What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-01-14 compared with 2025-12-15 · 255 added, 275 removed, 464 unchanged (53% of the section changed)

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We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

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

Riley Financial, Inc.

and all of its subsidiaries.

Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “BRC,” “BRC Group Holdings,” “we,” “us” or “our” refer to the combined business of BRC Group Holdings (f/k/a B.

Riley Financial, Inc.) and all of its subsidiaries.

Description of the Company

Riley Financial Inc.

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.

BRC Group Holdings, Inc.

Riley Financial Inc.) (NASDAQ:

RILY) (the “Company”) is a diversified holding company, 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.

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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.

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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We act as an advisor to our clients, which at times involves complex transactions consistent with our value-oriented investment philosophy.

We often provide consulting, capital raising, or investment banking services for companies in which B.

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

We often provide consulting, capital raising, or investment banking services for companies in which we may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

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.

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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 June 30, 2025 and December 31, 2024:

September 30,

2025 December 31,

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Total securities and other investments owned $ 315,466 $ 282,325

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.

Securities and other investments owned was $315.5 million and $282.3 million as of September 30, 2025 and December 31, 2024, respectively.

Of this amount, the carrying value of equity securities totaled $248.7 million and $232.5 million as of September 30, 2025 and December 31, 2024, respectively.

Of these amounts, public equity securities totaled $149.7 million and $124.9 million as of September 30, 2025 and December 31, 2024, and private equity securities totaled $99.0 million and $107.6 million as of September 30, 2025 and December 31, 2024, respectively.

The carrying value of Babcock & Wilcox Enterprises, Inc.’s (“B&W”) - common stock held as of held as of September 30, 2025 and December 31, 2024 was $79.6 million and $45.0 million, respectively.

The change in the carrying value for the nine months ended September 30, 2025 was due to a increase in the public share price during the period.

The carrying value of our Double Down Interactive Co., Ltd common stock held as of September 30, 2025 and December 31, 2024 was $32.2 million and $43.7 million, respectively.

The change in the carrying value for the nine months ended September 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 September 30, 2025 and December 31, 2024 was $33.5 million and $27.4 million, respectively.

The change in the carrying value for the nine months ended September 30, 2025 was driven by purchases of certain other public equity securities and, to a lesser extent, increases in the public share prices during the period.

The carrying value of our investments in other private equities held as of September 30, 2025 and December 31, 2024 was $99.0 million and $107.6 million, respectively.

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

Recent Developments

Exchange of Senior Notes

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, 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.

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

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

The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Borrower and its direct and indirect subsidiaries.

The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

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

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

Riley Commercial Capital, LLC (“BRCC”), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional

subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.

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

On January 1, 2026, the Company’s previously announced name change became effective.

The name of the Company is now BRC Group Holdings, Inc.

Our trading symbol (“RILY”) and our CUSIP (05580M108) remain the same.

Critical Accounting Estimates

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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.

There were no impairments of goodwill or indefinite-lived intangibles of other reporting units identified in an interim basis during the nine months ended September 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 June 30, 2025 Compared to Three Months Ended June 30, 2024

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

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 Amount %

Services and fees $ 170,668 $ 174,573 $ (3,905) (2.2) % %

Trading gains (losses), net 27,680 (31,321) 59,001 (188.4) %

Trading gains (losses), net 53,012 (1,238) 54,250 n/m

Fair value adjustments on loans 1,299 (71,477) 72,776 (101.8) % %

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Selling, general and administrative expenses 143,892 161,075 (17,183) (10.7) % %

Restructuring charge 321 20 301 n/m

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

Restructuring charge 184 116 68 58.6 % %

Interest expense - Securities lending and loan participations sold 2,094 6,359 (4,265) (67.1) % %

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Dividend income 564 675 (111) (16.4) % %

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

Realized and unrealized gains (losses) on investments 32,756 (22,197) 54,953 n/m

Change in fair value of financial instruments and other (3,314) — (3,314) n/m

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

Gain on sale and deconsolidation of businesses — 476 (476) (100.0) % %

Gain on senior note exchange 12,222 — 12,222 n/m

Income from equity investments 9,193 6 9,187 n/m

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

Loss on extinguishment of debt (950) (5,900) 4,950 (83.9) % %

Interest expense (18,769) (32,996) 14,227 (43.1) % %

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Income (loss) from continuing operations 97,419 (150,611) 248,030 (164.7) % %

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

Loss from discontinued operations, net of income taxes (1,866) (136,987) 135,121 (98.6) % %

Net income (loss) 95,553 (287,598) 383,151 (133.2) % %

Net income (loss) attributable to noncontrolling interests 4,470 (3,201) 7,671 n/m

Net income (loss) attributable to B.

Riley Financial, Inc.

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

Net income (loss) attributable to Registrant 91,083 (284,397) 375,480 (132.0) % %

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

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

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 Amount %

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Trading gains (losses), net:

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

Capital Markets segment 44,951 (1,908) 46,859 n/m

Wealth Management segment 8,061 670 7,391 n/m

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

Subtotal 53,012 (1,238) 54,250 n/m

Fair value adjustments on loans:

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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.

Total revenues increased $102.5 million to $277.9 million during the three months ended September 30, 2025 from $175.4 million during the three months ended September 30, 2024.

The increase in revenues during the three months ended September 30, 2025 was primarily due to increases in fair value adjustments on loans of $72.8 million, and increases in fair value of the portfolio of securities and other investments owned of $54.3 million, partially offset by decreases in revenues from interest income from loans of $9.2 million, sale of goods of $7.0 million, interest income from securities lending of $4.5 million, and services and fees of $3.9 million.

Of the $72.8 million increase in fair value adjustments related to loans, $54.2 million related to the loan to Vintage Capital Management, LLC (“VCM”) and $18.6 million related to the loan to

The decrease in revenue of $3.9 million from services and fees in the three months ended September 30, 2025 consisted of decreases in revenue of $15.0 million in the Wealth Management segment, $11.7 million in All Other, $6.9 million in the Communications segment, and $5.2 million in the E-Commerce segment, partially offset by an increase of revenue of $34.9 million in the Capital Markets segment.

Revenues from services and fees in the Capital Markets segment increased $34.9 million to $65.4 million during the three months ended September 30, 2025 from $30.4 million during the three months ended September 30, 2024.

The increase in revenues was primarily due to increases of $32.6 million of corporate finance, consulting, and investment banking fees, $2.2 million in asset management fees, $0.7 million in commission fees, and $0.3 million in dividends, partially offset by increases of $0.7 million of interest income, and $0.2 million in other income.

The increase in investment banking revenues is related to the episodic nature of this business, an increase in the number of transactions when compared to the prior period, and the public press release of the B.

Riley Securities Holdings, Inc.

(“BRSH”) carve out.

The increases in investment banking revenues were $13.6 million in investment banking underwriting fees, $11.5 million in private placement fees, and $9.4 million in at the market fees, partially offset by a decrease of $1.7 million in mergers and acquisitions advisory fees.

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

Three Months Ended

September 30,

Revenues - Services and fees

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Total services and fees revenue 34,342 49,389

Trading gains, net

Trading gains (losses), net 8,061 670

Total revenues $ 42,403 $ 50,059

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.

Revenues from brokerage and advisory decreased $13.7 million to $29.4 million during the three months ended September 30, 2025 from $43.1 million during the three months ended September 30, 2024.

The decrease in revenues was primarily due to decreases in revenue 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.

Total assets under management were approximately $13.3 billion and $25.7 billion at September 30, 2025 and September 30, 2024, respectively.

Of these amounts, advisory assets under management totaled approximately $4.2 billion at September 30, 2025 and $8.1 billion at September 30, 2024.

Advisory revenues were 0.25% and 0.24% of average advisory assets under management during the three months ended September 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.

Brokerage 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.

Revenues from services and fees in the Communications segment decreased $6.9 million to $59.4 million during the three months ended September 30, 2025 from $66.2 million during the three months ended September 30, 2024.

The decrease in revenues was primarily due to decreases in subscription revenue of $6.7 million, $1.7 million of which related to divestiture of the Lingo wholesale carrier business in third quarter of fiscal year 2024.

Of the remaining $5.1 million decrease in subscription revenue, $1.8 million was from Marconi Wireless, $1.7 million was from Lingo, $1.1 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.

There were no revenues from services and fees in the E-Commerce segment during the three months ended September 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 $11.7 million to $11.6 million during the three months ended September 30, 2025 from $23.3 million during the three months ended September 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 $11.2 million related to the regional environmental services business, and $0.9 million related to merchandise rental fees from bebe, partially offset by an increase in revenues of $0.4 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”).

Trading gains (losses), net increased $54.3 million to income of $53.0 million during the three months ended September 30, 2025 compared to loss of $1.2 million during the three months ended September 30, 2024.

The income of $53.0 million during the three months ended September 30, 2025 was primarily due to realized and unrealized income on investments made in our proprietary trading accounts, primarily gains of $30.2 million on Babcock & Wilcox Enterprises, Inc.

(“B&W”) and $28.4 million on Applied Digital Corporation (“Applied Digital”), offset by trading losses.

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.

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Loans Receivable, at Fair Value Three Months Ended

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

September 30,

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

Related Party Loans:

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Great American Holdings, LLC Professional Services 25,000 — — —

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

Other related party loans Professional Services, Industrials 1,542 4,937 116 2,779

Total related party 27,845 51,902 (49) (68,768)

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Technology 25,173 32,136 1,323 (221)

Core Scientific, Inc.

Technology — — — —

Norlin EV Limited Real Estate — 6,065 25 12

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Total $ 55,018 $ 90,103 $ 1,299 $ (71,477)

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 fair value adjustments on loans receivable for the three months ended September 30, 2025 and 2024, were $1.3 million and $(71.5) million, respectively.

During the three months ended September 30, 2025 and 2024, fair value adjustments for other loans receivable totaled $1.3 million and $(2.7) million, respectively.

The $72.8 million favorable variance in fair value adjustment related to our loans receivable during the three months ended September 30, 2025 was primarily driven by $54.2 million related to the VCM and $18.6 million related to Conn’s.

Interest income from loans decreased $9.2 million to $2.1 million during the three months ended September 30, 2025 from $11.3 million during the three months ended September 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.

$3.4 million for VCM, and $1.5 million for Nogin, as well as a reduction in loan receivable balances from $151.7 million as of September 30, 2024 to $55.0 million as of September 30, 2025.

Interest income from securities lending decreased $4.5 million to $2.5 million during the three months ended September 30, 2025 from $7.0 million during the three months ended September 30, 2024.

The decrease was due to counterparties constraining their business activity and a reduced strategic focus and deployment of capital in securities lending, which led to lower securities lending balances.

Revenues from the sale of goods decreased $7.0 million to $48.3 million during the three months ended September 30, 2025 from $55.2 million during the three months ended September 30, 2024.

The decrease was primarily related to decreases of $3.7 million from Nogin in the E-Commerce segment, which was deconsolidated in the first quarter of 2025,$2.8 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide, $0.3 million from the Communications segment, 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.

Direct cost of services decreased $18.4 million to $31.3 million during the three months ended September 30, 2025 from $49.7 million during the three months ended September 30, 2024.

The decrease in direct cost of services was primarily attributable to a decrease of $8.3 million from the Communications segment, $2.0 million of which was attributable to divestiture of the Lingo wholesale carrier business in third quarter of fiscal year 2024, $7.1 million from All Other, consisting of $6.7 million from the regional environmental services business that was sold in the first quarter of 2025, and $0.4 million from bebe, and $3.0 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.

Cost of goods sold for the three months ended September 30, 2025 decreased $5.3 million to $35.0 million from $40.3 million during the three months ended September 30, 2024.

The decrease in cost of goods sold was primarily attributable to decreases of $2.8 million in the Consumer Products segment, due to lower sales volume, $2.1 million from the E-Commerce segment, consisting of Nogin which was deconsolidated in the first quarter of 2025, $0.3 million from the Communications segment due to decreased sales, and $0.1 million from All Other consisting of cost of goods from bebe.

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

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

Three Months Ended September 30, 2025 Three Months Ended

September 30, 2024 Change

Amount % Amount % Amount %

5 unchanged sentences

Corporate and All Other

21,360 14.8 % % 33,011 20.5 % % (11,651) (35.3) % %

Total selling, general & administrative expenses $ 143,892 100.0 % % $ 161,075 100.0 % % $ (17,183) (10.7) % %

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.

Total selling, general and administrative expenses decreased by $17.2 million to $143.9 million during the three months ended September 30, 2025 from $161.1 million during the three months ended September 30, 2024.

The decrease was primarily due to decreases of $14.1 million in the Wealth Management segment, $11.7 million in Corporate and All Other, $9.1 million in the E-Commerce segment, $2.4 million in the Consumer Products segment, and $2.1 million in the Communications segment, partially offset by an increase of $22.2 million in the Capital Markets 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.

Selling, general and administrative expenses in the Capital Markets segment increased by $22.2 million to $53.4 million during the three months ended September 30, 2025 from $31.3 million during the three months ended September 30, 2024.

The increase was primarily due to increases of $21.2 million in employee compensation and benefit related expenses, which primarily related to increases in commissions paid, largely related to increased revenue, and $2.1 million in investment banking deal expenses, partially offset by decreases of $0.6 million in other expenses, and $0.5 million in occupancy-related costs.

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.

Selling, general and administrative expenses in the Wealth Management segment decreased by $14.1 million to $35.2 million during the three months ended September 30, 2025 from $49.3 million during the three months ended September 30, 2024, primarily due to decreases of $9.6 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, $3.8 million change in the fair value of contingent consideration, $0.6 million in depreciation and amortization expense, and $0.6 million in other expenses, partially offset by an increase of $0.5 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.

Selling, general and administrative expenses in the Communications segment decreased $2.1 million to $19.4 million for the three months ended September 30, 2025 from $21.5 million for the three months ended September 30, 2024.

The decrease was primarily due to decreases of $0.9 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, $0.6 million in professional services, $0.5 million in occupancy-related costs, and $0.1 million in depreciation and amortization expenses due to items being fully amortized in 2024.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $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.

Selling, general and administrative expenses in the Consumer Products segment decreased $2.4 million to $14.5 million for the three months ended September 30, 2025 from $16.9 million during the three months ended September 30, 2024.

The decrease was primarily due to decreases of $1.6 million in professional services and $0.8 million in employee compensation and benefit related expenses due to reduced headcount.

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

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

1 unchanged sentence

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.

Selling, general and administrative expenses for Corporate and All Other decreased $11.7 million to $21.4 million during the three months ended September 30, 2025 from $33.0 million during the three months ended September 30, 2024.

The decrease was primarily due to $5.6 million in employee compensation and benefit related expenses primarily driven by a decrease in corporate compensation, $2.6 million in other expenses, $2.4 million in foreign currency translation, and $1.1 million in depreciation and amortization.

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.

Interest Expense - Securities Lending and Loan Participations Sold decreased $4.3 million to $2.1 million during the three months ended September 30, 2025 from $6.4 million for the three months ended September 30, 2024.

The decrease was due to a reduced strategic focus and deployment of capital in securities lending, which led to lower securities lending balances.

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:

Other income included interest income of $1.5 million and $1.4 million during the three months ended September 30, 2025 and 2024, respectively.

Dividend income was $0.6 million during the three months ended September 30, 2025 compared to $0.7 million during the three months ended September 30, 2024.

Realized and unrealized (losses) gains on investments was a gain of $32.8 million during the three months ended September 30, 2025

compared to a loss of $22.2 million during the three months ended September 30, 2024, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Three Months Ended

Three Months Ended September 30,

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

19 unchanged sentences

Total $ 32,756 $ (22,197)

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”).

The favorable variance of $55.0 million was primarily due to unfavorable fair value adjustments recorded in the prior year quarter of $49.0 million for Freedom VCM and $35.9 million for BJES Holdings, LLC, and a $16.0 million increase in the fair value of our common stock investment in Babcock & Wilcox Enterprises, Inc, partially offset by favorable fair value adjustments recorded in the prior year quarter of $32.4 million for Kanaci Technologies, LLC and $13.1 million for Double Down Interactive Co., Ltd.

Other income (expense) also includes change in fair value of financial instruments and other was a loss of $3.3 million during the three months ended September 30, 2025.

Gain on senior note exchange was $12.2 million during the three months ended September 30, 2025.

Income from equity investments was $9.2 million during the three months ended September 30, 2025.

Loss on extinguishment of debt during the three months ended September 30, 2025 was $1.0 million compared to a loss of $5.9 million during the three months ended September 30, 2024.

Interest expense was $18.8 million during the three months ended September 30, 2025 compared to $33.0 million during the three months ended September 30, 2024.

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

The decreases in interest expense primarily consisted of $7.4 million from the issuance of senior notes, $5.9 million from the Nomura term loan, $1.4 million from the Lingo term loan, $0.4 million from the Nomura revolving credit facility, $0.4 million from the Targus term loan, $0.4 million from the Nogin secured convertible promissory note, and partially offset by increases in interest expense of $1.3 million from the Oaktree term loan, $0.6 million from the BRPAC term loan, and $0.1 million from the Targus FGI 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.

Provision for income taxes was $1.2 million during the three months ended September 30, 2025 compared to $10.0 million during the three months ended September 30, 2024.

The effective income tax rate was 1.2% for the three months ended September 30, 2025 as compared to 7.1% for the three months ended September 30, 2024.

Loss 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.

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

Loss from discontinued operations, net of tax, for Brands Transaction, as described in Note 4 to the accompanying unaudited condensed consolidated financial statements, was $(141.3) million during the three months ended September 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 September 30, 2024.

Loss from discontinued operations, net of income taxes was $(1.9) million during the three months ended September 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.

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

Loss from discontinued operations, net of tax for GlassRatner and Farber was $(1.9) million for the three months ended September 30, 2025, compared to income from discontinued operations of $6.2 million during the three months ended September 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.

Preferred stock dividends were $2.0 million for the three months ended September 30, 2025 and 2024.

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

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

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 Amount %

Services and fees $ 475,279 $ 591,563 $ (116,284) (19.7) % %

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

Trading gains (losses), net 64,521 (50,226) 114,747 n/m

Fair value adjustments on loans (5,997) (259,260) 253,263 (97.7) % %

11 unchanged sentences

Total operating expenses 674,489 898,595 (224,106) (24.9) % %

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

Operating income (loss) 14,747 (330,756) 345,503 (104.5) % %

Other income (expense):

1 unchanged sentence

Dividend income 821 4,139 (3,318) (80.2) % %

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

Realized and unrealized gains (losses) on investments 28,472 (212,362) 240,834 (113.4) % %

Change in fair value of financial instruments and other 9,492 — 9,492 n/m

2 unchanged sentences

Income from equity investments 34,244 12 34,232 n/m

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

Loss on extinguishment of debt (21,643) (5,780) (15,863) n/m

Interest expense (72,685) (102,195) 29,510 (28.9) % %

2 unchanged sentences

Income (loss) from continuing operations 149,144 (661,063) 810,207 (122.6) % %

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

Income (loss) from discontinued operations, net of income taxes 70,841 (108,270) 179,111 (165.4) % %

Net income (loss) 219,985 (769,333) 989,318 (128.6) % %

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

Net income (loss) attributable to B.

Riley Financial, Inc.

129,496 (482,769) 612,265 (126.8) %

Net loss attributable to noncontrolling interests (594) (2,167) 1,573 (72.6) % %

Net income (loss) attributable to Registrant 220,579 (767,166) 987,745 (128.8) % %

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

2 unchanged sentences

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

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 Amount %

9 unchanged sentences

Wealth Management segment 13,873 2,561 11,312 n/m

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

Subtotal 64,521 (50,226) 114,747 n/m

Fair value adjustments on loans:

13 unchanged sentences

n/m - Not applicable or not meaningful.

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.

Total revenues increased $121.4 million to $689.2 million during the nine months ended September 30, 2025 from $567.8 million during the nine months ended September 30, 2024.

The increase in revenues during the nine months ended September 30, 2025 was primarily due to increases in revenue from fair value adjustments on loans of $253.3 million, and in the fair value of the portfolio of securities and other investments owned of $114.7 million, partially offset by decreases in revenues from services and fees of $116.3 million, interest income from securities lending of $64.1 million, interest income from loans of $42.8 million, and sale of goods of $23.5 million.

Of the $253.3 million increase in fair value adjustments related to loans, $222.0 million related to VCM, $23.0 million related to the loan to Conn’s, $14.6 million related to the loan to Freedom VCM, and $6.2 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 $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.

The decrease in revenue of $116.3 million from services and fees in the

nine months ended September 30, 2025 consisted of decreases in revenue of $41.8 million in the Communications segment, $35.7 million in the Wealth Management segment, $22.9 million in All Other, $11.4 million in the Capital Markets segment, and $4.5 million in the E-Commerce segment.

Revenues from services and fees in the Capital Markets segment decreased $11.4 million to $129.7 million during the nine months ended September 30, 2025 from $141.0 million during the nine months ended September 30, 2024.

The decrease in revenues was primarily due to decreases of $7.6 million of corporate finance, consulting, and investment banking fees, $4.7 million in commission fees, $3.3 million in interest income and $1.1 million in dividends, $1.0 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 and $1.6 million in asset management fees.

The decrease in investment banking revenues is related to the episodic nature of this business and the decline in business due to the late SEC filings of the parent company, partially offset by an increase in the number of transactions when compared to the prior period driven in part by the public announcement of the BRSH carve out.

The decreases in investment banking revenues were $13.5 million in at the market fees, $9.2 million in mergers and acquisitions advisory fees, partially offset by increases of $8.6 million in private placement fees, and $6.5 million in investment banking underwriting fees.

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

Six Months Ended

Nine Months Ended

September 30,

Revenues - Services and fees

3 unchanged sentences

Total services and fees revenue 114,429 150,153

Trading gains, net

Trading gains (losses), net 13,873 2,561

Total revenues $ 128,302 $ 152,714

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.

Revenues from brokerage and advisory decreased $37.4 million to $91.7 million during the nine months ended September 30, 2025 from $129.1 million during the nine months ended September 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.

Total assets under management were approximately $13.3 billion and $25.7 billion at September 30, 2025 and September 30, 2024, respectively.

Of these amounts, advisory assets under management totaled approximately $4.2 billion at September 30, 2025 and $8.1 billion at September 30, 2024.

Advisory revenues were 0.26% and 0.25% of average advisory assets under management during the nine months ended September 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.

Brokerage 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 $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.

Revenues from services and fees in the Communications segment decreased $41.8 million to $183.3 million during the nine months ended September 30, 2025 from $225.1 million during the nine months ended September 30, 2024.

The decrease in revenues was primarily due to decreases in subscription revenue of $41.1 million, $24.8 million of which related to divestiture of the Lingo wholesale carrier business in third quarter of fiscal year 2024.

Of the remaining $16.3 million decrease in subscription revenue, $8.0 million was from Lingo, $4.3 million was from Marconi Wireless, $3.0 million was from magicJack, and $1.0 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.

Revenues from services and fees in the E-Commerce segment were $3.5 million during the nine months ended September 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 $22.9 million to $44.5 million during the nine months ended September 30, 2025 from $67.4 million during the nine months ended September 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 $21.3 million due to the operations of a regional environmental services business, and $3.8 million related to merchandise rental fees from bebe, partially offset by an increase of $2.2 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.

Trading gains (losses), net increased $114.7 million to income of $64.5 million during the nine months ended September 30, 2025 compared to a loss of $50.2 million during the nine months ended September 30, 2024.

The income of $64.5 million during the nine months ended September 30, 2025 was primarily due to realized and unrealized income on investments made in our proprietary trading accounts, primarily gains of $42.2 million for Applied Digital and $19.6 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.

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Fair Value Adjustments on Loans

Loans Receivable, at Fair Value Six Months Ended

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

Loans Receivable, at Fair Value Nine Months Ended

September 30,

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

Related Party Loans:

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Great American Holdings, LLC Professional Services 25,000 — — —

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

Other related party loans Professional Services, Industrials 1,542 4,937 (9) 3,470

Total related party 27,845 51,902 (3,185) (265,512)

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Total $ 55,018 $ 90,103 $ (5,997) $ (259,260)

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.

During the nine months ended September 30, 2025 and 2024, fair value adjustments for loans receivable from related parties totaled $(3.2) million and $(265.5) million, respectively.

During the nine months ended September 30, 2025 and 2024, fair value adjustments for other loans receivable totaled $(2.8) million and $6.3 million, respectively.

The $253.3 million favorable variance in fair value adjustment related to our loans receivable during the nine months ended September 30, 2025 was primarily driven by losses from fair value adjustments recorded in the prior year period of $222.7 million related to VCM loan, $27.1 million related to the loan to Conn’s, $13.2 million related to the loan to

Freedom VCM, and $6.0 million related to Badcock loan with no fair value adjustments of comparable magnitude recorded in the current year period, partially offset by a favorable variance of $8.5 million from a realized loss recorded in the prior year period related to the equity conversion of the Core Scientific loan.

Interest income - loans decreased $42.8 million to $9.1 million during the nine months ended September 30, 2025 from $51.9 million during the nine months ended September 30, 2024.

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

$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.

$15.6 million for VCM, $7.4 million for Conn’s, $5.9 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 $151.7 million as of September 30, 2024 to $55.0 million as of September 30, 2025.

Interest income – securities lending decreased $64.1 million to $5.5 million during the nine months ended September 30, 2025 from $69.6 million during the nine months ended September 30, 2024.

The decrease was due to counterparties constraining their business activity and a reduced strategic focus and deployment of capital in securities lending, which led to lower average securities lending balances.

Revenues from the sale of goods decreased $23.5 million to $140.8 million during the nine months ended September 30, 2025 from $164.3 million during the nine months ended September 30, 2024.

The decrease in revenues from sale of goods was attributable to decreases of $20.4 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide, $2.5 million from Nogin in the E-Commerce segment, $0.3 million from the Communications segment, and $0.3 million from All Other consisting of sale of goods from bebe.

Operating Expenses

Direct Cost of Services

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.

Direct cost of services decreased $60.8 million to $107.2 million during the nine months ended September 30, 2025 from $168.0 million during the nine months ended September 30, 2024.

The decrease in direct cost of services was primarily attributable to decreases of $41.2 million from the Communications segment, $26.9 million of which was attributable to divestiture of the Lingo wholesale carrier business in third quarter of fiscal year 2024, and $16.6 million from All Other consisting of $14.8 million from the regional environmental services business, which was sold in the first quarter of 2025, and $1.8 million from bebe.

Cost of goods sold

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.

Cost of goods sold for the nine months ended September 30, 2025 decreased $12.1 million to $106.8 million from $118.9 million during the nine months ended September 30, 2024.

The decrease in cost of goods sold was primarily attributable to decreases of $11.0 million in the Consumer Products segment, due to lower sales volume, and $0.6 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, $0.4 million from All Other consisting of bebe, and $0.1 million in the Communications segment.

Selling, General and Administrative Expenses

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

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

Nine Months Ended

September 30, 2025 Nine Months Ended

September 30, 2024 Change

Amount % Amount % Amount %

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Corporate and All Other

79,910 17.6 % % 96,150 18.6 % % (16,240) (16.9) % %

Total selling, general & administrative expenses $ 453,649 100.0 % % $ 518,029 100.0 % % $ (64,380) (12.4) % %

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.

Total selling, general and administrative expenses decreased by $64.4 million to $453.6 million during the nine months ended September 30, 2025 from $518.0 million during the nine months ended September 30, 2024.

The decrease was primarily due to decreases of $27.9 million in the Wealth Management segment, $16.2 million in Corporate and All Other, $10.9 million in the Communications segment, $6.7 million in the E-Commerce segment, and $6.7 million in the Consumer Products segment, partially offset by an increase of $4.1 million in the Capital Markets segment.

Capital Markets

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.

Selling, general and administrative expenses in the Capital Markets segment increased by $4.1 million to $139.9 million during the nine months ended September 30, 2025 from $135.8 million during the nine months ended September 30, 2024.

The increase was primarily due to increases of $1.8 million in professional services, an increase of $3.5 million in other expenses, partially offset by decreases of $0.7 million in occupancy-related costs, and $0.5 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses related to reduced revenue and loss of headcount.

Wealth Management

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.

Selling, general and administrative expenses in the Wealth Management segment decreased by $27.9 million to $120.7 million during the nine months ended September 30, 2025 from $148.6 million during the nine months ended September 30, 2024.

The decrease was primarily due to a decrease of $26.1 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, $3.8 million in change in fair value of contingent consideration, and $1.3 million in depreciation and amortization, partially offset by increases of $2.4 million in occupancy-related costs, due to multiple office closures and lease impairments as a result of the Stifel transaction, and $0.9 million in other expenses.

Communications

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.

Selling, general and administrative expenses in the Communications segment decreased $10.9 million to $60.0 million for the nine months ended September 30, 2025 from $70.9 million for the nine months ended September 30, 2024.

The decrease was primarily due to decreases of $4.7 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, $2.4 million in depreciation and amortization expenses due to items being fully amortized in 2024, $1.8 million in occupancy-related costs, $1.7 million in professional services, and $0.3 million in other expenses.

Consumer Products

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.

Selling, general and administrative expenses in the Consumer Products segment decreased $6.7 million to $44.7 million for the nine months ended September 30, 2025 from $51.5 million during the nine months ended September 30, 2024.

The decrease was primarily due to decreases of $3.7 million in professional services, $2.1 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.

Selling, general and administrative expenses in the E-Commerce segment decreased $6.7 million to $8.4 million during the nine months ended September 30, 2025 from $15.1 million for the nine months ended September 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.

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Corporate and All Other

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.

Selling, general and administrative expenses for Corporate and All Other decreased $16.2 million to $79.9 million during the nine months ended September 30, 2025 from $96.2 million for the nine months ended September 30, 2024.

The decrease was primarily due to decreases of $12.1 million in employee compensation and benefit related expenses primarily driven by decreases in corporate compensation and from the regional environmental services business which was sold in the first quarter of 2025, $3.9 million in other expenses, $3.2 million in occupancy-related costs, $1.6 million in depreciation and amortization expense and $1.2 million in insurance expense, 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, and $1.4 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

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

We recognized non-cash impairment charges of $27.7 million during the nine months ended September 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 $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.

Interest Expense - Securities Lending and Loan Participations Sold decreased $60.3 million to $4.8 million during the nine months ended September 30, 2025 from $65.1 million for the nine months ended September 30, 2024.

The decrease was due to a reduced strategic focus and deployment of capital in securities lending, which led to lower average securities lending balances.

Other Income (Expense).

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:

Other income included interest income of $3.5 million and $2.9 million during the nine months ended September 30, 2025 and 2024, respectively.

Dividend income was $0.8 million during the nine months ended September 30, 2025 compared to $4.1 million during the nine months ended September 30, 2024.

Realized and unrealized losses on investments was a gain of $28.5 million during the nine months ended September 30, 2025 compared to a loss of $212.4 million during the nine months ended September 30, 2024, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Six Months Ended

Nine Months Ended September 30,

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

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Total $ 28,472 $ (212,362)

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.

The favorable variance of $240.8 million was primarily due to unfavorable fair value adjustments recorded in the prior year period of $221.0 million for Freedom VCM, $35.9 million for BJES Holdings, LLC, and $12.0 million for Kanaci Technologies, LLC, and $18.6 million in the addition of our investment in Applied Digital Corporation in the current year.

These increases were partially offset by a favorable fair value adjustment recorded in the prior year period of $35.0 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 $9.5 million during the nine months ended September 30, 2025.

Gain on senior note exchange was $67.2 million during the nine months ended September 30, 2025.

Income from equity investments was $34.2 million during the nine months ended September 30, 2025.

Loss on extinguishment of debt was $21.6 million during the nine months ended September 30, 2025 compared to a loss of $5.8 million during the nine months ended September 30, 2024.

Interest expense was $72.7 million during the nine months ended September 30, 2025 compared to $102.2 million during the nine months ended September 30, 2024.

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

The decreases in interest expense primarily consisted of $16.1 million from the Nomura term loan, $16.0 million from the issuance of senior notes, $4.2 million from the Lingo term loan, $1.4 million from the Nomura revolving credit facility, $1.5 million and $0.6 million from the Targus term loan and revolver, respectively, and $0.2 million from the Nogin secured convertible promissory note, partially offset by increases in interest expense of $9.1 million from the Oaktree term loan, $1.8 million from the BRPAC term loan and $0.1 million from the Targus FGI loan.

Provision for Income Taxes.

Provision for income taxes was $1.2 million during the nine months ended September 30, 2025 compared to $17.8 million during the nine months ended September 30, 2024.

The effective income tax rate was 0.8% for the nine months ended September 30, 2025 as compared to 2.8% for the nine months ended September 30, 2024.

Income (Loss) 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.

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 six months ended June 30, 2025 and 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.

Loss from discontinued operations, net of tax for Brands Transaction was $(112.6) million during the nine months ended September 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 nine months ended September 30, 2024.

Loss from discontinued operations, net of tax for Great American Group was $(11.2) million during the nine months ended September 30, 2024.

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 nine months ended September 30, 2025 and 2024.

Income from discontinued operations, net of tax for GlassRatner and Farber was $70.8 million for the nine months ended September 30, 2025, compared to income from discontinued operations of $15.6 million during the nine months ended September 30, 2024.

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

Preferred Stock Dividends .

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.

Preferred stock dividends were $6.0 million for the nine months ended September 30, 2025 and 2024.

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

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

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 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.

During the nine months ended September 30, 2025 and 2024, we generated net income (loss) attributable to the Company of $220.6 million and $(767.2) million, respectively.

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

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.

As of September 30, 2025, we had $184.2 million of unrestricted cash and cash equivalents, $1.3 million of restricted cash, $315.5 million of securities and other investments owned, $55.0 million of loans receivable, at fair value, $1.4 billion of borrowings outstanding, and approximately $48.8 million of obligations under operating leases.

The Company expects to collect approximately $58.7 million of loans at fair value in the next twelve months and has approximately $149.8 million of level 1 securities and other investments owned that are available for sale during the next twelve months.

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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 $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.

In addition to the sale of these businesses, approximately $61.2 million of investments were sold during the nine months ended September 30, 2025 and approximately $4.7 million of investments and loans were sold from October 1, 2025 through December 31, 2025.

Approximately $50.4 million in repayments of loans receivable, fair value were received during the nine months ended September 30, 2025 and approximately $31.4 million in repayments of loans receivable, fair value were received from October 1, 2025 through December 31, 2025.

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

As discussed in more detail in Note 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.

As discussed in more detail in Note 12 - Senior Notes Payable, 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 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.

The borrowings outstanding of $1.4 billion as of September 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%, $121.9 million in term loans borrowed pursuant to the Oaktree Capital Management, L.P.

(“Oaktree”) and BRPI Acquisition Co LLC (“BRPAC”) credit agreements, and $10.2 million of revolving credit facility under the Targus credit facility.

Of the senior notes outstanding, after the completion of the Exchanged Notes described above, there is $280.1 million due in the next twelve months and $1.0 billion thereafter.

5 unchanged sentences

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 June 30, 2025, we did not pay any cash dividends on our common stock.

During the three months ended September 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.

1 unchanged sentence

The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors.

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

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

Date Declared Date Paid Stockholder Record Date Amount

3 unchanged sentences

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

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

As of September 30, 2025, dividends in arrears in respect of the Series A Preferred Stock and underlying Depositary Shares were $4.5 million.

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

2 unchanged sentences

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

As of 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.

As of September 30, 2025, dividends in arrears in respect of the Series B Preferred Stock and underlying Depositary Shares were $2.9 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 six months ended June 30, 2025 and the year ended December 31, 2024 was as follows:

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

Stockholder Preferred Dividend per Depositary Share

6 unchanged sentences

Cash Flow Summary

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

Net cash provided by (used in):

Net cash (used in) provided by:

Operating activities $ (85,932) $ 266,294

2 unchanged sentences

Effect of foreign currency on cash (183) (1,092)

Net increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

$ (71,177) $ (63,991)

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.

Cash used in operating activities was $85.9 million during the nine months ended September 30, 2025 compared to cash provided by operating activities of $266.3 million during the nine months ended September 30, 2024.

The reduction of $352.2 million in net cash provided by operating activities in 2025 was primarily due to $673.3 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 $422.0 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.

Cash used in operating activities for the nine months ended September 30, 2025 consisted of the impact of net income of $220.0 million, non-cash items of $172.4 million, and changes in operating assets and liabilities of $133.5 million.

The negative cash flow impact from non-cash items of $172.4 million included gain on sale and deconsolidation of businesses of $86.2 million, gain on senior note exchange of $67.2 million, gain on disposal of discontinued operations of $66.8 million, income from equity investments of $34.2 million, fair value and remeasurement adjustments of $8.6 million, gain on sale or disposal of fixed assets and other of $1.3 million, and net foreign currency gains of $0.5 million, partially offset by depreciation and amortization of $27.2 million, loss on extinguishment of debt of $21.6 million, share-based compensation of $11.0 million, depreciation of rental merchandise of $9.9 million, deferred income taxes of $9.2 million, non-cash interest and other of $9.2 million, provision for losses on accounts receivable of $2.6 million, impairment of goodwill and tradenames of $1.5 million, and dividends from equity investment of $0.2 million.

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

The positive cash flow impact from non-cash items of $394.9 million included fair value adjustments of $261.4 million, loss on disposal of discontinued operations of $39.5 million, depreciation and amortization of $34.1 million, impairment of goodwill and tradenames of $27.7 million, deferred income taxes of $20.5 million, share-based compensation of $17.6 million, depreciation of rental merchandise of $11.7 million, provision for losses on accounts receivable of $2.5 million, income allocated for mandatorily redeemable noncontrolling interests of $1.4 million, net foreign currency gains of $0.3 million, partially offset by non-cash interest and other of $26.3 million, and gain on sale of business of $0.8 million.

Cash provided by investing activities was $275.9 million during the nine months ended September 30, 2025 compared to cash provided by investing activities of $25.5 million for the nine months ended September 30, 2024.

The increase of $250.4 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, $37.5 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.

During the nine months ended September 30, 2025, cash provided by investing activities consisted of cash provided by proceeds from loans receivable repayment of $137.7 million, sale of discontinued operation of $114.0 million, proceeds from sale of business, net of cash sold and other of $94.9 million, distributions from equity investments of $37.5 million, proceeds from sale of loans receivable of $10.4 million, proceeds from sale of property, equipment, intangible assets and other of $7.6 million, proceeds from sale of loan participations of $4.5 million, and proceeds from consolidation of VIE, partially offset by cash used in purchases of loans receivable of $114.3 million, purchases of property, equipment and intangible assets of $10.3 million, and purchases of equity and other investments of $6.6 million.

During the nine months ended September 30, 2024, cash provided by investing activities consisted of cash received from loans receivable repayment of $105.3 million, proceeds from sale of loans receivable of $22.8 million, and proceeds from sale of loan participations of $4.0 million, partially offset by cash used for purchases of loans receivable of $79.9 million, acquisition of businesses and minority interest of $19.1 million, purchases of property and equipment of $6.7 million, purchases of equity and other investments of $1.1 million, and proceeds from sale of business, net of cash sold and other of $0.3 million.

Cash used in financing activities was $261.0 million during the nine months ended September 30, 2025 compared to cash used in financing activities of $354.7 million during the nine months ended September 30, 2024.

The decrease of $93.7 million in net cash used in financing activities in 2025 was primarily due to a net increase in debt-related proceeds of $47.9 million and the suspension of dividends, compared to $39.7 million paid in common stock and preferred dividends in 2024.

During the nine months ended September 30, 2025, cash used in financing activities primarily consisted of $314.3 million used in the repayment of term loan, $145.3 million used to redeem senior notes, $92.2 million used in payment of revolving line of credit, $13.4 million used to repay our notes payable and other, $13.2 million used to pay debt issuance and offering costs, $3.6 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, $86.1 million in proceeds from revolving line of credit, and $0.9 million in proceeds from notes payable.

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

Recent Accounting Standards

See Note 2(s) - Recent Accounting Standards to the accompanying unaudited condensed consolidated financial statements for recent accounting standards.

Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, the Company is not required to provide the information called for by this Item.

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