Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “seek,” “likely,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. Except as required by law, we are under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report to conform such statements to actual results or to changes in our expectations.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part II of this Quarterly Report under the caption “Risk Factors.”
Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: volatility in our revenues and results of operations; changing conditions in the financial markets; 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; material weaknesses in internal control over financial reporting; our ability to generate sufficient revenues to achieve and maintain profitability; failure to comply with the terms of our credit agreements or senior notes; the level of our indebtedness; our ability to meet future capital requirements; our exposure to credit risk; the short term nature of our engagements; failure to successfully compete in any of our businesses; the illiquidity of, and additional potential losses from, our proprietary investments; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; loss of key personnel; our ability to borrow under our credit facilities; our dependence on communications, information and other systems and third parties; the potential loss of financial institution clients; the diversion of management time on divestiture-related issues; 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; changing economic and market conditions, including inflation and any actions by the Federal Reserve to address inflation, and the possibility of recession or an economic downturn; the effects of tariffs and other governmental initiatives, and related impacts including supply chain disruptions, labor shortages and increased labor costs; and the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia’s invasion of Ukraine and conflicts in the Middle East. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “BRCGH,” “BRC,” “BRC Group Holdings,” “we,” “us” or “our” refer to the combined business of BRC Group Holdings, Inc. and all of its subsidiaries.
Overview
Description of the Company
BRC Group Holdings, Inc. (Nasdaq: RILY) (the “Company” or “BRCGH”), which changed its name from B. Riley Financial, Inc. effective January 1, 2026, is a diversified holding company offering a platform of businesses, including financial services (with complementary banking and wealth management businesses), telecom, retail, and investments in equity, debt and venture capital. We refer to BRCGH as having a “platform” because of the unique composition of our financial services businesses and diversification of its operations. Our core financial services platform provides small cap and middle market companies customized end-to-end solutions at every stage of the enterprise life cycle. Our complementary banking business offers comprehensive services in capital markets, sales, trading, research, merchant banking, M&A, and restructuring. Our complementary wealth management business offers wealth management and financial planning services including brokerage, investment management, insurance, and tax preparation. Our telecom
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businesses provide consumer and business services including traditional, mobile and cloud phone, internet and data, security, and email. Our consumer products and retail companies provide mobile computing accessories and home furnishings. BRCGH, through its investment business, deploys its capital inside and outside its core financial services business to generate shareholder value through opportunistic investments.
The Company opportunistically invests in and acquires companies or assets with attractive risk-adjusted return, with a focus on making operational improvements within these companies in an effort to maximize free cash flow.
We are headquartered in Los Angeles, California and maintain offices throughout the U.S., including in New York, New Jersey, Chicago, Metro District of Columbia, Boston, Dallas, Memphis, Miami, San Francisco, Boca Raton, and Palm Beach Gardens, as well as an office located in India.
Our Business Segments
We maintain a diverse composition of businesses that operate in seven reportable business segments: Capital Markets, Wealth Management, Lingo, magicJack, Marconi Wireless, UOL, and Consumer Products. The descriptions below illustrate the businesses that comprise our segments.
Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various businesses. However, across most businesses, management primarily assesses each business’s financial performance based upon each business’s revenues and operating profits generated excluding non-cash charges and the impact of gains and losses related to securities and other investments held. Management believes that gains and losses on individual investments are generally impacted by individual characteristics specific to each investment and although this has an impact on our overall financial performance, the impact of these gains and losses may not be indicative of the overall strength or weakness in each of our business operations. Additionally, in evaluating the financial performance of each of our businesses, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate. Management recognizes that some of the Company’s businesses exhibit more volatile results.
Capital Markets – We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors; and direct lending services to middle market companies. We also trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. We maintain an investment portfolio comprised of public and private equities and debt securities. We also opportunistically provide loans to our clients and we engage in securities-based lending which involves the borrowing and lending of equity and fixed income securities.
Our investment approach is value-oriented and represents a core competency of our capital markets strategy. We act as an advisor to our clients, which at times involves complex transactions consistent with our value-oriented investment philosophy. We often provide consulting, capital raising, or investment banking services for companies in which BRC may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.
Wealth Management – We provide retail brokerage, investment management, and insurance, and tax preparation services to individuals and families, small businesses, non-profits, trusts, foundations, endowments, and qualified retirement plans through a boutique private wealth and investment management firm to meet the individual financial needs and goals of our customers. Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions. Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions.
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Revenues from the Wealth Management segment are comprised of the following:
Three Months Ended
June 30, Six Months Ended
June 30,
2026 2025 2026 2025
Revenues - Services and fees
Brokerage revenues $ 16,101 $ 15,369 $ 31,762 $ 33,715
Advisory revenues 10,830 12,163 21,801 28,597
Other 21,771 5,889 37,218 17,775
Total services and fees revenue
48,702 33,421 90,781 80,087
Trading gains, net 9,251 5,200 19,347 5,812
Total revenues
$ 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. Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets. 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 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.
magicJack Segment – magicJack VoIP Services, LLC and related subsidiaries (together, “magicJack”) is a non-interconnected Voice-over-IP (“VoIP”) cloud-based communications service provider that offers related devices and subscription services within the United States and Canada. The magicJack services allow its subscribers to stay connected at low costs.
Marconi Wireless Segment – Marconi Wireless Holdings, LLC (“Marconi Wireless”) is a mobile virtual network operator that provides mobile phone voice, text, and data services and devices using the Credo Mobile brand.
UOL Segment – United Online, Inc. (“UOL”) is an Internet access provider that offers dial-up and digital subscriber line (“DSL”) services under the NetZero and Juno brands across the United States. UOL also provides paid and free e-mail subscription services that also generate advertising revenues.
Consumer Products Segment – This segment is comprised of Tiger US Holdings, Inc. (“Targus”), which is a multinational company that, together with its subsidiaries, designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries. The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories.
Our operating results are primarily comprised of the operations of these businesses within our seven reportable operating segments. However, we also generate revenues from investment and lending entities and other businesses that we may acquire with the goal to expand their operations, drive growth, and create operational efficiencies to improve cash flows to reinvest across other business operations in our platform. These businesses are typically in fragmented markets and include the operations of a regional environmental services business, which was sold in March 2025 and bebe stores inc. (“bebe”) which operates rent-to-own stores.
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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 June 30, 2026 and December 31, 2025:
June 30,
2026 December 31,
2025
Public Equity Securities:
Babcock & Wilcox Enterprises, Inc. - common stock $ 386,996 $ 174,011
Double Down Interactive Co., Ltd - common stock 18,751 30,010
Applied Digital Corporation - common stock 1,008 12,137
Other public equities 25,641 17,041
Total public equity securities 432,396 233,199
Private Equity Securities:
Applied Digital Corporation - preferred stock 80,040 41,115
Other private equities 92,538 94,490
Total private equity securities 172,578 135,605
Total equity securities 604,974 368,804
Corporate bonds 28,166 31,751
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 $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.
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• $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
The preparation of our unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities, and reported amounts of revenue and expense during the reporting period. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may significantly differ from those estimates. Critical accounting estimates represent the areas where more significant judgments and estimates are used in the preparation of our unaudited condensed consolidated financial statements. A discussion of such critical accounting estimates, which include fair value measurements, goodwill and other intangible assets, and accounting for income tax valuation allowances can be found in our Annual Report on Form 10-K/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.
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Results of Operations
The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Condensed Consolidated Statements of Operations
(Dollars in thousands)
Three Months Ended
June 30, Change
2026 2025 Amount %
Revenues:
Services and fees $ 173,595 $ 145,772 $ 27,823 19.1 %
Trading gains, net 12,874 27,680 (14,806) (53.5) %
Fair value adjustments on loans 4,245 800 3,445 430.6 %
Interest income - loans 2,171 3,853 (1,682) (43.7) %
Interest income - securities lending 1,632 2,124 (492) (23.2) %
Sale of goods 44,600 45,073 (473) (1.0) %
Total revenues 239,117 225,302 13,815 6.1 %
Operating expenses:
Direct cost of services 29,364 33,216 (3,852) (11.6) %
Cost of goods sold 31,361 35,113 (3,752) (10.7) %
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 38,195 10,815 27,380 253.2 %
Other income (expense):
Interest income 339 492 (153) (31.1) %
Dividend income 133 122 11 9.0 %
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 — 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 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 available to common shareholders $ 18,534 $ 137,456 $ (118,922) (86.5) %
_____________________________________________
n/m - Not applicable or not meaningful.
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Revenues
The table below, and the discussion that follows, are based on how we analyze our business.
Three Months Ended
June 30, Change
2026 2025 Amount %
Services and fees:
Capital Markets segment $ 45,939 $ 37,919 $ 8,020 21.2 %
Wealth Management segment 48,702 33,421 15,281 45.7 %
Lingo segment 38,788 39,907 (1,119) (2.8) %
magicJack segment 8,281 9,473 (1,192) (12.6) %
Marconi Wireless segment 6,878 8,065 (1,187) (14.7) %
UOL segment 2,881 3,287 (406) (12.4) %
Corporate and All Other 22,126 13,700 8,426 61.5 %
Subtotal 173,595 145,772 27,823 19.1 %
Trading gains (losses), net:
Capital Markets segment 4,363 21,249 (16,886) (79.5) %
Wealth Management segment 9,251 5,200 4,051 77.9 %
Corporate and All Other (740) 1,231 (1,971) (160.1) %
Subtotal 12,874 27,680 (14,806) (53.5) %
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) %
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.
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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:
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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)
Conn’s, Inc. (1)
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)
Conn’s, Inc. (1)
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:
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• $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; and
• $0.5 million decrease in depreciation and amortization attributable to certain leasehold improvements and intangible assets being fully depreciated.
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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; and
• $0.3 million decrease in professional services driven by lower legal and other consulting fees.
Lingo
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; and
• $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; and
• $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.
UOL
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;
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• $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; and
• $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; and
• $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:
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Realized and Unrealized Gains (Losses)
Three Months Ended
June 30,
2026 2025
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.
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(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.
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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 %
Revenues:
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.
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Revenues
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:
magicJack segment 596 659 (63) (9.6) %
Marconi Wireless segment 1,001 2,113 (1,112) (52.6) %
Consumer Products segment 87,652 85,387 2,265 2.7 %
Corporate and All Other 718 4,369 (3,651) (83.6) %
Subtotal 89,967 92,528 (2,561) (2.8) %
Total revenues $ 591,177 $ 411,365 179,812 43.7 %
_____________________________________________
n/m - Not applicable or not meaningful.
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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;
• $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; and
• $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:
• $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
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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 Six 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 $ 20 $ (589)
W.S. Badcock Corporation Consumer receivable portfolio — — — 250
Freedom VCM Receivables, Inc. Consumer receivable portfolio — — — 1,393
Conn’s, Inc. (1)
Retail / consumer n/a — — (4,065)
Other related party loans Services, oil & gas and industrial 1,035 1,000 36 (126)
Total related party loans receivable 1,035 2,835 56 (3,137)
XBP Americas, LLC Technology 15,041 21,415 192 (630)
Norlin EV Limited Real estate n/a 10 1,223 (484)
Conn’s, Inc. (1)
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)
Total loans receivable $ 38,802 $ 26,303 $ 10,790 $ (7,296)
(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 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 $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 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; partially offset by:
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• $2.3 million increase in the Consumer Products segment, driven by stronger distributor demand ahead of anticipated price increases from rising transportation costs, compared to an unusually weak prior period impacted by tariff uncertainty.
Operating expenses
Direct cost of services
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;
• $0.5 million decrease from the magicJack segment due to lower network costs driven by fewer active customers and lower personnel costs due to reduced headcount; and
• $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 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; and
• $1.6 million decrease from the Marconi Wireless segment due to lower product costs resulting from a decrease in the quantity of phones sold.
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Selling, general and administrative expenses
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 %
Capital Markets segment $ 72,090 26.8 % $ 79,766 25.8 % $ (7,676) (9.6) %
Wealth Management segment 76,597 28.6 % 85,494 27.6 % (8,897) (10.4) %
Lingo segment 25,526 9.5 % 28,013 9.0 % (2,487) (8.9) %
magicJack segment 4,965 1.9 % 5,364 1.7 % (399) (7.4) %
Marconi Wireless segment 3,377 1.3 % 4,552 1.5 % (1,175) (25.8) %
UOL segment 961 0.4 % 1,331 0.4 % (370) (27.8) %
Consumer Products segment 30,397 11.4 % 30,236 9.8 % 161 0.5 %
Corporate and All Other 53,812 20.1 % 75,001 24.2 % (21,189) (28.3) %
Total selling, general & administrative expenses $ 267,725 100.0 % $ 309,757 100.0 % $ (42,032) (13.6) %
Capital Markets
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:
• $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 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:
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• $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.
Lingo
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; and
• $0.2 million decrease in depreciation and amortization primarily due to certain software assets becoming fully amortized in 2025.
magicJack
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 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; and
• $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.
UOL
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 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:
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• $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; and
• $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 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;
• $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; and
• $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. 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 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)
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:
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Realized and Unrealized Gains (Losses)
Six Months Ended
June 30,
2026 2025
Other Income (Expense) - Realized & Unrealized Gains (Losses)
Public Equity Securities:
Babcock & Wilcox Enterprises, Inc. - common stock $ 92,136 $ (8,049)
Babcock & Wilcox Enterprises, Inc. - preferred stock — (173)
Double Down Interactive Co., Ltd - common stock 9,953 (3,925)
Applied Digital Corporation - common stock 7,720 5,383
Other public equities 9,033 (1,011)
Subtotal 118,842 (7,775)
Private Equity Securities:
Applied Digital Corporation - preferred stock 2,205 —
Other private equities (1,110) (1,205)
Subtotal 1,095 (1,205)
Corporate bonds (2,745) 4,696
Total $ 117,192 $ (4,284)
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
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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 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 $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.
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.
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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 cash flows. 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 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 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. Net cash provided by operating activities was $19.9 million inclusive of a balance sheet increase in Securities and other investments owned of $278.6 million in operating assets.
In the next 12 months, in addition to funding the Company’s operations, several debt obligations will be due including approximately $306.0 million in Senior Note maturities (RILYN in September 2026 and RILYG in December 2026) and a total of $9.0 million in term loan amortization payments. 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 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 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. Among many factors, the Company considers the timing of debt obligation payoffs, the cost of capital, and future value of assets when determining the sources used to fund debt obligations. 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 $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. 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. Additionally, the Company will evaluate operating company sales as a source of long-term liquidity. As with short-term obligations, the Company considers many factors including timing of debt obligation payoffs, the cost of capital, and future value when determining the source used to fund debt obligations. 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.
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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 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 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. There is no assurance on favorable refinancing terms, which will be subject to market conditions and our credit profile.
Dividends
From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. During the three months ended June 30, 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. The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our board of directors.
Holders of Series A Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends are payable quarterly in arrears. 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. Unpaid dividends will accrue until paid in full.
Holders of Series B Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends are payable quarterly in arrears. 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. Unpaid dividends will accrue until paid in full.
On April 30, 2026, the sixth quarterly Dividend Period for which dividends on the Series A Preferred Stock and Series B Preferred Stock have not been paid since the January 21, 2025 suspension occurred. As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation. 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.
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Cash Flow Summary
Six Months Ended
June 30,
2026 2025
(Dollars in thousands)
Net cash provided by (used in):
Operating activities $ 19,883 $ (25,375)
Investing activities (820) 289,220
Financing activities (90,510) (252,424)
Effect of foreign currency on cash (2,188) 546
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; and
• 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.
• 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
See Note 2(o) - Recent Accounting Standards to the accompanying unaudited condensed consolidated financial statements for recent accounting standards.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, the Company is not required to provide the information called for by this Item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.