What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 458 added, 169 removed, 294 unchanged (68% of the section changed)

13 unchanged sentences

changing conditions in the financial markets;

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

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

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

15 unchanged sentences

the diversion of management time on divestiture-related issues;

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

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

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

41 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Revenues - Services and fees

3 unchanged sentences

Total services and fees revenue

Trading income 10,096 612

48,702 33,421 90,781 80,087

Trading gains, net 9,251 5,200 19,347 5,812

Total revenues

Total assets under management were approximately $11.9 billion and $13.0 billion at March 31, 2026 and December 31, 2025, respectively.

Of these amounts, advisory assets under management totaled approximately $4.0 billion at March 31, 2026, and $4.3 billion at December 31, 2025.

Advisory revenues were 0.28% and 0.25% of average advisory assets under management during the three months ended March 31, 2026 and 2025, respectively.

$ 57,953 $ 38,621 $ 110,128 $ 85,899

Total assets under management were approximately $12.1 billion and $13.0 billion at June 30, 2026 and December 31, 2025, respectively.

Of these amounts, advisory assets under management totaled approximately $4.6 billion at June 30, 2026 and $4.3 billion at December 31, 2025.

Advisory revenues were 0.24% and 0.27% of average advisory assets under management during the three months ended June 30, 2026 and 2025, respectively and 0.25% and 0.26% for the six months ended June 30, 2026 and 2025, respectively.

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

1 unchanged sentence

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

Lingo Segment – Lingo Management, LLC and its subsidiary Bullseye Telecom (together, “Lingo”) is a global cloud/unified communications (“UC”) and managed service provider to Enterprise and Small to Medium Businesses in the United States.

Lingo Segment – Lingo Management, LLC and its subsidiary Bullseye Telecom (together, “Lingo”) is a global cloud/unified communications and managed service provider to Enterprise and Small to Medium Businesses in the United States.

Lingo primarily re-sells Plain Old Telephone Services (“POTS”), Broadband data services and Managed Security services in addition to the Cloud Voice, POTS Alternative and business collaboration communication services.

12 unchanged sentences

(“bebe”) which operates rent-to-own stores.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities, partnership interests and other investments, corporate bonds and other fixed income securities as follows at March 31, 2026 and December 31, 2025:

2026 December 31,

3 unchanged sentences

Double Down Interactive Co., Ltd - common stock 18,751 30,010

Synchronoss Technologies, Inc.

- common stock — 3,503

Applied Digital Corporation - common stock 1,008 12,137

Other public equities 25,641 17,041

1 unchanged sentence

Private Equity Securities:

Applied Digital Corporation - preferred stock 80,040 41,115

Other private equities 92,538 94,490

3 unchanged sentences

Other fixed income securities 5,175 4,373

Partnership interests - investment funds holding SpaceX positions 83,026 40,082

Partnership interest and other 2,374 1,833

Total securities and other investments owned $ 723,715 $ 446,843

Total securities and other investments owned increased $192.8 million during the three months ended March 31, 2026 primarily due to the following:

• $229.2 million increase in the carrying values of Babcock & Wilcox Enterprises, Inc.’s (“B&W”) common stock due to an increase in the public share price during the period.

• $(0.7) million decrease in the carrying values of our Double Down Interactive Co., Ltd common stock primarily driven by sales of the securities and a decrease in the public share price during the period.

• $(3.5) million decrease due to the disposition of our investment in Synchronoss Technologies, Inc.

in the current year period.

• $(3.0) million decrease in the carrying values of our investments in other public equities driven by net decreases in public share prices, partially offset by net additions during the period.

• $(41.6) million decrease in the carrying values of our investments in other private equities driven primarily by dispositions of certain private securities.

• $13.4 million increase in the carrying values of our investments in partnership interests and other securities primarily driven by net increase in market value of certain securities during the period.

Total securities and other investments owned increased $276.9 million during the six months ended June 30, 2026 primarily due to the following:

• $213.0 million increase in the carrying values of Babcock & Wilcox Enterprises, Inc.’s (“B&W”) common stock due to an increase in the public share price during the current period.

• $11.3 million decrease in the carrying values of our Double Down Interactive Co., Ltd common stock primarily driven by sales of the securities partially offset by an increase in the public share price during the period.

• $11.1 million decrease in the carrying value of our Applied Digital Corporation (“APLD”) common stock was driven by dispositions during the period.

• $8.6 million increase in the carrying values of our investments in other public equities driven by net additions during the period.

• $38.9 million increase in the carrying values of our investments in APLD preferred stock is due to additions in the current period.

• $2.0 million decrease in the carrying values of our investments in other private equities driven primarily by net dispositions and, to a lesser extent, a decrease in market value of certain private securities during the period.

• $3.6 million decrease in the carrying values of our investments in corporate bonds driven primarily by decrease in the public per unit price, partially offset by net additions during the period.

• $0.8 million increase in the carrying values of our investments in other fixed income securities driven primarily by net additions during the period.

• $42.9 million increase in the carrying value of our partnership interest from carried interest related to investment funds holding positions in SpaceX driven by an increase in market value.

• $0.5 million increase in the carrying values of our investments in other partnership interests and other securities primarily driven by net increase in market value of certain securities during the period.

Critical Accounting Estimates

4 unchanged sentences

A discussion of such critical accounting estimates, which include fair value measurements, goodwill and other intangible assets, and accounting for income tax valuation allowances can be found in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025.

At June 30, 2026, as a result of the current financial performance of the Targus subsidiary, which comprises the reporting unit of all operations within the Consumer Products segment, and current market conditions, the Company performed an interim quantitative impairment assessment of the Targus tradename.

The Company utilized the relief-from-royalty method to estimate the fair value of the Targus tradename, with key inputs including a long-term revenue growth rate of 3.0%, a discount rate of 22.0%, and a royalty rate of 1.0%.

This resulted in an impairment charge for the Targus tradename in the amount of $4.0 million at June 30, 2026.

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

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

There were no impairments of goodwill or indefinite-lived intangibles of other reporting units identified on an interim basis during the six months ended June 30, 2026.

Results of Operations

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

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Three Months Ended March 31, Change

Three Months Ended

June 30, Change

2026 2025 Amount %

Services and fees $ 173,595 $ 145,772 $ 27,823 19.1 %

Trading gains (losses), net 145,061 (16,171) 161,232 (997.0) %

Trading gains, net 12,874 27,680 (14,806) (53.5) %

Fair value adjustments on loans 4,245 800 3,445 430.6 %

7 unchanged sentences

Selling, general and administrative expenses 133,377 142,369 (8,992) (6.3) %

Restructuring charge 1,914 321 1,593 496.3 %

Impairment of tradename 4,000 1,500 2,500 166.7 %

Interest expense - Securities lending and loan participations sold 906 1,968 (1,062) (54.0) %

Total operating expenses 200,922 214,487 (13,565) (6.3) %

Operating income (loss) 152,928 (61,477) 214,405 (348.8) %

Operating income 38,195 10,815 27,380 253.2 %

Other income (expense):

1 unchanged sentence

Dividend income 133 122 11 9.0 %

Realized and unrealized gains (losses) on investments 105,100 (14,500) 119,600 (824.8) %

Realized and unrealized gains on investments 12,092 10,216 1,876 18.4 %

Change in fair value of financial instruments and other 1,546 11,884 (10,338) (87.0) %

Gain on sale and deconsolidation of businesses — 80,841 (80,841) (100.0) %

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

Income (loss) from equity investments 1,326 (552) 1,878 (340.2) %

Gain (loss) on extinguishment of debt 2,890 (10,427) 13,317 (127.7) %

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

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

(Loss) income from equity investments (5,459) 25,603 (31,062) n/m

Loss on extinguishment of debt (1,283) (10,266) 8,983 (87.5) %

Interest expense (18,016) (23,952) 5,936 (24.8) %

Income (loss) from continuing operations before income taxes 239,050 (23,004) 262,054 (1,139.2) %

(Provision for) benefit from income taxes (16,891) 3,042 (19,933) (655.3) %

Income (loss) from continuing operations 222,159 (19,962) 242,121 (1,212.9) %

Income from discontinued operations, net of income taxes — 3,395 (3,395) (100.0) %

Net income (loss) 222,159 (16,567) 238,726 (1,441.0) %

Net income (loss) attributable to noncontrolling interests 8,886 (6,592) 15,478 (234.8) %

Net income (loss) attributable to BRC Group Holdings, Inc.

Income from continuing operations before income taxes 27,547 74,740 (47,193) (63.1) %

Provision for income taxes (5,950) (3,053) (2,897) 94.9 %

Income from continuing operations 21,597 71,687 (50,090) (69.9) %

Income from discontinued operations, net of income taxes — 69,312 (69,312) n/m

Net income 21,597 140,999 (119,402) (84.7) %

Net income attributable to noncontrolling interests 1,048 1,528 (480) (31.4) %

Net income attributable to BRC Group Holdings, Inc.

20,549 139,471 (118,922) (85.3) %

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

Net income (loss) available to common shareholders $ 211,258 $ (11,990) $ 223,248 (1,862.0) %

Net income available to common shareholders $ 18,534 $ 137,456 $ (118,922) (86.5) %

_____________________________________________

n/m - Not applicable or not meaningful.

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

Three Months Ended March 31, Change

Three Months Ended

June 30, Change

2026 2025 Amount %

14 unchanged sentences

Fair value adjustments on loans:

Capital Markets segment 751 — 751 n/m

Corporate and All Other 3,494 800 2,694 336.8 %

Subtotal 4,245 800 3,445 430.6 %

Interest income - loans:

Capital Markets segment 1,027 — 1,027 n/m

Corporate and All Other 1,144 3,853 (2,709) (70.3) %

Subtotal 2,171 3,853 (1,682) (43.7) %

Interest income - securities lending:

Capital Markets segment 1,632 2,124 (492) (23.2) %

Corporate and All Other 6,545 (4,965) 11,510 n/m

Sale of goods:

magicJack segment 286 304 (18) (5.9) %

Marconi Wireless segment 490 1,167 (677) (58.0) %

Consumer Products segment 43,537 43,284 253 0.6 %

Corporate and All Other 287 318 (31) (9.7) %

Subtotal 44,600 45,073 (473) (1.0) %

Total revenues $ 239,117 $ 225,302 $ 13,815 6.1 %

_____________________________________________

n/m - Not applicable or not meaningful.

Services and fees

Total increase in services and fees revenues during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $15.3 million increase in Wealth Management segment primarily driven by $16.3 million in income from carried interest primarily related to investment funds holding positions in SpaceX, partially offset by a $1.3 million decrease in advisory fees and a $0.4 million decrease in other income;

• $8.4 million increase in Corporate and All Other non-reportable operating segments driven by income of $12.9 million from carried interest primarily related to investment funds holding positions in SpaceX, partially offset by a reduction in commissions related to APLD finder fees of $2.4 million and a decline at bebe of $1.0 million;

• $8.0 million increase in Capital Markets segment, driven by higher underwriting revenues of $4.4 million, increased finder fees of $2.4 million, higher securities lending locate fees of $1.8 million, higher secondary commissions of $1.7 million, and higher ATM and private placement revenues, net of a $3.2 million decrease in M&A and advisory fees;

partially offset by:

• $1.2 million decrease in magicJack segment, driven by fewer active customers resulting in lower renewal revenues and lower device service revenues;

• $1.2 million decrease in Marconi Wireless segment, driven by lower service revenues attributable to an ongoing decline in active customers;

• $1.1 million decrease in Lingo segment, driven by fewer POTS and broadband subscribers as customers migrated to VoIP services, partially offset by VoIP growth from those same conversions;

• $0.4 million decrease in UOL segment, driven by declines in internet access subscribers in addition to discontinuing telecom resale services.

Trading gains, net

Total decrease in net trading gains (losses) during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $16.9 million decrease in Capital Markets segment, primarily driven by lower net trading gains in the current year period, driven by gains of $8.0 million with APLD, $2.6 million with U.S.

Treasuries, $1.7 million with certain equity and various other securities, partially offset by a $9.2 million loss with B&W, compared to net trading gains in the prior year period of $4.4 million with B&W, $4.1 million with APLD, $6.5 million with certain equity securities, $2.2 million with U.S.

Treasuries, and net gains from various other securities;

• $2.0 million decrease in Corporate and All Other non-reportable operating segments primarily driven by increases in unrealized losses for certain securities in the current year period;

partially offset by:

• $4.1 million increase in Wealth Management segment, driven by revenue from the Variable Rate Transactions (“VRT”) of $2.7 million, net gains on certain equity securities of $0.6 million, and net gains from bond and structured trading activity.

Fair value adjustments on loans

We have a portfolio of loans receivable that are measured at fair value with changes in fair value reported in our results of operations.

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

Fair Value Adjustments on Loans Receivable

At Fair Value Three Months Ended June 30,

Industry or Type of Loan June 30, 2026 December 31, 2025 2026 2025

Related Party Loans Receivable:

Vintage Capital Management, LLC Retail / consumer n/a $ 1,835 $ — $ (866)

Retail / consumer n/a — n/a —

Other related party loans Services, oil & gas and industrial 1,035 1,000 82 (126)

Total related party loans receivable 1,035 2,835 82 (992)

XBP Americas, LLC Technology 15,041 21,415 287 2,049

Norlin EV Limited Real estate n/a 10 1,201 (257)

Retail / consumer — n/a 1,930 n/a

Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company Internet Services and Infrastructure 19,794 — 161 —

Other loans receivable Various 2,932 2,043 584 —

Total loans receivable $ 38,802 $ 26,303 $ 4,245 $ 800

(1) The Conn’s, Inc.

loan receivable was written off in January 2026 and is no longer a related party loan receivable.

Recovery of proceeds from the loan receivable is contingent upon collecting amounts from the Conn’s bankruptcy estate.

During the three months ended June 30, 2026, the Company recovered $1,930 of proceeds from the Conn’s bankruptcy estate, and it is reported as a fair value adjustment.

The $3.4 million favorable variance in fair value adjustments related to our loans receivable during the three months ended June 30, 2026, when compared to the same period in the prior year, was primarily driven by $1.9 million in proceeds recovered from the Conn's, Inc.

bankruptcy estate and a $1.2 million fair value increase on the Norlin EV Limited loan, partially offset by a $(1.8) million decrease in fair value adjustments on the XBP Americas, LLC loan compared to the prior year period.

Interest income - loans

The $1.7 million decrease in interest income related to loans receivable for the three months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by declines across the Exela portfolios of $2.1 million, GA Group portfolios of $0.4 million, and Norlin EV Limited of $0.2 million, partially offset by an increase of $1.0 million due to a loan entered with Enovum NC-1 Venture, LLC during the current year period.

Interest income - securities lending

The $0.5 million decrease in interest income related to securities lending during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by lower average spreads earned on equity securities lending, partially offset by higher average contract values across the portfolio.

Sale of goods

The decrease in sale of goods revenue during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily attributable to a $0.7 million decrease in the Marconi Wireless segment driven by lower product sales from an ongoing decline in active customers, partially offset by a $0.3 million increase in the Consumer Products segment.

Operating expenses

Direct cost of services

The decrease in direct cost of services during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $1.7 million decrease from the Lingo segment due to lower POTS unit volume, partially offset by higher costs associated with the conversion to VoIP services;

• $1.5 million decrease from the Marconi Wireless segment due to fewer active lines and migration of its customer base to a lower-cost third-party network;

• $0.4 million decrease from the Corporate and All Other category was due to a decline at bebe driven by a reduction in store count and lower inventory levels in the current period, and

• $0.2 million decrease from the magicJack segment due to lower network costs from fewer active customers and lower personnel-related costs from reduced headcount.

Cost of goods sold

The decrease in cost of goods sold during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $2.7 million decrease from the Consumer Products segment attributable to higher inventory reserve charges recorded in the prior year period, and a $0.9 million decrease from the Marconi Wireless segment driven by lower product costs resulting from a decrease in the quantity of phones sold.

Selling, general and administrative expenses

Selling, general and administrative expenses during the three months ended June 30, 2026 and 2025 were comprised of the following:

Three Months Ended June 30, 2026 Three Months Ended

June 30, 2025 Change

Amount % Amount % Amount %

Capital Markets segment $ 37,931 28.5 % $ 42,417 29.7 % $ (4,486) (10.6) %

Wealth Management segment 40,406 30.3 % 39,940 28.1 % 466 1.2 %

Lingo segment 12,163 9.1 % 14,023 9.8 % (1,860) (13.3) %

magicJack segment 2,422 1.8 % 2,503 1.8 % (81) (3.2) %

Marconi Wireless segment 1,663 1.2 % 2,288 1.6 % (625) (27.3) %

UOL segment 508 0.4 % 726 0.5 % (218) (30.0) %

Consumer Products segment 14,819 11.1 % 14,621 10.3 % 198 1.4 %

Corporate and All Other 23,465 17.6 % 25,851 18.2 % (2,386) (9.2) %

Total selling, general & administrative expenses $ 133,377 100.0 % $ 142,369 100.0 % $ (8,992) (6.3) %

Capital Markets

The decrease in selling, general and administrative expenses in the Capital Markets segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $2.3 million decrease in other selling, general and administrative expenses driven by a $1.1 million decrease in business license tax accrual recorded in the prior year period, lower investment banking deal expenses of $0.7 million, and lower corporate allocations of $0.6 million;

• $1.1 million decrease in employee compensation and benefits primarily due to a $1.5 million decrease in share-based compensation expense resulting from the vesting of prior year grants, and lower fixed compensation from reduced headcount, partially offset by a $0.9 million increase in commissions driven by higher investment banking activity;

• $0.6 million decrease in professional services primarily due to lower legal costs;

• $0.5 million decrease in depreciation and amortization attributable to certain leasehold improvements and intangible assets being fully depreciated.

Wealth Management

The increase in selling, general and administrative expenses in the Wealth Management segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $3.8 million increase in employee compensation and benefits driven by VRT bonuses, commissions due to the income from carried interest primarily related to investment funds holding positions in SpaceX, and higher allocated costs from affiliates;

partially offset by:

• $2.6 million and $0.4 million decreases in occupancy-related costs and other selling, general and administrative expenses, respectively, primarily driven by the sale of a portion of the Company's wealth management business to Stifel in April 2025;

• $0.3 million decrease in professional services driven by lower legal and other consulting fees.

The decrease in selling, general and administrative expenses in the Lingo segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $0.9 million decrease in employee compensation and benefits primarily due to a reduction in headcount, partially offset by higher allocated personnel costs from affiliates and higher accrued bonuses;

• $0.5 million decrease in other selling, general and administrative expenses primarily due to lower bad debt expense, lower filing and regulatory fees driven by lower sales, and lower business development expenses;

• $0.2 million decrease in occupancy-related costs primarily due to reduced IT software and licensing costs associated with cost reduction initiatives.

Marconi Wireless

The decrease in selling, general and administrative expenses in the Marconi Wireless segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $0.4 million decrease in employee compensation and benefits primarily due to higher personnel cost allocations to affiliates and net headcount reductions;

• $0.2 million decrease in occupancy-related costs primarily due to lower customer care costs reflecting reduced third-party agent needs as a result of fewer active customers and the completion of the network migration in 2025.

The decrease in selling, general and administrative expenses in the UOL segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.2 million decrease in employee compensation and benefits attributable to a reduction in headcount.

Consumer Products

The increase in selling, general and administrative expenses in the Consumer Products segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $0.4 million increase in employee compensation and benefits due to planned management bonus accruals in the current period and the absence of a severance accrual reversal recorded in the prior year period;

• $0.4 million increase in professional services primarily due to the reversal of a legal accrual recorded in the prior year period;

partially offset by:

• $0.3 million decrease in occupancy-related costs due to a decrease in accrued costs associated with office space in the current period;

• $0.3 million decrease in depreciation and amortization primarily due to certain fixed and intangible assets that became fully depreciated or amortized in the prior year, resulting in lower charges in the current period;

• $0.2 million decrease in other selling, general and administrative expenses due to lower marketing and insurance expenses, partially offset by higher bank charges.

Corporate and All Other

The decrease in selling, general and administrative expenses in the Corporate and All Other category during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $2.1 million decrease in employee compensation and benefits primarily due to a reduction in headcount;

• $1.7 million decrease in occupancy-related costs primarily due to a decline at bebe resulting from a reduction in store count;

partially offset by:

• $0.9 million increase in professional services primarily due to share-based compensation issued to the board of directors in the current period, partially offset by lower legal and other consulting fees;

• $0.6 million increase in other selling, general and administrative expenses primarily due to a decrease in intersegment related expenses that eliminate upon consolidation, partially offset by lower transaction costs in the current period.

Restructuring charge

Restructuring charges of $1.9 million were recorded during the three months ended June 30, 2026, compared to $0.3 million during the three months ended June 30, 2025.

The increase was primarily due to organizational realignments consisting of severance and related costs within the Capital Markets segment, compared to workforce reductions primarily within the Corporate and All Other category in the prior year period.

Impairment of tradename

Non-cash impairment charges of $4.0 million were recorded during the three months ended June 30, 2026, compared to $1.5 million during the three months ended June 30, 2025, both related to tradenames in the Consumer Products segment.

Interest expense - Securities lending and loan participations sold

Interest expense related to securities lending and loan participations was $0.9 million during the three months ended June 30, 2026, compared to $2.0 million during the three months ended June 30, 2025.

The decrease was primarily due to lower average spreads in equity securities lending, partially offset by higher average contract values compared to the prior year period.

Other income (expense)

Realized and unrealized gains on investments

Realized and unrealized gains on investments was $12.1 million during the three months ended June 30, 2026 compared to a gain of $10.2 million during the three months ended June 30, 2025, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Three Months Ended

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

Public Equity Securities:

Babcock & Wilcox Enterprises, Inc.

- common stock $ (7,005) $ 3,440

Babcock & Wilcox Enterprises, Inc.

- preferred stock — 289

Double Down Interactive Co., Ltd - common stock 10,633 (1,847)

Applied Digital Corporation - common stock 4,467 5,383

Other public equities 2,794 (803)

Subtotal 10,889 6,462

Private Equity Securities:

Applied Digital Corporation - preferred stock 3,607 —

Other private equities (520) 415

Subtotal 3,087 415

Corporate bonds (1,884) 3,339

Total $ 12,092 $ 10,216

The $1.9 million increase in net realized and unrealized gains for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by unrealized gains on Double Down Interactive Co., Ltd.

common stock of $12.5 million and unrealized gains on Applied Digital Corporation preferred stock of $3.6 million, partially offset by unrealized losses on Babcock & Wilcox Enterprises, Inc.

common stock of $10.4 million and a shift from gains to losses on corporate bonds of $5.2 million.

Change in fair value of financial instruments and other

Change in fair value of financial instruments and other was a gain of $1.5 million during the three months ended June 30, 2026, compared to a gain of $11.9 million during the three months ended June 30, 2025.

The decrease was primarily due to realized and unrealized losses recognized in the current period compared to unrealized gains recognized in the prior year period on embedded derivatives and liability-classified warrants, partially offset by a gain recognized upon the cashless exercise of the Oaktree Warrants during the three months ended June 30, 2026.

Gain on sale and deconsolidation of businesses

There was no gain on sale and deconsolidation of business during the three months ended June 30, 2026, compared to a gain of $5.4 million during the three months ended June 30, 2025 due to the sale of a portion of the Company’s wealth management business to Stifel.

Gain on senior note exchange

There was no gain on senior note exchange during the three months ended June 30, 2026, compared to a gain of $44.5 million during the three months ended June 30, 2025, as the prior year period included gains recognized in connection with troubled debt restructurings involving the exchange of senior notes for New Notes at favorable terms, with no such transactions occurring in the current year period, as more fully discussed in Note 15 - Senior Notes Payable.

(Loss) income from equity investments

Loss from equity investments was $5.5 million during the three months ended June 30, 2026, compared to income of $25.6 million during the three months ended June 30, 2025.

The decrease was primarily due to a loss recorded on the Company's investment in Great American Holdings, LLC (“GA Holdings”) under the HLBV method during the current year period, compared to income from GA Holdings and distributions received from GA Joann Retail Partnership, LLC in excess of the Company's investment balance in the prior year period.

(Loss) gain on extinguishment of debt

Loss on extinguishment of debt during the three months ended June 30, 2026 was $1.3 million compared to a loss of $10.3 million during the three months ended June 30, 2025.

The current year loss was in connection with the Section 3(a)(9) Exchanges of senior notes for shares of the Company's common stock, compared to the prior year loss which was attributable to principal repayments on the Oaktree Credit Facility, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.

Interest expense

Interest expense was $18.0 million during the three months ended June 30, 2026, compared to $24.0 million during the three months ended June 30, 2025.

The decrease in interest expense was primarily attributable to Corporate and All Other, driven by lower senior notes interest expense due to reduced outstanding principal balances resulting from the Section 3(a)(9) Exchanges and redemption of the 5.50% Senior Notes, as well as lower interest expense on the Oaktree Credit Facility due to principal paydowns, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.

Provision for income taxes

Provision for income taxes was $6.0 million during the three months ended June 30, 2026, compared to $3.1 million during the three months ended June 30, 2025.

The effective income tax rate was 21.6% for the three months ended June 30, 2026, compared to 4.1% for the three months ended June 30, 2025.

The current year provision is primarily comprised of estimated federal, state, and foreign taxes based on the expected annual effective tax rate for 2026, including the impact of the utilization of net operating loss carryforwards and disallowed interest expense carried forward from prior years.

The prior year provision primarily reflected uncertain tax positions for state and foreign taxes, including interest and penalties.

Income from discontinued operations, net of income taxes

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.

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

Refer to Note 4 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.

Preferred stock dividends

Preferred stock dividends accrued were $2.0 million for the three months ended June 30, 2026 and 2025.

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.

On April 30, 2026, the sixth quarterly Dividend Period (as defined in the applicable Certificate of Designation) for which dividends on our Series A Preferred Stock and Series B Preferred Stock have not been paid since the suspension occurred, resulting in a “Preferred Dividend Default” under each Certificate of Designation.

See Note 22 – Stockholders’ Equity.

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, 2026 Compared to Six Months Ended June 30, 2025

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Six Months Ended June 30, Change

2026 2025 Amount %

Services and fees $ 325,717 $ 304,611 $ 21,106 6.9 %

Trading gains, net 157,935 11,509 146,426 n/m

Fair value adjustments on loans 10,790 (7,296) 18,086 n/m

Interest income - loans 3,885 7,049 (3,164) (44.9) %

Interest income - securities lending 2,883 2,964 (81) (2.7) %

Sale of goods 89,967 92,528 (2,561) (2.8) %

Total revenues 591,177 411,365 179,812 43.7 %

Operating expenses:

Direct cost of services 61,066 75,916 (14,850) (19.6) %

Cost of goods sold 63,726 71,846 (8,120) (11.3) %

Selling, general and administrative expenses 267,725 309,757 (42,032) (13.6) %

Restructuring charge 1,914 321 1,593 496.3 %

Impairment of tradename 4,000 1,500 2,500 166.7 %

Interest expense - Securities lending and loan participations sold 1,623 2,687 (1,064) (39.6) %

Total operating expenses 400,054 462,027 (61,973) (13.4) %

Operating income (loss) 191,123 (50,662) 241,785 n/m

Other income (expense):

Interest income 697 1,978 (1,281) (64.8) %

Dividend income 802 257 545 212.1 %

Realized and unrealized gains (losses) on investments 117,192 (4,284) 121,476 n/m

Change in fair value of financial instruments and other (2,881) 12,806 (15,687) n/m

Gain on sale and deconsolidation of businesses — 86,213 (86,213) n/m

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

(Loss) income from equity investments (4,133) 25,051 (29,184) n/m

Income (loss) on extinguishment of debt 1,607 (20,693) 22,300 n/m

Interest expense (37,810) (53,916) 16,106 (29.9) %

Income from continuing operations before income taxes 266,597 51,736 214,861 415.3 %

Provision for income taxes (22,841) (11) (22,830) n/m

Income from continuing operations 243,756 51,725 192,031 371.3 %

Income from discontinued operations, net of income taxes — 72,707 (72,707) n/m

Net income 243,756 124,432 119,324 95.9 %

Net income (loss) attributable to noncontrolling interests 9,934 (5,064) 14,998 n/m

Net income attributable to BRC Group Holdings, Inc.

233,822 129,496 104,326 80.6 %

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

Net income available to common shareholders $ 229,792 $ 125,466 $ 104,326 83.2 %

_____________________________________________

n/m - Not applicable or not meaningful.

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

Six Months Ended

June 30, Change

2026 2025 Amount %

Services and fees:

Capital Markets segment $ 81,489 $ 59,511 $ 21,978 36.9 %

Wealth Management segment 90,781 80,087 10,694 13.4 %

Lingo segment 79,578 81,460 (1,882) (2.3) %

magicJack segment 16,754 18,919 (2,165) (11.4) %

Marconi Wireless segment 13,904 16,606 (2,702) (16.3) %

UOL segment 5,702 6,920 (1,218) (17.6) %

Corporate and All Other 37,509 41,108 (3,599) (8.8) %

Subtotal 325,717 304,611 21,106 6.9 %

Trading gains (losses), net:

Capital Markets segment 139,666 3,983 135,683 n/m

Wealth Management segment 19,347 5,812 13,535 232.9 %

Corporate and All Other (1,078) 1,714 (2,792) n/m

Subtotal 157,935 11,509 146,426 n/m

Fair value adjustments on loans:

Capital Markets segment 751 (3,131) 3,882 n/m

Corporate and All Other 10,039 (4,165) 14,204 n/m

Subtotal 10,790 (7,296) 18,086 n/m

Interest income - loans:

Capital Markets segment 1,034 65 969 n/m

Corporate and All Other 2,851 6,984 (4,133) (59.2) %

Subtotal 3,885 7,049 (3,164) (44.9) %

Interest income - securities lending:

Capital Markets segment 2,883 2,964 (81) (2.7) %

Sale of goods:

5 unchanged sentences

Total revenues $ 591,177 $ 411,365 179,812 43.7 %

Services and Fees Revenues

Total decrease in services and fees revenues during the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to the following:

• $(12.0) million decrease in Corporate and All Other non-reportable operating segments driven by decreases of $7.0 million due to the sale of Atlantic Coast Recycling in the prior year quarter, $3.5 million due to the deconsolidation of our investments in Nogin, Inc.

(“Nogin”) and a $0.9 million decline at bebe;

• $(4.6) million decrease in Wealth Management segment driven by a $9.2 million decline in wealth and asset management fees following the sale of a portion of the Company’s wealth management business to Stifel Financial Corp.

(“Stifel”) in April 2025, partially offset by $4.8 million in SpaceX SPV carried interest revenue;

_____________________________________________

n/m - Not applicable or not meaningful.

Services and fees

Total increase in services and fees revenues during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $22.0 million increase in Capital Markets segment, driven by higher M&A and advisory fees of $6.8 million, higher underwriting revenues of $5.7 million, increased private placement revenues of $3.9 million, increased finder fees of $3.9 million, higher secondary commissions of $3.3 million, and increased securities lending locate fees of $2.5 million, partially offset by a $5.0 million decrease in ATM revenues;

• $10.7 million increase in Wealth Management segment driven by $21.2 million in income from carried interest primarily related to investment funds holding positions in SpaceX and other funds carried interest revenue, net of a $6.8 million decrease in advisory fees primarily attributable to the sale of a portion of the Company's wealth management business to Stifel Financial Corp.

in April 2025, a $2.0 million decrease in commissions and fees, and a $1.7 million decrease in tax service fees and other income;

partially offset by:

• $3.6 million decrease in Corporate and All Other non-reportable operating segments primarily driven by decreases of $7.0 million due to the sale of Atlantic Coast Recycling in the prior year period, $3.5 million due to the deconsolidation of our investment in Nogin, $2.4 million due to higher finders fee expense related to increased APLD transactions, $1.9 million due to a decline at bebe driven by a reduction in store count, $1.7 million due to lower upfront and structuring fees resulting from the expiration of the management services agreement with B&W, $1.6 million driven by lower managed services and advisory fees across subsidiaries, and $1.4 million due to fees recognized under a transition services agreement with GA Holdings in the prior year period, partially offset by increases of $14.1 million due to income from carried interest primarily related to investment funds holding positions in SpaceX and $1.9 million due to upfront fees from Exela loans.

• $2.7 million decrease in Marconi Wireless segment, driven by lower service revenues attributable to an ongoing decline in active customers;

• $2.2 million decrease in magicJack segment, driven by fewer active customers driving lower renewal revenues, fewer device sales and first-year service customers, and a decline in ancillary services such as porting, number services, and termination fees;

• $(0.8) million decrease in UOL segment, driven by declines in internet access subscribers in addition to discontinuing telecom resale services;

• $1.9 million decrease in Lingo segment, driven by fewer POTS and broadband subscribers as customers migrated to VoIP services, partially offset by VoIP growth from those same conversions;

partially offset by

• $14.0 million increase in Capital Markets segment, driven by higher M&A and advisory fees of $9.9 million, increased private placement revenues of $3.8 million, higher secondary commissions of $2.2 million, increased finder fees of $1.6 million, and higher underwriting revenues of $1.3 million, partially offset by a $5.2 million decrease in ATM fees.

Trading Gains (Losses), Net

Total increase in net trading gains (losses) during the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to the following:

• $152.6 million increase in Capital Markets segment, driven by gains of $130.0 million in B&W, $3.9 million in Applied Digital Corporation (“APLD”), and $2.4 million in U.S.

Treasuries, compared to a $15.1 million loss in the prior period;

• $9.5 million increase in Wealth Management segment, driven by revenue from the APLD Variable Rate Transactions (“VRT”);

• $1.2 million decrease in UOL segment, driven by declines in internet access subscribers in addition to discontinuing telecom resale services.

Trading gains, net

Total increase in net trading gains (losses) during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $135.7 million increase in Capital Markets segment, driven by gains of $120.8 million with B&W, $11.9 million with APLD, $4.9 million with U.S.

Treasuries, and $1.3 million with certain equity securities in the current year period, compared to $4.0 million in net gains in the prior year period;

• $13.5 million increase in Wealth Management segment, driven primarily by revenue from VRT of $12.5 million and net gains from certain equity securities and bond and structured trading activity, partially offset by decreases in other equity securities and warrant valuations;

partially offset by:

• $(0.8) million decrease in Corporate and All Other non-reportable operating segments driven by overall increase in unrealized losses for certain equity securities in the current year period.

• $2.8 million decrease in Corporate and All Other non-reportable operating segments driven by increases in unrealized losses for certain equity securities in the current year period.

Fair value adjustments on loans

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.

We have a portfolio of loans receivable that are measured at fair value with changes in fair value reported in our results of operations.

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

Fair Value Adjustments on Loans Receivables

At Fair Value Three Months Ended March 31,

Industry or Type of Loan March 31, 2026 December 31, 2025 2026 2025

Fair Value Adjustments on Loans Receivable

At Fair Value Six Months Ended June 30,

Industry or Type of Loan June 30, 2026

December 31, 2025

Related Party Loans Receivable:

Vintage Capital Management, LLC Retail / consumer $ — $ 1,835 $ 20 $ 276

Vintage Capital Management, LLC Retail / consumer n/a $ 1,835 $ 20 $ (589)

Badcock Corporation Consumer receivable portfolio — — — 250

1 unchanged sentence

Consumer receivable portfolio — — — 1,393

Retail / consumer n/a — n/a (4,065)

Retail / consumer n/a — — (4,065)

Other related party loans Services, oil & gas and industrial 1,035 1,000 36 (126)

1 unchanged sentence

XBP Americas, LLC Technology 15,041 21,415 192 (630)

Norlin EV Limited Real estate — 10 22 (227)

Norlin EV Limited Real estate n/a 10 1,223 (484)

Retail / consumer — n/a 8,600 n/a

Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company Internet Services and Infrastructure 19,794 — 161 —

Other loans receivable Various 2,932 2,043 558 (3,045)

3 unchanged sentences

Recovery of proceeds from the loan receivable is contingent upon collecting amounts from the Conn’s bankruptcy estate.

During the three months ended March 31, 2026, the Company recovered $6,670 of proceeds from the Conn’s bankruptcy estate and is reported as a fair value adjustment.

The $14.6 million favorable variance in fair value adjustments related to our loans receivable during the three months ended March 31, 2026, when compared to the same period in the prior year, was primarily driven by unfavorable adjustments of $4.1 million, $2.7 million, and $3.0 million recorded for loans receivable with Conn’s, Inc., XBP Americas, LLC (formerly Exela Technologies, Inc.), and other non-related party loans receivable, respectively, in the prior year period with no adjustments of comparable magnitude recorded in the current year period, and a $6.7 million favorable adjustment recorded in the current year period related to the recovery of proceeds from the Conn’s, Inc.

bankruptcy estate.

These were partially offset by a $1.4 million favorable adjustment related to Freedom VCM Receivables, Inc.

recorded in the prior year quarter with no fair value adjustments of comparable magnitude recorded in the current year period.

During the six months ended June 30, 2026, the Company recovered $8,600 of proceeds from the Conn’s bankruptcy estate, and it is reported as a fair value adjustment.

The $18.1 million favorable variance in fair value adjustments related to our loans receivable during the six months ended June 30, 2026, when compared to the same period in the prior year, was primarily driven by $8.6 million in proceeds recovered from the Conn's, Inc.

bankruptcy estate and a $1.7 million favorable swing in fair value adjustments on the Norlin EV Limited loan, compared to net unfavorable fair value adjustments of $7.3 million across the loan portfolio in the prior year period.

Interest income - loans

The $(1.5) million decrease in interest income related to loans receivable for the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to declines across the XBP Americas, LLC and GA Group portfolios, which decreased by $0.9 million and $0.5 million, respectively.

Interest Income - Securities Lending

The $0.4 million increase in interest income related to securities lending was driven by a higher volume of securities on loan, partially offset by lower average spreads earned on those loans compared to the prior period.

The $3.2 million decrease in interest income related to loans receivable for the six months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by declines across the Exela portfolios of $2.9 million, GA Group portfolios of $0.9 million, and Norlin EV Limited of $0.4 million, partially offset by an increase of $1.0 million due to a loan entered with Enovum NC-1 Venture, LLC during the current year period.

Sale of goods

The decrease in sale of goods revenue during the three months ended March 31, 2026, compared to the same period in the prior year, was primarily due to the following:

• $(3.6) million decrease in the Corporate and All Other non-reportable operating segments driven primarily by a $3.5 million decrease due to the deconsolidation of Nogin in the prior year quarter;

The decrease in sale of goods revenue during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $3.7 million decrease in the Corporate and All Other non-reportable operating segments driven primarily by a $3.5 million decrease due to the deconsolidation of Nogin in the prior year period;

• $1.1 million decrease in the Marconi Wireless segment, driven by lower product sales attributable to an ongoing decline in active customers;

3 unchanged sentences

Direct cost of services

The decrease in direct cost of services during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $6.9 million decrease from the Corporate and All Other category primarily driven by decreases of $4.9 million due to the sale of Atlantic Coast Recycling and $1.6 million due to the deconsolidation of Nogin in the prior year quarter;

The decrease in direct cost of services during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $7.2 million decrease from the Corporate and All Other category primarily driven by decreases of $4.9 million due to the sale of Atlantic Coast Recycling and $1.6 million due to the deconsolidation of Nogin in the prior year period, with the remainder attributable to a decline at bebe by a reduction in store count and lower inventory levels;

• $3.6 million decrease from the Marconi Wireless segment due to fewer active lines and migration of its customer base to a lower-cost third-party network;

• $3.2 million decrease from the Lingo segment due to lower POTS unit volume, consistent with the decline in POTS revenue, partially offset by higher costs associated with the conversion to VoIP services;

• $0.3 million decrease from the magicJack segment due to lower carrier charges, reduced salary costs from restructuring, and lower professional services and depreciation;

• $0.3 million decrease from the UOL segment due to lower telecom costs due to declines in internet access subscribers in addition to discontinuing telecom resale services.

• $0.5 million decrease from the magicJack segment due to lower network costs driven by fewer active customers and lower personnel costs due to reduced headcount;

• $0.4 million decrease from the UOL segment due to lower telecom costs from declines in internet access subscribers and the discontinuation of telecom resale services.

Cost of goods sold

The decrease in cost of goods sold during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $3.2 million decrease from the Corporate and All Other category primarily driven by a $3.1 million decrease from the deconsolidation of Nogin in the prior year quarter;

• $0.7 million decrease from the Marconi Wireless segment driven by lower product costs resulting from a decrease in the quantity of phones sold;

• $0.5 million decrease from the Consumer Products segment due to improved product margins driven by price increases and a favorable shift in product mix toward higher margin products, partially offset by higher inventory reserve charges recorded in the prior year quarter;

• $0.1 million decrease from the magicJack segment due to lower hardware-related costs resulting from a decline in product sales, partially offset by an increase in shipping and freight costs.

The decrease in cost of goods sold during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $3.3 million decrease from the Corporate and All Other category primarily due to a $3.1 million decrease from the deconsolidation of Nogin in the prior year period, with the remainder attributable to a decline at bebe driven by a reduction in store count and lower inventory levels;

• $3.2 million decrease from the Consumer Products segment due to higher inventory reserve charges recorded in the prior year period;

• $1.6 million decrease from the Marconi Wireless segment due to lower product costs resulting from a decrease in the quantity of phones sold.

Selling, general and administrative expenses

Selling, general and administrative expenses during the three months ended March 31, 2026 and 2025 were comprised of the following:

Three Months Ended March 31, 2026 Three Months Ended

March 31, 2025 Change

Selling, general and administrative expenses during the six months ended June 30, 2026 and 2025 were comprised of the following:

Six Months Ended

June 30, 2026 Six Months Ended

June 30, 2025 Change

Amount % Amount % Amount %

9 unchanged sentences

Capital Markets

The decrease in selling, general and administrative expenses in the Capital Markets segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $6.8 million decrease in other selling, general and administrative expenses primarily due to lower corporate allocations, the absence of non-recurring charges incurred in the prior period, lower bad debt expense reflecting a reserve established in the prior period that was not repeated, and higher transaction costs in the prior period related to a carve-out that did not recur;

• $0.4 million decrease in depreciation and amortization due to the expiration of an office lease during the current period, resulting in no further amortization for that location;

• $0.4 million decrease in occupancy-related costs primarily due to the expiration of two office leases during the period, generating combined savings, partially offset by moving costs incurred in connection with office relocations during the current period;

The decrease in selling, general and administrative expenses in the Capital Markets segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $9.2 million decrease in other selling, general and administrative expenses due to lower transaction costs and other nonrecurring expenses recorded in the prior year period, lower corporate allocations, lower investment banking deal expenses, lower bad debt expense, decrease in business license tax accrual recorded in the prior year period, and lower business development expenses;

• $0.9 million decrease in depreciation and amortization due to the expiration of an office lease, resulting in no further amortization of leasehold improvements for that location, and certain intangible assets becoming fully amortized during the current period;

• $0.6 million decrease in professional services primarily due to lower litigation-related expenses;

• $0.4 million decrease in occupancy-related costs primarily due to lower rent expense resulting from an office relocation during the current period;

partially offset by:

• $4.5 million increase in employee compensation and benefits driven by higher primary commissions resulting from increased investment banking revenues during the period.

• $3.4 million increase in employee compensation and benefits due to higher primary commissions resulting from increased investment banking and VRT trading revenues during the period, partially offset by a decrease in other bonuses driven by additional nonrecurring profit sharing recorded in the prior year period.

Wealth Management

The decrease in selling, general and administrative expenses in the Wealth Management segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the sale of a portion of the Company’s wealth management business to Stifel in April 2025 and the departure of advisors and support staff.

The decrease was driven by the following:

• $4.8 million decrease in other selling, general and administrative expenses;

• $2.5 million decrease in employee compensation and benefits, partially offset by bonus accruals related to APLD VRT and unrealized carried interest;

• $1.3 million decrease in occupancy-related costs;

• $0.6 million decrease in depreciation and amortization;

• $0.2 million decrease in professional services primarily due to fewer legal cases and related consulting fees.

The decrease in selling, general and administrative expenses in the Lingo segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $0.2 million decrease in employee compensation and benefits primarily due to lower salaries from a reduction in force, partially offset by higher allocated personnel costs from affiliates;

The decrease in selling, general and administrative expenses in the Wealth Management segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $5.2 million decrease in other selling, general and administrative expenses, $3.9 million decrease in occupancy-related costs, and $0.6 million decrease in depreciation and amortization, each primarily resulting from the sale of a portion of the Company’s wealth management business to Stifel in April 2025;

• $0.5 million decrease in professional services primarily due to fewer legal cases and lower consulting fees;

partially offset by:

• $1.3 million increase in employee compensation and benefits due to VRT bonuses, commissions due to the income from carried interest primarily related to investment funds holding positions in SpaceX, and higher cost allocations from affiliates.

The decrease in selling, general and administrative expenses in the Lingo segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $1.1 million decrease in employee compensation and benefits primarily due to a reduction in headcount, partially offset by higher allocated personnel costs from affiliates and higher bonus accruals and severance expenses;

• $0.5 million decrease in other selling, general and administrative expenses due to lower sales resulting in decreased filing and regulatory fees, business development expenses, and outsourced services, partially offset by higher allocated costs from affiliates and increased bad debt expense;

• $0.4 million decrease in occupancy-related costs primarily due to lower IT software and licensing costs associated with cost reduction initiatives, partially offset by higher postage and facility-related charges;

• $0.3 million decrease in professional services primarily due to lower audit-related costs and legal fees;

• $0.2 million decrease in occupancy-related costs primarily due to reduced software and computer-related expenses following the reduction in force;

• $0.2 million decrease in depreciation and amortization primarily due to certain software assets becoming fully amortized in 2025.

The decrease in selling, general and administrative expenses in the magicJack segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $0.2 million decrease in professional services primarily due to lower outside consulting costs from reduced allocations and decreased legal services activity;

• $0.1 million decrease in other selling, general and administrative expenses primarily due to reduced headcount and outside consulting costs, partially offset by higher corporate cost allocations.

The decrease in selling, general and administrative expenses in the magicJack segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.2 million decrease in professional services attributable to the termination of outside consulting arrangements in the prior year.

Marconi Wireless

The decrease in selling, general and administrative expenses in the Marconi Wireless segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $0.4 million decrease in employee compensation and benefits primarily due to headcount reductions and severances paid in 2025 due to terminations;

• $0.1 million decrease in occupancy-related costs primarily due to a reduction in chat services costs, reflecting lower third-party headcount following the Company’s completion of its platform migration in 2025.

The decrease in selling, general and administrative expenses in the UOL segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $0.1 million decrease in employee compensation and benefits primarily due to reduction in headcount.

The decrease in selling, general and administrative expenses in the Marconi Wireless segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $0.8 million decrease in employee compensation and benefits primarily due to higher personnel cost allocations to affiliates and net headcount reductions;

• $0.3 million decrease in occupancy-related costs primarily due to lower customer care costs reflecting reduced third-party agent needs as a result of fewer active customers and the completion of the network migration in 2025.

The decrease in selling, general and administrative expenses in the UOL segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.3 million decrease in employee compensation and benefits attributable to a reduction in headcount.

Consumer Products

The decrease in selling, general and administrative expenses in the Consumer Products segment during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $0.6 million decrease in employee compensation and benefits primarily due to lower headcount as the Company continues to implement workforce reductions, which are expected to continue over the near term;

• $0.3 million decrease in depreciation and amortization primarily due to certain fixed assets becoming fully depreciated during the prior period;

mostly offset by

• $0.5 million increase in professional services primarily due to legal fees incurred in connection with the Targus/FGI Credit Agreement and higher audit fees during the current period;

• $0.2 million increase in other selling, general and administrative expenses primarily due to higher personnel costs within the Global Sourcing Group;

• $0.1 million increase in occupancy-related costs primarily due to higher IT costs incurred in connection with the Company’s ERP system implementation during the current period.

The increase in selling, general and administrative expenses in the Consumer Products segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $0.9 million increase in professional services primarily due to legal and audit fees incurred in connection with a revolving credit agreement with FGI Worldwide LLC (the “Targus/FGI Credit Agreement”) and the reversal of certain accrued legal costs in the prior year period that did not recur, partially offset by a decrease in loan fees associated with the repayment of the prior credit facility;

partially offset by:

• $0.5 million decrease in depreciation and amortization primarily due to certain fixed and intangible assets that became fully depreciated or amortized in the prior year, resulting in lower charges in the current period;

• $0.2 million decrease in occupancy-related costs primarily due to a decrease in accrued costs associated with office space in the current period;

• $0.2 million decrease in employee compensation and benefits primarily due to a reversal of accrued severance costs recorded in the prior year period, partially offset by higher bonus accruals in the current period.

Corporate and All Other

The decrease in selling, general and administrative expenses in the Corporate and All Other category during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to the following:

• $8.4 million decrease due to the deconsolidation of Nogin in the prior year quarter;

The decrease in selling, general and administrative expenses in the Corporate and All Other category during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:

• $8.4 million decrease due to the deconsolidation of Nogin in the prior year period;

• $4.8 million decrease due to the sale of Atlantic Coast Recycling;

• $3.9 million decrease in other selling, general and administrative expenses driven primarily by an impairment of a loan receivable, costs associated with the merger of B.

Riley Securities Holdings, Inc .

with a shell corporation, and losses on the extinguishment of debt recognized in the prior year quarter;

• $1.6 million decrease in employee compensation and benefits primarily driven by decreases in employee compensation and occupancy-related costs at bebe due to a reduction in store count, and decreases at Corporate due to lower share-based compensation expense resulting from the vesting of previously granted shares with no new grants issued, and a reduction in headcount;

partially offset by

• $0.7 million increase in professional services driven by higher spend on audit and accounting services.

• $5.1 million decrease in other selling, general and administrative expenses primarily due to lower transaction costs in the current period and an increase in intersegment related expenses that eliminate upon consolidation;

• $3.7 million decrease in employee compensation and benefits primarily due to a reduction in headcount, lower share-based compensation expense resulting from the vesting of previously granted awards with no replacement grants, and lower bebe compensation costs due to a reduction in store count.

Restructuring charge

Restructuring charges were $1.9 million during the six months ended June 30, 2026, compared to $0.3 million during the six months ended June 30, 2025.

Impairment of tradename

Non-cash impairment charges of $4.0 million were recorded during the six months ended June 30, 2026, compared to $1.5 million during the six months ended June 30, 2025, both related to tradenames in the Consumer Products segment.

Interest expense - Securities lending and loan participations sold

Interest expense related to securities lending and loan participations was $1.6 million during the six months ended June 30, 2026, compared to $2.7 million during the six months ended June 30, 2025.

The decrease was primarily due to lower average spreads in equity securities lending, partially offset by higher average contract values compared to the prior year period.

Other income (expense)

Other income included interest income of $0.4 million and $1.5 million during the three months ended March 31, 2026 and 2025, respectively.

Dividend income was $0.7 million during the three months ended March 31, 2026 compared to $0.1 million during the three months ended March 31, 2025.

Realized and unrealized (losses) gains on investments was a gain of $105.1 million during the three months ended March 31, 2026 compared to a loss of $14.5 million during the three months ended March 31, 2025, which is comprised of the following:

Realized and unrealized gains (losses) on investments

Realized and unrealized (losses) gains on investments was a gain of $117.2 million during the six months ended June 30, 2026 compared to a loss of $4.3 million during the six months ended June 30, 2025, which is comprised of the following:

Realized and Unrealized Gains (Losses)

Three Months Ended March 31,

Six Months Ended

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

9 unchanged sentences

Private Equity Securities:

Applied Digital Corporation - preferred stock 2,205 —

Other private equities (1,110) (1,205)

2 unchanged sentences

Total $ 117,192 $ (4,284)

The favorable variance of $119.6 million was primarily due to a $110.6 million change in realized and unrealized gains on B&W common stock, driven by an increase in the company’s public share price during the period.

Other income (expense) also includes changes in the fair value of financial and other instruments reflecting a loss of $4.4 million during the three months ended March 31, 2026 primarily related to unrealized losses on liability-classified warrants.

Gain on sale and deconsolidation of businesses of $80.8 million during the three months ended March 31, 2025 was primarily related to $52.4 million net gain on the sale of Atlantic Coast Recycling, as more fully discussed in Note 4 - Discontinued Operations and Assets Held For Sale, and $28.4 million related to the deconsolidation of Nogin.

Gain on senior note exchange was $10.5 million during the three months ended March 31, 2025 related to private transactions with institutional investors whereby senior notes were exchanged for new notes bearing interest at 8.00% due in 2028, as more fully discussed in Note 15 - Senior Notes Payable.

Income from equity investments was $1.3 million during the three months ended March 31, 2026, compared to a loss of $(0.6) million during the three months ended March 31, 2025.

Gain on extinguishment of debt during the three months ended March 31, 2026 was $2.9 million due to Section 3(a)(9) exchanges, compared to a loss of $10.4 million during the three months ended March 31, 2025 due to amendments to credit agreements with Oaktree, Nomura, and BRPI Acquisition Co LLC (“BRPAC”), as more fully discussed in Note 14 - Term Loans and Revolving Credit Facility.

Interest expense was $19.8 million during the three months ended March 31, 2026, compared to $30.0 million during the three months ended March 31, 2025.

The decreases in interest expense primarily consisted of $10.0 million from Corporate and All Other primarily due to lower debt balances.

(Provision for) benefit from income taxes.

(Provision for) benefit from income taxes was $(16.9) million during the three months ended March 31, 2026, compared to $3.0 million during the three months ended March 31, 2025.

The effective income tax rate was 7.1% for the three months ended March 31, 2026, as compared to 13.2% for the three months ended March 31, 2025.

The $121.5 million increase in net realized and unrealized gains for the six months ended June 30, 2026 compared to the same period in 2025 was primarily driven by unrealized gains on Babcock & Wilcox Enterprises, Inc.

common stock of $100.2 million, unrealized gains on Double Down Interactive Co., Ltd.

common stock of $13.9 million, unrealized gains on other public equity securities of $10.0 million, and unrealized gains on Applied Digital Corporation common stock of $2.3 million, partially offset by a shift from gains to losses on corporate bonds of $7.4 million.

Change in fair value of financial instruments and other

Change in fair value of financial instruments and other was a loss of $2.9 million during the six months ended June 30, 2026, compared to a gain of $12.8 million during the six months ended June 30, 2025.

The decrease was primarily due to realized and unrealized losses on embedded derivatives and liability-classified warrants in the current year period compared unrealized gains recognized in the prior year period, partially offset by a gain recognized upon the cashless exercise of the Oaktree Warrants during the six months ended June 30, 2026.

Gain on sale and deconsolidation of businesses

Gain on sale and deconsolidation of businesses of $86.2 million during the six months ended June 30, 2025 was primarily related to $52.4 million net gain on the sale of Atlantic Coast Recycling, $28.4 million related to the deconsolidation of Nogin, and $5.4 million due to the sale of a portion of the Company’s wealth management business to Stifel, as more fully discussed in Note 4 - Discontinued Operations and Assets Held For Sale.

Gain on senior note exchange

There was no gain on senior note exchange during the six months ended June 30, 2026, compared to a gain of $55.0 million during the six months ended June 30, 2025, as the prior year period included gains recognized in connection with troubled debt restructurings involving the exchange of senior notes for New Notes at favorable terms, with no such transactions occurring in the current year period, as more fully discussed in Note 15 - Senior Notes Payable.

(Loss) income from equity investments

Loss from equity investments was $4.1 million during the six months ended June 30, 2026, compared to income of $25.1 million during the six months ended June 30, 2025.

The decrease was primarily due to a loss recorded on the

Company's investment in GA Holdings under the HLBV method and lower distributions received from GA Joann Retail Partnership, LLC in excess of the Company's investment balance during the current year period compared to the prior year period.

(Loss) gain on extinguishment of debt

Gain on extinguishment of debt was $1.6 million during the six months ended June 30, 2026, compared to a loss of $20.7 million during the six months ended June 30, 2025.

The current year gain was in connection with the Section 3(a)(9) Exchanges of senior notes for shares of the Company's common stock, compared to the prior year loss which was attributable to principal repayments and amendments to the Oaktree, Nomura, and BRPAC credit facilities, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.

Interest expense

Interest expense was $37.8 million during the six months ended June 30, 2026, compared to $53.9 million during the six months ended June 30, 2025.

The decrease in interest expense was primarily attributable to Corporate and All Other, driven by lower senior notes interest expense due to reduced outstanding principal balances resulting from the Section 3(a)(9) Exchanges and redemption of the 5.50% Senior Notes, as well as lower interest expense on the Oaktree Credit Facility due to principal paydowns and the termination of the Nomura Credit Agreement in February 2025, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.

Provision for income taxes

Provision for income taxes was $22.8 million during the six months ended June 30, 2026, compared to less than $0.1 million during the six months ended June 30, 2025.

The effective income tax rate was 8.6% for the six months ended June 30, 2026, compared to less than 1.0% for the six months ended June 30, 2025.

The increase was primarily due to higher pre-tax income in the current year period, including the impact of the utilization of net operating loss carryforwards and disallowed interest expense carried forward from prior years, compared to the prior year period which benefited from the utilization of capital loss carryforwards to offset gains on the sale and deconsolidation of businesses.

Income from discontinued operations, net of income taxes

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 March 31, 2025.

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

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.

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

Refer to Note 4 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests was $9.9 million during the six months ended June 30, 2026, compared to a net loss of $5.1 million during the six months ended June 30, 2025.

The increase was primarily due to higher net income attributable to the noncontrolling interest in B.

Riley Securities Holdings, Inc.

during the current year period compared to the prior year period.

Preferred stock dividends

Preferred stock dividends accrued were $2.0 million for the three months ended March 31, 2026 and 2025.

Preferred stock dividends accrued were $4.0 million for the six months ended June 30, 2026 and 2025.

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.

See Note 27 – Subsequent Events.

See Note 22 – Stockholders’ Equity.

Liquidity and Capital Resources

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

The Company operates multiple business segments that provide sources of cash flow and operating income, which include a mix of businesses with recurring revenue models and transactional businesses with uneven cashflows.

With our primary business in capital markets and investment banking, we have expertise in accessing public and private capital markets and in transacting investments and operating companies.

We use our expertise to buy and sell assets and investments on our balance sheet and to access private and public capital, which are described in the 2026 activity summarized below.

During the three months ended March 31, 2026, the Company’s sources and uses of cash from investing, financing and operations included the following.

During the six months ended June 30, 2026, the Company’s sources and uses of cash from investing, financing and operations included the following.

The Company fully redeemed the $96.0 million of outstanding 5.50% Senior Notes due 2026 on the day prior to their maturity date.

During the three months ended March 31, 2026, the Company completed a series of Section 3(a)(9) Exchanges with the Investor whereby the Company exchanged an aggregate principal amount of $36.1 million of senior notes which included (i) $11.0 million of the 5.50% Senior Notes due March 31, 2026, (ii) $11.4 million of the 6.50% Senior Notes due September 30, 2026, (iii) $2.7 million of the 5.00% Senior Notes due December 31, 2026, (iv) $5.6 million of the 6.00% Senior Notes due January 31, 2028, and (v) $5.4 million of the 5.25% Senior Notes due August 31, 2028 for an aggregate of 4,553,866 shares of the Company’s common stock.

The Investor owns more than five percent of the Company’s common stock.

During the six months ended June 30, 2026, the Company completed a series of Section 3(a)(9) Exchanges with the Investor whereby the Company exchanged an aggregate principal amount of approximately $69.1 million of senior notes which included (i) $11.0 million of the 5.50% Senior Notes which were due March 31, 2026, (ii) $36.1 million of the 6.50% Senior Notes due September 30, 2026, (iii) $8.9 million of the 5.00% Senior Notes due December 31, 2026, (iv) $6.4 million of the 6.00% Senior Notes due January 31, 2028, and (v) $6.6 million of the 5.25% Senior Notes due August 31, 2028 for an aggregate of 8,358,495 shares of the Company’s common stock.

As disclosed in the Investor’s 13G filed on April 22, 2026, the Investor owns more than five percent of the Company’s common stock.

Additionally, from our securities and investments owned we had net proceeds of approximately $25.3 million, which excludes certain trading activity related to broker dealer operations and approximately $0.1 million in net proceeds from loans receivable.

2 unchanged sentences

The Company also has approximately $10.3 million of obligations due under operating leases, along with operational expenditures and investment opportunities in the ordinary course of business.

For additional information regarding our debt obligations and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facility and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements.

The Company expects capital expenditures to be less than $6.3 million for the next 12 months.

For additional information regarding our debt obligations and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements.

The Company expects capital expenditures to be approximately $6.3 million for the next 12 months.

To fund the short-term obligations due in the next 12 months, management plans to use a combination of existing cash on hand, cash generated from continuing operations, proceeds from investment and assets sales, and public and private capital market options.

As of March 31, 2026, the Company had $175.8 million of unrestricted cash and cash equivalents, $2.2 million of restricted cash, $639.7 million of securities and other investments owned, and $24.9 million of loans receivable, at fair value.

As of June 30, 2026, the Company had $154.1 million of unrestricted cash and cash equivalents, $1.5 million of restricted cash, $723.7 million of securities and other investments owned, and $38.8 million of loans receivable, at fair value.

Additionally, the Company will evaluate external sources of liquidity including public and private debt refinancing, bond swaps, buybacks or exchanges, and equity capital raises.

1 unchanged sentence

We believe these liquidity sources provide sufficient cash resources to meet our debt obligation and operating cash flow requirements in the next 12 months.

Our long-term debt obligations beyond 12 months include approximately $569.9 million on Senior Notes, $268.0 million Senior Secured Second Lien Notes due 2028 and $62.5 million in Oaktree term loans maturing February 2028.

Our long-term debt obligations beyond 12 months include approximately $565.1 million on Senior Notes, $258.9 million Senior Secured Second Lien Notes due 2028 and $62.5 million in Oaktree term loans.

Additionally, the Company’s term loan through Banc of California has $9.0 million annually in amortization payments due through maturity in January 2030 with approximately $21.8 million of obligations due under operating leases.

The Company has $10.7 million outstanding through the revolving credit facility through FGI as of March 31, 2026, with a final maturity date of August 20, 2028.

The Company expects capital expenditures to be less than $6.3 million annually.

As of June 30, 2026, the Company has $31.3 million outstanding through revolving credit facilities under the Targus/FGI Credit Agreement, which has a maturity date of August 20, 2028 and BRPAC Credit Agreement, which has a maturity date of January 6, 2030.

The Company expects capital expenditures to be approximately $6.3 million annually.

The Company will fund long-term obligations beyond 12 months using the same tactics described in the short-term liquidity.

2 unchanged sentences

As long-term capital planning is a continual process, the Company may also choose to address certain long-term capital and obligations over the next 12 months.

The Company’s debt structure as of March 31, 2026 included borrowings of $1.3 billion primarily comprised of $1.2 billion of Senior Notes and Senior Secured Second Lien Notes with varying maturity dates from September 30, 2026 through August 31, 2028, with fixed interest rates ranging from 5.00% to 8.00%.

The Company’s debt structure as of June 30, 2026 included borrowings of $1.3 billion primarily comprised of $1.1 billion of Senior Notes and Senior Secured Second Lien Notes with varying maturity dates from September 30, 2026 through August 31, 2028, with fixed interest rates ranging from 5.00% to 8.00%.

Additionally, we have $115.8 million in outstanding term loans borrowed pursuant to the Oaktree Capital Management, L.P.

and BRPI Acquisition Co LLC (“BRPAC”) credit agreements, and $10.7 million of revolving credit facility under the Targus credit facility, which are all subject to variable rates.

and BRPAC credit agreements, and $31.3 million outstanding under revolving credit facilities under the Targus/FGI and BRPAC credit agreements, which are all subject to variable rates.

The Company is compliant with its debt obligation requirements and maintains processes to monitor ongoing compliance.

For additional information regarding our debt obligations, covenant compliance, and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facility and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements.

For additional information regarding our debt obligations, covenant compliance, and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements.

The Company believes it has sufficient excess liquidity to meet our short-term obligations within the next 12 months and will pursue capital market options to reduce long-term debt, extend maturities, or remix our capital structure when advantageous.

1 unchanged sentence

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

During the three months ended March 31, 2026, we did not pay any cash dividends on our common stock.

During the three months ended June 30, 2026, we did not pay any cash dividends on our common stock.

In August 2024, we announced the suspension of our common stock dividend as we prioritize reducing our debt.

2 unchanged sentences

Dividends are payable quarterly in arrears.

As of March 31, 2026, dividends in arrears in respect of the Depositary Shares were $6.9 million.

As of June 30, 2026, dividends in arrears in respect of the Depositary Shares were $7.3 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.

As of March 31, 2026, dividends in arrears in respect of the Depositary Shares were $4.5 million.

As of June 30, 2026, dividends in arrears in respect of the Depositary Shares were $4.8 million.

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

2 unchanged sentences

As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation.

See Note 27 – Subsequent Events.

See Note 22 – Stockholders’ Equity.

Our principal sources of liquidity to finance our business are our existing cash on hand, cash flows generated from operating activities, funds available under revolving credit facilities and special purpose financing arrangements.

Cash Flow Summary

Three Months Ended

Six Months Ended

(Dollars in thousands)

4 unchanged sentences

Effect of foreign currency on cash (2,188) 546

Net decrease in cash, cash equivalents and restricted cash

$ (51,255) $ (113,629)

The increase of $37.9 million in net cash provided by operating activities in the first quarter of 2026 was primarily due to the following:

• An increase of $288.8 million in net income, net of non-cash items, partially offset by a $242.0 million decrease in cash flows from securities and other investments owned, primarily driven by increased investment activity in equity securities, with higher share prices also contributing to the period-over-period change.

• The increase in net income, net of non-cash items was also partially offset by $8.9 million of net working capital outflows, primarily driven by an increase in accounts receivable primarily due to an increase in investment banking receivables and an increase in securities borrowing activity, partially offset by cash inflows from securities sold, not yet purchased, reflecting net increases in short positions.

The decrease of $50.8 million in net cash provided by investing activities in the first quarter of 2026 was primarily due to the following:

• Proceeds of $68.9 million received from the sale of the Atlantic Coast Recycling business in the prior-year period with no comparable activity in the current period and a decrease in repayments of loans receivable of $18.3 million, partially offset by a decrease in purchases of loans receivable of $41.4 million.

The cash flows from loans receivable were driven by the repayment of certain loans outstanding in the prior-year period that did not recur, offset by the addition of the XBP Americas, LLC facility and recovery of proceeds from the Conn’s, Inc.

Net (decrease) increase in cash, cash equivalents and restricted cash $ (73,635) $ 11,967

The change of $45.3 million in cash flows from operating activities during the six months ended June 30, 2026, resulting in net cash provided by operating activities compared to net cash used in operating activities during the same period in the prior year, was primarily due to the following:

• An increase of $319.4 million in net income, net of non-cash items, partially offset by a $317.7 million decrease in cash flows from securities and other investments owned, primarily driven by increased investment activity in equity securities, with higher period-end valuations also contributing to the period-over-period change;

• An increase in cash provided by other working capital changes of $43.6 million, primarily driven by a decrease in amounts due from clearing brokers reflecting changes in trading position and settlement balances.

The change of $290.0 million in cash flows from investing activities during the six months ended June 30, 2026, resulting in net cash used in investing activities compared to net cash provided by investing activities during the same period in the prior year, was primarily due to the following:

• Proceeds of approximately $209.0 million received from the sale of businesses in the prior-year period with no comparable activity in the current period, including $114.0 million received from the sale of the GlassRatner and Farber business, $68.9 million received from the sale of the Atlantic Coast Recycling business, and $26.0 million received from the sale of the Wealth Management business;

• A decrease in loans receivable activity of $48.9 million, reflecting lower loan purchases and repayments in the current period and the absence of loan sales that occurred in the prior-year period.

The decrease was primarily driven by the repayment of certain loans outstanding in the prior-year period that did not recur, with current period activity consisting of additions of the XBP Americas, LLC facility and Enovum NC-1 Venture, LLC loan, and recovery of proceeds from the Conn’s, Inc.

bankruptcy estate.

Refer to Note 9 - Loans Receivable, at Fair Value in the accompanying unaudited condensed consolidated financial statements for further details.

The decrease of $75.7 million in net cash used in financing activities in the first quarter of 2026 was primarily due to the following:

• $211.2 million net decrease in debt proceeds and a $288.8 million net decrease in debt-related payments, primarily due to the absence of term loan issuances and related repayments that occurred in the prior-year period and did not recur in the current period, with lower cash paid for the redemption of senior notes also contributing to the decrease in payments.

• A $33.7 million decrease in distributions received from the Joann Retail equity investment.

The decrease of $161.9 million in net cash used in financing activities during the six months ended June 30, 2026 was primarily due to the following:

• A $174.7 million net decrease in debt proceeds and $336.2 million net decrease in debt-related payments, primarily due to the absence of term loan issuances and related repayments from the prior-year period, an increase in revolving credit facility borrowings and related repayments, and lower cash paid for the redemption of senior notes.

Recent Accounting Standards

3 unchanged sentences

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