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): November 12, 2019

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)	(IRS 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

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))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	GEC	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)
Preferred Stock Purchase Rights		Nasdaq Global Select Market
Units, par value, $0.001 per share		Nasdaq Global Select Market

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 November 12, 2019, the registrant issued the press release and published the 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 November 12, 2019.
99.2	Presentation, dated November 12, 2019.

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:  November 12, 2019	/s/  Brent J. Pearson ______________
	By: Brent J. Pearson
	Title: Chief Financial Officer

EX-99.1

Exhibit 99.1

GREAT ELM CAPITAL GROUP, INC. REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS

▪ Significant quarter-over-quarter DME revenue growth in major product categories

▪ New positive air pressure (“PAP”) patient setups increased by approximately 22.0%, year-over-year

▪ Investment Management reports free cash flow of $0.3 million for the three months ended September 30, 2019, up from $(0.1) million in the prior quarter

WALTHAM, MA, November 12, 2019 – Great Elm Capital Group, Inc. (NASDAQ: GEC, “Great Elm”) announced its financial results for the quarter ended September 30, 2019. Great Elm will host a conference call and webcast on Tuesday, November 12, 2019 at 5:00 p.m. Eastern Time to discuss its first quarter 2020 financial results. Please see below for details.

Select highlights from the first quarter 2020 include:

▪ Operating Companies:

▪ For the three months ended September 30, 2019, $13.2 million of revenue, $0.8 million of net loss and $3.0 million of adjusted EBITDA

▪ Invested heavily in people, processes and technology to enhance our scalable infrastructure, capable of supporting multiple acquisitions per year

▪ Management team has identified a large number of potential acquisition targets with strong product fit

▪ Outlook for continued growth in fiscal year 2020 underpinned by key performance indicators

▪ Investment Management:

▪ For the three months ended September 30, 2019, $0.9 million of revenue, net loss of $0.05 million and $1.0 million of adjusted EBITDA

▪ For the three months ended September 30, 2019, $1.0 million of adjusted EBITDA up 64% vs. $0.6 million during the same period in the prior year

▪ For the three months ended September 30, 2019, quarter-over-quarter management fee growth of approximately 2.2%

▪ Outlook for continued free cash flow growth in fiscal year 2020 based on an increase in management fee revenue and the termination of the Full Circle consulting agreement

“We have made, and will continue to make, significant investments in our DME business in order to develop a scalable platform, capable of supporting organic growth as well as numerous identified acquisition opportunities,” remarked Peter A. Reed, Great Elm’s Chief Executive Officer. “Furthermore, we believe our Investment Management business is poised for continued free cash flow growth.”  

Alignment of Interest

The employees of Great Elm and Great Elm Capital Management, Inc. (“GECM”) collectively own approximately 2.0 million shares of GEC stock, representing approximately 8% of its outstanding shares. Additionally, the directors of Great Elm collectively own or manage greater than 11% of Great Elm’s shares. Altogether, insiders collectively own or manage approximately 19% of the company’s outstanding shares, which Great Elm believes fosters a strong alignment of interest between employees, directors and the company’s shareholders.

BUSINESS OVERVIEW

Great Elm is a diversified, publicly-traded holding company that seeks to build long-term shareholder value across three verticals: Operating Companies, Investment Management and Real Estate.

Operating Companies

In the three months ended September 30, 2019, DME generated $3.0 million of adjusted EBITDA. During the third quarter DME experienced meaningful growth in major product categories. Management anticipates continued growth in fiscal year 2020, supported by encouraging key performance indicators, including approximately 22.0% year-over-year growth in PAP patient setups.

The team continues to pursue M&A opportunities with complementary product profiles that increase market penetration and extend existing geographic markets.  

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Investment Management

In the three months ended September 30, 2019, Investment Management generated $1.0 million of adjusted EBITDA, up 64% year over year. Adjusted EBITDA growth was driven by a significant reduction in operating expenses, as management continues to focus on operational efficiency.

Great Elm’s management team believes the Investment Management business is scalable, offers attractive margins and, when coupled with growth in assets under management, provides for the potential to generate incremental EBITDA.

Great Elm seeks to grow assets under management through capital raises and M&A. If successful, growth in assets under management should result in increased management fee revenue for GECM. This increase in management fee revenue should drive future free cash flow generation, aided by the termination of the Full Circle consulting agreement in November 2019.  

Alongside Great Elm Capital Corp., Great Elm Opportunities Fund I, LP and existing separately managed accounts, Great Elm continues to seek avenues for growth, potentially launching additional private funds and pursuing opportunistic acquisitions in the business development company space.

Real Estate

In the three months ended September 30, 2019, Real Estate generated $1.3 million in rental revenue and $1.1 million of adjusted EBITDA.

Great Elm continues to focus on credit tenant lease financings and ground lease structures across a variety of commercial, government and other properties. Great Elm’s substantial tax assets can make it a value-added partner or lessor. While Great Elm selectively pursues compelling real estate opportunities from time to time, it does not currently see an abundance of attractive potential acquisitions in what appears to be a relatively overheated market.

FINANCIAL REVIEW: SEGMENT FINANCIALS

As of September 30, 2019, Great Elm had four operating segments: Durable Medical Equipment, Investment Management, Real Estate and General Corporate.

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Durable Medical Equipment

Three Months Ended September 30, 2019:

Revenue:

▪ During the three months ended September 30, 2019, Great Elm recognized $13.2 million in total revenue vs. $4.1 million during the approximately one month of operations ended September 30, 2018.

Net Income (Loss):

▪ During the three months ended September 30, 2019, Great Elm recognized a net loss of $0.8 million vs. less than $0.1 million of net income during the approximately one month of operations ended September 30, 2018.

Adjusted EBITDA:

▪ During the three months ended September 30, 2019, Great Elm recognized $3.0 million in adjusted EBITDA vs. $1.3 million during the approximately one month of operations ended September 30, 2018.

Investment Management

Three Months Ended September 30, 2019:

Revenue:

▪ During the three months ended September 30, 2019, Great Elm recognized management fee revenue of $0.8 million vs. $0.8 million during the same period in the prior year.

▪ During the three months ended September 30, 2019, Great Elm recognized total investment management revenue of $0.9 million vs. $0.9 million during the same period in the prior year.

Net Income (Loss):

▪ During the three months ended September 30, 2019, Great Elm recognized a net loss of $0.05 million vs. a net loss of $0.7 million during the same period in the prior year.

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Adjusted EBITDA:

▪ During the three months ended September 30, 2019, Great Elm recognizedadjusted EBITDA of $1.0 million vs. $0.6 million during the same period in the prior year.

Real Estate

Three Months Ended September 30, 2019:

Revenue:

▪ During the three months ended September 30, 2019, Great Elm recognized $1.3 million in rental revenue vs. $1.4 million during the same period in the prior year.

Net Income (Loss):

▪ During the three months ended September 30, 2019, Great Elm recognized $0.1 million in net income vs. $0.1 million in net income during the same period in the prior year.

Adjusted EBITDA:

▪ During the three months ended September 30, 2019, Great Elm recognized $1.1 million in adjusted EBITDA vs. $1.1 million during the same period in the prior year.

General Corporate

Three Months Ended September 30, 2019:

Revenue:

▪ During the three months ended September 30, 2019, Great Elm recognized $0.02 million in revenue vs. $0.02 million in revenue during the same period in the prior year.

Net Income (Loss):

▪ During the three months ended September 30, 2019, Great Elm recognized $2.5 million in net loss vs. net loss of $1.4 million during the same period in the prior year.

Adjusted EBITDA:

▪ During the three months ended September 30, 2019, Great Elm recognized $(1.7) million in adjusted EBITDA vs. $(1.4) million during the same period in the prior year.

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Conference Call & Webcast

Great Elm will host a conference call and webcast on Tuesday, November 12, 2019 at 5:00 p.m. Eastern Time to discuss its first quarter 2020 financial results.

All interested parties are invited to participate in the conference call by dialing +1 (844) 559-0750; international callers should dial +1 (647) 689-5386. Participants should enter the Conference ID 1180236 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.

The conference call will be webcast simultaneously at: https://event.on24.com/wcc/r/2079890/B38EB6281BF27A7531852C0DFABBCF62.

About Great Elm Capital Group, Inc.

Great Elm is a publicly-traded holding company that seeks to build a business across three operating verticals: Operating Companies, Investment Management and Real Estate. Great Elm’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 revenue, adjusted EBITDA, expected growth, profitability, free cash flow and outlook 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 US GAAP financial measure, net income. The information in the table below represents Great Elm’s assumptions and expectations in light of currently available information. 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 September 30, 2019
$ in thousands	DME			Investment Management			Real Estate		General Corporate			Consolidated
EBITDA:
Net income (loss) - GAAP	$	(819	)	$	(45	)	$	60	$	(2,474	)	$	(3,278	)
Interest expense		996			42			658		-			1,696
Depreciation & Amortization		2,508			179			431		-			3,118
Tax expense		-			-			-		242			242
EBITDA		2,685			176			1,149		(2,232	)		1,778
Adjusted EBITDA
Unrecognized incentive fees 1		-			655			-		-			655
Stock based compensation		-			175			-		118			293
Change in contingent consideration 2		-			-			-		(195	)		(195	)
GECC Unrealized (gains) / losses		-			-			-		983			983
Dividend income from GECC		-			-			-		(490	)		(490	)
Other (income) expense		(3	)		-			-		-			(3	)
Transaction and integration costs 2		148			-			-		120			268
Severance		2			-			-		-			2
Pharmacy buildout		135			-			-		-			135
DME management and Monitoring fees		48			-			-		(23	)		25
Adjusted EBITDA	$	3,015		$	1,006		$	1,149	$	(1,719	)	$	3,451

	For the three months ended September 30, 2018
$ in thousands	DME 3			Investment Management			Real Estate		General Corporate 4			Consolidated
EBITDA:
Net income (loss) - GAAP	$	27		$	(689	)	$	51	$	(1,398	)	$	(2,009	)
Interest		286			44			665		-			995
Depreciation and amortization		423			136			431		-			990
Taxes		-			-			-		-			-
EBITDA	$	736		$	(509	)	$	1,147	$	(1,398	)	$	(24	)
Adjusted EBITDA:
Stock based compensation		-			545			-		128			673
Dividend income from GECC		(56	)		-			-		(434	)		(490	)
GECC Unrealized (gains) / losses		80			-			-		(985	)		(905	)
Unrecognized incentive fees earned 1		-			576			-		-			576
DME management and monitoring fees		18			-			-		(18	)		-
Transaction costs		542			-			-		1,324			1,866
Adjusted EBITDA	$	1,320		$	612		$	1,147	$	(1,383	)	$	1,696

(1) Unrecognized incentive fees earned include amounts earned under investment management agreements which are not recognized under US GAAP.

(2) Acquisition and integration related costs include transaction costs, costs to integrate acquired businesses and changes in the fair value of the contingent consideration liability since the initial valuation at the acquisition date.

(3) Our durable medical equipment business began in September 2018 and there was no related activity prior to that date.

(4) General Corporate net loss includes net loss attributable to discontinued operations.

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Media & Investor Contact:

Investor Relations

+1 (617) 375-3006

investorrelations@greatelmcap.com

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EX-99.2

Great Elm Capital Group, Inc. Investor Presentation – Quarter Ended September 30, 2019 November 12, 2019 © 2019 Great Elm Capital Group, Inc. Exhibit 99.2

© 2019 Great Elm Capital Group, Inc. Disclaimer Statements in this presentation that are “forward-looking” statements, including statements regarding revenue, adjusted EBITDA, expected growth, profitability, free cash flow and outlook 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 Elm 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, except 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. 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”). See the Appendix for important information regarding the use of non-GAAP financial measures and reconciliations of non-GAAP measures to their most directly comparable GAAP measures. This presentation does not constitute an offer of any securities for sale.

© 2019 Great Elm Capital Group, Inc. SlideSection 4Performance Overview 6 Organizational Overview 9Operating Companies: Great Elm DME 13Investment Management 17Real Estate 21General Corporate 23Financial Review 26Summary 28Q&A 29Appendix Table of Contents

Performance Overview © 2019 Great Elm Capital Group, Inc.

Performance Overview: Quarter Ended September 30, 20191 © 2019 Great Elm Capital Group, Inc. (1) Numbers in millions. (2) DME business acquired in September 2018. Thus, the first fiscal quarter of 2019 was a partial quarter. (3) Per US GAAP, real estate taxes were included in Real Estate revenue in the first fiscal quarter of 2019 but are not included in the first fiscal quarter of 2020. (4) Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix Revenue by Segment Segment 1Q20 1Q19 DME2 $13.2 $4.0999999999999996 Investment Management $0.9 $0.9 Real Estate3 $1.3 $1.5 General Corporate - - Consolidated $15.4 $6.5 Net Income (Loss) by Segment Segment 1Q20 1Q19 DME2 $-0.8 $0 Investment Management $-0.1 $-0.7 Real Estate3 $0.1 $0.1 General Corporate $-2.5 $-1.4 Consolidated $-3.3 $-2 Adjusted EBITDA4 by Segment Segment 1Q20 1Q19 DME2 $3 $1.4 Investment Management $1 $0.6 Real Estate3 $1.2 $1.1000000000000001 General Corporate $-1.7 $-1.4 Consolidated $3.5 $1.7000000000000002 Revenue by Segment Segment 1Q20 1Q19 DME2 $13.2 $4.0999999999999996 Investment Management $0.9 $0.9 Real Estate3 $1.3 $1.5 General Corporate - - Consolidated $15.4 $6.5 Net Income (Loss) by Segment Segment 1Q20 1Q19 DME2 $-0.8 $0 Investment Management $-0.1 $-0.7 Real Estate3 $0.1 $0.1 General Corporate $-2.5 $-1.4 Consolidated $-3.3 $-2 Adjusted EBITDA4 by Segment Segment 1Q20 1Q19 DME2 $3 $1.4 Investment Management $1 $0.6 Real Estate3 $1.2 $1.1000000000000001 General Corporate $-1.7 $-1.4 Consolidated $3.5 $1.7000000000000002 Revenue by Segment Segment 1Q20 1Q19 DME2 $13.2 $4.0999999999999996 Investment Management $0.9 $0.9 Real Estate3 $1.3 $1.5 General Corporate - - Consolidated $15.4 $6.5 Net Income (Loss) by Segment Segment 1Q20 1Q19 DME2 $-0.8 $0 Investment Management $-0.1 $-0.7 Real Estate3 $0.1 $0.1 General Corporate $-2.5 $-1.4 Consolidated $-3.3 $-2 Adjusted EBITDA4 by Segment Segment 1Q20 1Q19 DME2 $3.0150000000000001 $1.32 Investment Management $1.006 $0.61199999999999999 Real Estate3 $1.149 $1.147 General Corporate $-1.7190000000000001 $-1.383 Consolidated $3.4509999999999996 $1.6959999999999997

Organizational Overview © 2019 Great Elm Capital Group, Inc.

© 2019 Great Elm Capital Group, Inc. Organizational Overview: Drivers of Shareholder Value Operating Companies Real Estate Investment Management Target undercapitalized small and mid-sized companies where we can partner with management to accelerate earnings and cash flow growth Focus on companies that offer a platform for follow-on acquisitions and investment, particularly with respect to DME and adjacent industries Grow Great Elm Capital Corp. (“GECC”) through capital raises and potential BDC acquisitions Increase assets under management (“AUM”) via new fund launches, SMAs and co-investments Seek opportunities, such as the Fort Myers transaction, that utilize modest equity capital and monetize significant net operating loss carryforwards (“NOLs”)

© 2019 Great Elm Capital Group, Inc. Organizational Overview: Alignment of Interest When combined, insider ownership totals approximately 19% of the outstanding shares 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/Great Elm Capital Management, Inc. (“GECM”) collectively own approximately 2.0 million shares of GEC, representing approximately 8% of GEC’s outstanding shares1 The directors of GEC collectively own greater than 11% 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.

Operating Companies: Great Elm DME © 2019 Great Elm Capital Group, Inc.

Operating Companies: Rapid Growth at DME In FY 1Q20, Great Elm DME, Inc. (“DME”) generated $13.2 million of revenue, $0.8 million of net loss and $3.0 million of adjusted EBITDA1 Meaningful revenue growth in major product categories Management is investing heavily in people, processes and technology to enhance DME’s scalable infrastructure, capable of supporting multiple acquisitions per year DME has continued to generate rapid year-over-year patient growth in its PAP product category New patient setups grew by 22.0% year-over-year We expect continued organic growth from DME Fundamental demand for respiratory products and services, combined with the company’s focus on patient service and business expansion, provides a path to revenue and adjusted EBITDA growth in fiscal year 2020 © 2019 Great Elm Capital Group, Inc. (1) Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix

Operating Companies: M&A In addition to driving organic revenue, EBITDA and volume growth, DME will seek to acquire complementary, patient-focused businesses DME is pursuing an expansion strategy that targets businesses in tangential or overlapping markets These acquisition opportunities can help to further diversify DME’s payor and product mix The respiratory-focused, durable medical equipment industry is characterized by a fragmented landscape that we believe offers a significant opportunity for additional consolidation DME’s patient-centric service model differentiates it from the competition DME also seeks to explore complementary product lines and services that can leverage the company’s valuable contracts, referral sources, customer bases and infrastructure © 2019 Great Elm Capital Group, Inc.

Operating Companies: DME Segment Financial Detail © 2019 Great Elm Capital Group, Inc. 1 Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix 2 Timing of certain interest payments negatively impacted free cash flow by $0.8 million.

Investment Management © 2019 Great Elm Capital Group, Inc.

© 2019 Great Elm Capital Group, Inc. Investment Management: A Scalable, High Margin Business AUM Growth High Margins 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 launch additional vehicles HIGH MARGINS Given the largely fixed cost nature of the Investment Management business, we expect adjusted EBITDA margins to increase as our AUM increases and the business scales SCALABLE MODEL Investment team and infrastructure in place to support substantial growth in AUM and new investment vehicles SIGNIFICANT FREE CASH FLOW Growth in AUM in the Investment Management business coupled with its high margins and scalable business model could result in significant operating leverage and, thus, the potential for growth in adjusted EBITDA and free cash flow

© 2019 Great Elm Capital Group, Inc. Investment Management: Management Fee Growth

Investment Management: Segment Financial Detail © 2019 Great Elm Capital Group, Inc. 1 Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix Near-Term Drivers of Incremental Free Cash Flow: We believe GECC will continue to grow its investment portfolio, including via incremental capital raises, which will drive incremental management fee revenue The Full Circle consulting agreement terminated on November 3, 2019. The FY19 expense associated with this agreement was $763 thousand

Real Estate © 2019 Great Elm Capital Group, Inc.

© 2019 Great Elm Capital Group, Inc. Real Estate: Overview 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 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

Real Estate: Fort Myers – Organic Equity Growth © 2019 Great Elm Capital Group, Inc. Debt and Equity Values ($ in Millions) Multiple of Invested Capital Assuming a constant property value of $61.2 million, the chart at the right depicts the growth in GEC’s equity value as cash flows from the rental stream are utilized to amortize debt over the lease term As you can see, GEC builds significant equity value1 over time without any additional capital deployment 1 Equity value is equal to the property value at acquisition minus the face value of the debt on a given date.

Real Estate: Segment Financial Detail © 2019 Great Elm Capital Group, Inc. 1 Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix.

General Corporate © 2019 Great Elm Capital Group, Inc.

General Corporate: Segment Financial Detail © 2019 Great Elm Capital Group, Inc. 1 Please refer to the disclaimers on slide 2 and the Adjusted EBITDA reconciliation tables in the Appendix

© 2019 Great Elm Capital Group, Inc. Financial Review

Financial Review: 1Q20 Consolidating Balance Sheets (Unaudited) © 2019 Great Elm Capital Group, Inc.

Financial Review: 1Q20 Consolidating Income Statement (Unaudited) © 2019 Great Elm Capital Group, Inc. 1 Please refer to the Appendix for the Adjusted EBITDA reconciliation tables and disclaimers on slide 2. $ in thousands DME Investment Management Real Estate Corporate Consolidated Total Revenues $13,231.33092 $866.83767 $1,272.8684599999999 $22.95 $15,393.98705 Cost of revenue -5,727.5366400000003 0 0 0 -5,727.5366400000003 Depreciation and amortization expense -,456.97462000000002 -,178.97684000000001 -,431.47346999999996 0 -1,067.4249299999999 Selling, general and administration -6,872.4684300000035 -,690.75841000000014 -,123.80745000000002 -1,785.5940599999999 -9,472.6283500000027 Total operating costs and expenses ,-13,056.979690000004 -,869.73525000000018 -,555.28091999999992 -1,785.5940599999999 ,-16,267.589920000004 Operating income (loss) 174.35122999999658 -2.8975800000001755 717.58753999999999 -1,762.6440599999999 -,873.60287000000335 Dividends and interest income 0 0 0 513.84776999999997 513.84776999999997 Unrealized gain (loss) on investments 0 0 0 -,983.33349999999996 -,983.33349999999996 Interest expense, net -,995.86706000000004 -42.265129999999999 -,657.69424000000015 0 -1,695.8264300000001 Other income (expense), net 2.7766999999999999 0 0 0 2.7766999999999999 Income (loss) before taxes -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,232.12979 -3,036.1383300000039 Income tax expense 0 0 0 -,241.601 -,241.601 Net income (loss), net of tax -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,473.7307900000001 -3,277.739330000004 Adjusted EBITDA1 $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 3,451.4939399999957 Net free cash flow $-2,322 $349 $0 $-1,352 $-3,325 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated EBITDA: Net income (loss) - GAAP $-,818.73913000000346 $-45.162710000000175 $59.89329999999984 $-2,473.7307900000001 $-3,277.739330000004 Interest expense 995.86706000000004 42.265129999999999 657.69424000000015 0 1,695.8264300000001 Depreciation & Amortization 2,508.1081100000001 178.97684000000001 431.47346999999996 0 3,117.5584200000003 Tax expense 0 0 0 241.601 241.601 EBITDA 2,685.2360399999966 176.07925999999983 1,149.610099999999 -2,232.12979 1,778.2465199999965 Adjusted EBITDA Unrecognized incentive fees 1 0 655 0 0 655 Stock based compensation 0 175.25697 0 118.10668 293.36365000000001 Change in contingent consideration 2 0 0 0 -,195 -,195 GECC Unrealized (gains) / losses 0 0 0 983.33349999999996 983.33349999999996 Dividend income from GECC 0 0 0 -,490 -,490 Other (income) expense -2.7766999999999999 0 0 0 -2.7766999999999999 Transaction and integration costs 2 148.26702999999998 0 0 120.41705999999999 267.68408999999997 Severance 1.758 0 0 0 1.758 Pharmacy buildout 134.88604999999998 0 0 0 134.88604999999998 DME management and Monitoring fees 47.948830000000001 0 0 -22.95 24.998830000000002 Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,451.4939399999962 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated Free Cash-flow: Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,450.4939399999957 Interest expense paid1 -1,786 0 -,454 0 -2,240 Non-cash revenue / cash reserve 0 -,655 -,171 0 -,826 Transaction costs 0 0 0 -,120.41705999999999 -,120.41705999999999 Dividends received 0 0 0 490 490 Capital expenditures -2,090 -2 -3 -2,095 Free Cash-Flow $-,861 $349 $524 $-1,352 $-1,340 Uses of Free Cash-Flow Revolver paydowns -,500 0 0 0 -,500 Mandatory debt amortization -,625 0 -,524 0 -1,149 Excess cash flow payments -,336 0 0 0 -,336 Net Free Cash-Flow $-2,322 $349 $0 $-1,352 $-3,325 $0 $0 $0 $23.847770000000082 $23.8477699999994

Summary © 2019 Great Elm Capital Group, Inc.

© 2019 Great Elm Capital Group, Inc. Summary: Drivers of Shareholder Value Seek to enhance the value of our existing property through property improvement and lease modification Operating Companies Real Estate Investment Management Focus on growing Great Elm DME, Inc. both organically and via an expansion strategy that targets existing and adjacent markets Continue to strengthen Great Elm DME, Inc.’s scalable infrastructure, investing in people, processes and technology to support multiple acquisitions per year Focus on driving asset growth in GECC and raising capital for SMAs / other investment vehicles Leverage the existing team and infrastructure to generate incremental free cash flow

Q&A © 2019 Great Elm Capital Group, Inc.

Appendix © 2019 Great Elm Capital Group, Inc.

Appendix: Non-GAAP Reconciliation © 2019 Great Elm Capital Group, Inc. $ in thousands DME Investment Management Real Estate Corporate Consolidated Total Revenues $13,231.33092 $866.83767 $1,272.8684599999999 $22.95 $15,393.98705 Cost of revenue -5,727.5366400000003 0 0 0 -5,727.5366400000003 Depreciation and amortization expense -,456.97462000000002 -,178.97684000000001 -,431.47346999999996 0 -1,067.4249299999999 Selling, general and administration -6,872.4684300000035 -,690.75841000000014 -,123.80745000000002 -1,785.5940599999999 -9,472.6283500000027 Total operating costs and expenses ,-13,056.979690000004 -,869.73525000000018 -,555.28091999999992 -1,785.5940599999999 ,-16,267.589920000004 Operating income (loss) 174.35122999999658 -2.8975800000001755 717.58753999999999 -1,762.6440599999999 -,873.60287000000335 Dividends and interest income 0 0 0 513.84776999999997 513.84776999999997 Unrealized gain (loss) on investments 0 0 0 -,983.33349999999996 -,983.33349999999996 Interest expense, net -,995.86706000000004 -42.265129999999999 -,657.69424000000015 0 -1,695.8264300000001 Other income (expense), net 2.7766999999999999 0 0 0 2.7766999999999999 Income (loss) before taxes -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,232.12979 -3,036.1383300000039 Income tax expense 0 0 0 -,241.601 -,241.601 Net income (loss), net of tax -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,473.7307900000001 -3,277.739330000004 Adjusted EBITDA1 $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 3,451.4939399999957 Net free cash flow $-2,279 $349 $0 $-1,352 $-3,282 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated EBITDA: Net income (loss) - GAAP $-,818.73913000000346 $-45.162710000000175 $59.89329999999984 $-2,473.7307900000001 $-3,277.739330000004 Interest expense 995.86706000000004 42.265129999999999 657.69424000000015 0 1,695.8264300000001 Depreciation & Amortization 2,508.1081100000001 178.97684000000001 431.47346999999996 0 3,117.5584200000003 Tax expense 0 0 0 241.601 241.601 EBITDA 2,685.2360399999966 176.07925999999983 1,149.610099999999 -2,232.12979 1,778.2465199999965 Adjusted EBITDA Unrecognized incentive fees 1 0 655 0 0 655 Stock based compensation 0 175.25697 0 118.10668 293.36365000000001 Change in contingent consideration 2 0 0 0 -,195 -,195 GECC Unrealized (gains) / losses 0 0 0 983.33349999999996 983.33349999999996 Dividend income from GECC 0 0 0 -,490 -,490 Other (income) expense -2.7766999999999999 0 0 0 -2.7766999999999999 Transaction and integration costs 2 148.26702999999998 0 0 120.41705999999999 267.68408999999997 Severance 1.758 0 0 0 1.758 Pharmacy buildout 134.88604999999998 0 0 0 134.88604999999998 DME management and Monitoring fees 47.948830000000001 0 0 -22.95 24.998830000000002 Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,451.4939399999962 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated Free Cash-flow: Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,450.4939399999957 Interest expense paid1 -1,743 0 -,454 0 -2,197 Non-cash revenue / cash reserve 0 -,655 -,171 0 -,826 Transaction costs 0 0 0 -,120.41705999999999 -,120.41705999999999 Dividends received 0 0 0 490 490 Capital expenditures -2,090 -2 -3 -2,095 Free Cash-Flow $-,818 $349 $524 $-1,352 $-1,297 Uses of Free Cash-Flow Revolver paydowns -,500 0 0 0 -,500 Mandatory debt amortization -,625 0 -,524 0 -1,149 Excess cash flow payments -,336 0 0 0 -,336 Net Free Cash-Flow $-2,279 $349 $0 $-1,352 $-3,282 $0 $0 $0 $23.847770000000082 $23.8477699999994

Appendix: Non-GAAP Reconciliation (Continued) © 2019 Great Elm Capital Group, Inc. 1 Timing of certain interest payments negatively impacted free cash flow by $0.8 million. $ in thousands DME Investment Management Real Estate Corporate Consolidated Total Revenues $13,231.33092 $866.83767 $1,272.8684599999999 $22.95 $15,393.98705 Cost of revenue -5,727.5366400000003 0 0 0 -5,727.5366400000003 Depreciation and amortization expense -,456.97462000000002 -,178.97684000000001 -,431.47346999999996 0 -1,067.4249299999999 Selling, general and administration -6,872.4684300000035 -,690.75841000000014 -,123.80745000000002 -1,785.5940599999999 -9,472.6283500000027 Total operating costs and expenses ,-13,056.979690000004 -,869.73525000000018 -,555.28091999999992 -1,785.5940599999999 ,-16,267.589920000004 Operating income (loss) 174.35122999999658 -2.8975800000001755 717.58753999999999 -1,762.6440599999999 -,873.60287000000335 Dividends and interest income 0 0 0 513.84776999999997 513.84776999999997 Unrealized gain (loss) on investments 0 0 0 -,983.33349999999996 -,983.33349999999996 Interest expense, net -,995.86706000000004 -42.265129999999999 -,657.69424000000015 0 -1,695.8264300000001 Other income (expense), net 2.7766999999999999 0 0 0 2.7766999999999999 Income (loss) before taxes -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,232.12979 -3,036.1383300000039 Income tax expense 0 0 0 -,241.601 -,241.601 Net income (loss), net of tax -,818.73913000000346 -45.162710000000175 59.89329999999984 -2,473.7307900000001 -3,277.739330000004 Adjusted EBITDA1 $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 3,451.4939399999957 Net free cash flow $-2,322 $349 $0 $-1,352 $-3,325 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated EBITDA: Net income (loss) - GAAP $-,818.73913000000346 $-45.162710000000175 $59.89329999999984 $-2,473.7307900000001 $-3,277.739330000004 Interest expense 995.86706000000004 42.265129999999999 657.69424000000015 0 1,695.8264300000001 Depreciation & Amortization 2,508.1081100000001 178.97684000000001 431.47346999999996 0 3,117.5584200000003 Tax expense 0 0 0 241.601 241.601 EBITDA 2,685.2360399999966 176.07925999999983 1,149.610099999999 -2,232.12979 1,778.2465199999965 Adjusted EBITDA Unrecognized incentive fees 1 0 655 0 0 655 Stock based compensation 0 175.25697 0 118.10668 293.36365000000001 Change in contingent consideration 2 0 0 0 -,195 -,195 GECC Unrealized (gains) / losses 0 0 0 983.33349999999996 983.33349999999996 Dividend income from GECC 0 0 0 -,490 -,490 Other (income) expense -2.7766999999999999 0 0 0 -2.7766999999999999 Transaction and integration costs 2 148.26702999999998 0 0 120.41705999999999 267.68408999999997 Severance 1.758 0 0 0 1.758 Pharmacy buildout 134.88604999999998 0 0 0 134.88604999999998 DME management and Monitoring fees 47.948830000000001 0 0 -22.95 24.998830000000002 Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,451.4939399999962 For the three months ended September 30, 2019 $ in thousands DME Investment Management Real Estate General Corporate Consolidated Free Cash-flow: Adjusted EBITDA $3,015.3192499999964 $1,006.3362299999999 $1,149.610099999999 $-1,719.2225500000002 $3,450.4939399999957 Interest expense paid1 -1,786 0 -,454 0 -2,240 Non-cash revenue / cash reserve 0 -,655 -,171 0 -,826 Transaction costs 0 0 0 -,120.41705999999999 -,120.41705999999999 Dividends received 0 0 0 490 490 Capital expenditures -2,090 -2 -3 -2,095 Free Cash-Flow $-,861 $349 $524 $-1,352 $-1,340 Uses of Free Cash-Flow Revolver paydowns -,500 0 0 0 -,500 Mandatory debt amortization -,625 0 -,524 0 -1,149 Excess cash flow payments -,336 0 0 0 -,336 Net Free Cash-Flow $-2,322 $349 $0 $-1,352 $-3,325 $0 $0 $0 $23.847770000000082 $23.8477699999994

Appendix: Non-GAAP Reconciliation (Continued) © 2019 Great Elm Capital Group, Inc. For the three months ended September 30, 2018 $ in thousands DME 3 Investment Management Real Estate General Corporate 4 Consolidated EBITDA: Net income (loss) - GAAP $27 $-,689 $51 $-1,398 $-2,009 Interest 286 44 665 0 995 Depreciation and amortization 423 136 431 0 990 Taxes 0 0 0 0 0 EBITDA $736 $-,509 $1,147 $-1,398 $-24 Adjusted EBITDA: Stock based compensation 0 545 0 128 673 Dividend income from GECC -56 0 0 -,434 -,490 GECC Unrealized (gains) / losses 80 0 0 -,985 -,905 Unrecognized incentive fees earned 1 0 576 0 0 576 DME management and monitoring fees 18 0 0 -18 0 Transaction costs 542 0 0 1,324 1,866 Adjusted EBITDA $1,320 $612 $1,147 $-1,383 $1,696 For the three months ended September 30, 2018 $ in thousands DME 3 Investment Management Real Estate General Corporate 4 Consolidated Free Cash-flow: Adjusted EBITDA $1,320 $612 $1,147 $-1,383 $1,696 Interest expense paid -,243 -44 -,471 0 -,758 Non-cash revenue / cash reserve 0 -,576 -,191 0 -,767 Transaction costs 0 0 0 -1,324 -1,324 Dividends received 0 0 0 434 434 Capital expenditures -,490 0 0 0 -,490 Free Cash-Flow 587 -8 485 -2,273 -1,209 Uses of Free Cash-Flow Revolver paydowns 0 0 0 0 0 Mandatory debt amortization 0 0 -,485 0 -,485 Excess cash flow payments 0 0 0 0 0 Net Free Cash-Flow 587 -8 0 -2,273 -1,694

Appendix: Non-GAAP Reconciliation (Continued) © 2019 Great Elm Capital Group, Inc. For the three months ended September 30, 2018 $ in thousands DME 3 Investment Management Real Estate General Corporate 4 Consolidated EBITDA: Net income (loss) - GAAP $27 $-,689 $51 $-1,398 $-2,009 Interest 286 44 665 0 995 Depreciation and amortization 423 136 431 0 990 Taxes 0 0 0 0 0 EBITDA $736 $-,509 $1,147 $-1,398 $-24 Adjusted EBITDA: Stock based compensation 0 545 0 128 673 Dividend income from GECC -56 0 0 -,434 -,490 GECC Unrealized (gains) / losses 80 0 0 -,985 -,905 Unrecognized incentive fees earned 1 0 576 0 0 576 DME management and monitoring fees 18 0 0 -18 0 Transaction costs 542 0 0 1,324 1,866 Adjusted EBITDA $1,320 $612 $1,147 $-1,383 $1,696 For the three months ended September 30, 2018 $ in thousands DME 3 Investment Management Real Estate General Corporate 4 Consolidated Free Cash-flow: Adjusted EBITDA $1,320 $612 $1,147 $-1,383 $1,696 Interest expense paid -,243 -44 -,471 0 -,758 Non-cash revenue / cash reserve 0 -,576 -,191 0 -,767 Transaction costs 0 0 0 -1,324 -1,324 Dividends received 0 0 0 434 434 Capital expenditures -,490 0 0 0 -,490 Free Cash-Flow 587 -8 485 -2,273 -1,209 Uses of Free Cash-Flow Revolver paydowns 0 0 0 0 0 Mandatory debt amortization 0 0 -,485 0 -,485 Excess cash flow payments 0 0 0 0 0 Net Free Cash-Flow 587 -8 0 -2,273 -1,694

Appendix: Non-GAAP Reconciliation (Continued) © 2019 Great Elm Capital Group, Inc. Unrecognized incentive fees earned include amounts earned under investment management agreements which are not recognized under US GAAP. Acquisition and integration related costs include transaction costs, costs to integrate acquired businesses and changes in the fair value of the contingent consideration liability since the initial valuation at the acquisition date. Our durable medical equipment business began in September 2018 and there was no related activity prior to that date. General Corporate net loss includes net loss attributable to discontinued operations.

Appendix: Contact Information Investor Relations 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2019 Great Elm Capital Group, Inc.