UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 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.) |
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800 South Street, Suite 230, Waltham, MA |
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02453 |
(Address of Principal Executive Offices) |
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(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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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 |
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 May 5, 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 4, 2023, Peter A. Reed resigned as Chief Executive Officer of the Company, effective immediately following the filing of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023. Mr. Reed will continue to be available for consultation through May 5, 2024.
In connection with Mr. Reed’s separation, on May 4, 2023, the Company entered into a severance agreement (the “Severance Agreement”) and a consulting agreement (the “Consulting Agreement”) with Mr. Reed. The Severance Agreement and the Consulting Agreement provide for cash payments for consulting services of $20,833 per month and healthcare-related benefits through May 5, 2024. Mr. Reed will also vest in 9,183 shares of unvested common stock of Great Elm Capital Corp. (“GECC”) awarded to Mr. Reed by the Company (50% in September 2023 and 50% in September 2024). The Company will also grant to Mr. Reed, subject to a one-year lock up, $300,000 of shares of common stock of GECC held by the Company with the number of shares determined based on a 10-day volume-weighted average price of GECC’s common stock on the 10 trading days following May 5, 2023. Additionally, Mr. Reed’s option to purchase (1) 125,000 shares of the Company’s common stock may be exercised until September 18, 2027, (2) 213,000 shares of the Company’s common stock may be exercised until September 18, 2027, and (3) 57,143 shares of the Company’s common stock may be exercised until August 6, 2024. The Severance Agreement and the Consulting Agreement are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively.
On May 4, 2023, the Company appointed Jason W. Reese, age 57, as the Company’s Chairman and Chief Executive Officer, effective immediately following Mr. Reed’s resignation. Mr. Reese has been the Executive Chairman of the Company’s Board of Directors (the “Board”) since February 2020. Mr. Reese is the Co-Founder, Chairman and Chief Executive Officer of Imperial Capital Asset Management, LLC (“ICAM”) and the Co-Founder of Imperial Capital, LLC (“Imperial Capital”), both founded in 1997. ICAM is a registered investment advisor which has managed various hedge funds, investment partnerships, a private REIT and a private equity fund. Imperial Capital is a registered broker-dealer and an affiliate of ICAM. Prior to ICAM and Imperial Capital, Mr. Reese was a principal with Gordon Investment Corporation, a merchant banking firm in New York and Dallas, where he focused on investing in distressed real estate transactions, high yield securities and leveraged buyouts. Prior to his time with Gordon, Mr. Reese worked in the Corporate Finance Group at PaineWebber in New York. Mr. Reese is currently on the board of directors of City Ventures, LLC, a California-based private home builder. Mr. Reese graduated with honors from Yale University with a B.S. in Electrical Engineering.
Certain information regarding transactions with related persons between the Company and Mr. Reese is disclosed under the heading “Certain Relationships and Related Transactions” in the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on October 11, 2022, which information is incorporated by reference into this Item 5.02.
On May 4, 2023, the Company entered into an offer letter (the “Offer Letter”) with Mr. Reese in connection with his appointment as Chief Executive Officer. Under the Offer Letter, Mr. Reese’s annual compensation will consist of a base salary of $500,000, which will be subject to annual increase based on Company and individual performance and market conditions, as determined by the Board. Additionally, Mr. Reese will be eligible to participate in the Great Elm Capital Management, Inc. Discretionary Bonus Plan, and the target amount for any target bonus for each of the first five years of employment will be 200% of base salary. Mr. Reese will also be granted an option to purchase up to 2,000,000 shares of the Company’s common stock, which will vest and become exercisable upon the achievement of certain milestones. The Offer Letter is attached hereto as Exhibit 10.3.
Item 8.01 Other Events.
On May 5, 2023, the Company issued the press release attached as Exhibit 99.2 to this report announcing the officer appointment noted under Item 5.02 above.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number |
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Description |
10.1 |
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Severance Agreement, dated May 4, 2023, by and between Great Elm Group, Inc. and Peter A. Reed |
10.2 |
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Consulting Agreement, dated May 4, 2023, by and between Great Elm Group, Inc. and Peter A. Reed |
10.3 |
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Offer Letter, dated May 4, 2023, by and between Great Elm Group, Inc. and Jason W. Reese |
99.1 |
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99.2 |
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104 |
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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.
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GREAT ELM GROUP, INC. |
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Date: May 5, 2023 |
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/s/ Brent J. Pearson |
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By: Brent J. Pearson |
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Title: Chief Financial Officer |
Exhibit 10.1
CONFIDENTIAL SEPARATION AND GENERAL RELEASE AGREEMENT
This Confidential Separation and General Release Agreement (this “Agreement”) is made and entered into by and among Peter A. Reed (“Executive”) and Great Elm Group, Inc. (“GEG”), Great Elm Capital Corp., Inc. (“GECC”), and Great Elm Capital Management, Inc. (“GECM”), and their parent, successor, predecessor, affiliate and related entities (collectively, the “Company”). References to the “Parties” means the Executive and the Company.
RECITALS
WHEREAS, Executive is currently employed as Chief Executive Officer (“CEO”) of GEG and the Chief Investment Officer (“CIO”) of GECM;
WHEREAS, Executive intends to tender his resignation effective May 5, 2023 from his role as CEO and CIO; and
WHEREAS, the Company has agreed to accept Executive’s resignation under the terms and conditions set forth in this Agreement in exchange for Executive’s execution of this Agreement, including the general release of claims provided herein.
NOW, THEREFORE, for and in consideration of the mutual promises and covenants in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
.
[Signature Page Follows]
/s/ Peter A. Reed Execution Date: May 4, 2023
Peter A. Reed
By: /s/ Nichole Milz Execution Date: May 4, 2023
Nichole Milz
Chief Operating Officer
Exhibit 10.2
Consulting Agreement
This consulting agreement (this “Agreement”) is effective as of May 5, 2023 by and between Peter Reed (“Consultant”) and Great Elm Capital Management, LLC. (“Great Elm”).
GREAT ELM wishes to engage Consultant to provide the consulting services described herein below, and Consultant desires to provide such services to Great Elm upon the terms and conditions set forth in this Agreement. Both parties hereby agree as follows:
If to Consultant: Peter Reed
42 Pembroke Rd.
Wellesley, MA 02482
Email: preed1227@gmail.com
If to Great Elm: Great Elm Capital Management, Inc.
800 South Street, Suite 230
Waltham, MA 02453
Attn: Adam Kleinman
Email: akleinman@greatelmcap.com
Notices shall be effective on the date delivered by electronic mail, personal delivery or receipted delivery service, or three days after the date mailed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and first above written.
CONSULTANT
By: /s/ Peter Reed
Name: Peter Reed
GREAT ELM CAPITAL MANAGEMENT, INC.
By: /s/ Nichole Milz
Name: Nichole Milz
Title: CHIEF OPERATING OFFICER
Exhibit 10.3
Great Elm Group, Inc.
May 4, 2023
VIA EMAIL
Dear Jason,
We are excited about the opportunity to have you increase your role at Great Elm Group, Inc. (“GEG” and, together with each other subsidiary of GEG, collectively or individually, as the context may require, “Great Elm”). As you are aware, GEG is committed to hiring dedicated and experienced employees, all of whom are equally committed to our goals and have the desire to contribute in a positive, challenging and rewarding environment.
This letter is to confirm our offer to you of the expanded role of Chief Executive Officer of GEG along with continuing in your role as Chairman of the Board of Directors of GEG (the “GEG Board”). The terms of your offer are set forth in this letter agreement (the “Employment Agreement”) as follows:
Page 1
Great Elm Group, Inc.
It is understood and agreed that the Discretionary Bonus Plan and cycles discussed in this Section 4 are not a contractual entitlement or expectation that a bonus or the full Target Bonus will be received. If Great Elm, in its discretion, makes a bonus payment in respect to a particular bonus year, such an award does not imply any expectation or entitlement in respect of future bonus years or any other periods. Great Elm retains the sole right to modify the payment schedule of the Discretionary Bonus Plan in its discretion and all determinations by Great Elm regarding the interpretation and application of such program shall be final and binding.
Page 2
Great Elm Group, Inc.
Page 3
Great Elm Group, Inc.
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Stock Price Milestone Table |
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Performance Range |
Stock Price Vesting Triggers (30-day average) |
5-Year Annual Stock Price Appreciation |
Cumulative Number of Shares Subject to Stock-Price Based Option that Will Be Vested |
< Threshold |
Below $4.02 |
<15% |
0 |
Threshold |
$4.02 |
15% |
400,000 |
Target |
$6.00 |
25% |
800,000 |
Upside |
$8.00 |
32% |
1,200,000 |
Stretch |
$10.00 |
38% |
1,600,000 |
Outperform |
$12.00 |
43% |
2,000,000 |
Page 4
Great Elm Group, Inc.
Page 5
Great Elm Group, Inc.
Page 6
Great Elm Group, Inc.
Page 7
Great Elm Group, Inc.
For purposes of this Employment Letter, “Net After-Tax Benefit” means the sum of (i) all payments that you receive or are entitled to receive that are contingent on a change in the ownership or effective control of Great Elm or in the ownership of a substantial portion of the assets of Great Elm within the meaning of Section 280G(b)(2) of the Code, less (ii) the amount of federal, state, local, employment, and Excise Tax (if any) imposed with respect to such payments.
If amounts must be reduced pursuant to this Section 10, Great Elm shall (to the extent feasible) reduce accelerated equity incentive vesting first (to the extent the value of such accelerated vesting for 280G purposes is not determined pursuant to Treasury Regulation Section 1.280G-1 Q&A 24(c)), followed by cash payments and in the order in which such payments would be made (with payments made closest to the Change in Control being reduced first), followed by accelerated equity incentive vesting (to the extent the value of such accelerated vesting is determined pursuant to Treasury Regulation Section 1.280G-1 Q&A 24(c)), and followed last by the continued health and welfare benefits.
The calculations in this Section 10 shall be made by a certified public accounting firm, executive compensation consulting firm, or law firm designated by Great Elm and reasonably acceptable to you, and shall be determined using reasonable assumptions and approximations concerning applicable taxes and relying on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.
Page 8
Great Elm Group, Inc.
The costs of performing such calculations shall be borne exclusively by Great Elm.
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Great Elm Group, Inc.
You will have new hire orientation with Human Resources during which, we will provide you with a general orientation to include employee benefits. You will be expected to present and/or provide the following during your orientation: 1) Form I-9 eligible identification and 2) recent statements of all brokerage accounts.
Time is of the essence with respect to this opportunity. In that regard, this offer expires on May 4, 2023 at 5:00PM ET. Please acknowledge your agreement with the above terms and conditions and return the executed copy to Great Elm via email, facsimile or mail as follows:
c/o Olivia Pine
Vice President, HR
3801 PGA Boulevard, Suite 603
Palm Beach Gardens, Florida 33410
Email: opine@greatelmcap.com Fax: 561.214.7998
We are pleased to have you join us and we are confident you will make an important contribution. Should you have any questions, please feel free to call Olivia Pine at any time 561.214.7942.
Sincerely,
/s/ James Parmelee
James Parmelee
Chair of the Compensation Committee
Agreed and Accepted
/s/ Jason Reese May 4, 2023
Jason Reese Date
Page 10
Great Elm Group, Inc.
Exhibit A
Imperial Capital Group, LLC
Imperial Capital, LLC
Imperial Capital Group Holdings, LLC
Imperial Capital Group Holdings II, LLC
Imperial Capital Group Holdings Net Jets
Imperial Capital Asset Management, LLC
Imperial Capital Asset Management Holdings, LLC
Imperial Capital Reese
Bulldog Capital
Sienna Capital
2415 Casa de Marbella
Pueblo Development Group, Inc.
City Ventures Board
Long Ball Partners, LLC
Monomoy Partners, LLC
Great Elm Group, Inc.
GREAT ELM GROUP, INC.
TERMS OF EMPLOYMENT
Imperial Capital Leverage Income Fund Subject to your agreement to these terms, we welcome you as an employee of Great Elm Group, Inc. (the “Company”). Like most other organizations, we have certain policies essential to maintaining our high professional standards and protecting our valuable confidential and trade secret information. As a condition of your employment with the Company, please read this agreement (hereinafter “Agreement”) carefully and then sign it where indicated to confirm that you understand and agree to it.
CONFIDENTIALITY/AND TRADE SECRET INFORMATION.
(a) Company Information. You agree at all times during the term of your employment with the Company and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm, corporation or other entity (other than Imperial Capital Group Holdings, LLC (“ICGH”) pursuant to a non-disclosure agreement acceptable to the Company and ICGH, the “NDA”)) without written authorization of the Board of Directors of the Company, any Confidential Information of the Company which you obtain or create in connection with your employment with the Company or service on its Board of Directors. You understand that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, suppliers, , investment strategy, portfolio information, valuation data, marketing plans, operations or business plans, budgets, marketing plans, licenses, finances, budgets or other business information disclosed to you by the Company either directly or indirectly in writing, orally or by drawings or observation of parts or equipment or created by you during the period of your employment, whether or not during working hours as well as confidential or proprietary information provided to the Company by third parties. You further understand that Confidential Information does not include any items obtained as a result of your ownership interest in the Company pursuant to the NDA; or which has become publicly and widely known and made generally available or readily ascertainable through no wrongful act of yours or of others who were under confidentiality obligations as to the item or items involved.
(b) Nothing in this Agreement is intended to, or should be interpreted as preventing, prohibiting or discouraging you from making disclosures as permitted under applicable law or from bringing to the attention of federal, state, or local government officials, any regulatory agency, such as the Securities and Exchange Commission, or any self-regulatory organization (SRO), any information which you believe concerns a possible violation of law, regulation or SRO regulation, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. You do not need the prior authorization of the Company to make any such reports or disclosures and you are not required to notify the Company that you have made such reports or disclosures. You understand and acknowledge that the federal Defend Trade Secrets Act (“DTSA”) provides that an individual shall not be held criminally or civilly liable for the disclosure of a trade secret that is made (i) in confidence to a government official or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, you understand and acknowledge that the DTSA provides that an individual who files a retaliation lawsuit against an employer for reporting a suspected violation of law may disclose a trade secret to his/her attorney and use the trade secret information in court, but only if the individual (i) files any document containing the trade secret under seal; and (ii) does not disclose the trade secret, except pursuant to court order.
Great Elm Group, Inc.
RETURNING COMPANY DOCUMENTS. You agree that, at the time of termination of your employment with the Company or within ten (10) business days of written request therefor, you will deliver to the Company any and all devices, records, data, notes, reports, proposals, lists, correspondence, other documents or property, or reproductions of any aforementioned items developed by you pursuant to your employment. It is understood that the Company’s request for the return of documents will not include any items obtained as a result of your ownership interest in the Company which have become publicly and widely known and made generally available or readily ascertainable through no wrongful act of your or others who were under confidentiality obligations as to the item or items involved. You acknowledge that (i) any Company property situated on its premises is subject to inspection by Company personnel and (ii) you have no expectation of privacy with respect to the Company’s telecommunications, networking or information processing systems (including, without limitation, files, e-mail messages, and voice messages relating to the Company) and that your activity relating to the Company and any files or messages on or using any of those systems with respect to the Company may be monitored or reviewed, in each case, at any time without notice
INSIDE INFORMATION/INSIDER TRADING. As a condition of your employment, you will be required to agree to the Company’s standard Insider Trading Policy which defines the trading window outside of which you, or persons related to you, may not trade in Company Securities.
CODE OF ETHICS. We have adopted a Code of Ethics and Conduct with respect to our obligations to our clients. As a condition of your employment with the Company, you hereby agree to follow that Code of Ethics and all other policies and procedures of the Company.
NOTICE PERIOD. You recognize and agree that it is reasonable and necessary for the Company to protect its Confidential Information and Trade Secrets and to provide a smooth transition in the event that your employment with the Company is terminated. Consequently, you agree that you will provide the Company with ninety (90) days prior written notice (the “Notice”) of your intention to terminate your employment with the Company (the “Notice Period”). During the Notice Period, the Company may choose to discontinue or otherwise limit your access to information, and the Company may, at its sole discretion, elect to (a) require you to continue to perform your regular duties, or (b) require you to discontinue your regular duties, including prohibiting you from further entry to any of the Company’s premises other than the office in Palm Beach Gardens, Florida. The Company may also reduce the term of the Notice Period by accelerating the termination of your employment to an earlier date that the Company selects in its sole discretion.
NO SOLICITATION OF EMPLOYEES. To meet the demands of our clients, the Company invests substantial time and resources in identifying for hire and training quality employees. In addition, the identities, compensation information and skill set of the Company’s employees constitutes Confidential Information and Trade Secrets.
Great Elm Group, Inc.
In recognition of our investment, and to protect the Company’s Confidential Information and Trade Secrets, you agree that while you are employed by us, and (a) for a period of 6 months thereafter if you resign without Good Reason (as defined in the Employment Agreement, as defined below) or are terminated for Cause (as defined in the Employment Agreement) or (b) for a period of one (1) year thereafter if your employment with the Company ends due to an Involuntary Termination as set forth in Section 8 (a) and 8 (b) and the Company complies with its obligations in 8 (a) (i-iii) or 8 (b) (i-iii), in each case, starting with the date any applicable Notice Period begins (such 6 or 12 month period, as applicable, the “Restricted Period”), you will not, without the prior written consent of the Company, whether on your own behalf or on behalf of or in conjunction with any other person, directly or indirectly, in any manner, solicit, induce, recruit or encourage any employee to leave the Company’s employment.
NO COMPETITION. You understand that the nature of your position gives you access to and knowledge of Confidential Information and Trade Secrets that places you in a position of trust and confidence with the Company. You further acknowledge and agree that the Company’s ability to safeguard its Confidential Information and Trade Secrets for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by you is unlikely to result in unfair or unlawful competitive activity. Because of the Company’s legitimate business interests as described in this Agreement and the good and valuable consideration offered to you, the receipt and sufficiency of which is acknowledged, during the term of your employment and during the Restricted Period, you will not, without the prior written consent of the Company, directly or indirectly, on your own account or on behalf of or in conjunction with any other person or organization, whether as owner, partner, investor, operator, manager, officer, director, consultant, agent, employee, co-venturer, advisor, representative or otherwise, engage, participate, promote, assist or invest or actively prepare to engage, participate, promote, assist or invest in any Competing Business. “Competing Business” means any business, regardless of size or the form of the business, that (a) manages, sponsors, promotes, operates or engages in investment strategies or any other business activities similar to any of those engaged by (i) Great Elm Capital Corp. or its subsidiaries, including, without limitation, Great Elm Specialty Finance, LLC, Prestige Capital Finance, LLC, Great Elm Healthcare Finance, LLC, Sterling Commercial Credit, LLC and Lenders Funding, LLC (ii) Monomoy Properties REIT, LLC or its subsidiaries, (iii) Monomoy BTS Corp. and its subsidiaries, (iv) Tacora Capital, LP or its affiliates or (v) any other business or investment strategy in which the Company or its subsidiaries is engaged in any material respect at the time your employment with the Company ends, or (b) owns or controls a significant interest in any entity that directly or indirectly engages in any of the foregoing; provided that none of the entities set forth on Exhibit A to that certain Employment Agreement, dated as of the date hereof, between you and the Company (the “Employment Agreement”), shall be deemed to be a Competing Business for purposes of this section; provided further that during the Restricted Period, none of the entities set forth on Exhibit A may solicit or raise third party capital for any business or investment strategy described in clauses (a) and (b) above other than accepting subscriptions from existing investors in the entities set forth on Exhibit A in the ordinary course of business for (x) any business or investment strategy in which such entities are engaged in any material respect as of the time your employment with the Company begins or (y) any new business or investment strategy that is not described in clauses (a) and (b) above. Nothing herein shall prohibit you from (i) holding investments in any non-asset management entity and (ii) holding any passive investments in asset management businesses which do not exceed ten percent (10%) of the equity interests of such entity, subject to Section 2 of the Employment Agreement.
MONOMOY AGREEMENT. For the avoidance of doubt, nothing in this Agreement shall limit or modify the obligations of Imperial Capital Asset Management, LLC (“ICAM”) and its affiliates under that certain Purchase Agreement, dated May 4, 2022, between ICAM and Great Elm Capital Management, Inc. (“GECM”), including, without limitation, Section 4.6 thereof, which obligations shall remain in full force and effect.
Great Elm Group, Inc.
LITIGATION AND REGULATORY COOPERATION. During and after your employment, you shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while you were employed by the Company. Your full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after your employment, you also shall reasonably cooperate with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while you were employed by the Company. The Company shall reimburse you for any reasonable out of pocket expenses incurred in connection with the performance of your obligations herein.
ENFORCEMENT/ DAMAGES. Because your breach of this Agreement may cause the Company irreparable harm for which money is inadequate compensation, you agree that the Company will be entitled to injunctive relief to enforce this Agreement, in addition to actual damages, punitive damages and other available remedies.
ASSIGNMENT. To advise our clients, we must perform extensive investment analysis. This analysis requires the application of many analytical tools and inventions. Some of these tools and inventions are developed during the course and scope of our work and are designed for internal use only. As used in this Agreement, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable, copyrightable, registerable as a trademark, reduced to writing, or otherwise), or any part thereof, which relates to the Company’s actual or anticipated business, research and development or existing or future products or services and which are or were conceived, developed or made by you (whether or not during usual business hours, whether or not by the use of the facilities of the Company or any of its affiliates, and whether or not alone or in conjunction with any other person) while employed by the Company together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing. You acknowledge and agree that all such Work Product belong to and shall be the sole property of the Company, and you hereby assign all of your right, title and interest in and to such Work Product to the Company, including all intellectual property rights therein. You shall promptly disclose all Work Product to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or perfect its rights therein, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. You hereby appoint the Company as your attorney-in-fact to execute on your behalf any assignments or other documents deemed necessary by the Company to protect or perfect the Company’s rights to any Work Product.
“AT WILL” EMPLOYMENT. The employment relationship between you and the Company is “at will.” This means that, except as set forth in the Notice Period provision above, either you or the Company can terminate the employment relationship at any time with or without notice and with or without cause.
Great Elm Group, Inc.
This at will relationship between you and us cannot be changed or modified except as provided in an express written agreement stating that the at-will relationship has been changed, and signed by a member of the Great Elm Group Board of Directors (not including you). No representation by an employee or representative can change this policy or establish an employment contract or any term thereof. This is the full and complete agreement between you and the Company on this subject.
AMENDMENT AND BINDING EFFECT. This Agreement may not be amended except by an instrument in writing signed by both parties. This Agreement shall be binding on your heirs, executors, administrators, and other legal representatives and assigns, and is for the benefit of the Company and its successors, assigns, subsidiaries or related entities.
SEVERABILITY. While the provisions contained in this Agreement are considered by you and the Company to be reasonable in all circumstances, it is recognized that some provision may fail to technical reasons. Accordingly, it is hereby agreed and declared that if any one or more of such provisions shall, either by itself or themselves or taken with others, be adjudged to be invalid as exceeding what is reasonable in all circumstances for the protection of the interest of the Company, but would be valid if any particular restrictions or provisions were deleted or restricted or limited in a particular manner, then the said provisions shall apply with any such deletions, restrictions, limitations, reductions, curtailments, or modifications as may be necessary to make them valid and effective and the remaining provisions shall be unaffected thereby.
ARBITRATION. You and the Company each voluntarily promise and agree to arbitrate any dispute or claim between you, on the one hand, and the Company on the other hand, during, regarding, relating to or arising out of in any way your employment with the Company and you knowingly thereby waive any right to a jury trial or court proceedings. You and the Company recognize that arbitration is a more efficient means of resolving any disputes and, therefore, the mutual promises to arbitrate by you and the Company, constitute adequate consideration for each other and for this agreement to arbitrate. The parties further agree that such binding arbitration pursuant to this agreement shall be the sole and exclusive remedy for resolving any such claims or disputes. Although the decision of the arbitrator shall be the sole and exclusive remedy for any dispute, the decision may be subject to enforcement by a court.
1. Claims Covered by This Agreement.
a. Claims and disputes covered by this agreement include all claims by you against the Company (as defined below), and all claims that the Company may have against you, whether or not arising out of your employment (or its termination), including, without limitation, those arising under:
1) Any federal, state, or local laws, regulations, or statutes prohibiting employment discrimination (such as, without limitation, race, sex, sexual orientation, gender identity, national origin, age, disability, medical condition, pregnancy, genetic information, religion), retaliation, or harassment of any kind.
2) Any alleged or actual agreement or covenant (oral, written, or implied) between you and the Company.
Great Elm Group, Inc.
3) Any Company policy or compensation or benefit plan, unless the decision in question was made by an entity other than the Company.
4) Any public policy or tort.
5) Any federal, state, or other governmental law, statute, regulation, or ordinance.
6) Any other claim for personal, emotional, physical, or economic injury.
b. The only disputes between you and the Company which are not included within this mutual agreement to arbitrate are:
1) Any claim by you for workers’ compensation benefits or unemployment benefits.
2) Any claim by you for benefits under a Company employee benefit plan which provides its own arbitration procedure.
3) Any claims which, as a matter of law, cannot be subject to mandatory arbitration.
2. Class/ Collective Action Waiver; Provisional Remedies.
To the extent permitted by law, you agree that you may only bring claims under this Agreement in your individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding. You and the Company agree that nothing in this agreement is intended to prevent either you or the Company from obtaining emergency injunctive relief, or other provisional remedies from a court on the ground that the arbitration award to which you or the Company may be entitled may be rendered ineffectual without the injunctive or provisional relief. You agree to submit to the exclusive jurisdiction of any available federal or state court located in Palm Beach Gardens, FL for such proceeding.
3. Arbitration Procedure.
a. A written request for arbitration will be served on the other party.
b. At the time a written arbitration request is made, the arbitration will be conducted in accordance with the then-current Employment Arbitration rules of the Judicial Arbitration and Mediation Services (“JAMS”), except as those Employment Arbitration Rules are modified by or inconsistent with the procedures below. A copy of the JAMS Employment Arbitration Rules can be accessed on the worldwide web at www.jamsadr.com or obtained from the Company’s Human Resources Department.
i. The arbitration will be held in the state and county of your primary employment at the time of the act giving rise to the dispute.
ii. The arbitrator’s fees will be paid by the Company. Each party will pay for the fees and expenses of its own attorneys, experts, witnesses, and preparation and presentation of evidence and post-hearing briefs unless the party prevails on a claim for which attorneys’ fees are recoverable by applicable statute or contract.
Great Elm Group, Inc.
iii. The arbitrator shall be neutral, and will have experience in arbitrating employment disputes. The arbitrator shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to, any claim that all or any part of this Agreement is void or voidable. The arbitrator shall have the authority to grant any party all remedies otherwise available by law, including injunctions, but the arbitrator shall not have the power to grant any remedy that would not be available in state or federal court. The arbitrator shall apply the applicable statute of limitations to any claim. The arbitrator may not consolidate more than one person’s claims and may not otherwise preside over any form of a representative or class proceeding.
iv. Discovery shall be conducted in accordance with the then-current Employment Arbitration rules of JAMS. The arbitration shall provide discovery adequate to give the parties access to documents and witnesses that are essential to the dispute.
v. Each party shall have the right to subpoena witnesses and documents for the arbitration.
vi. The Arbitrator shall render a written award and opinion that includes the essential findings and conclusions upon which the decision is based. The arbitrator’s decision must be issued no later than thirty (30) days after a dispositive motion is heard and/or an arbitration hearing has been completed. The arbitrator’s decision regarding the claims shall be final and binding upon the parties and shall be enforceable in any court having jurisdiction thereof.
vii. Any action to enforce or vacate the arbitrator’s award shall be governed by the Federal Arbitration Act if applicable, and otherwise by applicable state law.
c. This is the complete agreement of the parties on the subject of arbitration of disputes of claims. This agreement shall survive the termination of your employment and can only be revoked or modified by a writing signed by you and a member of the GEG Board (other than you) which specifically states an intent to revoke or modify this agreement to arbitrate. If any provision of this agreement to arbitrate is adjudged to be void or otherwise unenforceable in whole or in part, such adjudication shall not affect the validity of the remainder of such agreement.
MISCELLANEOUS PROVISIONS.
a. For purposes of this Agreement, “Great Elm Group, Inc.” or “the Company” means Great Elm Group, Inc. and all related entities including Great Elm Capital Corp., GECM, and all successors and assigns of any of the above.
b. This Agreement and the Employment Agreement, together with all of the Company’s policies and procedures relating to employees, as in effect from time to time (collectively, “Employment Documents”), constitute our entire agreement with respect to your employment with the Company and no prior negotiations, drafts, arrangements or understandings with respect thereto shall be of any effect. This is the complete agreement of the parties on the subjects contained herein.
Great Elm Group, Inc.
c. If any sentence, phrase, paragraph, subparagraph or portion of this Agreement is found to be illegal or unenforceable, such action shall not affect the validity or enforceability of the remaining sentences, phrases, paragraphs, subparagraphs or portions of this Agreement
d. You have the right to have this Agreement reviewed by a counsel of your own choice.
e. This Agreement is not, and shall not be construed to create, any contract of employment, express or implied, nor does this agreement in any way alter the “at will” status of your employment.
Please refer to the Company’s complete policies and procedures governing your employment.
ASK FOR HELP. If you are ever unsure about whether some action would be consistent with our policies, you agree to ask us. Similarly, any time you encounter a situation and you are unsure what to do, you agree to tell us and ask for help.
ACKNOWLEDGMENT. By signing below, you acknowledge that you have read this carefully, understand and will comply with the agreements set forth in this form. You understand that none of these agreements can be changed or eliminated without written authorization of a member of the GEG Board (other than you).
DATE: May 4, 2023
SIGNATURE: /s/ Jason Reese
PRINT NAME: Jason Reese
Exhibit 99.1
GREAT ELM GROUP REPORTS FISCAL 2023 THIRD QUARTER
FINANCIAL RESULTS
Company to Host Conference Call at 9:00 a.m., ET on May 5, 2023
WALTHAM, MA, May 5, 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 third quarter ended March 31, 2023.
Leadership Update and Transactions Overview
Financial and Operational Highlights
1
Management Commentary
Jason Reese, Chief Executive Officer of the Company, stated, “In the third quarter of fiscal 2023, we completed the transformation of Great Elm Group to a simplified business focused on alternative asset management. During the quarter, we developed actionable plans to scale our existing businesses and cultivated a pipeline of potential investments, including opportunities to acquire the management rights to new, long-duration permanent capital vehicles. We remain committed in our efforts to grow a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance and other alternative strategies.”
Discussion of Financial Results for the Fiscal Quarter ended March 31, 2023
During the three months ended March 31, 2023, GEG reported total revenue of $1.9 million, a 92% increase compared to $1.0 million during the same period in the prior year. The increase primarily related to the May 2022 acquisition of the Monomoy REIT management agreement.
During the three months ended March 31, 2023, GEG recorded a net loss from continuing operations of $0.5 million, compared to a net loss from continuing operations of $6.5 million during the same period in the prior year. The change was driven by $2.0 million in net realized and unrealized gain on investments in the third quarter of fiscal 2023 compared to a net realized and unrealized loss on investments of $3.5 million in the prior-year quarter. The gain was partially offset by higher investment management expenses from the prior-year period.
During the three months ended March 31, 2023, GEG recorded Adjusted EBITDA of ($1.2) million, compared to Adjusted EBITDA of ($1.6) million from the same period in the prior year.
Sale of DME Business
On January 3, 2023, GEG sold its DME business to QHM Holdings, Inc., a wholly-owned subsidiary of Quipt, a U.S.-based leader in the home medical equipment industry, focused on end-to-end respiratory care. After payment of all obligations in connection with the transaction, GEG received approximately $26 million in net cash proceeds and 346,028 shares of Quipt common stock.
Sale of Interest in Forest
On January 17, 2023, GEG put its remaining 19% ownership interest in Forest to J.P. Morgan Broker-Dealer Holdings Inc. (“JPM”) for cash proceeds of approximately $27 million. This transaction followed its December 30, 2022 sale of 61% of the direct and indirect common equity in Forest to JPM for approximately $18 million in cash. GEG raised approximately $45 million in aggregate from the combined sales of its ownership interest in Forest in the second and third quarters of fiscal 2023.
The sale of the DME Business, together with the Forest transaction, added significant cash to GEG’s balance sheet to fund strategic growth initiatives and enables it to focus on scaling its alternative asset management platform.
2
Fiscal 2023 Third Quarter Conference Call & Webcast Information
When: |
Friday, May 5, 2023, 9:00 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 at the following link: https://events.q4inc.com/attendee/141685606. For a copy of the slide presentation accompanying the conference call, please visit: https://www.greatelmgroup.com/events-and-presentations. |
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.
Media & Investor Contact:
Investor Relations
geginvestorrelations@greatelmcap.com
4
Great Elm Group, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
Dollar amounts in thousands (except per share data)
ASSETS |
|
March 31, 2023 |
|
|
June 30, 2022 |
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
84,118 |
|
|
$ |
22,281 |
|
Receivables from managed funds |
|
|
2,421 |
|
|
|
2,445 |
|
Investments, at fair value (cost $41,079 and $68,766, respectively) |
|
|
35,104 |
|
|
|
48,042 |
|
Prepaid and other current assets |
|
|
946 |
|
|
|
665 |
|
Assets of Consolidated Fund: |
|
|
|
|
|
|
||
Investments, at fair value (cost $2,432) |
|
|
- |
|
|
|
1,797 |
|
Prepaid expenses |
|
|
- |
|
|
|
746 |
|
Real estate under development |
|
|
1,683 |
|
|
|
- |
|
Current assets held for sale |
|
|
- |
|
|
|
8,464 |
|
Total current assets |
|
|
124,272 |
|
|
|
84,440 |
|
Identifiable intangible assets, net |
|
|
12,391 |
|
|
|
13,250 |
|
Right of use assets |
|
|
582 |
|
|
|
733 |
|
Other assets |
|
|
137 |
|
|
|
103 |
|
Non-current assets held for sale |
|
|
- |
|
|
|
69,561 |
|
Total assets |
|
$ |
137,382 |
|
|
$ |
168,087 |
|
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
307 |
|
|
$ |
8 |
|
Accrued expenses and other liabilities |
|
|
4,122 |
|
|
|
3,845 |
|
Current portion of related party payables |
|
|
855 |
|
|
|
486 |
|
Current portion of lease liabilities |
|
|
347 |
|
|
|
341 |
|
Liabilities of Consolidated Fund - accrued expenses and other |
|
|
- |
|
|
|
11 |
|
Current liabilities held for sale |
|
|
- |
|
|
|
15,003 |
|
Total current liabilities |
|
|
5,631 |
|
|
|
19,694 |
|
Lease liabilities, net of current portion |
|
|
245 |
|
|
|
472 |
|
Long term debt (face value $26,945) |
|
|
25,737 |
|
|
|
25,532 |
|
Related party payables |
|
|
445 |
|
|
|
1,120 |
|
Related party notes payable, net of current portion |
|
|
- |
|
|
|
6,270 |
|
Convertible notes (face value $36,987 and $36,085, including $15,019 and $15,133 held by related parties, respectively) |
|
|
36,176 |
|
|
|
35,187 |
|
Redeemable preferred stock of subsidiaries (held by related parties, face value $35,010) |
|
|
- |
|
|
|
34,099 |
|
Other liabilities |
|
|
691 |
|
|
|
908 |
|
Non-current liabilities held for sale |
|
|
- |
|
|
|
2,551 |
|
Total liabilities |
|
|
68,925 |
|
|
|
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 30,598,911 shares issued and 29,146,053 outstanding at March 31, 2023; and 28,932,444 shares issued and 28,507,490 outstanding at June 30, 2022 |
|
|
29 |
|
|
|
29 |
|
Additional paid-in-capital |
|
|
3,314,737 |
|
|
|
3,312,763 |
|
Accumulated deficit |
|
|
(3,246,309 |
) |
|
|
(3,279,296 |
) |
Total Great Elm Group, Inc. stockholders' equity |
|
|
68,457 |
|
|
|
33,496 |
|
Non-controlling interest |
|
|
- |
|
|
|
6,533 |
|
Total stockholders' equity |
|
|
68,457 |
|
|
|
40,029 |
|
Total liabilities, non-controlling interest and stockholders' equity |
|
$ |
137,382 |
|
|
$ |
168,087 |
|
5
Great Elm Group, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Amounts in thousands (except per share data)
|
|
For the three months ended March 31, |
|
|
For the nine months ended March 31, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenues |
|
$ |
1,898 |
|
|
$ |
988 |
|
|
$ |
5,637 |
|
|
$ |
2,992 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment management expenses |
|
|
2,593 |
|
|
|
1,592 |
|
|
|
6,893 |
|
|
|
4,748 |
|
Depreciation and amortization |
|
|
281 |
|
|
|
89 |
|
|
|
870 |
|
|
|
307 |
|
Selling, general and administrative |
|
|
1,893 |
|
|
|
1,582 |
|
|
|
5,441 |
|
|
|
4,620 |
|
Expenses of Consolidated Fund |
|
|
- |
|
|
|
42 |
|
|
|
46 |
|
|
|
139 |
|
Total operating costs and expenses |
|
|
4,767 |
|
|
|
3,305 |
|
|
|
13,250 |
|
|
|
9,814 |
|
Operating loss |
|
|
(2,869) |
|
|
|
(2,317) |
|
|
|
(7,613) |
|
|
|
(6,822 |
) |
Dividends and interest income |
|
|
1,520 |
|
|
|
642 |
|
|
|
4,432 |
|
|
|
1,939 |
|
Net realized and unrealized gain (loss) on investments |
|
|
1,989 |
|
|
|
(3,220) |
|
|
|
17,434 |
|
|
|
(5,055 |
) |
Net realized and unrealized loss on investments of Consolidated Fund |
|
|
- |
|
|
|
(284) |
|
|
|
(16) |
|
|
|
(279 |
) |
Gain on sale of controlling interest in subsidiary |
|
|
- |
|
|
|
- |
|
|
|
10,524 |
|
|
|
- |
|
Interest expense |
|
|
(1,095) |
|
|
|
(1,286) |
|
|
|
(5,024) |
|
|
|
(3,872 |
) |
(Loss) income before income taxes from continuing operations |
|
|
(455) |
|
|
|
(6,465) |
|
|
|
19,737 |
|
|
|
(14,089 |
) |
Income tax (expense) benefit |
|
|
- |
|
|
|
(2) |
|
|
|
(2) |
|
|
|
83 |
|
Net (loss) income from continuing operations |
|
|
(455) |
|
|
|
(6,467) |
|
|
|
19,735 |
|
|
|
(14,006 |
) |
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from discontinued operations |
|
|
12,203 |
|
|
|
332 |
|
|
|
13,202 |
|
|
|
3,818 |
|
Net income (loss) |
|
$ |
11,748 |
|
|
$ |
(6,135) |
|
|
$ |
32,937 |
|
|
$ |
(10,188 |
) |
Less: net income (loss) attributable to non-controlling interest, continuing operations |
|
|
- |
|
|
|
1,146 |
|
|
|
(1,554) |
|
|
|
913 |
|
Less: net (loss) income attributable to non-controlling interest, discontinued operations |
|
|
- |
|
|
|
(1,372) |
|
|
|
1,504 |
|
|
|
(754 |
) |
Net income (loss) attributable to Great Elm Group, Inc. |
|
$ |
11,748 |
|
|
$ |
(5,909) |
|
|
$ |
32,987 |
|
|
$ |
(10,347 |
) |
Basic income (loss) per share from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
(0.02) |
|
|
$ |
(0.28) |
|
|
$ |
0.74 |
|
|
$ |
(0.55 |
) |
Discontinued operations |
|
|
0.42 |
|
|
|
0.06 |
|
|
|
0.41 |
|
|
|
0.17 |
|
Basic net income (loss) per share |
|
$ |
0.40 |
|
|
$ |
(0.22) |
|
|
$ |
1.15 |
|
|
$ |
(0.38 |
) |
Diluted income (loss) per share from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
(0.02) |
|
|
$ |
(0.28) |
|
|
$ |
0.56 |
|
|
$ |
(0.55 |
) |
Discontinued operations |
|
|
0.42 |
|
|
|
0.06 |
|
|
|
0.29 |
|
|
|
0.17 |
|
Diluted net income (loss) per share |
|
$ |
0.40 |
|
|
$ |
(0.22) |
|
|
$ |
0.85 |
|
|
$ |
(0.38 |
) |
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
28,997 |
|
|
|
26,842 |
|
|
|
28,779 |
|
|
|
26,963 |
|
Diluted |
|
|
28,997 |
|
|
|
26,842 |
|
|
|
40,673 |
|
|
|
26,963 |
|
6
Great Elm Group, Inc.
Reconciliation from EBITDA to Adjusted EBITDA - Quarterly
Dollar amounts in thousands
|
|
For the three months ended March 31, |
|
|
For the nine months ended March 31, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income (loss) from continuing operations – GAAP |
|
$ (455) |
|
|
$ (6,467) |
|
|
$ 19,735 |
|
|
$ (14,006) |
|
||||
Interest Expense |
|
|
1,095 |
|
|
|
1,286 |
|
|
|
5,024 |
|
|
|
3,872 |
|
Dividend income on investments |
|
|
(941) |
|
|
|
(642) |
|
|
|
(3,672) |
|
|
|
(1,939) |
|
Income tax expense (benefit) |
|
- |
|
|
2 |
|
|
2 |
|
|
(83) |
|
||||
Depreciation and amortization |
|
281 |
|
|
89 |
|
|
870 |
|
|
307 |
|
||||
Non-cash compensation |
|
|
660 |
|
|
|
578 |
|
|
|
2,246 |
|
|
|
2,572 |
|
(Gain) loss on investments, excluding investment in Forest |
|
|
(1,964) |
|
|
|
3,504 |
|
|
|
6,980 |
|
|
|
5,334 |
|
Gains related to sale of Forest |
|
|
(25) |
|
|
|
- |
|
|
|
(34,922) |
|
|
|
- |
|
Transaction and integration related costs(1) |
|
|
- |
|
|
|
92 |
|
|
|
471 |
|
|
|
311 |
|
Change in contingent consideration |
|
|
120 |
|
|
|
- |
|
|
|
180 |
|
|
|
- |
|
Adjusted EBITDA |
|
|
$ (1,229) |
|
|
|
$ (1,558) |
|
|
|
$ (3,086) |
|
|
|
$ (3,632) |
|
(1) Transaction and integration related costs include costs to sell, acquire and integrate acquired businesses.
7
Exhibit 99.2
GREAT ELM GROUP, INC. APPOINTS JASON REESE AS CEO
WALTHAM, MA, May 5, 2023 – Great Elm Group, Inc. (“we,” “us,” “our,” the “Company,” or “GEG”) (NASDAQ: GEG), an alternative asset manager, announced today that Peter Reed has resigned as Chief Executive Officer effective immediately following the filing of the Company’s Form 10-Q for the quarter ended March 31, 2023. The Board of Directors has unanimously appointed Jason Reese to the additional role of CEO effective upon Mr. Reed’s resignation. Jason Reese assumes the CEO position at GEG as a successful entrepreneur and financial services executive with over 30 years of experience founding and growing multiple financial services and real estate companies.
Mr. Reese served as the Executive Chairman of our Board of Directors since February 2020 and will now serve as Chairman of the Board and CEO. Mr. Reese is the Co-Founder, Chairman and Chief Executive Officer of Imperial Capital Asset Management, LLC (“ICAM”) and the Co-Founder of Imperial Capital, LLC (“Imperial Capital”), both founded in 1997. ICAM is a registered investment advisor that has managed various investment vehicles including hedge funds, investment partnerships, a private REIT and a private equity fund. Imperial Capital is a registered broker-dealer. During his time at Imperial Capital, Mr. Reese formed Monomoy Properties REIT, LLC in 2014, focusing on the Industrial Outdoor Storage sector, and continues to serve on the Board of Directors. Mr. Reese is also a founding member of City Ventures, LLC, a California-based private home builder, and has served on the Board of Directors since its inception in 2009. Mr. Reese graduated with honors from Yale University with a B.S. in Electrical Engineering. Through his position at ICAM and various affiliates, Mr. Reese is the largest beneficial owner of GEG stock.
“On behalf of the Board, I am thrilled to have Jason expand his role with GEG to CEO,” said Matt Drapkin, GEG Board Vice Chairman. “The Company has worked diligently over the last year to reposition its focus solely on alternative asset management with Jason as the Executive Chairman of the Board. The appointment of Jason as CEO is the natural culmination of our repositioning efforts.”
Jason Reese stated, “I want to take the opportunity to thank Pete Reed for his service and contributions to Great Elm. Pete steps down with our full support, and we look forward to working with Pete as a consultant to the Company to ensure a smooth transition. I am fortunate that the Board asked me to assume the role of CEO, and I gratefully accept their appointment. It is now my job as CEO to prove to our shareholders that we can achieve our plans to grow our existing businesses and expand our investment management platform.”
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.
Media & Investor Contact:
Investor Relations
geginvestorrelations@greatelmcap.com