What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-12-15 compared with 2025-11-18 · 446 added, 198 removed, 293 unchanged (69% of the section changed)

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Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “B.

Riley Financial,” “we,” “us” or “our” refer to the combined business of B.

Riley Financial,” “BRC,” “we,” “us” or “our” refer to the combined business of B.

Riley Financial, Inc.

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Riley Financial Inc.

RILY) (the “Company”) is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners.

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

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.

RILY) (the “Company”) which is changing its name to BRC Group Holdings, Inc.

(“BRC”) effective on January 1, 2026, is a diversified portfolio of companies, including financial services, telecom, and retail, and investments in equity, debt and venture capital.

Our core financial services platform provides small cap and middle market companies customized end-to-end solutions at every stage of the enterprise life cycle.

Our banking business offers comprehensive services in capital markets, sales, trading, research, merchant banking, M&A, and restructuring.

Our wealth management business offers wealth management and financial planning services including brokerage, investment management, insurance, and tax preparation.

Our telecom businesses provide consumer and business services including traditional, mobile and cloud phone, internet and data, security, and email.

Our retail companies provide home furnishings

and mobile computing accessories.

BRC deploys its capital inside and outside its core financial services platform to generate shareholder value through opportunistic investments.

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.

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Our Business Segments

We report our activities in five reportable business segments:

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

The descriptions below illustrate the businesses that comprise our segments.

We maintain a diverse composition of businesses that operate in five reportable segments:

Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various businesses.

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

The descriptions below illustrate the businesses that comprise our segments.

Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various business segments.

However, across most businesses, management primarily assesses each business’s financial performance based upon each of the businesses revenues and operating profits generated excluding non-cash charges and the impact of gains and losses related to securities and other investments held.

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

Capital Markets – We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors;

Capital Markets Segment – We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors;

fund and asset management services to institutional and high-net-worth individual investors;

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

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.

Wealth Management Segment – 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.

Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions.

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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.

(“Nogin”), which is a technology platform operating e-commerce stores that delivers Commerce-as-a-Service (“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.

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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:

Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore, and we generated other income from dividends we receive from our equity ownership of investments that range from 10% to 50% in companies that license the trademark and intellectual property of the Hurley, Justice, and Scotch & Soda brands and bebe and Brookstone brands (equity ownership of bebe stores, inc., our majority owned subsidiary).

(“bebe”), our majority owned subsidiary).

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 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 - 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,

Public Equity Securities:

Badcock & Wilcox Enterprises, Inc.

Babcock & Wilcox Enterprises, Inc.

- common stock $ 26,406 $ 45,012

Badcock & Wilcox Enterprises, Inc.

Babcock & Wilcox Enterprises, Inc.

- preferred stock 1,355 1,528

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Total securities and other investments owned $ 242,352 $ 282,325

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.

Securities and other investments owned was $242.4 million and $282.3 million as of June 30, 2025 and December 31, 2024, respectively.

Of this amount, the carrying value of equity securities totaled $186.9 million and $232.5 million as of June 30, 2025 and December 31, 2024, respectively.

Of these amounts, public equity securities totaled $88.9 million and $124.9 million as of June 30, 2025 and December 31, 2024, and private equity securities totaled $97.9 million and $107.6 million as of June 30, 2025 and December 31, 2024, respectively.

The carrying value of Babcock & Wilcox Enterprises, Inc’s (“B&W”).

- common stock held as of June 30, 2025 and December 31, 2024 was $26.4 million and $45.0 million, respectively.

The change in the carrying value for the six months ended June 30, 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 June 30, 2025 and December 31, 2024 was $34.5 million and $43.7 million, respectively.

The change in the carrying value for the six months ended June 30, 2025 was primarily driven by sales of the securities and, to a lesser extent, a decrease in the public share price during the period.

The carrying value of our investments in other public equities held as of June 30, 2025 and December 31, 2024 was $24.7 million and $27.4 million, respectively.

The change in the carrying value for the six months ended June 30, 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 June 30, 2025 and December 31, 2024 was $97.9 million and $107.6 million, respectively.

The decrease in the carrying value for the six months ended June 30, 2025 was driven by sales of certain private securities and, to a lesser extent, decreases in fair values during the period.

Recent Developments

Wealth Management

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.

As discussed in more detail in Note 12 - Senior Notes Payable with respect to prior private exchange transactions, on July 11, 2025, the Company completed private exchange transactions with institutional investors pursuant to which aggregate principal amounts of approximately $2.1 million of the 6.50% Senior Notes Payable due September 30, 2026, $19.7 million of the 5.00% Senior Notes due December 2026, $4.7 million of the 6.00% Senior Notes due January 2028, and $16.4 million of the 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $24.6 million aggregate principal amount of newly-issued 8.00% Senior Secured Second Lien Notes due 2028 (the “New Notes”), whereupon the Exchanged Notes were cancelled.

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").

On August 20, 2025, 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 11 — 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.

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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 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.

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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.

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.

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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.

At June 30, 2025 qualitative factors indicated it could be more likely than not that the carrying value of the Targus tradename in the Consumer Products segment could be impaired.

In order to estimate the fair value of the Targus tradename management must make certain estimates and assumptions which, among other things, included an assessment of market conditions, projected cash flows, discount rates, and revenue growth rates.

The inputs for the fair value calculations included a 3.5% growth rate to calculate the terminal value, a discount rate of 22.2%, and a royalty rate of 1.5%.

This resulted in an impairment charge for the Targus tradename in the amount of $1.5 million at June 30, 2025.

Changes in these estimates and assumptions could materially affect the determination of fair value and any impairment charge for the tradename.

Any changes from our current estimates and assumptions that result in materially different estimates and assumptions in the future in response to changing economic conditions, changes in our business or for other reasons could result in the recognition of additional impairment charges in future periods.

There were no impairments of goodwill or indefinite-lived intangibles of other reporting units identified in an interim basis during the six months ended June 30, 2025.

Results of Operations

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

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

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2025 2024 Amount %

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Selling, general and administrative expenses 142,369 178,014 (35,645) (20.0) %

Restructuring charge 321 20 301 n/m

Impairment of goodwill and tradenames 1,500 27,681 (26,181) (94.6) %

Interest expense - Securities lending and loan participations sold 1,968 23,313 (21,345) (91.6) %

Total operating expenses 214,487 327,465 (112,978) (34.5) %

Operating income (loss) 10,815 (232,580) 243,395 (104.7) %

Other income (expense):

Interest income 492 797 (305) (38.3) %

Dividend income 122 460 (338) (73.5) %

Realized and unrealized gains (losses) on investments 10,216 (155,241) 165,457 (106.6) %

Change in fair value of financial instruments and other 11,884 — 11,884 n/m

Gain on sale and deconsolidation of businesses 5,372 — 5,372 n/m

Gain on senior note exchange 44,454 — 44,454 n/m

Income from equity investments 25,603 10 25,593 n/m

(Loss) gain on extinguishment of debt (10,266) 120 (10,386) n/m

Interest expense (23,952) (33,534) 9,582 (28.6) %

Income (loss) from continuing operations before income taxes 74,740 (419,968) 494,708 (117.8) %

Provision for income taxes (3,053) (29,183) 26,130 (89.5) %

Income (loss) from continuing operations 71,687 (449,151) 520,838 (116.0) %

Income from discontinued operations, net of income taxes 69,312 15,370 53,942 n/m

Net income (loss) 140,999 (433,781) 574,780 (132.5) %

Net income (loss) attributable to noncontrolling interests 1,528 (177) 1,705 n/m

Net income (loss) attributable to B.

Riley Financial, Inc.

139,471 (433,604) 573,075 (132.2) %

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

Net income (loss) available to common shareholders $ 137,456 $ (435,619) $ 573,075 (131.6) %

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 June 30, Change

2025 2024 Amount %

Services and fees:

Capital Markets segment $ 39,095 $ 50,242 $ (11,147) (22.2) %

Wealth Management segment 33,421 49,582 (16,161) (32.6) %

Communications segment 60,732 77,744 (17,012) (21.9) %

E-Commerce segment — 2,731 (2,731) (100.0) %

All Other 12,524 22,610 (10,086) (44.6) %

Subtotal 145,772 202,909 (57,137) (28.2) %

Trading gains (losses), net:

Capital Markets segment 22,480 (32,612) 55,092 (168.9) %

Wealth Management segment 5,200 1,291 3,909 n/m

Subtotal 27,680 (31,321) 59,001 (188.4) %

Fair value adjustments on loans:

Capital Markets segment 800 (175,582) 176,382 (100.5) %

Interest income - loans:

Capital Markets segment 3,853 18,508 (14,655) (79.2) %

Interest income - securities lending:

Capital Markets segment 2,124 24,798 (22,674) (91.4) %

Sale of goods:

Communications segment 1,471 1,465 6 0.4 %

Consumer Products segment 43,284 51,424 (8,140) (15.8) %

E-Commerce segment — 2,265 (2,265) (100.0) %

All Other 318 419 (101) (24.1) %

Subtotal 45,073 55,573 (10,500) (18.9) %

Total revenues $ 225,302 $ 94,885 $ 130,417 137.4 %

_______________________________________________

n/m - Not applicable or not meaningful.

Total revenues increased $130.4 million to $225.3 million during the three months ended June 30, 2025 from $94.9 million during the three months ended June 30, 2024.

The increase in revenues during the three months ended June 30, 2025 was primarily due to increases in fair value adjustments on loans of $176.4 million, and increases in fair value of the portfolio of securities and other investments owned of $59.0 million, partially offset by decreases in revenues from services and fees of $57.1 million, interest income from securities lending of $22.7 million, interest income from loans of $14.7 million, and sale of goods of $10.5 million.

Of the $176.4 million increase in fair value adjustments related to loans, $150.3 million related to the loan to Vintage Capital Management, LLC (“VCM”), $12.0 million related to Freedom VCM Receivables, Inc.

(“Freedom VCM”), $7.4 million related to W.S.

Badcock Corporation (“Badcock”) and $7.2 million related to the loan to Conn’s Inc.

The decrease in revenue of $57.1 million from services and fees in the three

months ended June 30, 2025 consisted of decreases in revenue of $17.0 million in the Communications segment, $16.2 million in the Wealth Management segment, $11.1 million in the Capital Markets segment, $10.1 million in All Other, and $2.7 million in the E-Commerce segment.

Revenues from services and fees in the Capital Markets segment decreased $11.1 million to $39.1 million during the three months ended June 30, 2025 from $50.2 million during the three months ended June 30, 2024.

The decrease in revenues was primarily due to decreases of $7.7 million of corporate finance, consulting, and investment banking fees, $2.4 million in commission fees, $1.7 million of interest income, $0.4 million in asset management fees, and $0.4 million in dividends, partially offset by an increase of $1.5 million in other income.

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 $22.9 million in at the market fees, $9.4 million in mergers and acquisitions advisory fees, $5.2 million in investment banking underwriting fees, and $2.9 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 $ 15,369 $ 22,824

Advisory revenues 12,163 20,216

Other 5,889 6,542

Total services and fees revenue 33,421 49,582

Trading gains, net

Total revenues $ 38,621 $ 50,873

Revenues from brokerage and advisory decreased $15.5 million to $27.5 million during the three months ended June 30, 2025 from $43.0 million during the three months ended June 30, 2024.

The decrease in revenues was primarily due to decreases in revenue of from wealth and asset management fees due to a reduction in AUM which was driven by a loss of headcount of wealth management advisors and the Stifel transaction in April 2025.

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

Total assets under management were approximately $13.7 billion and $25.6 billion at June 30, 2025 and June 30, 2024, respectively.

Of these amounts, advisory assets under management totaled approximately $4.6 billion at June 30, 2025 and $8.0 billion at June 30, 2024.

Advisory revenues were 0.27% and 0.25% of average advisory assets under management during the three months ended June 30, 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 $17.0 million to $60.7 million during the three months ended June 30, 2025 from $77.7 million during the three months ended June 30, 2024.

The decrease in revenues was primarily due to decreases in subscription revenue of $16.7 million, $10.7 million of which related to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024.

Of the remaining $6.0 million decrease in subscription revenue, $3.4 million was from Lingo, $1.4 million was from Marconi Wireless, $0.8 million was from magicJack, and $0.4 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 are offered in a highly competitive marketplace.

There were no revenues from services and fees in the E-Commerce segment during the three months ended June 30, 2025.

This segment consisted of Nogin which we deconsolidated in the first quarter of 2025.

Refer to Note 3 to the accompanying unaudited condensed consolidated financial statements for additional information.

Revenues from services and fees in All Other decreased $10.1 million to $12.5 million during the three months ended June 30, 2025 from $22.6 million during the three months ended June 30, 2024.

These revenues include merchandise rental

fees and sales from bebe, and the operations of a regional environmental services business, which was sold in the first quarter of 2025.

Revenues from services and fees in All Other decreased by $9.5 million related to the regional environmental services business, and $1.1 million related to merchandise rental fees from bebe, partially offset by an increase in revenues of $0.6 million in other revenue.

Trading gains (losses), net increased $59.0 million to income of $27.7 million during the three months ended June 30, 2025 compared to loss of $31.3 million during the three months ended June 30, 2024.

The income of $27.7 million during the three months ended June 30, 2025 was primarily due to realized and unrealized income on investments made in our proprietary trading accounts, primarily $13.4 million on Applied Digital Corporation (“Applied Digital”), $4.5 million on Babcock & Wilcox Enterprises, Inc.

(“B&W”) and $4.0 million on Channell Commercial Corporation (“Channell”).

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 June 30, 2025 December 31, 2024

Related Party Loans:

Vintage Capital Management, LLC Retail / consumer $ 1,468 $ 2,057 $ (866) $ (151,147)

Freedom VCM Receivables, Inc.

Consumer receivable portfolio — 3,913 — (12,039)

Retail / consumer 11,000 38,826 — (7,230)

Badcock Corporation Consumer receivable portfolio — 2,169 — (7,396)

Great American Holdings, LLC Professional Services 4,700 — — —

Other related party loans Professional Services, Industrials, Oil & Gas 2,202 4,937 (126) 194

Total related party 19,370 51,902 (992) (177,618)

Exela Technologies, Inc.

Technology 29,610 32,136 2,049 55

Core Scientific, Inc.

Technology — — — —

Norlin EV Limited Real Estate — 6,065 (257) 21

Other loans Various — — — 1,960

Total $ 48,980 $ 90,103 $ 800 $ (175,582)

The fair value adjustments on loans receivable for the three months ended June 30, 2025 and 2024, were $0.8 million and $(175.6) million, respectively.

During the three months ended June 30, 2025 and 2024, fair value adjustments for other loans receivable totaled $1.8 million and $2.0 million, respectively.

The $176.4 million favorable variance in fair value adjustment related to our loans receivable during the three months ended June 30, 2025 was primarily driven by $150.3 million related to the VCM, $12.0 million related to Freedom VCM, $7.4 million related to Badcock and $7.2 million related to Conn’s.

Interest income from loans decreased $14.7 million to $3.9 million during the three months ended June 30, 2025 from $18.5 million during the three months ended June 30, 2024.

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

$6.1 million for VCM, $3.4 million for Conn’s, $2.2 million for Freedom VCM, which was sold in February 2025, and $1.6 million for Nogin, as well as a reduction in loan receivable balances from $229.2 million as of June 30, 2024 to $49.0 million as of June 30, 2025.

Interest income from securities lending decreased $22.7 million to $2.1 million during the three months ended June 30, 2025 from $24.8 million during the three months ended June 30, 2024.

The decrease was due to a reduction in the securities borrowed balance from $743.0 million as of June 30, 2024 to $72.3 million as of June 30, 2025 and decreases of revenue from business decline due to counterparties constraining their business activity.

Revenues from the sale of goods decreased $10.5 million to $45.1 million during the three months ended June 30, 2025 from $55.6 million during the three months ended June 30, 2024.

The decrease was primarily related to decreases of $8.1 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide, $2.3 million from Nogin in the E-Commerce segment, which was deconsolidated in the first quarter of 2025, and $0.1 million in All Other consisting of sales of goods from bebe.

Operating Expenses

Direct cost of services

Direct cost of services decreased $25.5 million to $33.2 million during the three months ended June 30, 2025 from $58.7 million during the three months ended June 30, 2024.

The decrease in direct cost of services was primarily attributable to a decrease of $16.7 million from the Communications segment, $11.4 million of which was attributable to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024, $7.2 million from All Other, consisting of $6.5 million from the regional environmental services business that was sold in the first quarter of 2025, and $0.7 million from bebe, and $1.6 million from the E-Commerce segment, consisting of Nogin which was deconsolidated in the first quarter of 2025.

Cost of goods sold

Cost of goods sold for the three months ended June 30, 2025 decreased $4.6 million to $35.1 million from $39.8 million during the three months ended June 30, 2024.

The decrease in cost of goods sold was primarily attributable to decreases of $3.0 million in the Consumer Products segment, due to lower sales volume, and $1.6 million from the E-Commerce segment, consisting of Nogin which was deconsolidated in the first quarter of 2025.

Selling, general and administrative expenses

Selling, general and administrative expenses during the three months ended June 30, 2025 and 2024 were comprised of the following:

Three Months Ended June 30, 2025 Three Months Ended

June 30, 2024 Change

Amount % Amount % Amount %

Capital Markets segment $ 44,626 31.3 % $ 50,551 28.4 % $ (5,925) (11.7) %

Wealth Management segment 39,940 28.1 % 49,205 27.6 % (9,265) (18.8) %

Communications segment 19,929 14.0 % 25,478 14.3 % (5,549) (21.8) %

Consumer Products segment 14,621 10.3 % 17,049 9.6 % (2,428) (14.2) %

E-Commerce segment — — % 6,037 3.4 % (6,037) (100.0) %

Corporate and All Other 23,253 16.3 % 29,694 16.7 % (6,441) (21.7) %

Total selling, general & administrative expenses $ 142,369 100.0 % $ 178,014 100.0 % $ (35,645) (20.0) %

Total selling, general and administrative expenses decreased by $35.6 million to $142.4 million during the three months ended June 30, 2025 from $178.0 million during the three months ended June 30, 2024.

The decrease was primarily due to decreases of $9.3 million in the Wealth Management segment, $6.4 million in Corporate and All Other, $6.0 million in the E-Commerce segment $5.9 million in the Capital Markets segment, $5.5 million in the Communications segment and $2.4 million in the Consumer Products segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment decreased by $5.9 million to $44.6 million during the three months ended June 30, 2025 from $50.6 million during the three months ended June 30, 2024.

The decrease was primarily due to decreases of $4.9 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 $1.3 million in other expenses, $0.3 million in occupancy-related costs, partially offset by an increase of $0.6 million in professional services.

Wealth Management

Selling, general and administrative expenses in the Wealth Management segment decreased by $9.3 million to $39.9 million during the three months ended June 30, 2025 from $49.2 million during the three months ended June 30, 2024, primarily due to decreases of $9.8 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, $0.6 million in depreciation and amortization expense, and $0.5 million in other expenses, partially offset by an increase of $1.6 million in occupancy-related costs, due to multiple office closures and lease impairments as a result of the Stifel transaction.

Communications

Selling, general and administrative expenses in the Communications segment decreased $5.5 million to $19.9 million for the three months ended June 30, 2025 from $25.5 million for the three months ended June 30, 2024.

The decrease was primarily due to decreases of $1.8 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, $1.1 million in depreciation and amortization expenses due to items being fully amortized in 2024, $1.0 million in professional services, $0.8 million in other expenses, and $0.8 million in occupancy-related costs.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $2.4 million to $14.6 million for the three months ended June 30, 2025 from $17.0 million during the three months ended June 30, 2024.

The decrease was primarily due to decreases of $1.4 million in professional services, $0.8 million in employee compensation and benefit related expenses due to reduced headcount, and $0.2 million in other expenses due to efforts to reduce costs.

There were no selling, general and administrative expenses in the E-Commerce segment during the three months ended June 30, 2025.

This segment consisted of Nogin which we deconsolidated in the first quarter of 2025.

Refer to Note 3 to the accompanying unaudited condensed consolidated financial statements for additional information.

Corporate and All Other

Selling, general and administrative expenses for Corporate and All Other decreased $6.4 million to $23.3 million during the three months ended June 30, 2025 from $29.7 million during the three months ended June 30, 2024.

The decrease was primarily due to $2.8 million in employee compensation and benefit related expenses primarily driven by a decrease in the regional environmental services business that was sold in the first quarter of 2025, $1.7 million in legal settlements, $1.6 million in transaction costs, $1.3 million in other expenses and, $0.9 million in depreciation and amortization, partially offset by an increase of $1.9 million in professional services.

Impairment of Goodwill and Tradenames.

We recognized non-cash impairment charges of $1.5 million during the three months ended June 30, 2025 related to tradenames in the Consumer Products segment.

We recognized non-cash impairment charges of $27.7 million during the three months ended June 30, 2024 consisting of $26.7 million of goodwill and $1.0 million of tradenames in the Consumer Products segment.

Interest Expense - Securities Lending and Loan Participations Sold.

Interest Expense - Securities Lending and Loan Participations Sold decreased $21.3 million to $2.0 million during the three months ended June 30, 2025 from

$23.3 million for the three months ended June 30, 2024.

The decrease was due to a decrease in the securities loaned and loan participations sold balances from $733.6 million as of June 30, 2024 to $65.1 million as of June 30, 2025.

Other Income (Expense).

Other income included interest income of $0.5 million and $0.8 million during the three months ended June 30, 2025 and 2024, respectively.

Dividend income was $0.1 million during the three months ended June 30, 2025 compared to $0.5 million during the three months ended June 30, 2024.

Realized and unrealized (losses) gains on investments was a gain of $10.2 million during the three months ended June 30, 2025 compared to a loss of $155.2 million during the three months ended June 30, 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 $ 3,440 $ 3,799

Babcock & Wilcox Enterprises, Inc.

- preferred stock 289 (429)

Double Down Interactive Co., Ltd - common stock (1,847) 7,691

Synchronoss Technologies, Inc.

- common stock — 974

Applied Digital Corporation - common stock 5,383 —

Other public equities (803) (4,760)

Subtotal 6,462 7,275

Private Equity Securities:

Freedom VCM Holdings, LLC — (139,355)

Kanaci Technologies, LLC — (9,818)

BJES Holdings, LLC — (15,911)

Other private equities 415 2,622

Subtotal 415 (162,462)

Corporate bonds 3,339 939

Partnership interest and other — (993)

Total $ 10,216 $ (155,241)

The favorable variance of $165.5 million was primarily due to unfavorable fair value adjustments recorded in the prior year quarter of $139.4 million for Freedom VCM, $15.9 million for BJES Holdings, LLC, and $9.8 million for Kanaci Technologies, LLC, partially offset by a favorable fair value adjustments recorded in the prior year quarter of $7.7 million for Double Down Interactive Co., Ltd..

Other income (expense) also includes change in fair value of financial instruments and other was a gain of $11.9 million during the three months ended June 30, 2025.

Gain on senior note exchange was $44.5 million during the three months ended June 30, 2025.

Income from equity investments was $25.6 million during the three months ended June 30, 2025.

Loss on extinguishment of debt during the three months ended June 30, 2025 was $10.3 million compared to a gain of $0.1 million during the three months ended June 30, 2024.

Interest expense was $24.0 million during the three months ended June 30, 2025 compared to $33.5 million during the three months ended June 30, 2024.

The decrease in interest expense was due to lower debt balances during the three months ended June 30, 2025.

The decreases in interest expense primarily consisted of $6.2 million from the Nomura term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Nomura Term Loan”), $5.7 million from the issuance of New Notes, $1.4 million from the Lingo term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Lingo Term Loan”), $0.5 million from the Nomura revolving credit facility as described in Note 11 to the accompanying unaudited condensed consolidated financial

statements (“Nomura Revolver”), $0.5 million and $0.1 million from the Targus term loan and revolver, respectively (each as described in Note 11 to the accompanying unaudited condensed consolidated financial statements, the “Targus Term Loan” and the “Targus Revolver”), $0.2 million from the Nogin secured convertible promissory note as described in Note 10 to the accompanying unaudited condensed consolidated financial statements (“Nogin Note”), and partially offset by increases in interest expense of $4.6 million from the Oaktree term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Oaktree Term Loan”), and $0.6 million from the BRPAC term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“BRPAC Term Loan”).

Provision for Income Taxes.

Provision for income taxes was $3.1 million during the three months ended June 30, 2025 compared to $29.2 million during the three months ended June 30, 2024.

The effective income tax rate was 4.1% for the three months ended June 30, 2025 as compared to 6.9% for the three months ended June 30, 2024.

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

On October 25, 2024, we and our subsidiary 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 June 30, 2024.

Income from discontinued operations, net of tax, for Brands Transaction, as described in Note 4 to the accompanying unaudited condensed consolidated financial statements, was $15.5 million during the three months ended June 30, 2024.

On November 15, 2024, we completed the sale of our Appraisal and Valuation Services, Real Estate, and Retail, Wholesale & Industrial Solutions businesses (collectively, the “Great American Group”) and its results have been presented as discontinued operations for the three months ended June 30, 2024.

Loss from discontinued operations, net of income taxes was $(6.2) million during the three months ended June 30, 2024.

On June 27, 2025, we signed an equity purchase agreement to sell all of the membership interests of GlassRatner Advisory & Capital Group, LLC (“GlassRatner”) and B.

Riley Farber Advisory Inc.

(“Farber”) and their results have been presented as discontinued operations for the three months ended June 30, 2025 and 2024.

Income from discontinued operations, net of tax for GlassRatner and Farber was $69.3 million for the three months ended June 30, 2025, compared to income from discontinued operations of $6.0 million during the three months ended June 30, 2024.

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

Preferred Stock Dividends .

Preferred stock dividends include $2.0 million of unpaid dividends for the three months ended June 30, 2025 and in the comparable prior year period include paid dividends of $2.0 million.

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

Unpaid dividends will accrue until paid in full.

Dividends on the Series A preferred paid during the three months ended June 30, 2024 were $0.4296875 per depository share.

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

Results of Operations

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

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Six Months Ended June 30, Change

2025 2024 Amount %

Services and fees $ 304,611 $ 416,990 $ (112,379) (27.0) %

Trading gains (losses), net 11,509 (48,988) 60,497 (123.5) %

Fair value adjustments on loans (7,296) (187,783) 180,487 (96.1) %

Interest income - loans 7,049 40,643 (33,594) (82.7) %

Interest income - securities lending 2,964 62,607 (59,643) (95.3) %

Sale of goods 92,528 109,006 (16,478) (15.1) %

Total revenues 411,365 392,475 18,890 4.8 %

Operating expenses:

Direct cost of services 75,916 118,349 (42,433) (35.9) %

Cost of goods sold 71,846 78,585 (6,739) (8.6) %

Selling, general and administrative expenses 309,757 356,954 (47,197) (13.2) %

Restructuring charge 321 809 (488) (60.3) %

Impairment of goodwill and tradenames 1,500 27,681 (26,181) (94.6) %

Interest expense - Securities lending and loan participations sold 2,687 58,696 (56,009) (95.4) %

Total operating expenses 462,027 641,074 (179,047) (27.9) %

Operating loss (61,477) (16,019) (45,458) n/m

Operating loss (50,662) (248,599) 197,937 (79.6) %

Other income (expense):

2 unchanged sentences

Realized and unrealized losses on investments (4,284) (190,165) 185,881 (97.7) %

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

Change in fair value of financial instruments and other 12,806 — 12,806 n/m

Gain on sale and deconsolidation of businesses 86,213 314 85,899 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) %

Gain on senior note exchange 54,986 — 54,986 n/m

Income from equity investments 25,051 6 25,045 n/m

(Loss) gain on extinguishment of debt (20,693) 120 (20,813) n/m

Interest expense (53,916) (69,199) 15,283 (22.1) %

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

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

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

Income (loss) from continuing operations before income taxes 51,736 (502,599) 554,335 (110.3) %

Provision for income taxes (11) (7,853) 7,842 (99.9) %

Income (loss) from continuing operations 51,725 (510,452) 562,177 (110.1) %

Income from discontinued operations, net of income taxes 72,707 28,717 43,990 153.2 %

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

Net income (loss) 124,432 (481,735) 606,167 (125.8) %

Net (loss) income attributable to noncontrolling interests (5,064) 1,034 (6,098) n/m

Net loss attributable to B.

Net income (loss) attributable to B.

Riley Financial, Inc.

1 unchanged sentence

Preferred stock dividends 4,030 4,030 — — %

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

Net income (loss) available to common shareholders $ 125,466 $ (486,799) $ 612,265 (125.8) %

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 March 31, Change

Six Months Ended June 30, Change

2025 2024 Amount %

4 unchanged sentences

E-Commerce segment 3,469 2,731 738 27.0 %

3,469 — 3,469 100.0 %

All Other 32,850 44,092 (11,242) (25.5) %

2 unchanged sentences

Capital Markets segment 5,697 (50,879) 56,576 (111.2) %

Wealth Management segment 612 600 12 2.0 %

Wealth Management segment 5,812 1,891 3,921 n/m

Subtotal 11,509 (48,988) 60,497 (123.5) %

9 unchanged sentences

E-Commerce segment 3,528 2,265 1,263 55.8 %

3,528 — 3,528 100.0 %

All Other 841 1,034 (193) (18.7) %

3 unchanged sentences

n/m - Not applicable or not meaningful.

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.

Total revenues increased $18.9 million to $411.4 million during the six months ended June 30, 2025 from $392.5 million during the six months ended June 30, 2024.

The increase in revenues during the six months ended June 30, 2025 was primarily due to increases in revenue from fair value adjustments on loans of $180.5 million, and in the fair value of the portfolio of securities and other investments owned of $60.5 million, partially offset by decreases in revenues from services and fees of $112.4 million, interest income from securities lending of $59.6 million, interest income from loans of $33.6 million, and sale of goods of $16.5 million.

Of the $180.5 million increase in fair value adjustments related to loans, $167.8 million related to VCM, $15.1 million related to the loan to Freedom VCM, and $7.1 million related to Badcock, partially offset by a decrease of $8.5 million related to Core Scientific, Inc.

(“Core Scientific”).

The decrease in revenue from services and fees in the six months ended June 30, 2025 consisted of decreases in revenue of $46.3 million in the

Capital Markets segment, and $34.9 million in the Communications segment, and $20.7 million in the Wealth Management segment, and $11.2 million in All Other, partially offset by an increase in revenue of $0.7 million in the E-Commerce segment.

Revenues from services and fees in the Capital Markets segment decreased $46.3 million to $64.3 million during the six months ended June 30, 2025 from $110.6 million during the six months ended June 30, 2024.

The decrease in revenues was primarily due to decreases of $40.2 million of corporate finance, consulting, and investment banking fees, $5.4 million in commission fees, $2.6 million in interest income and $1.4 million in dividends, $0.8 million in other income, partially offset by an increase of $4.1 million in advisory fees related to the Innovation X and GACP II funds.

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.

The decreases in investment banking revenues were $33.5 million in at the market fees, $20.6 million in mergers and acquisitions advisory fees, $12.7 million in investment banking underwriting fees, and $6.7 million in private placement fees.

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

Three Months Ended

Six Months Ended

Revenues - Services and fees

3 unchanged sentences

Total services and fees revenue 80,087 100,764

Trading income 612 600

Trading gains, net

Total revenues $ 85,899 $ 102,655

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.

Revenues from brokerage and advisory decreased $23.7 million to $62.3 million during the six months ended June 30, 2025 from $86.1 million during the six months ended June 30, 2024.

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

Total assets under management were approximately $13.7 billion and $25.6 billion at June 30, 2025 and June 30, 2024, respectively.

Of these amounts, advisory assets under management totaled approximately $4.6 billion at June 30, 2025 and $8.0 billion at June 30, 2024.

Advisory revenues were 0.26% and 0.25% of average advisory assets under management during the six months ended June 30, 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.

1 unchanged sentence

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.

Revenues from services and fees in the Communications segment decreased $34.9 million to $123.9 million during the six months ended June 30, 2025 from $158.8 million during the six months ended June 30, 2024.

The decrease in revenues was primarily due to decreases in subscription revenue of $34.3 million, $23.1 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.

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.

Of the remaining $11.2 million decrease in subscription revenue, $6.3 million was from Lingo, $2.4 million was from Marconi Wireless, $1.9 million was from magicJack, and $0.6 million was from UOL.

We expect Lingo, UOL, magicJack, and Marconi Wireless subscription revenue to continue to decline year-over-year as landline and VoIP technologies are older and cellular services are offered in a highly competitive marketplace.

Revenues from services and fees in the E-Commerce segment were $3.5 million during the six months ended June 30, 2025.

This segment consisted of Nogin which we deconsolidated in the first quarter of 2025.

Refer to Note 3 to the accompanying unaudited condensed consolidated financial statements for additional information.

Revenues from services and fees in All Other decreased $11.2 million to $32.9 million during the six months ended June 30, 2025 from $44.1 million during the six months ended June 30, 2024.

These revenues include merchandise rental

fees and sales from bebe, and the operations of a regional environmental services business, which was sold in the first quarter of 2025.

Revenues from services and fees in All Other decreased by $10.1 million due to the operations of a regional environmental services business, and $2.9 million related to merchandise rental fees from bebe, partially offset by an increase of $1.7 million in other revenue.

Trading gains (losses), net increased $60.5 million to income of $11.5 million during the six months ended June 30, 2025 compared to a loss of $49.0 million during the six months ended June 30, 2024.

The income of $11.5 million during the six months ended June 30, 2025 was primarily due to realized and unrealized income on investments made in our proprietary trading accounts, primarily $13.4 million for APLD, and $4.0 million for Channell, partially offset by losses of $10.6 million for B&W.

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.

1 unchanged sentence

Fair Value Adjustments on Loans

Loans Receivable, at Fair Value Three Months Ended

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

Loans Receivable, at Fair Value Six Months Ended

Industry or Type of Loan June 30, 2025 December 31, 2024

Related Party Loans:

5 unchanged sentences

Great American Holdings, LLC Professional Services 4,700 — — —

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

Other related party loans Professional Services, Industrials, Oil & Gas 2,202 4,937 (126) 692

7 unchanged sentences

Total $ 48,980 $ 90,103 $ (7,296) $ (187,783)

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.

During the six months ended June 30, 2025 and 2024, fair value adjustments for loans receivable from related parties totaled $(3.1) million and $(196.7) million, respectively.

During the six months ended June 30, 2025 and 2024, fair value adjustments for other loans receivable totaled $(4.2) million and $9.0 million, respectively.

The $180.5 million favorable variance in fair value adjustment related to our loans receivable during the six months ended June 30, 2025 was primarily driven by $167.8 million related to VCM loan, $15.1 million related to the loan to Freedom VCM, and $7.1 million related to Badcock loan, partially offset by a decrease of $8.5 million related to the Core Scientific loan.

Interest income - loans decreased $33.6 million to $7.0 million during the six months ended June 30, 2025 from $40.6 million during the six months ended June 30, 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.

$12.2 million for VCM, $7.4 million for Conn’s, $4.4 million for Freedom VCM, which was sold

in February 2025, and $3.5 million for Nogin, as well as a reduction in loan receivable balances from $229.2 million as of June 30, 2024 to $49.0 million as of June 30, 2025.

Interest income – securities lending decreased $59.6 million to $3.0 million during the six months ended June 30, 2025 from $62.6 million during the six months ended June 30, 2024.

Revenues from the sale of goods decreased $16.5 million to $92.5 million during the six months ended June 30, 2025 from $109.0 million during the six months ended June 30, 2024.

The decrease in revenues from sale of goods was attributable to decreases of $17.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide, and $0.2 million from All Other consisting of sale of goods from bebe, partially offset by an increase of $1.3 million from Nogin in the E-Commerce segment.

Operating Expenses

Direct Cost of Services

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.

Direct cost of services decreased $42.4 million to $75.9 million during the six months ended June 30, 2025 from $118.3 million during the six months ended June 30, 2024.

The decrease in direct cost of services was primarily attributable to decreases of $32.9 million from the Communications segment, $24.9 million of which was attributable to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024, and $9.5 million from All Other consisting of $8.1 million from the regional environmental services business, which was sold in the first quarter of 2025, and $1.4 million from bebe.

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.

Cost of goods sold for the six months ended June 30, 2025 decreased $6.7 million to $71.8 million from $78.6 million during the six months ended June 30, 2024.

The decrease in cost of goods sold was primarily attributable to decreases of $8.2 million in the Consumer Products segment, due to lower sales volume, and $0.3 million from All Other consisting of bebe, partially offset by increases of $1.5 million from the E-Commerce segment, consisting of Nogin which we acquired in the second quarter of 2024 and deconsolidated in the first quarter of 2025, and $0.3 million in the Communications segment.

Selling, General and Administrative Expenses

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

Selling, general and administrative expenses during the six months ended June 30, 2025 and 2024 were comprised of the following:

Six Months Ended

June 30, 2025 Six Months Ended

June 30, 2024 Change

Amount % Amount % Amount %

4 unchanged sentences

E-Commerce segment 8,428 2.7 % 6,037 1.7 % 2,391 39.6 %

8,428 5.0 % — — % 8,428 100.0 %

Corporate and All Other 58,550 18.9 % 63,139 17.7 % (4,589) (7.3) %

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

Total selling, general & administrative expenses $ 309,757 100.0 % $ 356,954 100.0 % $ (47,197) (13.2) %

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.

Total selling, general and administrative expenses decreased by $47.2 million to $309.8 million during the six months ended June 30, 2025 from $357.0 million during the six months ended June 30, 2024.

The decrease was primarily due to decreases of $18.1 million in the Capital Markets segment, $13.8 million in the Wealth Management segment, $8.8 million in the Communications segment, $4.6 million in Corporate and All Other, and $4.3 million in the Consumer Products segment, partially offset by an increase of $2.4 million in the E-Commerce segment.

Capital Markets

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.

Selling, general and administrative expenses in the Capital Markets segment decreased by $18.1 million to $86.5 million during the six months ended June 30, 2025 from $104.5 million during the six months ended June 30, 2024.

The decrease was primarily due to decreases of $21.7 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 $0.2 million in occupancy-related costs, partially offset by an increase in $1.9 million in other expenses and $1.9 million in professional services.

Wealth Management

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.

Selling, general and administrative expenses in the Wealth Management segment decreased by $13.8 million to $85.5 million during the six months ended June 30, 2025 from $99.3 million during the six months ended June 30, 2024.

The decrease was primarily due to a decrease of $16.6 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, and $0.7 million in depreciation and amortization, partially offset by increases of $1.9 million in occupancy-related costs, due to multiple office closures and lease impairments as a result of the Stifel transaction, and $1.6 million in other expenses.

Communications

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.

Selling, general and administrative expenses in the Communications segment decreased $8.8 million to $40.6 million for the six months ended June 30, 2025 from $49.4 million for the six months ended June 30, 2024.

The decrease was primarily due to decreases of $3.7 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, $2.3 million in depreciation and amortization expenses due to items being fully amortized in 2024, $1.4 million in occupancy-related costs, $1.0 million in professional services, and $0.4 million in other expenses.

Consumer Products

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.

Selling, general and administrative expenses in the Consumer Products segment decreased $4.3 million to $30.2 million for the six months ended June 30, 2025 from $34.6 million during the six months ended June 30, 2024.

The decrease was primarily due to decreases of $2.0 million in professional services, $1.4 million in employee compensation and benefit related expenses due to reduced headcount, and $0.9 million in other expenses.

Selling, general and administrative expenses in the E-Commerce segment increased $2.4 million to $8.4 million during the six months ended June 30, 2025 from $6.0 million for the six months ended June 30, 2024.

The E-Commerce segment was composed of Nogin which was acquired in the second quarter of 2024 and deconsolidated in the first quarter of 2025.

Refer to Note 3 to the accompanying unaudited condensed consolidated financial statements for additional information.

Corporate and All Other

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.

Selling, general and administrative expenses for Corporate and All Other decreased $4.6 million to $58.6 million during the six months ended June 30, 2025 from $63.1 million for the six months ended June 30, 2024.

The decrease was primarily due to decreases of $6.5 million in employee compensation and benefit related expenses primarily driven by decreases in share based compensation and from the regional environmental services business which was sold in the first quarter of 2025, $4.0 million in other expenses, and $1.8 million in occupancy-related costs, partially offset by increases of $4.4 million in transaction costs from the regional environmental services business which was sold in the first quarter of 2025, $2.0 million in foreign currency fluctuation, and $1.3 million in professional services.

Impairment of Goodwill and Tradenames.

We recognized non-cash impairment charges of $1.5 million during the six months ended June 30, 2025 related to tradenames in the Consumer Products segment.

We recognized non-cash

impairment charges of $27.7 million during the six months ended June 30, 2024 consisting of $26.7 million of goodwill and $1.0 million of tradenames in the Consumer Products segment

Interest Expense - Securities Lending and Loan Participations Sold.

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.

Interest Expense - Securities Lending and Loan Participations Sold decreased $56.0 million to $2.7 million during the six months ended June 30, 2025 from $58.7 million for the six months ended June 30, 2024.

The decrease was due to a decrease in the securities loaned and loan participations sold balances from $733.6 million as of June 30, 2024 to $65.1 million as of June 30, 2025.

Other Income (Expense).

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:

Other income included interest income of $2.0 million and $1.5 million during the six months ended June 30, 2025 and 2024, respectively.

Dividend income was $0.3 million during the six months ended June 30, 2025 compared to $3.5 million during the six months ended June 30, 2024.

Realized and unrealized losses on investments was a loss of $4.3 million during the six months ended June 30, 2025 compared to a loss of $190.2 million during the six months ended June 30, 2024, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Three Months Ended

Six Months Ended

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

9 unchanged sentences

- common stock — 3,495

- Common Stock — (1,015)

Applied Digital Corporation - common stock 5,383 —

Other public equities (1,011) (2,258)

3 unchanged sentences

Kanaci Technologies, LLC — (16,913)

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

BJES Holdings, LLC — (27,452)

Other private equities (1,205) 7,908

3 unchanged sentences

Total $ (4,284) $ (190,165)

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”) 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.

The favorable variance of $185.9 million was primarily due to unfavorable fair value adjustments recorded in the prior year six months of $172.0 million for Freedom VCM, $27.5 million for BJES Holdings, LLC, and $16.9 million for Kanaci Technologies, LLC, partially offset by a favorable fair value adjustments recorded in the prior year six months of $21.8 million for Double Down Interactive Co., Ltd.

Other income (expense) also includes change in fair value of financial instruments and other was a gain of $12.8 million during the six months ended June 30, 2025.

Gain on the exchange of existing senior notes for New Notes was $55.0 million during the six months ended June 30, 2025.

Income from equity investments was $25.1 million during the six months ended June 30, 2025.

Loss on extinguishment of debt was $20.7 million during the six months ended June 30, 2025 compared to a gain of $0.1 million during the six months ended June 30, 2024.

Interest expense was $53.9 million during the six months ended June 30, 2025 compared to $69.2 million during the six months ended June 30, 2024.

The decrease in

interest expense was due to lower debt balances during the six months ended June 30, 2025.

The decreases in interest expense primarily consisted of $10.2 million from the Nomura Term Loan, $8.5 million from the issuance of New Notes, $2.8 million from the Lingo Term Loan, $1.0 million from the Nomura Revolver, $1.0 million and $0.5 million from the Targus Term Loan and Targus Revolver, respectively, and $0.2 million from the Nogin Note, partially offset by increases in interest expense of $7.8 million from the Oaktree Term Loan, and $1.2 million from the BRPAC Term Loan.

(Provision for) Benefit from Income Taxes.

Provision for income taxes was zero during the six months ended June 30, 2025 compared to a benefit from income taxes of $7.9 million during the six months ended June 30, 2024.

The effective income tax rate was zero for the six months ended June 30, 2025 as compared to a benefit of 1.6% for the six months ended June 30, 2024.

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

On October 25, 2024, we and our subsidiary 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 six months ended June 30, 2024.

Income from discontinued operations, net of tax for Brands Transaction was $28.7 million during the six months ended June 30, 2024.

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

Loss from discontinued operations, net of tax for Great American Group was $(9.3) million during the six months ended June 30, 2024.

Income from discontinued operations, net of tax for GlassRatner and Farber was $72.7 million for the six months ended June 30, 2025, compared to income from discontinued operations of $9.4 million during the six months ended June 30, 2024.

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

Preferred Stock Dividends .

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.

Preferred stock dividends include $4.0 million of unpaid dividends for the six months ended June 30, 2025 and in the comparable prior year period include paid dividends of $4.0 million.

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

Unpaid dividends will accrue until paid in full.

Dividends on the Series A preferred paid during the six months ended June 30, 2024 were $0.4296875 per depository share.

Dividends on the Series B preferred paid during the six months ended June 30, 2024 were $0.4609375 per depository share.

Liquidity and Capital Resources

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.

During the six months ended June 30, 2025 and 2024, we generated net income (loss) attributable to the Company of $129.5 million and $(482.8) 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.

As of June 30, 2025, we had $267.4 million of unrestricted cash and cash equivalents, $1.3 million of restricted cash, $242.4 million of securities and other investments owned, at fair value, $49.0 million of loans receivable, at fair value, $1.5 billion of borrowings outstanding, and approximately $53.4 million of obligations under operating leases.

The Company expects to collect approximately $31.5 million of loans at fair value in the next twelve months and has approximately $89.1 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 12 - 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 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;

(b) the sale of part of the Wealth Management business for $26.0 million (the “Wealth Management Transaction”) as more fully described in Note 4 to the accompanying unaudited condensed consolidated financial statements;

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.

In addition to the sale of these businesses, approximately $53.5 million of investments were sold during the six months ended June 30, 2025 and approximately $10.8 million of investments were sold from July 1, 2025 through November 30, 2025.

Approximately $55.8 million in repayments of loans receivable, fair value were received during the six months ended June 30, 2025 and approximately $25.3 million in repayments of loans receivable, fair value were received from July 1, 2025 through November 30, 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.

As discussed in more detail in Note 12 - Senior Notes Payable with respect to prior private exchange transactions and above in Recent Developments, on July 11, 2025, the Company completed private exchange transactions with institutional investors pursuant to which the Exchanged Notes owned by the investors were exchanged for approximately $24.6 million aggregate principal amount of the New Notes, whereupon the Exchanged Notes were cancelled.

The borrowings outstanding of $1.5 billion as of June 30, 2025 included $1.3 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%, $124.6 million in term loans borrowed pursuant to the Oaktree Term Loan and BRPAC Term Loan, and $12.1 million of revolving credit facility under the Targus Revolver.

Of the senior notes outstanding, after the completion of the Exchanged Notes described above, there is $101.6 million due in the next twelve months and $1.2 billion thereafter.

The $135.0 million of term loans outstanding includes $16.0 million that is expected to be repaid in the next twelve months and $119.0 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.

Of the approximately $53.4 million of obligations due under operating leases, approximately $18.2 million is due in the next twelve months and approximately $35.2 million is due thereafter.

For additional information regarding our debt offerings and related agreements, refer to Note 10 - Notes Payable, Note 11 - Term Loans and Revolving Credit Facility, and Note 12 - 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 believe that the current cash and cash equivalents, securities and other investments owned, funds available under our credit facilities, and cash expected to be generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements.

We continue to monitor our financial performance to ensure sufficient liquidity to fund operations and execute on our business plan.

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

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

During the three months ended June 30, 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.

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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 three months ended March 31, 2025 and the year ended December 31, 2024 was as follows:

A summary of common stock dividend activity for the six months ended June 30, 2025 and the year ended December 31, 2024 was as follows:

Date Declared Date Paid Stockholder Record Date Amount

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

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

As of June 30, 2025, dividends in arrears in respect of the Series A Preferred Stock and underlying Depositary Shares were $3.2 million.

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

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

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

As of June 30, 2025, dividends in arrears in respect of the Series B Preferred Stock and underlying Depositary Shares were $2.1 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 three months ended March 31, 2025 and the year ended December 31, 2024 was as follows:

A summary of preferred stock dividend activity for the six months ended June 30, 2025 and the year ended December 31, 2024 was as follows:

Stockholder Preferred Dividend per Depositary Share

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Cash Flow Summary

Three Months Ended

Six Months Ended

(Dollars in thousands)

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Effect of foreign currency on cash 546 (5,233)

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

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.

Net increase in cash, cash equivalents and restricted cash

$ 11,967 $ 4,784

Cash used in operating activities was $25.4 million during the six months ended June 30, 2025 compared to cash provided by operating activities of $246.8 million during the six months ended June 30, 2024.

The reduction of $272.2 million in net cash provided by operating activities in 2025 was primarily due to $439.3 million less cash generated from securities and other investments owned, as fewer securities positions were sold to provide liquidity to fund operations and redemption of the 6.375% Senior Notes due February 28, 2025, partially offset by an increase of $175.1 million in net income, net of non-cash items.

Cash provided by operating activities for the six months ended June 30, 2025 consisted of the impact of net loss of $124.4 million, noncash items of $167.7 million, and changes in operating assets and liabilities of $17.9 million.

The negative cash flow impact from non-cash items of $167.7 million included gain on sale and deconsolidation of businesses of $86.2 million, gain on disposal of discontinued operations of $66.8 million, gain on senior note exchange of $55.0 million, income from equity investments of $25.1 million, fair value and remeasurement adjustments of $6.8 million, gain on sale or disposal of fixed assets and other of $1.1 million, and net foreign currency gains of $0.5 million, partially offset by loss on extinguishment of debt of $20.7 million, depreciation and amortization of $18.8 million, deferred income taxes of $9.1 million, share-based compensation of $8.6 million, depreciation of rental merchandise of $6.7 million, non-cash interest and other of $6.6 million, provision for losses on accounts receivable of $1.6 million, impairment of goodwill and tradenames of $1.5 million and dividends from equity investment of $0.1 million.

Cash provided by operating activities for the six months ended June 30, 2024 consisted of the impact of net loss of $481.7 million, non-cash items of $263.4 million, and changes in operating assets and liabilities of $465.2 million.

The positive cash flow impact from non-cash items of $263.4 million included fair value adjustments of $189.5 million, impairment of goodwill and tradenames of $27.7 million, depreciation and amortization of $22.9 million, share-based

compensation of $14.9 million, depreciation of rental merchandise of $8.2 million, deferred income taxes of $1.4 million, provision for losses on accounts receivable of $1.2 million, income allocated for mandatorily redeemable noncontrolling interests of $0.8 million, net foreign currency losses of $0.3 million, partially offset by non-cash interest and other of $3.3 million, and gain on sale of business of $0.3 million.

Cash provided by investing activities was $289.2 million during the six months ended June 30, 2025 compared to cash provided by investing activities of $6.7 million for the six months ended June 30, 2024.

The increase of $282.5 million in net cash provided by investing activities in 2025 was primarily due to $114.0 million in proceeds received from the sale of the GlassRatner and Farber business, $68.9 million in proceeds received from the sale of the Atlantic Coast Recycling business, $34.9 million in distributions received from equity investment Joann Retail, a new investment in 2025, $26.0 million in proceeds from the sale of the Wealth Management business, and a decrease of $19.1 million in cash paid for acquisitions, as Nogin was acquired in 2024 and there were no acquisitions in 2025.

During the six months ended June 30, 2025, cash provided by investing activities consisted of cash provided by proceeds from sale of discontinued operations of $114.0 million, loans receivable repayment of $105.4 million, proceeds from sale of business, net of cash sold and other of $94.9 million, distributions from equity investments of $34.9 million, proceeds from sale of loans receivable of $10.4 million, proceeds from sale of property, equipment, intangible assets and other of $7.2 million, proceeds from sale of loan participations of $4.5 million, and proceeds from consolidation of VIE of $0.4 million, partially offset by cash used in purchases of loans receivable of $66.7 million, purchases of property, equipment and intangible assets of $9.1 million, and purchases of equity and other investments of $6.6 million.

During the six months ended June 30, 2024, cash provided by investing activities consisted of cash received from loans receivable repayment of $72.4 million and proceeds from sale of loan receivable of $22.8 million, partially offset by cash used for purchases of loans receivable of $63.2 million, acquisition of businesses and minority interest of $19.1 million, purchases of property, equipment and intangible assets of $5.4 million, purchases of equity and other investments of $0.5 million, and proceeds from sale of business, net of cash sold and other of $0.1 million.

Cash used in financing activities was $252.4 million during the six months ended June 30, 2025 compared to cash used in financing activities of $243.5 million during the six months ended June 30, 2024.

The increase of $8.9 million in net cash used in financing activities in 2025 was primarily due to a net increase in debt-related payments of $46.0 million, partially offset by the suspension of dividends, compared to $37.7 million paid in common stock and preferred dividends in 2024.

During the six months ended June 30, 2025, cash used in financing activities primarily consisted of $310.3 million used in the repayment of term loan, $145.3 million used to redeem senior notes, $50.6 million used in payment of revolving line of credit, $13.1 million used to repay our notes payable and other, $11.3 million used to pay debt issuance and offering costs, $3.2 million in distributions to noncontrolling interests, and $1.4 million used to pay contingent consideration, partially offset by cash provided by $235.6 million in proceeds from term loan, $46.4 million in proceeds from revolving line of credit, and $0.9 million in proceeds from notes payable.

During the six months ended June 30, 2024, cash used in financing activities primarily consisted of $140.5 million used to redeem senior notes, $64.3 million used in repayment of revolving line of credit, $45.6 million used in the repayment of term loan, $33.6 million used to pay dividends on our common shares, $5.7 million used to repay our notes payable and other, $4.0 million used to pay dividends on our preferred shares, $3.2 million in distributions to noncontrolling interests, $3.1 million used in payment of employment taxes on vesting of restricted stock, $1.4 million used in the payment of contingent consideration, and $1.0 million used in the payment of debt issuance and offering costs, partially offset by cash provided by $40.3 million in proceeds from revolving line of credit, $15.0 million in proceeds from note payable, $3.0 million in contributions from noncontrolling interests, and $0.7 million in proceeds from exercise of warrants.

Recent Accounting Standards

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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