What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 430 added, 338 removed, 1203 unchanged (39% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2023 December 31,

6 unchanged sentences

Due from related parties 395 1,081

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

Loans receivable, at fair value (includes $ 192,828 and $ 98,729 from related parties as of September 30, 2023 and December 31, 2022, respectively)

549,142 701,652

26 unchanged sentences

1,000,000 shares authorized;

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

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

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

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

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

30,582,729 and 28,523,764 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 576,947 494,201

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Services and fees $ 278,023 $ 257,310 $ 743,909 $ 651,786

Trading income (loss) and fair value adjustments on loans 42,365 ( 117,763 ) 93,933 ( 137,041 )

Trading (loss) income and fair value adjustments on loans ( 10,587 ) ( 6,917 ) 83,346 ( 143,958 )

Interest income - Loans and securities lending 69,730 57,594 222,115 182,855

6 unchanged sentences

Restructuring charge 228 8,016 949 8,016

Impairment of tradenames 1,733 — 1,733 —

Impairment of goodwill and tradenames 35,500 — 37,233 —

Interest expense - Securities lending and loan participations sold 38,368 17,447 106,572 43,757

Total operating expenses 441,687 236,802 1,112,138 639,128

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

Operating income 20,625 75,315 188,542 59,450

Other income (expense):

1 unchanged sentence

Dividend income 12,876 9,175 35,635 26,279

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

Realized and unrealized (losses) gains on investments ( 75,361 ) 19,071 ( 84,960 ) ( 136,205 )

Change in fair value of financial instruments and other ( 4,170 ) ( 574 ) ( 3,998 ) 9,728

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

(Loss) income from equity investments ( 308 ) ( 91 ) ( 175 ) 3,285

Interest expense ( 45,229 ) ( 34,587 ) ( 140,122 ) ( 96,787 )

Income (loss) before income taxes 65,285 ( 189,101 ) 89,764 ( 201,992 )

(Provision for) benefit from income taxes ( 21,504 ) 52,513 ( 29,423 ) 56,208

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

(Loss) income before income taxes ( 91,387 ) 68,995 ( 1,623 ) ( 132,997 )

Benefit from (provision for) income taxes 15,079 ( 16,350 ) ( 14,344 ) 39,858

Net (loss) income ( 76,308 ) 52,645 ( 15,967 ) ( 93,139 )

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 2,485 ) 4,808 ( 5,680 ) 9,245

Net income (loss) attributable to B.

Net (loss) income attributable to B.

Riley Financial, Inc.

1 unchanged sentence

Preferred stock dividends 2,015 2,002 6,042 6,006

Net income (loss) available to common shareholders $ 44,366 $ ( 142,161 ) $ 59,509 $ ( 154,225 )

Basic income (loss) per common share $ 1.57 $ ( 5.07 ) $ 2.09 $ ( 5.52 )

Diluted income (loss) per common share $ 1.55 $ ( 5.07 ) $ 2.05 $ ( 5.52 )

Net (loss) income available to common shareholders $ ( 75,838 ) $ 45,835 $ ( 16,329 ) $ ( 108,390 )

Basic (loss) income per common share $ ( 2.53 ) $ 1.62 $ ( 0.56 ) $ ( 3.86 )

Diluted (loss) income per common share $ ( 2.53 ) $ 1.53 $ ( 0.56 ) $ ( 3.86 )

Weighted average basic common shares outstanding 29,961,068 28,293,064 28,933,546 28,068,160

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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

Other comprehensive income (loss):

Net (loss) income $ ( 76,308 ) $ 52,645 $ ( 15,967 ) $ ( 93,139 )

Other comprehensive (loss) income:

Change in cumulative translation adjustment ( 4,879 ) ( 2,842 ) ( 3,006 ) ( 5,646 )

Other comprehensive income (loss), net of tax 1,007 ( 2,316 ) 1,873 ( 2,804 )

Total comprehensive income (loss) 44,788 ( 138,904 ) 62,214 ( 148,588 )

Other comprehensive loss, net of tax ( 4,879 ) ( 2,842 ) ( 3,006 ) ( 5,646 )

Total comprehensive (loss) income ( 81,187 ) 49,803 ( 18,973 ) ( 98,785 )

Comprehensive (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 2,485 ) 6,187 ( 5,534 ) 10,751

Comprehensive income (loss) attributable to B.

Comprehensive (loss) income attributable to B.

Riley Financial, Inc.

5 unchanged sentences

(Dollars in thousands, except share data)

For the Three Months Ended June 30, 2023 and 2022

For the Three Months Ended September 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 )

Balance, July 1, 2023 4,563 $ — 28,480,870 $ 3 $ 452,254 $ ( 49,140 ) $ ( 597 ) $ 59,418 $ 461,938

Common stock issued, net of offering costs — — 2,090,909 — 114,507 — — — 114,507

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 10,950 — ( 277 ) — — — ( 277 )

Excise taxes — — — — 115 — — — 115

Share based payments — — — — 10,561 — — — 10,561

Share based payments in equity of subsidiary — — — — 32 — — — 32

Vesting of shares in equity of subsidiary — — — — ( 245 ) — — 245 —

Dividends on common stock ($ 1.00 per share)

1 unchanged sentence

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

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

Net loss — — — — — ( 73,823 ) — ( 2,485 ) ( 76,308 )

Distributions to noncontrolling interests — — — — — — — ( 4,527 ) ( 4,527 )

Contributions from noncontrolling interests — — — — — — — 699 699

Remeasurement of B.

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

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

Balance, June 30, 2023

Acquisition of noncontrolling interests — — — — — — 600 600

Other comprehensive loss — — — — — — ( 4,879 ) — ( 4,879 )

Balance, September 30, 2023

4,563 $ — 30,582,729 $ 3 $ 576,947 $ ( 157,693 ) $ ( 5,476 ) $ 53,950 $ 467,731

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 )

Balance, July 1, 2022 4,535 $ — 28,290,458 $ 3 $ 459,220 $ 32,570 $ ( 3,884 ) $ 55,467 $ 543,376

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 10,116 — ( 293 ) — — — ( 293 )

Common stock repurchased and retired — — ( 571 ) — ( 27 ) — — — ( 27 )

Share based payments — — — — 14,498 — — — 14,498

Share based payments in equity of subsidiary — — — — 57 — — — 57

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

Dividends on common stock ($ 1.00 per share)

1 unchanged sentence

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

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

Net income — — — — — 47,837 — 6,187 54,024

Remeasurement of B.

Riley Principal 150 and 250 Merger Corporations subsidiary temporary equity — — — — — ( 428 ) — — ( 428 )

Distributions to noncontrolling interests — — — — — — — ( 431 ) ( 431 )

1 unchanged sentence

Other comprehensive loss — — — — — — ( 2,842 ) — ( 2,842 )

Balance, June 30, 2022

Balance, September 30, 2022

4,535 $ — 28,300,003 $ 3 $ 473,420 $ 46,916 $ ( 6,726 ) $ 64,081 $ 577,694

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

For the Six Months Ended June 30, 2023 and 2022

For the Nine Months Ended September 30, 2023 and 2022

Preferred Stock Common Stock Additional

6 unchanged sentences

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

Common stock issued, net of offering costs — — 2,090,909 — 114,507 — — — 114,507

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

4 unchanged sentences

Share based payments — — — — 34,528 — — — 34,528

Share based payments in equity of subsidiary — — — — 168 — — — 168

Vesting of shares in equity of subsidiary — — — — ( 245 ) — — 245 —

Dividends on common stock ($ 3.00 per share)

1 unchanged sentence

Dividends on preferred stock — — — — — ( 6,042 ) — — ( 6,042 )

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

Net loss — — — — — ( 10,287 ) — ( 5,534 ) ( 15,821 )

Remeasurement of B.

3 unchanged sentences

Acquisition of noncontrolling interests — — — — — — — 1,138 1,138

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

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

Other comprehensive loss — — — — — — ( 3,006 ) — ( 3,006 )

Balance, September 30, 2023 4,563 $ — 30,582,729 $ 3 $ 576,947 $ ( 157,693 ) $ ( 5,476 ) $ 53,950 $ 467,731

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

1 unchanged sentence

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 404,668 — ( 6,733 ) — — — ( 6,733 )

Common stock repurchased and retired — — ( 571 ) — ( 27 ) — — — ( 27 )

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

Share based payments — — — — 45,713 — — — 45,713

Share based payments in equity of subsidiary — — — — 57 — — — 57

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

Dividends on common stock ($ 3.00 per share)

1 unchanged sentence

Dividends on preferred stock — — — — — ( 6,006 ) — — ( 6,006 )

Net loss — — — — — ( 150,221 ) — 4,564 ( 145,657 )

Net (loss) income — — — — — ( 102,384 ) — 10,751 ( 91,633 )

Remeasurement of B.

Riley Principal Merger II Corporation subsidiary temporary equity — — — — — ( 428 ) — — ( 428 )

Distributions to noncontrolling interests — — — — — — — ( 2,167 ) ( 2,167 )

2 unchanged sentences

Other comprehensive loss — — — — — — ( 5,646 ) — ( 5,646 )

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

Balance, September 30, 2022 4,535 $ — 28,300,003 $ 3 $ 473,420 $ 46,916 $ ( 6,726 ) $ 64,081 $ 577,694

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

3 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss) $ 60,341 $ ( 145,784 )

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

Net loss $ ( 15,967 ) $ ( 93,139 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 38,102 26,526

1 unchanged sentence

Share-based compensation 35,264 45,828

Fair value adjustments, non-cash ( 56,634 ) ( 13,572 )

Fair value and remeasurement adjustments, non-cash ( 42,819 ) 6,251

Non-cash interest and other ( 9,440 ) ( 5,392 )

Effect of foreign currency on operations 686 3,157

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

Loss (income) from equity investments 175 ( 3,285 )

Dividends from equity investments 198 2,491

Deferred income taxes ( 21,394 ) ( 81,832 )

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

Impairment of goodwill and tradenames 37,233 —

(Gain) loss on sale of business, disposal of fixed assets, and other ( 9,581 ) 5,537

Gain on extinguishment of loan — ( 1,102 )

Loss on extinguishment of debt 5,294 —

Gain on equity investment — ( 6,790 )

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

Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests 1,335 792

10 unchanged sentences

Securities loaned 438,759 150,565

Net cash provided by (used in) operating activities 77,105 ( 49,899 )

Net cash used in operating activities ( 40,957 ) ( 72,814 )

Cash flows from investing activities:

5 unchanged sentences

Purchases of property, equipment and intangible assets ( 5,782 ) ( 1,385 )

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

Proceeds from sales of property, equipment, intangible assets and other 17,346 2

Funds received from trust account of subsidiary 175,763 172,584

18 unchanged sentences

Redemption of subsidiary temporary equity and distributions ( 175,763 ) ( 172,584 )

Proceeds from issuance of common stock 115,000 —

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 and six months ended June 30, 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 June 30, 2022

Three Months Ended September 30, 2022

As Previously

2 unchanged sentences

Services and fees $ 266,485 $ ( 9,175 ) (a) $ 257,310

Trading (loss) income and fair value adjustments on loans ( 223,927 ) 106,164 (b) ( 117,763 )

Trading income (loss) and fair value adjustments on loans 12,154 ( 19,071 ) (b) ( 6,917 )

Interest income - Loans and securities lending 57,594 — 57,594

5 unchanged sentences

Selling, general and administrative expenses 163,727 — 163,727

Restructuring charge 8,016 — 8,016

Interest expense - Securities lending and loan participations sold 17,447 — 17,447

Total operating expenses 236,802 — 236,802

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

Operating income (loss) 103,561 ( 28,246 ) 75,315

Other income (expense):

1 unchanged sentence

Dividend income — 9,175 (a) 9,175

Realized and unrealized gains (losses) on investments — ( 106,164 ) (b) ( 106,164 )

Realized and unrealized gains on investments — 19,071 (b) 19,071

Change in fair value of financial instruments and other ( 574 ) — ( 574 )

Income from equity method investments ( 3,399 ) — ( 3,399 )

Loss from equity method investments ( 91 ) — ( 91 )

Interest expense ( 34,587 ) — ( 34,587 )

Loss before income taxes ( 189,101 ) — ( 189,101 )

Income before income taxes 68,995 — 68,995

Provision for income taxes ( 16,350 ) — ( 16,350 )

Net loss ( 136,588 ) — ( 136,588 )

Net income 52,645 — 52,645

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 4,808 — 4,808

Net loss attributable to B.

Net income attributable to B.

Riley Financial, Inc.

1 unchanged sentence

Preferred stock dividends 2,002 — 2,002

Net loss available to common shareholders $ ( 142,161 ) $ — $ ( 142,161 )

Basic loss per common share $ ( 5.07 ) $ ( 5.07 )

Diluted loss per common share $ ( 5.07 ) $ ( 5.07 )

Net income available to common shareholders $ 45,835 $ — $ 45,835

Basic income per common share $ 1.62 $ 1.62

Diluted income per common share $ 1.53 $ 1.53

Weighted average basic common shares outstanding 28,293,064 28,293,064

1 unchanged sentence

(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.

Six Months Ended June 30, 2022

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

Nine Months Ended September 30, 2022

As Previously

10 unchanged sentences

Selling, general and administrative expenses 506,062 — 506,062

Restructuring charge 8,016 — 8,016

Interest expense - Securities lending and loan participations sold 43,757 — 43,757

4 unchanged sentences

Dividend income — 26,279 (a) 26,279

Realized and unrealized gains (losses) on investments — ( 155,276 ) (b) ( 155,276 )

Realized and unrealized losses on investments — ( 136,205 ) (b) ( 136,205 )

Change in fair value of financial instruments and other 9,728 — 9,728

2 unchanged sentences

Loss before income taxes ( 132,997 ) — ( 132,997 )

Provision for income taxes 56,208 — 56,208

Benefit from income taxes 39,858 — 39,858

Net loss ( 93,139 ) — ( 93,139 )

24 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 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.

The results of operations for the three and nine months ended September 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 $ 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.

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 38,368 and $ 17,447 during the three months ended September 30, 2023 and 2022, respectively, and $ 106,572 and $ 43,757 during the nine months ended September 30, 2023 and 2022, respectively.

(d) Concentration of Risk

12 unchanged sentences

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

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 costs totaled $ 6,047 and $ 1,584 during the three months ended September 30, 2023 and 2022 and $ 16,904 and $ 5,941 during the nine months ended September 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 June 30, 2023 and December 31, 2022, restricted cash included $ 2,321 and $ 2,308 of cash collateral for leases, respectively.

As of September 30, 2023 and December 31, 2022, restricted cash included $ 2,060 and $ 2,308 of cash collateral for leases, respectively.

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

September 30,

2023 December 31,

3 unchanged sentences

(h) Loans Receivable

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

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

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

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 $ 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.

Loans receivable, at fair value totaled $ 549,142 and $ 701,652 as of September 30, 2023 and December 31, 2022, respectively.

The loans have various maturities through December 2027.

As of September 30, 2023 and December 31, 2022, the historical cost of loans receivable accounted for under the fair value option was $ 576,553 and $ 769,022 , respectively, which included principal balances of $ 578,581 and $ 772,873 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 2,028 and $ 3,851 , respectively.

During the three months ended September 30, 2023 and 2022, the Company recorded net unrealized losses of $ 859 and $ 19,158 , respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded net unrealized gains of $ 51,807 and net unrealized losses of $ 19,287 , 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 September 30, 2023 and December 31, 2022, respectively, which represented approximately 7.6 % and 1.0 % of total loans receivable, at fair value as of September 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 June 30, 2023, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

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

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

1 unchanged sentence

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.

As of September 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.

2 unchanged sentences

Badcock Loan Receivable

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

On December 20, 2021, the Company entered into a Master Receivables Purchase Agreement (“Badcock Receivables I”) with W.S.

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

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

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

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

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 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.

During the nine months ended September 30, 2023, BRRII entered into Amendment No.

3 to Badcock Receivables II with WSBC for a total of $ 145,278 in additional consumer credit receivables.

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

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

These loan receivables are measured at fair value.

On August 21, 2023, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables, Inc.

(“Freedom VCM Receivables”), for a purchase price of $ 58,872 , which resulted in a loss of $ 78 .

In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 11 and as consideration for the purchase price, Freedom VCM Receivables entered into a note receivable in the amount of $ 58,872 , with a stated interest rate of 19.74 % and a maturity date of August 21, 2033.

Principal and interest is payable based on the collateral without recourse to Freedom VCM Receivables which includes the performance of certain consumer credit receivables.

This loan receivable is measured at fair value.

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 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.

As of September 30, 2023 and December 31, 2022, the Badcock Receivables I loan receivable to WSBC in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $ 33,604 and $ 175,795 , respectively.

The Badcock Receivables II loan receivable was measured at fair value in the amount of $ 142,314 as of December 31, 2022.

As of September 30, 2023, the Freedom VCM Receivables’ loan receivable in connection with the sale of all of the equity interests of BRRII was included in the Company's condensed consolidated balance sheets in loans receivable, at fair value in the amount of $ 50,789 .

(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 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:

As of September 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:

September 30,

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 (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;

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

On August 21, 2023, the Company purchased a 31 % equity interest in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group, Inc., for $ 281,144 .

The Company has elected to account for this equity investment under the fair value option.

The following tables contain summarized financial information with respect to Freedom VCM, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 correspond to amounts as of September 30, 2023 of the Company;

income statement amounts during the three and nine months ended June 30, 2023 correspond to amounts during the three and nine months ended September 30, 2023 of the Company), which is the period in which the most recent financial information is available:

June 30, 2023

Total assets $ 3,571,861

1 unchanged sentence

Equity attributable to investee $ 225,431

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

For the three months ended June 30, For the nine months ended June 30,

Revenues $ 1,038,686 $ 3,259,396

Net loss attributable to investees $ ( 50,796 ) $ ( 159,824 )

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

income statement amounts during the three and nine months ended June 30, 2023 and 2022

correspond to amounts during the three and nine months ended September 30, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:

June 30, 2023 September 30, 2022

Total assets $ 193,335 $ 202,520

Total liabilities $ 9,780 $ 5,737

Equity attributable to investee $ 183,555 $ 196,783

For the three months ended June 30, For the nine months ended June 30,

2023 2022 2023 2022

1 unchanged sentence

Net income attributable to investees $ 18,038 $ 20,198 $ 40,724 $ 51,934

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

The following tables contain summarized financial information with respect to B&W, in which the Company owns a 31 % voting interest, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 and September 30, 2022 correspond to amounts as of September 30, 2023 and December 31, 2022, respectively, of the Company;

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

June 30, 2023 September 30, 2022

Total assets $ 986,880 $ 881,567

1 unchanged sentence

Equity attributable to investee $ ( 13,020 ) $ ( 17,128 )

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

For the three months ended June 30, For the nine months ended June 30,

2023 2022 2023 2022

1 unchanged sentence

Net (loss) income attributable to investees $ ( 8,803 ) $ ( 6,282 ) $ ( 22,993 ) $ 7,613

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.

As of September 30, 2023 and December 31, 2022, the fair value of these equity securities totaled $ 603,390 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

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

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.

As of September 30, 2023 and December 31, 2022, partnership and investment fund interests valued at NAV of $ 38,807 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.

These investments are accounted for using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments.

price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer.

Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer.

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

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

As of 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.

As of September 30, 2023 and December 31, 2022, investments in nonpublic entities valued using a measurement alternative of $ 79,683 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 June 30, 2023 and December 31, 2022.

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 September 30, 2023 and December 31, 2022, other than the fair value of goodwill and tradename as more fully discussed in Note 9.

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.

10 unchanged sentences

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.

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

Financial Assets and Liabilities Measured at Fair Value on a

Recurring Basis as of June 30, 2023 Using

Fair value as of June 30, 2023

Recurring Basis as of September 30, 2023 Using

Fair value as of September 30, 2023

Quoted prices in active markets

41 unchanged sentences

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

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.

As of September 30, 2023 and December 31, 2022, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,224,259 and $ 1,070,117 , respectively, or 19.9 % 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 June 30, 2023 and December 31, 2022:

Fair value at

June 30, 2023

September 30, 2023

Technique Unobservable

29 unchanged sentences

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

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

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

Period Level 3 Changes During the Period Level 3

3 unchanged sentences

Settlements Transfer in

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Equity securities $ 387,130 $ ( 11,194 ) $ ( 47 ) $ 299,763 $ ( 535 ) $ 675,117

2 unchanged sentences

Contingent consideration 27,724 9 — 254 — 27,987

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Equity securities $ 333,916 $ 5,453 $ — $ 34 $ ( 47 ) $ 339,356

2 unchanged sentences

Contingent consideration 17,722 620 — 11,236 — 29,578

(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:

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $( 2,347 ) relating to equity securities and $( 859 ) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 8,847 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended September 30, 2023.

Fair value adjustments represent realized and unrealized gains (losses) of which $ 4,606 relating to equity securities and $( 19,158 ) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $ 847 relating to

equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended September 30, 2022.

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

Year Level 3 Changes During the Period Level 3

3 unchanged sentences

Settlements Transfer in

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Equity securities $ 368,465 $ ( 2,923 ) $ ( 35 ) $ 317,168 $ ( 7,558 ) $ 675,117

2 unchanged sentences

Contingent consideration 31,046 ( 4,561 ) — 1,502 — 27,987

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Equity securities $ 377,549 $ ( 18,594 ) $ — $ 18,457 $ ( 38,056 ) $ 339,356

2 unchanged sentences

Contingent consideration — ( 3,880 ) — 33,458 — 29,578

(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.

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $ 11,573 relating to equity securities and $ 51,807 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 14,496 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the nine months ended September 30, 2023.

Fair value adjustments represent realized and unrealized gains (losses) of which $( 732 ) relating to equity securities and $( 19,205 ) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 17,862 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the nine months ended September 30, 2022.

The amount reported in the table above during the three and nine months ended September 30, 2023 and 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 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.

As of September 30, 2023 and December 31, 2022, the senior notes payable had a carrying amount of $ 1,667,088 and $ 1,721,751 , respectively, and fair value of $ 1,388,840 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.

4 unchanged sentences

Investments in nonpublic entities that do not report NAV are subject to a qualitative assessment for indicators of impairment.

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 June 30, 2023 and December 31, 2022.

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 September 30, 2023 and December 31, 2022.

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

As of June 30, 2023

As of September 30, 2023

Investments in nonpublic entities that do not report NAV $ 1,240 $ — $ — $ 1,240

3 unchanged sentences

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 June 30, 2023 and December 31, 2022, there were no forward exchange contracts outstanding.

As of September 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 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.

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

Transaction gains were $ 981 and $ 783 during the three months ended September 30, 2023 and 2022, respectively, and transaction gains were $ 394 and $ 1,913 during the nine months ended September 30, 2023 and 2022, respectively.

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

7 unchanged sentences

Changes to redeemable noncontrolling interest consist of the following:

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Balance, December 31, 2022 $ 178,622

3 unchanged sentences

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

Balance, June 30, 2023 $ —

Balance, September 30, 2023 $ —

(m) Equity Investment

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.

As of September 30, 2023 and December 31, 2022, equity investments of $ 32,705 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 June 30, 2023 and December 31, 2022, the Company had a 47.5 % and 40.1 % ownership interest in bebe stores, inc.

(“bebe”), respectively.

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

The common stock of bebe is publicly traded.

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.

The Company did not utilize bright-line tests in the evaluation.

Based on the available facts and information regarding the operating results of bebe, the Company’s ability and intent to hold the investments until recovery, the relative amount of the declines, and the length of time that the fair values were less than the carrying values, the Company concluded that recognition of impairment losses in earnings was not required.

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.

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

The equity ownership in bebe for the periods covered by this report was accounted for under the equity method of accounting and the investment is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

On October 6, 2023, the Company purchased an additional 3,700,000 shares of bebe for an aggregate purchase price of $ 18,500 , resulting in an increase in the Company's ownership interest to 76.2 %.

The purchase of these additional shares resulted in the Company having a majority voting interest in bebe and will require the consolidation of bebe financial results for periods subsequent to October 6, 2023.

The impact of the consolidation of bebe's financial statements is not expected to be material to the Company's financial position or operating results.

Since the controlling interest was acquired subsequent to quarter end, the Company believes the disclosure of pro forma financial information is impracticable because the financial information and valuation reports needed to account for the acquisition and prepare unaudited pro forma financial information has not been made available to the Company as of the reporting date.

As of September 30, 2023, the carrying value of the Company’s equity method investment in bebe was remeasured as a result of the purchase of additional shares on October 6, 2023 and the remeasurement resulted in the recognition of a loss in the amount of $ 12,891 , which is included in other income (expense) - change in fair value of financial instruments and other in the accompanying condensed consolidated statements of operations.

The carrying value and fair value of the investment in bebe was $ 30,575 as of September 30, 2023.

The carrying value of the investment in bebe was $ 40,383 and the fair value was $ 25,423 as of December 31, 2022.

Other Equity Investments

4 unchanged sentences

(n) Supplemental Non-cash Disclosures

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.

During the nine months ended September 30, 2023, non-cash activities related to the sale of BRRII and other businesses consisted of:

(1) non-cash investing activity for a decrease in loans receivable of $ 124,397 and receipt of a loan receivable in the amount of $ 58,872 , and (2) non-cash financing activity for a decrease in term loan in the amount of $ 65,790 and decrease in non-controlling interest related to the distribution of equity of subsidiary of $ 3,374 .

Other non-cash investing activities during the nine months ended included $ 24,780 of notes receivable that converted into equity

$ 23,668 of other receivables financed with a loan receivable;

$ 1,190 of loans receivable that was included in 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 nine months ended months ended September 30, 2023, non-cash financing activities also included $ 7,000 in seller financing related to the purchase of the Lingo noncontrolling interest.

During the nine months ended September 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 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.

Placement agent fees attributable to such arrangements were $ 2,551 and $ 349 during the three months ended September 30, 2023 and 2022, respectively, and $ 2,950 and $ 12,437 during the nine months ended September 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.

September 30,

2023 December 31,

7 unchanged sentences

The BRPM 150 and BRPM 250 Units were each sold at a price of $ 10.00 per unit, generating gross proceeds to BRPM 150 of $ 172,500 and BRPM 250 of $ 172,500 .

These proceeds which totaled $ 345,000 were deposited in a trust account established for the benefit of the BRPM 150 and BRPM 250 class A public shareholders and was included in prepaid expenses and other assets in the condensed balance sheet.

assets in the condensed balance sheet.

These proceeds are invested only in U.S.

18 unchanged sentences

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.

8 unchanged sentences

The Company adopted the ASU effective January 1, 2023.

The ASU had no impact on the consolidated results of operations, cash flows, and financial position and was immaterial to the financial statement disclosures.

no impact on the consolidated results of operations, cash flows, and financial position and was immaterial to the financial statement disclosures.

NOTE 4 — ACQUISITIONS

7 unchanged sentences

The assets and liabilities of Targus, both tangible and intangible, were recorded at their estimated fair values as of the October 18, 2022 acquisition date.

Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Targus, were charged against earnings in the amount of $ 1,921 and included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022.

Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Targus, were charged against earnings in the amount of $ 1,921 and included in selling, general and administrati ve expe nses in the consolidated statements of operations for the year ended December 31, 2022.

Targus goodwill recognized subsequent to the acquisition will be non-deductible for tax purposes.

24 unchanged sentences

Total $ 247,546

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

During the nine months ended September 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:

8 unchanged sentences

Pro Forma (unaudited)

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

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Revenues $ 419,715 $ 994,836

Net loss $ ( 135,394 ) $ ( 142,707 )

Net loss attributable to B.

Net income (loss) $ 60,188 $ ( 82,519 )

Net income (loss) attributable to B.

Riley Financial, Inc.

$ 55,380 $ ( 91,764 )

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

Net income (loss) attributable to common shareholders $ 53,378 $ ( 97,770 )

These pro forma results do not necessarily represent the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021, nor are they indicative of the results of operations for future periods.

9 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.

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 .

During the nine months ended September 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

2 unchanged sentences

The intangible assets acquired are primarily comprised of customer relationships, trade names and trademarks, developed technology, and backlog.

The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocations.

The Company utilized income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocations.

The estimated fair value of the customer relationships and backlog are determined using the multi-period excess earnings method and the estimated fair value of the trade names and trademarks and developed technology are determined using the relief from royalty method.

1 unchanged sentence

NOTE 5 — RESTRUCTURING CHARGE

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.

The Company had $ 228 and $ 8,016 restructuring charges during the three months ended September 30, 2023 and 2022, respectively, and $ 949 and $ 8,016 restructuring charges during the nine months ended September 30, 2023 and 2022, respectively.

The restructuring charges during the three and nine months ended September 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 and six months ended months ended June 30, 2023 and 2022:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Balance, end of period $ 1,628 $ 2,522 $ 1,628 $ 2,522

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.

The following table summarizes the restructuring activities by reportable segment during the three and nine months ended September 30, 2023 and 2022.

Wealth Management Communications Consumer Total

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

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

Employee termination $ — $ 145 $ 83 $ 228

Total restructuring charge $ — $ 145 $ 83 $ 228

Restructuring charges for the nine months ended September 30, 2023:

Employee termination $ — $ 402 $ 486 $ 888

Facility closure and consolidation 61 — — 61

Total restructuring charge $ 61 $ 402 $ 486 $ 949

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

Wealth Management Communications Total

Restructuring charges for the three and nine months ended September 30, 2022:

Employee termination $ 354 $ 906 $ 1,260

Impairment of intangibles 2,012 2,162 4,174

Facility closure and consolidation 1,741 841 2,582

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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 June 30, 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 September 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 June 30, 2023

As of September 30, 2023

Securities borrowed $ 2,782,000 $ — $ 2,782,000 $ 2,782,000 $ —

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(2) Includes the amount of cash collateral held/posted.

The following table presents the contract value of securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

Remaining contractual maturity Remaining contractual maturity

Overnight and continuous Total Overnight and continuous Total

Securities lending transactions

Corporate securities - fixed income $ 315,070 $ 315,070 $ 401,898 $ 401,898

Equity securities 2,448,926 2,448,926 1,925,549 1,925,549

Non-US sovereign debt 18,004 18,004 15,880 15,880

Total borrowings $ 2,782,000 $ 2,782,000 $ 2,343,327 $ 2,343,327

The Company's securities lending transactions require us to pledge collateral based on the terms of each contract which is generally denominated in U.S.

dollars and marked to market on a daily basis.

If the fair value of the collateral pledged for these transactions declines, the Company could be required to provide additional collateral to the counterparty,

therefore decreasing the amount of assets available for other liquidity needs that may arise.

The Company's liquidity risk is mitigated by maintaining offsetting securities borrowed transactions in which the Company receives cash from the counterparty which, in general, is equal to or greater than the cash the Company posts on securities lending transactions.

NOTE 7 — ACCOUNTS RECEIVABLE

The components of accounts receivable, net, include the following:

September 30,

2023 December 31,

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Prepaid expenses and other assets consist of the following:

September 30,

2023 December 31,

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NOTE 9 — GOODWILL AND OTHER INTANGIBLE ASSETS

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:

Goodwill was $ 497,388 and $ 512,595 as of September 30, 2023 and December 31, 2022, respectively.

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

Segment Wealth

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Acquisition of other business — — — 9,443 — — 2,428 11,871

Goodwill impairment — — — — — ( 27,500 ) — ( 27,500 )

Other — — — 9 672 3,668 ( 3,927 ) 422

Balance as of June 30, 2023

Balance as of September 30, 2023

$ 162,018 $ 51,195 $ 1,975 $ 33,132 $ 193,867 $ 51,921 $ 3,280 $ 497,388

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.

During the nine months ended September 30, 2023, the changes in goodwill included $ 9 of foreign currency translation amounts, $ 672 of working capital settlements as described in Note 4, $ 3,668 related to certain purchase price accounting adjustments, and $( 3,927 ) related to the sale of certain assets.

Intangible assets consisted of the following:

As of June 30, 2023

As of September 30, 2023

As of December 31, 2022

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Total intangible assets $ 469,556 $ ( 135,915 ) $ 333,641 $ 480,418 $ ( 106,320 ) $ 374,098

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.

Amortization expense was $ 10,228 and $ 9,390 during the three months ended September 30, 2023 and 2022, respectively, and $ 30,804 and $ 23,146 during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, estimated future amortization expense was $ 9,139 , $ 33,142 , $ 29,511 , $ 26,384 , and $ 24,018 for the

years ended December 31, 2023 (remaining three months), 2024, 2025, 2026 and 2027, respectively.

The estimated future amortization expense after December 31, 2027 was $ 59,171 .

The Company performs impairment tests for goodwill as of December 31 of each year and between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair values of the Company’s reporting units below their carrying values.

As a result of the current financial performance of the Company’s Targus subsidiary which is included in the Consumer segment as well as current market conditions that exist in the personal computer market for computers and accessories, the Company updated its long-term forecasts.

The Company performed an interim goodwill impairment quantitative assessment as of September 30, 2023, and based on the results of the analysis, the Company recorded a non-cash impairment charge of $ 35,500 consisting of a goodwill impairment charge of $ 27,500 and a tradename impairment charge of $ 8,000 , which was recorded in impairment of goodwill and tradenames in the accompanying condensed consolidated statements of operations during the three months ended September 30, 2023.

The Company previously recorded an impairment charge in the second quarter of 2023 for a tradename in the Capital markets segment that is no longer used by the Company.

Goodwill and tradename of the Company’s Targus subsidiary was measured at fair value on a nonrecurring basis as of September 30, 2023.

The estimated fair value of goodwill was $ 51,921 and the estimated fair value of tradename was $ 27,000 as of September 30, 2023.

The estimated fair value of the Company’s Targus reporting unit was calculated using a weighted-average of values determined from an income approach and a market approach.

The income approach involves estimating the fair value of the reporting unit by discounting its estimated future cash flows using a discount rate that would be consistent with a market participant’s assumption.

The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities.

In order to estimate the fair value of goodwill and tradename, management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment of market conditions, projected cash flows, discount rates, and growth rates.

The inputs for the fair value calculations of the reporting unit included a 3 % growth rate to calculate the terminal value, a discount rate of 18 %, and with respect to tradenames, a royalty rate of 2 %.

Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit using revenue growth rates, gross margins, and other cost assumptions consistent with the reporting unit's historical trends, and working capital requirements and future capital expenditures necessary to fund future operations.

The assumptions in the fair value measurement reflect the current market environment, industry-specific factors and company-specific factors.

NOTE 10 — NOTES PAYABLE

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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 $ 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.

Interest expense totaled $ 18 and $ 18 during the three months ended September 30, 2023 and 2022, respectively and $ 54 and $ 165 during the nine months ended September 30, 2023 and 2022, respectively.

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

As of September 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 September 30, 2023.

Other Notes Payable

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.

As of September 30, 2023 and December 31, 2022, the outstanding balance for the other notes payable was $ 21,300 and $ 25,263 , respectively.

Interest expense was $ 145 and $ 298 during the three months ended September 30, 2023 and 2022, respectively, and $ 463 and $ 825 during the nine months ended September 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.

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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 June 30, 2023.

The Borrower was not in compliance with the Fixed Charge Coverage Ratio financial covenant as of September 30, 2023.

The Borrower entered into Amendment No.1 to the Targus Credit Agreement on October 31, 2023, which, among other things, modified the Fixed Charge Coverage Ratio which waived the financial covenant breach.

The Borrower is in compliance with the Targus Credit Agreement and no event of default has occurred.

The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus an applicable margin of 3.75 %.

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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.

Quarterly installments from December 31, 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 September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 21,985 (net of unamortized debt issuance costs of $ 415 ) and $ 26,021 (net of unamortized debt issuance costs of $ 580 ), respectively, and the outstanding balance on the revolver loan was $ 57,246 and $ 52,978 , respectively.

Interest expense on these loans during the three and nine months ended September 30, 2023 was $ 1,790 (including amortization of deferred debt issuance costs of $ 111 and unused commitment fees of $ 18 ) and $ 5,547 (including amortization of deferred debt issuance costs of $ 416 and unused commitment fees of $ 57 ), respectively.

The interest rate on the term loan was 9.24 % and 8.43 % and the interest rate on the revolver loan ranged between 7.42 % and 10.25 % and between 6.03 % to 9.25 % as of September 30, 2023 and December 31, 2022, respectively.

Pathlight Credit Agreement

On September 23, 2022, the Company's subsidiary, B.

Riley Receivables II, LLC, a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Pathlight Credit Agreement”) by and among PLC Agent, LLC in the capacity as administrative agent and Pathlight Capital Fund I LP, Pathlight Capital Fund II LP, and Pathlight Capital Fund III LP as the lenders (collectively, “Pathlight”) for a five-year $ 148,200 term loan.

On September 23, 2022, the Company's subsidiary, BRRII (the “Borrower”), entered into a credit agreement (the “Pathlight Credit Agreement”) by and among PLC Agent, LLC in the capacity as administrative agent and Pathlight Capital Fund I LP, Pathlight Capital Fund II LP, and Pathlight Capital Fund III LP as the lenders (collectively, “Pathlight”) for a five-year $ 148,200 term loan.

On January 12, 2023, Amendment No.

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3 to the Pathlight Credit Agreement increased the term loan by an additional $ 49,890 .

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 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 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 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.

On August 21, 2023, in connection with the sale of all of the equity interests in BRRII to Freedom VCM Receivables as more fully described in Note 3(h), the Company was released from all

obligations, guarantees and covenants related to the Pathlight Credit Agreement.

The Company has been in compliance with all financial covenants in the Pathlight Credit Agreement.

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

As of December 31, 2022, the interest rate on the Pathlight Credit Agreement was 11.01 %.

As of December 31, 2022, the outstanding balance on the term loan was $ 118,437 (net of unamortized debt issuance costs of $ 2,377 ).

Interest expense on the term loan during the three and nine months ended September 30, 2023 was $ 2,052 (including amortization of deferred debt issuance costs of $ 722 ) and $ 14,359 (including amortization of deferred debt issuance costs of $ 4,262 ), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2022 was $ 418 (including amortization of deferred debt issuance costs of $ 89 ).

Lingo Credit Agreement

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

As of September 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.

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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 June 30, 2023.

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

Principal outstanding is due in quarterly installments.

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.

The quarterly installment for December 31, 2023 is in the amount of $ 2,281 , quarterly installments from March 31, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, quarterly installments 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 September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 67,644 (net of unamortized debt issuance costs of $ 793 ) and $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2023 was $ 1,624 (including amortization of deferred debt issuance costs of $ 73 ) and $ 4,811 (including amortization of deferred debt issuance costs of $ 222 ), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2022 was $ 403 (including amortization of deferred debt issuance costs of $ 26 ).

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.

The Term Loan Facility, Revolving Credit Facility, and Incremental Facility (together, the “Credit Facilities”), mature on June 23, 2025, subject to acceleration or prepayment.

SOFR rate loans under the Credit Facilities accrue interest at the term SOFR rate plus a term SOFR adjustment determined by the selected interest period and an applicable margin of 4.50 %.

Base rate loans accrue interest at the Base Rate plus an applicable margin of 3.50 %.

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

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

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

The Credit Agreement contains certain representations and warranties (subject to certain agreed qualifications) that are customary for financings of this kind.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company’s, the Primary Guarantor’s, the Borrower’s, and the Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.

In addition, the Credit Agreement contains a financial covenant that requires the Company to maintain operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of at least $ 135,000 and the Primary Guarantor to maintain net asset value of at least $ 1,100,000 .

The Company, and its wholly owned subsidiaries, BR Financial Holdings, LLC, and BR Advisory & Investments, LLC had entered into a credit agreement dated June 23, 2021 (as amended, the “Prior Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year $ 300,000 secured term loan credit facility (the “Prior Term Loan Facility”) and a four-year $ 80,000 secured revolving loan credit facility (the “Prior Revolving Credit Facility”) with a maturity date of June 23, 2025.

On August 21, 2023, the Company and its wholly owned subsidiary, BR Financial Holdings, LLC (the “Borrower”) entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as

administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $ 500,000 secured term loan credit facility (the “New Term Loan Facility”) and a four-year $ 100,000 secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”).

The purpose of the Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Term Loan Facility and Prior Revolving Credit Facility with an aggregate outstanding balance of $ 347,877 , which included $ 342,000 in principal and $ 5,877 in interest and fees, (iii) fund a dividend reserve in an amount not less than $ 65,000 , (iv) pay related fees and expenses, and (v) for general corporate purposes.

The Company recorded a loss on extinguishment of debt related to the Prior Credit Agreement of $ 5,408 , which was included in selling, general and administrative expenses on the condensed consolidated statements of operations.

SOFR rate loans under the New Credit Facilities accrue interest at the adjusted term SOFR rate plus an applicable margin of 6.00 %.

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

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.

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 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 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.

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

Commencing on September 30, 2023, the New Term Loan Facility began to amortize in equal quarterly installments of 0.625 % of the principal amount of the term loan as of the closing date with the remaining balance due at final maturity on August 21, 2027.

Quarterly installments from December 31, 2023 to June 30, 2027 are in the amount of $ 3,125 per quarter.

As of September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 477,756 (net of unamortized debt issuance costs of $ 19,119 ) and $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ), respectively.

Interest on the term loan during the three months ended September 30, 2023 and 2022 was $ 11,270 (including amortization of deferred debt issuance costs of $ 758 ) and $ 5,720 (including amortization of deferred debt issuance costs of $ 523 ), respectively, and during the nine months ended September 30, 2023 and 2022 was $ 26,127 (including amortization of deferred debt issuance costs of $ 1,820 ) and $ 14,557 (including amortization of deferred debt issuance costs of $ 1,548 ), respectively.

The interest rate on the term loan as of September 30, 2023 and December 31, 2022 was 11.38 % and 9.23 %, respectively.

The Company had an outstanding balance of zero and $ 74,700 under the revolving facility as of September 30, 2023 and December 31, 2022, respectively.

Interest on the revolving facility during the three months ended September 30, 2023 and 2022 was $ 1,913 (including unused commitment fees of $ 52 and amortization of deferred financing costs of $ 195 ) and $ 1,410 (including unused commitment fee of $ 6 and amortization of deferred financing costs of $ 146 ), respectively, and during the nine months ended September 30, 2023 and 2022 was $ 5,396 (including unused commitment fees of $ 80 and amortization of deferred financing costs of $ 496 ) and $ 3,737 (including unused commitment fee of $ 6 and amortization of deferred financing costs of $ 434 ), respectively.

The interest rate on the revolving facility as of September 30, 2023 and December 31, 2022 was 11.38 % and 9.23 %, respectively.

BRPAC Credit Agreement

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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 June 30, 2023.

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of September 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:

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

As of September 30, 2023 and December 31, 2022, the interest rate on the BRPAC Credit Agreement was 8.44 % and 7.65 %, respectively.

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

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.

The quarterly installment on December 31, 2023 is in the amount of $ 4,356 , quarterly installments from March 31, 2024 to December 31, 2026 are in the amount of $ 3,485 per quarter, the quarterly installment 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 September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 50,916 (net of unamortized debt issuance costs of $ 491 ) and $ 68,674 (net of unamortized debt issuance costs of $ 701 ), respectively.

Interest expense on the term loan during the three months ended September 30, 2023 and 2022 was $ 1,243 (including amortization of deferred debt issuance costs of $ 66 ) and $ 1,088 (including amortization of deferred debt issuance costs of $ 81 ), respectively, and during the nine months ended September 30, 2023 and 2022 was $ 4,034 (including amortization of deferred debt issuance costs of $ 210 ) and $ 2,168 (including amortization of deferred debt issuance costs of $ 252 ), respectively.

NOTE 12 — SENIOR NOTES PAYABLE

Senior notes payable, net, are comprised of the following:

September 30,

2023 December 31,

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$ 140,492 $ 199,232

6.500 % Senior notes due September 30, 2026

180,532 180,532

6.375 % Senior notes due February 28, 2025

146,432 146,432

6.000 % Senior notes due January 31, 2028

266,057 266,058

5.500 % Senior notes due March 31, 2026

217,440 217,440

5.250 % Senior notes due August 31, 2028

6.500 % Senior notes due September 30, 2026

180,532 180,532

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324,714 324,714

6.000 % Senior notes due January 31, 2028

266,058 266,058

5.250 % Senior notes due August 31, 2028

405,483 405,483

1,681,151 1,739,891

Unamortized debt issuance costs ( 14,063 ) ( 18,140 )

$ 1,667,088 $ 1,721,751

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.

The Company issued zero and $ 15,448 of senior notes during the three months ended September 30, 2023 and 2022, respectively, and $ 185 and $ 51,321 of senior notes during the nine months ended September 30, 2023 and 2022, respectively, with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc.

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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.

As of September 30, 2023 and December 31, 2022, total senior notes outstanding was $ 1,667,088 (net of unamortized debt issue costs of $ 14,063 ) and $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ), respectively, 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 $ 26,776 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.

Interest expense on senior notes totaled $ 25,088 and $ 25,149 during the three months ended September 30, 2023 and 2022, respectively, and $ 78,091 and $ 74,221 during the nine months ended September 30, 2023 and 2022, respectively.

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

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

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

As of September 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

Accrued expenses and other liabilities consist of the following:

September 30,

2023 December 31,

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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 and six months ended months ended June 30, 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 nine months ended September 30, 2023 and 2022 was as follows:

Segment Wealth

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Segment All Other Total

Revenues for the three months ended June 30, 2023

Revenues for the three months ended September 30, 2023

Corporate finance, consulting and investment banking fees $ 67,429 $ — $ — $ 23,580 $ — $ — $ — $ 91,009

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Interest income - Loans and securities lending 69,731 — — — — — — 69,731

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

Trading (losses) gains on investments ( 10,218 ) 490 — — — — — ( 9,728 )

Fair value adjustment on loans ( 859 ) — — — — — — ( 859 )

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Segment All Other Total

Revenues for the three months ended June 30, 2022

Revenues for the three months ended September 30, 2022

Corporate finance, consulting and investment banking fees $ 41,302 $ — $ — $ 12,342 $ — $ — $ — $ 53,644

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Interest income - Loans and securities lending 55,054 — 2,540 — — — — 57,594

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

Trading gains on investments 11,216 1,027 — — — — — 12,243

Fair value adjustment on loans ( 19,160 ) — — — — — — ( 19,160 )

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Segment All Other Total

Revenues for the six months ended June 30, 2023

Revenues for the nine months ended September 30, 2023

Corporate finance, consulting and investment banking fees $ 137,305 $ — $ — $ 57,238 $ — $ — $ — $ 194,543

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Segment All Other Total

Revenues for the six months ended June 30, 2022

Revenues for the nine months ended September 30, 2022

Corporate finance, consulting and investment banking fees $ 118,448 $ — $ — $ 44,958 $ — $ — $ — $ 163,406

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

Receivables related to revenues from contracts with customers totaled $ 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.

Receivables related to revenues from contracts with customers totaled $ 127,418 and $ 149,110 as of September 30, 2023 and December 31, 2022, respectively.

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

The Company also has $ 18,939 and $ 14,144 of unbilled receivables included in prepaid expenses and other assets as of September 30, 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 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.

Deferred revenue as of September 30, 2023 and December 31, 2022 was $ 73,829 and $ 85,441 , respectively.

The Company expects to recognize the deferred revenue of $ 73,829 as of September 30, 2023 as service and fee revenues when the performance obligation is met during the years

ended December 31, 2023 (remaining three months), 2024, 2025, 2026 and 2027 in the amount of $ 48,154 , $ 11,962 , $ 6,350 , $ 2,862 , and $ 1,591 , respectively.

The Company expects to recognize the deferred revenue of $ 2,910 after December 31, 2027.

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.

During the three months ended September 30, 2023 and 2022, the Company recognized revenue of $ 9,317 and $ 7,293 that was recorded as deferred revenue at the beginning of the respective year.

During the nine months ended September 30, 2023 and 2022, the Company recognized revenue of $ 43,484 and $ 32,287 that was recorded as deferred revenue at the beginning of the respective year.

Contract Costs

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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 $ 7,908 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.

The capitalized costs to fulfill a contract were $ 7,769 and $ 5,990 as of September 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 September 30, 2023 and 2022, the Company recognized expenses of $ 1,180 and $ 723 related to capitalized costs to fulfill a contract, respectively.

For the nine months ended September 30, 2023 and 2022, the Company recognized expenses of $ 3,453 and $ 1,813 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 nine months ended September 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 June 30, 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 June 30, 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 September 30, 2023.

NOTE 15 — INCOME TAXES

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 effective income tax rate was a benefit of 16.5 % for the three months ended September 30, 2023 as compared to a provision of 23.7 % for the three months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company had a loss before income taxes of $ 1,623 and a provision for income taxes of $ 14,344 resulting from the impact of the non-cash goodwill impairment charge of $ 27,500 , which is further discussed in Note 9, not being tax deductible and other items that are not tax deductible.

The change in the effective tax rate compared to the prior year is primarily due to the impact of the non-cash goodwill impairment charge and other items that are not tax deductible on the loss of $ 1,623 before income taxes.

As of September 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.

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

As of 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.

As of September 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.

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

Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,985,442 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.

Securities that could potentially dilute basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share were 1,169,913 and 1,721,132 during the three months ended September 30, 2023 and 2022, respectively, and 1,718,209 and 1,609,425 during the nine months ended September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) attributable to B.

Net (loss) income attributable to B.

Riley Financial, Inc.

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Preferred stock dividends ( 2,015 ) ( 2,002 ) ( 6,042 ) ( 6,006 )

Net income (loss) applicable to common shareholders $ 44,366 $ ( 142,161 ) $ 59,509 $ ( 154,225 )

Net (loss) income available to common shareholders $ ( 75,838 ) $ 45,835 $ ( 16,329 ) $ ( 108,390 )

Weighted average common shares outstanding:

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Diluted 29,961,068 29,968,417 28,933,546 28,068,160

Basic income (loss) per common share $ 1.57 $ ( 5.07 ) $ 2.09 $ ( 5.52 )

Diluted income (loss) per common share $ 1.55 $ ( 5.07 ) $ 2.05 $ ( 5.52 )

Basic (loss) income per common share $ ( 2.53 ) $ 1.62 $ ( 0.56 ) $ ( 3.86 )

Diluted (loss) income per common share $ ( 2.53 ) $ 1.53 $ ( 0.56 ) $ ( 3.86 )

NOTE 17 — COMMITMENTS AND CONTINGENCIES

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

On 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.

On May 10, 2023, the Company entered into certain agreements pursuant to which the Company had, 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 (the “Parent”), of FRG.

The Company entered into an Equity Commitment Letter with Freedom VCM (“TopCo”), the parent company of the Parent, and the Parent, pursuant to which the Company agreed to provide to TopCo, at or prior to the closing of the Acquisition, an amount equal to up to $ 560,000 in equity financing.

The Company and FRG also entered into a 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 its subsidiary to FRG of certain liabilities and obligations of the Parent or such subsidiary.

On August 21, 2023, in connection with the completion of the Acquisition and the Company's portion of the equity financing, the Company's obligations pursuant to the Equity Commitment Letter and Limited Guarantee were satisfied.

(d) Other Commitments

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Securities underwriting exposes the Company to market and credit risk, primarily in the event that, for any reason, securities purchased by the Company cannot be distributed at the anticipated price and to balance sheet risk in the event that debt or equity financing commitments cannot be syndicated.

With respect to one of the Company’s investments, a wholly owned subsidiary of the Company entered into an agreement whereby the subsidiary may be required, commencing in August 2027 and expiring in August 2028, to purchase additional equity capital at fair value which was originally valued at $ 15,000 .

NOTE 18 — SHARE-BASED PAYMENTS

(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 $ 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 .

Under the 2021 Stock Incentive Plan (the “2021 Plan”), share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 10,429 and $ 14,378 during the three months ended September 30, 2023 and 2022, respectively and $ 33,972 and $ 45,397 during the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 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 nine months ended September 30, 2022, in connection with employee stock incentive plans, the Company granted 559,168 restricted stock units with a grant date fair value of $ 31,859 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.

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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 $ 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.

In connection with the Company’s Employee Stock Purchase Plan (the “Purchase Plan”), share based compensation was $ 132 and $ 120 for the three months ended September 30, 2023 and 2022, respectively, and $ 556 and $ 316 for the nine months ended September 30, 2023 and 2022, respectively.

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

Since October 30, 2018, the Company’s Board of Directors has authorized annual share repurchase programs of up to $ 50,000 of its outstanding common shares.

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

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.

All share repurchases were effected on the open market at prevailing market

prices or in privately negotiated transactions.

During the nine months ended September 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 571 shares of its common stock for $ 27 , respectively.

The shares repurchased under the program are retired.

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.

In November 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 2024.

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 $ 114,507 after underwriting fees and costs.

(d) Preferred Stock

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.

During the nine months ended September 30, 2023 and 2022, the Company issued zero and 20 depository shares of the Series A Preferred Stock, respectively.

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

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

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

During the nine months ended September 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 September 30, 2023 and December 31, 2022, respectively.

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

Dividends on the Series B preferred paid during the nine months ended September 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.

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

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 ;

As of September 30, 2023, BRS had net capital of $ 146,622 , which was $ 142,616 in excess of required minimum net capital of $ 4,006 ;

and BRWM had net capital of $ 17,254 , which was $ 15,469 in excess of required minimum net capital of $ 1,785 .

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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 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.

As of September 30, 2023 and December 31, 2022, amounts due from related parties of $ 395 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 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.

During the three and nine months ended September 30, 2022, management fees paid for investment advisory services by Whitehawk were zero 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 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.

During the three and nine months ended September 30, 2022, the Company earned $ 65 and $ 129 , 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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(fka the Maven, Inc.)

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

(fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $ 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 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.

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

(fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $ 103,556 and $ 98,729 as of September 30, 2023 and December 31, 2022, respectively.

On August 31, 2023, the Arena loan was amended for an additional $ 6,000 loan receivable with interest payable at 10.0 % per annum and a maturity date of December 31, 2026.

During the three and nine months ended September 30, 2022, the Company earned zero 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 .

On May 20, 2023, the Company entered into a loan agreement with Applied Digital (“APLD”) and had a loan receivable due from APLD, which was paid off in full on July 17, 2023, and in respect of which the Company recognized interest income and loan fees of $ 1,447 .

On September 13, 2023, the Company provided APLD with an additional loan, which had a fair value of $ 4,879 as of September 30, 2023.

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

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 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.

Freedom VCM Holdings, LLC

On August 21, 2023, the Company purchased an equity investment in Freedom VCM for $ 281,144 , resulting in a 31 % voting interest.

On August 21, 2023, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables, for a purchase price of $ 58,872 which resulted in a loss of $ 78 .

In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 11 and as consideration for the purchase price Freedom VCM Receivables entered into a note receivable in the amount of $ 58,872 , with a stated interest rate of 19.74 % and a maturity date of August 21, 2033.

Principal and interest is payable based on the collateral without recourse to Freedom VCM Receivables, which includes the performance of certain consumer credit receivables.

This loan receivable was measured at fair value in the amount of $ 50,789 as of September 30, 2023.

Interest income on this loan receivable was $ 1,173 during the three and nine months ended September 30, 2023.

As a result of this equity investment, the Company's Badcock Receivable I loan receivable as more fully described in Note 3(h) was a related party loan receivable with a fair value of $ 33,604 as of September 30, 2023.

Torticity, LLC

On November 2, 2023, the Company loaned $ 15,369 to Torticity, LLC with interest payable of 15.0 % per annum and a maturity date of November 2, 2026.

This will be included in the Company's loans receivable, at fair value in its condensed consolidated balance sheets in the fourth quarter of 2023.

During the nine months ended September 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.

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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.

Our executive officers and members of our board of directors have 65.4 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 37.9 % in the BRCPOF as of September 30, 2023.

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

During the three months ended September 30, 2023 and 2022, the Company earned $ 2,439 and $ 35 of fees related to these services, respectively.

During the nine months ended September 30, 2023 and 2022, the Company earned $ 3,253 and $ 4,071 of fees related to these services, respectively.

NOTE 21 — BUSINESS SEGMENTS

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Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Revenues - Services and fees $ 80,913 $ 104,042 $ 183,803 $ 223,448

Trading income (loss) and fair value adjustments on loans 41,892 ( 119,292 ) 92,188 ( 139,091 )

Trading (loss) income and fair value adjustments on loans ( 11,077 ) ( 7,944 ) 81,111 ( 147,035 )

Interest income - Loans and securities lending 69,730 55,054 222,115 178,879

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Depreciation and amortization ( 900 ) ( 2,174 ) ( 3,149 ) ( 6,271 )

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

Segment income 37,400 95,858 201,096 89,609

Wealth Management segment:

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Depreciation and amortization ( 1,075 ) ( 1,261 ) ( 3,243 ) ( 4,402 )

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

Segment income (loss) 2,399 ( 9,497 ) 2,414 ( 26,906 )

Auction and Liquidation segment:

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Selling, general and administrative expenses ( 8,405 ) ( 2,228 ) ( 12,987 ) ( 6,225 )

Segment income (loss) 4,188 451 4,388 ( 349 )

Segment income 18,130 577 22,518 228

Financial Consulting segment:

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Restructuring charge ( 83 ) — ( 486 ) —

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

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

Impairment of goodwill and tradenames ( 35,500 ) — ( 35,500 ) —

Segment (loss) income ( 32,968 ) 3,599 ( 29,236 ) 10,590

Consolidated operating income from reportable segments 42,956 95,679 247,653 104,536

Revenues - Services and fees 9,928 4,072 28,870 5,382

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Dividend income 12,876 9,175 35,635 26,279

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

Realized and unrealized (losses) gains on investments ( 75,361 ) 19,071 ( 84,960 ) ( 136,205 )

Change in fair value of financial instruments and other ( 4,170 ) ( 574 ) ( 3,998 ) 9,728

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

(Loss) income on equity investments ( 308 ) ( 91 ) ( 175 ) 3,285

Interest expense ( 45,229 ) ( 34,587 ) ( 140,122 ) ( 96,787 )

Income (loss) before income taxes 65,285 ( 189,101 ) 89,764 ( 201,992 )

(Provision for) benefit from income taxes ( 21,504 ) 52,513 ( 29,423 ) 56,208

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

(Loss) income before income taxes ( 91,387 ) 68,995 ( 1,623 ) ( 132,997 )

Benefit from (provision for) income taxes 15,079 ( 16,350 ) ( 14,344 ) 39,858

Net (loss) income ( 76,308 ) 52,645 ( 15,967 ) ( 93,139 )

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 2,485 ) 4,808 ( 5,680 ) 9,245

Net income (loss) attributable to B.

Net (loss) income attributable to B.

Riley Financial, Inc.

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Preferred stock dividends 2,015 2,002 6,042 6,006

Net income (loss) available to common shareholders $ 44,366 $ ( 142,161 ) $ 59,509 $ ( 154,225 )

Net (loss) income available to common shareholders $ ( 75,838 ) $ 45,835 $ ( 16,329 ) $ ( 108,390 )

The following table presents revenues by geographical area:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

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Total Revenues - Services and fees 278,023 257,310 743,909 651,786

Trading income (loss) and fair value adjustments on loans

Trading (loss) income and fair value adjustments on loans

North America ( 10,587 ) ( 6,917 ) 83,346 ( 143,958 )

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Long-lived Assets - Property and Equipment, net:

6 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements