BRC Group Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “seek,” “likely,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We are under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report to conform such statements to actual results or to changes in our expectations. The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part II of this Quarterly Report under the caption “Risk Factors.” Risk factors that could cause actual results to differ from those contained in the forward-looking statements include but are not limited to risks related to: volatility in our revenues and results of operations; the unpredictable and ongoing impact of the COVID-19 pandemic; changing conditions in the financial markets; our ability to generate sufficient revenues to achieve and maintain profitability; our exposure to credit risk; the short term nature of our engagements; the accuracy of our estimates and valuations of inventory or assets in “guarantee” based engagements; competition in the asset management business; potential losses related to our auction or liquidation engagements; our dependence on communications, information and other systems and third parties; potential losses related to purchase transactions in our auction and liquidations business; the potential loss of financial institution clients; potential losses from or illiquidity of our proprietary investments; changing economic and market conditions; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; failure to successfully compete in any of our segments; loss of key personnel; our ability to borrow under our credit facilities or at-the-market offering as necessary; failure to comply with the terms of our credit agreements or senior notes; our ability to meet future capital requirements; our ability to realize the benefits of our completed acquisitions, including our ability to achieve anticipated opportunities and operating cost savings, and accretion to reported earnings estimated to result from completed and proposed acquisitions in the time frame expected by management or at all; the diversion of management time on acquisition- related issues; the failure of our brand investment portfolio licensees to pay us royalties; and the intense competition to which our brand investment portfolio is subject. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “B. Riley,” “B. Riley Financial,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries. Overview General B. Riley Financial, Inc. (NASDAQ: RILY) and its subsidiaries provide collaborative financial services and solutions through several operating subsidiaries including: ● B. Riley Securities, Inc. (“B. Riley Securities”) is a leading, full service investment bank providing financial advisory, corporate finance, research, securities lending and sales and trading services to corporate, institutional and high net worth individual clients. B. Riley Securities, (fka B. Riley FBR) was formed in November 2017 through the merger of B. Riley & Co, LLC and FBR Capital Markets & Co., which the Company acquired in June 2017. 37 ● B. Riley Wealth Management, Inc. (“B. Riley Wealth Management”) provides comprehensive wealth management and brokerage services to individuals and families, corporations and non-profit organizations, including qualified retirement plans, trusts, foundations and endowments. B. Riley Wealth Management was formerly Wunderlich Securities, Inc., which the Company acquired on July 3, 2017 and whose name was changed in June 2018. ● National Holdings Corporation (“National”) provides wealth management, brokerage, insurance, tax preparation and advisory services. On February 25, 2021, the Company completed a tender offer to acquire all of the outstanding shares of National not already owned by the Company. The merger expands the Company’s investment banking, wealth management and financial planning offerings. ● B. Riley Capital Management, LLC, a Securities and Exchange Commission (“SEC”) registered investment advisor, which includes: ○ B. Riley Asset Management, an advisor to certain private funds and to institutional and high net worth investors; ○ Great American Capital Partners, LLC (“GACP”), the general partner of two private funds, GACP I, L.P. and GACP II, L.P., both direct lending funds managed by WhiteHawk Capital Partners, L.P. pursuant to an investment advisory services agreement, that provide senior secured loans and second lien secured loan facilities to middle market public and private U.S. companies. ● B. Riley Advisory Services provides expert witness, bankruptcy, financial advisory, forensic accounting, valuation and appraisal, and operations management services. ● B. Riley Retail Solutions, LLC (fka Great American Group, LLC), a leading provider of asset disposition and auction solutions to a wide range of retail and industrial clients. ● B. Riley Real Estate works with real estate owners and tenants through all stages of the real estate life cycle. Our real estate advisors advise companies, financial institutions, investors, family offices and individuals on real estate projects worldwide. A core focus of B. Riley real estate is the restructuring of lease obligations in both distressed and non-distressed situations, both inside and outside of the bankruptcy process, on behalf of corporate tenants. ● B. Riley Principal Investments identifies attractive investment opportunities and aims to deliver financial and operational improvement to its portfolio companies. Our team concentrates on opportunities presented by distressed companies or divisions that exhibit challenging market dynamics. Representative transactions include recapitalization, direct equity investment, debt investment, active minority investment and buyouts. B. Riley Principal Investments seeks to control or influence the operations of our investments to deliver financial and operational improvements that will maximize free cash flow, and therefore, shareholder returns. As part of our principal investment strategy, we acquired United Online, Inc. (“UOL” or “United Online”) on July 1, 2016, magicJack VocalTec Ltd. (“magicJack”) on November 14, 2018 and on November 30, 2020 we acquired a 40% equity interest in with Lingo Management, LLC (“Lingo”), with the ability to acquire an additional 40% equity interest therein. ○ UOL is a communications company that offers consumer subscription services and products, consisting of Internet access services and devices under the NetZero and Juno brands primarily sold in the United States. ○ magicJack is a Voice over IP (“VoIP”) cloud-based technology and services communications provider. ○ Lingo is a global cloud/UC and managed service provider. ● BR Brand Holding, LLC (“BR Brands”), in which the Company owns a majority interest, provides licensing of certain brand trademarks. BR Brands owns the assets and intellectual property related to licenses of six brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore as well as investments in the Hurley and Justice brands with Bluestar Alliance LLC (“Bluestar”), a brand management company. 38 We are headquartered in Los Angeles with offices in major cities throughout the United States including New York, Chicago, Boston, Atlanta, Dallas, Memphis, Metro Washington D.C., West Palm Beach, and Boca Raton. During the fourth quarter of 2020, the Company realigned its segment reporting structure to reflect organizational management changes. Under the new structure, the valuation and appraisal businesses are reported in the Financial Consulting segment and our bankruptcy, financial advisory, forensic accounting, and real estate consulting businesses that were previously reported in the Capital Markets segment are now reported as part of the Financial Consulting segment. In conjunction with the new reporting structure, the Company recast its segment presentation for all periods presented. During the first quarter of 2021, in connection with the acquisition of National on February 25, 2021, the Company further realigned its segment reporting structure to reflect organizational management changes in the Company’s wealth management business and created a new Wealth Management segment that was previously reported as part of the Capital Markets segment in 2020. In conjunction with the new reporting structures, the Company recast its segment presentation for all periods presented. For financial reporting purposes we classify our businesses into six operating segments: (i) Capital Markets, (ii) Wealth Management, (iii) Auction and Liquidation, (iv) Financial Consulting, (v) Principal Investments – United Online and magicJack and (vi) Brands. Capital Markets Segment . Our Capital Markets segment provides a full array of investment banking, corporate finance, consulting, financial advisory, research, securities lending and sales and trading services to corporate, institutional and individual clients. Our corporate finance and investment banking services include merger and acquisitions as well as restructuring advisory services to public and private companies, initial and secondary public offerings, and institutional private placements. In addition, we trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. Our Capital Markets segment also includes our asset management businesses that manage various private and public funds for institutional and individual investors. Wealth Management Segment . Our Wealth Management segment provides wealth management and tax services to corporate, and high net worth clients. We offer comprehensive wealth management services for corporate businesses that include investment strategies, executive services, retirement plans, lending & liquidity resources, and settlement solutions. Our wealth management services for individual client services provide investment management, education planning, retirement planning, risk management, trust coordination, lending & liquidity solutions, legacy planning, and wealth transfer. In addition, we supply market insights to provide unbiased guidance to make important financial decisions. Wealth management resources include market views from our highly regarded Chief Investment Strategist and Capital Markets segment’s research. Auction and Liquidation Segment. Our Auction and Liquidation segment utilizes our significant industry experience, a scalable network of independent contractors and industry-specific advisors to tailor our services to the specific needs of a multitude of clients, logistical challenges and distressed circumstances. Furthermore, our scale and pool of resources allow us to offer our services across North America as well as parts of Europe, Asia and Australia. Our Auction and Liquidation segment operates through two main divisions, retail store liquidations and wholesale and industrial assets dispositions. Our wholesale and industrial assets dispositions division operates through limited liability companies that are controlled by us. Financial Consulting Segment. Our Financial Consulting segment provides services to law firms, corporations, financial institutions, lenders, and private equity firms. These services primarily include bankruptcy, financial advisory, forensic accounting, litigation support, real estate consulting and valuation and appraisal services. Our Financial Consulting segment operates through limited liability companies that are wholly owned or majority owned by us. Principal Investments - United Online and magicJack Segment. Our Principal Investments - United Online and magicJack segment consists of businesses which have been acquired primarily for attractive investment return characteristics. Currently, this segment includes UOL, through which we provide consumer Internet access, and magicJack, through which we provide VoIP communication and related product and subscription services. Brands Segment. Our Brands segment consists of our brand investment portfolio that is focused on generating revenue through the licensing of trademarks and is held by BR Brands. Recent Developments On June 23, 2021, we and our wholly owned subsidiaries, BR Financial Holdings, LLC, a Delaware limited liability company (the “Primary Guarantor”), and BR Advisory & Investments, LLC, a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Credit Agreement”) by and among us, Primary Guarantor, the Borrower, the lenders party thereto, Nomura Corporate Funding Americas, LLC, as administrative agent and Wells Fargo Bank, N.A., as collateral agent, providing for a four-year $200.0 million secured term loan credit facility (the “Term Loan Facility”) and a four-year $80.0 million 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. On the closing date, the Borrower borrowed the full $200.0 million under the Term Loan Facility. The Revolving Credit Facility is available for borrowing from time to time prior to the final maturity of the Revolving Credit Facility. Subsequent to June 30, 2021, we borrowed the full $80.0 million that was available under the Revolving Credit Facility. 39 On July 26, 2021, we redeemed, in full, $122.8 million 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 $2.1 million in accrued interest. In connection with the full redemption, the 7.25% 2027 Notes were delisted from NASDAQ. On 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 second quarter of 2021, the full impact of the COVID-19 outbreak continues to evolve. As the U.S. 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, including variant strains of COVID-19, amid uneven progress toward vaccination. The impact of the COVID-19 outbreak on our 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 to be highly uncertain and cannot be predicted. If the financial markets and/or the overall economy continue to be impacted, our results of operations, financial position and cash flows may be materially adversely affected. Results of Operations The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results. Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020 Condensed Consolidated Statements of Operations (Dollars in thousands) Three Months Ended June 30, June 30, Change 2021 2020 Amount % Revenues: Services and fees $ 266,143 $ 125,595 $ 140,548 111.9 % Trading income and fair value adjustments on loans 32,679 114,547 (81,868 ) (71.5 %) Interest income - Loans and securities lending 25,491 24,506 985 4.0 % Sale of goods 12,457 1,820 10,637 n/m Total revenues 336,770 266,468 70,302 26.4 % Operating expenses: Direct cost of services 12,094 7,985 4,109 51.5 % Cost of goods sold 3,626 860 2,766 n/m Selling, general and administrative expenses 199,922 106,562 93,360 87.6 % Impairment of tradenames — 8,500 (8,500 ) (100.0 %) Interest expense - Securities lending and loan participations sold 10,983 11,221 (238 ) (2.1 %) Total operating expenses 226,625 135,128 91,497 67.7 % Operating income 110,145 131,340 (21,195 ) (16.1 %) Other income (expense): Interest income 56 224 (168 ) (75.0 %) Gain on extinguishment of loans 6,509 — 6,509 100.0 % Loss from equity investments (852 ) (318 ) (534 ) 167.9 % Interest expense (20,856 ) (16,509 ) (4,347 ) 26.3 % Income before income taxes 95,002 114,737 (19,735 ) (17.2 %) Provision for income taxes (19,902 ) (32,208 ) 12,306 (38.2 %) Net income 75,100 82,529 (7,429 ) (9.0 %) Net loss attributable to noncontrolling interests (576 ) (1,311 ) 735 (56.1 %) Net income attributable to B. Riley Financial, Inc. 75,676 83,840 (8,164 ) (9.7 %) Preferred stock dividends 1,789 1,087 702 64.6 % Net income available to common shareholders $ 73,887 $ 82,753 $ (8,866 ) (10.7 %) n/m - Not applicable or not meaningful. 40 Revenues The table below and the discussion that follows are based on how we analyze our business. Three Months Ended June 30, June 30, Change 2021 2020 Amount % Revenues - Services and fees: Capital Markets segment $ 125,997 $ 60,364 $ 65,633 108.7 % Wealth Management segment 87,444 15,318 72,126 n/m Auction and Liquidation segment 5,534 7,206 (1,672 ) -23.2 % Financial Consulting segment 23,735 18,845 4,890 25.9 % Principal Investments - United Online and magicJack segment 18,932 20,656 (1,724 ) -8.3 % Brands segment 4,501 3,206 1,295 40.4 % Subtotal 266,143 125,595 140,548 111.9 % Revenues - Sale of goods: Auction and Liquidation segment 11,743 1,045 10,698 n/m Principal Investments - United Online and magicJack segment 714 775 (61 ) -7.9 % Subtotal 12,457 1,820 10,637 n/m Trading income (loss) and fair value adjustments on loans Capital Markets segment 29,897 114,080 (84,183 ) -73.8 % Wealth Management segment 2,865 467 2,398 n/m Brands segment (83 ) — (83 ) 100.0 % Subtotal 32,679 114,547 (81,868 ) -71.5 % Interest income - Loans and securities lending: Capital Markets segment 25,491 24,506 985 4.0 % Total revenues $ 336,770 $ 266,468 $ 70,302 26.4 % n/m - Not applicable or not meaningful. Total revenues increased approximately $70.3 million to $336.8 million during the three months ended June 30, 2021 from $266.5 million during the three months ended June 30, 2020. The increase in revenues during the three months ended June 30, 2021 was primarily due to an increase in revenue from services and fees of $140.5 million, revenue from sale of goods of $10.6 million, and interest income from loans and securities lending of $1.0 million, offset by a decrease in revenue from trading income and fair value adjustments on loans of $81.9 million. The increase in revenue from services and fees in the three months ended June 30, 2021 consisted of increases in revenue of $65.6 million in the Capital Markets segment, $72.1 million in the Wealth Management segment, $4.9 million in the Financial Consulting segment, and $1.3 million in the Brands segment, offset by decreases in revenues of $1.7 million in both the Auction and Liquidation segment and the Principal Investments — United Online and magicJack segment. Revenues from services and fees in the Capital Markets segment increased $65.6 million, to $126.0 million during the three months ended June 30, 2021 from $60.4 million during the three months ended June 30, 2020. The increase in revenues was primarily due to increases in revenue of $64.4 million from corporate finance, consulting and investment banking fees and $4.3 million from the acquisition of National in the first quarter of 2021, partially offset by decreases in asset management fees of $1.6 million and commissions of $1.5 million. Revenues from services and fees in the Wealth Management segment increased $72.1 million, to $87.4 million during the three months ended June 30, 2021 from $15.3 million during the three months ended June 30, 2020. The increase in revenues was primarily due to increases in revenue of $63.7 million from the acquisition of National and $8.4 million from wealth and asset management fees. Revenues from services and fees in the Auction and Liquidation segment decreased $1.7 million, to $5.5 million during the three months ended June 30, 2021 from $7.2 million during the three months ended June 30, 2020. The decrease in revenues was primarily due to fewer large retail fee liquidation engagements. Revenues from services and fees in the Financial Consulting segment increased $4.9 million, to $23.7 million during the three months ended June 30, 2021 from $18.8 million during the three months ended June 30, 2020. The increase in revenues was primarily due to an increase in revenue of $3.8 million in advisory services, $0.7 million in real estate engagement fees where we provide lease modification services for corporate tenants, and $0.4 million due to a newly formed operations management group during fiscal year 2021. Revenues from services and fees in the Principal Investments - United Online and magicJack segment decreased $1.7 million to $18.9 million during the three months ended June 30, 2021 from $20.7 million during the three months ended June 30, 2020. The decrease in revenues was primarily due to decreases in subscription services of $1.0 million and in advertising licensing and other of $0.8 million. Management expects revenues from the Principal Investments - United Online and magicJack segment to continue to decline year over year. 41 Revenues from services and fees in the Brands segment increased $1.3 million to $4.5 million during the three months ended June 30, 2021 from $3.2 million during the three months ended June 30, 2020. The primary source of revenue included in this segment is the licensing of trademarks. Trading income and fair value adjustments on loans decreased $81.9 million to $32.7 million during the three months ended June 30, 2021 compared to $114.5 million for the three months ended June 30, 2020. The $81.9 million decrease for the three months ended June 30, 2021 was primarily due to a decrease of $84.2 million in the Capital Markets segment partially offset by an increase of $2.4 million in the Wealth Management segment. The gain of $32.7 million for the three months ended June 30, 2021 included realized and unrealized amounts earned on investments made in our proprietary trading accounts of $33.4 million partially offset by an unrealized loss on our loans receivable, at fair value of $0.7 million. Interest income – loans and securities lending increased $1.0 million, to $25.5 million during the three months ended June 30, 2021 from $24.5 million during the three months ended June 30, 2020. Interest income from securities lending was $13.9 million and $13.5 million during the three months ended June 30, 2021 and 2020, respectively. Interest income from loans was $11.6 million and $11.0 million during the three months ended June 30, 2021 and 2020, respectively. Revenues – Sale of Goods Revenues from the sale of goods increased $10.6 million, to $12.5 million during the three months ended June 30, 2021 from $1.8 million during the three months ended June 30, 2020. Revenues from sale of goods were primarily attributable to $11.7 million of sales of retail goods related to a retail liquidation engagement in Europe and $0.7 million of sales of magicJack devices that were sold in connection with VoIP services. Cost of goods sold for the three months ended June 30, 2021 was $3.6 million, resulting in a gross margin of 70.9%. Operating Expenses Direct Cost of Services Direct cost of services increased $4.1 million, to $12.1 million during the three months ended June 30, 2021 from $8.0 million during the three months ended June 30, 2020. Direct costs of services increased by $4.3 million in the Auction and Liquidation segment and decreased by $0.2 million in the Principal Investments — United Online and magicJack segment. The increase in direct costs in the Auction and Liquidation segment was primarily due to a retail liquidation engagement in Europe where we purchased inventory for resale using the existing stores of the client. As part of the retail liquidation engagement, we incurred costs related to the store operations which primarily related to expenses for occupancy, payroll and other store operating costs. The decrease in direct costs in the Principal Investments — United Online and magicJack segment was primarily due to a corresponding decrease in revenues from subscription based customers for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Selling, General and Administrative Expenses Selling, general and administrative expenses during the three months ended June 30, 2021 and 2020 were comprised of the following: Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Change Amount % Amount % Amount % Capital Markets segment $ 65,720 33.0 % $ 57,218 53.6 % $ 8,502 14.9 % Wealth Management segment 91,042 45.5 % 15,753 14.8 % 75,289 n/m Auction and Liquidation segment 3,077 1.5 % 2,729 2.6 % 348 12.8 % Financial Consulting segment 19,560 9.8 % 15,341 14.4 % 4,219 27.5 % Principal Investments - United Online and magicJack segment 7,296 3.6 % 6,900 6.5 % 396 5.7 % Brands segment 1,405 0.7 % 1,024 1.0 % 381 37.2 % Corporate and Other segment 11,822 5.9 % 7,597 7.1 % 4,225 55.6 % Total selling, general & administrative expenses $ 199,922 100.0 % $ 106,562 100.0 % $ 93,360 87.6 % Total selling, general and administrative expenses increased approximately $93.4 million to $199.9 million during the three months ended June 30, 2021 from $106.6 million for the three months ended June 30, 2020. The increase of approximately $93.4 million in selling, general and administrative expenses was due to increases of $8.5 million in the Capital Markets segment, $75.3 million in the Wealth Management segment, $0.3 million in the Auction and Liquidation segment, $4.2 million in the Financial Consulting segment, $0.4 million in the Principal Investments — United Online and magicJack segment, $0.4 million in the Brands segment, and $4.2 million in the Corporate and Other segment. 42 Capital Markets Selling, general and administrative expenses in the Capital Markets segment increased by $8.5 million to $65.7 million during the three months ended June 30, 2021 from $57.2 million during the three months ended June 30, 2020. The increase was primarily due to increases of $17.7 million in payroll and related expenses, $1.5 million from the acquisition of National, and $2.0 million in investment banking deal expenses, partially offset by a decrease of $12.6 million in consulting expenses. Wealth Management Selling, general and administrative expenses in the Wealth Management segment increased by $75.3 million to $91.0 million during the three months ended June 30, 2021 from $15.8 million during the three months ended June 30, 2020. The increase was primarily due to increases of $69.6 million from the acquisition of National, $6.1 million in payroll and related expenses, $0.2 million in software and equipment expenses, $0.1 million in office expenses, and $0.1 million in travel and entertainment expenses, partially offset by decreases of $0.3 million in legal expenses, $0.3 million in occupancy expenses, and $0.3 million in other expenses. Auction and Liquidation Selling, general and administrative expenses in the Auction and Liquidation segment increased $0.3 million to $3.1 million during the three months ended June 30, 2021 from $2.7 million during the three months ended June 30, 2020. Financial Consulting Selling, general and administrative expenses in the Financial Consulting segment increased by $4.2 million to $19.6 million during the three months ended June 30, 2021 from $15.3 million during the three months ended June 30, 2020. The increase was primarily due to increases of $3.1 million in payroll and related expenses, $0.3 million in other expenses, $0.3 million in travel and entertainment expenses, $0.2 million in legal expenses, and $0.2 million in outside contractor expenses. Principal Investments — United Online and magicJack Selling, general and administrative expenses in the Principal Investments — United Online and magicJack segment increased $0.4 million to $7.3 million for the three months ended June 30, 2021 from $6.9 million for the three months ended June 30, 2020. The increase was primarily due to a $1.0 million legal settlement accrual release in the three months ended June 30, 2020, partially offset by decreases of $0.3 million in depreciation and amortization expenses, $0.2 million in payroll and related expenses, and $0.2 million in business promotion and marketing expenses. Brands Selling, general and administrative expenses in the Brands segment increased by $0.4 million to $1.4 million during the three months ended June 30, 2021 from $1.0 million during the three months ended June 30, 2020. The increase was primarily due to increases of $0.2 million in payroll and related expenses and $0.2 million in other expenses. Corporate and Other Selling, general and administrative expenses for the Corporate and Other segment increased approximately $4.2 million to $11.8 million during the three months ended June 30, 2021 from $7.6 million for the three months ended June 30, 2020. The increase was primarily due to increases of $2.9 million in payroll and related expenses, $0.5 million in gain from currency exchange, $0.4 million in software and equipment expense, $0.2 million in transaction costs, and $0.2 million in other expenses. Impairment of tradenames . Due to the impact of the COVID-19 outbreak on economic activity and market volatility, we tested our intangible assets as of June 30, 2020 and made the determination that the indefinite-lived tradenames in the Brands segment were impaired. In the three months ended June 30, 2020, the Company recognized impairment of $8.5 million on the indefinite-lived tradenames. There was no impairment in the three months ended June 30, 2021. 43 Other Income (Expense). Other income included interest income of less than $0.1 million during the three months ended June 30, 2021 and $0.2 million during the three months ended June 30, 2020. Gain on extinguishment of loans in the amount of $6.5 million during the three months ended June 30, 2021 was due to National PPP loans that were forgiven by the SBA. Interest expense was $20.9 million during the three months ended June 30, 2021 compared to $16.5 million during the three months ended June 30, 2020. The increase in interest expense during the three months ended June 30, 2021 was primarily due to an increase in interest expense of $4.3 million from the issuance of senior notes. Other income in the three months ended June 30, 2021 included a loss on equity investments of $0.9 million compared to a loss of $0.3 million in the prior year. Income Before Income Taxes . Income before income taxes was $95.0 million during the three months ended June 30, 2021 compared to $114.7 million during the three months ended June 30, 2020. The decrease in income before income taxes was primarily due to an increase in operating expenses of approximately $91.5 million, interest expense of $4.3 million, loss from equity investments of $0.5 million, and a decrease in interest income of $0.2 million, partially offset by an increase in revenue of $70.3 million and gain on extinguishment of loans of $6.5 million, as discussed above. Provision for Income Taxes. Provision for income taxes was $19.9 million during the three months ended June 30, 2021 compared to $32.2 million during the three months ended June 30, 2020. The effective income tax rate was 20.9% for the three months ended June 30, 2021 as compared to 28.1% for the three months ended June 30, 2020. Net Loss Attributable to Noncontrolling Interest . Net loss attributable to noncontrolling interests represents the proportionate share of net loss generated by membership interests of partnerships that we do not own. The net loss attributable to noncontrolling interests was $0.6 million during the three months ended June 30, 2021 compared to net loss of $1.3 million during the three months ended June 30, 2020. Net Income Attributable to the Company. Net income attributable to the Company for the three months ended June 30, 2021 was $75.7 million, a decrease from $83.8 million for the three months ended June 30, 2020. The decrease in net income attributable to the Company during the three months ended June 30, 2021 as compared to the same period in 2020 was primarily due to a decrease in operating income of $21.2 million, and increase in loss from equity investments of $0.5 million, an increase in interest expense of $4.3 million, and a decrease in interest income of $0.2 million, partially offset by a decrease in provision for income taxes of $12.3 million and a gain on extinguishment of loans of $6.5 million. Preferred Stock Dividends . On October 7, 2019, the Company closed its public offering of Depositary Shares, each representing 1/1000th of a share of 6.875% Series A Cumulative Perpetual Preferred Stock, (trading under NASDAQ symbol “RILYP”), par value $0.0001 per share. Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends are payable quarterly in arrears, on or about the last day of January, April, July and October. On April 5, 2021, the Company declared a cash dividend representing $0.4296875 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2020. On September 4, 2020, the Company closed its public offering of Depositary Shares, each representing 1/1000th of a share of 7.375% Series B Cumulative Perpetual Preferred Stock (trading under the NASDAQ symbol “RILYL”), par value $0.0001 per share. Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends are payable quarterly in arrears, on or about the last day of January, April, July and October. On April 5, 2021, the Company declared a cash dividend of $0.4609375 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021. Net Income Available to Common Shareholders . Net income available to common shareholders for the three months ended June 30, 2021 was $73.9 million, a decrease from $82.8 million for the three months ended June 30, 2020. The decrease in net income available to common shareholders during the three months ended June 30, 2021 as compared to the same period in 2020 was primarily due to a decrease in operating income of $21.2 million, an increase in interest expense of $4.3 million, an increase in preferred stock dividends of $0.7 million, an increase in loss from equity investments of $0.5 million, and a decrease in interest income of $0.2 million, partially offset by a decrease in provision for income taxes of $12.3 million, gain on extinguishment of loans of $6.5 million and a decrease in loss attributable to noncontrolling interest of $0.7 million. 44 Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020 Condensed Consolidated Statements of Operations (Dollars in thousands) Six Months Ended June 30, June 30, Change 2021 2020 Amount % Revenues: Services and fees $ 555,612 $ 284,976 $ 270,636 95.0 % Trading income (losses) and fair value adjustments on loans 299,621 (67,895 ) 367,516 n/m Interest income - Loans and securities lending 62,411 46,357 16,054 34.6 % Sale of goods 19,285 2,824 16,461 n/m Total revenues 936,929 266,262 670,667 n/m Operating expenses: Direct cost of services 23,416 27,937 (4,521 ) (16.2 %) Cost of goods sold 8,952 1,629 7,323 n/m Selling, general and administrative expenses 391,266 194,306 196,960 101.4 % Impairment of tradenames — 12,500 (12,500 ) (100.0 %) Interest expense - Securities lending and loan participations sold 30,172 19,694 10,478 53.2 % Total operating expenses 453,806 256,066 197,740 77.2 % Operating income 483,123 10,196 472,927 n/m Other income (expense): Interest income 105 470 (365 ) (77.7 %) Gain on extinguishment of loans 6,509 — 6,509 100.0 % Income (loss) on equity investments 23 (554 ) 577 n/m Interest expense (40,642 ) (32,163 ) (8,479 ) 26.4 % Income (loss) before income taxes 449,118 (22,051 ) 471,169 n/m (Provision) benefit for income taxes (117,420 ) 5,331 (122,751 ) n/m Net income (loss) 331,698 (16,720 ) 348,418 n/m Net income (loss) attributable to noncontrolling interests 1,366 (1,895 ) 3,261 (172.1 %) Net income (loss) attributable to B. Riley Financial, Inc. 330,332 (14,825 ) 345,157 n/m Preferred stock dividends 3,538 2,142 1,396 65.2 % Net income (loss) available to common shareholders $ 326,794 $ (16,967 ) $ 343,761 n/m n/m - Not applicable or not meaningful. 45 Revenues The table below and the discussion that follows are based on how we analyze our business. Six Months Ended June 30, June 30, Change 2021 2020 Amount % Revenues - Services and fees: Capital Markets segment $ 296,976 $ 133,964 $ 163,012 121.7 % Wealth Management segment 152,986 34,205 118,781 n/m Auction and Liquidation segment 12,892 27,867 (14,975 ) (53.7 %) Financial Consulting segment 45,144 39,559 5,585 14.1 % Principal Investments - United Online and magicJack segment 38,725 42,374 (3,649 ) (8.6 %) Brands 8,889 7,007 1,882 26.9 % Subtotal 555,612 284,976 270,636 95.0 % Revenues - Sale of goods Auction and Liquidation segment 17,835 1,045 16,790 n/m Principal Investments - United Online and magicJack segment 1,450 1,779 (329 ) n/m Subtotal 19,285 2,824 16,461 n/m Trading income (losses) and fair value adjustments on loans Capital Markets segment 294,400 (67,935 ) 362,335 n/m Wealth Management segment 5,221 40 5,181 n/m Subtotal 299,621 (67,895 ) 367,516 n/m Interest income - Loans and securities lending: Capital Markets segment 62,411 46,357 16,054 34.6 % Total revenues $ 936,929 $ 266,262 $ 670,667 n/m n/m - Not applicable or not meaningful. Total revenues increased approximately $670.7 million to $936.9 million during the six months ended June 30, 2021 from $266.3 million during the six months ended June 30, 2020. The increase in revenues during the six months ended June 30, 2021 was primarily due to trading gains and gains from fair value adjustment on loans that amounted to $299.6 million and in the prior year period ended June 30, 2020 trading losses and losses on fair value adjustments on loans amounted to $67.9 million and was reported as a reduction in revenue in 2020. The increase in revenue from services and fees of $270.6 million in the six months ended June 30, 2021 was primarily due to increases in revenue of $163.0 million in the Capital Markets segment, $118.8 million in the Wealth Management segment, $5.6 million in the Financial Consulting segment and $1.9 million in the Brands segment; partially offset by decreases in revenues of $15.0 million in the Auction and Liquidation segment and $3.6 million in the Principal Investments — United Online and magicJack segment. Revenues from services and fees in the Capital Markets segment increased $163.0 million, to $297.0 million during the six months ended June 30, 2021 from $134.0 million during the six months ended June 30, 2020. The increase in revenues was primarily due to increases in revenue of $140.8 million from corporate finance, consulting and investment banking fees, $19.1 million from the acquisition of National in the first quarter of 2021, and other income of $4.0 million; partially offset by decreases of $0.4 million in commissions and $0.4 million in wealth and asset management fees. Revenues from services and fees in the Wealth Management segment increased $118.8 million, to $153.0 million during the six months ended June 30, 2021 from $34.2 million during the six months ended June 30, 2020. The increase in revenues was primarily due to increases in revenue of $106.6 million from the acquisition of National and $12.0 million from wealth and asset management fees. Revenues from services and fees in the Auction and Liquidation segment decreased $15.0 million, to $12.9 million during the six months ended June 30, 2021 from $27.9 million during the six months ended June 30, 2020. The decrease in revenues was primarily due to fewer large retail fee liquidation engagements. Revenues from services and fees in the Financial Consulting segment increased $5.6 million, to $45.1 million during the six months ended June 30, 2021 from $39.6 million during the six months ended June 30, 2020. The increase in revenues was primarily due to an increase in revenue of $2.5 million from advisory services, $2.4 million in real estate engagement fees where we provide lease modification services for corporate tenants, and $0.6 million due to a newly formed operations management group during fiscal year 2021. Revenues from services and fees in the Principal Investments - United Online and magicJack segment decreased $3.6 million to $38.7 million during the six months ended June 30, 2021 from $42.4 million during the six months ended June 30, 2020. The decrease in revenues was primarily due to decreases in subscription services of $2.6 million and in advertising licensing and other of $1.1 million. Management expects revenues from the Principal Investments - United Online and magicJack segment to continue to decline year over year. 46 Revenues from services and fees in the Brands segment increased $1.9 million to $8.9 million during the six months ended June 30, 2021 from $7.0 million during the six months ended June 30, 2020. The primary source of revenue included in this segment is the licensing of trademarks. Trading income and fair value adjustments on loans consisted of gains in the amount of $299.6 million during the six months ended June 30, 2021 compared to trading losses and losses on fair value adjustments on loans in the amount of $67.9 million for the six months ended June 30, 2020. The $367.5 million increase in gain for the six months ended June 30, 2021 was primarily due to increases of $362.3 million in the Capital Markets segment and $5.2 million in the Wealth Management segment. The gain of $299.6 million for the six months ended June 30, 2021 included realized and unrealized amounts earned on investments made in our proprietary trading accounts of $289.6 million and unrealized amounts on our loans receivable, at fair value of $10.0 million. Interest income – loans and securities lending increased $16.1 million, to $62.4 million during the six months ended June 30, 2021 from $46.4 million during the six months ended June 30, 2020. Interest income from securities lending was $36.8 million and $23.6 million during the six months ended June 30, 2021 and 2020, respectively. Interest income from loans was $25.6 million and $22.7 million during the six months ended June 30, 2021 and 2020, respectively. Revenues – Sale of Goods Revenues from the sale of goods increased $16.5 million, to $19.3 million during the six months ended June 30, 2021 from $2.8 million during the six months ended June 30, 2020. Revenues from sale of goods were primarily attributable to $17.8 million of sales of retail goods related to a retail liquidation engagement in Europe and $1.5 million of sales of magicJack devices that were sold in connection with VoIP services. Cost of goods sold for the six months ended June 30, 2021 was $9.0 million, resulting in a gross margin of 53.6%. Operating Expenses Direct Cost of Services Direct cost of services decreased $4.5 million, to $23.4 million during the six months ended June 30, 2021 from $27.9 million during the six months ended June 30, 2020. Direct cost of services decreased by $3.9 million in the Auction and Liquidation segment and $0.6 million in the Principal Investments — United Online and magicJack segment. The decrease in direct costs in the Auction and Liquidation segment was primarily due to a decrease in the number of retail fee type engagements performed during the six months ended June 30, 2021, partially offset by an increase of $4.7 million of direct costs incurred on a retail liquidation engagement in Europe in the second quarter of 2021, where we purchased inventory for resale and as part of the retail liquidation engagement we incurred costs related to the store operations which primarily related to expenses for occupancy, payroll and other store operating costs. Selling, General and Administrative Expenses Selling, general and administrative expenses during the six months ended June 30, 2021 and 2020 were comprised of the following: Six Months Ended Six Months Ended June 30, 2021 June 30, 2020 Change Amount % Amount % Amount % Capital Markets segment $ 152,625 39.0 % $ 86,115 44.3 % $ 66,510 77.2 % Wealth Management segment 154,913 39.6 % 33,784 17.4 % 121,129 n/m Auction and Liquidation segment 4,566 1.2 % 4,256 2.2 % 310 7.3 % Financial Consulting segment 37,647 9.6 % 31,137 16.0 % 6,510 20.9 % Principal Investments - United Online and magicJack segment 14,700 3.8 % 15,242 7.8 % (542 ) (3.6 %) Brands segment 2,795 0.7 % 2,642 1.4 % 153 5.8 % Corporate and Other segment 24,020 6.1 % 21,130 10.9 % 2,890 13.7 % Total selling, general & administrative expenses $ 391,266 100.0 % $ 194,306 100.0 % $ 196,960 101.4 % Total selling, general and administrative expenses increased approximately $197.0 million to $391.3 million during the six months ended June 30, 2021 from $194.3 million for the six months ended June 30, 2020. The increase of approximately $197.0 million in selling, general and administrative expenses was due to increases of $66.5 million in the Capital Markets segment, $121.1 million in the Wealth Management segment, $0.3 million in the Auction and Liquidation segment, $6.5 million in the Financial Consulting segment, $0.2 million in the Brands segment, and $2.9 million in the Corporate and Other segment, partially offset by a decrease of $0.5 million in the Principal Investments — United Online and magicJack segment. 47 Capital Markets Selling, general and administrative expenses in the Capital Markets segment increased by $66.5 million to $152.6 million during the six months ended June 30, 2021 from $86.1 million during the six months ended June 30, 2020. The increase was primarily due to increases of $44.2 million in payroll and related expenses, $13.2 million from the acquisition of National, $6.9 million in consulting expenses, $2.6 million in investment banking deal expenses, and $0.4 million in clearing charges, partially offset by a decrease of $0.9 million in legal expenses. Wealth Management Selling, general and administrative expenses in the Wealth Management segment increased by $121.1 million to $154.9 million during the six months ended June 30, 2021 from $33.8 million during the six months ended June 30, 2020. The increase was primarily due to increases of $113.0 million from the acquisition of National and $9.3 million in payroll and related expenses, partially offset by decreases of $0.7 million in legal expenses and $0.5 million in clearing charges. Auction and Liquidation Selling, general and administrative expenses in the Auction and Liquidation segment increased by $0.3 million to $4.6 million during the six months ended June 30, 2021 from $4.3 million during the six months ended June 30, 2020. The increase was primarily due to an increase of $1.2 million in business development expenses; partially offset by decreases of $0.5 million in payroll and related expenses, and $0.5 million in foreign currency exchange. Financial Consulting Selling, general and administrative expenses in the Financial Consulting segment increased by $6.5 million to $37.6 million during the six months ended June 30, 2021 from $31.1 million during the six months ended June 30, 2020. The increase was primarily due to increases of $5.3 million in payroll and related expenses, $0.6 million in legal expenses, $0.3 million in outside contractor expenses, and $0.3 million in other expenses. Principal Investments — United Online and magicJack Selling, general and administrative expenses in the Principal Investments — United Online and magicJack segment decreased $0.5 million to $14.7 million for the six months ended June 30, 2021 from $15.2 million for the six months ended June 30, 2020. The decrease was primarily due to decreases of $0.6 million in payroll and related expenses, $0.6 million in depreciation and amortization expenses, and $0.1 million in communications expenses, partially offset by an increase primarily due to a $0.8 million legal settlement accrual release in the six months ended June 30, 2020. Brands Selling, general and administrative expenses in the Brands segment increased by $0.2 million to $2.8 million during the six months ended June 30, 2021 from $2.6 million during the six months ended June 30, 2020. The increase was primarily due to an increase of $0.2 million in management fees paid. Corporate and Other Selling, general and administrative expenses for the Corporate and Other segment increased approximately $2.9 million to $24.0 million during the six months ended June 30, 2021 from $21.1 million for the six months ended June 30, 2020. The increase was primarily due to increases of $9.2 million in payroll and related expenses, $2.5 million in extinguishment of debt as further discussed below, and $0.5 million in computer software expenses, partially offset by a decrease of $9.1 million primarily due to recording a pre-acquisition litigation claim related to one of our acquired subsidiaries in the six months ended June 30, 2021. 48 During the six months ended June 30, 2021, we repurchased 5,126,228 senior notes with an aggregate face value of $128.2 million at par, resulting in a loss net of expenses and original issue discount of $0.9 million. The total redemption payment included approximately $1.6 million in accrued interest. During the six months ended June 30, 2020, we repurchased 137,710 senior notes with an aggregate face value of $3.4 million for $1.8 million resulting in a gain net of expenses and original issue discount of $1.6 million. As part of the repurchase, the Company paid $0.03 million in interest accrued through the date of each respective repurchase. Impairment of tradenames . Due to the impact of the COVID-19 outbreak on economic activity and market volatility, we tested our intangible assets as of March 31, 2020 and June 30, 2020 and made the determination that the indefinite-lived tradenames in the Brands segment were impaired. In the six months ended June 30, 2020, the Company recognized impairments of $12.5 million on the indefinite-lived tradenames. There was no impairment in the six months ended June 30, 2021. Other Income (Expense). Other income included interest income of $0.1 million during the six months ended June 30, 2021 and $0.5 million during the six months ended June 30, 2020. Gain on extinguishment of loans in the amount of $6.5 million during the six months ended June 30, 2021 was due to National PPP loans that were forgiven by the SBA. Interest expense was $40.6 million during the six months ended June 30, 2021 compared to $32.2 million during the six months ended June 30, 2020. The increase in interest expense during the six months ended June 30, 2021 was primarily due to an increase in interest expense of $8.6 million from the issuance of senior notes, partially offset by a decrease in interest expense of $0.2 million on our asset based credit facility. Other income in the six months ended June 30, 2021 included a gain on equity investments of $0.02 million compared to a loss of $0.6 million in the prior year period. Income (Loss) Before Income Taxes . Income before income taxes was $449.1 million during the six months ended June 30, 2021 compared to loss before income taxes of $22.1 million during the six months ended June 30, 2020. The increase of $471.2 million in income before income taxes was primarily due to an increase in revenues of approximately $670.7 million, a gain on extinguishment of loans of $6.5 million, and a gain from equity investments of $0.6 million, partially offset by increases in operating expenses of $197.7 million, interest expense of $8.5 million, and a decrease in interest income of $0.4 million. (Provision) Benefit for Income Taxes. Provision for income taxes was $117.4 million during the six months ended June 30, 2021 compared to benefit for income taxes of $5.3 million during the six months ended June 30, 2020. The effective income tax rate was a provision of 26.1% for the six months ended June 30, 2021 as compared to a benefit of 24.2% for the six months ended June 30, 2020. Net Income (Loss) Attributable to Noncontrolling Interest . Net income attributable to noncontrolling interests represents the proportionate share of net income generated by membership interests of partnerships that we do not own. The net income attributable to noncontrolling interests was $1.4 million during the six months ended June 30, 2021 compared to net loss of $1.9 million during the six months ended June 30, 2020. Net Income (Loss) Attributable to the Company . Net income attributable to the Company for the six months ended June 30, 2021 was $330.3 million, an increase from net loss attributable to the Company of $14.8 million for the six months ended June 30, 2020. The increase of $345.2 million in net income attributable to the Company during the six months ended June 30, 2021 as compared to the same period in 2020 was primarily due to an increase in operating income of $472.9 million, an increase in gain on extinguishment of loans of $6.5 million, and an increase in gain from equity investments of $0.6 million, partially offset by an increase in provision for income taxes of $122.8 million, an increase in interest expense of $8.5 million, an increase in net income attributable to noncontrolling interests of $3.3 million, and a decrease in interest income of $0.4 million. 49 Preferred Stock Dividends . On October 7, 2019, the Company closed its public offering of Depositary Shares, each representing 1/1000th of a share of 6.875% Series A Cumulative Perpetual Preferred Stock, (trading under NASDAQ symbol “RILYP”), par value $0.0001 per share. Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends are payable quarterly in arrears, on or about the last day of January, April, July and October. On January 11, 2021, the Company declared a cash dividend representing $0.4296875 per Depositary Share, which was paid on January 29, 2021 to holders of record as of the close of business on January 21, 2021. On April 5, 2021, the Company declared a cash dividend representing $0.4296875 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021. On September 4, 2020, the Company closed its public offering of Depositary Shares, each representing 1/1000th of a share of 7.375% Series B Cumulative Perpetual Preferred Stock (trading under the NASDAQ symbol “RILYL”), par value $0.0001 per share. Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends are payable quarterly in arrears, on or about the last day of January, April, July and October. On January 11, 2021, the Company declared a cash dividend of $0.4609375 per Depositary Share, which was paid on January 29, 2021 to holders of record as of the close of business on January 21, 2021. On April 5, 2021, the Company declared a cash dividend representing $0.4609375 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021. Net Income (Loss) Available to Common Shareholders . Net income available to common shareholders for the six months ended June 30, 2021 was $326.8 million, an increase from net loss available to common shareholders of $17.0 million for the six months ended June 30, 2020. The increase of $343.8 million in net income available to common shareholders during the six months ended June 30, 2021 as compared to the same period in 2020 was primarily due to increases in operating income of $472.9 million, gain on extinguishment of loans of $6.5 million, and a gain from equity investments of $0.6 million, partially offset by an increase in provision for income taxes of $122.8 million, an increase in interest expense of $8.5 million, an increase in income attributable to noncontrolling interest of $3.3 million, an increase in preferred stock dividends of $1.4 million, and a decrease in interest income of $0.4 million. Liquidity and Capital Resources Our operations are funded through a combination of existing cash on hand, cash generated from operations, borrowings under our senior notes payable, term loans and credit facilities, and special purposes financing arrangements. During the six months ended June 30, 2021 and 2020, we generated net income of $331.7 million and net loss of $16.7 million, respectively. Our cash flows and profitability are impacted by capital market engagements performed on a quarterly and annual basis and amounts realized from the sale of our investments in marketable securities. As of June 30, 2021, we had $297.4 million of unrestricted cash and cash equivalents, $1.3 million of restricted cash, $1,278.8 million of securities and other investments owned at fair value, $270.3 million of loans receivable, and $1,475.0 million of borrowings outstanding. The borrowings outstanding of $1,475.0 million at June 30, 2021 included senior notes at amortized cost of $1,213.1 million, $257.1 million in term loans borrowed pursuant to the BRPAC and Nomura Credit Agreements, $4.4 million of loan participations sold, and $0.4 million of notes payable. We believe that our current cash and cash equivalents, securities and other investments owned, funds available under our asset based credit facility, funds available under the BRPAC and Nomura term loans, funds available under the Nomura revolving credit facility, and cash expected to be generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements. We continue to monitor our financial performance to ensure sufficient liquidity to fund operations and execute on our business plan. 50 From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. On July 29, 2021, we declared a regular dividend of $0.50 per share and special dividend of $1.50 per share that will be paid on or about August 26, 2021 to stockholders of record as of August 13, 2021. On May 3, 2021, we declared a regular dividend of $0.50 per share and special dividend of $2.50 per share that was paid on May 28, 2021 to stockholders of record as of May 17, 2021. On February 25, 2021, the Board of Directors announced an increase to the regular quarterly dividend from $0.375 per share to $0.50 per share. During the year ended December 31, 2020, we paid cash dividends on our common stock of $38.8 million. While it is the Board’s current intention to make regular dividend payments of $0.50 per share each quarter and special dividend payments dependent upon exceptional circumstances from time to time, our Board of Directors may reduce or discontinue the payment of dividends at any time for any reason it deems relevant. The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors. A summary of dividend activity for the six months ended June 30, 2021 and the year ended December 31, 2020 was as follows: Regular Special Total Stockholder Dividend Dividend Dividend Date Declared Date Paid Record Date Amount Amount Amount May 3, 2021 May 28, 2021 May 17, 2021 $ 0.500 $ 2.500 $ 3.000 February 25, 2021 March 24, 2021 March 10, 2021 0.500 3.000 3.500 October 28, 2020 November 24, 2020 November 10, 2020 0.375 0.000 0.375 July 30, 2020 August 28, 2020 August 14, 2020 0.300 0.050 0.350 May 8, 2020 June 10, 2020 June 1, 2020 0.250 0.000 0.250 March 3, 2020 March 31, 2020 March 17, 2020 0.250 0.100 0.350 Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25 thousand liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October. As of June 30, 2021, dividends in arrears in respect of the Depositary Shares were $0.8 million. On January 11, 2021, the Company declared a cash dividend $0.4296875 per Depositary Share, which was paid on January 29, 2021 to holders of record as of the close of business on January 21, 2021. On April 5, 2021, the Company declared a cash dividend $0.4296875 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021. On July 8, 2021, the Company declared a cash dividend $0.4296875 per Depositary Share, which will be paid on or about August 2, 2021 to holders of record as of the close of business on July 21, 2021. Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $25 thousand liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October. As of June 30, 2021, dividends in arrears in respect of the Depositary Shares were $0.5 million. On January 11, 2021, the Company declared a cash dividend $0.4609375 per Depositary Share, which was paid on January 29, 2021 to holders of record as of the close of business on January 21, 2021. On April 5, 2021, the Company declared a cash dividend $0.4609375 per Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021. On July 8, 2021, the Company declared a cash dividend $0.4609375 per Depositary Share, which will be paid on or about August 2, 2021 to holders of record as of the close of business on July 21, 2021. Our principal sources of liquidity to finance our business is our existing cash on hand, cash flows generated from operating activities, funds available under revolving credit facilities and special purpose financing arrangements. Cash Flow Summary Six Months Ended June 30, 2021 2020 (Dollars in thousands) Net cash (used in) provided by: Operating activities $ (147,901 ) $ 14,229 Investing activities (13,722 ) (83,354 ) Financing activities 356,051 71,815 Effect of foreign currency on cash (534 ) (705 ) Net increase in cash, cash equivalents and restricted cash $ 193,894 $ 1,985 51 Cash used in operating activities was $147.9 million during the six months ended June 30, 2021 compared to cash provided of $14.2 million during the six months ended June 30, 2020. Cash used in operating activities for the six months ended June 30, 2021 consisted of the positive impact of net income of $331.7 million and noncash items of $50.2 million, offset by the negative impact of changes in operating assets and liabilities of $529.8 million. The positive cash flow impact from noncash items of $50.2 million included deferred income taxes of $51.2 million, share-based compensation of $14.1 million, depreciation and amortization of $12.9 million, loss on extinguishment of debt of $0.9 million, provision for doubtful accounts of $0.8 million, dividends from equity investments of $0.6 million, and income allocated for mandatorily redeemable noncontrolling interests of $0.3 million, partially offset by fair value adjustments of $10.0 million, other noncash interest and other of $9.1 million, gain on extinguishment of loans of $6.5 million, gain on equity investment of $3.5 million, and effect of foreign currency on operations of $1.5 million. Cash used in investing activities was $13.7 million during the six months ended June 30, 2021 compared to cash used in investing activities of $83.4 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, cash used in investing activities consisted of cash used in purchases of loans receivable of $87.3 million, repayments of loan participations sold of $10.8 million, cash used for purchases of equity investments of $10.5 million, cash used in the National acquisition of $0.4 million, and purchases of property and equipment of $0.3 million, partially offset by cash received from loans receivable repayment of $95.5 million. During the six months ended June 30, 2020, cash used in investing activities consisted of cash used for the purchase of loans receivable of $152.2 million, repayments of loan participations sold of $0.9 million, cash used for equity investments of $6.5 million, and cash used for acquisition of other businesses of $1.5 million, offset by cash received from loans receivable repayment of $74.5 million, sale of a loan receivable to a related party of $1.8 million and loan participations sold of $2.4 million. Cash provided by financing activities was $356.1 million during the six months ended June 30, 2021 compared to cash provided by financing activities of $71.8 million during the six months ended June 30, 2020. During the six months ended June 30, 2021, cash provided by financing activities primarily consisted of $475.7 million proceeds from issuance of senior notes, $200.0 million proceeds from the Nomura term loan, $64.7 million net proceeds from offerings of common stock, $10.6 million contributions from noncontrolling interests, and $8.3 million net proceeds from offerings of preferred stock, partially offset by $181.3 million used to pay dividends on our common shares, $128.2 million used to repurchase our senior notes, $37.6 million used to repay our notes payable, $15.7 million used to pay debt issuance costs, $14.8 million in distributions to noncontrolling interests, $11.5 million used for repayment on our BRPAC term loan, $10.4 million used to pay employment taxes on vesting of restricted stock, and $3.5 million used to pay dividends on our preferred shares. During the six months ended June 30, 2020, cash provided by financing activities primarily consisted of $171.1 million proceeds from issuance of senior notes and $4.6 million proceeds from offerings of preferred stock, offset by $37.1 million used to repay our asset based credit facility, $27.8 million used to repurchase our common stock, $17.5 million used to pay dividends on our common shares, $9.6 million used for repayment on our BRPAC term loan, $2.8 million used to pay debt issuance costs, $2.7 million used for payment of employment taxes on vesting of restricted stock, $2.1 million in distributions to noncontrolling interests, $2.1 million used to pay dividends on our preferred shares, $1.8 million used to repurchase our senior notes, and $0.4 million used to repay our other notes payable. Credit Agreements Nomura Credit Agreement On June 23, 2021, the Company, the Primary Guarantor and the Borrower entered into the Credit Agreement with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, providing for a four-year $200.0 million secured Term Loan Facility and a four-year $80.0 million secured Revolving Credit Facility. The Credit Facilities will mature on June 23, 2025, subject to acceleration or prepayment. 52 Eurodollar 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 Revolving Credit 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 Credit 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 $115.0 million and the Primary Guarantor to maintain net asset value of at least $900.0 million. 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 $2.5 million per quarter. At June 30, 2021, the outstanding balance on the credit facility’s term loan was $194.2 million (net of unamortized debt issuance costs of $5.8 million). Interest on the term loan for the three and six months ended June 30, 2021 was $0.2 million (including amortization of deferred debt issuance costs of $0.03 million). The interest rate on the term loan at June 30, 2021 was 4.64%. We 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 $0.03 million (including amortization of deferred financing costs of $0.01 million). The interest rate on the Revolving Credit Facility at June 30, 2021 was 4.65%. Subsequent to June 30, 2021, we drew down the full $80.0 million of the Revolving Credit Facility. We are in compliance with all financial covenants in the Nomura Credit Agreement at June 30, 2021. 53 Wells Fargo Credit Agreement On April 21, 2017, we amended the asset based credit facility agreement (as amended, the “Credit Agreement”) with Wells Fargo Bank to increase the maximum borrowing limit from $100.0 million to $200.0 million. 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 a separate credit agreement (a “UK Credit Agreement”) dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom with borrowings up to 50.0 million British Pounds. Any borrowing on the UK Credit Agreement reduces the availability of the asset based $200.0 million credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. The Credit Agreement continues to include the addition of our Canadian subsidiary, from the October 5, 2016 amendment to the Credit Agreement, to facilitate borrowings to fund retail liquidation transactions in Canada. From time to time, we utilize this credit facility to fund costs and expenses incurred in connection with liquidation engagements. We also utilize this credit facility in order to issue letters of credit in connection with liquidation engagements conducted on a guaranteed basis. Subject to certain limitations and offsets, we are permitted to borrow up to $200.0 million under the credit facility, less the aggregate principal amount borrowed under the UK Credit Agreement (if in effect). Borrowings under the credit facility are only made at the discretion of the lender and are generally required to be repaid within 180 days. The interest rate for each revolving credit advance under the related 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 is secured by the proceeds received for services rendered in connection with the 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, if any. 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 liquidation engagements that are financed under the credit facility as set forth in the related credit agreement. We typically seek borrowings on an engagement-by-engagement basis. The Credit Agreement contains certain covenants, including covenants that limit or restrict our ability to incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. There was no outstanding balance on this credit facility at June 30, 2021 and 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. BRPAC 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 of borrowers, entered into a credit agreement with Banc of California, N.A. in the capacity as agent and lender and with the other lenders party thereto (the “BRPAC Credit Agreement”). Under the BRPAC Credit Agreement, we borrowed $80.0 million due December 19, 2023. Pursuant to the terms of the BRPAC Credit Agreement, we may request additional optional term loans in an aggregate principal amount of up to $10.0 million at any time prior to the first anniversary of the agreement date. On February 1, 2019, the Borrowers entered into the First Amendment to Credit Agreement and Joinder with City National Bank as a new lender in which the new lender extended to Borrowers the additional $10.0 million. 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 $75.0 million term loan to the Borrowers, the proceeds of which the Borrowers’ will use to repay the outstanding principal amount of the existing Terms Loans and Optional Loans and 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 $30.0 million on the date of the Second Amendment, (iii) the maturity date of the new Term Loans is 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, as further discussed in Note 8 to the accompanying financial statements. The borrowings under the amended BRPAC Credit Agreement bear interest equal to the LIBOR plus a margin of 2.75% to 3.25% depending on the Borrowers’ consolidated total funded debt ratio as defined in the BRPAC Credit Agreement. At June 30, 2021, the interest rate on the BRPAC Credit Agreement was 3.36%. 54 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 $4.8 million per quarter, from March 31, 2022 to December 31, 2022 are in the amount of $4.3 million per quarter, from March 31, 2023 to December 31, 2023 are in the amount of $3.8 million per quarter, from March 31, 2024 to December 31, 2024 are in the amount of $3.3 million per quarter, and from March 31, 2025 to December 31, 2025 are in the amount of $2.8 million per quarter. As of June 30, 2021 and December 31, 2020, the outstanding balance on the term loan was $62.9 million (net of unamortized debt issuance costs of $0.6 million) and $74.2 million (net of unamortized debt issuance costs of $0.8 million), respectively. Interest expense on the term loan during the three months ended June 30, 2021 and 2020, was $0.7 million (including amortization of deferred debt issuance costs of $0.08 million) and $0.6 million (including amortization of deferred debt issuance costs of $0.07 million), respectively. Interest expense on the term loan during the six months ended June 30, 2021 and 2020, was $1.4 million (including amortization of deferred debt issuance costs of $0.2 million) and $1.4 million (including amortization of deferred debt issuance costs of $0.1 million), respectively. We are in compliance with all financial covenants in the BRPAC Credit Agreement at June 30, 2021. Senior Note Offerings During the six months ended June 30, 2021, the Company issued $85.3 million of senior notes due with maturities 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 which allowed the Company to sell these senior notes. On January 25, 2021, the Company issued $230.0 million of senior notes due in January 2028 (“6.0% 2028 Notes”). 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 $225.7 million (after underwriting commissions, fees and other issuance costs of $4.3 million). The Notes bear interest at the rate of 6.0% per annum. On March 29, 2021, the Company issued $159.5 million of senior notes due in March 2026 (“5.5% 2026 Notes”). 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 $156.3 million (after underwriting commissions, fees and other issuance costs of $3.2 million). The 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 $128.2 million 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 $1.6 million in accrued interest. On 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 $122.8 million. 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 Date. At June 30, 2021 and December 31, 2020, the total senior notes outstanding was $1,213.1 million (net of unamortized debt issue costs of $13.9 million) and $870.8 million (net of unamortized debt issue costs of $9.6 million) with a weighted average interest rate of 6.49% and 6.95%, respectively. Interest on senior notes is payable on a quarterly basis. Interest expense on senior notes totaled $20.0 million and $15.6 million for the three months ended June 30, 2021 and 2020, respectively and $38.6 million and $30.0 million for the six months ended June 30, 2021 and 2020, respectively. 55 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 on January 28, 2021 (the “January 2021 Sales Agreement Prospectus”). This program provides for the sale by the Company of up to $150.0 million of certain of the Company’s senior notes. As of June 30, 2021, the Company had $64.7 million remaining availability under the April 2021 Sales Agreement. Off Balance Sheet Arrangements As part of our investment banking and financial services activities, from time to time we enter into guaranties of debt, commitments of other entities, and similar transactions that may be considered off-balance sheet arrangements. Babcock and Wilcox Commitments On June 30, 2021, in connection with B&W’s entry into new debt financing with lenders not related to us, we agreed to guaranty (the “B. Riley Guaranty”) up to $110.0 million of obligations that B&W may owe to providers of cash collateral pledged in connection with such debt financing. The B. Riley Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of B&W’s obligations under the Reimbursement Agreement. B&W shall pay us $0.9 million per annum in connection with the B. Riley Guaranty. B&W has agreed to reimburse us to the extent the B. Riley Guaranty is called upon. On August 10, 2020, we 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, we agreed to indemnify Berkley in connection with a default by B&W under the Indemnity Agreement relating to a $30.0 million 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 us $0.6 million on August 26, 2020. Other Commitments On June 19, 2020, we participated in a loan facility agreement to provide a total loan commitment up to 33.0 million EUROS to a retailer in Europe. We made an initial funding of 6.6 million EUROS in July 2020. No additional borrowings have been made since the initial funding, leaving unused future commitments available of up to 26.4 million EUROS as of June 30, 2021. At June 30, 2021, we had an outstanding commitment to purchase a loan pursuant to an assignment agreement with a client in the amount of $77.5 million that was funded on July 2, 2021. Simultaneously with the funding of the loan on July 2, 2021, we received a principal payment on the loan for $27.5 million reducing the loans receivable balance to $50.0 million. Except as disclosed above, we have no material obligations, assets or liabilities which would be considered off-balance sheet arrangements and do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, established for the purpose of facilitating off-balance sheet arrangements. Contractual Obligations On January 25, 2021, we issued $230.0 million of senior notes due in January 2028 (“6.0% 2028 Notes”) pursuant to the 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, we received net proceeds of $225.7 million (after underwriting commissions, fees and other issuance costs of $4.3 million). The Notes bear interest at the rate of 6.0% per annum. 56 On March 31, 2021, we exercised our option for early redemption at par $128.2 million 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 $1.6 million in accrued interest. On March 29, 2021, we issued $159.5 million of senior notes due in March 2026 (“5.5% 2026 Notes”) pursuant to the 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, we received net proceeds of $156.3 million (after underwriting commissions, fees and other issuance costs of $3.2 million). The Notes bear interest at the rate of 5.5% per annum. On July 26, 2021, we redeemed, in full, $122.8 million 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 $2.1 million in accrued interest. In connection with the full redemption, the 7.25% 2027 Notes were delisted from NASDAQ. As a result of the above, our total senior notes payable (including interest) increased to $1,497.4 million as of June 30, 2021, and comparing June 30, 2021 to December 31, 2020, our senior notes payable due in one year or less increased by $137.1 million, our senior notes payable due in 1-3 years increased by $128.5 million, our senior notes due in 4-5 years increased by $360.4 million while our senior notes due in more than 5 years decreased by $220.3 million. Additionally, our total contractual obligations increased to $1,860.1 million at June 30, 2021 and comparing June 30, 2021 to December 31, 2020, our total payments due in one year or less increased by $102.2 million, our payments due in 1-3 years increased $152.5 million, our payments due in 4-5 years increased by $541.7 million, while our payments due in more than 5 years decreased by $215.1 million. There were no other material changes to our contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. Recent Accounting Standards See Note 2(u) to the accompanying financial statements for recent accounting pronouncements we have not yet adopted and recently adopted.