What changed in this filing

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Item 9A. Controls and Procedures

2024-04-24 compared with 2023-03-16 · 1056 added, 1231 removed, 1727 unchanged (57% of the section changed)

2 unchanged sentences

We maintain a system of disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

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

under the Exchange Act.

Based upon the foregoing evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that as of December 31, 2023 our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described in the Report of Management on Internal Control over Financial Reporting.

Changes in Internal Control over Financial Reporting

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

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

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

Report of Management on Internal Control over Financial Reporting

2 unchanged sentences

Based on our evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2023.

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

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

In making our assessment of the Company’s internal control over financial reporting as of December 31, 2023, we excluded from our assessment the internal control over financial reporting at bebe stores, inc., in which a controlling financial interest was acquired on October 6, 2023, whose financial statements collectively constitute 2% of total assets and less than 1% of revenues as of and for the year ended December 31, 2023.

While management has concluded that the material weaknesses identified in 2022 are fully remediated, management has also identified additional material weaknesses for the year ended December 31, 2023, both as fully described below.

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

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

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

Remediation of Previously Reported Material Weaknesses

The material weaknesses in internal control over financial reporting that were reported in our Annual Report on Form 10-K for the year ended December 31, 2022, have been remediated as of December 31, 2023.

The remediation of our internal control over financial reporting to address the underlying causes of the material weaknesses are summarized below:

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

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

The Company enhanced the design and operation of management review controls that are utilized to determine the fair value of intangible assets and the fair value of reporting units by augmenting the review of certain attributes, specifically, (i) key inputs and (ii) appropriateness of assumptions and methodology used, to ensure sufficient evidence of an effective review is documented and maintained to support management’s conclusions.

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

The Company improved the design and operation of management review controls over income taxes, including the following:

(i) documenting the steps taken by management to perform the review of the income tax provision, and applying the appropriate level of precision and defined criteria to review and investigative procedures and (ii) ensuring sufficient evidence of an effective review is documented and maintained to support management’s conclusions.

Additionally, the Company hired additional personnel with the appropriate technical knowledge to support the accounting for income taxes.

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

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

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

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

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

We believe that these actions will remediate the material weakness.

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

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

The Company improved the design and operation of management review controls over financial statement presentation and classification by applying an appropriate level of review of our financial

disclosure controls and ensuring that the review is documented and maintained to support management’s conclusions.

Material Weaknesses Identified during the Current Period

For the period ended December 31, 2023:

• The Company identified two separate material weaknesses in controls related to information technology general controls (ITGCs) at our Lingo Management, LLC and Tiger US Holdings, Inc.

subsidiaries in the areas of user access, program change management, and information technology (IT) operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes.

As a result, business-process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

• The Company identified a separate material weakness relating to ITGC issues in one of our B.

Riley Advisory Holdings, LLC subsidiaries primarily related to ineffective controls over user access management over a certain business application.

As a result, business-process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

• The Company was unable to rely on a System and Organization Controls (SOC) 1 Type 2 report associated with the utilization of a third-party service organization's hosted IT solution for the processing of customer sales and billing information in our Marconi Wireless subsidiary.

As a result, the internal control processes performed by the third-party service organization were not designed or implemented to operate at a sufficient level of precision.

As such, the Company could not rely on the information produced by the system.

Business-process automated and manual controls that were dependent on these controls could have been adversely impacted.

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

• The Company did not have adequate controls in place to properly identify and disclose material related party transactions in accordance with Accounting Standards Codification (“ASC”) 850, Related Party Disclosures, which resulted in a material weakness.

Prior to filing this Annual Report on Form 10-K, we completed significant additional procedures for the year ended December 31, 2023.

Based on these procedures, management believes that our consolidated financial statements included in this Form 10-K have been prepared in accordance with U.S.

Our Co-CEOs and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Form 10-K.

Remediation Plan for Current Period Material Weaknesses

Management has begun to implement and plans to continue implementing measures designed to ensure that the control deficiencies contributing to the material weaknesses, described above, are remediated, such that the controls are designed, implemented, and operating effectively.

The remediation actions for the material weaknesses noted above include:

• Implementation and enhancement of its ITGCs and related policies.

This includes providing training and support to process owners and reviewers with a specific focus on understanding the risks being addressed by the controls they are performing, as well as requirements for sufficient documentation and evidence in the execution of the controls.

• Updating of its IT policies and procedures to enhance user access, change management, and IT operations processes to ensure timely and accurate assignment of access rights and prompt removal of access for terminated employees, and to ensure appropriate restriction of access rights based on job responsibilities.

• Reaching an agreement with the third-party service organization supporting Marconi Wireless to provide a compliant SOC 1 Type 2 report in 2024 to allow for Management’s monitoring of controls related to the design

and operating effectiveness of controls over customer sales and billing information.

Management will (i) review the SOC 1 Type 2 compliance report to assess design and operating effectiveness of internal controls over the service organization’s processing of customer sales and billing information and (ii) ensure that the complementary user controls are identified and tested.

• Implementation of measures designed to ensure controls are appropriately designed, implemented, and operating effectively as it relates to the material weakness identified in investment valuations.

The remediation actions include the improvement of the precision level of management review controls.

• Implementation and enhancement of its related party controls and policies.

This includes providing training to process owners and reviewers with specific focus on understanding the risks being addressed by the controls they are performing.

While the foregoing measures are intended to effectively remediate the material weaknesses described in this Item 9A, it is possible that additional remediation steps will be necessary.

As such, as we continue to evaluate and implement our plan to remediate the material weaknesses, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps described above.

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

We expect that the remediation of these material weaknesses will be completed by the end of fiscal 2024.

Our independent registered public accounting firm, Marcum LLP, has audited the consolidated financial statements and has issued an adverse attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report which is included in the Financial Statements of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

Excluding the above remediation actions of prior disclosed material weaknesses and the identification of new current period material weaknesses as fully described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to which this report relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

Certain of our officers have made elections to participate in, and are participating in, our employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld upon the vesting of restricted stock units to cover withholding taxes, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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

The financial statements of Babcock & Wilcox required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.1 to this Form 10-K.

Exhibits Required by Item 601 of Regulation S-K.

The exhibits listed in the Exhibit Index of the Form 10-K and this Amendment are field with, or incorporated by reference in, this report.

(b) Exhibits and Index to Exhibits, below.

(c) Financial Statement Schedule and Separate Financial Statements of Subsidiaries Not Consolidated and Fifty Percent or Less Owned Persons.

Babcock & Wilcox was deemed a significant equity investee under Rule 3-09 of Regulation S-X for the year ended December 31, 2022.

As such, Babcock & Wilcox’s financial statements for its fiscal years ended December 31, 2023, 2022, and 2021 are provided as Exhibit 99.1 to this Form 10-K incorporation by reference to Item 8 and the Financial Statement Schedule – Schedule II - Valuation and Qualifying Accounts included in Item 15 of Babcock & Wilcox Enterprises, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 15, 2024.

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8-K 3.1 9/4/2020

4.1 Form of common stock certificate.

10-K 4.1 3/30/2015

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

Bank National Association, as Trustee.

8-K 4.1 11/2/2016

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

Bank National Association, as Trustee.

8-K 4.1 5/31/2017

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

8-K 4.1 5/31/2017

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

Bank National Association, as Trustee.

4.1 Description of Registered Securities

10-K 4.29 5/16/2023

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

4.2 Form of common stock certificate

10-K 4.1 3/30/2015

1 unchanged sentence

Description Form Exhibit Filing Date

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

Bank National Association, as Trustee.

8-K 4.1 5/17/2018

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

4.3 Base Indenture, dated as of May 7, 2019, by and between the registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee

8-K 4.1 5/7/2019

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

Bank National Association, as Trustee.

4.4 First Supplemental Indenture, dated as of May 7, 2019, by and between the registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee

8-K 4.2 5/7/2019

14 unchanged sentences

8-K 4.3 10/7/2019

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

4.11 Third Supplemental Indenture, dated as of February 12, 2020, by and between the Company and The Bank of New York Mellon Trust Company N .

8-K 4.4 2/12/2020

14 unchanged sentences

8-K 4.5 1/25/2021

4.22 Form of 6.00% Senior Note due 2028

4.17 Form of 6.00% Senior Note due 2028 (included in Exhibit 4.16)

8-K 4.6 1/25/2021

1 unchanged sentence

8-K 4.6 3/29/2021

4.24 Form of 5.50% Senior Note due 2026

4.19 Form of 5.50% Senior Note due 2026 (included in Exhibit 4.18)

8-K 4.7 3/29/2021

1 unchanged sentence

8-K 4.7 8/6/2021

4.26 Form of 5.25% Senior Note due 2028

4.21 Form of 5.25% Senior Note due 2028 (included in Exhibit 4.20)

8-K 4.8 8/6/2021

1 unchanged sentence

8-K 4.8 12/3/2021

4.28 Form of 5.00% Senior Note due 2026

4.23 Form of 5.00% Senior Note due 2026 (included in Exhibit 4.22)

8-K 4.9 12/3/2021

4.29* Description of Registered Securities

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

10-Q 10.8 8/31/2009

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

8-K 10.6 8/6/2009

10.3# Form of Director and Officer Indemnification Agreement.

8-K 10.11 8/6/2009

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

8-K 10.1 5/26/2011

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

8-K 10.1 7/19/2013

Incorporated by Reference

Description Form Exhibit Filing Date

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

4 unchanged sentences

8-K 10.2 3/25/2014

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

and Great American Group, LLC.

10-Q 10.8 8/14/2014

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

10-Q 10.7 5/7/2015

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

and Wells Fargo Bank, National Association.

10-Q 10.8 5/7/2015

10.6# Amended and Restated 2009 Stock Incentive Plan

10-Q 10.1 8/11/2015

Incorporated by Reference

Description Form Exhibit Filing Date

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

5 unchanged sentences

8-K 10.1 8/18/2015

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

and Wells Fargo Bank, National Association.

10-Q 10.1 8/5/2016

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

10-Q 10.1 11/14/2016

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

8-K 10.1 4/27/2017

Incorporated by Reference

Description Form Exhibit Filing Date

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

8-K 10.1 7/5/2017

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

8-K 10.4 7/5/2017

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

8-K 10.1 1/5/2018

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

8-K 10.2 1/5/2018

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

8-K 10.4 1/5/2018

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

10-K 10.42 3/14/2018

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

1 unchanged sentence

8-K 10.1 1/16/2018

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

8-K 10.1 7/16/2018

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

Riley FBR, Inc.

and Andrew Moore.

8-K 10.2 7/16/2018

10.28# Amendment No.

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

8-K 10.3 7/16/2018

10.29# Amendment No.

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

8-K 10.4 7/16/2018

10.11# 2018 Employee Stock Purchase Plan

8 unchanged sentences

8-K 10.2 12/27/2018

Incorporated by Reference

Description Form Exhibit Filing Date

10.16 Unconditional Guaranty and Pledge Agreement by B.

5 unchanged sentences

10-Q 10.4 11/1/2019

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

Riley Financial, Inc.

2021 Stock Incentive Plan.

8-K 10.01 5/28/2021

Riley Financial, Inc.

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

8-K 10.01 6/3/2021

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

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

8-K 10.1 6/25/2021

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

8 unchanged sentences

8-K 10.3 12/22/2021

Incorporated by Reference

Description Form Exhibit Filing Date

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

10-K 10.44 2/25/2022

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

10-K 10.45 2/25/2022

10.24# PRSU Grant Agreement

5 unchanged sentences

8-K 10.1 4/25/2022

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

10.26 Fourth Amendment to Credit Agreement, dated as of June 21, 2022

10-Q 10.1 7/29/2022

10.27# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Bryant R.

8-K 10.1 4/14/2023

10.28# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Thomas J.

8-K 10.2 4/14/2023

10.29# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Phillip J.

8-K 10.3 4/14/2023

10.30# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Alan N.

8-K 10.4 4/14/2023

10.31# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Andrew Moore

8-K 10.5 4/14/2023

10.32# Amended and Restated Employment Agreement, dated April 11, 2023 by and between the registrant and Kenneth M.

8-K 10.6 4/14/2023

10.33 Credit Agreement, dated August 21, 2023 among B.

Riley Financial, Inc., B R Financial Holdings, LLC, Nomura Corporate Funding Americas, LLC, and Computershare Trust Company, N .A.

8-K 10.1 8/25/2023

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

Riley Financial, Inc.

2021 Stock Incentive Plan

Riley - Code of Business Conduct and Ethics

8-K 14.1 5/30/2023

Incorporated by Reference

Description Form Exhibit Filing Date

21.1* Subsidiary List

23.1* Consent of Marcum LLP

31.1* Certification of Co-Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

31.2* Certification of Co-Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

Incorporated by Reference

Description Form Exhibit Filing Date

31.3* Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

5 unchanged sentences

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

Riley - Clawback Policy

Babcock & Wilcox Financial Statements

10-K 3/15/2024

101.INS* Inline XBRL Instance Document

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** Furnished herewith.

*** The Company is providing financial statements for Babcock & Wilcox Enterprises, Inc.

(“Babcock & Wilcox”), pursuant to Rule 3-09 of Regulation S-X as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021.

Babcock & Wilcox was significant under Rule 3-09 for the year ended December 31, 2022.

+ Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

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The omitted information is not material and, if publicly disclosed, would likely cause competitive harm to the Company.

Certain schedules and annexes to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

Certain schedules and annexes to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-

A copy of any omitted schedule and/or annex will be furnished to the U.S.

5 unchanged sentences

Riley Financial, Inc.

March 15, 2023

April 23, 2024

/s/ PHILLIP J.

3 unchanged sentences

/s/ BRYANT R.

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

RILEY Co-Chief Executive Officer Chairman of the Board April 23, 2024

Riley) (Principal Executive Officer)

/s/ THOMAS J.

KELLEHER Co-Chief Executive Officer Director March 15, 2023

KELLEHER Co-Chief Executive Officer Director April 23, 2024

/s/ PHILLIP J.

AHN Chief Financial Officer Chief Operating Officer March 15, 2023

AHN Chief Financial Officer Chief Operating Officer April 23, 2024

Ahn) (Principal Financial Officer)

/s/ HOWARD E.

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

WEITZMAN Chief Accounting Officer (Principal Accounting Officer) April 23, 2024

/s/ ROBERT L.

ANTIN Director March 15, 2023

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

ANTIN Director April 23, 2024

/s/ ROBERT D’AGOSTINO Director April 23, 2024

(Robert D’Agostino)

/s/ TAMMY BRANDT Director March 15, 2023

/s/ TAMMY BRANDT Director April 23, 2024

(Tammy Brandt)

LABRAN Director March 15, 2023

LABRAN Director April 23, 2024

/s/ RANDALL E.

PAULSON Director March 15, 2023

PAULSON Director April 23, 2024

/s/ MICHAEL J.

SHELDON Director March 15, 2023

WALTERS Director March 15, 2023

SHELDON Director April 23, 2024

WALTERS Director April 23, 2024

RILEY FINANCIAL, INC.

16 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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

Restatement of Previously Issued Financial Statements

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

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

Basis for Opinion

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

Accounting for acquisition of Intangible Assets in Business Combinations

Description of the Matter

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

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

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

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

How We Addressed the Matter in Our Audit

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

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

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

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

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

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

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

Valuation of Level 3 Investments

Description of the Matter

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

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

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

As discussed in Note 2 (u) of the financial statements, the Company estimates the fair value of level 3 investments, which includes equity securities and loans receivable, at fair value.

At December 31, 2023, the Company reported equity securities and loans receivable, at fair value of approximately $735.6 million and $532.4 million, respectively.

Management uses judgment to determine the significant assumptions used in valuation models to record level 3 investments at their fair value using level 3 inputs.

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

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

Evaluating management’s significant assumptions to determine the fair value of level 3 investments was complex and required judgment, particularly when evaluating level 3 inputs such as discount rates, projected earnings before interest income, interest expense, income taxes, and depreciation and amortization (“EBITDA”), multiples of EBITDA, multiples of sales, market price of related securities, market interest rates and expected annualized volatility rates.

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

The principal considerations for our determination that performing procedures relating to the valuation of certain level 3 investments is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of certain level 3 investments, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the aforementioned significant unobservable level 3 inputs used in the valuation of level 3 investments, and (iii) the audit effort involved the use of firm employed valuation specialists with specialized skill and knowledge.

How We Addressed the Matter in Our Audit

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

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

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

• We obtained an understanding of the control environment related to the Company’s process to determine the reasonableness of significant assumptions used in valuation models to record level 3 investments at their fair value and evaluated the design effectiveness of the relevant controls.

• Tested the completeness, accuracy and reliability of level 3 inputs used by management in valuation models.

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

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

Impairment of Goodwill and Intangible Assets- Tiger US Holdings, Inc.

Description of the Matter

As discussed in Note 2 (t) and Note 9 of the financial statements, the Company annually assesses goodwill and intangible assets, or more frequently if events and circumstances indicate that the estimated fair value may no longer exceed its carrying value.

Such factors considered in the Company’s assessment include, but are not limited to, financial performance, macroeconomic conditions, as well as industry and market considerations.

When a quantitative impairment test is performed, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss.

During the year ended December 31, 2023, the Company completed their assessments of goodwill and intangibles assets for the Tiger US Holdings, Inc.

(“Targus”) reporting unit.

The annual assessment concluded that it was more likely than not the fair value of the Targus reporting unit was less than the carrying amount.

As a result, the Company recorded non-cash impairment charges for the year ended December 31, 2023, of approximately $53.1 million and $15.5 million related to the goodwill and intangibles assets, respectively.

The result of the impairment was a reduction in the carrying values of the Targus goodwill and intangible assets to approximately $26.7 million and $64.0 million, respectively.

The principal considerations for our determination that performing procedures relating to goodwill and intangible assets related to Targus is a critical audit matter are (i) the significant judgment by management when evaluating indicators of impairment;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions and (iii) the audit effort involved the use of firm employed valuation specialists with specialized skill and knowledge.

How We Addressed the Matter in Our Audit

Our audit procedures related to the valuation of goodwill and intangible assets for the Targus reporting unit address this critical audit matter included the following:

• We obtained an understanding of the control environment, evaluating the design effectiveness, and testing the operating effectiveness of controls over management’s goodwill and intangible assets impairment evaluation, including those over the determination of the fair value of the Targus reporting unit, such as controls related to future operating performance, projected cash flows, long term growth rates, royalty rates, market multiples and discount rates used.

• We evaluated the reasonableness of management’s revenue and cash flow forecasts by comparing management’s forecasts to historical results, and forecasted industry information of Targus and companies in its peer group.

• With the assistance of firm employed valuation specialists, we evaluated the reasonableness of the valuation technique, long term growth rates, royalty rates, market multiples and discount rates used by testing the underlying source information, the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the long-term growth rates, royalty rates, market multiples and discount rates selected by management.

• We compared the carrying value for the reporting unit to the amounts recorded by the Company.

/s/ Marcum LLP

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

March 15, 2023

April 23, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited B.

Riley Financial, Inc.

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

Riley Financial, Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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

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

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

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

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

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

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

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

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

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

• The Company identified two separate material weaknesses in controls related to information technology general controls (“ITGCs”) at Lingo Management, LLC and Tiger US Holdings, Inc.

and subsidiaries in the areas of user access, program change management, and information technology (“IT”) operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes.

As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

• The Company identified a separate material weakness relating to ITGC issues in one of the B.

Riley Advisory Holdings, LLC subsidiaries primarily related to ineffective controls over user access management over a certain business application.

As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

• The Company was unable to rely on a System and Organization Controls (“SOC") 1 Type 2 report associated with the utilization of a third-party service organization's hosted IT solution for the processing of customer sales and billing information in our Marconi Wireless subsidiary.

As a result, the internal control processes performed by the third-party service organization were not designed or implemented to operate at a sufficient level of precision.

As such, the Company could not rely on the information produced by the system.

Business process automated and manual controls that were dependent on these controls could have been adversely impacted.

• The Company did not have adequate controls in place as of December 31, 2023 to properly identify and disclose material related party transactions in accordance with Accounting Standards Codification (“ASC”) 850, Related Party Disclosures, which resulted in a material weakness.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the year ended December 31, 2023 of the consolidated financial statements, and this report does not affect our report dated April 23, 2024 on those consolidated financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2023 and 2022 and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2023 of the Company and our report dated April 23, 2024 expressed an unqualified opinion on those financial statements.

As described in the “Report of Management on Internal Control Over Financial Reporting”, management has excluded its bebe stores, inc.

from its assessment of internal control over financial reporting as of December 31, 2023 because this entity was acquired by the Company in a purchase business combination during 2023.

We have also excluded this from our audit of internal control over financial reporting.

This entity’s total assets and total revenues represent approximately 2%

and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Basis for Opinion

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

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

all material respects.

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

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

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Melville , NY

March 15, 2023

April 23, 2024

FINANCIAL INFORMATION

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Securities borrowed 2,870,939 2,343,327

Accounts receivable, net 149,110 49,673

Accounts receivable, net of allowance for credit losses of $ 7,339 and $ 3,664 as of December 31, 2023 and 2022, respectively

115,496 149,110

Due from related parties 172 1,081

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

liquidation preference of $ 113,615 and $ 112,790 as of December 31, 2022 and 2021, respectively.

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

Common stock, $ 0.0001 par value;

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Additional paid-in capital 572,170 494,201

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

Accumulated deficit ( 281,285 ) ( 45,220 )

Accumulated other comprehensive loss 229 ( 2,470 )

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2023 2022 2021

(As Restated) (As Restated)

Services and fees $ 1,002,370 $ 895,623 $ 1,153,225

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

Trading income (loss) and fair value adjustments on loans 41,828 ( 202,628 ) 220,545

Interest income - Loans and securities lending 284,896 245,400 122,723

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Restructuring charge 2,131 9,011 —

Impairment of tradenames — — 12,500

Impairment of goodwill and tradenames 70,333 — —

Interest expense - Securities lending and loan participations sold 145,435 66,495 52,631

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Dividend income 47,776 35,874 19,732

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

Realized and unrealized (losses) gains on investments ( 162,589 ) ( 201,079 ) 166,131

Change in fair value of financial instruments and other ( 4,748 ) 10,188 3,796

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

Gain on bargain purchase 15,903 — —

(Loss) income from equity method investments ( 181 ) 3,570 2,801

Interest expense ( 187,013 ) ( 141,186 ) ( 92,455 )

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Net (loss) income ( 105,631 ) ( 156,594 ) 450,802

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

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 5,721 ) 3,235 5,748

Net (loss) income attributable to B.

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Total comprehensive (loss) income ( 102,932 ) ( 157,984 ) 450,545

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

Comprehensive (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 5,721 ) 6,565 5,748

Comprehensive (loss) income attributable to B.

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Balance, January 1, 2020 3,971 $ — 25,777,796 $ 3 $ 310,326 $ 203,080 $ ( 823 ) $ 26,374 $ 538,960

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

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

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

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

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

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

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

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

Remeasurement of B.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dividends on common stock ($ 4.00 per share)

1 unchanged sentence

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

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

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

Remeasurement of B.

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Balance, December 31, 2022 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

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Common stock repurchased and retired — — ( 2,174,608 ) — ( 69,479 ) — — — ( 69,479 )

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

Shares issued for acquisition of a business — — 51,952 — 2,111 — — — 2,111

Remeasurement of Lingo redeemable minority interest — — — — ( 6,283 ) — — — ( 6,283 )

Share based payments — — — — 44,278 — — — 44,278

4 unchanged sentences

Dividends on preferred stock — — — — — ( 8,057 ) — — ( 8,057 )

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

Net loss — — — — — ( 99,910 ) — ( 5,575 ) ( 105,485 )

Remeasurement of B.

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

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

Distributions to noncontrolling interests — — — — — — — ( 8,497 ) ( 8,497 )

1 unchanged sentence

Acquisition of noncontrolling interests — — — — — — — 16,433 16,433

Other comprehensive loss — — — — — — ( 1,390 ) — ( 1,390 )

Other — — — — — — — 860 860

Other comprehensive income — — — — — — 2,699 — 2,699

Balance, December 31, 2023 4,563 $ — 29,937,067 $ 3 $ 572,170 $ ( 281,285 ) $ 229 $ 68,449 $ 359,566

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Depreciation and amortization 49,604 39,969 25,871

Provision for doubtful accounts 4,214 1,453 3,385

Provision for credit losses 7,147 4,214 1,453

Share-based compensation 45,109 61,140 36,011

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

Fair value and remeasurement adjustments, non-cash ( 10,699 ) 34,871 ( 7,562 )

Non-cash interest and other ( 9,652 ) ( 3,204 ) ( 22,322 )

Depreciation of rental merchandise 4,070 — —

Effect of foreign currency on operations ( 310 ) 754 127

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

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

Loss (income) from equity method investments 181 ( 3,570 ) ( 2,801 )

Dividends from equity investments 434 4,038 2,136

Deferred income taxes ( 40,945 ) ( 80,431 ) 61,770

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

Impairment of goodwill and tradenames 70,333 — —

(Gain) loss on sale of business, disposal of fixed assets, and other ( 9,034 ) 4,922 ( 137 )

Gain on bargain purchase ( 15,903 ) — —

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

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

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

Loss (gain) on extinguishment of debt 5,294 ( 1,102 ) 6,131

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

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

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

Income allocated to and fair value adjustment for mandatorily redeemable noncontrolling interests 1,835 1,119 857

Change in operating assets and liabilities:

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Securities borrowed ( 527,612 ) ( 252,361 ) ( 1,325,509 )

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

Accounts receivable 26,397 6,599 ( 715 )

Prepaid expenses and other assets 737 ( 54,273 ) ( 3,737 )

Year Ended December 31,

2023 2022 2021

Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities ( 79,848 ) ( 141,328 ) 37,798

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Repayments of loans receivable 606,716 574,854 172,119

Sale of loan receivable to related party — — 1,800

Proceeds from loan participations sold — — 6,900

Sale of loans receivable 84,984 — —

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

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

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

Year Ended December 31,

Acquisition of businesses and minority interest, net of $ 8,308 , $ 50,733 , and $ 34,942 cash acquired in 2023, 2022, and 2021, respectively

( 26,240 ) ( 261,693 ) ( 28,254 )

Purchases of property, equipment and intangible assets ( 7,711 ) ( 3,918 ) ( 676 )

Proceeds from sale of property, equipment and intangible assets 2 14 1

Proceeds from sale of business and other 17,490 2 14

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

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

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

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

Purchases of equity and other investments ( 4,871 ) ( 10,974 ) ( 612 )

Net cash provided by (used in) investing activities 301,174 ( 32,291 ) ( 956,534 )

Cash flows from financing activities:

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

Proceeds from revolving line of credit 219,157 64,878 80,000

Repayment of revolving line of credit ( 303,034 ) ( 17,200 ) —

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

Repayment of notes payable ( 530 ) ( 37,610 ) ( 357 )

Payment of participating note payable and contingent consideration — ( 3,714 ) ( 4,250 )

Repayment of notes payable and other ( 13,806 ) ( 530 ) ( 37,610 )

Proceeds from term loan 628,187 324,200 300,000

3 unchanged sentences

Payment of debt issuance and offering costs ( 27,993 ) ( 8,222 ) ( 33,377 )

Payment for contingent consideration ( 1,776 ) — —

Payment of contingent consideration ( 1,905 ) ( 1,776 ) ( 3,714 )

ESPP and payment of employment taxes on vesting of restricted stock ( 7,591 ) ( 10,286 ) ( 9,620 )

6 unchanged sentences

Proceeds from initial public offering of subsidiaries — — 345,000

Proceeds from offering common stock — 64,713 —

Proceeds from offering preferred stock 874 14,712 39,455

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

Proceeds from issuance of common stock 115,000 — 64,713

Proceeds from issuance of preferred stock 467 874 14,712

Net cash (used in) provided by financing activities ( 365,923 ) 17,637 1,081,045

(Decrease) increase in cash, cash equivalents and restricted cash ( 40,247 ) ( 8,001 ) 175,405

Year Ended December 31,

2023 2022 2021

Effect of foreign currency on cash, cash equivalents and restricted cash 3,160 ( 933 ) ( 382 )

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

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

The Company also has a portfolio of communication related businesses that provide consumer Internet access and cloud communication services and Tiger US Holdings, Inc.

(“Targus”), which designs and sells laptop and computer accessories.

During the fourth quarter of 2023, management reassessed the Company's previously reported Consumer segment due to organizational changes and financial information provided to the Chief Operating Decision Maker (“CODM”).

These changes resulted in Targus's operations being reported on a stand-alone basis in the Consumer Products segment and the operations related to brand licensing that were previously reported in the Consumer segment being reported in the All Other Category that is reported with Corporate and Other.

As a result of the changes, the Company has recast the financial data for the Consumer Products segment and reporting of the All Other Category for all periods presented.

The Company operates in six reportable operating segments:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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

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

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

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

Year Ended December 31, 2021

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

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

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

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

Sale of goods 58,205 — 58,205

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

Operating expenses:

Direct cost of services 54,390 — 54,390

Cost of goods sold 26,953 — 26,953

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

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

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

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

Other income (expense):

Interest income 229 — 229

Dividend income — 19,732 (a) 19,732

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

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

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

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

Income before income taxes 614,762 — 614,762

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

Net income 450,802 — 450,802

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

Net income attributable to B.

Riley Financial, Inc.

445,054 — 445,054

Preferred stock dividends 7,457 — 7,457

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

Basic income per common share $ 15.99 $ 15.99

Diluted income per common share $ 15.09 $ 15.09

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

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

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

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

Year Ended December 31, 2020

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

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

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

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

Sale of goods 29,135 — 29,135

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

Operating expenses:

Direct cost of services 60,451 — 60,451

Cost of goods sold 12,460 — 12,460

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

Restructuring charge 1,557 — 1,557

Impairment of tradenames 12,500 — 12,500

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

Total operating expenses 557,956 — 557,956

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

Other income (expense):

Interest income 564 — 564

Dividend income — 21,163 (a) 21,163

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

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

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

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

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

Net income 204,017 — 204,017

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

Net income attributable to B.

Riley Financial, Inc.

205,148 — 205,148

Preferred stock dividends 4,710 — 4,710

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

Basic income per common share $ 7.83 $ 7.83

Diluted income per common share $ 7.56 $ 7.56

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

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

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

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

and (vi) Consumer Products, which generates revenue through sales of laptop and computer accessories.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

See Note 3(ab) for further discussion.

See Note 2(aa) for further discussion.

(b) Use of Estimates

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

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

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

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

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

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

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

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

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

Capital Markets segment

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The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned.

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

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

Wealth Management segment

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Auction and Liquidation segment

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

when control of the product and risks of ownership has been transferred to the buyer.

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

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

These costs are amortized as the services are

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

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

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

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

revenues from the sale of the magicJack VocalTec Ltd.

(“magicJack”) access rights;

revenues from the sale of the magicJack VoIP Services, LLC, (“magicJack”) access rights;

revenues from access rights renewals and mobile apps;

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

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

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

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

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

For services offered by the Company in the Communications segment that include third-party providers, the Company evaluates whether it is acting as the principal or as the agent with respect to the goods or services provided to the customer.

This principal-versus-agent assessment involves judgment and focuses on whether the facts and circumstances of the arrangement indicate that the goods or services were controlled by the Company prior to transferring them to the customer.

To evaluate if the Company has control, it considers various factors including whether it is primarily responsible for fulfillment, bears risk of loss in billing the customer, and has discretion over pricing.

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

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

Consumer segment

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

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

Consumer Products segment

Revenues in the Consumer Products segment primarily consist of the global sales of notebook computer carrying cases and computer accessories.

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

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

Consignment customers represent retailers that are in possession of the Company's inventory but that inventory is owned by the Company until sold.

As such, consignment revenue is recognized when the retail sale is reported by the customer.

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

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

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

Other licensing fees are recognized at a point in time once the performance obligations have been satisfied.

Payments received as consideration for the grant of a license are recorded as deferred revenue at the time payment is received and recognized ratably as revenue over the term of the license agreement.

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

Royalty revenue is not recognized unless collectability is probable.

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

Revenues may be reduced by allowances for advertising and promotion, which generally represent contractual selling incentives offered to customers that will be charged to the Company at a later date.

During the year ended December 31, 2023 and the period from the date of acquisition October 18, 2022 to December 31, 2022, allowances for selling incentives were $ 16,633 and $ 4,297 , respectively.

These allowances are included in accrued expenses and other liabilities on the consolidated balance sheets and consist of rebates that reduce revenue at time of sale.

Shipping and handling expenses, which consist primarily of transportation charges incurred to move finished goods to customers, is included in cost of goods sold.

Revenue in the All Other category, which is not a reportable segment, includes licensing revenues, rental fees through rent-to-own agreements and merchandise sales from the operation of rent-to-own franchise stores, and revenues from a regional environmental services business in the New York metropolitan area and a landscaping business in the southeast United States, which was sold during the quarter ended September 30, 2023.

Rental fees consist of merchandise, such as furniture, appliances and consumer electronics, which is rented to customers pursuant to rental purchase agreements which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments.

At the end of each rental term, the customer may renew the agreement for the next rental term by making a payment in advance.

The customer can acquire ownership of the merchandise on lease by completing payment of all required rental periods.

The Company maintains ownership of the rental merchandise until all payment obligations are satisfied.

The customer can terminate the lease agreement at any time during the lease term and return the leased merchandise to the store.

All prior rental payments are nonrefundable.

Merchandise sales are from merchandise purchased upfront through a point-of-sale transaction.

In addition, rental customers may exercise an early purchase option to buy the merchandise at a fixed discount to the total contractual price at any point in the lease term as established in the original rental agreement.

Revenue from merchandise sales and early purchase option is recognized at the point in time when payment is received and ownership of the merchandise passes to the customer.

Any remaining net value of the merchandise is recorded to cost of sales at the time of the transaction.

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

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

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

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

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

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

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

Direct costs of services include cost of rentals and fees for the Company’s rent-to-own stores.

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

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

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

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

The Company maintains cash in various federally insured banking institutions.

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

On December 18, 2023, the Company loaned $ 108,000 to Conn’s Inc.

(“Conn’s”) as more fully described in Note 22.

This loan combined with two other existing loans receivable with an outstanding balance of $ 62,808 as of December 31, 2023 is collateralized by consumer loan receivables of customers of the furniture and electronics retailer.

These loans have an aggregate fair value of $ 167,568 or 31.5 % of the loan portfolio as of December 31, 2023 and are concentrated in the retail industry.

In the event there is a recession or economic downturn that would put pressure on the retailer’s customers, this could impact the operations of the retailer and payment patterns of the customers and the overall performance and collectability of these loans.

The Company also has a loan receivable in the amount of $ 200,506 as of December 31, 2023, which represents 37.7 % of the total loan portfolio as of December 31, 2023 that is secured by a first priority security interest in Freedom VCM Holdings, LLC (“Freedom VCM”) equity interests owned by Brian Kahn as more fully described in Note 2(r) below.

The loan receivable allows for interest to be paid-in-kind.

Deterioration in the collateral, including in the performance of Freedom VCM or delays in the execution of its strategies, including the possible disposition of additional businesses and further de-leveraging of its balance sheet, for the loan receivable may impact the ultimate collection of principal and interest.

The maximum amount of loss that the Company is exposed to is equivalent to the fair value of these loans which totaled $ 368,074 as of December 31, 2023.

(g) Advertising Expenses

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

The Company accounts for forfeitures when they occur rather than estimate a forfeiture rate.

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

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(n) Accounts Receivable

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

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

In establishing the required allowance, management utilizes the expected loss model.

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

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

In establishing the required allowance, management utilizes the expected loss model, which includes the pooling of receivables using the aging method and specific identification.

Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns.

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The Company does not have any off-balance sheet credit exposure related to its customers.

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

The Company’s bad debt expense and changes in the allowance for credit losses are included in Note 6.

(o) Inventories

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

The Company maintains an

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

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

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

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

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

The Company determines if an arrangement is, or contains, a lease at the inception date and reviews leases for finance or operating classification once control is obtained.

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

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

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

Finance leases are included in prepaid expenses and other assets, with the related liabilities included in accrued expenses and other liabilities in the consolidated balance sheets.

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

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

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

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(r) Loans Receivable

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

Under ASC 825 - Financial Instruments , the Company elected the fair value option for all outstanding loans receivable.

Management evaluates the performance of the loan portfolio on a fair value basis.

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

Loans receivable, at fair value totaled $ 532,419 and $ 701,652 as of December 31, 2023 and 2022, respectively.

The loans have various maturities through March 2027.

The loans have various maturities through December 2027.

As of December 31, 2023 and 2022, the aggregate cost of loans receivable accounted for under the fair value option was $ 555,882 and $ 769,022 , respectively, which included principal balances of $ 563,637 and $ 772,873 , respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 7,755 and $ 3,851 , respectively.

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

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

The principal balance of loans receivable exceeded the fair value of loans by $ 23,463 and $ 67,370 as of December 31, 2023 and 2022, respectively.

At the time of origination, the Company's loans are collateralized by the assets of borrowers and other pledged collateral and may have guarantees to provide for protection of the payments due on loans receivable.

During the years ended December 31, 2023, 2022 and 2021, the Company recorded net unrealized gains of $ 55,756 , net unrealized losses of $ 54,439 , and net unrealized gains of $ 10,035 , respectively, on loans receivable, at fair value, which is included in trading income and fair value adjustments on loans on the consolidated statements of operations.

Loans receivable, at fair value on non-accrual and 90 days or greater past due was $ 41,236 , which represents approximately 7.7 % of total loans receivable, at fair value as of December 31, 2023.

The principal balance of loans receivable on non-accrual and 90 days or greater past due was $ 43,326 as of December 31, 2023.

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

The principal balance of loans receivable on non-accrual was $ 42,077 as of December 31, 2022.

Interest income for loans on non-accrual and/or 90 days or greater past due is recognized separately from changes in fair value in interest income - loans and securities lending on the consolidated statements of operations.

The amount of gains or (losses) included in earnings attributable to changes in instrument – specific credit risk was $ 6,322 , $( 58,068 ), and $( 1,845 ) during the years ended December 31, 2023, 2022, and 2021, respectively.

The gains or losses attributable to changes in instrument – specific risk was determined by management based on an estimate of the fair value change during the year specific to each loan receivable.

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

As of December 31, 2023, the Company has provided limited guarantees with respect to Babcock & Wilcox Enterprises, Inc.

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

(“B&W”) up to a maximum of $ 150,000 as further described in Note 18(b).

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

As of December 31, 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.

Simultaneously with the completion of the FRG take-private transaction, one of the Company’s subsidiaries and Vintage Capital Management, LLC (“VCM”), an affiliate of Brian Kahn, amended and restated a promissory note (the “Amended and Restated Note”), pursuant to which VCM owes the Company's subsidiary the aggregate principal amount of $ 200,506 and bears interest at the rate of 12 % per annum payable-in-kind with a maturity date of December 31, 2027 (see Note 2(s)).

The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr.

Kahn or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM in amount equal to the greater of (i) 80 % of the net after-tax proceeds, and (ii) 50 % of gross proceeds.

The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr.

Kahn, the CEO and a board member of Freedom VCM as of December 31, 2023, and his spouse with a value (based on the transaction price in the FRG take-private transaction) of $ 227,296 as of August 21, 2023.

On January 22, 2024, Mr.

Kahn resigned as CEO and a member of the board of directors of Freedom VCM.

The fair value of the Freedom VCM equity interest owned by Mr.

Kahn and his spouse was $ 232,065 as of December 31, 2023.

Amounts owing under the Amended and Restated Note may be repaid at any time without penalty.

On a quarterly basis, the Company will continue to obtain third party appraisals to evaluate the value of the collateral of the loan since the repayment of the loan and accrued interest will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral.

In light of Mr.

Kahn’s alleged involvement with the alleged misconduct concerning Prophecy Asset Management LP, the Company can provide no assurances that it will not be subject to claims asserting an interest in the Freedom VCM equity interests owned by Mr.

Kahn, including those that collateralize the Amended and Restated Note.

If a claim were successful, it would diminish the value of the collateral which could impact the carrying value of the loan.

If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit.

Other factors leading to a deterioration in the collateral, including in the performance of Freedom VCM or delays in the execution of its strategies, including the possible disposition of additional businesses and further de-leveraging of its balance sheet, for the loan receivable may impact the ultimate collection of principal and interest.

In the event the loan balance and accrued interest exceed the underlying collateral value of the loan, this will impact the fair value of the loan and result in an unrealized loss being recorded in the consolidated statements of operations.

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

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Unearned income, discounts, and premiums are amortized to interest income using a level yield methodology.

As of December 31, 2023, loans receivable had an aggregate remaining contractual principal balance of $ 563,637 , an aggregate fair value of $ 532,419 , and the contractual principal balance exceeded the fair value by $ 31,218 .

As of December 31, 2022, loans receivable had an aggregate remaining contractual principal balance of $ 772,873 , an aggregate fair value of $ 701,652 , and the contractual principal balance exceeded the fair value by $ 71,221 .

Badcock Loan Receivable

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

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

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”), which at the time was an indirect wholly owned subsidiary of Franchise Group, Inc., a Delaware corporation (“FRG”), which became a subsidiary of Freedom VCM as a result of the transaction on August 21, 2023.

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

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

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

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

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

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

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

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

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

This purchase of $ 168,363 consumer credit receivables of WSBC was partially financed by a $ 148,200 term loan discussed in Note 12 to our consolidated financial statements.

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

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

The accounting for this transaction 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.

These loan receivables are measured at fair value.

On August 21, 2023, all of the equity interests of BRRII were sold to Freedom VCM Receivables, Inc.

(“Freedom VCM Receivables”), a subsidiary of Freedom VCM, 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 12 to our consolidated financial statements, and Freedom VCM Receivables entered into a non-recourse promissory note with another Freedom VCM affiliate in the amount of $ 58,872 , with a stated interest rate of 19.74 % and a maturity date of August 21, 2033 with payments of principal and interest on the note limited solely to performance of certain receivables held by BRRII.

This loan receivable is measured at fair value.

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

As of December 31, 2023 and 2022, the Badcock Receivables I loan receivable to WSBC in the Company's consolidated balance sheets included loans measured at fair value in the amount of $ 20,624 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 December 31, 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 consolidated balance sheets in loans receivable, at fair value in the amount of $ 42,183 .

Nogin Loan and Loan Commitment

On November 16, 2023, the Company entered into a Chapter 11 Restructuring Support Agreement (as amended, the “RSA”) with Nogin Inc.

and certain of its subsidiaries (collectively, “Nogin”), and certain holders of Nogin’s convertible notes (the “Consenting Noteholders”).

Pursuant to the RSA, the Company funded $ 17,530 of debtor-in-possession (“DIP”) financing as of December 31, 2023.

This loan receivable had a fair value of $ 17,980 as of December 31, 2023.

The Company funded an additional $ 15,470 in the first quarter of 2024, and an additional $ 3,000 in the second quarter of 2024, for a total $ 37,700 in DIP financing (inclusive of $ 1,700 in fees payable in kind).

The Company is committed to fund an additional $ 15,500 payment to the Consenting Noteholders.

Additionally, the Company is committed to serve as plan sponsor for Nogin’s Chapter 11 plan, which commitment entails an estimated $ 6,300 in cash payments that will be due in connection with the closing on a sale of substantially all of Nogin’s assets.

In addition to the foregoing, the Company or its designee may assume certain liabilities of Nogin’s non-debtor subsidiaries that are not discharged in connection with Nogin’s Chapter 11 cases.

On March 28, 2024, the Bankruptcy Court entered an order confirming Nogin’s Chapter 11 plan and approving the sale to a newly-formed indirect subsidiary of the Company.

The closing is expected to occur in April 2024.

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

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

Investments become subject to the equity method of accounting

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

Investments become subject to the equity method of accounting when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee.

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

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

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

The Brand Investments

The following tables contain summarized financial information with respect to five of the Company's investments in limited liability companies that primarily license brand names and trademarks through licensing agreements.

The Company has an ownership interest in each investee between 10 % and 50 %.

For the 10 % ownership interest, the Company is presumed to have the ability to exercise significant influence since the investment is more than minor and the limited liability company is required to maintain specific ownership accounts for each member.

The Company has significant influence in the other four investments due to the ownership interest being greater than 20 %.

The financial information of these five investments has been aggregated and included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2023 and 2022, correspond to amounts as of December 31, 2023 and 2022, respectively, of the Company;

income statement amounts during the twelve months ended September 30, 2023, 2022 and 2021, correspond to amounts during the twelve months ended December 31, 2023, 2022 and 2021, respectively, of the Company), which is the period in which the most recent financial information is available:

As of September 30,

Total assets $ 202,520 $ 198,454

Total liabilities $ 5,737 $ 8,232

Current assets $ 51,588 $ 58,552

Noncurrent assets $ 269,809 $ 143,969

Current liabilities $ 8,594 $ 4,855

Noncurrent liabilities $ 760 $ 883

Equity attributable to investee $ 309,167 $ 196,783

Noncontrolling interest $ 2,876 $ —

For the twelve months ended September 30,

2022 2021 2020

Revenues $ 147,938 $ 127,240 $ 99,386

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

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

Cost of revenues and expenses $ 75,160 $ 62,440 $ 51,430

Net income attributable to investees $ 75,338 $ 67,354 $ 62,925

(1) - Financial information for 2023 includes two additional investments as a result of the acquisition of a majority ownership interest in bebe stores, inc.

(“bebe”) in 2023 and an other investment made in 2023.

As of December 31, 2023 and 2022, the fair value of these five investments totaled $ 283,057 and $ 214,493 , respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.

Freedom VCM Holdings, LLC Equity Interest and Take-Private Transaction

On August 21, 2023, the Company acquired an equity interest in Freedom VCM Holdings, LLC (“Freedom VCM”) for $ 216,500 in cash in connection with the closing of the acquisition of FRG, by a buyer group that included members of senior management of FRG, led by Brian Kahn, FRG’s then Chief Executive Officer (the “FRG take-private transaction”).

In connection with the closing of the FRG take-private transaction, the Company terminated an investment advisory agreement (the “Advisory Agreement”) with Mr.

Pursuant to the Advisory Agreement, Mr.

Kahn, as financial advisor, had the sole power to vote or dispose of $ 64,644 of shares of FRG common stock (based on the value of FRG shares in the FRG take-private transaction as of the closing date of such transaction) held of record by B.

Riley Securities, Inc.

Upon the termination of the Advisory Agreement, (i) Mr.

Kahn’s right to vote or dispose of such FRG shares terminated, (ii) such FRG shares owned by BRS were rolled over into additional equity interests in Freedom VCM in connection with the FRG take-private transaction, and (iii) Mr.

Kahn owed a total of $ 20,911 to the Company under the Advisory Agreement which amount was added to, and included in, the Amended and Restated Note.

Following these transactions, the Company owns an equity interest of $ 281,144 or 31 % of the outstanding equity interests in Freedom VCM.

Also in connection with the FRG take-private transaction, on August 21, 2023 all of the equity interests of B.

Riley Receivables II, LLC (“BRRII”), a majority-owned subsidiary of the Company, were sold to a Freedom VCM affiliate, which resulted in a loss of $ 78 .

In connection with the sale, the Freedom VCM affiliate assumed the obligations with respect to the Pathlight Credit Agreement, as further discussed in Note 12, and the Company entered into a non-recourse promissory note with another Freedom VCM affiliate in the amount of $ 58,872 , with a stated interest rate of 19.74 % and a maturity date of August 21, 2033 (the “Freedom Receivables Note”) with payments of principal and interest on the note limited solely to performance of certain receivables held by BRRII.

The Company has elected to account for this 31 % 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 September 30, 2023 correspond to amounts as of December 31, 2023 of the Company;

income statement amounts during the twelve months ended September 30, 2023 correspond to amounts during the twelve months ended December 31, 2023 of the Company), which is the period in which the most recent financial information is available:

As of September 30, 2023

Total assets $ 881,567 $ 729,358

Total liabilities $ 898,695 $ 708,958

Current assets $ 1,219,682

Noncurrent assets $ 3,142,660

Current liabilities $ 749,894

Noncurrent liabilities $ 2,695,445

Equity attributable to investee $ 917,003

For the twelve months ended September 30, 2023

Revenues $ 4,276,097

Cost of revenues $ 2,608,203

Net loss attributable to investees $ ( 276,813 )

As of December 31, 2023, the fair value of the investment in Freedom VCM totaled $ 287,043 and is included in securities and other investments owned, at fair value in the consolidated balance sheets.

The change in fair value recorded in the income statement as an unrealized gain was $ 5,899 for the period from August 21, 2023 (date of the investment) through December 31, 2023.

Babcock and Wilcox Enterprises, Inc, Equity Investment

The Company owns a 31 % voting interest in B&W whereby the Company has elected to account for this investment under the fair value option.

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

income statement amounts during the twelve months ended September 30, 2023, 2022, and 2021, correspond to amounts during the twelve months ended December 31, 2023, 2022, and 2021, respectively, of the Company):

As of September 30,

Current assets $ 542,300 $ 498,593

Noncurrent assets $ 294,979 $ 382,974

Current liabilities $ 393,539 $ 319,533

Noncurrent liabilities $ 585,430 $ 579,162

Equity attributable to investee $ ( 142,316 ) $ ( 18,019 )

Noncontrolling interest $ 626 $ 891

For the twelve months ended September 30,

2023 2022 2021

Revenues $ 1,022,064 $ 832,233 $ 680,921

Cost of revenues $ 795,422 $ 651,493 $ 512,601

Loss (income) from continuing operations $ ( 23,484 ) $ ( 3,958 ) $ 13,045

Net (loss) income $ ( 128,587 ) $ ( 2,052 ) $ 6,362

Net (loss) income attributable to investees $ ( 143,591 ) $ ( 13,868 ) $ 481

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

As of December 31, 2023 and 2022, the fair value of the investment in B&W totaled $ 40,072 and $ 157,455 , respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.

Other Public Company Equity Investments

As of December 31, 2023, the Company had a voting interest of 14 % in Synchronoss Technologies, Inc.

and 11 % in Alta Equipment Group, Inc.

The Company has significant influence due to the equity ownership interest and board representation for both of these companies.

The Company has elected to account for these equity investments under the fair value option.

The following tables contain summarized financial information for these companies, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2023 and 2022, correspond to amounts as of December 31, 2023 and 2022, respectively, of the Company;

income statement amounts during the twelve months ended September 30, 2023, 2022, and 2021, correspond to amounts during the twelve months ended December 31,

2023, 2022 and 2021, respectively, of the Company), which is the period in which the most recent financial information is available:

Synchronoss Technologies, Inc.

Alta Equipment Group, Inc.

As of September 30, As of September 30,

2023 2022 2023 2022

Current assets $ 85,903 $ 112,377 $ 784,300 $ 581,900

Noncurrent assets $ 275,304 $ 286,512 $ 696,100 $ 560,700

Current liabilities $ 74,528 $ 81,667 $ 569,800 $ 415,200

Noncurrent liabilities $ 166,673 $ 170,809 $ 763,100 $ 586,700

Equity attributable to investee $ 120,006 $ 146,413 $ 147,500 $ 140,700

Synchronoss Technologies, Inc.

Alta Equipment Group, Inc.

For the twelve months ended September 30, For the twelve months ended September 30,

2023 2022 2021 2023 2022 2021

Revenues $ 234,699 $ 264,829 $ 276,161 $ 1,783,900 $ 1,499,500 $ 1,136,900

Cost of revenues $ 82,167 $ 95,621 $ 111,438 $ 1,298,900 $ 1,101,600 $ 847,200

Net (loss) income attributable to investees $ ( 45,468 ) $ ( 3,655 ) $ ( 142,810 ) $ 7,100 $ 6,500 $ ( 25,300 )

As of December 31, 2023 and 2022, the fair value of the equity investment in Synchronoss Technologies, Inc.

was $ 8,780 and $ 7,467 , respectively.

As of December 31, 2023 and 2022, the fair value of the equity investment in Alta Equipment Group, Inc.

was $ 44,653 and $ 79,150 , respectively.

These amounts are included in securities and other investments owned in the consolidated balance sheets.

Other Equity Investments

As of December 31, 2023, the Company had other equity investments where the Company is considered to have the ability to exercise influence since the Company has representation on the board of directors or the Company is presumed to have the ability to exercise significant influence since the investment is more than minor and the limited liability company is required to maintain specific ownership accounts for each member.

The Company has elected to account for these equity investments under the fair value option.

These equity investments are comprised of equity investments in six private companies at December 31, 2023.

The following table contains summarized financial information for these companies, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2023 and 2022, correspond to amounts as of December 31, 2023 and 2022, respectively, of the Company;

income statement amounts during the twelve months ended September 30, 2023, 2022, and 2021, correspond to amounts during the twelve months

ended December 31, 2023, 2022 and 2021, respectively, of the Company), which is the period in which the most recent financial information is available:

As of September 30,

Current assets $ 281,610 $ 69,706

Noncurrent assets $ 627,858 $ 168,721

Current liabilities $ 150,114 $ 40,985

Noncurrent liabilities $ 277,638 $ 104,758

Preferred stock $ 4,500 $ 4,500

Equity attributable to investee $ 477,216 $ 88,184

For the twelve months ended September 30,

2023 2022 2021

Revenues $ 551,374 $ 114,941 $ 17,352

Cost of revenue and expenses $ 383,461 $ 55,780 $ 7,432

Net income (loss) attributable to investees $ 35,898 $ 6,146 $ ( 3,402 )

As of December 31, 2023 and 2022, the fair value of these six investments totaled $ 81,685 and $ 83,791 , respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.

(t) Goodwill and Other Intangible Assets

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Goodwill includes the excess of the purchase price over the fair value of net assets acquired in business combinations and the acquisition of noncontrolling interests.

ASC 350 – Intangibles - Goodwill and Other requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment).

ASC 350 – Intangibles - Goodwill and Other, as amended by Accounting Standards Update (“ASU”) No.

2017-04, Simplifying the Test for Goodwill Impairment, permits management to perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its corresponding carrying value.

If management determines the reporting unit's fair value is more likely than not less than its carrying value, a quantitative analysis will be performed to compare the fair value of the reporting unit with its corresponding carrying value.

If the conclusion of the quantitative analysis is that the fair value is in fact less than the carrying value, management will recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying value exceeds its fair value.

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

The Company operates

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

The Company operates six reporting units, which are the same as its reporting segments described in Note 23.

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

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

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

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

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

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

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

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

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

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

In performing the qualitative analysis on an interim basis at September 30, 2023, qualitative factors indicated that it could be more likely than not that the carrying value of goodwill in the Consumer Products segment could be impaired due to the current financial performance of the Company’s Targus subsidiary and which is included in the Consumer Products segment, as well as current market conditions that existed in the personal computer market for computers and accessories.

The Company performed an interim quantitative goodwill impairment 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 an indefinite-lived tradename impairment charge of $ 8,000 .

As part of the annual review of goodwill at December 31, 2023, qualitative factors continued to indicate that it could be more likely than not that the carrying value of goodwill in the Consumer Products segment could be further impaired due to the financial performance of the Company’s Targus subsidiary during the holiday season and the expected recovery in market conditions for the personal computer market for computers and accessories that may be delayed.

performed an annual quantitative goodwill impairment and a year ended assessment as of December 31, 2023, and based on the results of the analysis, the Company recorded an additional non-cash impairment charge of $ 33,100 , consisting of a goodwill impairment charge of $ 25,600 and an indefinite-lived tradename impairment charge of $ 7,500 as of December 31, 2023.

Non-cash impairment charges totaled $ 68,600 during the full year ended December 31, 2023 and were recorded in impairment of goodwill and tradenames in the accompanying consolidated statements of operations during the year ended December 31, 2023, as more fully discussed in Note 9.

There were no impairments of goodwill or indefinite-lived intangibles were identified during the years ended December 31, 2022 and 2021.

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

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

During the year ended December 31, 2023, the Company recorded an impairment charge in the second quarter of 2023 of $ 1,733 for a finite-lived tradename in the Capital Markets segment that was no longer used by the Company, which was recorded in impairment of goodwill and tradenames in the accompanying consolidated statements of operations.

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

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

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

(u) Fair Value Measurements

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

For investments where little or

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

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

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

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

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

the value for these investments is derived from the most recent statements received

from the general partner or fund administrator.

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

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

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

As of December 31, 2023 and 2022, the following table presents the carrying value of equity securities measured under the measurement alternative investments and the related adjustments recorded during the periods presented for those securities with observable price changes:

2023 December 31, 2022

Securities and other investments owned, carrying value $ 64,455 $ 94,109

Upward carrying value changes 100 7,940

Downward carrying value changes/impairment ( 21,395 ) ( 4,268 )

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

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

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

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

During the years ended December 31, 2023, 2022, and 2021, 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 other than the fair value of goodwill and tradename as more fully disclosed 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.

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

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

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

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

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

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

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

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

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

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

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

Riley Principal 150 Merger Corporation (“BRPM 150”) and BRPM 250 as of December 31, 2022 and 2021, respectively.

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

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

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

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

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

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

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

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

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

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

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

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

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

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(Level 2) Significant

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

Securities and other investments owned:

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Mandatorily redeemable noncontrolling interests issued after November 5, 2003 5,835 — — 5,835

Warrant liabilities 173 173 — —

Contingent consideration 27,985 — — 27,985

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Warrant liabilities 173 173 — —

Contingent consideration 31,046 — — 31,046

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

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Equity securities $ 662,158 Market approach Multiple of EBITDA 0.7 x - 13.5 x

Multiple of Sales 3.0 x

Multiple of Sales 0.8 x - 3.8 x

Market price of related security $ 0.04 - $ 92.51

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Loans receivable at fair value 512,522 Discounted cash flow Market interest rate 10.0 % - 41.6 %

7,153 Market approach Multiple of EBITDA 4.5 x

19,897 Market approach Market price of related security $ 19.87 $ 19.87

Total level 3 assets measured at fair value $ 1,268,057

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Market interest rate 8.5 % 8.5 %

Revenue volatility 5.1 % 5.1 %

Total level 3 liabilities measured at fair value $ 33,820

(1) - Unobservable inputs were weighted by the relative fair value of the financial instruments.

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

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Equity securities $ 304,172 Market approach Multiple of EBITDA 1.5 x - 10.5 x

Multiple of PV-10 0.60 x - 0.65 x

Multiple of Sales 1.45 x - 1.60 x

Multiple of Sales 3.0 x

Market price of related security $ 10.01 - $ 18.88

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

7,153 Market approach Multiple of EBITDA 4.5 x

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

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

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

Asset volatility 69.0 % 69.0 %

Market interest rate 8.5 % 8.5 %

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

(1) - Unobservable inputs were weighted by the relative fair value of the financial instruments.

The changes in Level 3 fair value hierarchy during the year ended December 31, 2023 and 2022 are as follows:

Year Level 3 Changes During the Period Level 3

Adjustments Relating to

(1) Relating to

Undistributed

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Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,506 — 1,150 ( 1,008 ) — 4,648

Warrant liabilities — — — 10,466 ( 10,466 ) —

The amounts reported in the table above as of December 31, 2022 and 2021 include the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

Contingent consideration — ( 10,371 ) — 41,417 — 31,046

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $ 10,884 relating to equity securities and $ 22,366 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 16,019 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the consolidated statement of operations during the year ended December 31, 2023.

Fair value adjustments represent realized and unrealized gains (losses) of which $( 984 ) relating to equity securities and $( 54,357 ) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $ 12,094 relating to equity securities were included in realized and unrealized gains (losses) on investments in the consolidated statement of operations during the year ended December 31, 2022.

The amounts reported in the table above during the years ended December 31, 2023 and 2022 include the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

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

As of December 31, 2023 and 2022, the senior notes payable had a carrying amount of $ 1,668,021 and $ 1,721,751 , respectively, and a fair value of $ 1,127,503 and $ 1,431,787 , respectively.

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

The aggregate carrying amount of the Company's notes payable, revolving credit facility, and term loans of $ 688,343 and $ 725,020 as of December 31, 2023 and 2022, respectively, approximates fair value because the effective yield of such instrument is consistent with current market rates of interest for instruments of comparable credit risk.

The investments in nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in trading income (losses) and fair value adjustments on loans on the consolidated statements of operations.

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

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

These investments were measured due to an observable price change or impairment during the year ended December 31, 2022.

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

These investments were measured due to an observable price change or impairment during the years ended December 31, 2023 and 2022.

Fair Value Measurement Using

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Investments in nonpublic entities that do not report NAV $ 1,628 $ — $ 1,602 $ 26

As of December 31, 2022

Investments in nonpublic entities that do not report NAV $ 20,251 $ — $ 18,659 $ 1,592

(v) Derivative and Foreign Currency Translation

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

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

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

As of December 31, 2023 and 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.

Forward exchange contracts had a net gain of $ 68 , net gain of $ 1,052 , and net loss of $ 285 during the years ended December 31, 2022, 2021 and 2020, respectively.

Forward exchange contracts had a net gain of zero , $ 68 , and $ 1,052 during the years ended December 31, 2023, 2022, and 2021, respectively.

This amount is reported as a component of selling, general and administrative expenses in the consolidated statements of operations and is included in cash flows from operating activities in the consolidated cash flows.

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

Transaction gains were $ 2,224 , $ 1,256 , and transaction losses were $ 639 , during the years ended December 31, 2022, 2021, and 2020, respectively.

Transaction losses were $ 2,841 , gains were $ 2,224 , and gains were $ 1,256 , during the years ended December 31, 2023, 2022, and 2021, respectively.

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

As disclosed in Note 3(ab) below, the Company consolidated a VIE, BRPM 250, which has outstanding warrants that were issued in its initial public offering.

The warrants were recorded as a liability since the warrants contain a provision to be settled in cash in the event of a qualifying cash tender offer for BRPM 250, which is outside the control of the Company.

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

As of December 31, 2022 and 2021, the warrant liability for BRPM 250 totaled $ 173 and BRPM 150 and 250 totaled $ 12,938 , respectively, which is included in accrued expenses and other liabilities in the consolidated balance sheets.

(w) Redeemable Noncontrolling Interests in Equity of Subsidiaries

The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the class A ordinary shareholders in the BRPM 250 sponsored SPAC and the 20 % noncontrolling interest of Lingo Management, LLC (“Lingo”), which on February 24, 2023, the Company acquired, increasing its ownership interest in Lingo to 100 %.

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

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Changes to redeemable noncontrolling interest consist of the following:

December 31, 2022

Balance, January 1, 2021 $ —

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Balance, December 31, 2022 178,622

Net loss ( 146 )

Purchase of Lingo minority interest ( 11,190 )

Remeasurement adjustments for Lingo and BRPM 250 8,477

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

Balance, December 31, 2023 $ —

(x) Common Stock Warrants

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The BR Brands warrants expire in February 2025.

As of December 31, 2022, 200,000 BR Brands warrants were outstanding.

As of December 31, 2023 and 2022, 200,000 BR Brands warrants were outstanding.

In April 2024, 200,000 shares of the Company's common stock were issued in connection with the exercise of warrants for cash in the amount of $ 653 .

(y) Equity Method Investments

As of December 31, 2023 and 2022, equity method investments of $ 2,087 and $ 41,298 , respectively, were included in prepaid expenses and other assets in the accompanying consolidated balance sheets.

The Company’s share of earnings or losses from the equity method investees is included in income (loss) from equity method investments in the accompanying consolidated statements of operations.

The Company’s share of earnings or losses from the equity method investees is included in income (loss) from equity investments in the accompanying consolidated statements of operations.

bebe stores, inc.

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

In December 2021, the Company purchased an additional 71,970 shares of newly issued common stock of bebe for $ 612 and

increased its ownership interest from 39.5 % to 40.1 %.

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

The common stock of bebe is publicly traded.

The fair value of bebe as of December 31, 2022 and 2021 was $ 25,423 and $ 43,472 , respectively.

The carrying value of the investment in bebe as of December 31, 2022 and 2021 was $ 40,383 and $ 36,662 , respectively.

As of December 31, 2022, the carrying value of the Company’s equity method investment in bebe exceeded the fair value based on the quoted market prices.

In consideration of these facts, the Company evaluated its investment for other than temporary impairment under ASC 323.

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

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

However, the Company will continue to monitor the investment and it is possible that impairment losses will be recorded in earnings in future periods based on changes in facts and circumstances or intentions.

The total assets and liabilities of bebe as of December 31, 2022 was $ 94,401 and $ 45,858 , respectively.

As of December 31, 2022, the Company had a 40.1 % ownership interest in bebe.

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

On October 6, 2023, the fair value of the Company's existing equity interest in bebe was $ 30,575 .

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 the consolidation of bebe financial results for periods subsequent to October 6, 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, which resulted in the Company obtaining a controlling interest in bebe.

Upon obtaining the controlling interest, the Company was required to remeasure the carrying value of its investment in bebe.

Since the transaction price to obtain the controlling interest on a per share basis was less than the aggregate carrying value of the Company’s investment by $ 12,891 , upon remeasurement, the Company recorded a loss for this in the amount of $ 12,891 at September 30, 2023, which is included in other income (expense) - change in fair value of financial instruments and other in the accompanying consolidated statements of operations.

The carrying value of the investment in bebe was

$ 40,383 and the fair value was $ 25,423 as of December 31, 2022.

The total assets and liabilities of bebe as of December 31, 2022 was $ 94,401 and $ 45,858 , respectively.

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Net income of bebe during the years ended December 31, 2022 and 2021 was $ 17,423 and $ 8,366 , respectively.

National Holdings Corporation

As of December 31, 2020, the Company owned approximately 45 % of the outstanding common stock of National that was included in prepaid expenses and other assets in the consolidated balance sheets.

The equity ownership in National is accounted for under the equity method of accounting for periods prior to February 25, 2021.

On February 25, 2021, the Company completed the acquisition of National by acquiring the 55 % of common stock not previously owned by the Company.

During the years ended December 31, 2023, 2022, and 2021, the Company received dividends from bebe of $ 245 , $ 3,197 , and $ 2,136 , respectively.

Other Equity Method Investments

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

On May 31, 2022, the Company's ownership increased to 80 % and Lingo's operating results are consolidated with the Company from May 31, 2022 through December 31, 2022 as more fully described above in Note 4.

On May 31, 2022, the Company's ownership increased to 80 % and Lingo's operating results were consolidated with the Company.

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

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

(z) Supplemental Non-cash Disclosures

During the year ended December 31, 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 year ended December 31, 2023 included $ 26,817 of notes receivable that converted into equity securities;

$ 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 year ended December 31, 2023, non-cash financing activities also included $ 7,000 in seller financing related to the purchase of the Lingo noncontrolling interest.

During the year ended December 31, 2023, other non-cash activities included the recognition of new operating lease right-of-use assets of $ 15,979 and the recognition of new operating lease liabilities of $ 15,979 .

During the year ended December 31, 2022, non-cash investing activities included $ 35,648 in issuance of the Company's common stock and stock options as part of purchase price consideration from acquisitions the Company completed and the repayment of loans receivable in the amount of $ 850 with equity securities.

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During the year ended December 31, 2021, other non-cash activities included the recognition of new operating lease right-of-use assets of $ 18,862 and the recognition of new operating lease liabilities of $ 20,137 .

During the year ended December 31, 2020, non-cash investing activities included $ 11,133 non-cash conversions of equity method investments and $ 26,238 conversion of loans receivable to shares of stock.

In connection with the purchase

of a loan receivable in the amount of $ 61,687 , the Company funded $ 24,434 in cash and the remaining $ 37,253 remains payable as a note payable as of December 31, 2020.

During the year ended December 31, 2020, other non-cash activities included the recognition of new operating lease right-of-use assets of $ 8,915 and the recognition of new operating lease liabilities of $ 8,915 .

(aa) Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

Certain amounts reported in the Capital Markets segment during the years ended December 31, 2021 and 2020 have been reclassified and reported in the Consumer segment during the years ended December 31, 2021 and 2020 as a result of changes in the Company's reportable operating segments in the fourth quarter of 2022.

See Note 24 for more details.

Prior period amounts presented in Note 20 during the years ended December 31, 2021 and 2020 have been aggregated to reflect the Company's amended stock incentive plan.

See Note 20 for more details.

(ab) Variable Interest Entity

(aa) Variable Interest Entities

The Company holds interests in various entities that meet the characteristics of a VIE but are not consolidated as the Company is not the primary beneficiary.

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In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties.

The consolidation analysis can generally be performed qualitatively;

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

The party with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE.

The Company determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers:

(a) which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance;

(b) which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE;

(c) the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders;

(d) the terms between the VIE and its variable interest holders and other parties involved with the VIE;

and (e) related-party relationships with other parties that may also have a variable interest in the VIE.

On August 21, 2023, in connection with the FRG take-private transaction, one of the Company's subsidiaries (the “Lender”) and an affiliate of Mr.

Kahn (the “Borrower”) entered into an amended and restated a promissory note as discussed further in Note 2(r) and 2(s) above.

The Company was not involved in the design of the Borrower, has no equity financial interest, and has no rights to make decisions or participate in the management of the Borrower that significantly impact the economics of the Borrower.

Since the Company does not have the power to direct the activities of the Borrower, the Company is not the primary beneficiary and therefore does not consolidate the Borrower.

The promissory note is included in loans receivable, at fair value in the Company’s consolidated financial statements and is a variable interest in accordance with the accounting guidance.

As of December 31, 2023, the maximum amount of loss exposure to the VIE was $ 209,395 .

The Company, has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance.

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In 2021, the Company along with BRPM 150 and BRPM 250, both special purpose acquisition companies incorporated as Delaware corporations, consummated the initial public offerings of 17,250,000 units of BRPM 150 and 17,250,000 units of BRPM 250.

Each Unit of BRPM 150 and BRPM 250 consisted of one share of class A common stock

and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $ 11.50 per share.

Each Unit of BRPM 150 and BRPM 250 consisted of one share of class A common stock and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $ 11.50 per share.

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

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These proceeds are invested only in U.S.

treasury securities in accordance with the governing documents of BRPM 150 and BRPM 250.

treasury securities in accordance with the governing documents of

BRPM 150 and BRPM 250.

Under the terms of the BRPM 150 and BRPM 250 initial public offerings, BRPM 150 and BRPM 250 are required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of their respective initial public offerings.

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During the year ended December 31, 2022, the Company recognized incentive fees of $ 41,885 , which is included in services and fees in the consolidated statement of operations.

See Note 23 for further discussion.

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

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

(ab) Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

Certain amounts reported in the Consumer segment during the years ended December 31, 2022 and 2021 have been reclassified and reported in the Consumer Products segment and the All Other category during the years ended December 31, 2022 and 2021 as a result of changes in the Company's reportable operating segments in the fourth quarter of 2023.

See Note 23 for more details.

(ac) Recent Accounting Standards

Not yet adopted

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

Disclosure of Supplier Finance Program Obligations to enhance transparency about an entity’s use of supplier finance programs.

Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

An entity should also consider whether the existence of a supplier finance program changes the appropriate presentation of the payables in the program from trade payables to borrowings.

The amendments in this update are effective for the Company for fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the effect of this new standard, which is not expected to have a material impact on its financial position and results of operations.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures .

The amendments in this update improve income tax disclosure requirements, related to the transparency of rate reconciliation and income taxes paid disclosures and the effectiveness and comparability of disclosures of pretax income (or loss) and income tax expense (or benefit).

The amendments in this update are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The update should be applied on a prospective basis.

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

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures .

The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories included in each reported measure of a segment's profit or loss on an interim and annual basis.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The update should be

applied retrospectively to all prior periods presented in the financial statements.

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

Recently adopted

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

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

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

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

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

until the contractual restrictions expire or are modified.

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

Recently adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to require acquiring entities to apply Topic 606 when recognizing and measuring contract assets and contract liabilities instead of only recognizing such items at fair value on the acquisition date.

The update addressed diversity in practice related to the acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The Company early adopted the ASU on January 1, 2022.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

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

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

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

The Company early adopted this ASU in the fourth quarter of 2023.

The adoption of ASU 2022-03 resulted in a $ 1,133 change to the fair value of equity securities that were subject to contractual sale restrictions.

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations to enhance transparency about an entity’s use of supplier finance programs.

An entity should also consider whether the existence of a supplier finance program changes the appropriate presentation of the payables in the program from trade payables to borrowings.

The Company adopted the ASU effective January 1, 2023.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The Company adopted the ASU effective immediately.

The impact of adopting the ASU was immaterial to the consolidated results of operations, cash flows, financial position, and disclosures.

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

NOTE 3 — ACQUISITIONS

2023 Acquisitions

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 the consolidation of bebe financial results for periods subsequent to October 6, 2023.

The Company used the acquisition method of accounting and determined the fair value of assets exceeded consideration by $ 15,903 which was recorded as a bargain purchase gain during the three months ended December 31, 2023.

The gain on bargain purchase was included within other income (expense) in gain on bargain purchase in the consolidated statements of operations.

The bargain purchase gain resulted from the Company’s specific deferred tax asset attributes associated with the utilization of bebe’s net operating losses.

bebe is included in the All Other category that is reported with Corporate and Other in Note 23 - Business Segments.

Freedom VCM Equity Investment Acquisition - Pro Forma Financial Information

On August 21, 2023, the Company acquired approximately 31 % equity interest in Freedom VCM for total consideration of $ 281,144 .

The equity interest was acquired in connection with Freedom VCM's acquisition of FRG by a buyer group that included members of senior management of FRG, led by Brian Kahn, FRG’s then Chief Executive Officer as part of the FRG take-private transaction.

The unaudited pro-forma financial information for the years ended December 31, 2023 and 2022 in the table below summarizes the results of operations of the Company and the equity investment in Freedom VCM as though the acquisition of the approximately 31 % equity investment on August 21, 2023 had occurred as of the beginning of each of the years on January 1, 2023 and 2022.

The pro-forma financial information presented includes the effects of the common stock offering in July 2023 and adjustments related to additional interest expense from borrowings that the Company used to finance the acquisition of the equity interest.

The Company has elected to account for the acquisition of the equity investment under the fair value option and any changes in fair value of the equity investment during future periods will be recorded in the consolidated statements of operations.

The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition of the equity investment had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results.

Pro Forma (unaudited)

Year Ended December 31,

Revenues $ 1,643,600 $ 1,080,670

Net loss attributable to B.

Riley Financial, Inc.

$ ( 105,750 ) $ ( 168,970 )

Net loss attributable to common shareholders $ ( 113,807 ) $ ( 176,978 )

Basic loss per share $ ( 3.74 ) $ ( 5.84 )

Diluted loss per share $ ( 3.74 ) $ ( 5.84 )

Weighted average basic shares outstanding 30,456,631 30,279,439

Weighted average diluted shares outstanding 30,456,631 30,279,439

2022 Acquisitions

Acquisition of Targus

3 unchanged sentences

Goodwill of $ 79,781 and other intangible assets of $ 89,000 were recorded as a result of the acquisition.

The acquisition complements the Company’s existing investments and offers potential growth to the Company’s operations in the Consumer segment.

The acquisition complements the Company’s existing investments and offers potential growth to the Company’s operations in the Consumer Products segment.

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

26 unchanged sentences

Total $ 247,546

During the year ended December 31, 2023, goodwill for Targus changed by $ 4,028 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:

4 unchanged sentences

Total $ 89,000

The weighted average lives of amortizable intangible assets at acquisition date was 8.5 years.

Unaudited Pro Forma Information

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The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of Targus as if it had occurred on January 1, 2021.

The pro forma amounts include the historical operating results of the Targus prior to the acquisition, with adjustments directly attributable to the acquisition.

The pro forma results include adjustments and consequential tax effects to reflect incremental depreciation and amortization expense to be incurred based on preliminary fair values of the identifiable intangible assets acquired, the incremental interest expense associated with the issuance of debt to finance the acquisition, and the adjustments to exclude acquisition related costs incurred during the year ended December 31, 2022 and to recognize these costs during the year ended December 31, 2021 as if incurred on January 1, 2021.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations of the combined company were, nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

Pro Forma (unaudited)

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As part of the acquisition, the Company assumed liabilities in the amount of $ 32,172 and recorded goodwill of $ 34,412 and other intangible assets of $ 63,000 were recorded in the accompanying consolidated balance sheet.

The Company also completed the acquisitions of BullsEye, FocalPoint, and ACR (and related businesses), and other immaterial business.

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

The Company also completed the acquisitions of BullsEye Telecom (“BullsEye”), FocalPoint Securities LLC (“FocalPoint”), and Atlantic Coast Fibers (“ACR”) (and related businesses).

In accordance with ASC 805, the Company used the acquisition method of accounting for these acquisitions, none of which were material to the Company's consolidated financial statements.

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

1 unchanged sentence

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

2021 Acquisitions

Acquisition of National

On February 25, 2021, the Company completed the acquisition of all of the outstanding shares of National not already owned by the Company.

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

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

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

During the year ended December 31, 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

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

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

determined using the relief from royalty method.

Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

NOTE 4 — RESTRUCTURING CHARGE

The Company recorded restructuring charges in the amount of $ 9,011 , $ 0 , and $ 1,557 during the years ended December 31, 2022, 2021, and 2020, respectively.

The Company recorded restructuring charges in the amount of $ 2,131 , $ 9,011 , and zero during the years ended December 31, 2023, 2022, and 2021, respectively.

The restructuring charges during the year ended December 31, 2023 were primarily related to reorganization and consolidation activities in the Wealth Management segment, Communications segment, and Consumer Products segment.

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

The restructuring charges during the year ended December 31, 2022 were primarily related to the reorganization and consolidation activities in the Wealth Management segment and the Communications segment.

Reorganization and consolidation activities consisted of reductions in workforce, facility closures, and related intangible impairments and asset disposals.

The restructuring charges during the year ended December 31, 2020 were primarily related to impairment of certain acquired tradename intangibles associated with the Company’s brand realignment across its subsidiary companies to provide greater external consistency and affiliation.

The following tables summarize the changes in accrued restructuring charge during the years ended December 31, 2023, 2022, and 2021:

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The following table summarizes the restructuring activities by reportable segment during the years ended December 31, 2023 and 2022:

Markets Wealth

Management Auction

Liquidation Financial

Consulting Communications Total

Management Communications Consumer Products Total

Restructuring charges for the year ended December 31, 2023:

Employee termination $ — $ 1,150 $ — $ — $ 1,054 $ 2,204

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

Facility closure and consolidation — 1,792 — — 841 2,633

Employee termination costs $ — $ 1,540 $ 530 $ 2,070

Facility closure and consolidation charge 61 — — 61

Total restructuring charge $ 61 $ 1,540 $ 530 $ 2,131

Restructuring charges for the year ended December 31, 2022:

Employee termination costs $ 1,150 $ 1,054 $ — $ 2,204

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

Facility closure and consolidation charge 1,792 841 — 2,633

Total restructuring charge $ 4,954 $ 4,057 $ — $ 9,011

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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 December 31, 2023 and 2022:

December 31, 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 $ 283,809 $ 283,809 $ 401,898 $ 401,898

Equity securities 2,575,919 2,575,919 1,925,549 1,925,549

Non-US sovereign debt 11,211 11,211 15,880 15,880

Total borrowings $ 2,870,939 $ 2,870,939 $ 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 6 — ACCOUNTS RECEIVABLE

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Total accounts receivable 122,835 152,774

Allowance for doubtful accounts ( 3,664 ) ( 3,658 )

Allowance for credit losses ( 7,339 ) ( 3,664 )

Accounts receivable, net $ 115,496 $ 149,110

Additions and changes to the allowance for doubtful accounts consist of the following:

Additions and changes to the allowance for credit losses consist of the following:

Year Ended December 31,

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2023 December 31,

Funds held in trust account for BRPM 150 in 2022 and both BRPM 150 and 250 in 2021 to redeem noncontrolling interests in equity of subsidiaries $ 174,437 $ 345,024

Funds held in trust account for BRPM 250 to redeem noncontrolling interests in equity of subsidiaries $ — $ 174,437

Inventory 110,482 101,675

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Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service-based contracts in the Auction and Liquidation segment, mobile handsets in the Communications segment, and consulting related engagements in the Financial Consulting segment.

Other assets primarily consist of deposits, real estate held for investment, deferred financing costs, and finance lease assets.

NOTE 8 — PROPERTY AND EQUIPMENT

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2023 December 31,

Leasehold improvements Shorter of the remaining lease term or estimated useful life $ 13,484 $ 13,766

Leasehold improvements 1 to 15 years

$ 14,787 $ 13,484

Machinery, equipment and computer software 1 to 15 years

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Goodwill was $ 472,326 and $ 512,595 as of December 31, 2023 and 2022, respectively.

The increase in goodwill for the year ended December 31, 2022 was primarily from the acquisitions of Targus in the Consumer segment, FocalPoint in the Capital Markets segment, and Lingo and BullsEye in the Communications segment (See Note 1).

The decrease in goodwill for the year ended December 31, 2023 was primarily from the Targus goodwill impairment of $ 53,100 in the Consumer Products segment, partially offset by $ 11,871 from other acquisitions.

The increase in goodwill for the year ended December 31, 2022 was primarily from the acquisitions of Targus in the Consumer Products segment, FocalPoint in the Capital Markets segment, and Lingo and BullsEye in the Communications segment.

The changes in the carrying amount of goodwill during the years ended December 31, 2023 and 2022 were as follows:

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Segment Communications

Segment Consumer Segment All Other Total

Segment Consumer Products Segment All Other Total

Balance as of December 31, 2021

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162,018 51,195 1,975 23,680 193,195 75,753 4,779 512,595

Goodwill acquired during the year:

Changes in goodwill during the year:

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

Goodwill impairment — — — — — ( 53,100 ) — ( 53,100 )

Other — — — 187 672 4,028 ( 3,927 ) 960

Balance as of December 31, 2023

$ 162,018 $ 51,195 $ 1,975 $ 33,310 $ 193,867 $ 26,681 $ 3,280 $ 472,326

During the year ended December 31, 2023, the changes in goodwill included $ 187 of foreign currency translation amounts, $ 672 of working capital settlements as described in Note 3, $ 4,028 related to certain purchase price accounting adjustments, and $( 3,927 ) related to the sale of certain assets.

Intangible assets consisted of the following:

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The estimated future amortization expense after December 31, 2028 was $ 39,721 .

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 Products 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 a year ended assessment as of December 31, 2023, and based on the results of the analysis, the Company recorded a non-cash impairment charge of $ 68,600 consisting of a goodwill impairment charge of $ 53,100 and a tradename impairment charge of $ 15,500 , which was recorded in impairment of goodwill and tradenames in the accompanying consolidated statements of operations during the year ended December 31, 2023.

The Company previously recorded an impairment charge in the second quarter of 2023 of $ 1,733 for a finite-lived for a tradename in the Capital Markets segment that is no longer used by the Company, which was recorded in impairment of goodwill and tradenames in the accompanying consolidated statements of operations.

Goodwill and tradename of the Company’s Targus subsidiary was measured at fair value on a nonrecurring basis as of September 30, 2023 and December 31, 2023.

The estimated fair value of goodwill was $ 26,681 and the estimated fair value of tradename was $ 19,500 as of December 31, 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 approximate inputs for the fair value calculations of the reporting unit included an approximate growth rate of 4 % to calculate the terminal value, a discount rate of approximately 21 %, and with respect to tradenames, a royalty rate of approximately 2 %.

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 — LEASING ARRANGEMENTS

Operating Leases

The Company’s operating lease assets primarily represent the lease of office space and facilities where the Company conducts its operations with the weighted average lease term of 9.4 years and 10.4 years as of December 31, 2023 and 2022, respectively.

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imputed interest ( 33,597 )

Total operating lease liability $ 99,124

Total lease liability $ 98,563

Finance Leases

The Company’s financing lease assets primarily represent the lease of vehicles for the Company's subsidiary bebe.

As of December 31, 2023, finance lease assets of $ 1,847 are included in prepaid expenses and other assets with the related liabilities of $ 1,923 included in accrued expenses and other liabilities in the consolidated balance sheets.

As of December 31, 2023 and 2022, the Company did not have any significant leases executed but not yet commenced.

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Asset Based Credit Facility

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

and a maturity date of April 20, 2027.

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

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The interest rate for each revolving credit advance under the Credit Agreement is subject to certain terms and conditions, equal to the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25 % to 3.25 % depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.

The credit facility provides for success fees in the amount of 1.0 % to 10.0 % of the net profits, if any, earned on the liquidation

engagements funded under the Credit Agreement as set forth therein.

The credit facility provides for success fees in the amount of 1.0 % to 10.0 % of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein.

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

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As of December 31, 2023 and 2022, there were no open letters of credit outstanding.

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

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

On March 28, 2024, the Company received an extension under this credit agreement of the time required to deliver its 2023 audited financial statements, which was extended to April 29, 2024.

Other Notes Payable

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Interest expense was $ 609 , $ 1,125 , and $ 21 during the years ended December 31, 2023, 2022, and 2021, respectively.

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

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, which was paid in full on January 2, 2024.

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

NOTE 13 — TERM LOANS AND REVOLVING CREDIT FACILITY

NOTE 12 — TERM LOANS AND REVOLVING CREDIT FACILITIES

Targus Credit Agreement

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

The Targus Credit Agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

On October 18, 2022, the Company's subsidiary, Tiger US Holdings, Inc.

(the “Borrower”), a Delaware corporation, among others, entered into a credit agreement (“Targus Credit Agreement”) with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $ 28,000 term loan and a five-year $ 85,000 revolver loan, which was used to finance part of the acquisition of Targus.

The Targus Credit Agreement is secured by substantially all Targus assets as collateral defined in the Targus Credit Agreement.

The agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

The Targus Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

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

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

On October 31, 2023 and February 20, 2024, the Company entered into Amendment No.

1 and Amendment No.

2 to the Targus Credit Agreement, which, among other things, modified the fixed charge coverage ratio and the minimum earnings before interest, taxes, depreciation, and amortization requirements which waived the financial covenant breaches for the periods ended September 30, 2023 and December 31, 2023, respectively.

The Company 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 %.

The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal to the base rate plus an applicable margin of 1.00 % to 1.75 % and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 2.00 % to 2.75 %.

The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal

to the base rate plus an applicable margin of 1.00 % to 1.75 % and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 2.00 % to 2.75 %.

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

Quarterly installments from December 31, 2022 to September 30, 2027 are in the amount of $ 1,400 per quarter and the remaining principal balance is due at final maturity on October 18, 2027.

As of December 31, 2022, the outstanding balance on the term loan was $ 26,021 (net of unamortized debt issuance costs of $ 580 ) and the outstanding balance on the revolver loan was $ 52,978 .

Interest expense on these loans during the year ended December 31, 2022 was $ 1,322 (including amortization of deferred debt issuance costs and unused commitment fees of $ 157 ).

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

Quarterly installments from March 31, 2024 to March 31, 2027 are in the amount of $ 1,400 per quarter and the remaining principal balance is due at final maturity on October 18, 2027.

As of December 31, 2023 and 2022, the outstanding balance on the term loan was $ 17,834 (net of unamortized debt issuance costs of $ 366 ) and $ 26,021 (net of unamortized debt issuance costs of $ 580 ), respectively, and the outstanding balance on the revolver loan was $ 43,801 and $ 52,978 , respectively.

Interest expense on these loans during the years ended December 31, 2023 and 2022 was $ 7,303 (including amortization of deferred debt issuance costs and unused commitment fees of $ 664 ) and $ 1,322 (including amortization of deferred debt issuance costs and unused commitment fees of $ 157 ), respectively.

The interest rate on the term loan was 10.20 % and 8.43 % and the interest rate on the revolver loan ranged between 8.45 % to 11.25 % and between 6.03 % to 9.25 % as of December 31, 2023 and 2022, respectively.

The weighted average interest rate on the revolver loan was 8.53 % and 6.68 % as of December 31, 2023 and 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.

The Pathlight Credit Agreement was entered in connection with the purchase of the 2022 Badcock Receivable discussed in Note 3.

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

2 to the Pathlight Credit Agreement increased the term loan by an additional $ 78,296 .

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

On March 31, 2023, Amendment No.

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

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 2(r), the Company was released from all obligations, guarantees and covenants related to the Pathlight Credit Agreement.

The Company had 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 %.

The Pathlight Credit Agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

The Pathlight Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults, and cross defaults.

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

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

Principal outstanding under the Pathlight Credit Agreement is repaid based on collections of the 2022 Badcock Receivable less other application of payments as defined in the Pathlight Credit Agreement and the remaining principal balance is due at final maturity on September 23, 2027.

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

Interest expense on the term loan during the year ended December 31, 2022 was $ 5,331 (including amortization of deferred debt issuance costs of $ 1,328 ).

Interest expense on the term loan during the years ended December 31, 2023 and 2022 was $ 14,359 (including amortization of deferred debt issuance costs of $ 4,262 ) and $ 5,331 (including amortization of deferred debt issuance costs of $ 1,328 ), respectively.

Lingo Credit Agreement

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This loan was used to finance part of the purchase of Bullseye by Lingo.

On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank (the “New Lender”) for an incremental term loan of $ 7,500 , increasing the principal balance of the term loan to $ 52,500 .

On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank for an incremental term loan of $ 7,500 , increasing the principal balance of the term loan to $ 52,500 .

On November 10, 2022, Lingo entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $ 20,500 , increasing the principal balance of the term loan to $ 73,000 .

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 3.00 % to 3.75 % per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment.

As of December 31, 2022, the interest rate on the Lingo Credit Agreement was 7.89 %.

As of December 31, 2023 and 2022, the interest rate on the Lingo Credit Agreement was 8.70 % and 7.89 %, respectively.

The Lingo Credit Agreement is guaranteed by the Company and Lingo's subsidiaries and secured by certain Lingo assets and equity interests as collateral defined in the Lingo Credit Agreement.

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

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

If an event of default occurs, the

agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding agreement.

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

On March 15, 2024, the Company received an extension under its credit agreement with Banc of California, N.A.

of the time required to deliver its 2023 audited financial statements, which was extended to April 9, 2024, and on April 9, 2024, the Company received further extension of the time required to deliver its 2023 audited financial statements to April 29, 2024.

Principal outstanding is due in quarterly installments starting on March 31, 2023.

Quarterly installments from March 31, 2023 to December 31, 2023 are in the amount of $ 2,281 per quarter, from March 31, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, from March 31, 2025 to June 30, 2027 are in the amount of $ 3,650 , and the remaining principal balance is due at final maturity on August 16, 2027.

Quarterly installments from March 31, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, from March 31, 2025 to June 30, 2027 are in the amount of $ 3,650 , and the remaining principal balance is due at final maturity on August 16, 2027.

As of December 31, 2023 and 2022, the outstanding balance on the term loan was $ 63,153 (net of unamortized debt issuance costs of $ 722 ) and $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ), respectively.

Interest expense on the term loan during the years ended December 31, 2023 was $ 6,370 (including amortization of deferred debt issuance costs of $ 293 ) and $ 1,619 (including amortization of deferred debt issuance costs of $ 97 ), respectively.

bebe Credit Agreement

As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $ 25,000 five-year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt.

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 5.50 % to 6.00 % per annum, depending on the total fixed charge coverage ratio as defined in the bebe Credit Agreement.

As of December 31, 2023, the interest rate on the bebe Credit Agreement was 11.14 %.

The bebe Credit Agreement is collateralized by a first lien on all bebe assets and pledges of capital stock including equity interests.

The agreement contains certain covenants, including those limiting the borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends.

In addition, the agreement requires bebe to maintain certain financial ratios.

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

Principal outstanding is due in quarterly installments through June 30, 2026 in the amount of $ 313 per quarter and the remaining principal balance of $ 20,000 is due at final maturity on August 24, 2026.

As of December 31, 2023, the outstanding balance on the term loan was $ 22,487 (net of unamortized debt issuance costs of $ 638 ).

Interest expense on the term loan during the year ended December 31, 2022 was $ 1,619 (including amortization of deferred debt issuance costs of $ 97 ).

Interest expense on the term loan during the period from October 6, 2023 through December 31, 2023 was $ 680 (including amortization of deferred debt issuance costs of $ 56 ).

Nomura Credit Agreement

On June 23, 2021, the Company, and its wholly owned subsidiaries, BR Financial Holdings, LLC (the “Primary Guarantor”), and BR Advisory & Investments, LLC (the “Borrower”) entered into a credit agreement (as amended prior to the Second Amendment (as defined below) the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Administrative Agent”), and Wells Fargo Bank, N.A., as collateral agent (the “Collateral

Agent”), for a four-year $ 200,000 secured term loan credit facility (the “Term Loan Facility”) and a four-year $ 80,000 secured revolving loan credit facility (the “Revolving Credit Facility”).

On December 17, 2021 (the “Amendment Date”), the Company, the Primary Guarantor, and the Borrower entered into a Second Incremental Amendment to Credit Agreement (the “Second Amendment”), by and among the Company, the Primary Guarantor, the Borrower, each of the subsidiary guarantors signatory thereto, each of the lenders party thereto, the Administrative Agent and the Collateral Agent, pursuant to which the Borrower established an incremental facility in an aggregate principal amount of $ 100,000 (the “Incremental Facility” and the incremental term loans made thereunder, the “Incremental Term Loans”) of secured term loans under the Credit Agreement on terms identical to those applicable to the Term Loan Facility.

The Borrower borrowed the full amount of the Incremental Term Loans on the Amendment Date.

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

Eurodollar loans under the Credit Facilities accrue interest at the Eurodollar Rate plus an applicable margin of 4.50 %.

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

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

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

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 and the Second Amendment contain certain representations and warranties (subject to certain agreed qualifications) that are customary for financings of this kind.

The Credit Agreement and the Second Amendment contain 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 and the Second Amendment contain a financial covenant that requires the Company to maintain Operating EBITDA of at least $ 135,000 and the Primary Guarantor to maintain net asset value of at least $ 1,100,000 .

The Credit Agreement and the Second Amendment contain customary events of default, including with respect to a failure to make payments under the credit facilities, cross-default, certain bankruptcy and insolvency events and customary change of control events.

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

Commencing on September 30, 2022, the Term Loan Facility and Incremental Facility is amortizing in equal quarterly installments of 1.25 % of the aggregate principal amount of the term loan as of the closing date with the remaining balance due at final maturity on June 23, 2025.

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

As of December 31, 2022 and 2021, the outstanding balance on the Term Loan Facility and Incremental Facility was $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ) and $ 292,650 (net of unamortized debt issuance costs of $ 7,350 ), respectively.

Interest on the term loan during the years ended December 31, 2022 and 2021, was $ 21,310 (including amortization of deferred debt issuance costs of $ 2,085 ) and $ 5,907 (including amortization of deferred debt issuance costs of $ 766 ), respectively.

The 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”), and certain direct and indirect subsidiaries of the Borrower (the “Guarantors”), 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.

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 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 is secured on a first priority basis by a security interest in the equity interests of the Borrower and each of the Borrower’s subsidiaries (subject to certain exclusions) and a security interest in substantially all of the assets of the Borrower and the Guarantors.

The borrowing base as defined in the Credit Agreement consists of a collateral pool that includes certain of the Company's loans receivables in the amount of $ 375,814 and investments in the amount of $ 786,714 as of December 31, 2023.

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 December 31, 2023.

On March 26, 2024, the Company received an extension under its existing credit agreement with Nomura Corporate Funding Americas, LLC of the time required to deliver its 2023 audited financial statements, which was extended to April 29, 2024.

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 March 31, 2024 to June 30, 2027 are in the amount of $ 3,125 per quarter.

As of December 31, 2023 and 2022, the outstanding balance on the term loan was $ 475,056 (net of unamortized debt issuance costs of $ 18,694 ) and $ 286,962 (net of unamortized debt issuance costs of $ 5,538 ), respectively.

Interest on the term loan during the years ended December 31, 2023, 2022, and 2021 was $ 41,662 (including amortization of deferred debt issuance costs of $ 2,916 ), $ 21,310 (including amortization of deferred debt issuance costs of $ 2,085 ), and $ 5,907 (including amortization of deferred debt issuance costs of $ 766 ), respectively.

The interest rate on the term loan as of December 31, 2023 and 2022 was 11.37 % and 9.23 %, respectively.

The Company had an outstanding balance of $ 74,700 and $ 80,000 under the Revolving Credit Facility as of December 31, 2022 and 2021, respectively.

Interest on the revolving facility during the years ended December 31, 2022 and 2021 was $ 5,441 (including unused commitment fees of $ 13 and amortization of deferred financing costs of $ 586 ) and $ 1,915 (including unused commitment fees of $ 76 and amortization of deferred financing costs of $ 305 ), respectively.

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

Interest on the revolving facility during the years ended December 31, 2023, 2022, and 2021 was $ 5,908 (including unused commitment fees of $ 334 and amortization of deferred financing costs of $ 754 ), $ 5,441 (including unused commitment fees of $ 13 and amortization of deferred financing costs of $ 586 ), and $ 1,915 (including unused commitment fees of $ 76 and amortization of deferred financing costs of $ 305 ), respectively.

The interest rate on the revolving facility as of December 31, 2023 and 2022 was 11.37 % and 9.23 %, respectively.

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

The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties, including a pledge of (a) 100.00 % of the equity interests of the Credit Parties, (b) 65 % of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India;

and (c) 65 % of the equity interests in magicJack VocalTec LTD., a limited company organized under the laws of Israel.

The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties, including a pledge of (a) 100 % of the equity interests of the Credit Parties, (b) 65 % of the equity interests in United Online Software Development (India) Private Limited, a private

limited company organized under the laws of India;

and (c) 65 % of the equity interests in magicJack VoIP Services, LLC, a Delaware corporation.

Such security interests are evidenced by pledge, security, and other related agreements.

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

On March 15, 2024, the Company received an extension under its credit agreement with Banc of California, N.A.

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

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

Quarterly installments 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 December 31, 2023, and 2022, the outstanding balance on the term loan was $ 46,621 (net of unamortized debt issuance costs of $ 429 ) and $ 68,674 (net of unamortized debt issuance costs of $ 701 ), respectively.

Interest expense on the term loan during the years ended December 31, 2023, 2022, and 2021, was $ 5,201 (including amortization of deferred debt issuance costs of $ 272 ), $ 3,478 (including amortization of deferred debt issuance costs of $ 331 ), and $ 2,468 (including amortization of deferred debt issuance costs of $ 300 ), respectively.

See Note 13 for the aggregate maturities of borrowings as of December 31, 2023 for notes payable, term loans, credit facilities, and senior notes for the next five years.

NOTE 13 — SENIOR NOTES PAYABLE

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$ 140,492 $ 199,232

6.500 % Senior notes due September 30, 2026

180,532 178,787

6.375 % Senior notes due February 28, 2025

146,432 146,432

6.000 % Senior notes due January 31, 2028

266,058 259,347

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 ( 13,130 ) ( 18,140 )

$ 1,668,021 $ 1,721,751

During the years ended December 31, 2022 and 2021, the Company issued $ 111,841 and $ 233,416 , respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc.

which governs the program of at-the-market sales of the Company’s senior notes.

During the years ended December 31, 2023 and 2022, the Company issued $ 185 and $ 111,841 , respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with BRS which governs the program of at-the-market sales of the Company’s senior notes.

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

On November 15, 2022, the Company issued $ 60,000 of senior notes due in May 2024 (“ 6.75 % 2024 Notes”) pursuant to a prospectus supplement.

Interest on the 6.75 % 2024 Notes is payable quarterly at 6.75 %.

The 6.75 % 2024 Notes are unsecured and due and payable in full on May 30, 2024.

In connection with the issuance of the 6.75 % 2024 Notes, the Company received net proceeds of $ 59,016 (after underwriting commissions, fees and other issuance costs of $ 984 ).

The Notes bear interest at the rate of 6.75 % per annum.

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

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

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

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

On February 29, 2024, the Company partially redeemed $ 115,492 aggregate principal amount of its 6.75 % Senior Notes due 2024 (the “ 6.75 % 2024 Notes”) pursuant to the seventh supplemental indenture dated December 3, 2021.

The redemption price was equal to 100 % of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date.

The total redemption payment included approximately $ 628 in accrued interest.

As of December 31, 2023 and 2022, the total senior notes outstanding was $ 1,668,021 (net of unamortized debt issue costs of $ 13,130 ) and $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ) with a weighted average interest rate of 5.71 % and 5.75 %, respectively.

Interest on senior notes is payable on a quarterly basis.

Interest expense on senior notes totaled $ 99,854 , $ 81,475 , and $ 61,233 during the years ended December 31, 2022, 2021, and 2020, respectively.

Interest on the senior notes is payable on a quarterly basis.

Interest expense on the senior notes totaled $ 103,192 , $ 99,854 , and $ 81,475 during the years ended December 31, 2023, 2022, and 2021, respectively.

As of December 31, 2023, the aggregate maturities of borrowings from notes payable, term loans, credit facilities, and senior notes for the next five years are as follows:

2024 $ 190,324

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

The most recent sales agreement prospectus was filed by us with the SEC on January 5, 2022 (the “January 2022 Sales Agreement Prospectus”) superseding the prospectus filed with the SEC on August 11, 2021, the prospectus filed with the SEC on April 6, 2021, and the prospectus filed with the SEC on January 28, 2021.

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

As of December 31, 2022 and 2021, the Company had $ 69,500 and $ 111,911 , respectively, remaining availability under the Sales Agreement Prospectus.

NOTE 14 — REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers from the Company's six reportable operating segments and the All Other category during the years ended December 31, 2023, 2022, and 2021 is reported below.

There were no revenues in the All Other category during the years ended December 31, 2021 and 2020.

Markets Wealth

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Liquidation Financial

Consulting Communications Consumer All Other Total

Consulting Communications Consumer Products All Other Total

Revenues for the year ended December 31, 2023:

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Interest income - Loans and securities lending 284,896 — — — — — — 284,896

Trading (losses) gains on investments ( 151,816 ) 3,522 — — — — — ( 148,294 )

Trading gains on investments 16,845 4,758 — — — — — 21,603

Fair value adjustment on loans 20,225 — — — — — — 20,225

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Liquidation Financial

Consulting Communications Consumer Total

(As Restated) (As Restated)

Consulting Communications Consumer Products All Other Total

Revenues for the year ended December 31, 2022:

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Subscription services — — — — 219,379 — — 219,379

Service contract revenues — — 1,090 — — — 1,090

Sale of goods — — 56,928 — 7,526 77,821 — 142,275

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Interest income - Loans and securities lending 240,813 — 4,587 — — — — 245,400

Trading gains on investments 203,287 7,623 — — — — 210,910

Trading (losses) gains on investments ( 151,816 ) 3,522 — — — — — ( 148,294 )

Fair value adjustment on loans ( 54,334 ) — — — — — — ( 54,334 )

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Liquidation Financial

Consulting Communications Consumer Total

(As Restated) (As Restated)

Consulting Communications All Other Total

Revenues for the year ended December 31, 2021:

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A performance obligation may be satisfied over time or at a point in time.

Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer.

Revenue from a

performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service.

Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the

performance obligation in a manner that depicts the transfer of the goods or services to the customer.

Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”).

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and (e) prepaid international long distance minutes, which are recognized as the minutes are used or expired.

Subscription service revenues from our mobile phone business include revenues from mobile voice, text, and data services and are recognized ratably over the service period.

Subscription service revenues from our mobile phone business include revenues from mobile voice, text, and data services and are recognized

ratably over the service period.

Voice, text, and data overage charges are recognized over time as the consumer simultaneously receives and consumes the benefits each period as the Company performs.

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Sale of goods.

Sale of goods primarily consists of the sale of magicJack and Marconi Wireless devices, amounts from the sale of goods acquired in Auction and Liquidation asset purchase agreements, and amounts from the sale of goods from Targus in the Consumer segment.

Revenues from the sale of magicJack and Marconi Wireless devices are recognized upon delivery (when control transfers to the customer).

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Revenue is not recognized unless collectability is probable.

Other income primarily consists of services revenues from the operations of a regional environmental services business and a landscaping business.

Other income primarily consists of services revenues from the operations of a regional environmental services business, bebe, and a landscaping business.

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

Customer arrangements contain a single obligation to transfer processed recycled

goods and revenues are recognized at a point in time as processing fees when the performance obligation is satisfied.

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

bebe's revenues are primarily from rental fees of merchandise, and revenue is recognized over the rental term.

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

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NOTE 15 — INCOME TAXES

During the years ended December 31, 2023, 2022, and 2021, the Company's loss before income taxes of $ 142,324 , loss before income taxes of $ 220,450 , and income before income taxes $ 614,762 includes a United States component of loss before income taxes of $ 157,529 , loss before income taxes of $ 229,174 , and income before income taxes of $ 598,882 and a foreign component comprised of income before income taxes of $ 15,205 , $ 8,724 , and $ 15,880 , respectively.

The Company’s provision for income taxes consists of the following during the years ended December 31, 2023, 2022, and 2021:

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Employee stock based compensation 1.8 % ( 1.7 %) ( 1.1 %)

Bargain purchase ( 2.9 %) — % — %

Foreign tax ( 3.4 %) ( 0.2 %) 0.1 %

Goodwill impairment 9.2 % — % — %

Provision true-up ( 3.4 %) ( 0.8 %) ( 0.7 %)

NOL true-up ( 1.4 %) ( 1.2 %) 0.1 %

Other 0.4 % 3.7 % 0.7 %

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Mandatorily redeemable noncontrolling interests 1,190 1,190

State taxes — 5,321

Deferred revenue 3,696 —

Share based payments 13,953 14,346

Foreign tax and other tax credit carryforwards — 490

Capital loss carryforward 43,488 66,308

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Net deferred tax liabilities $ 33,595 $ ( 25,570 )

During the years ended December 31, 2022, 2021, and 2020, the Company's loss before income taxes of $ 220,450 , income before income taxes of $ 614,762 , and $ 279,457 includes a United States component of loss before income taxes of $ 229,174 , income before income taxes of $ 598,882 , and $ 264,654 and a foreign component comprised of income before income taxes of $ 8,724 , $ 15,880 , and $ 14,803 , respectively.

As of December 31, 2023, the Company had federal net operating loss carryforwards of $ 46,384 and state net operating loss carryforwards of $ 64,247 .

In addition, one of the Company's majority-owned subsidiaries that does not file a tax return as part of the Company's consolidated group had federal net operating loss carryforwards of $ 298,416 and state net operating loss carryforwards of $ 222,585 available to utilize against future taxable income of the majority-owner subsidiary.

During the years ended December 31, 2023, 2022, and 2021, the Company recorded a benefit in the provision for income taxes related to federal and state net operating loss carryforwards in the amount of $ 1,983 , $ 1,820 , and $ 1,527 , respectively.

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

As of December 31, 2023, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided an additional valuation allowance.

The valuation allowance increased by $ 20,740 during the year ended December 31, 2023.

The Company does not believe that it is more likely than not that it

will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 66,308 against these deferred tax assets.

This was primarily due to the inclusion of bebe in the Company's consolidated results offset by the expiration of capital loss carryover that had previously been valued.

Company does not believe that it is more likely than not that it will be able to utilize the benefits related to Israel capital loss carryforwards and has provided a full valuation allowance in the amount of $ 41,751 against these deferred tax assets.

As of December 31, 2023, the Company had gross unrecognized tax benefits totaling $ 14,819 all of which would have an impact on the Company’s effective income tax rate, if recognized.

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Beginning balance $ 16,146

Additions for current year tax positions 7,129

Reductions for prior year tax positions ( 969 )

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As of December 31, 2023, the Company believes it is reasonably possible that its gross liabilities for unrecognized tax benefits may decrease by approximately $ 2,395 within the next 12 months due to expiration of statute of limitations.

During the year ended December 31, 2022, the Company had accrued interest and penalties relating to uncertain tax positions of $ 531 and $ 4,785 for UOL and magicJack, respectively, all of which was included in income taxes payable.

During the year ended December 31, 2023, the Company had accrued interest and penalties relating to uncertain tax positions of $ 28 , $ 483 , and $ 4,068 for UOL, magicJack, and Targus respectively, all of which was included in income taxes payable.

During the year ended December 31, 2023, the Company recorded a net benefit of $ 45 and $ 142 for UOL and magicJack, respectively, related to interest and penalties for uncertain tax positions primarily due to the lapse in statute of limitations.

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The Company does not expect the IR Act to have a material impact on its financial position and result of operations.

The Pillar Two directive, which was established by the Organization for Economic Co-operation and Development, and which generally provides for a 15% minimum effective tax rate for multinational enterprises, in every jurisdiction in which they operate.

While the Company does not anticipate that this will have a material impact on its tax provision or effective tax rate, it will continue to monitor evolving tax legislation in the jurisdictions in which it operates.

NOTE 16 — EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period.

Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period.

Diluted earnings per share is calculated by dividing net income by the weighted-average number of

common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period.

Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend (see Note 2(w)).

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Accrued expenses primarily consist of accrued trade payables, investment banking payables and legal settlements.

Other liabilities primarily consist of interest payables, customer deposits, and accrued legal fees.

Other liabilities primarily consist of interest payables, customer deposits, accrued legal fees and finance lease liabilities.

NOTE 18 — COMMITMENTS AND CONTINGENCIES

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

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

other relief.

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

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

In addition to such legal and other claims, reviews, investigations, and proceedings, the Company and its subsidiaries are subject to the risk of unasserted claims, including, among others, as it relates to matters related to Mr.

Kahn and our investment in Freedom VCM.

For example, in light of Mr.

Kahn, including those that collateralize the Amended and Restated Note.

If a claim were successful, it would diminish the value of the collateral which could impact the carrying value of the loan.

If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit.

Notwithstanding the uncertainties described in this paragraph, the Company does not believe that the results of these asserted or unasserted claims are likely to have a material effect on its financial statements.

On January 24, 2024, a putative securities class action complaint was filed by Mike Coan in U.S.

Federal District Court, Central District of California, against the Company, Bryant Riley, Tom Kelleher and Phillip Ahn (“Defendants”).

The purported class includes persons and entities that purchased shares of the Company’s common stock between May 10, 2023 and November 9, 2023.

The complaint alleges that (a) the Company failed to disclose to investors that (i) Brian Kahn, had been implicated in a conspiracy to defraud third party investors, and (ii) the Company financed Brian Kahn and others in connection with a going private transaction involving FRG, and (b) as a result of the foregoing, the Company engaged in securities fraud in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

A second putative class action lawsuit was filed on March 15, 2024 by the KL Kamholz Joint Revocable Trust (“Kamholz”).

This complaint asserts similar allegations as the Coan complaint and covers an alleged class period between February 28, 2022 and November 9, 2023.

The Kamholz complaint further alleges that Defendants knew or should have known that Brian Kahn was engaged in illegal activities, including a conspiracy to commit fraud, and nonetheless proceeded with the FRG going-private transaction.

The Company cannot estimate the amount of potential liability, if any, that could arise from these matters and believes these claims are meritless and intends to defend these actions.

On September 21, 2023, the Company received a demand alleging that certain payments in the aggregate amount of approximately $ 32,166 made by Sorrento Therapeutics, Inc.

(“Sorrento”), a chapter 11 debtor in U.S.

Bankruptcy Court, Southern District of Texas, to B.

Riley Commercial Capital, LLC (“BRCC”), pursuant to that certain Bridge Loan Agreement dated September 30, 2022 between Sorrento and BRCC, are avoidable as preferential transfers.

The Company believes the Sorrento Unsecured Creditors Committee’s preference claims lack merit, and the Company intends to assert its statutory defenses to defeat the claim.

(b) Babcock & Wilcox Commitments and Guarantee

On June 30, 2021, the Company agreed to guaranty (the “B.

Riley Guaranty”) up to $ 110,000 of obligations that Babcock & Wilcox Enterprises, Inc.

(“B&W”) may owe to providers of cash collateral pledged in connection with B&W’s debt financing.

Riley Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of B&W’s obligations under a reimbursement agreement with respect to such cash collateral.

B&W will pay the Company $ 935 per annum in connection with the B.

Riley Guaranty.

B&W has agreed to reimburse the Company to the extent the B.

Riley Guaranty is called upon.

As of December 31, 2022, the B.

Riley Guaranty was in respect of up to $ 100,000 of B&W obligations after B&W made paydowns of $ 10,000 during the year ended December 31, 2022.

On August 10, 2020, the Company entered into a project specific indemnity rider to a general agreement of indemnity made by B&W in favor of one of its sureties.

Pursuant to the indemnity rider, the Company agreed to indemnify the surety in connection with a default by B&W under the underlying indemnity agreement relating to a $ 29,970 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W.

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

On January 18, 2024, the Company, entered into a guaranty (the “Axos Guaranty”) in favor of (i) Axos Bank, in its capacity as administrative agent (the “Administrative Agent”) for the secured parties under that certain credit agreement, dated as of January 18, 2024, among Babcock & Wilcox Enterprises, Inc.

(“B&W”), the guarantors party thereto, the lenders party thereto and the Administrative Agent (the “B&W Axos Credit Agreement”), and (ii) the secured parties.

Subject to the terms and conditions of the Axos Guaranty, the Company has guaranteed certain obligations of B&W (subject to certain limitations) under the B&W Axos Credit Agreement, including the obligation to repay outstanding loans and letters of credit and to pay earned interest, fees costs and expenses of enforcing the Axos Guaranty, provided however, that the Company’s obligations with respect to the principal amount of credit extensions and unreimbursed letter of credit obligations under the B&W Axos Credit Agreement shall not at any time exceed $ 150,000 in the aggregate, which is the maximum potential amount of future payments under the guaranty.

In consideration for the agreements and commitments under the Axos Guaranty and pursuant to a separate fee and reimbursement agreement, B&W has agreed to pay the Company a fee equal to 2.00 % of the aggregate revolving commitments (as defined in the B&W Axos Credit Agreement)

under the B&W Axos Credit Agreement, payable quarterly and, at B&W’s election, in cash in full or 50 % in cash and 50 % in the form of penny warrants.

On June 30, 2021, the Company agreed to guaranty (the “Cash Collateral Provider Guaranty”) up to $ 110,000 of obligations that B&W may owe to providers of cash collateral pledged in connection with a debt financing for B&W.

The Cash Collateral Provider Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of B&W’s obligations under a reimbursement agreement with respect to such cash collateral.

B&W will pay the Company $ 935 per annum in connection with the Cash Collateral Provider Guaranty.

B&W has agreed to reimburse the Company to the extent the Cash Collateral Provider Guaranty is called upon.

As of December 31, 2022, the Cash Collateral Provider Guaranty was in respect of up to $ 100,000 of B&W obligations after B&W made paydowns of $ 10,000 during the year ended December 31, 2022.

As of December 31, 2023, the Cash Collateral Provider Guaranty was in respect of up to $ 90,000 of B&W obligations after B&W made paydowns of $ 10,000 during the year ended December 31, 2023.

On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties.

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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 June 19, 2020, the Company participated in a loan facility agreement to provide a total loan commitment up to € 33,000 to a retailer in Europe.

The Company made an initial funding of € 6,600 in July 2020 and no additional borrowings were made after the initial funding.

The On December 29, 2021, the availability period under the loan expired, leaving no outstanding commitments under the facility as of December 31, 2021.

The loan was repaid in full on March 28, 2022.

On August 10, 2020, the Company entered into a project specific indemnity rider to a general agreement of indemnity made by B&W in favor of one of its sureties.

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

During the year ended December 31, 2023, the indemnity rider was reduced to $ 5,994 .

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 and the Company was paid the $ 16,500 fee pursuant to the Equity Commitment Letter and Limited Guarantee.

(d) Other Commitments

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

These commitments require the Company to purchase securities at a specified price or otherwise provide debt or equity financing on specified terms.

These commitments may require the Company to purchase securities at a specified price or otherwise provide debt or equity financing on specified terms.

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 19 — SHARE-BASED PAYMENTS

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Share-based compensation expense for restricted stock units under the 2021 Plan was $ 43,653 , $ 60,520 , and $ 35,253 during the years ended December 31, 2023, 2022, and 2021, respectively.

During the year ended December 31, 2023, in connection with employee stock incentive plans the Company granted 537,168 restricted stock units with a total grant date fair value of $ 20,496 .

During the year ended December 31, 2022, in connection with employee stock incentive plans the Company granted 728,056 restricted stock units with a total grant date fair value of $ 38,946 and 144,891 performance stock units with a total grant date fair value of $ 5,643 .

During the year ended December 31, 2021, in connection with employee stock incentive plans the Company granted 531,486 restricted

stock units with a total grant date fair value of $ 36,296 and 2,098,540 performance stock units with a total grant date fair value of $ 72,429 .

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

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During the years ended December 31, 2023, 2022, and 2021, the per-share weighted average grant-date fair value of restricted stock units granted was $ 38.16 , $ 53.49 , and $ 68.29 , respectively.

During the years ended December 31, 2022 and 2021, the per-share weighted average grant-date fair value of performance stock units granted was $ 38.95 and $ 34.51 , respectively.

During the years ended December 31, 2023, 2022, and 2021, the per-share weighted average grant-date fair value of performance stock units granted was zero , $ 38.95 , and $ 34.51 , respectively.

During the years ended December 31, 2023, 2022, and 2021, the total fair value of shares vested was $ 23,432 , $ 21,132 , and $ 11,251 , respectively.

As discussed in Note 3, there were 215,876 stock options with a fair value of $ 5,749 issued as part of the consideration for the purchase price of Targus.

All of these options were exercised during the fourth quarter of 2022 and there are no stock options outstanding as of December 31, 2022.

All of these options were exercised during the fourth quarter of 2022 and there were no stock options outstanding as of December 31, 2023 and 2022.

NOTE 20 — BENEFIT PLANS AND CAPITAL TRANSACTIONS

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The shares repurchased under the program were retired.

On March 3, 2023, the share repurchase program was reauthorized by the Board of Directors for share repurchases of up to $ 50,000 of the Company's outstanding common shares and expires in October 2023.

On October 31, 2022, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of the Company's outstanding common shares and expires in October 2023.

On October 25, 2021, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of the Company's outstanding common shares and expired in October 2022.

On January 15, 2021, the Company issued 1,413,045 shares of common stock inclusive of 184,310 shares issued pursuant to the full exercise of the Underwriter’s option to purchase additional shares of common stock at a price of $ 46 per share for net proceeds of approximately $ 64,713 after underwriting fees and costs.

In November 2023, the share repurchase program was reauthorized by the Board of Directors for share repurchases of up to $ 50,000 of the Company's outstanding common shares and expires in October 2024.

Amounts purchased prior to November 2023 relate to the previously authorized share repurchase program.

As of December 31, 2023, $ 34,206 remains available for common share repurchases under the share repurchase program.

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

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The offering of the 2,300,000 Depositary Shares generated $ 57,500 of gross proceeds.

The Company may elect from time to time to offer the Series A Preferred Stock via ATM sales.

During the years ended December 31, 2022 and 2021, the Company issued depositary shares equivalent to 20 and 233 shares, respectively, of the Series A Preferred Stock through ATM sales.

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

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

During the years ended December 31, 2023 and 2022, the Company issued depositary shares equivalent to zero and 20 shares, respectively, of the Series A Preferred Stock through ATM sales.

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

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

Dividends on the Series A preferred paid during the years ended December 31, 2023 and 2022 were $ 0.4296875 per depositary share.

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The offering resulted in gross proceeds of approximately $ 32,500 .

The Company may elect from time to time to offer the Series B Preferred Stock via ATM sales.

During the years ended December 31, 2023 and 2022, the Company issued depositary shares equivalent to 18 and 13 shares, respectively, of the Series B Preferred Stock through ATM sales.

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(i) senior to all classes or series of the Company’s common stock and to all other equity securities issued by the Company other than equity securities issued with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock or Series B Preferred Stock, (ii) junior to all equity securities issued by the Company with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock and the Series B Preferred Stock with respect to payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up and (iii) effectively junior to all of the Company’s existing and future indebtedness (including indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing or future subsidiaries.

Generally, the Series A Preferred Stock and the Series B Preferred Stock is not redeemable by the

Company prior to October 7, 2024.

Generally, the Series A Preferred Stock and the Series B Preferred Stock is not redeemable by the Company prior to October 7, 2024.

However, upon a change of control or delisting event, the Company will have the special option to redeem the Series A Preferred Stock and the Series B Preferred Stock.

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July 25, 2023 August 21, 2023 August 11, 2023 1.000 — 1.000

May 4, 2023 May 23, 2023 May 16, 2023 1.000 — 1.000

February 22, 2023 March 23, 2023 March 10, 2023 1.000 — 1.000

November 3, 2022 November 29, 2022 November 15, 2022 1.000 — 1.000

July 28, 2022 August 23, 2022 August 11, 2022 1.000 — 1.000

April 28, 2022 May 20, 2022 May 11, 2022 1.000 — 1.000

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February 25, 2021 March 24, 2021 March 10, 2021 0.500 3.000 3.500

October 28, 2020 November 24, 2020 November 10, 2020 0.375 — 0.375

July 30, 2020 August 28, 2020 August 14, 2020 0.300 0.050 0.350

May 8, 2020 June 10, 2020 June 1, 2020 0.250 — 0.250

March 3, 2020 March 31, 2020 March 17, 2020 0.250 0.100 0.350

Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,718.75 or $ 1.71875 per Depositary Share).

Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October.

As of December 31, 2022 and 2021, dividends in arrears in respect of the Depositary Shares were $ 812 and $ 806 , respectively.

As of December 31, 2023 and 2022, dividends in arrears in respect of the Depositary Shares were $ 812 .

On January 9, 2024, the Company declared a cash dividend of $ 0.4296875 per Depositary Share, which was paid on January 31, 2024 to holders of record as of the close of business on January 22, 2024.

Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375 % per annum of the $ 25,000 liquidation preference ($ 25.00 per Depositary Share) per year (equivalent to $ 1,843.75 or $ 1.84375 per Depositary Share).

Share) per year (equivalent to $ 1,843.75 or $ 1.84375 per Depositary Share).

Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October.

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July 11, 2023 July 31, 2023 July 21, 2023 0.4296875 0.4609375

April 10, 2023 May 1, 2023 April 21, 2023 0.4296875 0.4609375

January 9, 2023 January 31, 2023 January 20, 2023 0.4296875 0.4609375

October 10, 2022 October 31, 2022 October 21, 2022 0.4296875 0.4609375

July 7, 2022 July 29, 2022 July 19, 2022 0.4296875 0.4609375

April 7, 2022 April 29, 2022 April 19, 2022 0.4296875 0.4609375

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January 11, 2021 January 29, 2021 January 21, 2021 0.4296875 0.4609375

October 8, 2020 October 31, 2020 October 21, 2020 0.4296875 0.4609375

July 7, 2020 July 31, 2020 July 21, 2020 0.4296875 —

April 13, 2020 April 30, 2020 April 23, 2020 0.4296875 —

January 9, 2020 January 31, 2020 January 21, 2020 0.4296875 —

NOTE 21 — NET CAPITAL REQUIREMENTS

Riley Securities (“BRS”) and B.

Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and members of the Financial Industry Regulatory Authority, Inc.

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

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

During the years ended December 31, 2021 and 2020, the Company recorded interest expense of $ 525 and $ 1,710 , respectively, related to loan participations sold to BRC Partners Opportunity Fund, LP (“BRCPOF”), a private equity fund managed by one of its subsidiaries.

There were no loan participations sold or related interest expense to BRCPOF during the year ended December 31, 2022.

The Company also recorded commission income of $ 555 and $ 568 from introducing trades on behalf of BRCPOF during the years ended December 31, 2021 and 2020, respectively.

There was no commission income from introducing traders on behalf of BRCPOF during the year ended December 31, 2022.

Our executive officers and members of our board of directors had 47.2 % and 55.8 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 27.8 % and 31.8 % in the BRCPOF as of December 31, 2022 and 2021, respectively.

Management fees from the Funds during the years ended December 31, 2023, 2022, and 2021 totaled $ 1,725 , $ 6,937 , and $ 5,094 , respectively.

As of December 31, 2023, amounts due from related parties of $ 172 were from the Funds for management fees and other operating expenses.

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

As of December 31, 2023, amounts due to related parties were $ 2,731 , of which $ 2,480 related to bebe's rent to own stores which are franchised through Freedom VCM and consist of royalty fees, inventory purchases, marketing, and IT services.

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

(“Whitehawk”), a limited partnership controlled by Mr.

Ahn, who is the brother of Phil Ahn, the Company’s Chief Financial Officer and Chief Operating Officer.

Ahn, who is the brother of Phil Ahn, the Company’s Chief

Financial Officer and Chief Operating Officer.

Whitehawk has agreed to provide investment advisory services for GACP I, L.P.

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During the years ended December 31, 2023, 2022, and 2021, management fees paid for investment advisory services by Whitehawk was $ 1,142 , $ 1,173 , and $ 1,729 , respectively.

On February 1, 2024, one of the Company's loans receivable with a principal amount of $ 4,521 was sold to a fund managed by Whitehawk for $ 4,584 .

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

The Company had a last-out term loan receivable due from B&W that is included in loans receivable, at fair value with a fair value of $ 176,191 as of December 31, 2020.

On June 1, 2021, the Company agreed to settle the outstanding balance and accrued interest on the last-out term loan receivable in exchange for $ 848 and 2,916,880 shares of B&W’s 7.75 % Series A Cumulative Perpetual Preferred Stock .

During the years ended December 31, 2022, 2021, and 2020, the Company earned $ 154 , $ 15,766 , and $ 2,486 , 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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In March 2022, a $ 1,000 performance fee was approved in accordance with the Executive Consulting Agreement.

During the years ended December 31, 2023, 2022, and 2021, the Company earned zero , $ 154 , and $ 15,766 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

The Company is also a party to indemnification agreements for the benefit of B&W and the B.

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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 $ 98,729 and $ 69,835 as of December 31, 2022 and 2021, respectively.

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

During the year ended December 31, 2022, the Company earned $ 2,023 in underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities.

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 $ 98,729 as of December 31, 2022.

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.

Two of the Company's members of senior management were members of the board of directors of Arena.

On December 1, 2023, the Company sold its equity interest in Arena for $ 16,576 at a gain of $ 3,315 and its outstanding loans receivable for $ 78,796 at a loss of $ 28,919 .

Following the completion of the sale, two of the Company's members of senior management resigned from the board of directors of Arena and Arena is no longer a related party.

Interest income on the loan receivable was $ 10,882 , $ 7,540 , and $ 7,188 during the years ended December 31, 2023, 2022, and 2021, respectively.

During the year ended December 31, 2022, the Company earned $ 2,023 in underwriting and financial advisory and other fees from Arena.

There were no fees earned from Arena by the Company during the year ended December 31, 2023.

Applied Digital

On May 20, 2023, the Company entered into a loan agreement with Applied Digital (“APLD”).

The chief executive officer of APLD was also a member of senior management of the Company.

As of December 31, 2023, APLD had paid off its outstanding loan receivable balance with the Company, and the Company had an unfunded loan commitment with APLD of $ 5,500 .

Interest income on the loan receivable was $ 3,150 during the year ended December 31, 2023.

On February 5, 2024, the loan was terminated and no commitments remain.

During the years ended December 31, 2022 and 2021, the Company earned $ 2,321 and $ 3,513 , respectively, in underwriting and financial advisory fees from APLD.

There were no underwriting and financial advisory fees earned from APLD by the Company during the year ended December 31, 2023.

California Natural Resources Group, LLC.

On November 1, 2021 the Company extended a $ 34,393 bridge promissory note bearing interest at up to 10.0 % per annum to California Natural Resources Group, LLC (“CalNRG”).

On January 3, 2022, CalNRG repaid the promissory note using proceeds from a new credit facility with a third party bank (the “CalNRG Credit Facility”).

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

CalNRG is a related party as a result of the Company's approximately 25.0 % equity ownership.

On January 3, 2022, CalNRG repaid the promissory note using proceeds from a

new credit facility with a third party bank (the “CalNRG Credit Facility”).

Interest income on the loan receivable was $ 19 and $ 416 during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2023, the Company has guaranteed CalNRG’s obligations, up to $ 7,375 , under the CalNRG Credit Facility.

Charah Solutions, Inc.

On August 25, 2021, the Company extended a $ 17,852 promissory note to Charah Solutions, Inc., in which one of the Company’s senior executives served on the board of directors.

The promissory note bore interest at 8.0 % per annum and had a maturity date of September 25, 2022 and a 2.5 % commitment fee payable at maturity.

Interest income recorded on the promissory note was $ 1,122 during the year ended December 31, 2021.

The promissory note was paid in full on December 30, 2021.

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

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

Interest income was $ 420 during the period the loans were outstanding in 2022.

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

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

One of the Company's members of senior management was appointed to the board of directors of Faze.

During the year ended December 31, 2022, the Company earned $ 41,885 of incentive fees for the de-consolidation of BRPM 150 and $ 9,632 of underwriting and financial advisory fees from Faze and BRPM 150 in connection with the Business Combination and capital raising activities.

In September 2023, one of the Company's members of senior management resigned from the board of directors of Faze and Faze is no longer a related party.

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

This resulted in the consolidation of Lingo as more fully discussed in Note 1.

Interest income was $ 1,478 and $ 2,878 during the years ended December 31, 2022 and 2021, respectively.

Lingo was a related party due to our 40 % equity ownership prior to the Company obtaining a controlling ownership of 80 % on May 31, 2022, which resulted in Lingo becoming a majority-owned subsidiary of the Company.

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

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus for total purchase consideration of $ 247,546 as more fully discussed in Note 3.

1 unchanged sentence

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.

Freedom VCM Holdings, LLC

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 as part of the FRG take-private transaction as previously discussed in Note 2(s).

The Company entered into an Equity Commitment Letter with Freedom VCM, pursuant to which the Company agreed to provide up to $ 560,000 in equity financing at or prior to the closing of the FRG take-private transaction.

On August 21, 2023, in connection with the completion of the FRG take-private transaction, the Company's obligations pursuant to the Equity Commitment Letter and Limited Guarantee were satisfied.

Upon closing the acquisition on August 21, 2023, the Company was paid an equity commitment fee of $ 16,500 which is included in services and fees revenues.

At the time of the Company's equity investment on August 21, 2023, the Company's chief executive officer became a member of the board of directors of Freedom VCM.

On August 21, 2023, the Company purchased an equity interest in Freedom VCM for $ 216,500 , which resulted in a total equity interest of $ 281,144 and a 31 % voting interest and representation on the board of directors of Freedom VCM as part of the FRG take-private transaction as previously discussed in Note 2(s).

As part of the FRG take-private transaction, certain members of management of Freedom VCM, which are related parties to Freedom VCM, exchanged their equity interest in FRG for a combined 35 % voting interest in Freedom VCM, of which Mr.

Kahn and his wife and one of Mr.

Kahn’s affiliates comprised 32 %.

The Company has a first priority security interest in a 25 % equity interest of Mr.

(who was also CEO and a board member of Freedom VCM) in Freedom VCM to secure the loan to an affiliate of Mr.

Kahn as more fully described in Note 2(r).

In connection with the FRG take-private transaction, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables (a subsidiary of Freedom VCM), for a purchase price of $ 58,872 which resulted in a loss of $ 78 on August 21, 2023.

In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 12 and as consideration for the purchase price, the Company entered into a non-recourse promissory note with another Freedom VCM affiliate in the amount of $ 58,872 , with a stated interest rate of 19.74 % and a maturity date of August 21, 2033.

Payments of principal and interest on the note are limited solely to the performance of certain receivables held by BRRII.

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 $ 42,183 as of December 31, 2023.

Interest income on this loan receivable was $ 3,427 during the year ended December 31, 2023.

As more fully described in Note 2(r), the Company also has a related party loan receivable with a fair value of approximately $ 20,624 at December 31, 2023 from home-furnishing retailer W.S.

Badcock Corporation (“Badcock”) that is collateralized by consumer finance receivables of Badcock.

These consumer finance receivables were acquired from Badcock in multiple purchases beginning in December 2021.

On December 18, 2023, Badcock was sold by Freedom VCM to Conn’s and now operates as a wholly owned subsidiary of Conn’s.

This loan receivable is reported as a related party loan receivable due to the Company’s related party relationship with Freedom VCM and Freedom VCM’s ability to exercise influence over Conn’s as a result of the equity consideration Freedom VCM received from the sale of Badcock to Conn’s on December 18, 2023.

The Company also provided advisory services to Freedom VCM in the amount of $ 222 during the period from August 21, 2023 through December 31, 2023.

Vintage Capital Management - Brian Kahn

Simultaneously with the completion of the FRG take-private transaction, one of our subsidiaries and VCM, an affiliate of Brian Kahn, amended and restated a promissory note (the “Amended and Restated Note”), pursuant to which VCM owes our subsidiary the aggregate principal amount of $ 200,506 and bears interest at the rate of 12 % per annum payable-in-kind with a maturity date of December 31, 2027.

The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr.

Kahn, or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM in amount equal to the greater of (i) 80 % of the net after-tax proceeds, and (ii) 50 % of gross proceeds.

The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr.

Kahn and his spouse with a value (based on the transaction price in the FRG take-private transaction) of $ 227,296 as of August 21, 2023.

The fair value of the Freedom VCM equity interest owned by Mr.

Kahn and his spouse was $ 232,065 as of December 31, 2023.

In light of the Company’s determination that the repayment of the Amended and Restated Note will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral provided by Mr.

Kahn and his spouse being in Freedom VCM equity interests, the Company has determined that both VCM and Mr.

Kahn are related parties as of December 31, 2023.

Torticity, LLC

On November 2, 2023, the Company loaned $ 15,369 to Torticity, LLC, of which $ 6,690 was drawn upon with $ 8,679 remaining, with interest payable of 15.0 % per annum and a maturity date of November 2, 2026.

Interest income was $ 165 during the year ended December 31, 2023.

One of the Company's members of senior management is on the board of directors of Torticity.

The loan receivable had a fair value of $ 6,791 as of December 31, 2023 and is included in the Company's loans receivable, at fair value in the consolidated balance sheets.

Kanaci Technologies, LLC

On November 21, 2023, the Company loaned $ 10,000 to Kanaci Technologies, LLC (“Kanaci”), of which $ 4,000 was drawn upon with $ 6,000 remaining, with interest payable of 15.0 % per annum and a maturity date of June 30, 2026.

Interest income was $ 51 during the year ended December 31, 2023.

In June 2023, one of the Company's members of senior management was appointed to the board of directors of Kanaci.

The loan receivable had a fair value of $ 3,904 as of December 31, 2023 and is included in the Company's loans receivable, at fair value in the consolidated balance sheets.

On March 10, 2023, the Company sold a loan receivable including accrued interest in the amount of $ 7,600 to two related parties.

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

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

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

Our executive officers and members of our board of directors have 58.2 % financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 24.9 % in the BRCPOF as of December 31, 2023.

Our executive officers and members of our board of directors have a 15.3 % financial interest in the 272LP as of December 31, 2023.

On February 5, 2024, the Company sold its interest in 272LP and 272 Advisors, LLC for a promissory note of $ 2,000 plus additional revenue sharing up to $ 4,100 , which is based on future management fees earned.

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.

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The Company’s business is classified into six reportable operating segments:

the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Communications segment, and Consumer segment.

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

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

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

the Capital Markets segment, Wealth Management segment, Auction and Liquidation segment, Financial Consulting segment, Communications segment, and Consumer Products segment.

These reportable segments are all distinct businesses, each with a different marketing strategy and management structure, providing products and services primarily to customers that are end users within each segment and geographic region.

During the fourth quarter of 2023, management reassessed the Company's previously reported Consumer segment due to organizational changes and financial information provided to the CODM.

These changes resulted in Targus’ operations being reported on a stand alone basis in the Consumer Products segment and the operations related to brand licensing that was previously reported in the Consumer segment being reported in the All Other Category that is reported with Corporate and Other.

As a result of the changes discussed above in the Consumer segment, the Company has recast the financial data for the Consumer Products segment and reporting of the All Other Category for all periods presented.

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

1 unchanged sentence

2023 2022 2021

(As Restated) (As Restated)

Capital Markets segment:

Revenues - Services and fees $ 249,036 $ 292,933 $ 555,585

Trading (loss) income and fair value adjustments on loans ( 206,150 ) 212,922 55,873

Trading income (loss) and fair value adjustments on loans 37,070 ( 206,150 ) 212,922

Interest income - Loans and securities lending 284,896 240,813 122,723

1 unchanged sentence

Selling, general and administrative expenses ( 224,993 ) ( 171,006 ) ( 345,455 )

Restructuring charge — — ( 917 )

Interest expense - Securities lending and loan participations sold ( 145,435 ) ( 66,495 ) ( 52,631 )

Depreciation and amortization ( 3,998 ) ( 8,493 ) ( 2,136 )

Segment (loss) income 81,602 491,008 232,370

Impairment of tradenames ( 1,733 ) — —

Segment income 194,843 81,602 491,008

Wealth Management segment:

5 unchanged sentences

Depreciation and amortization ( 4,308 ) ( 5,488 ) ( 8,920 )

Segment income (loss) 3,097 ( 34,320 ) 15,934

Auction and Liquidation segment:

Year Ended December 31,

2023 2022 2021

Segment (loss) income ( 34,320 ) 15,934 2,901

Auction and Liquidation segment:

Revenues - Services and fees 29,062 12,581 20,169

5 unchanged sentences

Selling, general and administrative expenses ( 16,650 ) ( 19,683 ) ( 14,069 )

Restructuring charge — — ( 140 )

Depreciation and amortization — — ( 2 )

Segment income 21,371 12,600 8,054

2 unchanged sentences

Selling, general and administrative expenses ( 102,930 ) ( 81,891 ) ( 77,062 )

Restructuring charge — — ( 500 )

Depreciation and amortization ( 355 ) ( 305 ) ( 356 )

10 unchanged sentences

Segment income 34,725 30,320 27,158

Consumer segment:

Revenues - Services and fees 18,940 20,308 16,458

Consumer Products segment:

Revenues - Sale of goods 233,202 77,821 —

Total revenues 96,761 20,308 16,458

Cost of goods sold ( 164,635 ) ( 52,162 ) —

1 unchanged sentence

Depreciation and amortization ( 9,918 ) ( 2,168 ) —

Impairment of tradenames — — ( 12,500 )

Segment income 21,862 14,385 ( 1,789 )

Impairment of goodwill and tradenames ( 68,600 ) — —

Restructuring charge ( 530 ) — —

Segment (loss) income ( 77,710 ) 8,188 —

Consolidated operating income from reportable segments 206,746 114,702 559,048

Revenues - Services and fees 66,128 32,737 20,308

Revenues - Sale of goods 364 — —

Total revenues 66,492 32,737 20,308

Direct cost of services ( 30,072 ) ( 9,849 ) —

Cost of goods sold ( 353 ) — —

Corporate and other expenses ( 98,160 ) ( 68,142 ) ( 64,828 )

1 unchanged sentence

Dividend income 47,776 35,874 19,732

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

Realized and unrealized (losses) gains on investments ( 162,589 ) ( 201,079 ) 166,131

Change in fair value of financial instruments and other ( 4,748 ) 10,188 3,796

Gain on bargain purchase 15,903 — —

Year Ended December 31,

2023 2022 2021

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

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

(Loss) income from equity method investments ( 181 ) 3,570 2,801

Interest expense ( 187,013 ) ( 141,186 ) ( 92,455 )

2 unchanged sentences

Net (loss) income ( 105,631 ) ( 156,594 ) 450,802

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

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 5,721 ) 3,235 5,748

Net (loss) income attributable to B.

6 unchanged sentences

2023 2022 2021

(As Restated) (As Restated)

Revenues - Services and fees:

North America $ 1,000,688 $ 888,679 $ 1,148,751

Australia — — 664

Europe 1,682 6,944 4,474

Total Revenues - Services and fees 1,002,370 895,623 1,153,225

Trading (loss) income and fair value adjustments on loans

Trading income (loss) and fair value adjustments on loans

North America 41,828 ( 202,628 ) 220,545

2 unchanged sentences

Australia 11,878 4,903 —

Europe and Middle East 75,413 46,075 22,347

Europe, Middle East, and Africa 139,063 75,413 46,075

Asia 26,790 7,970 —

8 unchanged sentences

Australia 11,878 4,903 —

Europe and Middle East 86,944 50,549 47,625

Europe, Middle East, and Africa 140,745 86,944 50,549

Asia 26,790 7,970 —

5 unchanged sentences

North America $ 24,594 $ 26,276

Europe 396 577

Asia Pacific 133 162

1 unchanged sentence

Total $ 25,206 $ 27,141

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

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements

As previously disclosed in Note 2, in connection with the preparation of the Company's consolidated financial statements for the year ended December 31, 2022, the Company identified a classification error of dividend income and realized and unrealized gains (losses) on certain investments within revenue.

As a result of this classification error, the Company has restated its unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 and 2021, three and six months ended June 30, 2022 and 2021, and three and nine months ended September 30, 2022 and 2021.

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

The following tables represent our restated unaudited condensed consolidated financial statements for each quarter-to-date and year-to-date interim period within the nine months ended September 30, 2022 and the year ended December 31, 2021 and at each interim period therein.

The 2022 quarterly restatements will be effective with the filing of our future 2023 unaudited interim condensed consolidated financial statement filings in Quarterly Reports on Form 10-Q.

The financial information as previously reported for the quarters ended September 30, 2022, June 30, 2022, and March 31, 2022 were derived from our Quarterly Reports on Form 10-Q filed on November 4, 2022, July 29, 2022, and May 6, 2022, respectively.

The financial information as previously reported for the quarter ended December 31, 2021 were derived from our Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 28, 2022.

For the quarterly periods during the year ended December 31, 2022

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

NOTE 24 — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Riley Financial, Inc.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022

Three Months Ended Three Months Ended Nine Months Ended Three Months Ended Six Months Ended Three Months Ended

Services and fees $ 243,837 $ 257,310 $ 651,786 $ 191,662 $ 394,476 $ 202,814

Trading (loss) income and fair value adjustments on loans ( 58,670 ) ( 6,917 ) ( 143,958 ) ( 117,763 ) ( 137,041 ) ( 19,278 )

Interest income - Loans and securities lending 62,545 57,594 182,855 63,835 125,261 61,426

Sale of goods 134,380 4,130 7,895 1,887 3,765 1,878

Total revenues 382,092 312,117 698,578 139,621 386,461 246,840

( Parent Company Only)

Condensed Balance Sheets

(Dollars in thousands)

2023 December 31,

Cash and cash equivalents $ 1,147 $ 27,786

Investment in consolidated subsidiaries 2,002,325 2,198,902

Other assets 52,153 32,766

Total assets $ 2,055,625 $ 2,259,454

Liabilities and Stockholders' Equity

Accounts payable, accrued expenses and other liabilities $ 77,558 $ 57,266

Dividends payable 18,929 33,923

Senior notes payable, net 1,668,021 1,721,751

Total liabilities 1,764,508 1,812,940

Total stockholders' equity 291,117 446,514

Total liabilities and stockholders' equity $ 2,055,625 $ 2,259,454

See Notes to Condensed Financial Statements

Riley Financial, Inc.

(Parent Company Only)

Condensed Statements of Operations

(Dollars in thousands, except per share data)

Year Ended December 31,

2023 2022 2021

Revenues $ 17,066 $ 805 $ 10,697

Operating expenses:

Direct cost of services 68,496 44,523 73,959 17,785 29,436 11,651

Cost of goods sold 71,313 3,089 7,334 1,994 4,245 2,251

Selling, general and administrative expenses 40,053 39,146 41,369

Restructuring charge 995 8,016 8,016 — — —

Interest expense - Securities lending and loan participations sold — — 323

2 unchanged sentences

Other income (expense):

Interest income 1,482 686 1,253 500 567 67

Dividend income 9,595 9,175 26,279 9,243 17,104 7,861

Realized and unrealized gains (losses) on investments ( 64,874 ) 19,071 ( 136,205 ) ( 106,164 ) ( 155,276 ) ( 49,112 )

Interest and dividend income 201 272 4,591

Realized and unrealized (losses) gains on investments — — 129,351

Change in fair value of financial instruments and other — — ( 6,514 )

Income (loss) from equity method investments 285 ( 91 ) 3,285 ( 3,399 ) 3,376 6,775

Loss from equity investments — — ( 384 )

Interest expense ( 103,212 ) ( 100,087 ) ( 81,479 )

1 unchanged sentence

Benefit from (provision for) income taxes 32,192 34,788 ( 4,237 )

Income (loss) before income in equity investees ( 93,806 ) ( 103,368 ) 10,333

Equity in (loss) income of subsidiaries ( 6,104 ) ( 56,461 ) 434,721

Net (loss) income ( 99,910 ) ( 159,829 ) 445,054

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 6,010 ) 4,808 9,245 3,571 4,437 866

Net (loss) income attributable to B.

Riley Financial, Inc.

( 57,445 ) 47,837 ( 102,384 ) ( 140,159 ) ( 150,221 ) ( 10,062 )

Preferred stock dividends 2,002 2,002 6,006 2,002 4,004 2,002

Net (loss) income available to common shareholders $ ( 59,447 ) $ 45,835 $ ( 108,390 ) $ ( 142,161 ) $ ( 154,225 ) $ ( 12,064 )

Basic (loss) income per common share $ ( 2.08 ) $ 1.62 $ ( 3.86 ) $ ( 5.07 ) $ ( 5.52 ) $ ( 0.43 )

Diluted (loss) income per common share $ ( 2.08 ) $ 1.53 $ ( 3.86 ) $ ( 5.07 ) $ ( 5.52 ) $ ( 0.43 )

Weighted average basic common shares outstanding 28,545,714 28,293,064 28,068,160 28,051,570 27,953,845 27,855,033

Weighted average diluted common shares outstanding 28,545,714 29,968,417 28,068,160 28,051,570 27,953,845 27,855,033

For the quarterly periods during the year ended December 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021

Three Months Ended Three Months Ended Nine Months Ended Three Months Ended Six Months Ended Three Months Ended

Services and fees $ 308,062 $ 295,561 $ 845,163 $ 262,607 $ 549,602 $ 286,995

Trading income and fair value adjustments on loans 54,848 34,892 165,697 18,411 130,805 112,394

Interest income - Loans and securities lending 33,443 26,869 89,280 25,491 62,411 36,920

Sale of goods 3,961 34,959 54,244 12,457 19,285 6,828

Total revenues 400,314 392,281 1,154,384 318,966 762,103 443,137

Operating expenses:

Direct cost of services 12,955 18,019 41,435 12,094 23,416 11,322

Cost of goods sold 5,559 12,442 21,394 3,626 8,952 5,326

Selling, general and administrative expenses 270,712 244,218 635,484 199,922 391,266 191,344

Interest expense - Securities lending and loan participations sold 12,362 10,097 40,269 10,983 30,172 19,189

Total operating expenses 301,588 284,776 738,582 226,625 453,806 227,181

Operating income 98,726 107,505 415,802 92,341 308,297 215,956

Other income (expense):

Interest income 54 70 175 56 105 49

Dividend income 7,786 5,936 11,946 3,536 6,010 2,474

Realized and unrealized gains (losses) on investments 14,010 ( 16,695 ) 152,121 14,268 168,816 154,548

Change in fair value of financial instruments and other ( 4,471 ) 1,758 8,267 6,509 6,509 —

Income (loss) from method equity investments 1,629 1,149 1,172 ( 852 ) 23 875

Interest expense ( 26,441 ) ( 25,372 ) ( 66,014 ) ( 20,856 ) ( 40,642 ) ( 19,786 )

Income before income taxes 91,293 74,351 523,469 95,002 449,118 354,116

Provision for income taxes ( 23,847 ) ( 22,693 ) ( 140,113 ) ( 19,902 ) ( 117,420 ) ( 97,518 )

Net income 67,446 51,658 383,356 75,100 331,698 256,598

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,274 1,108 2,474 ( 576 ) 1,366 1,942

Net income attributable to B.

Riley Financial, Inc.

64,172 50,550 380,882 75,676 330,332 254,656

Preferred stock dividends 1,990 1,929 5,467 1,789 3,538 1,749

Net income available to common shareholders $ 62,182 $ 48,621 $ 375,415 $ 73,887 $ 326,794 $ 252,907

Basic income per common share $ 2.26 $ 1.76 $ 13.75 $ 2.70 $ 12.03 $ 9.38

Diluted income per common share $ 2.08 $ 1.69 $ 13.07 $ 2.58 $ 11.39 $ 8.81

Weighted average basic common shares outstanding 27,569,188 27,570,716 27,297,917 27,344,184 27,159,257 26,972,275

Weighted average diluted common shares outstanding 29,840,704 28,794,066 28,726,492 28,668,465 28,690,444 28,710,368

For the three months ended September 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended September 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

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

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

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

Sale of goods 4,130 — 4,130

Total revenues 340,363 ( 28,246 ) 312,117

Operating expenses:

Direct cost of services 44,523 — 44,523

Cost of goods sold 3,089 — 3,089

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

Restructuring charge 8,016 — 8,016

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

Total operating expenses 236,802 — 236,802

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

Other income (expense):

Interest income 686 — 686

Dividend income — 9,175 (a) 9,175

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

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

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

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

Income before income taxes 68,995 — 68,995

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

Net income 52,645 — 52,645

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

Net income attributable to B.

Riley Financial, Inc.

47,837 — 47,837

Preferred stock dividends 2,002 — 2,002

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

Basic income per common share $ 1.62 $ 1.62

Diluted income per common share $ 1.53 $ 1.53

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

Weighted average diluted common shares outstanding 29,968,417 29,968,417

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

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

For the nine months ended September 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Nine Months Ended September 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 678,065 $ ( 26,279 ) (a) $ 651,786

Trading (loss) income and fair value adjustments on loans ( 280,163 ) 136,205 (b) ( 143,958 )

Interest income - Loans and securities lending 182,855 — 182,855

Sale of goods 7,895 — 7,895

Total revenues 588,652 109,926 698,578

Operating expenses:

Direct cost of services 73,959 — 73,959

Cost of goods sold 7,334 — 7,334

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

Restructuring charge 8,016 — 8,016

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

Total operating expenses 639,128 — 639,128

Operating (loss) income ( 50,476 ) 109,926 59,450

Other income (expense):

Interest income 1,253 — 1,253

Dividend income — 26,279 (a) 26,279

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

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

Income from equity method investments 3,285 — 3,285

Interest expense ( 96,787 ) — ( 96,787 )

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

Benefit from income taxes 39,858 — 39,858

Net loss ( 93,139 ) — ( 93,139 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 9,245 — 9,245

Net loss attributable to B.

Riley Financial, Inc.

( 102,384 ) — ( 102,384 )

Preferred stock dividends 6,006 — 6,006

Net loss available to common shareholders $ ( 108,390 ) $ — $ ( 108,390 )

Basic loss per common share $ ( 3.86 ) $ ( 3.86 )

Diluted loss per common share $ ( 3.86 ) $ ( 3.86 )

Weighted average basic common shares outstanding 28,068,160 28,068,160

Weighted average diluted common shares outstanding 28,068,160 28,068,160

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

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

For the three months ended June 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended June 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 200,905 $ ( 9,243 ) (a) $ 191,662

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

Interest income - Loans and securities lending 63,835 — 63,835

Sale of goods 1,887 — 1,887

Total revenues 42,700 96,921 139,621

Operating expenses:

Direct cost of services 17,785 — 17,785

Cost of goods sold 1,994 — 1,994

Selling, general and administrative expenses 167,136 — 167,136

Interest expense - Securities lending and loan participations sold 14,544 — 14,544

Total operating expenses 201,459 — 201,459

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

Other income (expense):

Interest income 500 — 500

Dividend income — 9,243 (a) 9,243

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

Change in fair value of financial instruments and other 4,321 — 4,321

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

Interest expense ( 31,764 ) — ( 31,764 )

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

Benefit from income taxes 52,513 — 52,513

Net loss ( 136,588 ) — ( 136,588 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 3,571 — 3,571

Net loss attributable to B.

Riley Financial, Inc.

( 140,159 ) — ( 140,159 )

Preferred stock dividends 2,002 — 2,002

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

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

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

Weighted average basic common shares outstanding 28,051,570 28,051,570

Weighted average diluted common shares outstanding 28,051,570 28,051,570

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

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

For the six months ended June 30, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Six Months Ended June 30, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 411,580 $ ( 17,104 ) (a) $ 394,476

Trading (loss) income and fair value adjustments on loans ( 292,317 ) 155,276 (b) ( 137,041 )

Interest income - Loans and securities lending 125,261 — 125,261

Sale of goods 3,765 — 3,765

Total revenues 248,289 138,172 386,461

Operating expenses:

Direct cost of services 29,436 — 29,436

Cost of goods sold 4,245 — 4,245

Selling, general and administrative expenses 342,335 — 342,335

Interest expense - Securities lending and loan participations sold 26,310 — 26,310

Total operating expenses 402,326 — 402,326

Operating (loss) income ( 154,037 ) 138,172 ( 15,865 )

Other income (expense):

Interest income 567 — 567

Dividend income — 17,104 (a) 17,104

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

Change in fair value of financial instruments and other 10,302 — 10,302

Income from equity method investments 3,376 — 3,376

Interest expense ( 62,200 ) — ( 62,200 )

Loss before income taxes ( 201,992 ) — ( 201,992 )

Benefit from income taxes 56,208 — 56,208

Net loss ( 145,784 ) — ( 145,784 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 4,437 — 4,437

Net loss attributable to B.

Riley Financial, Inc.

( 150,221 ) — ( 150,221 )

Preferred stock dividends 4,004 — 4,004

Net loss available to common shareholders $ ( 154,225 ) $ — $ ( 154,225 )

Basic loss per common share $ ( 5.52 ) $ ( 5.52 )

Diluted loss per common share $ ( 5.52 ) $ ( 5.52 )

Weighted average basic common shares outstanding 27,953,845 27,953,845

Weighted average diluted common shares outstanding 27,953,845 27,953,845

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

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

For the three months ended March 31, 2022

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended March 31, 2022

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 210,675 $ ( 7,861 ) (a) $ 202,814

Trading (loss) income and fair value adjustments on loans ( 68,390 ) 49,112 (b) ( 19,278 )

Interest income - Loans and securities lending 61,426 — 61,426

Sale of goods 1,878 — 1,878

Total revenues 205,589 41,251 246,840

Operating expenses:

Direct cost of services 11,651 — 11,651

Cost of goods sold 2,251 — 2,251

Selling, general and administrative expenses 175,199 — 175,199

Interest expense - Securities lending and loan participations sold 11,766 — 11,766

Total operating expenses 200,867 — 200,867

Operating income 4,722 41,251 45,973

Other income (expense):

Interest income 67 — 67

Dividend income — 7,861 (a) 7,861

Realized and unrealized gains (losses) on investments — ( 49,112 ) (b) ( 49,112 )

Change in fair value of financial instruments and other 5,981 — 5,981

Income (loss) from equity method investments 6,775 — 6,775

Interest expense ( 30,436 ) — ( 30,436 )

Loss before income taxes ( 12,891 ) — ( 12,891 )

Benefit from income taxes 3,695 — 3,695

Net loss ( 9,196 ) — ( 9,196 )

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 866 — 866

Net loss attributable to B.

Riley Financial, Inc.

( 10,062 ) — ( 10,062 )

Preferred stock dividends 2,002 — 2,002

Net loss available to common shareholders $ ( 12,064 ) $ — $ ( 12,064 )

Basic loss per common share $ ( 0.43 ) $ ( 0.43 )

Diluted loss per common share $ ( 0.43 ) $ ( 0.43 )

Weighted average basic common shares outstanding 27,855,033 27,855,033

Weighted average diluted common shares outstanding 27,855,033 27,855,033

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

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

For the three months ended December 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended December 31, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 315,848 $ ( 7,786 ) (a) $ 308,062

Trading income (loss) and fair value adjustments on loans 68,858 ( 14,010 ) (b) 54,848

Interest income - Loans and securities lending 33,443 — 33,443

Sale of goods 3,961 — 3,961

Total revenues 422,110 ( 21,796 ) 400,314

Operating expenses:

Direct cost of services 12,955 — 12,955

Cost of goods sold 5,559 — 5,559

Selling, general and administrative expenses 270,712 — 270,712

Interest expense - Securities lending and loan participations sold 12,362 — 12,362

Total operating expenses 301,588 — 301,588

Operating income (loss) 120,522 ( 21,796 ) 98,726

Other income (expense):

Interest income 54 — 54

Dividend income — 7,786 (a) 7,786

Realized and unrealized gains (losses) on investments — 14,010 (b) 14,010

Change in fair value of financial instruments and other ( 4,471 ) — ( 4,471 )

Income from equity method investments 1,629 — 1,629

Interest expense ( 26,441 ) — ( 26,441 )

Income before income taxes 91,293 — 91,293

Provision for income taxes ( 23,847 ) — ( 23,847 )

Net income 67,446 — 67,446

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 3,274 — 3,274

Net income attributable to B.

Riley Financial, Inc.

64,172 — 64,172

Preferred stock dividends 1,990 — 1,990

Net income available to common shareholders $ 62,182 $ — $ 62,182

Basic income per common share $ 2.26 $ 2.26

Diluted income per common share $ 2.08 $ 2.08

Weighted average basic common shares outstanding 27,569,188 27,569,188

Weighted average diluted common shares outstanding 29,840,704 29,840,704

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

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

For the three months ended September 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended September 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 301,497 $ ( 5,936 ) (a) $ 295,561

Trading income and fair value adjustments on loans 18,197 16,695 (b) 34,892

Interest income - Loans and securities lending 26,869 — 26,869

Sale of goods 34,959 — 34,959

Total revenues 381,522 10,759 392,281

Operating expenses:

Direct cost of services 18,019 — 18,019

Cost of goods sold 12,442 — 12,442

Selling, general and administrative expenses 244,218 — 244,218

Interest expense - Securities lending and loan participations sold 10,097 — 10,097

Total operating expenses 284,776 — 284,776

Operating income 96,746 10,759 107,505

Other income (expense):

Interest income 70 — 70

Dividend income — 5,936 (a) 5,936

Realized and unrealized gains (losses) on investments — ( 16,695 ) (b) ( 16,695 )

Change in fair value of financial instruments and other 1,758 — 1,758

Income from equity method investments 1,149 — 1,149

Interest expense ( 25,372 ) — ( 25,372 )

Income before income taxes 74,351 — 74,351

Provision for income taxes ( 22,693 ) — ( 22,693 )

Net income 51,658 — 51,658

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,108 — 1,108

Net income attributable to B.

Riley Financial, Inc.

50,550 — 50,550

Preferred stock dividends 1,929 — 1,929

Net income available to common shareholders $ 48,621 $ — $ 48,621

Basic income per common share $ 1.76 $ 1.76

Diluted income per common share $ 1.69 $ 1.69

Weighted average basic common shares outstanding 27,570,716 27,570,716

Weighted average diluted common shares outstanding 28,794,066 28,794,066

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

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

For the nine months ended September 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Nine Months Ended September 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 857,109 $ ( 11,946 ) (a) $ 845,163

Trading income (loss) and fair value adjustments on loans 317,818 ( 152,121 ) (b) 165,697

Interest income - Loans and securities lending 89,280 — 89,280

Sale of goods 54,244 — 54,244

Total revenues 1,318,451 ( 164,067 ) 1,154,384

Operating expenses:

Direct cost of services 41,435 — 41,435

Cost of goods sold 21,394 — 21,394

Selling, general and administrative expenses 635,484 — 635,484

Interest expense - Securities lending and loan participations sold 40,269 — 40,269

Total operating expenses 738,582 — 738,582

Operating income (loss) 579,869 ( 164,067 ) 415,802

Other income (expense):

Interest income 175 — 175

Dividend income — 11,946 (a) 11,946

Realized and unrealized gains (losses) on investments — 152,121 (b) 152,121

Change in fair value of financial instruments and other 8,267 — 8,267

Income from equity method investments 1,172 — 1,172

Interest expense ( 66,014 ) — ( 66,014 )

Income before income taxes 523,469 — 523,469

Provision for income taxes ( 140,113 ) — ( 140,113 )

Net income 383,356 — 383,356

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 2,474 — 2,474

Net income attributable to B.

Riley Financial, Inc.

380,882 — 380,882

Preferred stock dividends 5,467 — 5,467

Net income available to common shareholders $ 375,415 $ — $ 375,415

Basic income per common share $ 13.75 $ 13.75

Diluted income per common share $ 13.07 $ 13.07

Weighted average basic common shares outstanding 27,297,917 27,297,917

Weighted average diluted common shares outstanding 28,726,492 28,726,492

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

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

For the three months ended June 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended June 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 266,143 $ ( 3,536 ) (a) $ 262,607

Trading income (loss) and fair value adjustments on loans 32,679 ( 14,268 ) (b) 18,411

Interest income - Loans and securities lending 25,491 — 25,491

Sale of goods 12,457 — 12,457

Total revenues 336,770 ( 17,804 ) 318,966

Operating expenses:

Direct cost of services 12,094 — 12,094

Cost of goods sold 3,626 — 3,626

Selling, general and administrative expenses 199,922 — 199,922

Interest expense - Securities lending and loan participations sold 10,983 — 10,983

Total operating expenses 226,625 — 226,625

Operating income (loss) 110,145 ( 17,804 ) 92,341

Other income (expense):

Interest income 56 — 56

Dividend income — 3,536 (a) 3,536

Realized and unrealized gains (losses) on investments — 14,268 (b) 14,268

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

Loss from equity method investments ( 852 ) — ( 852 )

Interest expense ( 20,856 ) — ( 20,856 )

Income before income taxes 95,002 — 95,002

Provision for income taxes ( 19,902 ) — ( 19,902 )

Net income 75,100 — 75,100

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests ( 576 ) — ( 576 )

Net income attributable to B.

Riley Financial, Inc.

75,676 — 75,676

Preferred stock dividends 1,789 — 1,789

Net income available to common shareholders $ 73,887 $ — $ 73,887

Basic income per common share $ 2.70 $ 2.70

Diluted income per common share $ 2.58 $ 2.58

Weighted average basic common shares outstanding 27,344,184 27,344,184

Weighted average diluted common shares outstanding 28,668,465 28,668,465

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

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

For the six months ended June 30, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Six Months Ended June 30, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 555,612 $ ( 6,010 ) (a) $ 549,602

Trading income (loss) and fair value adjustments on loans 299,621 ( 168,816 ) (b) 130,805

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

Sale of goods 19,285 — 19,285

Total revenues 936,929 ( 174,826 ) 762,103

Operating expenses:

Direct cost of services 23,416 — 23,416

Cost of goods sold 8,952 — 8,952

Selling, general and administrative expenses 391,266 — 391,266

Interest expense - Securities lending and loan participations sold 30,172 — 30,172

Total operating expenses 453,806 — 453,806

Operating income (loss) 483,123 ( 174,826 ) 308,297

Other income (expense):

Interest income 105 — 105

Dividend income — 6,010 (a) 6,010

Realized and unrealized gains (losses) on investments — 168,816 (b) 168,816

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

Income from equity method investments 23 — 23

Interest expense ( 40,642 ) — ( 40,642 )

Income before income taxes 449,118 — 449,118

Provision for income taxes ( 117,420 ) — ( 117,420 )

Net income 331,698 — 331,698

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,366 — 1,366

Net income attributable to B.

Other comprehensive income (loss) 2,699 ( 4,720 ) ( 257 )

Comprehensive (loss) income $ ( 97,211 ) $ ( 164,549 ) $ 444,797

See Notes to Condensed Financial Statements

Riley Financial, Inc.

(Parent Company Only)

Condensed Statements of Cash Flows

(Dollars in thousands)

Year Ended December 31,

2023 2022 2021

Preferred stock dividends 3,538 — 3,538

Net income available to common shareholders $ 326,794 $ — $ 326,794

Basic income per common share $ 12.03 $ 12.03

Diluted income per common share $ 11.39 $ 11.39

Weighted average basic common shares outstanding 27,159,257 27,159,257

Weighted average diluted common shares outstanding 28,690,444 28,690,444

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

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

For the three months ended March 31, 2021

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

Three Months Ended March 31, 2021

As Reported Restatement Adjustments Restatement Reference As Restated

Services and fees $ 289,469 $ ( 2,474 ) (a) $ 286,995

Trading (loss) income and fair value adjustments on loans 266,942 ( 154,548 ) (b) 112,394

Interest income - Loans and securities lending 36,920 — 36,920

Sale of goods 6,828 — 6,828

Total revenues 600,159 ( 157,022 ) 443,137

Operating expenses:

Direct cost of services 11,322 — 11,322

Cost of goods sold 5,326 — 5,326

Selling, general and administrative expenses 191,344 — 191,344

Interest expense - Securities lending and loan participations sold 19,189 — 19,189

Total operating expenses 227,181 — 227,181

Operating income (loss) 372,978 ( 157,022 ) 215,956

Other income (expense):

Interest income 49 — 49

Dividend income — 2,474 (a) 2,474

Realized and unrealized gains (losses) on investments — 154,548 (b) 154,548

Change in fair value of financial instruments and other — — —

Income from equity method investments 875 — 875

Interest expense ( 19,786 ) — ( 19,786 )

Income before income taxes 354,116 — 354,116

Provision for income taxes ( 97,518 ) — ( 97,518 )

Net income 256,598 — 256,598

Net income attributable to noncontrolling interests and redeemable noncontrolling interests 1,942 — 1,942

Net income attributable to B.

Cash flows from operating activities:

Net (loss) income $ ( 99,910 ) $ ( 159,829 ) $ 445,054

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

Equity in net loss of subsidiaries 6,104 56,461 ( 434,721 )

Share-based compensation 16,241 21,743 13,419

Non-cash interest and other 5,228 4,631 3,041

Depreciation and amortization 606 646 686

Loss on extinguishment of debt — — 6,514

Change in operating assets and liabilities:

Other assets 7,994 32,006 348,837

Accounts payable, accrued expenses and other liabilities 22,562 1,721 11,685

Other liabilities ( 2,268 ) ( 42,411 ) ( 27,561 )

Net cash (used in) provided by operating activities ( 43,443 ) ( 85,032 ) 366,954

Cash flows from investing activities:

Contributions to subsidiaries ( 392,984 ) ( 342,031 ) ( 1,349,077 )

Distributions from subsidiaries 580,000 519,213 522,824

Net cash provided by (used in) investing activities 187,016 177,182 ( 826,253 )

Cash flows from financing activities:

Proceeds from issuance of senior notes 185 51,601 1,249,083

Redemption of senior notes ( 58,924 ) — ( 507,348 )

Payment of debt issuance and offering costs ( 714 ) ( 1,041 ) ( 15,768 )

ESPP and payment of employment taxes on vesting of restricted stock ( 7,591 ) ( 10,286 ) ( 9,620 )

Common dividends paid ( 141,099 ) ( 119,454 ) ( 347,134 )

Preferred dividends paid ( 8,057 ) ( 8,008 ) ( 7,458 )

Repurchase of common stock ( 69,479 ) ( 6,516 ) ( 2,656 )

Proceeds from issuance of common stock 115,000 — 64,713

Proceeds from issuance of preferred stock 467 874 14,712

Net cash (used in) provided by financing activities ( 170,212 ) ( 92,830 ) 438,524

Decrease in cash, cash equivalents and restricted cash ( 26,639 ) ( 680 ) ( 20,775 )

Cash, cash equivalents and restricted cash, beginning of year 27,786 28,466 49,241

Cash, cash equivalents and restricted cash, end of year $ 1,147 $ 27,786 $ 28,466

See Notes to Condensed Financial Statements

NOTES TO CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY)

NOTE 1 — BASIS OF PRESENTATION

The accompanying condensed financial statements for B.

Riley Financial, Inc.

254,656 — 254,656

Preferred stock dividends 1,749 — 1,749

Net income available to common shareholders $ 252,907 $ — $ 252,907

Basic income per common share $ 9.38 $ 9.38

Diluted income per common share $ 8.81 $ 8.81

Weighted average basic common shares outstanding 26,972,275 26,972,275

Weighted average diluted common shares outstanding 28,710,368 28,710,368

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

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

(the “Parent Company”) summarize the results of operations and cash flows of the Parent Company for the years ended December 31, 2023, 2022, and 2021 and the financial position as of December 31, 2023 and 2022.

The condensed financial statements of the Parent Company have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of the Parent Company (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the Company.

The ability of the Parent Company's operating subsidiaries to pay dividends may be restricted due to the terms of the Nomura Credit Agreement.

In these statements, the Parent Company's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date the Parent Company began consolidating them.

The Parent Company's share of net income of its unconsolidated subsidiaries is included in consolidated income using the equity method.

The Parent Company financial statements should be read in conjunction with the consolidated financial statements of B.

Riley Financial and subsidiaries for the corresponding years.

NOTE 2 — TRANSACTIONS WITH SUBSIDIARIES

During the years ended December 31, 2023, 2022, and 2021, distributions from subsidiaries to the Parent Company were $ 580,000 , $ 519,213 , and $ 522,824 , respectively, and contributions from the Parent Company to its subsidiaries were $ 392,984 , $ 342,031 , and $ 1,349,077 , respectively.

The Parent Company maintains most of its cash and cash equivalents at its wholly owned subsidiaries to maximize returns on investments.

Distributions from subsidiaries to the Parent Company are primarily to fund periodic investments that are made at the Parent Company or to fund debt service and interest costs on on the senior notes, common stock and preferred stock dividends, and repurchases of common stock or other Parent Company securities.

Contributions from the Parent Company to its subsidiaries are primarily made to fund acquisitions and investments that are made at the subsidiary level.

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

What changed 10-K

Item 9A. Controls and Procedures