be made directly to Holders; provided Holders shall also provide notice to Obligor within 10 business days of delivering such notice to GECM.  Once any such notice has been given, the Obligor shall not give any contrary instructions to GECM (or any assignee or successor thereto or other counterparty under the Profit Agreement) without Requisite Holders’ prior written consent.

(iii)At any time after of Event of Default, Holders’ may, upon reasonable notice to Obligor, in Holders’ own names, or in the name of a nominee of Holders communicate with GECM (or any assignee or successor thereto or other counterparty under the Profit Agreement) to verify with such Persons, to Holders’ satisfaction, the existence, terms of, supporting detail for, and any other matter relating to, the Profit Agreement.  

(d)Representations and Warranties.  Obligor represents and warrants that:

(i)Obligor has rights in and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder free and clear of any and all Liens other than Liens permitted under the Note.

(ii)No effective security agreement, financing statement, equivalent security or Lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in any public office, except such as may have been filed by Obligor in favor of Holders pursuant to this Note.

(iii)This Note is effective to create a valid and continuing Lien on and, upon the filing of the Financing Statement, a perfected Lien in favor of Obligor on the Collateral with respect to which a Lien may be perfected by filing pursuant to the Code.  Such Lien is prior to all other Liens and is enforceable as such as against any and all creditors of and purchasers from Obligor.  All action by Obligor necessary or desirable to protect and perfect such Lien on each item of the Collateral has been duly taken.

(iv)obligor’s name as it appears in official filings in the state of its incorporation or organization, the type of entity of obligor, organizational identification number issued by obligor’s state of incorporation or organization, obligor’s state of organization or incorporation, the location of obligor’s chief executive office, principal place of business, and the locations of its books and records concerning the Collateral as provided to holders on or prior to the date hereof are complete, true and correct in  all respects. obligor has only one state of incorporation or organization.

(e)Obligor covenants and agrees with each Holder that from and after the date of this Note and until full and final repayment in cash of the Obligations:

(i)At any time and from time to time, upon the written request of Holders and

Annex 1-11

at the sole expense of Obligor, Obligor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further actions as Holders may reasonably require to obtain the full benefits of this Note and of the rights and powers herein granted, including (A) using its best efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Holders of any Contract held by Obligor comprising part of the Collateral and to enforce the security interests granted hereunder; and (B) filing any financing or continuation statements under the Code with respect to the Liens granted hereunder.

(ii)Unless Holders shall otherwise consent in writing (which consent may be revoked), Obligor shall deliver to Holders all Collateral consisting of negotiable Documents, certificated securities, Chattel Paper and Instruments (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank) promptly after Obligor receives the same.

(iii)Obligor hereby irrevocably authorizes Holders at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (A) indicate the Collateral (x) as described in this Section 11, or (y) as being of an equal or lesser scope or with greater detail, and (B) contain any other information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Obligor is an organization, the type of organization and any organization identification number issued thereto.  Obligor agrees to furnish any such information to the Holders promptly upon request.  Obligor also ratifies its authorization for the Holders to have filed in any Uniform Commercial Code jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

(iv)Obligor shall keep and maintain, at its own cost and expense, satisfactory and complete records of the Collateral, including a record of any and all payments received and any and all credits granted with respect to the Collateral and all other dealings with the Collateral.  Obligor shall mark its books and records pertaining to the Collateral to evidence this Note and the Liens granted hereby.  If Obligor retains possession of any Chattel Paper or Instruments with Holders’ consent, such Chattel Paper and Instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of MAST Capital Management, LLC.”

(v)In all material respects, Obligor will perform and comply with all obligations in respect of the Collateral and all other agreements to which it is a party or by which it is bound relating to the Collateral.

(vi)Obligor will not create, permit or suffer to exist, and Obligor will defend the Collateral against, and take such other action as is necessary to remove, any Lien on the Collateral, and will defend the right, title and interest of Obligor in and to any of Obligor’s rights under the Collateral against the claims and demands of all Persons whomsoever.

(vii)Obligor will not sell, license, lease, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so except as permitted by the Note.

(viii)Obligor will, if so requested by Holders from time to time, furnish to Holders statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Holders may reasonably request, in such detail as Holders may reasonably specify.

Annex 1-12

(ix)Obligor will advise Holders promptly, in reasonable detail, (i) of any Lien or claim made or asserted against any of the Collateral which could reasonably be expected to have a Material Adverse Effect, and (ii) of the occurrence of any other event which would have a Material Adverse Effect on the aggregate value of the Collateral or on the Liens created hereunder.

(x)Without limiting any other restrictions that may be set forth in this Note, Obligor shall not reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof without the prior written consent of Holders.

(xi)Obligor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of Holders and agrees that it will not do so without the prior written consent of Holders, subject to Holders rights under Section 9-509(d)(2) of the Code.

(f)Rights and Remedies Upon Default.

(i)In addition to all other rights and remedies granted to it under this the Note and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have occurred and be continuing, Holders may exercise all rights and remedies of a secured party under the Code.  Without limiting the generality of the foregoing, Obligor expressly agrees that in any such event Holders, without demand of performance or other demand, advertisement or notice of any kind to or upon Obligor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code and other applicable law), may forthwith enter upon the premises of Obligor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving Obligor or any other Person notice and opportunity for a hearing on Holders’ claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk.  Holders shall have the right upon any such sales to purchase the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption Obligor hereby releases.  Such sales may be adjourned and continued from time to time with or without notice.

(ii)Holders shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Obligations as provided in this Note, and only after so paying over such net proceeds, and after the payment by Holders of any other amount required by any provision of law, need Holders account for the surplus, if any, to Obligor.  To the maximum extent permitted by applicable law, Obligor waives all claims, damages, and demands against Holders arising out of the repossession, retention or sale of the Collateral except such as arise solely out of the gross negligence or willful misconduct of Holders as finally determined by a court of competent jurisdiction.  Obligor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Obligations, including any attorneys’ fees and other expenses incurred by Holders to collect such deficiency.

(iii)Obligor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Note or any Collateral.

Annex 1-13

(iv)The Holders shall not be required to make any demand upon, or pursue or exhaust any of their rights or remedies against, Obligor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof.  The Holders shall not be required to marshal the Collateral or any guarantee of the Obligations or to resort to the Collateral or any such guarantee in any particular order, and all of its and their rights hereunder shall be cumulative.  To the extent it may lawfully do so, Obligor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against Holders, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Note, or otherwise.

(g)Obligor hereby appoints Holders as its attorney-in-fact hereunder and authorizes Holders to take all such actions as they may deem necessary or desirable with respect to the Collateral in accordance with the terms of this Note.  The power of attorney granted hereby is a power coupled with an interest and shall be irrevocable until the full and final payment in cash of the Obligations.  The powers conferred on Holders under this power of attorney are solely to protect Holders’ interests in the Collateral and shall not impose any duty upon Holders to exercise any such powers.  Lender agrees that (x) it shall not exercise any power or authority granted under this power of attorney unless an Event of Default has occurred and is continuing, and (y) Holders shall account for any moneys received by Holders in respect of any foreclosure on or disposition of Collateral pursuant to this power of attorney provided that Holders shall not have any duty as to any Collateral, and Holders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers.  NONE OF HOLDERS OR THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS, MANAGERS, MEMBERS, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO OBLIGOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

(h)In any suit, proceeding or action brought by Holders relating to any Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect thereto, Holders will defend, indemnify and hold Holders harmless from and against all expense (including reasonable attorneys’ fees and expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of any Person obligated on the Collateral, arising out of a breach by Obligor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from Obligor, except in the case of Holders, to the extent such expense, loss, or damage is attributable solely to the gross negligence or willful misconduct of Holders as finally determined by a court of competent jurisdiction. All such obligations of Obligor shall be and remain enforceable against and only against Obligor and shall not be enforceable against Holders.

(i)This Note and the Liens granted hereunder shall remain in full force and effect and continue to be effective should any petition be filed by or against Obligor for liquidation or reorganization, should Obligor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of Obligor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law,

Annex 1-14

rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

12.Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail to the following address or such other address as Obligor or Holder may designate in writing from time to time:

(a)Obligor:c/o GECC GP Corp.

800 South Street, Suite 230

Waltham, MA 02453

Attention: General Counsel

(b)Holder:c/o MAST Capital Management, LLC

31 St. James Avenue, 6^th Floor

Boston, MA, 02116

Attention: David J. Steinberg

13.Waivers.  The Obligor hereby:

(a)waives presentment, demand, protest and notices of every kind and description, and defenses in the nature thereof; and

(b)waives any defenses based upon, and specifically assents to, any and all extensions and postponements of the time of payment and all other indulgences and forbearances which may be granted by the Holders to any party liable hereon.

14.Expenses; Indemnity; Damage Waiver.

(a)The Obligor shall pay (i) all reasonable out‑of‑pocket expenses incurred by the Holders (including all fees, charges and disbursements of counsel for the Holders), in connection with the preparation, negotiation, execution, delivery and administration of this Note or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable out‑of‑pocket expenses incurred by the Holders (including all  fees, charges and disbursements of any counsel for the Holders) in connection with the enforcement or protection of its rights in connection with the Note.

(b)The Obligor shall indemnify the Holders, and each of the Holders’ representatives, agents, advisors, partners, directors, officers, employees, shareholders, advisors and affiliates  (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) (collectively, “Losses”), incurred by any Indemnitee or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Note or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby

Annex 1-15

or thereby, (ii) the Note or the use or proposed use of the proceeds therefrom, or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory; provided that Obligor shall not be responsible for any Losses resulting solely from Holders’ gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.  To the fullest extent permitted by applicable law, the Obligor shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Note or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Note or the use of the proceeds thereof.

(c)The Obligor shall pay, and hold the Holders harmless from and against, any and all present and future taxes or other governmental charges with respect to amounts paid in respect of this Note, any payments due hereunder, or any collateral described therein, and save the Holders harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes or charges.  Nothing in this paragraph shall obligate the Obligor in respect of income taxes of the Holder.

(d)All amounts due under this Section shall be payable on demand therefor.  The agreements in this Section shall survive the replacement of the Holder, the termination of the Note and the repayment, satisfaction or discharge of all the other Obligations.

15.Payments Set Aside. To the extent that any payment by or on behalf of the Obligor is made to the Holder and such payment or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Holder in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy proceeding or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made.

16.Successors and Assigns.  The provisions of this Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Obligor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Holders.

17.Counterparts; Integration; Effectiveness.  This Note may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Note constitutes the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Delivery of an executed counterpart of a signature page of this Note by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Note.

18.Severability.  If any provision of this Note is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Note shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render

Annex 1-16

unenforceable such provision in any other jurisdiction.

19.Governing Law; Consent to Jurisdiction; Waiver of Venue; Service of Process.  THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.  

20.Dispute Resolution.  The arbitration provisions of the Asset Purchase Agreement apply to this Note mutatis mutandis.

21.Waiver of Jury Trial. THE OBLIGOR IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS.  Except as prohibited by law, each of the Obligor and the Holders waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages.

22.No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof), the Obligor acknowledges and agrees that: (i) (A) the services regarding this Agreement provided by the Holders are arm’s-length commercial transactions between the Obligor, on the one hand, and the Holders, on the other hand, (B) Obligor has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) Obligor is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby; (ii) (A) each Holder is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Obligor or any other person or entity and (B) the Holders do not have any obligation to the Obligor with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (iii) the Holders may be engaged in a broad range of transactions that involve interests that differ from those of the Obligor and Holder has no obligation to disclose any of such interests to the Obligor.  To the fullest extent permitted by law, the Obligor hereby waives and releases any claims that it may have against the Holders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Annex 1-17

EXECUTED as of the date first above written.

OBLIGOR

GECC GP Corp.

By: ______________________

Name: Richard S. Chernicoff

Title:Treasurer

HOLDERS

MAST Capital Management, LLC

By:_____________________

Name: David J. Steinberg

Title:Managing Member

Annex 1-18

Exhibit A

Form of Assignment and Assumption Agreement

THIS ASSIGNMENT AND ASSUMPTION (this “Assignment and Assumption”) dated as of [_______ __, 20__], is by and between [____________], a [__________] (“Assignor”) and [_________], a [_________] (“Assignee”).  Reference is made to that certain Promissory Note dated as of September 18, 2017 (as may be amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Note”), made by GECC GP Corp., a Delaware corporation (“Borrower”), in favor of MAST Capital Management, LLC, a Delaware limited liability company, as lender (“MAST”). All capitalized terms used herein shall have the meanings given to such terms in the Note, receipt of a copy of which is hereby acknowledged by the Assignee.

The Assignor and Assignee agree as follows:

1.Assignor hereby assigns to Assignee, and Assignee hereby purchases and assumes from Assignor a principal amount of $[_______] of Assignor’s interest in the Note (the “Assigned Interest”), together with an interest corresponding to the Assigned Interest.  This Assignment and Assumption shall be effective as of the date indicated above (the “Effective Date”).  From and after the Effective Date, Assignee hereby expressly assumes, and undertakes to perform, all of Assignor’s obligations in respect of the Assigned Interest, and all principal, interest, fees and other amounts which would otherwise be payable to or for Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s account, to the extent such amounts accrue on or after the Effective Date.  

2.Assignor (a) represents that as of the date hereof, (i) prior to giving effect to this assignment, the outstanding principal balance of the Note is $[________], and after giving effect to this assignment, the outstanding principal balance of its interest in the Note will be $[________], (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Note or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Note or any other instrument or document furnished pursuant thereto, other than that Assignor is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim, and (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance by Borrower of its obligations under the Note or the related collateral documents.

3.Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Assumption, (b) confirms that it has received copies of the Note and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption, (c) agrees that it shall, independently and without reliance upon Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Note, (d) confirms that it is a permitted assignee of the Note, (e) agrees that it will observe and perform all obligations that are required to be performed by it as a “Holder” under the Note, and (g) represents and warrants that the assignment evidenced hereby will not result in a non-exempt “prohibited transaction” under Section 406 of ERISA.

4.This Assignment and Assumption shall be governed by the laws of the State of New York without giving effect to the choice of law provisions thereof.  If any provision is found to be invalid

Annex 1-19

under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Assignment and Assumption shall remain in full force and effect.

5.Each notice or other communication hereunder shall be in writing, shall be sent by messenger, by telecopy or facsimile transmission, or by first-class mail, shall be deemed given when sent and shall be sent as follows:

(a)If to Assignee, to the following address (or to such other address as Assignee may designate from time to time):

(b)If to Assignor, to the following address (or to such other address as Assignor may designate from time to time):

6.Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:

(a)If to Assignee, to the following account (or to such other account as Assignee may designate from time to time):

(b)If to Assignor, to the following account (or to such other account as Assignor may designate from time to time):

Annex 1-20

IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption as of the day and year first above written.

ASSIGNOR:

[_______]

By:________________________________

Name:  

Title:    

ASSIGNEE:

By: ________________________

Name:  

Title:    

Annex 1-21

Annex 2

September 18, 2017

ComputerShare Trust Company, N.A.

250 Royal Street

Canton, MA 02021

Ladies and Gentlemen:

This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of Great Elm Capital Group, Inc., a Delaware corporation (the “Company”), at such time and the conditions set forth in this letter are satisfied), subject to any stop transfer instructions that we may issue to you from time to time, if any,  to issue certificates representing an aggregate of 54,733 shares of common stock, par value $0.001 per share, of the Company (the “Shares”), in the name of MAST Capital Management, LLC, a Delaware limited liability company (“MCM”).

You acknowledge and agree that so long as you have received (a) written confirmation from the Company’s legal counsel that either (1) a registration statement covering resales of the Shares has been declared effective by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), or (2) the Shares have been sold in conformity with Rule 144 under the Securities Act (“Rule 144”) or are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such securities and without volume or manner-of-sale restrictions and (b) if applicable, a copy of such registration statement, then, unless otherwise required by law, within three trading days of your receipt of a notice of transfer, Shares, you shall issue the certificates representing the Shares, as the case may be, registered in the names of such holders or transferees, as the case may be, and such certificates shall not bear any legend restricting transfer of the Shares thereby and should not be subject to any stop-transfer restriction; provided, however, that if such Shares are not registered for resale under the Securities Act or able to be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such securities and without volume or manner-of-sale restrictions, then the certificates for such Shares shall bear the following legend:

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING AGREEMENT CONTAINED IN THE SEPARATION AGREEMENT, DATED SEPTEMBER 18, 2017. A COPY OF SUCH AGREEMENT MAY BE EXAMINED AT THE CORPORATION’S PRINCIPAL EXECUTIVE OFFICES.

The shares shall also bear such legends as required under the Company’s stockholders rights plan and the transfer restrictions in its certificate of incorporation.

Please be advised that MCM is relying upon this letter as an inducement to enter into a Separation Agreement and, accordingly, MCM is a third party beneficiary to these instructions.

Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions.

Very truly yours,

GREAT ELM CAPITAL GROUP, INC.

By:__________________________

Name:

Title:

Acknowledged and Agreed:

COMPUTERSHARE TRUST COMPANY, N.A.

By:_________________________________

Name:

Title:

Date:

Annex 3

September 18, 2017

GECC GP Corp.

800 South Street, Suite 230

Waltham, MA 02453

Ladies and Gentlemen:

We refer to the Profit Sharing Agreement, dated as of November 3, 2016 (the “Agreement”), by and between you and us.

If GECC Net Profit is a negative number, such negative amount shall be carried forward to future periods and offset against GECC Net Profit of future periods on a first-in, first-out basis.  If there are not future positive GECC Net Profit, you will have no obligation to reimburse us for such cumulative negative GECC Net Profit.  

All other provisions of the Agreement are in full force and effect and unaffected by this letter agreement.  Article 6 of the Agreement shall apply mutatis mutandis to this letter agreement.

Very truly yours,

Peter A. Reed

Chief Investment Officer

Great Elm Capital Management, Inc.

Accepted and agreed as of the date first written above.

GECC GP CORP.

By:____________________

Name:Richard S. Chernicoff

Title:Treasurer

Annex 4

THE ISSUANCE OF THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

Great Elm Capital Group, Inc.

Warrant to Purchase Shares of Common Stock

Number of Shares of Common Stock: 420,000

Date of Issuance: September 18, 2017 (“Issuance Date”)

Great Elm Capital Group, Inc., a Delaware corporation  (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MAST Capital Management, LLC, a Delaware limited liability company and the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), up to 420,000 shares of Common Stock (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 17.

This Warrant is being issued in connection with that certain Separation Agreement (the “Separation Agreement”), dated as of the Issuance Date, by and among the Company, Great Elm Capital Management, Inc.,  a Delaware corporation, GECC GP Corp., a Delaware corporation, the Holder, MAST Capital Management IA Holdings, LLC, a Delaware limited liability company (“IA”), Mast Credit Opportunities I Master Fund Limited, a Cayman Islands corporation (“Credit Opportunities”), Mast OC I Master Fund L.P., a Cayman Islands exempted limited partnership (“OC”), Mast Select Opportunities Master Fund, L.P., a Cayman Islands exempted limited partnership (“Select”), Mast Admiral Master Fund, L.P., a Cayman Islands exempted limited partnership (“Admiral” and, together with Credit Opportunities, OC and Select, and each of their respective feeder funds, alternative investment vehicles, liquidating accounts and special purpose entities, collectively, the “Mast Funds”) and the other parties signatory thereto.

1. Exercise of Warrant

1.1 Mechanics of Exercise.

(a) Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder, from the date that is ten (10) Trading Days following the Issuance Date up to and until the Expiration Date, in whole or in part, but in no case on more than one occasion, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant, (ii) wire transfer to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available funds and (iii) delivery of this Warrant to the Company for cancellation with delivery of the related Exercise Notice. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and forfeit of the right to purchase any remaining Warrant Shares.  This Warrant may be exercised by the Holder on behalf of itself or any of the Mast Funds (a “Designee”).

(b) Subject to the Holder or its Designee having delivered documentation reasonably requested by the Company’s transfer agent, on or before the third Trading Day following the date on which the Company has received each of the Exercise Notice and the wire transfer of the Aggregate Exercise

Price and this Warrant (the “Exercise Delivery Documents”), the Company shall credit to the Holder’s or its Designee’s account with the Company’s transfer agent the number of shares of Common Stock to which the Holder or its Designee is entitled pursuant to such exercise.

(c) Upon delivery of the Exercise Delivery Documents, the Holder or its Designee shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s or its Designee’s account.

(d) The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or its Designee or any transfer of this Warrant from the Holder to a Designee. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or Holder or its Designee receiving Warrant Shares upon exercise hereof.

1.2 Exercise Price. For purposes of this Warrant, “Exercise Price” means the simple average of the Weighted Average Price of the Common Stock for the ten (10) consecutive Trading Days ending on and including the Trading Day immediately prior to the date of the Exercise Notice.

1.3 Company’s Failure to Timely Deliver Securities. If, within three Trading Days after the Company’s receipt of the Exercise Delivery Documents, the Company shall fail to issue and deliver a certificate to the Holder or its Designee and register such shares of Common Stock on the Company’s share register the number of shares of Common Stock to which the Holder or its Designee is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder or its Designee purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder or its Designee of shares of Common Stock issuable upon such exercise that the Holder or its Designee anticipated receiving from the Company, then the Company shall, within three Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder or its Designee in an amount equal to the Holder’s or its Designee’s total purchase price (including customary brokerage commissions and other reasonable out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such book entry credit (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder or its Designee book-entry credit of  such shares of Common Stock or credit such Holder’s or its Designee’s balance account with DTC and pay cash to the Holder or its Designee in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Weighted Average Price on the date of exercise.

1.4 Holder Covenant.  Holder represents and covenants that upon exercise of the Warrant and until the first (1^st) anniversary of the Exercise Date, the Holder shall have sole voting control over all Warrant Shares held by the Holder or its Designee.  

1.5 Disputes. In the case of a dispute as to the determination of the Exercise Price, or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder or its Designee the number of Warrant Shares that are not disputed and resolve such dispute per Section 13.

1.6 Limitations on Exercises.

(a) The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, if the Holder no longer beneficially owns at least 3% of the outstanding shares of Common Stock immediately prior to such exercise.  For the purpose of the foregoing sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); provided, that solely for the purposes of this Section

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1.6(a), the Holder shall be deemed not to beneficially own the shares of Common Stock underlying this Warrant.  

(b) The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, the Holder (and any persons controlling the Holder) would beneficially own in excess of 9.9% of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For the purpose of the foregoing sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act.

(c) For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, unless provided otherwise herein, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Warrant, by the Holder and its Designees since the date as of which such number of outstanding shares of Common Stock was reported.

(d) The provisions of this Section 1.6 shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof to correct this Section 1.6 (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

1.7 Expiration Date. This Warrant and the Holder’s right to exercise this Warrant shall expire and automatically terminate on the Expiration Date.

1.8 No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.

1.9 Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 2, if any). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

2. Adjustment of Number of Warrant Shares.  The number of Warrant Shares underlying the Warrant shall be adjusted from time to time prior to exercise as follows:

2.1 Adjustment upon Subdivision or Combination of shares of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the number of Warrant Shares will be proportionately increased. If the Company at any time

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on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2.1 shall become effective at the close of business on the date the subdivision or combination becomes effective.

2.2 Other Events. If any event occurs of the type contemplated by the provisions of Section 2.1 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features that have the effects contemplated by Section ‎2.1), then the Company’s Board of Directors (the “Board”) will make an appropriate adjustment in the number of Warrant Shares so as to protect the rights of the Holder; provided, that no such adjustment pursuant to this Section 2.2 will decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.  

3. Consents

3.1 Consent under Certificate.  In accordance with Article XIV, Part III of its Amended and Restated Certificate of Incorporation (the “Certificate”), the Board has approved the issuance of this Warrant, the Warrant Shares and Purchase Rights and has waived any and all other conditions, notice requirements and other limitations found in Article XIV of the Certificate affecting the issuance of this Warrant, the Warrant Shares or the Purchase Rights.   The Company has provided the Holder a copy of the Board resolutions authorizing such waiver and approval.

3.2 Consent under Tax Benefits Preservation Agreement.  In accordance with Section 29 of that certain Tax Benefits Preservation Agreement, dated as of January 20, 2015, by and between the Company (f/k/a Unwired Planet, Inc.) and Computershare Trust Company, N.A. (the “Rights Plan”), the Board has granted an exemption under the Rights Plan to this Warrant (including the Purchase Rights) and the exercise of this Warrant by the Holder and the issuance of the Warrant Shares to the Holder or its Designee, and has waived any and all other conditions, notice requirements (including but not limited to those regarding the submission of an Exemption Request, as such term is defined in the Rights Plan) and other limitations found in the Rights Plan affecting the issuance of this Warrant, the Holder’s ability to exercise this Warrant and to receive the Warrant Shares, or that would otherwise cause any Rights (as defined in the Rights Plan) to become exercisable pursuant to the Rights Plan.  The Company has provided the Holder a copy of the Board resolutions authorizing such exemption and waiver

4. Purchase Rights; Fundamental Transactions.

4.1 Purchase Rights. In addition to any adjustments pursuant to Section 2, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder or its Designee will be entitled upon exercise of this Warrant for the purchase of any or all of the Warrant Shares, to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder or its Designee could have acquired had the Holder or its Designee been the holder of such Warrant Shares on the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. The Company will at all times set aside in escrow and keep available for distribution to such holder upon exercise of this Warrant a portion of the Purchase Rights to satisfy the rights to which such Holder or its Designee is entitled pursuant to the preceding sentence; provided, that, in lieu of setting aside and keeping such Purchase Rights available, the Company may net settle the delivery of such Purchase Rights by equitably reducing the Exercise Price in an amount as reasonably determined by the Board acting in good faith.  Such Purchase Rights and the securities issuable thereunder may not be registered under the Securities Act and applicable blue sky laws and

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the time for payment of any subscription price shall be concurrent with the exercise of this Warrant.  The Company shall not be obligated to reserve any such Purchase Rights if such reservation could reasonably be expected to result in an increase in the cumulative owner shift under Section 382 of the Internal Revenue Code of 1986, as amended, and the applicable regulations and administrative pronouncements thereunder of 0.5%.

4.2 Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4.2, including agreements to deliver to each holder of the Warrant in exchange for such Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of the publicly traded common stock or common shares (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been exercised immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate Event had this Warrant been exercised immediately prior to such Corporate Event. The provisions of this Section 4.2 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

5. Non Circumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its governing documents, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant , and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant and (iii) shall, so long as any of the Warrants are outstanding, take all action within its control necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrant, the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding (without

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regard to any limitations on exercise).

6. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

7. Reissuance of Warrants.

7.1 Registration of Warrant. The Company shall register this Warrant, upon the records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary, subject to the Holder’s right to exercise the Warrant on behalf of its Designee. The Company shall also register any transfer, exchange, reissuance or cancellation of any portion of this Warrant in the Warrant Register.

7.2 Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7.5), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7.5) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

7.3 Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7.5) representing the right to purchase the Warrant Shares then underlying this Warrant.

7.4 Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant (in accordance with Section 7.5) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, that no Warrants for fractional shares of Common Stock shall be given.

7.5 Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7.2 or Section 7.4, the Warrant Shares designated by the Holder which, when added to the number of

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shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

8. Notices. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given upon delivery of notice personally delivered or delivered by internationally recognized overnight courier service, such as DHL, to the Company and the Holder at the following addresses (or at such other address for a either as may be specified by like notice):

If to the Company:c/o Great Elm Capital Group, Inc.

800 South Street, Suite 230

Waltham, MA 02453

Attention: General Counsel; with a copy

(which shall not constitute notice) to:Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, CA 94301

Attention: Michael J. Mies; and

if to the Holder:MAST Capital Management , LLC

31 St. James Avenue, 6th Floor

Boston, MA 02116

Attention: David J. Steinberg

The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) promptly upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided, that in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

9. Amendment. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders; provided, that no such action may increase the exercise price of any Warrant or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the Holder. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Warrants then outstanding.

10. No Waiver. No failure or delay in the exercise or assertion of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, or create an estoppel with respect to any breach of any representation, warranty or covenant herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies under this Warrant are cumulative to, and not exclusive of, any rights or remedies otherwise available.

11. Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this

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Warrant shall be governed by, the laws of the State of Delaware applicable to contracts made in and solely to be performed in the State of Delaware.

12. Construction; Headings.  When a reference is made in this Warrant to a section or article, such reference will be to a section or article of this Warrant, unless otherwise clearly indicated to the contrary. Whenever the words “include,” “includes” or “including” are used in this Warrant they will be deemed to be followed by the words “without limitation”. The words “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Warrant as a whole and not to any particular provision of this Warrant, and article and section references are references to the articles and sections of this Warrant, unless otherwise specified. The plural of any defined term will have a meaning correlative to such defined term and words denoting any gender will include all genders and the neuter. Where a word or phrase is defined herein, each of its other grammatical forms will have a corresponding meaning. A reference to any legislation or to any provision of any legislation will include any modification, amendment, re-enactment thereof, any legislative provision substituted therefore and all rules, regulations and statutory instruments issued or related to such legislation. If any ambiguity or question of intent or interpretation arises, this Warrant will be construed as if drafted jointly by the Company and the Holder, and no presumption or burden of proof will arise favoring or disfavoring the Company or the Holder by virtue of the authorship of any provision of this Warrant. No prior draft of this Warrant will be used in the interpretation or construction of this Warrant. Headings are used for convenience only and will not in any way affect the construction or interpretation of this Warrant.

13. Exercise Price Dispute Resolution. In the case of a dispute as to the determination of the Exercise Price, the number of Warrant Shares or the arithmetic calculation of the Warrant Shares, the Company shall notify to the Holder the disputed determinations or arithmetic within two Business Days of receipt of the Exercise Notice giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price, the number of Warrant Shares or the Warrant Shares within five Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two Business Days, submit (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall use commercially reasonable efforts to cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. The expenses of the investment bank and accountant will be borne by the Company unless the investment bank or accountant determines that the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares by the Holder was incorrect, in which case the expenses of the investment bank and accountant will be borne by the Holder.

14. Enforcement.

14.1 Exclusive Forum. Any dispute arising under, related to or otherwise involving this Warrant, other than a dispute regarding the Exercise Price, in which case such dispute shall be governed by Section 13, will be litigated in the Court of Chancery of the State of Delaware. The Company and the Holder agree to submit to the jurisdiction of the Court of Chancery of the State of Delaware, waive any objection on the basis of inconvenient forum or improper venue, and waive trial by jury. The Company and the Holder do not consent to mediate any disputes before the Court of Chancery.

14.2 Subject Matter Jurisdiction Fallback. Notwithstanding the foregoing, if there is a determination that the Court of Chancery of the State of Delaware does not have subject matter jurisdiction over any dispute arising under this Warrant, the Company and the Holder agree that: (i) such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Superior Court

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of Delaware of and for the County of New Castle; (ii) if the Superior Court of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Complex Commercial Litigation Division of the Superior Court of the State of Delaware of and for the County of New Castle; and (iii) if the Complex Commercial Litigation Division of the Superior Court of the State of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the United States District Court for the State of Delaware.

14.3 Submission to Jurisdiction; JURY WAIVER. Each of the Company and the Holder irrevocably (i) consents to submit itself to the personal jurisdiction of the Delaware courts in connection with any dispute arising under this Warrant, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for relief from the Delaware courts or any other court or governmental body and (iii) agrees that it will not bring any action arising under this Warrant in any court other than the Delaware courts. THE COMPANY AND THE HOLDER IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS WARRANT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.4 Process. Process may be served in the manner specified in Section 8, such service will be deemed effective on the date of such notice, and the Company and the Holder irrevocably waive any defenses or objections it may have to service in such manner.

14.5 Specific Performance. The Company and the Holder irrevocably stipulate that irreparable damage would occur if any of the provisions of this Warrant were not performed per their specific terms. Accordingly, the Company and the Holder will be entitled to specific performance of the terms hereof in addition to any other remedy to which it is entitled at law or in equity.

14.6 Attorneys’ Fees. The court shall award attorneys’ fees and expenses and costs to the Holder if it is the substantially prevailing party in any action (including appeals) for the enforcement or interpretation of this Warrant. If there are cross claims in such action (including appeals), the court will determine if the Holder is the substantially prevailing party as to the action as a whole.

15. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to seek an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

16. Severability. Any term or provision of this Warrant that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the invalid, void or unenforceable term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares any term or provision hereof invalid, void or unenforceable, the court or other authority making such determination will have the power to and will, subject to the discretion of such body, reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or

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unenforceable term or provision.

17. Private Placement.

17.1 No Intent to Distribute. The Holder understands that the Warrant is, and the Warrant Shares (together, the “Securities”) will be, “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Warrant and, upon exercise of the Warrant, will acquire the Warrant Shares as principal for its own account and not with a view to, or for distributing or reselling such securities or any part thereof in violation of the Securities Act or any applicable state securities laws. The Holder does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Securities acquired hereunder (or any securities which are derivatives thereof) to or through any person or entity.

17.2 Accredited Investor. At the time the Holder was offered the Securities, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act.

17.3 Sophistication. The Holder has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Holder is able to bear the economic risk of an investment in such securities and, at the present time, is able to afford a complete loss of such investment.

17.4 Due Diligence.The Holder has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in such securities; (ii) access to information about the Company and its Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

17.5 Reliance. The Holder understands that the Securities being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of this Section ‎‎17 in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

17.6 No Government Approval. The Holder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in such securities nor have such authorities passed upon or endorsed the merits of the offering of such securities.

18. Certain Definitions. For purposes of this Warrant, the following terms shall have the following meanings:

18.1 “Bloomberg” means Bloomberg Financial Markets.

18.2 “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

18.3 “Closing Bid Price” means, for any security as of any date, the last closing bid price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such

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security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC. If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 13. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

18.4 “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

18.5 “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

18.6 “Eligible Market” means the Principal Market, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market, The New York Stock Exchange, Inc., or The NYSE Amex and the markets operated by the OTC Markets Group, Inc.

18.7 “Expiration Date” means the date of expiration of the Standstill Period (as defined in the Separation Agreement).

18.8 “Fundamental Transaction” means that (A) the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), or (v) reorganize, recapitalize or reclassify its Common Stock or (B) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock.

18.9 “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

18.10 “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common shares or common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

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18.11 “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

18.12 “Principal Market” means the principal securities market on which the Common Stock is then trading.

18.13 “Required Holders” means the holders of the Warrants representing at least a majority of the shares of Common Stock underlying the Warrants then outstanding.

18.14 “Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

18.15 “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York time).

18.16 “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 13 with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

[SIGNATURE PAGE FOLLOWS]

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The Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date.

Great Elm Capital Group, Inc.

By:______________________

Name:Richard S. Chernicoff

Title:Principal Executive Officer

[Signature Page to Warrant to Purchase Common Stock]

Exhibit A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK

The undersigned holder hereby exercises the right to purchase shares of the Common Stock (“Warrant Shares”) of Great Elm Capital Group, Inc., a corporation organized under the laws of the State of Delaware (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1. Warrant Shares.  The Holder elects to exercise the Warrant with respect to ________________ Warrant Shares. The Holder confirms that such exercise does not violate Section 1.6(a) or 1.6(b) of the Warrant.

2.  Designee.  The Holder hereby designates ____________________________ as its Designee and directs that all Warrant Shares be issued to, and in the name of, such Designee.

3. Calculation of Exercise Price. The Holder has calculated the Exercise Price per Warrant Share as follows:

Trading Date	Weighted Average Price
Exercise Price per share (simple average):

4. Payment of Exercise Price. The Designee shall pay the Aggregate Exercise Price in the sum of $____________ to the Company in accordance with the terms of the Warrant.

5. Delivery of Warrant Shares. The Company shall deliver to the Designee Warrant Shares in accordance with the terms of the Warrant.

6. Representation and Warranty. Notwithstanding anything to the contrary contained herein, this Exercise Notice shall constitute a representation by the Holder of the Warrant submitting this Exercise Notice that, after giving effect to the exercise provided for in this Exercise Notice, such Holder shall not be in violation of Section 1.6 of the Warrant.

Date: ________________

[Name of Registered Holder]

By:_________________

Name:

Title:

The Company hereby acknowledges this Exercise Notice and hereby directs [Insert name of Transfer Agent] to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent

Instructions dated       , from the Company and acknowledged and agreed to [Insert name of Transfer Agent].

Great Elm Capital Group, Inc.

By:_________________

Name:

Title:

Annex 5

SHARE REGISTRATION AGREEMENT

SHARE REGISTRATION AGREEMENT, dated as of September 18, 2017 (this “Agreement”), by and between Great Elm Capital Group, Inc., a Delaware corporation (“GEC”) and MAST Capital Management, LLC, a Delaware limited liability company (“MCM”).

Recitals

GEC has executed that certain Warrant to Purchase Shares of Common Stock, dated as of September xx, 2017 (the “Warrant”), pursuant to which GEC has granted MCM a warrant to purchase certain shares of GEC’s common stock, par value $0.001 per share (the “Common Stock”).

GEC and MCM each desire that any Common Stock issued to MCM as a result of the exercise of the Warrant shall be registered under the Securities Act (as defined herein) upon the demand of MCM.

Agreement

In consideration of the foregoing and the promises and undertakings in this Agreement, the parties, intending to be legally bound, agree as follows:

1. Registration Rights.

1.1 Definitions.  As used in this Agreement,

(a) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include all persons or entities that at any time during the term of this Agreement become Affiliates of any person or entity referred to in this Agreement; provided, that “Affiliate” shall not include (i) any person that is a publicly held concern and is otherwise an Affiliate solely by reason of the fact that a principal of MCM serves as a member of the board of directors or similar governing body of such concern provided that MCM does not control such concern, or (ii) such principal in his/her capacity as a member of the board of directors or other similar governing body of such concern;

(b) “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended, or the rules or regulations promulgated thereunder;

(c) “Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 pursuant to the regulations under the Securities Act (“Rule 433”) (or that would otherwise constitute a “free writing prospectus”, as defined in Rule 405 of the regulations under the Securities Act), relating to the Securities that (a) is required to be filed with the SEC by GEC, (b  is a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the SEC, (c) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the SEC or, if not required to be filed, in the form retained in GEC’s records pursuant to Rule 433(g), or (d) to which GEC has given its prior consent;

(d) “MCM Party” shall mean each of, and collectively, MCM and the Designees (as is defined in the Warrant);

(e) “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature, including any governmental authority;

(f) “Public Offering” shall mean the sale of shares of Common Stock in a public offering registered with the SEC;

(g) “register,” “registered” and “registration” shall mean a registration effected by preparing and filing a registration statement with the SEC (“Registration Statement”) in compliance with the Securities Act, and the declaration or ordering of effectiveness of such Registration Statement by the SEC;

(h) “Registrable Securities” shall mean (i) any shares of Common Stock issued as a result of MCM’s exercise of the Warrant and (ii) any shares of Common Stock which were issued or received in respect of, or in exchange or in substitution for any of the foregoing, including, but not limited to, those arising from a stock dividend, distribution, stock split, reclassification, reorganization, merger, consolidation, sale or transfer of assets or other exchange of securities. As to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (b) such securities shall have ceased to be outstanding or (c) such securities shall be eligible to be resold to the public without any volume or manner of sale restrictions pursuant to Rule 144 (or any successor provision) under the Securities Act;

(i) “SEC” shall mean the United States Securities and Exchange Commission;

(j) “Securities Act” shall mean the United States Securities Act of 1933, as amended; and

(k) “Scheduled Blackout” means any ordinary course blackout period declared by GEC in connection with an annual or quarterly earnings release in accordance with GEC policy.

1.2 Demand Registration.

(a) Following the first anniversary of the date hereof and upon the receipt of a written request from any MCM Party that GEC file a Registration Statement under the Securities Act covering the registration for the offer and sale of all or part of the Registrable Securities (a “Demand Registration”), as soon as practicable, GEC shall file with the SEC and use its reasonable best efforts to cause to be declared effective, a registration statement relating to all Registrable Securities that MCM Party has requested be registered to be registered under the Securities Act, subject to and in accordance with the terms, conditions, procedures and limitations contained in this Agreement. The MCM Parties are collectively entitled to effect two (2) such Demand Registrations pursuant to this Section 1.2(a); provided, that, a registration requested pursuant to this Section 1.2(a) shall not be deemed to have been effected unless a Registration Statement with respect thereto has become effective (other than due to the fault of a MCM Party) and at least 75% of the Registrable Securities requested to be included in such Demand Registration (and not withdrawn) shall have been disposed of in accordance with the plan of distribution set forth therein.  The MCM Party

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may terminate a Demand Registration prior to the filing of a Registration Statement relating thereto, or require GEC to withdraw promptly any Registration Statement which has been filed pursuant to this Section 1 but which has not become effective under the Securities Act, and such registration shall not be deemed to be a Demand Registration if either (i) it agrees to pay the costs and expenses of such registration as set forth in Section 1.6 hereof, or (ii) such withdrawal is accompanied by notice from the MCM Party that, in the good faith exercise of its reasonable judgment, (A) such withdrawal is warranted based on a change in the business or prospects of GEC or a change in the condition of the United States financial markets, or (B) there has occurred a misstatement or omission in any prospectus which makes it inadvisable to proceed with the registration.

1.3 Piggyback Registration.

Subject to Section 1.7 hereof, if at any time GEC proposes to register its shares of its Common Stock under the Securities Act, either for its own account or for the account of others, in connection with the Public Offering of such shares of Common Stock solely for cash, on a registration form that would also permit the registration of Registrable Securities (other than (i) a registration statement on Form S-8 or any successor form, (ii) for the purpose of offering such securities to another business entity, or a registration on Form S-4 for the purpose of offering such securities to another business entity or the shareholders of such entity in connection with the acquisition of assets or shares of capital stock, respectively, of such entity or (iii) a resale shelf registration filed in connection with an acquisition, reorganization, recapitalization, rights offering, merger, consolidation or similar transaction), GEC shall, each such time, give each MCM Party written notice of such proposal no later than 15 days prior to the filing of the Registration Statement relating thereto (a “Piggyback Registration Notice”). Within 10 days after the Piggyback Registration Notice is given, the MCM Parties shall give notice as to the number of shares of Registrable Securities, if any, which such MCM Parties request to be registered simultaneously with such registration by GEC (“Piggyback Registration”). GEC shall include any Registrable Securities in such Registration Statement which the MCM Parties request to be registered under the Securities Act, subject to and in accordance with the terms, conditions, procedures and limitations contained in this Agreement. Notwithstanding the foregoing, GEC shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 at any time in its sole discretion whether or not any MCM Party has elected to include Registrable Securities in such Registration Statement.  The registration expenses of such withdrawn registration shall be borne by GEC in accordance with Section 1.6 hereof.  Each MCM Party requesting inclusion in a registration made pursuant to this Section 1.3 may, at any time before the effective date of the Registration Statement relating to such registration, revoke such request by providing written notice of such revocation to GEC, in which case GEC shall cause such MCM Party’s Registrable Securities to be withdrawn from such Registration Statement. For the avoidance of doubt, there shall be no limit to the number of times a MCM Party may exercise its rights to request Piggyback Registration hereunder.

1.4 Blackout Periods.  Notwithstanding any other provision of this Agreement to the contrary, GEC shall have the right to defer the filing of, or suspend the use by the MCM Parties of, any Registration Statement (or any amendment thereto) for a period of up to 60 days, (A) for so long as a MCM Party is an affiliate of GEC, during a Scheduled Blackout, (B) if the Board determines that a postponement is in the best interest of GEC and its stockholders generally due to a pending transaction involving GEC, (C) the Board determines such registration would render GEC unable to comply with applicable securities laws or (D) the Board

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determines such registration would require disclosure of material information that GEC has a bona fide business purpose for preserving as confidential (any such period, a “Blackout Period”); provided, however, that in no event may GEC deliver more than two (2) notices of a Blackout Period (other than of any Scheduled Blackout) in any 12 month period.

1.5 Obligations of GEC.  Whenever required under this Agreement to effect the registration of any Registrable Securities, GEC shall, as expeditiously as reasonably possible:

(a) Prepare and file with the SEC a Registration Statement covering such Registrable Securities, with respect to registration pursuant to Section 1.2 no later than twenty (20) days after request by a MCM Party (excluding any days which occur during a Blackout Period), and use its reasonable best efforts to cause such Registration Statement to be declared effective by the SEC and to keep such registration effective until the date when all Registrable Securities covered by the Registration Statement have been sold; provided, however, in the case of registration under Section 1.2 or 1.3 hereof, not longer than 180 days after the effective date of the Registration Statement or prospectus or any amendments or supplements thereto.

(b) Prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement as may be necessary to keep such Registration Statement effective until the applicable date referred to in Section 1.5(a) hereof and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement, and cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed with the SEC pursuant to Rule 424 under the Securities Act.

(c) Comply with all of its obligations under the Securities Act and the Exchange Act, and the rules and regulations thereunder, use its reasonable best efforts to qualify the shares of Common Stock under the blue sky laws of such states as the underwriters in such registration shall reasonably request, and use its reasonable best efforts to list the shares of Common Stock on the national securities exchange on which shares of Common Stock are then listed.

1.6 Registration Expenses.  Except as set forth below, in connection with any registration of Registrable Securities hereunder, GEC will pay all of the expenses relating to such registration; provided, however, that (i) GEC will only pay the fees and disbursements charged by one counsel chosen by the MCM Parties, and (ii) each MCM Party participating in the sale of Registrable Securities will pay pro rata any underwriting discounts, commissions, stock transfer taxes and fees attributable to the sale of its Registrable Securities and any out of pocket expenses of such MCM Party (or the agents who manage its accounts) or the fees and disbursements of its counsel (other than the legal counsel referred to in Section 1.6(i) above).

1.7 Underwriting Requirements and Cutbacks.

(a) With respect to a Demand Registration pursuant to Section 1.2 hereof, the MCM Party shall have the right to select the investment banker(s) and manager(s) to administer such registration, subject to the approval of GEC, which approval will not be unreasonably withheld, delayed or conditioned.

(b) With respect to a Piggyback Registration pursuant to Section 1.3 hereof, GEC shall have the

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sole right to select the investment banker(s) and manager(s) to administer such registration.

(c) If a registration under Section 1.2 hereof is an underwritten offering and the managing underwriters advise GEC that in their opinion the number of shares of Common Stock requested to be registered exceeds the number of shares which can be sold in such offering without materially and adversely affecting the marketability of the offering, then GEC will include in such registration (A) first, Registrable Securities owned by the MCM Parties and shares of Common Stock owned by other shareholders of GEC who hold contractual demand registration rights (pro rata among all such shareholders (including such MCM Parties) on the basis of the number of Registrable Securities and other shares of Common Stock such shareholders (including such MCM Parties) have requested to be registered), and (B) second, shares of Common Stock owned by the other shareholders of GEC who hold contractual piggyback registration rights (pro rata among all such shareholders on the basis of the number of shares of Common Stock such shareholders have requested to be registered). Notwithstanding anything in the foregoing to the contrary:

(i) If a registration under Section 1.3 hereof is an underwritten primary offering initiated by GEC and the managing underwriters advise GEC that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of the offering, GEC will include in such registration (x) first, the securities GEC proposes to sell, and (y) second, (1) shares of Common Stock held by other shareholders of GEC pursuant to the terms and conditions of agreements existing on the date of this Agreement, (2) Registrable Securities owned by the MCM Parties that have requested the inclusion of any Registrable Securities in such registration pursuant to Section 1.3 and (3) shares of Common Stock held by other shareholders of GEC requesting such registration pursuant to contractual registration rights, in each case, pro rata among all such shareholders (including MCM Parties) on the basis of the number of Registrable Securities and other shares of Common Stock such shareholders (including MCM Parties) have so requested to be registered.

(ii) If a registration under Section 1.3 hereof is an underwritten registration initiated by any of the shareholders of GEC (other than a MCM Party) and the managing underwriters advise GEC that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of the offering, GEC will include in such registration (x) first, shares of Common Stock owned by the other shareholders of GEC (and not any MCM Party) who hold contractual demand registration rights (pro rata among all such other shareholders on the basis of the number of shares of Common Stock such shareholders have requested to be registered), (y) shares of Common Stock held by other shareholders of GEC pursuant to the terms and conditions of agreements existing on the date of this Agreement, and (z) third, Registrable Securities owned by the MCM Parties requested to be included in such registration pursuant to Section 1.3 and shares of Common Stock owned by other shareholders of GEC who hold contractual piggyback registration rights (pro rata among all such shareholders (including such MCM Parties) on the basis of the number of shares of Common Stock such shareholders (including the MCM Parties) have requested to be registered).

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1.8 Furnish Information.  It shall be a condition precedent to the obligations of GEC to take any action pursuant to this Section 1 with respect to the Registrable Securities, that the MCM Parties shall furnish to GEC such information regarding them, the Registrable Securities held by them, and the intended method of disposition by them of such Registrable Securities as is customarily provided by selling securityholders and as GEC or any underwriters shall reasonably request.

1.9 Indemnification and Contribution. In the event any Registrable Securities are included in a Registration Statement under this Agreement:

(a) To the full extent permitted by law, GEC will and hereby does (A) indemnify and hold harmless each MCM Party, each director, officer, partner, employee, Affiliate, or agent of or for such MCM Party, any underwriter (as defined in the Securities Act) for such MCM Party, and each person, if any, who controls such MCM Party or underwriter within the meaning of the Securities Act, against any losses, claims, damages, costs or liabilities, joint or several, to which they may become subject insofar as such losses, claims, damages, costs or liabilities (or actions in respect thereof) (x) arise out of, are caused by, or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement, including any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (y) arise out of, are caused by, or are based on any untrue or alleged untrue statement of any material fact contained in any preliminary prospectus, Free Writing Prospectus or final prospectus contained in such Registration Statement, including any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (z) arise out of, or are caused by, any violation by GEC of any securities law, rule or regulation applicable to GEC and relating to action or inaction required of GEC in connection with any such registration; and (B) reimburse each such person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, costs, liability, or action; provided, however, that the indemnity agreement contained in this Section 1.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of GEC (which consent shall not be unreasonably withheld, delayed or conditioned) nor shall GEC be liable to a MCM Party, underwriter or controlling person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or an alleged untrue statement or omission or alleged omission made in connection with such Registration Statement, preliminary prospectus, Free Writing Prospectus, final prospectus, or amendments or supplements thereto in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by or on behalf of any such MCM Party, underwriter or controlling person. This indemnity shall be in addition to other indemnification arrangements to which GEC and any MCM Party may otherwise be party.

(b) To the full extent permitted by law, each MCM Party requesting or joining in a registration under this Agreement, severally and not jointly, will and hereby does (A) indemnify and hold harmless GEC, each of its directors, each of its officers who have signed the Registration Statement, each person, if any, who controls GEC within the meaning of the Securities Act, and any underwriter (as defined in the Securities Act) for GEC, against any

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losses, claims, damages or liabilities, joint or several, to which GEC or any such director, officer, controlling person, or underwriter may become subject, under the Securities Act and applicable state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (x) arise out of, are caused by, or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement, including any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (y) arise out of, are caused by, or are based on any untrue or alleged untrue statement of any material fact contained in any preliminary prospectus, Free Writing Prospectus or final prospectus contained in such Registration Statement, including any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary prospectus, Free Writing Prospectus or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by such MCM Party expressly for use in such Registration Statement, preliminary prospectus, Free Writing Prospectus or final prospectus, or amendments or supplements thereto; and (B) reimburse any legal or other expenses reasonably incurred by GEC or any such director, officer, controlling person or underwriter attributable to investigating or defending any loss, claim, damage, liability or action indemnified by such MCM Party pursuant to clause (A) above; provided, however, that the indemnity agreement contained in this Section 1.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such MCM Party (which consent shall not be unreasonably withheld, delayed or conditioned). In no event shall the liability of any MCM Party be greater than the dollar amount of the proceeds (net of payment of all expenses) received by such MCM Party upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action or knowledge of a claim that would, if asserted, give rise to a claim for indemnity hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.9 notify the indemnifying party in writing of the commencement thereof or knowledge thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to such parties. If prejudicial to any material extent to his, her or its ability to defend such action, the failure to notify an indemnifying party promptly of the commencement of any such action or of the knowledge of any such claim, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.9 to the extent so prejudiced, but the omission so to notify the indemnifying party will not relieve him, her or it of any liability that he may have to any indemnified party otherwise than under this Section 1.9. Each indemnified party shall have the right to employ separate counsel in such action, claim or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of each indemnified party unless:  (A) such indemnifying party has agreed to pay such expenses, (B) such indemnifying party has failed promptly to assume the defense and employ counsel reasonably satisfactory to such indemnified party or (C) such indemnified party shall have

46

been advised in writing by counsel that either there may be one or more legal defenses available to it which are different from or in addition to those available to such indemnifying party or such Affiliate or controlling person or a conflict of interest may exist if such counsel represents such indemnified party and such indemnifying party or its Affiliate or controlling person; provided, however, that such indemnifying party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be responsible hereunder for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel), which counsel shall be designated by such indemnified party.

(d) The indemnifying party’s liability to any such indemnified party hereunder shall not be extinguished solely because any other indemnified party is not entitled to indemnity hereunder. The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party, and will survive the transfer of any applicable securities. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to indemnification from any person who was not guilty of such fraudulent misrepresentation.

(e) If the indemnification provided for in this Section 1.9 is for any reason, other than pursuant to the terms thereof, held to be unavailable or insufficient to an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying and indemnified parties in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault but also the relative benefits received by the indemnifying and indemnified parties from the offering of Registrable Securities. The relative benefits received by a party shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by such party bears to the total net proceeds from the offering received by all parties. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by GEC or a MCM Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. GEC and the MCM Parties agree that it would not be just and equitable if contribution pursuant to this Section 1.9(e) were determined by pro rata allocation or by any other method of allocation not taking into account the equitable considerations referred to above in this Section 1.9(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 1.9(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

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(f) If there is a conflict between the provisions of this Section ‎1.9 and the form of underwriting agreement reasonably requested by any underwriter, the provisions of this Section ‎1.9 shall be amended or waived in order to comply with the requirements of such underwriter.

1.10 Holdback Agreements.  Each MCM Party agrees not to effect any sale or distribution (including hedging transactions) of shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, including a sale pursuant to Rule 144 under the Securities Act, during such period as reasonably requested by the managing underwriter of any offering by the Company or any offering contemplated herein; provided, however, with respect to any particular registration, such period shall not extend beyond 90 days after the effective date of the registration statement relating thereto. Each MCM Party agrees to enter into such form of agreement between it and the managing underwriter as the managing underwriter shall reasonably request to more fully set forth and to further effect the provisions of this Section 1.10.

1.11 Third Party Registration Rights.  Nothing in this Agreement shall be deemed to prevent GEC from providing registration rights to any other person on such terms as GEC deems desirable in its sole discretion.

2. Representations and Warranties.  The parties represent and warrant to each other that, as of the Effective Date:

2.1 Organization; Authority.  Each party that is an entity is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and fully perform its obligations hereunder. The execution and delivery of this Agreement by such party and performance by such party of its obligations hereunder have been duly authorized by all necessary action on the part of such party. This Agreement has been duly executed by such party, and when delivered by such party in accordance with the terms hereof, will constitute the valid and legally binding obligation of such party, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

2.2 No Conflicts.  The execution, delivery and performance by such party of this Agreement and the performance by such party of its obligations hereunder will not (a) result in a violation of the organizational documents of such party, as applicable, (b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such party is a party, or (c) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such party, except in the case of clauses (b) and (c), for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such party to perform its obligations hereunder.

2.3 Legal Counsel.  Such party has been advised to seek legal counsel, engage a financial advisor, seek tax counsel and receive GAAP and tax advice from accountants in connection with this Agreement. Each party has relied on its own advisors and legal counsel and not on any other

48

party to this Agreement in entering into this Agreement.

3. Miscellaneous

3.1 Additional Assurances.  The parties each agree to execute, acknowledge and deliver such further instruments, and to do such other acts, as may be reasonably necessary in order to carry out the intent and purposes of this Agreement.

3.2 Expenses.  Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such costs and expenses.

3.3 Choice of Law.  This Agreement will be governed by the laws of the State of Delaware that are applicable to contracts made in and performed solely in Delaware.

3.4 Enforcement.

(a) Any dispute arising under, related to or otherwise involving this Agreement will be litigated in the Court of Chancery of the State of Delaware. The parties agree to submit to the jurisdiction of the Court of Chancery of the State of Delaware, waive any objection on the basis of inconvenient forum or improper venue, and waive trial by jury. The parties do not consent to mediate any disputes before the Court of Chancery.

(b) Notwithstanding the foregoing, if there is a determination that the Court of Chancery of the State of Delaware does not have subject matter jurisdiction over any dispute arising under this Agreement, the parties agree that: (i) such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Superior Court of Delaware of and for the County of New Castle; (ii) if the Superior Court of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the Complex Commercial Litigation Division of the Superior Court of the State of Delaware of and for the County of New Castle; and (iii) if the Complex Commercial Litigation Division of the Superior Court of the State of Delaware does not have subject matter jurisdiction over such dispute, then such dispute will be adjudicated only by, and will be subject to the exclusive jurisdiction and venue of, the United States District Court for the State of Delaware.

(c) Each of the parties irrevocably (i) consents to submit itself to the personal jurisdiction of the Delaware courts in connection with any dispute arising under this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for relief from the Delaware courts or any other court or governmental body and (iii) agrees that it will not bring any action arising under this Agreement in any court other than the Delaware courts. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(d) Process may be served in the manner specified in Section 3.5, such service will be deemed effective on the date of such notice, and each party irrevocably waives any defenses or objections it may have to service in such manner.

49

(e) The parties irrevocably stipulate that irreparable damage would occur if any of the provisions of this Agreement were not performed per their specific terms. Accordingly, each party will be entitled to specific performance of the terms hereof in addition to any other remedy to which it is entitled at law or in equity.

3.5 Notices.  All notices and other communications hereunder will be in writing in the English language and will be deemed given when delivered personally or by an internationally recognized courier service, such as DHL, to the parties at the following addresses (or at such other address for a party as may be specified by like notice):

(a) If to GEC:c/o Great Elm Capital Group, Inc.

800 South Street, Suite 230

Waltham, MA 02453

Attention: General Counsel; with a copy

(which shall not constitute notice) to:Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, CA 94301

Attention: Michael J. Mies; and

(b) if to MCM:MAST Capital Management, LLC

31 St. James Avenue, 6th Floor

Boston, MA 02116

Attention: David J. Steinberg

3.6 No Third Party Beneficiaries.  This Agreement is solely for the benefit of the parties. No other person will be entitled to rely on this Agreement or to anticipate the benefits of this Agreement as a third party beneficiary hereof.

3.7 Assignment.  Except as provided in this Section 3.7, no party may assign, delegate or otherwise transfer this Agreement or any rights or obligations under this Agreement in whole or in part (whether by operation of law or otherwise), without the prior written content of the other party. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. Any assignment in violation of this Section 3.7 will be null and void.

3.8 No Waiver.  No failure or delay in the exercise or assertion of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, or create an estoppel with respect to any breach of any representation, warranty or covenant herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

3.9 Severability.  Any term or provision hereof that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the invalid, void or unenforceable term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares any term or provision hereof invalid, void or

50

unenforceable, the court or other authority making such determination will have the power to and will, subject to the discretion of such body, reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

3.10 Amendment.  To be valid against any party, a waiver, extension, amendment, modification or supplement of this Agreement must be in an instrument in writing signed by such party.

3.11 Term and Termination. The MCM Party’s rights to request the registration of the Registrable Securities under this Agreement will terminate automatically once all Registrable Securities cease to be Registrable Securities.

3.12 Entire Agreement.  This Agreement contains the entire agreement of the parties and supersedes all prior and contemporaneous agreements, negotiations, arrangements, representations and understandings, written, oral or otherwise, between the parties with respect to the subject matter hereof.

3.13 Counterparts.  This Agreement may be executed in one or more counterparts (whether delivered by electronic copy or otherwise), each of which will be considered one and the same agreement and will become effective when two or more counterparts have been signed by each of the parties and delivered to the other party. Each party need not sign the same counterpart.

3.14 Construction and Interpretation.  When a reference is made in this Agreement to a section or article, such reference will be to a section or article of this Agreement, unless otherwise clearly indicated to the contrary. Whenever the words “include,” “includes” or “including” are used in this Agreement they will be deemed to be followed by the words “without limitation”. The words “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article and section references are references to the articles and sections of this Agreement, unless otherwise specified. The plural of any defined term will have a meaning correlative to such defined term and words denoting any gender will include all genders and the neuter. Where a word or phrase is defined herein, each of its other grammatical forms will have a corresponding meaning. A reference to any legislation or to any provision of any legislation will include any modification, amendment, re-enactment thereof, any legislative provision substituted therefore and all rules, regulations and statutory instruments issued or related to such legislation. If any ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. No prior draft of this Agreement will be used in the interpretation or construction of this Agreement. Headings are used for convenience only and will not in any way affect the construction or interpretation of this Agreement.

[SIGNATURE PAGES FOLLOW]

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This Agreement has been duly executed and delivered as of the date first written above.

Great Elm Capital Group, Inc.

By:______________________

Name:

Title:

MAST CAPITAL MANAGEMENT LLC

By:______________________

Name:David J. Steinberg

Title:Managing Member

Annex 6

GREAT ELM CAPITAL GROUP ENTERS INTO AGREEMENT TO ESTABLISH OPERATING AND GOVERNANCE INDEPENDENCE

•Names Peter Reed CEO of Great Elm Capital Group

•Significantly Reduces Debt Obligations

•Terminates Ongoing Requirements to Provide Services to MAST Capital

WALTHAM, MA and BOSTON, MA, September 18, 2017, Great Elm Capital Group, Inc. (NASDAQ: GEC, “Great Elm”) and MAST Capital Management, LLC (“MAST”) announced today that they entered into a number of agreements. Great Elm, MAST, Northern Right Capital Management, L.P. (“Northern Right”) and other parties entered into a series of agreements that facilitate Great Elm’s transition to an independent operating entity and align value creation with stockholders.  Great Elm Capital Management, Inc. was formed in 2016 through a series of transaction that initially shared services with MAST under a cost sharing agreement with MAST.  As Great Elm’s strategy has developed and its strategic plan became more defined, the parties determined that such arrangements are no longer mutually beneficial. A copy of the agreements will be filed with the Securities and Exchange Commission and should be read carefully in their entirety.

The agreements effect a full separation of Great Elm’s business from MAST.  Highlights of these agreements include:

▪ Peter A. Reed will assume the position of CEO of Great Elm in addition to his role as CIO of Great Elm Capital Management (“GECM”).  Mr. Reed was elected by MAST to serve on Great Elm’s board in 2015, led the formation of GECM and associated transactions and has a 13 year track record of leading investments in equity and debt instruments of leveraged companies;

▪ Great Elm will no longer provide services to MAST, including shared investment management, legal and compliance personnel and office space;

▪ All employees, including Peter Reed and Adam Kleinman, are no longer employees of MAST.  Great Elm’s executives, business development and investment personnel will focus 100% of their professional efforts on Great Elm’s businesses;

▪ The principal of the note issued by a Great Elm subsidiary to MAST was reduced by $7.3 million;

▪ 220,000 shares of Great Elm common stock were retired;

▪ The parties terminated their cost sharing agreement; and

▪ Jeffrey Serota was elected chairman of Great Elm’s Board of Directors.

“Establishing independence from MAST will allow our team to focus on our mission of growing our investment management business as well as to consider acquisitions of other assets.  We are extremely excited to continue our efforts of utilizing our advantaged balance sheet to drive shareholder value,” said Peter Reed

As part of the transaction, MAST has the right to purchase from Great Elm an additional 420,000 shares of Great Elm common stock at market prices.  David Steinberg, founding partner of MAST, said, “As the largest stockholder of Great Elm, MAST looks forward to the Great Elm board guiding the company with a focus on value creation.”

Northern Right, a recent 4.9% stockholder of Great Elm, has recommended additional shareholder alignment. Great Elm and Northern Right agreed to:

▪ an additional investment by Northern Right in up to 1,266,000 shares of Great Elm’s common stock from Great Elm; and

▪ the appointment of Matthew A. Drapkin to Great Elm’s nominating and corporate governance committee and its compensation committee.

Now fully separate from MAST, Great Elm executed a cost reduction program for its investment management team, including downsizing and reducing fixed cash compensation by $1.5 million and tying incremental compensation to EBITDA targets.

As part of the agreements, MAST and their respective affiliates entered into a standstill and voting agreement.

About Great Elm Capital Group

Great Elm Capital Group, Inc. (NASDAQ: GEC) is a holding company that is actively seeking acquisitions and, through its subsidiaries, conducts an investment management business focused on leveraged finance.  Great Elm Capital Group’s website at greatelmcap.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.

With the exception of the historical information contained in this news release, the matters described herein contain “forward-looking” statements that involve risk and uncertainties that may individually or collectively impact the matters herein described.  These are detailed in the “Risk Factors” section of the registration statement and in Great Elm Capital Group’s SEC reports filed from time to time.  Further information relating to Great Elm Capital Group’s financial position, results of operations, and investor information is contained in the company’s annual and quarterly reports filed with the SEC and available for download at its website www.greatelmcap.com or at the SEC website www.sec.gov.

Media & Investor Contacts:

Great Elm Capital Group

Meaghan K. Mahoney

+1 617 375 3006

mmahoney@greatelmcap.com

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Name	Jurisdiction of organization
Great Elm Capital GP Corp	Delaware
Great Elm Capital Management, Inc.	Delaware
Openwave Systems Service India Private LTD.	India
Openwave Systems (South Africa) Pty LTD	South Africa
Openwave Technologies Inc.	Delaware
Signalsoft Corporation	California
Solomio Corporation	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated September 13, 2016, with respect to the consolidated financial statements included in the Annual Report of Great Elm Capital Group, Inc. on Form 10-K for the year ended June 30, 2017. We consent to the incorporation by reference of said report in the Registration Statements of Great Elm Capital Group, Inc. on Form S-3 (File No. 333-191605) and on Forms S-8 (File Nos. 333-214401, 333-192800, 333-163480, 333-156444, and 333-140691).

/s/ GRANT THORNTON LLP

Phoenix, Arizona

September 18, 2017

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-191605 on Form S-3, and Registration Nos. 333-214401, 333-192800, 333-163480, 333-156444, and 333-140691 on Form S-8 of our reports dated September 18, 2017, relating to (1) the 2017 consolidated financial statements and the retrospective adjustments to the June 30, 2016 consolidated balance sheet of Great Elm Capital Group, Inc. (the “Company”) and (2) the effectiveness of the Company's internal control over financial reporting (which report expresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of material weaknesses), appearing in this Annual Report on Form 10-K of the Company for the year ended June 30, 2017.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

September 18, 2017

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report on Form 10-K of Great Elm Capital Group for the year ended June 30, 2017, our report dated March 29, 2017 (June 30, 2017 as it relates to the financial highlights in Note 11), relating to the financial statements of Great Elm Capital Corp included in Form N-2 (File No. 333-217222) filed with the SEC on June 30, 2017, and to the reference to us under the headings "Selected Financial Data” and “Independent Registered Public Accounting Firm" .

/s/ Deloitte & Touche LLP

McLean, VA

September 18, 2017

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Peter A. Reed, certify that:

1. I have reviewed this annual report on Form 10-K of Great Elm Capital Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Except for the material weakness in internal control over financial reporting disclosed in this report, designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Except for the material weakness in internal control over financial reporting disclosed in this report, designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	September 18, 2017
By:	/s/ Peter A. Reed
Name:	Peter A. Reed
Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, James D. Wheat, certify that:

1. I have reviewed this annual report on Form 10-K of Great Elm Capital Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Except for the material weakness in internal control over financial reporting disclosed in this report, designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Except for the material weakness in internal control over financial reporting disclosed in this report, designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	September 18, 2017
By:	/s/ James D. Wheat
Name:	James D. Wheat
Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter A. Reed, as Chief Executive Officer of Great Elm Capital Group, Inc. (the “Company”) certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. the accompanying Form 10-K report for the period ending June 30, 2017 as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	September 18, 2017
By:	/s/ Peter A. Reed
Name:	Peter A. Reed
Title:	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James D. Wheat, as Chief Financial Officer of Great Elm Capital Group, Inc. (the “Company”) certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. the accompanying Form 10-K report for the period ending June 30, 2017 as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	September 18, 2017
By:	/s/ James D. Wheat
Name:	James D. Wheat
Title:	Chief Financial Officer

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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2017	Sep. 01, 2017	Dec. 31, 2016
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Entity Registrant Name	Great Elm Capital Group, Inc.
Entity Central Index Key	0001082506
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		24,139,631
Entity Public Float			$ 70.0

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 45,894	$ 80,711
Investment management fees receivable - related party	549
Related party dividend receivable	163
Related party receivable	348
Investment in GECC (cost $30,000)	20,886
Prepaid and other current assets	174	110
Total current assets	68,014	80,821
Investment management fees receivable - related party, net of current portion	2,757
Property and equipment, net	41
Identifiable intangible assets, net	4,102
Right to use asset, net	1,688
Other assets, net	92	76
Total assets	76,694	80,897
Current liabilities:
Accounts payable	52	521
Accrued liabilities	1,019	108
Accrued legal expense	164	1,787
Accrued compensation	214	520
Lease liabilities	421
Liabilities related to discontinued operations	3,608	7,338
Related party note payable	250	33,786
Total current liabilities	5,728	44,060
Related party note payable, net of current portion	2,924
Lease liabilities, net of current portion	1,640
Warrant liability	186
Other long-term liabilities related to discontinued operations		16
Total liabilities	10,478	44,076
Commitments and Contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.001 par value; 5,000 authorized and zero outstanding
Common stock, $0.001 par value; 350,000,000 shares authorized and 24,258,847 shares issued and 23,200,153 outstanding at June 30, 2017; and 9,466,670 shares issued and outstanding at June 30, 2016	23	9
Additional paid-in-capital	3,293,683	3,249,085
Accumulated deficit	(3,227,480)	(3,212,273)
Total Great Elm Capital Group, Inc. stockholders' equity	66,226	36,821
Non-controlling interest	(10)
Total stockholders' equity	66,216	36,821
Total liabilities and stockholders' equity	$ 76,694	$ 80,897

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Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Statement Of Financial Position [Abstract]
Investments, cost basis	$ 30,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	24,258,847	9,466,670
Common stock, shares outstanding	23,200,153	9,466,670

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Revenue:
Investment management and administration fees	$ 4,927
Operating costs and expenses:
Investment management expenses	4,779
Amortization and depreciation	340	$ 63	$ 107
General and administrative	4,413	9,772	7,933
Total operating costs and expenses	9,532	9,835	8,040
Operating loss	(4,605)	(9,835)	(8,040)
Dividends and interest income	1,306	6	72
Unrealized loss on investment in GECC	(9,114)
Interest expense	(6,321)	(4,947)	(4,332)
Other income, net	84	233	268
Loss from continuing operations, before income taxes	(18,650)	(14,543)	(12,032)
Provision for (benefit from) income taxes	(1,210)	(5,103)	164
Loss from continuing operations	(17,440)	(9,440)	(12,196)
Discontinued operations:
Gain on sale of discontinued operations, net of tax		24,692
Income (loss) from discontinued operations, net of tax	2,203	(5,830)	(29,563)
Net income (loss) from discontinued operations, net of tax	2,203	18,862	(29,563)
Net income (loss)	(15,237)	9,422	(41,759)
Less: net loss attributable to non-controlling interest	(30)
Net income (loss) attributable to Great Elm Capital Group	$ (15,207)	$ 9,422	$ (41,759)
Basic and diluted earnings (loss) per share from:
Continuing operations	$ (1.06)	$ (1.00)	$ (1.31)
Discontinued operations	0.13	2.00	(3.17)
Net income (loss)	$ (0.93)	$ 1.00	$ (4.48)
Weighted average shares outstanding
Basic and diluted	16,433	9,412	9,332

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Other comprehensive income (loss)
Net income (loss)	$ (15,237)	$ 9,422	$ (41,759)
Change in unrealized gain loss on marketable securities			(21)
Gain (loss) on foreign currency translation adjustment		(234)	231
Total comprehensive income (loss)	(15,237)	9,188	(41,549)
Comprehensive income (loss) attributable to non-controlling interest	(30)
Total comprehensive income (loss) attributable to Great Elm Capital Group	$ (15,207)	$ 9,188	$ (41,549)

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Consolidated Statements of Stockholders Equity - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated other Comprehensive Income (loss)	Accumulated Deficit	Total Great Elm Capital Group Inc. Stockholders' Equity	Non-controlling Interest
Beginning balance at Jun. 30, 2014	$ 63,071	$ 9	$ (884)	$ 3,243,858	$ 24	$ (3,179,936)	$ 63,071
Beginning balance (in shares) at Jun. 30, 2014		9,343,000	(38,000)
Net income (loss)	(41,759)					(41,759)	(41,759)
Issuance of common stock related to stock option exercises and vesting of restricted stock units	92			92			92
Issuance of common stock related to stock option exercises and vesting of restricted stock units (in shares)		5,000
Retirement of treasury stock			$ 1,001	(1,001)
Retirement of treasury stock (in shares)		(45,000)	45,000
Purchase of treasury stock	(210)		$ (210)				(210)
Purchase of treasury stock (in shares)			(18,000)
Stock-based compensation	2,100			2,100			2,100
Stock-based compensation (in shares)		70,000
Other comprehensive income (loss)	210				210		210
Ending balance at Jun. 30, 2015	23,504	$ 9	$ (93)	3,245,049	234	(3,221,695)	23,504
Ending balance (in shares) at Jun. 30, 2015		9,373,000	(11,000)
Net income (loss)	9,422					9,422	9,422
Issuance of common stock related to stock option exercises and vesting of restricted stock units	$ (103)			(103)			(103)
Issuance of common stock related to stock option exercises and vesting of restricted stock units (in shares)	0	122,000
Retirement of treasury stock			$ 235	(235)
Retirement of treasury stock (in shares)		(28,000)	28,000
Purchase of treasury stock	$ (142)		$ (142)				(142)
Purchase of treasury stock (in shares)			(17,000)
Stock-based compensation	4,374			4,374			4,374
Other comprehensive income (loss)	(234)				$ (234)		(234)
Ending balance at Jun. 30, 2016	$ 36,821	$ 9		3,249,085		(3,212,273)	36,821
Ending balance (in shares) at Jun. 30, 2016	9,466,670,000	9,467,000
Net income (loss)	$ (15,237)					(15,207)	(15,207)	$ (30)
Acquisition of GP Corp.	20							20
Issuance of common stock in rights offering, net of issuance costs	42,647	$ 12		42,635			42,647
Issuance of common stock in rights offering, net of issuance costs (in shares)		13,701,000
Issuance of common stock related to stock option exercises and vesting of restricted stock units	$ 2	$ 2					2
Issuance of common stock related to stock option exercises and vesting of restricted stock units (in shares)	0	32,000
Stock-based compensation	$ 1,963			1,963			1,963
Ending balance at Jun. 30, 2017	$ 66,216	$ 23		$ 3,293,683		$ (3,227,480)	$ 66,226	$ (10)
Ending balance (in shares) at Jun. 30, 2017	23,200,153,000	23,200,000

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income (loss)	$ (15,237)	$ 9,422	$ (41,759)
(Income) loss from discontinued operations	(2,203)	5,830	29,563
Gain on sale of discontinued operations		(24,692)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	340	63	107
Stock-based compensation	1,963	2,029	765
Re-measurement of warrant liability	30
Unrealized loss on investment in GECC	9,114
Gain on foreign currency		(277)
Loss on fixed asset disposal		82
Amortization of premiums/discounts on investments, net		3	79
In kind interest payments on note payable		4,355	3,837
Amortization of debt discount and issuance costs	2,802	592	495
Changes in operating assets and liabilities:
Investment management fees receivable	(3,306)
Related party receivable	(348)
Related party dividends receivable	(163)
Prepaid assets, deposits, and other assets	(81)	464	37
Accounts payable	(468)	(157)	(502)
Accrued legal	(1,623)	1,710	(174)
Accrued liabilities	231	292	(89)
Restricted cash		3	586
Net cash used in operating activities - continuing operations	(8,949)	(281)	(7,055)
Net cash used in operating activities - discontinued operations	(1,542)	(34,296)	(52,918)
Net cash used in operating activities	(10,491)	(34,577)	(59,973)
Cash flows from investing activities:
Acquisition of subsidiary	(100)
Purchases of property and equipment	(35)	(35)	(30)
Proceeds from sale of discontinued operations, net		30,000
Deconsolidation of GECC into equity method investment	(30,000)
Proceeds from sales and maturities of investments		11,710	40,000
Net cash provided by (used in) investing activities	(30,135)	41,675	39,970
Cash flows from financing activities:
Proceeds from issuance of common stock in rights offering, gross	45,000
Principal payments on related party note payable	(36,838)		91
Payment of equity issuance costs	(2,353)
Purchase of treasury stock		(142)	(210)
Net cash provided by (used in) financing activities	5,809	(142)	(119)
Net increase (decrease) in cash and cash equivalents	(34,817)	6,956	(20,122)
Cash and cash equivalents at beginning of year	80,711	73,755	93,877
Cash and cash equivalents at end of year	45,894	80,711	73,755
Cash paid for interest	3,535
Non-cash financing activities
Issuance of related party note payable in acquisition	3,424
Issuance of equity-linked instruments classified as warrant liability	$ 216
Retirement of treasury stock		$ 235	1,001
Unpaid debt and equity issuance costs			$ 31

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Organization

12 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

1. Organization

Great Elm Capital Group, Inc. (referred to as the Company, formerly Unwired Planet, Inc.) is a holding company incorporated in Delaware.  The Company currently has two operating segments, investment management and corporate.  The Company is pursuing other acquisition opportunities, within investment management and other industries.

On September 27, 2016, the Company’s wholly-owned SEC-registered investment advisor subsidiary Great Elm Capital Management, Inc., a Delaware corporation (GECM), entered into an investment management agreement (the IMA) with Great Elm Capital Corp., a publicly-traded business development company incorporated in Maryland (GECC).  

On November 3, 2016, Full Circle Capital Corporation merged with and into GECC (the Merger), and GECM hired the employees of MAST Capital Management, LLC, a Delaware limited liability company (MAST Capital), to manage the assets of GECC.  Certain funds managed by MAST Capital own approximately 8.7% of the Company’s common stock.  Through the Company’s 80.1% owned subsidiary, GECC GP Corp. (GP Corp), the Company acquired assets and assumed related liabilities (collectively, the Acquisition) associated with the on-going operations of GECM.  Approximately 5% of the 19.9% non-controlling interest of GP Corp is owned by MAST Capital, and its affiliates and officers.

As of June 30, 2017, the Company owns approximately 17% of the outstanding shares of GECC with a cost basis of $30 million.  The Company agreed with GECC that it would not transfer or dispose of its GECC shares until November 3, 2017.

Prior to the divestiture on June 30, 2016, as described in Note 3, the Company’s wholly-owned subsidiaries, Unwired Planet IP Holdings, Inc. and Unwired Planet IP Manager, LLC, were engaged in patent licensing with a portfolio of mobile technology patents and patent applications.

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Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company consolidates the assets, liabilities, and operating results of its wholly-owned subsidiaries; majority-owned subsidiaries; and subsidiaries that it has control over.  The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, GECM; and its majority-owned subsidiary, GP Corp.  All intercompany accounts and transactions have been eliminated in consolidation.

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and consolidated statements of comprehensive income (loss).

Investment in GECC

On November 1, 2016, the Company deconsolidated its investment in GECC upon the Company no longer having a controlling financial interest in GECC.  The Company determined that, by virtue of being GECC’s investment manager, the Company has significant influence over GECC.  Upon deconsolidation, the Company elected to account for its approximately 17% investment in GECC at fair value.In accordance with this election, unrealized gains and losses at each measurement date are recognized as a component of net loss in the accompanying consolidated statements of operations and dividends are recognized if, as and when declared by GECC’s board of directors.

Discontinued Operations

On June 30, 2016, the Company completed the Purchase and Sale Agreement (as amended, the PSA) with Optis UP Holdings, LLC (Optis), pursuant to which Optis acquired all of the outstanding membership interests of the Company’s wholly-owned subsidiary, Unwired Planet, LLC (UPLLC), which owns all of the outstanding shares of Unwired Planet International Limited, an Irish company.  Together, the disposed subsidiaries owned all of the Company’s patent assets.

As a result of the disposition of the Company’s intellectual property licensing business and underlying patent and patent applications, the Company has presented financial results for these businesses in discontinued operations.  The divesture of the intellectual property licensing component consisted of all patent licensing expenses as previously presented in the accompanying consolidated statements of operations; certain general and administrative costs incurred by the disposed subsidiaries; and certain liabilities of the divested subsidiaries.

Use of Estimates

The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segments

In November 2016, the Company changed its organizational structure in connection with the Acquisition. As a result, information that the Company’s chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed.  As of June 30, 2017, the Company has two reporting segments:  Investment Management; and General Corporate.  The Company’s chief operating decision maker did not allocate resources or assess performance on a segmented basis prior to the formation of the investment management business within the fiscal year ended June 30, 2017.

Revenue Recognition

The Company recognizes revenue on services at the time when services are performed, and the following conditions are met: persuasive evidence of an arrangement exists, the service is complete, the price is fixed and determinable, and collection of the proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.

The Company recognizes revenue from its investment management business at amounts that reflect the consideration to which it expects to be entitled in exchange for providing services to its customer.  Investment management revenue primarily consists of fees based on a percentage of assets under management; fees based on the performance of managed assets; and administrative fees; as follows:

Management Fees

The base management fee from GECC is calculated at an annual rate of 1.50% of GECC’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of GECC’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

Incentive Fees

The incentive fee from GECC consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, GECC will pay the Company 20% of the amount by which GECC’s pre-incentive fee net investment income (the Pre-Incentive Fee Net Investment Income) for the quarter exceeds a hurdle rate of 1.75% of GECC’s net assets at the end of the immediately preceding calendar quarter. This calculation will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the then current quarter.

Under the capital gains component of the incentive fee, GECC is obligated to pay the Company, at the end of each calendar year, 20% of the aggregate cumulative realized capital gains from November 4, 2016 through the end of the of such calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such calendar year, less the aggregate amount of any previously paid capital gains incentive fees.

Incentive fees are recorded based upon an assumed liquidation of GECC’s net assets on the reporting date and the distribution of the net proceeds in accordance with GECC’s income allocation provisions.   Incentive fees recorded may be subject to reversal to the extent the amount recorded exceeds the amount due to the Company based on negative investment performance after the reporting date.   Accrued but unpaid incentive fees and deferred incentive fees as of the reporting date are recorded in related party investment management fees receivable in the accompanying consolidated balance sheet. Incentive fees realized and collected are not subject to reversal.  As of June 30, 2017, approximately $1.7 million of incentive fees recognized in revenue were subject to reversal.  

Investment Management Expenses

The Company classifies all direct expenses of its investment management segment including: payroll, stock-compensation, and related taxes and benefits; facilities costs; and consulting; in investment management expenses in the accompanying consolidated statements of operations.  The Company has a three-year contractual arrangement with a third party to provide services in exchange for 26% of the fees earned from the management of GECC, excluding incentive fees.

Identifiable Intangible Assets

The Company amortizes its identifiable intangible assets over their estimated useful lives using a discounted cash flow attribution method.  The Company currently amortizes its identifiable intangible assets over a period of fifteen years.  The Company’s identifiable intangible assets relate to the investment management assets acquired during the year ended June 30, 2017.

Cash and Cash Equivalents

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. 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 by the FDIC or SIPC.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, generally one to five years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the lease term.

Long-lived Assets

Long-lived assets are recorded at cost and depreciated over their estimated useful lives. For purposes of determining whether there are any impairment losses, management evaluates the carrying value of the Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present, considering whether the undiscounted lowest identifiable cash flows are sufficient to recover the carrying amount of the applicable asset or asset group.  If an impairment is indicated, the Company computes the impairment based on the fair value of the asset, as compared to the carrying value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate.

Stock-based Compensation

Stock-based compensation costs for eligible employees and directors are measured at fair value on the date of grant and are expensed over the requisite service period using a straight-line attribution method for the entire award that are subject to only service vesting conditions.  Awards with both performance and service requirements are expensed using a graded attribution method over the requisite service periods.

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 expected to be recovered.

The Company has provided a full valuation allowance against its deferred tax assets because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other 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 in 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. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns that do not meet the more likely than not standards.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), unrealized gains (losses) on available for sale securities and foreign currency translation adjustments for subsidiaries whose functional currency is not United States dollars. Tax effects of comprehensive loss are not material to periods presented. The Company reports the components of comprehensive income (loss) on its Consolidated Statements of Comprehensive Income (Loss).

Concentration of Risk

The Company has placed substantially all of its cash with a single well established financial institution, and its cash equivalents consist primarily of an exchange traded money market fund with the same institution. The Company is exposed to credit risk related to the potential inability to access liquidity in the financial institution where its cash and cash equivalents are concentrated.

The Company’s net revenue and receivables from continuing operations for the fiscal year ended June 30, 2017, were attributable to the management of one investment vehicle, GECC.

The Company has $30 million invested in shares of common stock of GECC.

Earnings (Loss) Per Share

The following table presents the calculation of basic and diluted earnings (loss) per share (in thousands except per share amounts):

	Fiscal Year Ended June 30,
	2017			2016			2015
Loss from continuing operations	$	(17,440	)	$	(9,440	)	$	(12,196	)
Income (loss) from discontinued operations, net of tax		2,203			18,862			(29,563	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Less: net loss attributable to non-controlling    interest		(30	)		—			—
Net income (loss) attributable to Great Elm    Capital Group	$	(15,207	)	$	9,422		$	(41,759	)
Weighted average shares basic and diluted:
Weighted average shares of common stock    outstanding		16,433			9,412			9,333
Weighted average shares of restricted stock subject    to repurchase		—			—			(1	)
Weighted average shares used in computing    earnings (loss) per share		16,433			9,412			9,332
Basic and diluted earnings (loss) per share from:
Income (loss) from continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)
Income (loss) from discontinued operations		0.13			2.00			(3.17	)
Net income (loss)	$	(0.93	)	$	1.00		$	(4.48	)

As of June 30, 2017, 2016, and 2015, the Company had 1,923,279; 32,638; and 306,000 potential shares of Company common stock, respectively, that are not included in the diluted net income (loss) per share calculation because to do so would be antidilutive.

As of June 30, 2017, the Company had an aggregate of 1,058,694 outstanding shares that are subject to repurchase by the Company at a nominal price if service and performance milestones are not met. The Company does not account for such shares as being outstanding for accounting purposes since they are unvested and subject to forfeiture.

Restrictions on Subsidiary Dividends

In the GP Corp Note Agreement, GP Corp agreed not to declare any dividends until the GP Corp note is satisfied.  As of June 30, 2017, GP Corp had an accumulated deficit not legally available for dividend.

Reclassifications

Due to the separate presentation of amortization and depreciation in the accompanying consolidated statements of operations, $0.1 million and $0.1 million of amortization and depreciation expense for the years ended June 30, 2016 and 2015, respectively, was reclassified from general and administrative expenses. These reclassifications did not have an impact on the Company’s previously presented net results of operations, financial position, or cash flows.

Recently Issued Accounting Standards

Financial Instruments. In January 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revised entities’ accounting related to: (1) the classification and measurement of investments in equity securities; and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2018 and requires a modified retrospective approach to adoption. Early adoption is only permitted for the provision related to instrument-specific credit risk. The Company believes that adoption of ASU 2016-01 will have no material impact on the consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires the use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2020 and requires a modified-retrospective approach to adoption. Early adoption is permitted for the fiscal year beginning July 1, 2019. The Company believes that adopting ASU 2016-13 will have no material impact on the consolidated financial statements and related disclosures.

Customer Revenue. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606) Deferral of the Effective Date.  The Company is currently evaluating the adoption of ASU 2015-14 and related Topic 606 updates will have on its financial statements. Based on the on-going evaluation, the Company has determined that the recognition of its investment management incentive fees may be deferred upon the implementation of ASU 2015-14 and related guidance.  Other than the potential incentive fee impacts, the Company has not determined whether the adoption of ASU 2015-14 and related guidance, will have a material effect on the Company’s results of operations, financial position, cash flows or footnote disclosures.  The Company is continuing to evaluate the impact of this new guidance.

Stock-Based Compensation.  In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) to provide clarity and simplification to accounting for a change in the terms or conditions of a stock-based payment award.  The ASU defines several changes in the conditions that would not result in the modification of an award including: no changes in the fair value of the original and modified award prior to modification, or changes in the inputs for the valuation technique used; no changes in vesting conditions; and no change amongst equity or liability classification of the modified award.  The amendments contained in ASU 2017-09 are effective for annual and interim periods beginning after December 15, 2017 with early adoption permitted.  The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial statements.

Changes in Accounting Principles

Leases. In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company adopted ASU 2016-02 effective July 1, 2016.  On the adoption date, the Company elected the practical expedient to not reassess whether any expired contracts contained leases.  Additionally, the Company has elected to not apply the recognition standards of ASU 2016-02 to operating leases with effective terms of twelve months or less (Short-Term Leases).  For Short-Term Leases, the Company recognizes lease payments on a straight-line basis over the lease term in the period in which the obligation for those payments is incurred.

On the adoption date, all of the Company’s contracts containing leases were expired or were Short Term Leases. Accordingly, the adoption of ASU 2016-02 required no changes in the accompanying consolidated financial statements for any of the periods presented.

Presentation of Debt Issuance Costs. On July 1, 2016, the Company implemented ASU 2015-03 Interest – Imputation of Interest (Topic 830) – Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the nature of debt discounts and its implementation results in reclassification of the prior periods. In the accompanying consolidated balance sheet as of June 30, 2016, the reclassification of debt issuance costs resulted in a reduction of total assets of $0.9 million and a corresponding reduction in total liabilities of $0.9 million.  All of the Company’s debt issuance costs recognized prior to the adoption of ASU 2015-03 on July 1, 2016, have been fully amortized and expensed as of June 30, 2017.  

Stock-Based Compensation. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2017 with early adoption permitted. The Company prospectively adopted ASU 2016-09 on July 1, 2016.  Upon adoption, the Company made an election to account for forfeitures of non-vested equity awards in the periods in which they occur.  The other provisions of ASU 2016-09 did not have a material impact on the accompanying consolidated financial statements for any of the periods presented.

Income Taxes.  In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires that the Company recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.  The Company adopted ASU 2016-16 prospectively on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Goodwill.  In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating the quantitative test (Step 2) for impairment for any reporting unit with a zero or negative carrying amount based on a qualitative assessment (Step 1).  The Company adopted ASU 2017-04 on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Business Combinations.  In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business. The Company adopted ASU 2017-01 on July 1, 2016 without material impact on the Company’s accompanying consolidated financial statements.

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Discontinued Operations

12 Months Ended

Jun. 30, 2017

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On June 30, 2016, the Company sold two of its previously wholly-subsidiaries (the Divestiture) engaged in the patent licensing business for an aggregate purchase price of up to $40 million. The purchaser paid the Company $30 million, plus certain adjustments, upon the closing of the Divestiture, and has made claims that it has incurred indemnifiable losses in excess of the remaining $10 million due under the purchase and sale agreement.  As a result, the Company has not recognized any portion of the remaining $10 million purchase price.

The following table provides a reconciliation of the Company’s previous operations as reclassified for all of the periods presented:

	2017			2016			2015
Discontinued operations:
Net revenue	$	8,750		$	27,826		$	4,505
Patent licensing expenses (1)		(5,630	)		(30,780	)		(31,069	)
General and administrative expenses		—			(2,876	)		(2,989	)
Other non-significant expenses		—			—			(10	)
Gain (loss) from discontinued operations		3,120			(5,830	)		(29,563	)
Gain on sale of discontinued operations		—			29,795			—
Total pretax gain (loss) on discontinued    operations		3,120			23,965			(29,563	)
Income tax benefit (expense)		(917	)		(5,103	)		—
Net gain (loss) from discontinued operations	$	2,203		$	18,862		$	(29,563	)

(1) Amounts for the fiscal year ended June 30, 2017 primarily consist of non-recurring fee split obligations associated with the Microsoft settlement as further discussed below.

During the year ended June 30, 2017, the Company reached a final settlement with Microsoft Corporation for a one-time payment by Microsoft Corporation, related to an infringement judgment in our favor previously under appeal, of $8.8 million.  The payment, received in October 2016, included reimbursement of litigation costs incurred by the Company of approximately $1.9 million.  The settlement was paid to the Company as part of the Divesture and subject to fee split provisions.  During the year ended June 30, 2017, the Company paid $1.7 million with respect to its fee split obligations, all of which are classified as patent licensing expenses in the above table, with the purchaser of the divested subsidiaries.  As of June 30, 2017, the Company has recorded estimated remaining fee share obligations associated with the Divesture totaling $3.6 million.

The Company did not allocate interest expense to discontinued operations and no general corporate overhead expenses have been reclassified to discontinued operations.

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Investments, at Fair Value

12 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Investments, at Fair Value

4. Investments, at Fair Value

In November 2016, the Company ceased to have a controlling financial interest in its previously wholly-owned subsidiary, GECC.  On the cessation date, the Company deconsolidated its investment in GECC and made an election to recognize its remaining ownership position at fair value on a recurring basis.  On the date of deconsolidation, and based on the NASDAQ-listed market price of GECC (a Level 1 input in accordance with the US GAAP fair value hierarchy), the Company recorded an unrealized loss of $8.5 million on the value of its investment in GECC.  Subsequent to the deconsolidation, and through the year ended June 30, 2017, the Company recognized an additional unrealized loss on its investment in GECC totaling $0.6 million.  The total unrealized loss of $9.1 million for the year ended June 30, 2017 is recognized as a component of net loss, classified in other income in the accompanying consolidated statements of operations.  Additionally, dividends and interest from the Company’s investment in GECC, totaling $1.3 million for the year ended June 30, 2017, are reported separately in the accompanying consolidated statements of operations.

As of June 30, 2017, the Company owned approximately 17% of the outstanding shares of GECC.  The Company did not have any investments for which it made a fair value election as of June 30, 2016 and 2015.

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Acquisition

12 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Acquisition

5. Acquisition

In November 2016, the Company completed a series of transactions culminating in the creation of its investment management segment.  The transactions, some of which involved MAST Capital, a related party, and employees of MAST Capital, included: the formation of GECM; the acquisition of an 80.1% in GP Corp.; and GP Corp.’s acquisition of certain assets and liabilities of MAST Capital.

On November 3, 2016, the Company obtained an 80.1% controlling financial interest in GP Corp by purchasing shares of GP Corp common stock for a $0.08 million capital contribution to GP Corp.  GP Corp was initially formed and capitalized by MAST Capital and certain of its employees.

On November 3, 2016, subsequent to the Company’s acquisition of its interest in GP Corp, GP Corp. acquired certain assets and liabilities from MAST Capital (the Acquisition).  In consideration for the acquired assets and liabilities, GP Corp issued a senior secured note payable with a maximum amount due of approximately $10.8 million, and an estimated fair value of $3.4 million, after giving effect to estimated allowable cost off-sets to the maximum contractual balance due.  The GP Corp Note is due on November 3, 2026, bears interest at 3% over the 90-day LIBOR rate, requires mandatory repayments of $0.3 million per year, and may be repaid by GP Corp at its option at par plus accrued and unpaid interest and is secured by a first perfected security interest in the net profits generated by GECM related to its management of GECC.

The consideration for the acquisition also included the issuance of a warrant (the Warrant) to purchase 54,733 shares of Company common stock with an estimated grant date fair value of $0.2 million to MAST Capital.  The Warrant has a $0.01 exercise price per share, and the number of shares issuable thereunder is subject to reduction to the extent GECM’s cumulative revenue collected under the GECC Investment Management Agreement (IMA) is less than $40 million through November 3, 2021.  Since the shares issuable under the warrant agreement are variable based on the post-acquisition revenue generated by the IMA, the Company concluded the warrants are not indexed to its equity.  As a result of this determination, the Company classified the warrants as a liability in the accompanying consolidated balance sheets, and the changes in the fair value of the warrants through the date of settlement is recognized in other income, net in the accompanying consolidated statements of operations.  For the year ended June 30, 2017, the Company recognized a gain of $0.03 million on the change in the fair value of the liability included in other income, net in the accompanying consolidated statements of operations.

On the date of the Acquisition, the Company allocated the consideration given to the individual assets acquired and the liabilities assumed based on a preliminary estimate of their fair values. The assessment of fair value previously reported, as of and for the interim periods ended December 31, 2016 and March 31, 2017, were preliminary as the Company had not finalized its fair value estimates and primarily reflected the maximum payment that may be due to MAST Capital.

During the quarter ended June 30, 2017, the Company obtained and considered additional information related to the assets acquired and liabilities assumed; including items impacting the fair value of the consideration due in the form of a note payable.  Upon consideration of this additional information and further analysis of the assets acquired, the Company determined that the $3.9 million fair value related to the IMA intangible asset represented substantially all the fair value of the assets acquired in the Acquisition.  This valuation reflects that the Company acquired the right to manage a single portfolio of assets in exchange for the consideration.  As a result, the Company concluded that the Acquisition should be accounted for as an acquisition of assets rather than an acquisition of a business as required by ASU 2017-01, Business Combinations (Topic 805)adopted by the Company on July 1, 2016 which clarifies the definition of a business.

The following table represents the preliminary fair value estimates as previously reported along with the adjustments made to the preliminary valuation in the fourth quarter of the year ended June 30, 2017 (in thousands):

	As of						As of
	November 3,						November 3,
	2016			Adjustment			2016
	As Previously Reported						As Adjusted
GP Corp note issued	$	10,824		$	(7,400	)	$	3,424
Warrants issued (classified as a liability)		216						216
Total consideration	$	11,040		$			$	3,640
Furniture and fixtures	$	22		$	—		$	22
Lease deposit		170			(170	)		—
Identifiable intangible assets		11,161			(6,735	)		4,426
Lease liability, net		(313	)		(495	)		(808	)
Net assets acquired	$	11,040		$			$	3,640

In addition to the adjustment to the fair value described above, the Company determined that the estimated useful life of the identifiable intangible assets acquired was fifteen years.  In its prior filings on Form 10-Q, as of and for the periods ended December 31, 2016 and March 31, 2017, the Company recognized amortization associated with its identifiable intangible assets based on their preliminary fair values over the contractual life. As a result of the change in the estimated useful life of the identifiable intangible assets, the Company reversed approximately $2.3 million of amortization expense previously recognized through the nine-month period ended March 31, 2017 during the quarter ended June 30, 2017.

The following tables provide additional detail related to the Company’s acquired identifiable intangible assets (in thousands):

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (in years)
Amortized intangible assets:
Investment management agreement	$	3,900	$	(280	)	$	3,620		15
Assembled workforce		526		(44	)		482		15
Total	$	4,426	$	(324	)	$	4,102

Aggregate Amortization Expense:	Amount
For the year ended June 30, 2017	$	324
Estimated Amortization Expense:
For the year ended June 30, 2018	$	527
For the year ended June 30, 2019		621
For the year ended June 30, 2020		599
For the year ended June 30, 2021		456
For the year ended June 30, 2022		382

In September 2017, the Company entered into a Separation Agreement with MAST Capital and related entities.  As part of the Separation Agreement, the principal balance of the note was revised to be $3.3 million; the 54,733 warrants were cancelled and replaced with shares of common stock of the Company; and the cost-sharing agreement between the parties was cancelled.

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Related Party Transactions

12 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

6. Related Party Transactions

The Company has entered into several transactions, as further discussed below and in Note 5, with MAST Capital, entities controlled by MAST Capital, and its employees.  MAST Capital and its affiliates currently own approximately 8.7% of the Company’s outstanding common stock.

In conjunction with the acquisition of GP Corp, on November 3, 2016, GECM entered into a profit sharing agreement with GP Corp. (Profit Sharing Agreement).  Under the Profit Sharing Agreement, the profit from GECC is paid from GECM to GP Corp.  Since its inception in November 2016, GECM operated at a cumulative loss through June 30, 2017; correspondingly, no profits were available to GP Corp. under the Profit Sharing Agreement.

In conjunction with the commencement of GECC, GECM entered into two agreements with GECC, the IMA providing for GECM to manage GECC’s investment portfolio, and the Administrative Agreement, under which GECM provides administrative services to GECC.  Under these agreements, GECM receives an administrative fee, a management fee based on GECC’s assets (other than cash and cash equivalents), and incentive management fees if GECC has net capital gains, or if its net investment income exceeds a specified hurdle rate.  Fees under the agreements began to accrue on November 4, 2016.

Certain MAST Capital employees are employees of GECM.  In accordance with the terms of a cost-sharing agreement, employee and other operating costs incurred with the Company’s investment management business are based on direct management of each Company’s investment portfolio, or correlated to the percentages of assets under management as a total MAST’s and GECC’s asset portfolio. If GECM’s annual costs under the cost sharing agreement exceed $1.4 million, the excess for such year over $1.4 million may be set off dollar for dollar against the principal balance of the GP Corp Note.  

The following table illustrates the activity related to the operations of the acquisitions for the periods presented.  The Company did not engage in the operations and transactions noted below for the fiscal years June 30, 2016 and 2015, correspondingly, those periods have been omitted:

	Asof and for the Year ended June 30, 2017
Investment in GECC
Unrealized loss on investment in GECC	$	(9,114	)
GECC dividends and interest recognized for the    period	$	1,306
Managing GECC
Reimbursement of GECC formation expenses for the    period (1)	$	2,989
Investment management fees for the period	$	4,287
GECC administrative fees during the period	$	640
Net receivable due from GECC at the end of the    period	$	3,654
Cost Sharing with MAST
GECM costs charged to MAST Capital (2)	$	1,809
Net receivable due from MAST at the end of the    period	$	—
Profit Sharing with GP Corp
GP Corp Note balance at the end of the period	$	3,174
Interest accrued and paid on GP Corp Note during    the period	$	285
Principal payments made on GP Corp Note during    the period	$	250
GECM net profit paid to GP Corp (3)	$	—

(1) Recognized in general and administrative expenses in the accompanying consolidated statements of operations.

(2) Recognized in investment management expenses in the accompanying consolidated statements of operations.

(3) GECM did not generate a net profit as defined by the Profit Sharing Agreement with GP Corp.

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Financial Instruments

12 Months Ended

Jun. 30, 2017

Investments All Other Investments [Abstract]

Financial Instruments

7. Financial Instruments

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based upon the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

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:

▪ Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

▪ Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

▪ Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

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 assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized in the tables below (in thousands):

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Investment in GECC	$	20,886	$	—	$	—	$	20,886

The Company’s investment in GECC is classified within Level 1 of the fair value hierarchy using quoted market prices on a recurring basis.  The Company did not have any financial assets measured at fair value on a recurring basis as of June 30, 2016.

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability		—		—		186		186

The Company values its warrant liability using a Black-Scholes-Merton option pricing model with assumptions classified as unobservable inputs within Level 3 of the fair value hierarchy.  The assumptions used to value the warrant on a recurring basis consisted of:  expected volatilities between 65.7 to 66.6%; no expected dividend yields; a risk-free rate of 1.5%; and an expected term equal to the contractual term.  The warrant has an exercise price of $0.01 per share and a contractual term of ten (10) years from the date of issuance on November 3, 2016.  

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis (in thousands):

	As of  June 30,
	2017			2016
Beginning of year	$	—		$	—
Aggregate fair value of warrant issued		216			—
Re-measurement of warrant liability (gain)		(30	)		—
End of year	$	186		$	—

The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the fiscal year ended June 30, 2017, 2016 or 2015.  

The Company estimated the fair value of the related party notes payable outstanding as of June 30, 2017 and 2016, on a non-recurring basis, using Level 3 inputs.  The Level 3 inputs consisted of a discounted cash flow analysis, which incorporated spread and discount rate assumptions considering the Company’s financial status and risk, as well as indications from comparable publicly traded debt instruments.  As of June 30, 2017 and 2016, the carrying value of the notes approximated the fair value.  The fair value of the related party notes payable outstanding as of June 30, 2016 is presented net of unamortized discounts and debt issuance costs.   The carrying value of all other financial assets and liabilities approximate their fair values.

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Related Party Note Payable

12 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Related Party Note Payable

8. Related Party Note Payable

The Company’s related party notes (Notes) are summarized below (in thousands):

	June 30,			June 30,
	2017			2016
Balance beginning of year	$	33,786		$	29,020
Issuance of GP Corp Note, at fair value		3,424			—
Issuance of in-kind notes		—			4,355
Amortization of discount issuance costs		2,802			411
Principal and interest payments		(36,838	)		—
Balance end of year	$	3,174		$	33,786
Current portion, end of year	$	250		$	33,786
Balance, net of current portion, end of year	$	2,924		$	—

For the years ended June 30, 2017, 2016, and 2015, the Company recognized interest expense of approximately $6.3,$4.9 million, and $4.3 million, respectively. In May of 2015, the Company’ previously outstanding Senior Secured Notes payable were purchased by MAST Capital Management, LLC as part of a private transaction.  MAST Capital Management, LLC is and was a significant stockholder of the Company. The sale of the Notes did not have any impact on the Company’s obligations under the original terms of the Notes.   In October 2016, the Company called and retired the previously outstanding Senior Secured Notes.  As part of the retirement, the Company made cash payments totaling $39.8 million; consisting of interest payments of $1.2 million; call premiums totaling $2.0 million classified as interest expense in the accompanying consolidated statements of operations; and principal payments of $36.6 million.

On November 3, 2016, GP Corp issued the GP Corp Note. The note calls for variable interest payments based on the ninety-day LIBOR plus 3%.  For the year ended June 30, 2017, the Company incurred interest expense totaling $0.3 million, based on an average interest rate of approximately 4.0% during the period.

The GP Corp Note is held by MAST Capital and is secured by the profits generated by GECM’s management of GECC.   The GP Corp Note requires quarterly interest only payments and annual principal payments of at least $0.3 million, based on the Company’s fiscal year ending June 30.   

The GP Corp Note does not have any recourse to any of the Company’s operations or net assets not related to GECM’s management of the investments assets held by GECC.  The GP Corp Note may be prepaid at any time with prior written notice to the holders of the GP Corp Note.  Additionally, GP Corp is required to prepay the GP Corp Note upon certain material liquidation transactions.

The following table summarizes the Company’s maximum obligations, and estimated cumulative off-sets allowed by the cost-sharing agreement, under the GP Corp Note as of June 30, 2017 (in thousands):

Year	Principal
2018	$	250
2019		250
2020		250
2021		250
2022		250
Thereafter		9,324
Total, maximum obligation	$	10,574
Estimated reduction from cost sharing agreement		(7,400	)
Estimated GP Corp Note, net	$	3,174

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Commitments and Contingencies

12 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

In conjunction with the Divesture of its patent licensing business on June 30, 2016, the Company may receive additional proceeds of up to $10 million, subject to adjustment for indemnification or claims breach of representations, and warranties.  The purchaser has claimed that it has losses indemnifiable in excess of the $10 million contractual payment due on June 30, 2018.  As such, and as of June 30, 2017, the Company has determined the Holdback was not realizable or estimable. The Company expects to recognize the known or estimable portion of the Holdback consideration in the period it becomes realizable, not later than June 30, 2018.

The Company has been named in two related complaints, captioned Daniel Saunders, on behalf of himself and all others similarly situated, v. Full Circle Capital Corporation, et al., filed on September 23, 2016 (the Saunders Action), and William L. Russell, Jr., individually and on behalf of all others similarly situated, v. Biderman, et al. filed on September 12, 2016 and amended on September 22, 2016 (the Russell Action), were filed in the United States District Court for the District of Maryland and in the Circuit Court for Baltimore City, (the Circuit Court), respectively. On October 7, 2016, a complaint captioned David Speiser, individually and on behalf of all others similarly situated v. Felton, et al., was filed in the Circuit Court (the Speiser Action, and together with the Saunders Action and the Russell Action, the Actions).  

On October 24, 2016, the Company, along with Full Circle, GECC, MAST Capital, certain directors of Full Circle and plaintiffs in the Actions reached an agreement in principle providing for the settlement of the Actions on the terms and conditions set forth in a memorandum of understanding (the MOU). Pursuant to the terms of the MOU, without agreeing that any of the claims in the Actions have merit or that any supplemental disclosure was required under any applicable statute, rule, regulation or law, Full Circle and GECC agreed to and did make the supplemental disclosures with respect to the merger. The MOU further provides that, among other things, (a) the parties to the MOU will enter into a definitive stipulation of settlement (the Stipulation) and will submit the Stipulation to the Circuit Court for review and approval; (b) the Stipulation will provide for dismissal of the Actions on the merits; (c) the Stipulation will include a general release of defendants of claims relating to the transactions contemplated by the Merger Agreement; and (d) the proposed settlement is conditioned on final approval by the Circuit Court after notice to Full Circle's stockholders. There can be no assurance that the settlement will be finalized or that the Circuit Court will approve the settlement. The Company has determined there is a remote possibility the outcome of these complaints will have a material effect on its financial position, results of operations, or cash flows.

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.

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Operating Leases

12 Months Ended

Jun. 30, 2017

Leases Operating [Abstract]

Operating Leases

10. Operating Leases

The Company has obtained the right of use for two separate office space assets under operating lease agreements as follows:

Hancock Lease

The Company obtained the right of use of office space located in Boston, MA on November 3, 2016 in conjunction with the Acquisition transaction with MAST Capital that terminates onDecember 31, 2017.  

As of June 30, 2017, the remaining obligation under the Hancock lease was $0.7 million, inclusive of the remaining early termination payment, classified as current in the accompanying consolidated balance sheets.

Watermill Lease

On December 23, 2016, the commencement date, the Company obtained the right of use of office space located in Waltham, MA. On the commencement date of the lease, the non-cancellable term was for eighty-eight (88) months from the occupancy date of June 1, 2017 and contains an option to extend for an additional sixty (60) month period.  

The Company determined the expected term of the right of use of the office to be 88 months on the commencement and recognized the lease liability and corresponding right of use asset totaling $1.7 million using a discount rate of 10%.  The lease payments commence on October 1, 2017, four months after the Company began to occupy the space.  On an annual basis, the lease payments increase at an average rate of approximately 2.4% from $28 to $32 thousand per month.

As of June 30, 2017, the Company had a remaining right of use asset and lease liability of $1.7 million related to the Watermill lease in Waltham.

The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities as of June 30 (in thousands):

Year	Amount
2018	$	920
2019		337
2020		345
2021		353
2022		362
Thereafter		843
Total	$	3,160

The Company recognized rent expense totaling $0.7 million, $0.3 million, and $0.2 million for the fiscal years ended June 2017, 2016, and 2015, respectively.  

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Stockholders' Equity

12 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stockholders' Equity

11. Stockholders' Equity

Rights Offering

In September 2016, the Company entered into a backstop investment agreement with a consortium of investors led by Gracie Investing LLC.  Members of the Company’s board of directors and a number of the Company’s employees were backstop investors. On October 2016, the Company and the backstop providers amended and restated the backstop investment agreement which contemplated up to a $36.6 million investment in shares of the Company’s common stock. In November 2016, the Company commenced a $45 million rights offering to its existing stockholders at a price of $3.285 per share. The Company sold an aggregate of 12,755,200 shares of its common stock for gross proceeds of $41.9 million, which after deducting expenses, totaling approximately $2.4 million, resulted in net proceeds of $39.5 million in the rights offering; and 945,333 shares of its common stock for gross proceeds of $3.1 million from the backstop providers.  The Company intends to use the proceeds of the offerings to make acquisitions of new businesses and working capital.

Tax Benefits Preservation Agreement

On January 20, 2015, 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) to replace the Company’s existing Tax Benefits Preservation Agreement, which expired on January 29, 2015, (the Expired Agreement). The Agreement is substantially the same as the Expired Agreement.  In December 2015, the Rights Plan was approved by the Company’s stockholders.

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 4.99% or more of the Company’s common stock and the ability of persons or entities now owning 5% or more of the outstanding common shares from acquiring additional common shares.

Pursuant to the terms of the Rights Plan, the Company’s Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (a Tax Right) for each outstanding share of common stock, par value $0.001 per share of the Company (the Common Stock), to stockholders of record as of the close of business on January 29, 2015 (the Record Date). In addition, one Tax Right will automatically attach to each share of Common Stock issued between the Record Date and the Distribution Date (as defined in the Rights Plan). Each Tax Right entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share (a Unit) of Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company at a cash exercise price of $15.00 per Unit (the Exercise Price), subject to adjustment, under the conditions specified in the Rights Plan.

The Tax Rights are not exercisable until the Distribution Date and will expire at the earlier of (a) January 29, 2018; (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 November 2013, the Company’s stockholders approved the Amended and Restated 1999 Directors’ Equity Compensation Plan (the Directors’ Plan).  Options and awards granted to new or existing Outside Directors (as defined in the Directors’ Plan) under the Directors’ Plan vest ratably over a period of three years. The Directors’ Plan also provides for the acceleration of options upon the dismissal of an Outside Director from the Board of Directors of the Company upon or within 24 months following a change in control of the Company. The exercise price of options granted under the Directors’ Plan is equal to the fair market value of the Company’s common stock on the date of grant. Under the Directors’ Plan, stock option grants have a term of ten years. As of June 30, 2017, the Company had a total of 109,058 shares outstanding under the Directors’ Plan.

In November 2013, the Company’s stockholders approved the Amended and Restated 2006 Stock Incentive Plan (the 2006 Plan) to provide incentive stock options, non-statutory stock options, restricted stock purchase rights and stock appreciation rights to employees and consultants of the Company and its affiliates. The plan also provides restricted stock bonus, phantom stock units, restricted stock units, performance shares bonus and performance share units.  Each share of Company common stock issued pursuant to a stock award issued under this Plan shall reduce the Share Reserve by one share; provided, however that for each Full-Value Stock Award, the share reserve shall be reduced by one and one-half shares. The exercise price of options granted under the 2006 Plan approximates the fair market value of the Company’s common stock on the date of grant. Options issued under the 2006 Plan generally expire ten years from the date of grant. Vesting periods are determined by the plan administrator and generally provide for shares to vest ratably over a period of three to four years, with options for new employees generally including a one-year cliff period. As of June 30, 2017, the Company had a total of 438,981 shares outstanding under the 2006 Stock Plan.

In June 2016, the Company’s stockholders approved the Great Elm Capital Group, Inc. 2016 Long-Term Incentive Plan and the Great Elm Capital Group, Inc. 2016 Employee Stock Purchase Plan.  As of June 30, 2017, the Company had a total of 897,714 shares outstanding under the 2016 Long-Term Incentive Plan.

The following table summarizes the number of common shares reserved for issuance under the plans discussed above as of June 30, 2017:

Shares of Common Stock Reserved for Issuance
Director's Plan	—
2006 Plan	131,797
2016 Long-Term Incentive Plan	1,652,286
2016 Employee Stock Purchase Plan	944,000
Total	2,728,083

Stock-Based Compensation

The fair value of each option grant is estimated on the date of grant using the Black-Scholes-Merton option pricing model and assumptions noted in the following table. The Company estimates the expected term for new grants based upon actual historical experience. The Company’s expected volatility for the expected term of the option is based upon the historical volatility experienced in the Company’s stock price.  The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company determines the fair value of non-vested shares based on the Nasdaq closing stock price on the date of grant.

The ranges of assumptions used to value options granted were as follows:

	Fiscal Year Ended June 30,
	2017		2016		2015
Expected volatility	64.7 - 66.6	%	64.9 - 69.1	%	67.7		%
Expected dividends	—		—			—
Expected term (years)	6.25-7.25		5.88 - 9.88			6.18
Risk-free rate	1.5 - 2.00	%	1.73 - 2.05	%	1.77		%

A summary of option activity through June 30, 2017 is presented below (in thousands except per share and year amounts):

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
Options	Shares			Exercise Price		Term (years)		Intrinsic Value
Outstanding at June 30, 2016		610		$	9.60
Options granted		170			3.27
Exercised		—			—
Forfeited, cancelled or expired		(58	)		17.57
Outstanding at June 30, 2017		722		$	7.46		7.29	$	22
Exercisable at June 30, 2017		604		$	8.28		6.91	$	6
Vested and expected to vest as of June 30, 2017		722		$	7.46		7.29	$	22

The weighted average grant date fair value of options, per share, granted during the 2017, 2016, and 2015 fiscal years was $3.68, $5.62, and $5.04, respectively. During the year ended June 30, 2017, and 2016 there were no options exercised, and options exercised during the year ended June 30, 2015 had intrinsic value of approximately $0.02 million.

A summary of the activity of the Company’s restricted stock units through June 30, 2017 is presented below (in thousands except per share amounts):

				Weighted
				Average
	Restricted			Grant Date
Restricted Stock Units	Stock Units			Fair Value
Outstanding at June 30, 2016		32		$	13.30
Granted		1,168			3.92
Vested		(32	)		13.30
Forfeited		(21	)		3.95
Outstanding at June 30, 2017		1,147		$	3.88

During the year ended June 30, 2017, the Company granted an aggregate of 1,058,694 shares of restricted stock (net of forfeitures), included in the above table, with both performance and service requirements in connection with the formation of its investment management business.  The vesting of these awards is subject to a five-year service requirement and an investment management cumulative revenue collection target of $40 million.  In order to recognize compensation expense over the vesting period, the Company estimated the probability of the entire performance target being met on an on-going basis.  

The aggregate grant date fair value of RSUs granted during the 2017, 2016, and 2015 fiscal years was $4.5 million, $0.7 million and $1.9 million, respectively.

Stock-based compensation expense totaled $2.0 million, $4.4 million, and $2.1 million for the 2017, 2016, and 2015 fiscal years, respectively.  Stock-based compensation expense for the year ended June 30, 2016 included approximately $2.3 million related to modifications of awards primarily held by our former officers and directors.  The award modifications were the result of accelerated vesting of previously unvested awards upon termination, and the extension of the post termination exercise term from ninety days to one year.  In addition, approximately $2.3 million and $1.3 million of stock based compensation was included in discontinued operations for the fiscal years ended June 30, 2016 and 2015, respectively.

As of June 30, 2017, the Company had unrecognized compensation cost related to all unvested share awards and options totaling $3.4 million expected to be recognized as the shares vest over the next 3.8 years.

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Income Taxes

12 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Income (loss) from continuing operations before provision for income taxes is comprised of the following (in thousands):

	Fiscal Year ended June 30,
	2017				2016		2015
Domestic	$	(18,650	)	$	(14,543	)	$	(12,032	)
Foreign		—			—			—
Total	$	(18,650	)	$	(14,543	)	$	(12,032	)

The provision (benefit) for income taxes includes the following (in thousands):

	Fiscal Year ended June 30,
	2017			2016			2015
Current:
Domestic Income Tax	$	—		$	—		$	—
Foreign Income Tax		—			—			164
	$	—		$	—		$	164
Deferred:
Domestic Income Tax	$	(1,210	)	$	(5,103	)	$	—
Foreign Income Tax		—			—			—
	$	(1,210	)	$	(5,103	)	$	—
Total	$	(1,210	)	$	(5,103	)	$	164

The Company recognized an income tax (benefit) from continuing operations of $(1.2) million and $(5.1) million, respectively, for the years ended June 30, 2017 and 2016. For the year ended June 30, 2015, the Company recognized income tax expense of $0.2 million from continuing operations.

During 2017 and 2016, the Company provided for income tax with respect to discontinued operations of $1.2 million and $5.1 million, respectively, related to intraperiod allocations.  During 2017, income tax expense from discontinued operations totaled $0.9 million, net of the release of $0.3 million of accrued taxes for divested foreign subsidiaries and other for taxes previously accrued by the subsidiaries.  No intraperiod allocations were made in 2015.

The following table reconciles the expected corporate federal income tax expense (benefit), computed by multiplying the Company's income (loss) before income taxes by the statutory income tax rate of 35% (in thousands):

	Fiscal Year End June 30th,
	2017				2016		2015
Federal Benefit at Statutory Rate	$	(6,523	)	$	(5,090	)	$	(4,211	)
State taxes		(794	)		(12	)		(211	)
Effect of foreign corporations		—			(607	)		(139	)
Permanent adjustments		22			(208	)		3
Change in valuation allowance		6,244			(164	)		(3,320	)
Abandonment of state net operating losses		—			—			7,544
Stock compensation adjustment		—			924			794
Other		(159	)		54			(296	)
Total Tax Expense/(Benefit)	$	(1,210	)	$	(5,103	)	$	164

The tax effect of temporary differences that give rise to significant portions of the Company's deferred tax assets and liabilities are as follows (in thousands):

	Fiscal Year End June 30
	2017				2016			2015
Deferred Tax Assets:
Net operating loss carryforwards	$	612,378		$	623,221		$	617,331
Accruals and allowances not deductible for tax    purposes		141			278			(574	)
Research and development credit and other carry    -forwards		39,112			38,371			38,371
Stock based compensation		604			184			806
Unrealized loss on investment		3,575			—			—
Investment in Partnership		—			—			11,942
Total Deferred tax assets, gross	$	655,810		$	662,054		$	667,876
Less: valuation allowance	$	(655,810	)	$	(662,054	)	$	(667,876	)
Total deferred tax assets, net	$	—		$	—		$	—

In light of the Company's 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. The state deferred amounts reflected in the above table were calculated using the enacted tax rates. As a result of the sale of the product business, the Company does not have any foreign deferred tax assets as of June 30, 2017, 2016, and 2015.

As of June 30, 2017, the Company has net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $1.7 billion and $217 million, respectively. During the 2017 fiscal year, approximately $58 million of California net operating loss carryforwards expired. The Company has gross federal, California, and Massachusetts research and development credit carryforwards of approximately $30.0 million, $20.9 million, and $0.9 million, respectively. The federal NOL carryforwards and research and development credit carryforwards will expire from 2018 through 2036. The California research and development credits may be carried forward indefinitely. The Massachusetts research and development credit expires in 2025.  The federal NOLs can be carried forward for 20 years; California net operating loss carryforwards will expire from 2018 through 2037; and the Massachusetts net operating loss carryforwards will expire from 2031 to 2037.

The following table reflects federal NOL carryforwards that will expire beginning in 2018 (in thousands):

Fiscal Year of Expiration	Federal NOL carryforwards
2018	$	15,511
2019		59,062
2020		488,814
2021		190,624
2022		143,137
2023 through 2037		797,851
Total	$	1,694,999

Under Code Section 382, the utilization of a corporation's NOL carryforwards is limited following a change in ownership (as defined by the Code) of greater than 50% within a rolling three-year period.

During the 2015, 2016 and 2017 fiscal years, the total amount of gross unrecognized tax benefit activity was as follows (in thousands):

Balance as of June 30, 2014	$	13,290
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(152	)
Balance as of June 30, 2015		13,138
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(172	)
Balance as of June 30, 2016		12,966
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		(54	)
Lapse of statute of limitations		(176	)
Balance as of June 30, 2017	$	12,736

During the fiscal year ended June 30, 2017, the Company’s unrecognized tax benefits decreased by $0.2 million due to the expiration of certain statutes of limitations reflected in discontinued operations.

As of June 30, 2017 and June 30, 2016, the Company had approximately $12.7 million and $13.0 million, respectively of unrecognized tax benefits. All of the tax benefit realized during the 2017, 2016, and 2015 fiscal years were recorded as net income or expense from discontinued operations. The unrecognized tax benefits, if recognized, would impact the effective tax rate by $12.7 million and $13.0 million without considering the impact of the valuation allowance.  The unrecognized tax benefit at June 30, 2017 of $12.7 million, is offset against the deferred tax asset for federal and state research and development tax credits.

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, 2017, no amount is accrued for interest associated with tax liabilities.

Although timing of the resolution and/or closure on the Company's unrecognized tax benefits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.

The Company files U.S. federal, U.S. state and foreign tax returns. Because of NOL carryforwards, substantially all of the Company's tax years, from the 1995 through 2016 fiscal years, remain open to IRS examinations with the exception of the 2010 and 2009 fiscal years for which IRS examinations have been completed.  Substantially all of the Company’s tax years, from the 1995 through 2016 fiscal years, remain open to state tax examination with the exception of Alabama, Massachusetts, and Texas. Most of the Company's remaining foreign jurisdictions have three or four open tax years at any point in time.

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Segment Information

12 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Information

13. Segment Information

Effective upon the closing of a series of transactions, as discussed in Note 5, culminating in the creation of the Company’s investment management business, the Company’s chief operating decision maker began to view where resources would be allocated to the investment management business based on performance of the investment management business relative to acquisition opportunities in other industries.  Prior to the Divestiture of the Company’s patent licensing business on June 30, 2016, the Company viewed all of its operations as a single integrated business.  The following table provides detail of each of the Company’s operating segments (in thousands):

	For the Years Ended June 30,
	2017			2016
Revenue:
Investment management	$	4,927		$	—
General corporate		—			—
Total revenue		4,927			—
Costs and Expenses:
Investment management	$	5,119		$	—
General corporate		4,413			9,835
Total operating costs and expenses		9,532			9,835
Operating income (loss):
Investment management	$	(489	)	$	—
General corporate		(18,161	)		(14,543	)
Total pre-tax income (loss) from continuing operations		(18,650	)		(14,543	)
Provision for (benefit from) income tax	$	(1,210	)	$	(5,103	)
Income (loss) from discontinued operations, net		2,203			18,862
Net income (loss)	$	(15,237	)	$	9,422
Less: net loss attributable to non-controlling interest		(30	)		—
Net loss attributable to Great Elm Capital Group	$	(15,207	)	$	9,422

	As of  June 30,
	2017		2016
Assets:
Investment management	$	9,619	$	—
General corporate		67,075		80,897
Total assets	$	76,694	$	80,897

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Quarterly Financial Results Unaudited

12 Months Ended

Jun. 30, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Results (Unaudited)

14. Quarterly Financial Results (Unaudited)

The following table sets forth a summary of the Company’s unaudited quarterly operating results for each of the eight quarters in the period ended June 30, 2017. All quarters have been revised as necessary to reflect discontinued operations.  The information has been derived from the Company’s unaudited consolidated financial statements that, in management’s opinion, have been prepared on a basis consistent with the accompanying consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation.

	Fiscal Year Ended June 30, 2017												Fiscal Year Ended June 30, 2016
	Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
Net revenues	$	2,065		$	1,582		$	1,280		$	—		$	—		$	—		$	—		$	—
Operating costs and expenses		1,880			4,256			858			2,538			4,890			2,006			1,396			1,651
Operating loss from continuing operations	$	185		$	(2,674	)	$	422		$	(2,538	)	$	(4,890	)	$	(2,006	)	$	(1,396	)	$	(1,651	)
Loss from continuing operations	$	(786	)	$	(2,797	)	$	(8,344	)	$	(5,513	)	$	(902	)	$	(3,165	)	$	(2,537	)	$	(2,836	)
Income (loss) from discontinued operations		(105	)		—			210			2,098			43,003			(6,621	)		(10,139	)		(7,381	)
Net income (loss) attributable to Great Elm Capital    Group, Inc.	$	(1,305	)	$	(2,519	)	$	(7,968	)	$	(3,415	)	$	42,101		$	(9,786	)	$	(12,676	)	$	(10,217	)
Basic and diluted earnings (loss) per share from    continuing operations per share	$	(0.03	)	$	(0.11	)	$	(0.81	)	$	(0.58	)	$	(0.10	)	$	(0.34	)	$	(0.27	)	$	(0.30	)
Basic and diluted earnings (loss) from discontinued    operations per share	$	—		$	—		$	0.02		$	0.22		$	4.57		$	(0.70	)	$	(1.08	)	$	(0.79	)
Basic and diluted earnings (loss) per share	$	(0.03	)	$	(0.11	)	$	(0.79	)	$	(0.36	)	$	4.47		$	(1.04	)	$	(1.35	)	$	(1.09	)
Shares used in computing:
Basic and diluted earnings (loss) per share		23,200			23,187			10,073			9,467			9,412			9,432			9,408			9,366

(1) Net revenues for the second and third quarters of fiscal 2017 include the reclassification of $0.3 million and $0.5 million of dividends and interest income from net revenues to other operating income, respectively.  The reclassifications did not have an impact on the previously reporting losses from continuing operations or net loss for the applicable periods ended December 31, 2016 and March 31, 2017.

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Subsequent Events

12 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

In September 2017, the Company and its subsidiaries, entered into a Separation Agreement with MAST Capital Management, LLC (MCM), certain funds and other entities controlled by MCM, David J. Steinberg (Steinberg), Peter A. Reed (Reed), our newly appointed Chief Executive Officer, and Adam M. Kleinman (Kleinman).  As part of the Separation Agreement, the GP Corp Note, with a maximum principal amount of $10.8 million on November 3, 2016, was amended and restated in an aggregate principal amount of $3.3 million.  In conjunction with the reduction in the principal amount of the GP Corp Note, the cost sharing agreement between MCM and GECM was cancelled upon payment of all amounts between the parties as of the effective date of the Separation Agreement.

As further part of the Separation Agreement, the Company cancelled the warrant to purchase 54,733 shares of common stock issued as part of the Acquisition consideration and replaced the warrant with 54,733 fully vested shares of common stock.  Additionally, Steinberg voluntarily agreed to resign from employment with GECM; correspondingly, Steinberg’s previously issued restricted stock award, totaling 220,923 shares, was forfeited.  The Company granted MCM a two-year warrant to purchase up to 420,000 shares of common stock at a price equal to the simple weighted average trading price for the ten (10) preceding the date notice of exercise is provided.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The Company consolidates the assets, liabilities, and operating results of its wholly-owned subsidiaries; majority-owned subsidiaries; and subsidiaries that it has control over.  The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, GECM; and its majority-owned subsidiary, GP Corp.  All intercompany accounts and transactions have been eliminated in consolidation.

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and consolidated statements of comprehensive income (loss).

Investment in GECC

On November 1, 2016, the Company deconsolidated its investment in GECC upon the Company no longer having a controlling financial interest in GECC.  The Company determined that, by virtue of being GECC’s investment manager, the Company has significant influence over GECC.  Upon deconsolidation, the Company elected to account for its approximately 17% investment in GECC at fair value.In accordance with this election, unrealized gains and losses at each measurement date are recognized as a component of net loss in the accompanying consolidated statements of operations and dividends are recognized if, as and when declared by GECC’s board of directors.

Discontinued Operations

Discontinued Operations

On June 30, 2016, the Company completed the Purchase and Sale Agreement (as amended, the PSA) with Optis UP Holdings, LLC (Optis), pursuant to which Optis acquired all of the outstanding membership interests of the Company’s wholly-owned subsidiary, Unwired Planet, LLC (UPLLC), which owns all of the outstanding shares of Unwired Planet International Limited, an Irish company.  Together, the disposed subsidiaries owned all of the Company’s patent assets.

As a result of the disposition of the Company’s intellectual property licensing business and underlying patent and patent applications, the Company has presented financial results for these businesses in discontinued operations.  The divesture of the intellectual property licensing component consisted of all patent licensing expenses as previously presented in the accompanying consolidated statements of operations; certain general and administrative costs incurred by the disposed subsidiaries; and certain liabilities of the divested subsidiaries.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segments

Segments

In November 2016, the Company changed its organizational structure in connection with the Acquisition. As a result, information that the Company’s chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed.  As of June 30, 2017, the Company has two reporting segments:  Investment Management; and General Corporate.  The Company’s chief operating decision maker did not allocate resources or assess performance on a segmented basis prior to the formation of the investment management business within the fiscal year ended June 30, 2017.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue on services at the time when services are performed, and the following conditions are met: persuasive evidence of an arrangement exists, the service is complete, the price is fixed and determinable, and collection of the proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.

The Company recognizes revenue from its investment management business at amounts that reflect the consideration to which it expects to be entitled in exchange for providing services to its customer.  Investment management revenue primarily consists of fees based on a percentage of assets under management; fees based on the performance of managed assets; and administrative fees; as follows:

Management Fees

The base management fee from GECC is calculated at an annual rate of 1.50% of GECC’s average adjusted gross assets, including assets purchased with borrowed funds. The base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of GECC’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial quarter are prorated.

Incentive Fees

The incentive fee from GECC consists of two components, an investment income component and a capital gains component. Under the investment income component, on a quarterly basis, GECC will pay the Company 20% of the amount by which GECC’s pre-incentive fee net investment income (the Pre-Incentive Fee Net Investment Income) for the quarter exceeds a hurdle rate of 1.75% of GECC’s net assets at the end of the immediately preceding calendar quarter. This calculation will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the then current quarter.

Under the capital gains component of the incentive fee, GECC is obligated to pay the Company, at the end of each calendar year, 20% of the aggregate cumulative realized capital gains from November 4, 2016 through the end of the of such calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such calendar year, less the aggregate amount of any previously paid capital gains incentive fees.

Incentive fees are recorded based upon an assumed liquidation of GECC’s net assets on the reporting date and the distribution of the net proceeds in accordance with GECC’s income allocation provisions.   Incentive fees recorded may be subject to reversal to the extent the amount recorded exceeds the amount due to the Company based on negative investment performance after the reporting date.   Accrued but unpaid incentive fees and deferred incentive fees as of the reporting date are recorded in related party investment management fees receivable in the accompanying consolidated balance sheet. Incentive fees realized and collected are not subject to reversal.  As of June 30, 2017, approximately $1.7 million of incentive fees recognized in revenue were subject to reversal.  

Investment Management Expenses

Investment Management Expenses

The Company classifies all direct expenses of its investment management segment including: payroll, stock-compensation, and related taxes and benefits; facilities costs; and consulting; in investment management expenses in the accompanying consolidated statements of operations.  The Company has a three-year contractual arrangement with a third party to provide services in exchange for 26% of the fees earned from the management of GECC, excluding incentive fees.

Identifiable Intangible Assets

Identifiable Intangible Assets

The Company amortizes its identifiable intangible assets over their estimated useful lives using a discounted cash flow attribution method.  The Company currently amortizes its identifiable intangible assets over a period of fifteen years.  The Company’s identifiable intangible assets relate to the investment management assets acquired during the year ended June 30, 2017.

Cash and Cash Equivalents

Cash and Cash Equivalents

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. 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 by the FDIC or SIPC.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, generally one to five years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the lease term.

Long-lived Assets

Long-lived Assets

Long-lived assets are recorded at cost and depreciated over their estimated useful lives. For purposes of determining whether there are any impairment losses, management evaluates the carrying value of the Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present, considering whether the undiscounted lowest identifiable cash flows are sufficient to recover the carrying amount of the applicable asset or asset group.  If an impairment is indicated, the Company computes the impairment based on the fair value of the asset, as compared to the carrying value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate.

Stock-based Compensation

Stock-based Compensation

Stock-based compensation costs for eligible employees and directors are measured at fair value on the date of grant and are expensed over the requisite service period using a straight-line attribution method for the entire award that are subject to only service vesting conditions.  Awards with both performance and service requirements are expensed using a graded attribution method over the requisite service periods.

Income Taxes

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 expected to be recovered.

The Company has provided a full valuation allowance against its deferred tax assets because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other 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 in 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. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns that do not meet the more likely than not standards.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), unrealized gains (losses) on available for sale securities and foreign currency translation adjustments for subsidiaries whose functional currency is not United States dollars. Tax effects of comprehensive loss are not material to periods presented. The Company reports the components of comprehensive income (loss) on its Consolidated Statements of Comprehensive Income (Loss).

Concentration of Risk

Concentration of Risk

The Company has placed substantially all of its cash with a single well established financial institution, and its cash equivalents consist primarily of an exchange traded money market fund with the same institution. The Company is exposed to credit risk related to the potential inability to access liquidity in the financial institution where its cash and cash equivalents are concentrated.

The Company’s net revenue and receivables from continuing operations for the fiscal year ended June 30, 2017, were attributable to the management of one investment vehicle, GECC.

The Company has $30 million invested in shares of common stock of GECC.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

The following table presents the calculation of basic and diluted earnings (loss) per share (in thousands except per share amounts):

	Fiscal Year Ended June 30,
	2017			2016			2015
Loss from continuing operations	$	(17,440	)	$	(9,440	)	$	(12,196	)
Income (loss) from discontinued operations, net of tax		2,203			18,862			(29,563	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Less: net loss attributable to non-controlling    interest		(30	)		—			—
Net income (loss) attributable to Great Elm    Capital Group	$	(15,207	)	$	9,422		$	(41,759	)
Weighted average shares basic and diluted:
Weighted average shares of common stock    outstanding		16,433			9,412			9,333
Weighted average shares of restricted stock subject    to repurchase		—			—			(1	)
Weighted average shares used in computing    earnings (loss) per share		16,433			9,412			9,332
Basic and diluted earnings (loss) per share from:
Income (loss) from continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)
Income (loss) from discontinued operations		0.13			2.00			(3.17	)
Net income (loss)	$	(0.93	)	$	1.00		$	(4.48	)

As of June 30, 2017, 2016, and 2015, the Company had 1,923,279; 32,638; and 306,000 potential shares of Company common stock, respectively, that are not included in the diluted net income (loss) per share calculation because to do so would be antidilutive.

As of June 30, 2017, the Company had an aggregate of 1,058,694 outstanding shares that are subject to repurchase by the Company at a nominal price if service and performance milestones are not met. The Company does not account for such shares as being outstanding for accounting purposes since they are unvested and subject to forfeiture.

Restrictions on Subsidiary Dividends

Restrictions on Subsidiary Dividends

In the GP Corp Note Agreement, GP Corp agreed not to declare any dividends until the GP Corp note is satisfied.  As of June 30, 2017, GP Corp had an accumulated deficit not legally available for dividend.

Reclassifications

Reclassifications

Due to the separate presentation of amortization and depreciation in the accompanying consolidated statements of operations, $0.1 million and $0.1 million of amortization and depreciation expense for the years ended June 30, 2016 and 2015, respectively, was reclassified from general and administrative expenses. These reclassifications did not have an impact on the Company’s previously presented net results of operations, financial position, or cash flows.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Financial Instruments. In January 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revised entities’ accounting related to: (1) the classification and measurement of investments in equity securities; and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2018 and requires a modified retrospective approach to adoption. Early adoption is only permitted for the provision related to instrument-specific credit risk. The Company believes that adoption of ASU 2016-01 will have no material impact on the consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires the use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2020 and requires a modified-retrospective approach to adoption. Early adoption is permitted for the fiscal year beginning July 1, 2019. The Company believes that adopting ASU 2016-13 will have no material impact on the consolidated financial statements and related disclosures.

Customer Revenue. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606) Deferral of the Effective Date.  The Company is currently evaluating the adoption of ASU 2015-14 and related Topic 606 updates will have on its financial statements. Based on the on-going evaluation, the Company has determined that the recognition of its investment management incentive fees may be deferred upon the implementation of ASU 2015-14 and related guidance.  Other than the potential incentive fee impacts, the Company has not determined whether the adoption of ASU 2015-14 and related guidance, will have a material effect on the Company’s results of operations, financial position, cash flows or footnote disclosures.  The Company is continuing to evaluate the impact of this new guidance.

Stock-Based Compensation.  In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) to provide clarity and simplification to accounting for a change in the terms or conditions of a stock-based payment award.  The ASU defines several changes in the conditions that would not result in the modification of an award including: no changes in the fair value of the original and modified award prior to modification, or changes in the inputs for the valuation technique used; no changes in vesting conditions; and no change amongst equity or liability classification of the modified award.  The amendments contained in ASU 2017-09 are effective for annual and interim periods beginning after December 15, 2017 with early adoption permitted.  The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial statements.

Changes in Accounting Principles

Changes in Accounting Principles

Leases. In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. The Company adopted ASU 2016-02 effective July 1, 2016.  On the adoption date, the Company elected the practical expedient to not reassess whether any expired contracts contained leases.  Additionally, the Company has elected to not apply the recognition standards of ASU 2016-02 to operating leases with effective terms of twelve months or less (Short-Term Leases).  For Short-Term Leases, the Company recognizes lease payments on a straight-line basis over the lease term in the period in which the obligation for those payments is incurred.

On the adoption date, all of the Company’s contracts containing leases were expired or were Short Term Leases. Accordingly, the adoption of ASU 2016-02 required no changes in the accompanying consolidated financial statements for any of the periods presented.

Presentation of Debt Issuance Costs. On July 1, 2016, the Company implemented ASU 2015-03 Interest – Imputation of Interest (Topic 830) – Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the nature of debt discounts and its implementation results in reclassification of the prior periods. In the accompanying consolidated balance sheet as of June 30, 2016, the reclassification of debt issuance costs resulted in a reduction of total assets of $0.9 million and a corresponding reduction in total liabilities of $0.9 million.  All of the Company’s debt issuance costs recognized prior to the adoption of ASU 2015-03 on July 1, 2016, have been fully amortized and expensed as of June 30, 2017.  

Stock-Based Compensation. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows. The new guidance is effective for the Company’s fiscal year that begins on July 1, 2017 with early adoption permitted. The Company prospectively adopted ASU 2016-09 on July 1, 2016.  Upon adoption, the Company made an election to account for forfeitures of non-vested equity awards in the periods in which they occur.  The other provisions of ASU 2016-09 did not have a material impact on the accompanying consolidated financial statements for any of the periods presented.

Income Taxes.  In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires that the Company recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.  The Company adopted ASU 2016-16 prospectively on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Goodwill.  In January 2017, the FASB issued ASU 2017-04 Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating the quantitative test (Step 2) for impairment for any reporting unit with a zero or negative carrying amount based on a qualitative assessment (Step 1).  The Company adopted ASU 2017-04 on October 1, 2016 with no effect on the accompanying consolidated financial statements.

Business Combinations.  In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business. The Company adopted ASU 2017-01 on July 1, 2016 without material impact on the Company’s accompanying consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Earnings Per Share, Basic and Diluted

The following table presents the calculation of basic and diluted earnings (loss) per share (in thousands except per share amounts):

	Fiscal Year Ended June 30,
	2017			2016			2015
Loss from continuing operations	$	(17,440	)	$	(9,440	)	$	(12,196	)
Income (loss) from discontinued operations, net of tax		2,203			18,862			(29,563	)
Net income (loss)	$	(15,237	)	$	9,422		$	(41,759	)
Less: net loss attributable to non-controlling    interest		(30	)		—			—
Net income (loss) attributable to Great Elm    Capital Group	$	(15,207	)	$	9,422		$	(41,759	)
Weighted average shares basic and diluted:
Weighted average shares of common stock    outstanding		16,433			9,412			9,333
Weighted average shares of restricted stock subject    to repurchase		—			—			(1	)
Weighted average shares used in computing    earnings (loss) per share		16,433			9,412			9,332
Basic and diluted earnings (loss) per share from:
Income (loss) from continuing operations	$	(1.06	)	$	(1.00	)	$	(1.31	)
Income (loss) from discontinued operations		0.13			2.00			(3.17	)
Net income (loss)	$	(0.93	)	$	1.00		$	(4.48	)

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Discontinued Operation (Tables)

12 Months Ended

Jun. 30, 2017

Discontinued Operations And Disposal Groups [Abstract]

Reconciliation of Previous Operations as Reclassified for All Periods Presented

The following table provides a reconciliation of the Company’s previous operations as reclassified for all of the periods presented:

	2017			2016			2015
Discontinued operations:
Net revenue	$	8,750		$	27,826		$	4,505
Patent licensing expenses (1)		(5,630	)		(30,780	)		(31,069	)
General and administrative expenses		—			(2,876	)		(2,989	)
Other non-significant expenses		—			—			(10	)
Gain (loss) from discontinued operations		3,120			(5,830	)		(29,563	)
Gain on sale of discontinued operations		—			29,795			—
Total pretax gain (loss) on discontinued    operations		3,120			23,965			(29,563	)
Income tax benefit (expense)		(917	)		(5,103	)		—
Net gain (loss) from discontinued operations	$	2,203		$	18,862		$	(29,563	)

(1) Amounts for the fiscal year ended June 30, 2017 primarily consist of non-recurring fee split obligations associated with the Microsoft settlement as further discussed below.

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Acquisition (Tables)

12 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Summary of Preliminary Fair Value Estimates as Previously Reported with Adjustments

The following table represents the preliminary fair value estimates as previously reported along with the adjustments made to the preliminary valuation in the fourth quarter of the year ended June 30, 2017 (in thousands):

	As of						As of
	November 3,						November 3,
	2016			Adjustment			2016
	As Previously Reported						As Adjusted
GP Corp note issued	$	10,824		$	(7,400	)	$	3,424
Warrants issued (classified as a liability)		216						216
Total consideration	$	11,040		$			$	3,640
Furniture and fixtures	$	22		$	—		$	22
Lease deposit		170			(170	)		—
Identifiable intangible assets		11,161			(6,735	)		4,426
Lease liability, net		(313	)		(495	)		(808	)
Net assets acquired	$	11,040		$			$	3,640

Summary of Acquired Identifiable Intangible Assets

The following tables provide additional detail related to the Company’s acquired identifiable intangible assets (in thousands):

	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (in years)
Amortized intangible assets:
Investment management agreement	$	3,900	$	(280	)	$	3,620		15
Assembled workforce		526		(44	)		482		15
Total	$	4,426	$	(324	)	$	4,102

Summary of Amortization Expense of Identifiable Intangible Assets

Aggregate Amortization Expense:	Amount
For the year ended June 30, 2017	$	324
Estimated Amortization Expense:
For the year ended June 30, 2018	$	527
For the year ended June 30, 2019		621
For the year ended June 30, 2020		599
For the year ended June 30, 2021		456
For the year ended June 30, 2022		382

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Related Party Transactions (Tables)

12 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Schedule of Investments and Sharing Agreements

The following table illustrates the activity related to the operations of the acquisitions for the periods presented.  The Company did not engage in the operations and transactions noted below for the fiscal years June 30, 2016 and 2015, correspondingly, those periods have been omitted:

	Asof and for the Year ended June 30, 2017
Investment in GECC
Unrealized loss on investment in GECC	$	(9,114	)
GECC dividends and interest recognized for the    period	$	1,306
Managing GECC
Reimbursement of GECC formation expenses for the    period (1)	$	2,989
Investment management fees for the period	$	4,287
GECC administrative fees during the period	$	640
Net receivable due from GECC at the end of the    period	$	3,654
Cost Sharing with MAST
GECM costs charged to MAST Capital (2)	$	1,809
Net receivable due from MAST at the end of the    period	$	—
Profit Sharing with GP Corp
GP Corp Note balance at the end of the period	$	3,174
Interest accrued and paid on GP Corp Note during    the period	$	285
Principal payments made on GP Corp Note during    the period	$	250
GECM net profit paid to GP Corp (3)	$	—

(1) Recognized in general and administrative expenses in the accompanying consolidated statements of operations.

(2) Recognized in investment management expenses in the accompanying consolidated statements of operations.

(3) GECM did not generate a net profit as defined by the Profit Sharing Agreement with GP Corp.

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Financial Instruments (Table)

12 Months Ended

Jun. 30, 2017

Investments All Other Investments [Abstract]

Summary of Assets and Liabilities Measured at Fair Value on Recurring and Non-recurring Basis

The assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized in the tables below (in thousands):

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Investment in GECC	$	20,886	$	—	$	—	$	20,886

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
Liabilities:
Warrant liability		—		—		186		186

Summary of Changes in Fair Value of Level 3 Financial Liabilities Measured on Recurring Basis

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis (in thousands):

	As of  June 30,
	2017			2016
Beginning of year	$	—		$	—
Aggregate fair value of warrant issued		216			—
Re-measurement of warrant liability (gain)		(30	)		—
End of year	$	186		$	—

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Related Party Note Payable (Tables)

12 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Summary of Related Party Notes

The Company’s related party notes (Notes) are summarized below (in thousands):

	June 30,			June 30,
	2017			2016
Balance beginning of year	$	33,786		$	29,020
Issuance of GP Corp Note, at fair value		3,424			—
Issuance of in-kind notes		—			4,355
Amortization of discount issuance costs		2,802			411
Principal and interest payments		(36,838	)		—
Balance end of year	$	3,174		$	33,786
Current portion, end of year	$	250		$	33,786
Balance, net of current portion, end of year	$	2,924		$	—

Summary of Company's Maximum Obligations and Estimated Cumulative Off-Sets Allowed by Cost-Sharing Agreements

The following table summarizes the Company’s maximum obligations, and estimated cumulative off-sets allowed by the cost-sharing agreement, under the GP Corp Note as of June 30, 2017 (in thousands):

Year	Principal
2018	$	250
2019		250
2020		250
2021		250
2022		250
Thereafter		9,324
Total, maximum obligation	$	10,574
Estimated reduction from cost sharing agreement		(7,400	)
Estimated GP Corp Note, net	$	3,174

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Operating Leases (Tables)

12 Months Ended

Jun. 30, 2017

Leases Operating [Abstract]

Schedule of Company's Undiscounted Cash Payment Obligations for Operating Lease Liabilities

The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities as of June 30 (in thousands):

Year	Amount
2018	$	920
2019		337
2020		345
2021		353
2022		362
Thereafter		843
Total	$	3,160

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Stockholders' Equity (Tables)

12 Months Ended

Jun. 30, 2017

Equity [Abstract]

Summary of the Number of Common Shares Reserved for Issuance

The following table summarizes the number of common shares reserved for issuance under the plans discussed above as of June 30, 2017:

Shares of Common Stock Reserved for Issuance
Director's Plan	—
2006 Plan	131,797
2016 Long-Term Incentive Plan	1,652,286
2016 Employee Stock Purchase Plan	944,000
Total	2,728,083

Schedule of the Ranges of Assumptions Used to Value Options Granted

The ranges of assumptions used to value options granted were as follows:

	Fiscal Year Ended June 30,
	2017		2016		2015
Expected volatility	64.7 - 66.6	%	64.9 - 69.1	%	67.7		%
Expected dividends	—		—			—
Expected term (years)	6.25-7.25		5.88 - 9.88			6.18
Risk-free rate	1.5 - 2.00	%	1.73 - 2.05	%	1.77		%

Summary of Option Activity

A summary of option activity through June 30, 2017 is presented below (in thousands except per share and year amounts):

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
Options	Shares			Exercise Price		Term (years)		Intrinsic Value
Outstanding at June 30, 2016		610		$	9.60
Options granted		170			3.27
Exercised		—			—
Forfeited, cancelled or expired		(58	)		17.57
Outstanding at June 30, 2017		722		$	7.46		7.29	$	22
Exercisable at June 30, 2017		604		$	8.28		6.91	$	6
Vested and expected to vest as of June 30, 2017		722		$	7.46		7.29	$	22

Summary of the Activity of Restricted Stock Units

A summary of the activity of the Company’s restricted stock units through June 30, 2017 is presented below (in thousands except per share amounts):

				Weighted
				Average
	Restricted			Grant Date
Restricted Stock Units	Stock Units			Fair Value
Outstanding at June 30, 2016		32		$	13.30
Granted		1,168			3.92
Vested		(32	)		13.30
Forfeited		(21	)		3.95
Outstanding at June 30, 2017		1,147		$	3.88

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Summary of Income (Loss) From Continuing Operations Before Provision for Income Taxes

Income (loss) from continuing operations before provision for income taxes is comprised of the following (in thousands):

	Fiscal Year ended June 30,
	2017				2016		2015
Domestic	$	(18,650	)	$	(14,543	)	$	(12,032	)
Foreign		—			—			—
Total	$	(18,650	)	$	(14,543	)	$	(12,032	)

Schedule of Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes includes the following (in thousands):

	Fiscal Year ended June 30,
	2017			2016			2015
Current:
Domestic Income Tax	$	—		$	—		$	—
Foreign Income Tax		—			—			164
	$	—		$	—		$	164
Deferred:
Domestic Income Tax	$	(1,210	)	$	(5,103	)	$	—
Foreign Income Tax		—			—			—
	$	(1,210	)	$	(5,103	)	$	—
Total	$	(1,210	)	$	(5,103	)	$	164

Reconciliation of Expected Federal Income Tax Expense (Benefit)

The following table reconciles the expected corporate federal income tax expense (benefit), computed by multiplying the Company's income (loss) before income taxes by the statutory income tax rate of 35% (in thousands):

	Fiscal Year End June 30th,
	2017				2016		2015
Federal Benefit at Statutory Rate	$	(6,523	)	$	(5,090	)	$	(4,211	)
State taxes		(794	)		(12	)		(211	)
Effect of foreign corporations		—			(607	)		(139	)
Permanent adjustments		22			(208	)		3
Change in valuation allowance		6,244			(164	)		(3,320	)
Abandonment of state net operating losses		—			—			7,544
Stock compensation adjustment		—			924			794
Other		(159	)		54			(296	)
Total Tax Expense/(Benefit)	$	(1,210	)	$	(5,103	)	$	164

Schedule of Tax Effect of Temporary Differences of Deferred Tax Assets and Liabilities

The tax effect of temporary differences that give rise to significant portions of the Company's deferred tax assets and liabilities are as follows (in thousands):

	Fiscal Year End June 30
	2017				2016			2015
Deferred Tax Assets:
Net operating loss carryforwards	$	612,378		$	623,221		$	617,331
Accruals and allowances not deductible for tax    purposes		141			278			(574	)
Research and development credit and other carry    -forwards		39,112			38,371			38,371
Stock based compensation		604			184			806
Unrealized loss on investment		3,575			—			—
Investment in Partnership		—			—			11,942
Total Deferred tax assets, gross	$	655,810		$	662,054		$	667,876
Less: valuation allowance	$	(655,810	)	$	(662,054	)	$	(667,876	)
Total deferred tax assets, net	$	—		$	—		$	—

Schedule of Federal Net Operating Loss Carryforwards

The following table reflects federal NOL carryforwards that will expire beginning in 2018 (in thousands):

Fiscal Year of Expiration	Federal NOL carryforwards
2018	$	15,511
2019		59,062
2020		488,814
2021		190,624
2022		143,137
2023 through 2037		797,851
Total	$	1,694,999

Schedule of Gross Unrecognized Tax Benefit Activity

During the 2015, 2016 and 2017 fiscal years, the total amount of gross unrecognized tax benefit activity was as follows (in thousands):

Balance as of June 30, 2014	$	13,290
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(152	)
Balance as of June 30, 2015		13,138
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		—
Lapse of statute of limitations		(172	)
Balance as of June 30, 2016		12,966
Addition for tax positions of prior years		—
Reductions for tax positions of prior years		(54	)
Lapse of statute of limitations		(176	)
Balance as of June 30, 2017	$	12,736

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Segment Information (Tables)

12 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Schedule of Operating Segments

The following table provides detail of each of the Company’s operating segments (in thousands):

	For the Years Ended June 30,
	2017			2016
Revenue:
Investment management	$	4,927		$	—
General corporate		—			—
Total revenue		4,927			—
Costs and Expenses:
Investment management	$	5,119		$	—
General corporate		4,413			9,835
Total operating costs and expenses		9,532			9,835
Operating income (loss):
Investment management	$	(489	)	$	—
General corporate		(18,161	)		(14,543	)
Total pre-tax income (loss) from continuing operations		(18,650	)		(14,543	)
Provision for (benefit from) income tax	$	(1,210	)	$	(5,103	)
Income (loss) from discontinued operations, net		2,203			18,862
Net income (loss)	$	(15,237	)	$	9,422
Less: net loss attributable to non-controlling interest		(30	)		—
Net loss attributable to Great Elm Capital Group	$	(15,207	)	$	9,422

	As of  June 30,
	2017		2016
Assets:
Investment management	$	9,619	$	—
General corporate		67,075		80,897
Total assets	$	76,694	$	80,897

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Quarterly Financial Results Unaudited (Tables)

12 Months Ended

Jun. 30, 2017

Quarterly Financial Information Disclosure [Abstract]

Summary of Unaudited Quarterly Operating Results

	Fiscal Year Ended June 30, 2017												Fiscal Year Ended June 30, 2016
	Fourth			Third			Second			First			Fourth			Third			Second			First
	Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter			Quarter
Net revenues	$	2,065		$	1,582		$	1,280		$	—		$	—		$	—		$	—		$	—
Operating costs and expenses		1,880			4,256			858			2,538			4,890			2,006			1,396			1,651
Operating loss from continuing operations	$	185		$	(2,674	)	$	422		$	(2,538	)	$	(4,890	)	$	(2,006	)	$	(1,396	)	$	(1,651	)
Loss from continuing operations	$	(786	)	$	(2,797	)	$	(8,344	)	$	(5,513	)	$	(902	)	$	(3,165	)	$	(2,537	)	$	(2,836	)
Income (loss) from discontinued operations		(105	)		—			210			2,098			43,003			(6,621	)		(10,139	)		(7,381	)
Net income (loss) attributable to Great Elm Capital    Group, Inc.	$	(1,305	)	$	(2,519	)	$	(7,968	)	$	(3,415	)	$	42,101		$	(9,786	)	$	(12,676	)	$	(10,217	)
Basic and diluted earnings (loss) per share from    continuing operations per share	$	(0.03	)	$	(0.11	)	$	(0.81	)	$	(0.58	)	$	(0.10	)	$	(0.34	)	$	(0.27	)	$	(0.30	)
Basic and diluted earnings (loss) from discontinued    operations per share	$	—		$	—		$	0.02		$	0.22		$	4.57		$	(0.70	)	$	(1.08	)	$	(0.79	)
Basic and diluted earnings (loss) per share	$	(0.03	)	$	(0.11	)	$	(0.79	)	$	(0.36	)	$	4.47		$	(1.04	)	$	(1.35	)	$	(1.09	)
Shares used in computing:
Basic and diluted earnings (loss) per share		23,200			23,187			10,073			9,467			9,412			9,432			9,408			9,366

(1) Net revenues for the second and third quarters of fiscal 2017 include the reclassification of $0.3 million and $0.5 million of dividends and interest income from net revenues to other operating income, respectively.  The reclassifications did not have an impact on the previously reporting losses from continuing operations or net loss for the applicable periods ended December 31, 2016 and March 31, 2017.

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Organization (Details) $ in Millions	12 Months Ended
	Jun. 30, 2017 USD ($) Segment	Nov. 01, 2016
Number of operating segments | Segment	2
GP Corp.
Percentage of ownership interest (as a percent)	80.10%
Noncontrolling Interest of GP Corp	19.90%
MAST Capital Investor
Percentage of outstanding shares, held by MAST capital	8.70%
Noncontrolling Interest owned by MAST	5.00%
GECC
Percentage of ownership interest (as a percent)	17.00%	17.00%
Cost basis of GECC shares owned | $	$ 30

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Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	12 Months Ended
	Jun. 30, 2017 USD ($) ReportingSegment customer shares	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 USD ($) shares	Nov. 01, 2016
Significant Accounting Policies [Line Items]
Number of Reportable Segments | ReportingSegment	2
Incentive fee recognized in revenue that are subject to reversal	$ 1.7
Term of contractual arrangement to provide investment management related services	3 years
Percentage of fees for investment management related services	26.00%
Amortization period of intangible assets	15 years
Potentially dilutive shares excluded from diluted net income (loss) per share | shares	1,923,279	32,638	306,000
Number of shares subject to repurchase | shares	1,058,694
Decrease in net assets due to reclassification of debt issuance costs		$ 0.9
Decrease in net liabilities due to reclassification of debt issuance costs		0.9
General and Administrative Expense
Significant Accounting Policies [Line Items]
Prior period reclassification adjustment		$ 0.1	$ 0.1
Customer Concentration Risk | Sales Revenue, Discontinued Operations
Significant Accounting Policies [Line Items]
Number of customers | customer	1
Minimum
Significant Accounting Policies [Line Items]
Estimated useful life of property and equipment	1 year
Maximum
Significant Accounting Policies [Line Items]
Estimated useful life of property and equipment	5 years
GECC
Significant Accounting Policies [Line Items]
Percentage of ownership interest (as a percent)	17.00%			17.00%
Annual rate of base management fee earned as percentage of average adjusted gross assets	1.50%
Incentive fee earned on net investment income	20.00%
Fixed hurdle rate per quarter	1.75%
Incentive fee earned on net capital gains	20.00%
Investment in shares of common stock	$ 30.0
GECC | Common Stock
Significant Accounting Policies [Line Items]
Investment in shares of common stock	$ 30.0

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Summary of Significant Accounting Policies - Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Accounting Policies [Abstract]
Loss from continuing operations									$ (17,440)	$ (9,440)		$ (12,196)
Income (loss) from discontinued operations, net of tax	$ (105)		$ 210	$ 2,098	$ 43,003	$ (6,621)	$ (10,139)	$ (7,381)	2,203	18,862	$ (29,563)	(29,563)
Net income (loss)									(15,237)	9,422		(41,759)
Less: net loss attributable to non-controlling interest									(30)
Net income (loss) attributable to Great Elm Capital Group	$ (1,305)	$ (2,519)	$ (7,968)	$ (3,415)	$ 42,101	$ (9,786)	$ (12,676)	$ (10,217)	$ (15,207)	$ 9,422		$ (41,759)
Weighted average shares basic and diluted:
Weighted average shares of common stock outstanding									16,433	9,412		9,333
Weighted average shares of restricted stock subject to repurchase												(1)
Weighted average shares used in computing earnings (loss) per share	23,200	23,187	10,073	9,467	9,412	9,432	9,408	9,366	16,433	9,412		9,332
Basic and diluted earnings (loss) per share from:
Income (loss) from continuing operations									$ (1.06)	$ (1.00)		$ (1.31)
Income (loss) from discontinued operations									0.13	2.00		(3.17)
Net income (loss)	$ (0.03)	$ (0.11)	$ (0.79)	$ (0.36)	$ 4.47	$ (1.04)	$ (1.35)	$ (1.09)	$ (0.93)	$ 1.00		$ (4.48)

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Discontinued Operations - Additional Information (Detail)		1 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($) subsidiary	Oct. 31, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($) subsidiary	Dec. 31, 2015 USD ($)
Discontinued Operations [Line Items]
Payment of fee split obligations			$ 1,700,000
General and administrative expenses				$ 2,876,000	$ 2,989,000
General corporate overhead
Discontinued Operations [Line Items]
General and administrative expenses			0
Microsoft Litigation
Discontinued Operations [Line Items]
Settlement payment			8,800,000
Reimbursement of litigation costs		$ 1,900,000
Divesture
Discontinued Operations [Line Items]
Number of Wholly subsidiaries Discontinued | subsidiary	2			2
Purchase price for divesture	$ 40,000,000
Divesture of businesses closing adjustment first amount	30,000,000
Divesture of businesses closing adjustment second amount	$ 10,000,000			$ 10,000,000
Remaining fee share contingent obligations			$ 3,600,000

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Discontinued Operations - Reconciliation of Previous Operations (Detail) - USD ($) $ in Thousands		3 Months Ended							12 Months Ended
		Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Discontinued operations:
Net revenue									$ 8,750	$ 27,826	$ 4,505
Patent licensing expenses	[1]								(5,630)	(30,780)	(31,069)
General and administrative expenses										(2,876)	(2,989)
Other non-significant expenses											(10)
Gain (loss) from discontinued operations									3,120	(5,830)	(29,563)
Gain on sale of discontinued operations										29,795
Total pretax gain (loss) on discontinued operations									3,120	23,965	(29,563)
Income tax benefit (expense)									(917)	(5,103)
Net income (loss) from discontinued operations, net of tax		$ (105)	$ 210	$ 2,098	$ 43,003	$ (6,621)	$ (10,139)	$ (7,381)	$ 2,203	$ 18,862	$ (29,563)	$ (29,563)

[1] Amounts for the fiscal year ended June 30, 2017 primarily consist of non-recurring fee split obligations associated with the Microsoft settlement as further discussed below.

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Investments, at Fair Value (Details) - USD ($) $ in Thousands	1 Months Ended	7 Months Ended	12 Months Ended
	Nov. 30, 2016	Dec. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015	Nov. 01, 2016
Unrealized loss on investment in GECC			$ (9,114)
Dividends and interest income			1,306	$ 6	$ 72
GECC
Unrealized loss on investment in GECC	$ (8,500)	$ (600)	(9,114)
Dividends and interest income			$ 1,300
Percentage of ownership interest (as a percent)			17.00%			17.00%

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Acquisition - Additional Information (Details) - USD ($)		3 Months Ended	12 Months Ended
	Nov. 03, 2016	Jun. 30, 2017	Jun. 30, 2017	Sep. 30, 2017	Nov. 30, 2016	Jun. 30, 2016
Business Acquisition [Line Items]
Common stock, shares authorized		350,000,000,000	350,000,000,000			350,000,000,000
Common stock, par value		$ 0.001	$ 0.001			$ 0.001
Investment Management Agreement fee performance requirement			$ 40,000,000
Gain on change in fair value of liability			$ 30,000
Payment for investment management agreement		$ 3,900,000
Initial estimated useful life of identifiable intangible assets acquired			15 years
Estimated useful life of identifiable intangible assets acquired			22 years
Reversal of amortization expense previously recognized			$ 2,300,000
GP Corp.
Business Acquisition [Line Items]
Percentage of ownership interest by parent	80.10%
Investment in equity interest	$ 80,000
GP Corp. | Scenario, Forecast
Business Acquisition [Line Items]
Secured notes, amount				$ 3,300,000
Warrant rights cancelled				54,733
GP Corp.
Business Acquisition [Line Items]
Percentage of ownership interest (as a percent)		80.10%	80.10%
Percentage of ownership interest by parent		19.90%	19.90%
MAST Capital Investor | Common Stock Warrant
Business Acquisition [Line Items]
Common stock, shares authorized	54,733
Estimated grant date fair value	$ 200,000
Common stock, par value	$ 0.01
MAST Capital Investor | Minimum | Common Stock Warrant
Business Acquisition [Line Items]
Investment Management Agreement fee performance requirement	$ 40,000,000
Acquisition Agreement with MAST Capital | GP Corp.
Business Acquisition [Line Items]
Secured notes, amount	10,800,000
Estimated fair value	$ 3,400,000
Secured notes, due date	Nov. 03, 2026
Mandatory annual payments on debt	$ 300,000
Acquisition Agreement with MAST Capital | GP Corp. | 90-day LIBOR
Business Acquisition [Line Items]
Spread on variable rate basis of debt	3.00%
Acquisition Agreement with MAST Capital | GP Corp.
Business Acquisition [Line Items]
Percentage of ownership interest (as a percent)					80.10%

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Acquisition - Summary of Preliminary Fair Value Estimates as Previously Reported with Adjustments (Details) - USD ($) $ in Thousands		12 Months Ended
	Nov. 03, 2016	Jun. 30, 2017
Assets Acquired and Liabilities Assumed
GP Corp note issued		$ 3,424
GP Corp. | As Previously Reported
Assets Acquired and Liabilities Assumed
GP Corp note issued	$ 10,824,000
Warrants issued	216,000
Total consideration	11,040,000
Furniture and fixtures	22,000
Lease deposit	170,000
Identifiable intangible assets	11,161,000
Lease liability, net	(313,000)
Net assets acquired	11,040,000
GP Corp. | Adjustment
Assets Acquired and Liabilities Assumed
GP Corp note issued	(7,400,000)
Lease deposit	(170,000)
Identifiable intangible assets	(6,735,000)
Lease liability, net	(495,000)
GP Corp. | As Adjusted
Assets Acquired and Liabilities Assumed
GP Corp note issued	3,424,000
Warrants issued	216,000
Total consideration	3,640,000
Furniture and fixtures	22,000
Identifiable intangible assets	4,426,000
Lease liability, net	(808,000)
Net assets acquired	$ 3,640,000

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Acquisition - Summary of Acquired Identifiable Intangible Assets (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2017 USD ($)
Business Acquisition [Line Items]
Gross Carrying Amount	$ 4,426
Accumulated Amortization	(324)
Net Carrying Amount	4,102
Investment Management Agreement
Business Acquisition [Line Items]
Gross Carrying Amount	3,900
Accumulated Amortization	(280)
Net Carrying Amount	$ 3,620
Weighted Average Useful Life (in years)	15 years
Assembled Workforce
Business Acquisition [Line Items]
Gross Carrying Amount	$ 526
Accumulated Amortization	(44)
Net Carrying Amount	$ 482
Weighted Average Useful Life (in years)	15 years

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Acquisition -Summary of Amortization Expense of Identifiable Intangible Assets (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Finite Lived Intangible Assets Future Amortization Expense Current And Five Succeeding Fiscal Years [Abstract]
Aggregate Amortization Expense	$ 324
Estimated Amortization Expense, For the year ended June 30, 2018	527
Estimated Amortization Expense, For the year ended June 30, 2019	621
Estimated Amortization Expense, For the year ended June 30, 2020	599
Estimated Amortization Expense, For the year ended June 30, 2021	456
Estimated Amortization Expense, For the year ended June 30, 2022	$ 382

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Related Party Transactions - Additional Information (Details) - MAST Capital Investor $ in Millions	12 Months Ended
	Jun. 30, 2017 USD ($)
Related Party Transaction [Line Items]
Percentage of outstanding shares, held by MAST capital	8.70%
Cost sharing agreement limit	$ 1.4

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Related Party Transactions - Schedule of Investments and Sharing Agreements - (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Related Party Transaction [Line Items]
Unrealized loss on investment in GECC									$ (9,114)
Investment management fees for the period									4,927
Net receivable due at the end of the period	$ 348								348
GECM costs charged to MAST Capital	1,880	$ 4,256	$ 858	$ 2,538	$ 4,890	$ 2,006	$ 1,396	$ 1,651	9,532	$ 9,835	$ 8,040
GECM net profit paid to GP Corp	(1,305)	$ (2,519)	$ (7,968)	$ (3,415)	$ 42,101	$ (9,786)	$ (12,676)	$ (10,217)	(15,207)	$ 9,422	$ (41,759)
Investment in GECC
Related Party Transaction [Line Items]
Unrealized loss on investment in GECC									(9,114)
GECC dividends and interest recognized for the period									1,306
Managing GECC
Related Party Transaction [Line Items]
Reimbursement of GECC formation expenses for the period									2,989
Investment management fees for the period									4,287
GECC administrative fees during the period									640
Net receivable due at the end of the period	3,654								3,654
Cost Sharing with MAST
Related Party Transaction [Line Items]
GECM costs charged to MAST Capital									1,809
Profit Sharing with GP Corp
Related Party Transaction [Line Items]
Secured notes, amount	$ 3,174								3,174
Interest accrued and paid on GP Corp Note during the period									285
Principal payments made on GP Corp Note during the period									$ 250

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Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value on Recurring and Non-recurring Basis (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Liabilities:
Warrant liability	$ 186
GECC
Assets:
Investment in GECC	20,886
Level 1 | GECC
Assets:
Investment in GECC	20,886
Level 3
Liabilities:
Warrant liability	$ 186

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Financial Instruments (Detail) - USD ($)	8 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Financial assets measured at fair value on recurring or non-recurring basis		$ 0
Fair value assumptions, expected dividend yields	0.00%
Fair value assumptions, risk-free interest rate	1.50%
Warrant exercise price	$ 0.01
Warrants, contractual term	10 years
Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value assumptions, expected volatility rate	65.70%
Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value assumptions, expected volatility rate	66.60%

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Financial Instruments - Summary of Changes in Fair Value of Level 3 Financial Liabilities Measured on Recurring Basis (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2017 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Re-measurement of warrant liability (gain)	$ 30
Derivative Financial Instruments, Liabilities | Fair Value Level 3 Financial Liabilities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Aggregate fair value of warrant issued	216
Re-measurement of warrant liability (gain)	(30)
End of year	$ 186

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Related Party Note Payable - Summary of Related Party Notes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Debt Instrument [Line Items]
Balance beginning of year	$ 33,786	$ 29,020
Issuance of GP Corp Note, at fair value	3,424
Amortization of discount issuance costs	2,802	411
Principal and interest payments	(36,838)
Balance end of year	$ 33,786	29,020	$ 3,174	$ 33,786
Current portion, end of year			250	$ 33,786
Balance, net of current portion, end of year			2,924
GP Corp Note
Debt Instrument [Line Items]
Issuance of in-kind notes		$ 4,355
Balance end of year			$ 3,174

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Related Party Note Payable - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
	Nov. 03, 2016	Oct. 31, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Interest expense			$ 6,321	$ 4,947	$ 4,332
Senior Secured Notes
Debt Instrument [Line Items]
Interest expense		$ 1,200
Total cash payment to retire Notes		39,800
Call premium		2,000
Payment of related party Note		$ 36,600
GP Corp Note
Debt Instrument [Line Items]
Interest expense			$ 300
Average interest rate			4.00%
Mandatory annual payments on debt	$ 300
GP Corp Note | 90-day LIBOR
Debt Instrument [Line Items]
Spread on variable rate basis of debt	3.00%

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Related Party Note Payable - Summary of Company's Maximum Obligations and Estimated Cumulative Off-Sets Allowed by Cost-Sharing Agreements (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Estimated GP Corp Note, net	$ 3,174	$ 33,786	$ 29,020
GP Corp Note
Debt Instrument [Line Items]
2018	250
2019	250
2020	250
2021	250
2022	250
Thereafter	9,324
Total, maximum obligation	10,574
Estimated reduction from cost sharing agreement	(7,400)
Estimated GP Corp Note, net	$ 3,174

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Commitments and Contingencies (Detail) - Divesture - USD ($) $ in Millions		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Commitments and Contingencies
Maximum additional proceeds	$ 10		$ 10
Divesture of businesses closing adjustment second amount	$ 10		$ 10
Contractual payment due date		Jun. 30, 2018

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Operating Leases - Additional Information (Details) $ in Thousands		12 Months Ended
	Dec. 23, 2016 USD ($)	Jun. 30, 2017 USD ($) Office
Operating Leased Assets [Line Items]
Number of operating leased asset obtained | Office		2
Hancock Lease
Operating Leased Assets [Line Items]
Operating leases early effective termination date		Dec. 31, 2017
Obligation under operating lease		$ 700
Watermill Lease
Operating Leased Assets [Line Items]
Obligation under operating lease		$ 1,700
Operating lease remaining initial term	88 months
Operating leases optional lease extension period	60 months
Expected term of right of use of office space	88 months
Lease liability	$ 1,700
Lease discount rate	10.00%
Increase in average rate of lease payment		2.40%
Watermill Lease | Minimum
Operating Leased Assets [Line Items]
Increase in average rate of lease payment, amount		$ 28
Watermill Lease | Maximum
Operating Leased Assets [Line Items]
Increase in average rate of lease payment, amount		$ 32

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Operating Leases - Schedule of Company's Undiscounted Cash Payment Obligations for Operating Lease Liabilities (Detail) $ in Thousands	Jun. 30, 2017 USD ($)
Operating Leases Future Minimum Payments Due [Abstract]
2018	$ 920
2019	337
2020	345
2021	353
2022	362
Thereafter	843
Total	$ 3,160

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Stockholders' Equity - Rights Offering (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		12 Months Ended
	Nov. 30, 2016	Oct. 31, 2016	Jun. 30, 2017
Stockholders' Equity
Stock rights exercise price			$ 0.01
Proceeds from rights offering issuance of common stock			$ 45,000
Expense of sale of stock			$ 2,353
Rights Offering
Stockholders' Equity
Proceeds from investors, on issuance of common stock	$ 45,000	$ 36,600
Stock rights exercise price	$ 3.285
Common stock, shares issued	12,755,200
Proceeds from rights offering issuance of common stock	$ 41,900
Expense of sale of stock	2,400
Net proceeds	$ 39,500
Rights Offering | Backstop Providers
Stockholders' Equity
Common stock, shares issued	945,333
Proceeds from rights offering issuance of common stock	$ 3,100

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Stockholders' Equity - Tax Benefits Preservation Agreement (Detail) - $ / shares	Jan. 20, 2015	Jun. 30, 2017	Jun. 30, 2016
Stockholders' Equity
Common stock, par value		$ 0.001	$ 0.001
Preferred stock, par value		0.001	$ 0.001
Preferred stock rights exercise price		$ 0.01
Rights plan restriction, maximum percentage of common stock a person or an entity can acquire		4.99%
Rights plan restriction, maximum percentage of common stock owned by a person or an entity restricted from buying additional shares		5.00%
Preferred Stock Purchase Right
Stockholders' Equity
Number of rights distributed per common share	1
Common stock, par value	$ 0.001
Number of rights automatically attaching per common share	1
Number of shares of Series A Junior Participating Cumulative Preferred Stock purchased by each right	0.0001
Preferred stock, par value	$ 0.001
Preferred stock rights exercise price	$ 15.00

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Stockholders' Equity - Stock Plans (Detail) - shares	1 Months Ended	12 Months Ended
	Nov. 30, 2013	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period		5 years
Directors Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period	3 years
Term of stock option grants	10 years
Common stock, shares outstanding		109,058
Directors Stock Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Options acceleration period	24 months
2006 Plan
Share-based Compensation Arrangement by Share-based Payment Award
Term of stock option grants	10 years
Common stock, shares outstanding		438,981
Reduction in Share Reserve	1
Cliff period of options for new employees	1 year
2006 Plan | Full Value Stock Award
Share-based Compensation Arrangement by Share-based Payment Award
Reduction in Share Reserve	1.5
2006 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period	4 years
2006 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period	3 years
2016 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award
Common stock, shares outstanding		897,714

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Stockholders' Equity - Shares of Common Stock Reserved For Issuance (Detail)	Jun. 30, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award
Common stock available for grant	2,728,083
2006 Plan
Share-based Compensation Arrangement by Share-based Payment Award
Common stock available for grant	131,797
2016 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award
Common stock available for grant	1,652,286
2016 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award
Common stock available for grant	944,000

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Stockholders' Equity - Assumptions Used to Value Options (Detail)	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Expected volatility			67.70%
Expected volatility, minimum	64.70%	64.90%
Expected volatility, maximum	66.60%	69.10%
Expected term (years)			6 years 2 months 5 days
Risk-free rate			1.77%
Risk-free rate, minimum	1.50%	1.73%
Risk-free rate, maximum	2.00%	2.05%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Expected term (years)	6 years 2 months 30 days	5 years 10 months 17 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Expected term (years)	7 years 2 months 30 days	9 years 10 months 17 days

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Stockholders' Equity - Summary of Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Shares
Beginning Balance	610,000
Options granted	170,000
Exercised	0	0
Forfeited, cancelled or expired	(58,000)
Ending Balance	722,000	610,000
Exercisable	604,000
Vested and expected to vest	722,000
Weighted average exercise price
Beginning Balance	$ 9.60
Options granted	3.27
Forfeited, cancelled or expired	17.57
Ending Balance	7.46	$ 9.60
Exercisable	8.28
Vested and expected to vest	$ 7.46
Weighted average remaining contractual term
Outstanding	7 years 3 months 15 days
Exercisable	6 years 10 months 28 days
Vested and expected to vest	7 years 3 months 15 days
Aggregate Intrinsic Value, Outstanding	$ 22
Aggregate Intrinsic Value, Exercisable	6
Aggregate Intrinsic Value, Vested and expected to vest	$ 22
Weighted average grant date fair value of options per share granted	$ 3.68	$ 5.62	$ 5.04
Exercised	0	0
Value of options exercised			$ 20

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Stockholders' Equity - Activity of Restricted Stock Units (Detail) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Weighted average grant date fair value
Granted	1,058,694
Investment management cumulative revenue collection target	$ 40.0
Vesting period	5 years
Restricted Stock Units (RSUs)
Shares
Beginning Balance	32,000
Granted	1,168,000
Vested	(32,000)
Forfeited	(21,000)
Ending Balance	1,147,000	32,000
Weighted average grant date fair value
Beginning Balance	$ 13.30
Granted	3.92
Vested	13.30
Forfeited	3.95
Ending Balance	$ 3.88	$ 13.30
Aggregate grant date fair value of RSU's granted	$ 4.5	$ 0.7	$ 1.9

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Stockholders' Equity - Stock-Based Compensation Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Stock based compensation reclassified to discontinued operations		$ 2.3	$ 1.3
Total unrecognized compensation cost	$ 3.4
Stock-based compensation period for recognition	3 years 9 months 18 days
Minimum
Post termination exercise term	90 days
Maximum
Post termination exercise term	1 year
Employees and Directors
Stock-based compensation expense	$ 2.0	4.4	$ 2.1
Former Officers And Directors
Stock-based compensation expense		$ 2.3

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Income Taxes - Income (Loss) From Continuing Operations Before Provision for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Domestic	$ (18,650)	$ (14,543)	$ (12,032)
Loss from continuing operations, before income taxes	$ (18,650)	$ (14,543)	$ (12,032)

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Income Taxes - Provision (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Current:
Foreign Income Tax			$ 164
Current tax expense			164
Deferred:
Domestic Income Tax	$ (1,210)	$ (5,103)
Deferred tax expense	(1,210)	(5,103)
Total tax expense (benefit)	$ (1,210)	$ (5,103)	$ 164

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Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Income Taxes
Provision for (benefit from) income taxes	$ (1,210,000)	$ (5,103,000)	$ 164,000
Income tax expense (benefit) from discontinued operations	1,200,000	$ 5,100,000	$ 0
Income tax for the period	900,000
Accrued taxes for divested foreign subsidiaries	$ 300,000
Statutory income tax rate	35.00%	35.00%	35.00%
Federal net operating loss carryforwards	$ 1,700,000,000	$ 1,694,999,000
Operating loss carryforward for state income tax	217,000,000
Reduction in state net operating losses for ceased operations	$ 58,000,000
Net operating loss carryforwards description	Under Code Section 382, the utilization of a corporation's NOL carryforwards is limited following a change in ownership (as defined by the Code) of greater than 50% within a rolling three-year period.
Tax benefits preservation agreement, minimum increase of collective ownership of aggregate amount of outstanding shares	50.00%
Tax benefits preservation agreement, ownership change period	3 years
Decrease in unrecognized tax benefits due to discontinued operations	$ 200,000
Unrecognized tax benefits	12,700,000	13,000,000
Total unrecognized tax benefits that, if recognized would affect effective tax rate	12,700,000	13,000,000
Amount of unrecognized tax benefit offset against the deferred tax asset	12,700,000
Interest accrued for tax liabilities	0
California
Income Taxes
Research and development credit carryforward	20,900,000
Massachusetts
Income Taxes
Research and development credit carryforward	$ 900,000
Operating loss carryforwards expiration period	2025
Federal
Income Taxes
Net operating losses, carryforward period	20 years
Federal | California
Income Taxes
Research and development credit carryforward	$ 30,000,000
Minimum
Income Taxes
Tax benefits preservation agreement, ownership change period	3 years
Minimum | California
Income Taxes
Operating loss carryforwards expiration period	2018
Minimum | Massachusetts
Income Taxes
Operating loss carryforwards expiration period	2031
Minimum | Federal
Income Taxes
Operating loss carryforwards expiration period	2018
Minimum | Research and Development
Income Taxes
Operating loss carryforwards expiration period	2018
Maximum
Income Taxes
Tax benefits preservation agreement, ownership change period	4 years
Maximum | California
Income Taxes
Operating loss carryforwards expiration period	2037
Maximum | Massachusetts
Income Taxes
Operating loss carryforwards expiration period	2037
Maximum | Federal
Income Taxes
Operating loss carryforwards expiration period	2036
Maximum | Research and Development
Income Taxes
Operating loss carryforwards expiration period	2036
Mediation And Messaging Businesses
Income Taxes
Foreign deferred tax assets	$ 0	$ 0	$ 0

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Income Taxes - Reconciliation of Expected Federal Income Tax Expense Benefit (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Federal Benefit at Statutory Rate	$ (6,523)	$ (5,090)	$ (4,211)
State taxes	(794)	(12)	(211)
Effect of foreign corporations		(607)	(139)
Permanent adjustments	22	(208)	3
Change in valuation allowance	6,244	(164)	(3,320)
Abandonment of state net operating losses			7,544
Stock compensation adjustment		924	794
Other	(159)	54	(296)
Total tax expense (benefit)	$ (1,210)	$ (5,103)	$ 164

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Income Taxes - Tax Effect of Temporary Differences of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2015
Deferred Tax Assets:
Net operating loss carryforwards	$ 612,378	$ 623,221	$ 617,331
Accruals and allowances not deductible for tax purposes	141	278	(574)
Research and development credit and other carry-forwards	39,112	38,371	38,371
Stock based compensation	604	184	806
Unrealized loss on investment	3,575
Investment in Partnership			11,942
Total Deferred tax assets, gross	655,810	662,054	667,876
Less: valuation allowance	$ (655,810)	$ (662,054)	$ (667,876)

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Income Taxes - Federal Net Operating Loss Carryforwards (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Operating Loss Carryforwards
Federal net operating loss carryforwards	$ 1,700,000	$ 1,694,999
2018
Operating Loss Carryforwards
Federal net operating loss carryforwards		15,511
2019
Operating Loss Carryforwards
Federal net operating loss carryforwards		59,062
2020
Operating Loss Carryforwards
Federal net operating loss carryforwards		488,814
2021
Operating Loss Carryforwards
Federal net operating loss carryforwards		190,624
2022
Operating Loss Carryforwards
Federal net operating loss carryforwards		143,137
2023 through 2037
Operating Loss Carryforwards
Federal net operating loss carryforwards		$ 797,851

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Income Taxes - Gross Unrecognized Tax Benefit Activity (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Beginning Balance	$ 12,966	$ 13,138	$ 13,290
Reductions for tax positions of prior years	(54)
Lapse of statute of limitations	(176)	(172)	(152)
Ending Balance	$ 12,736	$ 12,966	$ 13,138

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Revenue:
Total revenue	$ 2,065	$ 1,582	$ 1,280						$ 4,927
Costs and Expenses:
Total operating costs and expenses	1,880	4,256	858	$ 2,538	$ 4,890	$ 2,006	$ 1,396	$ 1,651	9,532	$ 9,835		$ 8,040
Operating income (loss):
Operating income (loss)									(18,650)	(14,543)
Provision for (benefit from) income taxes									(1,210)	(5,103)		164
Income (loss) from discontinued operations, net	(105)		210	2,098	43,003	(6,621)	(10,139)	(7,381)	2,203	18,862	$ (29,563)	(29,563)
Net income (loss)									(15,237)	9,422		(41,759)
Less: net loss attributable to non-controlling interest									(30)
Net income (loss) attributable to Great Elm Capital Group	(1,305)	$ (2,519)	$ (7,968)	$ (3,415)	42,101	$ (9,786)	$ (12,676)	$ (10,217)	(15,207)	9,422		$ (41,759)
Assets:
Total assets	76,694				80,897				76,694	80,897
Investment management
Revenue:
Total revenue									4,927
Costs and Expenses:
Total operating costs and expenses									5,119
Operating income (loss):
Operating income (loss)									(489)
Assets:
Total assets	9,619								9,619
General corporate
Costs and Expenses:
Total operating costs and expenses									4,413	9,835
Operating income (loss):
Operating income (loss)									(18,161)	(14,543)
Assets:
Total assets	$ 67,075				$ 80,897				$ 67,075	$ 80,897

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Quarterly Financial Results (Unaudited) - Summary of Quarterly Financial Results (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Quarterly Financial Information Disclosure [Abstract]
Net revenues	$ 2,065	$ 1,582	$ 1,280						$ 4,927
Operating costs and expenses	1,880	4,256	858	$ 2,538	$ 4,890	$ 2,006	$ 1,396	$ 1,651	9,532	$ 9,835		$ 8,040
Operating loss	185	(2,674)	422	(2,538)	(4,890)	(2,006)	(1,396)	(1,651)	(4,605)	(9,835)		(8,040)
Loss from continuing operations	(786)	(2,797)	(8,344)	(5,513)	(902)	(3,165)	(2,537)	(2,836)
Income (loss) from discontinued operations	(105)		210	2,098	43,003	(6,621)	(10,139)	(7,381)	2,203	18,862	$ (29,563)	(29,563)
Net income (loss) attributable to Great Elm Capital Group	$ (1,305)	$ (2,519)	$ (7,968)	$ (3,415)	$ 42,101	$ (9,786)	$ (12,676)	$ (10,217)	$ (15,207)	$ 9,422		$ (41,759)
Basic and diluted earnings (loss) per share from continuing operations per share	$ (0.03)	$ (0.11)	$ (0.81)	$ (0.58)	$ (0.10)	$ (0.34)	$ (0.27)	$ (0.30)	$ (1.06)	$ (1.00)		$ (1.31)
Basic and diluted earnings (loss) from discontinued operations per share			0.02	0.22	4.57	(0.70)	(1.08)	(0.79)	0.13	2.00		(3.17)
Net income (loss)	$ (0.03)	$ (0.11)	$ (0.79)	$ (0.36)	$ 4.47	$ (1.04)	$ (1.35)	$ (1.09)	$ (0.93)	$ 1.00		$ (4.48)
Shares used in computing:
Basic and diluted earnings (loss) per share	23,200	23,187	10,073	9,467	9,412	9,432	9,408	9,366	16,433	9,412		9,332

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Quarterly Financial Results (Unaudited) - Summary of Quarterly Financial Results (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Reclassification adjustment of dividend and interest income	$ 0.5	$ 0.3

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Subsequent Events - Additional Information (Detail) - USD ($)	1 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Nov. 03, 2016
Subsequent Event [Line Items]
Common stock fully vested		604,000
Scenario, Forecast | MAST Capital Investor
Subsequent Event [Line Items]
Restricted stock award, forfeited	220,923
Warrants purchase period	2 years
Number of days preceding the date notice of exercise	10 days
Scenario, Forecast | MAST Capital Investor | Maximum
Subsequent Event [Line Items]
Warrants granted to purchase common stock	420,000
GP Corp. | Maximum
Subsequent Event [Line Items]
Secured notes, amount			$ 10,800,000
GP Corp. | Scenario, Forecast
Subsequent Event [Line Items]
Secured notes, amount	$ 3,300,000
Warrant rights cancelled	54,733
Common stock fully vested	54,733