What changed in this filing

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Item 1. Financial Statements

2022-07-29 compared with 2022-04-29 · 332 added, 246 removed, 899 unchanged (39% of the section changed)

12 unchanged sentences

Due from related parties 645 2,074

Loans receivable, at fair value (includes $ 154,862 and $ 167,744 from related parties as of March 31, 2022 and December 31, 2021, respectively)

Loans receivable, at fair value (includes $ 88,893 and $ 167,744 from related parties as of June 30, 2022 and December 31, 2021, respectively)

770,840 873,186

11 unchanged sentences

Deferred tax liabilities, net — 93,055

Due to related parties and partners 470 —

Due to clearing brokers 24,695 69,398

12 unchanged sentences

1,000,000 shares authorized;

4,535 and 4,512 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively;

and liquidation preference of $ 113,380 and $ 112,790 as of March 31, 2022 and December 31, 2021, respectively

4,535 and 4,512 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively;

and liquidation preference of $ 113,380 and $ 112,790 as of June 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

27,928,234 and 27,591,028 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

28,290,458 and 27,591,028 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 459,220 413,486

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Services and fees $ 200,905 $ 266,143 $ 411,580 $ 555,612

9 unchanged sentences

Total operating expenses 201,459 226,625 402,326 453,806

Operating income 4,722 372,978

Operating (loss) income ( 158,759 ) 110,145 ( 154,037 ) 483,123

Other income (expense):

1 unchanged sentence

Change in fair value of financial instruments and other 4,321 6,509 10,302 6,509

Income from equity investments 6,775 875

(Loss) income from equity investments ( 3,399 ) ( 852 ) 3,376 23

Interest expense ( 31,764 ) ( 20,856 ) ( 62,200 ) ( 40,642 )

(Loss) income before income taxes ( 189,101 ) 95,002 ( 201,992 ) 449,118

Benefit (provision) for income taxes 3,695 ( 97,518 )

Benefit from (provision for) income taxes 52,513 ( 19,902 ) 56,208 ( 117,420 )

Net (loss) income ( 136,588 ) 75,100 ( 145,784 ) 331,698

Net income attributable to noncontrolling interests 866 1,942

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,571 ( 576 ) 4,437 1,366

Net (loss) income attributable to B.

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net (loss) income $ ( 136,588 ) $ 75,100 $ ( 145,784 ) $ 331,698

1 unchanged sentence

Change in cumulative translation adjustment ( 2,316 ) 281 ( 2,804 ) ( 355 )

Other comprehensive loss, net of tax ( 488 ) ( 636 )

Other comprehensive (loss) income, net of tax ( 2,316 ) 281 ( 2,804 ) ( 355 )

Total comprehensive (loss) income ( 138,904 ) 75,381 ( 148,588 ) 331,343

Comprehensive income (loss) attributable to noncontrolling interests 866 1,942

Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,698 ( 576 ) 4,564 1,366

Comprehensive (loss) income attributable to B.

6 unchanged sentences

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2022 and 2021

For the Three Months Ended June 30, 2022 and 2021

Preferred Stock Common Stock Additional

5 unchanged sentences

Shares Amount Shares Amount

Balance, April 1, 2022 4,535 $ — 27,928,234 $ 3 $ 450,164 $ 205,765 $ ( 1,568 ) $ 45,813 $ 700,177

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 362,224 — ( 5,146 ) — — — ( 5,146 )

Share based payments — — — — 14,202 — — — 14,202

Dividends on common stock ($ 1.00 per share)

— — — — — ( 31,034 ) — — ( 31,034 )

Dividends on preferred stock — — — — — ( 2,002 ) — — ( 2,002 )

Net loss — — — — — ( 140,159 ) — 3,698 ( 136,461 )

Distributions to noncontrolling interests — — — — — — — ( 801 ) ( 801 )

Contributions from noncontrolling interests — — — — — — — 6,757 6,757

Other comprehensive loss — — — — — — ( 2,316 ) — ( 2,316 )

Balance, June 30, 2022

4,535 $ — 28,290,458 $ 3 $ 459,220 $ 32,570 $ ( 3,884 ) $ 55,467 $ 543,376

Balance, April 1, 2021 3,971 $ — 27,194,909 $ 3 $ 380,543 $ 352,910 $ ( 1,459 ) $ 33,823 $ 765,820

Preferred stock issued 304 — — — 8,281 — — — 8,281

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 385,391 — ( 10,348 ) — — — ( 10,348 )

Share based payments — — — — 8,608 — — — 8,608

Dividends on common stock ($ 3.00 per share)

— — — — — ( 88,537 ) — — ( 88,537 )

Dividends on preferred stock — — — — — ( 1,789 ) — — ( 1,789 )

Net income — — — — — 75,676 — ( 576 ) 75,100

Distributions to noncontrolling interests — — — — — — — ( 2,597 ) ( 2,597 )

Contributions from noncontrolling interests — — — — — — — 6,928 6,928

Other comprehensive loss — — — — — — 281 — 281

Balance, June 30, 2021

4,275 $ — 27,580,300 $ 3 $ 387,084 $ 338,260 $ ( 1,178 ) $ 37,578 $ 761,747

The accompanying notes are an integral part of these condensed consolidated financial statements.

For the Six Months Ended June 30, 2022 and 2021

Preferred Stock Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Noncontrolling

Interests Total

Shares Amount Shares Amount

Balance, January 1, 2022 4,512 $ — 27,591,028 $ 3 $ 413,486 $ 248,862 $ ( 1,080 ) $ 43,930 $ 705,201

Preferred stock issued 23 — — — 639 — — — 639

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 32,328 — ( 1,294 ) — — — ( 1,294 )

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 394,552 — ( 6,440 ) — — — ( 6,440 )

Shares issued for the acquisition of FocalPoint — — 304,878 — 20,320 — — — 20,320

8 unchanged sentences

Other comprehensive loss — — — — — — ( 2,804 ) — ( 2,804 )

Balance, March 31, 2022

Balance, June 30, 2022

4,535 $ — 28,290,458 $ 3 $ 459,220 $ 32,570 $ ( 3,884 ) $ 55,467 $ 543,376

1 unchanged sentence

Common stock issued, net of offering costs — — 1,413,045 — 64,713 — — — 64,713

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 4,068 — ( 22 ) — — — ( 22 )

Preferred stock issued 304 — — — 8,281 — — — 8,281

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 389,459 — ( 10,370 ) — — — ( 10,370 )

Share based payments — — — — 14,134 — — — 14,134

7 unchanged sentences

Other comprehensive loss — — — — — — ( 355 ) — ( 355 )

Balance, March 31, 2021

Balance, June 30, 2021

4,275 $ — 27,580,300 $ 3 $ 387,084 $ 338,260 $ ( 1,178 ) $ 37,578 $ 761,747

4 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

1 unchanged sentence

Net (loss) income $ ( 145,784 ) $ 331,698

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization 15,809 12,924

7 unchanged sentences

Deferred income taxes ( 95,342 ) 51,242

Loss on loans receivable and disposal of fixed assets 257 —

Loss on disposal of fixed assets 122 —

Gain on extinguishment of loan ( 1,102 ) ( 6,509 )

24 unchanged sentences

Purchase of equity and other investments ( 2,786 ) ( 10,485 )

Net cash used in investing activities ( 35,513 ) ( 171,838 )

Net cash provided by (used in) investing activities 523 ( 358,722 )

Cash flows from financing activities:

1 unchanged sentence

Repayment of term loan ( 54,316 ) ( 11,484 )

Proceeds from term loan 75,000 200,000

Proceeds from issuance of senior notes 35,874 475,698

5 unchanged sentences

Preferred dividends paid ( 4,004 ) ( 3,538 )

Distribution to noncontrolling interests ( 1,051 ) ( 11,571 )

Contribution from noncontrolling interests 1,770 3,722

Distributions to noncontrolling interests ( 2,414 ) ( 14,792 )

Contributions from noncontrolling interests 8,527 10,650

Proceeds from initial public offering of subsidiaries — 345,000

18 unchanged sentences

and its subsidiaries (collectively, the “Company”) provide investment banking and financial services to corporate, institutional and high net worth clients, and asset disposition, financial consulting, appraisal and capital advisory services to a wide range of retail, wholesale and industrial clients, as well as lenders, capital providers, private equity investors and professional services firms throughout the United States, Australia, Canada, and Europe and consumer Internet access and cloud communication services through its wholly-owned subsidiaries United Online, Inc.

(“UOL” or “United Online”) and magicJack VocalTec Ltd.

(“magicJack”).

The Company has a majority ownership interest in BR Brands Holding, LLC (“BR Brands” or “Brands”), which provides licensing of trademarks.

On January 19, 2022, the Company acquired FocalPoint Securities, LLC ("FocalPoint"), an independent investment bank headquartered in Los Angeles, California.

The purchase price consideration totaled $ 124,479 , which consisted of $ 64,248 in cash, $ 20,320 in issuance of common stock of the Company, and $ 39,911 in deferred cash and contingent consideration payable over the next three years .

The Company used the acquisition method of accounting for this acquisition.

Goodwill of $ 110,612 and other intangible assets of $ 10,680 that were recorded as a result of the acquisition will be deductible for tax purposes.

The acquisition is expected to expand B.

Riley Securities’ mergers and acquisitions (“M&A”) advisory business and enhance its debt capital markets and financial restructuring capabilities.

On February 25, 2021, the Company completed the acquisition of all of the outstanding shares of National Holdings Corporation (“National”) not already owned by the Company.

The total cash consideration for the approximately 55 % of National outstanding shares that the Company did not previously own and settlement of outstanding share based awards amounted to $ 35,314 .

The Company used the acquisition method of accounting for this acquisition.

The acquisition expanded the Company’s investment banking, wealth management and financial planning offerings by adding National’s brokerage, insurance, tax preparation and advisory services.

(“UOL” or “United Online”), magicJack VocalTec Ltd.

(“magicJack”), and Marconi Wireless ("Marconi"), and majority ownership interest in Lingo Management, LLC (“Lingo”).

The Company also has a majority ownership interest in BR Brands Holding, LLC (“BR Brands” or “Brands”), which provides licensing of trademarks.

The Company operates in six operating segments:

3 unchanged sentences

(iv) Financial Consulting, through which the Company provides bankruptcy, financial advisory, forensic accounting, real estate consulting and valuation and appraisal services;

(v) Principal Investments - Communications and Other, through which the Company provides consumer Internet access and related subscription services from United Online, cloud communication services primarily through the magicJack devices, and mobile phone voice, text, and data services and devices through a mobile virtual network operator;

(v) Principal Investments - Communications and Other, through which the Company provides consumer Internet access and related subscription services from United Online, cloud communication services primarily through the magicJack devices, global cloud/unified communications and managed services from Lingo, and mobile phone voice, text, and data services and devices through a mobile virtual network operator;

and (vi) Brands, which is focused on generating revenue through the licensing of trademarks.

On May 31, 2022, the Company's ownership interest in Lingo increased from 40 % to 80 % as a result of the conversion of $ 17,500 of debt owed by Lingo to equity.

As a result of the consolidation of Lingo, the pre-existing equity investment was remeasured at fair value resulting in the recognition of a gain of $ 6,790 , which is included in trading (losses) income and fair value adjustments on loans in the condensed consolidated statement of operations for the three and six months ended June 30, 2022.

In accordance with ASC 805, the company used the acquisition method of accounting.

The total fair value of the acquired assets of Lingo was $ 115,832 and the fair value of the 20 % noncontrolling interest was $ 8,021 at May 31, 2022.

Goodwill of $ 31,965 and other intangible assets of $ 65,200 were recorded as a result of the acquisition.

The acquisition is expected to expand the services offered in the Company's Principal Investments - Communications and Other segment.

On January 19, 2022, the Company acquired FocalPoint Securities, LLC ("FocalPoint"), an independent investment bank headquartered in Los Angeles, California.

The Company used the acquisition method of accounting for this acquisition.

Goodwill of $ 110,512 and other intangible assets of $ 10,780 that were recorded as a result of the acquisition will be deductible for tax purposes.

The acquisition is expected to expand B.

Riley Securities’ mergers and acquisitions (“M&A”) advisory business and enhance its debt capital markets and financial restructuring capabilities.

There continues to be widespread impact from COVID-19, which the World Health Organization classified as a pandemic in March 2020.

1 unchanged sentence

however, the full impact of the COVID-19 outbreak continues to evolve with the emergence of new variant strains and breakthrough infections.

Although the U.S.

economy continued to grow during the first quarter of 2022, the continuing impact of the COVID-19 pandemic, higher inflation, the actions by the Federal Reserve to address inflation, and rising energy prices create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods.

The continuing impact of the COVID-19 pandemic, higher inflation, the actions by the Federal Reserve to address inflation, Russia's invasion of Ukraine, and rising energy prices create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods.

These developments and the impact on the financial markets and the overall economy continue to be highly uncertain and cannot be predicted.

16 unchanged sentences

These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

Revision of Prior Period Financial Statements

In connection with the preparation of the Company’s consolidated financial statements during prior year, the Company identified an error that was not material related to the consolidation of certain VIEs which primarily resulted in a gross up between investing activities and financing activities in the consolidated statements of cash flows.

In accordance with SAB No.

In accordance with Staff Accounting Bulletin (“SAB”) No.

99, “Materiality,” and SAB No.

3 unchanged sentences

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period.

Estimates are used when accounting for certain items such as valuation of securities, allowance for doubtful accounts, the fair value of loans receivables, intangible assets and goodwill, share based arrangements, contingent consideration, and accounting for income tax valuation allowances, recovery of contract assets and sales returns and allowances.

Estimates are used when accounting for certain items such as valuation of securities, allowance for doubtful accounts, the fair value of loans receivables, intangible assets and goodwill, share based arrangements, contingent consideration, accounting for income tax valuation allowances, recovery of contract assets, and sales returns and allowances.

Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances.

2 unchanged sentences

Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment.

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 11,766 and $ 18,721 during the three months ended March 31, 2022 and 2021,

respectively.

Interest expense from loan participations sold totaled zero and $ 468 during the three months ended March 31, 2022 and 2021, respectively.

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 14,544 and $ 10,725 during the three months ended June 30, 2022 and 2021,

respectively, and $ 26,310 and $ 29,446 during the six months ended June 30, 2022 and 2021, respectively.

Interest expense from loan participations sold totaled $ 258 and $ 726 during the three and six months ended June 30, 2021, respectively.

(d) Concentration of Risk

1 unchanged sentence

Revenues in the Auction and Liquidation segment are primarily generated in the United States, Canada, and Europe.

The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors.

Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors.

The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry.

To mitigate the exposure to losses on any one specific liquidations services contract, the Company sometimes conducts operations with third parties through collaborative arrangements.

The Company maintains cash in various federally insured banking institutions.

4 unchanged sentences

The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred.

Advertising costs totaled $ 1,763 and $ 578 during the three months ended March 31, 2022 and 2021, respectively.

Advertising costs totaled $ 2,594 and $ 578 during the three months ended June 30, 2022 and 2021, respectively, and $ 4,357 and $ 1,156 during the six months ended June 30, 2022 and 2021, respectively.

Advertising expense was included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

4 unchanged sentences

In June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to purchase common stock through payroll deductions at a price that is 85 % of the market value of the common stock on the last day of the offering period.

In accordance with the provisions of (ASC) 718 - Compensation — Stock Compensation (“ASC 718”), the Company is required to recognize compensation expense relating to shares offered under the Purchase Plan.

During the three months ended March 31, 2022 and 2021, the Company recognized compensation expense of $ 153 and $ 227 , respectively, related to the Purchase Plan.

In accordance with the provisions of Accounting Standards Codification (“ASC”) 718 - Compensation — Stock Compensation (“ASC 718”), the Company is required to recognize compensation expense relating to shares offered under the Purchase Plan.

During the three months ended June 30, 2022 and 2021, the Company recognized compensation expense of $ 43 and $ 115 , respectively, related to the Purchase Plan.

During the six months ended June 30, 2022 and 2021, the Company recognized compensation expense of $ 196 and $ 342 , respectively, related to the Purchase Plan.

(g) Income Taxes

7 unchanged sentences

Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements.

The Company accrues interest on unrecognized tax benefits as a component of income tax expense.

Company accrues interest on unrecognized tax benefits as a component of income tax expense.

Penalties, if incurred, would be recognized as a component of income tax expense.

2 unchanged sentences

(i) Restricted Cash

As of March 31, 2022 and December 31, 2021, restricted cash included $ 928 and $ 927 of cash collateral for leases, respectively.

As of June 30, 2022 and December 31, 2021, restricted cash included $ 928 and $ 927 of cash collateral for leases, respectively.

Cash, cash equivalents and restricted cash consist of the following:

15 unchanged sentences

Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.

Depreciation expense on property and equipment was $ 1,032 and $ 873 during the three months ended March 31, 2022 and 2021, respectively.

Depreciation expense on property and equipment was $ 1,021 and $ 1,031 during the three months ended June 30, 2022 and 2021, respectively, and $ 2,053 and $ 1,904 during the six months ended June 30, 2022 and 2021, respectively.

(l) Loans Receivable

2 unchanged sentences

These loans are no longer subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through fair value changes.

Loans receivable, at fair value totaled $ 882,391 and $ 873,186 as of March 31, 2022 and December 31, 2021, respectively.

Loans receivable, at fair value totaled $ 770,840 and $ 873,186 as of June 30, 2022 and December 31, 2021, respectively.

The loans have various maturities through March 2027 .

As of March 31, 2022 and December 31, 2021, the historical cost of loans receivable accounted for under the fair value option was $ 875,794 and $ 877,527 , respectively,

which included principal balances of $ 883,965 and $ 886,831 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 8,170 and $ 9,304 , respectively.

During the three months ended March 31, 2022 and 2021, the Company recorded net unrealized gains of $ 10,937 and $ 10,726 , respectively, on the loans receivable at fair value, which was included in trading income (losses) and fair value adjustments on loans on the condensed consolidated statements of operations.

As of June 30, 2022 and December 31, 2021, the historical cost of loans receivable accounted for under the fair value option was $ 783,901 and $ 877,527 , respectively, which included principal balances of $ 788,972 and $ 886,831 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 5,071 and $ 9,304 , respectively.

During the three months ended June 30, 2022 and 2021,

the Company recorded net unrealized losses of $ 10,985 and $ 680 , respectively, and during the six months ended June 30, 2022 and 2021, the Company recorded a net unrealized loss of $ 129 and net unrealized gain of $ 10,046 , respectively, on the loans receivable at fair value, which was included in trading income (losses) and fair value adjustments on loans on the condensed consolidated statements of operations.

The Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending clients.

As of March 31, 2022, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

As of June 30, 2022, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

(“B&W”) as further described in Note 15.

In accordance with the new credit loss standard, the Company evaluates the need to record an allowance for credit losses for these loan guarantees since they have off-balance sheet credit exposures.

As of March 31, 2022, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure.

As of June 30, 2022, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure.

Interest income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance plus the amortization of any costs, origination fees, premiums and discounts and is included in interest income - loans and securities lending on the condensed consolidated statements of operations.

7 unchanged sentences

In addition, subject to certain terms and conditions, FRG has agreed to guarantee the performance by WSBC of its obligations under the Receivables Purchase Agreement and the Servicing Agreement.

As of March 31, 2022 and December 31, 2021, the principal outstanding for the Badcock Receivables was $ 380,591 and $ 400,000 , respectively, and included in loans receivable, at fair value on the condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the principal outstanding for the Badcock Receivables was $ 309,355 and $ 400,000 , respectively, and included in loans receivable, at fair value on the condensed consolidated balance sheets.

(m) Securities and Other Investments Owned and Securities Sold Not Yet Purchased

2 unchanged sentences

Changes in the value of these securities are reflected currently in the results of operations.

As of March 31, 2022 and December 31, 2021, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:

As of June 30, 2022 and December 31, 2021, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:

2022 December 31,

31 unchanged sentences

These partnership and investment fund interests are valued at net asset value (“NAV”) in accordance with ASC 820 - Fair Value Measurements.

As of March 31, 2022 and December 31, 2021, partnership and investment fund interests valued at NAV of $ 74,222 and $ 77,383 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, partnership and investment fund interests valued at NAV of $ 78,965 and $ 77,383 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

Securities and other investments owned also include investments in nonpublic entities that do not have a readily determinable fair value and do not report NAV per share.

3 unchanged sentences

Any investments adjusted to their fair value by applying the measurement alternative are disclosed as nonrecurring fair value measurements, including the level in the fair value hierarchy that was used.

As of March 31, 2022 and December 31, 2021, investments in nonpublic entities valued using a measurement alternative of $ 73,006 and $ 59,745 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, investments in nonpublic entities valued using a measurement alternative of $ 84,280 and $ 59,745 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

Funds held in trust represents U.S.

6 unchanged sentences

The warrants are accounted for as liabilities in accordance with ASC 815 - Derivatives and Hedging and are measured at fair value at inception and on a recurring basis using quoted prices in over-the-counter markets.

Warrant liabilities are included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets with changes in fair value that amounted to $ 4,879 during the three months ended March 31, 2022 included within change in fair value of financial instruments and other as part of other income (expense) in the condensed consolidated statements of operations.

Warrant liabilities are included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets in the amount of $ 3,737 and $ 12,938 as of June 30, 2022 and December 31, 2021, respectively.

Changes in fair value of warrants are included within change in fair value of financial instruments and other as part of other income (expense) in the condensed consolidated statements of operations.

The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of March 31, 2022 and December 31, 2021.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.

Financial Assets and Liabilities Measured at Fair Value on a

Recurring Basis as of March 31, 2022 Using

Fair value as of March 31, 2022

Recurring Basis as of June 30, 2022 Using

Fair value as of June 30, 2022

Quoted prices in active markets

42 unchanged sentences

Total liabilities measured at fair value $ 46,067 $ 33,240 $ 8,321 $ 4,506

As of March 31, 2022 and December 31, 2021, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,271,055 and $ 1,250,735 , respectively, or 24.2 % and 21.4 %, respectively, of the Company’s total assets.

As of June 30, 2022 and December 31, 2021, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,104,756 and $ 1,250,735 , respectively, or 18.8 % and 21.4 %, respectively, of the Company’s total assets.

In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity.

The following table summarizes the significant unobservable inputs in the fair value measurement of Level 3 financial assets and liabilities by category of investment and valuation technique as of March 31, 2022:

Fair value at

March 31, 2022

June 30, 2022

Technique Unobservable

1 unchanged sentence

Equity securities $ 266,927 Market approach Multiple of EBITDA 1.75 x - 10.50 x

Multiple of PV-10 0.32 x - 0.70 x

Multiple of Sales 1.22 x - 1.25 x

Multiple of PV-10 0.33 x

Multiple of Sales 1.00 x

Market price of related security $ 9.90 - $ 24.16

2 unchanged sentences

Loans receivable at fair value 770,840 Discounted cash flow Market interest rate 6.0 % - 28.3 %

32,833 Market approach Multiple of EBITDA 5.00 x 5.00 x

Total level 3 assets measured at fair value $ 1,104,756

1 unchanged sentence

Contingent earnout 17,722 Discounted cash flow EBITDA volatility 80.0 % 80.0 %

The changes in Level 3 fair value hierarchy during the three months ended March 31, 2022 and 2021 were as follows:

Total level 3 liabilities measured at fair value $ 21,882

The changes in Level 3 fair value hierarchy during the six months ended June 30, 2022 and 2021 were as follows:

Year Level 3 Changes During the Period Level 3

3 unchanged sentences

Settlements Transfer in

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Equity securities $ 377,549 $ ( 24,047 ) $ — $ 18,423 $ ( 38,009 ) $ 333,916

2 unchanged sentences

Contingent earnout — ( 4,500 ) — 22,222 — 17,722

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Equity securities $ 149,292 $ 53,074 $ — $ 119,745 $ ( 3,613 ) $ 318,498

1 unchanged sentence

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,700 — ( 595 ) — — 4,105

The amount reported in the table above during the three months ended March 31, 2021 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The amount reported in the table above during the six months ended June 30, 2022 and 2021 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments.

As of March 31, 2022 and December 31, 2021, the senior notes payable had a carrying amount of $ 1,627,649 and $ 1,606,560 , respectively, and fair value of $ 1,626,938 and $ 1,661,189 , respectively.

As of June 30, 2022 and December 31, 2021, the senior notes payable had a carrying amount of $ 1,644,678 and $ 1,606,560 , respectively, and fair value of $ 1,544,036 and $ 1,661,189 , respectively.

The carrying amount of the term loans approximates fair value because the effective yield of such instruments are consistent with current market rates of interest for instruments of comparable credit risk.

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If indicators of impairment are present, the Company is required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2022 and December 31, 2021.

These investments were measured due to an observable price change or impairment during the three months ended March 31, 2022.

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of June 30, 2022.

These investments were measured due to an observable price change or impairment during the six months ended June 30, 2022.

Fair Value Measurement Using

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(Level 2) Significant unobservable inputs

As of March 31, 2022

Investments in nonpublic entities that do not report NAV $ 16,011 $ — $ 15,511 $ 500

As of December 31, 2021

As of June 30, 2022

Investments in nonpublic entities that do not report NAV $ 16,387 $ — $ 15,737 $ 650

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The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain loans receivable and Auction and Liquidation engagements with operations outside the United States.

As of March 31, 2022, there were no forward exchange contracts outstanding.

As of June 30, 2022, there were no forward exchange contracts outstanding.

As of December 31, 2021, 6,000 € forward exchange contracts were outstanding.

The forward exchange contracts were entered into to improve the predictability of cash flows related to a retail store liquidation engagement and a loan receivable.

The net gain from forward exchange contracts was $ 68 and $ 310 during the three months ended March 31, 2022 and 2021, respectively.

The net gain from forward exchange contracts was zero and $ 363 during the three months ended June 30, 2022 and 2021, respectively, and $ 68 and $ 673 during the six months ended June 30, 2022 and 2021, respectively.

This amount was reported as a component of selling, general and administrative expenses in the condensed consolidated statements of operations.

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The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets.

Transaction gains were $ 296 and $ 555 during the three months ended March 31, 2022 and 2021, respectively.

Transaction gain was $ 834 and loss was $ 390 during the three months ended June 30, 2022 and 2021, respectively, and gains were $ 1,130 and $ 166 during the six

months ended June 30, 2022 and 2021, respectively.

These amounts were included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

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The outstanding warrants are considered derivative instruments with the warrant liability measured at fair value at each reporting date until exercised, with changes in fair value reported in other income in the condensed consolidated statements of operations.

As of March 31, 2022 and December 31, 2021, the warrant liability totaled $ 8,059 and $ 12,938 , respectively, which was included in accrued expenses and other liabilities in the condensed consolidated balance sheet.

As of June 30, 2022 and December 31, 2021, the warrant liability totaled $ 3,737 and $ 12,938 , respectively, which was included in accrued expenses and other liabilities in the condensed consolidated balance sheet.

(p) Redeemable Noncontrolling Interests in Equity of Subsidiaries

The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the class A ordinary shareholders in BRPM 150 and BRPM 250 sponsored SPACs.

The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the class A ordinary shareholders in BRPM 150 and BRPM 250 sponsored SPACs and the 20 % noncontrolling interest of Lingo.

These interests are presented as redeemable noncontrolling interests in equity of subsidiaries within the condensed consolidated balance sheet, outside of the permanent equity section.

The class A ordinary shareholders of BRPM 150 and BRPM 250 have redemption rights that are considered to be outside of the Company’s control.

As of March 31, 2022 and December 31, 2021, the carrying amount of the redeemable noncontrolling interest in equity of subsidiaries was recorded at its redemption value of $ 345,000 .

Remeasurements to the redemption value of the redeemable noncontrolling interest in equity of subsidiaries are recorded

within retained earnings.

Such remeasurements totaled $ 18,182 , comprising of offering costs incurred in connection with the sale of class A shares of BRPM 150 and BRPM 250 in the amount of $ 7,716 and initial valuation of the public warrants of BRPM 150 and BRPM 250 in the amount of $ 10,466 .

The operating agreement with Lingo has provisions which result in the noncontrolling interest being accounted for as temporary equity.

The total redeemable noncontrolling interest of Lingo amounted to $ 7,284 at June 30, 2022 and includes $ 127 of net losses, which is reflected in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in the condensed consolidated statement of operations.

As of June 30, 2022 and December 31, 2021, the total carrying amount of the redeemable noncontrolling interests in equity of subsidiaries was $ 352,894 and $ 345,000 , respectively.

Remeasurements to the redemption value of the redeemable noncontrolling interest in equity of subsidiaries are recorded within retained earnings.

(q) Equity Investment

As of March 31, 2022 and December 31, 2021, equity investments of $ 45,978 and $ 39,190 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, equity investments of $ 43,235 and $ 39,190 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

The Company’s share of earnings or losses from equity method investees was included in income from equity investments in the accompanying condensed consolidated statements of operations.

bebe stores, inc.

As of March 31, 2022 and December 31, 2021, the Company had a 40.1 % ownership interest in bebe stores, inc.

As of June 30, 2022 and December 31, 2021, the Company had a 40.1 % ownership interest in bebe stores, inc.

In December 2021, the Company purchased an additional 71,970 shares of newly issued common stock of bebe for $ 612 and increased its ownership interest from 39.5 % to 40.1 %.

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Other Equity Investments

The Company had other equity investments over which the Company exercises significant influence but which did not meet the requirements for consolidation, the largest ownership interest being a 40 % ownership interest in Lingo Management, LLC (“Lingo”) which was acquired in November 2020.

The Company had other equity investments over which the Company exercises significant influence but which did not meet the requirements for consolidation.

The equity ownership in these other investments was accounted for under the equity method of accounting and was included in prepaid expenses and other assets in the condensed consolidated balance sheets.

(r) Supplemental Non-cash Disclosures

During the three months ended March 31, 2022, non-cash investing activities included $ 20,320 in issuance of the Company's common stock as part of the purchase price consideration from the FocalPoint acquisition and $ 22,661 in seller financing for deferred cash consideration.

During the three months ended March 31, 2021, non-cash investing activities included the repayment of a loan receivable in full in the amount of $ 64,754 with equity securities.

In addition, $ 35,000 of loans receivable were exchanged for $ 35,000 of newly issued debt securities.

During the six months ended June 30, 2022, non-cash investing activities included $ 20,320 in issuance of the Company's common stock as part of the purchase price consideration from the FocalPoint acquisition and $ 22,661 in seller financing for deferred cash consideration, the conversion of $ 17,500 of debt owed by Lingo to equity, and the repayment of loans receivable in the amount of $ 850 with equity securities.

During the six months ended June 30, 2021, non-cash investing activities included the repayment of a loan receivable in full in the amount of $ 133,453 with equity securities.

In addition, $ 35,000 of loans receivable were exchanged for $ 35,000 of newly issued debt securities and a $ 36,000 note receivable was issued for the sale of equity securities to a third party.

(s) Variable Interest Entities

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however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed.

In November 2020, the Company invested in Lingo, a joint venture with an unaffiliated third party.

On March 10, 2021, the Company also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary of Lingo).

Lingo is a VIE because the entity does not have enough equity at risk to finance its activities without additional subordinated financial support.

The Company has determined that it is not the primary beneficiary because it does not have the power to direct the activities of the VIE that most significantly impact the entity’s financial performance.

The Company’s variable interests in Lingo include loans receivable at fair value and an equity investment accounted for under the equity method of accounting.

The Company, through its subsidiary, National, has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered VIEs under the accounting guidance.

The Company, through its subsidiary, National Holdings Corporation (“National”), has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered VIEs under the accounting guidance.

The Company earns fees from the Funds in the form of placement agent fees and carried interest.

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As the fee arrangements under such agreements are arm’s length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company does not consolidate such VIEs.

Placement agent fees attributable to such arrangements during the three months ended March 31, 2022 and 2021 were $ 12,051 and $ 11,360 , respectively, and are included in services and fees in the condensed consolidated statements of operations.

Placement agent fees attributable to such arrangements during the six months ended June 30, 2022 and 2021 were $ 12,088 and $ 25,382 , respectively, and are included in services and fees in the condensed consolidated statements of operations.

The carrying value of the Company’s investments in the VIEs that were not consolidated is shown below.

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In connection with the completion of the initial public offerings of BRPM 150 and BRPM 250, the Company invested in the private placement units of BRPM 150 and BRPM 250.

Both BRPM 150 and BRPM 250 are determined to be VIE’s because each of the entities do not have enough equity at risk to finance their activities without additional subordinated financial support.

Both BRPM 150 and BRPM 250 are determined to be VIE’s because each of the entities do not have enough equity at risk to finance their activities without additional subordinated

financial support.

The Company has determined that the class A shareholders of BRPM 150 and BRPM 250 do not have substantive rights as shareholders of BRPM 150 and BRPM 250 since these equity interests are determined to be temporary equity.

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Since the Company is determined to be the primary beneficiary, BRPM 150 and BRPM 250 are consolidated into the Company’s financial statements.

On July 19, 2022, BRPM 150 completed a business combination with FaZeClan Holdings, Inc.

(“Faze Holdings”) in a reverse merger transaction resulting in BRPM 150 no longer being a VIE of the Company and no longer be included in the consolidated group of the Company.

In connection with the de-consolidation of BRPM 150 subsequent to June 30, 2022, among other items, prepaid expenses and other assets decreased by $ 172,762 related to funds held in a trust account and redeemable noncontrolling interests in equity of subsidiaries decreased by $ 172,500 .

(t) Recent Accounting Standards

Not yet adopted

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820).

This update clarifies that a contractual restriction on the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account.

Therefore, a contractual sale restriction should not be considered when measuring an equity security's fair value.

The update also prohibits an entity from recognizing a contractual sale restriction as a separate unit of account.

Specific disclosures related to equity securities subject to contractual sale restrictions are required and include the fair value of such equity securities on the balance sheet, the nature and remaining duration of the corresponding restrictions, and any circumstances that could cause a lapse in the restrictions.

The amendments in this update are effective for the Company for fiscal periods beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.

Investment companies as defined by Topic 946 should apply the amendments in this update to an equity security with a contract containing a sale restriction that was executed or modified on or after the date of adoption.

For an equity security with a contract containing a sale restriction that was executed before the date of adoption, investment companies should continue to account for the equity security under their historical accounting policy for measuring such securities until the contractual restrictions expire or are modified.

The Company has not yet adopted this update and is currently evaluating the effect, if any, this new standard will have on its financial position and results of operations.

Recently adopted

In March 2020, FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848) , which provided optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR").

The amendments applied only to contracts, hedging relationships, and other transactions that reference LIBOR or another

reference rate expected to be discontinued.

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) , which provided optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”).

The amendments applied only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) , which refined the scope of Topic 848 through optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships.

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NOTE 3 — RESTRUCTURING CHARGE

The Company had no restructuring charges during the three months ended March 31, 2022 and 2021.

The following tables summarize the changes in accrued restructuring charge during the three months ended March 31, 2022 and 2021:

The Company had no restructuring charges during the three and six months ended June 30, 2022 and 2021.

The following tables summarize the changes in accrued restructuring charge during the three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Balance, beginning of period $ 599 $ 702 $ 624 $ 727

Restructuring charge — —

Cash paid ( 28 ) ( 29 ) ( 55 ) ( 57 )

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NOTE 4 — SECURITIES LENDING

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of March 31, 2022 and December 31, 2021:

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of June 30, 2022 and December 31, 2021:

Gross amounts recognized Gross amounts offset in the consolidated balance

Net amounts included in the consolidated balance sheets Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default (2)

As of March 31, 2022

As of June 30, 2022

Securities borrowed $ 2,414,074 $ — $ 2,414,074 $ 2,414,074 $ —

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Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Balance, beginning of period $ 3,103 $ 3,526 $ 3,658 $ 3,599

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NOTE 7 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $ 362,466 and $ 250,568 as of March 31, 2022 and December 31, 2021, respectively.

The changes in the carrying amount of goodwill for the three months ended March 31, 2022 were as follows:

Goodwill was $ 394,331 and $ 250,568 as of June 30, 2022 and December 31, 2021, respectively.

The changes in the carrying amount of goodwill during the six months ended June 30, 2022, resulting primarily from the acquisition of FocalPoint in the Capital Markets segment and Lingo in the Principal Investments – Communications and Other segment (as previously discussed in Note 1), were as follows:

Capital Markets Segment Wealth Management Segment Auction and Liquidation Segment Financial Consulting Segment Principal Investments- Communications and Other Segment Total

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Goodwill acquired during the period:

Acquisition of other business 110,612 — — — 1,286 111,898

Balance as of March 31, 2022

Acquisition of other businesses 110,512 — — — 33,251 143,763

Balance as of June 30, 2022

$ 161,850 $ 51,195 $ 1,975 $ 23,680 $ 155,631 $ 394,331

Intangible assets consisted of the following:

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

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Total intangible assets $ 354,434 $ ( 84,112 ) $ 270,322 $ 278,006 $ ( 70,355 ) $ 207,651

Amortization expense was $ 6,816 and $ 5,886 during the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, estimated future amortization expense was $ 19,268 , $ 19,873 , $ 15,757 , $ 11,322 , and $ 10,473 for the years ended December 31, 2022 (remaining nine months), 2023, 2024, 2025 and 2026, respectively.

Amortization expense was $ 6,940 and $ 5,134 during the three months ended June 30, 2022 and 2021, respectively, and $ 13,756 and $ 11,020 during the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, estimated future amortization expense was $ 14,825 , $ 23,934 , $ 19,814 , $ 15,346 , and $ 14,530 for the years ended December 31, 2022 (remaining six months), 2023, 2024, 2025 and 2026, respectively.

The estimated future amortization expense after December 31, 2026 was $ 56,597 .

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The Company is party to a credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) with a maximum borrowing limit of $ 200,000 and a maturity date of April 20, 2027.

Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion.

Cash advances and the issuance of letters of credit under the credit facility are made

at the lender’s discretion.

The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more fully described in Note 2(d) in the Annual Report on Form 10-K.

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The credit facility also provides for funding fees in the amount of 0.05 % to 0.20 % of the aggregate principal amount of all credit advances and letters of credit issued in connection with a liquidation sale.

Interest expense totaled $ 108 during the three months ended March 31, 2022 and 2021.

There was no outstanding balance on this credit facility as of March 31, 2022 and December 31, 2021.

As of March 31, 2022, there were no open letters of credit outstanding.

The Company is in compliance with all financial covenants in the asset based credit facility as of March 31, 2022.

Interest expense totaled $ 39 and $ 108 during the three months ended June 30, 2022 and 2021, respectively, and $ 147 and $ 216 during the six months ended June 30, 2022 and 2021, respectively.

There was no outstanding balance on this credit facility as of June 30, 2022 and December 31, 2021.

As of June 30, 2022, there were no open letters of credit outstanding.

The Company is in compliance with all financial covenants in the asset based credit facility as of June 30, 2022.

Other Notes Payable

As of March 31, 2022 and December 31, 2021, the outstanding balance for the other notes payable was $ 22,891 and $ 357 , respectively.

Interest expense was $ 232 and $ 7 during the three months ended March 31, 2022 and 2021, respectively.

Notes payable consisted of additional deferred cash consideration owed to the sellers of FocalPoint as of March 31, 2022.

Notes payable to a clearing organization for one of the Company’s broker dealers, which accrued interest at the prime rate plus 2.0 %, matured on January 31, 2022 and was repaid during the three months ended March 31, 2022.

As of June 30, 2022 and December 31, 2021, the outstanding balance for the other notes payable was $ 23,186 and $ 22,891 , respectively.

Interest expense was $ 295 and $ 5 during the three months ended June 30, 2022 and 2021, respectively, and $ 527 and $ 12 during the six months ended June 30, 2022 and 2021, respectively.

Notes payable consisted of additional deferred cash consideration owed to the sellers of FocalPoint as of June 30, 2022.

NOTE 9 — TERM LOANS AND REVOLVING CREDIT FACILITY

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

Subject to certain eligibility requirements, the assets of certain subsidiaries of the Company that hold credit assets, private equity assets, and public equity assets are placed into a borrowing base, which serves to limit the borrowings under

the Credit Facilities.

If borrowings under the facilities exceed the borrowing base, the Company is obligated to prepay the loans in an aggregate amount equal to such excess.

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Quarterly installments from September 30, 2022 to March 31, 2025 are in the amount of $ 3,750 per quarter.

As of March 31, 2022 and December 31, 2021, the outstanding balances on the Term Loan Facility and Incremental Facility were $ 293,159 (net of unamortized debt issuance costs of $ 6,841 ) and $ 292,650 (net of unamortized debt issuance costs of $ 7,350 ), respectively.

Interest on the term loan during the three months ended March 31, 2022 was $ 4,102 (including amortization of deferred debt issuance costs of $ 509 ).

The interest rate on the term loan as of March 31, 2022 and December 31, 2021 was 5.46 % and 4.72 %, respectively.

The Company had an outstanding balance of $ 80,000 under the Revolving Credit Facility as of March 31, 2022 and December 31, 2021.

Interest on the revolving facility during the three months ended March 31, 2022 was $ 1,100 (including amortization of deferred financing costs of $ 143 ).

The interest rate on the revolving facility as of March 31, 2022 and December 31, 2021 was 5.01 % and 4.67 %, respectively.

The Company is in compliance with all financial covenants in the Credit Agreement as of March 31, 2022.

As of June 30, 2022 and December 31, 2021, the outstanding balances on the Term Loan Facility and Incremental Facility were $ 293,676 (net of unamortized debt issuance costs of $ 6,324 ) and $ 292,650 (net of unamortized debt issuance costs of $ 7,350 ), respectively.

Interest on the term loan during the three months ended June 30, 2022 and 2021 was $ 4,735 (including amortization of deferred debt issuance costs of $ 516 ) and $ 236 (including amortization of deferred debt issuance costs of $ 30 ), respectively.

Interest on the term loan during the six months ended June 30, 2022 and 2021 was $ 8,837 (including amortization of deferred debt issuance costs of $ 1,025 ) and $ 236 (including amortization of deferred debt issuance costs of $ 30 ), respectively.

The interest rate on the term loan as of June 30, 2022 and December 31, 2021 was 6.65 % and 4.72 %, respectively.

The Company had an outstanding balance of $ 80,000 under the Revolving Credit Facility as of June 30, 2022 and December 31, 2021.

Interest on the revolving facility during the three and six months ended June 30, 2022 was $ 1,227 (including amortization of deferred financing costs of $ 145 ) and $ 2,327 (including amortization of deferred financing costs of $ 288 ), respectively.

The unused commitment fee on the revolving facility for the three and six months ended June 30, 2021 was $ 30 (including amortization of deferred financing costs of $ 13 ).

The interest rate on the revolving facility as of June 30, 2022 and December 31, 2021 was 6.13 % and 4.67 %, respectively.

The Company is in compliance with all financial covenants in the Credit Agreement as of June 30, 2022.

BRPAC Credit Agreement

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In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial ratios.

The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment

defaults, breach of representations and warranties, covenant defaults and cross defaults.

The BRPAC Credit Agreement also

contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding BRPAC Credit Agreement.

Under the BRPAC Credit Agreement, the Company borrowed $ 80,000 due December 19, 2023.

Pursuant to the terms of the BRPAC Credit Agreement, the Company may request additional optional term loans in an aggregate principal amount of up to $ 10,000 at any time prior to the first anniversary of the agreement date (the “Option Loan”) with a final maturity date of December 19, 2023.

On February 1, 2019, the Credit Parties, the Closing Date Lenders, the Agent and City National Bank, as a new lender (the “New Lender”), entered into the First Amendment to the Credit Agreement and Joinder (the “First Amendment”) pursuant to which, among other things, (i) New Lender became a party to the BRPAC Credit Agreement, (ii) the New Lender extended to Borrowers the Option Loan in the amount of $ 10,000 , (iii) the aggregate outstanding principal amount of the term loans was increased from $ 80,000 to $ 90,000 , and (iv) the amortization schedule under the BRPAC was amended as set forth in the First Amendment.

Additionally, in connection with the Option Loan, the Borrowers executed a term note in favor of New Lender dated February 1, 2019 in the amount of $ 10,000 .

On December 31, 2020, the Borrowers, the Secured Guarantors, the Agent and the Lenders, entered into the Second Amendment to Credit Agreement (the “Second Amendment”) pursuant to which, among other things, (i) the Lenders agreed to make a new $ 75,000 term loan to the Borrowers, the proceeds of which the Borrowers’ used to repay the outstanding principal amount of the existing Terms Loans and Optional Loans and will use for other general corporate purposes, (ii) the Borrowers were permitted to make a one-time Permitted Distribution (as defined in the Second Amendment) in the amount of $ 30,000 on the date of the Second Amendment, (iii) the maturity date of the new Term Loans was set at five ( 5 ) years from the date of the Second Amendment, (iv) the interest rate margin was increased by 25 basis points as set forth in the Second Amendment, (v) the Borrowers agreed to make mandatory prepayments of the Term Loans from a portion of the Consolidated Excess Cash Flow (as defined in the Credit Agreement), (vi) the maximum Consolidated Total Funded Debt Ratio (as defined in the Credit Agreement) was increased as set forth in the Second Amendment and (vii) the Company and B.

Riley Principal Investments, LLC entered into a reaffirmation of their guarantees of the Borrowers’ obligations under the Credit Agreement.

Additionally, the Borrowers paid a commitment fee and an arrangement fee, each based on a percentage of the aggregate commitments, in each case upon the closing of the Second Amendment.

On December 16, 2021, the Borrowers, the Secured Guarantors, the Agent and the Closing Date Lenders entered into the Third Amendment to Credit Agreement (the “Third Amendment”) which, among other things, replaced LIBOR with the SOFR reference rate, and pursuant to which the Borrowers were permitted to make a one-time Permitted Distribution (as defined in the Third Amendment) in the amount of $ 15,000 on the date of the Third Amendment.

Through a series of amendments, including the most recent Fourth Amendment to the BRPAC Credit Agreement (the “Fourth Amendment”) on June 21, 2022, the Borrowers, the Secured Guarantors, the Agent and the Closing Date Lenders agreed to the following, among other things:

(i) the Lenders agreed to make a new $ 75,000 term loan to the Borrowers, the proceeds of which the Borrowers’ used to repay the outstanding principal amount of the existing terms loans and optional loans and will use for other general corporate purposes, (ii) a new applicable margin level of 3.50 % was established as set forth from the date of the Fourth Amendment, (iii) Marconi Wireless Holdings, LLC was added to the Borrowers, (iv) the maturity date of the term loan was set to June 30, 2027, and (v) the Borrowers were permitted to make certain distributions to the parent company of the Borrowers.

The borrowings under the amended BRPAC Credit Agreement bear interest equal to the SOFR rate plus a margin of 2.75 % to 3.50 % per annum, depending on the Borrowers’ consolidated total funded debt ratio as defined in the BRPAC Credit Agreement.

As of March 31, 2022 and December 31, 2021, the interest rate on the BRPAC Credit Agreement was 3.26 % and 3.17 %, respectively.

As of June 30, 2022 and December 31, 2021, the interest rate on the BRPAC Credit Agreement was 4.66 % and 3.17 %, respectively.

Principal outstanding under the Amended BRPAC Credit Agreement is due in quarterly installments.

Quarterly installments from June 30, 2022 to December 31, 2022 are in the amount of $ 4,116 per quarter, from March 31, 2023 to December 31, 2023 are in the amount of $ 3,631 per quarter, from March 31, 2024 to December 31, 2024 are in the amount of $ 3,147 per quarter, from March 31, 2025 to December 31, 2025 are in the amount of $ 2,663 per quarter, and the remaining principal balance is due at final maturity on December 31, 2025.

As of March 31, 2022 and December 31, 2021, the outstanding balance on the term loan was $ 49,691 (net of unamortized debt issuance costs of $ 510 ) and $ 53,735 (net of unamortized debt issuance costs of $ 582 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2022 and 2021, was $ 502 (including amortization of deferred debt issuance costs of $ 72 ) and $ 714 (including amortization of deferred debt issuance costs of $ 80 ), respectively.

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of March 31, 2022.

Quarterly installments from September 30, 2022 to December 31, 2022 are in the amount of $ 2,813 per quarter, from March 31, 2023 to December 31, 2023 are in the amount of $ 4,688 per quarter, from March 31, 2024 to December 31, 2026 are in the amount of $ 3,750 per quarter, on March 31, 2027 is in the amount of $ 2,813 , and the remaining principal balance is due at final maturity on June 30, 2027.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the term loan was $ 74,140 (net of unamortized debt issuance costs of $ 860 ) and $ 53,735 (net of unamortized debt issuance costs of $ 582 ), respectively.

Interest expense on the term loan during the three months ended June 30, 2022 and 2021 was $ 578 (including amortization of deferred debt issuance costs of $ 99 ) and $ 663 (including amortization of deferred debt issuance costs of $ 77 ), respectively.

Interest expense on the term loan during the six months ended June 30, 2022 and 2021 was $ 1,080 (including amortization of deferred debt issuance costs of $ 171 ) and $ 1,377 (including amortization of deferred debt issuance costs of $ 157 ), respectively.

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of June 30, 2022.

NOTE 10 — SENIOR NOTES PAYABLE

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$ 1,644,778 $ 1,606,560

During the three months ended March 31, 2022 and 2021, the Company issued $ 20,073 and $ 12,858 , respectively, of senior notes with maturity dates ranging from May 2023 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

During the three months ended June 30, 2022 and 2021, the Company issued $ 15,800 and $ 72,469 , respectively, of senior notes, and during the six months ended June 30, 2022 and 2021, the Company issued $ 35,873 and $ 85,327 , respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market

Issuance Sales Agreements with B.

Riley Securities, Inc.

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A series of prospectus supplements were filed by the Company with the SEC in respect of the Company’s offerings of these senior notes.

As of March 31, 2022 and December 31, 2021, the total senior notes outstanding was $ 1,627,649 (net of unamortized debt issue costs of $ 20,474 ) and $ 1,606,560 (net of unamortized debt issue costs of $ 21,489 ) with a weighted average interest rate of 5.69 %.

As of June 30, 2022 and December 31, 2021, the total senior notes outstanding was $ 1,644,778 (net of unamortized debt issue costs of $ 19,144 ) and $ 1,606,560 (net of unamortized debt issue costs of $ 21,489 ) with a weighted average interest rate of 5.70 % and 5.69 %, respectively.

Interest on senior notes is payable on a quarterly basis.

Interest expense on senior notes totaled $ 24,409 and $ 18,706 for the three months ended March 31, 2022 and 2021, respectively.

Interest expense on senior notes totaled $ 24,650 and $ 19,970 for the three months ended June 30, 2022 and 2021, respectively, and totaled $ 49,072 and $ 38,564 for the six months ended June 30, 2022 and 2021, respectively.

Sales Agreement Prospectus to Issue Up to $ 250,000 of Senior Notes

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This program provides for the sale by the Company of up to $ 250,000 of certain of the Company’s senior notes.

As of March 31, 2022 and December 31, 2021, the Company had $ 91,838 and $ 111,911 , respectively, remaining availability under the Sales Agreement Prospectus.

As of June 30, 2022 and December 31, 2021, the Company had $ 76,038 and $ 111,911 , respectively, remaining availability under the Sales Agreement Prospectus.

NOTE 11 — ACCRUED EXPENSES AND OTHER LIABILITIES

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NOTE 12 — REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers by reportable segment for the three months ended March 31, 2022 and 2021 was as follows:

Revenue from contracts with customers by reportable segment for the three and six months ended June 30, 2022 and 2021 was as follows:

Segment Wealth

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Segment Total

Revenues for the three months ended March 31, 2022

Revenues for the three months ended June 30, 2022

Corporate finance, consulting and investment banking fees $ 35,473 $ — $ — $ 15,646 $ — $ — $ 51,119

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Subscription services — — — — 37,809 — 37,809

Service contract revenues — — — — — — —

Advertising, licensing and other (1)

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Segment Total

Revenues for the three months ended March 31, 2021

Revenues for the three months ended June 30, 2021

Corporate finance, consulting and investment banking fees $ 107,224 $ — $ — $ 14,513 $ — $ — $ 121,737

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(1) Includes sale of goods of $ 11,743 in Auction and Liquidation and $ 714 in Principal Investments - Communications and Other.

Segment Wealth

Segment Auction and

Segment Financial

Segment Principal

Investments -

Communications and Other Segment Brands

Segment Total

Revenues for the six months ended June 30, 2022

Corporate finance, consulting and investment banking fees $ 77,146 $ — $ — $ 32,616 $ — $ — $ 109,762

Wealth and asset management fees 4,919 117,513 — — — — 122,432

Commissions, fees and reimbursed expenses 23,381 16,161 5,843 17,630 — — 63,015

Subscription services — — — — 65,622 — 65,622

Advertising, licensing and other (1)

— — — — 9,575 9,731 19,306

Total revenues from contracts with customers 105,446 133,674 5,843 50,246 75,197 9,731 380,137

Interest income - Loans and securities lending 123,825 — 1,436 — — — 125,261

Trading (losses) gains on investments ( 294,343 ) 2,050 — — — — ( 292,293 )

Fair value adjustment on loans ( 24 ) — — — — — ( 24 )

Other 31,064 4,144 — — — — 35,208

Total revenues $ ( 34,032 ) $ 139,868 $ 7,279 $ 50,246 $ 75,197 $ 9,731 $ 248,289

(1) Includes sale of goods of $ 3,765 in Principal Investments - Communications and Other.

Segment Wealth

Segment Auction and

Segment Financial

Segment Principal

Investments -

Communications and Other Segment Brands

Segment Total

Revenues for the six months ended June 30, 2021

Corporate finance, consulting and investment banking fees $ 254,293 $ — $ — $ 27,940 $ — $ — $ 282,233

Wealth and asset management fees 4,878 117,528 — — — — 122,406

Commissions, fees and reimbursed expenses 26,809 31,600 11,807 17,204 — — 87,420

Subscription services — — — — 34,499 — 34,499

Service contract revenues — — 1,085 — — — 1,085

Advertising, licensing and other (1)

— — 17,835 — 5,676 8,889 32,400

Total revenues from contracts with customers 285,980 149,128 30,727 45,144 40,175 8,889 560,043

Interest income - Loans and securities lending 62,411 — — — — — 62,411

Trading (losses) gains on investments 284,354 5,221 — — — — 289,575

Fair value adjustment on loans 10,046 — — — — — 10,046

Other 10,996 3,858 — — — — 14,854

Total revenues $ 653,787 $ 158,207 $ 30,727 $ 45,144 $ 40,175 $ 8,889 $ 936,929

(1) Includes sale of goods of $ 17,835 in Auction and Liquidation and $ 1,450 in Principal Investments - Communications and Other.

Contract Balances

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Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligation(s) are satisfied.

Receivables related to revenues from contracts with customers totaled $ 44,722 and $ 49,673 as of March 31, 2022 and December 31, 2021, respectively.

The Company had no significant impairments related to these receivables during the three months ended March 31, 2022 and 2021.

The Company also has $ 14,100 and $ 12,315 of unbilled receivables included in prepaid expenses and other assets as of March 31, 2022 and December 31, 2021, respectively, and advances against customer contracts included in prepaid expenses and other assets of $ 200 as of March 31, 2022 and December 31, 2021.

The Company’s deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, financial consulting engagements, subscription services where the performance obligation has not yet been satisfied and license agreements with guaranteed minimum royalty payments and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

Deferred revenue as of March 31, 2022 and

December 31, 2021 was $ 75,509 and $ 69,507 , respectively.

The Company expects to recognize the deferred revenue of $ 75,509 as of March 31, 2022 as service and fee revenues when the performance obligation is met during the years December 31, 2022 (remaining nine months), 2023, 2024, 2025 and 2026 in the amount of $ 43,386 , $ 12,249 , $ 8,594 , $ 5,344 , and $ 2,724 , respectively.

Receivables related to revenues from contracts with customers totaled $ 52,935 and $ 49,673 as of June 30, 2022 and December 31, 2021, respectively.

The Company had no significant impairments related to these receivables during the three and six months ended June 30, 2022 and 2021.

The Company also had $ 16,491 and $ 12,315 of unbilled receivables included in prepaid expenses and other assets as of June 30, 2022 and December 31, 2021, respectively, and advances against customer contracts included in prepaid expenses and other assets of $ 200 as of June 30, 2022 and December 31, 2021.

satisfied and license agreements with guaranteed minimum royalty payments and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

Deferred revenue as of June 30, 2022 and December 31, 2021 was $ 79,226 and $ 69,507 , respectively.

The Company expects to recognize the deferred revenue of $ 79,226 as of June 30, 2022 as service and fee revenues when the performance obligation is met during the years December 31, 2022 (remaining six months), 2023, 2024, 2025 and 2026 in the amount of $ 48,031 , $ 12,620 , $ 8,421 , $ 4,792 , and $ 2,247 , respectively.

The Company expects to recognize the deferred revenue of $ 3,115 after December 31, 2026.

During the three months ended March 31, 2022 and 2021, the Company recognized revenue of $ 14,939 and $ 17,279 that was recorded as deferred revenue at the beginning of the respective year.

During the three months ended June 30, 2022 and 2021, the Company recognized revenue of $ 10,055 and $ 9,370 that was recorded as deferred revenue at the beginning of the respective year.

During the six months ended June 30, 2022 and 2021, the Company recognized revenue of $ 24,994 and $ 26,649 that was recorded as deferred revenue at the beginning of the respective year.

Contract Costs

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(2) costs to fulfill Auction and Liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue is recognized over time when the performance obligation is satisfied;

and (3) commissions paid to obtain magicJack contracts which are recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably over the service period.

The capitalized costs to fulfill a contract were $ 868 and $ 1,605 as of March 31, 2022 and December 31, 2021, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended March 31, 2022 and 2021, the Company recognized expenses of $ 915 and $ 57 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three months ended March 31, 2022 and 2021.

and (3) commissions paid to obtain magicJack and Lingo contracts which are recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably over the service period.

The capitalized costs to fulfill a contract were $ 2,564 and $ 1,605 as of June 30, 2022 and December 31, 2021, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

During the three months ended June 30, 2022 and 2021, the Company recognized expenses of $ 175 and $ 51 related to capitalized costs to fulfill a contract, respectively.

During the six months ended June 30, 2022 and 2021, the Company recognized expenses of $ 1,090 and $ 109 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three and six months ended June 30, 2022 and 2021.

Remaining Performance Obligations and Revenue Recognized from Past Performance

The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of March 31, 2022.

Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of March 31, 2022.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of June 30, 2022.

NOTE 13 — INCOME TAXES

The Company’s effective income tax rate was a provision of 28.7 % and 27.5 % for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the Company had federal net operating loss carryforwards of $ 48,869 and state net operating loss carryforwards of $ 52,548 .

The Company’s effective income tax rate was a provision of 27.8 % and 26.1 % for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, the Company had federal net operating loss carryforwards of $ 48,869 and state net operating loss carryforwards of $ 52,548 .

The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2031 through December 31, 2038.

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Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income.

As of March 31, 2022, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not believe that it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 65,900 against these deferred tax assets.

As of June 30, 2022, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not believe that

it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 65,900 against these deferred tax assets.

The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions.

The Company is currently under audit by certain federal, state and local, and foreign tax authorities.

audits are in varying stages of completion.

The audits are in varying stages of completion.

The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities.

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According to ASC 480 - Distinguishing Liabilities from Equity , there is no impact on earnings per share in the computation of basic and diluted earnings per share to common shareholders for changes in the carrying value of the redeemable noncontrolling interests in equity, when such changes in carrying value which in substance approximates fair value.

Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,350,062 and 727,994 for the three months ended March 31, 2022 and 2021, respectively, because to do so would have been anti-dilutive.

Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,757,081 and 936,727 for the three months ended June 30, 2022 and 2021, respectively, and 1,553,571 and 832,360 for the six months ended June 30, 2022 and 2021, respectively, because to do so would have been anti-dilutive.

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net (loss) income attributable to B.

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In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters.

Some of these claims seek substantial compensatory, punitive, or indeterminate damages.

of these claims seek substantial compensatory, punitive, or indeterminate damages.

The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief.

In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be.

Notwithstanding this

uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

(b) Babcock & Wilcox Commitments and Guarantees

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In consideration for providing the indemnity, B&W paid the Company fees in the amount of $ 1,694 on January 20, 2022.

On December 30, 2021, the Company agreed to guaranty up to $ 25,000 of obligations that certain affiliates of Nextpoint Financial, Inc.

(collectively, “Nextpoint”) may owe to lenders to Nextpoint (the “Nextpoint Guaranty”).

The Company entered into the Nextpoint Guaranty in connection with the entry by Nextpoint into a credit agreement with the lenders.

The Nextpoint Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of Nextpoint’s obligations to the lenders.

In consideration for the Nextpoint Guaranty, Nextpoint paid the Company a fee of $ 800 on January 6, 2022 and will pay the Company 10 % of any amount paid by the Company to the lenders to the extent the Nextpoint Guaranty is called upon, in addition to indemnifying the Company from all losses incurred by the Company in connection with the Nextpoint Guaranty.

(d) Other Commitments

In the normal course of business, the Company enters into commitments to its clients in connection with capital raising transactions, such as firm commitment underwritings, equity lines of credit, or other commitments to provide financing on specified terms and conditions.

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The 2021 Stock Incentive Plan (the “2021 Plan”) replaced the Amended and Restated 2009 Stock Incentive Plan on May 27, 2021.

Share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 16,860 and $ 5,299 for the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022, in connection with employee stock incentive plans, the Company granted 161,559 restricted stock units with a grant date fair value of $ 11,863 and 65,000 performance based restricted stock units with a grant date fair value of $ 2,329 .

During the three months ended March 31, 2021, in connection with employee stock incentive plans, the Company granted 48,714 restricted stock units with a grant date fair value of $ 2,234 and 1,100,000 performance based restricted stock units with a grant date fair value of $ 40,876 .

Share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 14,159 and $ 8,493 for the three months ended June 30, 2022 and 2021, respectively, and $ 31,019 and $ 13,792 for the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June 30, 2022, in connection with employee stock incentive plans, the Company granted 555,168 restricted stock units with a grant date fair value of $ 31,670 and 65,000 performance based restricted stock units with a grant date fair value of $ 2,329 .

During the six months ended June 30, 2021, in connection with employee stock incentive plans, the Company granted 365,050 restricted stock units with a grant date fair value of $ 25,534 and 1,100,000 performance based restricted stock units with a grant date fair value of $ 40,876 .

The restricted stock units generally vest over a period of one to five years based on continued service.

Performance based restricted stock units generally vest based on both the employee’s continued service and the achievement of a set threshold of the Company’s common stock price, as defined in the grant, during the two to three-year period following the grant.

In determining the fair value of restricted stock units on the grant date, the fair value

is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S.

In determining the fair value of restricted stock units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S.

Treasuries for a maturity matching the expected holding period.

(b) Employee Stock Purchase Plan

In connection with the Company’s Employee Stock Purchase Plan ("Purchase Plan"), share based compensation was $ 153 and $ 227 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and December 31, 2021, there were 450,717 shares reserved for issuance under the Purchase Plan.

In connection with the Company’s Employee Stock Purchase Plan ("Purchase Plan"), share based compensation was $ 43 and $ 115 for the three months ended June 30, 2022 and 2021, respectively, and $ 196 and $ 342 for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, there were 398,442 and 450,717 shares reserved for issuance under the Purchase Plan, respectively.

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All share repurchases were effected on the open market at prevailing market prices or in privately negotiated transactions.

During the three months ended March 31, 2022 and 2021, the Company did not repurchase shares of its common stock.

During the six months ended June 30, 2022 and 2021, the Company did not repurchase shares of its common stock.

The shares repurchased under the program are retired.

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(d) Preferred Stock

During the three months ended March 31, 2022 and 2021, the Company issued 20 and no depository shares of the Series A Preferred Stock, respectively.

There were 2,834 and 2,814 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Total liquidation preference for the Series A Preferred Stock as of March 31, 2022 and December 31, 2021, was $ 70,854 and $ 70,362 , respectively.

Dividends on the Series A preferred paid during the three months ended March 31, 2022 and 2021, were $ 0.4296875 per depository share.

During the three months ended March 31, 2022 and 2021, the Company issued 4 and no depository shares of the Series B Preferred Stock.

There were 1,701 and 1,697 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Total liquidation preference for the Series B Preferred Stock as of March 31, 2022 and December 31, 2021, was $ 42,527 and $ 42,428 , respectively.

Dividends on the Series B preferred paid during the three months ended March 31, 2022 and 2021, were $ 0.4609375 per depository share.

During the six months ended June 30, 2022 and 2021, the Company issued 19,659 and 76,417 depository shares of the Series A Preferred Stock, respectively.

There were 2,834,144 and 2,814,485 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

Total liquidation preference for the Series A Preferred Stock as of June 30, 2022 and December 31, 2021, was $ 70,854 and $ 70,362 , respectively.

Dividends on the Series A preferred paid during the six months ended June 30, 2022 and 2021, were $ 0.4296875 per depository share.

During the six months ended June 30, 2022 and 2021, the Company issued 3,941 and 228,477 depository shares of the Series B Preferred Stock.

There were 1,701,075 and 1,697,134 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

Total liquidation preference for the Series B Preferred Stock as of June 30, 2022 and December 31, 2021, was $ 42,527 and $ 42,428 , respectively.

Dividends on the Series B preferred paid during the six months ended June 30, 2022 and 2021, were $ 0.4609375 per depository share.

NOTE 17 — NET CAPITAL REQUIREMENTS

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As such, they are subject to the minimum net capital requirements promulgated by the SEC.

As of March 31, 2022, BRS had net capital of $ 249,536 , which was $ 245,970 in excess of required minimum net capital of $ 3,566 ;

As of June 30, 2022, BRS had net capital of $ 150,415 , which was $ 146,305 in excess of required minimum net capital of $ 4,110 ;

BRWM had net capital of $ 10,699 , which was $ 10,029 in excess of required minimum net capital of $ 670 ;

NSC had net capital of $ 363 which was $ 113 in excess of required minimum net capital of $ 250 ;

FocalPoint had net capital of $ 1,444 which was $ 672 in excess of the required minimum net capital of $ 772 .

and FocalPoint had net capital of $ 513 which was $ 271 in excess of the required minimum net capital of $ 242 .

As of December 31, 2021, BRS had net capital of $ 277,611 , which was $ 265,093 in excess of its required minimum net capital of $ 12,518 ;

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In connection with these services, the Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Funds.

As of March 31, 2022, amounts due from related parties of $ 1,480 included $ 1,088 from the Funds for management fees and other operating expenses, and $ 442 due from CA Global Partners (“CA Global”) for operating expenses related to

wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Partners.

As of June 30, 2022, amounts due from related parties of $ 645 included $ 625 from the Funds for management fees and other operating expenses.

As of December 31, 2021, amounts due from related parties of $ 2,306 included $ 621 from the Funds for management fees and other operating expenses, and $ 1,635 due from CA Global Partners (“CA Global”) for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Partners.

No interest expense was recorded related to loan participations sold to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity fund managed by one of its subsidiaries, during the three months ended March 31, 2022.

During the three months ended March 31, 2021, the Company recorded interest expense of $ 346 related to loan participations sold to BRCPOF.

No commission income was recorded from introducing trades on behalf of BRCPOF during three months ended March 31, 2022.

The Company recorded commission income of $ 330 from introducing trades on behalf of BRCPOF during the three months ended March 31, 2021.

Our executive officers and members of our board of directors have a 49.1 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 29.1 % in the BRCPOF as of March 31, 2022.

No interest expense was recorded related to loan participations sold to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity fund managed by one of the Company's subsidiaries, during the three and six months ended June 30, 2022.

During the three and six months ended June 30, 2021, the Company recorded interest expense of $ 133 and $ 479 related to loan participations sold to BRCPOF.

No commission income was recorded from introducing trades on behalf of BRCPOF during the three and six months ended June 30, 2022, respectively.

The Company recorded commission income of $ 92 and $ 422 from introducing trades on behalf of BRCPOF during the three and six months ended June 30, 2021.

Our executive officers and members of our board of directors have a 48.1 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 27.3 % in BRCPOF as of June 30, 2022.

In June 2020, the Company entered into an investment advisory services agreement with Whitehawk Capital Partners, L.P.

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and GACP II, L.P.

During the three months ended March 31, 2022 and 2021, management fees paid for investment advisory services by Whitehawk was $ 1,079 and $ 1,210 , respectively.

During the three months ended June 30, 2022 and 2021, management fees paid for investment advisory services by Whitehawk was $ 94 and $ 236 , respectively, and during the six months ended June 30, 2022 and 2021 management fees paid was $ 1,173 and $ 1,446 , respectively.

The Company periodically participates in loans and financing arrangements for which the Company has an equity ownership and representation on the board of directors (or similar governing body).

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Babcock and Wilcox

During the three months ended March 31, 2022 and 2021, the Company earned $ 53 and $ 10,638 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

During the three months ended June 30, 2022 and 2021, the Company earned $ 11 and $ 1,710 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

During the six months ended June 30, 2022 and 2021, the Company earned $ 64 and $ 12,348 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

One of the Company’s wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the Company to serve as the Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”), unless terminated by either party with thirty days written notice.

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The Company has loans receivable due from The Arena Group Holdings, Inc.

(fka the Maven, Inc.) ("Arena") included in loans receivable, at fair value with a fair value of $ 67,988 and $ 69,835 as of March 31, 2022 and December 31, 2021, respectively.

(fka the Maven, Inc.) ("Arena") included in loans receivable, at fair value with a fair value of $ 68,047 and $ 69,835 as of June 30, 2022 and December 31, 2021, respectively.

Interest on these loans is payable at 10 % per annum with maturity dates through December 2023.

During the three months ended March 31, 2022, the Company earned $ 2,021 underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities.

The Company has a loan receivable due from Lingo included in loans receivable, at fair value with a fair value of $ 71,842 and $ 58,565 as of March 31, 2022 and December 31, 2021, respectively.

The term loan bears interest at 16.0 % per annum with a maturity date of December 1, 2022.

The term loan had a conversion feature under which $ 17,500 will convert to additional equity ownership upon receipt of certain regulatory approval.

If those regulatory approvals are received, the conversion would increase the Company’s ownership interest in Lingo from 40 % to 80 %.

On August 1, 2021, the credit agreement was amended to allow the borrower to elect that a portion of interest payable be payable in kind.

March 10, 2021, the Company also extended a promissory note to Lingo Communications, LLC in the amount of $ 1,100 .

The note bears interest at 6 % per annum with a maturity date of June 30, 2022.

During the three and six months ended June 30, 2022, the Company earned $ 2 and $ 2,023 , respectively, in underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities.

California Natural Resources Group, LLC

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The Company has guaranteed CalNRG’s obligations, up to $ 10,375 , under the CalNRG Credit Facility.

On March 9, 2022, the Company extended $ 10,000 to Faze Clan, Inc.

On March 9, 2022, the Company lent $ 10,000 to Faze Clan, Inc.

(“Faze”) pursuant to a bridge credit agreement (the “Bridge Agreement”).

The terms of the Bridge Agreement allow Faze to borrow an additional $ 10,000 with all principal and accrued interest due upon closing of Faze’s merger with B.

Riley Principal 150 Merger Corp.

In the event the merger agreement is terminated, without completion of the merger, Faze will issue convertible secured promissory notes in an aggregate principal amount equal to the outstanding principal balance and the unpaid accrued interest of the loans on such date.

As of March 31, 2022, the note is included in loans receivable, at fair value in the amount of $ 9,540 .

Notes issued pursuant to the Bridge Agreement bear interest at 7.0 % per annum.

As of March 31, 2022 and December 31, 2021, the Company had loans receivable due from other related parties in the amount of $ 4,417 and $ 4,201 , respectively.

On April 25, 2022, the Company lent an additional $ 10,000 pursuant to the Bridge Agreement.

All principal and accrued interest pursuant to the Bridge Agreement was repaid upon closing of Faze’s business combination (the “Business Combination”) with BRPM 150, which following the Business Combination changed its name to Faze

As a result of the Business Combination, BRPM 150 is no longer a VIE of the Company.

On July 19, 2022, in connection with the Business Combination, the Company purchased 5,342,500 shares of Faze Holdings Class A common stock for $ 10.00 per share.

As of June 30, 2022 and December 31, 2021, the Company had loans receivable due from other related parties in the amount of $ 500 and $ 4,201 , respectively.

The Company often provides consulting or investment banking services to raise capital for companies in which the Company has significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

During the three months ended March 31, 2022, the Company earned $ 1,880 of fees related to these services.

Other than the fees described above, during the three months ended June 30, 2022 and 2021, the Company earned $ 2,156 and $ 1,234 , respectively, of fees related to these services and during the six months ended June 30, 2022 and 2021, the Company earned $ 4,036 and $ 2,957 , respectively, of fees related to these services.

NOTE 19 — BUSINESS SEGMENTS

1 unchanged sentence

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

In 2022, the segment results in the Capital Markets segment include the operations of FocalPoint and the segment results in the Principal Investments – Communications and Other segment include the operations from Lingo (as previously discussed in Note 1) in each case from the date of acquisition

The following is a summary of certain financial data for each of the Company’s reportable segments:

Three Months Ended

Six Months Ended

2022 2021 2022 2021

Capital Markets segment:

6 unchanged sentences

Depreciation and amortization ( 2,204 ) ( 247 ) ( 4,097 ) ( 1,012 )

Segment income 13,822 366,308

Segment (loss) income ( 158,243 ) 104,682 ( 144,421 ) 470,990

Wealth Management segment:

8 unchanged sentences

Revenues - Sale of goods — 11,743 — 17,835

Interest income - Loans and securities lending 1,436 — 1,436 —

Total revenues 3,924 17,277 7,279 30,727

2 unchanged sentences

Selling, general and administrative expenses ( 2,177 ) ( 3,077 ) ( 3,997 ) ( 4,566 )

Segment (loss) income ( 800 ) 907

Segment income (loss) 451 3,555 ( 349 ) 4,462

Financial Consulting segment:

14 unchanged sentences

Revenues - Services and fees 5,174 4,501 9,731 8,889

Trading income and fair value adjustments on loans — 83

Trading loss and fair value adjustments on loans — ( 83 ) — —

Total revenues 5,174 4,418 9,731 8,889

2 unchanged sentences

Segment income 3,773 3,013 6,991 6,094

Consolidated operating income from reportable segments 19,900 385,176

Consolidated operating (loss) income from reportable segments ( 149,401 ) 121,967 ( 129,501 ) 507,143

Corporate and other expenses ( 9,358 ) ( 11,822 ) ( 24,536 ) ( 24,020 )

1 unchanged sentence

Change in fair value of financial instruments and other 4,321 6,509 10,302 6,509

Income on equity investments 6,775 875

(Loss) income from equity investments ( 3,399 ) ( 852 ) 3,376 23

Interest expense ( 31,764 ) ( 20,856 ) ( 62,200 ) ( 40,642 )

2 unchanged sentences

Net (loss) income ( 136,588 ) 75,100 ( 145,784 ) 331,698

Net income attributable to noncontrolling interests 866 1,942

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,571 ( 576 ) 4,437 1,366

Net (loss) income attributable to B.

5 unchanged sentences

Three Months Ended

Six Months Ended

2022 2021 2022 2021

Revenues - Services and fees:

6 unchanged sentences

North America 1,887 709 $ 3,765 $ 7,537

Europe — 11,748 — 11,748

Total Revenues - Sale of goods 1,887 12,457 $ 3,765 $ 19,285

Revenues - Interest income - Loans and securities lending:

4 unchanged sentences

Total Revenues $ 42,700 $ 336,770 $ 248,289 $ 936,929

As of March 31, 2022 and December 31, 2021, long-lived assets, which consist of property and equipment and other assets, of $ 12,980 and $ 12,870 , respectively, were located in North America.

As of June 30, 2022 and December 31, 2021, long-lived assets, which consist of property and equipment and other assets, of $ 14,182 and $ 12,870 , respectively, were located in North America.

Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed.

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The revision to the accompanying unaudited condensed consolidated statements of cash flows are as follows:

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

As Previously

3 unchanged sentences

Investment of subsidiaries initial public offering proceeds into trust account $ — $ ( 345,000 ) $ ( 345,000 )

Net cash provided by (used in) investing activities $ 662 $ ( 172,500 ) $ ( 171,838 )

Net cash used in investing activities $ ( 13,722 ) $ ( 345,000 ) $ ( 358,722 )

Cash flows from financing activities:

2 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 1. Financial Statements