8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 8-K

 _______________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 15, 2018

_______________________________________

Great Elm Capital Group, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________

Delaware	001-16073	94-3219054
(State or other jurisdiction of incorporation)	(Commission File Number)	(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

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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.      ☐

Item 2.02 Results of Operations and Financial Condition.

On May 15, 2018, the registrant issued the press release and published a presentation furnished as exhibits 99.1 and 99.2, respectively, to this report.

The foregoing information (including the exhibits hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished with this report but shall not be deemed filed:

Exhibit Number	Description
99.1	Press release, dated May 15, 2018.
99.2	Presentation, dated May 15, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GREAT ELM CAPITAL GROUP, INC.
Date. May 15, 2018		/s/ John J. Woods
	By:	John J. Woods
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

GREAT ELM CAPITAL GROUP, INC. REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS

•      Significant growth in assets under management;

•      GECC shareholder approval for additional leverage enhances revenue and earnings potential;

•      GECM well positioned to be preferred partner to work out challenged portfolios based on success to date with legacy Full Circle portfolio

WALTHAM, Mass., May 15, 2018 – Great Elm Capital Group, Inc. (NASDAQ: GEC, “Great Elm,” or the “Company”) today announced its financial results for the quarter ended March 31, 2018 and filed its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission. Great Elm will host a conference call and webcast on Wednesday, May 16, 2018 at 9:00 a.m., Eastern Daylight time, to discuss its third quarter financial results. Please see page [6] below for details.

Select highlights from the third fiscal quarter of 2018 include:

▪ During the quarter ending March 31, 2018, Great Elm Capital Corp. (NASDAQ: GECC), a publicly-traded business development company (“BDC”) that is externally managed by GECM, grew its investment portfolio by 18% quarter-over-quarter.  This asset growth was primarily driven by the proceeds from a baby bond offering (NASDAQ: GECCM) that was completed in January and February of 2018. The proceeds from this debt issuance were deployed into what GECM views as attractive risk-adjusted credit opportunities, resulting in portfolio growth and increased diversification of assets during the quarter.

▪ In May 2018, an overwhelming majority of GECC’s stockholders approved a reduction in the asset coverage ratio from 200% to 150%, in accordance with the Small Business Credit Availability Act. The approval to reduce the asset coverage ratio allows for GECC to issue, based on its portfolio valuations as of March 31, 2018, up to an additional $172 million in debt.  The deployment of such proceeds into income-producing assets enhances the fee and earning potential for GECM.

▪ Since GECC’s merger with Full Circle Capital Corporation (“Full Circle”) closed in November 2016, the GECM team has extracted significant value from a portfolio that the equity market had viewed as “challenged.” In the year and a half since, we have exited approximately 70% of the initial cost basis of this portfolio across 22 positions and 15

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portfolio companies, realizing an aggregate total return of $4.2 million to date, a significant achievement given the market’s previous assessment of its value.

▪ In March 2018, Great Elm announced the closing of its first transaction for its Real Estate platform by partnering with a leading investor in the Credit Tenant Lease (“CTL”) space to recapitalize the Gartner I and Gartner II Class A office buildings and associated property in Fort Myers, Florida for an initial capital outlay of approximately $3 million on a transaction value of approximately $61 million.  

BUSINESS OVERVIEW

Great Elm is a publicly-traded holding company that is seeking to create long-term shareholder value by building a business across three verticals: Investment Management, Real Estate, and Operating Companies.

Alignment of Interest

We believe in creating a strong and long-term alignment of interest with our shareholders and in investing alongside them. The employees of GEC and GECM own over 1.6 million shares of GEC, representing approximately 6.3% of the shares outstanding.¹ Additionally, the directors of GEC own or manage approximately 10.5% of GEC’s shares.¹ Between the employees and directors, insiders collectively own or manage approximately 16.8% of the Company’s shares outstanding, which we believe demonstrates the extent of our conviction in what we are seeking to build here at Great Elm.

Investment Management

We view the Investment Management vertical as providing an attractive platform with high margins and a highly scalable business model which, coupled with growth in assets under management, provides significant operating leverage and thus the potential for substantial growth in adjusted EBITDA. We intend to focus on growing the assets of the BDC through additional debt issuances and equity raises.

Additionally, we intend to opportunistically pursue potential M&A activity within the BDC space, leveraging our core skill set as value investors with significant work-out experience. Our team’s success to-date in extracting value from the legacy Full Circle portfolio, largely deemed by the market to be “challenged,” is a testament to this team’s significant experience in rehabilitating companies in financial distress. As referenced above, in the year and half since the merger closed, we have monetized nearly 70% of the day one portfolio across 22 positions and 15 companies, realizing an aggregate total return of $4.2 million.

¹  This includes restricted shares that are subject to both performance and service vesting and is based on the share count pro forma for the vesting of said restricted shares.

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Lastly, we intend to leverage the team’s experience and long track record of success with co-investment opportunities as we seek to grow the GECM platform more broadly.

“We continue to be enthusiastic about the attractiveness of the Investment Management business,” remarked Mr. Peter Reed, the Chief Executive Officer of Great Elm.

“During the quarter, we successfully completed an additional baby bond financing, resulting in an increased asset base for GECC to deploy into attractive total return investment opportunities. Furthermore, we received significant shareholder support for incurring additional leverage at GECC, permitting us to add leverage up to the new statutory limit of two to one debt to equity. As previously stated, we intend to use this additional leverage prudently, in amounts and at times that GECM believes can best deliver attractive risk-adjusted returns.”

Real Estate

Following the announcement of the Fort Myers transaction in March, our Real Estate team has received in excess of 50 opportunities to review in two months, with deal sizes ranging from a few million dollars to over $100 million. We are primarily seeing transactions with a price greater than $20 million which are generally single tenant leaseholds or ground leases across commercial, government and healthcare properties.

“We are pleased to report that our already robust deal flow has significantly increased since the announcement of the Fort Myers transaction in March. As we pursue due diligence on a select number of these opportunities, we continue to focus on building a diversified portfolio of high-quality, income-producing real estate assets that we believe will create long-term shareholder value,” stated Mr. Reed.

Operating Companies

The GEC team continues to focus on sourcing and conducting due diligence on what it views to be attractive acquisition candidates for its Operating Company vertical. For this vertical, we are focusing on the acquisition of growing businesses with demonstrated histories of generating meaningful earnings that are high returns on the capital employed by the business. We hope to acquire controlling interests in these businesses at what we view as reasonable multiples of earnings while utilizing prudent amounts of non-recourse leverage.

“Operating companies continue to be an area of keen focus for us as we seek to build and diversify the Great Elm platform, yet we believe our discipline with respect to business diligence and purchase price, among other factors, will benefit our shareholders in the long run. We continue to focus on not just getting a deal done, but the right deal done,” remarked Mr. Reed.

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CONSOLIDATED FINANCIAL REVIEW & SEGMENT FINANCIALS

As of March 31, 2018, Great Elm had three operating segments: Investment Management, Real Estate and General Corporate.

Investment Management

In March 2018, Great Elm reversed approximately $2.1 million of incentive fees earned by GECM under the investment management agreement and recognized in revenue in prior periods. Generally speaking, GECM earns 20% of GECC’s pre incentive fee net investment income (“NII”) in excess of a 7% hurdle under its investment management agreement with GECC.  Payment of this fee is also subject to a total return hurdle as set forth in the investment management agreement. To the extent that any of such NII is composed of non-cash income, then payment of the incentive fees owed to GECM in respect of such NII is deferred until received by GECC in cash.   GECC’s largest investment, Avanti Communications Group plc (“Avanti”), has generated significant non-cash income in the form of payment-in-kind (“PIK”) interest.  In connection with the recent restructuring of Avanti completed on April 26, 2018, GECC’s investment in Avanti’s third lien notes was converted into Avanti common equity.  As a result of this debt-for-equity conversion, we have determined that the accrued incentives fees associated with the portion of such PIK interest generated by the third lien notes cannot at this time be recognized in revenue and must be reversed for prior periods.  Notwithstanding this reversal, such incentives fees remain payable under the investment management agreement (subject to achievement of return hurdles) and will be recognized in revenue to the extent a hypothetical sale of the new common  equity at the market price would result in gross proceeds to GECC in excess of its initial cost basis in the third lien notes.  We can make no assurances that such incentive fees will ultimately be recognized in revenue or as to the timing of any such recognition.  

Three Months Ended March 31, 2018:

▪ Revenue:

▪ During the quarter ended March 31, 2018, Great Elm recognized and earned management fee revenue of $693,000 vs. $582,000 during the same period in the prior year.

▪ During the quarter ended March 31, 2018, Great Elm recognized and earned administration fee revenue of $283,000 vs. $384,000 during the same period in the prior year.

▪ During the quarter ended March 31, 2018, Great Elm earned, but deferred incentive fee revenue of $966,000 vs. $1.000 million during the same period in the prior year.  During the quarter ended March 31, 2018, Great Elm recognized incentive

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fee revenue of ($1.766) million vs. $1.000 million during the same period in the prior year.

▪ During the quarter ended March 31, 2018, Great Elm earned, but deferred total investment management revenue of $1.942 million vs. $1.966 million during the same period in the prior year.  During the quarter ended March 31, 2018, Great Elm recognized total investment management revenue of ($791,000) vs. $1.966 million during the same period in the prior year.

▪ Net Income (Loss):

▪ During the quarter ended March 31, 2018, Great Elm recognized a net lossof ($2.056) million vs. ($1.346) million during the same period in the prior year.

▪ Adjusted EBITDA:

▪ During the quarter ended March 31, 2018, Great Elm recognized and earned adjusted EBITDA of $616,000 vs. $796,000 during the same period in the prior year.²

Nine Months Ended March 31, 2018³:

▪ Revenue:

▪ During the nine months ended March 31, 2018, Great Elm recognized and earned management fee revenue of $1.849 million vs. $982,000 during the same period in the prior year.

▪ During the nine months ended March 31, 2018, Great Elm recognized and earned administration fee revenue of $916,000 vs. $446,000 during the same period in the prior year.

▪ During the nine months ended March 31, 2018, Great Elm earned incentive fee revenue of $3.467 million vs. $1.880 million during the same period in the prior year. During the nine months ended March 31, 2018, Great Elm recognized incentive fee revenue of $735,000 vs. $1.880 million during the same period in the prior year.

▪ During the nine months ended March 31, 2018, Great Elm recognized total investment management revenue of $3.501 million vs. $3.308 million during the same period in the prior year. During the nine months ended March 31, 2018,

²  Operating expenses during the three month period ended March 31, 2017 were depressed due to an allocation of such expenses under the cost-sharing agreement, resulting in increased adjusted EBITDA for such period.

³  The nine months ended March 31, 2017 spanned from November 3, 2016 to March 31, 2017, with the closing of the Full Circle merger on November 3, 2016.

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Great Elm earned total investment management revenue of $6.233 million vs. $3.308 million during the same period in the prior year.

▪ Net Income (Loss):

▪ During the nine months ended March 31, 2018, Great Elm recognized a net lossof ($3.532) million vs. ($2.178) million during the same period in the prior year.

▪ Adjusted EBITDA:

▪ During the nine months ended March 31, 2018, Great Elm recognized and earned adjusted EBITDA of $2.148 million vs. $1.366 million during the same period in the prior year.

Real Estate

Three Months Ended March 31, 2018:

▪ Revenue:

▪ During the three months ended March 31, 2018, Great Elm earned and recognized $343,000 in rental revenue.

▪ Net Income (Loss):

▪ During the three months ended March 31, 2018, Great Elm earned and recognized $23,000 in net income.

▪ Adjusted EBITDA:

▪ During the three months ended March 31, 2018, Great Elm earned and recognized $322,000 in adjusted EBITDA.

Conference Call & Webcast

Great Elm will host a conference call and webcast on Wednesday, May 16, 2018 at 9:00 a.m., Eastern Daylight time, to discuss its third quarter financial results.

All interested parties are invited to participate in the conference call by dialing +1 (866) 393-4306; international callers should dial +1 (734) 385-2616. Participants should enter the Conference ID 8884509 when asked.

For a copy of the slide presentation that will be referenced during the course of our conference call, please visit: https://www.greatelmcap.com/events-and-presentations/default.aspx or email investorrelations@greatelmcap.com.

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Additionally, the conference call will be webcast simultaneously at:

https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&referrer=&eventid=1678884&sessionid=1&key=831F053A9598B4C068BD887B05BE334C&regTag=&sourcepage=register.

About Great Elm Capital Group, Inc.

Great Elm Capital Group, Inc. (NASDAQ: GEC) is a publicly-traded holding company that is seeking to build a business across three operating verticals: investment management, real estate and operating companies. Great Elm Capital Group’s website can be found at www.greatelmcap.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements in this press release that are “forward-looking” statements, including statements regarding expected revenue, taxable income and net income, involve risks and uncertainties that may individually or collectively impact the matters described herein. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made and represent Great Elm’s assumptions and expectations in light of currently available information.  These statements involve risks, variables and uncertainties, and Great Elm’s actual performance results may differ from those projected, and any such differences may be material. For information on certain factors that could cause actual events or results to differ materially from Great Elm’s expectations, please see Great Elm’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Additional information relating to Great Elm’s financial position and results of operations is also contained in Great Elm’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.

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Non-GAAP Financial Measures

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 adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted EBITDA is derived from methodologies other than in accordance with US GAAP. Great Elm believes that Adjusted EBITDA is an important measure for investors to use in evaluating Great Elm’s businesses. In addition, Great Elm’s management reviews Adjusted EBITDA as they evaluate acquisition opportunities.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it either in isolation from, or as a substitute for, analyzing Great Elm’s results as reported under US GAAP. Non-GAAP financial measures reported by Great Elm may not be comparable to similarly titled amounts reported by other companies.

Set forth below is a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income. The information in the table below includes forecasts, projections and other predictive statements that represent Great Elm’s assumptions and expectations in light of currently available information. These forecasts, projections and other predictive statements involve risks, variables and uncertainties. Great Elm’s actual performance results may differ from those projected in in the table below, and any such differences may be material.

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	For the Three Months Ended March 31, 2018											For the Three Months Ended March 31, 2017
Dollar amounts in thousands	Investment Management			Real Estate		General Corporate			Total			Investment Management			Real Estate		General Corporate			Total
Net income (loss) - US GAAP	$	(2,056	)	$	23	$	(2,356	)	$	(4,389	)	$	(1,346	)	$	—	$	(1,451	)	$	(2,797	)
EBITDA:
Net income (loss) - US GAAP	$	(2,056	)	$	23	$	(2,356	)	$	(4,389	)	$	(1,346	)	$	—	$	(1,451	)	$	(2,797	)
Interest		39			186		—			225			108			—		—			108
Taxes		—			—		(182	)		(182	)		—			—		—			—
Depreciation and amortization		136			113		—			249			1,546			—		—			1,546
EBITDA:	$	(1,881	)	$	322	$	(2,538	)	$	(4,097	)	$	308		$	—	$	(1,451	)	$	(1,143	)
Adjusted EBITDA:
EBITDA	$	(1,881	)	$	322	$	(2,538	)	$	(4,097	)	$	308		$	—	$	(1,451	)	$	(1,143	)
Stock based compensation		618			—		300			918			488			—		85			573
Unrealized loss on investment in GECC		—			—		1,219			1,219			—			—		570			570
Unrecognized incentive fees earned, net of related cost adjustments (1)		1,879			—		—			1,879			—			—		—			—
Non-reimbursable MAST Capital    expenses		—			—		—			—			—			—		—			—
Re-measurement of warrant liability		—			—		—			—			—			—		(25	)		(25	)
Adjusted EBITDA	$	616		$	322	$	(1,019	)	$	(81	)	$	796		$	—	$	(821	)	$	(25	)
(1)      Amount represents $2.7 million of unrecognized incentive fees earned, net of $0.8 million of unrecognized related bonus compensation expense.

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	For the Nine Months Ended March 31, 2018											For the Nine Months Ended March 31, 2017
Dollar amounts in thousands	Investment Management			Real Estate		General Corporate			Total			Investment Management			Real Estate		General Corporate			Total
Net income (loss) - US GAAP	$	(3,532	)	$	23	$	(5,465	)	$	(8,974	)	$	(2,178	)	$	—	$	(12,168	)	$	(14,346	)
EBITDA:
Net income (loss) - US GAAP	$	(3,532	)	$	23	$	(5,465	)	$	(8,974	)	$	(2,178	)	$	—	$	(12,168	)	$	(14,346	)
Interest		174			186		—			360			175			—		6,036			6,211
Taxes		—			—		(182	)		(182	)		—			—		—			—
Depreciation and amortization		449			113		—			562			2,564			—		—			2,564
EBITDA:	$	(2,909	)	$	322	$	(5,647	)	$	(8,234	)	$	561		$	—	$	(6,132	)	$	(5,571	)
Adjusted EBITDA:
EBITDA	$	(2,909	)	$	322	$	(5,647	)	$	(8,234	)	$	561		$	—	$	(6,132	)	$	(5,571	)
Stock based compensation		2,889			—		713			3,602			805			—		414			1,219
Unrealized loss on investment in    GECC		—			—		2,753			2,753			—			—		7,619			7,619
Unrecognized incentive fees earned, net of related cost adjustments (1)		1,879			—		—			1,879			—			—		—			—
Non-reimbursable MAST Capital    expenses		281			—		128			409			—			—		—			—
Re-measurement of warrant liability		8			—		—			8			—			—		(36	)		(36	)
Adjusted EBITDA	$	2,148		$	322	$	(2,053	)	$	417		$	1,366		$	—	$	1,865		$	3,231
(1)      Amount represents $2.7 million of unrecognized incentive fees earned, net of $0.8 million of unrecognized related bonus compensation expense.

Media & Investor Contact:

Great Elm Capital Group

Meaghan K. Mahoney

Senior Vice President

+1 617 375-3006

mmahoney@greatelmcap.com  or investorrelations@greatelmcap.com

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EX-99.2

Great Elm Capital Group, Inc. Investor Presentation – Quarter Ended March 31, 2018 May 15, 2018 © 2018 Great Elm Capital Group, Inc. Exhibit 99.2

© 2018 Great Elm Capital Group, Inc. Disclaimer Statements in this presentation that are “forward-looking” statements, including, but not limited to, statements regarding potential or expected IRRs, cash-on-cash returns and net operating loss utilization, involve risks and uncertainties that may individually or collectively impact the matters described herein. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made and represent Great Elm Capital Group, Inc.’s (“Great Elm” or “GEC”) assumptions and expectations in light of currently available information.  Great Elms assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this presentation or to conform prior statements to actual results or revised expectations, expect as required by law. These statements involve risks, variables and uncertainties, and Great Elm’s actual performance results may differ from those projected, and any such differences may be material. For information on certain factors that could cause actual events or results to differ materially from Great Elm’s expectations, please see Great Elm’s filings with the Securities and Exchange Commission (the “SEC”), including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Additional information relating to Great Elm’s financial position and results of operations is also contained in Great Elm’s annual and quarterly reports filed with the SEC, which are available for download at its website www.greatelmcap.com or at the SEC website www.sec.gov. This presentation does not constitute an offer of any securities for sale.

© 2018 Great Elm Capital Group, Inc. Agenda Item:Pages: I. Organizational Overview4 – 7 II. Investment Management8 - 16 III. Real Estate17 - 20 IV. Operating Companies21 - 23 V. Financial Review24 - 28 VI. Summary28 - 30 VII. Q&A 31 VIII. Appendix 32 - 34 Table of Contents

Organizational Overview © 2018 Great Elm Capital Group, Inc.

© 2018 Great Elm Capital Group, Inc. Organizational Overview *All debt of subsidiaries is non-recourse to GEC Real Estate Great Elm FM Acquisition, Inc. Great Elm FM Acquisition, Inc. indirectly owns 80.1% of CRIC IT Fort Myers LLC (“CRIC IT”), which owns the properties that are leased on a long-term and triple net basis to Gartner, Inc. CRIC IT is the issuer of a $54.6 million A1 note and a $2.7 million A2 note Future Real Estate Acquisition Subsidiaries Direct owner of property to issue debt GEC to indirectly own at least 80.1% of equity in property owner Investment Management Great Elm Capital Management, Inc. (“GECM”) SEC Registered Investment Advisor Investment Management Agreement (“IMA”) with Great Elm Capital Corp. (“GECC”), a business development company (“BDC”) Three IMAs with a leading institutional investor Manager for future funds, co-investments and separately managed accounts (“SMAs”) GECC GP Corp. Receives profits solely from GECC IMA Issuer of $3.3 million note 80.1% owned by GEC, 19.9% owned by employees / former employees Operating Companies Operating Company 1 Issuer of debt GEC to indirectly own at least 80.1% of equity Operating Company 2 Issuer of debt GEC to indirectly own at least 80.1% of equity Operating Company 3 Issuer of debt GEC to indirectly own at least 80.1% of equity

© 2018 Great Elm Capital Group, Inc. Organizational Overview: Drivers of Shareholder Value Target growing companies with attractive returns on capital and limited depreciation and amortization expense Focus on companies that can be acquired at a reasonable multiple of earnings Investment Management Operating Companies Real Estate Grow GECC through additional debt issuances and equity raises, as well as by acquiring other BDCs via M&A Increase assets under management (“AUM”) via new fund launches, SMAs and co-investments Seek opportunities, such as the Fort Myers transaction that closed in March 2018, that utilize modest equity capital and monetize significant net operating loss carryforwards (“NOLs”)

© 2018 Great Elm Capital Group, Inc. Organizational Overview: Alignment of Interest When combined, insider ownership totals approximately 16.8% of the shares outstanding We believe this level of insider ownership results in a significant and long-term alignment of interest between the shareholders and the insiders of GEC Director Share Ownership Employees of GEC/GECM collectively own over 1.6 million shares in GEC, representing approximately 6.3% of the shares outstanding1 The directors of GEC collectively own approximately 10.5% of GEC’s outstanding shares1 Significant Alignment of Interest Employee Share Ownership (1) This includes restricted shares that are subject to both performance and service vesting and is based on the share count pro forma for the vesting of said restricted shares.

Investment Management © 2018 Great Elm Capital Group, Inc.

© 2018 Great Elm Capital Group, Inc. Investment Management: A Scalable, High Margin Business AUM Growth High Adjusted EBITDA Margins Highly Scalable Model Significant Free Cash Flow AUM GROWTH Grow GECC’s AUM through the issuance of additional debt and equity, complemented with accretive acquisitions of other BDCs, resulting in an increase in fee revenue Grow the Investment Management business by leveraging the existing team to raise additional vehicles HIGH MARGINS Our Q3 and YTD Adjusted EBITDA margins on earned but not recognized revenues were 31.7% and 34.5% respectively1 We expect these margins to increase as our AUM increases HIGHLY SCALABLE MODEL Investment team and platform in place to support substantial growth in AUM and investment vehicles SIGNIFICANT FREE CASH FLOW Growth in AUM in the Investment Management business coupled with its high margins and highly scalable business model results in significant operating leverage and thus the potential for substantial growth in adjusted EBITDA (1) Please refer to reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA and an explanation of earned but unrecognized revenues in the Appendix.

© 2018 Great Elm Capital Group, Inc. Investment Management: Revenue Generation Management & Administration Fees GECM charges management fees of 1.50% on GECC’s gross assets under management, excluding cash GECM receives reimbursement of certain expenses per its administration agreement with GECC Incentive Fees: Part I (Pre-Incentive Fee NII) Subject to a quarterly hurdle rate of 1.75% on GECC’s net assets, GECM also charges a 20.0% incentive fee on GECC’s pre-incentive fee net investment income (“NII”), which includes, but is not limited to: interest income, accretion of OID and market discount and dividends. Payment of this incentive fee is subject to a total return hurdle Incentive Fees: Part II (Capital Gains) GECM charges a 20.0% incentive fee on GECC’s aggregate, cumulative net realized capital gains less any aggregate, cumulative unrealized losses

© 2018 Great Elm Capital Group, Inc. Investment Management: AUM by Vehicle and Revenue Growth1 ($ in M) AUM by Vehicle 1 Investment Management Revenue1 Great Elm Capital Corp. Separately Managed Accounts Annual Management Fee Revenue1 GECC grew its investment portfolio1 by approximately 18% quarter-over-quarter from the quarter ended 12/31/2017 to 3/31/2018 through utilizing the proceeds of its most recent debt issuance and deploying said capital into new and existing investment opportunities Additionally, during the quarter ended 3/31/2018, GECM added three new SMAs with a fair market value of $15 million and a par value of $33 million (1) The chart above includes annualized management fee revenue for 2016 and 2018 and actual management fee revenue for 2017. Assets are based on fair market value of investments as of year-end or quarter-end, as applicable.

© 2018 Great Elm Capital Group, Inc. Investment Management: BDC Growth Initiatives Addition of a credit facility and / or raise additional debt GECC has raised approximately $79 million in two baby bond issuances since September 2017 and is currently at a debt-to-equity ratio of 63 cents of debt for every dollar of equity (or an asset coverage ratio of approximately 255%). The initial baby bond issuance (NASDAQ: GECCL) was to refinance existing debt and the second issuance (NASDAQ: GECCM) was used to add assets to its portfolio Any subsequent debt raises would also be utilized to add investment assets to its portfolio In March 2018, the Small Business Credit Availability Act (“SBCAA”) was signed into law, permitting a reduction in the required asset coverage ratio test for BDCs from 200% to 150% In May 2018, a majority of GECC’s stockholders approved the application of the modified minimum asset coverage requirements set forth in the SBCAA Based on this reduction in the required asset coverage test, GECC would be permitted to raise up to approximately $172 million in additional debt capital to fund new investments based on its current amount of outstanding indebtedness GECM intends to continue growing its Investment Management platform by focusing on growing GECC both organically and inorganically GECM intends to continue to deploy leverage prudently, in amounts and at times that GECM believes best deliver attractive risk-adjusted returns to GECC’s stockholders Additional Debt Capital

© 2018 Great Elm Capital Group, Inc. Investment Management: BDC Growth Initiatives Consider raising equity at times when common shares trade at or above net asset value (“NAV”); GECC requires that a majority of shareholders approve the issuance of shares below NAV We believe there are two key “overhangs” to the GECC shares currently, which are trading at approximately 80% of NAV Investment in Avanti Communications Group plc (“Avanti”): the investment in Avanti currently represents approximately 21% of the fair market value of investments in the GECC portfolio (please see Slide 16 for further information regarding the Avanti investment) “MAST Overhang:” funds managed by MAST Capital Management, LLC (“MAST”) own approximately 47% of the outstanding shares of GECC Alternatively, raise equity via a rights offering or issue shares below NAV with shareholder approval GECM intends to continue growing its Investment Management platform by focusing on growing GECC both organically and inorganically Additional Equity Capital

Investment Management: BDC Growth Initiatives GECC can utilize its shares as acquisition currency to acquire other BDCs, increasing assets under management and potentially fees. GECM can execute on this strategy even if GECC’s shares are not trading at / near NAV and said transaction, importantly, can still be accretive to GECC stockholders Since GECC’s merger with Full Circle Capital Corporation (“Full Circle”) closed in November 2016, the GECM team has extracted significant value from a portfolio that the equity market had viewed as “challenged” under former management. In the year and a half since, we have exited approximately 70% of the initial cost basis of this portfolio across 22 positions and 15 portfolio companies, realizing an aggregate total return of $4.2 million to date, a significant achievement given the market’s assessment of the value With our significant experience in rehabilitating companies in financial distress, we believe that GECM is uniquely positioned to unlock value in other “challenged” BDC portfolios, similar to what we have accomplished with the Full Circle portfolio GECM intends to continue growing its Investment Management platform by focusing on growing GECC both organically and inorganically © 2018 Great Elm Capital Group, Inc. M&A Activity

Investment Management: Other Growth Initiatives Building on the team’s track record of success with co-investments, GECM has been in dialogue with institutional and family office investors about potential co-investments, SMAs and other fund investment opportunities. We are specifically focused on actionable co-investment opportunities to drive near-term growth GECM intends to continue growing its Investment Management platform by focusing on fund launches, SMAs and co-investment opportunities © 2018 Great Elm Capital Group, Inc. With a high degree of operating leverage in a scalable business model, GEC can continue to grow its Investment Management business, leveraging the skill set of the existing team with little additional capital required Other Growth Initiatives

Investment Management: Avanti Update Avanti is a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. Avanti’s satellites utilize Ka-band frequencies, enabling higher speed and volume at lower cost. GECC’s debt investment in Avanti is secured by a collateral package that consists of satellites in orbit (HYLAS 1, 2 and 4), one satellite under construction (HYLAS 3), ground earth stations, spectrum and orbital slots. As of March 31, 2018, approximately 21% of the fair market value of GECC’s investments were in Avanti securities In December 2017, Avanti announced a proposed restructuring plan whereby the terms of its second lien debt would be amended and its current third lien debt would be “equitized” in a debt-for-equity swap. In April 2018, a majority of Avanti shareholders voted in support of the proposed restructuring plan, allowing for the plan to close on April 26, 2018. In consideration for their support, the existing shareholders retained 7.5% of the common equity pro-forma for the issuance associated with the restructuring and the third lien debtholders received 92.5%. GECC now owns approximately 9.1% of Avanti’s common equity Additionally, in April 2018, Kyle Whitehill joined Avanti as its new CEO, replacing Alan Harper, previously the company’s Interim CEO. Mr. Whitehill started in April and Mr. Harper resumed his role as a Non-Executive Director of Avanti. Mr. Whitehill brings significant experience working with telecommunications companies in emerging market countries, similar to the ones that Avanti serves Lastly, Avanti successfully launched HYLAS 4 in April 2018, its largest capacity satellite. HYLAS 4 is now in its period of in-orbit testing, a period that typically lasts approximately three months. If in-orbit testing is successfully completed, we anticipate Avanti would commence selling capacity and thus generating revenue from HYLAS 4 © 2018 Great Elm Capital Group, Inc. About Avanti Recent Events With the completion of these three significant events, we believe Avanti is well-positioned for improved operating results, which may lead to an opportunity for GECC to reduce its exposure to this issuer at potentially higher prices

Real Estate © 2018 Great Elm Capital Group, Inc.

© 2018 Great Elm Capital Group, Inc. Real Estate: A Refresher We believe we are uniquely positioned to be a preferred partner to a sub-set of real estate investors because of our ability to absorb phantom income We view Credit Tenant Lease financings in Real Estate to High-Quality Tenants as an attractive business for GEC for the following reasons: Limited Equity Capital Deployed High Level of Non-Recourse Leverage Monetization of Significant NOLs

© 2018 Great Elm Capital Group, Inc. Real Estate: Fort Myers Transaction Cash Flows CRIC IT Fort Myers LLC Summary of Cash Rent, Amortization and Mortgage Balances                     Senior Note Senior Note Sub. Note Sub. Note Remaining Mortgage Remaining Mortgage   Cash Rent Amortization Interest Amortization Interest Balance (Sr. Note) Balance (Sub. Note) Year               1 $ 4,000,394 $ (1,946,883) $ (1,881,660) $ - $ - $ 52,850,853   2 4,089,997 (2,104,321) (1,811,215) - - 50,746,532   3 4,181,631 (2,269,346) (1,735,155) - - 48,477,187   4 4,277,059 (2,443,941) (1,653,208) - - 46,033,245   5 4,383,281 (2,635,402) (1,564,876) - - 43,397,844   6 4,492,249 (2,836,359) (1,469,712) - - 40,561,484   7 4,604,035 (3,047,224) (1,367,377) - - 37,514,260   8 4,740,238 (3,289,625) (1,257,213) - - 34,224,635   9 4,882,445 (3,546,575) (1,138,328) - - 30,678,060   10 5,028,918 (3,816,845) (1,010,264) - - 26,861,215   11 5,179,786 (4,101,036) (872,547) - - 22,760,179   12 5,766,208 (4,387,097) (778,135) - - 18,373,083     $ 55,626,238 $ (36,424,654) $ (16,539,690) $ - $ - $ 18,373,083 $ 16,269,888                 Senior Note: Beginning Balance $ 54,797,736           Senior Note: Remaining Balance $ 18,373,083           Sub. Note: Beginning Balance $ 2,685,993           Sub. Note: Remaining Balance $ 16,269,888           Over the course of this twelve-year lease term, the cash flows from the rental income will amortize down the senior note from approximately $54.8 million to $18.4 million, allowing us to create significant equity value with limited equity capital deployed

Since announcing the Fort Myers Transaction in March 2018, our Real Estate team has received in excess of 50 opportunities to review Approximately 75% of the deals we have reviewed have prices greater than $20 million Primarily single tenant leaseholds and ground leases across commercial office space and industrial properties Tenant types include enterprise, healthcare and government / GSA Currently focused on 3 – 5 potential acquisitions that range from $30 to $130 million in offer price 50+ Opportunities Since Early March Deal Flow Characteristics Focus: 3 - 5 Deals Under Further Review © 2018 Great Elm Capital Group, Inc. Real Estate: Deal Pipeline Post-Fort Myers Transaction

Operating Companies © 2018 Great Elm Capital Group, Inc.

© 2018 Great Elm Capital Group, Inc. Operating Companies: A Refresher Further, we are focused on businesses that we can acquire at what we view to be reasonable multiples of earnings while utilizing prudent amounts of non-recourse leverage We are seeking to acquire controlling interests in Operating Companies that meet the following characteristics: High-Quality, Growing Businesses Proven History of Generating Meaningful Earnings Attractive Returns on Capital Employed By The Business

During the past 18 months, we have seen a significant number of possible acquisition candidates, with enterprise values (“EV”) ranging from $5 to $200 million The bulk of the transactions we have been evaluating have an EV between $10 and $70 million. To date, we have passed on potential transactions primarily due to: purchase price, lack of durable competitive advantage, excessive cyclicality, customer concentration and transaction size Most recently, we declined to pursue a transaction that we had under exclusivity because of heightened operational risks uncovered during due diligence Significant Deal Flow Transaction Focus Final Due Diligence © 2018 Great Elm Capital Group, Inc. Operating Companies: Deal Pipeline

© 2018 Great Elm Capital Group, Inc. Financial Review

Financial Review: Quarterly Financial Results © 2018 Great Elm Capital Group, Inc. See reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA in the Appendix. Interest, taxes, depreciation and amortization are added back to net income (loss) in determining EBITDA. Stock based compensation expense, unrealized loss on investments, unrecognized incentive fees earned (net of related compensation costs) and other minor adjustments are added back to EBITDA in determining Adjusted EBITDA. The Adjusted EBITDA for the three months ended 12/31/2017 was increased by the gain resulting from the redemption of the Full Circle baby bonds (NASDAQ: FULLL) being taken into GECC’s NII. Operating expenses during the three month period ended 3/31/2017 were depressed due to an allocation of such expenses under the cost-sharing agreement resulting in increased adjusted EBITDA for such period.

Financial Review: Year to Date Financial Review © 2018 Great Elm Capital Group, Inc. See reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA in the Appendix. Interest, taxes, depreciation and amortization are added back to net income (loss) in determining EBITDA. Stock based compensation expense, unrealized loss on investments, unrecognized incentive fees earned (net of related compensation costs) and other minor adjustments are added back to EBITDA in determining Adjusted EBITDA. The Adjusted EBITDA for the three months ended 12/31/2017 was increased by the gain resulting from the redemption of the Full Circle baby bonds (NASDAQ: FULLL) being taken into GECC’s NII. Operating expenses during the three month period ended 3/31/2017 were depressed due to an allocation of such expenses under the cost-sharing agreement resulting in increased adjusted EBITDA for such period.

Financial Results: Earned vs. Recognized Fee Income © 2018 Great Elm Capital Group, Inc. November 3, 2016 through March 31, 2018. After the impact of the $2.1 million reversal recorded in the quarter ending March 31, 2018. Please refer to an explanation of earned but unrecognized revenues in the Appendix.. Great Elm Capital Management, Inc.  Earned vs. Recognized Fee Income     Three Months Ended   Nine Months Ended   Inception to Date1 $ in K   March 31, 2018   March 31, 2018   March 31, 2018               Management and Administration Fees:             Management and Administration Fees - Earned   $ 975   $ 2,766   $ 4,936 Management and Administration Fees - Recognized   975   2,766   4,936 Management and Administration Fees - Earned, Not Recognized   $ -   $ -   $ -               Incentive Fees:             Incentive Fees - Earned   $ 966   $ 3,467   $ 6,224 Incentive Fees - Recognized2,3   352   1,801   3,491 Incentive Fees - Earned, Not Recognized2,3   $ 614   $ 1,666   $ 2,732               Total Investment Management Fees:             Investment Management Fees - Earned   $ 1,942   $ 6,233   $ 11,160 Investment Management Fees - Recognized2,3   1,328   4,567   8,428 Total Investment Management Fees - Earned, Not Recognized2,3   $ 614   $ 1,666   $ 2,732              

Financial Results: Path to Cash Flow Break-Even © 2018 Great Elm Capital Group, Inc. Includes audit, tax and other professional fees, board of director costs, other public company expenses and compensation for corporate team. Excludes M&A related expenses and stock based compensation. Including the dividend income generated from our holdings in GECC shares, Great Elm Capital is close to “cash flow” break-even for Corporate overhead Great Elm Capital Group, Inc. Cash Flow Break-Even Analysis                Pro Forma   Pro Forma $ in K   Quarterly   Annualized Corporate Overhead1   $ (950)   $ (3,800) Dividend from GECC   490   1,959 Net Corporate Overhead   $460 $1,841 Investment Management Cash Flows Required to Break-Even $460 $1,841

Summary © 2018 Great Elm Capital Group, Inc.

© 2018 Great Elm Capital Group, Inc. Summary: Drivers of Shareholder Value Continue to pursue acquisitions of operating companies that meet our investment criteria: high-quality, growing businesses with demonstrated histories of generating meaningful earnings that offer attractive returns on the capital employed by the businesses Focus on acquiring these businesses at what we view to be reasonable multiples of earnings Investment Management Operating Companies Real Estate Focus on driving asset growth in GECC coupled with raising capital for SMAs / other investment vehicles. Through leveraging the existing team and infrastructure, we anticipate this growth could result in an improvement in cash flow generation Capitalize on increased deal flow from the announcement of the Fort Myers transaction Seek to enhance value of existing and potential acquired properties through property enhancement and lease modification

Q&A © 2018 Great Elm Capital Group, Inc.

Appendix © 2018 Great Elm Capital Group, Inc.

Appendix: Incentive Fee Reversal © 2018 Great Elm Capital Group, Inc. In March 2018, the Company reversed approximately $2.1 million of incentive fees earned by GECM under the investment management agreement and recognized in revenue in prior periods. Generally speaking, GECM earns 20% of GECC’s pre-incentive fee net investment income (“NII”) in excess of a 7% hurdle under its investment management agreement with GECC. Payment of this fee is also subject to a total return hurdle as set forth in the investment management agreement. To the extent that any of such NII is composed of non-cash income, then payment of the incentive fees owed to GECM in respect of such NII is deferred until received by GECC in cash. GECC’s largest investment, Avanti Communications Group plc (“Avanti”), has generated significant non-cash income in the form of payment-in-kind (“PIK”) interest. In connection with the recent restructuring of Avanti completed on April 26, 2018, GECC’s investment in Avanti’s third lien notes was converted into Avanti common equity. As a result of this debt-for-equity conversion, we have determined that the accrued incentives fees associated with the portion of such PIK interest generated by the third lien notes cannot at this time be recognized in revenue and must be reversed for prior periods. Notwithstanding this reversal, such incentives fees remain payable under the investment management agreement (subject to achievement of return hurdles) and will be recognized in revenue to the extent a hypothetical sale of the new common equity at the market price would result in gross proceeds to GECC in excess of its initial cost basis in the third lien notes. We can make no assurances that such incentive fees will ultimately be recognized in revenue or as to the timing of any such recognition.

Appendix: Contact Information Investor Relations Meaghan K. Mahoney Senior Vice President 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2018 Great Elm Capital Group, Inc.