What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-08 · 435 added, 238 removed, 1106 unchanged (38% of the section changed)

12 unchanged sentences

Due from related parties 669 1,081

Loans receivable, at fair value (includes $ 97,062 and $ 98,729 from related parties as of March 31, 2023 and December 31, 2022, respectively)

Loans receivable, at fair value (includes $ 130,024 and $ 98,729 from related parties as of June 30, 2023 and December 31, 2022, respectively)

683,827 701,652

26 unchanged sentences

1,000,000 shares authorized;

4,563 and 4,545 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively;

and liquidation preference of $ 114,082 and $ 113,615 as of March 31, 2023 and December 31, 2022, respectively

4,563 and 4,545 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively;

and liquidation preference of $ 114,082 and $ 113,615 as of June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

28,135,636 and 28,523,764 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

28,480,870 and 28,523,764 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 452,254 494,201

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

As Restated As Restated

Services and fees $ 230,327 $ 191,662 $ 465,886 $ 394,476

8 unchanged sentences

Restructuring charge 628 — 721 —

Impairment of tradenames 1,733 — 1,733 —

Interest expense - Securities lending and loan participations sold 35,780 14,544 68,204 26,310

Total operating expenses 323,284 201,459 670,451 402,326

Operating income 84,923 45,973

Operating income (loss) 82,994 ( 61,838 ) 167,917 ( 15,865 )

Other income (expense):

1 unchanged sentence

Dividend income 9,555 9,243 22,759 17,104

Realized and unrealized losses on investments ( 28,442 ) ( 49,112 )

Realized and unrealized gains (losses) on investments 18,843 ( 106,164 ) ( 9,599 ) ( 155,276 )

Change in fair value of financial instruments and other 381 4,321 172 10,302

(Loss) income from equity investments ( 10 ) 6,775

Income (loss) from equity investments 143 ( 3,399 ) 133 3,376

Interest expense ( 47,332 ) ( 31,764 ) ( 94,893 ) ( 62,200 )

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income (loss) $ 43,781 $ ( 136,588 ) $ 60,341 $ ( 145,784 )

12 unchanged sentences

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2023 and 2022

For the Three Months Ended June 30, 2023 and 2022

Preferred Stock Common Stock Additional

5 unchanged sentences

Shares Amount Shares Amount

Balance, April 1, 2023 4,563 $ — 28,135,636 $ 3 $ 445,352 $ ( 62,566 ) $ ( 1,604 ) $ 59,179 $ 440,364

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 345,234 — ( 3,523 ) — — — ( 3,523 )

Share based payments — — — — 10,425 — — — 10,425

Dividends on common stock ($ 1.00 per share)

— — — — — ( 30,144 ) — — ( 30,144 )

Dividends on preferred stock — — — — — ( 2,015 ) — — ( 2,015 )

Net income — — — — — 46,381 — ( 2,600 ) 43,781

Distributions to noncontrolling interests — — — — — — — ( 740 ) ( 740 )

Contributions from noncontrolling interests — — — — — — — 3,579 3,579

Remeasurement of B.

Riley Principal 250 Merger Corporation subsidiary temporary equity — — — — — ( 796 ) — — ( 796 )

Other comprehensive income — — — — — — 1,007 — 1,007

Balance, June 30, 2023

4,563 $ — 28,480,870 $ 3 $ 452,254 $ ( 49,140 ) $ ( 597 ) $ 59,418 $ 461,938

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

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

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

Dividends on common stock ($ 1.00 per share)

— — — — — ( 31,034 ) — — ( 31,034 )

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

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

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

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

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

Balance, June 30, 2022

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

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

For the Six Months Ended June 30, 2023 and 2022

Preferred Stock Common Stock Additional

Capital (Accumulated Deficit) Retained

Earnings Accumulated

Comprehensive

Loss Noncontrolling

Interests Total

Shares Amount Shares Amount

Balance, January 1, 2023 4,545 $ — 28,523,764 $ 3 $ 494,201 $ ( 45,220 ) $ ( 2,470 ) $ 59,379 $ 505,893

Preferred stock issued 18 — — — 467 — — — 467

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 1,012,751 — ( 4,819 ) — — — ( 4,819 )

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 1,357,985 — ( 8,342 ) — — — ( 8,342 )

Common stock repurchased and retired — — ( 1,452,831 ) — ( 53,803 ) — — — ( 53,803 )

6 unchanged sentences

Net income — — — — — 63,536 — ( 3,049 ) 60,487

Distributions to noncontrolling interests — — — — — — — ( 720 ) ( 720 )

Contributions from noncontrolling interests — — — — — — — 431 431

Remeasurement of B.

Riley Principal 250 Merger Corporation subsidiary temporary equity — — — — — ( 1,994 ) — — ( 1,994 )

Acquisition of noncontrolling interest — — — — — — — 538 538

Distributions to noncontrolling interests — — — — — — — ( 1,460 ) ( 1,460 )

Contributions from noncontrolling interests — — — — — — — 4,010 4,010

Acquisition of noncontrolling interests — — — — — — — 538 538

Other comprehensive income — — — — — — 1,873 — 1,873

Balance, March 31, 2023

4,563 $ — 28,135,636 $ 3 $ 445,352 $ ( 62,566 ) $ ( 1,604 ) $ 59,179 $ 440,364

Balance, June 30, 2023 4,563 $ — 28,480,870 $ 3 $ 452,254 $ ( 49,140 ) $ ( 597 ) $ 59,418 $ 461,938

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

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

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

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

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

8 unchanged sentences

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

Balance, March 31, 2022

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

Balance, June 30, 2022 4,535 $ — 28,290,458 $ 3 $ 459,220 $ 32,570 $ ( 3,884 ) $ 55,467 $ 543,376

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

3 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

7 unchanged sentences

Effect of foreign currency on operations ( 224 ) 298

Loss (income) from equity investments 10 ( 6,775 )

Income from equity investments ( 133 ) ( 3,376 )

Dividends from equity investments 129 1,908

Deferred income taxes 18,516 ( 95,342 )

Loss on loans receivable and disposal of fixed assets 5 257

Impairment of intangibles, loss on disposal of fixed assets, and other 1,583 122

Gain on extinguishment of loan — ( 1,102 )

Gain on equity investment — ( 6,790 )

Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests 778 436

19 unchanged sentences

Proceeds from sale of property, equipment, intangible assets, and other 1,511 2

Funds received from trust account of subsidiary 175,763 —

Purchase of equity and other investments ( 4,871 ) ( 2,786 )

Net cash used in investing activities ( 57,164 ) ( 35,513 )

Net cash provided by investing activities 216,319 523

Cash flows from financing activities:

5 unchanged sentences

Proceeds from issuance of senior notes 185 35,874

Redemption of senior notes ( 58,924 ) —

Payment of debt issuance and offering costs ( 3,205 ) ( 450 )

Payment of contingent consideration ( 1,339 ) ( 451 )

Payment of employment taxes on vesting of restricted stock ( 4,819 ) ( 1,294 )

ESPP and payment of employment taxes on vesting of restricted stock ( 8,342 ) ( 6,440 )

Common dividends paid ( 80,348 ) ( 62,039 )

2 unchanged sentences

Distribution to noncontrolling interests ( 2,535 ) ( 2,414 )

Contribution from noncontrolling interests 431 1,770

Contributions from noncontrolling interests 4,010 8,527

Redemption of subsidiary temporary equity and distributions ( 175,763 ) —

Proceeds from issuance of preferred stock 467 639

29 unchanged sentences

In connection with the preparation of the 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.

The following tables summarize the effects of the correction of the classification error on the Company’s restated condensed consolidated statements of operations for the three months ended March 31, 2022.

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

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

As Previously

12 unchanged sentences

Total operating expenses 201,459 — 201,459

Operating income 4,722 41,251 45,973

Operating (loss) income ( 158,759 ) 96,921 ( 61,838 )

Other income (expense):

20 unchanged sentences

(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.

Six Months Ended June 30, 2022

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

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 )

Provision for 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.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

11 unchanged sentences

These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

(b) Use of Estimates

5 unchanged sentences

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

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 32,424 and $ 11,766 during the three months ended March 31, 2023 and 2022, respectively.

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 35,780 and $ 14,544 during the three months ended June 30, 2023 and 2022, respectively, and $ 68,204 and $ 26,310 during the six months ended June 30, 2023 and 2022, respectively.

(d) Concentration of Risk

6 unchanged sentences

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.

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.

2 unchanged sentences

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

Advertising costs totaled $ 5,121 and $ 1,763 during the three months ended March 31, 2023 and 2022, respectively.

Advertising costs totaled $ 5,736 and $ 2,594 during the three months ended June 30, 2023 and 2022 and $ 10,857 and $ 4,357 during the six months ended June 30, 2023 and 2022, respectively.

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

2 unchanged sentences

(g) Restricted Cash

As of March 31, 2023 and December 31, 2022, restricted cash included $ 2,351 and $ 2,308 of cash collateral for leases, respectively.

As of June 30, 2023 and December 31, 2022, restricted cash included $ 2,321 and $ 2,308 of cash collateral for leases, respectively.

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

7 unchanged sentences

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

Loans receivable, at fair value totaled $ 772,085 and $ 701,652 as of March 31, 2023 and December 31, 2022, respectively.

The loans have various maturities through March 2027.

As of March 31, 2023 and December 31, 2022, the historical cost of loans receivable accounted for under the fair value option was $ 795,996 and $ 769,022 , respectively, which included principal balances of $ 799,616 and $ 772,873 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 3,620 and $ 3,851 , respectively.

During the three months ended March 31, 2023 and 2022, the Company recorded net unrealized gains of $ 43,459 and $ 10,937 , respectively, on the loans receivable at fair value, which was included in trading income (losses) and fair value adjustments on loans on the condensed consolidated statements of operations.

Loans receivable, at fair value on non-accrual was $ 39,552 and $ 7,153 as of March 31, 2023 and December 31, 2022, respectively, which represented approximately 5.1 % and 1.0 % of total loans receivable, at fair value as of March 31, 2023 and December 31, 2022, respectively.

Loans receivable, at fair value totaled $ 683,827 and $ 701,652 as of June 30, 2023 and December 31, 2022, respectively.

The loans have various maturities through June 2026.

As of June 30, 2023 and December 31, 2022, the historical cost of loans receivable accounted for under the fair value option was $ 698,531 and $ 769,022 , respectively, which included principal balances of $ 703,432 and $ 772,873 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 4,901 and $ 3,851 , respectively.

During the three months ended June 30, 2023 and 2022, the Company recorded net unrealized gains of $ 9,207 and net unrealized losses of $ 10,985 , respectively, and during the six months ended June 30, 2023 and 2022 the Company recorded net unrealized gains of $ 52,666 and net unrealized losses of $ 129 , respectively, on the loans receivable at fair value, which was included in trading income (loss) and fair value adjustments on loans on the condensed consolidated statements of operations.

Loans receivable, at fair value on non-accrual was $ 41,656 and $ 7,153 as of June 30, 2023 and December 31, 2022, respectively, which represented approximately 6.1 % and 1.0 % of total loans receivable, at fair value as of June 30, 2023 and December 31, 2022, respectively.

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

As of March 31, 2023, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

As of June 30, 2023, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

(“B&W”) as further described in Note 17.

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

As of March 31, 2023, 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.

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 June 30, 2023, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure.

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

7 unchanged sentences

This purchase of $ 168,363 consumer credit receivables of WSBC was partially financed by a $ 148,200 term loan discussed in Note 11.

During the three months ended March 31, 2023, BRRII entered into Amendment No.

During the six months ended June 30, 2023, BRRII entered into Amendment Nos.

3 to the 2022 Badcock Receivable with WSBC for a total of $ 145,278 in additional consumer credit receivables.

1 unchanged sentence

The loan receivable was measured at fair value on the condensed 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 connection with these loans, the Company entered into a Servicing Agreement with WSBC pursuant to which WSBC provides 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 March 31, 2023 and December 31, 2022, loans receivable to WSBC in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $ 324,328 and $ 318,109 , respectively.

As of June 30, 2023 and December 31, 2022, loans receivable to WSBC in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $ 206,196 and $ 318,109 , respectively.

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

2 unchanged sentences

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

As of March 31, 2023 and December 31, 2022, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:

As of June 30, 2023 and December 31, 2022, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:

2023 December 31,

14 unchanged sentences

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 (for balance sheet information the period ended December 31, 2022 and September 30, 2022 correspond to the period ended March 31, 2023 and December 31, 2022, respectively, of the Company and for income statement information the three months ended December 31, 2022 and 2021 correspond to the three months ended March 31, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:

December 31, 2022 September 30, 2022

for income statement amounts during the three and six months ended March 31, 2023 and 2022 correspond to amounts during the three and six months ended June 30, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:

March 31, 2023 September 30, 2022

Total assets $ 189,999 $ 202,520

1 unchanged sentence

Equity attributable to investee $ 180,420 $ 196,783

For the three months ended December 31,

For the three months ended March 31, For the six months ended March 31,

2023 2022 2023 2022

Revenues $ 16,457 $ 21,674 $ 44,428 $ 48,883

Net income (loss) attributable to investees $ 11,808 $ 12,882

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 (for balance sheet information the period ended December 31, 2022 and September 30, 2022 correspond to the period ended March 31, 2023 and December 31, 2022, respectively, of the Company and for income statement information the three months ended December 31, 2022 and 2021 correspond to the three months ended March 31, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:

2022 September 30,

Net income attributable to investees $ 10,878 $ 18,853 $ 22,686 $ 31,735

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 balance sheet amounts as of March 31, 2023 and September 30, 2022 correspond to amounts as of June 30, 2023 and December 31, 2022, respectively, of the Company;

March 31, 2023 September 30, 2022

Total assets $ 986,420 $ 881,567

1 unchanged sentence

Equity attributable to investee $ ( 10,206 ) $ ( 17,128 )

For the three months ended December 31,

For the three months ended March 31, For the six months ended March 31,

2023 2022 2023 2022

Revenues $ 257,247 $ 204,049 $ 507,124 $ 396,344

Net income attributable to investees $ 2,021 $ 25,874

As of March 31, 2023 and December 31, 2022, the fair value of these equity securities totaled $ 370,502 and $ 371,948 , respectively, and are included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

Net (loss) income attributable to investees $ ( 16,211 ) $ ( 11,979 ) $ ( 14,190 ) $ 13,895

As of June 30, 2023 and December 31, 2022, the fair value of these equity securities totaled $ 365,657 and $ 371,948 , respectively, and are included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

(j) Fair Value Measurements

19 unchanged sentences

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

As of March 31, 2023 and December 31, 2022, partnership and investment fund interests valued at NAV of $ 48,930 and $ 70,063 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, partnership and investment fund interests valued at NAV of $ 40,557 and $ 70,063 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

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

3 unchanged sentences

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

As of March 31, 2023 and December 31, 2022, investments in nonpublic entities valued using a measurement alternative of $ 86,920 and $ 94,109 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, investments in nonpublic entities valued using a measurement alternative of $ 88,959 and $ 94,109 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

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.

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 March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, funds held in trust represents amounts invested in a mutual fund that invests in U.S.

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 June 30, 2023 and December 31, 2022.

As of December 31, 2022, the Company had $ 174,437 of funds held in trust that were 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”), which is a consolidated special purpose acquisition corporation (“SPAC”).

As of March 31, 2023 and December 31, 2022, the Company had $ 176,182 and $ 174,437 , respectively, of funds held in trust related to the SPAC.

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 SPAC 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 condensed consolidated balance sheets.

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 Level 1 of the fair value hierarchy and included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets in the amount of $ 381 and $ 173 for BRPM 250 as of March 31, 2023 and December 31, 2022, 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.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

Riley Principal 250 Merger Corporation (“BRPM 250”), which was a special purpose acquisition corporation (“SPAC”).

The funds raised were held in a trust account that was 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 as set forth in the trust agreement.

As of December 31, 2022, the funds held in trust were included within Level 1 of the fair value hierarchy and included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

The BRPM 250 Class A public shares were deemed cancelled on May 4, 2023, and the funds held in trust were used to fund the corresponding redemption amounts to the BRPM 250 Class A shareholders.

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

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

Warrant liabilities were included in Level 1 of the fair value hierarchy and included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets in the amount of $ 173 for BRPM 250 as of December 31, 2022.

The warrants expired worthless on May 4, 2023 when all of the BRPM 250 Class A public shares were redeemed.

Changes in fair value of warrants were 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 was determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2023 and December 31, 2022.

Financial Assets and Liabilities Measured at Fair Value on a

Recurring Basis as of March 31, 2023 Using

Fair value as of March 31, 2023

Recurring Basis as of June 30, 2023 Using

Fair value as of June 30, 2023

Quoted prices in active markets

2 unchanged sentences

(Level 2) Significant unobservable inputs

Funds held in trust account $ 176,182 $ 176,182 $ — $ —

Securities and other investments owned:

11 unchanged sentences

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,352 — — 4,352

Warrant liabilities 381 381 — —

Contingent consideration 27,724 — — 27,724

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

As of March 31, 2023 and December 31, 2022, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,131,126 and $ 1,070,117 , respectively, or 17.1 % and 17.5 %, respectively, of the Company’s total assets.

As of June 30, 2023 and December 31, 2022, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,070,957 and $ 1,070,117 , respectively, or 17.1 % and 17.5 %, respectively, of the Company’s total assets.

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

The following table summarizes the significant unobservable inputs in the fair value measurement of Level 3 financial assets and liabilities by category of investment and valuation technique as of March 31, 2023 and December 31, 2022:

Fair value at

March 31, 2023

June 30, 2023

Technique Unobservable

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Equity securities $ 309,614 Market approach Multiple of EBITDA 1.5 x - 16.0 x

Multiple of Sales 3.8 x

Multiple of Sales 2.9 x - 3.8 x

Market price of related security $ 0.01 - $ 79.15

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

The changes in Level 3 fair value hierarchy during the three months ended March 31, 2023 and 2022 were as follows:

The changes in Level 3 fair value hierarchy during the three months ended June 30, 2023 and 2022 were as follows:

Period Level 3 Changes During the Period Level 3

Adjustments (1) Relating to

Undistributed

Earnings Purchases,

Settlements Transfer in

Three Months Ended June 30, 2023

Equity securities $ 359,041 $ 17,287 $ 12 $ 10,918 $ ( 128 ) $ 387,130

Loans receivable at fair value 772,085 9,207 ( 1,281 ) ( 95,934 ) ( 250 ) 683,827

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,654 — 470 ( 772 ) — 4,352

Contingent consideration 28,884 ( 1,123 ) — ( 37 ) — 27,724

Three Months Ended June 30, 2022

Equity securities $ 388,664 $ ( 19,504 ) $ — $ ( 1,489 ) $ ( 33,755 ) $ 333,916

Loans receivable at fair value 882,391 ( 10,984 ) 2,135 ( 61,865 ) ( 40,837 ) 770,840

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,502 — 221 ( 563 ) — 4,160

Contingent consideration 22,464 ( 4,500 ) — ( 242 ) — 17,722

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $ 13,932 relating to equity securities and $ 9,207 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $ 3,355 relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations.

The changes in Level 3 fair value hierarchy during the six months ended June 30, 2023 and 2022 were as follows:

Year Level 3 Changes During the Period Level 3

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Settlements Transfer in

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Equity securities $ 368,465 $ 8,271 $ 12 $ 17,405 $ ( 7,023 ) $ 387,130

2 unchanged sentences

Contingent consideration 31,046 ( 4,570 ) — 1,248 — 27,724

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

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

2 unchanged sentences

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

The amount reported in the table above as of March 31, 2023 and December 31, 2022 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $ 13,920 relating to equity securities and $ 52,666 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on

loans and $( 5,649 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations.

The amount reported in the table above as of June 30, 2023 and December 31, 2022 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

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

As of March 31, 2023 and December 31, 2022, the senior notes payable had a carrying amount of $ 1,722,977 and $ 1,721,751 , respectively, and fair value of $ 1,258,532 and $ 1,431,787 , respectively.

As of June 30, 2023 and December 31, 2022, the senior notes payable had a carrying amount of $ 1,666,009 and $ 1,721,751 , respectively, and fair value of $ 1,339,607 and $ 1,431,787 , respectively.

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

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 condensed consolidated statements of operations.

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 realized and unrealized gains (losses) on investments on the condensed consolidated statements of operations.

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.

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2023 and December 31, 2022.

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of June 30, 2023 and December 31, 2022.

These investments were measured due to an observable price change or impairment during the periods below.

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(Level 2) Significant unobservable inputs

As of March 31, 2023

As of June 30, 2023

Investments in nonpublic entities that do not report NAV $ 1,476 $ — $ 1,476 $ —

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

As of March 31, 2023 and December 31, 2022, there were no forward exchange contracts outstanding.

As of June 30, 2023 and December 31, 2022, there were no forward exchange contracts 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 zero and $ 68 during the three months ended March 31, 2023 and 2022, respectively.

The net gain from forward exchange contracts was zero during the three months ended June 30, 2023 and 2022, and zero and $ 68 during the six months ended June 30, 2023 and 2022, respectively.

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

The Company transacts business in various foreign currencies.

In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates.

In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside

the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates.

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

Transaction losses were $ 234 and gains were $ 296 during the three months ended March 31, 2023 and 2022, respectively.

Transaction losses were $ 353 and gains were $ 834 during the three months ended June 30, 2023 and 2022, respectively, and transaction losses were $ 587 and gains were $ 1,130 during the six months ended June 30, 2023 and 2022, respectively.

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

As disclosed in Note 3(o) below, the Company has consolidated a VIE, BRPM 250, which has outstanding warrants that were issued in its 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 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 condensed consolidated statements of operations.

As of March 31, 2023 and December 31, 2022, the warrant liability for BRPM 250 totaled $ 381 and $ 173 , respectively, which was included in accrued expenses and other liabilities in the condensed consolidated balance sheet.

(l) Redeemable Noncontrolling Interests in Equity of Subsidiaries

6 unchanged sentences

Changes to redeemable noncontrolling interest consist of the following:

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Balance, December 31, 2022 $ 178,622

2 unchanged sentences

Remeasurement adjustments for Lingo and BRPM 250 8,477

Balance, March 31, 2023 $ 174,967

Redemption of BRPM 250 Class A common stock ( 175,763 )

Balance, June 30, 2023 $ —

(m) Equity Investment

As of March 31, 2023 and December 31, 2022, equity investments of $ 41,816 and $ 41,298 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, equity investments of $ 46,174 and $ 41,298 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

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

bebe stores, inc.

As of March 31, 2023 and December 31, 2022, the Company had a 41.3 % and 40.1 % ownership interest in bebe stores, inc.

As of June 30, 2023 and December 31, 2022, the Company had a 47.5 % and 40.1 % ownership interest in bebe stores, inc.

(“bebe”), respectively.

1 unchanged sentence

The common stock of bebe is publicly traded.

The fair value of bebe as of March 31, 2023 and December 31, 2022 was $ 22,573 and $ 25,423 , respectively.

The carrying value of the investment in bebe as of March 31, 2023 and December 31, 2022 was $ 40,937 and $ 40,383 , respectively.

As of March 31, 2023, the carrying value of the Company’s equity method investment in bebe exceeded the fair value based on the quoted market prices.

The fair value of bebe as of June 30, 2023 and December 31, 2022 was $ 16,511 and $ 25,423 , respectively.

The carrying value of the investment in bebe as of June 30, 2023 and December 31, 2022 was $ 44,037 and $ 40,383 , respectively.

As of June 30, 2023, 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.

1 unchanged sentence

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.

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.

Other Equity Investments

4 unchanged sentences

(n) Supplemental Non-cash Disclosures

During the three months ended March 31, 2023, non-cash investing activities included $ 15,000 of a convertible note receivable which was included in loans receivable, at fair value, that converted into an equity security, $ 1,190 of loans receivable, at fair value, was credited to the consideration paid for the purchase of the Lingo noncontrolling interest, and $ 2,111 of common stock issued as part of the purchase price consideration for a business acquisition.

During the three months ended March 31, 2023, non-cash financing activities included $ 7,000 in seller financing related to the purchase of the Lingo noncontrolling interest.

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

During the six months ended June 30, 2023, non-cash investing activities included $ 15,000 of a convertible note receivable which was included in loans receivable, at fair value, that converted into an equity security, $ 1,190 of loans receivable, at fair value, was credited to the consideration paid for the purchase of the Lingo noncontrolling interest, and $ 2,111 of common stock issued as part of the purchase price consideration for a business acquisition.

During the six months ended months ended June 30, 2023, non-cash financing activities included $ 7,000 in seller financing related to the purchase of the Lingo noncontrolling interest.

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

(o) Variable Interest Entities

10 unchanged sentences

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

Placement agent fees attributable to such arrangements during the three months ended March 31, 2023 and 2022 were zero and $ 12,051 , respectively, and were included in services and fees in the condensed consolidated statements of operations.

Placement agent fees attributable to such arrangements were $ 399 and $ 37 during the three months ended June 30, 2023 and 2022, respectively, and $ 399 and $ 12,088 during the six months ended June 30, 2023 and 2022, respectively, and were included in services and fees in the condensed consolidated statements of operations.

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

14 unchanged sentences

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.

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.

5 unchanged sentences

On April 21, 2023, the Board of Directors of BRPM 250 approved a plan to redeem all of the outstanding shares of Class A common stock of BRPM 250, effective as of May 4, 2023.

On May 4, 2023, the funds held in trust in the amount of $ 176,182 which is included in prepaid expenses and other assets will be distributed to pay income taxes and redeem the $ 174,967 of the redeemable noncontrolling interest in equity of subsidiaries that is included in the condensed consolidated balance sheet as of March 31, 2023.

The BRPM 250 Class A public shares were deemed cancelled on May 4, 2023, and the funds held in trust were used to fund the corresponding redemption amounts to the BRPM 250 Class A shareholders and BRPM 250 is no longer a VIE.

(p) Recent Accounting Standards

Not yet adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820).

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

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

1 unchanged sentence

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.

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.

3 unchanged sentences

Recently adopted

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

In September 2022, the FASB issued 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.

39 unchanged sentences

Total $ 247,546

During the three months ended March 31, 2023, goodwill for Targus changed by $ 2,766 related to certain purchase price accounting adjustments.

During the six months ended June 30, 2023, goodwill for Targus changed by $ 3,668 related to certain purchase price accounting adjustments.

The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets:

7 unchanged sentences

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)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Revenues $ 233,834 $ 575,121

2 unchanged sentences

Riley Financial, Inc.

$ ( 138,965 ) $ ( 147,144 )

Net loss attributable to common shareholders $ ( 140,967 ) $ ( 151,148 )

5 unchanged sentences

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 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, 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.

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.

2 unchanged sentences

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

In February 2023, certain working capital holdback provisions in the

BullsEye purchase agreement were finalized resulting in the Company receiving $ 1,101 of cash which reduced goodwill from $ 151,925 to $ 150,824 .

During the six months ended June 30, 2023, certain working capital holdback provisions in the BullsEye purchase agreement were finalized resulting in the Company receiving $ 672 of cash, which reduced goodwill from $ 151,925 to $ 151,253 .

Valuation Assumptions for Purchase Price Allocation

6 unchanged sentences

NOTE 5 — RESTRUCTURING CHARGE

The Company had $ 93 and no restructuring charges during the three months ended March 31, 2023 and 2022, respectively.

The restructuring charges during the three months ended March 31, 2023 were primarily related to reorganization and consolidation activities in the Wealth Management segment and the Communications segment.

The Company had $ 628 and no restructuring charges during the three months ended June 30, 2023 and 2022, respectively, and $ 721 and no restructuring charges during the six months ended June 30, 2023 and 2022, respectively.

restructuring charges during the three and six months ended months ended June 30, 2023 were primarily related to reorganization and consolidation activities in the Wealth Management segment, Communications segment, and Consumer segment.

Reorganization and consolidation activities consisted of reductions in workforce and facility closures.

The following tables summarize the changes in accrued restructuring charge during the three months ended March 31, 2023 and 2022:

The following tables summarize the changes in accrued restructuring charge during the three and six months ended months ended June 30, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Balance, beginning of period $ 1,996 $ 599 $ 2,335 $ 624

3 unchanged sentences

Balance, end of period $ 1,792 $ 574 $ 1,792 $ 574

The following table summarizes the restructuring activities by reportable segment during the three months ended March 31, 2023.

There were no restructuring charges during the three months ended March 31, 2022.

Wealth Management Communications Total

Restructuring charges for the three months ended March 31, 2023:

The following table summarizes the restructuring activities by reportable segment during the three and six months ended months ended June 30, 2023.

There were no restructuring charges during the three and six months ended June 30, 2022.

Wealth Management Communications Consumer Total

Restructuring charges for the three months ended June 30, 2023:

Employee termination $ — $ 197 $ 403 $ 600

1 unchanged sentence

Total restructuring charge $ 28 $ 197 $ 403 $ 628

Restructuring charges for the six months ended June 30, 2023:

Employee termination $ — $ 257 $ 403 $ 660

Facility closure and consolidation 61 — — 61

Total restructuring charge $ 61 $ 257 $ 403 $ 721

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 March 31, 2023 and December 31, 2022:

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of June 30, 2023 and December 31, 2022:

Gross amounts recognized Gross amounts offset in the consolidated balance

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

As of March 31, 2023

As of June 30, 2023

Securities borrowed $ 2,938,521 $ — $ 2,938,521 $ 2,938,521 $ —

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Balance, beginning of period $ 6,324 $ 3,103 $ 3,664 $ 3,658

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NOTE 9 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $ 523,997 and $ 512,595 as of March 31, 2023 and December 31, 2022, respectively.

The changes in the carrying amount of goodwill for the three months ended March 31, 2023 were as follows:

Goodwill was $ 526,827 and $ 512,595 as of June 30, 2023 and December 31, 2022, respectively.

The changes in the carrying amount of goodwill for the six months ended June 30, 2023 were as follows:

Segment Wealth

7 unchanged sentences

Other — — — 191 672 3,668 — 4,531

Balance as of March 31, 2023

Balance as of June 30, 2023

$ 162,018 $ 51,195 $ 1,975 $ 31,144 $ 193,867 $ 79,421 $ 7,207 $ 526,827

During the three months ended March 31, 2023, the changes in goodwill included $ 36 of foreign currency translation amounts, $( 1,101 ) of working capital settlements as described in Note 4, and $ 2,766 related to certain purchase price accounting adjustments.

During the six months ended June 30, 2023, the changes in goodwill included $ 191 of foreign currency translation amounts, $ 672 of working capital settlements as described in Note 4, and $ 3,668 related to certain purchase price accounting adjustments.

Intangible assets consisted of the following:

As of March 31, 2023

As of June 30, 2023

As of December 31, 2022

13 unchanged sentences

Total intangible assets $ 480,339 $ ( 126,011 ) $ 354,328 $ 480,418 $ ( 106,320 ) $ 374,098

Amortization expense was $ 10,473 and $ 6,816 during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, estimated future amortization expense was $ 23,998 , $ 26,786 , $ 22,198 , $ 18,897 , and $ 26,132 for the three months ended March 31, 2023 (remaining nine months), 2024, 2025, 2026 and 2027, respectively.

Amortization expense was $ 10,103 and $ 6,940 during the three months ended June 30, 2023 and 2022, respectively, and 20,576 and $ 13,756 during the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, estimated future amortization expense was $ 19,279 , $ 33,689 , $ 30,029 , $ 26,792 , and $ 24,412 for the years ended December 31, 2023 (remaining six months), 2024, 2025, 2026 and 2027, respectively.

The estimated future amortization expense after December 31, 2027 was $ 59,851 .

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

Interest expense totaled $ 18 and $ 108 during the three months ended March 31, 2023 and 2022, respectively.

There was no outstanding balance on this credit facility as of March 31, 2023 and December 31, 2022.

As of March 31, 2023, there were no open letters of credit outstanding.

The Company is in compliance with all financial covenants in the asset based credit facility as of March 31, 2023.

Interest expense totaled $ 18 and $ 39 during the three months ended June 30, 2023 and 2022, respectively and $ 36 and $ 147 during the six months ended June 30, 2023 and 2022, respectively.

There was no outstanding balance on this credit facility as of June 30, 2023 and December 31, 2022.

As of June 30, 2023, there were no open letters of credit outstanding.

The Company is in compliance with all financial covenants in the asset based credit facility as of June 30, 2023.

Other Notes Payable

As of March 31, 2023 and December 31, 2022, the outstanding balance for the other notes payable was $ 19,882 and $ 25,263 , respectively.

Interest expense was $ 174 and $ 232 during the three months ended March 31, 2023 and 2022, respectively.

Notes payable primarily consisted of additional deferred cash consideration owed to the sellers of FocalPoint and a promissory note related to the Lingo minority interest purchase as of March 31, 2023.

As of June 30, 2023 and December 31, 2022, the outstanding balance for the other notes payable was $ 21,298 and $ 25,263 , respectively.

Interest expense was $ 144 and $ 295 during the three months ended June 30, 2023 and 2022, respectively, and $ 318 and $ 527 during the six months ended June 30, 2023 and 2022, respectively.

Notes payable primarily consisted of additional deferred cash consideration owed to the sellers of FocalPoint and a promissory note related to the Lingo minority interest purchase.

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

6 unchanged sentences

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 March 31, 2023.

The Company is in compliance with all financial covenants in the Targus Credit Agreement as of June 30, 2023.

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 June 30, 2023 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 March 31, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 24,678 (net of unamortized debt issuance costs of $ 522 ) and $ 26,021 (net of unamortized debt issuance costs of $ 580 ), respectively, and the outstanding balance on the revolver loan was $ 62,463 and $ 52,978 , respectively.

Interest expense on these loans during the three months ended March 31, 2023 was $ 1,689 (including amortization of deferred debt issuance costs and unused commitment fees of $ 173 ).

The interest rate on the term loan was 8.66 % and 8.43 % and the interest rate on the revolver loan ranged between 6.66 % and 9.75 % and between 6.03 % to 9.25 % as of March 31, 2023 and December 31, 2022, respectively.

Principal outstanding that is due in quarterly installments started on December 31, 2022.

Quarterly installments from September 30, 2023 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 June 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 23,333 (net of unamortized debt issuance costs of $ 467 ) and $ 26,021 (net of unamortized debt issuance costs of $ 580 ), respectively, and the outstanding balance on the revolver loan was $ 53,875 and $ 52,978 , respectively.

Interest expense on these loans during the three and six months ended June 30, 2023 was $ 2,068 (including amortization of deferred debt issuance costs of $ 151 and unused commitment fees of $ 20 ) and $ 3,757 (including amortization of deferred debt issuance costs of $ 305 and unused commitment fees of $ 39 ), respectively.

The interest rate on the term loan was 9.09 % and 8.43 % and the interest rate on the revolver loan ranged between 7.18 % and 10.00 % and between 6.03 % to 9.25 % as of June 30, 2023 and December 31, 2022, respectively.

Pathlight Credit Agreement

6 unchanged sentences

The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus an applicable margin of 6.50 %.

As of March 31, 2023 and December 31, 2022, the interest rate on the Pathlight Credit Agreement was 11.40 % and 11.01 %, respectively.

As of June 30, 2023 and December 31, 2022, the interest rate on the Pathlight Credit Agreement was 11.72 % and 11.01 %, respectively.

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 March 31, 2023.

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 June 30, 2023.

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 March 31, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 184,358 (net of unamortized debt issuance costs of $ 3,837 ) and $ 118,437 (net of unamortized debt issuance costs of $ 2,377 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2023 was $ 6,430 (including amortization of deferred debt issuance costs of $ 1,744 ).

As of June 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 102,607 (net of unamortized debt issuance costs of $ 2,041 ) and $ 118,437 (net of unamortized debt issuance costs of $ 2,377 ), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2023 was $ 5,877 (including amortization of deferred debt issuance costs of $ 1,796 ) and $ 12,307 (including amortization of deferred debt issuance costs of $ 3,540 ), respectively.

Lingo Credit Agreement

5 unchanged sentences

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 March 31, 2023 and December 31, 2022, the interest rate on the Lingo Credit Agreement was 8.48 % and 7.89 %, respectively.

As of June 30, 2023 and December 31, 2022, the interest rate on the Lingo Credit Agreement was 8.93 % and 7.89 %, respectively.

The Lingo 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 its businesses, engage in transactions with related parties, make certain investments or pay dividends.

2 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 Lingo Credit Agreement.

The Company is in compliance with all financial covenants in the Lingo Credit Agreement as of March 31, 2023.

The Company is in compliance with all financial covenants in the Lingo Credit Agreement as of June 30, 2023.

Principal outstanding is due in quarterly installments.

Quarterly installments from June 30, 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 March 31, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 69,778 (net of unamortized debt issuance costs of $ 940 ) and $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2023 was $ 1,561 (including amortization of deferred debt issuance costs of $ 75 ).

Quarterly installments from September 30, 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 June 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 67,571 (net of unamortized debt issuance costs of $ 867 ) and $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2023 was $ 1,626 (including amortization

of deferred debt issuance costs of $ 74 ) and $ 3,187 (including amortization of deferred debt issuance costs of $ 149 ), respectively.

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, 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”).

On December 17, 2021 (the “Amendment Date”), the Company, the Primary Guarantor, and the Borrower entered into a Second Incremental Amendment to Credit Agreement, 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.

9 unchanged sentences

The Credit Agreement contains 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.

The Company is in compliance with all financial covenants in the Credit Agreement as of March 31, 2023.

The Company is in compliance with all financial covenants in the Credit Agreement as of June 30, 2023.

Commencing on September 30, 2022, the Term Loan Facility and Incremental Facility began to 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 on June 23, 2025.

Quarterly installments from June 30, 2023 to March 31, 2025 are in the amount of $ 3,750 per quarter.

As of March 31, 2023 and December 31, 2022, the outstanding balances on the Term Loan Facility and Incremental Facility were $ 283,739 (net of unamortized debt issuance costs of $ 5,011 ) and $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ), respectively.

Interest on the term loan during the three months ended March 31, 2023 and 2022 was $ 7,300 (including amortization of deferred debt issuance costs of $ 527 ) and $ 4,102 (including amortization of deferred debt issuance costs of $ 509 , respectively.

The interest rate on the term loan as of March 31, 2023 and December 31, 2022 was 9.59 % and 9.23 %, respectively.

The Company had an outstanding balance of $ 77,000 and $ 74,700 under the Revolving Credit Facility as of March 31, 2023 and December 31, 2022, respectively.

Interest on the revolving facility during the three months ended March 31, 2023 and 2022 was $ 1,956 (including amortization of deferred financing costs of $ 150 ) and $ 1,100 (including amortization of deferred financing costs of $ 143 ).

The interest rate on the revolving facility as of March 31, 2023 and December 31, 2022 was 9.69 % and 9.23 %, respectively.

Quarterly installments from September 30, 2023 to March 31, 2025 are in the amount of $ 3,750 per quarter.

As of June 30, 2023 and December 31, 2022, the outstanding balances on the Term Loan Facility and Incremental Facility were $ 280,525 (net of unamortized debt issuance costs of $ 4,475 ) and $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ), respectively.

Interest on the term loan during the three months ended June 30, 2023 and 2022 was $ 7,557 (including amortization of deferred debt issuance costs of $ 536 ) and $ 4,735 (including amortization of deferred debt issuance costs of $ 516 ), respectively, and during the six months ended June 30, 2023 and 2022 was $ 14,857 (including amortization of deferred debt issuance costs of $ 1,062 ) and $ 8,837 (including amortization of deferred debt issuance costs of $ 1,025 ), respectively.

The interest rate on the term loan as of June 30, 2023 and December 31, 2022 was 9.99 % and 9.23 %, respectively.

The Company had an outstanding balance of $ 57,000 and $ 74,700 under the Revolving Credit Facility as of June 30, 2023 and December 31, 2022, respectively.

Interest on the revolving facility during the three months ended June 30, 2023 and 2022 was $ 1,527 (including unused commitment fees of $ 28 and amortization of deferred financing costs of $ 151 ) and $ 1,227 (including amortization of deferred financing costs of $ 145 ), respectively, and during the six months ended June 30, 2023 and 2022 was $ 3,483 (including unused commitment fees of $ 28 and amortization of deferred financing costs of $ 301 ) and $ 2,327 (including amortization of deferred financing costs of $ 288 ), respectively.

The interest rate on the revolving facility as of June 30, 2023 and December 31, 2022 was 9.99 % and 9.23 %, respectively.

BRPAC Credit Agreement

5 unchanged sentences

In addition, the Company and B.

Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are guarantors of the obligations under the BRPAC Credit

Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests of BRPAC are pledged as collateral.

Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests of BRPAC are pledged as collateral.

The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties, including a pledge of (a) 100 % of the equity interests of the Credit Parties;

6 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 BRPAC Credit Agreement.

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of March 31, 2023.

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of June 30, 2023.

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:

1 unchanged sentence

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 March 31, 2023 and December 31, 2022, the interest rate on the BRPAC Credit Agreement was 8.23 % and 7.65 %, respectively.

As of June 30, 2023 and December 31, 2022, the interest rate on the BRPAC Credit Agreement was 8.18 % and 7.65 %, respectively.

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

Quarterly installments from June 30, 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 March 31, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 64,061 (net of unamortized debt issuance costs of $ 627 ) and $ 68,674 (net of unamortized debt issuance costs of $ 701 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2023 and 2022 was $ 1,443 (including amortization of deferred debt issuance costs of $ 74 ) and $ 502 (including amortization of deferred debt issuance costs of $ 72 ), respectively.

Quarterly installments from September 30, 2023 to December 31, 2023 are in the amount of $ 4,356 per quarter, from March 31, 2024 to December 31, 2026 are in the amount of $ 3,485 per quarter, on March 31, 2027 is in the amount of $ 2,614 , and the remaining principal balance is due at final maturity on June 30, 2027.

As of June 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 55,206 (net of unamortized debt issuance costs of $ 557 ) and $ 68,674 (net of unamortized debt issuance costs of $ 701 ), respectively.

Interest expense on the term loan during the three months ended June 30, 2023 and 2022 was $ 1,348 (including amortization of deferred debt issuance costs of $ 70 ) and $ 578 (including amortization of deferred debt issuance costs of $ 99 ), respectively, and during the six months ended June 30, 2023 and 2022 was $ 2,791 (including amortization of deferred debt issuance costs of $ 144 ) and $ 1,080 (including amortization of deferred debt issuance costs of $ 171 ), respectively.

NOTE 12 — SENIOR NOTES PAYABLE

18 unchanged sentences

$ 1,666,009 $ 1,721,751

During the three months ended March 31, 2023 and 2022, the Company issued zero and $ 20,073 , respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

The Company issued $ 185 and $ 15,800 during the three months ended June 30, 2023 and 2022, respectively, and $ 185 and $ 35,873 during the six months ended June 30, 2023 and 2022, 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.

1 unchanged sentence

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

As of March 31, 2023 and December 31, 2022, the total senior notes outstanding was $ 1,722,977 (net of unamortized debt issue costs of $ 16,914 ) and $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ) with a weighted average interest rate of 5.75 % and 5.75 %, respectively.

In June 2023, the Company entered into note purchase agreements in connection with the 6.75 % Senior Notes due 2024 (“ 6.75 % 2024 Notes”) that were issued for the Targus acquisition.

The note purchase agreements had a repurchase date of June 30, 2023 on which date the Company repurchased 2,356,978 shares of its 6.75 % 2024 Notes with an aggregate principal amount of $ 58,924 .

The repurchase price was equal to the aggregate principal amount, plus accrued and unpaid interest up to, but excluding, the repurchase date.

The total repurchase payment included approximately $ 663 in accrued interest.

As of June 30, 2023 and December 31, 2022, total senior notes outstanding was $ 1,666,009 (net of unamortized debt issue costs of $ 15,141 ) and $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ) with a weighted average interest rate of 5.71 % and 5.75 %, respectively.

Interest on senior notes is payable on a quarterly basis.

Interest expense on senior notes totaled $ 26,227 and $ 24,409 during the three months ended March 31, 2023 and 2022, respectively.

Interest expense on senior notes totaled $ 26,776 and $ 24,650 during the three months ended June 30, 2023 and 2022, respectively, and $ 53,003 and $ 49,072 during the six months ended June 30, 2023 and 2022, respectively.

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

1 unchanged sentence

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

As of March 31, 2023 and December 31, 2022, the Company had $ 70 remaining availability under the Sales Agreement Prospectus.

As of June 30, 2023 and December 31, 2022, the Company had $ 137,974 and $ 138,159 , respectively, remaining availability under the Sales Agreement Prospectus.

NOTE 13 — ACCRUED EXPENSES AND OTHER LIABILITIES

13 unchanged sentences

NOTE 14 — REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers by the Company's six reportable operating segments and the All Other category during the three months ended March 31, 2023 and 2022 was as follows:

Revenue from contracts with customers by the Company's six reportable operating segments and the All Other category during the three and six months ended months ended June 30, 2023 and 2022 was as follows:

Segment Wealth

3 unchanged sentences

Segment All Other Total

Revenues for the three months ended March 31, 2023

Revenues for the three months ended June 30, 2023

Corporate finance, consulting and investment banking fees $ 30,727 $ — $ — $ 19,144 $ — $ — $ — $ 49,871

6 unchanged sentences

Interest income - Loans and securities lending 75,199 — — — — — — 75,199

Trading (loss) gain on investments 7,020 1,272 — — — — — 8,292

Trading gains on investments 32,685 473 — — — — — 33,158

Fair value adjustment on loans 9,207 — — — — — — 9,207

6 unchanged sentences

Segment All Other Total

Revenues for the three months ended March 31, 2022

Revenues for the three months ended June 30, 2022

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

7 unchanged sentences

Interest income - Loans and securities lending 62,399 — 1,436 — — — — 63,835

Trading (loss) gain on investments ( 30,738 ) 522 — — — — — ( 30,216 )

Trading (losses) gains on investments ( 108,329 ) 1,528 — — — — — ( 106,801 )

Fair value adjustment on loans ( 10,962 ) — — — — — — ( 10,962 )

1 unchanged sentence

Total revenues $ 1,291 $ 62,389 $ 3,924 $ 24,310 $ 41,922 $ 5,174 $ 611 $ 139,621

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer

Segment All Other Total

Revenues for the six months ended June 30, 2023

Corporate finance, consulting and investment banking fees $ 69,877 $ — $ — $ 33,659 $ — $ — $ — $ 103,536

Wealth and asset management fees 1,922 87,759 — — — — — 89,681

Commissions, fees and reimbursed expenses 17,164 6,935 14,329 22,563 — — — 60,991

Subscription services — — — — 165,190 — — 165,190

Sale of goods — — 1,892 — 3,507 120,765 — 126,164

Advertising, licensing and other

— — — — 3,178 9,350 18,942 31,470

Total revenues from contracts with customers 88,963 94,694 16,221 56,222 171,875 130,115 18,942 577,032

Interest income - Loans and securities lending 152,385 — — — — — — 152,385

Trading gains on investments 39,705 1,745 — — — — — 41,450

Fair value adjustment on loans 52,483 — — — — — — 52,483

Other 13,927 1,091 — — — — — 15,018

Total revenues $ 347,463 $ 97,530 $ 16,221 $ 56,222 $ 171,875 $ 130,115 $ 18,942 $ 838,368

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer

Segment All Other Total

Revenues for the six months ended June 30, 2022

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

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

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

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

Sale of goods — — — — 3,765 — — 3,765

Advertising, licensing and other

— — — — 4,500 9,731 1,310 15,541

Total revenues from contracts with customers 105,446 133,674 5,843 50,246 73,887 9,731 1,310 380,137

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

Trading (losses) gains on investments ( 139,067 ) 2,050 — — — — — ( 137,017 )

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

Other 13,960 4,144 — — — — — 18,104

Total revenues $ 104,140 $ 139,868 $ 7,279 $ 50,246 $ 73,887 $ 9,731 $ 1,310 $ 386,461

Contract Balances

2 unchanged sentences

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 $ 120,853 and $ 149,110 as of March 31, 2023 and December 31, 2022, respectively.

The Company had no significant impairments related to these receivables during the three months ended March 31, 2023 and 2022.

The Company also has $ 14,857 and $ 14,144 of unbilled receivables included in prepaid expenses and other assets as of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022 was $ 84,019 and $ 85,441 , respectively.

The Company expects to recognize the deferred revenue of $ 84,019 as of March 31, 2023 as service and fee revenues when the performance obligation is met during the years ended December 31, 2023 (remaining nine months), 2024, 2025, 2026 and 2027 in the amount of $ 54,839 , $ 13,350 , $ 7,449 , $ 3,552 , and $ 1,780 , respectively.

Receivables related to revenues from contracts with customers totaled $ 118,927 and $ 149,110 as of June 30, 2023 and December 31, 2022, respectively.

The Company had no significant impairments related to these receivables during the three and six months ended months ended June 30, 2023 and 2022.

The Company also has $ 17,979 and $ 14,144 of unbilled receivables included in prepaid expenses and other assets as of June 30, 2023 and December 31, 2022, respectively.

Deferred revenue as of June 30, 2023 and December 31, 2022 was $ 77,089 and $ 85,441 , respectively.

The Company expects to recognize the deferred revenue of $ 77,089 as of June 30, 2023 as service and fee revenues when the performance obligation is met during the years ended December 31,

2023 (remaining six months), 2024, 2025, 2026 and 2027 in the amount of $ 50,260 , $ 12,500 , $ 6,764 , $ 3,063 , and $ 1,577 , respectively.

The Company expects to recognize the deferred revenue of $ 2,925 after December 31, 2027.

During the three months ended March 31, 2023 and 2022, the Company recognized revenue of $ 22,502 and $ 14,939 that was recorded as deferred revenue at the beginning of the respective year.

During the three months ended June 30, 2023 and 2022, the Company recognized revenue of $ 11,665 and $ 10,055 that was recorded as deferred revenue at the beginning of the respective year.

During the six months ended June 30, 2023 and 2022, the Company recognized revenue of $ 34,167 and $ 24,994 that was recorded as deferred revenue at the beginning of the respective year.

Contract Costs

3 unchanged sentences

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

The capitalized costs to fulfill a contract were $ 7,190 and $ 5,990 as of March 31, 2023 and December 31, 2022, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended March 31, 2023 and 2022, the Company recognized expenses of $ 1,015 and $ 915 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three months ended March 31, 2023 and 2022.

The capitalized costs to fulfill a contract were $ 7,908 and $ 5,990 as of June 30, 2023 and December 31, 2022, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended June 30, 2023 and 2022, the Company recognized expenses of $ 1,258 and $ 175 related to capitalized costs to fulfill a contract, respectively.

For the six months ended June 30, 2023 and 2022, the Company recognized expenses of $ 2,273 and $ 1,090 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three and six months ended months ended June 30, 2023 and 2022.

Remaining Performance Obligations and Revenue Recognized from Past Performance

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

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of March 31, 2023.

Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of March 31, 2023.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of June 30, 2023.

NOTE 15 — INCOME TAXES

The Company’s effective income tax rate was a provision of 32.4 % during the three months ended March 31, 2023 and a benefit of 28.7 % during the three months ended March 31, 2022.

As of March 31, 2023, the Company had federal net operating loss carryforwards of $ 55,349 and state net operating loss carryforwards of $ 46,981 , respectively.

The Company’s effective income tax rate was a provision of 32.8 % during the six months ended June 30, 2023 and a benefit of 27.8 % during the six months ended June 30, 2022.

As of June 30, 2023, the Company had federal net operating loss carryforwards of $ 55,349 and state net operating loss carryforwards of $ 46,981 , respectively.

The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2033 through December 31, 2038.

4 unchanged sentences

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

As of March 31, 2023, 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.

As of June 30, 2023, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not believe that it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 66,308 against these deferred tax assets.

23 unchanged sentences

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

Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,999,273 and 1,350,062 for the three months ended March 31, 2023 and 2022, respectively, because to do so would have been anti-dilutive.

Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,985,442 and 1,757,081 during the three months ended June 30, 2023 and 2022, respectively, and 1,992,357 and 1,553,571 during the six months ended June 30, 2023 and 2022, respectively, because to do so would have been anti-dilutive.

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income (loss) attributable to B.

30 unchanged sentences

In consideration for providing the indemnity rider, B&W paid the Company fees in the amount of $ 600 on August 26, 2020.

On April 20, 2023, the indemnity rider was reduced to $ 8,991 .

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 30,000 € payment and performance bond issued by the surety in connection with a construction project undertaken by B&W.

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 May 10, 2023, the Company entered into certain agreements pursuant to which the Company has, among other things, agreed to provide certain equity funding and other support in connection with the acquisition (the “Acquisition”) by Freedom VCM, Inc., a Delaware corporation (“Parent”), of Franchise Group, Inc., a Delaware corporation (“FRG”).

Parent has agreed to acquire FRG pursuant to an Agreement and Plan of Merger, dated as of May 10, 2023, by and among Parent, Freedom VCM Subco, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (the “Merger Sub”), and FRG (the “Merger Agreement”), pursuant to which, upon the terms and subject to the conditions set forth therein, at the closing, Merger Sub will merge with and into FRG, with FRG surviving the merger as a wholly owned subsidiary of Parent.

The buyer group includes members of the senior management team of FRG, including FRG’s Chief Executive Officer.

The Company is not a party to the Merger Agreement.

Riley entered into the Equity Commitment Letter and the Limited Guarantee, each as defined below, in connection with the Acquisition.

FRG has scheduled a special meeting of stockholders for August 17, 2023 to vote on the transaction and related matters.

The proposed transaction is anticipated to close in the second half of 2023, subject to FRG's stockholder's approval and satisfaction or waiver of the closing conditions contained in the definitive documentation.

Equity Commitment Letter

The Company entered into an Equity Commitment Letter, dated as of May 10, 2023 (the “Equity Commitment Letter”), with Freedom VCM Holdings, LLC (“TopCo”) and Parent, pursuant to which the Company, subject to the terms and conditions of the Equity Commitment Letter, has agreed to contribute to TopCo, at or prior to the closing of the Merger, an amount equal to up to $ 560,000 in equity financing (the “B.

Riley Equity Commitment”).

Riley Equity Commitment will then be used by TopCo to fund part of the Acquisition.

FRG is a third party beneficiary of the Equity Commitment Letter, and FRG is entitled to specifically enforce the Equity Commitment Letter;

provided, however, that the Company’s obligations under the Equity Commitment Letter will terminate in the event that any claim is brought by FRG with respect to the Limited Guarantee, as defined below.

Subject to certain conditions set forth in the Equity Commitment Letter, the Company has the right to assign all or a portion of such commitments to its affiliates, financing sources or other investors, and the Company expects the actual amount to be funded by it at Closing to be less than the $ 560,000 .

Limited Guarantee

The Company and FRG entered into a Limited Guarantee dated as of May 10, 2023 (the “Limited Guarantee”) in favor of FRG, pursuant to which the Company agreed to guarantee to FRG the due and punctual payment, performance and discharge when required by Parent or Merger Sub to FRG of certain liabilities and obligations of Parent or Merger Sub under the Merger Agreement pursuant to and in accordance therewith, including (i) a termination fee due to FRG in the amount of $ 55,000 if the Merger Agreement is terminated under certain specified circumstances provided for in the Merger Agreement;

(ii) certain reimbursement obligations of Parent when required to be paid by Parent pursuant to the Merger Agreement;

and (iii) liabilities or damages resulting from any actual fraud or Willful and Material Breach (as defined in the Merger Agreement) by Parent or Merger Sub required to be paid by Parent or Merger Sub pursuant to the Merger Agreement;

provided, that, except in the case of actual fraud or Willful and Material Breach by Parent or Merger Sub, the aggregate liability of the Company under the Limited Guarantee will not exceed $ 57,000 .

The Company also waived certain defenses arising out of certain events set forth in the Limited Guarantee.

(d) Other Commitments

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

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(a) Employee Stock Incentive Plans

Under the 2021 Stock Incentive Plan (the “2021 Plan”), share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 13,312 and $ 16,860 during the three months ended March 31, 2023 and 2022, respectively.

During the three months ended March 31, 2023, in connection with employee stock incentive plans, the Company granted 502,824 restricted stock units with a grant date fair value of $ 19,338 .

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

Under the 2021 Stock Incentive Plan (the “2021 Plan”), share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 10,231 and $ 14,159 during the three months ended June 30, 2023 and 2022, respectively and $ 23,543 and $ 31,019 during the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, in connection with employee stock incentive plans, the Company granted 537,168 restricted stock units with a grant date fair value of $ 20,496 .

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

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

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

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

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

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(b) Employee Stock Purchase Plan

In connection with the Company’s Employee Stock Purchase Plan ("Purchase Plan"), share based compensation was $ 298 and $ 153 for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 and December 31, 2022, there were 362,986 shares reserved for issuance under the Purchase Plan.

In connection with the Company’s Employee Stock Purchase Plan ("Purchase Plan"), share based compensation was $ 126 and $ 43 for the three months ended June 30, 2023 and 2022, respectively, and $ 424 and $ 196 for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, there were 301,582 and 362,986 shares reserved for issuance under the Purchase Plan, respectively.

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

During the three months ended March 31, 2023 and 2022, the Company repurchased 1,452,831 shares of its common stock for $ 53,688 , which represents an average price of $ 36.95 per common share and zero shares of its common stock, respectively.

During the six months ended June 30, 2023 and 2022, the Company repurchased 1,452,831 shares of its common stock for $ 53,688 , which represents an average price of $ 36.95 per common share, and zero shares of its common stock, respectively.

The shares repurchased under the program are retired.

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 the reauthorized program expires in October 2023.

On March 3, 2023, 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 the reauthorized program expires in October 2023.

On July 28, 2023, the Company issued 2,090,909 shares of common stock through a public offering at a price of $ 55.00 per share for net proceeds of approximately $ 115,000 after underwriting fees and costs.

(d) Preferred Stock

During the three months ended March 31, 2023 and 2022, the Company issued zero and 19 depository shares of the Series A Preferred Stock, respectively.

There were 2,834 shares issued and outstanding as of March 31, 2023 and December 31, 2022.

Total liquidation preference for the Series A Preferred Stock as of March 31, 2023 and December 31, 2022 was $ 70,854 .

Dividends on the Series A preferred paid during the three months ended March 31, 2023 and 2022 were $ 0.4296875 per depository share, respectively.

During the three months ended March 31, 2023 and 2022, the Company issued 18 and 4 depository shares of the Series B Preferred Stock.

There were 1,729 and 1,710 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.

Total liquidation preference for the Series B Preferred Stock as of March 31, 2023 and December 31, 2022 was $ 43,228 and $ 42,761 , respectively.

Dividends on the Series B preferred paid during the three months ended March 31, 2023 and 2022 were $ 0.4609375 per depository share, respectively.

During the six months ended June 30, 2023 and 2022, the Company issued zero and 19 depository shares of the Series A Preferred Stock, respectively.

There were 2,834 shares issued and outstanding as of June 30, 2023 and December 31, 2022.

Total liquidation preference for the Series A Preferred Stock as of June 30, 2023 and December 31, 2022 was $ 70,854 .

Dividends on the Series A preferred paid during the six months ended June 30, 2023 and 2022 were $ 0.4296875 per depository share.

During the six months ended June 30, 2023 and 2022, the Company issued 18 and 4 depository shares of the Series B Preferred Stock.

There were 1,729 and 1,710 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.

Total liquidation preference for the Series B Preferred Stock as of June 30, 2023 and December 31, 2022 was $ 43,228 and $ 42,761 , respectively.

Dividends on the Series B preferred paid during the six months ended June 30, 2023 and 2022 were $ 0.4609375 per depository share.

NOTE 19 — NET CAPITAL REQUIREMENTS

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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, shall not exceed 15 to 1.

defined, shall not exceed 15 to 1.

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

As of March 31, 2023, BRS had net capital of $ 146,827 , which was $ 142,696 in excess of required minimum net capital of $ 4,131 ;

As of June 30, 2023, BRS had net capital of $ 127,286 , which was $ 123,745 in excess of required minimum net capital of $ 3,541 ;

and BRWM had net capital of $ 13,510 , which was $ 11,328 in excess of required minimum net capital of $ 2,182 .

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

As of March 31, 2023 and December 31, 2022, amounts due from related parties of $ 372 and $ 1,081 , respectively, were due from the Funds for management fees and other operating expenses.

As of June 30, 2023 and December 31, 2022, amounts due from related parties of $ 669 and $ 1,081 , respectively, were due from the Funds for management fees and other operating expenses.

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

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and GACP II, L.P.

During the three months ended March 31, 2023 and 2022, management fees paid for investment advisory services by Whitehawk was $ 1,142 and $ 1,079 , respectively.

During the three months ended June 30, 2023 and 2022, management fees paid for investment advisory services by Whitehawk was zero and $ 94 , respectively.

During the six months ended June 30, 2023 and 2022, management fees paid for investment advisory services by Whitehawk was $ 1,142 and $ 1,173 , respectively.

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

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Babcock and Wilcox

During the three months ended March 31, 2023 and 2022, the Company earned zero and $ 53 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

During the three and six months ended June 30, 2022, the Company earned $ 11 and $ 64 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

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

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

(fka the Maven, Inc.) ("Arena") included in loans receivable, at fair value of $ 97,062 and $ 98,729 as of March 31, 2023 and December 31, 2022, respectively.

(fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $ 97,395 and $ 98,729 as of June 30, 2023 and December 31, 2022, respectively.

Interest on these loans is payable at 10.0 % per annum with maturity dates through December 2023.

During the three months ended March 31, 2023 and 2022, the Company earned zero and $ 2,021 underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities, respectively.

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

Applied Digital

On May 20, 2023, the Company entered into a loan agreement with Applied Digital (“APLD”) and had a loans receivable due from APLD included in loans receivable, at fair value of $ 32,628 as of June 30, 2023.

Interest on these

loans was payable at 9.0 % per annum with a maturity date of May 20, 2025.

On July 17, 2023, APLD repaid the loans receivable in full and the Company recognized interest income and loan fees of $ 1,447 .

California Natural Resources Group, LLC

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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.

During the three months ended March 31, 2023, the Company sold a loan receivable including accrued interest in the amount of $ 7,600 to two related parties.

During the six months ended June 30, 2023, the Company sold a loan receivable including accrued interest in the amount of $ 7,600 to two related parties.

BRC Partners Opportunity Fund, LP (“BRCPOF”) purchased $ 3,519 of the loan receivable including accrued interest and 272 Capital L.P.

(“272LP”) purchased $ 4,081 of the loan receivable including accrued interest, both of the partnerships are private equity funds managed by one of the Company’s subsidiaries.

Our executive officers and members of our board of directors have 70.4 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 41.0 % in the BRCPOF as of March 31, 2023.

Our executive officers and members of our board of directors have a 13.6 % financial interest in the 272LP as of March 31, 2023.

(“272LP”) purchased $ 4,081 of the loan receivable including accrued interest;

both of the partnerships are private equity funds managed by one of the Company’s subsidiaries.

Our executive officers and members of our board of directors have 71.8 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 42.1 % in the BRCPOF as of June 30, 2023.

Our executive officers and members of our board of directors have a 14.3 % financial interest in the 272LP as of June 30, 2023.

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

During the three months ended March 31, 2023 and 2022, the Company earned $ 784 and $ 1,880 of fees related to these services, respectively.

During the three months ended June 30, 2023 months ended June 30, 2023 and 2022, the Company earned $ 30 and $ 2,156 of fees related to these services, respectively.

During the six months ended June 30, 2023 months ended June 30, 2023 and 2022, the Company earned $ 814 and $ 4,036 of fees related to these services, respectively.

NOTE 21 — BUSINESS SEGMENTS

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Three Months Ended

Six Months Ended

2023 2022 2023 2022

Capital Markets segment:

(As Restated)

(As Restated) (As Restated)

Revenues - Services and fees $ 44,961 $ 58,184 $ 102,890 $ 119,406

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Selling, general and administrative expenses ( 45,870 ) ( 45,865 ) ( 111,581 ) ( 79,982 )

Impairment of tradenames ( 1,733 ) — ( 1,733 ) —

Interest expense - Securities lending and loan participations sold ( 35,780 ) ( 14,544 ) ( 68,204 ) ( 26,310 )

Depreciation and amortization ( 993 ) ( 2,204 ) ( 2,249 ) ( 4,097 )

Segment income 86,020 55,073

Segment income (loss) 77,676 ( 61,322 ) 163,696 ( 6,249 )

Wealth Management segment:

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Depreciation and amortization ( 1,082 ) ( 1,308 ) ( 2,168 ) ( 3,141 )

Segment income (loss) 1,373 ( 10,096 )

Segment (loss) income ( 1,358 ) ( 7,313 ) 15 ( 17,409 )

Auction and Liquidation segment:

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Revenues - Sale of goods 1,676 — 1,892 —

Interest Income - Loan — 1,436 — 1,436

Total revenues 10,561 3,924 16,221 7,279

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Depreciation and amortization ( 2,639 ) ( 583 ) ( 5,478 ) ( 1,166 )

Restructuring charge ( 403 ) — ( 403 ) —

Segment income 2,086 3,773 3,732 6,991

Consolidated operating income from reportable segments 103,805 61,276

Consolidated operating income (loss) from reportable segments 100,892 ( 52,419 ) 204,697 8,857

Revenues - Services and fees 9,669 611 18,942 1,310

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Dividend income 9,555 9,243 22,759 17,104

Realized and unrealized losses on investments ( 28,442 ) ( 49,112 )

Realized and unrealized gains (losses) on investments 18,843 ( 106,164 ) ( 9,599 ) ( 155,276 )

Change in fair value of financial instruments and other 381 4,321 172 10,302

(Loss) income on equity investments ( 10 ) 6,775

Income (loss) on equity investments 143 ( 3,399 ) 133 3,376

Interest expense ( 47,332 ) ( 31,764 ) ( 94,893 ) ( 62,200 )

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Three Months Ended

(As Restated)

Six Months Ended

2023 2022 2023 2022

(As Restated) (As Restated)

Revenues - Services and fees

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Europe, Middle East, and Africa 17,198 — 34,626 —

Asia 6,316 — 12,540 —

Latin America 2,295 — 5,014 —

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North America 75,199 62,399 152,385 123,825

Europe — 1,436 — 1,436

Total Revenues - Interest income - Loans and securities lending 75,199 63,835 152,385 125,261

Total Revenues

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Europe, Middle East, and Africa 17,614 3,257 35,671 5,210

Asia 6,316 — 12,540 —

Latin America 2,295 — 5,014 —

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The following table presents long-lived assets, which consists of property and equipment, net, by geographical area:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Long-lived Assets - Property and Equipment, net:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements