Item 7. Management’s Discussion and Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations is a supplement to, and should be read in conjunction with, and is qualified entirely by, our consolidated financial statements (including Notes to the Consolidated Financial Statements) and the other consolidated financial information appearing elsewhere in this report. Some of the information in this discussion and analysis includes forward-looking statements that involve risk and uncertainties. Actual results and timing of events could differ from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
GEG is 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. GEG and its subsidiaries currently manage GECC, a publicly-traded BDC, and Monomoy UpREIT, an Industrial Outdoor Storage ( IOS ) focused real estate investment trust, in addition to other investment vehicles. The combined assets under management of these entities at June 30, 2026 was approximately $770.6 million.
GEG 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. As of the date of this report, GEG had no unfunded binding commitments to make additional investments.
As part of its build-to-suit development initiatives, MBTS purchases certain land parcels. Contemporaneously with the land purchases, MBTS enters into commercial lease agreements, as a lessor, in respect to the land parcels and build-to-suit improvements to be constructed thereon. The leases commence upon substantial completion of the build-to-suit developments. The Company intends to sell the land and improvements with the attached leases at, or subsequent to, the respective lease commencement date. During the year ended June 30, 2026, GEG capitalized development costs of $6.5 million attributed to the cost of land and development and construction costs directly identifiable with the real estate projects.
On February 4, 2025, GEG acquired certain assets of Greenfield CRE ( Greenfield ), a construction management company and previous partner of MCRE (the Greenfield Acquisition ). In connection with the acquisition, the Company formed Monomoy Construction Services, LLC ( MCS ), a wholly owned subsidiary of GEG, and combined Greenfield's assets with the assets of Monomoy BTS Construction Management, LLC ( MCM ) to launch an integrated, full-service construction business. MCS will be dedicated to serving the Company's various real estate businesses, as well as expanding its existing third-party consulting business. The financial results of MCS are included in the Company's consolidated results for the period beginning on February 4, 2025.
Change in Segments
During the first quarter of fiscal 2026, the Company realigned the information that the Chief Operating Decision Maker ( CODM ) regularly reviews to evaluate performance for operating decision-making purposes, including performance assessment and allocation of resources. As a result of this change in segment reporting, the Company retrospectively recast prior period results, by segment, to conform to the current period presentation. This structure includes two reportable segments: Alternative Credit and Real Estate. The structure is based on the Company’s various investment strategies.
As a result of the change noted above, effective for the quarter ended September 30, 2025, the Company began reporting the following business segments:
• Alternative Credit - 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
• Real Estate - full service, end-to-end real estate platform combining investment expertise and turnkey execution capabilities for IOS sector
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The Company has a corporate office that is included in “Corporate & Other”. The corporate office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance and human resources.
Results of Operations
The following table provides the consolidated results of our operations:
For the twelve months ended June 30,
(in thousands)
2026
Percent Change
2025
Revenues
$
27,776
70%
$
16,316
Cost of Revenues
13,248
NM*
1,082
Operating costs and expenses:
Compensation and benefits
19,582
27%
15,478
Selling, general and administrative
7,433
15%
6,451
Depreciation and amortization
1,299
4%
1,249
Expenses of Consolidated Funds
224
NM*
59
Total operating costs and expenses
28,538
23,237
Operating loss
(14,010
)
(8,003
)
Other (expense) income:
Interest expense
(4,106
)
(1)%
(4,157
)
Other (expense) income, net
(19,168
)
NM*
27,796
Total other (expense) income, net
(23,274
)
23,639
(Loss) income before income taxes
(37,284
)
15,636
Income tax benefit (expense)
376
NM*
(86
)
Net (loss) income
$
(36,908
)
$
15,550
*NM - not meaningful
Revenues and Cost of Revenues
Revenues and cost of revenues for the year ended June 30, 2026 increased $11.5 million and $12.2 million, respectively, as compared to the year ended June 30, 2025, primarily due to an increase in Real Estate property sales revenues and related cost of revenues due to September 2025 and June 2026 property sales. The increase in revenues were partially offset by a reduction in incentive fees of $4.1 million and an increase in project management fees of $1.3 million compared to the prior year period.
Operating Costs and Expenses
Compensation and benefits expenses for the year ended June 30, 2026 increased $4.1 million as compared to the corresponding prior year period primarily driven by increased personnel due to the Greenfield Acquisition. Selling, general and administrative expenses for the year ended June 30, 2026 increased $1.0 million as compared to the corresponding prior year period, which was mainly attributable to an increase in accounting and tax consulting fees, along with an increase in selling, general and administrative expenses due to the Greenfield Acquisition.
Other Income (Expense)
Other income (expense), net includes dividend and interest income and net realized and unrealized gains and losses. For the year ended June 30, 2026, net realized and unrealized gains decreased $39.1 million to a net realized and unrealized loss as compared to the corresponding prior year period due to notable unrealized losses being recognized on our three special purpose vehicles in the current year period, as opposed to unrealized gains on these special purpose vehicles in the prior year period, along with a significant reduction in stock price for another one of our investments during the current year period, as opposed to an increase in stock price for this investment in the prior year period. Further, a notable unrealized loss was recognized on one of our investments in a private fund in the current year period as opposed to an unrealized gain on this investment in the prior year period. For the year ended June 30, 2026, interest income decreased $0.6 million as compared to the corresponding prior year period, due to changes in the investment portfolio shifting away from interest earning marketable securities into other strategic private investments. For the year ended June 30, 2026, dividend income decreased $0.7 million as compared to the corresponding prior year period, primarily driven by a decrease in the dividend rate per share held on one of our investments in the current period compared to the dividend rate per share held on one of our investments in the prior year period.
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Income Taxes
The Company recognized an income tax benefit of $0.4 million for the year ended June 30, 2026 and an income tax expense of $0.1 million for the year ended June 30, 2025. The tax benefit for the year ended June 30, 2026 consists primarily of the release of uncertain tax positions related to a lapse of the statute of limitations and the reduction of the naked credit deferred tax liability. The expense for the year ended June 30, 2025 consists of the recognition of income tax expense related to the deferred tax liability with an indefinite reversal period. This is offset by the income tax benefit recognized from the reversal of the prior year's income tax expense, resulting from provision-to-return adjustments. As of June 30, 2026, we had $13.4 million of net operating loss carryforwards for federal income tax purposes, of which approximately $1.5 million will expire in fiscal years 2027 through 2038 and $11.9 million can be carried forward indefinitely. As of June 30, 2026, the Company also had $14.0 million of state NOL carryforwards, principally in Massachusetts, that will expire from 2037 to 2046.
Segment Analysis
We conduct our operations through two business segments: Alternative Credit and Real Estate.
Effective for the quarter ended September 30, 2025, we began reporting the following business segments.
• Alternative Credit - 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
• Real Estate - full service, end-to-end real estate platform combining investment expertise and turnkey execution capabilities for IOS sector
The Company has a corporate office that is included in “Corporate & Other”. The corporate office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance and human resources.
The primary measure used by CODM in measuring performance and allocating resources to the segments is net income, as reported on our consolidated statements of operations, predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a quarterly basis when making decisions about internal operations, such as staffing and related compensation, and planning for future investments.
Alternative Credit Segment
The following table provides the results of our Alternative Credit segment:
For the twelve months ended June 30,
(in thousands)
2026
Percent Change
2025
Revenues
$
6,071
(41)%
$
10,323
Operating costs and expenses:
Compensation and benefits
5,316
(17)%
6,383
Selling, general and administrative
1,542
17%
1,317
Depreciation and amortization
177
(35)%
273
Total operating costs and expenses
7,035
7,973
Operating (loss) income
(964
)
2,350
Other income:
Other income, net
-
(100)%
1
Total other income, net
-
1
(Loss) income before income taxes
(964
)
2,351
Income tax expense
-
0%
-
Net (loss) income
$
(964
)
$
2,351
Alternative Credit Revenue
Alternative Credit revenues for the year ended June 30, 2026 decreased $4.3 million as compared to the year ended June 30, 2025 primarily due to a reduction in incentive fee revenue compared to the prior year period due to the incentive fee waiver provided to GECC.
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Alternative Credit Expenses
Alternative Credit segment compensation and benefits expenses for the year ended June 30, 2026 decreased $1.1 million due to a reduction in bonus expense. Alternative Credit segment selling, general and administrative expenses for the year ended June 30, 2026 increased $0.2 million as compared to the year ended June 30, 2025 primarily driven by an increase in software expense and other miscellaneous general and administrative expenses.
Real Estate Segment
The following table provides the results of our Real Estate segment:
For the twelve months ended June 30,
(in thousands)
2026
Percent Change
2025
Revenues
$
21,705
NM*
$
5,993
Cost of Revenues
13,248
NM*
1,082
Operating costs and expenses:
Compensation and benefits
11,109
86%
5,959
Selling, general and administrative
2,513
44%
1,744
Depreciation and amortization
1,039
6%
976
Total operating costs and expenses
14,661
8,679
Operating loss
(6,204
)
(3,768
)
Other income:
Other income, net
53
0%
-
Total other income, net
53
-
Loss before income taxes
(6,151
)
(3,768
)
Income tax expense
(212
)
0%
-
Net loss
$
(6,363
)
$
(3,768
)
*NM - not meaningful
Real Estate Revenue
Real Estate revenues for the year ended June 30, 2026 increased $15.7 million as compared to the year ended June 30, 2025 driven by property sales occurring in September 2025 and June 2026. Related costs of revenues for the year ended June 30, 2026 increased by $12.2 million compared to the year ended June 30, 2025 due to these sales. Further, $2.2 million of revenue was recognized in the year ended June 30, 2026 related to our construction business, compared to $0.9 million in the corresponding prior year period due to the growth in construction business from the Greenfield Acquisition that occurred in February 2025.
Real Estate Expenses
Real Estate segment compensation and benefits expenses for the year ended June 30, 2026 increased $5.2 million as compared to the corresponding prior year period driven by increased personnel expense due to the Greenfield Acquisition. Real Estate segment selling, general and administrative expenses increased $0.8 million for the year ended June 30, 2026 compared to the year ended June 30, 2025 primarily due to increased accounting, insurance, software and other expenses due to increased activity at these entities and the Greenfield Acquisition. Depreciation and amortization increased $0.1 million for the year ended June 30, 2026, as compared to the corresponding prior year period due to amortization of intangible assets related to the Greenfield Acquisition.
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Corporate & Other
The following table provides the results of Corporate & Other:
For the twelve months ended June 30,
(in thousands)
2026
Percent Change
2025
Operating costs and expenses:
Compensation and benefits
$
3,157
1%
$
3,136
Selling, general and administrative
3,378
(0)%
3,390
Depreciation and amortization
83
0%
-
Expenses of Consolidated Funds
224
NM*
59
Total operating costs and expenses
6,842
6,585
Operating loss
(6,842
)
(6,585
)
Other income (expense):
Interest expense
(4,106
)
(1)%
(4,157
)
Other (expense) income, net
(19,221
)
NM*
27,795
Total other (expense) income, net
(23,327
)
23,638
(Loss) income before income taxes
(30,169
)
17,053
Income tax benefit (expense)
588
NM*
(86
)
Net (loss) income
$
(29,581
)
$
16,967
*NM - not meaningful
Corporate & Other Operating Costs and Expenses
Compensation and benefits expenses related to Corporate & Other for the year ended June 30, 2026 remained flat as compared to the corresponding prior year period.
Corporate & Other Expenses - Other Income and Expenses
For the year ended June 30, 2026, net realized and unrealized gains decreased $39.1 million to a net realized and unrealized loss as compared to the corresponding prior year period due to notable unrealized losses being recognized on our three special purpose vehicles in the current year period, as opposed to unrealized gains on these special purpose vehicles in the prior year period, along with a significant reduction in stock price for another one of our investments during the current year period, as opposed to an increase in stock price for this investment in the prior year period. Further, a notable unrealized loss was recognized on one of our investments in a private fund in the current year period as opposed to an unrealized gain on this investment in the prior year period. For the year ended June 30, 2026, interest income decreased $0.6 million as compared to the corresponding prior year period, due to changes in the investment portfolio shifting away from interest earning marketable securities into other strategic private investments. For the year ended June 30, 2026, dividend income decreased $0.7 million as compared to the corresponding prior year period, primarily driven by a decrease in the dividend rate per share held on one of our investments in the current period compared to prior year period.
Liquidity and Capital Resources
The following table presents selected financial information:
(in thousands)
June 30, 2026
June 30, 2025
Current assets
$
99,634
$
137,897
Current liabilities
7,729
9,614
Working capital
$
91,905
$
128,283
Long-term liabilities
$
65,146
$
63,657
For the twelve months ended June 30,
(in thousands)
2026
2025
Net cash provided by (used in) operating activities
$
15,675
$
(9,006
)
Net cash provided by (used in) investing activities
$
12,568
$
(1,336
)
Net cash used in financing activities
$
(5,372
)
$
(8,773
)
Net increase (decrease) in cash and cash equivalents
$
22,871
$
(19,115
)
Net change in cash, cash equivalents and restricted cash
$
22,871
$
(19,115
)
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As of June 30, 2026, we had an unrestricted cash balance of $53.5 million and investments with a fair value of $32.6 million, including 1,356,125 shares of GECC common stock with an estimated fair value of $7.4 million.
We could make acquisitions that will likely result in our investment of all of our liquid financial resources, the issuance of equity securities and the incurrence of indebtedness. If we are unsuccessful at raising additional capital resources, through either debt or equity, it is unlikely we will be able to execute our strategic growth plan. See “Item 1A. Risk Factors.”
Net cash from operating activities increased $24.7 million, from net cash used of $9.0 million for the year ended June 30, 2025 to net cash provided of $15.7 million for the year ended June 30, 2026, driven by proceeds from sale of real estate in September 2025 and June 2026 and changes in operating assets and liabilities period-over-period.
Net cash from investing activities increased $13.9 million, from net cash used of $1.3 million for the year ended June 30, 2025 to net cash provided of $12.6 million for the year ended June 30, 2026, driven by settlement of related party loan receivable and net sales of investments for the year ended June 30, 2026.
Net cash from financing activities increased $3.4 million, from net cash used of $8.8 million for the year ended June 30, 2025 to net cash used of $5.4 million for the year ended June 30, 2026, driven by distributions and redemptions of non-controlling interests in consolidated funds and stock repurchases during the year ended June 30, 2026. These were partially offset by proceeds from issuance of common stock during the year ended June 30, 2026.
We believe we have sufficient liquidity available to meet our short-term and long-term obligations for at least the next 12 months and the foreseeable future thereafter.
Borrowings
As of June 30, 2026, the Company had $26.9 million in outstanding aggregate principal of the GEGGL Notes. The GEGGL Notes are due on June 30, 2027, and interest is paid quarterly. The GEGGL Notes include covenants that limit additional indebtedness or the payment of dividends in the event that our net consolidated debt to equity ratio is, or would be on a pro forma basis, greater than 2 to 1. In addition, if our net consolidated debt to equity ratio is greater than 2 to 1 at the end of any calendar quarter, we must retain no less than 10% of our excess cash flow as cash and cash equivalents until such time as our net consolidated debt to equity ratio is less than 2 to 1 at the end of a calendar quarter.
As of June 30, 2026, the Company had $36.8 million principal balance in outstanding Convertible Notes (including cumulative interest paid in-kind) held by a consortium of investors, including related parties, that accrue interest at 5.0% per annum, payable semiannually in arrears on June 30 and December 31, in cash or in-kind at the option of the Company. The Convertible Notes are due on February 26, 2030, but are convertible at the option of the holders, subject to the terms therein, prior to maturity into shares of our common stock. Upon conversion of any note, the Company will pay or deliver, as the case may be, to the noteholder, in respect of each $1,000 principal amount of notes being converted, shares of common stock equal to the conversion rate in effect on the conversion date, together with cash, if applicable, in lieu of delivering any fractional share of common stock. To date, all interest on these instruments has been paid in-kind.
Critical Accounting Policies and Estimates
The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( GAAP ). The preparation of financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an on-going basis, the Company evaluates all of these estimates and assumptions. Actual results could be different from these estimates.
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Business Combinations
Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses. Measurement period adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration if applicable, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of finite-lived intangible assets, or the recognition of additional consideration which would be expensed.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary, in order to reduce deferred tax assets to the amounts more likely than not to be recovered.
The Company has established a valuation allowance for its deferred tax assets that are not recoverable from taxable temporary differences because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other deferred tax assets is more likely than not.
The calculation of the Company’s tax positions involves dealing with uncertainties in the application of complex tax regulations for federal and several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. GAAP provides guidance on the accounting for and disclosure of uncertainty in tax positions and requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more likely than not" of being sustained by the applicable taxing authority. The Company recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In making these assessments, the Company determines the accounting recognition based on the technical merits of the position and consults with external tax experts as appropriate. The Company does not recognize income tax benefits for positions that it takes on its income tax returns that do not meet the more likely than not standard on its technical merits.
New Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statemen ts and Supplementary Data.
The information required by this Item appears beginning on page F-1 of this Annual Report on Form 10-K and is incorporated in this Item 8 by reference.
Item 9. Changes in and Disagreements With Accou ntants on Accounting and Financial Disclosure.
Not applicable.
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