Great Elm Capital 10-Q 9 Nov 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2016	Nov. 07, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Registrant Name	Great Elm Capital Group, Inc.
Entity Central Index Key	1,082,506
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		9,466,670

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 62,414	$ 80,711
Assets sold, net (Note 5)	8,750
Restricted cash		4
Prepaid and other current assets	534	106
Total current assets	71,698	80,821
Other assets, net		76
Total assets	71,698	80,897
Current liabilities:
Accounts payable	3,688	2,936
Liabilities related to assets sold	6,275	7,338
Related party notes payable	28,147	33,786
Total current liabilities	38,110	44,060
Other long-term liabilities related to assets sold		16
Total liabilities	38,110	44,076
Commitments and Contingencies (Note 6)
Stockholders' equity
Preferred stock, $0.001 par value; 5,000 authorized and zero outstanding
Common stock, $0.001 par value; 350,000 shares authorized; 9,467 shares issued outstanding at September 30, 2016 and June 30, 2016, respectively	9	9
Additional paid-in-capital	3,249,267	3,249,085
Accumulated deficit	(3,215,688)	(3,212,273)
Total stockholders' equity	33,588	36,821
Total liabilities and stockholders' equity	$ 71,698	$ 80,897

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2016	Jun. 30, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	350,000	350,000
Common stock, shares issued	9,467	9,467
Common stock, shares outstanding	9,467	9,467

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net revenue
Operating costs and expenses:
General and administrative	2,538	1,651
Total operating costs and expenses	2,538	1,651
Operating loss	(2,538)	(1,651)
Interest income		5
Interest expense	(3,453)	(1,203)
Other income, net		40
Loss from continuing operations, before income taxes	(5,991)	(2,809)
Provision for (benefit from) income taxes	(478)	27
Loss from continuing operations	(5,513)	(2,836)
Discontinued operations:
Income (loss) from discontinued operations, net of tax	2,098	(7,381)
Income (loss) from discontinued operations, net of tax	2,098	(7,381)
Net loss	$ (3,415)	$ (10,217)
Basic and diluted earnings (loss) per share from:
Continuing operations	$ (0.58)	$ (0.30)
Discontinued operations	0.22	(0.79)
Net loss	$ (0.36)	$ (1.09)
Weighted average shares outstanding
Basic and diluted	9,467	9,366

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (3,415)	$ (10,217)
Other comprehensive loss
Foreign currency translation adjustment		(34)
Other comprehensive loss		(34)
Comprehensive loss	$ (3,415)	$ (10,251)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (3,415)	$ (10,217)
(Income) loss from discontinued operations	(2,098)	7,381
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		28
Stock-based compensation	182	272
Amortization of premiums/discounts on investments, net		3
Realized gain on sale of investments		(40)
In kind interest payments on note payable		1,038
Amortization of debt discount and issuance costs	2,232	165
Changes in operating assets and liabilities:
Prepaid assets, deposits, and other assets	(352)	(296)
Accounts payable	659	1,367
Accrued liabilities	78	(46)
Restricted cash	4	13
Net cash used in operating activities - continuing operations	(2,710)	(332)
Net cash used in operating activities - discontinued operations	(7,716)	(7,787)
Net cash used in operating activities	(10,426)	(8,119)
Cash flows from investing activities:
Purchases of property and equipment		(28)
Proceeds from sales and maturities of investments		8,003
Net cash provided by investing activities		7,975
Cash flows from financing activities:
Principal payment on related party note payable	(7,871)
Purchase of treasury stock		(46)
Net cash used in financing activities	(7,871)	(46)
Net decrease in cash and cash equivalents	(18,297)	(190)
Cash and cash equivalents at beginning of period	80,711	73,755
Cash and cash equivalents at end of period	62,414	$ 73,565
Cash paid for interest	$ 1,222

Organization and Basis of Prese

Organization and Basis of Presentation	3 Months Ended
	Sep. 30, 2016
Organization and Basis of Presentation
Organization and Basis of Presentation	1. Organization and Basis of Presentation Organization Great Elm Capital Group, Inc. (referred to as the Company, formerly Unwired Planet, Inc.) is a holding company incorporated in Delaware. The Company is in the investment management business; developing financial products and seeking business acquisitions or investments with a view to long-term value creation. Prior to June 30, 2016, the Company’s subsidiaries were engaged in patent licensing with a portfolio of mobile technology patents and patent applications. The subsidiaries associated with the patent licensing business were sold as of June 30, 2016, and all activities associated with them have been reclassified to discontinued operations for the periods presented in this report. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( US GAAP ) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission ( SEC ). Accordingly, they do not contain all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, consisting of those in the normal course of business and recurring in nature, for the fair presentation of the Company’s financial position as of September 30, 2016, and June 30, 2016, and the results of its operations for the three months ended September 30, 2016 and 2015, and cash flows for the three months ended September 30, 2016 and 2015. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2016. Use of Estimates The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents are comprised of cash and highly liquid investments with remaining maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange traded money market funds. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured. Reclassifications On July 1, 2016, the Company the implemented Financial Accounting Standards Board’s ( FASB ) Accounting Standards Update ( ASU ) No. 2015-03 Interest– Imputation of Interest (Topic 830) – Simplifying the Presentation of Debt Issuance Costs . The ASU requires debt issuance costs to be presented in the nature of debt discounts and its implementation results in reclassification of the prior periods. The Company reclassified $200 and $900 of debt issuance costs from prepaid and other current assets to related party notes payable as of September 30, 2016, and June 30, 2016, respectively, in the accompanying condensed consolidated balance sheets. See Note 5 for Discontinued Operations reclassifications. Recently Issued Accounting Pronouncements In March 2016, FASB issued ASU No. 2016-07 Investments – Equity Method and Joint Ventures (Topic 323). The amendment eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendment is effective for fiscal years and interim periods beginning after December 15, 2016, and should be adopted prospectively with early adoption permitted. The Company is currently evaluating the applicability of the amendment on its future consolidated results of operations and cash flows. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments (Topic 230). The amendment provides guidance on the following eight specific cash flow issues: 1. Debt prepayment or debt extinguishment costs 2. Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing 3. Contingent consideration payments made after a business combination 4. Proceeds from the settlement of insurance claims 5. Proceeds from the settlement of corporate owned life insurance policies including bank-owned life insurance policies 6. Distributions received from equity method investees 7. Beneficial interests in securitization transactions 8. Separately identifiable cash flows and application of the predominance principle The amendment is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company will evaluate the applicability of the provisions of the amendment on specifically covered transactions as they arise. If the Company elects early adoption for one of the specific provisions, the amendment requires early adoption for all eight of the cash flow issues.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Stockholders' Equity	2. Stockholders’ Equity Common Stock Outstanding Shares As of September 30, 2016, the Company had 9,466,670 shares of common stock issued and outstanding. Proposed Rights Offering On September 13, 2016, the Company entered into a backstop investment agreement with a consortium of investors led by Gracie Investing LLC. Members of the Company’s board of directors are backstop investors as well as a number of employees of MAST Capital. On October 13, 2016, the Company and the backstop providers amended and restated the backstop investment agreement which contemplates a $36,600 investment in shares of the Company’s common stock. On October 14, 2016, the Company commenced a $45,000 rights offering to its existing stockholders at the 30-day volume weighted average price of the Company’s common stock as of the date the rights are distributed to the Company’s existing stockholders. Employee and Director Stock Compensation During the three months ended September 30, 2016 and 2015, the Company recognized stock based compensation for employees and directors of $200 and $500, respectively. Options During the three months ended September 30, 2016, and the three months ended September 30, 2015, the Company granted a total of 141,437 options and 87,500 options to non-employees and employees, respectively. The grant date fair value of the options granted during the three months ended September 30, 2016 and 2015, was $500 and $500, respectively. As of September 30, 2016, the Company had a total of 708,153 outstanding options of which 566,050 are exercisable with a weighted average remaining contractual term of 7.28 years and a weighted average exercise price of $8.98 per share. No options were exercised during the periods ended September 30, 2016 and 2015. As of September 30, 2016, the Company had unrecognized compensation cost associated with outstanding stock options totaling $500. Restricted Stock Units The Company did not issue any restricted units during the period ended September 30, 2016. As of September 30, 2016, the Company had 33,138 restricted stock units outstanding with total unrecognized compensation cost of $100.

Related Party Borrowings

Related Party Borrowings	3 Months Ended
	Sep. 30, 2016
Related Party Borrowings
Related Party Borrowings	3. Related Party Borrowings The Company’s Senior Secured Notes due 2019 (“Notes”) are summarized below, in Thousands: September 30, June 30, 2016 2016 Balance beginning of year $ $ Issuance of in-kind notes — Reclassification of unamortized debt issuance costs — Amortization of discount and issuance costs Principal payments — Balance end of period $ $ The Notes are owned by private investment funds (the “MAST Funds”) managed by MAST Capital Management, LLC (“MAST Capital”). As of September 30, 2016, the MAST Funds together with the MAST Funds and other private investment funds managed by MAST Capital own an aggregate of approximately 18.6% of the outstanding shares of the Company’s common stock. On August 17, 2016, the Company repurchased approximately $7,900 of Notes for an aggregate purchase price of approximately $8,200, inclusive of interest and redemption premium. On September 13, 2016, the Company called all of the remaining Notes for redemption and, in October 2016, made a total cash payment of $30,700 to effect the redemption. The Company will record $1,800 of redemption premium in the quarter ending December 31, 2016, which will be classified as interest expense for financial reporting purposes, related to the retirement of all of the remaining Notes. For the three months ended September 30, 2016, the Company incurred interest expense of approximately $3,500 consisting of accrued interest on the Notes at the cash pay rate; redemption premiums; and amortization of discount and debt issuance costs. For the three months ended September 30, 2015, the Company recognized interest expense of approximately $1,200, consisting of payment of “in-kind” notes and amortization of discount and debt issuance costs.

Income Taxes

Income Taxes	3 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	4. Income Taxes For the three months ended September 30, 2016, the Company recognized a loss before income taxes from continuing operations of approximately $6,000, and income before taxes from discontinued operations totaling approximately $3,200. In accordance with intraperiod tax allocation rules as promulgated by US GAAP, the Company’s income tax for the period ended September 30, 2016, totaling $656, is comprised of a tax benefit allocation of $478 to continuing operations, and incremental tax expense allocated to discontinued operations totaling $1,134. Total income tax for the period is based on an effective tax rate of 8.13% The net income tax benefit in continuing operations recognized for the period is based on forecasted financial results associated with the Company’s continuing operations for the entire fiscal year; the Company having a full valuation allowance on its deferred tax positions at the beginning of the year and expected to remain consistent at the end of the year; and the overall net tax position for the fiscal year expected to be zero. However, in accordance with intraperiod tax allocation rules promulgated by US GAAP, the Company is required to consider all sources of income in determining the benefit related to a loss from continuing operations, including any income from other than continuing operations, such as discontinued operations. The Company will re-evaluate its fiscal 2017 forecast and re-compute its effective tax rate on a quarterly basis through the end of the fiscal year, and adjust the provision associated with intraperiod tax allocation rules quarterly, as applicable.

Discontinued Operations

Discontinued Operations	3 Months Ended
	Sep. 30, 2016
Discontinued Operations
Discontinued Operations	5. Discontinued Operations On June 30, 2016, the Company sold its patent licensing business resulting in the reclassification of all assets, liabilities, and operating results of the subsidiaries disposed. During the three months ended September 30, 2016, the Company reached a final settlement with Microsoft Corporation for a one-time payment of $8,750. The payment, received in October 2016, included reimbursement of litigation costs incurred by the Company of approximately $2,000. In addition, the Company’s agreements with respect to its discontinued operations resulted in accrual of fee split obligations totaling $5,300. The Company incurred $200 of professional fees during the three months ended September 30, 2016 related to its divested patent business. The following presents the activity associated with the divested business, as reclassified for the three months ended September 30, 2015: For the Three Months Ended As Previously As Presented Reclassified September 30, 2015 Reclassification September 30, 2015 Net revenue $ $ $ — Operating costs and expenses: Patent licensing expenses — General and administrative Total operating costs and expenses Operating loss from continuing operations Interest income Interest expense Other income (expense), net Loss from continuing operations Income tax Loss from continuing operations after income taxes Discontinued operations: Loss from discontinued operations, net of tax — Net loss $ $ Basic and diluted net loss per share from: Continuing operations $ $ Discontinued operations — Net loss per share $ $ Weighted average shares outstanding basic and diluted

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Commitments and Contingencies	6. Commitments and Contingencies In September 2015, the Company entered into a three year lease with a base monthly rent of $11 to move its corporate headquarters to Los Altos, California. Upon execution of the lease, the Company paid a $50 refundable deposit. As a result of the Company’s strategic shift, the Company expects to early terminate the Los Altos California office lease. Pursuant to the terms of the lease agreement, the Company will prepay six months of lease obligations and forfeit its refundable deposit of $50. The Company expects to settle this lease obligation totaling approximately $118, inclusive of the refundable deposit during the fiscal year ended June 30, 2017.

Great Elm Capital Corp.

Great Elm Capital Corp.	3 Months Ended
	Sep. 30, 2016
Great Elm Capital Corp.
Great Elm Capital Corp.	7. Great Elm Capital Corp. Great Elm Capital Corp. ( GECC ) was, for financial reporting purposes under US GAAP, a wholly- owned subsidiary of the Company as of September 30, 3016 and June 30, 2016. On June 23, 2016, the Company, GECC and private investment funds managed by MAST Capital (the MAST Investors ) entered into a Subscription Agreement (the Subscription Agreement ). Concurrent with entering into the Subscription Agreement, GECC entered into an Agreement and Plan of Merger (the Merger Agreement ) with Full Circle Capital Corporation ( Full Circle ) that provided for the merger of Full Circle with and into GECC (the Merger ). The closings under the Subscription Agreement and the Merger Agreement are cross-conditioned. On September 27, 2016, GECC elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, and on October 1, 2016, GECC elected to be taxed as regulated investment company under the Internal Revenue Code of 1986, as amended. Great Elm Capital Management ( GECM ), a wholly-owned subsidiary of the Company, will be the external manager of GECC. On September 27, 2016, GECC and GECM entered into an investment management agreement and an administration agreement, under which GECM will earn fees and be reimbursed for expenses. The accrual of amounts under those agreements begins on the day following completion of the Merger. Subscription Agreement On June 23, 2016, pursuant to the Subscription Agreement, the Company made a $30,000 cash investment in 1,966,667 shares of GECC common stock. On September 27, 2016, pursuant to the Subscription Agreement, the MAST Investors entered into agreements transferring a portfolio of debt investments (the Initial GECC Portfolio ) that settled on November 1, 2016 in exchange for 5,935,800 shares of GECC common stock. The closing under the Subscription Agreement was conditioned upon completion of the Merger. As of September 30, 2016, the Company had incurred approximately $3,400 of costs related to the transactions described in the preceding paragraph. Under the Subscription Agreement, if the Merger is completed, GECC is obligated to reimburse those costs to the Company. Merger Agreement The completion of the Merger was subject to approval of the Merger by holders of a majority of the outstanding shares of Full Circle common stock. The Company did not own any Full Circle shares nor did it have voting agreements with any Full Circle stockholders. Upon completion of the Merger on November 3, 2016, 4,986,637 shares of GECC common stock became issuable to former Full Circle stockholders. Acquisition On November 3, 2016, GECM hired all of the employees of MAST Capital (who also remain employees of MAST Capital). GECM entered into an acquisition agreement with MAST Capital to acquire the infrastructure to support the GECM team, and the goodwill associated with the right to manage the Initial GECC Portfolio. As part of these transactions, MAST Capital entered into a cost sharing agreement that provides for reimbursement of GECM’s costs based principally upon relative assets under management between GECM and MAST. Additionally, GECM invested $80 to acquire an 80.1% interest in GECC GP Corp. ( GP Corp. ), a company owned by MAST Capital and GECM’s employees and GECM agreed to pay the net profits of managing GECC to GP Corp (the Profit Sharing Agreement ). GP Corp entered into a $10,824 secured note (the GP Note ) with MAST Capital. GECM has the right to set-off against amounts due under the GP Note, unreimbursed costs of GECM in excess of $1,430 per year. The GP Note is secured by the Profit Sharing Agreement, bears interest at LIBOR plus 3%, is due in November 2026, is subject to mandatory $250 payments per year and may be repaid by GECM in whole or in part at any time without prepayment penalty.

Subsequent Events

Subsequent Events	3 Months Ended
	Sep. 30, 2016
Subsequent Events
Subsequent Events	8. Subsequent Events On October 18, 2016, the Company retired its related party notes for a cash payment of $30,700 as described in Note 3. On October 24, 2016, the Company received the $8,750 payment from the Microsoft settlement as described in Note 5. On November 1, 2016, the Initial GECC Portfolio acquisition settled and on November 3, 2016, the Merger and the Acquisition were completed, each as described in Note 7. As of November 1, 2016, the Company will deconsolidate GECC. On November 1, 2016, the Company announced it was restarting the rights offering. The rights offering is now expected to close in December 2016.

Organization and Basis of Pre15

Organization and Basis of Presentation (Policies)	3 Months Ended
	Sep. 30, 2016
Organization and Basis of Presentation
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( US GAAP ) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission ( SEC ). Accordingly, they do not contain all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary, consisting of those in the normal course of business and recurring in nature, for the fair presentation of the Company’s financial position as of September 30, 2016, and June 30, 2016, and the results of its operations for the three months ended September 30, 2016 and 2015, and cash flows for the three months ended September 30, 2016 and 2015. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2016.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents are comprised of cash and highly liquid investments with remaining maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange traded money market funds. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.
Reclassifications	Reclassifications On July 1, 2016, the Company the implemented Financial Accounting Standards Board’s ( FASB ) Accounting Standards Update ( ASU ) No. 2015-03 Interest– Imputation of Interest (Topic 830) – Simplifying the Presentation of Debt Issuance Costs . The ASU requires debt issuance costs to be presented in the nature of debt discounts and its implementation results in reclassification of the prior periods. The Company reclassified $200 and $900 of debt issuance costs from prepaid and other current assets to related party notes payable as of September 30, 2016, and June 30, 2016, respectively, in the accompanying condensed consolidated balance sheets. See Note 5 for Discontinued Operations reclassifications.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In March 2016, FASB issued ASU No. 2016-07 Investments – Equity Method and Joint Ventures (Topic 323). The amendment eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendment is effective for fiscal years and interim periods beginning after December 15, 2016, and should be adopted prospectively with early adoption permitted. The Company is currently evaluating the applicability of the amendment on its future consolidated results of operations and cash flows. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments (Topic 230). The amendment provides guidance on the following eight specific cash flow issues: 1. Debt prepayment or debt extinguishment costs 2. Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing 3. Contingent consideration payments made after a business combination 4. Proceeds from the settlement of insurance claims 5. Proceeds from the settlement of corporate owned life insurance policies including bank-owned life insurance policies 6. Distributions received from equity method investees 7. Beneficial interests in securitization transactions 8. Separately identifiable cash flows and application of the predominance principle The amendment is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company will evaluate the applicability of the provisions of the amendment on specifically covered transactions as they arise. If the Company elects early adoption for one of the specific provisions, the amendment requires early adoption for all eight of the cash flow issues.

Related Party Borrowings (Table

Related Party Borrowings (Tables)	3 Months Ended
	Sep. 30, 2016
Related Party Borrowings
Summary of Senior Secured Notes	The Company’s Senior Secured Notes due 2019 (“Notes”) are summarized below, in Thousands: September 30, June 30, 2016 2016 Balance beginning of year $ $ Issuance of in-kind notes — Reclassification of unamortized debt issuance costs — Amortization of discount and issuance costs Principal payments — Balance end of period $ $

Discontinued Operation (Tables)

Discontinued Operation (Tables)	3 Months Ended
	Sep. 30, 2016
Discontinued Operations
Schedule of Activity Associated with the Divested Business, as Reclassified	The following presents the activity associated with the divested business, as reclassified for the three months ended September 30, 2015: For the Three Months Ended As Previously As Presented Reclassified September 30, 2015 Reclassification September 30, 2015 Net revenue $ $ $ — Operating costs and expenses: Patent licensing expenses — General and administrative Total operating costs and expenses Operating loss from continuing operations Interest income Interest expense Other income (expense), net Loss from continuing operations Income tax Loss from continuing operations after income taxes Discontinued operations: Loss from discontinued operations, net of tax — Net loss $ $ Basic and diluted net loss per share from: Continuing operations $ $ Discontinued operations — Net loss per share $ $ Weighted average shares outstanding basic and diluted

Organization and Basis of Pre18

Organization and Basis of Presentation (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Prepaid and other current assets	$ 534	$ 106
Related party notes payable	28,147	33,786
Accounting Standards Update 2015-03 | As Previously Presented
Prepaid and other current assets	200	900
Accounting Standards Update 2015-03 | Reclassification
Related party notes payable	$ 200	$ 900

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	Oct. 14, 2016	Oct. 13, 2016	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Stockholders' Equity
Common stock, shares issued			9,467,000		9,467,000
Common stock, shares outstanding			9,467,000		9,467,000
Stock-based compensation			$ 182	$ 272
Rights Offering
Stockholders' Equity
Proceeds from investors, on issuance of common stock		$ 36,600
Proceeds from rights offering issuance of common stock	$ 45,000
Rights offering, term of trading activity to determine weighted average share price of common stock	30 days
Employees and Directors
Stockholders' Equity
Stock-based compensation			$ 200	$ 500
Options
Stockholders' Equity
Options granted (in shares)			141,437	87,500
Grant date fair value of options granted			$ 500	$ 500
Options outstanding (in shares)			708,153
Options exercisable (in shares)			566,050
Weighted average remaining contractual term			7 years 3 months 11 days
Weighted average exercise price (in dollars per share)			$ 8.98
Exercised (in shares)			0	0
Total unrecognized compensation cost			$ 500
Restricted Stock Units
Stockholders' Equity
Restricted stock awards outstanding			33,138
Total unrecognized compensation cost			$ 100

Related Party Borrowings - Seni

Related Party Borrowings - Senior Secured Notes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Amortization of discount and issuance costs	$ 2,232	$ 165
MAST Capital Investor
Percentage of outstanding shares, held by MAST capital	18.60%
MAST Capital Investor | Senior Secured Notes
Balance beginning of year	$ 33,786	$ 29,874	$ 29,874
Issuance of in-kind notes			4,355
Reclassification of unamortized debt issuance costs			(854)
Amortization of discount and issuance costs	2,232		411
Principal payments	(7,871)
Balance end of period	$ 28,147		$ 33,786

Related Party Borrowings - Addi

Related Party Borrowings - Additional Information (Details) - USD ($) $ in Thousands	Oct. 18, 2016	Aug. 17, 2016	Dec. 31, 2016	Sep. 30, 2016	Sep. 30, 2015
Debt Instrument
Face value of related party Notes		$ 7,900
Payment of related party Note		$ 8,200		$ 7,871
Interest expense				3,453	$ 1,203
Subsequent Event
Debt Instrument
Total cash payment to retire Notes	$ 30,700
Senior Secured Notes
Debt Instrument
Interest expense				$ 3,500	$ 1,200
Forecast | Senior Secured Notes
Debt Instrument
Redemption premium			$ 1,800

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2017
Schedule of Income Before Income Tax
Income (loss) before income taxes from continuing operations	$ (5,991)	$ (2,809)
Income before taxes from discontinued operations	3,200
Income tax for the period	656
Income tax benefit from continuing operations	478	$ (27)
Incremental tax expense allocated to discontinued operations	$ 1,134
Effective tax rate	8.13%
Forecast
Schedule of Income Before Income Tax
Income tax for the period			$ 0

Discontinued Operations (Detail

Discontinued Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended	3 Months Ended
	Oct. 31, 2016	Sep. 30, 2016	Sep. 30, 2015
Discontinued Operations
Accrual of fee split obligations		$ 5,300
Net revenue
Operating costs and expenses:
General and administrative		2,538	1,651
Total operating costs and expenses		2,538	1,651
Operating loss		(2,538)	(1,651)
Interest income			5
Interest expense		(3,453)	(1,203)
Other income (expense), net			40
Loss from continuing operations, before income taxes		(5,991)	(2,809)
Income tax		478	(27)
Loss from continuing operations		(5,513)	(2,836)
Discontinued operations:
Loss from discontinued operations, net of tax		2,098	(7,381)
Net loss		$ (3,415)	$ (10,217)
Basic and diluted earnings (loss) per share from:
Continuing operations		$ (0.58)	$ (0.30)
Discontinued operations		0.22	(0.79)
Net loss		$ (0.36)	$ (1.09)
Weighted average shares outstanding basic and diluted		9,467	9,366
Divested Patent Business
Discontinued Operations
Professional fees		$ 200
Microsoft Litigation
Discontinued Operations
Settlement payment	$ 8,750
Reimbursement of litigation costs	$ 2,000
As Previously Presented
Discontinued Operations
Net revenue			$ 1,251
Operating costs and expenses:
Patent licensing expenses			7,798
General and administrative			2,485
Total operating costs and expenses			10,283
Operating loss			(9,032)
Interest income			5
Interest expense			(1,203)
Other income (expense), net			40
Loss from continuing operations, before income taxes			(10,190)
Income tax			(27)
Loss from continuing operations			(10,217)
Discontinued operations:
Net loss			$ (10,217)
Basic and diluted earnings (loss) per share from:
Continuing operations			$ (1.09)
Net loss			$ (1.09)
Weighted average shares outstanding basic and diluted			9,366
Reclassification
Discontinued Operations
Net revenue			$ (1,251)
Operating costs and expenses:
Patent licensing expenses			(7,798)
General and administrative			(834)
Discontinued operations:
Loss from discontinued operations, net of tax			$ (7,381)

Commitments and Contingencies (

Commitments and Contingencies (Details) - Corporate Headquarters - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2016
Operating Lease
Operating leases, term of contract	3 years
Base monthly rent	$ 11
Refundable deposit	$ 50
Term of prepaid lease obligations	6 months
Operating leases, settlement amount		$ 118

Great Elm Capital Corp. (Detail

Great Elm Capital Corp. (Details) - USD ($) $ in Thousands	Nov. 03, 2016	Sep. 27, 2016	Jun. 23, 2016	Sep. 30, 2016
Subscription Agreement
Great Elm Capital Corp.
Cash investment in GECC common stock			$ 30,000
Investment in GECC common stock (in shares)			1,966,667
Transaction related costs				$ 3,400
Subscription Agreement | MAST Capital Investor
Great Elm Capital Corp.
Investment in GECC common stock (in shares)		5,935,800
Merger Agreement | Full Circle
Great Elm Capital Corp.
Investment in GECC common stock (in shares)	4,986,637
Acquisition Agreement with MAST Capital | GECC GP Corp.
Great Elm Capital Corp.
Investment in equity interest	$ 80
Percentage of ownership interest (as a percent)	80.10%
Secured notes, amount	$ 10,824
Maximum unreimbursed costs before right of set-off against amounts due under debt agreements	1,430
Mandatory annual payments on debt	$ 250
Acquisition Agreement with MAST Capital | GECC GP Corp. | LIBOR
Great Elm Capital Corp.
Spread on variable rate basis of debt	3.00%

Subsequent Events (Details)

Subsequent Events (Details) - USD ($) $ in Thousands	Oct. 24, 2016	Oct. 18, 2016	Oct. 31, 2016
Microsoft Litigation
Subsequent Events
Settlement payment			$ 8,750
Subsequent Event
Subsequent Events
Total cash payment to retire Notes		$ 30,700
Subsequent Event | Microsoft Litigation
Subsequent Events
Settlement payment	$ 8,750