What changed in this filing

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Item 9A. Controls and Procedures

2023-03-16 compared with 2022-02-28 · 1883 added, 1440 removed, 1075 unchanged (76% of the section changed)

3 unchanged sentences

Under the supervision and with the participation of our management, including our Co-Chief Executive Officers and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act.

Based upon the foregoing evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that as of December 31, 2021 our disclosure controls and procedures were effective at the reasonable assurance level.

Based upon the foregoing evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that as of December 31, 2022 our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described in the Report of Management on Internal Control over Financial Reporting.

Changes in Internal Control over Financial Reporting

On February 25, 2021, we

completed the acquisition of National Holdings Corporation (“National”).

We are in the process of integrating National and

will be conducting an evaluation of internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002.

Excluding the

National acquisition, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

During the year ended December 31, 2022, we acquired Targus Cayman Holdco Limited (“Targus”), Atlantic Coast Fibers, LLC (“ACR”), BullsEye Telecom (“BullsEye”) and Lingo Management, LLC (“Lingo”).

We are in the process of integrating these acquisitions and will be conducting an evaluation of internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002.

Excluding the above mentioned acquisitions, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to which this report relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report of Management on Internal Control over Financial Reporting

1 unchanged sentence

Under the supervision and with the participation of management, including our Co-Chief Executive Officers and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Management has excluded from

its assessment of internal controls over financial reporting as of December 31, 2021 the internal control over financial reporting of

National and their subsidiaries, which we acquired in a purchase business combination on February 25, 2021.

National’s total assets

and total revenues represents 2.6% and 18.0%, respectively, of our related consolidated financial statements amounts as of and for the

year ended December 31, 2021.

Our independent registered public accounting firm, Marcum LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in their report which is included in the Financial Statements of this Annual Report on Form 10-K.

Our management, including our Co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud.

A control system, no matter how well- designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Projections of any evaluation of the effectiveness of controls to future periods are subject to risks.

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Based on our evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2022.

Management has excluded from its assessment of internal controls over financial reporting as of December 31, 2022 the internal control over financial reporting of the Targus, ACR, BullsEye, and Lingo and their subsidiaries.

These acquisitions’ total assets and total revenues represents 6.6% and 18.3%, respectively, of our related consolidated financial statements amounts as of and for the year ended December 31, 2022.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, using criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management concluded there is a material weakness in internal controls over financial reporting as December 31, 2022, related to:

• The Company identified a material weakness relating to the operating effectiveness of management's review controls over key assumptions that are utilized to determine the fair value of intangible assets for new acquisitions and the fair value of reporting units in the Company’s assessment of goodwill impairment.

• The Company identified a material weakness relating to the operating effectiveness of management's review controls over the income tax provision such that management's review procedures were not operating at a level of precision to prevent or detect a potential material misstatement in the consolidated statements.

• The Company identified a material weakness relating to the operating effectiveness of management’s review controls over the presentation and classification of dividend income and realized and unrealized gains (losses) on certain equity securities.

The Company’s material weaknesses relating to the operating effectiveness of management's review controls over key assumptions that are utilized to determine the fair value of intangible assets for new acquisitions and the fair value of reporting units and management’s review controls over the income tax provision described above did not result in a material adjustment to the Company’s consolidated financial statements.

The Company’s material weakness for presentation and classification of dividend income and realized and unrealized gains (losses) on certain equity securities resulted in the correction to reclassify certain revenue amounts to other income in the consolidated statement of operations and did not result in changes to the balance sheet, statement of equity, statement of cash flows, net income (loss) or earnings per share as previously reported.

Management continues to implement measures designed to ensure that the control deficiency contributing to the material weakness is remediated, such that the controls are designed, implemented, and operating effectively.

The remediation actions include the enhancement of control activity evidence, improvement of the precision level of management review controls, and reclassification of dividend income and realized and unrealized gains (losses) on certain equity securities.

We believe that these actions will remediate the material weakness.

The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively.

We expect that the remediation of this material weakness will be completed prior to the end of fiscal 2023.

Our independent registered public accounting firm, Marcum LLP, has audited the consolidated financial statements and has issued an adverse attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2022, as stated in their report which is included in the Financial Statements of this Annual Report on Form 10-K.

OTHER INFORMATION

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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The information called for by this item is hereby incorporated by reference from our definitive Proxy Statement relating to the 2023 Annual Meeting of Stockholders, which Proxy Statement is anticipated to be filed with the Securities and Exchange Commission within 120 days of December 31, 2022.

CERTAIN RELATIONSHIPS AND RELATED TRANACTIONS, AND DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

(a) The following documents are filed as part of this report:

Financial Statements.

The Company’s Consolidated Financial Statements required to be filed in the Annual Report on the Form 10-K and the notes thereto, together with the report of the independent auditors on those Consolidated Financial Statements and the effectiveness of internal control over financial reporting of the Company, are hereby filed as part of this report, beginning on page F-1.

Statement Schedules.

Financial Statement Schedules.

Financial Statement Schedules other than those listed above have been omitted because they are either not applicable or the information is otherwise included in the consolidated financial statements or the notes thereto.

Exhibits and Index to Exhibits, below.

(b) Exhibits and Index to Exhibits, below.

Incorporated by Reference

Description Form Exhibit Filing Date

3.1 Amended and Restated Certificate of Incorporation, as amended, dated as of August 17, 2015.

10-Q 3.1 8/3/2018

3.2 Amended and Restated Bylaws, dated as of November 6, 2014.

10-Q 3.6 11/6/2014

3.3 Amendment to Amended and Restated Bylaws of B.

Riley Financial, Inc., dated April 3, 2019.

8-K 3.1 4/9/2019

3.4 Certificate of Designation designating the 6.875% Series A Cumulative Perpetual Preferred Stock of B.

Riley Financial, Inc.

8-K 3.1 10/7/2019

3.5 Certificate of Designation designating the 7.375% Series B Cumulative Perpetual Preferred Stock of B.

Riley Financial, Inc.

8-K 3.1 9/4/2020

4.1 Form of common stock certificate.

10-K 4.1 3/30/2015

4.2 Base Indenture, dated as of November 2, 2016, by and between the registrant and U.S.

Bank National Association, as Trustee.

8-K 4.1 11/2/2016

4.3 Second Supplemental Indenture, dated as of May 31, 2017, by and between the registrant and U.S.

Bank National Association, as Trustee.

8-K 4.1 5/31/2017

4.4 Form of 7.50% Senior Note due 2027 (included in Exhibit 4.3).

8-K 4.1 5/31/2017

4.5 Third Supplemental Indenture, dated as of December 13, 2017, by and between the registrant and U.S.

Bank National Association, as Trustee.

Incorporated by Reference

8-K 4.1 12/13/2017

4.6 Form of 7.25% Senior Note due 2027 (included in Exhibit 4.5).

8-K 4.1 12/13/2017

Incorporated by Reference

Description Form Exhibit Filing Date

4.7 Fourth Supplemental Indenture, dated as of May 17, 2018, by and between the registrant and U.S.

Bank National Association, as Trustee.

8-K 4.1 5/17/2018

4.8 Form of 7.375% Senior Note due 2023 (included in Exhibit 4.7).

8-K 4.2 5/17/2018

4.9 Fifth Supplemental Indenture, dated as of September 11, 2018, by and between the registrant and U.S.

Bank National Association, as Trustee.

8-K 4.1 9/11/2018

4.10 Form of 6.875% Senior Note due 2023 (included in Exhibit 4.9).

8-K 4.2 9/11/2018

4.11 Second Supplemental Indenture, dated as of September 23, 2019, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee.

8-K 4.3 9/23/2019

4.12 Form of 6.50% Senior Note due 2026 (included in Exhibit 4.11).

8-K 4.4 9/23/2019

4.13 Deposit Agreement, dated October 7, 2019, among B.

1 unchanged sentence

Riley Financial, Inc.’s 6.875% Series A Cumulative Perpetual Preferred Stock.

8-K 4.1 10/7/2019

4.14 Form of Specimen Certificate representing the 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share, of B.

Riley Financial, Inc.

8-K 4.2 10/7/2019

4.15 Form of Depositary Receipt.

8-K 4.3 10/7/2019

4.16 Third Supplemental Indenture, dated as of February 12, 2020, by and between the Company and The Bank of New York Mellon Trust Company National Association, as Trustee.

8-K 4.4 2/12/2020

4.17 Form of 6.375% Senior Note due 2025 (included in Exhibit 4.16).

8-K 4.4 2/12/2020

4.18 Deposit Agreement, dated September 4, 2020, among B.

1 unchanged sentence

Riley Financial, Inc.’s 7.375% Series B Cumulative Perpetual Preferred Stock

8-K 4.1 9/4/2020

4.19 Form of Specimen certificate representing the 7.375% Series B Cumulative Perpetual Preferred Stock, par value $0.0001 per share, of B.

Riley Financial, Inc.

8-K 4.2 9/4/2020

4.20 Form of Depositary Receipt.

8-K 4.3 9/4/2020

Incorporated by Reference

Description Form Exhibit Filing Date

4.21 Fourth Supplemental Indenture, dated as of January 25, 2021, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K 4.5 1/25/2021

4.22 Form of 6.00% Senior Note due 2028

8-K 4.6 1/25/2021

4.23 Fifth Supplemental Indenture, dated as of March 29, 2021, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee

Incorporated by Reference

8-K 4.6 3/29/2021

4.24 Form of 5.50% Senior Note due 2026

8-K 4.7 3/29/2021

4.25 Sixth Supplemental Indenture, dated as of August 6, 2021, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K 4.7 8/6/2021

4.26 Form of 5.25% Senior Note due 2028

8-K 4.8 8/6/2021

4.27 Seventh Supplemental Indenture, dated as of December 3, 2021, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K 4.8 12/3/2021

4.28 Form of 5.00% Senior Note due 2026

8-K 4.9 12/3/2021

4.29* Description of Registered Securities

10.1 Security Agreement, dated as of October 21, 2008, by and between Great American Group WF, LLC and Wells Fargo Bank, National Association (Successor to Wells Fargo Retail Finance, LLC).

10-Q 10.8 8/31/2009

10.2 Escrow Agreement, dated as of July 31, 2009, by and among Alternative Asset Management Acquisition Corp., the registrant, Andrew Gumaer, as the Member Representative, and Continental Stock Transfer & Trust Company.

8-K 10.6 8/6/2009

10.3# Form of Director and Officer Indemnification Agreement.

8-K 10.11 8/6/2009

10.4 Loan and Security Agreement (Accounts Receivable & Inventory Line of Credit), dated as of May 17, 2011, by and between BFI Business Finance and Great American Group Advisory & Valuation Services, LLC.

8-K 10.1 5/26/2011

10.5 Second Amended and Restated Credit Agreement, dated as of July 15, 2013, by and between Great American Group WF, LLC and Wells Fargo Bank, National Association.

8-K 10.1 7/19/2013

Incorporated by Reference

Description Form Exhibit Filing Date

10.6 Third Amended and Restated Guaranty, dated as of July 15, 2013, by and between the registrant and Great American Group, LLC, in favor of Wells Fargo Bank, National Association.

8-K 10.2 7/19/2013

10.7 Uncommitted Liquidation Finance Agreement, dated as of March 19, 2014, by and among GA Asset Advisors Limited, each special purpose vehicle affiliated to GA Asset Advisors Limited which accedes to such agreement, and Burdale Financial Limited.

8-K 10.1 3/25/2014

10.8 Master Guarantee and Indemnity, dated as of March 19, 2014, by and among GA Asset Advisors Limited, the registrant, Great American Group, LLC, Great American Group WF, LLC, Burdale Financial Limited and Wells Fargo Bank, National Association.

8-K 10.2 3/25/2014

10.9 First Amendment to Credit Agreement and Limited Consent and Waiver, dated as of May 28, 2014, by and among Wells Fargo Bank, National Association, Great American Group WF, LLC, Great American Group, Inc.

and Great American Group, LLC.

Incorporated by Reference

10-Q 10.8 8/14/2014

10.10 Third Amendment to Credit Agreement, dated as of February 5, 2015, by and between Great American Group WF, LLC and Wells Fargo Bank, National Association.

10-Q 10.7 5/7/2015

10.11 Fourth Amendment to Credit Agreement, dated as of February 19, 2015, by and between Great American Group WF, LLC, GA Retail, Inc.

and Wells Fargo Bank, National Association.

10-Q 10.8 5/7/2015

10.12# Amended and Restated 2009 Stock Incentive Plan.

10-Q 10.1 8/11/2015

10.13# Amended and Restated 2009 Stock Incentive Plan – Form of Restricted Stock Unit Agreement.

10-Q 10.2 8/11/2015

10.14# Amended and Restated 2009 Stock Incentive Plan – Stock Bonus Program and Form of Stock Bonus Award Agreement.

10-Q 10.3 8/11/2015

Riley Financial, Inc.

Management Bonus Plan.

8-K 10.1 8/18/2015

10.16 Fifth Amendment to Credit Agreement, dated June 10, 2016, by and among Great American Group WF, LLC, GA Retail, Inc.

and Wells Fargo Bank, National Association.

10-Q 10.1 8/5/2016

10.17 Sixth Amendment and Joinder under Credit Facility among Great American Group WF, LLC and Wells Fargo Bank, National Association as Lender October 5, 2016.

10-Q 10.1 11/14/2016

10.18 Seventh Amendment to Credit Agreement, dated as of April 21, 2017, by and among Great American Group WF, LLC, GA Retail, Inc., GA Retail Canada, ULC, Wells Fargo Bank, National Association and Wells Fargo Capital Finance Corporation Canada.

8-K 10.1 4/27/2017

Incorporated by Reference

Description Form Exhibit Filing Date

10.19 Warrant Agreement, dated as of July 3, 2017, by and between the registrant and Continental Stock Transfer & Trust Company.

8-K 10.1 7/5/2017

10.20# Registration Rights Agreement, dated as of July 3, 2017, by and among the registrant and the persons listed on the signature pages thereto.

8-K 10.4 7/5/2017

10.21# Employment Agreement, dated as of January 1, 2018, by and between the registrant and Bryant R.

8-K 10.1 1/5/2018

10.22# Employment Agreement, dated as of January 1, 2018, by and between the registrant and Thomas J.

8-K 10.2 1/5/2018

10.23# Employment Agreement, dated as of January 1, 2018, by and between the registrant and Phillip J.

8-K 10.4 1/5/2018

10.24# Employment Agreement, dated as of January 1, 2018, by and between the registrant and Alan N.

Incorporated by Reference

10-K 10.42 3/14/2018

10.25 Debt Conversion and Purchase and Sale Agreement, dated January 12, 2018, by and among the registrant, bebe stores, inc.

and The Manny Mashouf Living Trust.

8-K 10.1 1/16/2018

10.26# Employment Agreement, dated as of July 10, 2018, by and between the registrant and Kenneth M.

8-K 10.1 7/16/2018

10.27# Employment Agreement, dated as of July 10, 2018, by and between B.

1 unchanged sentence

and Andrew Moore.

8-K 10.2 7/16/2018

10.28# Amendment No.

1 to Employment Agreement, dated as of July 10, 2018, by and between the registrant and Bryant R.

8-K 10.3 7/16/2018

10.29# Amendment No.

1 to Employment Agreement, dated as of July 10, 2018, by and between the registrant and Thomas Kelleher.

8-K 10.4 7/16/2018

10.30# 2018 Employee Stock Purchase Plan.

8-K 10.1 7/31/2018

10.31 Credit Agreement, dated December 19, 2018.

8-K 10.1 12/27/2018

10.32 First Amendment to Credit Agreement and Joinder, dated February 1, 2019

8-K 10.2 2/7/2019

10.33 Second Amendment to Credit Agreement, dated December 31, 2020

8-K 10.1 1/6/2021

10.34 Security and Pledge Agreement, dated December 19, 2018.

8-K 10.2 12/27/2018

Incorporated by Reference

Description Form Exhibit Filing Date

10.35 Unconditional Guaranty and Pledge Agreement by B.

Riley Principal Investments, LLC, dated December 19, 2018.

8-K 10.3 12/27/2018

10.36 Unconditional Guaranty by the registrant, dated December 19, 2018.

8-K 10.3 12/27/2018

10.37# Amendment to Amended and Restated 2009 Stock Incentive Plan.

10-Q 10.4 11/1/2019

10.38 Form of Restricted Stock Unit Award Agreement (Time-Vesting) under the B.

1 unchanged sentence

2021 Stock Incentive Plan.

8-K 10.01 5/28/2021

Riley Financial, Inc.

2021 Stock Incentive Plan, incorporated by reference to Appendix A to the Company’s definitive proxy statement, dated April 20, 2021 filed with the Securities and Exchange Commission.

Incorporated by Reference

8-K 10.01 6/3/2021

10.40 Credit agreement, dated June 23, 2021, among B.

Riley Financial, Inc., BR Financial Holdings, LLC, BR Advisory & Investments, LLC, each of the lenders from time to time parties thereto, Nomura Corporate Funding Americas, LLC, and Wells Fargo Bank, N.A.

8-K 10.1 6/25/2021

10.41 Master Receivables Purchase Agreement, dated as of December 20, 2021, between B.

1 unchanged sentence

Badcock Corporation

8-K 10.1 12/22/2021

10.42 Servicing Agreement, dated as of December 20, 2021, between B.

1 unchanged sentence

Badcock Corporation

8-K 10.2 12/22/2021

10.43 Form of Director and Officer Indemnification Agreement

8-K 10.3 12/22/2021

10.44 Third Amendment to Credit Agreement, dated as of December 16, 2021.

10-K 10.44 2/25/2022

10.45 Second Incremental Amendment to Credit Agreement, dated as of December 17, 2021.

10-K 10.45 2/25/2022

10.46# PRSU Grant Agreement

10-K 10.46 2/25/2022

10.47 Third Amended and Restated Credit Agreement, dated as of April 20, 2022, by and among B.

Riley Retail Solutions WF, LLC, B.

Riley Retail, Inc., B.

Riley Retail Canada, ULC, Wells Fargo Bank, National Association and Wells Fargo Capital Finance Corporation Canada

8-K 10.1 4/25/2022

10.48 Fourth Amendment to Credit Agreement, dated as of June 21, 2022 10-Q 10.1 7/29/2022

Riley – Code of Business Conduct and Ethics_022321

8-K 14.1 3/01/2021

Incorporated by Reference

Description Form Exhibit Filing Date

21.1* Subsidiary List

9 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Incorporated by Reference

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.INS* Inline XBRL Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_________________________________

* Filed herewith.

13 unchanged sentences

Riley Financial, Inc.

February 25, 2022

March 15, 2023

/s/ PHILLIP J.

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated:

Signature Title Date

/s/ BRYANT R.

Co-Chief Executive Officer Chairman of the Board

February 25, 2022

(Principal Executive Officer)

RILEY Co-Chief Executive Officer Chairman of the Board March 15, 2023

Riley) (Principal Executive Officer)

/s/ THOMAS J.

Co-Chief Executive Officer Director

February 25, 2022

KELLEHER Co-Chief Executive Officer Director March 15, 2023

/s/ PHILLIP J.

Chief Financial Officer Chief Operating Officer

February 25, 2022

(Principal Financial Officer)

AHN Chief Financial Officer Chief Operating Officer March 15, 2023

Ahn) (Principal Financial Officer)

/s/ HOWARD E.

Accounting Officer (Principal Accounting Officer)

February 25, 2022

WEITZMAN Chief Accounting Officer (Principal Accounting Officer) March 15, 2023

/s/ ROBERT L.

February 25, 2022

/s/ ROBERT D’AGOSTINO

February 25, 2022

ANTIN Director March 15, 2023

/s/ ROBERT D’AGOSTINO Director March 15, 2023

(Robert D’Agostino)

/s/ TAMMY BRANDT

February 25, 2022

/s/ TAMMY BRANDT Director March 15, 2023

(Tammy Brandt)

February 25, 2022

LABRAN Director March 15, 2023

/s/ RANDALL E.

February 25, 2022

PAULSON Director March 15, 2023

/s/ MICHAEL J.

February 25, 2022

SHELDON Director March 15, 2023

WALTERS Director March 15, 2023

RILEY FINANCIAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 ) F-2

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting F-4

Consolidated Balance Sheets F-5

Consolidated Statements of Income F-6

Consolidated Statements of Comprehensive Income F-7

Consolidated Statements of Equity F-8

Consolidated Statements of Cash Flows F-9

Notes to Consolidated Financial Statements F-10

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 )

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Opinion on the Financial Statements

We have audited

the accompanying consolidated balance sheets of B.

We have audited the accompanying consolidated balance sheets of B.

Riley Financial, Inc.

and Subsidiaries (the “Company”) as of December 31,

2021 and 2020, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years

in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021,

in conformity with accounting principles generally accepted in the United States of America.

We also have audited,

in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal

control over financial reporting as of December 31, 2021, based on the criteria established in Internal Control - Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated February 25, 2022,

expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 15, 2023, and expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.

Restatement of Previously Issued Financial Statements

As discussed in Note 2 to the financial statements, the Company has restated its financial statements for the years ended December 31, 2021 and 2020 to correct misstatements.

Basis for Opinion

These financial

statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our

audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included

performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for

Critical Audit

The critical audit

matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

for acquisition of National Holdings Corporation (“National”)

of the Matter

As discussed in

Note 1 of the financial statements, the Company completed an acquisition of the remaining 55% of National outstanding shares that the

Company did not previously own and settlement of outstanding share based awards amounting to approximately $35,314,000.

The transaction

was accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible

assets acquired and liabilities assumed based on their respective fair values.

Auditing the Company's accounting for the acquisition

of National was complex due to the significant estimates in determining the fair value of its identifiable intangible assets, which principally

consisted of customer relationships and trademarks.

The uncertainty of significant estimates was primarily due to the sensitivity of

the underlying assumptions related to future performance of the acquired business.

The significant assumptions used to estimate the fair

value of the customer relationships included the future operating performance and cash flows generated by the customer relationships

and a discount rate.

The significant assumptions used to estimate the fair value of the trademarks included the projected revenues generated

by the trademarks, a royalty rate, and a discount rate.

These significant assumptions are forward looking and could be affected by future

economic and market conditions.

We Addressed the Matter in Our Audit

Our audit procedures

related to the accounting for the acquisition of National to address this critical audit matter included the following:

● We obtained an understanding,

evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for acquisitions, including

the valuation of identifiable intangible assets

● We tested the Company's

controls over management’s review of the identifiable intangible asset valuation models, as well as the significant assumptions

used in the valuation models.

● Additionally we read the

purchase agreement to identify the significant terms, and tested management’s process for estimating the fair value of customer

relationships and trademarks including:

o We involved our valuation specialists to assist in our evaluation of the methodologies

used by the Company and the significant assumptions included in the fair value estimates, which included guideline companies, discount

rates, internal rate of return, weighted average cost of capital, weighted average return on assets.

o We evaluated the reasonableness of management’s forecasts of future cash

flows by comparing projections to historical results and applying a reasonable growth rate.

o We compared the significant assumptions to the historical results of the acquired

business and performed retrospective review of the actual results compared to the projected cash flows.

of Certain Level 3 Investments

of the Matter

The Company estimates

the fair value of certain investments and loans receivable utilizing valuation models with unobservable inputs.

Unlike Level 1 and 2 inputs,

Level 3 inputs are unobservable, supported by little or no market activity, and are significant to the fair value of certain investments

and loans receivable.

As of December 31, 2021, the Company had equity securities of $377,549,000 and loan receivables recorded at fair

value of $873,186,000 utilizing Level 3 inputs.

Subjective and

challenging judgment is required by management to determine the assumptions and valuation methodology to record financial assets at their

fair value using Level 3 inputs.

Auditing management’s models to determine the fair value of certain investments and loans receivable

was complex and required judgment, particularly when evaluating inputs such as discount rates, projected EBITDA, multiples of EBITDA,

projected revenue, multiples of revenue, multiple of PV-10, expected annualized volatility rates and market interest rates.

These assumptions

are affected by expectations about future economic and industry factors as well as estimates of the investee’s future growth.

How We Addressed

the Matter in Our Audit

Our audit procedures

related to the valuation of certain Level 3 Investments to address this critical audit matter included the following:

● We obtained an understanding

of the control environment, evaluating the design effectiveness, and testing the operating effectiveness of controls over the Company’s

process to establish a valuation methodology and determine assumptions used in valuation models to record financial assets at their fair

For example, we tested management’s review controls over the significant assumptions described above as well as over the

data used in the valuation models.

● With assistance from our

valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions;

tested inputs for reasonableness,

including discount rates, multiples of revenue, multiple of PV-10, expected annualized volatility rates and market interest rates;

corroborated with audit evidence from external sources or comparisons to other companies in the industry.

● We tested the Company's

process used to develop the revenue, projected EBITDA, multiples of EBITDA, projected revenue, multiple of PV-10 and EBITDA projections

evaluated audit evidence from events or transactions occurring after the measurement date for comparison to management’s estimate.

for investments in variable interest entities

of the Matter

As discussed in

Note 2 (ab) to the consolidated financial statements, the Company holds interests in various entities that meet the characteristics of

a variable interest entity (“VIE”).

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes

involved with a VIE, which requires consolidation based upon the following criteria:

a) the power to direct the activities of the entity that most significantly impact

its economic success,

b) the obligation to absorb the expected losses of the entity, or

c) the right to receive the expected residual returns of the entity;

d) the voting rights of some investors in the entity are not proportional to their

economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small

voting interest.

We identified the

accounting for investments in variable interest entities to be a critical audit matter.

Evaluating the Company’s judgments in determining

whether an entity is a VIE and the primary beneficiary of each VIE required a high degree of complex auditor judgment.

How We Addressed

the Matter in Our Audit

Our audit procedures

related to the accounting for investments in variable interest entities to address this critical audit matter included the following:

● We tested certain internal

controls over the Company’s process to identify and account for a VIE.

These included controls related to the consideration of various

interests in an entity, and determining whether the Company is the primary beneficiary of the VIE.

● We obtained and read the

agreements in which the Company evaluated and compared the terms of the agreements to the Company’s assessment.

● We reviewed the Company’s

VIE analyses to determine if the VIE meets the criteria for consolidation in accordance with Accounting Standards Codification (“ASC”)

810, Consolidations.

● We evaluated the factors

considered to determine whether the Company omitted any significant potential variable interests in their analyses.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for acquisition of Intangible Assets in Business Combinations

Description of the Matter

As discussed in Note 4 of the financial statements, the Company completed acquisitions of several entities.

These transactions were accounted for as business combinations and the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values.

The acquired intangible assets included approximately $137 million in customer relationships, $16 million in internally developed software and other intangibles and $52 million in trademarks and tradenames.

The significant assumptions used to estimate the fair value of the intangible assets included future operating performance and projected cash flows, growth rates, attrition rates, royalty rates and discount rates.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included:

• Obtained an understanding, evaluated the design and implementation, and tested the operating effectiveness of controls over the Company’s accounting for acquisitions, including the valuation of identifiable intangible assets.

We considered the material weakness relating to management’s review controls in determining the nature, timing and extent of audit tests applied in our audit.

• Evaluated the Company's selection of the valuation methodologies and significant assumptions used by the Company in the valuation of the intangible assets, and the reasonableness of significant assumptions and estimates.

• Involved firm employed valuation specialists to assist with our evaluation of the methodologies used by the Company and significant assumptions included in the fair value estimates.

• Evaluated the assumptions utilized in the prospective financial information included in the fair value estimates.

• Tested the mathematical accuracy of the models used to determine the fair values of assets acquired.

Valuation of Level 3 Investments

Description of the Matter

The Company estimates the fair value of Level 3 investments, which includes equity securities and loans receivable.

At December 31, 2022, the Company reported equity securities and loans receivable of approximately $368 million and $702 million, respectively.

Management uses judgment to determine the significant assumptions and valuation methodologies used in valuation models to record financial assets at their fair value using Level 3 inputs.

These Level 3 inputs are unobservable, supported by little or no market activity, and are significant to the fair value of Level 3 investments.

Evaluating management’s significant assumptions and valuation methodologies to determine the fair value of Level 3 investments was complex and required judgment, particularly when evaluating Level 3 inputs such as discount rates, projected EBITDA, multiples of EBITDA, multiples of sales, market price of related securities, market interest rates and expected annualized volatility rates.

These significant assumptions are affected by expectations about future economic and industry factors as well as estimates of the investee’s future growth.

How We Addressed the Matter in Our Audit

Our audit procedures related to the valuation of Level 3 investments to address this critical audit matter included the following:

• We obtained an understanding of the control environment, evaluating the design effectiveness, and testing the operating effectiveness of controls over the Company’s process to determine significant assumptions and valuation methodologies used in valuation models to record financial assets at their fair value.

• With the assistance of firm employed valuation specialists, we evaluated the reasonableness of significant assumptions and valuation methodologies, and tested Level 3 inputs for reasonableness.

• Tested the mathematical accuracy of the valuation models used to determine the fair values of Level 3 investments.

/s/ Marcum LLP

We have served as the Company’s auditor since 2009.

February 25, 2022

March 15, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Riley Financial, Inc.

Opinion on Internal Control over Financial Reporting

Adverse Opinion on Internal Control over Financial Reporting

We have audited B.

Financial, Inc.'s (the “Company”) internal control over financial reporting as of December 31, 2021, based on criteria established

in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December

31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission.

We have also audited, in accordance with the standards

of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December

31, 2021 and 2020 and the related consolidated statements of income, comprehensive income, equity, and cash flows and the related notes

for each of the three years in the period ended December 31, 2021 of the Company, and our report dated February 25, 2022 expressed an

unqualified opinion on those financial statements.

Riley Financial, Inc.

and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in the “Report of Management on Internal Control over Financial Reporting”:

• The Company has a material weakness relating to the operating effectiveness of management's review controls over key assumptions that are utilized to determine the fair value of intangible assets for new acquisitions and the fair value of reporting units in the Company’s assessment of goodwill impairment.

• The Company has a material weakness relating to the operating effectiveness of management's review controls over the income tax provision.

• The Company has a material weakness relating to the operating effectiveness of management’s review controls over the presentation and classification of dividend income and realized and unrealized gains (losses) on certain equity securities.

This resulted in a restatement of previously issued financial statements as discussed in Note 2 of the consolidated financial statements.

The material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit for the year ended December 31, 2022 of the consolidated financial statements, and this report does not affect our report dated March 15, 2023 on those consolidated financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2022 and 2021 and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows and the related notes for each of the three years in the period ended December 31, 2022 of the Company, and our report dated March 15, 2023 expressed an unqualified opinion on those consolidated financial statements.

As described in the Report of Management on Internal Control over Financial Reporting, management has excluded Targus Cayman Holdco Limited, Atlantic Coast Fibers, LLC, BullsEye Telecom, and Lingo Management, LLC and their subsidiaries (“acquired entities”), from its assessment of internal control over financial reporting as of December 31, 2022 because these entities were acquired by the Company in purchase business combinations during 2022.

We have also excluded the acquired entities from our audit of internal control over financial reporting.

These acquired entities’ combined total assets and total revenues represent approximately 6.6% and 18.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022 .

Basis for Opinion

The Company's management is responsible for maintaining

effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,

included in the accompanying “Management Annual Report on Internal Control over Financial Reporting”.

Our responsibility is

to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered

with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective

internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,

and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included

performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis

for our opinion.

Definition and Limitations of Internal Control

over Financial Reporting

A company’s internal control over financial

reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over

financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the company’s assets that could have a material effect on the financial statements.

Because of the inherent

limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

degree of compliance with the policies or procedures may deteriorate.

New York , NY

February 25, 2022

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Report of Management on Internal Control over Financial Reporting”.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in

all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

/s/ Marcum LLP

Melville , NY

March 15, 2023

FINANCIAL INFORMATION

4 unchanged sentences

(Dollars in thousands, except par value)

2022 December 31,

Cash and cash equivalents $ 268,618 $ 278,933

6 unchanged sentences

Loans receivable, at fair value (includes $ 98,729 and $ 167,744 from related parties as of December 31, 2022 and 2021, respectively)

701,652 873,186

Prepaid expenses and other assets 460,696 463,502

1 unchanged sentence

Property and equipment, net 27,141 12,870

Goodwill 512,595 250,568

Other intangible assets, net 374,098 207,651

Deferred tax assets, net

Deferred income taxes 3,978 2,848

Total assets $ 6,111,202 $ 5,851,919

Liabilities and Equity

2 unchanged sentences

Deferred revenue 85,441 69,507

Deferred tax liabilities, net

Deferred income taxes 29,548 93,055

Due to related parties and partners 2,210 —

4 unchanged sentences

Notes payable 25,263 357

Loan participations sold

Revolving credit facility 127,678 80,000

Term loans, net 572,079 346,385

Senior notes payable, net 1,721,751 1,606,560

12 unchanged sentences

Additional paid-in capital 494,201 413,486

Retained earnings

(Accumulated deficit) retained earnings ( 45,220 ) 248,862

Accumulated other comprehensive loss ( 2,470 ) ( 1,080 )

2 unchanged sentences

Noncontrolling interests 59,379 43,930

Total equity 505,893 705,201

Total liabilities and equity $ 6,111,202 $ 5,851,919

2 unchanged sentences

AND SUBSIDIARIES

Consolidated Statements of Income

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Year Ended December 31,

2022 2021 2020

(As Restated) (As Restated)

Services and fees $ 895,623 $ 1,153,225 $ 645,906

Trading income and fair value adjustments on loans

Trading (loss) income and fair value adjustments on loans ( 202,628 ) 220,545 56,677

Interest income - Loans and securities lending 245,400 122,723 102,499

12 unchanged sentences

Interest income 2,735 229 564

Gain on extinguishment of loans and other

Income (loss) from equity investments

Dividend income 35,874 19,732 21,163

Realized and unrealized gains (losses) on investments ( 201,079 ) 166,131 47,341

Change in fair value of financial instruments and other 10,188 3,796 —

Income (loss) from equity method investments 3,570 2,801 ( 623 )

Interest expense ( 141,186 ) ( 92,455 ) ( 65,249 )

Income before income taxes

Provision for income taxes

Net income (loss) attributable to noncontrolling interests

Net income attributable to B.

(Loss) income before income taxes ( 220,450 ) 614,762 279,457

Benefit from (provision for) income taxes 63,856 ( 163,960 ) ( 75,440 )

Net (loss) income ( 156,594 ) 450,802 204,017

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,235 5,748 ( 1,131 )

Net (loss) income attributable to B.

Riley Financial, Inc.

( 159,829 ) 445,054 205,148

Preferred stock dividends 8,008 7,457 4,710

Net income available to common shareholders

Basic income per common share

Diluted income per common share

Net (loss) income available to common shareholders $ ( 167,837 ) $ 437,597 $ 200,438

Basic (loss) income per common share $ ( 5.95 ) $ 15.99 $ 7.83

Diluted (loss) income per common share $ ( 5.95 ) $ 15.09 $ 7.56

Weighted average basic common shares outstanding 28,188,530 27,366,292 25,607,278

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AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

(Dollars in thousands)

Year Ended December 31,

Other comprehensive income (loss):

2022 2021 2020

Net (loss) income $ ( 156,594 ) $ 450,802 $ 204,017

Other comprehensive (loss) income:

Change in cumulative translation adjustment ( 1,390 ) ( 257 ) 1,165

Other comprehensive income (loss), net of tax

Total comprehensive income

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income attributable to B.

Other comprehensive (loss) income, net of tax ( 1,390 ) ( 257 ) 1,165

Total comprehensive (loss) income ( 157,984 ) 450,545 205,182

Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 6,565 5,748 ( 1,131 )

Comprehensive (loss) income attributable to B.

Riley Financial, Inc.

$ ( 164,549 ) $ 444,797 $ 206,313

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

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(Dollars in thousands, except share data)

Preferred Stock

Preferred Stock Common Stock Additional

Capital Retained

Earnings (Accumulated Deficit) Accumulated

Comprehensive

Noncontrolling

Loss Noncontrolling

Interests Total

Shares Amount Shares Amount

Balance, January 1, 2019 2,349 $ — 26,972,332 $ 3 $ 323,109 $ 39,536 $ ( 1,988 ) $ 29,591 $ 390,251

Common stock issued

Preferred stock issued 1,622 — — — 39,455 — — — 39,455

Issuance of common stock warrant for

purchase of BR Brand Holdings, LLC

ESPP shares issued and vesting of

restricted stock, net of shares

withheld for employer taxes

ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes — — 1,358,212 — ( 22,578 ) — — — ( 22,578 )

Common stock repurchased and retired — — ( 2,552,748 ) — ( 48,248 ) — — — ( 48,248 )

Warrants repurchased and retired

Share based payments — — — — 18,588 — — — 18,588

Dividends on common stock

($ 1.49 per share)

Dividends on common stock ($ 1.325 per share)

— — — — — ( 36,894 ) — — ( 36,894 )

Dividends on preferred stock — — — — — ( 4,710 ) — — ( 4,710 )

Net income (loss) — — — — — 205,148 — ( 1,131 ) 204,017

Distributions to noncontrolling interests — — — — — — — ( 2,690 ) ( 2,690 )

Noncontrolling interest from purchase

of BR Brand Holdings, LLC

Contributions from noncontrolling interests — — — — — — — 604 604

Foreign currency translation adjustment — — — — — — 1,165 — 1,165

Balance, December 31, 2020 3,971 $ — 25,777,796 $ 3 $ 310,326 $ 203,080 $ ( 823 ) $ 26,374 $ 538,960

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

Preferred stock issued 541 — — — 14,712 — — — 14,712

ESPP shares issued and vesting of

restricted stock, net of shares

withheld for employer taxes

ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes — — 433,182 — ( 9,620 ) — — — ( 9,620 )

Common stock repurchased and retired — — ( 44,650 ) — ( 2,656 ) — — — ( 2,656 )

( 2,552,748 )

Warrants exercised — — 11,655 — — — — — —

Share based payments — — — — 36,011 — — — 36,011

Dividends on common stock

($1.325 per share)

Dividends on common stock ($ 12.50 per share)

— — — — — ( 373,633 ) — — ( 373,633 )

Dividends on preferred stock — — — — — ( 7,457 ) — — ( 7,457 )

Net income (loss)

Net income — — — — — 445,054 — 5,748 450,802

Remeasurement of B.

Riley Principal 150 and 250 Merger Corporations subsidiary temporary equity — — — — — ( 18,182 ) — — ( 18,182 )

Distributions to noncontrolling interests — — — — — — — ( 15,497 ) ( 15,497 )

Contributions from noncontrolling interests — — — — — — — 13,680 13,680

Foreign currency translation adjustment

Acquisition of noncontrolling interests — — — — — — — 13,625 13,625

Other comprehensive loss — — — — — — ( 257 ) — ( 257 )

Balance, December 31, 2021 4,512 $ — $ 27,591,028 $ 3 $ 413,486 $ 248,862 $ ( 1,080 ) $ 43,930 $ 705,201

Common stock issued, net of offering costs

Preferred stock issued 33 — — — 874 — — — 874

ESPP shares issued and vesting of

restricted stock and other, net of

shares withheld for employer taxes

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 583,624 — ( 10,271 ) — — — ( 10,271 )

Common stock repurchased and retired — — ( 183,257 ) — ( 6,516 ) — — — ( 6,516 )

Warrants exercised

Shares issued for acquisitions — — 532,369 — 35,648 — — — 35,648

Share based payments — — — — 60,890 — — — 60,890

Share based payments in equity of subsidiary — — — — 125 — — — 125

Vesting of shares in equity of subsidiary — — — — ( 35 ) — — 35 —

Dividends on common stock ($ 4.00 per share)

— — — — — ( 124,891 ) — — ( 124,891 )

Dividends on preferred stock — — — — — ( 8,008 ) — — ( 8,008 )

Net (loss) income — — — — — ( 159,829 ) — 5,803 ( 154,026 )

Remeasurement of B.

Riley Principal 150

and 250 Merger Corporations

subsidiary temporary equity

Riley Principal 150 and 250 Merger Corporations subsidiary temporary equity — — — — — ( 1,354 ) — — ( 1,354 )

Distributions to noncontrolling interests — — — — — — — ( 11,731 ) ( 11,731 )

9 unchanged sentences

Year Ended December 31,

2022 2021 2020

Cash flows from operating activities:

(Revised - See Note 23)

Net (loss) income $ ( 156,594 ) $ 450,802 $ 204,017

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

2 unchanged sentences

Share-based compensation 61,140 36,011 18,588

Fair value adjustments, non-cash

Fair value adjustments 34,871 ( 7,562 ) 21,954

Non-cash interest and other ( 3,204 ) ( 22,322 ) ( 16,810 )

Effect of foreign currency on operations 754 127 ( 460 )

(Income) loss from equity investments

Dividends from equity investments

(Income) loss from equity method investments ( 3,570 ) ( 2,801 ) 623

Dividends from equity method investments 4,038 2,136 1,343

Deferred income taxes ( 80,431 ) 61,770 61,619

Impairment of leaseholds and intangibles, lease loss accrual and gain on disposal of fixed assets

Gain on extinguishment of loans

Loss (gain) on extinguishment of debt

Gain on equity investment

Impairment of leaseholds and intangibles, lease loss accrual, and gain (loss) on disposal of fixed assets 4,922 ( 137 ) 14,107

Change in fair value of financial instruments and other — ( 6,509 ) —

(Gain) loss on extinguishment of debt ( 1,102 ) 6,131 ( 1,556 )

Gain on equity method investment ( 6,790 ) ( 3,544 ) —

De-consolidation of BRPM 150 ( 8,294 ) — —

Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests 1,119 857 1,230

3 unchanged sentences

Securities borrowed ( 252,361 ) ( 1,325,509 ) 48,873

( 1,325,509 )

Accounts receivable and advances against customer contracts 6,599 ( 715 ) 18,776

5 unchanged sentences

Securities loaned 245,346 1,328,875 ( 50,685 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities 6,653 50,894 57,689

Cash flows from investing activities:

4 unchanged sentences

Repayment of loan participations sold — ( 15,216 ) ( 2,233 )

Asset acquisition - BR Brand, net of cash acquired $ 2,160

Acquisition of businesses, net of $ 34,942 cash acquired in 2021

Proceeds from sale of division of magicJack

Acquisition of businesses, net of $ 50,733 and $ 34,942 cash acquired in 2022 and 2021, respectfully

( 261,693 ) ( 28,254 ) ( 1,500 )

Year Ended December 31,

2022 2021 2020

Purchases of property, equipment and intangible assets ( 3,918 ) ( 676 ) ( 2,045 )

2 unchanged sentences

Investment of subsidiaries initial public offering proceeds into trust account — ( 345,000 ) ( 176,750 )

Purchases of equity investments

Distributions from equity investments

Purchases of equity method investments ( 10,974 ) ( 612 ) ( 7,500 )

Net cash (used in) provided by investing activities ( 32,291 ) ( 956,534 ) 21,790

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Proceeds from revolving line of credit, net 64,878 80,000 —

Proceeds from asset based credit facility

Repayment of revolving line of credit ( 17,200 ) — —

Repayment of asset based credit facility — — ( 37,096 )

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Payment of debt issuance and offering costs ( 8,222 ) ( 33,377 ) ( 9,845 )

Payment of employment taxes on vesting of restricted stock

Payment for contingent consideration ( 1,776 ) — —

ESPP and payment of employment taxes on vesting of restricted stock ( 10,286 ) ( 9,620 ) ( 22,578 )

Common dividends paid ( 119,454 ) ( 347,135 ) ( 38,792 )

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Repurchase of common stock ( 6,516 ) ( 2,656 ) ( 48,248 )

Repurchase of warrants

Distribution to noncontrolling interests ( 4,208 ) ( 16,542 ) ( 3,826 )

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Net cash provided by (used in) financing activities 17,637 1,081,045 ( 80,692 )

Increase (decrease) in cash, cash equivalents and restricted cash

(Decrease) increase in cash, cash equivalents and restricted cash ( 8,001 ) 175,405 ( 1,213 )

Effect of foreign currency on cash, cash equivalents and restricted cash ( 933 ) ( 382 ) 1,311

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash ( 8,934 ) 175,023 98

Cash, cash equivalents and restricted cash, beginning of year 279,860 104,837 104,739

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Interest paid $ 193,387 $ 138,369 $ 98,595

Taxes paid $ 49,357 $ 88,153 $ 2,368

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

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Riley Financial, Inc.

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

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

As a result of the National acquisition, the Company realigned its segment reporting structure in the first quarter of 2021 to reflect organizational management changes for its wealth management business.

Under the new structure, the wealth management business previously reported in the Capital Markets segment are now reported in the Wealth Management segment.

In conjunction with the new reporting structure, the Company recast its segment presentation for all periods presented.

The Company operates in six operating segments:

and its subsidiaries (collectively, the “Company”) provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.

The Company also has a portfolio of communication related businesses that provide consumer Internet access and cloud communication services and consumer related businesses that consist of a brands portfolio, which provides licensing of trademarks and brand investments, and Targus Cayman Holdco Limited (“Targus”), which designs and sells laptop and computer accessories.

The Company operates in six reportable operating segments:

(i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, research, sales and trading services to corporate and institutional clients;

(ii) Wealth Management, through which the Company provides wealth management and tax services to corporate, institutional and high net worth clients;

(ii) Wealth Management, through which the Company provides wealth management and tax services to corporate and high-net-worth clients;

(iii) Auction and Liquidation, through which the Company provides auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property;

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

(v) Principal Investments - Communications, through which the Company provides consumer Internet access and related subscription services from United Online and cloud communication services primarily through the magicJack devices;

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

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

During the fourth quarter of 2021, the full impact of the COVID-19 outbreak continues to evolve, with the emergence of variant strains and breakthrough infections becoming prevalent both in the U.S.

and worldwide.

economy recovers, aided by additional stimulus packages, inflation has been rising at historically high rates, and the Federal Reserve has signaled that it will begin increasing the target federal funds effective rate and positive momentum in the domestic vaccine rollout, countries across the world continue to manage repeated waves of the pandemic, including variant strains of COVID-19, amid uneven progress toward vaccination.

The impact of the COVID-19 outbreak on our results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the success of vaccines and natural immunity in controlling slowing or halting the pandemic.

These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy continue to be highly uncertain and cannot be predicted.

If the financial markets and/or the overall economy continue to be impacted, our results of operations, financial position and cash flows may be materially adversely affected.

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

(v) Communications, through which the Company provides consumer Internet access and related subscription services, cloud communication services, and mobile phone voice, text, and data services and devices;

(vi) Consumer, including brands, which generates revenue through the licensing of trademarks, and Targus, which generates revenue through sales of laptop and computer accessories.

During the fourth quarter of 2022, the Company realigned its segment reporting structure to reflect organizational changes from recent acquisitions and the manner in which capital is allocated.

The Consumer segment includes the previously reported Brands segment and Targus, which the Company acquired in the fourth quarter of 2022.

The Company has also re-aligned its previously reported Principal Investments - Communications and Other segment into the Communications segment and the All Other category that is reported with Corporate and Other.

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus in a transaction pursuant to a Securities Purchase Agreement (the “Purchase Agreement”).

The purchase price consideration totaled $ 247,546 , which consisted of $ 112,686 in cash, $ 54,000 in seller financing, $ 59,016 in 6.75 % senior notes due 2024, $ 15,328 in shares of the Company's common stock and stock options, and $ 6,515 in deferred payments.

In accordance with Accounting Standards Codification (“ASC”) 805, the Company used the acquisition method of accounting for this acquisition.

Goodwill of $ 75,753 and other intangible assets of $ 89,000 were recorded as a result of the acquisition.

The acquisition complements the Company's existing investments and offers potential growth to the Company's portfolio of steady-cash generative businesses.

To finance part of this acquisition, on October 18, 2022, the Company's subsidiary, Tiger US Holdings, Inc., a Delaware corporation, among others, entered into a credit agreement with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $ 28,000 term loan and a five-year $ 85,000 revolver loan.

On May 31, 2022, the Company converted $ 17,500 of a loan receivable with Lingo Management, LLC (“Lingo”) into equity and the Company's ownership interest in Lingo increased from 40 % to 80 %.

This resulted in the consolidation of Lingo and the pre-existing equity method investment was remeasured at fair value resulting in the recognition of other income - realized and unrealized gains (losses) on investments in the amount of $ 6,790 , which is included in trading (losses) income and fair value adjustments on loans in the consolidated statements of operations.

Upon the consolidation of Lingo on May 31, 2022, the total fair value of the assets of Lingo was $ 116,500 and the fair value of the 20 % noncontrolling interest was $ 8,021 and goodwill of $ 34,412 and other intangible assets of $ 63,000 were recorded in the accompanying consolidated balance sheet.

On February 24, 2023, the Company acquired the remaining 20 % ownership in Lingo, increasing the Company's ownership interest from 80 % to 100 %.

The Company also completed the acquisitions of BullsEye Telecom (“BullsEye”), FocalPoint Securities, LLC (“FocalPoint”), and Atlantic Coast Fibers, LLC (“ACR”) (and related businesses), and other immaterial business during the year ended December 31, 2022.

In accordance with ASC 805, the Company used the acquisition method of accounting for these acquisitions, which were not material to our consolidated financial statements.

The aggregate purchase price consideration consisted of $ 145,987 in cash, $ 20,320 in issuance of common stock of the Company, $ 52,969 in assumed debt and other consideration payable.

The purchase price allocation consisted of $ 151,925 in goodwill, $ 52,860 in

intangible assets, and $ 2,522 in net assets acquired.

The results of operations of the acquisitions which were not material, have been included in our consolidated financial statements from the date of purchase.

NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2022, we identified a classification error of dividend income and realized and unrealized gains (losses) on certain investments within revenue.

The following tables summarize the effects of the correction of the classification error on the Company’s restated consolidated statements of operations for the years ended December 31, 2021 and 2020.

The classification error had no impact on the Company's consolidated balance sheet, consolidated statements of equity, cash flows, net income, or earnings per share.

The following tables present the corrections by financial statement line item within statement of operations for all periods presented:

Year Ended December 31, 2021

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

Services and fees $ 1,172,957 $ ( 19,732 ) (a) $ 1,153,225

Trading (loss) income and fair value adjustments on loans 386,676 ( 166,131 ) (b) 220,545

Interest income - Loans and securities lending 122,723 — 122,723

Sale of goods 58,205 — 58,205

Total revenues 1,740,561 ( 185,863 ) 1,554,698

Operating expenses:

Direct cost of services 54,390 — 54,390

Cost of goods sold 26,953 — 26,953

Selling, general and administrative expenses 906,196 — 906,196

Interest expense - Securities lending and loan participations sold 52,631 — 52,631

Total operating expenses 1,040,170 — 1,040,170

Operating income (loss) 700,391 ( 185,863 ) 514,528

Other income (expense):

Interest income 229 — 229

Dividend income — 19,732 (a) 19,732

Realized and unrealized gains (losses) on investments — 166,131 (b) 166,131

Change in fair value of financial instruments and other 3,796 — 3,796

Income from equity method investments 2,801 — 2,801

Interest expense ( 92,455 ) — ( 92,455 )

Income before income taxes 614,762 — 614,762

Provision for income taxes ( 163,960 ) — ( 163,960 )

Net income 450,802 — 450,802

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 5,748 — 5,748

Net income attributable to B.

Riley Financial, Inc.

445,054 — 445,054

Preferred stock dividends 7,457 — 7,457

Net income available to common shareholders $ 437,597 $ — $ 437,597

Basic income per common share $ 15.99 $ 15.99

Diluted income per common share $ 15.09 $ 15.09

Weighted average basic common shares outstanding 27,366,292 27,366,292

Weighted average diluted common shares outstanding 29,005,602 29,005,602

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

Year Ended December 31, 2020

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

Services and fees $ 667,069 $ ( 21,163 ) (a) $ 645,906

Trading (loss) income and fair value adjustments on loans 104,018 ( 47,341 ) (b) 56,677

Interest income - Loans and securities lending 102,499 — 102,499

Sale of goods 29,135 — 29,135

Total revenues 902,721 ( 68,504 ) 834,217

Operating expenses:

Direct cost of services 60,451 — 60,451

Cost of goods sold 12,460 — 12,460

Selling, general and administrative expenses 428,537 — 428,537

Restructuring charge 1,557 — 1,557

Impairment of tradenames 12,500 — 12,500

Interest expense - Securities lending and loan participations sold 42,451 — 42,451

Total operating expenses 557,956 — 557,956

Operating income (loss) 344,765 ( 68,504 ) 276,261

Other income (expense):

Interest income 564 — 564

Dividend income — 21,163 (a) 21,163

Realized and unrealized gains (losses) on investments — 47,341 (b) 47,341

Loss from equity method investments ( 623 ) — ( 623 )

Interest expense ( 65,249 ) — ( 65,249 )

(Loss) income before income taxes 279,457 — 279,457

Provision for income taxes ( 75,440 ) — ( 75,440 )

Net income 204,017 — 204,017

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests ( 1,131 ) — ( 1,131 )

Net income attributable to B.

Riley Financial, Inc.

205,148 — 205,148

Preferred stock dividends 4,710 — 4,710

Net income available to common shareholders $ 200,438 $ — $ 200,438

Basic income per common share $ 7.83 $ 7.83

Diluted income per common share $ 7.56 $ 7.56

Weighted average basic common shares outstanding 25,607,278 25,607,278

Weighted average diluted common shares outstanding 26,508,397 26,508,397

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Riley Financial, Inc.

and its wholly-owned and majority-owned subsidiaries.

The consolidated financial statements also include the accounts of Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50 % member interest, appointment of two of the three executive officers and significant influence over the funding of operations.

and its wholly owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

All intercompany accounts and transactions have been eliminated upon consolidation.

The accounting guidance requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity;

to require ongoing reassessments of whether an enterprise is the primary beneficiary of a Variable Interest Entity (“VIE”);

to eliminate the solely quantitative approach previously required for determining the primary beneficiary of a VIE;

to add an additional reconsideration event for determining whether an entity is a VIE when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity’s economic performance;

and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE.

Revision of Prior Period Financial Statements

In connection with the preparation of the Company’s consolidated

financial statements during the year ended December 31, 2021, the Company identified an error that was not material related to the consolidation

of certain VIE 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.

99, “Materiality,” and SAB No.

108, “Considering the Effects

of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the error

and determined that the related impact did not, either individually or in the aggregate, materially misstate previously issued consolidated

financial statements.

A summary of revisions to certain previously reported financial information presented herein is included in

The Company consolidates all entities that it controls through a majority voting interest.

In addition, the Company performs an analysis to determine whether its variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”) including ongoing reassessments of whether it is the primary beneficiary of a VIE.

See Note 3(ab) for further discussion.

(b) Use of Estimates

The preparation of the consolidated financial statements in accordance

with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the 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,

and 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.

inherent uncertainty involved with estimates, actual results may differ.

(d) Revenue Recognition

The Company recognizes revenues under Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers.

The preparation of the 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 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, 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.

Due to the inherent uncertainty involved with estimates, actual results may differ.

The Company recognizes revenues under ASC 606 – Revenue from Contracts with Customers.

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.

Revenues from contracts with customers in the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Principal Investments – Communications segment and Brands segment are primarily comprised of the following:

Capital Markets segment – Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent.

Revenues from contracts with customers in the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Communications segment, Consumer segment, and the All Other category are primarily comprised of the following:

Capital Markets segment

Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent.

Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies.

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Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research.

Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders and fair value adjustments on loans, (iii) trading activities from the Company’s principal investments in equity and other securities for the Company’s account, and (iv) other income.

Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders and fair value adjustments on loans, (iii) trading activities from investments in securities for the Company’s account, and (iv) other income.

Interest income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party and loaned to another.

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Other revenues include (i) net trading gains and losses from market making activities in the Company’s fixed income group, (ii) carried interest from the Company’s asset management recognized as earnings from financial assets within the scope of ASC 323 - Investments - Equity Method and Joint Ventures , and therefore will not be in the scope of ASC 606 - Revenue from Contracts with Customers .

In accordance with ASC 323 - Investments - Equity Method and Joint Ventures , the Company will record equity method income (losses) as a component of investment income based on the change in the Company’s proportionate claim on net assets of the investment fund, including performance-based capital allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements, and (iii) other miscellaneous income.

Wealth Management segment – Fees from wealth management asset advisory services consist primarily of investment advisory fees that are recognized over the period the performance obligation for the services is provided.

In accordance with ASC 323 - Investments - Equity Method and Joint Ventures , the Company records investment income based on the change in the Company’s proportionate claim on net assets of the investment fund, including performance-based capital allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements, and (iii) other miscellaneous income.

Wealth Management segment

Fees from wealth management asset advisory services consist primarily of investment advisory fees that are recognized over the period the performance obligation for the services is provided.

Investment advisory and asset management fees are primarily comprised of fees for investment services and are generally based on the dollar amount of the assets being managed.

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Auction and Liquidation segment – Commission and fees earned on the sale of goods at Auction and Liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer.

The commission and fees earned for these services are included in revenues in the accompanying consolidated statements of income.

Auction and Liquidation segment

Commission and fees earned on the sale of goods at Auction and Liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer.

The commission and fees earned for these services are included in revenues in the accompanying consolidated statements of operations.

Under these types of arrangements, revenues also include contractual reimbursable costs.

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Costs that directly relate to the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in the accompanying consolidated balance sheets.

These costs are amortized as the services are transferred to the customer over the contract period, which generally does not exceed six months, and the expense is recognized as a component of direct cost of services.

These costs are amortized as the services are

transferred to the customer over the contract period, which generally does not exceed six months, and the expense is recognized as a component of direct cost of services.

If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

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A provision for the entire loss as negative revenue on the performance obligation is recognized in the period the loss is determined.

Financial Consulting segment – Revenues in the Financial Consulting segment are primarily comprised of fees earned from providing bankruptcy, financial advisory, forensic accounting, real estate consulting and valuation and appraisal services.

Financial Consulting segment

Revenues in the Financial Consulting segment are primarily comprised of fees earned from providing bankruptcy, financial advisory, forensic accounting, real estate consulting and valuation and appraisal services.

Fees earned from bankruptcy, financial advisory, forensic accounting and real estate consulting services are rendered to clients over time as work progresses on the engagement and services are delivered to the client.

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Revenues in the Financial Consulting segment also include contractual reimbursable costs.

Investments – Communications segment – Revenues in the Principal Investments - Communications segment are primarily comprised

of subscription services revenues which consist of fees charged to United Online pay accounts;

revenues from the sale of the magicJack

access rights;

Communications segment

Revenues in the Communications segment are primarily comprised of subscription services revenues which consist of fees charged to United Online pay accounts;

revenues from the sale of the magicJack VocalTec Ltd.

(“magicJack”) access rights;

revenues from access rights renewals and mobile apps;

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revenues from access and wholesale charges;

service revenue from UCaaS hosting services;

service revenue from unified communication as a service (“UCaaS”) hosting services;

and revenues from mobile phone voice, text, and data services.

Products revenues consist

of revenues from the sale of magicJack, mobile phone, and mobile broadband service devices, including the related shipping and handling

and installation fees, if applicable.

This segment’s revenues also include advertising revenues which consist primarily of amounts

from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search

services and amounts generated from display advertisements.

The Company recognizes such advertising revenues in the period in which the

advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met.

service revenues are recognized over time in the service period in which the transaction price has been determinable and the related performance

obligations for services are provided to the customer.

Fees charged to customers in advance are initially recorded in the consolidated

balance sheets as deferred revenue and then recognized ratably over the service period as the performance obligations are provided.

Product revenues for hardware and shipping are recognized at the time

Revenues from sales of devices and services represent revenues recognized from sales of the magicJack devices to retailers,

wholesalers, or direct to customers, net of returns, and rights to access the Company’s servers over the period associated with

the access right period, and from sales of mobile phones and voice, text, and data services.

The transaction price for devices is allocated

between equipment and service based on stand-alone selling prices.

Revenues allocated to devices are recognized upon delivery (when control

transfers to the customer), and service revenue is recognized ratably over the service term.

The Company estimates the return of magicJack

device direct sales as part of the transaction price using a six month rolling average of historical returns.

Brands segment – Licensing revenue results from various license agreements that provide revenue based on guaranteed minimum royalty amounts and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

Guaranteed minimum royalty amounts are recognized as revenue on a straight-line basis over the full contract term.

Products revenues consist of revenues from the sale of magicJack, mobile phone, and mobile broadband service devices, including the related shipping and handling and installation fees, if applicable.

This segment’s revenues also include advertising revenues which consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements.

The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met.

Subscription service revenues are recognized over time in the service period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer.

Fees charged to customers in advance are initially recorded in the consolidated balance sheets as deferred revenue and then recognized ratably over the service period as the performance obligations are provided.

Product revenues for hardware and shipping are recognized at the time of delivery.

Revenues from sales of devices and services represent revenues recognized from sales of the magicJack devices to retailers or direct to customers, net of returns, and rights to access the Company’s servers over the period associated with the access right period, and from sales of mobile phones and voice, text, and data services.

The transaction price for devices is allocated between equipment and service based on stand-alone selling prices.

Revenues allocated to devices are recognized upon delivery (when control transfers to the customer), and service revenue is recognized ratably over the service term.

The Company estimates the return of magicJack device direct sales as part of the transaction price using a six-month rolling average of historical returns.

Consumer segment

Revenues in the Consumer segment primarily consists of the global sales of notebook computer carrying cases and computer accessories;

licensing revenues from various licensing agreements that provide revenue based on guaranteed minimum royalty amounts and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

Global sales of consumer goods to customers are subject to contracts that contain a single performance obligation and revenue is recognized at a point in time when control of the product transfers to the customer which is generally upon product shipment.

Customers consist primarily of equipment manufacturers, distributors (servicing resellers and corporate end-customers), and retailers.

Generally, the terms of the contracts for the sale of global goods do not allow for a right of return except for matters related to products with defects or damages.

Licensing revenues include guaranteed minimum royalty amounts that are recognized as revenue on a straight-line basis over the contract term.

Royalty payments exceeding the guaranteed minimum amounts in a specific contract year are recognized only subsequent to when the guaranteed minimum amount has been achieved.

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Advanced royalty payments are recorded as deferred revenue at the time payment is received and recognized as revenue when earned.

Revenue is not recognized unless collectability is probable.

Royalty revenue is not recognized unless collectability is probable.

Revenue from the All Other category, which is not a reportable segment, includes income from a regional environmental services business in the New York metropolitan area and a landscaping business in the southeast United States.

The environmental services business is engaged in the recycling of scrap and waste materials and deals primarily in paper products.

The business provides processing services that consists of the receipt of materials from municipalities and commercial entities that is then sorted and then disposed of or sold, using third-party processors as needed.

The businesses's customer arrangements contain a single obligation to transfer processed recycled goods and revenues are recognized at a point in time as processing fees when the performance obligation is satisfied.

The pricing for recyclable materials can fluctuate based upon market conditions and the business has certain arrangements with customers to reduce the risk exposure to commodity pricing volatility through revenue sharing (or processing fee) contracts with customers.

The landscaping business provides landscaping maintenance, improvements, and irrigation services to its customers.

Revenues are recognized as the services are performed, which is typically ratably over the term of the contract.

The business recognizes revenues as it transfers control of services to its customers in an amount reflecting the total consideration it expects to receive from the customer.

(d) Direct Cost of Services

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Direct costs of services also include the cost of consultants and other direct expenses related to Auction and Liquidation contracts pursuant to commission and fee-based arrangements in the Auction and Liquidation segment.

Direct cost of services in the Principal Investments - Communications segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees.

Direct cost of services in the Communications segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees.

Direct cost of services does not include an allocation of the Company’s overhead costs.

(e) Interest Expense - Securities Lending Activities and Loan Participations Sold

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 $ 51,753 , $ 40,490 , and $30,739 during the years ended

December 31, 2021, 2020, and 2019, respectively.

There were no loan participations sold outstanding as of December 31, 2021 and the

loan participation sold totaled $ 17,316 , as of December 31, 2020.

Interest expense from loan participations sold totaled $ 878 , $ 1,961 ,

and $ 1,405 during the years ended December 31, 2021, 2020, and 2019, respectively.

(e) Interest Expense - Securities Lending Activities

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 $ 66,495 , $ 51,753 , and $ 40,490 during the years ended December 31, 2022, 2021, and 2020, respectively.

(f) Concentration of Risk

in the Capital Markets, Financial Consulting, Wealth Management, Principal Investments - Communications and Brands segments are

currently primarily generated in the United States.

Revenues in the Auction and Liquidation segment are primarily generated in the

United States, Australia, 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.

Revenues in the Capital Markets, Financial Consulting, Wealth Management, and Communications segments are primarily generated in the United States.

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

The Company maintains cash in various federally insured banking institutions.

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The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements.

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.

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

(g) Advertising Expenses

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Advertising costs totaled $ 11,434 , $ 3,681 , and $ 3,013 during the years ended December 31, 2022, 2021, and 2020, respectively.

Advertising expense is included as a component of selling, general and administrative expenses in the accompanying consolidated statements of income.

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

(h) Share-Based Compensation

1 unchanged sentence

In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities.

For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the consolidated statements of income over the requisite service or performance period the award is expected to vest.

For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest.

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.

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(j) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

(k) Restricted Cash

As of December 31, 2021, restricted cash included $ 927 of cash collateral

As of December 31, 2020, restricted cash included $ 764 of cash collateral for foreign exchange contracts and $ 471 of collateral

related to one of the Company’s telecommunication suppliers.

Cash, cash equivalents

and restricted cash consist of the following:

As of December 31, 2022 and 2021, restricted cash included $ 2,308 and $ 927 , respectively, primarily consisting of cash collateral for leases.

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

2022 December 31,

Cash and cash equivalents $ 268,618 $ 278,933

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(n) Accounts Receivable

Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Financial Consulting, Capital Markets, Wealth Management, Principal Investments - Communications and Brands customers.

Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Financial Consulting, Capital Markets, Wealth Management, Communications, and Consumer customers.

The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio.

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The Company’s bad debt expense and changes in the allowance for doubtful accounts are included in Note 7.

(o) Inventories

Inventories are substantially all finished goods from the Consumer and Communications segments and are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value.

The Company maintains an

allowance for excess and obsolete inventories to reflect its estimate of realizable value of the inventory based on historical sales and recoveries.

Inventories are included in prepaid and other assets in the consolidated balance sheet.

The Company determines if an arrangement is, or contains, a lease at the inception date.

Operating leases are included in right-of-use assets, with the related liabilities included in operating lease liabilities in the consolidated balance sheets.

Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating leases with terms greater than twelve months are included in right-of-use assets, with the related liabilities included in operating lease liabilities in the consolidated balance sheets.

Operating lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

We use our estimated incremental borrowing rate in determining the present value of lease payments.

The Company uses its estimated incremental borrowing rate in determining the present value of lease payments.

Variable components of the lease payments such as fair market value adjustments, utilities, and maintenance costs are expensed as incurred and not included in determining the present value.

Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company's lease terms include rent escalations and options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

Lease expense is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components which are accounted for as a single lease component.

The Company has lease agreements with lease and non-lease components which are accounted for as a single lease component.

See Note 11 for additional information on leases.

(p) Property and Equipment

(q) Property and Equipment

Property and equipment are stated at cost.

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Depreciation expense on property and equipment was $ 5,677 , $ 3,865 , and $ 3,632 during the years ended December 31, 2022, 2021, and 2020, respectively.

(q) Loans Receivable

Under ASC 326 - Financial Instruments – Credit Losses , the Company elected the irrevocable fair value option for all outstanding loans receivable that were previously measured at amortized cost.

Under the fair value option, loans receivables are measured at each reporting period based upon their exit value in an orderly transaction and unrealized gains or losses from changes in fair value are recorded in the consolidated statements of income.

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 $ 873,186 and $ 390,689 as of

December 31, 2021 and 2020, respectively.

(r) Loans Receivable

Under ASC 326 - Financial Instruments – Credit Losses , the Company elected the fair value option for all outstanding loans receivable.

Loans receivable, at fair value totaled $ 701,652 and $ 873,186 as of December 31, 2022 and 2021, respectively.

The loans have various maturities through March 2027.

As of December 31, 2021 and 2020,

the historical cost of loans receivable accounted for under the fair value option was $ 877,527 and $ 405,064 , respectively, which included

principal balances of $ 886,831 and $ 416,401 , respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 9,304

and $ 11,337 , respectively.

During the years ended December 31, 2021 and 2020, the Company recorded net unrealized gains of $ 10,035 and

net unrealized losses of $ 22,033 , respectively, on loans receivable, at fair value, which is included in trading income and fair value

adjustments on loans on the consolidated statements of income.

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

of December 31, 2021, the Company has provided limited guarantees with respect to Babcock & Wilcox Enterprises, Inc.

as further described in Note 17(b).

In accordance with the 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 December 31, 2021, 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 consolidated statements of income.

As of December 31, 2022 and 2021, the aggregate cost of loans receivable accounted for under the fair value option was $ 769,022 and $ 877,527 , respectively, which included principal balances of $ 772,873 and $ 886,831 , respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 3,851 and $ 9,304 , respectively.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded net unrealized losses of $ 54,439 , net unrealized gains of $ 10,035 , and net unrealized losses of 22,033 , respectively, on loans receivable, at fair value, which is included in trading income and fair value adjustments on loans on the consolidated statements of operations.

Loans receivable, at fair value on non-accrual was $ 7,153 as of December 31, 2022, which represents approximately 1.0 % of total loans receivable, at fair value as of December 31, 2022.

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

As of December 31, 2022, the Company has provided limited guarantees with respect to Babcock & Wilcox Enterprises, Inc.

(“B&W”) as further described in Note 19(b).

In accordance with the 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 December 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.

Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans.

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Badcock Loan Receivable

December 20, 2021, the Company entered into a Master Receivables Purchase Agreement (“Receivables Purchase Agreement” with

Badcock Corporation, a Florida corporation (“WSBC”), an indirect wholly owned subsidiary of Franchise Group, Inc., a

Delaware corporation (“FRG”).

The Company paid $ 400,000 in cash to WSBC for the purchase of certain consumer credit receivables

The Company recognized the $ 400,000 as part of its loans receivable, at fair value on the consolidated balance sheets, which

is collateralized by the performance of the consumer credit receivables of WSBC.

In connection with the Receivables Purchase Agreement,

the Company entered into a Servicing Agreement (the “Servicing Agreement”) with WSBC pursuant to which WSBC will provide to

the Company certain customary servicing and account management services in respect of the receivables purchased by the Company under the

Receivables Purchase Agreement.

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.

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

On December 20, 2021, the Company entered into a Master Receivables Purchase Agreement with W.S.

Badcock Corporation, a Florida corporation (“WSBC”), an indirect wholly owned subsidiary of Franchise Group, Inc., a Delaware corporation (“FRG”).

The Company paid $ 400,000 in cash to WSBC for the purchase of certain consumer credit receivables of WSBC.

The accounting for this transaction resulted in the Company recording a $ 400,000 loan receivable from WSBC with the recognition of interest income at an imputed rate based on the cash flows expected to be received from the collection of the consumer receivables that serve as collateral for the loan.

The loan receivable was measured at fair value on the consolidated balance sheets.

On September 23, 2022, the Company's subsidiary, B Riley Receivables II, LLC, a Delaware limited liability company, entered into a Master Receivables Purchase Agreement (“2022 Badcock Receivable”) with WSBC.

This purchase of $ 168,363 consumer credit receivables of WSBC was partially financed by a $ 148,200 term loan discussed in Note 13.

The accounting for this transaction resulted in the Company recording a $ 168,363 loan receivable from WSBC with the recognition of interest income at an imputed rate based on the cash flows expected to be received from the collection of the consumer receivables that serve as collateral for the loan.

The loan receivable was measured at fair value on the consolidated balance sheets.

In connection with these loans, the Company entered into a Servicing Agreement with WSBC pursuant to which WSBC will provide to the Company certain customary servicing and account management services in respect of the receivables purchased by the Company under the Receivables Purchase Agreement.

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

As of December 31, 2022 and 2021, loans receivable to WSBC in the Company's consolidated balance sheets included loans measured at fair value in the amount of $ 318,109 and $ 400,000 , respectively.

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

Securities owned consist of equity securities including, common and preferred stocks, warrants, and options;

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As of December 31, 2022 and 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,

Securities and other investments owned:

3 unchanged sentences

Partnership interests and other 70,063 77,383

$ 1,129,268 $ 1,532,095

Securities sold not yet purchased:

2 unchanged sentences

Other fixed income securities 269 1,994

(s) Goodwill and Other Intangible Assets

$ 5,897 $ 28,623

The Company owns certain equity securities that are accounted for under the fair value option where the Company would otherwise use the equity method of accounting.

Investments become subject to the equity method of accounting

when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.

The ability to exercise significant influence is presumed when the Company possesses more than 20% of the voting interests of the investee.

However, the Company may have the ability to exercise significant influence over the investee when the Company owns less than 20% of the voting interests of the investee depending on the facts and circumstances that demonstrate that the ability to exercise influence is present, such as when the Company has representation on the board of directors of such investee.

The following tables contain summarized financial information with respect to two of the Company's individually greater than 20% investments, where the Company has a voting interest in each investee of 41 % and 43 %, respectively, which has been aggregated and included below for purposes of the disclosure a quarter in arrears as of and for the twelve months ended September 30, 2022 and 2021, which is the period in which the most recent financial information is available:

As of September 30,

Total assets $ 202,520 $ 198,454

Total liabilities $ 5,737 $ 8,232

Equity attributable to investee $ 196,783 $ 190,222

For the twelve months ended September 30,

2022 2021 2020

Revenues $ 127,240 $ 99,386 $ 44,766

Net income (loss) attributable to investees $ 67,354 $ 62,925 $ ( 13,721 )

The following tables contain summarized financial information with respect to B&W, where the Company owns a 31 % voting interest, included below for purposes of the disclosure a quarter in arrears as of and for the twelve months ended September 30, 2022 and 2021, which is the period in which the most recent financial information is available:

As of September 30,

Total assets $ 881,567 $ 729,358

Total liabilities $ 898,695 $ 708,958

Equity attributable to investee $ ( 17,128 ) $ 20,400

For the twelve months ended September 30,

2022 2021 2020

Revenues $ 832,233 $ 680,921 $ 596,880

Net (loss) income attributable to investees $ ( 13,868 ) $ 481 $ ( 2,520 )

As of December 31, 2022 and 2021, the fair value of these equity securities totaled $ 371,948 and $ 407,834 , respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.

(t) Goodwill and Other Intangible Assets

The Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.

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Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value.

The Company operates six reporting units, which are the same as its reporting segments described in Note 22.

The Company operates

six reporting units, which are the same as its reporting segments described in Note 24.

Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions.

Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.

When testing goodwill for

impairment, in accordance with ASC 350, the Company made a qualitative assessment of the impact of the COVID-19 outbreak on goodwill

and other intangible assets during the years ended December 31, 2021 and 2020.

Based on the Company’s qualitative assessments, the

Company concluded that a positive assertion could be made from the qualitative assessments that it is more likely than not that the fair

value of the reporting units exceeded their carrying values.

There were no impairments of goodwill identified during the years ended December

31, 2021, 2020, and 2019.

During the years ended December

31, 2021 and 2019, the Company recognized no impairment of indefinite-lived intangibles.

During the year ended December 31, 2020, the

Company determined that the COVID-19 outbreak was a triggering event for testing the indefinite-lived tradenames in the Brands segment

during the first quarter and again in the second quarter and determined that the indefinite-lived tradenames in the Brands segment were

As a result, the Company recognized impairment charges of $ 12,500 , during the year ended December 31, 2020, which were included

as an impairment of tradenames in the Company’s consolidated statements of income.

The Company reviews the

carrying value of its finite-lived amortizable intangibles and other long-lived assets for impairment at least annually or whenever

events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of

long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the

asset or asset group is expected to generate.

If the undiscounted cash flows of such assets are less than the carrying amount, the

impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its

fair market value.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized no impairment of finite-lived

(t) Fair Value Measurements

When testing goodwill for impairment, in accordance with ASC 350, the Company made an assessment of qualitative factors on goodwill and other intangible assets and concluded that a positive assertion could be made that it is more likely than not that the fair value of the reporting units exceeded their carrying values.

In performing the analysis, qualitative factors indicated that it could be more likely than not that the carrying value of goodwill in the Wealth Management segment could be impaired as a result of the segment loss incurred during the year ended December 31, 2022.

The Company performed a quantitative goodwill impairment test for its Wealth Management segment and determined the fair value of this reporting segment using the market approach and income approach exceeded the carrying value of goodwill.

The Company concluded there was no impairment of goodwill in the Wealth Management segment.

No impairments of goodwill were identified during the years ended December 31, 2022, 2021, and 2020.

During the years ended December 31, 2022 and 2021, the Company recognized no impairment of indefinite-lived intangibles.

During the year ended December 31, 2020, the Company determined that the COVID-19 outbreak was a triggering event for testing the indefinite-lived tradenames in the Consumer segment during the first quarter and again in the second quarter and determined that the indefinite-lived tradenames in the Consumer segment were impaired.

As a result, the Company recognized impairment charges of $ 12,500 during the year ended December 31, 2020, which were included as an impairment of tradenames in the Company’s consolidated statements of operations.

The Company reviews the carrying value of its finite-lived amortizable intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate.

If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair market value.

During the year ended December 31, 2022, the Company recognized $ 4,174 impairment of finite-lived intangibles representing the carrying amount of tradenames and software development costs as a result of the reorganization and consolidation activities in the Wealth Management segment and the Communications segment, which was included as a restructuring charge in the Company's consolidated statements of operations.

During the years ended December 31, 2021, and 2020, the Company recognized no impairment of finite-lived intangibles.

(u) Fair Value Measurements

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred

stocks and warrants, corporate bonds, and investments in partnerships.

Investments in common stocks that are based on quoted prices in

active markets are included in Level 1 of the fair value hierarchy.

The Company also holds loans receivable valued at fair value, nonpublic

common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a

consistent basis.

For investments where little or no public market exists, management’s determination of fair value is based on

the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment,

taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities

and liquidity risks.

The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate bonds, and investments in partnerships.

Investments in common stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy.

The Company also holds loans receivable valued at fair value, nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis.

For investments where little or

no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

These investments are included in Level 3 of the fair value hierarchy.

Investments in partnership interests include

investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds.

The Company also

invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed

income securities and restrictions exist on the redemption of amounts invested by the Company.

The Company’s partnership and investment

fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds;

for these investments is derived from the most recent statements received from the general partner or fund administrator.

These partnership

and investment fund interests are valued at net asset value (“NAV”) and are excluded from the fair value hierarchy in the

table below in accordance with ASC 820 - Fair Value Measurements .

As of December 31, 2021 and 2020, partnership and investment

fund interests valued at NAV of $ 77,383 and $ 74,923 , respectively, and are included in securities and other investments owned in the accompanying

consolidated balance sheets.

Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds.

The Company also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company.

The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds;

the value for these investments is derived from the most recent statements received from the general partner or fund administrator.

These partnership and investment fund interests are valued at net asset value (“NAV”) and are excluded from the fair value hierarchy in the table below in accordance with ASC 820 - Fair Value Measurements .

As of December 31, 2022 and 2021, partnership and investment fund interests valued at NAV of $ 70,063 and $ 77,383 , respectively, and are included in securities and other investments owned in the accompanying 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.

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For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

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 December 31, 2022 and 2021, investments in nonpublic entities valued using a measurement alternative of $ 94,109 and $ 59,745 , respectively, are included in securities and other investments owned in the accompanying consolidated balance sheets.

Funds held in trust represents U.S.

treasury bills that were purchased with funds raised through the initial public offerings of B.

Riley Principal 150 Merger Corporation (“BRPM 150”) and B.

Riley Principal 250 Merger Corporation (“BRPM 250”), consolidated special purpose acquisition corporations (“SPACs”).

The funds raised are held in trust accounts that are restricted for use and may only be used for purposes of completing an initial business combination or redemption of the class A public common shares of the SPAC’s as set forth in their respective trust agreements.

The Company measures certain assets at fair value on a nonrecurring basis.

These assets include equity method investments when they are deemed to be other-than-temporarily impaired, investments adjusted to their fair value by applying the measurement alternative, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired.

During the years ended December 31, 2022, 2021, and 2020, the Company did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.

As of December 31, 2022, funds held in trust represents amounts invested in a mutual fund that invests in U.S.

Treasury securities that were purchased with funds raised through the initial public offering of B.

Riley Principal 250 Merger Corporation (“BRPM 250”).

As of December 31, 2021, funds held in trust represents amounts invested in a mutual fund that invests in U.S.

Treasury securities that were purchased with funds raised through the initial public offering of BRPM 250 and B.

Riley Principal 150 Merger Corporation (“BRPM 150”), which are consolidated special purpose acquisition corporations (“SPACs”).

As of December 31, 2022 and 2021, the Company had $ 174,437 and $ 345,024 , respectively, of funds held in trust related to the SPACs.

The funds raised are held in a trust account that is restricted for use and may only be used for purposes of completing an initial business combination or redemption of the class A public common shares of the SPACs as set forth in the trust agreement.

The funds held in trust are included within Level 1 of the fair value hierarchy and included in prepaid expenses and other assets in the accompanying consolidated balance sheets.

The Company has warrant liabilities related to warrants of the SPAC’s that are held by investors in BRPM 150 and BRPM 250.

The Company has warrant liabilities related to warrants of the SPAC that are held by investors in BRPM 250.

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 consolidated balance sheets with changes in fair value that amounted to a loss of $ 2,473 during the year ended December 31, 2021 included within gain on extinguishment of loans and other as part of other income (expense) in the consolidated statements of income.

Warrant liabilities are included in Level 1 of the fair value hierarchy and included in accrued expenses and other liabilities in the accompanying consolidated balance sheets in the amount of $ 173 for BRPM 250 and $ 12,938 for B.

Riley Principal 150 Merger Corporation (“BRPM 150”) and BRPM 250 as of December 31, 2022 and 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 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.

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on a Recurring Basis at December 31, 2022 Using

Quoted prices in

Fair value at

Quoted prices in

active markets for

identical assets

(Level 1) Other

(Level 2) Significant

Funds held in trust account $ 174,437 $ 174,437 $ — $ —

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Warrant liabilities 173 173 — —

Contingent consideration 31,046 — — 31,046

Total liabilities measured at fair value $ 41,764 $ 4,639 $ 1,431 $ 35,694

1 unchanged sentence

on a Recurring Basis at December 31, 2021 Using

Quoted prices in

Fair value at

Quoted prices in

active markets for

identical assets

(Level 1) Other

(Level 2) Significant

Funds held in trust account $ 345,024 $ 345,024 $ — $ —

Securities and other investments owned:

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Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,506 — — 4,506

Warrant liabilities 12,938 12,938 — —

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

3 unchanged sentences

Fair value at

Valuation Technique

Unobservable Input

Equity securities

Market approach

Multiple of EBITDA

3.25 x - 17.50 x

Multiple of PV-10

0.60 x - 0.65 x

Multiple of Sales

1.45 x - 1.60 x

Valuation Technique Unobservable Input Range Weighted

Equity securities $ 304,172 Market approach Multiple of EBITDA 1.50 x - 10.50 x

Multiple of Sales 3.0 x

Market price of related security $ 10.01 - $ 18.88

$0.84 - $51.43

Discounted cash flow

Market interest rate

Option pricing model

Annualized volatility

Loans receivable at fair value

Discounted cash flow

57,267 Discounted cash flow Market interest rate 23.8 % 23.8 %

7,026 Option pricing model Annualized volatility 0.3 % - 26.1 %

Loans receivable at fair value 694,499 Discounted cash flow Market interest rate 6.0 % - 83.5 %

7,153 Market approach Multiple of EBITDA 4.5 x

Total level 3 assets measured at fair value $ 1,070,117

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,648 Market approach Operating income multiple 6.0 x

Contingent consideration 31,046 Discounted cash flow EBITDA volatility 80.0 % 80.0 %

Asset volatility 69.0 % 69.0 %

Market interest rate 8.5 % 8.5 %

Total level 3 liabilities measured at fair value $ 35,694

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 December 31, 2021:

Fair value at December 31,

2021 Valuation Technique Unobservable Input Range Weighted

Equity securities $ 291,178 Market approach Multiple of EBITDA 3.25 x - 17.50 x

Multiple of PV-10 0.60 x - 0.65 x

Multiple of Sales 1.45 x - 1.60 x

Market price of related security $ 0.84 - $ 51.43

74,157 Discounted cash flow Market interest rate 14.8 % 14.8 %

12,214 Option pricing model Annualized volatility 30.0 % - 280.0 %

Loans receivable at fair value 873,186 Discounted cash flow Market interest rate 6.0 % - 38.0 %

Total level 3 assets measured at fair value $ 1,250,735

Mandatorily redeemable noncontrolling interests issued after November 5, 2003

Market approach

Operating income multiple

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,506 Market approach Operating income multiple 6.0 x

The changes in Level 3 fair value hierarchy during the year ended December 31, 2022 and 2021 are as follows:

Level 3 Changes During the Period

Year Level 3 Changes During the Period Level 3

Adjustments Relating to

Undistributed

Earnings Purchases,

Settlements Transfer in

Year Ended December 31, 2022

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Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,506 — 1,150 ( 1,008 ) — 4,648

Warrant liabilities

Contingent consideration — ( 10,371 ) — 41,417 — 31,046

Year Ended December 31, 2021

2 unchanged sentences

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,700 — ( 194 ) — — 4,506

Under ASC 326, the Company elected the irrevocable fair value option for all outstanding loans receivable that were measured at amortized cost.

The loans receivable, at fair value are included in transfers into level 3 fair value assets in the above table.

The amounts reported in the table above during the years ended December 31, 2021 and 2020 include the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

Warrant liabilities — — — 10,466 ( 10,466 ) —

The amounts reported in the table above as of December 31, 2022 and 2021 include the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the 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.

Changes in the Level 3 fair value hierarchy during the year ended December 31, 2021 included the fair value of warrant liabilities associated with BRPM 150 and BRPM 250.

The value of these warrants transferred from Level 3 to Level 1 of the fair value hierarchy when the public warrants started trading in the over-the-counter markets after the initial public offering.

As of December 31, 2022 and 2021, the senior notes payable had a carrying amount of $ 1,721,751 and $ 1,606,560 , respectively, and a fair value of $ 1,431,787 and $ 1,661,189 , respectively.

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

The investments in nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in trading income (losses) and fair value adjustments on loans on the consolidated statements of income.

These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer.

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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.

As of December 31, 2021 and 2020, except for the impact of the intangible impairment charge in 2020 as described in Note 8 – Goodwill and Intangible Assets, there were no additional assets or liabilities measured at fair value on a non-recurring basis.

(u) Derivative and Foreign Currency Translation

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 December 31, 2022.

These investments were measured due to an observable price change or impairment during the year ended December 31, 2022.

Fair Value Measurement Using

Total Quoted prices in active markets

for identical assets

(Level 1) Other observable inputs

(Level 2) Significant unobservable inputs

As of December 31, 2022

Investments in nonpublic entities that do not report NAV $ 20,251 $ — $ 18,659 $ 1,592

(v) Derivative and Foreign Currency Translation

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.

During the year ended December 31, 2020, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of 12,700 Euros, of which 6,700 Euros were settled.

As of December 31, 2021 and 2020, forward exchange contracts in the amount of 6,000 Euros were outstanding.

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

As of December 31, 2021, forward exchange contracts in the amount of € 6,000 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 $ 1,052 and net loss was $ 285 during the years ended December 31, 2021 and 2020, respectively.

This amount is reported as a component of selling, general and administrative expenses in the consolidated statements of income.

Forward exchange contracts had a net gain of $ 68 , net gain of $ 1,052 , and net loss of $ 285 during the years ended December 31, 2022, 2021 and 2020, respectively.

This amount is reported as a component of selling, general and administrative expenses in the consolidated statements of operations and is included in cash flows from operating activities in the consolidated cash flows.

The Company transacts business in various foreign currencies.

1 unchanged sentence

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

Transaction gains (losses) were $ 1,256 , ($ 639 ), and ($ 238 ), during the years ended December 31, 2021, 2020, and 2019, respectively.

These amounts are included in selling, general and administrative expenses in the Company’s consolidated statements of income.

disclosed in Note 2(ab) below, the Company has consolidated two VIE’s, BRPM 150 and BRPM 250, which have outstanding warrants that

were issued in their respective initial public offerings.

The warrants have been recorded as a liability since the warrants contain a

provision to be settled in cash in the event of a qualifying cash tender offer, which is outside the control of the Company, for both

BRPM 150 and BRPM 250.

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 consolidated statements of income.

As of December 31, 2021, the warrant liability totaled $ 12,938 which is included in accrued expenses and other liabilities in the consolidated

balance sheets.

(v) Redeemable Noncontrolling Interests in Equity of Subsidiaries

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.

These interests are presented as redeemable noncontrolling interests in equity

of subsidiaries within the consolidated balance sheets, 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 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

Such remeasurements totaled $ 18,182 , comprising of offering costs incurred in connection with the sale of class A shares of

SPAC 150 and SPAC 250 in the amount of $ 7,716 and initial valuation of the public warrants of SPAC 150 and SPAC 250 in the amount of $ 10,466 .

(w) Common Stock Warrants

Company issued 821,816 warrants to purchase common stock of the Company (the “Wunderlich Warrants”) in connection with

the acquisition of Wunderlich Securities, Inc.

(“Wunderlich”) on July 3, 2017.

The Wunderlich Warrants entitle the

holders of the warrants to acquire shares of the Company’s common stock from the Company at an exercise price of $ 17.50 per

share, subject to, among other matters, the proper completion of an exercise notice and payment.

The exercise price and the number

of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which

include stock splits, subdivisions or reclassifications of the Company’s common stock.

On May 16, 2019, the Company

repurchased 638,311 warrants for $ 2,777 ($ 4.35 per warrant).

On June 11, 2020, 167,352 warrants held in escrow from the acquisition

of Wunderlich were cancelled in accordance with the terms of the escrow instructions.

The Wunderlich Warrants expire on July 3,

All warrants were exercised in the third quarter of fiscal year 2021.

As of December 31, 2021 and 2020, zero and 16,153

Wunderlich Warrants to purchase shares of common stock, respectively, were outstanding.

Transaction gains were $ 2,224 , $ 1,256 , and transaction losses were $ 639 , during the years ended December 31, 2022, 2021, and 2020, respectively.

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

As disclosed in Note 3(ab) below, the Company consolidated a VIE, BRPM 250, which has outstanding warrants that were issued in its initial public offering.

The warrants were recorded as a liability since the warrants contain a provision to be settled in cash in the event of a qualifying cash tender offer for BRPM 250, which is outside the control of the Company.

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

As of December 31, 2022 and 2021, the warrant liability for BRPM 250 totaled $ 173 and BRPM 150 and 250 totaled $ 12,938 , respectively, which is included in accrued expenses and other liabilities in the consolidated balance sheets.

(w) 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 the BRPM 250 sponsored SPAC and the 20 % noncontrolling interest of Lingo.

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

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

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

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

Net income (losses) are reflected in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in the consolidated statement of operations.

Changes to redeemable noncontrolling interest consist of the following:

December 31, 2022

Balance, January 1, 2021 $ —

Proceeds from issuance of BRPM 150 common stock of $ 172,500 and BRPM 250 common stock of $ 172,500 subject to possible redemption

Balance, December 31, 2021 345,000

Net loss ( 1,215 )

De-consolidation of BRPM 150 ( 172,584 )

Contributions - Fair value of Lingo non-controlling interest as of May 31, 2022 (see Note 4) 8,021

Distributions ( 600 )

Balance, December 31, 2022 $ 178,622

(x) Common Stock Warrants

On October 28, 2019, the Company issued 200,000 warrants to purchase common stock of the Company (the “BR Brands Warrants”) in connection with the acquisition of a majority ownership interest in BR Brand Holdings LLC.

The BR Brands Warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at an exercise price of $ 26.24 per share.

One-third of the BR Brands Warrants immediately vested and became exercisable upon issuance, and the remaining two-thirds of warrants will vest and become exercisable following the first and/or second anniversaries of the closing, subject to BR Brands’ (or another related joint venture with Bluestar Alliance LLC) satisfaction of specified financial performance targets.

The BR Brands warrants expire three years after the last vesting event occurs.

As of December 31, 2021 and 2020, 200,000 BR Brands warrants were outstanding.

(x) Equity Investment

As of December 31, 2021 and 2020, equity investments of $ 39,190 and $ 54,953 , respectively, were included in prepaid expenses and other assets in the accompanying consolidated balance sheets.

The Company’s share of earnings or losses from equity method investees is included in gain (loss) from equity investments in the accompanying consolidated statements of income.

One-third of the BR Brands Warrants immediately vested and became exercisable upon issuance, and the remaining two-thirds of warrants vested and became exercisable on the second anniversary of the closing, upon the BR Brands’ satisfaction of specified financial performance targets.

The BR Brands warrants expire in February 2025.

As of December 31, 2022, 200,000 BR Brands warrants were outstanding.

(y) Equity Method Investments

As of December 31, 2022 and 2021, equity method investments of $ 41,298 and $ 39,190 , respectively, were included in prepaid expenses and other assets in the accompanying consolidated balance sheets.

The Company’s share of earnings or losses from the equity method investees is included in income (loss) from equity method investments in the accompanying consolidated statements of operations.

bebe stores, inc.

As of December 31, 2021 and

2020, the Company had a 40.1 % and 39.5 % ownership interest, respectively, 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 %.

The equity ownership in bebe is accounted for under the equity method of accounting and is included in prepaid expenses

and other assets in the consolidated balance sheets.

As of December 31, 2022 and 2021, the Company had 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 %.

The equity ownership in bebe is accounted for under the equity method of accounting and is included in prepaid expenses and other assets in the consolidated balance sheets.

The common stock of bebe is publicly traded.

The fair value of bebe as of December 31, 2022 and 2021 was $ 25,423 and $ 43,472 , respectively.

The carrying value of the investment in bebe as of December 31, 2022 and 2021 was $ 40,383 and $ 36,662 , respectively.

As of December 31, 2022, the carrying value of the Company’s equity method investment in bebe exceeded the fair value based on the quoted market prices.

In consideration of these facts, the Company evaluated its investment for other than temporary impairment under ASC 323.

The Company did not utilize bright-line tests in the evaluation.

Based on the available facts and information regarding the operating results of bebe, the Company’s ability and intent to hold the investments until recovery, the relative amount of the declines, and the length of time that the fair values were less than the carrying values, the Company concluded that recognition of impairment losses in earnings was not required.

However, the Company will continue to monitor the investment and it is possible that impairment losses will be recorded in earnings in future periods based on changes in facts and circumstances or intentions.

The total assets and liabilities of bebe as of December 31, 2022 was $ 94,401 and $ 45,858 , respectively.

The total assets and liabilities of bebe as of December 31, 2021 was $ 78,761 and $ 40,173 , respectively.

Total revenues of bebe during the years ended December 31, 2022, 2021, and 2020 was $ 55,452 , $ 50,745 , and $ 6,258 , respectively.

Net income of bebe during the years ended December 31, 2022, 2021, and 2020 was $ 17,423 , $ 8,366 , and $ 6,383 , respectively.

National Holdings Corporation

As of December 31, 2020, the Company owned approximately 45 % of the commons stock of National which was included in prepaid expenses and other assets in the consolidated balance sheets.

As of December 31, 2020, the Company owned approximately 45 % of the outstanding common stock of National that was included in prepaid expenses and other assets in the consolidated balance sheets.

The equity ownership in National is accounted for under the equity method of accounting for periods prior to February 25, 2021.

On February 25, 2021, the Company completed the acquisition of National by acquiring the 55 % of common stock not previously owned by the Company pursuant to an agreement and plan of merger dated January 10, 2021, following the successful completion of a tender offer commenced by us on January 27, 2021.

The cash consideration for the purchase of the 55 % of common stock not previously owned by the Company and settlement of outstanding share based awards was $ 35,314 .

National’s operating results subsequent to February 25, 2021 is included in the Company’s consolidated financial statements.

Other Equity Investments

The Company has other equity investments over which the Company exercises significant influence but do 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 equity ownership in these other investments was accounted for under the equity method of accounting and is included in prepaid expenses and other assets in the consolidated balance sheets.

(y) Loan Participations Sold

of December 31, 2021, the Company has sold investments (“Loan Participations Sold”) to third parties (“Participants”)

that are accounted for as secured borrowings under ASC 860 - Transfers and Servicing.

ASC 860, a partial loan transfer does not qualify for sale accounting.

A participation or other partial loan transfer that meets the

definition of a participating interest is classified as loan receivable and the portion transferred is recorded as a secured borrowing

under loan participations sold in the consolidated balance sheets.

The Participants are entitled to payments made by the borrower of

the related loan equal to the current Loan Participations Sold outstanding at the interest rates for the respective investment.

event that the borrower defaults, the Participants have rights to payments from such borrower, but do not have recourse to the Company.

The terms of the Loan Participations Sold are commensurate with the terms of the related loan.

As of December 31, 2021, there were no outstanding loan participations.

As of December 31, 2020, the Company had entered into participation agreements for a total of $ 17,316 .

In addition, the interest income and interest expense related to the Loan Participations Sold resulted in interest income and interest expense which is presented gross on the consolidated statements of income.

On February 25, 2021, the Company completed the acquisition of National by acquiring the 55 % of common stock not previously owned by the Company.

Other Equity Method Investments

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

On May 31, 2022, the Company's ownership increased to 80 % and Lingo's operating results are consolidated with the Company from May 31, 2022 through December 31, 2022 as more fully described above in Note 4.

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

(z) Supplemental Non-cash Disclosures

During the year ended December 31, 2022, non-cash investing activities included $ 35,648 in issuance of the Company's common stock and stock options as part of purchase price consideration from acquisitions the Company completed and the repayment of loans receivable in the amount of $ 850 with equity securities.

During the year ended December 31, 2022, non-cash financing activities included $ 22,661 in seller financing for deferred cash consideration, the conversion of $ 17,500 of a loan receivable to equity related to an acquisition, and the distribution of investment securities of $ 4,408 to non-controlling interests.

During the year ended December 31, 2022, other non-cash activities included the recognition of new operating lease right-of-use assets of $ 48,552 and the recognition of new operating lease liabilities of $ 49,050 .

During the year ended December 31, 2021, non-cash investing activities included:

2 unchanged sentences

During the year ended December 31, 2020, non-cash investing activities included $ 11,133 non-cash conversions of equity method investments and $ 26,238 conversion of loans receivable to shares of stock.

In connection with the purchase of a loan receivable in the amount of $ 61,687 , the Company funded $ 24,434 in cash and the remaining $ 37,253 remains payable as a note payable as of December 31, 2020.

In connection with the purchase

of a loan receivable in the amount of $ 61,687 , the Company funded $ 24,434 in cash and the remaining $ 37,253 remains payable as a note payable as of December 31, 2020.

During the year ended December 31, 2020, other non-cash activities included the recognition of new operating lease right-of-use assets of $ 8,915 and the recognition of new operating lease liabilities of $ 8,915 .

During the year ended December 31, 2019, non-cash activities included the conversion of loans receivable in the amount of $ 12,209 into securities and other investments owned, the recognition of new operating right-of-use assets of $ 1,032 , the recognition of new operating lease liabilities of $ 1,032 and the issuance of warrants to purchase the Company’s stock in the amount of $ 990 related to the purchase of BR Brand.

(aa) Reclassifications

prior period amounts have been reclassified to conform with the current period presentation.

Such reclassifications consist of a

reclass of unbilled receivables from accounts receivables, net, to contract assets that is included in prepaid expenses and other

assets and a reclass of advances against customer contracts to contract assets that is included in prepaid expenses and other assets on the consolidated balance sheets.

Certain amounts reported in the Capital Markets segment during

the years ended December 31, 2020 and 2019 have been reclassified and reported in the Financial Consulting and Wealth Management

segments during the years ended December 31, 2020 and 2019 as a result of the organizational changes that created the new Financial

Consulting segment in the fourth quarter of 2020 and Wealth Management segment in the first quarter of 2021.

Certain prior period amounts have been reclassified to conform with the current period presentation.

Certain amounts reported in the Capital Markets segment during the years ended December 31, 2021 and 2020 have been reclassified and reported in the Consumer segment during the years ended December 31, 2021 and 2020 as a result of changes in the Company's reportable operating segments in the fourth quarter of 2022.

See Note 24 for more details.

Prior period amounts presented in Note 20 during the years ended December 31, 2021 and 2020 have been aggregated to reflect the Company's amended stock incentive plan.

See Note 20 for more details.

(ab) Variable Interest Entity

1 unchanged sentence

Interests in these entities are generally in the form of equity interests, loans receivable, or fee arrangements.

Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion

at each reporting date.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in

the entity held either directly by the Company or indirectly through related parties.

The consolidation analysis can generally be performed

qualitatively;

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 Management, LLC (“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.

Company, through its newly acquired subsidiary, National, has entered into agreements to provide investment banking and advisory services

to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance.

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

For placement agent fees, the Company receives

a cash fee of generally 7 % to 10 % of the amount of raised capital for the Funds and the fee is recognized at the time the placement

services occurred.

The Company receives carried interest as a percentage allocation ( 8 % to 15 %) of the profits of the Funds as compensation

for asset management services provided to the Funds and it is recognized under the ownership model of ASC “Topic 323:

– Equity Method and Joint Ventures” as an equity method investment with changes in allocation recorded currently in the results

of operations.

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 year ended December 31, 2021 were $ 66,263 and are included in services and fees in the consolidated

statements of income.

The carrying amounts for the Company’s variable interests in

VIEs that were not consolidated is shown below.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties.

The consolidation analysis can generally be performed qualitatively;

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

The Company, has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance.

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

For placement agent fees, the Company receives a cash fee of generally 7 % to 10 % of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred.

The Company receives carried interest as a percentage allocation ( 8 % to 15 %) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized under the ownership model of ASC 323 - Investments – Equity Method and Joint Ventures as an equity method investment with changes in allocation recorded currently in the results of operations.

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 years ended December 31, 2022 and 2021 were $ 12,576 and $ 66,263 , respectively, and are included in services and fees in the consolidated statements of operations.

The carrying amounts included in the Company’s consolidated financial statements related to variable interests in VIEs that were not consolidated is shown below.

2022 December 31, 2021

Securities and other investments owned, at fair value $ 33,743 $ 27,445

Loans receivable, at fair value 46,700 205,265

Other assets 3,755 4,956

Maximum exposure to loss $ 84,198 $ 237,666

Riley Principal 150 and 250 Merger Corporations

the year ended December 31, 2021, the Company along with BRPM 150 and BRPM 250, both newly formed SPACs incorporated as Delaware corporations,

consummated the initial public offerings of 17,250,000 units of BRPM 150 and 17,250,000 units of BRPM 250.

Each Unit of BRPM 150

and BRPM 250 consisted of one share of class A common stock and one-third of one redeemable warrant, each whole warrant entitling the

holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $ 11.50 per share.

BRPM 150 and BRPM 250 Units were each sold at a price of $ 10.00 per unit, generating gross proceeds to BRPM 150 of $ 172,500 and

BRPM 250 of $ 172,500 .

These proceeds which totaled $ 345,000 were deposited in a trust account established for the benefit of the BRPM

150 and BRPM 250 class A public shareholders and is included in prepaid expenses and other assets in the consolidated balance sheets

as of December 31, 2021.

In 2021, the Company along with BRPM 150 and BRPM 250, both special purpose acquisition companies incorporated as Delaware corporations, consummated the initial public offerings of 17,250,000 units of BRPM 150 and 17,250,000 units of BRPM 250.

Each Unit of BRPM 150 and BRPM 250 consisted of one share of class A common stock

and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $ 11.50 per share.

The BRPM 150 and BRPM 250 Units were each sold at a price of $ 10.00 per unit, generating gross proceeds to BRPM 150 of $ 172,500 and BRPM 250 of $ 172,500 .

These proceeds which totaled $ 345,000 were deposited in a trust account established for the benefit of the BRPM 150 and BRPM 250 class A public shareholders and was included in prepaid expenses and other assets in the balance sheet.

These proceeds are invested only in U.S.

treasury securities in accordance with the governing documents of BRPM

150 and BRPM 250.

Under the terms of the BRPM 150 and BRPM 250 initial public offerings, BRPM 150 and BRPM 250 are required to consummate

a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of their respective

initial public offerings.

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.

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.

As such, the Company has determined that it is the primary beneficiary of BRPM 150 and BRPM 250

as it has the right to receive benefits or the obligation to absorb losses of each entity, as well as the power to direct a majority of

the activities that significantly impact BRPM 150 and BRPM 250’s economic performance.

Since the Company is determined to be the

primary beneficiary, BRPM 150 and BRPM 250 are consolidated into the Company’s financial statements.

treasury securities in accordance with the governing documents of BRPM 150 and BRPM 250.

Under the terms of the BRPM 150 and BRPM 250 initial public offerings, BRPM 150 and BRPM 250 are required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of their respective initial public offerings.

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.

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.

As such, the Company has determined that it is the primary beneficiary of BRPM 150 and BRPM 250 as it has the right to receive benefits or the obligation to absorb losses of each of the entities, as well as the power to direct a majority of the activities that significantly impact BRPM 150 and BRPM 250’s economic performance.

Since the Company is determined to be the primary beneficiary, BRPM 150 and BRPM 250 were 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 being included in the consolidated group of the Company.

In connection with the de-consolidation of BRPM 150, among other items, prepaid expenses and other assets decreased by $ 172,584 related to funds held in a trust account and redeemable noncontrolling interests in equity of subsidiaries decreased by $ 172,500 .

During the year ended December 31, 2022, the Company recognized incentive fees of $ 41,885 , which is included in services and fees in the consolidated statement of operations.

See Note 23 for further discussion.

(ac) Recent Accounting Standards

Not yet adopted

March 2020, FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848) ,

which provide d 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 appl ied 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 refine d the

scope of Topic 848 through optional expedients and exceptions when accounting

for derivative contracts and certain hedging relationships.

The amendments were

effective through December 31, 2022.

The Company is currently assessing the potential

impacts of this ASU and does not expect it to have any material impact on its consolidated results of operations, cash flows, financial

position or disclosures.

In October 2021 ,

the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business

Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to require acquiring

entities to apply Topic 606 when recognizing and measuring contract assets and contract liabilities instead of only recognizing such

items at fair value on the acquisition date.

The update addressed diversity in practice related to the acquired contract liability and

payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in this update are effective the Company

beginning with fiscal year 2023, with early adoption permitted, and should be applied prospectively to business combinations after the

adoption date.

The Company is currently assessing the potential impacts of this ASU and does not

expect it to have any material impact on its consolidated results of operations, cash flows, financial position or disclosures.

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations to enhance transparency about an entity’s use of supplier finance programs.

Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

An entity should also consider whether the existence of a supplier finance program changes the appropriate presentation of the payables in the program from trade payables to borrowings.

The amendments in this update are effective for the Company for fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the effect of this new standard, which is not expected to have a material impact on its financial position and results of operations.

In June 2022, the FASB issued 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 December 2019, the FASB

issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard simplifies the accounting

for income taxes by removing certain exceptions for recognizing deferred taxes on investments, performing intra-period allocations, and

calculating income taxes in interim periods.

The ASU also adds guidance to reduce the complexity in certain areas, including recognizing

deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

Most amendments within the standard are required

to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

Company adopted the ASU effective January 1, 2021.

The impact of adopting the ASU was immaterial to the consolidated results of operations,

cash flows, financial position, and disclosures.

In January 2020, the FASB

issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323),

and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 to address accounting

for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments.

Entities are required to remeasure its investment immediately before the transition from the measurement alternative for an equity investment

under ASC 321 to the equity method due to an observable transaction.

Similarly, entities are required to remeasure its investment immediately

after the transition from the equity method to ASC 321 due to an observable transaction.

The amendments

in this update should be applied prospectively and at the beginning of the period that includes the adoption date.

adopted the ASU effective January 1, 2020.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash

flows, financial position, and disclosures.

In August 2020, the FASB

issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in

Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity to

simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments

and contracts on an entity’s own equity.

The Company adopted the ASU effective January 1, 2021.

amendments in this update can be applied through either a modified retrospective method or fully retrospective method of transition.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to require acquiring entities to apply Topic 606 when recognizing and measuring contract assets and contract liabilities instead of only recognizing such items at fair value on the acquisition date.

The update addressed diversity in practice related to the acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The Company early adopted the ASU on January 1, 2022.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

In October 2020, the FASB

issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs .

The amendments

in this update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33

for each reporting period.

The Company adopted the ASU effective January 1, 2021.

The amendments

in this update should be applied prospectively and at the beginning of the period that includes the adoption date.

The impact of

adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

In October 2020, the FASB

issued ASU 2020-09, Debt (Topic 470):

Amendments to SEC Paragraphs Pursuant to SEC Release No.

The amendments mostly

apply to Topic 470 and relate to financial disclosure requirements for SEC registrants and other entities required to furnish information

with the SEC.

The Company adopted the ASU effective January 4, 2021.

The impact of adopting the ASU was immaterial to the consolidated

results of operations, cash flows, financial position, and disclosures.

In October 2020, the FASB

issued ASU 2020-10, Codification Improvements to make incremental improvements to GAAP and

address stakeholder suggestions, including, among other things, clarifying that the requirement to provide comparative information in

the financial statements extends to the corresponding disclosures section.

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.

The Company adopted the ASU effective January 1, 2022.

The amendments in this update should be applied retrospectively and at the beginning of the

period that includes the adoption date.

The impact of adopting the ASU was immaterial to the consolidated results of operations,

cash flows, financial position, and disclosures.

In August 2021, the FASB

issued ASU 2021-06, Presentation of Financial Statements (Topic 205) Financial Services—Depositary and Lending (Topic 942), and

Financial Services— Investment Companies (Topic 946).

This update amends certain SEC paragraphs from the Codification in response

to the issuance of SEC Final Rule Nos.

33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses ,

which modified the significance test and improved disclosure requirements for acquired businesses and pro forma financial information.

The Company adopted the SEC Final Rule effective January 1, 2021, and the ASU was adopted immediately.

The impact of adopting the ASU

was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The Company adopted the ASU effective immediately.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

NOTE 4 — ACQUISITIONS

2022 Acquisitions

Acquisition of Targus

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus in a transaction pursuant to Purchase Agreement with Targus, the sellers identified therein, and the other parties thereto.

The purchase price consideration totaled $ 247,546 , which consisted of cash in the amount of $ 112,686 , seller financing of $ 54,000 , the issuance of $ 59,016 in 6.75 % senior notes due 2024, the issuance of $ 15,328 of the Company’s common stock and stock options, and deferred payments of $ 6,515 .

In accordance with ASC 805, the Company used the acquisition method of accounting for this acquisition.

Goodwill of $ 75,753 and other intangible assets of $ 89,000 were recorded as a result of the acquisition.

The acquisition complements the Company’s existing investments and offers potential growth to the Company’s operations in the Consumer segment.

The assets and liabilities of Targus, both tangible and intangible, were recorded at their estimated fair values as of the October 18, 2022 acquisition date.

Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Targus, were charged against earnings in the amount of $ 1,921 and included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022.

Targus goodwill recognized subsequent to the acquisition will be non-deductible for tax purposes.

The fair value of acquisition consideration and preliminary purchase price allocation was as follows:

Consideration paid:

Cash $ 112,686

Fair value of seller financing 54,000

Fair value of 2,400,000 RILYO shares issued in senior notes at $ 24.59 per share

Fair value of 227,491 B.

Riley common shares issued at $ 42.11 per share

Fair value of 215,876 stock options attributable to service period prior to acquisition

Fair value of deferred payments 6,515

Total consideration $ 247,546

Assets acquired and liabilities assumed:

Cash and cash equivalents $ 18,810

Accounts receivable 91,039

Prepaid and other assets 90,289

Right-of-use assets 7,665

Property and equipment 8,320

Other intangible assets 89,000

Accounts payable ( 54,553 )

Accrued expenses and other liabilities ( 58,911 )

Deferred income taxes ( 9,989 )

Contingent consideration ( 2,212 )

Lease liability ( 7,665 )

Net tangible assets acquired and liabilities assumed 171,793

Goodwill 75,753

Total $ 247,546

The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets:

Category Useful life Fair Value

Customer relationships 9 years $ 50,000

Internally developed software and other intangibles 1 to 3 years

Tradenames N/A 35,000

Total $ 89,000

Unaudited Pro Forma Information

Acquisition of Targus

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of Targus as if it had occurred on January 1, 2021.

The pro forma amounts include the historical operating results of the Targus prior to the acquisition, with adjustments directly attributable to the acquisition.

The pro forma results include adjustments and consequential tax effects to reflect incremental depreciation and amortization expense to be incurred based on preliminary fair values of the identifiable intangible assets acquired, the incremental interest expense associated with the issuance of debt to finance the acquisition, and the adjustments to exclude acquisition related costs incurred during the year ended December 31, 2022 and to recognize these costs during the year ended December 31, 2021 as if incurred on January 1, 2021.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations of the combined company were, nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

Pro Forma (unaudited)

Year Ended December 31,

Revenues $ 1,418,291 $ 1,887,385

Net (loss) income $ ( 138,448 ) $ 461,892

Net (loss) income attributable to B.

Riley Financial, Inc.

$ ( 141,683 ) $ 456,144

Net (loss) income attributable to common shareholders $ ( 149,691 ) $ 448,687

These pro forma results do not necessarily represent the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021, nor are they indicative of the results of operations for future periods.

For the period from October 18, 2022 to December 31, 2022, revenues and pre-tax income from Targus included in the Company’s consolidated results of operations were $ 77,821 and $ 6,899 , respectively.

Other Acquisitions

During the year ended December 31, 2022, the Company converted $ 17,500 of a loan receivable with Lingo into equity and the Company's ownership interest in Lingo increased from 40 % to 80 %.

This resulted in the consolidation of Lingo and the pre-existing equity method 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 consolidated statements of operations.

Upon the consolidation of Lingo on May 31, 2022, the total fair value of the assets of Lingo was $ 116,500 and the fair value of the 20 % noncontrolling interest was $ 8,021 .

As part of the acquisition, the Company assumed liabilities in the amount of $ 32,172 and recorded goodwill of $ 34,412 and other intangible assets of $ 63,000 were recorded in the accompanying consolidated balance sheet.

The Company also completed the acquisitions of BullsEye, FocalPoint, and ACR (and related businesses), and other immaterial business.

In accordance with ASC 805, the Company used the acquisition method of accounting for these acquisitions, which were not material to our consolidated financial statements.

The aggregate purchase price consideration consisted of $ 145,987 in cash, $ 20,320 in issuance of common stock of the Company, $ 52,969 in assumed debt and other consideration payable.

The purchase price allocation consisted of $ 151,925 in goodwill, $ 52,860 in intangible assets, and $ 2,522 in net assets acquired.

The results of operations of the acquisitions which were not material, have been included in our consolidated financial statements from the date of purchase.

2021 Acquisitions

Acquisition of National

On February 25, 2021, the Company completed the acquisition of all of the outstanding shares of 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 expands the Company’s investment banking, wealth management and financial planning offerings by adding National’s brokerage, insurance, tax preparation and advisory services.

Valuation Assumptions for Purchase Price Allocation

Our valuation assumptions used to value the acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets, inventories, property and equipment, and deferred income taxes.

In determining the fair value of intangible assets acquired, the Company must make assumptions about the future performance of the acquired businesses, including among other things, the forecasted revenue growth attributable to the asset groups and projected operating expenses inclusive of expected synergies, future cost savings, and other benefits expected to be achieved by combining the businesses acquired with the Company.

The intangible assets acquired are primarily comprised of customer relationships, trade names and trademarks, developed technology, and backlog.

The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocations.

The estimated fair value of the customer relationships and backlog are determined using the multi-period excess earnings method and the estimated fair value of the trade names and trademarks and developed technology are

determined using the relief from royalty method.

Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

NOTE 5 — RESTRUCTURING CHARGE

The Company did not record any restructuring charges during the year ended December 31, 2021.

The Company recorded restructuring charges in the amount of $ 9,011 , $ 0 , and $ 1,557 during the years ended December 31, 2022, 2021, and 2020, respectively.

The restructuring charges during the year ended December 31, 2022 were primarily related to the reorganization and consolidation activities in the Wealth Management segment and the Communications segment.

Reorganization and consolidation activities consisted of reductions in workforce, facility closures, and related intangible impairments and asset disposals.

The restructuring charges during the year ended December 31, 2020 were primarily related to impairment of certain acquired tradename intangibles associated with the Company’s brand realignment across its subsidiary companies to provide greater external consistency and affiliation.

The restructuring charges during the year ended December 31, 2019 were primarily related to severance costs for magicJack employees from a reduction in workforce and lease termination costs in the Principal Investments – Communications segment.

The following tables summarize the changes in accrued restructuring charge during the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31,

2022 2021 2020

Balance, beginning of year $ 624 $ 727 $ 1,600

Restructuring charge 9,011 — 1,557

Cash paid ( 2,712 ) ( 114 ) ( 901 )

Non-cash items ( 4,588 ) 11 ( 1,529 )

Balance, end of year $ 2,335 $ 624 $ 727

The following tables summarize the restructuring activities by reportable segment during the years ended December 31, 2020 and 2019:

Investments -

Communications

The following table summarizes the restructuring activities by reportable segment during the years ended December 31, 2022 and 2020:

Markets Wealth

Management Auction

Liquidation Financial

Consulting Communications Total

Restructuring charges for the year ended December 31, 2022:

Impairment of intangible assets

Employee termination $ — $ 1,150 $ — $ — $ 1,054 $ 2,204

Impairment of intangibles — 2,012 — — 2,162 4,174

Facility closure and consolidation — 1,792 — — 841 2,633

Total restructuring charge $ — $ 4,954 $ — $ — $ 4,057 $ 9,011

Restructuring charges for the year ended December 31, 2020:

Employee termination costs

Facility closure and consolidation charge (recovery)

Impairment of intangibles $ 917 $ — $ 140 $ 500 $ — $ 1,557

Total restructuring charge $ 917 $ — $ 140 $ 500 $ — $ 1,557

There were no restructuring charges during the year ended December 31, 2021.

NOTE 6 — SECURITIES LENDING

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

Gross amounts recognized

Gross amounts offset in the consolidated balance sheets (1)

Net amounts included in the consolidated balance sheets

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

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 December 31, 2022

4 unchanged sentences

Securities loaned $ 2,088,685 $ — $ 2,088,685 $ 2,088,685 $ —

_______________________

(1) Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.

2 unchanged sentences

The components of accounts receivable, net, include the following:

2022 December 31,

Accounts receivable $ 144,120 $ 39,045

3 unchanged sentences

Accounts receivable, net $ 149,110 $ 49,673

and changes to the allowance for doubtful accounts consist of the following:

Additions and changes to the allowance for doubtful accounts consist of the following:

Year Ended December 31,

2022 2021 2020

Balance, beginning of period $ 3,658 $ 3,114 $ 1,514

Additions to reserve 4,164 1,453 3,385

Write-offs ( 4,145 ) ( 1,074 ) ( 1,785 )

Recovery ( 13 ) 165 —

Balance, end of period $ 3,664 $ 3,658 $ 3,114

1 unchanged sentence

Prepaid expenses and other assets consist of the following:

Funds held in trust account

Equity investments

2022 December 31,

Funds held in trust account for BRPM 150 in 2022 and both BRPM 150 and 250 in 2021 to redeem noncontrolling interests in equity of subsidiaries $ 174,437 $ 345,024

Inventory 101,675 3,981

Equity method investments 41,298 39,190

Prepaid expenses 17,623 14,965

1 unchanged sentence

Other receivables 66,403 40,483

Other assets 45,116 7,544

Prepaid expenses and other assets $ 460,696 $ 463,502

receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service

based contracts in the Auction and Liquidation segment, mobile handsets in the Principal Investments – Communications segment,

and consulting related engagements in the Financial Consulting segment.

Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service-based contracts in the Auction and Liquidation segment, mobile handsets in the Communications segment, and consulting related engagements in the Financial Consulting segment.

NOTE 9 — PROPERTY AND EQUIPMENT

Property and equipment, net, consists of the following:

Leasehold improvements

Shorter of the remaining lease term or estimated useful life

Machinery, equipment and computer software

1.8 to 15 years

Furniture and fixtures

Useful Lives December 31,

2022 December 31,

Leasehold improvements Shorter of the remaining lease term or estimated useful life $ 13,484 $ 13,766

Machinery, equipment and computer software 1 to 15 years

30,930 16,624

Furniture and fixtures 3 to 5 years

Total 50,386 35,114

Accumulated depreciation and amortization ( 23,245 ) ( 22,244 )

$ 27,141 $ 12,870

Depreciation expense was $ 5,677 , $ 3,865 , and $ 3,632 during the years ended December 31, 2022, 2021, and 2020, respectively.

1 unchanged sentence

Goodwill was $ 512,595 and $ 250,568 as of December 31, 2022 and 2021, respectively.

The increase in goodwill for the year ended December 31, 2022 was primarily from the acquisitions of Targus in the Consumer segment, FocalPoint in the Capital Markets segment, and Lingo and BullsEye in the Communications segment (See Note 1).

The changes in the carrying amount of goodwill during the years ended December 31, 2022 and 2021 were as follows:

Communications

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer Segment All Other Total

Balance as of December 31, 2020

$ 50,806 $ 28,396 $ 1,975 $ 23,680 $ 122,189 $ — $ — $ 227,046

Goodwill acquired during the year:

Acquisition of other business

Acquisition of other businesses 532 22,799 — — 191 — — 23,522

Balance as of December 31, 2021

51,338 51,195 1,975 23,680 122,380 — — 250,568

Goodwill acquired during the year:

Acquisition of other business

Acquisition of other businesses 110,680 — — — 70,815 75,753 4,779 262,027

Balance as of December 31, 2022

$ 162,018 $ 51,195 $ 1,975 $ 23,680 $ 193,195 $ 75,753 $ 4,779 $ 512,595

Intangible assets consisted of the following:

1 unchanged sentence

As of December 31, 2021

Useful Life Gross

Value Accumulated

Amortization Intangibles

Value Accumulated

Amortization Intangibles

Amortizable assets:

Customer relationships

0.1 to 16 Years

Advertising relationships

Internally developed software and other intangibles

0.5 to 5 Years

6 to 10 Years

Customer relationships 1.9 to 16 Years

$ 268,253 $ ( 87,049 ) $ 181,204 $ 130,801 $ ( 59,671 ) $ 71,130

Domain names 7 years 185 ( 169 ) 16 185 ( 143 ) 42

Advertising relationships 8 years 100 ( 81 ) 19 100 ( 69 ) 31

Internally developed software and other intangibles 0.5 to 5 Years

28,295 ( 12,714 ) 15,581 15,275 ( 8,820 ) 6,455

Trademarks 3 to 10 Years

23,309 ( 6,307 ) 17,002 6,369 ( 1,652 ) 4,717

Total 320,142 ( 106,320 ) 213,822 152,730 ( 70,355 ) 82,375

Non-amortizable assets:

Tradenames 160,276 — 160,276 125,276 — 125,276

Total intangible assets $ 480,418 $ ( 106,320 ) $ 374,098 $ 278,006 $ ( 70,355 ) $ 207,651

2 unchanged sentences

The estimated future amortization expense after December 31, 2027 was $ 58,914 .

In the first quarter of 2020, in accordance with ASC 350, the Company made a qualitative assessment of the impact of the COVID-19 outbreak on goodwill and other intangible assets.

The Company determined that the COVID-19 outbreak was a triggering event for testing the indefinite-lived tradenames in the Brands segment and made a determination that the indefinite-lived tradenames in the Brands segment were impaired and the Company recognized an impairment charge of $ 4,000 .

As a result of the continuing impact and duration of the COVID-19 outbreak on the operations of the Brands segment, the Company determined that there was another triggering event for testing the indefinite-lived tradenames in the Brands segment and made a determination that the indefinite-lived tradenames in the Brands segment were impaired and the Company recognized an additional impairment charge of $ 8,500 in the second quarter of 2020.

There have been no triggering events subsequent to the second quarter of 2020 for testing indefinite-lived tradenames in the Brands segment.

The Company will continue to monitor the impacts of the COVID-19 outbreak in future quarters.

Changes in our forecasts could cause the book values of indefinite-lived tradenames to exceed fair values which may result in additional impairment charges in future periods.

NOTE 11 — LEASING ARRANGEMENTS

The Company’s operating

lease assets primarily represent the lease of office space where the Company conducts its operations with the weighted average lease term

of 7.4 years and 7.2 years as of December 31, 2021 and 2020, respectively.

The operating leases have lease terms up to 10 and 11 years

as of December 31, 2021 and 2020, respectively.

The weighted average discount rate used to calculate the present value of lease payments

was 5.25 % and 5.55 % as of December 31, 2021 and 2020, respectively.

During the years ended December 31, 2021, 2020, and 2019, the total

operating lease expense was $ 15,230 , $ 13,434 , and $ 12,582 , respectively.

During the years ended December 31, 2021, 2020, and 2019,

$ 1,377 , $ 1,225 , and $ 1,289 , respectively, of operating lease expense were attributable to variable lease expenses.

Operating lease expense

is included in selling, general and administrative expenses in the consolidated statements of income.

During the years ended December

31, 2021, 2020, and 2019, cash payments against operating lease liabilities totaled $ 15,509 , $ 12,901 , and $ 12,934 respectively, and non-cash

lease expense transactions totaled $ 3,750 , $ 3,314 , and $ 3,679 , respectively.

Cash flows from operating leases are classified as net cash

flows from operating activities in the accompanying consolidated statements of cash flows.

The Company’s operating lease assets primarily represent the lease of office space and facilities where the Company conducts its operations with the weighted average lease term of 10.4 years and 7.4 years as of December 31, 2022 and 2021, respectively.

The operating leases have lease terms up to 19.6 years and 10.0 years as of December 31, 2022 and 2021, respectively.

The weighted average discount rate used to calculate the present value of lease payments was 6.21 % and 5.25 % as of December 31, 2022 and 2021, respectively.

During the years ended December 31, 2022, 2021, and 2020, the total operating lease expense was $ 17,518 , $ 15,230 , and $ 13,434 , respectively.

During the years ended December 31, 2022, 2021, and 2020, $ 1,305 , $ 1,377 , and $ 1,225 , respectively, of operating lease expense were attributable to variable lease expenses.

Operating lease expense is included in selling, general and administrative expenses in the consolidated statements of operations.

During the years ended December 31, 2022, 2021, and 2020, cash payments against operating lease liabilities totaled $ 18,548 , $ 15,509 , and $ 12,901 respectively, and non-cash lease expense transactions totaled $ 4,465 , $ 3,750 , and $ 3,314 , respectively.

Cash flows from operating leases are classified as net cash flows from operating activities in the accompanying consolidated statements of cash flows.

As of December 31, 2022, maturities of operating lease liabilities were as follows:

Year ending December 31:

2023 $ 19,846

Thereafter 53,327

Total lease payments 134,789

4 unchanged sentences

Asset Based Credit Facility

On April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $ 100,000 to $ 200,000 .

Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022.

The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom.

Such facility allows the Company to borrow up to 50 million British Pounds.

Any borrowings on the UK Credit Agreement reduce the availability on the asset based $ 200,000 credit facility.

The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement.

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.

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(e).

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.

All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding.

The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract.

The Company paid Wells Fargo Bank a closing fee in the amount of $ 500 in connection with the April 2017 amendment to the Credit Agreement.

The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25 % to 3.25 % depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.

The credit facility also provides for success fees in the amount of 2.5 % to 17.5 % of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein.

The interest rate for each revolving credit advance under the Credit Agreement is subject to certain terms and conditions, equal to the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25 % to 3.25 % depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.

The credit facility provides for success fees in the amount of 1.0 % to 10.0 % of the net profits, if any, earned on the liquidation

engagements funded under the Credit Agreement as set forth therein.

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 $ 183 , $ 435 , and $ 639 during the years ended December 31, 2022, 2021, and 2020, respectively.

1 unchanged sentence

As of December 31, 2022 and 2021, there were no open letters of credit outstanding.

We are in compliance with all financial covenants in the asset based credit facility as of December 31, 2021.

Paycheck Protection Program

On April 10, 2020, NSC (a subsidiary of National) entered into a Promissory Note (the “NSC Note”) with Axos Bank as the lender (the “Lender”), pursuant to which the Lender agreed to make a loan to NSC under the Paycheck Protection Program (the “NSC Loan”) offered by the U.S.

Small Business Administration (the “SBA”) pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to qualified small businesses (the “PPP”) in a principal amount of $ 5,524 .

On April 15, 2020, WEC (another subsidiary of National) also entered into a Promissory Note (the “WEC Note” and together with the NSC Note, the “PPP Notes”) with the Lender, pursuant to which the Lender agreed to make a loan to WEC under the PPP (the “WEC Loan” and together with the NSC Loan, the “PPP Loans”) in a principal amount of $ 973 .

The full amount of the Company’s

PPP loans and accrued interest were forgiven in the amount of $ 6,509 in June 2021, and the Company recorded a gain on extinguishment

of loans and other for this amount in the accompanying consolidated statements of income.

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

Other Notes Payable

Notes payable include notes payable to a clearing organization for one of the Company’s broker dealers.

The notes payable accrue interest at the prime rate plus 2.0 % ( 5.25 % as of December 31, 2021) payable annually, maturing January 31, 2022.

As of December 31, 2021 and 2020, the outstanding balance for the notes payable was $ 357 and $ 714 , respectively.

As of December 31, 2022 and 2021, the outstanding balance for the other notes payable was $ 25,263 and $ 357 , respectively.

Interest expense was $ 1,125 , $ 21 , and $ 51 during the years ended December 31, 2022, 2021, and 2020, respectively.

Also included in notes payable as of December 31, 2020, was a $ 37,253 note payable to Garrison TNCI LLC which was assumed as part of the Company’s investment in Lingo Management LLC.

The note accrued interest at 12.5 % per annum and had a maturity date of March 31, 2021.

During the years ended December 31, 2021 and 2020, interest expense on the note was $ 238 and $ 447 , respectively.

The note was paid in full in January 2021.

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

Notes payable to a clearing organization for one of the Company’s broker dealers, which accrued interest at the prime rate plus 2.00 %, matured on January 31, 2022 and was repaid during the year ended December 31, 2022.

NOTE 13 — TERM LOANS AND REVOLVING CREDIT FACILITY

Targus Credit Agreement

On October 18, 2022, the Company's subsidiary, Tiger US Holdings, Inc., a Delaware corporation, among others, entered into a credit agreement (“Targus Credit Agreement”) with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $ 28,000 term loan and a five-year $ 85,000 revolver loan, which was used to finance part of the acquisition of Targus.

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

The Targus 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 outstanding under the Targus Credit Agreement.

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

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus an applicable margin of 3.75 %.

The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal to the base rate plus an applicable margin of 1.00 % to 1.75 % and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 2.00 % to 2.75 %.

Principal outstanding is due in quarterly installments starting on December 31, 2022.

Quarterly installments from December 31, 2022 to September 30, 2027 are in the amount of $ 1,400 per quarter and the remaining principal balance is due at final maturity on October 18, 2027.

As of December 31, 2022, the outstanding balance on the term loan was $ 26,021 (net of unamortized debt issuance costs of $ 580 ) and the outstanding balance on the revolver loan was $ 52,978 .

Interest expense on these loans during the year ended December 31, 2022 was $ 1,322 (including amortization of deferred debt issuance costs and unused commitment fees of $ 157 ).

The interest rate on the term loan was 8.43 % and the interest rate on the revolver loan ranged between 6.03 % to 9.25 % as of December 31, 2022.

Pathlight Credit Agreement

On September 23, 2022, the Company's subsidiary, B.

Riley Receivables II, LLC, a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Pathlight Credit Agreement”) by and among PLC Agent, LLC in the capacity as administrative agent and Pathlight Capital Fund I LP, Pathlight Capital Fund II LP, and Pathlight Capital Fund III LP as the lenders (collectively, “Pathlight”) for a five-year $ 148,200 term loan.

The Pathlight Credit Agreement was entered in connection with the purchase of the 2022 Badcock Receivable discussed in Note 3.

On January 12, 2023, Amendment No.

2 to the Pathlight Credit Agreement increased the term loan by an additional $ 78,296 .

loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus an applicable margin of 6.50 %.

As of December 31, 2022, the interest rate on the Pathlight Credit Agreement was 11.01 %.

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

The Pathlight 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 Pathlight Credit Agreement.

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

Principal outstanding under the Pathlight Credit Agreement is repaid based on collections of the 2022 Badcock Receivable less other application of payments as defined in the Pathlight Credit Agreement and the remaining principal balance is due at final maturity on September 23, 2027.

As of December 31, 2022, the outstanding balance on the term loan was $ 118,437 (net of unamortized debt issuance costs of $ 2,377 ).

Interest expense on the term loan during the year ended December 31, 2022 was $ 5,331 (including amortization of deferred debt issuance costs of $ 1,328 ).

Lingo Credit Agreement

On August 16, 2022, the Company's subsidiary, Lingo, a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Borrower, the Company as the secured guarantor, and Banc of California, N.A.

in its capacity as administrative agent and lender, for a five-year $ 45,000 term loan.

This loan was used to finance part of the purchase of Bullseye by Lingo.

On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank (the “New Lender”) for an incremental term loan of $ 7,500 , increasing the principal balance of the term loan to $ 52,500 .

On November 10, 2022, Lingo entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $ 20,500 , increasing the principal balance of the term loan to $ 73,000 .

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 3.00 % to 3.75 % per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment.

As of December 31, 2022, the interest rate on the Lingo Credit Agreement was 7.89 %.

The agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

In addition, the agreement requires the Borrower to maintain certain financial ratios.

The 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 agreement.

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

Principal outstanding is due in quarterly installments starting on March 31, 2023.

Quarterly installments from March 31, 2023 to December 31, 2023 are in the amount of $ 2,281 per quarter, from March 31, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, from March 31, 2025 to June 30, 2027 are in the amount of $ 3,650 , and the remaining principal balance is due at final maturity on August 16, 2027.

As of December 31, 2022, the outstanding balance on the term loan was $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ).

Interest expense on the term loan during the year ended December 31, 2022 was $ 1,619 (including amortization of deferred debt issuance costs of $ 97 ).

Nomura Credit Agreement

On June 23, 2021, the Company, and its wholly owned subsidiaries, BR Financial Holdings, LLC (the “Primary Guarantor”), and BR Advisory & Investments, LLC (the “Borrower”) entered into a credit agreement (as amended prior to the Second Amendment (as defined below) the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Administrative Agent”), and Wells Fargo Bank, N.A., as collateral agent (the “Collateral Agent”), for a four-year $ 200,000 secured term loan credit facility (the “Term Loan Facility”) and a four-year $ 80,000 secured revolving loan credit facility (the “Revolving Credit Facility”).

December 17, 2021 (the “Amendment Date”), the Company, the Primary Guarantor, and the Borrower entered into a Second Incremental

Amendment to Credit Agreement (the “Second Amendment”), by and among the Company, the Primary Guarantor, the Borrower, each

of the subsidiary guarantors signatory thereto, each of the lenders party thereto, the Administrative Agent and the Collateral Agent,

pursuant to which the Borrower established an incremental facility in an aggregate principal amount of $ 100,000 (the “Incremental

Facility” and the incremental term loans made thereunder, the “Incremental Term Loans”) of secured term loans under

the Credit Agreement on terms identical to those applicable to the Term Loan Facility.

The Borrower borrowed the full amount of the Incremental

Term Loans on the Amendment Date.

The Term Loan Facility, Revolving Credit Facility, and Incremental Facility, together, (“Credit

Facilities”), mature on June 23, 2025, subject to acceleration or prepayment.

loans under the Credit Facilities accrue interest at the Eurodollar Rate plus an applicable margin of 4.50 %.

Base rate loans accrue interest

at the Base Rate plus an applicable margin of 3.50 %.

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.

Agent”), for a four-year $ 200,000 secured term loan credit facility (the “Term Loan Facility”) and a four-year $ 80,000 secured revolving loan credit facility (the “Revolving Credit Facility”).

On December 17, 2021 (the “Amendment Date”), the Company, the Primary Guarantor, and the Borrower entered into a Second Incremental Amendment to Credit Agreement (the “Second Amendment”), by and among the Company, the Primary Guarantor, the Borrower, each of the subsidiary guarantors signatory thereto, each of the lenders party thereto, the Administrative Agent and the Collateral Agent, pursuant to which the Borrower established an incremental facility in an aggregate principal amount of $ 100,000 (the “Incremental Facility” and the incremental term loans made thereunder, the “Incremental Term Loans”) of secured term loans under the Credit Agreement on terms identical to those applicable to the Term Loan Facility.

The Borrower borrowed the full amount of the Incremental Term Loans on the Amendment Date.

The Term Loan Facility, Revolving Credit Facility, and Incremental Facility, together, (“Credit Facilities”), mature on June 23, 2025, subject to acceleration or prepayment.

Eurodollar loans under the Credit Facilities accrue interest at the Eurodollar Rate plus an applicable margin of 4.50 %.

Base rate loans accrue interest at the specified base rate plus an applicable margin of 3.50 %.

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.

4 unchanged sentences

The Credit Agreement and the Second Amendment contain customary events of default, including with respect to a failure to make payments under the credit facilities, cross-default, certain bankruptcy and insolvency events and customary change of control events.

Commencing on September 30, 2022, the Term Loan Facility and Incremental Facility will amortize in equal quarterly installments of 1.25 % of the aggregate principal amount of the term loan as of the closing date with the remaining balance due at final maturity.

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

of December 31, 2021, the outstanding balance on the Term Loan Facility and Incremental Facility was $ 292,650 (net of unamortized debt

issuance costs of $ 7,350 ).

Interest on the term loan during the year ended December 31, 2021, was $ 5,907 (including amortization of deferred

debt issuance costs of $ 766 ).

The interest rate on the term loan as of December 31, 2021 was 4.72 %.

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

Interest on the revolving facility during the year ended December 31, 2021 was $ 1,915 (including unused commitment fees of $ 76 and amortization of deferred financing costs of $ 305 ).

The interest rate on the revolving facility as of December 31, 2021 was 4.67 %.

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

Commencing on September 30, 2022, the Term Loan Facility and Incremental Facility is amortizing in equal quarterly installments of 1.25 % of the aggregate principal amount of the term loan as of the closing date with the remaining balance due at final maturity on June 23, 2025.

Quarterly installments from March 31, 2023 to March 31, 2025 are in the amount of $ 3,750 per quarter.

As of December 31, 2022 and 2021, the outstanding balance on the Term Loan Facility and Incremental Facility was $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ) and $ 292,650 (net of unamortized debt issuance costs of $ 7,350 ), respectively.

Interest on the term loan during the years ended December 31, 2022 and 2021, was $ 21,310 (including amortization of deferred debt issuance costs of $ 2,085 ) and $ 5,907 (including amortization of deferred debt issuance costs of $ 766 ), respectively.

The interest rate on the term loan as of December 31, 2022 and 2021 was 9.23 % and 4.72 %, respectively.

The Company had an outstanding balance of $ 74,700 and $ 80,000 under the Revolving Credit Facility as of December 31, 2022 and 2021, respectively.

Interest on the revolving facility during the years ended December 31, 2022 and 2021 was $ 5,441 (including unused commitment fees of $ 13 and amortization of deferred financing costs of $ 586 ) and $ 1,915 (including unused commitment fees of $ 76 and amortization of deferred financing costs of $ 305 ), respectively.

The interest rate on the revolving facility as of December 31, 2022 and 2021 was 9.23 % and 4.67 %, respectively.

BRPAC Credit Agreement

13 unchanged sentences

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 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 .

December 31, 2020, the Borrowers, the Secured Guarantors, the Agent and the Closing Date 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 is 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.

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”) pursuant to which, among other things, replaced LIBOR with the Secured Overnight

Financing Rate (“SOFR”) reference rate, and the Borrowers were permitted to make a one-time Permitted Distribution (as defined

in the Third Amendment) in the amount of $ 30,000 on the date of the Third Amendment.

Borrowings under the amended BRPAC Credit Agreement bear interest at a rate equal to (a) the SOFR rate for loans, plus (b) the applicable margin rate, which ranges from 2.75 % to 3.25 % per annum, based upon the Borrowers’ ratio of consolidated funded indebtedness to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding four fiscal quarters or other applicable period.

As of December 31, 2021 and 2020, the interest rate on the amended BRPAC Credit Agreement was 3.17 % and 3.40 %, respectively.

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

Quarterly installments from March 31, 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 $ 2,663

per quarter, and the remaining principal balance is due at final maturity on December 31, 2025.

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

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 (“Marconi Wireless”) 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 Term 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 December 31, 2022 and 2021, the interest rate on the BRPAC Credit Agreement was 7.65 % and 3.17 %, respectively.

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

Quarterly installments 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 December 31, 2022, and 2021, the outstanding balance on the term loan was $ 68,674 (net of unamortized debt issuance costs of $ 701 ) and $ 53,735 (net of unamortized debt issuance costs of $ 582 ), respectively.

Interest expense on the term loan during the years ended December 31, 2022, 2021, and 2020, was $ 3,478 (including amortization of deferred debt issuance costs of $ 331 ), $ 2,468 (including amortization of deferred debt issuance costs of $ 300 ), and $ 2,369 (including amortization of deferred debt issuance costs of $ 278 ), respectively.

We are in compliance with all financial covenants in the amended BRPAC Credit Agreement as of December 31, 2021.

NOTE 14 — SENIOR NOTES PAYABLE

Senior notes payable, net, is comprised of the following as of December 31, 2022 and 2021:

7.500 % Senior notes due May 31, 2027

7.250 % Senior notes due December 31, 2027

7.375 % Senior notes due May 31, 2023

6.875 % Senior notes due September 30, 2023

2022 December 31,

6.750 % Senior notes due May 31, 2024

$ 199,232 $ 111,170

6.500 % Senior notes due September 30, 2026

180,532 178,787

6.375 % Senior notes due February 28, 2025

146,432 144,521

6.000 % Senior notes due January 31, 2028

266,058 259,347

5.500 % Senior notes due March 31, 2026

217,440 214,243

5.250 % Senior notes due August 31, 2028

405,483 397,302

5.000 % Senior notes due December 31, 2026

324,714 322,679

1,739,891 1,628,049

Unamortized debt issuance costs ( 18,140 ) ( 21,489 )

During the year ended December 31, 2021, the Company issued $ 233,416 of senior notes with maturity dates ranging from May 2023 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc., which governs the program of at-the-market sales of the Company’s senior notes.

On January 25, 2021, the Company issued $ 230,000 of senior notes due in January 2028 (“6.0% 2028 Notes”) pursuant to a prospectus supplement dated February 12, 2020.

Interest on the 6.0% 2028 Notes is payable quarterly at 6.0 %.

The 6.0% 2028 Notes are unsecured and due and payable in full on January 31, 2028.

In connection with the issuance of the 6.0% 2028 Notes, the Company received net proceeds of $ 225,723 (after underwriting commissions, fees, and other issuance costs of $ 4,277 ).

The 6.0% 2028 Notes bear interest at the rate of 6.0 % per annum.

On March 29, 2021, the Company issued $ 159,493 of senior notes due in March 2026 (“5.5% 2026 Notes”) pursuant to a prospectus supplement dated January 28, 2021.

Interest on the 5.5% 2026 Notes is payable quarterly at 5.5 %.

The 5.5% 2026 Notes are unsecured and due and payable in full on March 31, 2026.

In connection with the issuance of the 5.5% 2026 Notes, the Company received net proceeds of $ 156,260 (after underwriting commissions, fees, and other issuance costs of $ 3,233 ).

The 5.5% 2026 Notes bear interest at the rate of 5.5 % per annum.

On March 31, 2021, the Company exercised its option for early redemption at par $ 128,156 of senior notes due in May 2027 (“7.50% 2027 Notes”) pursuant to the second supplemental indenture dated May 31, 2017.

The total redemption payment included $ 1,602 in accrued interest.

On July 26, 2021, the Company redeemed, in full, $ 122,793 aggregate principal amount of its 7.25 % Senior Notes due 2027 (“7.25% 2027 Notes”) pursuant to the third supplemental indenture dated December 31, 2017.

The 7.25 % Notes had an aggregate principal amount of $ 122,793 .

The redemption price was equal to 100 % of the aggregate principal amount, plus accrued and unpaid interest up to, but excluding, the redemption date.

The total redemption payment included approximately $ 2,127 in accrued interest.

In connection with the full redemption, the 7.25% 2027 Notes, which were listed on NASDAQ under the ticker symbol “RILYG,” were delisted from NASDAQ and ceased trading on the redemption date.

On August 4, 2021, the Company issued $ 316,250 of senior notes due in August 2028 (“5.25% 2028 Notes”) pursuant to a prospectus supplement dated January 28, 2021.

$ 1,721,751 $ 1,606,560

During the years ended December 31, 2022 and 2021, the Company issued $ 111,841 and $ 233,416 , 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.

which governs the program of at-the-market sales of the Company’s senior notes.

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

On November 15, 2022, the Company issued $ 60,000 of senior notes due in May 2024 (“ 6.75 % 2024 Notes”) pursuant to a prospectus supplement.

Interest on the 6.75 % 2024 Notes is payable quarterly at 6.75 %.

The 5.25% 2028 Notes are unsecured and due and payable in full on August 31, 2028.

The 6.75 % 2024 Notes are unsecured and due and payable in full on May 30, 2024.

In connection with the issuance of the 6.75 % 2024 Notes, the Company received net proceeds of $ 59,016 (after underwriting commissions, fees and other issuance costs of $ 984 ).

The Notes bear interest at the rate of 6.75 % per annum.

On September 4, 2021, the Company redeemed, in full, $ 137,454 aggregate principal amount of its 7.375 % Senior Notes due 2023 (“7.375% 2023 Notes”) pursuant to the fifth supplemental indenture dated September 11, 2018.

The redemption price was equal to 101.5 % of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date.

The total redemption payment included approximately $ 957 in accrued interest and $ 2,062 in premium.

In connection with the full redemption, the 7.375% 2023 Notes, which were listed on NASDAQ under the ticker symbol “RILYH,” were delisted from NASDAQ and ceased trading on the redemption date.

October 22, 2021, the Company redeemed, in full, $ 115,726 aggregate principal amount of its 6.875 % Senior Notes due 2023 (the “6.875%

2023 Notes”) pursuant to the fifth supplemental indenture dated September 11, 2018.

The redemption price was equal to 101.0 % of

the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date.

The total redemption

payment included approximately $ 1,812 in accrued interest and $ 1,157 in premium.

In connection with the full redemption, the 6.875% 2023

Notes under the ticker symbol “RILYI,” were delisted from NASDAQ and ceased trading on the redemption date.

On December 3, 2021, the

Company issued $ 322,679 of senior notes due in December 2026 (“5.00% 2026 Notes”) pursuant to a prospectus supplement

dated November 29, 2021.

Interest on the 5.00% 2026 Notes is payable quarterly at 5.00 %.

The 5.00% 2026 Notes are unsecured and

due and payable in full on December 31, 2026.

In connection with the issuance of the 5.00% 2026 Notes, the Company received net

proceeds of $ 317,633 (after underwriting commissions, fees, and other issuance costs of $ 5,046 ).

The 5.00% 2026 Notes bear

interest at the rate of 5.00 % per annum.

As of December 31, 2022 and 2021, the total senior notes outstanding was $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ) and $ 1,606,560 (net of unamortized debt issue costs of $ 21,489 ) with a weighted average interest rate of 5.75 % and 5.69 %, respectively.

1 unchanged sentence

Interest expense on senior notes totaled $ 99,854 , $ 81,475 , and $ 61,233 during the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022, the aggregate maturities of borrowings from notes payable, term loans, credit facilities, and senior notes for the next five years are as follows:

2023 $ 165,592

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 December 31, 2021, the Company had $ 111,911 remaining availability under the January 2022 Sales Agreement.

As of December 31, 2022 and 2021, the Company had $ 69,500 and $ 111,911 , respectively, remaining availability under the Sales Agreement Prospectus.

NOTE 15 — REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers by reportable segment during the years ended December 31, 2021, 2020, and 2019 is as follows:

Investments -

Communications

Revenue from contracts with customers from the Company's six reportable operating segments and the All Other category during the years ended December 31, 2022, 2021, and 2020 is reported below.

There were no revenues in the All Other category during the years ended December 31, 2021 and 2020.

Markets Wealth

Management Auction and

Liquidation Financial

Consulting Communications Consumer All Other Total

Revenues for the year ended December 31, 2022:

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Subscription services — — — — 219,379 — — 219,379

Service contract revenues

Sale of goods — — 56,928 — 7,526 77,821 — 142,275

Advertising, licensing and other — — — — 8,750 18,940 13,797 41,487

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Interest income - Loans and securities lending 240,813 — 4,587 — — — — 245,400

Trading gains on investments

Trading (losses) gains on investments ( 151,816 ) 3,522 — — — — — ( 148,294 )

Fair value adjustment on loans ( 54,334 ) — — — — — — ( 54,334 )

Other 69,115 6,631 — — — — — 75,746

Total revenues $ 327,596 $ 234,257 $ 74,096 $ 98,508 $ 235,655 $ 96,761 $ 13,797 $ 1,080,670

(1) Includes sale of goods of $ 53,348 in Auction Liquidation and

$ 4,857 in Principal Investments - Communications.

Markets Wealth

Management Auction and

Liquidation Financial

Consulting Communications Consumer Total

(As Restated) (As Restated)

Revenues for the year ended December 31, 2021:

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Service contract revenues — — 1,090 — — — 1,090

Sale of goods — — 53,348 — 4,857 — 58,205

Advertising, licensing and other — — — — 9,341 20,308 29,649

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Fair value adjustment on loans 9,635 — — — — — 9,635

Other 16,187 15,874 — — — — 32,061

Total revenues $ 891,230 $ 381,984 $ 73,517 $ 94,312 $ 93,347 $ 20,308 $ 1,554,698

(1) Includes sale of goods of $ 25,663 in Auction Liquidation and

$ 3,472 in Principal Investments - Communications.

Markets Wealth

Management Auction and

Liquidation Financial

Consulting Communications Consumer Total

(As Restated) (As Restated)

Revenues for the year ended December 31, 2020:

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Service contract revenues — — 13,066 — — — 13,066

Sale of goods — — 25,663 — 3,472 — 29,135

Advertising, licensing and other — — — — 11,000 16,458 27,458

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Fair value adjustment on loans ( 22,033 ) — — — — — ( 22,033 )

Other 7,884 1,141 — 716 — — 9,741

Total revenues $ 477,086 $ 73,149 $ 88,764 $ 91,622 $ 87,138 $ 16,458 $ 834,217

(1) Includes sale of goods of $ 4,220 in Auction Liquidation and

$ 3,715 in Principal Investments - Communications.

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Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer.

Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service.

Revenue from a

performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”).

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In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of the Company’s past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties.

Payment terms vary by customer with due dates varying in advance of service or upon invoice of the service or for the sale of goods with credit terms.

Revenues by geographic region by segment is included in Note 24 – Business Segments.

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Subscription services .

Subscription service revenues are primarily earned from Principal Investments – Communication service contracts and are recognized

in the period in which the transaction price has been determinable and the related performance obligations for services are provided to

the customer.

UOL pay accounts generally pay in advance for their internet access services and revenues are then recognized ratably over

the service period.

Subscription service revenues from magicJack include (a) revenues for initial access rights, which are recognized

ratably over the service term, (b) revenues from access rights renewal, which are recognized ratably over the extended access right period;

Subscription service revenues are primarily earned from the Communications segment's service contracts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer.

UOL pay accounts generally pay in advance for their internet access services and revenues are then recognized ratably over the service period.

Subscription service revenues from magicJack include (a) revenues for initial access rights, which are recognized ratably over the service term, (b) revenues from access rights renewal, which are recognized ratably over the extended access right period;

(d) revenues from UCaaS services,

which are recognized in the period the services are provided over the term of the customer agreements;

and (e) prepaid international long

distance minutes, which are recognized as the minutes are used or expired.

Subscription service revenues from our mobile phone business

include revenues from mobile voice, text, and data services and are recognized ratably over the service period.

Voice, text, and data

overage charges are recognized over time as the consumer simultaneously receives and consumes the benefits each period as the Company

(d) revenues from UCaaS services, which are recognized in the period the services are provided over the term of the customer agreements;

and (e) prepaid international long distance minutes, which are recognized as the minutes are used or expired.

Subscription service revenues from our mobile phone business include revenues from mobile voice, text, and data services and are recognized ratably over the service period.

Voice, text, and data overage charges are recognized over time as the consumer simultaneously receives and consumes the benefits each period as the Company performs.

Service contract revenues .

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A provision for the entire loss as negative revenue on the performance obligation is recognized in the period the loss is determined.

Negative revenue from one retail liquidation engagement contributed to the Company reporting negative service contract revenues of $ 31,553 in the Auction and Liquidation segment during the year ended December 31, 2019.

Sale of goods.

Sale of goods primarily consists of the sale of magicJack and Marconi Wireless devices, amounts from the sale of goods acquired in Auction and Liquidation asset purchase agreements, and amounts from the sale of goods from Targus in the Consumer segment.

Revenues from the sale of magicJack and Marconi Wireless devices are recognized upon delivery (when control transfers to the customer).

Sale of product revenues also include the related shipping and handling and installment fees, if applicable.

Revenues from the sale of goods acquired in Auction and Liquidation asset purchase agreements are recognized when control of the product and risks of ownership has been transferred to the buyer.

Revenue from the sale of Targus goods is recognized when control of the product transfers to the customer, generally upon product shipment.

Revenue is measured as the amount of consideration expected to be received in exchange for the transfer of product.

There are no significant judgments or estimates made to determine the amount or timing of reported revenues.

Sales terms do not allow for a right of return except for matters related to products with defects or damages.

Advertising, licensing and other .

Advertising and other revenues consist primarily of amounts from UOL’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements, the portion of revenues from the sale of magicJack devices that is allocated to hardware, as well as revenues from magicJack ancillary products and mobile broadband service devices to customers, and amounts from the sale of goods acquired in Auction and Liquidation asset purchase agreements.

Advertising revenues consist of amounts from UOL’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements.

Advertising revenues are recognized in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met.

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The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available.

Revenues from the hardware portion of the sale of magicJack devices are recognized upon delivery (when control transfers to the customer).

Revenues from the sale of other magicJack related products are recognized at the time of sale.

Sale of product revenues also include the related shipping and handling and installment fees, if applicable.

Revenues from the sale of goods acquired in Auction and Liquidation asset purchase agreements are recognized when control of the product and risks of ownership has been transferred to the buyer.

Licensing revenue results from various license agreements that provide revenue based on guaranteed minimum royalty amounts and advertising/marketing fees with additional royalty revenue based on a percentage of defined sales.

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Revenue is not recognized unless collectability is probable.

Other income primarily consists of services revenues from the operations of a regional environmental services business and a landscaping business.

The environmental services business is engaged in the recycling of scrap and waste materials and deals primarily in paper products.

Customer arrangements contain a single obligation to transfer processed recycled

goods and revenues are recognized at a point in time as processing fees when the performance obligation is satisfied.

The landscaping business provides landscaping maintenance, improvements, and irrigation services to its customers.

Revenues are recognized as the services are performed, which is typically ratably over the term of the contract.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

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Contract Balances

The timing of the Company’s

revenue recognition may differ from the timing of payment by its customers.

The Company records a receivable when revenue is recognized

prior to payment and the Company has an unconditional right to payment.

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 $ 49,673 and $ 40,806 as of December 31, 2021 and 2020, respectively.

The Company had no significant impairments

related to these receivables during the years ended December 31, 2021 and 2020.

The Company also has $ 12,315 and $ 5,712 of unbilled receivables

included in prepaid expenses and other assets as of December 31, 2021 and 2020, respectively, and advances against customer contracts

of $ 200 included in prepaid expenses and other assets as of December 31, 2021 and 2020, respectively.

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.

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers.

The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment.

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 $ 149,110 and $ 49,673 as of December 31, 2022 and 2021, respectively.

The Company had no significant impairments related to these receivables during the years ended December 31, 2022 and 2021.

The Company also has $ 14,144 and $ 12,315 of unbilled receivables included in prepaid expenses and other assets as of December 31, 2022 and 2021, respectively.

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 December 31, 2022 and 2021 was $ 85,441 and $ 69,507 , respectively.

The Company expects to recognize

the deferred revenue of $ 69,507 as of December 31, 2021 as service and fee revenues when the performance obligation is met during the

years December 31, 2022, 2023, 2024, 2025 and 2026 in the amount of $ 39,181 , $ 11,364 , $ 7,936 , $ 5,265 , and $ 2,745 , respectively.

expects to recognize the deferred revenue of $ 3,016 after December 31, 2026.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized revenue of $ 39,906 , $ 38,330 , and $ 39,885 that was recorded as deferred revenue, respectively.

The Company expects to recognize the deferred revenue of $ 85,441 as of December 31, 2022 as service and fee revenues when the performance obligation is met during the years December 31, 2023, 2024, 2025, 2026 and 2027 in the amount of $ 54,696 , $ 13,713 , $ 7,994 , $ 3,897 , and $ 1,780 , respectively.

The Company expects to recognize the deferred revenue of $ 3,361 after December 31, 2027.

During the years ended December 31, 2022, 2021, and 2020, the Company recognized revenue of $ 37,254 , $ 39,906 , and $ 38,330 that was recorded as deferred revenue at the beginning of each period, respectively.

Contract Costs

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Year Ended December 31,

2022 2021 2020

Federal $ 15,793 $ 67,322 $ 4,730

State ( 1,053 ) 30,036 3,297

Foreign 1,638 4,796 5,344

Total current provision 16,378 102,154 13,371

Federal ( 60,736 ) 42,734 41,979

State ( 19,544 ) 17,824 18,518

Foreign 46 1,248 1,572

Total deferred ( 80,234 ) 61,806 62,069

Total provision for income taxes

Total (benefit from) provision for income taxes $ ( 63,856 ) $ 163,960 $ 75,440

A reconciliation of the federal statutory rate of 21.0 % to the effective tax rate for income before income taxes is as follows during the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31,

2022 2021 2020

Provision for income taxes at federal statutory rate 21.0 % 21.0 % 21.0 %

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Employee stock based compensation 1.7 % ( 1.1 %) ( 2.2 %)

Other ( 1.5 %) 0.2 % 2.0 %

Effective income tax rate 29.0 % 26.7 % 27.0 %

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Mandatorily redeemable noncontrolling interests 1,190 1,190

State taxes — 5,321

Share based payments 14,346 6,871

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Deductible goodwill and other intangibles ( 44,155 ) ( 5,129 )

Share based payments

State taxes ( 3,839 ) —

Depreciation ( 4,087 ) ( 1,592 )

Deferred revenue ( 15,967 ) ( 116,631 )

Other ( 15,574 ) ( 6,483 )

Total deferred tax liabilities ( 83,622 ) ( 129,835 )

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Net deferred tax liabilities $ ( 25,570 ) $ ( 90,207 )

The Company’s income before

income taxes of $ 614,762 during the year ended December 31, 2021 includes a United States component of income before income taxes of

$ 598,882 and a foreign component comprised of income before income taxes of $ 15,880 .

As of December 31, 2021, 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, the state net operating

loss carryforwards will expire in tax years commencing in December 31, 2025.

During the years ended December 31, 2022, 2021, and 2020, the Company's loss before income taxes of $ 220,450 , income before income taxes of $ 614,762 , and $ 279,457 includes a United States component of loss before income taxes of $ 229,174 , income before income taxes of $ 598,882 , and $ 264,654 and a foreign component comprised of income before income taxes of $ 8,724 , $ 15,880 , and $ 14,803 , respectively.

As of December 31, 2022, the Company had federal net operating loss carryforwards of $ 55,349 and state net operating loss carryforwards of $ 46,981 .

During the years ended December 31, 2022, 2021, and 2020, the Company recorded a benefit in the provision for income taxes related to federal and state net operating loss carryforwards in the amount of $ 1,820 , $ 1,527 , and $ 1,313 , respectively.

The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2033 through December 31, 2038, the state net operating loss carryforwards will expire in tax years commencing in December 31, 2030.

The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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As of December 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 it 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 December 31, 2021,

the Company had gross unrecognized tax benefits totaling $ 10,826 all of which would have an impact on the Company’s effective income tax

rate, if recognized.

A reconciliation of the amounts of gross unrecognized tax benefits (before federal impact of state items), excluding

interest and penalties, was as follows:

The valuation allowance increased by $ 5,414 during the year ended December 31, 2022.

The Company does not believe that it is more likely than not that it

will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 66,308 against these deferred tax assets.

As of December 31, 2022, the Company had gross unrecognized tax benefits totaling $ 16,146 all of which would have an impact on the Company’s effective income tax rate, if recognized.

A reconciliation of the amounts of gross unrecognized tax benefits (before federal impact of state items), excluding interest and penalties, was as follows:

Beginning balance $ 10,826

Additions for current year tax positions 7,129

Additions for prior year tax positions

Reductions for prior year tax positions ( 1,766 )

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As of December 31, 2022, the Company believes it is reasonably possible that its gross liabilities for unrecognized tax benefits may decrease by approximately $ 34 within the next 12 months due to expiration of statute of limitations.

During the year ended December

31, 2021, the Company had accrued interest and penalties relating to uncertain tax positions of $ 551 and $ 5,345 for UOL and magicJack,

respectively, all of which was included in income taxes payable.

During the year ended December 31, 2021, the Company recorded a benefit

of $ 103 for UOL related to interest and penalties for uncertain tax positions primarily due to the lapse in statute of limitations.

During the year ended December 31, 2022, the Company had accrued interest and penalties relating to uncertain tax positions of $ 531 and $ 4,785 for UOL and magicJack, respectively, all of which was included in income taxes payable.

During the year ended December 31, 2022, the Company recorded a net benefit of $ 39 and $ 702 for UOL and magicJack, respectively, related to interest and penalties for uncertain tax positions primarily due to the lapse in statute of limitations.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.

The IR Act provides for, among other things, a new U.S.

federal 1% excise tax on certain repurchases if stock by publicly traded U.S.

domestic corporations and certain U.S.

domestic subsidiaries of public traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of excise tax is generally 1% of the fair market value of the shares repurchased at the time of repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

The Company does not expect the IR Act to have a material impact on its financial position and result of operations.

NOTE 17 — EARNINGS PER SHARE

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Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period.

Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend (see Note 2(v)).

Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend (see Note 3(w)).

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.

Basic common shares outstanding exclude 387,365 common shares in 2019 that were held in escrow and subject to forfeiture.

The 387,365 common shares held in escrow were forfeited and cancelled on June 11, 2020 to indemnify the Company for certain representations and warranties and related claims pursuant to a related acquisition agreement.

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 1,651,011 , 1,639,310 , and 1,445,301 during the years ended December 31, 2022, 2021, and 2020, respectively, because to do so would have been anti-dilutive.

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Year Ended December 31,

Net income attributable to B.

2022 2021 2020

Net (loss) income attributable to B.

Riley Financial, Inc.

$ ( 159,829 ) $ 445,054 $ 205,148

Preferred stock dividends ( 8,008 ) ( 7,457 ) ( 4,710 )

Net income applicable to common shareholders

Net (loss) income applicable to common shareholders $ ( 167,837 ) $ 437,597 $ 200,438

Weighted average common shares outstanding:

Basic 28,188,530 27,366,292 25,607,278

Effect of dilutive potential common shares:

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Contingently issuable shares — 124,582 —

Basic income per common share

Diluted income per common share

Diluted 28,188,530 29,005,602 26,508,397

Basic (loss) income per common share $ ( 5.95 ) $ 15.99 $ 7.83

Diluted (loss) income per common share $ ( 5.95 ) $ 15.09 $ 7.56

NOTE 18 — ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:

2022 December 31,

Accrued payroll and related expenses $ 86,798 $ 107,904

2 unchanged sentences

Other tax liabilities 23,426 20,106

Contingent consideration 31,046 —

Accrued expenses 68,180 96,250

1 unchanged sentence

Accrued expenses and other liabilities $ 322,974 $ 343,750

Other tax liabilities primarily consist of uncertain

tax positions, sales and VAT taxes payable, and other non-income tax liabilities.

Accrued expenses primarily consist of accrued trade

payables, investment banking payables and legal settlements.

Other liabilities primarily consist of interest payables, customer deposits,

and accrued legal fees.

Other tax liabilities primarily consist of uncertain tax positions, sales and VAT taxes payable, and other non-income tax liabilities.

Accrued expenses primarily consist of accrued trade payables, investment banking payables and legal settlements.

Other liabilities primarily consist of interest payables, customer deposits, and accrued legal fees.

NOTE 19 — COMMITMENTS AND CONTINGENCIES

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Some 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.

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.

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Riley Guaranty is called upon.

As of December 31, 2022, the B.

Riley Guaranty was in respect of up to $ 100,000 of B&W obligations after B&W made paydowns of $ 10,000 during the year ended December 31, 2022.

On August 10, 2020, the Company entered into a project specific indemnity rider to a general agreement of indemnity made by B&W in favor of one of its sureties.

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On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties.

Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a EUR 30,000 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W.

Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a € 30,000 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W.

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

On June 19, 2020, the Company participated in a loan facility agreement to provide a total loan commitment up to 33,000 EUROS to a retailer in Europe.

The Company made an initial funding of 6,600 EUROS in July 2020 and no additional borrowings were made after the initial funding.

On December 29, 2021, the availability period under the loan expired, leaving no outstanding commitments under the facility as of December 31, 2021.

As of December 31, 2020, unused commitments of 26,400 EUROS were outstanding under the facility.

On June 19, 2020, the Company participated in a loan facility agreement to provide a total loan commitment up to € 33,000 to a retailer in Europe.

The Company made an initial funding of € 6,600 in July 2020 and no additional borrowings were made after the initial funding.

The On December 29, 2021, the availability period under the loan expired, leaving no outstanding commitments under the facility as of December 31, 2021.

The loan was repaid in full on March 28, 2022.

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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2021 Stock Incentive Plan

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 2021 Plan was $ 33,168 , $ 14,830 , and $ 11,626 during

the years ended December 31, 2021, 2020, and 2019, respectively.

During the year ended December 31, 2021, in connection with employee

stock incentive plans the Company granted 516,152 restricted stock units with

a total grant date fair value of $ 35,289 and 1,958,540 performance stock units with a total grant date fair value of $ 67,227 .

the year ended December 31, 2020, in connection with employee stock incentive plans the Company granted 465,711 restricted stock units

with a total grant date fair value of $ 8,818 .

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 Company’s common stock price, as defined in the grant, achieving a

set threshold 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.

On May 27, 2021, the 2021 Stock Incentive Plan (the “2021 Plan”) replaced the Amended and Restated 2009 Stock Incentive Plan (the “2009 Plan”) and replaced the FBR & Co.

2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”).

Equity awards previously granted or available for issuance under the 2009 Plan and FBR Stock Plan are now included in the 2021 Plan activity reported below.

Share-based compensation expense for restricted stock units under the 2021 Plan was $ 60,520 , $ 35,253 , and $ 18,211 during the years ended December 31, 2022, 2021, and 2020, respectively.

During the year ended December 31, 2022, in connection with employee stock incentive plans the Company granted 728,056 restricted stock units with a total grant date fair value of $ 38,946 and 144,891 performance stock units with a total grant date fair value of $ 5,643 .

During the year ended December 31, 2021, in connection with employee stock incentive plans the Company granted 531,486 restricted

stock units with a total grant date fair value of $ 36,296 and 2,098,540 performance stock units with a total grant date fair value of $ 72,429 .

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 Company’s common stock price, as defined in the grant, achieving a set threshold 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.

Treasuries for a maturity matching the expected holding period.

As of December 31, 2021,

the expected remaining unrecognized share-based compensation expense of $ 82,639 was to be expensed over a weighted average period of 1.9

As of December 31, 2020, the expected remaining unrecognized share-based compensation expense of $ 11,156 was to be expensed over

a weighted average period of 1.9 years.

As of December 31, 2022, the expected remaining unrecognized share-based compensation expense of $ 66,425 was to be expensed over a weighted average period of 1.3 years.

As of December 31, 2021, the expected remaining unrecognized share-based compensation expense of $ 87,822 was to be expensed over a weighted average period of 1.9 years.

A summary of equity incentive award activity during the years ended December 31, 2022 and 2021 was as follows:

Shares Weighted

Nonvested at December 31, 2020

1,117,342 $ 19.59

Nonvested at December 31, 2020

Nonvested at December 31, 2021

per-share weighted average grant-date fair value of restricted stock units granted during the years ended December 31, 2021 and 2020

was $ 68.37 and $ 18.93 , respectively.

For the year ended December 31, 2021, the grant-date per-share weighted average fair value of performance

stock units granted was $ 34.33 .

During the year ended December 31, 2021, the total fair value of shares vested was $ 8,233 .

year ended December 31, 2020, the total fair value of shares vested was $ 18,831 , which included $ 11,236 in performance based restricted

stock units which fully vested in December 2020.

(b) Amended and Restated FBR & Co.

2006 Long-Term Stock Incentive Plan

connection with the acquisition of FBR & Co.

on June 1, 2017, the equity awards previously granted or available for issuance under

the FBR & Co.

2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”) may be issued.

On May 27, 2021, the FBR Stock

Plan was replaced by the 2021 Plan.

During the year ended December 31, 2021, the Company granted restricted stock units representing 15,334

shares of common stock with a total grant date fair value of $ 1,007 and 140,000 performance stock units with a grant date fair value of

$ 5,202 under the FBR Stock Plan.

During the year ended December 31, 2020, the Company granted, restricted stock units representing 142,029

shares of common stock with a total grant date fair value of $ 2,603 under the FBR Stock Plan.

The share-based compensation expense in

connection with the FBR Stock Plan restricted stock awards was $ 2,085 , $ 3,381 , and $ 3,969 during the years ended December 31, 2021, 2020,

and 2019, respectively.

As of December 31, 2021, the expected remaining unrecognized share-based compensation expense of $ 5,183 will

be expensed over a weighted average period of 1.2 years.

As of December 31, 2020, the expected remaining unrecognized share-based

compensation expense of $ 3,686 will be expensed over a weighted average period of 1.8 years.

A summary of equity incentive

award activity as of December 31, 2021 and 2020 was as follows:

Nonvested at December 31, 2019

Granted 2,630,026 50.78

Vested ( 562,609 ) 20.00

Forfeited ( 16,402 ) 37.60

Nonvested at December 31, 2021

3,168,357 $ 52.84

Granted 872,947 51.08

Vested ( 571,448 ) 36.98

Forfeited ( 94,229 ) 57.46

Nonvested at December 31, 2022

per-share weighted average grant-date fair value of restricted stock units granted as of December 31, 2021 and 2020 was $ 65.69 and

$ 18.33 , respectively.

As of December 31, 2021, the grant-date per-share weighted average fair value of performance stock units granted

was $ 37.16 .

The total fair value of shares vested as of December 31, 2021 and 2020 was $ 3,018 and $ 5,400 , respectively.

3,375,627 $ 54.66

During the years ended December 31, 2022 and 2021, the per-share weighted average grant-date fair value of restricted stock units granted was $ 53.49 and $ 68.29 , respectively.

During the years ended December 31, 2022 and 2021, the per-share weighted average grant-date fair value of performance stock units granted was $ 38.95 and $ 34.51 , respectively.

During the years ended December 31, 2022 and 2021, the total fair value of shares vested was $ 21,132 and $ 11,251 , respectively.

As discussed in Note 4, there were 215,876 stock options with a fair value of $ 5,749 issued as part of the consideration for the purchase price of Targus.

All of these options were exercised during the fourth quarter of 2022 and there are no stock options outstanding as of December 31, 2022.

NOTE 21 — BENEFIT PLANS AND CAPITAL TRANSACTIONS

6 unchanged sentences

In connection with the Company’s Employee Stock Purchase Plan, share based compensation was $ 369 , $ 758 and $ 377 during the years ended December 31, 2022, 2021, and 2020, respectively.

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

As of December 31, 2020, there were 502,326 shares reserved for issuance under the Purchase Plan.

As of December 31, 2022 and 2021, there were 362,986 and 450,717 shares, respectively, reserved for issuance under the Purchase Plan.

3 unchanged sentences

The shares repurchased under the program were retired.

On October 25, 2021, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of its outstanding common shares and expires in October 2022.

During the year ended December 31, 2020, the Company repurchased 2,165,383 shares of its common stock for $ 48,248 which represents an average price of $ 22.28 per common share.

On July 1, 2020, the Company entered into an agreement to repurchase 900,000 shares of its common stock for $ 19,800 ($ 22.00 per common share) from one of its shareholders.

In accordance with the agreement, the Company repurchased 450,000 shares for $ 9,900 on July 2, 2020 and the remaining 450,000 shares were repurchased for $ 9,900 on November 2, 2020.

In addition to the repurchases of common stock, 387,365 shares of the Company’s common stock that were previously held in escrow in connection with the acquisition of a wealth management company in 2017 were forfeited and cancelled on June 11, 2020 to indemnify the Company for certain representations and warranties and related claims pursuant to a related acquisition agreement.

In January and February of 2020, the Company repurchased 880,000 shares of its common stock in a block purchase from an existing stockholder as part of a privately-negotiated transaction.

The Company purchased the shares at $ 24.4725 per share for an aggregate amount of $ 21,536 .

January 15, 2021, the Company issued 1,413,045 shares of common stock inclusive of 184,310 shares issued pursuant to the full exercise

of the Underwriter’s option to purchase additional shares of common stock at a price of $ 46 per share for net proceeds of approximately

$ 64,713 after underwriting fees and costs.

On March 3, 2023, the share repurchase program was reauthorized by the Board of Directors for share repurchases of up to $ 50,000 of the Company's outstanding common shares and expires in October 2023.

On October 31, 2022, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of the Company's outstanding common shares and expires in October 2023.

On October 25, 2021, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of the Company's outstanding common shares and expired in October 2022.

On January 15, 2021, the Company issued 1,413,045 shares of common stock inclusive of 184,310 shares issued pursuant to the full exercise of the Underwriter’s option to purchase additional shares of common stock at a price of $ 46 per share for net proceeds of approximately $ 64,713 after underwriting fees and costs.

(d) Preferred Stock

October 7, 2019, the Company closed its public offering of depositary shares (the “Depositary Shares”), each representing

1/1000 th of a share of 6.875 % Series A Cumulative Perpetual Preferred Stock, par value $ 0.0001 per share (the “Series

A Preferred Stock”).

On October 7, 2019, the Company closed its public offering of depositary shares (the “Depositary Shares”), each representing 1/1000 th of a share of 6.875 % Series A Cumulative Perpetual Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”).

The liquidation preference of each share of Series A Preferred Stock is $ 25,000 ($ 25.00 per Depositary Share).

At the closing, the Company issued 2,000 shares of Series A Preferred Stock represented by 2,000,000 Depositary Shares issued.

On October 11,

2019, the Company completed the sale of an additional 300,000 Depositary Shares, pursuant to the underwriters’ full exercise of

their over-allotment option to purchase additional Depositary Shares.

The offering of the 2,300,000 Depositary Shares generated $ 57,500

of gross proceeds.

On October 11, 2019, the Company completed the sale of an additional 300,000 Depositary Shares, pursuant to the underwriters’ full exercise of their over-allotment option to purchase additional Depositary Shares.

The offering of the 2,300,000 Depositary Shares generated $ 57,500 of gross proceeds.

The Company may elect from time to time to offer the Series A Preferred Stock via ATM sales.

During the years ended December 31, 2021 and 2020, the Company issued

depositary shares equivalent to 233 and 232 shares, respectively, of the Series A Preferred Stock through ATM sales.

There were 2,814

and 2,581 shares issued and outstanding as of December 31, 2021 and 2020, respectively.

Total liquidation preference for the Series A

Preferred Stock as of December 31, 2021 and 2020, was $ 70,362 and $ 64,519 , respectively.

Dividends on the Series A preferred paid during

the years ended December 31, 2021 and 2020, were $ 1.71875 and $ 1.71875 per depositary share, respectively.

September 4, 2020, the Company issued depositary shares each representing 1/1000th of a share of 7.375 % Series B Cumulative Perpetual

Preferred Stock, par value $ 0.0001 per share (the “Series B Preferred Stock”).

The Series B Preferred Stock has a liquidation

preference of $ 25 per 1/1000 depositary share or $ 25,000 per preferred share.

As a result of the offering the Company issued 1,300 shares

of Series B Preferred Stock represented by 1,300,000 depositary shares.

During the years ended December 31, 2022 and 2021, the Company issued depositary shares equivalent to 20 and 233 shares, respectively, of the Series A Preferred Stock through ATM sales.

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

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

Dividends on the Series A preferred paid during the years ended December 31, 2022 and 2021, were $ 1.71875 per depositary share.

On September 4, 2020, the Company issued depositary shares each representing 1/1000th of a share of 7.375 % Series B Cumulative Perpetual Preferred Stock, par value $ 0.0001 per share (the “Series B Preferred Stock”).

The Series B Preferred Stock has a liquidation preference of $ 25 per 1/1000 depositary share or $ 25,000 per preferred share.

As a result of the offering the Company issued 1,300 shares of Series B Preferred Stock represented by 1,300,000 depositary shares.

The offering resulted in gross proceeds of approximately $ 32,500 .

The Company may elect from time to time to offer the Series B Preferred Stock via ATM sales.

the years ended December 31, 2021 and 2020, the Company issued depositary shares equivalent to 307 and 90 shares, respectively, of the

Series B Preferred Stock through ATM sales.

There were 1,697 shares and 1,390 shares issued and outstanding as of December 31, 2021, and

2020, respectively.

Total liquidation preference for the Series B Preferred Stock as of December 31, 2021 and 2020, was $ 42,428 and $ 34,741 ,

respectively.

Dividends on the Series B preferred paid during the years ended December 31, 2021 and 2020, were $ 1.84375 and $ 0.29193 per

depositary share, respectively.

During the years ended December 31, 2022 and 2021, the Company issued depositary shares equivalent to 13 and 307 shares, respectively, of the Series B Preferred Stock through ATM sales.

There were 1,710 shares and 1,697 shares issued and outstanding as of December 31, 2022, and 2021, respectively.

Total liquidation preference for the Series B Preferred Stock as of December 31, 2022 and 2021, was $ 42,761 and $ 42,428 , respectively.

Dividends on the Series B preferred paid during the years ended December 31, 2022 and 2021, were $ 1.84375 per depositary share.

The Series A Preferred Stock and the Series B Preferred Stock ranks, as to dividend rights and rights upon the Company’s liquidation, dissolution or winding up:

(i) senior to all classes or series of the Company’s common stock and to all other equity securities issued by the Company other than equity securities issued with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock or Series B Preferred Stock, (ii) junior to all equity securities issued by the Company with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock and the Series B Preferred Stock with respect to payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up and (iii) effectively junior to all of the Company’s existing and future indebtedness (including indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing or future subsidiaries.

Generally, the Series A Preferred Stock and the Series B Preferred Stock is not redeemable by the Company prior to October 7, 2024.

Generally, the Series A Preferred Stock and the Series B Preferred Stock is not redeemable by the

Company prior to October 7, 2024.

However, upon a change of control or delisting event, the Company will have the special option to redeem the Series A Preferred Stock and the Series B Preferred Stock.

(e) Dividends

From time to time, we may decide to pay dividends which will be dependent

upon our financial condition and results of operations.

During the years ended December 31, 2021, 2020, and 2019, we paid cash dividends

on our common stock of $ 347,135 , $ 38,792 , and $ 41,138 , respectively.

On February 23, 2022, the Company declared a regular quarterly dividend

of $ 1.00 per share, which will be paid on or about March 23, 2022 to stockholders of record as of March 9, 2022.

On October 28, 2021,

we declared a regular dividend of $ 1.00 per share and special dividend of $ 3.00 per share that will be paid on or about November 23, 2021

to stockholders of record as of November 9, 2021.

On July 29, 2021, we declared a regular dividend of $ 0.50 per share and special dividend

of $ 1.50 per share that was paid on August 26, 2021 to stockholders of record as of August 13, 2021.

On May 3, 2021, we declared a regular

dividend of $ 0.50 per share and special dividend of $ 2.50 per share that was paid on May 28, 2021 to stockholders of record as of May

On October 28, 2021, the Board of Directors announced an increase to the regular quarterly dividend from $ 0.50 per share to

$ 1.00 per share.

While it is the Board’s current intention to make regular dividend payments of $ 0.50 per share each quarter

and special dividend payments dependent upon certain circumstances from time to time, our Board of Directors may reduce or discontinue

the payment of dividends at any time for any reason it deems relevant.

The declaration and payment of any future dividends or repurchases

of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results

of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors.

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

During the years ended December 31, 2022, 2021, and 2020, the Company paid cash dividends on its common stock of $ 119,454 , $ 347,135 , and $ 38,792 , respectively.

On February 22, 2023, the Company declared a regular quarterly dividend of $ 1.00 per share, which will be paid on or about March 23, 2023 to stockholders of record as of March 10, 2023.

On October 28, 2021, the Board of Directors announced an increase to the regular quarterly dividend from $ 0.50 per share to $ 1.00 per share.

While it is the Board’s current intention to make regular dividend payments of $ 1.00 per share each quarter and special dividend payments dependent upon certain circumstances from time to time, our Board of Directors may reduce or discontinue the payment of dividends at any time for any reason it deems relevant.

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

A summary of our common stock dividend activity during the years ended December 31, 2022, 2021, and 2020 was as follows:

Regular Dividend

Special Dividend

Total Dividend

Date Declared

Stockholder Record Date

October 28, 2021

November 23, 2021

November 9, 2021

July 29, 2021

August 26, 2021

August 13, 2021

February 25, 2021

March 24, 2021

March 10, 2021

October 28, 2020

November 24, 2020

November 10, 2020

July 30, 2020

August 28, 2020

August 14, 2020

June 10, 2020

March 3, 2020

March 31, 2020

March 17, 2020

October 30, 2019

November 26, 2019

November 14, 2019

August 1, 2019

August 29, 2019

August 15, 2019

March 5, 2019

March 26, 2019

March 19, 2019

of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends

at the rate of 6.875 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,718.75

or $ 1.71875 per Depositary Share).

Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and

On January 9, 2020, the Company declared a cash dividend of $ 0.4296875 per Depositary Share, which was paid on January 31,

2020 to holders of record as of the close of business on January 21, 2020.

On April 13, 2020, the Company declared

a cash dividend of $ 0.4296875 per Depositary Share, which was paid on April 30, 2020 to holders of record as of the close of business

on April 23, 2020.

On July 7, 2020, the Company declared a cash dividend of $ 0.4296875 per Depositary Share, which was paid on July 31,

2020 to holders of record as of the close of business on July 21, 2020.

On October 8, 2020, the Company declared a cash dividend

of $ 0.4296875 per Depositary Share, which was paid on October 31, 2020 to holders of record as of the close of business on October 21,

On January 11, 2021, the Company declared a cash dividend of $ 0.4296875 per Depositary Share, which was paid on January 29,

2021 to holders of record as of the close of business on January 21, 2021.

April 5, 2021, the Company declared a cash dividend $ 0.4296875 per Depositary Share, which was paid on April 30, 2021 to holders

of record as of the close of business on April 20, 2021.

On July 8, 2021, the Company declared a cash dividend $ 0.4296875 per

Depositary Share, which was paid on August 2, 2021 to holders of record as of the close of business on July 21, 2021.

6, 2021, the Company declared a cash dividend $ 0.4296875 per Depositary Share, which was paid on November 1, 2021 to holders

of record as of the close of business on October 21, 2021.

On January 10, 2022, the Company declared a cash dividend $ 0.4296875 per

Depositary Share, which was paid on January 31, 2022 to holders of record as of the close of business on January 21, 2022.

of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends

at the rate of 7.375 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,843.75

or $ 1.84375 per Depositary Share).

Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and

On October 8, 2020, the Company declared a cash dividend of $ 0.29193 per Depositary Share, which was paid on October

31, 2020 to holders of record as of the close of business on October 21, 2020.

On January 11, 2021, the Company declared a cash dividend

of $ 0.4609375 per Depositary Share, which was paid on January 29, 2021 to holders of record as of the close of business on January 21,

On April 5, 2021, the Company declared a cash dividend $ 0.4609375 per

Depositary Share, which was paid on April 30, 2021 to holders of record as of the close of business on April 20, 2021.

8, 2021, the Company declared a cash dividend $ 0.4609375 per Depositary Share, which was paid on August 2, 2021 to holders of

record as of the close of business on July 21, 2021.

On October 6, 2021, the Company declared a cash dividend $ 0.4609375 per

Depositary Share, which was paid on November 1, 2021 to holders of record as of the close of business on October 21, 2021.

January 10, 2022, the Company declared a cash dividend $ 0.4609375 per Depositary Share, which was paid on January 31, 2022 to

holders of record as of the close of business on January 21, 2022.

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

Date Declared Date Paid Stockholder Record Date Regular Dividend

Amount Special Dividend

Amount Total Dividend

November 3, 2022 November 29, 2022 November 15, 2022 $ 1.000 $ — $ 1.000

July 28, 2022 August 23, 2022 August 11, 2022 1.000 — 1.000

April 28, 2022 May 20, 2022 May 11, 2022 1.000 — 1.000

February 23, 2022 March 23, 2022 March 9, 2022 1.000 — 1.000

October 28, 2021 November 23, 2021 November 9, 2021 1.000 3.000 4.000

July 29, 2021 August 26, 2021 August 13, 2021 0.500 1.500 2.000

May 3, 2021 May 28, 2021 May 17, 2021 0.500 2.500 3.000

February 25, 2021 March 24, 2021 March 10, 2021 0.500 3.000 3.500

October 28, 2020 November 24, 2020 November 10, 2020 0.375 — 0.375

July 30, 2020 August 28, 2020 August 14, 2020 0.300 0.050 0.350

May 8, 2020 June 10, 2020 June 1, 2020 0.250 — 0.250

March 3, 2020 March 31, 2020 March 17, 2020 0.250 0.100 0.350

Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,718.75 or $ 1.71875 per Depositary Share).

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

As of December 31, 2022 and 2021, dividends in arrears in respect of the Depositary Shares were $ 812 and $ 806 , respectively.

On January 9, 2023, the Company declared a cash dividend of $ 0.4296875 per Depositary Share, which was paid on January 31, 2023 to holders of record as of the close of business on January 20, 2023.

Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,843.75 or $ 1.84375 per Depositary Share).

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

As of December 31, 2022 and 2021, dividends in arrears in respect of the Depositary Shares were $ 526 and $ 522 , respectively.

On January 9, 2023, the Company declared a cash dividend of $ 0.4609375 per Depositary Share, which was paid on January 31, 2023 to holders of record as of the close of business on January 20, 2023.

A summary of our preferred stock dividend activity during the years ended December 31, 2022, 2021, and 2020 was as follows:

Preferred Dividend per Depositary Share

Date Declared Date Paid Stockholder Record Date Series A Series B

October 10, 2022 October 31, 2022 October 21, 2022 $ 0.4296875 $ 0.4609375

July 7, 2022 July 29, 2022 July 19, 2022 0.4296875 0.4609375

April 7, 2022 April 29, 2022 April 19, 2022 0.4296875 0.4609375

January 10, 2022 January 31, 2022 January 21, 2022 0.4296875 0.4609375

October 6, 2021 November 1, 2021 October 21, 2021 0.4296875 0.4609375

July 8, 2021 August 2, 2021 July 21, 2021 0.4296875 0.4609375

April 5, 2021 April 30, 2021 April 20, 2021 0.4296875 0.4609375

January 11, 2021 January 29, 2021 January 21, 2021 0.4296875 0.4609375

October 8, 2020 October 31, 2020 October 21, 2020 0.4296875 0.4609375

July 7, 2020 July 31, 2020 July 21, 2020 0.4296875 —

April 13, 2020 April 30, 2020 April 23, 2020 0.4296875 —

January 9, 2020 January 31, 2020 January 21, 2020 0.4296875 —

NOTE 22 — NET CAPITAL REQUIREMENTS

Riley Securities (“BRS”), B.

Riley Wealth Management (“BRWM”), and National Securities Corporation (“NSC”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and members of the Financial Industry Regulatory Authority, Inc.

Riley Securities (“BRS”) and B.

Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and members of the Financial Industry Regulatory Authority, Inc.

The Company’s broker-dealer subsidiaries are subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, to not exceed 15 to 1.

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

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 ;

BRWM had net capital of $ 13,833 , which was $ 12,819 in excess of its required minimum net capital of $ 1,014 ;

and NSC had net capital of $ 1,959 which was $ 959 in excess of required minimum net capital of $ 1,000 .

As of December 31, 2020, BRS had net capital of $ 146,060 , which was $ 140,101 in excess of its required minimum net capital of $ 5,959 ;

and BRWM had net capital of $ 4,998 , which was $ 4,299 in excess of its required minimum net capital of $ 699 .

As of December 31, 2022, BRS had net capital of $ 175,503 , which was $ 169,458 in excess of its required minimum net capital of $ 6,045 and BRWM had net capital of $ 11,144 , which was $ 8,615 in excess of its required minimum net capital of $ 2,529 .

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 and BRWM had net capital of $ 13,833 , which was $ 12,819 in excess of its required minimum net capital of $ 1,014 .

NOTE 23 — RELATED PARTY TRANSACTIONS

The Company provides asset

management and placement agent services to unconsolidated funds affiliated with the Company (the “Funds”).

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 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.

As of December 31, 2020, amounts due from related parties of $ 1,037 included $ 604 from the Funds for management fees and other operating

expenses and $ 433 due from CA Global for operating expenses related to wholesale and industrial liquidation engagements managed by CA

Global on behalf of GA Global Partners.

The Company provides asset management and placement agent services to unconsolidated funds affiliated with the Company (the “Funds”).

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 December 31, 2022, amounts due from related parties of $ 1,081 included were 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 for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Partners.

During the years ended December 31, 2021 and 2020, the Company recorded interest expense of $ 525 and $ 1,710 , respectively, related to loan participations sold to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity fund managed by one of its subsidiaries.

There were no loan participations sold or related interest expense to BRCPOF during the year ended December 31, 2022.

The Company also recorded commission income of $ 555 and $ 568 from introducing trades on behalf of BRCPOF during the years ended December 31, 2021 and 2020, respectively.

Our executive officers and members of our board of directors have a 55.8 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 31.8 % in the BRCPOF as of December 31, 2021.

The Company had no outstanding loan participations to BRCPOF as of December 31, 2021 and had $ 14,816 outstanding as of December 31, 2020.

In June 2020, the Company entered into an investment advisory services

agreement with Whitehawk Capital Partners, L.P.

There was no commission income from introducing traders on behalf of BRCPOF during the year ended December 31, 2022.

Our executive officers and members of our board of directors had 47.2 % and 55.8 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 27.8 % and 31.8 % in the BRCPOF as of December 31, 2022 and 2021, respectively.

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

(“Whitehawk”), a limited partnership controlled by Mr.

Ahn, who is the

brother of Phil Ahn, the Company’s Chief Financial Officer and Chief Operating Officer.

Whitehawk has agreed to provide investment

advisory services for GACP I, L.P.

Ahn, who is the brother of Phil Ahn, the Company’s Chief Financial Officer and Chief Operating Officer.

Whitehawk has agreed to provide investment advisory services for GACP I, L.P.

and GACP II, L.P.

During the years ended December 31, 2021 and 2020, management fees paid for

investment advisory services by Whitehawk was $ 1,729 and $ 1,214 , respectively.

During the years ended December 31, 2022, 2021, and 2020, management fees paid for investment advisory services by Whitehawk was $ 1,173 , $ 1,729 , and $ 1,214 , 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).

9 unchanged sentences

In addition, subject to the achievement of certain performance objectives as determined by B&W’s compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company.

In March 2022, a $ 1,000 performance fee was approved in accordance with the Executive Consulting Agreement.

The Company is also a party to indemnification agreements for the benefit of B&W, and the B.

Riley Guaranty, each as disclosed above in Note 19 – Commitments and Contingencies.

The Company has loans receivable due from the Maven, Inc.

that are included in loans receivable, at fair value of $ 69,835 and $ 56,552 as of December 31, 2021 and 2020, respectively.

The Arena Group Holdings, Inc.

(fka the Maven, Inc.)

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

(fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $ 98,729 and $ 69,835 as of December 31, 2022 and 2021, respectively.

Interest on these loans is payable at 10.0 % per annum with maturity dates through December 2023.

The Company has loans receivable due from Lingo Management LLC (“Lingo”) included in loans receivable, at fair value with a fair value of $ 58,565 and $ 55,066 as of December 31, 2021 and 2020, respectively.

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

The term loan has 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.

On March 10, 2021, the Company also extended a promissory note to Lingo Communications, LLC (a wholly owned subsidiary of Lingo) in the amount of $ 1,100 .

The note bears interest at 6 % per annum with a maturity date of March 31, 2022 .

The Company had a loan receivable due from bebe included in loans receivable, at fair value with a fair value of $ 8,000 as of December 31, 2020.

The term loan bore interest at 16.0 % per annum and had a maturity date of November 10, 2021.

The term loan was paid in full in August 2021.

Charah Solutions, Inc.

On August 25, 2021 the Company extended a $ 17,852 promissory note to Charah Solutions, Inc., in which one of the Company’s senior executives serves on the board of directors.

The promissory note bore interest at 8.0 % per annum and had a maturity date of September 25, 2022 and a 2.5 % commitment fee payable at maturity.

The promissory note was paid in full in December 2021.

During the year ended December 31, 2022, the Company earned $ 2,023 in underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities.

California Natural Resources Group, LLC.

On November 1, 2021 the Company extended a $ 34,393 bridge promissory

note bearing interest at up to 10 % per annum (the “Bridge Note”) to California Natural Resources Group, LLC (“CalNRG”).

As of December 31, 2021, the Bridge Note is included in loans receivable, at fair value in the amount of $ 34,000 .

On January 3, 2022,

CalNRG repaid the Bridge Note using proceeds from a new credit facility with a third party bank (the “CalNRG Credit Facility”).

On November 1, 2021 the Company extended a $ 34,393 bridge promissory note bearing interest at up to 10.0 % per annum to California Natural Resources Group, LLC (“CalNRG”).

On January 3, 2022, CalNRG repaid the promissory note using proceeds from a new credit facility with a third party bank (the “CalNRG Credit Facility”).

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

As of December 31, 2021, the Company has loans receivable due from other related parties in the amount of $ 4,201 .

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

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

On April 25, 2022, the Company loaned 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 Holdings.

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.

During the year ended December 31, 2022, the Company earned $ 41,885 of incentive fees for the de-consolidation of BRPM 150 and $ 9,632 of underwriting and financial advisory fees from Faze and BRPM 150 in connection with the Business Combination and capital raising activities.

On May 31, 2022, the Company converted $ 17,500 of a loan receivable with Lingo Management, LLC (“Lingo”) into equity and the Company's ownership interest in Lingo increased from 40 % to 80 %.

This resulted in the consolidation of Lingo as more fully discussed in Note 1.

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus for total purchase consideration of $ 247,546 as more fully discussed in Note 4.

At the time of the acquisition, the chief executive officer of Targus was also a member of the Company’s board of directors.

Upon closing the acquisition, the individual resigned from the Company’s board of directors and continues to serve as the chief executive officer of Targus.

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 year ended December 31, 2021, the Company earned $ 26,236 of fees related to these services.

During the years ended December 31, 2022 and 2021, the Company earned $ 4,168 and $ 26,236 , respectively, of fees related to these services.

NOTE 24 — BUSINESS SEGMENTS

The Company’s business is classified into the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Principal Investments - Communications segment and Brands segment.

The Company’s business is classified into six reportable operating segments:

the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Communications segment, and Consumer segment.

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

During the fourth quarter of 2020, the Company realigned its segment reporting structure to reflect organizational management changes.

Under the new structure, the valuation and appraisal businesses are reported in the Financial Consulting segment and our bankruptcy, financial advisory, forensic accounting, and real estate consulting businesses that were previously reported in the Capital Markets segment are now reported in the Financial Consulting segment.

Under the new structure, the wealth management business previously reported in the Capital Markets segment are now reported in the Wealth Management segment.

Under the new structure, there is a new segment for Wealth Management.

In conjunction with the new reporting structure, the Company recast its segment presentation for all periods presented.

During the fourth quarter of 2022, the Company realigned its segment reporting structure to reflect organizational changes from recent acquisitions and the manner in which capital is allocated.

The Consumer segment includes the previously reported Brands segment and Targus, which the Company acquired in the fourth quarter of 2022.

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

Year Ended December 31,

2022 2021 2020

(As Restated) (As Restated)

Capital Markets segment:

Revenues - Services and fees $ 292,933 $ 555,585 $ 318,714

Trading income and fair value adjustments on loans

Trading (loss) income and fair value adjustments on loans ( 206,150 ) 212,922 55,873

Interest income - Loans and securities lending 240,813 122,723 102,499

4 unchanged sentences

Depreciation and amortization ( 8,493 ) ( 2,136 ) ( 2,386 )

Segment income

Segment (loss) income 81,602 491,008 232,370

Wealth Management segment:

Revenues - Services and fees 230,735 374,361 72,345

Trading income and fair value adjustments on loans

Trading income and fair value adjustments 3,522 7,623 804

Total revenues 234,257 381,984 73,149

Selling, general and administrative expenses ( 258,134 ) ( 357,130 ) ( 68,368 )

Restructuring recovery

Restructuring charge ( 4,955 ) — —

Depreciation and amortization ( 5,488 ) ( 8,920 ) ( 1,880 )

Segment income

Year Ended December 31,

2022 2021 2020

Segment (loss) income ( 34,320 ) 15,934 2,901

Auction and Liquidation segment:

1 unchanged sentence

Revenues - Sale of goods 56,928 53,348 25,663

Interest Income - Loan 4,587 — —

Total revenues 74,096 73,517 88,764

4 unchanged sentences

Depreciation and amortization — — ( 2 )

Segment income (loss)

Segment income 12,600 8,054 25,769

Financial Consulting segment:

4 unchanged sentences

Segment income 16,312 16,894 22,543

Principal Investments - Communications segment:

Communications segment:

Revenues - Services and fees 228,129 88,490 83,666

7 unchanged sentences

Segment income 30,320 27,158 33,360

Brands segment:

Consumer segment:

Revenues - Services and fees 18,940 20,308 16,458

Revenues - Sale of goods 77,821 — —

Total revenues 96,761 20,308 16,458

Cost of goods sold ( 52,162 ) — —

Selling, general and administrative expenses ( 18,458 ) ( 3,178 ) ( 2,889 )

1 unchanged sentence

Impairment of tradenames — — ( 12,500 )

Segment income (loss)

Segment income 21,862 14,385 ( 1,789 )

Consolidated operating income from reportable segments 128,376 573,433 315,154

Revenues - Services and fees 13,797 — —

Corporate and other expenses ( 72,725 ) ( 58,905 ) ( 38,893 )

Interest income 2,735 229 564

Gain on extinguishment of loans and other

Income (loss) on equity investments

Dividend income 35,874 19,732 21,163

Realized and unrealized gains (losses) on investments ( 201,079 ) 166,131 47,341

Year Ended December 31,

2022 2021 2020

Change in fair value of financial instruments and other 10,188 3,796 —

Income (loss) on equity method investments 3,570 2,801 ( 623 )

Interest expense ( 141,186 ) ( 92,455 ) ( 65,249 )

Income before income taxes

Provision for income taxes

Net income (loss) attributable to noncontrolling interests

Net income attributable to B.

(Loss) income before income taxes ( 220,450 ) 614,762 279,457

Benefit from (provision for) income taxes 63,856 ( 163,960 ) ( 75,440 )

Net (loss) income ( 156,594 ) 450,802 204,017

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,235 5,748 ( 1,131 )

Net (loss) income attributable to B.

Riley Financial, Inc.

( 159,829 ) 445,054 205,148

Preferred stock dividends 8,008 7,457 4,710

Net income available to common shareholders

Net (loss) income available to common shareholders $ ( 167,837 ) $ 437,597 $ 200,438

The following table presents revenues by geographical area:

Year Ended December 31,

2022 2021 2020

(As Restated) (As Restated)

Revenues - Services and fees:

North America $ 888,679 $ 1,148,751 $ 619,964

Australia — — 664

Europe 6,944 4,474 25,278

Total Revenues - Services and fees 895,623 1,153,225 645,906

income and fair value adjustments on loans

Trading (loss) income and fair value adjustments on loans

North America ( 202,628 ) 220,545 56,677

1 unchanged sentence

North America 51,899 12,130 6,788

Australia 4,903 — —

Europe and Middle East 75,413 46,075 22,347

Asia 7,970 — —

Latin America 2,090 — —

Total Revenues - Sale of Goods 142,275 58,205 29,135

1 unchanged sentence

North America 240,813 122,723 102,499

Europe 4,587 — —

245,400 122,723 102,499

Total Revenues:

North America 978,763 1,504,149 785,928

Australia 4,903 — 664

Europe and Middle East 86,944 50,549 47,625

Asia 7,970 — —

Latin America 2,090 — —

Total Revenues $ 1,080,670 $ 1,554,698 $ 834,217

As of December 31, 2021 and 2020 long-lived assets, which consist of property and equipment and other assets of $ 12,870 and $ 11,685 , respectively, were located in North America.

The following table presents long-lived assets, which consists of property and equipment, net, by geographical area:

December 31, 2022 December 31, 2021

Long-lived Assets - Property and Equipment, net:

North America $ 26,276 $ 12,870

Asia Pacific 162 —

Australia 126 —

Total $ 27,141 $ 12,870

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.

NOTE 23 — REVISION OF PRIOR PERIOD FINANCIALS

As disclosed in Note 2(a), during the year ended December 31, 2021, the Company identified misstatements related to the consolidation of certain VIE’s, which primarily resulted in a gross up the investing and financing activities in the consolidated statements of cash flows.

Although the Company concluded that these misstatements were not material, either individually or in aggregate, to its current or previously issued consolidated financial statements, the Company has elected to revise its previously issued consolidated financial statements to correct for these misstatements.

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

Year Ended December 31, 2020

As Previously

Statement of Cash Flows

Cash flows from investing activities:

Purchase of equity investments

Funds received from trust account of subsidiary

Investment of subsidiaries initial public offering proceeds into trust account

Net cash (used in) provided by investing activities

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements

As previously disclosed in Note 2, in connection with the preparation of the Company's consolidated financial statements for the year ended December 31, 2022, the Company identified a classification error of dividend income and realized and unrealized gains (losses) on certain investments within revenue.

As a result of this classification error, the Company has restated its unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 and 2021, three and six months ended June 30, 2022 and 2021, and three and nine months ended September 30, 2022 and 2021.

The classification error had no impact on the Company's consolidated balance sheet, consolidated statements of equity, cash flows, net income, or earnings per share for the foregoing periods.

The following tables represent our restated unaudited condensed consolidated financial statements for each quarter-to-date and year-to-date interim period within the nine months ended September 30, 2022 and the year ended December 31, 2021 and at each interim period therein.

The 2022 quarterly restatements will be effective with the filing of our future 2023 unaudited interim condensed consolidated financial statement filings in Quarterly Reports on Form 10-Q.

The financial information as previously reported for the quarters ended September 30, 2022, June 30, 2022, and March 31, 2022 were derived from our Quarterly Reports on Form 10-Q filed on November 4, 2022, July 29, 2022, and May 6, 2022, respectively.

The financial information as previously reported for the quarter ended December 31, 2021 were derived from our Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 28, 2022.

For the quarterly periods during the year ended December 31, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022

Three Months Ended Three Months Ended Nine Months Ended Three Months Ended Six Months Ended Three Months Ended

Services and fees $ 243,837 $ 257,310 $ 651,786 $ 191,662 $ 394,476 $ 202,814

Trading (loss) income and fair value adjustments on loans ( 58,670 ) ( 6,917 ) ( 143,958 ) ( 117,763 ) ( 137,041 ) ( 19,278 )

Interest income - Loans and securities lending 62,545 57,594 182,855 63,835 125,261 61,426

Sale of goods 134,380 4,130 7,895 1,887 3,765 1,878

Total revenues 382,092 312,117 698,578 139,621 386,461 246,840

Operating expenses:

Direct cost of services 68,496 44,523 73,959 17,785 29,436 11,651

Cost of goods sold 71,313 3,089 7,334 1,994 4,245 2,251

Selling, general and administrative expenses 208,552 163,727 506,062 167,136 342,335 175,199

Restructuring charge 995 8,016 8,016 — — —

Interest expense - Securities lending and loan participations sold 22,738 17,447 43,757 14,544 26,310 11,766

Total operating expenses 372,094 236,802 639,128 201,459 402,326 200,867

Operating (loss) income 9,998 75,315 59,450 ( 61,838 ) ( 15,865 ) 45,973

Other income (expense):

Interest income 1,482 686 1,253 500 567 67

Dividend income 9,595 9,175 26,279 9,243 17,104 7,861

Realized and unrealized gains (losses) on investments ( 64,874 ) 19,071 ( 136,205 ) ( 106,164 ) ( 155,276 ) ( 49,112 )

Change in fair value of financial instruments and other 460 ( 574 ) 9,728 4,321 10,302 5,981

Income (loss) from equity method investments 285 ( 91 ) 3,285 ( 3,399 ) 3,376 6,775

Interest expense ( 44,399 ) ( 34,587 ) ( 96,787 ) ( 31,764 ) ( 62,200 ) ( 30,436 )

(Loss) income before income taxes ( 87,453 ) 68,995 ( 132,997 ) ( 189,101 ) ( 201,992 ) ( 12,891 )

Benefit from (provision for) income taxes 23,998 ( 16,350 ) 39,858 52,513 56,208 3,695

Net (loss) income ( 63,455 ) 52,645 ( 93,139 ) ( 136,588 ) ( 145,784 ) ( 9,196 )

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 6,010 ) 4,808 9,245 3,571 4,437 866

Net (loss) income attributable to B.

Riley Financial, Inc.

( 57,445 ) 47,837 ( 102,384 ) ( 140,159 ) ( 150,221 ) ( 10,062 )

Cash flows from financing activities:

Payment of debt issuance and offering costs

Redemption of subsidiary temporary equity and distributions

Proceeds from initial public offering of subsidiaries

Net cash provided by (used in) financing activities

Preferred stock dividends 2,002 2,002 6,006 2,002 4,004 2,002

Net (loss) income available to common shareholders $ ( 59,447 ) $ 45,835 $ ( 108,390 ) $ ( 142,161 ) $ ( 154,225 ) $ ( 12,064 )

Basic (loss) income per common share $ ( 2.08 ) $ 1.62 $ ( 3.86 ) $ ( 5.07 ) $ ( 5.52 ) $ ( 0.43 )

Diluted (loss) income per common share $ ( 2.08 ) $ 1.53 $ ( 3.86 ) $ ( 5.07 ) $ ( 5.52 ) $ ( 0.43 )

Weighted average basic common shares outstanding 28,545,714 28,293,064 28,068,160 28,051,570 27,953,845 27,855,033

Weighted average diluted common shares outstanding 28,545,714 29,968,417 28,068,160 28,051,570 27,953,845 27,855,033

For the quarterly periods during the year ended December 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021

Three Months Ended Three Months Ended Nine Months Ended Three Months Ended Six Months Ended Three Months Ended

Services and fees $ 308,062 $ 295,561 $ 845,163 $ 262,607 $ 549,602 $ 286,995

Trading income and fair value adjustments on loans 54,848 34,892 165,697 18,411 130,805 112,394

Interest income - Loans and securities lending 33,443 26,869 89,280 25,491 62,411 36,920

Sale of goods 3,961 34,959 54,244 12,457 19,285 6,828

Total revenues 400,314 392,281 1,154,384 318,966 762,103 443,137

Operating expenses:

Direct cost of services 12,955 18,019 41,435 12,094 23,416 11,322

Cost of goods sold 5,559 12,442 21,394 3,626 8,952 5,326

Selling, general and administrative expenses 270,712 244,218 635,484 199,922 391,266 191,344

Interest expense - Securities lending and loan participations sold 12,362 10,097 40,269 10,983 30,172 19,189

Total operating expenses 301,588 284,776 738,582 226,625 453,806 227,181

Operating income 98,726 107,505 415,802 92,341 308,297 215,956

Other income (expense):

Interest income 54 70 175 56 105 49

Dividend income 7,786 5,936 11,946 3,536 6,010 2,474

Realized and unrealized gains (losses) on investments 14,010 ( 16,695 ) 152,121 14,268 168,816 154,548

Change in fair value of financial instruments and other ( 4,471 ) 1,758 8,267 6,509 6,509 —

Income (loss) from method equity investments 1,629 1,149 1,172 ( 852 ) 23 875

Interest expense ( 26,441 ) ( 25,372 ) ( 66,014 ) ( 20,856 ) ( 40,642 ) ( 19,786 )

Income before income taxes 91,293 74,351 523,469 95,002 449,118 354,116

Provision for income taxes ( 23,847 ) ( 22,693 ) ( 140,113 ) ( 19,902 ) ( 117,420 ) ( 97,518 )

Net income 67,446 51,658 383,356 75,100 331,698 256,598

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,274 1,108 2,474 ( 576 ) 1,366 1,942

Net income attributable to B.

Riley Financial, Inc.

64,172 50,550 380,882 75,676 330,332 254,656

Year Ended December 31, 2019

As Previously

Statement of Cash Flows

Cash flows from investing activities:

Purchase of equity investments

Investment of subsidiaries initial public offering proceeds into trust account

Net cash used in investing activities

Preferred stock dividends 1,990 1,929 5,467 1,789 3,538 1,749

Net income available to common shareholders $ 62,182 $ 48,621 $ 375,415 $ 73,887 $ 326,794 $ 252,907

Basic income per common share $ 2.26 $ 1.76 $ 13.75 $ 2.70 $ 12.03 $ 9.38

Diluted income per common share $ 2.08 $ 1.69 $ 13.07 $ 2.58 $ 11.39 $ 8.81

Weighted average basic common shares outstanding 27,569,188 27,570,716 27,297,917 27,344,184 27,159,257 26,972,275

Weighted average diluted common shares outstanding 29,840,704 28,794,066 28,726,492 28,668,465 28,690,444 28,710,368

For the three months ended September 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended September 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 266,485 $ ( 9,175 ) (a) $ 257,310

Trading (loss) income and fair value adjustments on loans 12,154 ( 19,071 ) (b) ( 6,917 )

Interest income - Loans and securities lending 57,594 — 57,594

Sale of goods 4,130 — 4,130

Total revenues 340,363 ( 28,246 ) 312,117

Operating expenses:

Direct cost of services 44,523 — 44,523

Cost of goods sold 3,089 — 3,089

Selling, general and administrative expenses 163,727 — 163,727

Restructuring charge 8,016 — 8,016

Interest expense - Securities lending and loan participations sold 17,447 — 17,447

Total operating expenses 236,802 — 236,802

Operating income (loss) 103,561 ( 28,246 ) 75,315

Other income (expense):

Interest income 686 — 686

Dividend income — 9,175 (a) 9,175

Realized and unrealized gains (losses) on investments — 19,071 (b) 19,071

Change in fair value of financial instruments and other ( 574 ) — ( 574 )

Loss from equity method investments ( 91 ) — ( 91 )

Interest expense ( 34,587 ) — ( 34,587 )

Income before income taxes 68,995 — 68,995

Provision for income taxes ( 16,350 ) — ( 16,350 )

Net income 52,645 — 52,645

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 4,808 — 4,808

Net income attributable to B.

Riley Financial, Inc.

47,837 — 47,837

Preferred stock dividends 2,002 — 2,002

Net income available to common shareholders $ 45,835 $ — $ 45,835

Basic income per common share $ 1.62 $ 1.62

Diluted income per common share $ 1.53 $ 1.53

Weighted average basic common shares outstanding 28,293,064 28,293,064

Weighted average diluted common shares outstanding 29,968,417 29,968,417

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the nine months ended September 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Nine Months Ended September 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 678,065 $ ( 26,279 ) (a) $ 651,786

Trading (loss) income and fair value adjustments on loans ( 280,163 ) 136,205 (b) ( 143,958 )

Interest income - Loans and securities lending 182,855 — 182,855

Sale of goods 7,895 — 7,895

Total revenues 588,652 109,926 698,578

Operating expenses:

Direct cost of services 73,959 — 73,959

Cost of goods sold 7,334 — 7,334

Selling, general and administrative expenses 506,062 — 506,062

Restructuring charge 8,016 — 8,016

Interest expense - Securities lending and loan participations sold 43,757 — 43,757

Total operating expenses 639,128 — 639,128

Operating (loss) income ( 50,476 ) 109,926 59,450

Other income (expense):

Interest income 1,253 — 1,253

Dividend income — 26,279 (a) 26,279

Realized and unrealized gains (losses) on investments — ( 136,205 ) (b) ( 136,205 )

Change in fair value of financial instruments and other 9,728 — 9,728

Income from equity method investments 3,285 — 3,285

Interest expense ( 96,787 ) — ( 96,787 )

Loss before income taxes ( 132,997 ) — ( 132,997 )

Benefit from income taxes 39,858 — 39,858

Net loss ( 93,139 ) — ( 93,139 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 9,245 — 9,245

Net loss attributable to B.

Riley Financial, Inc.

( 102,384 ) — ( 102,384 )

Preferred stock dividends 6,006 — 6,006

Net loss available to common shareholders $ ( 108,390 ) $ — $ ( 108,390 )

Basic loss per common share $ ( 3.86 ) $ ( 3.86 )

Diluted loss per common share $ ( 3.86 ) $ ( 3.86 )

Weighted average basic common shares outstanding 28,068,160 28,068,160

Weighted average diluted common shares outstanding 28,068,160 28,068,160

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended June 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended June 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 200,905 $ ( 9,243 ) (a) $ 191,662

Trading (loss) income and fair value adjustments on loans ( 223,927 ) 106,164 (b) ( 117,763 )

Interest income - Loans and securities lending 63,835 — 63,835

Sale of goods 1,887 — 1,887

Total revenues 42,700 96,921 139,621

Operating expenses:

Direct cost of services 17,785 — 17,785

Cost of goods sold 1,994 — 1,994

Selling, general and administrative expenses 167,136 — 167,136

Interest expense - Securities lending and loan participations sold 14,544 — 14,544

Total operating expenses 201,459 — 201,459

Operating (loss) income ( 158,759 ) 96,921 ( 61,838 )

Other income (expense):

Interest income 500 — 500

Dividend income — 9,243 (a) 9,243

Realized and unrealized gains (losses) on investments — ( 106,164 ) (b) ( 106,164 )

Change in fair value of financial instruments and other 4,321 — 4,321

Loss from equity method investments ( 3,399 ) — ( 3,399 )

Interest expense ( 31,764 ) — ( 31,764 )

Loss before income taxes ( 189,101 ) — ( 189,101 )

Benefit from income taxes 52,513 — 52,513

Net loss ( 136,588 ) — ( 136,588 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 3,571 — 3,571

Net loss attributable to B.

Riley Financial, Inc.

( 140,159 ) — ( 140,159 )

Cash flows from financing activities:

Payment of debt issuance and offering costs

Proceeds from initial public offering of subsidiaries

Net cash provided by financing activities

NOTE 24 — SUBSEQUENT EVENT

On January 19, 2022, the

Company completed the acquisition of FocalPoint Securities, LLC (“FocalPoint”), an independent investment bank, for total

cash, stock, and contingent consideration of up to $ 175,000 .

The acquisition is expected to expand B.

Riley Securities’ mergers

and acquisitions advisory business and enhance its debt capital markets and financial restructuring capabilities.

The acquisition of FocalPoint

will be accounted for using the acquisition method of accounting in the first quarter of fiscal year 2022.

The Company has not completed

the preliminary purchase price accounting since it is in the process of completing the valuation of the assets of FocalPoint.

Preferred stock dividends 2,002 — 2,002

Net loss available to common shareholders $ ( 142,161 ) $ — $ ( 142,161 )

Basic loss per common share $ ( 5.07 ) $ ( 5.07 )

Diluted loss per common share $ ( 5.07 ) $ ( 5.07 )

Weighted average basic common shares outstanding 28,051,570 28,051,570

Weighted average diluted common shares outstanding 28,051,570 28,051,570

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the six months ended June 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Six Months Ended June 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 411,580 $ ( 17,104 ) (a) $ 394,476

Trading (loss) income and fair value adjustments on loans ( 292,317 ) 155,276 (b) ( 137,041 )

Interest income - Loans and securities lending 125,261 — 125,261

Sale of goods 3,765 — 3,765

Total revenues 248,289 138,172 386,461

Operating expenses:

Direct cost of services 29,436 — 29,436

Cost of goods sold 4,245 — 4,245

Selling, general and administrative expenses 342,335 — 342,335

Interest expense - Securities lending and loan participations sold 26,310 — 26,310

Total operating expenses 402,326 — 402,326

Operating (loss) income ( 154,037 ) 138,172 ( 15,865 )

Other income (expense):

Interest income 567 — 567

Dividend income — 17,104 (a) 17,104

Realized and unrealized gains (losses) on investments — ( 155,276 ) (b) ( 155,276 )

Change in fair value of financial instruments and other 10,302 — 10,302

Income from equity method investments 3,376 — 3,376

Interest expense ( 62,200 ) — ( 62,200 )

Loss before income taxes ( 201,992 ) — ( 201,992 )

Benefit from income taxes 56,208 — 56,208

Net loss ( 145,784 ) — ( 145,784 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 4,437 — 4,437

Net loss attributable to B.

Riley Financial, Inc.

( 150,221 ) — ( 150,221 )

Preferred stock dividends 4,004 — 4,004

Net loss available to common shareholders $ ( 154,225 ) $ — $ ( 154,225 )

Basic loss per common share $ ( 5.52 ) $ ( 5.52 )

Diluted loss per common share $ ( 5.52 ) $ ( 5.52 )

Weighted average basic common shares outstanding 27,953,845 27,953,845

Weighted average diluted common shares outstanding 27,953,845 27,953,845

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended March 31, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended March 31, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 210,675 $ ( 7,861 ) (a) $ 202,814

Trading (loss) income and fair value adjustments on loans ( 68,390 ) 49,112 (b) ( 19,278 )

Interest income - Loans and securities lending 61,426 — 61,426

Sale of goods 1,878 — 1,878

Total revenues 205,589 41,251 246,840

Operating expenses:

Direct cost of services 11,651 — 11,651

Cost of goods sold 2,251 — 2,251

Selling, general and administrative expenses 175,199 — 175,199

Interest expense - Securities lending and loan participations sold 11,766 — 11,766

Total operating expenses 200,867 — 200,867

Operating income 4,722 41,251 45,973

Other income (expense):

Interest income 67 — 67

Dividend income — 7,861 (a) 7,861

Realized and unrealized gains (losses) on investments — ( 49,112 ) (b) ( 49,112 )

Change in fair value of financial instruments and other 5,981 — 5,981

Income (loss) from equity method investments 6,775 — 6,775

Interest expense ( 30,436 ) — ( 30,436 )

Loss before income taxes ( 12,891 ) — ( 12,891 )

Benefit from income taxes 3,695 — 3,695

Net loss ( 9,196 ) — ( 9,196 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 866 — 866

Net loss attributable to B.

Riley Financial, Inc.

( 10,062 ) — ( 10,062 )

Preferred stock dividends 2,002 — 2,002

Net loss available to common shareholders $ ( 12,064 ) $ — $ ( 12,064 )

Basic loss per common share $ ( 0.43 ) $ ( 0.43 )

Diluted loss per common share $ ( 0.43 ) $ ( 0.43 )

Weighted average basic common shares outstanding 27,855,033 27,855,033

Weighted average diluted common shares outstanding 27,855,033 27,855,033

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended December 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended December 31, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 315,848 $ ( 7,786 ) (a) $ 308,062

Trading income (loss) and fair value adjustments on loans 68,858 ( 14,010 ) (b) 54,848

Interest income - Loans and securities lending 33,443 — 33,443

Sale of goods 3,961 — 3,961

Total revenues 422,110 ( 21,796 ) 400,314

Operating expenses:

Direct cost of services 12,955 — 12,955

Cost of goods sold 5,559 — 5,559

Selling, general and administrative expenses 270,712 — 270,712

Interest expense - Securities lending and loan participations sold 12,362 — 12,362

Total operating expenses 301,588 — 301,588

Operating income (loss) 120,522 ( 21,796 ) 98,726

Other income (expense):

Interest income 54 — 54

Dividend income — 7,786 (a) 7,786

Realized and unrealized gains (losses) on investments — 14,010 (b) 14,010

Change in fair value of financial instruments and other ( 4,471 ) — ( 4,471 )

Income from equity method investments 1,629 — 1,629

Interest expense ( 26,441 ) — ( 26,441 )

Income before income taxes 91,293 — 91,293

Provision for income taxes ( 23,847 ) — ( 23,847 )

Net income 67,446 — 67,446

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 3,274 — 3,274

Net income attributable to B.

Riley Financial, Inc.

64,172 — 64,172

Preferred stock dividends 1,990 — 1,990

Net income available to common shareholders $ 62,182 $ — $ 62,182

Basic income per common share $ 2.26 $ 2.26

Diluted income per common share $ 2.08 $ 2.08

Weighted average basic common shares outstanding 27,569,188 27,569,188

Weighted average diluted common shares outstanding 29,840,704 29,840,704

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended September 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended September 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 301,497 $ ( 5,936 ) (a) $ 295,561

Trading income and fair value adjustments on loans 18,197 16,695 (b) 34,892

Interest income - Loans and securities lending 26,869 — 26,869

Sale of goods 34,959 — 34,959

Total revenues 381,522 10,759 392,281

Operating expenses:

Direct cost of services 18,019 — 18,019

Cost of goods sold 12,442 — 12,442

Selling, general and administrative expenses 244,218 — 244,218

Interest expense - Securities lending and loan participations sold 10,097 — 10,097

Total operating expenses 284,776 — 284,776

Operating income 96,746 10,759 107,505

Other income (expense):

Interest income 70 — 70

Dividend income — 5,936 (a) 5,936

Realized and unrealized gains (losses) on investments — ( 16,695 ) (b) ( 16,695 )

Change in fair value of financial instruments and other 1,758 — 1,758

Income from equity method investments 1,149 — 1,149

Interest expense ( 25,372 ) — ( 25,372 )

Income before income taxes 74,351 — 74,351

Provision for income taxes ( 22,693 ) — ( 22,693 )

Net income 51,658 — 51,658

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,108 — 1,108

Net income attributable to B.

Riley Financial, Inc.

50,550 — 50,550

Preferred stock dividends 1,929 — 1,929

Net income available to common shareholders $ 48,621 $ — $ 48,621

Basic income per common share $ 1.76 $ 1.76

Diluted income per common share $ 1.69 $ 1.69

Weighted average basic common shares outstanding 27,570,716 27,570,716

Weighted average diluted common shares outstanding 28,794,066 28,794,066

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the nine months ended September 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Nine Months Ended September 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 857,109 $ ( 11,946 ) (a) $ 845,163

Trading income (loss) and fair value adjustments on loans 317,818 ( 152,121 ) (b) 165,697

Interest income - Loans and securities lending 89,280 — 89,280

Sale of goods 54,244 — 54,244

Total revenues 1,318,451 ( 164,067 ) 1,154,384

Operating expenses:

Direct cost of services 41,435 — 41,435

Cost of goods sold 21,394 — 21,394

Selling, general and administrative expenses 635,484 — 635,484

Interest expense - Securities lending and loan participations sold 40,269 — 40,269

Total operating expenses 738,582 — 738,582

Operating income (loss) 579,869 ( 164,067 ) 415,802

Other income (expense):

Interest income 175 — 175

Dividend income — 11,946 (a) 11,946

Realized and unrealized gains (losses) on investments — 152,121 (b) 152,121

Change in fair value of financial instruments and other 8,267 — 8,267

Income from equity method investments 1,172 — 1,172

Interest expense ( 66,014 ) — ( 66,014 )

Income before income taxes 523,469 — 523,469

Provision for income taxes ( 140,113 ) — ( 140,113 )

Net income 383,356 — 383,356

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 2,474 — 2,474

Net income attributable to B.

Riley Financial, Inc.

380,882 — 380,882

Preferred stock dividends 5,467 — 5,467

Net income available to common shareholders $ 375,415 $ — $ 375,415

Basic income per common share $ 13.75 $ 13.75

Diluted income per common share $ 13.07 $ 13.07

Weighted average basic common shares outstanding 27,297,917 27,297,917

Weighted average diluted common shares outstanding 28,726,492 28,726,492

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended June 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended June 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 266,143 $ ( 3,536 ) (a) $ 262,607

Trading income (loss) and fair value adjustments on loans 32,679 ( 14,268 ) (b) 18,411

Interest income - Loans and securities lending 25,491 — 25,491

Sale of goods 12,457 — 12,457

Total revenues 336,770 ( 17,804 ) 318,966

Operating expenses:

Direct cost of services 12,094 — 12,094

Cost of goods sold 3,626 — 3,626

Selling, general and administrative expenses 199,922 — 199,922

Interest expense - Securities lending and loan participations sold 10,983 — 10,983

Total operating expenses 226,625 — 226,625

Operating income (loss) 110,145 ( 17,804 ) 92,341

Other income (expense):

Interest income 56 — 56

Dividend income — 3,536 (a) 3,536

Realized and unrealized gains (losses) on investments — 14,268 (b) 14,268

Change in fair value of financial instruments and other 6,509 — 6,509

Loss from equity method investments ( 852 ) — ( 852 )

Interest expense ( 20,856 ) — ( 20,856 )

Income before income taxes 95,002 — 95,002

Provision for income taxes ( 19,902 ) — ( 19,902 )

Net income 75,100 — 75,100

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests ( 576 ) — ( 576 )

Net income attributable to B.

Riley Financial, Inc.

75,676 — 75,676

Preferred stock dividends 1,789 — 1,789

Net income available to common shareholders $ 73,887 $ — $ 73,887

Basic income per common share $ 2.70 $ 2.70

Diluted income per common share $ 2.58 $ 2.58

Weighted average basic common shares outstanding 27,344,184 27,344,184

Weighted average diluted common shares outstanding 28,668,465 28,668,465

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the six months ended June 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Six Months Ended June 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 555,612 $ ( 6,010 ) (a) $ 549,602

Trading income (loss) and fair value adjustments on loans 299,621 ( 168,816 ) (b) 130,805

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

Sale of goods 19,285 — 19,285

Total revenues 936,929 ( 174,826 ) 762,103

Operating expenses:

Direct cost of services 23,416 — 23,416

Cost of goods sold 8,952 — 8,952

Selling, general and administrative expenses 391,266 — 391,266

Interest expense - Securities lending and loan participations sold 30,172 — 30,172

Total operating expenses 453,806 — 453,806

Operating income (loss) 483,123 ( 174,826 ) 308,297

Other income (expense):

Interest income 105 — 105

Dividend income — 6,010 (a) 6,010

Realized and unrealized gains (losses) on investments — 168,816 (b) 168,816

Change in fair value of financial instruments and other 6,509 — 6,509

Income from equity method investments 23 — 23

Interest expense ( 40,642 ) — ( 40,642 )

Income before income taxes 449,118 — 449,118

Provision for income taxes ( 117,420 ) — ( 117,420 )

Net income 331,698 — 331,698

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,366 — 1,366

Net income attributable to B.

Riley Financial, Inc.

330,332 — 330,332

Preferred stock dividends 3,538 — 3,538

Net income available to common shareholders $ 326,794 $ — $ 326,794

Basic income per common share $ 12.03 $ 12.03

Diluted income per common share $ 11.39 $ 11.39

Weighted average basic common shares outstanding 27,159,257 27,159,257

Weighted average diluted common shares outstanding 28,690,444 28,690,444

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

For the three months ended March 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended March 31, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 289,469 $ ( 2,474 ) (a) $ 286,995

Trading (loss) income and fair value adjustments on loans 266,942 ( 154,548 ) (b) 112,394

Interest income - Loans and securities lending 36,920 — 36,920

Sale of goods 6,828 — 6,828

Total revenues 600,159 ( 157,022 ) 443,137

Operating expenses:

Direct cost of services 11,322 — 11,322

Cost of goods sold 5,326 — 5,326

Selling, general and administrative expenses 191,344 — 191,344

Interest expense - Securities lending and loan participations sold 19,189 — 19,189

Total operating expenses 227,181 — 227,181

Operating income (loss) 372,978 ( 157,022 ) 215,956

Other income (expense):

Interest income 49 — 49

Dividend income — 2,474 (a) 2,474

Realized and unrealized gains (losses) on investments — 154,548 (b) 154,548

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

Income from equity method investments 875 — 875

Interest expense ( 19,786 ) — ( 19,786 )

Income before income taxes 354,116 — 354,116

Provision for income taxes ( 97,518 ) — ( 97,518 )

Net income 256,598 — 256,598

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,942 — 1,942

Net income attributable to B.

Riley Financial, Inc.

254,656 — 254,656

Preferred stock dividends 1,749 — 1,749

Net income available to common shareholders $ 252,907 $ — $ 252,907

Basic income per common share $ 9.38 $ 9.38

Diluted income per common share $ 8.81 $ 8.81

Weighted average basic common shares outstanding 26,972,275 26,972,275

Weighted average diluted common shares outstanding 28,710,368 28,710,368

(a) To reclassify dividends received from investments from Services and fees to Dividend income.

(b) To reclassify realized and unrealized gains (losses) on investments from Trading income (loss) and fair value on loans to Realized and unrealized gains (losses) on investments.

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-K

Item 9A. Controls and Procedures