What changed in this filing

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Item 1. Financial Statements

2021-08-02 compared with 2021-05-10 · 1598 added, 1282 removed, 377 unchanged (88% of the section changed)

1 unchanged sentence

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

in thousands, except par value)

and cash equivalents

from clearing brokers

and other investments owned, at fair value

receivable, net

from related parties

against customer contracts

Loans receivable, at fair value (includes $ 202,618 and $ 295,809 from related parties at March 31, 2021 and December 31, 2020, respectively)

expenses and other assets

lease right-of-use assets

and equipment, net

intangible assets, net

tax assets, net

expenses and other liabilities

tax liabilities, net

to related parties and partners

to clearing brokers

sold not yet purchased

redeemable noncontrolling interests

lease liabilities

participations sold

notes payable, net

and contingencies (Note 13)

Condensed Consolidated Balance

(Dollars in thousands, except

Cash and cash equivalents

Restricted cash

Due from clearing brokers

Securities and other investments owned, at fair value

Securities borrowed

Accounts receivable, net

Due from related parties

Advances against customer contracts

Loans receivable, at fair value (includes $ 131,379 and $ 295,809 from related parties at June 30, 2021 and December 31, 2020, respectively)

Prepaid expenses and other assets

Operating lease right-of-use assets

Property and equipment, net

Other intangible assets, net

Deferred tax assets, net

Liabilities and Equity

Accounts payable

Accrued expenses and other liabilities

Deferred revenue

Deferred tax liabilities, net

Due to related parties and partners

Due to clearing brokers

Securities sold not yet purchased

Securities loaned

Mandatorily redeemable noncontrolling interests

Operating lease liabilities

Notes payable

Loan participations sold

Term loans, net

Senior notes payable, net

Total liabilities

Commitments and contingencies (Note 13)

Riley Financial, Inc.

stockholders’ equity:

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

3,971 shares issued and outstanding as of March 31, 2021 and December 31, 2020;

and liquidation preference of $ 99,260 as of March 31, 2021 and December 31,2020.

4,275 and 3,971 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively;

and liquidation preference of $ 106,882 and $ 99,260 as of June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

27,194,909 and 25,777,796 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

paid-in capital

other comprehensive loss

27,580,300 and 25,777,796 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Riley Financial, Inc.

stockholders’ equity

Noncontrolling

liabilities and equity

accompanying notes are an integral part of these condensed consolidated financial statements.

Noncontrolling interests

Total liabilities and equity

The accompanying notes are

an integral part of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

in thousands, except share data)

Trading income (losses) and

fair value adjustments on loans

Interest income - Loans and

securities lending

Condensed Consolidated Statements

of Operations

(Dollars in thousands, except

Three Months Ended

Six Months Ended

Services and fees

Trading income (losses) and fair value adjustments on loans

Interest income - Loans and securities lending

Sale of goods

Total revenues

Operating expenses:

1 unchanged sentence

Cost of goods sold

Selling, general and administrative

Selling, general and administrative expenses

Impairment of tradenames

expense - Securities lending and loan participations sold

operating expenses

Operating income (loss)

Interest expense - Securities lending and loan participations sold

Total operating expenses

Operating income

Other income (expense):

Interest income

Gain (loss) from equity investments

Income (loss) before income

benefit for income taxes

Gain on extinguishment of loans

(Loss) income from equity investments

Interest expense

Income (loss) before income taxes

(Provision) benefit for income taxes

Net income (loss)

income (loss) attributable to noncontrolling interests

Net income (loss) attributable

Net (loss) income attributable to noncontrolling interests

Net income (loss) attributable to B.

Riley Financial, Inc.

stock dividends

income (loss) available to common shareholders

Basic income (loss) per

Diluted income (loss) per

Weighted average basic common

shares outstanding

Weighted average diluted

common shares outstanding

accompanying notes are an integral part of these condensed consolidated financial statements.

Preferred stock dividends

Net income (loss) available to common shareholders

Basic income (loss) per common share

Diluted income (loss) per common share

Weighted average basic common shares outstanding

Weighted average diluted common shares outstanding

The accompanying notes are

an integral part of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

in thousands)

income (loss)

comprehensive income (loss):

in cumulative translation adjustment

comprehensive loss, net of tax

comprehensive income (loss)

Comprehensive

income (loss) attributable to noncontrolling interests

Comprehensive

income (loss) attributable to B.

Condensed Consolidated Statements

of Comprehensive Income (Loss)

(Dollars in thousands)

Three Months Ended

Six Months Ended

Net income (loss)

Other comprehensive income (loss):

Change in cumulative translation adjustment

Other comprehensive income (loss), net of tax

Total comprehensive income (loss)

Comprehensive (loss) income attributable to noncontrolling interests

Comprehensive income (loss) attributable to B.

Riley Financial, Inc.

accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are

an integral part of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Equity

in thousands, except share data)

Condensed Consolidated Statements

(Dollars in thousands, except

Three Months Ended June 30, 2021 and 2020

Preferred Stock

Comprehensive

Noncontrolling

Balance, April 1, 2021

Preferred stock issued

ESPP shares issued and vesting of restricted stock and

other, net of shares withheld for employer taxes

Share based payments

Dividends on common stock ($ 3.00 per share)

Dividends on preferred stock

Distributions to noncontrolling interests

Contributions from noncontrolling interests

Other comprehensive income

Balance, June 30, 2021

Balance, April 1, 2020

ESPP shares issued and vesting of restricted stock and

other, net of shares withheld for employer taxes

Common stock repurchased and retired

Share based payments

Dividends on common stock ($ 0.25 per share)

Dividends on preferred stock

Distributions to noncontrolling interests

Other comprehensive income

Balance, June 30, 2020

The accompanying notes are

an integral part of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

Condensed Consolidated Statements

of Equity (Continued)

(Dollars in thousands, except

months ended June 30, 2021 and 2020

Preferred Stock

Comprehensive

Noncontrolling

Balance, January 1, 2021

Common stock issued, net of offering costs

Vesting of restricted stock and other, net of shares withheld for

employer taxes

Preferred stock issued

ESPP shares issued and vesting of restricted stock and

other, net of shares withheld for employer taxes

Share based payments

5 unchanged sentences

Other comprehensive loss

Balance, March 31, 2021

Balance, June 30, 2021

Balance, January 1, 2020

Preferred stock issued

Vesting of restricted stock, net of shares withheld for employer

ESPP shares issued and vesting of restricted stock and

other, net of shares withheld for employer taxes

Common stock repurchased and retired

5 unchanged sentences

Other comprehensive loss

Balance, March 31, 2020

accompanying notes are an integral part of these condensed consolidated financial statements.

Balance, June 30, 2020

The accompanying notes are

an integral part of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

in thousands)

flows from operating activities:

income (loss)

to reconcile net income (loss) to net cash (used in) provided by operating activities:

and amortization

for doubtful accounts

value adjustments, non-cash

interest and other

of foreign currency on operations

loss from equity investments

from equity investments

of intangibles and gain on disposal of fixed assets

(gain) on extinguishment of debt

on equity investment

allocated for mandatorily redeemable noncontrolling interests

in operating assets and liabilities:

clearing brokers

and other investments owned

receivable and advances against customer contracts

expenses and other assets

payable, accrued expenses and other liabilities

due to/from related parties and partners

sold, not yet purchased

cash (used in) provided by operating activities

flows from investing activities:

of loans receivable

of loan receivable to related party

of loan participations sold

Condensed Consolidated Statements

of Cash Flows

(Dollars in thousands)

Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation and amortization

Provision for doubtful accounts

Share-based compensation

Fair value adjustments, non-cash

Non-cash interest and other

Effect of foreign currency on operations

(Income) loss from equity investments

Dividends from equity investments

Deferred income taxes

Impairment of intangibles and gain on disposal of fixed assets

Gain on extinguishment of loans

Loss (gain) on extinguishment of debt

Gain on equity investment

Income allocated for mandatorily redeemable noncontrolling interests

Change in operating assets and liabilities:

Due from clearing brokers

Securities and other investments owned

Securities borrowed

Accounts receivable and advances against customer contracts

Prepaid expenses and other assets

Accounts payable, accrued expenses and other liabilities

Amounts due to/from related parties and partners

Securities sold, not yet purchased

Deferred revenue

Securities loaned

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Purchases of loans receivable

Repayments of loans receivable

Sale of loan receivable to related party

Proceeds from loan participations sold

Repayment of loan participations sold

Acquisition of business, net of $ 34,924 cash acquired

of property, equipment and other

from sale of property, equipment and intangible assets

of equity investments

cash provided by (used in) investing activities

flows from financing activities:

of asset based credit facility

of notes payable

from issuance of senior notes

of senior notes

of debt issuance costs

for contingent consideration

of employment taxes on vesting of restricted stock

dividends paid

of common stock

to noncontrolling interests

from noncontrolling interests

from issuance of common stock

from issuance of preferred stock

cash provided by financing activities

in cash, cash equivalents and restricted cash

of foreign currency on cash, cash equivalents and restricted cash

Purchases of property, equipment and other

Proceeds from sale of property, equipment and intangible assets

Purchase of equity investments

Net cash used in investing activities

Cash flows from financing activities:

Repayment of asset based credit facility

Repayment of notes payable

Repayment of term loan

Proceeds from term loan

Proceeds from issuance of senior notes

Redemption of senior notes

Payment of debt issuance costs

Payment for contingent consideration

Payment of employment taxes on vesting of restricted stock

Common dividends paid

Preferred dividends paid

Repurchase of common stock

Distribution to noncontrolling interests

Contribution from noncontrolling interests

Proceeds from issuance of common stock

Proceeds from issuance of preferred stock

Net cash provided by financing activities

Increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash, beginning of period

cash equivalents and restricted cash, end of period

accompanying notes are an integral part of these condensed consolidated financial statements.

Effect of foreign currency on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosures:

Interest paid

The accompanying notes are an integral part

of these condensed consolidated financial statements.

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except share data)

1—ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(Dollars in thousands, except share data)

NOTE 1—ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

Riley Financial, Inc.

and its subsidiaries (collectively, the “Company”) provide investment banking and financial services

to corporate, institutional and high net worth clients, and asset disposition, financial consulting, appraisal and capital advisory services

to a wide range of retail, wholesale and industrial clients, as well as lenders, capital providers, private equity investors and professional

services firms throughout the United States, Australia, Canada, and Europe and consumer Internet access and cloud communication services

through its wholly-owned subsidiaries United Online, Inc.

(“UOL” or “United Online”) and magicJack VocalTec Ltd.

and its subsidiaries (collectively, the “Company”)

provide investment banking and financial services to corporate, institutional and high net worth clients, and asset disposition, financial

consulting, appraisal and capital advisory services to a wide range of retail, wholesale and industrial clients, as well as lenders, capital

providers, private equity investors and professional services firms throughout the United States, Australia, Canada, and Europe and consumer

Internet access and cloud communication services through its wholly-owned subsidiaries United Online, Inc.

(“UOL” or “United

Online”) and magicJack VocalTec Ltd.

(“magicJack”).

The Company acquired a majority ownership interest in BR Brands Holding, LLC (“BR Brands” or “Brands”),

which provides licensing of trademarks.

February 25, 2021, the Company completed the acquisition of all of the outstanding shares of National Holdings Corporation

(“National”) not already owned by the Company.

The total cash consideration for the approximately 55 % of National

outstanding shares that the Company did not previously own and settlement of outstanding share based awards amounted to $ 35,184 .

Company used the acquisition method of accounting for this acquisition.

The acquisition expands the Company’s investment

banking, wealth management and financial planning offerings by adding National’s brokerage, insurance, tax preparation and

advisory services.

As a result of the National acquisition, the Company realigned its segment reporting structure in the first

quarter of 2021 to reflect organizational management changes for its wealth management business.

Under the new structure, the wealth

management business previously reported in the Capital Markets segment are now reported in the Wealth Management segment.

The Company also has a majority ownership interest in BR Brands

Holding, LLC (“BR Brands” or “Brands”), which provides licensing of trademarks.

On February 25, 2021, the Company completed the acquisition of all

of the outstanding shares of National Holdings Corporation (“National”) not already owned by the Company.

The total cash consideration

for the approximately 55 % of National outstanding shares that the Company did not previously own and settlement of outstanding share

based awards amounted to $ 35,314 .

The Company used the acquisition method of accounting for this acquisition.

The acquisition expands

the Company’s investment banking, wealth management and financial planning offerings by adding National’s brokerage, insurance,

tax preparation and advisory services.

As a result of the National acquisition, the Company realigned its segment reporting structure

in the first quarter of 2021 to reflect organizational management changes for its wealth management business.

Under the new structure,

the wealth management business previously reported in the Capital Markets segment are now reported in the Wealth Management segment.

conjunction with the new reporting structure, the Company recast its segment presentation for all periods presented.

Company operates in six operating segments:

(i) Capital Markets, through which the Company provides investment banking, corporate

finance, securities lending, restructuring, research, sales and trading services to corporate and institutional clients;

Management, through which the Company provides wealth management and tax services to corporate, institutional and high net worth clients;

(iii) Auction and Liquidation, through which the Company provides auction and liquidation services to help clients dispose of assets

that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and

real property;

(iv) Financial Consulting, through which the Company provides bankruptcy, financial advisory, forensic accounting, real

estate consulting and valuation and appraisal services;

(v) Principal Investments - United Online and magicJack, through which the Company

provides consumer Internet access and related subscription services from United Online and cloud communication services primarily through

the magicJack devices;

and (vi) Brands, which is focused on generating revenue through the licensing of trademarks.

January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus

(the “COVID-19 outbreak”).

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the

rapid increase in exposure globally.

During the first quarter 2021, the full impact of the COVID-19 outbreak continues to

economy recovers, aided by additional stimulus packages and positive momentum in the domestic vaccine rollout, countries

across the world continue to manage repeated waves of the pandemic amid uneven progress toward vaccination.

The impact of the COVID-19

outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including

the duration and spread of the outbreak and related advisories and restrictions and the success of vaccines in slowing or halting the

The Company operates in six operating

(i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring,

research, sales and trading services to corporate and institutional clients;

(ii) Wealth Management, through which the Company provides

wealth management and tax services to corporate, institutional and high net worth clients;

(iii) Auction and Liquidation, through which

the Company provides auction and liquidation services to help clients dispose of assets that include multi-location retail inventory,

wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property;

(iv) Financial Consulting, through

which the Company provides bankruptcy, financial advisory, forensic accounting, real estate consulting and valuation and appraisal services;

(v) Principal Investments - United Online and magicJack, through which the Company provides consumer Internet access and related subscription

services from United Online and cloud communication services primarily through the magicJack devices;

and (vi) Brands, which is focused

on generating revenue through the licensing of trademarks.

On January 30, 2020, the

World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure

During the second quarter of 2021, the full impact of the COVID-19 outbreak continues to evolve.

recovers, aided by additional stimulus packages and positive momentum in the domestic vaccine rollout, countries across the world continue

to manage repeated waves of the pandemic, including variant strains of COVID-19, amid uneven progress toward vaccination.

The impact of

the COVID-19 outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments,

including the duration and spread of the outbreak and related advisories and restrictions and the success of vaccines in slowing or halting

the pandemic.

These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy continue

2 unchanged sentences

results of operations, financial position and cash flows may be materially adversely affected.

2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

condensed consolidated financial statements include the accounts of B.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

( a) Principles of Consolidation and Basis

of Presentation

The condensed consolidated

financial statements include the accounts of B.

Riley Financial, Inc.

and its wholly-owned and majority-owned

subsidiaries.

The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which

is controlled by the Company as a result of its ownership of a 50 % member interest, appointment of two of the three executive officers

and significant influence over the funding of operations, and (b) National Asset Management, Inc.

(“NAM”), a federally-registered

investment adviser providing asset management advisory services to retail clients for a fee based upon a percentage of assets managed.

NAM has a majority voting interest in Innovation X Management, LLC (“Innovation X”), which together serve as the investment

manager of an investment fund (see Variable Interest Entities below).

Because NAM has the majority voting interest in Innovation X, the

results of operations of Innovation X are included in the Company’s consolidated financial statements, and the amount attributable

to the other investor is recorded as a non-controlling interest.

The condensed consolidated financial statements have been prepared by

the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange

Commission (“SEC”).

Certain information and footnote disclosures normally included in annual financial statements prepared

in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed

or omitted pursuant to such rules and regulations.

In the opinion of the Company’s management, all adjustments, consisting of only

normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods

presented have been included.

These condensed consolidated financial statements and the accompanying notes should be read in conjunction

with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2020, filed with the SEC on March 4, 2021.

The results of operations for the three months ended March

31, 2021 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

Use of Estimates

preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported

amounts of revenue and expense during the reporting period.

Estimates are used when accounting for certain items such as valuation of

securities and loan receivables, allowance for doubtful accounts, the fair value of intangible assets and goodwill, the fair value of

mandatorily redeemable noncontrolling interests, fair value of share based arrangements, accounting for income tax valuation allowances,

recovery of contract assets, sales returns and allowances and contingencies.

Estimates are based on historical experience, where applicable,

and assumptions that management believes are reasonable under the circumstances.

Due to the inherent uncertainty involved with estimates,

actual results may differ.

Interest Expense — Securities Lending Activities and Loan Participations Sold

expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment.

expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled

$ 18,721 and $ 7,921 for the three months ended March 31, 2021 and 2020, respectively.

Loan participations sold as of March 31, 2021 and

2020 totaled $ 11,230 and $ 12,405 , respectively.

Interest expense from loan participations sold totaled $ 468 and $ 552 for the three months

ended March 31, 2021 and 2020, respectively.

Concentration of Risk

in the Capital Markets, Financial Consulting, Wealth Management, Brands and Principal Investments — United Online and magicJack

segments are currently primarily generated in the United States.

Revenues in the Auction and Liquidation segment are primarily generated

in the United States, Australia, Canada and Europe.

Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers

and secured creditors.

Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors.

seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure

to losses on any one specific liquidation services contract or concentration within any one specific industry.

To mitigate the exposure

to losses on any one specific liquidations services contract, the Company sometimes conducts operations with third parties through collaborative

arrangements.

Company maintains cash in various federally insured banking institutions.

The account balances at each institution periodically exceed

the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration

of credit risk related to amounts in excess of FDIC insurance coverage.

and its wholly-owned and majority-owned subsidiaries.

The condensed

consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company

as a result of its ownership of a 50 % member interest, appointment of two of the three executive officers and significant influence over

the funding of operations, and (b) National Asset Management, Inc.

(“NAM”), a federally-registered investment adviser providing

asset management advisory services to retail clients for a fee based upon a percentage of assets managed.

NAM has a majority voting interest

in Innovation X Management, LLC (“Innovation X”), which together serve as the investment manager of an investment fund (see

Variable Interest Entities below).

Because NAM has the majority voting interest in Innovation X, the results of operations of Innovation

X are included in the Company's consolidated financial statements, and the amount attributable to the other investor is recorded as a

non-controlling interest.

The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to

interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”).

information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.

In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for

a fair presentation of the financial position and the results of operations for the periods presented have been included.

These condensed

consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements

and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the

SEC on March 4, 2021.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the

operating results to be expected for the full fiscal year or any future periods.

(b) Use of Estimates

The preparation of the condensed

consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense

during the reporting period.

Estimates are used when accounting for certain items such as valuation of securities and loans receivables,

allowance for doubtful accounts, the fair value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling

interests, fair value of share based arrangements, accounting for income tax valuation allowances, recovery of contract assets, sales

returns and allowances and contingencies.

Estimates are based on historical experience, where applicable, and assumptions that management

believes are reasonable under the circumstances.

Due to the inherent uncertainty involved with estimates, actual results may differ.

— Securities Lending Activities and Loan Participations Sold

Interest expense from securities

lending activities is included in operating expenses related to operations in the Capital Markets segment.

Interest expense from securities

lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 10,725 and $ 10,802

for the three months ended June 30, 2021 and 2020, respectively, and $ 29,446 and $ 18,723 for the six months ended June 30, 2021 and 2020,

respectively.

Loan participations sold as of June 30, 2021 and 2020 totaled $ 4,444 and $ 14,109 , respectively.

Interest expense from loan

participations sold totaled $ 258 and $ 419 for the three months ended June 30, 2021 and 2020, respectively, and $ 726 and $ 971 for the six

months ended June 30, 2021 and 2020, respectively.

(d) Concentration of

Revenues in the Capital Markets,

Financial Consulting, Wealth Management, Brands and Principal Investments — United Online and magicJack segments are currently primarily

generated in the United States.

Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia,

Canada and Europe.

The Company’s activities

in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors.

Concentrations

of credit risk can be affected by changes in economic, industry, or geographical factors.

The Company seeks to control its credit risk

and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific

liquidation services contract or concentration within any one specific industry.

To mitigate the exposure to losses on any one specific

liquidations services contract, the Company sometimes conducts operations with third parties through collaborative arrangements.

The Company maintains cash

in various federally insured banking institutions.

The account balances at each institution periodically exceed the Federal Deposit Insurance

Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts

in excess of FDIC insurance coverage.

The Company has not experienced any losses in such accounts.

The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed

to parties in accordance with the collaborative arrangements.

Advertising Expenses

Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred.

Advertising costs totaled $ 578

and $ 841 for the three months ended March 31, 2021 and 2020, respectively.

Advertising expense is included as a component of selling,

general and administrative expenses in the accompanying condensed consolidated statements of operations.

Share-Based Compensation

Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated

with the Company’s employee stock purchase plan.

In accordance with the applicable accounting guidance, share-based payment awards

are classified as either equity or liabilities.

For equity-classified awards, the Company measures compensation cost for the grant of

membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements

of operations over the requisite service or performance period the award is expected to vest.

June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to

purchase common stock through payroll deductions at a price that is 85% of the market value of the common stock on the last day of the

offering period.

In accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”),

the Company is required to recognize compensation expense relating to shares offered under the Purchase Plan.

For the three months ended

March 31, 2021 and 2020, the Company recognized compensation expense of $ 227 and $ 165 , respectively, related to the Purchase Plan.

Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in

the condensed consolidated financial statements or tax returns.

Deferred tax liabilities and assets are determined based on the difference

between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which

the differences are expected to reverse.

The Company estimates the degree to which tax assets and credit carryforwards will result in

a benefit based on expected profitability by tax jurisdiction.

A valuation allowance for such tax assets and loss carryforwards is provided

when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods.

Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future

operating results, the eligible carryforward period, and other circumstances.

If it becomes more likely than not that a tax asset will

be used, the related valuation allowance on such assets would be reduced.

Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained

on examination by the taxing authorities, based on the technical merits of the position.

Once this threshold has been met, the Company’s

measurement of its expected tax benefits is recognized in its financial statements.

The Company accrues interest on unrecognized tax

benefits as a component of income tax expense.

The Company also has substantial cash

balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative

arrangements.

(e) Advertising Expenses

The Company expenses advertising

costs, which consist primarily of costs for printed materials, as incurred.

Advertising costs totaled $ 578 and $ 864 for the three months

ended June 30, 2021 and 2020, respectively, and $ 1,156 and $ 1,704 for the six months ended June 30, 2021 and 2020, respectively.

expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements

of operations.

(f) Share-Based Compensation

The Company’s share-based

payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s

employee stock purchase plan.

In accordance with the applicable accounting guidance, share-based payment awards are classified as either

equity or liabilities.

For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair

value on the date of grant and recognizes compensation expense in the condensed consolidated statements of operations over the requisite

service or performance period the award is expected to vest.

In June 2018, the Company adopted the 2018 Employee Stock Purchase

Plan (“Purchase Plan”) which allows eligible employees to purchase common stock through payroll deductions at a price that

is 85 % of the market value of the common stock on the last day of the offering period.

In accordance with the provisions of Accounting

Standards Codification 718, Compensation — Stock Compensation (“ASC 718”), the Company is required to recognize

compensation expense relating to shares offered under the Purchase Plan.

For the three months ended June 30, 2021 and 2020, the Company

recognized compensation expense of $ 115 and $ 59 , respectively, related to the Purchase Plan.

For the six months ended June 30, 2021 and

2020, the Company recognized compensation expense of $ 342 and $ 224 , respectively, related to the Purchase Plan.

(g) Income Taxes

The Company recognizes deferred

tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial

statements or tax returns.

Deferred tax liabilities and assets are determined based on the difference between the financial statement

basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to

The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability

by tax jurisdiction.

A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely

than not that the benefit of such deferred tax asset will not be realized in future periods.

Tax benefits of operating loss carryforwards

are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward

period, and other circumstances.

If it becomes more likely than not that a tax asset will be used, the related valuation allowance on

such assets would be reduced.

The Company recognizes tax

benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the

taxing authorities, based on the technical merits of the position.

Once this threshold has been met, the Company’s measurement of

its expected tax benefits is recognized in its financial statements.

The Company accrues interest on unrecognized tax benefits as a component

of income tax expense.

Penalties, if incurred, would be recognized as a component of income tax expense.

Cash and Cash Equivalents

Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

(i) Restricted Cash

of March 31, 2021, restricted cash included $ 1,508 of cash collateral for foreign exchange contracts and leases, $ 471 related to

one of the Company’s telecommunication suppliers and $ 6,553 related to a loan taken out by National under the Paycheck Protection

Program Loan (“PPP”).

Upon completion of the acquisition of National, in accordance with the provisions of the Small Business

Administration regarding changes of ownership of an entity that has received PPP funds, the Company was required to place $ 6,553 of cash

in a restricted cash account with the PPP lender.

As of December 31, 2020, restricted cash included $ 764 of cash collateral for

foreign exchange contracts and $ 471 related to one of the Company’s telecommunication suppliers.

Securities Borrowed and Securities Loaned

borrowed and securities loaned are recorded based upon the amount of cash advanced or received.

Securities borrowed transactions facilitate

the settlement process and require the Company to deposit cash or other collateral with the lender.

With respect to securities loaned,

the Company receives collateral in the form of cash.

The amount of collateral required to be deposited for securities borrowed, or received

for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned.

monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral

recalled, when deemed appropriate.

Company accounts for securities lending transactions in accordance with ASC “Topic 210:

Balance Sheet,” which requires companies

to report disclosures of offsetting assets and liabilities.

The Company does not net securities borrowed and securities loaned and these

items are presented on a gross basis in the condensed consolidated balance sheets.

Property and Equipment

and equipment are stated at cost.

Depreciation and amortization are computed using the straight-line method over the estimated useful

lives of the assets.

Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the

lease term or estimated useful life of the asset.

Depreciation and amortization expense on property and equipment was $ 873 and $ 932 for

the three months ended March 31, 2021 and 2020, respectively.

Loans Receivable

Company adopted the new credit loss standard effective January 1, 2020.

Pursuant to ASU 2016-13 and its amendment ASU 2019-05, the Company

elected the irrevocable fair value option for all outstanding loans receivable that were previously measured at amortized cost.

the fair value option, loans receivable are measured at each reporting period based upon their exit value in an orderly transaction and

unrealized gains or losses from changes in fair value are recorded in the consolidated statements of operations.

These loans are no longer

subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through fair value changes.

impact of adopting ASC 326 was immaterial to the consolidated financial statements.

receivable, at fair value totaled $ 294,085 and $ 390,689 at March 31, 2021 and December 31, 2020, respectively.

The loans have

various maturities through March 2027.

As of March 31, 2021 and December 31, 2020, the historical cost of loans receivable

accounted for under the fair value option was $ 297,786 and $ 405,064 , respectively, which included principal balances of $ 306,967 and

$ 416,401 , respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 9,181 and $ 11,337 , respectively.

During the three months ended March 31, 2021 and 2020, the Company recorded unrealized gains (losses) of $ 10,726 and ($ 17,926 ),

respectively, on the loans receivable, at fair value, which is included in trading income (losses) and fair value adjustments

on loans on the consolidated statements of operations.

Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending

At March 31, 2021, the Company has outstanding limited guarantees with respect to Babcock & Wilcox Enterprises, Inc.

(h) Cash and Cash

The Company considers all

highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

(i) Restricted

As of June 30, 2021, restricted cash included $ 864 of cash collateral

for foreign exchange contracts and leases and $ 471 related to one of the Company’s telecommunication suppliers.

In June 2021, National’s

Paycheck Protection Program (“PPP”) which the Company assumed as part of the acquisition of National on February 25, 2021

was forgiven, and $ 6,553 of restricted cash related to the loans was returned to the Company.

As of December 31, 2020, restricted cash

included $ 764 of cash collateral for foreign exchange contracts and $ 471 related to one of the Company’s telecommunication

(j) Securities

Borrowed and Securities Loaned

Securities borrowed and

securities loaned are recorded based upon the amount of cash advanced or received.

Securities borrowed transactions facilitate the settlement

process and require the Company to deposit cash or other collateral with the lender.

With respect to securities loaned, the Company receives

collateral in the form of cash.

The amount of collateral required to be deposited for securities borrowed, or received for securities

loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned.

The Company monitors the

market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled,

when deemed appropriate.

The Company accounts for

securities lending transactions in accordance with ASC “Topic 210:

Balance Sheet,” which requires companies to report disclosures

of offsetting assets and liabilities.

The Company does not net securities borrowed and securities loaned and these items are presented

on a gross basis in the condensed consolidated balance sheets.

and Equipment

Property and equipment are

stated at cost.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated

useful life of the asset.

Depreciation and amortization expense on property and equipment was $ 1,031 and $ 899 for the three months ended

June 30, 2021 and 2020, respectively and $ 1,904 and $ 1,831 for the six months ended June 30, 2021 and 2020, respectively.

The Company adopted the new credit loss standard effective January

Pursuant to ASU 2016-13 and its amendment ASU 2019-05, the Company elected the irrevocable fair value option for all outstanding

loans receivable that were previously measured at amortized cost.

Under the fair value option, loans receivables are measured at each

reporting period based upon their exit value in an orderly transaction and unrealized gains or losses from changes in fair value are recorded

in the condensed consolidated statements of operations.

These loans are no longer subject to evaluation for impairment through an allowance

for loan loss as such losses will be captured through fair value changes.

The impact of adopting ASC 326 was immaterial to the consolidated

financial statements.

Loans receivable, at fair value totaled $ 270,295 and $ 390,689 at

June 30, 2021 and December 31, 2020, respectively.

The loans have various maturities through March 2027.

As of June 30, 2021 and December 31,

2020, the historical cost of loans receivable accounted for under the fair value option was $ 274,624 and $ 405,064 , respectively, which

included principal balances of $ 284,664 and $ 416,401 , respectively, and unamortized costs, origination fees, premiums and discounts,

totaling $ 10,040 and $ 11,337 , respectively.

During the three months ended June 30, 2021 and 2020, the Company recorded unrealized losses

on the loans receivable at fair value of $ 680 and $ 4,049 , respectively, and during the six months ended June 30, 2021 and 2020, unrealized

gains of $ 10,046 and losses of $ 21,975 , respectively, which is included in trading income (losses) and fair value adjustments on loans

on the condensed consolidated statements of operations.

The Company may periodically provide limited guarantees to third parties

for loans that are made to investment banking and lending clients.

At June 30, 2021, the Company has outstanding limited guarantee

arrangements with respect to Babcock & Wilcox Enterprises, Inc.

(“B&W”) as further described in Note 13.

In accordance with the new credit loss standard, the Company

evaluates the need to record an allowance for credit losses for these loan guarantees since they have off-balance sheet credit

At March 31, 2021, the Company has not recorded any provision for credit losses on the B&W guarantees since the

underlying guaranteed loans are senior to most of the outstanding debt of B&W and the Company believes that there is sufficient

collateral to protect the Company from any credit loss exposure.

The maximum amount of credit exposure related to these

limited guarantees is approximately $ 80,000 .

income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance plus the amortization

of any costs, origination fees, premiums and discounts and is included in interest income - loans and securities lending on the consolidated

statements of operations.

Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest

income over the lives of the related loans.

Unearned income, discounts and premiums are amortized to interest income using a level yield

Securities and Other Investments Owned and Securities Sold Not Yet Purchased

owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value.

sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby

create a liability to purchase the security in the market at prevailing prices.

Changes in the value of these securities are reflected

currently in the results of operations.

of March 31, 2021 and December 31, 2020, the Company’s securities and other investments owned and securities sold not yet purchased

at fair value consisted of the following securities:

In accordance

with the new credit loss standard, the Company evaluates the need to record an allowance for credit losses for these loan guarantees since

they have off-balance sheet credit exposures.

At June 30, 2021, the Company has not recorded any provision for credit losses on the

B&W guarantees since the Company believes

that there is sufficient collateral to protect the Company from any credit loss exposure.

Interest income on loans receivable is recognized based on the stated

interest rate of the loan on the unpaid principal balance plus the amortization of any costs, origination fees, premiums and discounts

and is included in interest income - loans and securities lending on the condensed consolidated statements of operations.

Loan origination

fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related

Unearned income, discounts and premiums are amortized to interest income using a level yield methodology.

(m) Securities and

Other Investments Owned and Securities Sold Not Yet Purchased

Securities owned consist

of marketable securities and investments in partnership interests and other securities recorded at fair value.

Securities sold, but not

yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability

to purchase the security in the market at prevailing prices.

Changes in the value of these securities are reflected currently in the results

of operations.

As of June 30, 2021 and December

31, 2020, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of

the following securities:

Securities and other investments owned:

7 unchanged sentences

Other fixed income securities

Fair Value Measurements

Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment

and considers factors specific to the asset or liability.

Fair value is the price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement assumes

that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the

absence of a principal market, the most advantageous market.

In general, fair values determined by Level 1 inputs utilize quoted prices

(unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets.

determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly or indirectly.

Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical

or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated

by market data.

Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to

the fair value of the assets or liabilities.

In certain cases, the inputs used to measure fair value may fall into different levels of

the fair value hierarchy.

In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety

falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s

assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors

specific to the asset or liability.

Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred

stocks and warrants, corporate bonds, and investments in partnerships.

Investments in common stocks that are based on quoted prices in

active markets are included in Level 1 of the fair value hierarchy.

The Company also holds loans receivable valued at fair value, nonpublic

common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on

a consistent basis.

For investments where little or no public market exists, management’s determination of fair value is based

on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment,

taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s

securities and liquidity risks.

These investments are included in Level 3 of the fair value hierarchy.

Investments in partnership interests

include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds.

also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed

fixed income securities and restrictions exist on the redemption of amounts invested by the Company.

The Company’s partnership

and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds;

the value for these investments are derived from the most recent statements received from the general partner or fund administrator.

These partnership and investment fund interests are valued at net asset value (“NAV”) in accordance with ASC “Topic

(n) Fair Value Measurements

The Company’s assessment

of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific

to the asset or liability.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

A fair value measurement assumes that the transaction to sell the asset

or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most

advantageous market.

In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments

that are highly liquid, observable and actively traded in over-the-counter markets.

Fair values determined by Level 2 inputs utilize inputs

other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 inputs

include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are

not active and model-derived valuations whose inputs are observable and can be corroborated by market data.

Level 3 inputs are unobservable

inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, the level

in the fair value hierarchy within which the fair value measurement in its entirety has been determined based on the lowest level input

that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular

input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The Company’s securities

and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate

bonds, and investments in partnerships.

Investments in common stocks that are based on quoted prices in active markets are included in

Level 1 of the fair value hierarchy.

The Company also holds loans receivable valued at fair value, nonpublic common and preferred stocks

and warrants for which there is little or no public market and fair value is determined by management on a consistent basis.

For investments

where little or no public market exists, management’s determination of fair value is based on the best available information which

may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors

including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

These investments

are included in Level 3 of the fair value hierarchy.

Investments in partnership interests include investments in private equity partnerships

that primarily invest in equity securities, bonds, and direct lending funds.

The Company also invests in priority investment funds and

the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist

on the redemption of amounts invested by the Company.

The Company’s partnership and investment fund interests are valued based on

the Company’s proportionate share of the net assets of the partnerships and funds;

the value for these investments is derived from

the most recent statements received from the general partner or fund administrator.

These partnership and investment fund interests are

valued at net asset value (“NAV”) in accordance with ASC “Topic 820:

Fair Value Measurements.”

and other investments owned also include investments in nonpublic entities that do not have a readily determinable fair value and do

not report NAV per share.

These investments are accounted for using a measurement alternative under which they are measured at cost and

adjusted for observable price changes and impairments.

Observable price changes result from, among other things, equity transactions

for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions

related to the same issuer.

For these transactions to be considered observable price changes of the same issuer, we evaluate whether

these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other

factors, to the investments we hold.

Any investments adjusted to their fair value by applying the measurement alternative are disclosed

as nonrecurring fair value measurements, including the level in the fair value hierarchy that was used.

We had no investments measured

at fair value on a nonrecurring basis for the three months ended March 31, 2021 and 2020.

As of March 31, 2021 and December 31, 2020,

investments in nonpublic entities valued using a measurement alternative of $ 37,348 and $ 26,948 , respectively, are included in securities

and other investments owned in the accompanying consolidated balance sheets.

fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references

to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis

as of March 31, 2021 and December 31, 2020.

Assets and Liabilities Measured at Fair Value

on a Recurring Basis at March 31, 2021 Using

Securities and other investments

owned also include investments in nonpublic entities that do not have a readily determinable fair value and do not report NAV per share.

These investments are accounted for using a measurement alternative under which they are measured at cost and adjusted for observable

price changes and impairments.

Observable price changes result from, among other things, equity transactions for the same issuer executed

during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer.

these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights

and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

Any investments adjusted to their fair value by applying the measurement alternative are disclosed as nonrecurring fair value measurements,

including the level in the fair value hierarchy that was used.

As of June 30, 2021 and December 31, 2020, investments in nonpublic entities

valued using a measurement alternative of $ 42,931 and $ 26,948 , respectively, are included in securities and other investments owned

in the accompanying condensed consolidated balance sheets.

The fair value of mandatorily

redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables,

and relied, in part, on information obtained from appraisal reports and internal valuation models.

The following tables present

information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2021 and December 31,

Financial Assets and Liabilities Measured at Fair Value

on a Recurring Basis at June 30, 2021 Using

Quoted prices in

Fair value at

1 unchanged sentence

identical assets

observable inputs

unobservable inputs

Securities and other investments owned:

10 unchanged sentences

Total securities sold not yet purchased

redeemable noncontrolling interests issued after November 5, 2003

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

Total liabilities measured at fair value

Financial Assets and Liabilities

Measured at Fair Value

Financial Assets and Liabilities Measured at Fair Value

on a Recurring Basis at December 31, 2020 Using

Fair value at

Quoted prices in

Fair value at

active markets for

identical assets

observable inputs

unobservable inputs

Securities and other investments owned:

10 unchanged sentences

Total securities sold not yet purchased

redeemable noncontrolling interests issued after November 5, 2003

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

Total liabilities measured at fair value

of March 31, 2021 and December 31, 2020, financial assets measured and reported at fair value on a recurring basis and classified within

Level 3 were $ 466,055 and $ 539,981 , respectively, or 11.3 % and 20.3 %, respectively, of the Company’s total assets.

In determining

the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate

the value, including where applicable, over-the-counter market trading activity.

following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities

by category of investment and valuation technique as of March 31, 2021:

As of June 30, 2021 and December

31, 2020, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 588,793 and $ 539,981 ,

respectively, or 14.3 % and 20.3 %, respectively, of the Company’s total assets.

In determining the fair value for these Level 3 financial

assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter

market trading activity.

The following table summarizes

the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment

and valuation technique as of June 30, 2021:

Fair value at

8 unchanged sentences

Market price of related security

$0.83 - $4.00

Option pricing model

3 unchanged sentences

Market interest rate

Total level 3 assets measured at fair

Total level 3 assets measured at fair value

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

1 unchanged sentence

Operating income multiple

changes in Level 3 fair value hierarchy during the three months ended March 31, 2021 and 2020 are as follows:

The changes in Level 3 fair

value hierarchy during the six months ended June 30, 2021 and 2020 are as follows:

Level 3 Changes During the Period

Fair Value Adjustments

Undistributed Earnings

Three Months Ended March 31, 2021

Undistributed

Six Months Ended June 30, 2021

Equity securities

1 unchanged sentence

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Equity securities

1 unchanged sentence

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

Company adopted ASU 2016-13 and its amendment ASU 2019-05 effective January 1, 2020.

Pursuant to ASU 2016-13 and its amendment ASU 2019-05,

the Company elected the irrevocable fair value option for all outstanding loans receivable that were measured at amortized cost as of

December 31, 2019.

The Company adopted ASU 2016-13

and its amendment ASU 2019-05 effective January 1, 2020.

Pursuant to ASU 2016-13 and its amendment ASU 2019-05, the Company elected the

irrevocable fair value option for all outstanding loans receivable that were measured at amortized cost as of December 31, 2019.

The loans receivable, at fair value are included in transfers into level 3 fair value assets in the above table.

amount reported in the table above for the three months ended March 31, 2021 and 2020 includes the amount of undistributed earnings

attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the condensed

consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses

and other liabilities approximate fair value based on the short-term maturity of these instruments.

of March 31, 2021 and December 31, 2020, the senior notes payable had a carrying amount of $ 1,139,100 and $ 870,783 , respectively,

and fair value of $ 1,190,847 and $ 898,606 , respectively.

The carrying amount of the term loan approximates fair value because the effective

yield of such instrument is consistent with current market rates of interest for instruments of comparable credit risk.

the three months ended March 31, 2021 and 2020, except for the impact of the intangible impairment charge in 2020 as described in Note

6 - Goodwill and Intangible Assets, there were no assets or liabilities measured at fair value on a non-recurring basis.

Derivative and Foreign Currency Translation

Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain

loans receivable and Auction and Liquidation engagements with operations outside the United States.

As of March 31, 2021 and December

31, 2020, forward exchange contracts in the amount of 6,000 Euros were outstanding.

forward exchange contracts were entered into to improve the predictability of cash flows related to a retail store liquidation engagement

and a loan receivable.

The net gain from forward exchange contracts was $ 310 during the three months ended March 31, 2021.

was no forward exchange contract activity during the three months ended March 31, 2020.

This amount is reported as a component of selling,

general and administrative expenses in the consolidated statements of operations.

The amount reported in the

table above for the six months ended June 30, 2021 and 2020 includes the amount of undistributed earnings attributable to the noncontrolling

interests that is distributed on a quarterly basis.

The carrying amounts reported in the condensed consolidated financial statements for

cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate

fair value based on the short-term maturity of these instruments.

As of June 30, 2021 and December 31, 2020, the senior notes payable

had a carrying amount of $ 1,213,105 and $ 870,783 , respectively, and fair value of $ 1,262,750 and $ 898,606 , respectively.

amount of the term loans approximates fair value because the effective yield of such instruments are consistent with current market rates

of interest for instruments of comparable credit risk.

The investments in nonpublic entities that do not report NAV are measured

at cost, adjusted for observable price changes and impairments, with changes recognized in trading income (losses) and fair value adjustments

on loans on the condensed consolidated statements of operations.

These investments are evaluated on a nonrecurring basis based on the

observable price changes in orderly transactions for the identical or similar investment of the same issuer.

Further adjustments are not

made until another observable transaction occurs.

Therefore, the determination of fair values of these investments in nonpublic entities

that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments.

Investments in nonpublic

entities that do not report NAV are subject to a qualitative assessment for indicators of impairment.

If indicators of impairment are

present, the Company is required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount

equal to the investment’s carrying value in excess of its estimated fair value.

The following table sets

forth the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of June 30, 2021.

investment was measured due to an observable price change during the three months ended June 30, 2021.

Measurement Using

Quoted prices in

active markets for

identical assets

As of June 30, 2021

Investments in nonpublic entities that do not report NAV

As of December 31, 2020

Investments in nonpublic entities that do not report NAV

During the six months ended

June 30, 2021 and 2020, except for the impact of the intangible impairment charge in 2020 as described in Note 6 - Goodwill and Intangible

Assets, there were no additional assets or liabilities measured at fair value on a non-recurring basis.

(o) Derivative and

Foreign Currency Translation

The Company periodically uses derivative instruments, which primarily

consist of the purchase of forward exchange contracts, for certain loans receivable and Auction and Liquidation engagements with operations

outside the United States.

As of June 30, 2021 and December 31, 2020, forward exchange contracts in the amount of 20,200 Euros and 6,000

Euros, respectively, were outstanding.

The forward exchange contracts

were entered into to improve the predictability of cash flows related to a retail store liquidation engagement and a loan receivable.

The net gain from forward exchange contracts was $ 363 and $ 673 during the three and six months ended June 30, 2021, respectively.

was no forward exchange contract activity during the three and six months ended June 30, 2020.

This amount is reported as a component

of selling, general and administrative expenses in the consolidated statements of operations.

The Company transacts business in various foreign currencies.

4 unchanged sentences

loss in the accompanying condensed consolidated balance sheets.

Transaction gains were $ 555 and $ 949 during the three months ended March

31, 2021 and 2020, respectively.

These amounts are included in selling, general and administrative expenses in the Company’s condensed

consolidated statements of operations.

Equity Investment

March 31, 2021 and December 31, 2020, equity investments of $ 44,221 and $ 54,953 , respectively, are included in prepaid expenses and other

assets in the accompanying condensed consolidated balance sheets.

March 31, 2021 and December 31, 2020, the Company had a 39.5 % ownership interest in bebe stores, inc.

10, 2020, the Company purchased an additional 1,500,000 shares of newly issued common stock of bebe for $ 7,500 and increased

its’ ownership interest increased from 31.5 % to 39.5 %.

The equity ownership in bebe is accounted for under the equity

method of accounting and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

As of March 31, 2021, the carrying value of the Company’s equity

investment in bebe exceeded the fair value based on the quoted market prices.

In consideration of these facts, the Company evaluated its

investment for impairment.

Transaction losses were $ 390 and $ 438 during the three months ended June

30, 2021 and 2020, respectively and gains were $ 166 and $ 510 during the six months ended June 30, 2021 and 2020, respectively.

These amounts

are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

(p) Equity Investment

At June 30, 2021 and December 31, 2020, equity investments of $ 48,851

and $ 54,953 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

The Company’s share of earnings or losses from equity method investees is included in gain (loss) from equity investments in the

accompanying condensed consolidated statements of operations.

bebe stores, inc.

At June 30, 2021 and December 31, 2020, the Company had a 39.5 %

ownership interest in bebe stores, inc.

On November 10, 2020, the Company purchased an additional 1,500,000 shares

of newly issued common stock of bebe for $ 7,500 and increased its’ ownership interest increased from 31.5 % to 39.5 %.

The equity ownership in bebe was accounted for under the equity method of accounting and is included in prepaid expenses and other assets

in the condensed consolidated balance sheets.

As of June 30, 2021, the

carrying value of the Company’s equity investment in bebe exceeded the fair value based on the quoted market prices.

In consideration

of these facts, the Company evaluated its investment for impairment.

The Company did not utilize bright-line tests in the evaluation.

Based on the available facts and information

regarding the operating results of bebe, the Company’s ability and intent to hold the investments until recovery, the relative amount

of the declines, and the length of time that the fair values were less than the carrying values, the Company concluded that recognition

of impairment losses in earnings was not required.

However, the Company will continue to monitor the investment and it is possible that

impairment losses will be recorded in earnings in future periods based on changes in facts and circumstances or intentions.

Holdings Corporation

of December 31, 2020, the Company owned approximately 45 % of the commons stock of National which is included in prepaid expenses and

other assets in the condensed consolidated balance sheets.

The equity ownership in National is accounted for under the equity method

of accounting for periods prior to February 25, 2021.

On February 25, 2021, the Company completed the acquisition of National

by acquiring the 55 % of common stock not previously owned by the Company pursuant to an agreement and plan of merger dated January 10,

2021, following the successful completion of a tender offer commenced by us on January 27, 2021.

The cash consideration for the purchase

of the 55 % of common stock not previously owned by the Company and settlement of outstanding share based awards was $ 35,184 .

operating results subsequent to February 25, 2021 are included in the Company’s condensed consolidated financial statements.

Equity Investments

Company has other equity investments, the largest being a 40 % ownership interest in Lingo Management, LLC (“Lingo”)

which was purchased in November 2020.

The equity ownership in these other investments is accounted for under the equity method of accounting

and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

Loan Participations Sold

of March 31, 2021, the Company has sold investments (“Loan Participations Sold”) to third parties (“Participants”)

that are accounted for as secured borrowings under ASC Topic 860, Transfers and Servicing.

Under ASC Topic 860, a partial loan transfer

does not qualify for sale accounting in order for sale treatment to be allowed.

A participation or other partial loan transfer that meets

the definition of a participating interest is classified as loan receivable and the portion transferred is recorded as a secured borrowing

under loan participations sold in the condensed consolidated balance sheet.

The Participants are entitled to payments made by the borrower

of the related loan equal to the current Loan Participations Sold outstanding at the interest rates for the respective investment.

the event that the borrower defaults, the Participants have rights to payments from such borrower, but do not have recourse to the Company.

The terms of the Loan Participations Sold are commensurate with the terms of the related loan.

As of March 31, 2021 and December 31, 2020, the Company had entered

into participation agreements for a total of $ 11,230 and $ 17,316 , respectively.

In addition, the interest income and interest expense

related to the Loan Participations Sold resulted in interest income and interest expense which is presented gross on the condensed consolidated

statements of operations.

Supplemental Non-cash Disclosures

the three months ended March 31, 2021, non-cash investing activities included the repayment of a loan receivable in full in the amount

of $ 64,754 with equity securities.

In addition, $ 35,000 of loans receivable were exchanged for $ 35,000 of newly issued debt

During the three months ended March 31, 2020, non-cash investing activities included $ 4,633 non-cash conversion of an equity

method investment.

Reclassifications

amounts reported in the Capital Markets segment for the period ended March 31, 2020 have been reclassified and reported in the Financial

Consulting segment for the period ended March 31, 2020 as a result of the organizational changes that created the new Financial Consulting

segment in the fourth quarter of 2020.

the three months ended March 31, 2020, $ 589 of dividends received from equity method investments that were previously included in

cash flows from investing activities have been reclassified and included in cash flows from operating activities to conform to the 2021

presentation.

Variable Interest Entities

2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations.

The Partnership is a variable interest entity (“VIE”) since the unaffiliated limited partners do not have substantive kick-

out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership.

has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not

deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that

conclusion at each reporting date.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests

in the entity held either directly by the Company or indirectly through related parties.

The consolidation analysis can generally be

performed qualitatively;

however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis

may also be performed.

November 2020, the Company invested in Lingo Management, LLC (“Lingo”), a joint venture with an unaffiliated third

On March 10, 2021, the Company also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary of

Lingo is a VIE because the entity does not have enough equity at risk to finance its activities without additional

subordinated financial support.

The Company has determined that it is not the primary beneficiary because it does not have the power

to direct the activities of the VIE that most significantly impact the entity’s financial performance.

The Company’s

variable interests in Lingo include loans receivable at fair value and an equity investment accounted for under the equity method of

Company, through its newly acquired subsidiary, National, has entered into agreements to provide investment banking and advisory services

to numerous investment funds (the “Funds”) that are considered variable interest entities (“VIEs”) under the

accounting guidance.

These Funds are established primarily to make and manage investments in equity or convertible debt securities of

privately held companies that the Company, as investment advisor to the Funds, believes possess innovative or disruptive technologies

and present opportunities for an initial public offering (“IPO”) or other similar liquidity event within approximately one

to five years from the date of investment.

The Funds intend to hold the investments until an IPO or other similar liquidity event and

then to make distributions to its investors when contractually permitted, estimated at approximately six months following such IPO or

liquidity event.

The Company earns fees from the Funds in the form of placement agent

fees and carried interest.

For placement agent fees, the Company receives a cash fee of generally 7% to 10% of the amount of raised capital

for the Funds and the fee is recognized at the time the placement services occurred.

The Company receives carried interest as a percentage

allocation (8% to 15%) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized

under the ownership model of ASC 323 as an equity method investment with changes in allocation recorded currently in the results of operations.

Once fund investors have received distributions in an amount equal to one hundred percent (100%) of their total capital contributions,

the Company as the manager of the Funds will be entitled to share in any profits of the Funds to the extent of the carried interest.

the fee arrangements under such agreements are arm's length and contain customary terms and conditions and represent compensation that

is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company

does not consolidate such VIEs.

agent fees attributable to such arrangements from acquisition date through March 31, 2021 were $ 11,360 and are included in services and

fees in the condensed consolidated statements of operations.

carrying value of the Company’s investments in the VIE that was not consolidated is shown below.

Based on the available facts and information regarding the operating results of bebe, the Company’s ability and intent to hold the

investments until recovery, the relative amount of the declines, and the length of time that the fair values were less than the carrying

values, the Company concluded that recognition of impairment losses in earnings was not required.

However, the Company will continue to

monitor the investment and it is possible that impairment losses will be recorded in earnings in future periods based on changes in facts

and circumstances or intentions.

National Holdings Corporation

As of December 31, 2020, the Company owned approximately 45 % of the

commons stock of National which was included in prepaid expenses and other assets in the condensed consolidated balance sheets.

ownership in National was accounted for under the equity method of accounting for periods prior to February 25, 2021.

On February 25,

2021, the Company completed the acquisition of National by acquiring the 55 % of common stock not previously owned by the Company pursuant

to an agreement and plan of merger dated January 10, 2021, following the successful completion of a tender offer commenced by us on January

The cash consideration for the purchase of the 55 % of common stock not previously owned by the Company and settlement of outstanding

share based awards was $ 35,314 .

National’s operating results subsequent to February 25, 2021 is included in the Company’s

condensed consolidated financial statements.

Other Equity Investments

The Company has other equity investments over which the Company exercises

significant influence but which do not meet the requirements for consolidation, including B.

Riley Principal 150 Merger Corp., B.

Principal 250 Merger Corp., and 40 % ownership interest in Lingo Management, LLC.

The equity ownership in these other investments was accounted

for under the equity method of accounting and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

(q) Loan Participations

As of June 30, 2021, the Company has sold investments (“Loan

Participations Sold”) to third parties (“Participants”) that are accounted for as secured borrowings under ASC Topic

860, Transfers and Servicing.

Under ASC Topic 860, a partial loan transfer does not qualify for sale accounting in order for sale treatment

to be allowed.

A participation or other partial loan transfer that meets the definition of a participating interest is classified as loan

receivable and the portion transferred is recorded as a secured borrowing under loan participations sold in the condensed consolidated

balance sheets.

The Participants are entitled to payments made by the borrower of the related loan equal to the current Loan Participations

Sold outstanding at the interest rates for the respective investment.

In the event that the borrower defaults, the Participants have rights

to payments from such borrower, but do not have recourse to the Company.

The terms of the Loan Participations Sold are commensurate with

the terms of the related loan.

As of June 30, 2021 and December

31, 2020, the Company had entered into participation agreements for a total of $ 4,444 and $ 17,316 , respectively.

In addition, the interest

income and interest expense related to the Loan Participations Sold resulted in interest income and interest expense which is presented

gross on the condensed consolidated statements of operations.

(r) Supplemental Non-cash

During the six months ended

June 30, 2021, non-cash investing activities included the repayment of a loan receivable in full in the amount of $ 133,453 with equity

In addition, $ 35,000 of loans receivable were exchanged for $ 35,000 of newly issued debt securities and a $ 36,000 note receivable

was issued for the sale of equity securities to a third party.

During the six months ended June 30, 2020, non-cash investing activities

included $ 4,633 non-cash conversion of an equity method investment and $ 6,170 conversion of a loan receivable to shares of stock.

(s) Reclassifications

Certain amounts reported

in the Capital Markets segment for the three and six months ended June 30, 2020 have been reclassified and reported in the Financial Consulting

and Wealth Management segments for the three and six months ended June 30, 2020 as a result of the organizational changes that created

the new Financial Consulting segment in the fourth quarter of 2020 and Wealth Management segment in the first quarter of 2021.

For the six months ended

June 30, 2020, $ 797 of dividends received from equity method investments that were previously included in cash flows from investing

activities have been reclassified and included in cash flows from operating activities to conform to the 2021 presentation.

(t) Variable Interest

In 2018, the operations of

GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations.

The Partnership is a

variable interest entity (“VIE”) since the unaffiliated limited partners do not have substantive kick-out or participating

rights to remove the Company’s subsidiary that is the general partner managing the Partnership.

The Company has determined that

it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable

interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant.

determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at

each reporting date.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the

entity held either directly by the Company or indirectly through related parties.

The consolidation analysis can generally be performed

qualitatively;

however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also

be performed.

In November 2020, the Company

invested in Lingo Management, LLC (“Lingo”), a joint venture with an unaffiliated third party.

On March 10, 2021, the Company

also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary of Lingo).

Lingo is a VIE because the entity does

not have enough equity at risk to finance its activities without additional subordinated financial support.

The Company has determined

that it is not the primary beneficiary because it does not have the power to direct the activities of the VIE that most significantly

impact the entity’s financial performance.

The Company’s variable interests in Lingo include loans receivable, at fair value

and an equity investment accounted for under the equity method of accounting.

The Company, through its

newly acquired subsidiary, National, has entered into agreements to provide investment banking and advisory services to numerous investment

funds (the “Funds”) that are considered variable interest entities under the accounting guidance.

Funds are established primarily to make and manage investments in equity or convertible debt securities of privately held companies that

the Company, as investment advisor to the Funds, believes possess innovative or disruptive technologies and present opportunities for

an initial public offering (“IPO”) or other similar liquidity event within approximately one to five years from the date of

The Funds intend to hold the investments until an IPO or other similar liquidity event and then to make distributions to its

investors when contractually permitted, estimated at approximately six months following such IPO or liquidity event.

The Company earns fees from

the Funds in the form of placement agent fees and carried interest.

For placement agent fees, the Company receives a cash fee of generally

7% to 10% of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred.

receives carried interest as a percentage allocation (8% to 15%) of the profits of the Funds as compensation for asset management services

provided to the Funds and it is recognized under the ownership model of ASC 323 as an equity method investment with changes in allocation

recorded currently in the results of operations.

Once fund investors have received distributions in an amount equal to one hundred percent

(100%) of their total capital contributions, the Company as the manager of the Funds will be entitled to share in any profits of the Funds

to the extent of the carried interest.

As the fee arrangements under such agreements are arm's length and contain customary terms and

conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered

variable interests and accordingly, the Company does not consolidate such VIEs.

Placement agent fees

attributable to such arrangements from acquisition date through June 30, 2021 were $ 25,382 and are included in services and fees in

the condensed consolidated statements of operations.

The carrying value of the

Company’s investments in the VIEs that were not consolidated is shown below.

Partnership investments

Equity Investment

Due from related party

Loans receivable, at fair value

Maximum exposure to loss

Recent Accounting Standards

March 2020, FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides

optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference

rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”).

The amendments in ASU 2020-04

apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be

discontinued.

The amendments in ASU 2020-04 are effective through December 31, 2022.

The Company is currently assessing the potential

impacts the adoption of ASU 2020-04 may have on its consolidated results of operations, cash flows, financial position or disclosures.

August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts

in Entity’s Own Equity (Subtopic 815-40):

(u) Recent Accounting

Not yet adopted

In March 2020, FASB issued

2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides optional guidance for

a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected

to be discontinued, such as the London Interbank Offered Rate ("LIBOR").

The amendments in ASU 2020-04 apply only to contracts,

hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued.

The amendments

in ASU 2020-04 are effective through December 31, 2022.

The Company is currently assessing the potential impacts the adoption of ASU 2020-04

may have on its consolidated results of operations, cash flows, financial position or disclosures.

In August 2020, the FASB

issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

This Update addresses issues identified as a result of the complexity associated with applying generally accepted accounting principles

(GAAP) for certain financial instruments with characteristics of liabilities and equity.

In addressing the complexity, the Board focused

on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in an entity’s

For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments

and convertible preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized

from the host contract as compared with current GAAP.

In addition to eliminating certain accounting models, the ASU also provides guidance

to enhance information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share

(EPS) guidance.

Additionally, the ASU amends the guidance for the derivatives scope exception for contracts in an entity’s own

equity to reduce form-over-substance-based accounting conclusions, and to amend the related EPS guidance.

The amendments in this update

are effective for public business entities for fiscal periods beginning after December 15, 2021, including interim periods within those

fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The Company has not yet

adopted this update and is currently evaluating the effect, if any, this new standard will have on its financial condition and results

of operations.

December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This standard simplifies the accounting for income taxes

by removing certain exceptions for recognizing deferred taxes on investments, performing intra-period allocations, and calculating income

taxes in interim periods.

The ASU also adds guidance to reduce the complexity in certain areas, including recognizing deferred taxes

for tax goodwill and allocating taxes to members of a consolidated group.

The revised guidance will be applied prospectively and is effective

for SEC filers for annual periods or interim periods with fiscal years beginning after December 15, 2020.

This Update addresses

issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial

instruments with characteristics of liabilities and equity.

In addressing the complexity, the Board focused on amending the guidance on

convertible instruments and the guidance on the derivatives scope exception for contracts in an entity’s own equity.

For convertible

instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared

with current GAAP.

In addition to eliminating certain accounting models, the ASU also provides guidance to enhance information transparency

by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance.

Additionally, the

ASU amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based

accounting conclusions, and to amend the related EPS guidance.

The amendments in this update are effective for public business entities

for fiscal periods beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted,

for interim or annual periods for which financial statements have not been issued.

The Company adopted the ASU effective January 1, 2021.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position and disclosures.

October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs.

The amendments in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph

310-20-35-33 for each reporting period.

The Update is intended to clarify the Codification and make the Codification easier to understand

and easier to apply by eliminating inconsistencies and providing clarifications.

The amendments in this update are effective for public

business entities for fiscal periods beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption

is not permitted.

but no earlier than fiscal years beginning after December 15, 2020.

The Company has not yet adopted this update and is currently evaluating

the effect, if any, this new standard will have on its financial condition and results of operations.

Recently adopted

In December 2019, the Financial

Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic

Simplifying the Accounting for Income Taxes.

This standard simplifies the accounting for income taxes by removing certain exceptions

for recognizing deferred taxes on investments, performing intra-period allocations, and calculating income taxes in interim periods.

ASU also adds guidance to reduce the complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating

taxes to members of a consolidated group.

The revised guidance will be applied prospectively and is effective for SEC filers for annual

periods or interim periods with fiscal years beginning after December 15, 2020.

Early adoption is permitted for interim or annual periods

for which financial statements have not been issued.

The Company adopted the ASU effective January 1, 2021.

The impact of adopting the ASU was immaterial to the consolidated

results of operations, cash flows, financial position and disclosures.

October 2020, the FASB issued ASU 2020-10, Codification Improvements.

The Update contains amendments that improve the consistency of

the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50).

Many of the Amendments arose

because the Board provided an option to give certain information either on the face of the financial statements or in the notes to financial

statements and that option was only included in the Other Presentation Matters Section (Section 45) of the Codification.

The option to

disclose information in the notes to financial statements should have been codified in the Disclosure section as well as the Other Presentation

Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears).

These amendments are not expected to change current practice but are intended to improve the Codification by ensuring that all guidance

that requires or provides an option for an entity to provide information in the notes to financial statements is included in the Disclosure

Section of the Codification, thus reducing the likelihood that the disclosure requirement would be missed.

The Board does not anticipate

that the amendments will result in any changes to current GAAP.

The amendments in the Update are effective for annual periods beginning

after December 15, 2020, for public business entities.

Early application of the amendments is permitted for public business entities

for any annual or interim period for which financial statements have not been issued.

The amendments in the Update should be applied

retrospectively.

The impact of adopting the

ASU was immaterial to the consolidated results of operations, cash flows, financial position and disclosures.

In October 2020, the FASB

issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs.

The amendments in this

Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each

reporting period.

The Update is intended to clarify the Codification and make the Codification easier to understand and easier to apply

by eliminating inconsistencies and providing clarifications.

The amendments in this update are effective for public business entities

for fiscal periods beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption is not permitted.

The Company adopted the ASU effective January 1, 2021.

The impact of adopting the ASU was immaterial to the consolidated

results of operations, cash flows, financial position and disclosures.

3— RESTRUCTURING CHARGE

Company did not record any restructuring charges for the three months ended March 31, 2021 and 2020.

following tables summarize the changes in accrued restructuring charge during the three months ended March 31, 2021 and 2020:

The impact of adopting the ASU was immaterial to the consolidated results of operations,

cash flows, financial position and disclosures.

In October 2020, the FASB

issued ASU 2020-10, Codification Improvements.

The Update contains amendments that improve the consistency of the Codification by including

all disclosure guidance in the appropriate Disclosure Section (Section 50).

Many of the Amendments arose because the Board provided an

option to give certain information either on the face of the financial statements or in the notes to financial statements and that option

was only included in the Other Presentation Matters Section (Section 45) of the Codification.

The option to disclose information in the

notes to financial statements should have been codified in the Disclosure section as well as the Other Presentation Matters Section (or

other Section of the Codification in which the option to disclose in the notes to financial statements appears).

These amendments are

not expected to change current practice but are intended to improve the Codification by ensuring that all guidance that requires or provides

an option for an entity to provide information in the notes to financial statements is included in the Disclosure Section of the Codification,

thus reducing the likelihood that the disclosure requirement would be missed.

The Board does not anticipate that the amendments will result

in any changes to current GAAP.

The amendments in the Update are effective for annual periods beginning after December 15, 2020, for public

business entities.

Early application of the amendments is permitted for public business entities for any annual or interim period for

which financial statements have not been issued.

The amendments in the Update should be applied retrospectively.

The Company adopted the

ASU effective January 1, 2021.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial

position and disclosures.

NOTE 3—RESTRUCTURING CHARGE

The Company did not record

any restructuring charges for the three and six months ended June 30, 2021 and 2020.

The following tables summarize the changes in accrued

restructuring charge during the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Balance, beginning of period

Restructuring charge

Non-cash items

Balance, end of period

4— SECURITIES LENDING

following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as

of March 31, 2021 and December 31, 2020:

amounts recognized

amounts offset in the consolidated balance sheets (1)

included in the consolidated balance sheets

Amounts not offset in the consolidated balance sheets but eligible

for offsetting upon counterparty default (2)

As of March 31, 2021

NOTE 4— SECURITIES LENDING

The following table presents

the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of June 30, 2021 and December

offset in the

consolidated balance

Gross amounts

sheets but eligible

offset in the

included in the

for offsetting

Gross amounts

upon counterparty

balance sheets (1)

balance sheets

As of June 30, 2021

Securities borrowed

Securities loaned

As of December 31, 2020

As of June 30, 2020

Securities borrowed

3 unchanged sentences

(2) Includes the amount of cash collateral held/posted.

5— ACCOUNTS RECEIVABLE

components of accounts receivable, net, include the following:

NOTE 5— ACCOUNTS

The components of accounts receivable, net, include

the following:

Accounts receivable

4 unchanged sentences

Accounts receivable, net

Unbilled receivables represent the amount of contractual reimbursable

costs and fees for services performed in connection with fee and service based auction and liquidation contracts.

and changes to the allowance for doubtful accounts consist of the following:

Unbilled receivables represent

the amount of contractual reimbursable costs and fees for services performed in connection with fee and service based auction and liquidation

Additions and changes to the allowance for doubtful accounts

consist of the following:

Three Months Ended

Six Months Ended

Balance, beginning of period

1 unchanged sentence

Balance, end of period

6— GOODWILL AND OTHER INTANGIBLE ASSETS

was $ 233,807 and $ 227,046 at March 31, 2021 and December 31, 2020, respectively.

changes in the carrying amount of goodwill for the three months ended March 31, 2021 were as follows:

NOTE 6— GOODWILL AND

OTHER INTANGIBLE ASSETS

Goodwill was $ 236,005 and

$ 227,046 at June 30, 2021 and December 31, 2020, respectively.

The changes in the carrying

amount of goodwill for the six months ended June 30, 2021 were as follows:

United Online

3 unchanged sentences

Acquisition of business

Balance as of March 31, 2021

assets consisted of the following:

As of March 31, 2021

Balance as of June 30, 2021

Intangible assets consisted of the

As of June 30, 2021

As of December 31, 2020

3 unchanged sentences

Advertising relationships

Internally developed software and

other intangibles

Internally developed software and other intangibles

0.5 to 5 Years

7 to 10 Years

Non-amortizable assets:

Total intangible assets

expense was $ 5,886 and $ 4,024 for the three months ended March 31, 2021 and 2020, respectively.

At March 31, 2021, estimated future

amortization expense was $ 15,295 , $ 17,193 , $ 14,686 , $ 10,745 and $ 7,519 for the years ended December 31, 2021 (remaining nine months),

Amortization expense was

$ 5,134 and $ 4,024 for the three months ended June 30, 2021 and 2020, respectively and $ 11,020 and $ 8,048 for the six months ended June

30, 2021 and 2020, respectively.

The estimated future amortization expense after December 31, 2025 was $ 14,726 .

At June 30, 2021, estimated future amortization expense was $ 10,159 , $ 17,193 , $ 14,686 , $ 10,745 and $ 7,518

for the years ended December 31, 2021 (remaining six months), 2022, 2023, 2024 and 2025, respectively.

The estimated future amortization

expense after December 31, 2025 was $ 14,727 .

the first quarter of 2020, in accordance with ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

5 unchanged sentences

31, 2020, the Company recognized an impairment charge of $ 4,000 for the indefinite-lived tradenames in the Brands segment.

also determined that there was a further triggering event for testing the indefinite-lived tradenames in the Brands segment in the second

quarter of 2020 and made a determination that the indefinite-lived tradenames in the Brands segment were impaired and an additional impairment

charge of $8,500 was recorded in the second quarter of 2020.

There have been no triggering events subsequent to the second quarter of

2020 for testing indefinite-lived tradenames in the Brands segment.

The Company will continue to monitor the impacts of the COVID-19

outbreak in future quarters.

Changes in our forecasts could cause the book values of indefinite-lived tradenames to exceed fair values

which may result in additional impairment charges in future periods.

7— NOTES PAYABLE

Based Credit Facility

April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based

credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit

from $ 100,000 to $ 200,000 .

Such amendment, among other things, also extended the expiration date of the credit facility from July

15, 2018 to April 21, 2022.

The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK

Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of

transactions in the United Kingdom.

Such facility allows the Company to borrow up to 50,000 British Pounds.

Any borrowings on the UK

Credit Agreement reduce the availability on the asset based $ 200,000 credit facility.

The UK Credit Agreement is cross

collateralized and integrated in certain respects with the Credit Agreement.

Cash advances and the issuance of letters of credit

under the credit facility are made at the lender’s discretion.

The letters of credit issued under this facility are furnished

by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more

fully described in Note 2(c) in the Annual Report on Form 10-K.

All outstanding loans, letters of credit, and interest are due on the expiration date which is

generally within 180 days of funding.

The credit facility is secured by the proceeds received for services rendered in connection

with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are

sold at liquidation related to such contract.

The Company paid Wells Fargo Bank a closing fee in the amount of $ 500 in connection

with the April 2017 amendment to the Credit Agreement.

The interest rate for each revolving credit advance under the Credit

Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of

advance and the percentage such advance represents of the related transaction for which such advance is provided.

facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation

Company also determined that there was a further triggering event for testing the indefinite-lived tradenames in the Brands segment in

the second quarter of 2020 and made a determination that the indefinite-lived tradenames in the Brands segment were impaired and an additional

impairment charge of $ 8,500 was recorded in the second quarter of 2020.

There have been no triggering events subsequent to the second

quarter of 2020 for testing indefinite-lived tradenames in the Brands segment.

The Company will

continue to monitor the impacts of the COVID-19 outbreak in future quarters.

Changes in our forecasts could cause the book values of indefinite-lived

tradenames to exceed fair values which may result in additional impairment charges in future periods.

NOTE 7— NOTES PAYABLE

Asset Based Credit Facility

On April 21, 2017, the Company

amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo

Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $ 100,000 to $ 200,000 .

Such amendment,

among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022.

The Credit Agreement

continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19,

2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom.

Such facility allows

the Company to borrow up to 50,000 British Pounds.

Any borrowings on the UK Credit Agreement reduce the availability on the asset based

$ 200,000 credit facility.

The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement.

Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion.

The letters of

credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees

under liquidation services contracts more fully described in Note 2(c) in the Annual Report on Form 10-K.

All outstanding loans, letters

of credit, and interest are due on the expiration date which is generally within 180 days of funding.

The credit facility is secured by

the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or

letters of credit are issued and the assets that are sold at liquidation related to such contract.

The Company paid Wells Fargo Bank a

closing fee in the amount of $ 500 in connection with the April 2017 amendment to the Credit Agreement.

The interest rate for each revolving

credit advance under the Credit Agreement is subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25%

depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.

The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation

engagements funded under the Credit Agreement as set forth therein.

Interest expense totaled $ 108 and $ 277 for the three months

ended March 31, 2021 and 2020, respectively.

There was no outstanding balance on this credit facility at March 31, 2021 or December

At March 31, 2021, there were no open letters of credit outstanding.

are in compliance with all financial covenants in the asset based credit facility at March 31, 2021.

Protection Program

April 10, 2020, NSC (a subsidiary of National) entered into a Promissory Note (the “NSC Note”) with Axos Bank as the lender

(the “Lender”), pursuant to which the Lender agreed to make a loan to NSC under the Paycheck Protection Program (the “NSC

Loan”) offered by the U.S.

Small Business Administration (the “SBA”) pursuant to the Coronavirus Aid, Relief, and Economic

Security (“CARES”) Act to qualified small businesses (the “PPP”) in a principal amount of $ 5,524 .

2020, WEC (another subsidiary of National) also entered into a Promissory Note (the “WEC Note” and together with the NSC

Note, the “PPP Notes”) with the Lender, pursuant to which the Lender agreed to make a loan to WEC under the PPP (the “WEC

Loan” and together with the NSC Loan, the “PPP Loans”) in a principal amount of $ 973 .

interest rate on each PPP Note is a fixed rate of 1 % per annum.

Interest is calculated by applying the ratio of the interest rate over

a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is

The applicable borrower is required to make monthly payments commencing on the first day of the first full calendar month

following the end of a statutorily defined deferral period (the “Deferral Period”), and such payments shall continue to be

due and payable on the first day of each calendar month thereafter until the date that is two years following the funding date (the “Maturity

Date”), or April 13, 2022 in the case of the NSC Note and April 16, 2022 in the case of the WEC Note.

Monthly payment amounts are

based on repayment of interest accrued during the Deferral Period, interest accruing until and including the Maturity Date, and full

amortization of the outstanding principal balance.

Interest expense totaled $ 108 and $ 143 for the three months ended

June 30, 2021 and 2020, respectively and $ 216 and $ 420 for the six months ended June 30, 2021 and 2020, respectively.

There was no outstanding

balance on this credit facility at June 30, 2021 or December 31, 2020.

At June 30, 2021, there were no open letters of credit outstanding.

We are in compliance with

all financial covenants in the asset based credit facility at June 30, 2021.

Paycheck Protection Program

On April 10, 2020, NSC (a

subsidiary of National) entered into a Promissory Note (the “NSC Note”) with Axos Bank as the lender (the “Lender”),

pursuant to which the Lender agreed to make a loan to NSC under the Paycheck Protection Program (the “NSC Loan”) offered by

Small Business Administration (the “SBA”) pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”)

Act to qualified small businesses (the “PPP”) in a principal amount of $ 5,524 .

On April 15, 2020, WEC (another subsidiary

of National) also entered into a Promissory Note (the “WEC Note” and together with the NSC Note, the “PPP Notes”)

with the Lender, pursuant to which the Lender agreed to make a loan to WEC under the PPP (the “WEC Loan” and together with

the NSC Loan, the “PPP Loans”) in a principal amount of $ 973 .

The interest rate on each

PPP Note is a fixed rate of 1 % per annum.

Interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied

by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.

The applicable borrower

is required to make monthly payments commencing on the first day of the first full calendar month following the end of a statutorily defined

deferral period (the “Deferral Period”), and such payments shall continue to be due and payable on the first day of each calendar

month thereafter until the date that is two years following the funding date (the “Maturity Date”), or April 13, 2022 in the

case of the NSC Note and April 16, 2022 in the case of the WEC Note.

Monthly payment amounts are based on repayment of interest accrued

during the Deferral Period, interest accruing until and including the Maturity Date, and full amortization of the outstanding principal

The PPP loans are included in notes payable in the condensed consolidated balance sheets.

to the terms of the PPP, all or a portion of loans under the PPP may be forgiven if certain conditions set forth in the CARES Act and

the rules of the SBA are met.

In order to be forgiven, the proceeds of each PPP Loan are to be used to pay for payroll costs, continuation

of group health care benefits during periods of paid sick, medical, or family leave, or insurance premiums; salaries or commissions

or similar compensation; rent; utilities; and interest on certain other outstanding debt; however, 60 % of the proceeds

of each PPP Loan must be used for payroll purposes.

its option, each of NSC and WEC may prepay all or a portion of its PPP Loan without penalty.

PPP Note includes events of default, the occurrence and continuation of which would provide the Lender with the right to exercise remedies

against NSC or WEC, as applicable, including the right to declare the entire unpaid principal balance under the applicable PPP Note and

all accrued unpaid interest immediately due.

Upon completion of the acquisition of National, in accordance with the provisions of the

Small Business Administration regarding changes of ownership of an entity that has received PPP funds, the Company was required to place

$ 6,553 of cash in a restricted cash account with the PPP lender.

Notes Payable

payable include notes payable to a clearing organization for one of the Company’s broker dealers.

The notes payable accrue interest

at the prime rate plus 2.0% (5.25% at March 31, 2021) payable annually, maturing January 31, 2022.

At March 31, 2021 and December 31,

2020, the outstanding balance for the notes payable was $ 357 and $ 714 , respectively.

Interest expense was $ 7 and $ 15 for the three months

ended March 31, 2021 and 2020, respectively.

included in notes payable at December 31, 2020, was a $ 37,253 note payable to Garrison TNCI LLC which was assumed as part of the

Company’s investment in Lingo Management LLC.

The note accrued interest at 12.5 % per annum and had a maturity date of

March 31, 2021.

During the three months ended March 31, 2021, interest expense on the note was $ 238 .

According to the terms of

the PPP, all or a portion of loans under the PPP may be forgiven if certain conditions set forth in the CARES Act and the rules of the

In order to be forgiven, the proceeds of each PPP Loan are to be used to pay for payroll costs, continuation of group health

care benefits during periods of paid sick, medical, or family leave, or insurance premiums; salaries or commissions or similar compensation;

rent; utilities; and interest on certain other outstanding debt; however, 60 % of the proceeds of each PPP Loan must be

used for payroll purposes.

Each PPP Note includes events

of default, the occurrence and continuation of which would provide the Lender with the right to exercise remedies against NSC or WEC,

as applicable, including the right to declare the entire unpaid principal balance under the applicable PPP Note and all accrued unpaid

interest immediately due.

Upon completion of the acquisition of National, in accordance with the provisions of the Small Business Administration

regarding changes of ownership of an entity that has received PPP funds, the Company was required to place $ 6,553 of cash in a restricted

cash account with the PPP lender.

In June 2021, the full amount

of the Company’s PPP loans and accrued interest were forgiven in the amount of $ 6,509 , and the Company recorded a gain on extinguishment

of loans for this amount in the accompanying Condensed Consolidated Statement of Operations.

Other Notes Payable

Notes payable include notes

payable to a clearing organization for one of the Company’s broker dealers.

The notes payable accrue interest at the prime rate

plus 2.0% (5.25% at June 30, 2021) payable annually, maturing January 31, 2022.

At June 30, 2021 and December 31, 2020, the outstanding

balance for the notes payable was $ 357 and $ 714 , respectively.

Interest expense was $ 5 and $ 48 for the three months ended June 30, 2021

and 2020, respectively and $ 12 and $ 63 for the six months ended June 30, 2021 and 2020, respectively.

Also included in notes payable

at December 31, 2020, was a $ 37,253 note payable to Garrison TNCI LLC which was assumed as part of the Company’s investment

in Lingo Management LLC.

The note accrued interest at 12.5 % per annum and had a maturity date of March 31, 2021.

During the six months ended June 30, 2021, interest expense on the note was $ 238 .

The note was paid in full in

January 2021.

8 — TERM LOAN

December 19, 2018, BRPI Acquisition Co LLC (“BRPAC”), a Delaware limited liability company, UOL, and YMAX Corporation, Delaware

corporations (collectively, the “Borrowers”), indirect wholly owned subsidiaries of the Company, in the capacity as borrowers,

entered into a credit agreement (the “BRPAC Credit Agreement”) with the Banc of California, N.A.

in the capacity as agent

(the “Agent”) and lender and with the other lenders party thereto (the “Closing Date Lenders”).

Certain of the

Borrowers’ U.S.

subsidiaries are guarantors of all obligations under the BRPAC Credit Agreement and are parties to the BRPAC Credit

Agreement in such capacity (collectively, the “Secured Guarantors”;

NOTE 8 — TERM LOANS

Credit Agreement

23, 2021, the Company, and its wholly owned subsidiaries, BR Financial Holdings, LLC (the “Primary Guarantor”), and

BR Advisory & Investments, LLC (the “Borrower”) entered into a credit agreement (the “Credit Agreement”)

with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year

$ 200,000 secured term loan credit facility (the “Term Loan Facility”) and a four-year $ 80,000 secured revolving loan

credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit

Facilities”) .

The Credit Facilities will mature on June 23, 2025, subject to acceleration or prepayment.

loans under the Credit Facilities will accrue interest at the Eurodollar Rate plus an applicable margin of 4.50 %.

Base rate loans will

accrue interest at the Base Rate plus an applicable margin of 3.50 %.

In addition to paying interest on outstanding borrowings under the

Revolving Credit Facility, the Company is required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit

Facility, which is determined by the average utilization of the facility for the immediately preceding fiscal quarter.

Subject to certain eligibility requirements, the assets of certain

subsidiaries of the Company that hold credit assets, private equity assets, and public equity assets are placed into a borrowing base,

which serves to limit the borrowings under the Credit Facilities.

If borrowings under the facilities exceed the borrowing base, the Company

is obligated to prepay the loans in an aggregate amount equal to such excess.

The Credit Agreement contains certain representations and

warranties (subject to certain agreed qualifications) that are customary for financings of this kind.

The Credit Agreement contains certain affirmative and negative covenants

customary for financings of this type that, among other things, limit the Company’s, the Primary Guarantor’s, the Borrower’s,

and the Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain

fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions,

to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective

equity interests.

In addition, the Credit Agreement contains a financial covenant that requires the Company to maintain Operating EBITDA

of at least $ 115,000 and the Primary Guarantor to maintain net asset value of at least $ 900,000 .

The Credit Agreement contains customary

events of default, including with respect to a failure to make payments under the credit facilities, cross-default, certain bankruptcy

and insolvency events and customary change of control events.

Commencing on September 30, 2022, the Term Loan Facility will amortize

in equal quarterly installments of 1.25 % of the aggregate principal amount of the term loan as of the closing date with the remaining

balance due at final maturity.

Quarterly installments from September 30, 2022 to March 31, 2025 are in the amount of $ 2,500 per quarter.

At June 30, 2021, the outstanding balance on the credit facility’s

term loan was $ 194,218 (net of unamortized debt issuance costs of $ 5,782 ).

Interest on the term loan for the three and six months ended

June 30, 2021, was $ 236 (including amortization of deferred debt issuance costs of $ 30 ).

The interest rate on the term loan at June 30,

2021 was 4.64 %.

Company had not made any borrowings under the Revolving Credit Facility at June 30, 2021.

The unused commitment fee on the revolving facility

for the three and six months ended June 30, 2021 was $ 30 (including amortization of deferred financing costs of $ 13 ).

The interest rate

on the revolving facility at June 30, 2021 was 4.65 %.

Subsequent to June 30, 2021, the Company drew down the full $ 80,000 of the Revolving

Credit Facility.

The Company is in compliance

with all financial covenants in the Nomura Credit Agreement at June 30, 2021.

Credit Agreement

On December 19, 2018, BRPI

Acquisition Co LLC (“BRPAC”), a Delaware limited liability company, UOL, and YMAX Corporation, Delaware corporations (collectively,

the “Borrowers”), indirect wholly owned subsidiaries of the Company, in the capacity as borrowers, entered into a credit agreement

(the “BRPAC Credit Agreement”) with the Banc of California, N.A.

in the capacity as agent (the “Agent”) and lender

and with the other lenders party thereto (the “Closing Date Lenders”).

Certain of the Borrowers’ U.S.

subsidiaries are

guarantors of all obligations under the BRPAC Credit Agreement and are parties to the BRPAC Credit Agreement in such capacity (collectively,

the “Secured Guarantors”;

and together with the Borrowers, the “Credit Parties”).

In addition, the Company and B.

Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are

guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares

outstanding membership interests of BRPAC are pledged as collateral.

obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially

all of the assets of the Credit Parties, including a pledge of (a) 100% of the equity interests of the Credit Parties, (b) 65% of the

equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of

and (c) 65% of the equity interests in magicJack VocalTec LTD., a limited company organized under the laws of Israel.

Such security

interests are evidenced by pledge, security and other related agreements.

BRPAC Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’

ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions

with related parties, make certain investments or pay dividends.

In addition, the BRPAC Credit Agreement requires the Credit Parties

to maintain certain financial ratios.

The BRPAC Credit Agreement also contains customary representations and warranties, affirmative

covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the

outstanding BRPAC Credit Agreement.

the BRPAC Credit Agreement, the Company borrowed $ 80,000 due December 19, 2023.

Pursuant to the terms of the BRPAC Credit Agreement,

the Company may request additional optional term loans in an aggregate principal amount of up to $10,000 at any time prior to the

first anniversary of the agreement date (the “Option Loan”) with a final maturity date of December 19, 2023.

1, 2019, the Credit Parties, the Closing Date Lenders, the Agent and City National Bank, as a new lender (the “New Lender”),

entered into the First Amendment to the Credit Agreement and Joinder (the “First Amendment”) pursuant to which, among other

things, (i) New Lender became a party to the BRPAC Credit Agreement, (ii) the New Lender extended to Borrowers the Option Loan in the

amount of $ 10,000 , (iii) the aggregate outstanding principal amount of the term loans was increased from $ 80,000 to $ 90,000 ;

(iv) the amortization schedule under the BRPAC was amended as set forth in the First Amendment.

Additionally, in connection with

the Option Loan, the Borrowers executed a term note in favor of New Lender dated February 1, 2019 in the amount of $10,000.

December 31, 2020, the Borrowers, the Secured Guarantors, the Agent and the Lenders, entered into the Second Amendment to

Credit Agreement (the “Second Amendment”) pursuant to which, among other things, (i) the Lenders agreed to make a new

$75,000 term loan to the Borrowers, the proceeds of which the Borrowers’ used to repay the outstanding principal amount of the

existing Terms Loans and Optional Loans and will use for other general corporate purposes, (ii) the Borrowers were permitted to make

a one-time Permitted Distribution (as defined in the Second Amendment) in the amount of $30,000 on the date of the Second

Amendment, (iii) the maturity date of the new Term Loans was set at five (5) years from the date of the Second Amendment, (iv) the

interest rate margin was increased by 25 basis points as set forth in the Second Amendment, (v) the Borrowers agreed to make

mandatory prepayments of the Term Loans from a portion of the Consolidated Excess Cash Flow (as defined in the Credit Agreement),

(vi) the maximum Consolidated Total Funded Debt Ratio (as defined in the Credit Agreement) was increased as set forth in the Second

Amendment and (vii) the Company and B.

Riley Principal Investments, LLC entered into a reaffirmation of their guarantees of the

Borrowers’ obligations under the Credit Agreement.

Additionally, the Borrowers paid a commitment fee and an arrangement fee,

each based on a percentage of the aggregate commitments, in each case upon the closing of the Second Amendment.

under the BRPAC Credit Agreement bear interest at a rate equal to (a) the LIBOR rate for Eurodollar loans, plus (b) the applicable

margin rate, which ranges from 2.75% to 3.25% per annum, based upon the Borrowers’ ratio of consolidated funded indebtedness

to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding four fiscal quarters or other

applicable period.

At March 31, 2021, the interest rate on the BRPAC Credit Agreement was at 3.36 %.

outstanding under the Amended BRPAC Credit Agreement are due in quarterly installments commencing on March 31, 2021.

Quarterly installments

from June 30, 2021 to December 31, 2021 are in the amount of $ 4,750 per quarter, from March 31, 2022 to December 31, 2022 are in

the amount of $ 4,250 per quarter, from March 31, 2023 to December 31, 2023 are in the amount of $ 3,750 per quarter, from March

31, 2024 to December 31, 2024 are in the amount of $ 3,250 per quarter, and from March 31, 2025 to December 31, 2025 are in

the amount of $ 2,750 per quarter.

of March 31, 2021 and December 31, 2020, the outstanding balance on the term loan was $ 69,543 (net of unamortized debt issuance

costs of $ 707 ) and $ 74,213 (net of unamortized debt issuance costs of $ 787 ), respectively.

Interest expense on the term loan during

the three months ended March 31, 2021, and 2020, was $ 714 (including amortization of deferred debt issuance costs of $ 80 ) and $ 829 (including

amortization of deferred debt issuance costs of $ 76 ), respectively.

are in compliance with all financial covenants in the BRPAC Credit Agreement at March 31, 2021.

9—SENIOR NOTES PAYABLE

notes payable, net, are comprised of the following:

In addition, the Company and

Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are guarantors of the obligations

under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests

of BRPAC are pledged as collateral.

The obligations under the

BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets

of the Credit Parties, including a pledge of (a) 100% of the equity interests of the Credit Parties, (b) 65% of the equity interests in

United Online Software Development (India) Private Limited, a private limited company organized under the laws of India;

and (c) 65% of

the equity interests in magicJack VocalTec LTD., a limited company organized under the laws of Israel.

Such security interests are evidenced

by pledge, security and other related agreements.

The BRPAC Credit Agreement

contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’ ability to incur indebtedness,

incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties,

make certain investments or pay dividends.

In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial

The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default,

including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

If an event of default occurs,

the agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding BRPAC Credit Agreement.

Under the BRPAC Credit Agreement,

the Company borrowed $ 80,000 due December 19, 2023.

Pursuant to the terms of the BRPAC Credit Agreement, the Company may request

additional optional term loans in an aggregate principal amount of up to $10,000 at any time prior to the first anniversary of the

agreement date (the “Option Loan”) with a final maturity date of December 19, 2023.

On February 1, 2019, the Credit Parties,

the Closing Date Lenders, the Agent and City National Bank, as a new lender (the “New Lender”), entered into the First Amendment

to the Credit Agreement and Joinder (the “First Amendment”) pursuant to which, among other things, (i) New Lender became a

party to the BRPAC Credit Agreement, (ii) the New Lender extended to Borrowers the Option Loan in the amount of $ 10,000 , (iii) the aggregate

outstanding principal amount of the term loans was increased from $ 80,000 to $ 90,000 ;

and (iv) the amortization schedule under the

BRPAC was amended as set forth in the First Amendment.

Additionally, in connection with the Option Loan, the Borrowers executed a

term note in favor of New Lender dated February 1, 2019 in the amount of $10,000.

On December 31, 2020, the

Borrowers, the Secured Guarantors, the Agent and the Lenders, entered into the Second Amendment to Credit Agreement (the “Second

Amendment”) pursuant to which, among other things, (i) the Lenders agreed to make a new $ 75,000 term loan to the Borrowers, the

proceeds of which the Borrowers’ used to repay the outstanding principal amount of the existing Terms Loans and Optional Loans and

will use for other general corporate purposes, (ii) the Borrowers were permitted to make a one-time Permitted Distribution (as defined

in the Second Amendment) in the amount of $ 30,000 on the date of the Second Amendment, (iii) the maturity date of the new Term Loans was

set at five (5) years from the date of the Second Amendment, (iv) the interest rate margin was increased by 25 basis points as set forth

in the Second Amendment, (v) the Borrowers agreed to make mandatory prepayments of the Term Loans from a portion of the Consolidated Excess

Cash Flow (as defined in the Credit Agreement), (vi) the maximum Consolidated Total Funded Debt Ratio (as defined in the Credit Agreement)

was increased as set forth in the Second Amendment and (vii) the Company and B.

Riley Principal Investments, LLC entered into a reaffirmation

of their guarantees of the Borrowers’ obligations under the Credit Agreement.

Additionally, the Borrowers paid a commitment fee

and an arrangement fee, each based on a percentage of the aggregate commitments, in each case upon the closing of the Second Amendment.

under the BRPAC Credit Agreement bear interest at a rate equal to (a) the LIBOR rate for Eurodollar loans, plus (b) the applicable margin

rate, which ranges from 2.75 % to 3.25 % per annum, based upon the Borrowers’ ratio of consolidated funded indebtedness to adjusted

earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding four fiscal quarters or other applicable period.

June 30, 2021 and December 31, 2020, the interest rate on the BRPAC Credit Agreement was 3.36 % and 3.40 %, respectively.

Amounts outstanding under

the Amended BRPAC Credit Agreement are due in quarterly installments commencing on March 31, 2021.

Quarterly installments from September

30, 2021 to December 31, 2021 are in the amount of $ 4,750 per quarter, from March 31, 2022 to December 31, 2022 are in the amount

of $ 4,250 per quarter, from March 31, 2023 to December 31, 2023 are in the amount of $ 3,750 per quarter, from March 31, 2024

to December 31, 2024 are in the amount of $ 3,250 per quarter, and from March 31, 2025 to December 31, 2025 are in the amount

of $ 2,750 per quarter.

As of June 30, 2021 and December 31,

2020, the outstanding balance on the term loan was $ 62,885 (net of unamortized debt issuance costs of $ 631 ) and $ 74,213 (net

of unamortized debt issuance costs of $ 787 ), respectively.

Interest expense on the term loan during the three months ended June 30, 2021

and 2020, was $ 663 (including amortization of deferred debt issuance costs of $ 77 ) and $ 586 (including amortization of deferred

debt issuance costs of $ 72 ), respectively.

Interest expense on the term loan during the six months ended June 30, 2021 and 2020, was $ 1,377 (including

amortization of deferred debt issuance costs of $ 157 ) and $ 1,415 (including amortization of deferred debt issuance costs of $ 148 ),

respectively.

The Company is in compliance

with all financial covenants in the BRPAC Credit Agreement at June 30, 2021.

NOTE 9—SENIOR NOTES PAYABLE

Senior notes payable, net,

are comprised of the following:

7.500 % Senior notes due May 31, 2027

8 unchanged sentences

Unamortized debt issuance costs

the three months ended March 31, 2021, the Company issued $ 12,858 of senior notes due with maturity dates ranging from May 2023

to January 2028 pursuant to At the Market Issuance Sales Agreements with B.

During the six months ended

June 30, 2021, the Company issued $ 85,327 of senior notes due with maturity dates ranging from May 2023 to January 2028 pursuant to At

the Market Issuance Sales Agreements with B.

Riley Securities, Inc.

which governs the program of at-the-market

sales of the Company’s senior notes.

A series of prospectus supplements were filed by the Company with the SEC in respect of the

Company’s offerings of these senior notes.

January 25, 2021, the Company issued $ 230,000 of senior notes due in January 2028 (“6.0% 2028 Notes”) pursuant to a

prospectus supplement dated February 12, 2020.

Interest on the 6.0% 2028 Notes is payable quarterly at 6.0 %.

The 6.0% 2028 Notes

are unsecured and due and payable in full on January 31, 2028.

In connection with the issuance of the 6.0% 2028 Notes, the Company

received net proceeds of $ 225,723 (after underwriting commissions, fees and other issuance costs of $ 4,277 ).

The Notes bear

interest at the rate of 6.0% per annum.

March 29, 2021, the Company issued $ 159,493 of senior notes due in March 2026 (“5.5% 2026 Notes”) pursuant to a prospectus

supplement dated January 28, 2021.

Interest on the 5.5% 2026 Notes is payable quarterly at 5.5 %.

The 5.5% 2026 Notes are unsecured

and due and payable in full on March 31, 2026.

In connection with the issuance of the 5.5% 2026 Notes, the Company received net

proceeds of $ 156,260 (after underwriting commissions, fees and other issuance costs of $ 3,233 ).

The Notes bear interest at

the rate of 5.5 % per annum.

March 31, 2021, the Company exercised its option for early redemption at par $ 128,156 of senior notes due in May 2027 (“7.50%

2027 Notes”) pursuant to the second supplemental indenture dated May 31, 2017.

The total redemption payment included $ 1,602 in

accrued interest.

At March 31, 2021 and December

which governs the program of at-the-market sales of the Company’s

senior notes.

A series of prospectus supplements were filed by the Company with the SEC in respect of the Company’s offerings of

these senior notes.

On January 25, 2021, the Company issued $ 230,000 of senior notes

due in January 2028 (“6.0% 2028 Notes”) pursuant to a prospectus supplement dated February 12, 2020.

Interest on the 6.0%

2028 Notes is payable quarterly at 6.0 %.

The 6.0% 2028 Notes are unsecured and due and payable in full on January 31, 2028.

In connection with the issuance of the 6.0% 2028 Notes, the Company received net proceeds of $ 225,723 (after underwriting commissions,

fees and other issuance costs of $ 4,277 ).

The 6.0% 2028 Notes bear interest at the rate of 6.0% per annum.

On March 29, 2021, the Company issued $ 159,493 of senior notes

due in March 2026 (“5.5% 2026 Notes”) pursuant to a prospectus supplement dated January 28, 2021.

Interest on the 5.5% 2026

Notes is payable quarterly at 5.5 %.

The 5.5% 2026 Notes are unsecured and due and payable in full on March 31, 2026.

In connection

with the issuance of the 5.5% 2026 Notes, the Company received net proceeds of $ 156,260 (after underwriting commissions, fees and

other issuance costs of $ 3,233 ).

The 5.5% 2026 Notes bear interest at the rate of 5.5% per annum.

On March 31, 2021, the Company

exercised its option for early redemption at par $ 128,156 of senior notes due in May 2027 (“7.50% 2027 Notes”) pursuant

to the second supplemental indenture dated May 31, 2017.

The total redemption payment included $ 1,602 in accrued interest.

June 24, 2021, the Company announced it will redeem all of the issued and outstanding 7.25 % Senior Notes due 2027 (the "Notes")

on July 26, 2021 (the "Redemption Date").

The Notes have an aggregate principal amount of $ 122,793 .

The redemption

price is equal to 100 % of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the Redemption Date.

The Notes, which are listed on NASDAQ under the ticker symbol "RILYG," will be delisted and cease trading on the Redemption

On July 26, 2021, the Company redeemed, in full, $ 122,793 aggregate principal amount of its 7.25 % Senior Notes

due 2027 (“7.25% 2027 Notes”) pursuant to the third supplemental indenture dated December 31, 2017.

The total redemption payment

included approximately $ 2,127 in accrued interest.

In connection with the full redemption, the 7.25% 2027 Notes were delisted from NASDAQ.

At June 30, 2021 and December

31, 2020, the total senior notes outstanding was $ 1,213,105 (net of unamortized debt issue costs of $ 13,900 ) and $ 870,783 (net of unamortized

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on a quarterly basis.

Interest expense on senior notes totaled $ 18,706 and $ 14,392 for the three months ended March 31, 2021 and 2020,

respectively.

Agreement Prospectus to Issue Up to $ 150,000 of Senior Notes

most recent sales agreement prospectus was filed by us with the SEC on April 6, 2021 (the “April 2021 Sales Agreement Prospectus”)

supplementing the prospectus filed with the SEC on January 28, 2021 (the “January 2021 Sales Agreement Prospectus”).

program provides for the sale by the Company of up to $ 150,000 of certain of the Company’s senior notes.

As of March 31, 2021,

the Company had $ 137,142 remaining availability under the January 2021 Sales Agreement.

10—REVENUE FROM CONTRACTS WITH CUSTOMERS

from contracts with customers by reportable segment for the three months ended March 31, 2021 and 2020 is as follows:

Interest expense on senior notes totaled $ 19,970 and $ 15,588 for the three months ended June 30, 2021 and 2020,

respectively and $ 38,564 and $ 29,980 for the six months ended June 30, 2021 and 2020, respectively.

Sales Agreement Prospectus

to Issue Up to $ 150,000 of Senior Notes

The most recent sales agreement

prospectus was filed by us with the SEC on April 6, 2021 (the “April 2021 Sales Agreement Prospectus”) supplementing the prospectus

filed with the SEC on January 28, 2021 (the “January 2021 Sales Agreement Prospectus”).

This program provides for the sale

by the Company of up to $ 150,000 of certain of the Company’s senior notes.

As of June 30, 2021, the Company had $ 64,673 remaining

availability under the April 2021 Sales Agreement.

NOTE 10—REVENUE FROM CONTRACTS WITH CUSTOMERS

from contracts with customers by reportable segment for the three and six months ended June 30, 2021 and 2020 is as follows:

Investments -

United Online

and magicJack

Revenues for the three months ended March 31, 2021

Revenues for the three months ended June 30, 2021

Corporate finance, consulting and investment

Wealth and asset management fees

Commissions, fees and reimbursed expenses

Subscription services

Service contract revenues

Advertising, licensing and other (1)

Total revenues from contracts with customers

Interest income - Loans and securities lending

Trading gains on investments

Fair value adjustment on loans

Total revenues

(1) Includes sale of goods of $11,743 in Auction and Liquidation and

$714 in Principal Investments - United Online and magicJack.

Revenues for the three months ended June 30, 2020

Corporate finance, consulting and investment

Wealth and asset management fees

Commissions, fees and reimbursed expenses

Subscription services

Service contract revenues

Advertising, licensing and other (1)

Total revenues from contracts with customers

Interest income - Loans and securities lending

Trading gains on investments

Fair value adjustment on loans

Total revenues

(1) Includes sale of goods of $1,045 in Auction and Liquidation and

$775 in Principal Investments - United Online and magicJack.

Investments -

United Online

Revenues for the six months ended June 30, 2021

Corporate finance, consulting and investment banking fees

9 unchanged sentences

Total revenues

Includes sale of goods of $6,092 in Auction and Liquidation and $736 in Principal Investments - United Online and

Revenues for the three months ended March 31, 2020

(1) Includes sale of goods of $17,835 in Auction and Liquidation

and $1,450 in Principal Investments - United Online and magicJack.

Revenues for the six months ended June 30, 2020

Corporate finance, consulting and investment banking fees

9 unchanged sentences

Total revenues

sale of goods of $ 1,004 in Principal Investments - United Online and magicJack.

timing of the Company’s revenue recognition may differ from the timing of payment by its customers.

The Company records a receivable

when revenue is recognized prior to payment and the Company has an unconditional right to payment.

Alternatively, when payment precedes

the provision of the related services, the Company records deferred revenue until the performance obligation(s) are satisfied.

related to revenues from contracts with customers totaled $ 62,425 and $ 46,518 at March 31, 2021 and December 31, 2020, respectively.

The Company had no significant impairments related to these receivables during the three months ended March 31, 2021 and 2020, respectively.

The Company also has $ 6,382 and $ 5,712 of unbilled receivables at March 31, 2021 and December 31, 2020, respectively, and advances against

customer contracts of $ 200 at March 31, 2021 and December 31, 2020.

The Company’s deferred revenue primarily relates to retainer

and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, financial

consulting engagements, subscription services where the performance obligation has not yet been satisfied and license agreements with

guaranteed minimum royalty payments and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

Deferred revenue at March 31, 2021 and December 31, 2020 was $ 68,515 and $ 68,651 , respectively.

The Company expects to recognize the

deferred revenue of $ 68,515 at March 31, 2021 as service and fee revenues when the performance obligation is met during the years December

31, 2021 (remaining nine months), 2022, 2023, 2024 and 2025 in the amount of $39,000, $11,395, $7,104, $4,777, and $2,860, respectively.

(1) Includes sale of goods of $1,044 in Auction and Liquidation

and $1,780 in Principal Investments - United Online and magicJack.

Contract Balances

The timing of the Company’s revenue recognition may differ from

the timing of payment by its customers.

The Company records a receivable when revenue is recognized prior to payment and the Company has

an unconditional right to payment.

Alternatively, when payment precedes the provision of the related services, the Company records deferred

revenue until the performance obligation(s) are satisfied.

Receivables related to revenues from contracts with customers totaled $ 57,853

and $ 46,518 at June 30, 2021 and December 31, 2020, respectively.

The Company had no significant impairments related to these receivables

during the three and six months ended June 30, 2021 and 2020.

The Company also has $ 6,684 and $ 5,712 of unbilled receivables at June 30,

2021 and December 31, 2020, respectively, and advances against customer contracts of $ 200 at June 30, 2021 and December 31, 2020.

Company’s deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking

advisory engagements, asset management agreements, financial consulting engagements, subscription services where the performance obligation

has not yet been satisfied and license agreements with guaranteed minimum royalty payments and advertising/marketing fees with additional

royalty revenue based on a percentage of defined sales.

Deferred revenue at June 30, 2021 and December 31, 2020 was $ 68,398 and $ 68,651 ,

respectively.

The Company expects to recognize the deferred revenue of $68,398 at June 30, 2021 as service and fee revenues when the performance

obligation is met during the years December 31, 2021 (remaining six months), 2022, 2023, 2024 and 2025 in the amount of $ 37,452 , $ 11,493 ,

$ 7,632 , $ 5,212 , and $ 3,025 , respectively.

The Company expects to recognize the deferred revenue of $ 3,584 after December 31, 2025.

the three months ended March 31, 2021 and 2020, the Company recognized revenue of $ 17,279 and $ 13,987 that was recorded as deferred revenue

at the beginning of the respective year.

costs include:

(1) costs to fulfill contracts associated with corporate finance and investment banking engagements are capitalized where

the revenue is recognized at a point in time and the costs are determined to be recoverable;

(2) costs to fulfill Auction and Liquidation

services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue

is recognized over time when the performance obligation is satisfied;

and (3) commissions paid to obtain magicJack contracts which are

recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which

are recognized ratably over the service period.

capitalized costs to fulfill a contract were $ 257 and $ 279 at March 31, 2021 and December 31, 2020, respectively, and are recorded in

prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended March 31, 2021 and 2020, the

During the three months ended

June 30, 2021 and 2020, the Company recognized revenue of $ 9,370 and $ 10,087 that was recorded as deferred revenue at the beginning of

the respective year.

During the six months ended June 30, 2021 and 2020, the Company recognized revenue of $ 26,649 and $ 24,074 that was

recorded as deferred revenue at the beginning of the respective year.

Contract Costs

Contract costs include:

costs to fulfill contracts associated with corporate finance and investment banking engagements are capitalized where the revenue is recognized

at a point in time and the costs are determined to be recoverable;

(2) costs to fulfill Auction and Liquidation services contracts where

the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue is recognized over time

when the performance obligation is satisfied;

and (3) commissions paid to obtain magicJack contracts which are recognized ratably over

the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably

over the service period.

The capitalized costs to

fulfill a contract were $ 242 and $ 279 at June 30, 2021 and December 31, 2020, respectively, and are recorded in prepaid expenses and other

assets in the condensed consolidated balance sheets.

For the three months ended June 30, 2021 and 2020, the Company recognized expenses

of $ 51 and $ 70 related to capitalized costs to fulfill a contract, respectively.

For the six months ended June 30, 2021 and 2020, the

Company recognized expenses of $ 109 and $ 142 related to capitalized costs to fulfill a contract, respectively.

There were no significant

impairment charges recognized in relation to these capitalized costs during the three months ended March 31, 2021 and 2020.

Performance Obligations and Revenue Recognized from Past Performance

Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected

duration of one year or less.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations

with an original expected duration exceeding one year was not material at March 31, 2021.

Corporate finance and investment banking fees

and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution

services are also excluded as the fees are considered variable and not included in the transaction price at March 31, 2021.

11— INCOME TAXES

The Company’s effective income tax rate was 27.5 % and 27.4 % for the three months ended March 31, 2021 and 2020, respectively.

of March 31, 2021, the Company had federal net operating loss carryforwards of $ 60,422 and state net operating loss carryforwards of

The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2031 through

December 31, 2038.

The state net operating loss carryforwards will expire in the tax years commencing in December 31, 2025.

The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion

or all of the deferred tax assets will not be realized.

Tax benefits of operating loss, capital loss and tax credit carryforwards are

evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period,

and other circumstances.

The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue

Code Section 382.

Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income.

As of March 31, 2021, the Company believes that the existing net operating

loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future

taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not

believe that it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and

has provided a valuation allowance in the amount of $ 61,315 against these deferred tax assets.

Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions.

is currently under audit by certain federal, state and local, and foreign tax authorities.

impairment charges recognized in relation to these capitalized costs during the three and six months ended June 30, 2021 and 2020.

Remaining Performance Obligations and

Revenue Recognized from Past Performance

The Company does not disclose

information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration

exceeding one year was not material at June 30, 2021.

Corporate finance and investment banking fees and retail liquidation engagement

fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded

as the fees are considered variable and not included in the transaction price at June 30, 2021.

NOTE 11— INCOME TAXES

The Company’s effective

income tax rate was a provision of 26.1 % and benefit of 24.2 % for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, the

Company had federal net operating loss carryforwards of $ 60,422 and state net operating loss carryforwards of $ 72,058 .

The Company’s

federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2031 through December 31, 2038.

net operating loss carryforwards will expire in the tax years commencing in December 31, 2025.

The Company establishes a

valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred

tax assets will not be realized.

Tax benefits of operating loss, capital loss and tax credit carryforwards are evaluated on an ongoing

basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances.

The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue Code Section 382.

the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s

actual taxable income.

As of June 30, 2021, the Company believes that the existing net operating loss carryforwards will be utilized in

future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient

to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not believe that it is more likely than

not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance

in the amount of $ 61,315 against these deferred tax assets.

The Company files income

tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions.

The Company is currently under

audit by certain federal, state and local, and foreign tax authorities.

The audits are in varying stages of completion.

The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities.

Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress

of tax audits, case law developments and closing of statutes of limitations.

Such adjustments are reflected in the provision for income

taxes, as appropriate.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the

calendar years ended December 31, 2017 to 2020.

12— EARNINGS PER SHARE

earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period.

earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect

to all dilutive potential common shares outstanding during the period.

Basic common shares outstanding exclude 387,365 common shares

in 2020 that were held in escrow and subject to forfeiture.

The 387,365 common shares held in escrow were forfeited and cancelled

on June 11, 2020 to indemnify the Company for certain representations and warranties and related claims pursuant to a related acquisition

Securities that could potentially dilute basic net income per share in the future that were not included in the computation

of diluted net income per share were 727,994 and 1,820,178 for the three months ended March 31, 2021 and 2020, respectively, because

to do so would have been anti-dilutive.

and diluted earnings per share were calculated as follows:

The Company evaluates

its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities.

Uncertain tax positions

are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, case

law developments and closing of statutes of limitations.

Such adjustments are reflected in the provision for income taxes, as appropriate.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December

31, 2017 to 2020.

NOTE 12— EARNINGS PER SHARE

Basic earnings per share

is calculated by dividing net income by the weighted-average number of shares outstanding during the period.

Diluted earnings per share

is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive

potential common shares outstanding during the period.

Securities that could potentially dilute basic net income per share in the future

that were not included in the computation of diluted net income per share were 936,727 and 1,365,738 for the three months ended June 30,

2021 and 2020, respectively and 832,360 and 1,592,958 for the six months ended June 30, 2021 and 2020, respectively, because to do so

would have been anti-dilutive.

Basic and diluted earnings per share were calculated

Three Months Ended

Six Months Ended

Net income (loss) attributable to B.

7 unchanged sentences

Diluted income (loss) per common share

13 — COMMITMENTS AND CONTINGENCIES

Legal Matters

Company is subject to certain legal and other claims that arise in the ordinary course of its business.

In particular, the Company and

its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business

activities, including lawsuits, arbitration claims, class actions, and regulatory matters.

Some of these claims seek substantial compensatory,

punitive, or indeterminate damages.

The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings

by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements,

fines, penalties, injunctions, and other relief.

In view of the number and diversity of claims against the Company, the number of jurisdictions

in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot

state with certainty what the eventual outcome of pending litigation or other claims will be.

NOTE 13 — COMMITMENTS AND

CONTINGENCIES

(a) Legal Matters

The Company is subject to

certain legal and other claims that arise in the ordinary course of its business.

In particular, the Company and its subsidiaries are

named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including

lawsuits, arbitration claims, class actions, and regulatory matters.

Some of these claims seek substantial compensatory, punitive, or

indeterminate damages.

The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental

and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties,

injunctions, and other relief.

In view of the number and diversity of claims against the Company, the number of jurisdictions in which

litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state

with certainty what the eventual outcome of pending litigation or other claims will be.

Notwithstanding this uncertainty, the Company

does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

January 5, 2017, complaints filed in November 2015 and May 2016 naming MLV & Co.

(“MLV”) and National Securities

Corporation, each an indirect broker-dealer subsidiary of the Company, as defendants in putative class action lawsuits alleging claims

under the Securities Act, in connection with the offerings of Miller Energy Resources, Inc.

On January 5, 2017, complaints

filed in November 2015 and May 2016 naming MLV & Co.

(“MLV”) and National Securities Corporation, each an indirect

broker-dealer subsidiary of the Company, as defendants in putative class action lawsuits alleging claims under the Securities Act, in

connection with the offerings of Miller Energy Resources, Inc.

(“Miller”), have been consolidated.

The Consolidated Complaint, styled Gaynor v.

Miller et al., is pending in the Circuit Court for Morgan County, Tennessee, and, like its

predecessor complaints, continues to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged

material misrepresentations and omissions in the registration statement and prospectuses issued in connection with six offerings (February

June 28, 2013;

The Consolidated Complaint,

styled Gaynor v.

Miller et al., is pending in the Circuit Court for Morgan County, Tennessee, and, like its predecessor complaints, continues

to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged material misrepresentations and

omissions in the registration statement and prospectuses issued in connection with six offerings (February 13, 2013;

September 26, 2013;

October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate

offering price of approximately $ 151,000 .

A Court ordered mediation before a federal magistrate took place on August 6, 2019, with no

In December 2019, the Court remanded the case to state court.

In July 2020, the Company agreed to settle this matter, subject to

court approval which is expected in 2021.

An accrual for the settlement

is included in the accompanying condensed consolidated financial statements.

October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate offering price of approximately

A Court ordered mediation before a federal magistrate took place on August 6, 2019, with no resolution.

In December 2019, the

Court remanded the case to state court.

In July 2020, the Company agreed to settle this matter, subject to court approval which is expected

An accrual for the settlement is included in the accompanying condensed consolidated financial statements.

July 3, 2019, a lawsuit was filed against National Securities Corporation, (“NSC”) National Asset Management, Inc., National,

26 unchanged sentences

and all claims have been dismissed.

New York Department of Financial Services (the “Department”) conducted an investigation of NSC’s compliance with the

Department’s Cybersecurity Requirements for Financial Services Companies (the “Regulations”).

The Regulations establish

standards for the cybersecurity programs of entities the Department licenses or otherwise regulates, including NSC.

On April 14, 2021,

NSC paid the Department a fine of $ 3,000 as a result of the Department’s finding that NSC violated certain of the Regulations.

is a respondent in several Financial Industry Regulatory Authority (“FINRA”) arbitration proceedings filed by investors

alleging claims in connection with equity investments in GPB Capital Holdings, LLC (“GPB”) involving matters prior to

the Company’s acquisition of National on February 25, 2021.

Some of these arbitration claims, among other things, also allege

that NSC failed to supervise certain registered representatives.

The New York Department of

Financial Services (the “Department”) completed its investigation of NSC’s compliance with the Department’s Cybersecurity

Requirements for Financial Services Companies (the “Regulations”).

The Regulations establish standards for the cybersecurity

programs of entities the Department licenses or otherwise regulates, including NSC.

On April 14, 2021, NSC paid the Department a fine

of $ 3,000 as a result of the Department’s finding that NSC violated certain of the Regulations.

NSC is a respondent in several

Financial Industry Regulatory Authority (“FINRA”) arbitration proceedings filed by investors alleging claims in connection

with equity investments in GPB Capital Holdings, LLC (“GPB”) involving matters prior to the Company’s acquisition of

National on February 25, 2021.

Some of these arbitration claims, among other things, also allege that NSC failed to supervise certain

registered representatives.

NSC is evaluating each arbitration claim on its own merits.

GPB and its affiliates have been the subject of various civil claims and fraud investigations over the past few years and, in

February 2021, the U.S.

Department of Justice indicted certain individuals affiliated with GPB for material misrepresentations and

omissions under the federal securities laws with respect to funds managed by GPB.

At the present time, the Company continues

to vigorously defend these actions and is not able to determine the ultimate resolution of these matters.

Adverse judgments in these

matters in the aggregate could materially and adversely affect the Company and its financial condition.

Franchise Group Commitment Letter, Loan Participant Guaranty and CIBC Guarantee

January 23, 2021, the Company committed up to $ 400,000 aggregate principal amount of unsecured debt financing, consisting of $ 100,000

of secured debt financing, and $ 300,000 of unsecured debt financing, to affiliates of Franchise Group, Inc.

(collectively, “FRG”)

in connection with FRG’s acquisition of Pet Supplies Plus (“PSP”).

FRG consummated the acquisition of PSP in March

2021 and the Company was not required, nor did it provide, any debt financing in connection therewith.

At March 31, 2021, there were

no further commitments outstanding to FRG.

Babcock & Wilcox Commitments and Guarantee

May 14, 2020, the Company entered into an agreement to provide Babcock & Wilcox Enterprises, Inc.

(“B&W”) future

commitments to loan B&W up to $ 40,000 at various dates starting in November 2020, of which, at March 31, 2021, no amounts remain

The Company provided a limited guaranty of B&W’s obligations under B&W’s amended credit facility as more

GPB and its affiliates have been the subject

of various civil claims and fraud investigations over the past few years and, in February 2021, the U.S.

Department of Justice indicted

certain individuals affiliated with GPB for material misrepresentations and omissions under the federal securities laws with respect to

funds managed by GPB.

At the present time, the Company continues to vigorously defend these actions and is not able to determine

the ultimate resolution of these matters.

Adverse judgments in these matters in the aggregate could materially and adversely affect the

Company and its financial condition.

(b) Babcock &

Wilcox Commitments and Guarantees

On June 30, 2021, the Company agreed to guaranty (the “B.

Guaranty”) up to $ 110,000 of obligations that Babcock & Wilcox Enterprises, Inc.

(“B&W”) may owe to providers

of cash collateral pledged in connection with B&W’s debt financing.

Riley Guaranty is enforceable in certain circumstances,

including, among others, certain events of default and the acceleration of B&W’s obligations under a reimbursement agreement

with respect to such cash collateral.

B&W will pay the Company $ 935 per annum in connection with the B.

Riley Guaranty.

agreed to reimburse the Company to the extent the B.

Riley Guaranty is called upon.

On August 10, 2020, the Company entered into a project specific indemnity

rider (the “Indemnity Rider”) in favor of Berkley Insurance Company and/or Berkley Regional Insurance Company (collectively,

“Berkley”) to a general agreement of indemnity made by B&W in favor of Berkley (the “Indemnity Agreement”).

Pursuant to the Indemnity Rider, the Company agreed to indemnify Berkley in connection with a default by B&W under the Indemnity Agreement

relating to a $ 29,970 payment and performance bond issued by Berkley in connection with a construction project undertaken by B&W.

In consideration for providing the Indemnity Rider, B&W paid the Company fees in the amount of $ 600 on August 26, 2020.

On May 14, 2020, the Company

entered into an agreement to provide B&W future commitments to loan B&W up to $ 40,000 at various dates starting in November

2020, of which, at June 30, 2021, no amounts remain available.

The Company provided a limited guaranty of B&W’s obligations

under B&W’s credit facility with Bank of America, N.A., as Administrative Agent, and the other lenders party thereto (the “BOA

Credit Facility”), which was paid off and the Company’s obligations relating thereto terminated as of June 30, 2021, as more

fully described in Note 16 - Related Party Transactions

August 10, 2020, the Company entered into a project specific indemnity rider (the “Indemnity Rider”) in favor of Berkley

Insurance Company and/or Berkley Regional Insurance Company (collectively, “Berkley”) to a general agreement of indemnity

made by B&W in favor of Berkley (the Indemnity Agreement”).

Pursuant to the Indemnity Rider, the Company agreed to indemnify

Berkley in connection with a default by B&W under the Indemnity Agreement relating to a $ 29,970 payment and performance bond

issued by Berkley in connection with a construction project undertaken by B&W.

In consideration for providing the Indemnity Rider,

B&W paid the Company fees in the amount of $ 600 on August 26, 2020.

Other Commitments

June 19, 2020, the Company participated in a loan facility agreement to provide a total loan commitment up to 33,000 EUROS

to a retailer in Europe.

The Company made an initial funding of 6,600 EUROS in July 2020.

No additional borrowings have been

made since the initial funding, leaving unused future commitments available of up to 26,400 EUROS as of March 31, 2021 and December 31,

14— SHARE-BASED PAYMENTS

On June 19, 2020, the Company

participated in a loan facility agreement to provide a total loan commitment up to 33,000 EUROS to a retailer in Europe.

Company made an initial funding of 6,600 EUROS in July 2020.

No additional borrowings have been made since the initial funding, leaving

unused future commitments available of up to 26,400 EUROS as of June 30, 2021 and December 31, 2020.

At June 30, 2021, the Company had an outstanding commitment to purchase

a loan pursuant to an assignment agreement with a client in the amount of $ 77,477 that was funded on July 2, 2021.

Simultaneously with

the funding of the loan on July 2, 2021, the Company received a principal payment on the loan for $27,477 reducing the loans receivable

balance to $ 50,000 .

NOTE 14— SHARE-BASED PAYMENTS

Employee Stock Incentive Plans

compensation expense for restricted stock units under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “Plan”)

was $ 5,299 and $ 5,157 for the three months ended March 31, 2021 and 2020, respectively.

During the three months ended March

31, 2021, in connection with employee stock incentive plans, the Company granted 48,714 restricted stock units with a grant

date fair value of $ 2,234 and 1,100,000 performance based restricted stock units with a grant date fair value of $ 40,876 .

The restricted

stock units generally vest over a period of one to three years based on continued service.

Performance based restricted stock units generally

vest based on both the employee’s continued service and the achievement of a set threshold of the Company’s common stock

price, as defined in the grant, during the three-year period following the grant.

In determining the fair value of restricted stock

units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns

and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S.

Treasuries for a maturity matching the expected holding period.

was $ 8,493 and $ 4,109 for the three months ended June 30, 2021 and 2020, respectively and $ 13,792 and $ 9,265 for the six months

ended June 30, 2021 and 2020, respectively.

During the six months ended June 30, 2021, in connection with employee stock incentive

plans, the Company granted 365,050 restricted stock units with a grant date fair value of $ 25,534 and 1,100,000 performance

based restricted stock units with a grant date fair value of $ 40,876 .

The restricted stock units generally vest over a period of

one to three years based on continued service.

Performance based restricted stock units generally vest based on both the employee’s

continued service and the achievement of a set threshold of the Company’s common stock price, as defined in the grant, during the

three-year period following the grant.

In determining the fair value of restricted stock units on the grant date, the fair value

is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend

payments over the expected holding period and (c) the risk-free interest rate based on U.S.

Treasuries for a maturity matching the expected

holding period.

Employee Stock Purchase Plan

connection with the Company’s Purchase Plan, share based compensation was $ 227 and $ 165 for the three months ended March 31, 2021

and 2020, respectively.

At March 31, 2021, there were 502,326 shares reserved for issuance under the Purchase Plan.

connection with the Company’s Purchase Plan, share based compensation was $ 115 and $ 59 for the three months ended June 30, 2021

and 2020, respectively and $ 342 and $ 224 for the six months ended June 30, 2021 and 2020, respectively.

At June 30, 2021, there were 471,973

shares reserved for issuance under the Purchase Plan.

October 30, 2018, the Company’s Board of Directors authorized a share repurchase program of up to $ 50,000 of its outstanding

7 unchanged sentences

The shares repurchased under the program were retired.

During the three months ended March 31, 2021, the Company did not repurchase any shares of its common stock.

During the six months ended June 30, 2021, the Company did not repurchase any shares of its common stock.

January 15, 2021, the Company issued 1,413,045 shares of common stock inclusive of 184,310 shares issued pursuant

2 unchanged sentences

Preferred Stock

the three months ended March 31, 2021, the Company did not issue any depository shares of the Series A Preferred Stock.

There were 2,581 shares

issued and outstanding as of March 31, 2021 and December 31, 2020.

Total liquidation preference for the Series A Preferred Stock at March

31, 2021 and December 31, 2020, was $ 64,519 .

Dividends on the Series A preferred paid during the three months ended March 31, 2021, were

$ 0.4296875 per depository share.

the three months ended March 31, 2021, the Company did not issue any depository shares of the Series B Preferred Stock.

There were 1,390 shares

issued and outstanding as of March 31, 2021 and December 31, 2020.

Total liquidation preference for the Series B Preferred Stock at March

31, 2021 and December 31, 2020, was $ 34,741 .

Dividends on the Series B preferred paid during the three months ended March 31, 2021, were

$ 0.4609375 per depository share.

15— NET CAPITAL REQUIREMENTS

the six months ended June 30, 2021, the Company issued 76,417 depository shares of the Series A Preferred Stock.

There were 2,657 and

2,581 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Total liquidation preference for the

Series A Preferred Stock at June 30, 2021 and December 31, 2020, was $ 66,430 and $ 64,519 , respectively.

Dividends on the Series A preferred

paid during the six months ended June 30, 2021, were $ 0.859375 per depository share.

the six months ended June 30, 2021, the Company issued 228,477 depository shares of the Series B Preferred Stock.

There were 1,618

and 1,390 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Total liquidation preference for

the Series B Preferred Stock at June 30, 2021 and December 31, 2020, was $ 40,452 and $ 34,741 , respectively.

Dividends on the Series B

preferred paid during the six months ended June 30, 2021, were $ 0.921875 per depository share.

NOTE 15— NET CAPITAL

Riley Securities (“BRS”),

4 unchanged sentences

As such, they are subject to the minimum net capital requirements promulgated by the SEC.

As of March 31, 2021, BRS had net capital of

As of June 30, 2021, BRS had net capital of

$ 329,063 , which was $ 324,101 in excess of required minimum net capital of $ 4,962 ;

1 unchanged sentence

excess of required minimum net capital of $ 745 ;

NSC had net capital of $ 13,470

which was $ 12,470 in excess of required minimum net capital of $ 1,000 ;

Winslow, Evans & Crocker, Inc (“WEC”), a subsidiary

of National also subject to Rule 15c3-1, had net capital of $ 2,127 which was $ 1,982 in excess of required minimum net capital of $ 145 .

16— RELATED PARTY TRANSACTIONS

March 31, 2021, amounts due from related parties of $ 1,079 included $ 22 from GACP I, L.P.

(“GACP I”) and $ 1,057 from

GACP II, L.P.

(“GACP II”) for management fees and other operating expenses.

At December 31, 2020, amounts due from related

parties of $ 986 included $ 9 from GACP I, L.P.

NSC had net capital of $ 7,162 which was $ 6,162 in excess of required minimum net capital

Winslow, Evans & Crocker, Inc (“WEC”), a subsidiary of National also subject to Rule 15c3-1, had net capital

of $ 2,599 which was $ 2,460 in excess of required minimum net capital of $ 139 .

NOTE 16— RELATED PARTY

At June 30, 2021, amounts

due from related parties of $ 734 included $ 1 from GACP I, L.P.

(“GACP I”) and $ 536 from GACP II, L.P.

for management fees and other operating expenses, and $ 433 due from CA Global Partners (“CA Global”) for operating expenses

related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Partners.

March 31, 2021, the Company had sold loan participations to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity

fund managed by one of its subsidiaries, in the amount of $ 6,630 , and recorded interest expense of $ 346 during the three months ended

March 31, 2021 related to BRCPOF’s loan participations.

The Company also recorded commission income of $ 330 from

introducing trades on behalf of BRCPOF during the three months ended March 31, 2021.

Our executive officers and members of our board

of directors have a 42.5 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer,

of 32.9 % in the BRCPOF at March 31, 2021.

At March 31, 2021 and December 31, 2020, the Company had outstanding loan to participations

to BRCPOF in the amount of $ 6,630 and $ 14,816 , respectively.

April 1, 2019, the Company entered into a Transfer Agreement (the “Transfer Agreement”) with GACP II, a fund

managed by GACP, and John Ahn, who is the brother of Phil Ahn, the Company’s Chief Financial Officer and Chief Operating

The Transfer Agreement provides for among other things, the transfer to Mr.

Ahn of 55.56% of the Company’s limited

partnership interest in GACP II (the “Transferred Interest”), which represents a capital commitment in the aggregate

amount of $5,000.

In connection with the Transfer Agreement, the Company provided Mr.

Ahn with a non-recourse, secured line of

credit in an aggregate amount of up to $5,003 pursuant to the terms of a Secured Line of Credit Promissory Note (the

“Note”) dated April 1, 2019, to fund the purchase price of the Transferred Interest.

We also entered into a Security

Agreement with Mr.

Ahn on April 1, 2019, which granted to the Company a security interest in the Transferred Interest to secure

Ahn’s obligations under the Note.

The Note is subject to an interest rate per annum of 7.00%.

As of December 31, 2019,

the principal and accrued interest on the Note were $ 3,798 and $48, respectively.

In June 2020, the Company entered into an

investment advisory services agreement with Whitehawk Capital Partners, L.P., a limited partnership controlled by Mr.

(“Whitehawk”).

Whitehawk has agreed to provide investment advisory services for GACP I and GACP II.

In accordance

with the terms of the Note, Mr.

Ahn surrendered the Transferred Interest to the Company in exchange for the cancellation of

During the three months ended March 31, 2021, management fees paid for investment advisory services by Whitehawk

was $ 1,210 .

Company periodically participates in loans and financing arrangements for which the Company has an equity ownership and representation

on the board of directors (or similar governing body).

The Company may also provide consulting services or investment banking services

to raise capital for these companies.

II”) for management fees and other operating expenses, and $ 197 due from CA Global Partners (“CA Global”) for operating

expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Partners.

31, 2020, amounts due from related parties of $ 986 included $ 9 from GACP I, L.P.

(“GACP I”) and $ 544 from GACP

(“GACP II”) for management fees and other operating expenses, and $ 433 due from CA Global Partners (“CA

Global”) for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA

Global Partners.

At June 30, 2021, the Company

had sold loan participations to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity fund managed by one of its

subsidiaries, in the amount of $ 1,975 , and recorded interest expense of $ 133 and $ 479 during the three and six months ended June 30, 2021

related to BRCPOF’s loan participations, respectively.

The Company also recorded commission income of $ 93 and $ 422 from

introducing trades on behalf of BRCPOF during the three and six months ended June 30, 2021, respectively.

Our executive officers

and members of our board of directors have a 65.6 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief

Executive Officer, of 52.8 % in the BRCPOF at June 30, 2021.

At June 30, 2021 and December 31, 2020, the Company had outstanding

loan to participations to BRCPOF in the amount of $ 1,975 and $ 14,816 , respectively.

In June 2020, the Company entered into an investment advisory services

agreement with Whitehawk Capital Partners, L.P.

(“Whitehawk”), a limited partnership controlled by Mr.

Ahn, who is the

brother of Phil Ahn, the Company’s Chief Financial Officer and Chief Operating Officer.

Whitehawk has agreed to provide investment

advisory services for GACP I and GACP II.

During the three and six months ended June 30, 2021, management fees paid for investment

advisory services by Whitehawk was $ 236 and $ 1,446 , respectively.

The Company periodically

participates in loans and financing arrangements for which the Company has an equity ownership and representation on the board of directors

(or similar governing body).

The Company may also provide consulting services or investment banking services to raise capital for these

These transactions can be summarized as follows:

4 unchanged sentences

has also agreed to loan BRPM 150 up to $ 300 for operating expenses.

The loan is interest free and there were no amounts outstanding at

December 31, 2020.

Subsequent to December 31, 2020, the Company loaned BRPM 150 $ 40 which was repaid in full on March 1, 2021, using

proceeds from the BRPM 150 initial public offering.

addition to the above, the Company from time to time participates in commitments, loans and financing arrangements in respect of companies

in which the Company has an equity ownership and representation on the board of directors or equivalent body.

The Company may also provide

consulting services or investment banking services to raise capital for these companies.

These transactions can be summarized as follows:

Company has a last-out term loan receivable due from B&W that is included in loans receivable, at fair value with a fair value of

$ 73,330 and $ 176,191 at March 31, 2021 and December 31, 2020, respectively.

Additionally, the Company holds senior notes from B&W

with a fair value of $ 36,961 at March 31, 2021.

January 31, 2020, the Company provided B&W with an additional $ 30,000 of last-out term loans pursuant to new amendments to B&W’s

credit agreement.

On May 14, 2020, it provided B&W with another $ 30,000 of last-out term loans pursuant to a further amendment to

B&W’s credit agreement which also included future commitments for the Company to loan B&W $ 40,000 at various dates starting

in November 2020, of which, at March 31, 2021, no amounts remain available, and a limited guaranty of B&W’s obligations under the amended credit facility, (the “Amendment Transactions”).

In November 2020, an additional $ 10,000 was funded under the Amendment Transactions.

Interest is payable quarterly at the fixed rate

of 12.0 % per annum in common stock of B&W at $ 2.28 per common share through December 31, 2020 and in cash thereafter.

loans were made to B&W as part of various amendments to B&W’s existing credit agreement with other lenders not related

to the Company.

The loan is interest free and there were no amounts outstanding

at December 31, 2020.

Subsequent to December 31, 2020, the Company loaned BRPM 150 $ 40 which was repaid in full on March 1, 2021,

using proceeds from the BRPM 150 IPO.

During the three months ended

June 30, 2021, the Company earned $ 3,337 of underwriting fees from the initial public offering of B.

Riley Principal 250 Merger Corp,

(“BRPM 250”), which was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,

reorganization or similar business combination with one or more businesses (the “BRPM 250 IPO”).

Company has also agreed to loan BRPM 250 up to $ 300 for operating expenses.

The loan is interest free and there were no amounts outstanding

at December 31, 2020.

Subsequent to December 31, 2020, the Company loaned BRPM 250 $ 100 which was repaid in full on May 17, 2021,

using proceeds from the BRPM 250 initial public offering.

On June 30, 2021, the Company and EF Hutton, division of Benchmark

Investments, LLC (the “Sales Agents”), as sales agents, entered into an At Market Issuance Sales Agreement (the “Sonim

Sales Agreement”) with Sonim Technologies, Inc.

(“Sonim”) to sell shares of Sonim’s common stock, $ 0.001 par value

per share (the “Sonim Common Stock”), having an aggregate offering price of up to $ 10,000 (the “Sonim Shares”)

through the Sales Agents.

Under the Sonim Sales Agreement, the Sales Agents will be entitled to compensation of up to 3.0 % of the gross

proceeds from each sale of Sonim Shares sold through the Sales Agents.

Babcock and Wilcox

The Company had a last-out term loan receivable due from B&W that

was included in loans receivable, at fair value with a fair value of $ 176,191 at December 31, 2020.

On June 1, 2021 the Company agreed

to settle the outstanding balance and accrued interest on the last-out term loan receivable in exchange for $ 848 and 2,916,880 shares

of B&W’s 7.75 % Series A Cumulative Perpetual Preferred Stock.

Additionally, the Company holds senior notes from B&W with

a fair value of $ 21,415 at June 30, 2021.

On January 31, 2020, the Company provided B&W with an additional

$ 30,000 of last-out term loans pursuant to amendments to B&W’s BOA Credit Facility.

On May 14, 2020, the Company provided B&W

with another $ 30,000 of last-out term loans pursuant to a further amendment to the BOA Credit Facility which also included future commitments

for the Company to loan B&W $ 40,000 at various dates starting in November 2020 and a limited guaranty of B&W’s obligations

under the amended BOA Credit Facility, (the “Amendment Transactions”).

In November 2020, an additional $ 10,000 was funded

under the Amendment Transactions.

As part of the Amendment Transactions, the Company entered into the following agreements:

(i) an Amendment and Restatement

Agreement, dated as of May 14, 2020, among B&W, Bank of America, N.A., as Administrative Agent, and the other lenders party thereto,

including us;

(i) an Amendment

and Restatement Agreement, dated as of May 14, 2020, among B&W, Bank of America, N.A., as Administrative Agent, and the other lenders

party thereto, including us;

(ii) a Fee Letter, dated as of May 14, 2020, among B&W and us;

(iii) a Fee and Interest Equitization Agreement, dated

May 14, 2020, between B&W and us;

(iv) a Termination Agreement, dated as of May 14, 2020, among us, B&W and acknowledged by Bank

of America, N.A.

(iii) a Fee and Interest Equitization

Agreement, dated May 14, 2020, between B&W and us;

(iv) a Termination Agreement, dated as of May 14, 2020, among us, B&W and acknowledged

by Bank of America, N.A.

with respect to the Backstop Commitment Letter described below (the “Termination Agreement”);

Limited Guaranty Agreement, dated as of May 14, 2020, among B&W, Bank of America, N.A and the Company.

January 31, 2020, the Company also entered into a letter agreement with B&W (the “Backstop Commitment Letter”) pursuant

to which it agreed to fund any shortfall in the $ 200,000 of new debt or equity financing required as part of the terms of the Refinancing

to the extent such amounts have not been raised from third parties on the same terms contemplated by the Refinancing.

On May 14, 2020,

the Company provided B&W with another $ 30,000 of last-out term loans pursuant to further amendments to B&W’s credit agreement,

which also included future commitments from the Company to loan B&W $ 40,000 on various dates starting in November 2020 and a limited

guaranty of B&W’s obligations under the amended credit facility.

The Backstop Commitment Letter terminated pursuant to the

Termination Agreement.

connection with making the loan to B&W, in April 2019 the Company received warrants to purchase 1,666,667 shares of common

stock of B&W with an exercise price of $ 0.01 per share.

The option to exercise the warrants expires on April 5, 2022.

February 12, 2021, B&W issued the Company an aggregate $ 35,000 in principal amount of 8.125 % senior notes due 2026 in consideration

for the cancellation or deemed prepayment of $ 35,000 principal amount of the existing Tranche A Term Loans made by the Company to

the three months ended March 31, 2021, the Company earned $ 10,638 of underwriting and financial advisory and other fees from B&W

in connection with B&W’s capital raising activities.

of the Company’s wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the

Company to serve as the Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”),

unless terminated by either party with thirty days written notice.

(v) a Limited Guaranty Agreement, dated as of May 14, 2020, among B&W, Bank of America, N.A and the Company.

On June 30, 2021, the

amended BOA Credit Facility was paid off and the Company’s obligations relating thereto terminated.

On February 12, 2021, B&W issued the Company an aggregate $ 35,000 in

principal amount of 8.125 % senior notes due 2026 in consideration for the cancellation or deemed prepayment of $ 35,000 principal

amount of Tranche A Term Loans made by the Company to B&W pursuant to the new BOA Credit Facility.

During the three and six months ended June 30, 2021, the Company earned

$ 1,710 and $ 12,348 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s

capital raising activities.

One of the Company’s

wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the Company to serve as the

Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”), unless terminated by either

party with thirty days written notice.

The agreement was extended through December 31, 2023.

Under this agreement,

fees for services provided are $ 750 per annum, paid monthly.

In addition, subject to the achievement of certain performance objectives

as determined by B&W’s compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company.

Company is also a party to an Indemnity Rider with B&W, as disclosed above in Note 13 – Commitments and Contingencies and other limited guarantees as disclosed above in Note 2(l) – Loans Receivable.

Company has loans receivable due from the Maven, Inc.

(“Maven”) that are included in loans receivable, at fair value of $ 59,240

and $ 56,552 at March 31, 2021 and December 31, 2020, respectively.

Interest on these loans is payable at 12.0% to 15.0% per

annum with maturity dates through December 2022.

October 28, 2020, in connection with a capital raise by Maven, the Company converted $ 3,367 of Maven notes receivable into 3,367 shares

of Maven Series K Preferred stock.

In November 2020, the Company earned $ 441 of financial advisory fees from Maven in connection

with providing services with their capital raising activities.

On December 30, 2020, the Company converted loans receivable with a principal

value of $ 9,991 and accrued but unpaid interest of $ 2,698 into 38,376,090 shares of Maven common stock at an average price

of $ 0.33 per share.

Company has a loan receivable due from Lingo Management LLC (“Lingo”) included in loans receivable at fair value with a

fair value of $ 55,483 and $ 55,066 at March 31, 2021 and December 31, 2020, respectively.

The term loan bears interest

at 16.0 % per annum with a maturity date of December 1, 2022.

The term loan has a conversion feature under which $ 17,500 will

convert to additional equity ownership upon receipt of certain regulatory approval.

If those regulatory approvals are received, the

conversion would increase the Company’s ownership interest in Lingo from 40 % to 80 %.

On March 10, 2021, the Company also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary

of Lingo) in the amount of $ 1.1 million.

The note bears interest at 6 % per annum with a maturity date of March 31, 2022.

Company has a loan receivable due from bebe Stores, Inc.

included in loans receivable at fair value with a fair value of $ 8,000 at

March 31, 2021 and December 31, 2020.

The term loan bears interest at 16.0 % per annum with a maturity date of November 10, 2021.

Under this agreement, fees for services provided

are $ 750 per annum, paid monthly.

In addition, subject to the achievement of certain performance objectives as determined by B&W’s

compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company.

The Company is also a party

to an Indemnity Rider with B&W, and the B.

Riley Guaranty, each as disclosed above in Note 13 – Commitments and Contingencies.

The Company has loans receivable

due from Dash Holding Company, Inc.

due from the Maven, Inc.

(“Maven”) that are included in loans receivable, at fair value of $ 60,491 and $ 56,552 at June

30, 2021 and December 31, 2020, respectively.

Interest on these loans is payable at 10 % per annum with maturity dates through December

On October 28, 2020, in connection

with a capital raise by Maven, the Company converted $ 3,367 of Maven notes receivable into 3,367 shares of Maven Series

K Preferred stock.

In November 2020, the Company earned $ 441 of financial advisory fees from Maven in connection with providing services

with their capital raising activities.

On December 30, 2020, the Company converted loans receivable with a principal value of $ 9,991 and

accrued but unpaid interest of $ 2,698 into 38,376,090 shares of Maven common stock at an average price of $ 0.33 per share.

The Company has a loan receivable due from Lingo Management LLC (“Lingo”)

included in loans receivable, at fair value with a fair value of $ 56,335 and $ 55,066 at June 30, 2021 and December 31, 2020, respectively.

The term loan bears interest at 16.0 % per annum with a maturity date of December 1, 2022.

The term loan has a conversion feature

under which $ 17,500 will convert to additional equity ownership upon receipt of certain regulatory approval.

If those regulatory approvals

are received, the conversion would increase the Company’s ownership interest in Lingo from 40 % to 80 %.

On March 10, 2021,

the Company also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary of Lingo) in the amount of $ 1,100 .

The note bears interest at 6 % per annum with a maturity date of March 31, 2022.

The Company has a loan receivable due from bebe stores, Inc.

in loans receivable, at fair value with a fair value of $ 7,900 and $ 8,000 at June 30, 2021 and December 31, 2020, respectively.

term loan bears interest at 16.0 % per annum with a maturity date of November 10, 2021.

The Company has loans receivable due from Dash Holding Company, Inc.

with a fair value of $ 3,020 and Rumble On, Inc.

with a fair value of $ 2,500 included in loans receivable

at fair value at March 31, 2021.

On March 2, 2021, the Company purchased a $ 2,400 minority equity interest in Dash Medical Holdings,

LLC (“Dash”).

The Company also loaned Dash Holding Company, Inc.

(together with Dash Medical Holdings, LLC, “Dash”),

$ 3,000 pursuant to that certain Subordinated Working Capital Promissory Note (the “Note”) and Subordination Agreement

that was entered into on March 2, 2021.

with a fair value of $ 2,568 included in loans receivable, at fair value at June 30, 2021.

On March 2, 2021, the Company purchased a $ 2,400 minority equity interest in Dash Medical Holdings, LLC (“Dash”).

Company also loaned Dash Holding Company, Inc.

(together with Dash Medical Holdings, LLC, “Dash”), $ 3,000 pursuant to

that certain Subordinated Working Capital Promissory Note (the “Note”) and Subordination Agreement entered into on March 2,

The Note bears interest at 12.0 % per annum with a maturity date of March 1, 2027.

Dash is controlled

by a member of our Board of Directors.

Dash is controlled by a member of our Board of

On March 12, 2021, the Company loaned Rumble On, Inc.

$ 2,500 , a Company in which two senior executives

are on the board, which bears interest at 12 % and is due on September 30, 2021.

17— BUSINESS SEGMENTS

Company’s business is classified into the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment,

Financial Consulting segment, Principal Investments — United Online and magicJack segment, and Brands segment.

These reportable

segments are all distinct businesses, each with a different marketing strategy and management structure.

a result of the National acquisition, the Company realigned its segment reporting structure in the first quarter of 2021 to reflect organizational

management changes for its wealth management business.

Under the new structure, the wealth management business previously reported in

the Capital Markets segment are now reported in the Wealth Management segment.

Under the new structure, there is a new segment for Wealth

In conjunction with the new reporting structure, the Company recast its segment presentation for all periods presented.

following is a summary of certain financial data for each of the Company’s reportable segments:

$ 2,500 , a company in which two of the Company’s senior executives

serve on the board of directors, which bears interest at 12 % and is due on September 30, 2021.

During the six months ended

June 30, 2021, the Company earned $ 2,957 and $ 1,234 of underwriting and financial advisory and other fees from Rumble On, Inc and

Applied Blockchain, Inc, a company in which a senior executive of the Company and the spouse of a senior executive of the Company serve

on the board of directors and in which employees and executives of the Company are investors, respectively, in connection with capital

raising activities.

NOTE 17— BUSINESS SEGMENTS

The Company’s business

is classified into the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment,

Principal Investments — United Online and magicJack segment, and Brands segment.

These reportable segments are all distinct businesses,

each with a different marketing strategy and management structure.

As a result of the National

acquisition, the Company realigned its segment reporting structure in the first quarter of 2021 to reflect organizational management changes

for its wealth management business.

Under the new structure, the wealth management business previously reported in the Capital Markets

segment are now reported in the Wealth Management segment.

Under the new structure, there is a new segment for Wealth Management.

In conjunction

with the new reporting structure, the Company recast its segment presentation for all periods presented.

The following is a summary

of certain financial data for each of the Company’s reportable segments:

Three Months Ended

Six Months Ended

Capital Markets segment:

Revenues - Services and fees

Trading income (losses) and fair value adjustments on loans

Trading income and fair value adjustments on loans

Interest income - Loans and securities lending

3 unchanged sentences

Depreciation and amortization

Segment income (loss)

Segment income

Wealth Management segment:

Revenues - Services and fees

Trading income (losses) and fair value adjustments on loans

Trading income and fair value adjustments on loans

Total revenues

1 unchanged sentence

Depreciation and amortization

Segment income

Segment (loss) income

Auction and Liquidation segment:

23 unchanged sentences

Revenues - Services and fees

Trading income and fair value adjustments on loans

Trading loss and fair value adjustments on loans

Total revenues

3 unchanged sentences

Segment income (loss)

Consolidated operating income (loss) from reportable segments

Corporate and other expenses (including (loss) gain on extinguishment of debt of ($ 919 ) and $ 1,556 during the three months ended March 31, 2021 and 2020, respectively.)

Consolidated operating income from reportable segments

Corporate and other expenses

Interest income

Income (loss) on equity investments

Gain on extinguishment of loans

(Loss) income on equity investments

Interest expense

2 unchanged sentences

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net (loss) income attributable to noncontrolling interests

Net income (loss) attributable to B.

2 unchanged sentences

Net income (loss) available to common shareholders

following table presents revenues by geographical area:

The following table presents

revenues by geographical area:

Three Months Ended

Six Months Ended

Revenues - Services and fees:

3 unchanged sentences

North America

$ ( 182,442 )

Revenues - Sale of goods

North America

Total Revenues - Services and fees

Revenues - Interest income - Loans and securities lending:

3 unchanged sentences

Total Revenues

the three months ended March 31, 2021 and December 31, 2020 long-lived assets, which consist of property and equipment and other assets,

of $ 15,295 and $ 11,685 , respectively, were located in North America.

assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance

of, the segments and therefore, total segment assets have not been disclosed.

As of June 30, 2021 and December

31, 2020 long-lived assets, which consist of property and equipment and other assets, of $ 14,447 and $ 11,685 , respectively, were located

in North America.

Segment assets are not reported

to, or used by, the Company's Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore,

total segment assets have not been disclosed.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements