Great Elm Group, Inc.

Great Elm Group, Inc. operates as a publicly-traded alternative asset management company 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. The company's wholly-owned registered investment adviser subsidiary, Great Elm Capital Management, LLC (GECM), provides investment management services to Great Elm Capital Corp. (GECC), a business development company, as well as other private funds. Another wholly-owned subsidiary, Monomoy CRE, LLC (MCRE), provides investment management services to Monomoy UpREIT, the operating subsidiary of a private real estate investment trust with a portfolio of diversified net leased industrial assets. The combined assets under management of these entities at June 30, 2026 was approximately $770.6 million ¹. The company also owns Monomoy Construction Services, LLC (MCS), an integrated, full-service construction business, and Monomoy BTS Corporation (MBTS), which purchases land parcels for build-to-suit development initiatives. The company faces competition from larger, well-financed organizations, including global asset managers, investment banks, commercial banks, private equity funds, sovereign wealth funds, and state-owned enterprises.

The company's competitive positioning is anchored in its investment management agreements with pooled investment vehicles, which provide for management fees, property management fees, incentive fees, and/or administration fees based on assets under management, rent collected, investment performance, and allocable expenses. The company owns approximately 9.8% of GECC's shares as of June 30, 2026 ², and approximately 3.3% of Monomoy UpREIT ³ and approximately 3.6% of Monomoy Properties REIT, LLC ⁴. The company's growth strategy involves exploring other investment management opportunities and areas that provide attractive risk-adjusted returns. The company's ability to retain its investment management agreements is dependent on its investment performance, as the agreements may be cancelled at the counterparty's discretion. The company has recorded an intangible asset attributable to the IMAs that is being amortized over a 15-year economic life ⁵.

The core business model of Great Elm Group is generating revenue through investment management agreements with various pooled investment vehicles, such as GECC and Monomoy UpREIT. These agreements provide for management fees, property management fees, incentive fees, and/or administration fees, which are generally based on assets under management, rent collected, investment performance, and allocable expenses. The company also generates revenue from its construction management business, MCS, which provides construction management services to clients, and from its build-to-suit development initiatives through MBTS, where it purchases land parcels, enters into commercial lease agreements, and intends to sell the land and improvements with attached leases. The company's revenue is significantly tied to the value of assets under management at its pooled investment vehicles, and a decline in these values would reduce the fees earned.

The Alternative Credit segment is focused on income generation and capital preservation through investment in debt and income-generating securities, direct lending, CLOs, and specialty finance businesses including Factoring, Asset Based Lending, and Healthcare. For the twelve months ended June 30, 2026, this segment reported revenues of $6.071 million ⁶, a decrease of 41% compared to $10.323 million ⁷ in the prior year. The segment reported an operating loss of $0.964 million ⁸ for the current year, compared to operating income of $2.350 million ⁹ in the prior year. The segment's net loss before income taxes was $0.964 million ¹⁰ for the current year, versus net income before income taxes of $2.351 million ¹¹ in the prior year.

The Real Estate segment is a full-service, end-to-end real estate platform combining investment expertise and turnkey execution capabilities for the Industrial Outdoor Storage (IOS) sector. For the twelve months ended June 30, 2026, this segment reported revenues of $21.705 million ¹², an increase of 262% compared to $5.993 million ¹³ in the prior year. The segment reported operating income of $2.397 million ¹⁴ for the current year, compared to an operating loss of $0.402 million ¹⁵ in the prior year. The segment's net income before income taxes was $2.397 million ¹⁶ for the current year, versus a net loss before income taxes of $0.402 million ¹⁷ in the prior year.

During the fiscal year ended June 30, 2026, the company capitalized development costs of $6.5 million ¹⁸ attributed to the cost of land and development and construction costs directly identifiable with the real estate projects. On February 4, 2025, the company acquired certain assets of Greenfield CRE, a construction management company, and formed Monomoy Construction Services, LLC (MCS) to launch an integrated, full-service construction business ¹⁹. In July 2025, the Board authorized an increase in the company's stock repurchase plan from $20 million to $25 million ²⁰. In April 2026, the Board authorized a further increase from $25 million to $40 million ²¹. As of August 24, 2026, approximately $24 million remained available to repurchase shares under the program ²². In May 2026, the company adopted a Rule 10b5-1 plan authorizing the repurchase of up to 5,000,000 shares of common stock ²³.

For the fiscal year ended June 30, 2026, total revenues were $27.776 million ²⁴, a 70% increase from $16.316 million ²⁵ in the prior year. The company reported a net loss of $36.908 million ²⁶ for the current year, compared to net income of $15.550 million ²⁷ in the prior year. The operating loss was $14.010 million ²⁸ for the current year, compared to an operating loss of $8.003 million ²⁹ in the prior year. The increase in revenues was primarily due to an increase in Real Estate property sales revenues, partially offset by a reduction in incentive fees of $4.1 million ³⁰ and an increase in project management fees of $1.3 million ³¹. Net realized and unrealized gains decreased $39.1 million ³² to a net realized and unrealized loss in the current year, driven by notable unrealized losses on three special purpose vehicles and a significant reduction in stock price for another investment.

The company's growth strategy is centered on expanding its portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies. The company continues to explore other investment management opportunities, as well as opportunities in other areas that it believes provide attractive risk-adjusted returns on invested capital. The company's ability to grow is dependent on its ability to identify and consummate attractive investment opportunities, which may be time-consuming and costly, and it faces intense competition from other companies with similar objectives, including private equity and venture capital funds, sovereign wealth funds, SPACs, and investment firms with significantly greater financial resources.

The company is focused on growing its construction management business, MCS, which was launched following the Greenfield Acquisition. The company's revenue from this business line depends on the size and number of projects it is able to manage, and its ability to scale the business in terms of number and size of projects. The company faces intense competition in this industry, including from competitors with more financial resources. The company also continues to pursue build-to-suit development initiatives through MBTS, where it purchases land parcels, enters into commercial lease agreements, and intends to sell the land and improvements with attached leases at or subsequent to the lease commencement date.

The company's margin and cost outlook is influenced by its ability to manage operating costs and expenses, which include compensation and benefits, selling, general and administrative expenses, and depreciation and amortization. For the fiscal year ended June 30, 2026, compensation and benefits expenses increased $4.1 million ³³ primarily due to increased personnel from the Greenfield Acquisition. Selling, general and administrative expenses increased $1.0 million ³⁴, mainly attributable to an increase in accounting and tax consulting fees and expenses from the Greenfield Acquisition. The company's cost of revenues increased $12.2 million ³⁵ due to an increase in Real Estate property sales revenues and related cost of revenues.

The company's operational outlook includes its ability to manage its real estate properties and construction projects. The company's real estate segment is focused on the IOS sector, and it intends to sell land and improvements with attached leases. The company's construction management business depends on its ability to contract with skilled trade partners at reasonable rates and manage a number of projects at one time. The company also relies on its cybersecurity program implemented by GECM, which is reviewed and assessed by third parties, and includes annual penetration testing of its network.

The company's capital allocation strategy includes a stock repurchase program. In July 2025, the Board authorized an increase in the repurchase plan from $20 million to $25 million ³⁶. In April 2026, the Board authorized a further increase from $25 million to $40 million ³⁷. As of August 24, 2026, approximately $24 million remained available to repurchase shares under the program ³⁸. The company does not currently intend to pay dividends on its common stock. The company may also issue notes or other debt securities to finance its growth plans, as it did in June 2022 when it raised $26.9 million through the issuance of 7.25% Notes due 2027 ³⁹.

The company faces several headwinds and constraints, including changing conditions in financial markets and the economy, which could impact it through decreased revenues, losses, or other adverse consequences. Disruptions in financial markets, including regional bank instability, high inflation and interest rates, tariffs and trade tensions, have increased spreads between yields on risk-free and higher risk securities, resulting in illiquidity and volatility. These conditions have increased construction costs, affected the availability of construction financing, and led to declining property values and weakened rental demand. The company's growth strategy may not be successful, and it may fail to identify attractive opportunities or consummate identified transactions due to regulatory or legal complexities, failure to obtain financing, or adverse developments in the U.S. or global economy.

The company's business is subject to extensive regulation, and changes in laws and regulations could have an effect on its revenue and profitability, limit its ability to pursue business opportunities, impact the value of assets it holds, require it to change certain business practices, and impose additional costs. The financial services industry is subject to extensive laws, rules, and regulations, and regulators will supervise the company's business activities to monitor compliance. The company may also be deemed to be an investment company under the Investment Company Act, which would subject it to additional regulatory requirements and restrictions on its activities.

The company's growth strategy may not be successful, and it may fail to identify attractive investment opportunities or consummate transactions due to intense competition from private equity and venture capital funds, sovereign wealth funds, SPACs, and investment firms with significantly greater financial resources. The company's revenue is significantly tied to the value of assets under management at its pooled investment vehicles, and a decline in these values would reduce fees earned. The investment management agreements with GECC and Monomoy UpREIT may be cancelled at the counterparty's discretion without any termination payment, and the company does not control the boards of these vehicles. The company has recorded an intangible asset attributable to the IMAs that is being amortized over a 15-year economic life ⁴⁰, even though the IMAs are cancellable. The company's construction management business, MCS, is a new business line with no prior experience, and its revenue depends on the size and number of projects it can manage, with many projects being small in size. The company faces intense competition in this industry, including from competitors with more financial resources. The company's common stock is subject to transfer restrictions to preserve net operating loss carryforwards, and the Tax Benefits Preservation Agreement restricts ownership of 4.99% or more of outstanding shares ⁴¹. The company may issue additional shares of common stock or preferred stock, which would dilute stockholders' interests. The company's common stockholders may experience significant dilution upon the issuance of common stock upon conversion of the 5.0% Convertible Senior Notes due 2030, which have a conversion price of $3.4722 per share ⁴², and upon exercise of warrants, with the Series A warrant allowing the purchase of 1,000,000 shares at $3.50 per share ⁴³ and the Series B warrant allowing the purchase of 1,000,000 shares at $5.00 per share ⁴⁴.

Management's message emphasizes the company's focus on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies. The company's strategic priorities include expanding its investment management business through GECM and MCRE, growing its construction management business MCS, and continuing to explore other investment management opportunities. Management highlights the company's ability to generate recurring free cash flows and its growth prospects, as well as the industry expertise of its Board and employees. The company's forward-looking statements include expectations about the ability of GECM to profitably manage GECC and the ability of MCRE to manage Monomoy UpREIT, the dividend rates that GECC and Monomoy UpREIT will pay, the results of investment management activities, the ability to sell real estate properties at a profit, and the ability to raise capital to fund the business plan.