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): September 20, 2023

Great Elm Group, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-39832	85-3622015
(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	GEG	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)
7.25% Notes due 2027	GEGGL	The Nasdaq Stock Market LLC (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 September 20, 2023, Great Elm Group, Inc. (the “Company”) issued the press release furnished as Exhibit 99.1 to this report.

The foregoing information (including the Exhibit 99.1 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 5.05 Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics.

On September 20, 2023, the Company adopted an amended SOX Code of Business Conduct and Ethics (the "Code") that was approved by the board of directors of the Company on September 20, 2023, and which applies to all directors, officers and employees of the Company and its subsidiaries and controlled affiliates.

The description of the Code contained in this Form 8-K is qualified in its entirety by reference to the full text of the Code filed as Exhibit 14.1 to this Form 8-K. The Code is available on the Company's website at www.greatelmgroup.com. We will post amendments to the Code or waivers to the Code for directors and executive officers on the same website.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
14.1	SOX Code of Business Conduct and Ethics of Great Elm Group, Inc.
99.1	Press Release, dated September 20, 2023
104	The cover page from this Current Report on Form 8-K, formatted as inline XBRL

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 GROUP, INC.
Date: September 20, 2023	/s/ Keri A. Davis
	By: Keri A. Davis
	Title: Chief Financial Officer

EX-14.1

Exhibit 14.1

GREAT ELM GROUP, INC.

SOX

CODE OF BUSINESS

CONDUCT AND ETHICS

As Adopted: September 20, 2023

SOX

CODE OF BUSINESS CONDUCT

AND ETHICS

TABLE OF CONTENTS

Page

Introduction 1

Purpose of the Code 1

Conflicts of Interest 2

Corporate Opportunities 2

Confidentiality 2

Fair Dealing 3

Protection and Proper Use of Company Assets 3

Compliance with Applicable Laws, Rules and Regulations 3

Equal Opportunity, Harassment 3

Accuracy of Company Records 4

Retaining Business Communications 4

Political Contributions 4

Media Relations 4

Intellectual Property Information 5

Internet and E-mail Policy 5

Reporting Violations and Complaint Handling 5

Administration of the Code 6

Sanctions for Code Violations 6

Application/Waivers 6

Revisions and Amendments 7

Appendices

CodeAcknowledgment 8

7

Exhibit 14.1

SOX CODE OF BUSINESS CONDUCT AND ETHICS

Introduction

Section 406 of the Sarbanes-Oxley Act of 2002 (“SOX”) and Item 406 of Regulation S-K require that public companies disclose whether or not they have adopted a code of business conduct and ethics for senior financial officers and, if not, to explain why not, and the NASDAQ requires the same for all directors, officers and employees. A code of business conduct and ethics for this purpose is defined as a document setting forth standards that are reasonably designed to deter wrongdoing and to promote, among other matters, honest and ethical conduct, full and accurate disclosures in SEC filings and other public communications, and compliance with applicable laws, rules and regulations.

Ethics are important to Great Elm Group, Inc. (“GEG” and, together with its direct and indirect subsidiaries, “Great Elm”, “our”, “us”, or “we”) and to its management. GEG is committed to the highest ethical standards and to conducting its business with the highest level of integrity.

All officers, directors, employees, consultants and shared service personnel of Great Elm (collectively, the “Covered Persons,” and individually, “you”) are responsible for maintaining this level of integrity and for complying with the policies contained in this Code. If you have a question or concern about what is proper conduct for you or anyone else, please raise these concerns with any member of GEG’s management, or follow the procedures outlined in applicable sections of this Code.

Purpose of the Code

This Code is intended to:

•help you recognize ethical issues and take the appropriate steps to resolve these issues;

•deter ethical violations;

•assist you in reporting any unethical or illegal conduct; and

•reaffirm and promote our commitment to a corporate culture that values honesty and accountability.

All Covered Persons will acknowledge in writing that they have received a copy of this Code, read it, and understand that the Code contains our expectations regarding their conduct.

1

Exhibit 14.1

Conflicts of Interest

You must avoid any conflict, or the appearance of a conflict, between your personal interests and our interests. A conflict exists when your personal interests in any way interfere – or even appear to interfere – with our interests, or when you take any action or have any interests that may make it difficult for you to perform your job objectively and effectively. For example, a conflict of interest probably exists if:

•you cause us to enter into business relationships with you or a member of your family, or invest in companies affiliated with you or a member of your family;

•you, or a member of your family, receive improper personal benefits as a result of your position with us;

•you use any nonpublic information about us, our customers or our other business partners for your personal gain, or the gain of a member of your family; or

•you use or communicate confidential information obtained in the course of your work for your or another’s personal benefit.

Corporate Opportunities

Each of us has a duty to advance the legitimate interests of Great Elm when the opportunity to do so presents itself. Therefore, you may not:

•take for yourself personally opportunities, including investment opportunities, discovered through the use of your position with us, or through the use of either’s property or information;

•use our property, information, or position for your personal gain or the gain of a family member; or

•compete, or prepare to compete, with us.

Confidentiality

You must not disclose confidential information regarding Great Elm, our affiliates, our lenders, our clients, or our other business partners, unless disclosure is authorized or required by law. Confidential information includes all non-public information that might be harmful to, or useful to the competitors of, Great Elm, our affiliates, our lenders, our clients, or our other business partners. This obligation continues even after you leave Great Elm, until the information becomes publicly available.

Fair Dealing

You must endeavor to deal fairly with our customers, suppliers and business partners, or any other companies or individuals with whom we do business or come into contact with, including

2

Exhibit 14.1

fellow employees and our competitors. You must not take unfair advantage of these or other parties by means of:

•manipulation;

•concealment;

•abuse of privileged information;

•misrepresentation of material facts; or

•any other unfair-dealing practice.

Protection and Proper Use of Company Assets

Our assets are to be used only for legitimate business purposes. Theft, carelessness and waste have a direct impact on our profitability. You should protect our assets and ensure that they are used efficiently.

Incidental personal use of telephones, fax machines, copy machines, personal computers and similar equipment is generally allowed if there is no significant added cost to us, it does not interfere with your work duties, and is not related to an illegal activity or to any outside business.

Compliance with Applicable Laws, Rules and Regulations

Each of us has a duty to comply with all laws, rules and regulations that apply to our business, including those relating to insider trading. Please talk to our Chief Compliance Officer if you have any questions about how to comply with the above regulations and other laws, rules and regulations.

In addition, we expect you to comply with all our policies and procedures that apply to you. We may modify or update our policies and procedures in the future and may adopt new company policies and procedures from time to time. You are also expected to observe the terms of any confidentiality agreement, employment agreement or other similar agreement that applies to you.

Equal Opportunity, Harassment

We are committed to providing equal opportunity in all of our employment practices including selection, hiring, promotion, transfer, and compensation of all qualified applicants and employees without regard to race, color, sex or gender, sexual orientation, religion, age, national origin, handicap, disability, citizenship status, or any other status protected by law. With this in mind, there are certain behaviors that will not be tolerated. These include harassment, violence, intimidation, and discrimination of any kind involving race, color, sex or gender, sexual

3

Exhibit 14.1

orientation, religion, age, national origin, handicap, disability, citizenship status, marital status, or any other status protected by law.

Accuracy of Company Records

We require honest and accurate recording and reporting of information in order to make responsible business decisions. This includes such data as quality, safety, and personnel records, as well as financial records.

All financial books, records and accounts must accurately reflect transactions and events, and conform both to required accounting principles and to our system of internal controls.

Retaining Business Communications

The law requires us to maintain certain types of corporate records, usually for specified periods of time. Failure to retain those records for those minimum periods could subject us to penalties and fines, cause the loss of rights, obstruct justice, place us in contempt of court, or seriously disadvantage us in litigation.

From time to time we establish retention or destruction policies in order to ensure legal compliance. We expect you to fully comply with any published records retention or destruction policies, provided that you should note the following exception: If you believe, or we inform you, that our records are relevant to any litigation or governmental action, or any potential litigation or action, then you must preserve those records until we determine the records are no longer needed. This exception supersedes any previously or subsequently established destruction policies for those records. If you believe that this exception may apply or have any questions regarding the possible applicability of that exception, please contact our Chief Compliance Officer.

Political Contributions

No funds of Great Elm may be given directly to political candidates. You may, however, engage in political activity with your own resources on your own time, subject, however, to any restrictions contained in any policies of GEG’s direct and indirect subsidiaries, including, without limitation, Great Elm Capital Management, Inc.

Media Relations

We must speak with a unified voice in all dealings with the press and other media. As a result, our Chairman and Chief Executive Officer or GEG Investor Relations (as directed by the Chairman and CEO) are the only contacts for media seeking information about Great Elm. Any requests from the media must be referred to our Chairman and CEO.

4

Exhibit 14.1

Intellectual Property Information

Information generated in our business is a valuable asset. Protecting this information plays an important role in our growth and ability to compete. Such information includes business and research plans; objectives and strategies; trade secrets; unpublished financial information; salary and benefits data; lender and other business partner lists. Employees who have access to our intellectual property information are obligated to safeguard it from unauthorized access and:

•Not disclose this information to persons outside of Great Elm;

•Not use this information for personal benefit or the benefit of persons outside of Great Elm; and

•Not share this information with other employees except on a legitimate “need to know” basis.

Internet and E-Mail Policy

We provide an e-mail system and Internet access to certain of our employees to help them do their work. You may use the e-mail system and the Internet only for legitimate business purposes in the course of your duties. Incidental and occasional personal use is permitted, but never for personal gain or any improper use. Further, you are prohibited from discussing or posting information regarding Great Elm in any external electronic forum, including Internet chat rooms or electronic bulletin boards.

Reporting Violations and Complaint Handling

You are responsible for compliance with the rules, standards and principles described in this Code. In addition, you should be alert to possible violations of the Code by any Covered Person, and you are expected to report a violation promptly. Normally, reports should be made to one’s immediate supervisor. Under some circumstances, it may be impractical or you may feel uncomfortable raising a matter with your supervisor. In those instances, you are encouraged to contact our Chief Compliance Officer who will investigate and report the matter to our Chief Executive Officer and/or Board of Directors, as the circumstance dictates. You will also be expected to cooperate in an investigation of a violation.

Anyone who has a concern about our conduct, the conduct of an officer of Great Elm or our accounting, internal accounting controls or auditing matters, may communicate that concern to the Audit Committee of the Board of Directors by direct communication with our Chief Compliance Officer or by email or in writing. All reported concerns shall be forwarded to the Audit Committee and will be simultaneously addressed by our Chief Compliance Officer in the same way that other concerns are addressed by us. The status of all outstanding concerns forwarded to the Audit Committee will be reported on a quarterly basis by our Chief Compliance Officer. The Audit Committee may direct that certain matters be presented to the full board and

5

Exhibit 14.1

may also direct special treatment, including the retention of outside advisors or counsel, for any concern reported to it.

Questionable or unethical activities can also be reported to your supervisor or any of the members of senior management. While we strongly encourage you to report your concerns to us, they can also be anonymously reported by emailing concerns@greatelmcap.com or by contacting GEG’s Audit Committee directly or by accessing the Great Elm whistleblower hotline by calling 844-420-0044 or emailing reports@lighthouse-services.com(must include company name with report).

All reports will be investigated, and whenever possible, requests for confidentiality shall

be honored. All cases of questionable activity or improper actions will be reviewed for appropriate action, discipline or corrective actions. Whenever possible, we will keep confidential the identity of employees, officers or directors who are accused of violations, unless or until it has been determined that a violation has occurred.

There will be no reprisal, retaliation, or adverse action taken against any employee who, in good faith, reports or assists in the investigation of, a violation or suspected violation, or who makes an inquiry about the appropriateness of an anticipated or actual course of action.

For reporting concerns about Great Elm’s conduct, the conduct of an officer of Great Elm or about Great Elm’s accounting, internal accounting controls or auditing matters, you may use the following means of communication:

ADDRESS:	Great Elm Group, Inc.
	800 South Street
	Suite 230
	Waltham, Massachusetts 02453

In the case of a confidential, anonymous submission other than through the whistleblower hotline, employees should set forth their concerns in writing and forward them in a sealed envelope to the Chairperson of the Audit Committee, in care of our Chief Compliance Officer, such envelope to be labeled with a legend such as: “To be opened by the Audit Committee only.”

Administration of the Code

The Chief Compliance Officer has overall responsibility for administering the Code and reporting on the administration of and compliance with the Code and related matters to our Board of Directors.

Sanctions for Code Violations

6

Exhibit 14.1

All violations of the Code will result in appropriate corrective action, up to and including dismissal. If the violation involves potentially criminal activity, the individual or individuals in question will be reported, as warranted, to the appropriate authorities.

Application/Waivers

All Covered Persons are subject to this Code.

Insofar as other policies or procedures of Great Elm govern or purport to govern the behavior or activities of all persons who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code.

Any amendment or waiver of the Code for an executive officer or member of our Boards of Directors must be made by our Board of Directors and disclosed on a Form 8-K filed with the Securities and Exchange Commission within four business days following such amendment or waiver.

Revisions and Amendments

This Code may be revised, changed or amended at any time by our Board of Directors. Following any material revisions or updates, an updated version of this Code will be distributed to you, and will supersede the prior version of this Code effective upon distribution. We may ask you to sign an acknowledgement confirming that you have read and understood the revised version of the Code, and that you agree to comply with the provisions.

7

Exhibit 14.1

SOX CODE OF BUSINESS CONDUCT AND ETHICS

APPENDIX A

Great Elm Group, Inc.

Acknowledgment Regarding

SOX Code of Business Conduct and Ethics

This acknowledgment is to be signed and returned to our Chief Compliance Officer and will be retained as part of your permanent personnel file.

I have received a copy of Great Elm Group, Inc.’s SOX Code of Business Conduct and Ethics, read it, and understand that the Code contains the expectations of Great Elm Group, Inc. regarding conduct. I agree to observe the policies and procedures contained in the SOX Code of Business Conduct and Ethics and have been advised that, if I have any questions or concerns relating to such policies or procedures, I understand that I have an obligation to report to the Audit Committee, the Chief Compliance Officer, or other such designated officer, any suspected violations of the Code of which I am aware. I also understand that the Code is issued for informational purposes and that it is not intended to create, nor does it represent, a contract of employment.

Name (Printed)

Signature

Date

The failure to read and/or sign this acknowledgment in no way relieves you of your responsibility to comply with Great Elm Group, Inc.’s SOX Code of Business Conduct and Ethics

8

EX-99.1

Exhibit 99.1

 

Great Elm Group Reports FISCAL 2023 FOURTH QUARTER AND FULL YEAR

financial resulTs

Company to Host Conference Call at 8:30 a.m., ET on September 21, 2023

WALTHAM, MA, September 20, 2023 -- Great Elm Group, Inc. (“we,” “our,” “GEG,” “Great Elm,” or “the Company”), (NASDAQ: GEG), an alternative asset manager, today announced financial results for its fiscal fourth quarter and year ended June 30, 2023.

Fiscal Fourth Quarter 2023 Highlights

•GEG collected incentive fees from Great Elm Capital Corp. (“GECC") for the first time in the Company’s history, totaling $1.0 million for the fourth quarter.

•As of June 30, 2023, GEG had approximately $85 million of cash and U.S. Treasuries on its balance sheet to deploy across its growing alternative asset management platform.

•Fee paying assets under management totaled $448.7 million as of June 30, 2023, representing approximately 2% sequential growth from March 31, 2023, and up approximately 10% year-over-year.

•Assets under management totaled $639.8 million as of June 30, 2023, representing approximately 1% sequential growth from March 31, 2023, and up approximately 5% year-over-year.

•Total revenue for the fourth quarter grew 96% to $3.0 million, compared to $1.5 million for the prior-year period, largely attributed to incentive fees from GECC.

•Net loss from continuing operations was ($5.3) million for the fourth quarter, comparable to the prior-year period.

•Adjusted EBITDA for the fourth quarter was $0.4 million, compared to $0.3 million for the prior-year period.

Full Fiscal Year 2023 Highlights

•During fiscal year 2023 and subsequent to year end, GEG hired key executives, bringing years of asset management experience to its team.

oOn September 6, 2022, GEG added experienced operations professional Nichole Milz as Chief Operating Officer.

oOn May 5, 2023, GEG's Board of Directors appointed Jason Reese, the Executive Chairman of GEG’s Board of Directors since 2020, to the additional role of Chief Executive Officer.

oOn May 15, 2023, GEG’s Board of Directors appointed Keri Davis as Chief Financial Officer of Great Elm, expanding upon her role as Chief Financial Officer of GECC.

oOn September 6, 2023, GEG’s Monomoy team added senior construction executive Andrew Wright as Vice President of Real Estate.

•On January 3, 2023, GEG sold its Durable Medical Equipment (“DME”) business for $80 million. After settling all obligations, the transaction resulted in approximately $26 million in net cash proceeds and 346,028 shares of Quipt Home Medical Corp. (“Quipt”) common stock.

•On January 17, 2023, GEG exercised a put right for the remaining 19% of the equity interests in Forest Investments, Inc. (“Forest”), following its sale of 61% of the equity interests in Forest on December 30, 2022, resulting in combined cash proceeds from the Forest sales of approximately $45 million.

1

 

•Total revenue for the fiscal year ended June 30, 2023 grew 92% to $8.7 million, compared to $4.5 million for fiscal 2022.

•Net income from continuing operations for the fiscal year ended June 30, 2023 of $14.5 million, compared to net loss from continuing operations of ($19.3) million in fiscal 2022.

•Adjusted EBITDA of $1.0 million for the fiscal year ended June 30, 2023, compared to an adjusted EBITDA loss of ($1.3) million in fiscal 2022.

Management Commentary

Jason Reese, Chief Executive Officer of the Company, stated, “As we close fiscal year 2023, we are proud of the Company’s evolution into a more simplified business focused on alternative asset management. Throughout the year, our management team took transformative steps to reshape our balance sheet, increasing liquidity and growing AUM. In addition, in the fiscal fourth quarter, Great Elm recognized incentive fees from GECC for the first time in the Company’s history – a testament to GECC’s markedly improved portfolio positioning and operations. Looking ahead, we are steadfast in our long-term strategy to scale our core businesses, build upon our curated pipeline of new funds and potential investments and utilize our strong balance sheet to deploy capital where we see attractive opportunities to achieve compelling risk-adjusted returns.”

Discussion of Financial Results for the Fiscal Fourth Quarter Ended June 30, 2023

During the three months ended June 30, 2023, GEG reported total revenue of $3.0 million, representing a 59% sequential increase and a 96% increase from $1.5 million in the prior-year period. The increase primarily related to significantly improved cash incentive fees from GECC and the May 2022 acquisition of the Monomoy REIT management agreement.

During the three months ended June 30, 2023, GEG recorded net loss from continuing operations of ($5.3) million, comparable to the prior-year period.

During the three months ended June 30, 2023, GEG recorded Adjusted EBITDA of $0.4 million, compared to $0.3 million from the same period in the prior year.

Discussion of Financial Results for the Fiscal Year Ended June 30, 2023

Total revenue for the fiscal year ended June 30, 2023 increased 92% to $8.7 million from $4.5 million in the prior fiscal year.

For the fiscal year ended June 30, 2023, the Company reported net income from continuing operations of $14.5 million, compared to net loss from continuing operations of ($19.3) million for fiscal 2022, driven by higher revenue, interest and dividend income, as well as significant gains related to the Forest transaction.

Adjusted EBITDA for the fiscal year ended June 30, 2023 was $1.0 million, compared to an adjusted EBITDA loss of ($1.3) million in the prior fiscal year.

2

 

Fiscal 2023 Fourth Quarter and Full Year Conference Call & Webcast Information

When: Thursday, September 21, 2023, 8:30 a.m. Eastern Time (ET)

Call: All interested parties are invited to participate in the conference call by dialing +1 (888) 440-4537; international callers should dial +1 (646) 960-0669. Participants should enter the Conference ID 2595129 when asked.

Webcast: The conference call will be webcast simultaneously and can be accessed here. A copy of the slide presentation accompanying the conference call, can be found here.

About Great Elm Group, Inc.

Great Elm Group, Inc. (NASDAQ: GEG) is a publicly-traded, alternative asset manager focused on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies. Great Elm Group, Inc. and its subsidiaries currently manage Great Elm Capital Corp., a publicly-traded business development company, and Monomoy Properties REIT, LLC, an industrial-focused real estate investment trust, in addition to other investments. Great Elm Group, Inc.’s website can be found at www.greatelmgroup.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 growth, profitability, acquisition opportunities 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 Securities and Exchange Commission (“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.greatelmgroup.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”). 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.

3

 

Included in the financial tables below is a reconciliation of Adjusted EBITDA to the most directly comparable US GAAP financial measure, net income from continuing operations.

Media & Investor Contact:

Investor Relations

geginvestorrelations@greatelmcap.com

4

 

Great Elm Group, Inc.

Consolidated Balance Sheets

Dollar amounts in thousands (except per share data)

ASSETS	June 30, 2023			June 30, 2022
Current assets
Cash and cash equivalents	$	60,165		$	22,281
Receivables from managed funds		3,308			2,445
Investments in marketable securities		24,595			-
Investments, at fair value (cost $40,387 and $68,766, respectively)		32,611			48,042
Prepaid and other current assets		717			665
Assets of Consolidated Fund:
Investments, at fair value (cost $2,432)		-			1,797
Prepaid expenses		-			746
Real estate under development		1,742			-
Current assets held for sale		-			8,464
Total current assets		123,138			84,440
Identifiable intangible assets, net		12,115			13,250
Right-of-use assets		497			733
Other assets		143			103
Non-current assets held for sale		-			69,561
Total assets	$	135,893		$	168,087
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	191		$	8
Accrued expenses and other current liabilities		5,418			3,845
Current portion of related party payables		1,409			486
Current portion of lease liabilities		359			341
Liabilities of Consolidated Fund - accrued expenses and other		-			11
Current liabilities held for sale		-			15,003
Total current liabilities		7,377			19,694
Lease liabilities, net of current portion		142			472
Long-term debt (face value $26,945)		25,808			25,532
Related party payables, net of current portion		926			1,120
Related party notes payable, net of current portion		-			6,270
Convertible notes (face value $37,912 and $36,085, including $15,395 and $15,133 held by related parties, respectively)		37,129			35,187
Redeemable preferred stock of subsidiaries (held by related parties, face value $35,010)		-			34,099
Other liabilities		669			908
Non-current liabilities held for sale		-			2,551
Total liabilities		72,051			125,833
Contingently redeemable non-controlling interest		-			2,225
Stockholders' equity
Preferred stock, $0.001 par value; 5,000,000 authorized and zero outstanding		-			-
Common stock, $0.001 par value; 350,000,000 shares authorized and 30,651,047 shares issued and 29,546,655 outstanding at June 30, 2023; and 28,932,444 shares issued and 28,507,490 outstanding at June 30, 2022		30			29
Additional paid-in-capital		3,315,378			3,312,763
Accumulated deficit		(3,251,566	)		(3,279,296	)
Total Great Elm Group, Inc. stockholders' equity		63,842			33,496
Non-controlling interest		-			6,533
Total stockholders' equity		63,842			40,029
Total liabilities, non-controlling interest and stockholders' equity	$	135,893		$	168,087

5

 

Great Elm Group, Inc.

Consolidated Statements of Operations

Amounts in thousands (except per share data)

	For the twelve months ended June 30,
	2023			2022
Revenues	$	8,663		$	4,516
Operating costs and expenses:
Investment management expenses		10,196			6,616
Depreciation and amortization		1,152			524
Selling, general and administrative		8,480			5,982
Expenses of Consolidated Fund		46			135
Total operating costs and expenses		19,874			13,257
Operating loss		(11,211	)		(8,741	)
Dividends and interest income		6,209			3,161
Net realized and unrealized gain (loss) on investments		15,247			(7,571	)
Net realized and unrealized loss on investments of Consolidated Fund		(16	)		(525	)
Gain on sale of controlling interest in subsidiary		10,524			-
Interest expense		(6,074	)		(5,546	)
Income (loss) before income taxes from continuing operations		14,679			(19,222	)
Income tax expense		(200	)		(83	)
Net income (loss) from continuing operations		14,479			(19,305	)
Discontinued operations:
Net income from discontinued operations		13,201			4,268
Net income (loss)	$	27,680		$	(15,037	)
Less: net (loss) income attributable to non-controlling interest, continuing operations		(1,554	)		684
Less: net income (loss) attributable to non-controlling interest, discontinued operations		1,504			(828	)
Net income (loss) attributable to Great Elm Group, Inc.	$	27,730		$	(14,893	)
Basic net income (loss) per share from:
Continuing operations	$	0.55		$	(0.75	)
Discontinued operations		0.40			0.19
Basic net income (loss) per share	$	0.95		$	(0.56	)
Diluted net income (loss) per share from:
Continuing operations	$	0.44		$	(0.75	)
Discontinued operations		0.29			0.19
Diluted net income (loss) per share	$	0.73		$	(0.56	)
Weighted average shares outstanding
Basic		28,910			26,784
Diluted		40,980			26,784

6

 

Great Elm Group, Inc.

Reconciliation from EBITDA to Adjusted EBITDA - Quarterly

Dollar amounts in thousands

	For the three months ended June 30,				For the twelve months ended June 30,
	2023		2022		2023		2022
Net income (loss) from continuing operations – GAAP	$      (5,256)		$        (5,299)		$         14,479		$ (19,305)
Interest expense		1,050		1,674		6,074		5,546
Income tax expense		198		166		200		83
Depreciation and amortization	282		217		1,152		524
Non-cash compensation	702		639		2,948		3,211
Loss on investments, excluding investment in Forest		2,187		2,762		9,167		8,096
Gains related to sale of Forest		-		-		(34,922)		-
Transaction and integration related costs(1)		634		188		1,105		499
Change in contingent consideration		603		-		783		-
Adjusted EBITDA(2)		$ 400		$ 347		$ 986		$ (1,346)

(1) Transaction and integration related costs include costs to sell, acquire and integrate acquired businesses.

(2) Adjusted EBITDA for prior periods has been adjusted to include dividend income earned during such periods consistent with the methodology for June 30, 2023.

7

XML

Document and Entity Information	Sep. 20, 2023
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 20, 2023
Entity Registrant Name	Great Elm Group, Inc.
Entity Central Index Key	0001831096
Entity Emerging Growth Company	false
Entity File Number	001-39832
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-3622015
Entity Address, Address Line One	800 South Street
Entity Address, Address Line Two	Suite 230
Entity Address, City or Town	Waltham
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02453
City Area Code	617
Local Phone Number	375-3006
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Common Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	GEG
Security Exchange Name	NASDAQ
7.25% Notes due 2027 [Member]
Entity Listings [Line Items]
Title of 12(b) Security	7.25% Notes due 2027
Trading Symbol	GEGGL
Security Exchange Name	NASDAQ