What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-18 compared with 2025-02-21 · 299 added, 785 removed, 192 unchanged (85% of the section changed)

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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.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited 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:

Risk factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to:

volatility in our revenues and results of operations;

changing conditions in the financial markets;

matters related to our investment in Freedom VCM Holdings, LLC (“Freedom VCM”) and developments related to our prior business relationship with Brian Kahn (the former CEO of Freedom VCM);

the receipt by the Company and Bryant Riley of subpoenas from the SEC;

material weaknesses in internal control over financial reporting;

our ability to generate sufficient revenues to achieve and maintain profitability;

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the short term nature of our engagements;

the accuracy of our estimates and valuations of inventory or assets in “guarantee” based engagements;

failure to successfully compete in any of our businesses;

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, including continuing inflation and any further actions by the Federal Reserve to address inflation and the possibility of recession or an economic downturn;

the effects of pandemics or severe public health crises, and other related impacts including supply chain disruptions, labor shortages and increased labor costs;

the illiquidity of, and additional potential losses from, our proprietary investments;

changing economic and market conditions, including inflation and any actions by the Federal Reserve to address inflation, and the possibility of recession or an economic downturn;

the effects of tariffs and other governmental initiatives, and related impacts including supply chain disruptions, labor shortages and increased labor costs;

potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation;

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loss of key personnel;

our ability to borrow under our credit facilities or at-the-market offering as necessary;

our ability to borrow under our credit facilities;

failure to comply with the terms of our credit agreements or senior notes;

the level of our indebtedness;

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 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;

the impact of legal proceedings, including those related to the allegations raised against Brian Kahn;

the diversion of management time on divestiture -related issues;

the impact of legal proceedings, including in respect of matters related to Freedom VCM and Brian Kahn;

the activities of short sellers and their impact on our business and reputation;

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We operate through several consolidated subsidiaries (collectively, “B.

Riley”) that provide investment banking, brokerage, wealth management, asset management, direct lending, and business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.

The Company opportunistically invests in and acquires companies or assets with attractive risk-adjusted return profiles to benefit our shareholders.

We own and operate several uncorrelated consumer businesses on a principal basis.

approach is focused on high quality companies and assets in industries in which we have extensive knowledge and can benefit from our experience to make operational improvements and maximize free cash flow.

Our principal investments often leverage the financial, restructuring, and operational expertise of our professionals who work collaboratively across disciplines.

Riley”) that provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.

The Company also opportunistically invests in and acquires companies or assets with attractive risk-adjusted return, with a focus on making operational improvements within these companies in an effort to maximize free cash flow.

We are headquartered in Los Angeles, California and maintain offices throughout the U.S.

including in New York, Chicago, Metro District of Columbia, Boston, Memphis, Miami, San Francisco, Boca Raton, and Palm Beach, as well as additional offices located in Canada, Europe, Asia, and Australia.

Our Business Segments

We report our activities in five reportable business segments:

Capital Markets, Wealth Management, Financial Consulting, Communications, and Consumer segment.

Capital Markets, Wealth Management, Communications, Consumer, and E-Commerce segment.

The descriptions below illustrate the businesses that comprise our segments.

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Management believes that gains and losses on individual investments are generally impacted by individual characteristics specific to each investment and although this has an impact on our overall financial performance the impact of these gains and losses may not be indicative of the overall strength or weakness in each of our business operations.

Additionally, in evaluating the financial performance of each of our business, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate.

Additionally, in evaluating the financial performance of each of our businesses, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate.

Management recognizes that some of the Company’s businesses exhibit more volatile results.

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Riley may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

In our Capital Markets segment we have a portfolio of loans receivable that consisted of the following at September 30, 2024 and December 31, 2023:

Fair Value Adjustments on Loans

Loans Receivable, at Fair Value Three Months Ended

September 30, Nine Months Ended

September 30,

Industry or Type of Loan September 30, 2024 December 31, 2023

2024 2023 2024 2023

Related Party Loans:

Vintage Capital Management, LLC Retail / consumer $ 2,250 $ 200,506 $ (54,333) $ — $ (222,718) $ —

Freedom VCM Receivables, Inc.

Consumer receivable portfolio 9,310 42,183 534 419 (13,187) 419

Retail / consumer 63,705 104,760 (18,600) — (27,084) —

Badcock Corporation Consumer receivable portfolio 3,141 20,624 852 (5,185) (5,993) (5,185)

Other related party loans Services, Oil & Gas and Industrial 19,886 10,695 2,779 107 3,470 (1,439)

Total related party 98,292 378,768 (68,768) (4,659) (265,512) (6,205)

Excela Technologies, Inc.

Technology 36,609 50,296 (221) 4,420 47 2,575

Core Scientific, Inc.

Technology — 45,509 — (757) 8,473 34,785

Other loans Various 16,803 57,846 (2,488) 136 (2,268) 20,468

Total $ 151,704 $ 532,419 $ (71,477) $ (860) $ (259,260) $ 51,623

The fair value adjustments on loans receivable for the three months ended September 30, 2024 and 2023 were $(71.5) million and $(0.9) million, respectively.

The fair value adjustments on loans receivable for the nine months ended September 30, 2024 and 2023 was $(259.3) million and $51.6 million, respectively.

During the three and nine months ended September 30, 2024, fair value adjustments for loans receivable from related parties totaled $(68.8) million and $(265.5) million as compared to $(4.7) million and $(6.2) million during the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2024, fair value adjustments for other loans receivable totaled $(2.7) million and $6.3 million as compared to $3.8 million and $57.8 million during the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2024, fair value adjustments for the loan receivable for Vintage Capital Management, LLC was $(54.3) million and $(222.7) million, respectively.

The fair value adjustments are related primarily to the decline in the equity fair value of Freedom VCM Holdings, LLC (“Freedom VCM”) which, along with certain guarantees, is the primary collateral for this loan.

The decline in the equity fair value of Freedom VCM is due to increases in net debt, a decrease in the operational performance of Freedom VCM various business units during 2024, and a decline in the equity value of Freedom VCM’s investment in Conn’s, Inc.

common stock which was impacted by Conn’s Inc.

voluntary petition filing on July 23, 2024 for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

Subsequent to September 30, 2024, the collateral value for the VCM loan receivable was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

These factors resulted in a decrease in the fair value of the Freedom VCM loan receivable to $2.3 million at September 30, 2024.

During the three and nine months ended September 30, 2024, we recorded $0.5 million and $(13.2) million of fair value adjustments to the loan receivable for Freedom VCM Receivables, Inc..

The fair value adjustment of $(13.2) million during the nine months ended September 30, 2024 was primarily due to a fair value adjustment of $12.0 million recorded in the second quarter of 2024 resulting from higher projected charge offs of receivables on the consumer receivable portfolio that are serviced by Conn's, Inc.

which was impacted by Conn’s voluntary petition filing on July 23, 2024 for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

During the three and nine months ended September 30, 2024, we recorded $(18.6) million and $(27.1) million of fair value adjustments to the loan receivable for Conn’s, Inc.

The Company collected principal payments $104.8 million loan receivable from Conn’s Inc.

which reduced the principal balance of the loan to $93.0 million at June 30, 2024.

All accrued interest on this loan receivable was paid through June 30, 2024.

The fair value of the Conn’s loan receivable was $63.7 million at September 30, 2024.

The fair value adjustments of $(18.6) million during the quarter ended September 30, 2024, is primarily related to Conn’s Inc.

July 23, 2024 Chapter 11 Cases.

The filing of the Chapter 11 Cases impacted the operational performance of the stores operated by Conn’s, Inc.

and the additional expenses projected to be incurred in the

Chapter 11 Cases resulted in a decline in the projected recovery value of the collateral for the Conn’s Inc.

loan receivable.

The $45.5 million of loans receivable from Core Scientific, Inc.

(“Core Scientific”) at December 31, 2023 included a loan in the amount of $42.1 million that was settled in full upon Core Scientific’s exit from Chapter 11 bankruptcy in January 2024.

During the three and nine months ended September 30, 2024, fair value adjustments for the loan receivable from W.S.

Badcock Corporation was $0.9 million and $(6.0) million, respectively.

During the three and nine months ended September 30, 2023, fair value adjustments for the loan receivable from W.S.

Badcock Corporation was $(5.2) million.

The fair value adjustment of $(6.0) million during the nine months ended September 30, 2024, was primarily due to fair value adjustments recorded in the second quarter of 2024 related to higher projected charge offs of receivables on the consumer receivable portfolio resulting from Conn’s, Inc.

bankruptcy and estimated costs and losses from the projected liquidation of the consumer receivable portfolio.

During the nine months ended September 30, 2024, fair value adjustments for the loan receivable from Core Scientific, Inc.

was $8.5 million.

In the prior year nine months ended September 30, 2023, fair value adjustments for the loans receivable from Core Scientific, Inc.

was $34.8 million.

Core Scientific, Inc.

provides digital infrastructure for bitcoin mining and high-performance computing.

Core Scientific, Inc.

filed Chapter 11 bankruptcy in 2022, leading to a significant mark down of the loan receivable in the fourth quarter of 2022.

Subsequent to the Chapter 11 restructuring, and during the first quarter of 2023, there was a significant rebound in bitcoin prices resulting in significant growth and value assumptions.

As a result, the Core Scientific, Inc.

loan receivable had a fair value adjustment of $34.8 million for the nine months ended September 30, 2023.

Wealth Management – We provide retail brokerage, investment management, and insurance, and tax preparation services to individuals and families, small businesses, non-profits, trusts, foundations, endowments, and qualified retirement plans through a boutique private wealth and investment management firm to meet the individual financial needs and goals of our customers.

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Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions.

Wealth management revenues are comprised of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Brokerage revenues

$ 23,120 $ 25,018 $ 69,613 $ 68,655

Advisory revenues

19,935 18,915 59,501 55,199

6,334 6,942 21,039 22,806

$ 49,389 $ 50,875 $ 150,153 $ 146,660

Total assets under management were approximately $25.7 billion, $25.4 billion, and $24.0 billion at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.

Of these amounts, advisory assets under management totaled approximately $8.1 billion at September 30, 2024, and $8.0 billion at December 31, 2023, and $7.5 billion at September 30, 2023.

Advisory revenues were 0.24% of average advisory assets under management during the three months ended September 30, 2024 and 2023, respectively, and 0.25% and 0.24% of average advisory assets under management during the nine months ended September 30, 2024 and 2023, respectively.

The average revenues earned on advisory assets under management are not expected to fluctuate significantly from period to period as a percentage of advisory assets under management.

Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets.

Other revenues is primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Financial Consulting Segment - We provide a variety of specialized advisory services spanning bankruptcy, restructuring, turnaround management, forensic accounting, crisis and litigation support, and operations management.

On November 15, 2024, as more fully described in recent developments, the Company entered into a transaction whereby approximately 52.6% of the common equity interests of a newly formed subsidiary that included the Company’s appraisal and valuation and real estate advisory services operations along with the Company’s auction and liquidations operations was sold to an investment management firm.

These operations are included in discontinued operations as discussed in Note 4 to the accompanying condensed consolidated financial statements and are expected to be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% in the business.

Communications Segment – We own a number of businesses that comprises our Communications Segment that we have acquired for attractive risk-adjusted investment return characteristics.

We may pursue future acquisitions to expand this portfolio of businesses which currently includes:

Lingo Management, LLC (“Lingo Management”), a global cloud/unified communications and managed service provider that includes the operations of BullsEye Telecom that was merged into Lingo Management in July 2023, a single source communications and cloud technology provider (collectively “Lingo”);

Marconi Wireless Holdings, LLC, a mobile virtual network operator that provides mobile phone voice, text, and data services and devices;

magicJack VoIP Services, LLC, a VoIP cloud-based technology and communications provider that offers related devices and subscription services;

and United Online, Inc., an Internet access provider that offers dial-up, mobile broadband and digital subscriber line services under the NetZero and Juno brands.

Consumer Products Segment – This segment is comprised of Targus, which is a multinational company that designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries.

The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories that we acquired on October 18, 2022.

Lingo Management, LLC ("Lingo"), a global cloud/unified communications and managed service provider that includes the operations of BullsEye Telecom, Inc.

("BullsEye"), a single source communications and cloud technology provider (previously merged into Lingo);

Marconi Wireless Holdings, LLC ("Marconi Wireless"), a mobile virtual network operator that provides mobile phone voice, text, and data services and devices;

magicJack VoIP Services, LLC ("magicJack"), a VoIP cloud-based technology and communications provider that offers related devices and subscription services;

and United Online, Inc.

("UOL"), an Internet access provider that offers dial-up, mobile broadband and digital subscriber line services under the NetZero and Juno brands.

Consumer Products Segment – This segment is comprised of Tiger US Holdings, Inc.

("Targus"), which is a multinational company that, together with its subsidiaries, designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries.

The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories.

E-Commerce Segment – This segment is comprised of Nogin, Inc.

("Nogin"), which is a technology platform operating e-commerce stores that delivers CaaS solutions for apparel brands and other retailers.

The Company manages clients’

front-to-back-end operations of the e-commerce stores and also provides marketing services to their clients.

The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis.

Our operating results are primarily comprised of the operations of these businesses within our five reportable operating segments.

However, we also generate revenues from other businesses that we may acquire with the goal to expand their operations, drive growth, and create operational efficiencies to improve cash flows to reinvest across other business operations in our platform.

These businesses are typically in fragmented markets and include the operations of a regional environmental services business, bebe which operates rent-to-own stores, and a technology company that provides e-commerce platforms, marketing and technology services acting as a merchant for consumer brand companies.

These businesses are typically in fragmented markets and include the operations of a regional environmental services business, and bebe which operates rent-to-own stores.

In prior years, we also generated operating revenues from our majority owned subsidiary that licenses the trademarks and intellectual properties from our ownership of six brands:

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We also reported fair value adjustments from these equity investments since we elected to account for these equity investments using the fair value method of accounting.

These operations are included in discontinued operations as discussed in Note 4 to the accompanying condensed consolidated financial statements and are expected to be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% in the business.

These operating results are included in discontinued operations and are expected to be deconsolidated as a result of the Sale by bebe and completion of the Secured Financing of the Brand Interests as discussed in Note 4 to the accompanying condensed consolidated financial statements.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities that are primarily comprised of our 31% investment in Freedom VCM Holdings, LLC described above, partnership interests and other investments, corporate bonds and other fixed income securities as follows at September 30, 2024 and December 31, 2023:

September 30,

These operating results are included in discontinued operations and are expected to be deconsolidated as a result of the Sale by bebe and completion of the Secured Financing of the Brand Interests as discussed in Note 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private equity securities, corporate bonds, other fixed income securities, and partnership interests and other investments as follows at March 31, 2025 and December 31, 2024:

2025 December 31,

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- preferred stock 1,066 1,528

Alta Equipment Group, Inc.

- common stock — 44,653

Double Down Interactive Co., Ltd - common stock 41,820 43,706

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Private Equity Securities:

Freedom VCM Holdings, LLC — 287,043

Other private equities 97,747 107,616

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Total securities and other investments owned $ 231,760 $ 282,325

Securities and other investments owned was $341.8 million and $809.0 million as of September 30, 2024 and December 31, 2023.

Of this amount, the fair value of equity securities totaled $289.3 million and $711.6 million as of September 30, 2024 and December 31, 2023.

Of these amounts, public equity securities totaled $161.6 million and $194.5 million as of September 30, 2024 and December 31, 2023, and private equity securities totaled $127.7 million and $517.0 million as of September 30, 2024 and December 31, 2023.

The fair value of Badcock & Wilcox Enterprises, Inc.

- common stock held as of held as of September 30, 2024 and December 31, 2023 was $56.0 million and $40.1 million, respectively.

The change in fair value for the nine months ended September 30, 2024 is primarily related to an increase in the public share price during the period.

The fair value of Alta Equipment Group, Inc.

common stock held as of December 31, 2023 was $44.7 million, and the Company sold the entire position in the first quarter of 2024 and recorded a loss of $(3.5) million.

The sale was executed to raise additional capital to fund operating activities.

The fair value of our Double Down Interactive Co., Ltd common stock held as of September 30, 2024 and December 31, 2023 was $66.5 million and $30.4 million, respectively.

The change in fair value for the nine months ended September 30, 2024 is primarily related to an increase in the public share price during the period.

The fair value of our investment in Freedom VCM Holdings, LLC held as of September 30, 2024 and December 31, 2023 was zero and $287.0 million, respectively.

During the nine months ended September 30, 2024, we recorded fair value adjustments of $(221.0) million primarily due to increases in net debt, declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc.

common stock and impact of Conn's bankruptcy filing on July 23, 2024, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business segments.

Subsequent to September 30, 2024, the investment in Freedom VCM Holdings, LLC was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

Realized and Unrealized Gains (Losses)

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Other income (Expense) - Realized & Unrealized Gains (Losses)

Public Equity Securities:

Babcock & Wilcox Enterprises, Inc.

- common stock $ 7,005 $ (33,537) $ 5,930 $ (29,672)

Babcock & Wilcox Enterprises, Inc.

- preferred stock 2,495 (148) 2,342 2,621

Alta Equipment Group, Inc.

- common stock — (17,873) (3,537) 2,743

Double Down Interactive Co., Ltd - common stock 13,113 (4,220) 34,952 38

Synchronoss Technologies, Inc.

- common stock 6,445 (530) 9,940 (530)

Other public equities 204 (3,244) (2,328) (16,910)

Subtotal 29,262 (59,552) 47,299 (41,710)

Private Equity Securities:

Freedom VCM Holdings, LLC (49,033) — (221,042) —

Other private equities (1,766) (15,581) (40,966) (21,592)

Subtotal (50,799) (15,581) (262,008) (21,592)

Corporate bonds (245) 628 1,141 976

Partnership interest and other (415) (2,782) 1,206 (14,694)

Total $ (22,197) $ (77,287) $ (212,362) $ (77,020)

During the three and nine months ended September 30, 2024, realized and unrealized losses of $(22.2) million and $(212.4) million were recorded to other income as realized and unrealized losses on investments.

These realized and unrealized losses are made up of realized and unrealized gains (losses) recorded to public equity securities, private equity securities, corporate bonds, and partnership interest and other investments.

The majority of realized and unrealized (losses) gains on investments during the three and nine months ended September 30, 2024 are related to public equity securities (equity securities that trade on major exchanges), and private equity securities.

During the three and nine months ended September 30, 2024, $29.3 million and $47.3 million of realized and unrealized gains were recorded for public equity securities to other income as realized and unrealized gains on investments.

Of these amounts, Double Down Interactive Co., Ltd common stock made up the majority of the balances.

During the three and nine months ended September 30, 2024, we recorded $13.1 million and $35.0 million, respectively, to realized and unrealized gains related to Double Down Interactive Co., Ltd.

primarily related to public share price movements during these periods.

During the three and nine months ended September 30, 2024, $(50.8) million and $(262.0) million of realized and unrealized losses were recorded for private equity securities to other income as realized and unrealized losses on investments.

Of these amounts, our investment in Freedom VCM Holdings, LLC made up the majority of the balances.

During the three and nine months ended September 30, 2024, we recorded $(49.0) million and $(221.0) million to realized and unrealized losses related to our investment in Freedom VCM Holdings, LLC.

The entirety of the balances were made related to fair value adjustments due primarily to increases in net debt as well as significant declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc., market-related inputs, and overall operational performance.

We are headquartered in Los Angeles, California and maintain offices throughout the U.S.

including in New York, Chicago, Metro District of Columbia, Atlanta, Boston, Dallas, Metro Detroit, Houston, Memphis, Miami, San Francisco, Boca Raton, and West Palm Beach, as well as additional offices located in Canada, Europe, Asia, and Australia.

We report our activities in five reportable business segments:

Capital Markets, Wealth Management, Financial Consulting, Communications, and Consumer Products segment.

These reportable segments are all distinct businesses, each with a different marketing strategy and management structure.

During the fourth quarter of 2023, we reassessed our previously reported Consumer segment due to organizational changes and financial information provided to the Chief

Operating Decision Maker (“CODM”).

These changes resulted in Targus’ operations being reported on a stand-alone basis in the Consumer Products segment.

Securities and other investments owned was $231.8 million and $282.3 million as of March 31, 2025 and December 31, 2024.

Of this amount, the carrying value of equity securities totaled $177.4 million and $232.5 million as of March 31, 2025 and December 31, 2024.

Of these amounts, public equity securities totaled $79.7 million and $124.9 million as of March 31, 2025 and December 31, 2024, and private equity securities totaled $97.7 million and $107.6 million as of March 31, 2025 and December 31, 2024.

The carrying value of Badcock & Wilcox Enterprises, Inc.

- common stock held as of held as of March 31, 2025 and December 31, 2024 was $18.5 million and $45.0 million, respectively.

The change in the carrying value for the three months ended March 31, 2025 was due to a decrease in the public share price during the period.

The carrying value of our Double Down Interactive Co., Ltd common stock held as of March 31, 2025 and December 31, 2024 was $41.8 million and $43.7 million, respectively.

The change in the carrying value for the three months ended March 31, 2025 was primarily due to a decrease in the public share price during the period.

The carrying value of our investments in other public equities held as of March 31, 2025 and December 31, 2024 was $15.0 million and $27.4 million, respectively.

The change in the carrying value for the three months ended March 31, 2025 was driven by sales of certain other public equity securities and, to a lesser extent, decreases in the public share prices during the period.

The carrying value of our investments in other private equities held as of March 31, 2025 and December 31, 2024 was $97.7 million and $107.6 million, respectively.

The decrease in the carrying value for the three months ended March 31, 2025 was driven by sales of certain private securities and, to a lesser extent, decreases in fair values during the period.

Recent Developments

Great American Group Transaction

On November 15, 2024 the Company and BR Financial Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“BR Financial”), consummated the transactions contemplated by an equity purchase agreement, dated October 13, 2024 (the “Equity Purchase Agreement”), by and among OCM SSF III Great American PT, L.P., a Delaware limited partnership (“Investor 1”), Opps XII Great American Holdings, LLC, a Delaware limited liability company (“Investor 2”), and VOF Great American Holdings, L.P., a Delaware limited partnership (“Investor 3,” and, together with Investor 1 and Investor 2, the “Investors”), Great American Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Great American NewCo”), and certain other parties identified therein, with respect to the ownership of Great American NewCo by the Investors and the Company.

The Investors are affiliates of Oaktree Capital Management, L.P.

Pursuant to, and subject to the terms and conditions set forth in, the Equity Purchase Agreement, the Company conducted an internal reorganization and contributed all of the interests in the Company’s Appraisal and Valuation Services, Retail, Wholesale & Industrial Solutions and Real Estate businesses (collectively, the “Great American Group”), to Great American NewCo.

At the Closing, (i) the Investors received (a) all of the outstanding class A preferred limited liability units of Great American NewCo (which will have a 7.5% cash coupon and a 7.5% payment-in-kind coupon) (the “Class A Preferred Units”) and (b) common limited liability units of Great American NewCo (the “Common Units”) representing 52.6% of the issued and outstanding common limited liability units in Great American NewCo for a purchase price of approximately $203.0 million (which have an initial liquidation preference of approximately $203.0 million).

BR Financial retains (a) 93.2% of the issued and outstanding class B preferred limited liability company units of Great American NewCo (which will have a 2.3% payment-in-kind coupon and an initial aggregate liquidation preference of approximately $183.0 million) (the “Class B Preferred Units”) and (b) 44.2% of the issued and outstanding Common Units.

The remaining 6.8% of issued and outstanding Class B Preferred Units and 3.2% of issued and outstanding Common Units will be held by certain minority investors.

The investors in Great American NewCo will also be entitled to certain quarterly tax distributions pursuant to the Great American NewCo LLCA (defined below).

At the closing, (i) BR Financial, the Investors and the other minority investors entered into an Amended and Restated Limited Liability Company Agreement of Great American NewCo (the “Great American NewCo LLCA”), (ii) BR Financial and Great American NewCo entered into a Transition Services Agreement, pursuant to which BR Financial will provide certain transition services to Great American NewCo relating for the Great American Group for a period of up to one year from the Closing, subject to certain exceptions, and (iii) an affiliate of the Company, Great American NewCo and certain subsidiary guarantors of Great American NewCo entered into a credit agreement, pursuant to which an affiliate of the Company, as lender, will provide to Great American NewCo, as borrower, a first lien secured revolving credit facility of up to $25.0 million for general corporate purposes, subject to the terms and conditions set forth therein., which had an outstanding balance of $1.8 million at closing, and (iv) entered into promissory notes which totaled $15.3 million related to capital requirements for certain retail liquidation engagements that were ongoing as of closing.

Under the Great American NewCo LLCA, Great American NewCo will initially have a five-member board of directors that will oversee the day-to-day management of Great American NewCo, subject to certain approval rights reserved for the Investors and/or BR Financial, as applicable.

The Investors will be entitled to appoint a majority of the directors of the board for so long as they collectively hold at least 25% of their combined amount of Common Units owned immediately following the Closing.

The Great American NewCo LLCA will also contain certain protections for BR Financial, including, but not limited to, requiring BR Financial approval for certain fundamental actions.

The Investors will have certain drag-along rights following the second-year anniversary of the Closing Date and certain call rights exercisable starting on the fifth-year anniversary of the Closing Date.

The Great American NewCo LLCA sets forth distribution mechanics pursuant to which Great American NewCo will make distributions in cash and payment-in-kind at any time the board of directors may authorize, with the Class A Preferred Units having priority in any such distribution over Class B Preferred Units.

In addition, the Great American NewCo LLCA will contain certain transfer restrictions and other transfer rights and obligations that apply to BR Financial, the Investors and other unitholders, as applicable, in certain circumstances.

Upon closing the Equity Purchase Agreement on November 15, 2024, B.

Riley will record a gain of approximately $235.0 million and the operations of Great American NewCo will be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% of the common units

along with the Preferred B units described above.

After the closing of the Equity Purchase Agreement, the Company will account for this equity method investment under the equity method of accounting.

Wealth Management

On October 31, 2024, we signed a definitive agreement to sell a portion of the Company’s traditional (W-2) Wealth Management business to Stifel Financial Corp.

(“Stifel”) for estimated net consideration of $27.0 million to $35.0 million in cash.

Subject to the terms of the agreement, the final consideration will be based on the number of advisors that join Stifel at closing, among other things.

The transaction is expected to include up to 15% of the wealth management advisors, along with the associated customer accounts.

The accounts managed by these advisors represents up to $4.5 billion total assets under management (AUM) as of September 30, 2024.

The transaction has been approved by the Board of Directors of the Company and is subject to the receipt of required regulatory approvals and other customary closing conditions.

It is expected to close early in the second quarter of 2025.

Brands Transaction

On October 25, 2024, our wholly-owned subsidiary, B.

Riley Brand Management LLC (“B.

Riley Brand Management”), entered into a transfer and contribution agreement, dated October 25, 2024 (the “Transfer and Contribution Agreement”), by and between B.

Riley Brand Management and BR Funding Holdings 2024-1, LLC, a Delaware limited liability company and, prior to the consummation of the transactions described herein, wholly-owned subsidiary of B.

Riley Brand Management (“Holdings”), pursuant to which, among other things, B.

Riley Brand Management transferred and contributed its limited liability company interests in (i) BR Brand Holdings LLC, a New York limited liability company, (ii) HRLY Brand Management LLC, a Delaware limited liability company, (iii) Justice Brand Management LLC, a New York limited liability company, and (iv) S&S Brand Management LLC, a New York limited liability company (such limited liability interests collectively, the “Brands Interests,” and such transfer, the “Transfer”).

In connection with the transactions contemplated by the Transfer and Contribution Agreement, Holdings transferred and contributed the Brand Interests to its subsidiary, BR Funding 2024-1, LLC, a Delaware limited liability company and securitization financing vehicle (“Issuer”) and Issuer issued notes and preferred stock secured by the Brands Interests (the “Secured Financing”) to a third party purchaser, HBN 101, LLC, a Delaware limited liability company (the "Purchaser"), the proceeds of which were used to fund an upfront payment to the Company of approximately $189.3 million.

Additionally, in connection with the Transfer and Contribution Agreement, bebe stores, inc., a California corporation and majority owned subsidiary of the Company (“bebe”), entered into a membership interest purchase agreement, dated October 25, 2024 (the “bebe Purchase Agreement”), by and among bebe, HBN 120, LLC, a Delaware limited liability company (“Buyer”), BB Brand Holdings LLC, a Delaware limited liability company (“BB Brand Holdings”), and BKST Brand Management LLC, a New York limited liability company (“BKST Brand Management” and together with BB Brand Holdings, the “bebe Brands”), pursuant to which, among other things, bebe sold its limited liability company interests in the bebe Brands to Buyer, an affiliate of the Purchaser for approximately $46.6 million in net proceeds (such sale, the “Sale”), with certain of such proceeds applied towards indebtedness related to the bebe holdings.

Upon closing of the Sale proceeds of $22.2 million was used to pay off the then outstanding balance of the bebe Credit Agreement in full (see note 11 to the accompanying condensed consolidated financial statements) and $0.2 million of loan related pay off expenses.

The Sale by bebe resulted in a subsequent fair value adjustment at September 30, 2024 in the amount of approximately $(20.0) million that was recorded during the quarter ended September 30, 2024 for the sale of the bebe Brands.

In addition, upon completion of the Secured Financing of the Brand Interests, the Company will deconsolidate the ownership of the Brand Interests and the Company’s ownership in the Brand Interest will be reported as a non-controlling equity method investment that is estimated to have nominal value as a result of the liquidation preferences and notes that were issued as part of the Secured Financing and upon deconsolidation a loss at September 30, 2024 in the amount of approximately $(133.0) million was recorded in the quarter ending September 30, 2024.

Take-Private Proposal

On August 16, 2024, the Company’s Board of Directors received an unsolicited preliminary, non-binding letter of proposal from the Company’s Chairman and Co-CEO, Bryant Riley, to acquire the outstanding shares of the Company not currently owned by Mr.

Riley, in a transaction to take the Company private, at a proposed purchase price of $7.00 per share.

Following receipt of the proposal, the Company’s Board of Directors established a special committee consisting of independent directors, which has engaged its own advisors to evaluate the proposal and determine the appropriate course of

action and process.

There can be no assurance that any definitive offer will be received, that any definitive agreement will be executed relating to the proposal or that this or any other transaction will be approved or consummated.

On July 3, 2024, each of the Company and Bryant Riley, Chairman and Co-Chief Executive Officer, received a subpoena from the U.S.

Securities and Exchange Commission (the “SEC”) requesting the production of certain documents and other information primarily related to (i) the Company’s business dealings with Brian Kahn, (ii) certain transactions in an unrelated public company’s securities, and (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries.

On November 22, 2024, each of the Company and Mr.

Riley received an additional SEC subpoena requesting the production of certain additional documents and information relating to Franchise Group, Inc.

(including its holding company, Freedom VCM Holdings, LLC) as well as Mr.

Riley’s personal loan and his pledge of shares of the Company’s common stock as collateral for such loan.

As previously disclosed on April 23, 2024, the Audit Committee of the Company’s Board of Directors, with the assistance of Sullivan & Cromwell LLP, the Company’s legal counsel, conducted an internal review, and separately the Audit Committee retained Winston & Strawn LLP, independent legal counsel, to conduct an independent investigation, to review transactions among Mr.

Kahn (and his affiliates) and the Company (and its affiliates).

The review and the investigation both confirmed that the Company and its executives, including Mr.

Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Mr.

Kahn or any of his affiliates.

The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred.

Both the Company and Mr.

Riley are responding to the subpoenas and are fully cooperating with the SEC.

Conn’s and FRG

The Company’s results during the three and nine months ended September 30, 2024 were negatively impacted by a significant non-cash markdown of $(54.3) million and $(222.7) million related to its investment in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group (“FRG”).

Freedom VCM’s strategy, which included the potential divestiture or monetization of certain assets, was materially negatively impacted by the unexpected announcement in November 2023 concerning FRG’s former CEO and his alleged involvement in fraudulent schemes despite the fact that these allegations are unrelated to FRG and its businesses.

In the meantime, the consumer-facing portion of the U.S.

economy has deteriorated.

On July 23, 2024, Conn’s, Inc.

(“Conn’s”) and certain of its subsidiaries filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s in exchange for the sale of its Badcock Home Furniture & more business to Conn’s.

The commencement of the Chapter 11 Cases constitute an event of default that accelerated the obligations under the Term Loan and Security Agreement, dated as of December 18, 2023 (the “Conn’s Term Loan”), among Conn’s, W.S.

Badcock LLC, as borrowers, and an affiliate of the Company, as administrative agent, collateral agent, and lender.

As of the date of the filing of the Chapter 11 Cases, $93.0 million in outstanding borrowings existed under the Conn’s Term Loan.

Any efforts to enforce payment obligations under the Conn’s Term Loan are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of the Conn’s Term Loan are subject to the applicable provisions of the Bankruptcy Code.

The fair value adjustment on the Conn’s loan receivable was $(18.6) million and $(27.1) million for the three and nine months ended September 30, 2024.

On November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed voluntary petitions for relief (the “FRG Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code.

As a result, on November 4, 2024, we concluded that we are required to record an additional impairment of with respect to the Freedom VCM Investment and the Vintage Loan Receivable.

The additional non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable are $118.0 million in the aggregate as of November 4, 2024.

The fair value adjustment for the Conn’s loan receivable was $(18.6) million for the three months ended September 30, 2024 and $(27.1) million for the nine months ended September 30, 2024.

As a result of such additional impairment we have ascribed no value to the Freedom VCM Investment and the Vintage Loan Receivable was valued at $2.3 million at September 30, 2024 which approximates the fair value of the underlying collateral for this loan which is primarily comprised of other securities.

Subsequent to September 30, 2024, the fair value of the underlying collateral for this loan, which is comprised of other public securities, decreased to a fair value of $2.2 million at February 7, 2025.

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel for estimated net consideration based on the number of advisors that join Stifel at closing, among other things.

Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26.0 million, representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 23.6%, of assets under management ("AUM") as of March 31, 2025.

Exchange of Senior Notes

As discussed in more detail in Note 11 - Senior Notes Payable, from April 7, 2025 to July 11, 2025, we completed four private exchange transactions with institutional investors pursuant to which aggregate principal amounts of approximately $29.5 million of the 5.50% Senior Notes due March 2026, $2.1 million of the 6.50% Senior Notes Payable due September 2026, $109.7 million of the 5.00% Senior Notes due December 2026, $51.1 million of the 6.00% Senior Notes due January 2028, and $39.5 million of the 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $140.7 million aggregate principal amount of 8.00% Senior Secured Second Lien Notes due 2028 (the "New Notes"), whereupon the Exchanged Notes were cancelled.

Sale of GlassRatner and Farber

On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber.

The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117.8 million, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date.

In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.

Targus/FGI Credit Agreement

On August 20, 2025, the Targus ("Targus Borrower") and certain of its direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement (as more fully discussed in Note 10 — Term Loans and Revolving Credit Facility) with PNC Bank, National Association ("PNC").

The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.

The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment.

The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term Secured Overnight Financing Rate for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.

The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a

pledge of all of the equity interests of the Borrower and its direct and indirect subsidiaries.

The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' 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.

The Targus/FGI 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 uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.

As required under the Targus/FGI Credit Agreement, B.

Riley Commercial Capital, LLC ("BRCC"), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.

On November 11, 2025, the Company announced that it will change its name to BRC Group Holdings, Inc., effective on January 1, 2026.

Critical Accounting Estimates

The preparation of our condensed consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities, and reported amounts of revenue and expense during the reporting period.

The estimates and assumptions are based on historical experience and on other factors that management

believes to be reasonable.

Actual results may differ from those estimates.

Critical accounting estimates represent the areas where more significant judgments and estimates are used in the preparation of our condensed consolidated financial statements.

The preparation of our unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities, and reported amounts of revenue and expense during the reporting period.

The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable.

Actual results may significantly differ from those estimates.

Critical accounting estimates represent the areas where more significant judgments and estimates are used in the preparation of our unaudited condensed consolidated financial statements.

A discussion of such critical accounting estimates, which include fair value measurements, goodwill and other intangible assets, and accounting for income tax valuation allowances can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

1 unchanged sentence

The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Three Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 Amount %

Services and fees $ 158,839 $ 214,081 $ (55,242) (25.8) %

Trading loss (1,238) (9,727) 8,489 (87.3) %

Fair value adjustments on loans (71,477) (860) (70,617) n/m

Trading gains (losses), net (16,171) (17,667) 1,496 (8.5) %

Fair value adjustments on loans (8,096) (12,201) 4,105 (33.6) %

Interest income - loans 3,196 22,135 (18,939) (85.6) %

7 unchanged sentences

Restructuring charge — 789 (789) (100.0) %

Impairment of goodwill and tradenames — 35,500 (35,500) (100.0) %

Interest expense - Securities lending and loan participations sold 719 35,383 (34,664) (98.0) %

2 unchanged sentences

Other income (expense):

Interest income 1,438 180 1,258 n/m

Interest income 1,486 663 823 124.1 %

Dividend income 135 3,004 (2,869) (95.5) %

1 unchanged sentence

Change in fair value of financial instruments and other 922 — 922 — %

Income (loss) from equity investments 6 (308) 314 (101.9) %

Gain on sale and deconsolidation of businesses 80,841 314 80,527 n/m

Gain on senior note exchange 10,532 — 10,532 100.0 %

Loss from equity investments (552) (4) (548) n/m

Loss on extinguishment of debt (10,427) — (10,427) (100.0) %

Interest expense (29,964) (35,665) 5,701 (16.0) %

Loss from continuing operations before income taxes (23,004) (82,631) 59,627 (72.2) %

(Provision for) benefit from income taxes (14,508) 23,638 (38,146) (161.4) %

Benefit from income taxes 3,042 21,330 (18,288) (85.7) %

Loss from continuing operations (19,962) (61,301) 41,339 (67.4) %

(Loss) income from discontinued operations, net of income taxes (138,746) 23,741 (162,487) n/m

Net loss (287,598) (76,308) (211,290) n/m

Net loss attributable to noncontrolling interests (3,201) (2,485) (716) 28.8 %

Income from discontinued operations, net of income taxes 3,395 13,347 (9,952) (74.6) %

Net loss (16,567) (47,954) 31,387 (65.5) %

Net (loss) income attributable to noncontrolling interests (6,592) 1,211 (7,803) n/m

Net loss attributable to B.

Riley Financial, Inc.

(284,397) (73,823) (210,574) n/m

(9,975) (49,165) 39,190 (79.7) %

Preferred stock dividends 2,015 2,015 — — %

Net loss available to common shareholders $ (286,412) $ (75,838) $ (210,574) n/m

Net loss available to common shareholders $ (11,990) $ (51,180) $ 39,190 (76.6) %

n/m - Not applicable or not meaningful.

The table below and the discussion that follows are based on how we analyze our business.

Three Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 Amount %

2 unchanged sentences

Wealth Management segment 46,666 51,182 (4,516) (8.8) %

Financial Consulting segment 23,941 20,225 3,716 18.4 %

Communications segment 63,173 81,070 (17,897) (22.1) %

E-Commerce segment

3,469 — 3,469 100.0 %

All Other 20,326 21,482 (1,156) (5.4) %

Subtotal 158,839 214,081 (55,242) (25.8) %

Trading (loss) income:

Trading gains (losses), net:

Capital Markets segment (16,783) (18,267) 1,484 (8.1) %

2 unchanged sentences

Fair value adjustments on loans:

Capital Markets segment (71,477) (860) (70,617) n/m

Capital Markets segment (8,096) (12,201) 4,105 (33.6) %

Interest income - loans:

5 unchanged sentences

Consumer Products segment 42,103 51,522 (9,419) (18.3) %

E-Commerce segment

3,528 — 3,528 100.0 %

All Other 523 615 (92) (15.0) %

3 unchanged sentences

n/m - Not applicable or not meaningful.

Total revenues decreased $164.0 million to $199.3 million during the three months ended September 30, 2024 from $363.3 million during the three months ended September 30, 2023.

The decrease in revenues during the three months ended September 30, 2024 was primarily due to decreases in fair value adjustments on loans of $70.6 million, revenues from services and fees of $45.6 million, interest income from securities lending of $35.3 million, interest income from loans of $16.1 million, and sale of goods of $4.8 million, partially offset by increases in fair value of the portfolio of securities and other investments owned of $8.5 million.

Of the $70.6 million decrease in fair value adjustments related to loans, $54.3 million related to the loan to Vintage Capital Management, LLC (“VCM”), and $18.6 million related to the loan to Conn’s Inc.

(“Conn’s”), partially offset by fair value gains of $6.0 million related to the loan to Badcock Receivables I.

The decrease in revenue of $45.6 million from services and fees in the three months ended September 30, 2024 consisted of decreases in revenue of $50.5 million in the Capital Markets segment, $15.9 million in the Communications segment, and $1.5 million in the Wealth Management segment, partially offset by increases in revenues of $18.6 million in All Other, and $3.7 million in the Financial Consulting segment.

Revenues from services and fees in the Capital Markets segment decreased $50.5 million to $30.4 million during the three months ended September 30, 2024 from $80.9 million during the three months ended September 30, 2023 related to a decrease in underwriting engagements.

The decrease in revenues was primarily due to decreases of $46.1 million of corporate finance, consulting, and investment banking fees, $1.9 million in commission fees, $1.0 million in dividends, $0.9 million in asset management fees, and $0.8 million of interest income, partially offset by an increase of $0.2 million in other income.

Revenues from services and fees in the Wealth Management segment decreased $1.5 million to $49.4 million during the three months ended September 30, 2024 from $50.9 million during the three months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in revenue of $1.6 million from wealth and asset management fees and $0.1 million in commission fees, partially offset by an increase of $0.2 million in other income.

Revenues from services and fees in the Financial Consulting segment increased $3.7 million to $23.9 million during the three months ended September 30, 2024 from $20.2 million during the three months ended September 30, 2023.

The increase in revenues was primarily due to an increase of $7.0 million from the bankruptcy and restructuring, forensic and litigation, C&W, Interface Consulting and Farber divisions offset by a decrease in revenues of $3.3 million from the automotive restructuring division.

Revenues from services and fees in the Communications segment decreased $15.9 million to $66.2 million during the three months ended September 30, 2024 from $82.2 million during the three months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $15.7 million and $0.2 million in advertising and other revenue.

We expect UOL, magicJack, and Marconi subscription revenue to continue to decline year-over-year.

Revenues from services and fees in All Other increased $18.6 million to $28.5 million during the three months ended September 30, 2024 from $9.9 million during the three months ended September 30, 2023.

These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, commission fees from Nogin Inc.

(“Nogin”) which we acquired in the second quarter of 2024, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022 and sold in the third quarter of 2023.

Revenues from services and fees in All Other increased by approximately $12.1 million related to merchandise rental fees from bebe, $5.2 million in commission fees from Nogin, and $4.4 million related to the regional environmental services business, partially offset by a decrease in revenues of $3.1 million due to the sale of the landscaping business in the fourth quarter of 2023.

Trading income (loss) increased approximately $8.5 million to a loss of $1.2 million during the three months ended September 30, 2024 compared to loss of $9.7 million during the three months ended September 30, 2023.

The loss of $1.2 million during the three months ended September 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The decrease in fair value adjustment of $70.6 million on our loans receivable during the three months ended September 30, 2024 was primarily due to $54.3 million related to VCM, and $18.6 million related to Conn’s, partially offset by an increase of $6.0 million related to Badcock Receivables I.

Interest income – loans decreased $16.1 million to $11.3 million during the three months ended September 30, 2024 from $27.4 million during the three months ended September 30, 2023 due to a reduction in loan receivable balances from $549.1 million as of September 30, 2023 to $151.7 million as of September 30, 2024.

Interest income – securities lending decreased $35.3 million to $7.0 million during the three months ended September 30, 2024 from $42.3 million during the three months ended September 30, 2023.

The decrease was due to a reduction in the securities borrowed balance from $2,782.0 million as of September 30, 2023 to $64.0 million as of September 30, 2024.

Revenues from the sale of goods decreased $4.8 million to $55.2 million during the three months ended September 30, 2024 from $60.0 million during the three months ended September 30, 2023.

The decrease was primarily related to a decrease of $8.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $0.3 million from the Communications segment, partially offset by an increase of $4.1 million in All Other consisting of $3.7 million in sales of goods from Nogin which we acquired in the second quarter of 2024 and $0.4 million in sales of goods from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Cost of goods sold for the three months ended September 30, 2024 decreased approximately $1.9 million to $40.3 million from $42.2 million during the three months ended September 30, 2023.

The decrease in cost of goods sold

was primarily attributable to decreases of $4.1 million in the Consumer Products segment and $0.4 million in the Communications segment, partially offset by an increase of $2.6 million from All Other, primarily from Nogin which we acquired in the second quarter of 2024.

Total revenues decreased $111.5 million to $186.1 million during the three months ended March 31, 2025 from $297.6 million during the three months ended March 31, 2024.

The decrease in revenues during the three months ended March 31, 2025 was primarily due to decreases in revenues from services and fees of $55.2 million, interest income from securities lending of $37.0 million, interest income from loans of $18.9 million, sale of goods of $6.0 million, partially offset by increases in revenue from fair value adjustments on loans of $4.1 million, and in the fair value of the portfolio of securities and other investments owned of $1.5 million.

The $4.1 million favorable variance in fair value adjustments related to loans was primarily driven by $17.5 million related to the loan to Vintage Capital Management, LLC ("VCM"), $3.1 million related to the loan to Freedom VCM Receivables, Inc.

("Freedom VCM"), partially offset by unfavorable variances of $8.5 million related to the loan to Core Scientific, Inc.

("Core Scientific"), $2.9 million related to the loan to Exela Technologies, Inc.

("Exela"), $2.8 million related to the loan to Conn’s, Inc.

("Conn's"), and $2.3 million from all other

loans receivable.

The decrease in revenue from services and fees in the three months ended March 31, 2025 consisted of decreases in revenue of $35.1 million in the Capital Markets segment, and $17.9 million in the Communications segment, $4.5 million in the Wealth Management segment, and $1.2 million in All Other, partially offset by an increase in revenue of $3.5 million in the E-Commerce segment.

Revenues from services and fees in the Capital Markets segment decreased $35.1 million to $25.2 million during the three months ended March 31, 2025 from $60.3 million during the three months ended March 31, 2024.

The decrease in revenues was primarily due to decreases in revenue of $32.4 million in corporate finance, consulting, and investment banking fees, $2.9 million in commission fees, $1.0 million in dividends, $0.9 million in interest income, $0.3 million in other income and $0.2 million in asset management fees, partially offset by an increase of $2.7 million in contingent accrued management fees.

The decrease in investment banking revenues is related to the episodic nature of this business and the decline in business due to the late SEC filings of the parent company.

The decreases in investment banking revenues were $11.3 million in mergers and acquisitions advisory fees, $10.6 million in at the market fees, $7.6 million in investment banking underwriting fees, and $3.7 million in private placement fees.

Revenues from the Wealth Management segment are comprised of the following:

Three Months Ended

Revenues - Services and fees

Brokerage revenues $ 18,346 $ 23,669

Advisory revenues 16,434 19,350

Other 11,886 8,163

Total services and fees revenue 46,666 51,182

Trading income 612 600

Total revenues $ 47,278 $ 51,782

Revenues from services and fees in the Wealth Management segment decreased $4.5 million to $46.7 million during the three months ended March 31, 2025 from $51.2 million during the three months ended March 31, 2024.

The decrease in revenues was primarily due to decreases in revenue of $8.8 million from wealth and asset management fees due to a reduction in AUM in December 2024, driven by a loss of headcount, $0.3 million in other income, and $0.3 million in commission fees, partially offset by an increase of $4.9 million in contingent accrued management fees for companies in the process of going public.

Total assets under management were approximately $18.4 billion, $20.7 billion, and $25.8 billion at March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

Of these amounts, advisory assets under management totaled approximately $6.5 billion at March 31, 2025, and $6.9 billion at December 31, 2024, and $8.0 billion at March 31, 2024.

Advisory revenues were 0.25% and 0.24% of average advisory assets under management during the three months ended March 31, 2025 and 2024, respectively.

The average revenues earned on advisory assets under management are not expected to fluctuate significantly from period to period as a percentage of advisory assets under management.

Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets.

Other revenues is primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Revenues from services and fees in the Communications segment decreased $17.9 million to $63.2 million during the three months ended March 31, 2025 from $81.1 million during the three months ended March 31, 2024.

The decrease in revenues was primarily due to decreases in subscription revenue of $17.6 million, $12.4 million of which related to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024.

Of the remaining $5.2 million decrease in subscription revenue, $2.9 million was from Lingo, $1.1 million was from magicJack, $1.0 million was from Marconi Wireless, and $0.2 million was from UOL.

We expect Lingo, magicJack, Marconi Wireless and UOL subscription revenue to continue to decline year-over-year as landline and VoIP technologies are older and cellular services have a higher customer acquisition cost than profitability.

Revenues from services and fees in the E-Commerce segment were $3.5 million during the three months ended March 31, 2025.

These revenues consisted of commission fees from Nogin which we acquired in the second quarter of 2024.

Revenues from services and fees in All Other decreased $1.2 million to $20.3 million during the three months ended March 31, 2025 from $21.5 million during the three months ended March 31, 2024.

These revenues include merchandise rental fees and sales from bebe and the operations of a regional environmental services business.

Revenues from services and fees in All Other decreased by $1.8 million related to merchandise rental fees from bebe, and $0.5 million due to the operations of a regional environmental services business, partially offset by increases in revenues of $1.1 million in other income.

Trading gains (losses), net decreased $1.5 million to a loss of $16.2 million during the three months ended March 31, 2025 compared to loss of $17.7 million during the three months ended March 31, 2024.

The loss of $16.2 million during the three months ended March 31, 2025 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts, primarily $15.1 million on B&W driven by a decrease in share price.

In our Capital Markets segment, we have a portfolio of loans receivable that are measured at fair value with changes in fair value reported in our results of operations.

The loan portfolio and fair value adjustments on loans consisted of the following:

Fair Value Adjustments on Loans

Loans Receivable, at Fair Value Three Months Ended

Industry or Type of Loan March 31, 2025 December 31, 2024

Related Party Loans:

Vintage Capital Management, LLC Retail / consumer $ 2,334 $ 2,057 $ 276 $ (17,238)

Freedom VCM Receivables, Inc.

Consumer receivable portfolio — 3,913 1,393 (1,681)

Retail / consumer 15,000 38,826 (4,065) (1,254)

Badcock Corporation Consumer receivable portfolio — 2,169 250 551

Great American Holdings, LLC Professional Services 27,898 — — —

GA Joann Retail Partnership Professional Services 14,184 — — —

Other related party loans Professional Services, Industrials, Oil & Gas 1,900 4,937 — 497

Total related party 61,316 51,902 (2,146) (19,125)

Exela Technologies, Inc.

Technology 27,563 32,136 (2,677) 213

Core Scientific, Inc.

Technology — — — 8,473

Norlin EV Limited Real Estate 6,142 6,065 (227) 28

Other loans Various 3,575 — (3,046) (1,790)

Total $ 98,596 $ 90,103 $ (8,096) $ (12,201)

The fair value adjustments on loans receivable for the three months ended March 31, 2025 and 2024, were $(8.1) million and $(12.2) million, respectively.

During the three months ended March 31, 2025 and 2024, fair value adjustments for loans receivable from related parties totaled $(2.1) million and $(19.1) million, respectively.

During the three months ended March 31, 2025 and 2024, fair value adjustments for other loans receivable totaled $(6.0) million and $6.9 million, respectively.

The $4.1 million favorable variance in fair value adjustments related to loans was primarily driven by $17.5 million related to the loan to VCM, $3.1 million related to the loan to Freedom VCM, partially offset by unfavorable variances of $8.5 million related to the loan to Core Scientific, $2.9 million related to the loan to Exela, $2.8 million related to the loan to Conn's, and $2.3 million from all other loans receivable.

Interest income from loans decreased $18.9 million to $3.2 million during the three months ended March 31, 2025 from $22.1 million during the three months ended March 31, 2024.

The decrease was primarily due to non-accrual of interest on the following adjusted loans:

$6.1 million for VCM, $4.1 million for Conn's, $2.2 million for Freedom VCM, which was sold in February 2025, and $1.8 million for Nogin, as well as a reduction in loan receivable balances from $452.5 million as of March 31, 2024 to $98.6 million as of March 31, 2025.

Interest income from securities lending decreased $37.0 million to $0.8 million during the three months ended March 31, 2025 from $37.8 million during the three months ended March 31, 2024.

The decrease was due to a decrease in the securities borrowed balance from $2.1 billion as of March 31, 2024 to $40.9 million as of March 31, 2025 and decreases of revenue from business decline due to counterparties constraining their business activity.

Revenues from the sale of goods decreased $6.0 million to $47.5 million during the three months ended March 31, 2025 from $53.4 million during the three months ended March 31, 2024.

The decrease in revenues from sale of goods was attributable to decreases of $9.4 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide due to market conditions and $0.1 million in All Other, consisting of sale of goods from bebe, partially offset by an increase of $3.5 million from the E-Commerce segment consisting of sale of goods from Nogin, which we acquired in the second quarter of 2024.

Operating Expenses

Direct cost of services

Direct cost of services decreased approximately $3.0 million to $49.7 million during the three months ended September 30, 2024 from $52.6 million during the three months ended September 30, 2023.

The decrease in direct cost of services was primarily attributable to a decrease of $9.8 million from the Communications segment, partially offset by an increase of $6.8 million from All Other consisting of $3.7 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $3.0 million from Nogin which we acquired in the second quarter of 2024, and $0.1 million from the regional environmental services business.

Direct cost of services decreased $17.0 million to $42.7 million during the three months ended March 31, 2025 from $59.7 million during the three months ended March 31, 2024.

The decrease in direct cost of services was primarily attributable to decreases of $16.2 million from the Communications segment, $13.4 million of which was attributable to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024, and $2.3 million from All Other consisting of $0.7 million from bebe, and $1.6 million from the regional environmental services business, partially offset by an increase of $1.6 million from the E-Commerce segment consisting of Nogin, which we acquired in the second quarter of 2024.

Cost of goods sold

Cost of goods sold for the three months ended March 31, 2025 decreased $2.1 million to $36.7 million from $38.8 million during the three months ended March 31, 2024.

The decrease in cost of goods sold was primarily attributable to decreases of $5.3 million in the Consumer Products segment, due to lower sales volume, $0.2 million in the Communications segment and $0.1 million from All Other consisting of bebe, partially offset by an increase of $3.1 million from the E-Commerce segment, consisting of Nogin which we acquired in the second quarter of 2024.

Selling, general and administrative expenses

Selling, general and administrative expenses during the three months ended September 30, 2024 and 2023 were comprised of the following:

Three Months Ended September 30, 2024 Three Months Ended

September 30, 2023 Change

Selling, general and administrative expenses during the three months ended March 31, 2025 and 2024 were comprised of the following:

Three Months Ended

March 31, 2025 Three Months Ended

March 31, 2024 Change

Amount % Amount % Amount %

1 unchanged sentence

Wealth Management segment 45,554 27.2 % 50,103 28.0 % (4,549) (9.1) %

Financial Consulting segment 19,813 10.7 % 17,925 8.9 % 1,888 10.5 %

Communications segment 20,657 12.3 % 23,874 13.3 % (3,217) (13.5) %

Consumer Products segment 15,615 9.3 % 17,522 9.8 % (1,907) (10.9) %

E-Commerce segment

8,428 5.0 % — — % 8,428 100.0 %

Corporate and All Other

35,297 21.1 % 33,446 18.7 % 1,851 5.5 %

Total selling, general & administrative expenses $ 167,388 100.0 % $ 178,940 100.0 % $ (11,552) (6.5) %

Total selling, general and administrative expenses decreased by $17.7 million to $184.6 million during the three months ended September 30, 2024 from $202.3 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $32.5 million in the Capital Markets segment, $6.9 million in the Communications segment, and $1.9 million in the Consumer Products segment, partially offset by increases of $21.4 million in Corporate and All Other, $1.9 million in the Financial Consulting segment, and $0.3 million in the Wealth Management segment.

Total selling, general and administrative expenses decreased by $11.6 million to $167.4 million during the three months ended March 31, 2025 from $178.9 million during the three months ended March 31, 2024.

The decrease was primarily due to decreases of $12.2 million in the Capital Markets segment, $4.5 million in the Wealth Management segment, $3.2 million in the Communications segment, and $1.9 million in the Consumer Products segment, partially offset by increases of $8.4 million in the E-Commerce segment and $1.9 million in Corporate and All Other.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment decreased by $32.5 million to $31.3 million during the three months ended September 30, 2024 from $63.8 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $26.8 million in payroll and related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses, $4.0 million in consulting expenses of which $2.9 million related to an advisory agreement which ended in August of 2023, $0.8 million in clearing and execution costs, $0.7 million in business development activities, $0.7 million in investment banking deal expenses, $0.6 million in foreign currency fluctuation, and $0.2 million in other expenses, partially offset by an increase of $1.3 million in legal expenses.

The advisory agreement was terminated in August 2023 in connection with the FRG take private transaction as more fully described in Note 2(h) of the accompanying condensed consolidated financial statements and there was no expense during the three months ended September 30, 2024 as compared to the prior year when the expense totaled $2.9 million.

For any given reporting period in 2023, the advisory agreement would result in an expense being reported in selling, general and administrative expenses when realized and unrealized gains on certain invested balances in the Company’s broker-dealer subsidiary exceeded a minimum return on the invested balances during such period;

in addition, a decrease in the invested balance in value during such reporting period would result in the reporting of a credit to selling, general and administrative expense.

During the three months ended September 30, 2023, the Company recorded an advisory fee of $2.9 million in accordance with the advisory agreement due to the realized and unrealized gains earned.

Selling, general and administrative expenses in the Capital Markets segment decreased by $12.2 million to $41.8 million during the three months ended March 31, 2025 from $54.0 million during the three months ended March 31, 2024.

The decrease was primarily due to decreases of $16.8 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses largely related to reduced revenue and loss of headcount, and $0.1 million in other expenses, partially offset by increases of $3.4 million in write-offs of receivables and $1.3 million in professional services.

Wealth Management

Selling, general and administrative expenses in the Wealth Management segment increased by $0.3 million to $49.3 million during the three months ended September 30, 2024 from $49.0 million during the three months ended September 30, 2023, primarily due to payroll and related expenses.

Financial Consulting

Selling, general and administrative expenses in the Financial Consulting segment increased by $1.9 million to $19.8 million during the three months ended September 30, 2024 from $17.9 million during the three months ended September 30, 2023.

The increase was primarily due to an increase of $1.6 million in payroll and related expenses related to a business acquired in the third quarter of 2023 and an increase in headcount and an increase of $0.3 million in other expenses.

Selling, general and administrative expenses in the Wealth Management segment decreased by $4.5 million to $45.6 million during the three months ended March 31, 2025 from $50.1 million during the three months ended March 31, 2024.

The decrease was primarily due to a decrease of $6.8 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, bonuses and other payroll expenses due to a decrease in headcount, which aligns with the decrease in revenue, partially offset by increases of $1.8 million in arbitration settlements and $0.4 million in other expenses.

Communications

Selling, general and administrative expenses in the Communications segment decreased $6.9 million to $21.5 million for the three months ended September 30, 2024 from $28.4 million for the three months ended September 30, 2023.

The decrease was primarily due to decreases of $2.7 million in payroll and related expenses, $1.9 million in depreciation and amortization expenses, non-recurring receipt of $1.2 million refund of regulatory taxes that were overpaid in the prior year based on estimated billing, $0.8 million in communications expenses, and $0.3 million in other expenses.

The decrease in payroll and related expenses and other expenses was primarily due to cost savings in 2024 resulting from the implementation of cost savings programs in second half of 2023 that included a reduction in headcount and other operating expenses and sale of the Lingo carrier business in the third quarter of 2024.

Selling, general and administrative expenses in the Communications segment decreased $3.2 million to $20.7 million for the three months ended March 31, 2025 from $23.9 million for the three months ended March 31, 2024.

The decrease was primarily due to decreases of $2.0 million in employee compensation and benefit related expenses due to lower headcount, lower commissions and sale of the Lingo carrier business in the third quarter of 2024, and $1.2 million in depreciation and amortization expenses due to items being fully amortized in 2024.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $1.9 million to $16.9 million for the three months ended September 30, 2024 from $18.8 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $0.7 million in payroll and related expenses due to reduced headcount, $0.7 million in depreciation and amortization expense due to items being fully amortized, $0.7 million in currency fluctuation, and $0.6 million in other expenses due to efforts to reduce costs, partially offset by an increase of $0.8 million in professional fees.

Selling, general and administrative expenses in the Consumer Products segment decreased $1.9 million to $15.6 million for the three months ended March 31, 2025 from $17.5 million during the three months ended March 31, 2024.

The decrease was primarily due to decreases of $0.6 million in professional fees partially due to nonrecurring legal expenses in the prior year, $0.5 million in employee compensation and benefit related expenses due to reduced headcount, and $0.5 million in marketing costs, and $0.3 million in other expenses due to efforts to reduce costs.

Selling, general and administrative expenses in the E-Commerce segment consisted of $8.4 million during the three months ended March 31, 2025 from Nogin which was acquired in the second quarter of 2024.

Of the $8.4 million, $3.2 million was in employee compensation and benefit related expenses, $2.5 million was in other selling general and administrative expenses, and $2.1 million was in professional services.

Corporate and All Other

Selling, general and administrative expenses for Corporate and All Other increased approximately $21.4 million to $45.8 million during the three months ended September 30, 2024 from $24.4 million during the three months ended September 30, 2023.

The increase was primarily due to increases of $9.3 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $9.1 million from Nogin which we acquired in the second quarter of 2024, $3.1 million in legal expenses, $2.8 million in currency fluctuation, $2.0 million from the regional environmental services business, $1.6 million in accounting expenses, $1.0 million in transaction costs, $0.9 million in other expenses, and $0.5 million in consulting expenses, partially offset by decreases of $7.5 million in payroll and related expenses, which primarily related to decreases in share based compensation and other variable compensation, $0.9 million related to the landscaping business that was sold in 2023 and $0.7 million in outside contractor expenses.

Other Income (Expense).

Other income included interest income of $1.4 million and $0.2 million during the three months ended September 30, 2024 and 2023, respectively.

Dividend income was $0.7 million during the three months ended September 30, 2024 compared to $3.4 million during the three months ended September 30, 2023.

Realized and unrealized (losses) gains on investments was a loss of $22.2 million during the three months ended September 30, 2024 compared to a loss of $77.3 million during the three months ended September 30, 2023.

The change was primarily due to increases in the valuation of our investments in Babcock & Wilcox Enterprises, Inc.

of $43.2 million, Alta Equipment Group, Inc.

of $17.9 million, Double Down Interactive Co., Ltd of $17.3 million, partially offset by a decrease in valuation of Freedom VCM Holdings, LLC of $49.0 million.

Change in fair value of financial instruments and other was a gain of $0.5 million during the three months ended September 30, 2024 and a loss of $4.2 million during the three months ended September 30, 2023.

Interest expense was $33.0 million during the three months ended September 30, 2024 compared to $37.5 million during the three months ended September 30, 2023.

The decrease in interest expense was due to lower debt balances during the three months ended September 30, 2024.

The decreases in interest expense primarily consisted of $5.4

million from the Nomura term loan, $2.1 million from the Pathlight term loan, $2.5 million from the issuance of senior notes, $1.5 million from the Nomura revolving credit facility, $0.2 million and $0.6 million from the Targus term loan and revolver, respectively, $0.4 million from the BRPAC term loan, and $0.3 million from the Lingo term loan, partially offset by increases in interest expense of $0.7 million from the bebe term loan, and $0.4 million from the Nogin secured convertible promissory note.

Loss from Continuing Operations Before Income Taxes .

Loss from continuing operations before income taxes was $134.3 million during the three months ended September 30, 2024 compared to loss before income taxes of $123.7 million during the three months ended September 30, 2023.

The change was due to a decrease in revenue of $164.0 million, an decrease in operating expenses of $90.2 million, and a decrease of $2.7 million in dividend income, partially offset by a change in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in change in fair value of financial instruments and other of $4.6 million, a decrease in interest expense of $4.5 million and an increase of $1.3 million in interest income.

(Provision for) Benefit from Income Taxes.

Provision for income taxes was $14.5 million during the three months ended September 30, 2024 compared to a benefit from income taxes of $23.6 million during the three months ended September 30, 2023.

The effective income tax rate was 10.8% for the three months ended September 30, 2024 as compared to 19.1% for the three months ended September 30, 2023.

Loss from Continuing Operations.

Loss from continuing operations was $148.9 million during the three months ended September 30, 2024 compared to $100.0 million during the three months ended September 30, 2023.

The change was due to a decrease of $73.8 million in operating loss, change in income tax benefit to provision of $38.1 million and a decrease of $2.7 million in dividend income, partially offset by a change in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in change in fair value of financial instruments and other of $4.6 million, a decrease in interest expense of $4.5 million and an increase of $1.3 million in interest income.

(Loss) Income from Discontinued Operations, Net of Income Taxes.

On October 25, 2024, we and our subsidiary bebe stores, inc.

(“bebe”) have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds.

The results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Brands Transaction was $134.4 million during the three months ended September 30, 2024 compared to income from discontinued operations of $10.3 million during the three months ended September 30, 2023.

The loss from discontinued operations is primarily due to realized and unrealized losses incurred on the brand equity investments during the three months ended September 30, 2024 from the planned securitization transaction and Sale of equity investments by the Company’s majority owned subsidiary bebe, as more fully discussed in Note 4 to the accompanying condensed consolidated financial statements.

On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Great American Group was $4.4 million for the three months ended September 30, 2024, compared to income from discontinued operations of $13.4 million during the three months ended September 30, 2023.

Refer to Note 4 to the accompanying condensed consolidated financial statements for additional information.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests.

Net loss attributable to noncontrolling interests and redeemable 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 $3.2 million during the three months ended September 30, 2024 compared to net loss of $2.5 million during the three months ended September 30, 2023.

Net Loss Attributable to the Company .

Net loss attributable to the Company was $284.4 million during the three months ended September 30, 2024 compared to net loss attributable to the Company of $73.8 million for the three months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $73.8 million, a change in provision for income taxes of $38.1 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $0.7 million, and a decrease in realized and unrealized (losses) gains on investments of $55.1 million, a decrease of $2.7 million in dividend income, partially offset by a decrease in interest expense of $4.5 million, an increase in change in fair value of financial instruments and other of $4.6 million, and an increase of $1.3 million in interest income.

Preferred Stock Dividends .

Preferred stock dividends were $2.0 million for the three months ended September 30, 2024 and 2023.

Dividends on the Series A preferred paid during the three months ended September 30, 2024 and 2023

were $0.4296875 per depository share.

Dividends on the Series B preferred paid during the three months ended September 30, 2024 and 2023 were $0.4609375 per depository share.

Net Loss Available to Common Shareholders .

Net loss available to common shareholders was $286.4 million during the three months ended September 30, 2024 compared to net loss available to common shareholders $75.8 million during the three months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $73.8 million, a change in provision for income taxes of $38.1 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $0.7 million, and a decrease of $2.7 million in dividend income, partially offset by a decrease in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in interest expense of $4.5 million, an increase in change in fair value of financial instruments and other of $4.6 million, and an increase of $1.3 million in interest income.

Results of Operations

The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Nine Months Ended September 30, Change

2024 2023 Amount %

Services and fees $ 660,946 $ 662,181 $ (1,235) (0.2) %

Trading (loss) income (50,226) 31,723 (81,949) n/m

Fair value adjustments on loans (259,260) 51,623 (310,883) n/m

Interest income - loans 51,894 102,535 (50,641) (49.4) %

Interest income - securities lending 69,614 119,580 (49,966) (41.8) %

Sale of goods 164,254 184,301 (20,047) (10.9) %

Total revenues 637,222 1,151,943 (514,721) (44.7) %

Operating expenses:

Direct cost of services 168,008 156,373 11,635 7.4 %

Cost of goods sold 118,897 129,490 (10,593) (8.2) %

Selling, general and administrative expenses 577,377 579,964 (2,587) (0.4) %

Restructuring charge 925 949 (24) (2.5) %

Impairment of goodwill and tradenames 27,681 37,233 (9,552) (25.7) %

Selling, general and administrative expenses for Corporate and All Other increased $1.9 million to $35.3 million during the three months ended March 31, 2025 from $33.4 million for the three months ended March 31, 2024.

The increase was primarily due to increases of $6.0 million in transaction costs, of which $4.4 million were from the regional environmental services business which was sold this quarter, $1.5 million in foreign currency fluctuation, and $0.9 million in legal settlements, partially offset by decreases of $3.6 million in employee compensation and benefit related expenses primarily driven by a decrease in share based compensation, $2.0 million in occupancy-related costs, $0.6 million in professional services and $0.3 million in other expenses.

Interest Expense - Securities Lending and Loan Participations Sold.

Total operating expenses 957,943 1,010,581 (52,638) (5.2) %

Operating (loss) income (320,721) 141,362 (462,083) n/m

Interest expense - securities lending and loan participations sold decreased $34.7 million to $0.7 million during the three months ended March 31, 2025 from $35.4 million for the three months ended March 31, 2024.

The decrease was due to a decrease in the securities loaned and loan participations sold balances from $2.0 billion as of March 31, 2024 to $33.0 million as of March 31, 2025.

Other Income (Expense).

Interest income 2,909 3,455 (546) (15.8) %

Dividend income 4,139 9,541 (5,402) (56.6) %

Realized and unrealized losses on investments (212,362) (77,020) (135,342) 175.7 %

Change in fair value of financial instruments and other 627 (3,998) 4,625 (115.7) %

Income (loss) from equity investments 12 (175) 187 (106.9) %

Interest expense (102,195) (118,630) 16,435 (13.9) %

Loss from continuing operations before income taxes (627,591) (45,465) (582,126) n/m

Provision for income taxes (17,915) (3,045) (14,870) n/m

Loss from continuing operations (645,506) (48,510) (596,996) n/m

(Loss) income from discontinued operations, net of income taxes (123,827) 32,543 (156,370) n/m

Net loss (769,333) (15,967) (753,366) n/m

Net loss attributable to noncontrolling interests (2,167) (5,680) 3,513 (61.8) %

Net loss attributable to B.

Riley Financial, Inc.

(767,166) (10,287) (756,879) n/m

Preferred stock dividends 6,045 6,042 3 — %

Net loss available to common shareholders $ (773,211) $ (16,329) $ (756,882) n/m

n/m - Not applicable or not meaningful.

The table below and the discussion that follows are based on how we analyze our business.

Nine Months Ended September 30, Change

2024 2023 Amount %

Services and fees:

Capital Markets segment $ 141,026 $ 183,803 $ (42,777) (23.3) %

Wealth Management segment 150,153 146,660 3,493 2.4 %

Financial Consulting segment 69,383 52,325 17,058 32.6 %

Communications segment 225,055 250,523 (25,468) (10.2) %

All Other 75,329 28,870 46,459 160.9 %

Other income included interest income of $1.5 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively.

Dividend income was $0.1 million during the three months ended March 31, 2025 compared to $3.0 million during the three months ended March 31, 2024.

Realized and unrealized losses on investments was a loss of $14.5 million during the three months ended March 31, 2025 compared to a loss of $34.9 million during the three months ended March 31, 2024, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Three Months Ended

Other income (Expense) - Realized & Unrealized Gains (Losses)

Public Equity Securities:

Babcock & Wilcox Enterprises, Inc.

- common stock $ (11,488) $ (4,875)

Babcock & Wilcox Enterprises, Inc.

- preferred stock (462) 276

Alta Equipment Group, Inc.

- common stock — (3,537)

Double Down Interactive Co., Ltd - common stock (2,077) 14,147

Synchronoss Technologies, Inc.

- common stock — 2,520

- Common Stock — (1,015)

Other public equities (208) 2,204

Subtotal (14,235) 9,720

Trading (loss) income:

Capital Markets segment (52,787) 29,488 (82,275) n/m

Wealth Management segment 2,561 2,235 326 14.6 %

Subtotal (50,226) 31,723 (81,949) n/m

Fair value adjustments on loans:

Capital Markets segment (259,260) 51,623 (310,883) n/m

Interest income - loans:

Capital Markets segment 51,894 102,535 (50,641) (49.4) %

Interest income - securities lending:

Capital Markets segment 69,614 119,580 (49,966) (41.8) %

Sale of goods:

Communications segment 4,079 5,145 (1,066) (20.7) %

Consumer Products segment 152,739 179,156 (26,417) (14.7) %

All Other 7,436 — 7,436 100.0 %

Private Equity Securities:

Freedom VCM Holdings, LLC — (32,655)

Kanaci Technologies, LLC — (7,096)

CSL Completions Co-Invest-A, LLC — (11,541)

Other private equities (1,622) 6,223

Subtotal (1,622) (45,069)

Total revenues $ 637,222 $ 1,151,943 $ (514,721) (44.7) %

_______________________________________________

n/m - Not applicable or not meaningful.

Total revenues decreased $514.7 million to $637.2 million during the nine months ended September 30, 2024 from $1,151.9 million during the nine months ended September 30, 2023.

The decrease in revenues during the nine months ended September 30, 2024 was primarily due to decreases in fair value adjustments on loans of $310.9 million, in the fair value of the portfolio of securities and other investments owned of $81.9 million, interest income from loans of $50.6 million, interest income from securities lending of $50.0 million, sale of goods of $20.0 million, and revenues from services and fees of $1.2 million.

Of the $310.9 million decrease in fair value adjustments related to loans, $222.7 million related to the loan to VCM, $13.6 million related to the loan to Freedom VCM, $27.1 million related to the loan to Conn’s, and $0.8 million related to the loan to Badcock Receivables I.

The decrease in revenue from services and fees in the nine months ended September 30, 2024 consisted of decreases in revenue of $42.8 million in the Capital Markets segment, and $25.5 million in the Communications segment, partially offset by increases in revenue of $46.5 million in All Other, $17.1 million in the Financial Consulting segment, and $3.5 million in the Wealth Management segment.

Revenues from services and fees in the Capital Markets segment decreased $42.8 million to $141.0 million during the nine months ended September 30, 2024 from $183.8 million during the nine months ended September 30, 2023.

the lead manager on fewer underwriting engagements in 2024 than 2023.

The decrease in revenues was primarily due to decreases of $25.7 million of corporate finance, consulting, and investment banking fees, $7.0 million in dividends, $5.8 million in commission fees, $2.2 million of interest income, $1.8 million in other income, and $0.2 million in asset management fees.

Revenues from services and fees in the Wealth Management segment increased $3.5 million to $150.2 million during the nine months ended September 30, 2024 from $146.7 million during the nine months ended September 30, 2023.

The increase in revenues was primarily due to increases in revenue of $2.9 million from wealth and asset management fees and $1.0 million in other income, partially offset by a decrease of $0.4 million in commission fees.

Revenues from services and fees in the Financial Consulting segment increased $17.1 million to $69.4 million during the nine months ended September 30, 2024 from $52.3 million during the nine months ended September 30, 2023.

The increase in revenues was primarily due to an increase of $19.0 million from the bankruptcy and restructuring, forensic and litigation, automotive restructuring, C&W, Interface Consulting and Farber divisions offset by a decrease in revenues of $1.9 million from the risk compliance and finance, valuation and due diligence divisions.

Revenues from services and fees in the Communications segment decreased $25.5 million to $225.1 million during the nine months ended September 30, 2024 from $250.5 million during the nine months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $24.7 million and $0.8 million in advertising and other revenue.

We expect UOL, magicJack, and Marconi subscription revenue to continue to decline year-over-year.

Revenues from services and fees in All Other increased $46.5 million to $75.3 million during the nine months ended September 30, 2024 from $28.9 million during the nine months ended September 30, 2023.

These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, commission fees from Nogin which we acquired in the second quarter of 2024, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022 and sold in the third quarter of 2023.

Revenues from services and fees in All Other increased by approximately $39.1 million related to merchandise rental fees from bebe, $8.0 million in commission fees from Nogin, and $7.3 million related to the regional environmental services business, partially offset by a decrease in revenues of $8.0 million due to the sale of the landscaping business in the fourth quarter of 2023.

Trading (loss) income decreased approximately $81.9 million to a loss of $50.2 million during the nine months ended September 30, 2024 compared to income of $31.7 million during the nine months ended September 30, 2023.

The loss of $50.2 million during the nine months ended September 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The decrease in the fair value adjustment of $310.9 million on our loans receivable during the nine months ended September 30, 2024 was primarily due to $222.7 million related to VCM, $13.6 million related to the loan to Freedom VCM, $27.1 million related to Conn’s, and $0.8 million related to Badcock Receivables I.

Interest income - loans decreased $50.6 million to $51.9 million during the nine months ended September 30, 2024 from $102.5 million during the nine months ended September 30, 2023.

The decrease was due to a reduction in loan receivable balances from $549.1 million as of September 30, 2023 to $151.7 million as of September 30, 2024.

Interest income – securities lending decreased $50.0 million to $69.6 million during the nine months ended September 30, 2024 from $119.6 million during the nine months ended September 30, 2023.

The decrease was due to a decrease in the securities borrowed balance from $2,782.0 million as of September 30, 2023 to $64.0 million as of September 30, 2024.

Revenues from the sale of goods decreased $20.0 million to $164.3 million during the nine months ended September 30, 2024 from $184.3 million during the nine months ended September 30, 2023.

The decrease in revenues from sale of goods was attributable to a decrease of $26.4 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $1.1 million from the Communications segment, partially offset by an increase of $7.4 million from All Other consisting of $6.0 million in sale of goods from Nogin which we acquired in the second quarter of 2024 and $1.4 million in sale of goods from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Cost of goods sold for the nine months ended September 30, 2024 decreased approximately $10.6 million to $118.9 million from $129.5 million during the nine months ended September 30, 2023.

The decrease in cost of goods sold was primarily attributable to decreases of $14.3 million in the Consumer Products segment and $1.6 million in the Communications segment, partially offset by increases of $5.3 million from All Other

consisting of $3.7 million from Nogin which we acquired in the second quarter of 2024 and $1.6 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Operating Expenses

Direct Cost of Services

Direct cost of services increased approximately $11.6 million to $168.0 million during the nine months ended September 30, 2024 from $156.4 million during the nine months ended September 30, 2023.

The increase in direct cost of services was primarily attributable to an increase of $17.1 million from All Other consisting of $12.4 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $4.5 million from Nogin which we acquired in the second quarter of 2024, and $0.2 million from the regional environmental services business, partially offset by a decrease of $5.5 million from the Communications segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses during the nine months ended September 30, 2024 and 2023 were comprised of the following:

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023 Change

Amount % Amount % Amount %

Capital Markets segment $ 135,816 23.5 % $ 177,628 30.7 % $ (41,812) (23.5) %

Wealth Management segment 148,587 25.7 % 146,420 25.2 % 2,167 1.5 %

Financial Consulting segment 56,553 9.8 % 43,166 7.4 % 13,387 31.0 %

Communications segment 70,886 12.3 % 84,215 14.5 % (13,329) (15.8) %

Consumer Products segment 51,464 8.9 % 59,774 10.3 % (8,310) (13.9) %

Corporate and All Other 114,071 19.8 % 68,761 11.9 % 45,310 65.9 %

Total selling, general & administrative expenses $ 577,377 100.0 % $ 579,964 100.0 % $ (2,587) (0.4) %

Total selling, general and administrative expenses decreased by $2.6 million to $577.4 million during the nine months ended September 30, 2024 from $580.0 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $41.8 million in the Capital Markets segment, $13.3 million in the Communications segment, and $8.3 million in the Consumer Products segment, partially offset by increases of $45.3 million in Corporate and All Other, $13.4 million in the Financial Consulting segment, and $2.2 million in the Wealth Management segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment decreased by $41.8 million to $135.8 million during the nine months ended September 30, 2024 from $177.6 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $26.0 million in payroll and related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses, $14.1 million in consulting expenses, of which $12.9 million related to an advisory agreement which ended in August of 2023, $2.2 million in clearing and execution charges, $1.5 million in investment banking deal expenses, $0.8 million in depreciation and amortization expenses, $0.6 million in business development activities and $0.1 million in other expenses, partially offset by an increase of $3.5 million in change in fair value of contingent consideration.

The advisory agreement was terminated in August 2023 in connection with the FRG take private transaction as more fully described in Note 2(h) to the accompanying condensed consolidated financial statements and there was no expense during the nine months ended September 30, 2024 as compared to the prior year when the expense totaled $12.9 million.

in addition, a decrease in the invested balance in value during such reporting period would result in the reporting of a credit to selling, general and administrative expense.

During the nine months ended September 30, 2023, the Company recorded an advisory fee of $12.9 million in accordance with the advisory agreement due to the realized and unrealized gains earned.

Wealth Management

Selling, general and administrative expenses in the Wealth Management segment increased by $2.2 million to $148.6 million during the nine months ended September 30, 2024 from $146.4 million during the nine months ended September 30, 2023.

The increase was primarily due to increases of $4.0 million in payroll and related expenses and $1.4 million in legal settlements, partially offset by decreases of $2.5 million in other expenses and $0.7 million in software and equipment expenses.

Financial Consulting

Selling, general and administrative expenses in the Financial Consulting segment increased by $13.4 million to $56.6 million during the nine months ended September 30, 2024 from $43.2 million during the nine months ended September 30, 2023.

The increase was primarily due to increases of $9.6 million in payroll and related expenses related to a business acquired in the third quarter of 2023, an increase in headcount, and an increase in variable compensation, $1.4 million in change in fair value of contingent consideration, $0.9 million in legal settlements, $0.7 million in travel and entertainment expenses, $0.5 million in outside contractor expenses and $0.3 million in other expenses.

Communications

Selling, general and administrative expenses in the Communications segment decreased $13.3 million to $70.9 million for the nine months ended September 30, 2024 from $84.2 million for the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $8.1 million in payroll and related expenses due to lower headcount, $3.0 million in depreciation and amortization expenses due to items being fully amortized, $1.6 million in regulatory taxes due to receiving credits, and $0.7 million in software and equipment.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $8.3 million to $51.5 million for the nine months ended September 30, 2024 from $59.8 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $1.9 million in depreciation and amortization expense due to items being fully amortized, $1.8 million in other expenses due to efforts to reduce costs, $1.5 million in professional fees partially due to large legal expense in the prior year, $1.2 million in payroll and related expenses due to reduced headcount, $0.6 million in travel and entertainment expenses, and $0.6 million in marketing costs, partially offset by an increase of $0.5 million in share based compensation due to a reversal of performance based shares in the prior year.

Corporate and All Other

Selling, general and administrative expenses for Corporate and All Other increased approximately $45.3 million to $114.1 million during the nine months ended September 30, 2024 from $68.8 million for the nine months ended September 30, 2023.

The increase was primarily due to increases of $28.6 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $15.1 million from Nogin which was acquired in the second quarter of 2024, $9.0 million in legal expenses, $5.9 million in accounting expenses, $4.6 million from the regional environmental services business, $2.0 million in legal settlements, and $1.3 million in transaction costs, partially offset by decreases of $17.1 million in payroll and related expenses, which primarily related to decreases in share based compensation and other variable compensation, $2.0 million related to the landscaping business that was sold in 2023, $1.5 million in outside contractor expenses, and $0.4 million in other expenses.

Impairment of goodwill and tradenames.

We recognized impairment charges of $27.7 million during the nine months ended September 30, 2024.

We performed an interim impairment test as of June 30, 2024, as further discussed in Note 9 of the accompanying condensed consolidated financial statements.

Based on the results of the impairment test, we recorded a non-cash impairment charge of $26.7 million related to goodwill and $1.0 million related to tradenames in the Consumer Products segment.

We recognized impairment charges of $37.2 million during the nine months ended September 30, 2023 consisting of $8.0 million in impairment of indefinite-lived tradenames and $27.5 million of impairment of goodwill in the Consumer segment and $1.7 million in impairment of tradenames in the Capital Markets segment.

Other Income (Expense).

Other income included interest income of $2.9 million and $3.5 million during the nine months ended September 30, 2024 and 2023, respectively.

Dividend income was $4.1 million during the nine months ended September 30, 2024 compared to $9.5 million during the nine months ended September 30, 2023.

Realized and unrealized losses on investments was a loss of $212.4 million during the nine months ended September 30, 2024 compared to a loss of $77.0 million during the nine months ended September 30, 2023.

The change was primarily due to a decrease in the valuation of our investment in Freedom VCM Holdings, LLC of $221.0 million, partially offset by increases of $35.3 million in Babcock & Wilcox Enterprises, Inc., $34.9 million in Double Down Interactive Co., Ltd and $21.3 million in The Arena Group, Inc.

Change in fair value of financial instruments and other was a gain of $0.6 million during the nine months ended September 30, 2024 and a loss of $4.0 million during the nine months ended September 30, 2023.

Interest expense was $102.2 million during the nine months ended September 30, 2024 compared to $118.6 million during the nine months ended September 30, 2023.

The decrease in interest expense was due to lower debt balances during the nine months ended September 30, 2024.

The decreases in interest expense primarily consisted of $14.4 million from the Pathlight term loan, $8.1 million from the issuance of senior notes, $7.5 million from the Nomura term loan, $4.0 million from the Nomura revolving credit facility, $0.4 million and $1.7 million from the Targus term loan and revolver, respectively, and $1.2 million from the BRPAC term loan, partially offset by increases in interest expense of $2.1 million from the bebe term loan, and $0.6 million from the Nogin secured convertible promissory note.

Loss from Continuing Operations Before Income Taxes .

Loss from continuing operations before income taxes was $627.6 million during the nine months ended September 30, 2024 compared to loss before income taxes of $45.5 million during the nine months ended September 30, 2023.

The change was due to a decrease in revenue of $514.7 million, a change in realized and unrealized losses on investments of $135.3 million, a decrease in operating expenses of $52.6 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a decrease in interest expense of $16.4 million.

Provision for Income Taxes.

Provision for income taxes was $17.9 million during the nine months ended September 30, 2024 compared to a provision for income taxes of $3.0 million during the nine months ended September 30, 2023.

The effective income tax rate was 2.9% for the nine months ended September 30, 2024 as compared to 6.7% for the nine months ended September 30, 2023.

Loss from Continuing Operations.

Loss from continuing operations was $645.5 million during the nine months ended September 30, 2024 compared to loss of $48.5 million during the nine months ended September 30, 2023.

The change was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

(Loss) Income from Discontinued Operations, Net of Income Taxes.

Corporate bonds 1,357 467

Partnership interest and other — (42)

Total $ (14,500) $ (34,924)

The $20.4 million favorable variance was primarily due to unfavorable fair value adjustments recorded in the prior year quarter and no fair value adjustments recorded in the current quarter of $32.7 million in our investment in Freedom VCM Holdings, LLC, which was written off in the fourth quarter of the prior year, $11.5 million in our investment in CSL Completions Co-Invest-A, LLC, $7.1 million in our investment in Kanaci Technologies, LLC, and $3.5 million in our investment in Alta Equipment Group, Inc., the three of which were sold prior to March 31, 2025.

These favorable increases were partially offset by unfavorable variances between the comparative reporting periods of $16.2 million related to our investment in Double Down Interactive Co.

Ltd and $7.4 million related to our investment in Babcock & Wilcox Enterprises, Inc., both of which were driven by favorable changes in their respective stock prices in the prior year quarter, other private equities of $7.8 million, and other public equities of $3.9 million.

Other income (expense) also includes change in fair value of financial instruments and other was a gain of $0.9 million during the three months ended March 31, 2025 and a gain on sale and deconsolidation of businesses of $80.8 million during the three months ended March 31, 2025 primarily related to $52.4 million net gain on the sale of Atlantic Coast Recycling and $28.4 million net gain on the disposition of Nogin.

The gain on senior note exchange was $10.5 million during the three months ended March 31, 2025.

The loss on extinguishment of debt was $10.4 million during the three months ended March 31, 2025.

Interest expense was $30.0 million during the three months ended March 31, 2025 compared to $35.7 million during the three months ended March 31, 2024.

The decrease in interest expense was due to lower average debt balances during the three months ended March 31, 2025 when compared to the same period in the prior year.

The decreases in interest expense primarily consisted of $4.1 million from the Nomura term loan, $2.8 million from the issuance of senior notes,

$1.4 million from the Lingo term loan, $0.5 million from the Nomura revolving credit facility, and $0.5 million and $0.4 million from the Targus term loan and revolver, respectively, partially offset by increases in interest expense of $3.2 million from the Oaktree term loan, $0.5 million from the BRPAC term loan, and $0.4 million from the Nogin secured convertible promissory note.

Benefit from Income Taxes.

Benefit from income taxes was $3.0 million during the three months ended March 31, 2025 compared to a benefit from income taxes of $21.3 million during the three months ended March 31, 2024.

The benefit for income taxes in 2025 is primarily limited to the reversal of tax reserves due to the expiration of stature of limitations since the Company has a valuation allowance for deferred taxes.

In the prior year period the benefit for income taxes approximated the effective rate for income taxes prior to establishing a valuation allowance at June 30, 2024 due to losses incurred in 2024.

The effective income tax rate was 13.2% for the three months ended March 31, 2025 as compared to 25.8% for the three months ended March 31, 2024.

Income from Discontinued Operations, Net of Income Taxes.

On October 25, 2024, we and our subsidiary bebe stores, inc.

(“bebe”) have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds.

The results have been presented as discontinued operations for the nine months ended September 30, 2024.

Loss from discontinued operations, net of tax for Brands Transaction was $112.6 million during the nine months ended September 30, 2024 compared to income from discontinued operations of $21.7 million during the nine months ended September 30, 2023.

On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Great American Group was $11.2 million for the nine months ended September 30, 2023, compared to income from discontinued operations of $10.8 million during the nine months ended September 30, 2023.

Refer to Note 4 to the accompanying condensed consolidated financial statements for additional information.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests.

The net loss attributable to noncontrolling interests was $2.2 million during the nine months ended September 30, 2024 compared to net loss of $5.7 million during the nine months ended September 30, 2023.

Net Loss Attributable to the Company .

Net loss attributable to the Company was $767.2 million during the nine months ended September 30, 2024 compared to net loss attributable to the Company of $10.3 million for the nine months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $3.5 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

(“bebe”) completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds.

The results have been presented as discontinued operations for the three months ended March 31, 2024.

Income from discontinued operations, net of tax for Brands Transaction was $13.1 million during the three months ended March 31, 2024.

The income from discontinued operations is primarily due to realized and unrealized losses incurred on the brand equity investments during the three months ended March 31, 2024 from the planned securitization transaction and Sale of equity investments by the Company’s majority owned subsidiary bebe, as more fully discussed in Note 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements.

On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the three months ended March 31, 2024.

Loss from discontinued operations, net of tax for Great American Group was $3.2 million during the three months ended March 31, 2024.

Refer to Note 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.

On June 27, 2025, we signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber and their results have been presented as discontinued operations for the three months ended March 31, 2025 and 2024.

Income from discontinued operations, net of tax for GlassRatner and Farber was $3.4 million for the three months ended March 31, 2025 and 2024.

Refer to Note 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.

Preferred Stock Dividends .

Preferred stock dividends were $6.0 million for the nine months ended September 30, 2024 and 2023.

Dividends on the Series A preferred paid during the nine months ended September 30, 2024 and 2023 were $0.4296875 per depository share.

Dividends on the Series B preferred paid during the nine months ended September 30, 2024 and 2023 were $0.4609375 per depository share.

Net Loss Available to Common Shareholders .

Net loss available to common shareholders was $773.2 million during the nine months ended September 30, 2024 compared to net loss available to common shareholders $16.3 million during the nine months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $3.5 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

Preferred stock dividends were $2.0 million for the three months ended March 31, 2025 and 2024.

Dividends on the Series A preferred paid during the three months ended March 31, 2024 were $0.4296875 per depository share.

Dividends on the Series B preferred paid during the three months ended March 31, 2024 were $0.4609375 per depository share.

On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A and B Preferred Stock.

Unpaid dividends will accrue until paid in full.

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 nine months ended September 30, 2024 and 2023, we generated net losses of $645.5 million and $48.5 million, respectively.

The Company operates a number of businesses in its segments that provide steady cash flows and operating income throughout the year, however, our cash flows and profitability are impacted by capital market engagements.

As of September 30, 2024, we had $159.2 million of unrestricted cash and cash equivalents, $1.4 million of restricted cash, $341.8 million of securities and other investments owned, at fair value, $151.7 million of loans receivable, at fair value, and $2,067.8 million of borrowings outstanding.

The borrowings outstanding of $2,067.8 million as of September 30, 2024 included $1,529.6 million from the issuance of series of senior notes that are due at various dates ranging from February 28, 2025 to August 31, 2028 with interest rates ranging from 5.00% to 6.50%, $490.7 million in term loans borrowed pursuant to the Tiger US Holdings Inc.

(“Targus”), Lingo Management, LLC (“Lingo Management”), BRPI Acquisition Co LLC (“BRPAC”), Nomura Corporate Fundings Americas, LLC (“Nomura”), and bebe credit agreements discussed below, $13.7 million of revolving credit facility under the Targus credit facility discussed below, and $29.9 million of notes payable.

In November 2024, the Company also entered into a transaction whereby all of its interests in the Great American Group businesses was contributed to a newly formed subsidiary and issued preferred and common units to an investor for a purchase price of approximately $203.0 million referred to as the Great American Transaction above.

In connection with such transaction, the Company used proceeds to further reduce the outstanding balance on the Nomura credit facility from $216.6 million to $125.0 million.

The Company has $145.3 million of 6.375% Senior Notes due on February 28, 2025 that mature and will use cash on hand to repay these senior notes.

We believe that our current cash and cash equivalents, securities and other investments owned, funds available under our asset based credit facility and funds available under the Targus 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.

The Company also has $217.4 million of the $1,529.6 million of Senior Notes outstanding at September 30, 2024 that are due to mature on March 31, 2026.

The Company is considering a number of additional strategic alternatives to satisfy this obligation;

which among other things, includes:

existing cash on hand;

the sale of a portion of the Company’s traditional (W-2) Wealth Management business (as more further discussed above);

the sale of non-core businesses;

and the sale or refinancing of other assets and investments.

There can be no assurance that these contemplated transactions will occur and in the event these transactions are not completed it could have a material impact on the Company’s financial condition.

Due to the fact that we are no longer a well-known seasoned issued and no longer eligible to file a short form registration statement with the SEC, accessing the capital markets could take longer and cost more than would otherwise be the case.

Our operations are funded through a combination of existing cash on hand, cash generated from operations, investment portfolio liquidity, borrowings under our senior notes payable, term loans and credit facilities, other financing arrangements, and obligations under operating leases.

During the three months ended March 31, 2025 and 2024, we generated a net loss attributable to the Company of $10.0 million and $49.2 million, respectively.

The Company operates several businesses in its segments that provide cash flows and operating income throughout the year.

As of March 31, 2025, we had $138.3 million of unrestricted cash and cash equivalents, $1.4 million of restricted cash, $231.8 million of securities and other investments owned, $98.6 million of loans receivable, at fair value, $1.6 billion of borrowings outstanding, and approximately $64.0 million of obligations under operating leases.

The Company expects to collect approximately $72.5 million of loans at fair value in the next twelve months and has approximately $80.2 million of level 1 securities and other investments owned that are available for sale during the next twelve months.

The Company expects to utilize existing cash balances, cash generated from investments, cash proceeds from the sale of certain businesses described below, available borrowing capacity under our existing revolving credit facility and cash generated from operations to fund debt service obligations over the next twelve months which includes amounts coming due on the Company’s senior notes payable as discussed in Note 11 - Senior Notes Payable.

The Company may also explore various funding options in the future that may include additional debt exchanges, refinancing of existing senior

notes and other debt, equity capital raises, the sale of operating companies, or the liquidation of securities and investments owned to provide liquidity to meet future debt obligations as they become due.

The following summarizes key liquidity events.

We completed the sale of (a) the Company’s majority owned subsidiary Atlantic Coast Recycling, LLC on March 3, 2025 for proceeds of approximately $68.6 million (the “Atlantic Coast Transaction”);

(b) the sale of part of Wealth Management business for $26.0 million (the “Wealth Transaction”) as more fully described in Note 3;

and (c) the sale of the Company’s financial consulting business on June 27, 2025 for $117.8 million.

In addition to the sale of these businesses, approximately $30.0 million of investments and loans were sold during the three months ended March 31, 2025 and approximately $14.0 million of investments were sold from April 1, 2025 through October 31, 2025.

Approximately $34.0 million in repayments of loans receivable, fair value were received during the three months ended March 31, 2025 and approximately $44.0 million in repayments of loans receivable, fair value were received from April 1, 2025 through October 31, 2025.

The sale of additional investments in the next twelve months will vary based upon the realization of the investments providing the best economic value or as liquidity needs arise for the Company.

As discussed in more detail in Note 11 - Senior Notes Payable, from April 7, 2025 to July 11, 2025, we completed four private exchange transactions with institutional investors pursuant to which aggregate principal amounts of approximately $29.5 million of the 5.50% Senior Notes due March 2026, $2.1 million of the 6.50% Senior Notes Payable due September 2026, $109.7 million of the 5.00% Senior Notes due December 2026, $51.1 million of the 6.00% Senior Notes due January 2028, and $39.5 million of the 5.25% Senior Notes due August 2028 of the Company’s Exchanged Notes owned by the investors were exchanged for approximately $140.7 million aggregate principal amount of New Notes, whereupon the Exchanged Notes were cancelled.

The borrowings outstanding of $1.6 billion as of March 31, 2025 included $1.4 billion from the issuance of series of senior notes that are due at various dates ranging from March 31, 2026 to August 31, 2028 with interest rates ranging from 5.00% to 8.00%, $184.1 million in term loans borrowed pursuant to the Oaktree Capital Management, L.P.

("Oaktree") and BRPI Acquisition Co LLC (“BRPAC”) credit agreements, and $13.8 million of revolving credit facility under the Targus credit facility.

Of the senior notes outstanding, after the completion of the four private exchange transactions discussed above, there is $101.6 million of senior notes due in the next twelve months and $1.2 billion thereafter.

The $205.5 million of term loans outstanding includes $83.0 million that is expected to be repaid in the next twelve months and $122.5 million thereafter.

Of the approximately $64.0 million of obligations due under operating lease, approximately $22.0 million is due in the next twelve months and approximately $42.0 million is due thereafter.

For additional information regarding our debt offerings and related agreements, refer to Note 9 - Notes Payable, Note 10 - Term Loans and Revolving Credit Facility, and Note 11 - Senior Notes Payable to the unaudited condensed consolidated financial statements.

We believe that the current cash and cash equivalents, securities and other investments owned, funds available under our credit facilities, cash expected to be generated from operating activities and proceeds received from the Wealth Management Transaction and the sale of the Company’s GlassRatner and Farber financial consulting business 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.

From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations.

During the nine months ended September 30, 2024, we paid cash dividends on our common stock of $33.6 million.

During the three months ended March 31, 2025, we did not pay any cash dividends on our common stock.

During the year ended December 31, 2024, we paid cash dividends on our common stock of $33.7 million.

1 unchanged sentence

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 common stock dividend activity for the nine months ended September 30, 2024 and the year ended December 31, 2023 was as follows:

A summary of common stock dividend activity for the three months ended March 31, 2025 and the year ended December 31, 2024 was as follows:

Date Declared Date Paid Stockholder Record Date Amount

1 unchanged sentence

February 29, 2024 March 22, 2024 March 11, 2024 0.50

November 8, 2023 November 30, 2023 November 20, 2023 1.00

July 25, 2023 August 21, 2023 August 11, 2023 1.00

May 4, 2023 May 23, 2023 May 16, 2023 1.00

February 22, 2023 March 23, 2023 March 10, 2023 1.00

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 $0.03 million 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.

As of September 30, 2024, dividends in arrears in respect of the Depositary Shares were $0.8 million.

On October 16, 2024, the Company declared a cash dividend of $0.4296875 per Depositary Share, which was paid on October 31, 2024 to holders of record as of the close of business on October 28, 2024.

As of March 31, 2025, dividends in arrears in respect of the Depositary Shares were $2.0 million.

On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A Preferred Stock.

2 unchanged sentences

Dividends are payable quarterly in arrears, on or about the last day of January, April, July, and October.

As of September 30, 2024, dividends in arrears in respect of the Depositary Shares were $0.5 million.

On October 16, 2024, the Company declared a cash dividend of $0.4609375 per Depositary Share, which was paid on October 31, 2024 to holders of record as of the close of business on October 28, 2024.

As of March 31, 2025, dividends in arrears in respect of the Depositary Shares were $1.3 million.

On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series B Preferred Stock.

Unpaid dividends will accrue until paid in full.

A summary of preferred stock dividend activity for the nine months ended September 30, 2024 and the year ended December 31, 2023 was as follows:

A summary of preferred stock dividend activity for the three months ended March 31, 2025 and the year ended December 31, 2024 was as follows:

Stockholder Preferred Dividend per Depositary Share

Date Declared Date Paid Record Date Series A Series B

July 9, 2024 July 31, 2024 July 22, 2024 $ 0.4296875 $ 0.4609375

April 9, 2024 April 30, 2024 April 22, 2024 0.4296875 0.4609375

January 9, 2024 January 31, 2024 January 22, 2024 0.4296875 0.4609375

October 16, 2024 October 31, 2024 October 28, 2024 $ 0.4296875 $ 0.4609375

July 9, 2024 July 31, 2024 July 22, 2024 0.4296875 0.4609375

April 10, 2023 May 1, 2023 April 21, 2023 0.4296875 0.4609375

April 9, 2024 April 30, 2024 April 22, 2024 0.4296875 0.4609375

January 9, 2024 January 31, 2024 January 22, 2024 0.4296875 0.4609375

1 unchanged sentence

Cash Flow Summary

Nine Months Ended

September 30,

Three Months Ended

(Dollars in thousands)

5 unchanged sentences

Net decrease in cash, cash equivalents and restricted cash $ (113,629) $ (41,260)

Cash provided by operating activities was $266.3 million during the nine months ended September 30, 2024 compared to cash used in operating activities of $41.0 million during the nine months ended September 30, 2023.

Cash provided by operating activities for the nine months ended September 30, 2024 consisted of the impact of net loss of $769.3 million, noncash items of $394.9 million, and changes in operating assets and liabilities of $640.7 million.

The positive cash flow impact from noncash items of $394.9 million included fair value adjustments of $261.4 million, loss on disposal of discontinued operations of $39.5 million , depreciation and amortization of $34.1 million, impairment of goodwill and tradenames of $27.7 million, deferred income taxes of $20.5 million, share-based compensation of $17.6 million, depreciation of rental merchandise of $11.7 million, provision for credit losses of $2.5 million, income allocated for mandatorily redeemable noncontrolling interests of $1.4 million, effect of foreign currency of $0.3 million, partially offset by non-cash interest and other of $26.3 million, and gain on sale of business, disposal of fixed assets, and other of $0.7 million.

Cash used in operating activities for the nine months ended September 30, 2023 consisted of the impact of net loss of $16.0 million, noncash items of $40.9 million, and changes in operating assets and liabilities of $65.9 million.

The positive cash flow impact from noncash items of $40.9 million included depreciation and amortization of $38.1 million, share-based compensation of $35.3 million, provision for credit losses of $5.9 million, impairment of goodwill and tradenames of $37.2 million, loss on extinguishment of debt of $5.3 million , income allocated for mandatorily redeemable noncontrolling interests of $1.3 million, effect of foreign currency of $0.7 million, income from equity investments of $0.2 million and dividends from equity investments of $0.2 million, partially offset by fair value adjustments of $42.8 million, deferred income taxes of $21.4 million, gain on sale of businesses, disposal of fixed assets, and other of $9.6 million, and noncash interest and other of $9.4 million.

Cash provided by investing activities was $25.5 million during the nine months ended September 30, 2024 compared to cash provided by investing activities of $313.0 million for the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, cash provided by investing activities consisted of cash provided by loans receivable

repayment of $105.3 million, sale of loans receivable of $22.8 million, and proceeds from sale of loan participations of $4.0 million, partially offset by cash used in purchases of loans receivable of $79.9 million, acquisition of businesses and minority interest, net of cash acquired of $19.1 million, purchases of property and equipment of $6.7 million, purchases of equity and other investments of $1.1 million, and sale of business, net of cash sold and other of $0.3 million.

During the nine months ended September 30, 2023, cash provided by investing activities consisted of cash received from loans receivable repayment of $543.6 million, funds received from trust account of subsidiary of $175.8 million, proceeds from sale of business, net of cash sold and other of $17.3 million, and sale of loan receivable of $7.5 million, partially offset by cash used for purchases of loans receivable of $405.4 million, acquisition of businesses and minority interest of $15.3 million, purchases of equity and other investments of $4.9 million, and purchases of property and equipment of $5.8 million.

Cash used in financing activities was $354.7 million during the nine months ended September 30, 2024 compared to cash used in financing activities of $285.5 million during the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, cash used in financing activities primarily consisted of $140.5 million used to redeem senior notes, $94.2 million used in payment of revolving lines of credit, $138.6 million used in the repayment of term loan, $33.6 million used to pay dividends on our common shares, $6.2 million used to repay our notes payable and other, $6.0 million used to pay dividends on our preferred shares, $7.4 million used to pay contingent consideration, $4.6 million in distributions to noncontrolling interests, $3.5 million used to pay debt issuance and offering costs, and $3.1 million used in payment of ESPP and employment taxes on vesting of restricted stock, partially offset by cash provided by $64.1 million in proceeds from revolving line of credit, $15.0 million in proceeds from notes payable, $3.2 million in contributions from noncontrolling interests, and $0.7 million in proceeds from exercise of warrants.

During the nine months ended September 30, 2023, cash used in financing activities primarily consisted of $175.8 million used in redemption of subsidiary temporary equity and distributions, $504.2 million used in the repayment of term loan, $111.0 million used to pay dividends on our common shares, $261.7 million used in repayment of revolving line of credit, $58.9 million used to redeem senior notes, $53.7 million used to repurchase our common shares, $27.2 million used in the payment of debt issuance and offering costs, $11.9 million used to repay our notes payable and other, $8.6 million used in payment of ESPP and employment taxes on vesting of restricted stock, $6.0 million used to pay dividends on our preferred shares, $4.0 million in distributions to noncontrolling interests, and $1.9 million used in the payment of contingent consideration, partially offset by cash provided by $628.2 million in proceeds from term loans, $191.3 million in proceeds from revolving line of credit, $4.3 million in contributions from noncontrolling interests, and $0.5 million in proceeds from issuance of preferred stock.

Credit Agreements

Targus Credit Agreement

On October 18, 2022, our subsidiary, Tiger US Holdings, Inc.

(the “Borrower”), a Delaware corporation, among others, entered into a credit agreement (“Targus Credit Agreement”) with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $28.0 million term loan and a five-year $85.0 million revolver loan, which was used to finance part of the acquisition of Targus.

The final maturity date is October 18, 2027.

The Targus Credit Agreement is secured by substantially all Targus assets as collateral defined in the Targus Credit Agreement which totals approximately $204.0 million.

The agreement contains certain covenants, including those limiting the Borrower’s 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.

The Targus 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 outstanding under the Targus Credit Agreement.

On October 31, 2023 and February 20, 2024, we entered into Amendment No.

1 and Amendment No.

2 to the Targus Credit Agreement, which, among other things, modified the fixed charge coverage ratio and the minimum earnings before interest, taxes, depreciation, and amortization requirements which waived the financial covenant breaches for the periods ended September 30, 2023 and December 31, 2023, respectively.

Amendment No.

2 also provided, among other things, with a cure right for us to provide a capital contribution to Targus in the event of a financial covenant breach.

For the period ended September 30, 2023, the Fixed Charge Coverage Ratio “FCCR” covenant was not fulfilled in accordance with the Targus Credit Agreement and for the period ended December 31, 2023, the FCCR and minimum EBITDA covenant was not fulfilled in accordance with the Targus Credit Agreement.

However, the amendments to the Targus Credit Agreement and the capital contributions made to the subsidiary cured the covenant breaches.

On June 27, 2024 we entered into Amendment No.

3 to the Targus Credit Agreement to replace the terminating Canadian

benchmark interest rate with the Term CORRA Reference Rate.

For the period ended June 30, 2024, the minimum EBITDA covenant was also breached.

On August 14, 2024, we contributed $1.6 million to Targus to cure a minimum EBITDA financial covenant requirement for the period ended June 30, 2024.

For the period ended September 30, 2024, the minimum EBITDA covenant was also breached.

On November 7, 2024, we entered into Amendment No.

4 to the Targus Credit Agreement, which among other things, reduced revolving loan sublimits, modified the FCCR covenant, removed the minimum EBITDA requirement, imposed a minimum undrawn availability covenant, and modified the terms of the Keepwell.

Amendment No.

4 to the Targus Credit Agreement also waived the September 30, 2024 minimum EBITDA covenant breach.

Concurrently with the effectiveness of Amendment No.

4 to the Targus Credit Agreement, the Company repaid the outstanding balance of the term loan in full with $2.1 million of revolver loan advances and $7.5 million of cash from the Company.

The term loan bears interest on the outstanding principal amount equal to the Term Secured Overnight Financing Rate (“SOFR”) rate plus an applicable margin of 5.75%.

The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal to the base rate plus an applicable margin of 3.00% and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 4.00%.

Principal outstanding for the term loan under the amended Targus Credit Agreement is due in quarterly installments.

Quarterly installments from September 30, 2024 to December 31, 2025 are in the amount of $2.1 million per quarter and the remaining principal balance is due on March 31, 2026.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $11.5 million (net of unamortized debt issuance costs of $0.2 million) and $17.8 million (net of unamortized debt issuance costs of $0.4 million), respectively, and the outstanding balance on the revolver loan was $13.7 million and $43.8 million, respectively.

Interest expense on these loans during the three and nine months ended September 30, 2024 was $1.0 million (including amortization of deferred debt issuance costs of $0.2 million and unused commitment fees of $0.02 million) and $3.4 million (including amortization of deferred debt issuance costs of $0.6 million and unused commitment fees of $0.1 million), respectively.

Interest expense on these loans during the three and nine months ended September 30, 2023 was $1.8 million (including amortization of deferred debt issuance costs of $0.1 million and unused commitment fees of $0.02 million) and $5.5 million (including amortization of deferred debt issuance costs of $0.4 million and unused commitment fees of $0.06 million), respectively.

The interest rate on the term loan was 11.18% and 10.20% and the interest rate on the revolver loan ranged between 8.96% to 11.25% and between 8.45% to 11.25% as of September 30, 2024 and December 31, 2023, respectively.

The weighted average interest rate on the revolver loan was 9.04% and 8.53% as of September 30, 2024 and December 31, 2023, respectively.

Lingo Credit Agreement

On August 16, 2022, our subsidiary, Lingo a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Borrower, the Company as the secured guarantor, and Banc of California, N.A.

in its capacity as administrative agent and lender, for a five-year $45.0 million term loan.

This loan was used to finance part of the purchase of BullsEye by Lingo.

On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank (the “New Lender”) for an incremental term loan of $7.5 million, increasing the principal balance of the term loan to $52.5 million.

On November 10, 2022, Lingo entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $20.5 million, increasing the principal balance of the term loan to $73.0 million.

The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus a margin of 3.00% to 3.75% per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment.

As of September 30, 2024 and December 31, 2023, the interest rate on the Lingo Credit Agreement was 8.59% and 8.70% , respectively.

The Lingo Credit Agreement is guaranteed by the Company and Lingo's subsidiaries and secured by certain Lingo assets and equity interests as collateral which totals approximately $230.1 million defined in the Lingo Credit Agreement.

The agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of its businesses, engage in transactions with related parties, make certain investments or pay dividends.

In addition, the Lingo Credit Agreement requires the Borrower to maintain certain financial ratios.

The Lingo 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 Lingo Credit Agreement.

We are in compliance with all financial covenants in the Lingo Credit Agreement as of September 30, 2024.

Principal outstanding is due in quarterly installments.

The quarterly installments from September 30, 2024 to December 31, 2024 are in the amount of $2.7 million per quarter, quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $3.7 million, and the remaining principal balance is due at final maturity on August 16, 2027.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $55.0 million (net of unamortized debt issuance costs of $0.6 million) and $63.2 million (net of unamortized debt issuance costs of $0.7 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2024 was $1.4 million (including amortization of deferred debt issuance costs of $0.1 million) and $4.3 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2023 was $1.6 million (including amortization of deferred debt issuance costs of $0.1 million) and $4.8 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

On January 6, 2025, as discussed below BRPAC entered into an amended and restated credit agreement (the “BRPAC Amended Credit Agreement”) with the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time.

A portion of the proceeds from the BRPAC Amended Credit Agreement were used to pay all outstanding principal amounts and accrued interest under the Lingo Credit Agreement and the Lingo Credit Agreement was effectively terminated upon repayment on January 6, 2025.

bebe Credit Agreement

As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $25.0 million five-year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt.

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 5.50% to 6.00% per annum, depending on the total fixed charge coverage ratio as defined in the bebe Credit Agreement.

As of September 30, 2024 and December 31, 2023, the interest rate on the bebe Credit Agreement was 10.78% and 11.14%, respectively.

The bebe Credit Agreement is collateralized by a first lien on all bebe assets and pledges of capital stock including equity interests which totals approximately $110.9 million.

The agreement contains certain covenants, including those limiting the borrower’s 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 agreement requires bebe to maintain certain financial ratios.

The 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.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $21.7 million (net of unamortized debt issuance costs of $0.5 million) and $22.5 million (net of unamortized debt issuance costs of $0.6 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2024 was $0.7 million (including amortization of deferred debt issuance costs of $0.1 million) and $2.1 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

Principal outstanding is due in quarterly installments through June 30, 2026 in the amount of $0.3 million per quarter and the remaining principal balance of $20.0 million is due at final maturity on August 24, 2026.

On October 25, 2024, upon the closing of the Brands Transaction as described in Note 4 – Discontinued Operations of the accompanying condensed consolidated financial statements, proceeds of $22.2 million was used to pay off the then outstanding balance of the loan in full and $0.2 million of loan payoff expenses.

Nomura Credit Agreement

We and our wholly owned subsidiaries, BR Financial Holdings, LLC, and BR Advisory & Investments, LLC had entered into a credit agreement dated June 23, 2021 (as amended, the “Prior Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year $300.0 million secured term loan credit facility (the “Prior Term Loan Facility”) and a four-year $80.0 million secured revolving loan credit facility (the “Prior Revolving Credit Facility”) with a maturity date of June 23, 2025.

On August 21, 2023, we and our wholly owned subsidiary, BR Financial Holdings, LLC (the “Borrower”), and certain direct and indirect subsidiaries of the Borrower (the “Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $500.0 million secured term loan credit facility (the “New Term Loan Facility”) and a four-year $100.0 million secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”).

The purpose of the Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Term Loan Facility and Prior Revolving Credit Facility with an aggregate outstanding balance of $347.9 million, which included $342.0 million in principal and $5.9 million in interest and fees, (iii) fund a dividend reserve in an amount not less than $65.0 million, (iv) pay related fees and expenses, and (v) for general corporate purposes.

We recorded a loss on extinguishment of debt related to the Prior Credit Agreement of $5.4 million, which was included in selling, general and administrative expenses on the condensed consolidated statements of operations.

SOFR rate loans under the New Credit Facilities accrue interest at the adjusted term SOFR rate plus an applicable margin of 6.00%.

In addition to paying interest on outstanding borrowings under the New Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion, which is determined by the average utilization of the facility for the immediately preceding fiscal quarter.

The Credit Agreement is secured on a first priority basis by a security interest in the equity interests of the Borrower and each of the Borrower’s subsidiaries (subject to certain exclusions) and a security interest in substantially all of the assets of the Borrower and the Guarantors.

The borrowing base as defined in the Credit Agreement consists of a collateral pool that includes certain of the Company's loans receivables in the amount of $209.9 million (which is included in the total loans receivable, at fair value balance of $151.7 million reported in our condensed consolidated balance sheet at September 30, 2024) and $375.8 million (which is included in the total loans receivable, at fair value balance of $532.4 million reported in our condensed consolidated balance sheet at December 31, 2023) and investments in the amount of $706.7 million (which is included in the total securities and other investments owned, at fair value of $341.8 million reported in our condensed consolidated balance sheet at September 30, 2024) and $786.7 million (which is included in the total securities and other investments owned, at fair value of $809.0 million reported in our condensed consolidated balance sheet at December 31, 2023) as of September 30, 2024 and December 31, 2023, respectively.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company’s and its 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.

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.

We are in compliance with all financial covenants in the Credit Agreement as of September 30, 2024.

On September 17, 2024, we entered into Amendment No.

4 to our credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fourth Amendment”).

On September 17, 2024, we made a payment of $85.9 million which consisted of a principal payment of $85.1 million and accrued interest of $0.7 million.

Loan fees incurred in connection with the Fourth Amendment totaled $5.9 million of which $3.5 million was added to the principal balance of the term loan.

After giving effect to these amounts, the outstanding principal balance on the term loan was reduced from $469.8 million to $388.1 million.

In connection with the Fourth Amendment, the revolving credit facility in the amount of $100.0 million which had no balance outstanding at September 17, 2024 was terminated and we are required to reduce the principal amount of the term loan to be no greater than $100.0 million on or prior to September 30, 2025.

The maturity date of the term loan is August 21, 2027 and all outstanding principal is required to be paid.

The Fourth Amendment contains certain provisions related to borrowing base, including specific treatment for certain assets in the calculation of borrowing base and also includes mandatory prepayment provisions regarding asset sales.

Interest on the term loan increased to:

SOFR loans will accrue interest at the adjusted term SOFR plus an applicable margin of 7.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined plus an applicable margin of 6.00% cash interest plus 1.50% paid-in-kind interest;

and base rate loans will accrue interest at the base rate plus an applicable margin of 6.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined for such day plus an applicable margin of 5.00% cash interest plus 1.50% PIK Interest.

On December 9, 2024, the Company entered into Amendment No.

5 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fifth Amendment”).

The Fifth Amendment extended the springing maturity date of the term loans if more than $25.0 million aggregate principal amount of the 5.50% 2026 Notes is outstanding to February 3, 2026 and permits under certain conditions an additional $10.0 million of telecommunications financing.

On January 3, 2025, we entered into Amendment No.

6 to our credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Sixth Amendment”).

Sixth Amendment agreed to permit under certain conditions the contribution by BRPI of 100% of the equity interests in Lingo to BRPAC in connection with the entry into the BRPAC Credit Agreement.

There was no fee charged in connection with the Sixth Amendment.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $369.5 million (net of unamortized debt issuance costs of $18.8 million) and $475.1 million (net of unamortized debt issuance costs of $18.7 million), respectively.

Interest on the term loan during the three months ended September 30, 2024 and 2023 was $6.1 million (including amortization of deferred debt issuance costs of $1.4 million) and $11.3 million (including amortization of deferred debt issuance costs of $0.8 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $18.8 million (including amortization of deferred debt issuance costs of $3.6 million) and $26.1 million (including amortization of deferred debt issuance costs of $1.8 million), respectively.

The interest rate on the term loan as of September 30, 2024 and December 31, 2023 was 12.13% and 11.37%, respectively.

We had an outstanding balance of zero under the revolving facility as of September 30, 2024 and December 31, 2023.

Interest on the revolving facility during the three months ended September 30, 2024 and 2023 was $0.4 million (including unused commitment fees of $0.2 million and amortization of deferred financing costs of $0.2 million) and $1.9 million (including unused commitment fees of $0.05 million and amortization of deferred financing costs of $0.2 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $1.4 million (including unused commitment fees of $0.7 million and amortization of deferred financing costs of $0.7 million) and $5.4 million (including unused commitment fees of $0.08 million and amortization of deferred financing costs of $0.5 million), respectively.

The interest rate on the Revolving Credit Facility as of September 30, 2024 and December 31, 2023 was 11.37%.

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 ours, 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 ours, 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 which totals approximately $185.0 million, 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., an Israel corporation.

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 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 BRPAC Credit Agreement.

We are in compliance with all financial covenants in the BRPAC Credit Agreement as of September 30, 2024.

Through a series of amendments, including the most recent Fourth Amendment to the BRPAC Credit Agreement (the “Fourth Amendment”) on June 21, 2022, the Borrowers, the Secured Guarantors, the Agent and the Closing Date Lenders agreed to the following, 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’ used to repay the outstanding principal amount of the existing terms loans and optional loans and will use for other general corporate purposes, (ii) a new applicable margin level of 3.50% was established as set forth from the date of the Fourth Amendment, (iii) Marconi Wireless Holdings, LLC (“Marconi Wireless”) was added to the Borrowers, (iv) the maturity date of the term loan was set to June 30, 2027, and (v) the Borrowers were permitted to make certain distributions to the parent company of the Borrowers.

The borrowings under the amended BRPAC Credit Agreement bear interest equal to the term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the Borrowers’ consolidated total funded debt ratio as defined in the BRPAC Credit Agreement.

As of September 30, 2024 and December 31, 2023, the interest rate on the BRPAC Credit Agreement was 8.10% and 8.46%, respectively.

Principal outstanding under the Amended BRPAC Credit Agreement is due in quarterly installments.

The quarterly installments from September 30, 2024 to December 31, 2026 are in the amount of $3.2 million per quarter, the quarterly installment on March 31, 2027 is in the amount of $2.4 million, and the remaining principal balance is due at final maturity on June 30, 2027.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $32.9 million (net of unamortized debt issuance costs of $0.4 million) and $46.6 million (net of unamortized debt issuance costs of $0.4 million), respectively.

Interest expense on the term loan during the three months ended September 30, 2024 and 2023 was $0.8 million (including amortization of deferred debt issuance costs of $0.1 million) and $1.2 million (including amortization of deferred debt issuance costs of $0.1 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $2.8 million (including amortization of deferred debt issuance costs of $0.2 million) and $4.0 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

On January 6, 2025 (the “Closing Date”), BRPAC entered into the BRPAC Amended Credit Agreement with certain subsidiaries of the Company, the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time.

Our subsidiary Lingo was added as a Borrower to the BRPAC Amended Credit Agreement.

Pursuant to the BRPAC Amended Credit Agreement, the lenders made a new five-year $80.0 million term loan to the Borrowers, the proceeds of which were used to repay in full the obligations under the original BRPAC Credit Agreement dated December 19, 2018 and the Lingo Credit Agreement.

In connection with the BRPAC Amended Credit Agreement, the Borrowers also made certain distributions to the parent company of the Borrowers from existing cash on hand.

The BRPAC Amended Credit Agreement also builds in provisions for incremental term loans up to $40.0 million allowing certain distributions to the parent company of the Borrowers from the proceeds of such incremental term loans.

The Borrowers’ U.S.

subsidiaries are guarantors of all obligations under the BRPAC Amended Credit Agreement.

The obligations under the BRPAC Amended Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Borrowers, including a pledge of (a) 100% of the equity interests of the Borrowers;

(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., an Israel corporation.

Such security interests are evidenced by pledge, security, and other related agreements.

The borrowings under the BRPAC Amended Credit Agreement bear interest equal to the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the Borrowers consolidated total funded debt ratio as defined in the BRPAC Amended Credit Agreement.

The interest rate is subject to a margin level of 3.25%.

As of the Closing Date, the outstanding principal amount was $80.0 million with quarterly installments of principal due in the amount of $4.0 million, and any remaining principal balance is due at final maturity on January 6, 2030.

The BRPAC Amended 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 Amended Credit Agreement requires the Credit Parties to maintain certain financial ratios.

The BRPAC Amended 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 outstanding amounts due under the BRPAC Amended Credit Agreement.

Senior Note Offerings

During the nine months ended September 30, 2024, we did not issue any new senior notes.

During the nine months ended September 30, 2023, we issued $0.2 million of senior notes.

The maturity dates of outstanding senior notes ranged from February 2025 to August 2028.

On February 28, 2025, the maturity date of all of the 6.375% Senior Notes due February 28, 2025 are due and payable which includes $145.3 million of principal amount that will be funded from cash and cash equivalents on hand.

All of the senior notes have been issued 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.

In June 2023, we entered into note purchase agreements in connection with the 6.75% Senior Notes due 2024 (“6.75% 2024 Notes”) that were issued for the Targus acquisition.

The note purchase agreements had a repurchase date of June 30, 2023 on which date we repurchased our 6.75% 2024 Notes with an aggregate principal amount of $58.9 million.

The repurchase price was equal to the aggregate principal amount, plus accrued and unpaid interest up to, but excluding, the repurchase date.

The total repurchase payment included approximately $0.7 million in accrued interest.

On February 29, 2024, we redeemed $115.5 million aggregate principal amount of our 6.75% Senior Notes due 2024 (the “6.75% 2024 Notes”) pursuant to the seventh supplemental indenture dated December 3, 2021.

The redemption price was equal to 100.00% of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date.

The total redemption payment included approximately $0.6 million in accrued interest.

On May 31, 2024, we redeemed the remaining $25.0 million aggregate principal amount of the 6.75% 2024 Notes.

The redemption price was equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date.

The total redemption payment included approximately $0.1 million in accrued interest.

In connection with the full redemption, the 6.75% 2024 Notes, which were listed on NASDAQ under the ticker symbol “RILYO,” were delisted from NASDAQ and ceased trading on the redemption date.

As of September 30, 2024 and December 31, 2023, the total senior notes outstanding was $1,529.7 million (net of unamortized debt issue costs of $10.0 million) and $1,668.0 million (net of unamortized debt issue costs of $13.1 million), respectively, with a weighted average interest rate of 5.62% and 5.71%, respectively.

The Company has $145.3 million of Senior Notes that are due to mature on February 28, 2025, $722.7 million due to mature in 2026, and $671.5 million due to mature in 2028.

Interest on senior notes is payable on a quarterly basis.

Interest expense on senior notes totaled $22.6 million and $25.1 million during the three months ended September 30, 2024 and 2023, respectively and $70.0 million and $78.1 million during the nine months ended September 30, 2024 and 2023, respectively.

Other Notes Payable

As of September 30, 2024 and December 31, 2023, the outstanding balance for the other notes payable was $29.9 million and $19.4 million, respectively.

On May 3, 2024, upon closing of the acquisition of Nogin, Nogin entered into a secured convertible promissory note agreement with a principal amount of $15.0 million with an annual interest rate of 10.0% and a maturity date of May 3, 2027.

The remaining notes payable primarily consisted of additional deferred cash consideration owed to the sellers of FocalPoint and a promissory note related to the Lingo minority interest purchase, which was paid in full on January 2, 2024.

Interest expense was $0.5 million and $0.1 million during the three months ended September 30, 2024 and 2023, respectively, and $1.1 million and $0.5 million during the nine months ended September 30, 2024 and 2023, respectively.

Cash provided by operating activities was $0.2 million during the three months ended March 31, 2025 compared to cash provided by operating activities of $135.4 million during the three months ended March 31, 2024.

The reduction of $135.2 million in net cash provided by operating activities in the first quarter of 2025 was primarily due to $143.4 million less cash generated from securities and other investments owned, as fewer securities positions were sold to provide liquidity to fund operations and repayment of the 6.375% Senior Notes due February 28, 2025.

Cash provided by operating activities for the three months ended March 31, 2025 consisted of the impact of net loss of $16.6 million, noncash items of $40.9 million, and changes in operating assets and liabilities of $57.7 million.

The negative cash flow impact from noncash items of $40.9 million included gain on sale and deconsolidation of business of $80.8 million, gain on senior note exchange of $10.5 million, gain on sale or disposal of fixed assets and other of $1.4 million, and net foreign currency gains of $0.2 million, partially offset by positive impact from loss on extinguishment of debt of $10.4 million, depreciation and amortization of $10.1 million, deferred income taxes of $9.0 million, fair value and remeasurement adjustments of $8.4 million, non-cash interest and other of $4.5 million, share-based compensation of $3.6 million, depreciation of rental merchandise of $3.4 million, provision for losses on accounts receivable of $2.1 million, loss from equity investments of

$0.6 million and dividends from equity investments of $0.1 million.

Cash provided by operating activities for the three months ended March 31, 2024 consisted of the impact of net loss of $48.0 million, noncash items of $19.8 million, and changes in operating assets and liabilities of $163.5 million.

The positive cash flow impact from noncash items of $19.8 million included fair value and remeasurement adjustments of $13.7 million, depreciation and amortization of $11.1 million, share-based compensation of $8.7 million, depreciation of rental merchandise of $4.2 million, provision for losses on accounts receivable of $0.4 million, income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests of $0.3 million, net foreign currency losses of $0.3 million, partially offset by deferred income taxes of $16.0 million, non-cash interest and other of $2.7 million, and gain on sale of business and other of $0.3 million.

Cash provided by investing activities was $59.2 million during the three months ended March 31, 2025 compared to cash provided by investing activities of $18.3 million for the three months ended March 31, 2024.

The increase of $40.9 million in net cash provided by investing activities in the first quarter of 2025 was primarily due to $68.9 million in proceeds received from the sale of the Atlantic Coast Recycling business, partially offset by a $27.3 million reduction in net proceeds from loans receivable, which were used in the first quarter of 2024 to create additional liquidity and facilitate the repayment of 6.375% Senior Notes due February 28, 2025.

During the three months ended March 31, 2025, cash provided by investing activities consisted of cash provided by sale of business, net of cash sold and other of $68.9 million, loans receivable repayment of $46.8 million, proceeds from sale of property, equipment, intangible assets, and other of $7.2 million, sale of loans receivable of $6.8 million, proceeds from sale of loan participations of $4.0 million, and consolidation of VIE of $0.4 million , partially offset by cash used in purchases of loans receivable of $61.5 million, purchases of property, equipment and intangible assets of $6.7 million, and purchases of equity and other investments of $6.6 million.

During the three months ended March 31, 2024, cash provided by investing activities consisted of cash received from loans receivable repayment of $39.5 million, and sale of loan receivable of $22.8 million, partially offset by cash used for purchases of loans receivable of $42.9 million, purchases of property and equipment of $0.9 million, and sale of business, net of cash sold and other of $0.2 million.

Cash used in financing activities was $172.5 million during the three months ended March 31, 2025 compared to cash used in financing activities of $190.9 million during the three months ended March 31, 2024.

The reduction of $18.4 million in net cash used in financing activities in the first quarter of 2025 was primarily due to the suspension of dividends, compared to $18.0 million paid in common stock and preferred dividends in the first quarter of 2024.

During the three months ended March 31, 2025, cash used in financing activities primarily consisted of $239.3 million used in the repayment of term loan, $145.3 million used to redeem senior notes, $24.1 million used in payment of revolving line of credit, $12.8 million used to repay our notes payable and other, and $8.9 million used to pay debt issuance and offering costs, partially offset by cash provided by $235.6 million in proceeds from term loan, $21.5 million in proceeds from revolving line of credit, and $0.9 million in proceeds from notes payable.

During the three months ended March 31, 2024, cash used in financing activities primarily consisted of $115.5 million used to redeem senior notes, $39.3 million used in repayment of revolving line of credit, $30.0 million used in the repayment of term loan, $16.0 million used to pay dividends on our common shares, $5.4 million used to repay our notes payable and other, $2.0 million used to pay dividends on our preferred shares, $1.5 million in distributions to noncontrolling interests, $1.2 million used in payment of employment taxes on vesting of restricted stock, $0.2 million used in the payment of debt issuance and offering costs, and $0.1 million used in the payment of contingent consideration, partially offset by cash provided by $17.7 million in proceeds from revolving line of credit and $2.5 million in contributions from noncontrolling interests.

Recent Accounting Standards

See Note 2(p) to the accompanying financial statements for recent accounting standards.

See Note 2(s) - Recent Accounting Standards to the accompanying unaudited condensed consolidated financial statements for recent accounting standards.

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 2. Management’s Discussion and Analysis