What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-15 compared with 2023-11-09 · 623 added, 776 removed, 857 unchanged (62% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2024 December 31,

4 unchanged sentences

Securities borrowed 2,050,079 2,870,939

Accounts receivable, net 127,418 149,110

Accounts receivable, net of allowance for credit losses of $ 7,122 and $ 7,339 as of March 31, 2024 and December 31, 2023, respectively

123,797 115,496

Due from related parties 92 172

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

Loans receivable, at fair value (includes $ 355,287 and $ 387,657 from related parties as of March 31, 2024 and December 31, 2023, respectively)

452,496 532,419

10 unchanged sentences

Deferred revenue 68,643 71,504

Deferred income taxes 6,677 29,548

Due to related parties and partners 1,763 2,731

Due to clearing brokers — 19,307

Securities sold not yet purchased 6,423 8,601

7 unchanged sentences

Commitments and contingencies (Note 16)

Redeemable noncontrolling interests in equity of subsidiaries — 178,622

Riley Financial, Inc.

1 unchanged sentence

1,000,000 shares authorized;

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

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

4,563 shares issued and outstanding as of March 31, 2024 and December 31, 2023;

and liquidation preference of $ 114,082 as of March 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

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

30,095,303 and 29,937,067 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 579,647 572,170

Accumulated deficit ( 347,558 ) ( 281,285 )

Accumulated other comprehensive loss ( 5,476 ) ( 2,470 )

Accumulated other comprehensive (loss) income ( 3,643 ) 229

Riley Financial, Inc.

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

As Restated As Restated

Services and fees $ 257,303 $ 235,559

8 unchanged sentences

Restructuring charge 789 93

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

Interest expense - Securities lending and loan participations sold 35,383 32,424

Total operating expenses 346,461 347,167

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

Operating (loss) income ( 3,429 ) 84,923

Other income (expense):

1 unchanged sentence

Dividend income 11,815 13,204

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

Realized and unrealized losses on investments ( 29,545 ) ( 28,442 )

Change in fair value of financial instruments and other 314 ( 209 )

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

Loss from equity investments ( 4 ) ( 10 )

Interest expense ( 44,864 ) ( 47,561 )

2 unchanged sentences

Net (loss) income ( 47,954 ) 16,560

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

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 1,211 ( 595 )

Net (loss) income attributable to B.

10 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Dollars in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income $ ( 47,954 ) $ 16,560

1 unchanged sentence

Change in cumulative translation adjustment ( 3,872 ) 866

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

Other comprehensive (loss) income, net of tax ( 3,872 ) 866

Total comprehensive (loss) income ( 51,826 ) 17,426

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

Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 1,211 ( 449 )

Comprehensive (loss) income attributable to B.

6 unchanged sentences

(Dollars in thousands, except share data)

For the Three Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

Preferred Stock Common Stock Additional

5 unchanged sentences

Shares Amount Shares Amount

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

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

Balance, January 1, 2024 4,563 $ — 29,937,067 $ 3 $ 572,170 $ ( 281,285 ) $ 229 $ 68,449 $ 359,566

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 158,236 — ( 1,170 ) — — — ( 1,170 )

Excise taxes — — — — 115 — — — 115

Share based payments — — — — 8,611 — — — 8,611

Share based payments in equity of subsidiary — — — — 36 — — — 36

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

Dividends on common stock ($ 0.50 per share)

4 unchanged sentences

Contributions from noncontrolling interests — — — — — — — 2,502 2,502

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

Other comprehensive loss — — — — — — ( 3,872 ) — ( 3,872 )

Balance, September 30, 2023

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

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

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

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

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

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

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

Dividends on common stock ($ 1.00 per share)

— — — — — ( 31,061 ) — — ( 31,061 )

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

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

Remeasurement of B.

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

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

Contributions from noncontrolling interests — — — — — — — 2,823 2,823

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

Balance, September 30, 2022

Balance, March 31, 2024

4,563 $ — 30,095,303 $ 3 $ 579,647 $ ( 347,558 ) $ ( 3,643 ) $ 71,208 $ 299,657

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

For the Nine Months Ended September 30, 2023 and 2022

Preferred Stock Common Stock Additional

Capital (Accumulated Deficit) Retained

Earnings Accumulated

Comprehensive

Loss Noncontrolling

Interests Total

Shares Amount Shares Amount

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

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

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

ESPP shares issued and vesting of restricted stock and other, net of shares withheld for employer taxes — — 1,368,935 — ( 8,619 ) — — — ( 8,619 )

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

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

2 unchanged sentences

Share based payments — — — — 13,678 — — — 13,678

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

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

Dividends on common stock ($ 1.00 per share)

1 unchanged sentence

Dividends on preferred stock — — — — — ( 2,012 ) — — ( 2,012 )

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

Remeasurement of B.

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

Net income — — — — — 17,155 — ( 449 ) 16,706

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

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

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

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

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

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

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

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

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

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

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

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

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

Dividends on common stock ($ 3.00 per share)

— — — — — ( 93,128 ) — — ( 93,128 )

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

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

Remeasurement of B.

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

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

Contributions from noncontrolling interests — — — — — — — 11,350 11,350

Riley Principal 250 Merger Corporations subsidiary temporary equity — — — — — ( 1,198 ) — — ( 1,198 )

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

Other comprehensive loss — — — — — — 866 — 866

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

Balance, March 31, 2023

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

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

3 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

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

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

Net (loss) income $ ( 47,954 ) $ 16,560

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

Depreciation and amortization 11,137 13,077

Provision for doubtful accounts 5,881 2,786

Provision for credit losses 436 3,173

Share-based compensation 8,682 13,746

1 unchanged sentence

Non-cash interest and other ( 2,661 ) ( 1,141 )

Depreciation of rental merchandise 4,202 —

Effect of foreign currency on operations 271 271

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

Loss from equity investments 4 10

Dividends from equity investments 37 129

Deferred income taxes ( 16,012 ) 5,807

Impairment of goodwill and tradenames 37,233 —

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

Gain on extinguishment of loan — ( 1,102 )

Loss on extinguishment of debt 5,294 —

Gain on equity investment — ( 6,790 )

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

(Gain) loss on sale of business and disposal of fixed assets ( 203 ) 5

Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests 293 308

10 unchanged sentences

Securities loaned ( 818,137 ) 603,951

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

Net cash provided by operating activities 135,357 52,617

Cash flows from investing activities:

1 unchanged sentence

Repayments of loans receivable 39,493 260,587

Sale of loan receivable 7,500 —

Acquisition of businesses and minority interest, net of $ 772 and $ 32,135 cash acquired for 2023 and 2022, respectively

( 15,276 ) ( 113,605 )

Sale of loans receivable 22,785 7,500

Acquisition of businesses and minority interest, net of $ 234 cash acquired for 2023

Sale of business, net of cash sold and other ( 184 ) 1,364

Purchases of property, equipment and intangible assets ( 913 ) ( 1,696 )

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

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

Purchase of equity and other investments — ( 662 )

Net cash provided by investing activities 312,954 41,746

Net cash provided by (used in) investing activities 18,278 ( 57,164 )

Cash flows from financing activities:

1 unchanged sentence

Repayment of revolving line of credit ( 39,343 ) ( 17,237 )

Repayment of notes payable ( 11,853 ) ( 409 )

Repayment of notes payable and other ( 5,361 ) ( 11,510 )

Repayment of term loan ( 30,036 ) ( 72,924 )

Proceeds from term loan — 128,187

Proceeds from issuance of senior notes 185 51,215

Redemption of senior notes ( 115,492 ) —

1 unchanged sentence

Payment of contingent consideration ( 70 ) ( 1,302 )

ESPP and payment of employment taxes on vesting of restricted stock ( 8,619 ) ( 6,733 )

Payment of employment taxes on vesting of restricted stock ( 1,170 ) ( 4,819 )

Common dividends paid ( 16,014 ) ( 46,856 )

3 unchanged sentences

Contributions from noncontrolling interests 2,502 431

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

Proceeds from issuance of common stock 115,000 —

Proceeds from issuance of preferred stock — 467

16 unchanged sentences

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 owns 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:

4 unchanged sentences

(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;

and (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.

NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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

The following tables summarize the effects of the correction of the classification error on the Company’s restated condensed consolidated statements of operations for the three and nine months ended September 30, 2022.

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

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

Three Months Ended September 30, 2022

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

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

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

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

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

Nine Months Ended September 30, 2022

As Previously

Reported Restatement Adjustments Restatement Reference As Restated

Statement of Operations

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 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.

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

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

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(o) for further discussion.

See Note 2(n) for further discussion.

The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”).

1 unchanged sentence

In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included.

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

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

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

(b) Use of Estimates

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

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

Estimates are used when accounting for certain items such as valuation of securities, allowance for 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.

2 unchanged sentences

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

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

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 35,383 and $ 32,424 during the three months ended March 31, 2024 and 2023, respectively.

(d) Concentration of Risk

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.

3 unchanged sentences

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

Concentrations of credit risk can be affected by changes in economic, industry,

or geographical factors.

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

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

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 19.

On February 14, 2024, the Company collected $ 15,000 of principal payments which reduced the loan balance to $ 93,000 .

This loan combined with two other existing loans receivable with an outstanding balance of $ 58,350 and $ 62,808 as of March 31, 2024 and December 31, 2023, respectively, is collateralized by consumer loan receivables of customers of the furniture and electronics retailer.

These loans have an aggregate fair value of $ 147,630 and $ 167,568 or 32.6 % and 31.5 % of the loan portfolio as of March 31, 2024 and December 31, 2023, respectively, 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 with a principal amount of $ 200,506 as of March 31, 2024 and December 31, 2023.

The loan receivable allows for interest to be paid-in-kind, which is capitalized to the loan receivable balance annually on the loan's anniversary date.

The interest receivable on the loan was $ 14,971 and $ 8,889 as of March 31, 2024 and December 31, 2023, respectively, and is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

The loan receivable 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(h) below.

The fair value of the loan receivable was $ 183,268 and $ 200,506 or 40.5 % and 37.7 % of the total loan portfolio as of March 31, 2024 and December 31, 2023, respectively.

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 $ 330,898 and $ 368,074 as of March 31, 2024 and December 31, 2023, respectively.

(e) Advertising Expenses

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

Advertising costs totaled $ 6,047 and $ 1,584 during the three months ended September 30, 2023 and 2022 and $ 16,904 and $ 5,941 during the nine months ended September 30, 2023 and 2022, respectively.

Advertising costs totaled $ 2,410 and $ 2,937 during the three months ended March 31, 2024 and 2023, respectively.

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

2 unchanged sentences

(g) Restricted Cash

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

As of March 31, 2024 and December 31, 2023, restricted cash included $ 1,889 and $ 1,875 , respectively, primarily consisting of cash collateral for leases.

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

September 30,

2024 December 31,

3 unchanged sentences

(h) Loans Receivable

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

Under 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 condensed consolidated statements of operations.

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

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

The loans have various maturities through December 2027.

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

During the three months ended September 30, 2023 and 2022, the Company recorded net unrealized losses of $ 859 and $ 19,158 , respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded net unrealized gains of $ 51,807 and net unrealized losses of $ 19,287 , respectively, on the loans receivable at fair value, which was included in trading income (loss) and fair value adjustments on loans on the condensed consolidated statements of operations.

Loans receivable, at fair value on non-accrual was $ 41,656 and $ 7,153 as of September 30, 2023 and December 31, 2022, respectively, which represented approximately 7.6 % and 1.0 % of total loans receivable, at fair value as of September 30, 2023 and December 31, 2022, respectively.

Loans receivable, at fair value totaled $ 452,496 and $ 532,419 as of March 31, 2024 and December 31, 2023, respectively.

The loans have various maturities through August 2033.

As of March 31, 2024 and December 31, 2023, the historical cost of loans receivable accounted for under the fair value option was $ 494,730 and $ 555,882 , respectively, which included principal balances of $ 499,956 and $ 563,637 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 5,226 and $ 7,755 , respectively.

The principal balance of loans receivable exceeded the fair value of loans by $ 42,234 and $ 23,463 as of March 31, 2024 and December 31, 2023, 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 three months ended March 31, 2024 and 2023, the Company recorded net unrealized losses of $ 18,771 and net unrealized gains of $ 43,459 , respectively, on loans receivable, at fair value, which is included in trading income (loss) and fair value adjustments on loans on the condensed consolidated statements of operations.

Loans receivable, at fair value on non-accrual and 90 days or greater past due was approximately zero as of March 31, 2024.

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.

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 condensed consolidated statements of operations.

The amount of gains or (losses) included in earnings attributable to changes in instrument – specific credit risk was $( 11,339 ) and $ 37,488 during the three months ended March 31, 2024 and 2023, 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 period 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 clients.

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

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

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

As of March 31, 2024, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

(“B&W”) as further described in Note 16(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 March 31, 2024, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure.

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

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

On August 21, 2023, 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.

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 $ 197,782 and $ 232,065 as of March 31, 2024 and December 31, 2023, respectively.

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 condensed consolidated statements of operations.

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

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

As of March 31, 2024, loans receivable had an aggregate remaining contractual principal balance of $ 499,956 , an aggregate fair value of $ 452,496 , and the contractual principal balance exceeded the fair value by $ 47,460 .

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 .

Badcock Loan Receivable

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

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

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.

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

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 (“Badcock Receivables II”) with WSBC.

This purchase of $ 168,363 consumer credit receivables of WSBC was partially financed by a $ 148,200 term loan discussed in Note 10.

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

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

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

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These loan receivables are measured at fair value.

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

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

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

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

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 10 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 the performance of certain consumer receivables held by BRRII.

This loan receivable is measured at fair value.

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

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

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

As of March 31, 2024 and December 31, 2023, the Badcock Receivables I loan receivable to WSBC in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $ 15,868 and $ 20,624 , respectively.

As of March 31, 2024 and 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 condensed consolidated balance sheets in loans receivable, at fair value in the amount of $ 42,482 and $ 42,183 , respectively.

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.

The Company funded an additional $ 15,470 during the three months ended March 31, 2024, which increased the DIP financing to $ 33,000 at March 31, 2024.

This loan receivable had a fair value of $ 32,673 and $ 17,980 as of March 31, 2024 and December 31, 2023, respectively.

An additional $ 3,000 of DIP financing was funded in the second quarter of 2024, for a total DIP financing (inclusive of $ 1,700 in fees payable in kind) of $ 37,700 .

On May 3, 2024, the Company funded an additional $ 21,300 in cash to complete the acquisition of Nogin of which $ 15,500 was a payment to the Consenting Noteholders.

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

Securities and other investments owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value.

Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices.

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

corporate bonds;

other fixed income securities including, government and agency bonds;

loans receivable valued at fair value;

and investments in partnerships.

Securities sold, but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices.

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

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

September 30,

As of March 31, 2024 and December 31, 2023, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:

2024 December 31,

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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.

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

The 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 December 31, 2023 and September 30, 2023 correspond to amounts as of March 31, 2024 and December 31, 2023, respectively, of the Company;

income statement amounts during the three months ended December 31, 2023 and 2022 correspond to amounts during the three months ended March 31, 2024 and 2023, respectively, of the Company), which is the period in which the most recent financial information is available:

December 31, September 30,

Current assets $ 47,356 $ 51,588

Noncurrent assets $ 266,995 $ 269,809

Current liabilities $ 9,524 $ 8,594

Noncurrent liabilities $ 621 $ 760

Equity attributable to investee $ 301,380 $ 309,167

Noncontrolling interest $ 2,826 $ 2,876

For the three months ended December 31,

Revenues $ 33,966 $ 27,971

Cost of revenues $ 19,069 $ 16,387

Net income attributable to investees $ 15,152 $ 11,808

(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 March 31, 2024 and December 31, 2023, the fair value of these five investments totaled $ 288,436 and $ 283,057 , respectively, and are included in securities and other investments owned, at fair value in the condensed 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 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 Mr.

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 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 10, 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 June 30, 2023 correspond to amounts as of September 30, 2023 of the Company;

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

June 30, 2023

Total assets $ 3,571,861

Total liabilities $ 3,346,430

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 December 31, 2023 and September 30, 2023 correspond to amounts as of March 31, 2024 and December 31, 2023, respectively, of the Company;

income statement amounts during the three months ended December 31, 2023 correspond to amounts during the three months ended March 31, 2024 of the Company), which is the period in which the most recent financial information is available:

December 31, 2023 September 30, 2023

Current assets $ 961,787 $ 1,219,682

Noncurrent assets $ 3,131,506 $ 3,142,660

Current liabilities $ 720,510 $ 749,894

Noncurrent liabilities $ 2,640,805 $ 2,695,445

Equity attributable to investee $ 731,978 $ 917,003

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

For the three months ended December 31,

Revenues $ 806,229

Cost of revenues $ 499,679

Loss from continuing operations $ ( 1,175 )

Net loss attributable to investees $ ( 169,583 )

The following tables contain summarized financial information with respect to two of the Company's individually greater than 20% investments, where the Company has a voting interest in each investee of 41 % and 43 %, respectively, which has been aggregated and included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 and September 30, 2022 correspond to amounts as of September 30, 2023 and December 31, 2022, respectively, of the Company;

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

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

June 30, 2023 September 30, 2022

Total assets $ 193,335 $ 202,520

Total liabilities $ 9,780 $ 5,737

As of March 31, 2024 and December 31, 2023, the fair value of the investment in Freedom VCM totaled $ 244,638 and $ 287,043 , respectively, and is included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

The change in fair value recorded in the income statement was an unrealized loss of $ 42,405 for the three months ended March 31, 2024.

The change in fair value recorded in the income statement was an unrealized gain of $ 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 December 31, 2023 and September 30, 2023 correspond to amounts as of March 31, 2024 and December 31, 2023, respectively, of the Company;

December 31, 2023 September 30, 2023

Current assets $ 497,593 $ 542,300

Noncurrent assets $ 278,105 $ 294,979

Current liabilities $ 350,197 $ 393,539

Noncurrent liabilities $ 625,851 $ 585,430

Equity attributable to investee $ ( 200,961 ) $ ( 142,316 )

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

2023 2022 2023 2022

Noncontrolling interest $ 611 $ 626

For the three months ended December 31,

Revenues $ 227,167 $ 236,424

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

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

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

June 30, 2023 September 30, 2022

Total assets $ 986,880 $ 881,567

Total liabilities $ 999,900 $ 898,695

Cost of revenues $ 171,552 $ 182,760

Loss from continuing operations $ ( 54,266 ) $ ( 2,289 )

Net (loss) income $ ( 62,724 ) $ 5,660

Net (loss) income attributable to investees $ ( 66,454 ) $ 2,021

As of March 31, 2024 and December 31, 2023, the fair value of the investment in B&W totaled $ 31,015 and $ 40,072 , respectively, and is included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

Other Public Company Equity Investments

As of March 31, 2024, the Company had a voting interest of 14 % in Synchronoss Technologies, Inc.

The Company has significant influence due to the equity ownership interest and board representation for this company.

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

The following tables contain summarized financial information with respect to Synchronoss Technologies, Inc., included below for purposes of the disclosure a quarter in

arrears (balance sheet amounts as of December 31, 2023 and September 30, 2023 correspond to amounts as of March 31, 2024 and December 31, 2023, respectively, of the Company;

Synchronoss Technologies, Inc.

December 31, 2023 September 30, 2023

Current assets $ 82,002 $ 85,903

Noncurrent assets $ 228,335 $ 275,304

Current liabilities $ 47,697 $ 74,528

Noncurrent liabilities $ 164,706 $ 166,673

Equity attributable to investee $ 97,934 $ 120,006

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

2023 2022 2023 2022

Synchronoss Technologies, Inc.

For the three months ended December 31,

Revenues $ 41,402 $ 41,252

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

As of September 30, 2023 and December 31, 2022, the fair value of these equity securities totaled $ 603,390 and $ 371,948 , respectively, and are included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

Cost of revenues $ 10,292 $ 11,999

Net loss attributable to investees $ ( 35,001 ) $ ( 15,927 )

As of March 31, 2024 and December 31, 2023, the fair value of the equity investment in Synchronoss Technologies, Inc.

was $ 11,806 and $ 8,780 , respectively.

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

Other Equity Investments

As of March 31, 2024, 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 March 31, 2024.

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 December 31, 2023 and September 30, 2023 correspond to amounts as of March 31, 2024 and December 31, 2023, respectively, of the Company;

income statement amounts during the three months ended December 31, 2023 and 2022 correspond to amounts during the

three months ended March 31, 2024 and 2023, respectively, of the Company), which is the period in which the most recent financial information is available:

December 31, 2023 September 30, 2023

Current assets $ 279,810 $ 281,610

Noncurrent assets $ 622,632 $ 627,858

Current liabilities $ 185,925 $ 150,114

Noncurrent liabilities $ 236,829 $ 277,638

Preferred stock $ 4,500 $ 4,500

Equity attributable to investee $ 475,188 $ 477,216

For the three months ended December 31,

Revenues $ 170,034 $ 37,924

Cost of revenues 145,288 $ 33,062

Net loss attributable to investees ( 852 ) $ ( 13,613 )

As of March 31, 2024 and December 31, 2023, the fair value of these six investments totaled $ 72,145 and $ 87,713 , respectively, and is included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

(j) Fair Value Measurements

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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.

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

As of September 30, 2023 and December 31, 2022, partnership and investment fund interests valued at NAV of $ 38,807 and $ 70,063 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

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

from the general partner or fund administrator.

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

As of March 31, 2024 and December 31, 2023, partnership and investment fund interests valued at NAV of $ 18,964 and $ 35,196 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

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

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

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

As of September 30, 2023 and December 31, 2022, investments in nonpublic entities valued using a measurement alternative of $ 79,683 and $ 94,109 , respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets.

The following table presents, as of March 31, 2024 and December 31, 2023, 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:

2024 December 31,

Securities and other investments owned, carrying value $ 68,135 $ 64,455

Upward carrying value changes 928 100

Downward carrying value changes/impairment ( 2 ) ( 21,395 )

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

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

The Company did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition as of September 30, 2023 and December 31, 2022, other than the fair value of goodwill and tradename as more fully discussed in Note 9.

As of December 31, 2022, the Company had $ 174,437 of funds held in trust that were invested in a mutual fund that invests in U.S.

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

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

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

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

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

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

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

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

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

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

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

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

The Company did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition as of March 31, 2024 and December 31, 2023.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of March 31, 2024 and December 31, 2023.

Financial Assets and Liabilities Measured at Fair Value on a

Recurring Basis as of September 30, 2023 Using

Fair value as of September 30, 2023

Recurring Basis as of March 31, 2024 Using

Fair value as of March 31, 2024

Quoted prices in active markets

24 unchanged sentences

(Level 2) Significant unobservable inputs

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

Securities and other investments owned:

11 unchanged sentences

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

Warrant liabilities 173 173 — —

Contingent consideration 27,985 — — 27,985

Total liabilities measured at fair value $ 42,421 $ 1,037 $ 7,564 $ 33,820

As of September 30, 2023 and December 31, 2022, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,224,259 and $ 1,070,117 , respectively, or 19.9 % and 17.5 %, respectively, of the Company’s total assets.

As of March 31, 2024 and December 31, 2023, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 1,127,175 and $ 1,268,057 , respectively, or 22.6 % and 20.9 %, respectively, of the Company’s total assets.

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

The following table summarizes the significant unobservable inputs in the fair value measurement of Level 3 financial assets and liabilities by category of investment and valuation technique as of September 30, 2023 and December 31, 2022:

Fair value at

September 30, 2023

Fair value at March 31,

2024 Valuation

Technique Unobservable

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231,837 Market approach Market price of related security $ 17.22 $ 17.22

Multiple of Sales 0.6 x - 0.7 x

Total level 3 assets measured at fair value $ 1,127,175

3 unchanged sentences

Market interest rate 8.5 % 8.5 %

Revenue volatility 5.1 % 5.1 %

Total level 3 liabilities measured at fair value $ 32,571

Total level 3 liabilities measured at fair value $ 34,923 Revenue volatility 5.0 % - 6.3 %

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

Fair value at December 31,

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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 to 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

3 unchanged sentences

Market interest rate 8.5 % 8.5 %

Revenue volatility 5.1 % 5.1 %

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

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

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

The changes in Level 3 fair value hierarchy during the three months ended March 31, 2024 and 2023 were as follows:

Period Level 3 Changes During the Period Level 3

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Settlements Transfer in

Three Months Ended September 30, 2023

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

Loans receivable at fair value 683,827 ( 859 ) 1,531 ( 135,357 ) — 549,142

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,352 — 557 ( 325 ) — 4,584

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

Three Months Ended September 30, 2022

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

Loans receivable at fair value 770,840 ( 19,158 ) 4,181 58,852 — 814,715

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,160 — 356 ( 194 ) — 4,322

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

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

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

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

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

Year Level 3 Changes During the Period Level 3

Adjustments (1) Relating to

Undistributed

Earnings Purchases,

Settlements Transfer in

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Equity securities $ 735,638 $ ( 51,009 ) $ 12 $ ( 8,888 ) $ ( 1,074 ) $ 674,679

2 unchanged sentences

Contingent consideration 27,985 1,407 — ( 70 ) — 29,322

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Equity securities $ 368,465 $ ( 9,016 ) $ — $ 6,487 $ ( 6,895 ) $ 359,041

2 unchanged sentences

Contingent consideration 31,046 ( 3,447 ) — 1,285 — 28,884

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

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

The amount reported in the table above during the three and nine months ended September 30, 2023 and 2022 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $( 10,390 ) relating to equity securities and $( 12,130 ) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 40,619 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended March 31, 2024.

Fair value adjustments represent realized and unrealized gains (losses) of which $( 12 ) relating to equity securities and $ 43,459 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $( 9,004 ) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended March 31, 2023.

The amount reported in the table above during the three months ended March 31, 2024 and 2023 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

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

As of September 30, 2023 and December 31, 2022, the senior notes payable had a carrying amount of $ 1,667,088 and $ 1,721,751 , respectively, and fair value of $ 1,388,840 and $ 1,431,787 , respectively.

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

As of March 31, 2024 and December 31, 2023, the senior notes payable had a carrying amount of $ 1,553,616 and $ 1,668,021 , respectively, and fair value of $ 1,038,272 and $ 1,127,503 , respectively.

The aggregate carrying amount of the Company's notes payable, revolving credit facility, and term loans of $ 632,784 and $ 688,343 as of March 31, 2024 and December 31, 2023, 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 realized and unrealized gains (losses) on investments on the condensed consolidated statements of operations.

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

If indicators of impairment are present, the Company is required to estimate the

investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.

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

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

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2024 and December 31, 2023.

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

As of September 30, 2023

As of March 31, 2024

Investments in nonpublic entities that do not report NAV $ 3,424 $ — $ 3,424 $ —

1 unchanged sentence

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

(k) 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 September 30, 2023 and December 31, 2022, there were no forward exchange contracts outstanding.

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

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

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

(k) Foreign Currency Translation

The Company transacts business in various foreign currencies.

1 unchanged sentence

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

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

Transaction gains were $ 2,268 and losses were $ 234 during the three months ended March 31, 2024 and 2023, respectively.

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

(l) 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 condensed consolidated balance sheet, outside of the permanent equity section.

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

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

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

Net income (losses) are reflected in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in the condensed consolidated statement of operations.

Changes to redeemable noncontrolling interest consist of the following:

Nine Months Ended September 30, 2023

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, September 30, 2023 $ —

(m) Equity Investment

As of September 30, 2023 and December 31, 2022, equity investments of $ 32,705 and $ 41,298 , respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

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

(l) Equity Method Investment

As of March 31, 2024 and December 31, 2023, an equity investment that is accounted for under the equity method of accounting had a carrying value of $ 2,046 and $ 2,087 , respectively, which is included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

The Company’s share of earnings or losses from equity method investees included in income (loss) from equity investments was $( 4 ) and $( 10 ) during the three months ended March 31, 2024 and 2023, respectively, in the accompanying condensed consolidated statements of operations.

bebe stores, inc.

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

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

As of March 31, 2023, the Company owned a 41.3 % ownership interest in bebe.

This was accounted for under the equity method of accounting and the Company had no income from this equity investment during the three months ended March 31, 2023.

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

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

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

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

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

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

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

Other Equity Investments

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 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 condensed consolidated balance sheets.

(n) Supplemental Non-cash Disclosures

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

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

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

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

$ 1,190 of loans receivable that was included in consideration paid for the purchase of the Lingo noncontrolling interest;

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.

(m) Supplemental Non-cash Disclosures

During the three months ended March 31, 2024, there was non-cash investing activity related to the receipt of a note receivable in the amount of $ 2,000 related to the sale of certain assets and $ 42,077 related to a loan receivable, at fair value that converted into equity securities.

During the three months ended March 31, 2023, non-cash investing activities included $ 15,000 of notes receivable that converted into equity securities;

$ 1,190 of loans receivable, at fair value, that was included in consideration paid for the purchase of the Lingo noncontrolling interest;

and $ 2,111 of common stock issued as part of the purchase price consideration for a business acquisition.

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

During the nine months ended September 30, 2022, non-cash investing activities included $ 20,320 in issuance of the Company's common stock as part of the purchase price consideration from an acquisition and $ 22,661 in seller financing for deferred cash consideration;

the conversion of $ 17,500 of debt owed by Lingo to equity;

and the repayment of loans receivable in the amount of $ 850 with equity securities.

(o) Variable Interest Entities

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

(n) 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.

2 unchanged sentences

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(h) and 2(i) 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 March 31, 2024 and December 31, 2023, the maximum amount of loss exposure to the VIE was $ 215,477 and $ 209,395 , respectively.

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.

3 unchanged sentences

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

Placement agent fees attributable to such arrangements were $ 2,551 and $ 349 during the three months ended September 30, 2023 and 2022, respectively, and $ 2,950 and $ 12,437 during the nine months ended September 30, 2023 and 2022, respectively, and were included in services and fees in the condensed consolidated statements of operations.

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

September 30,

Placement agent fees attributable to such arrangements were $ 372 and zero during the three months ended March 31, 2024 and 2023, respectively, and were included in services and fees in the condensed consolidated statements of operations.

The carrying amounts included in the Company’s condensed consolidated balance sheets related to variable interests in VIEs that were not consolidated is shown below.

2024 December 31,

3 unchanged sentences

Maximum exposure to loss $ 279,247 $ 290,792

Riley Principal 150 and 250 Merger Corporations

In 2021, the Company along with BRPM 150 and BRPM 250, both newly formed special purpose acquisition companies incorporated as Delaware corporations, consummated the initial public offerings of 17,250,000 units of BRPM 150 and 17,250,000 units of BRPM 250.

Each Unit of BRPM 150 and BRPM 250 consisted of one share of class A common stock and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $ 11.50 per share.

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

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

assets in the condensed balance sheet.

Riley Principal 250 Merger Corporation (“BRPM”)

In 2021, the Company along with BRPM 250, a newly formed special purpose acquisition company incorporated as a Delaware corporation, consummated the initial public offering of 17,250,000 units of BRPM 250.

Each Unit of 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 250 class A common stock at an exercise price of $ 11.50 per share.

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

These proceeds were deposited in a trust account established for the benefit of the BRPM 250 class A public shareholders and was included in prepaid expenses and other assets in the condensed consolidated balance sheets.

These proceeds are invested only in U.S.

treasury securities in accordance with the governing documents of BRPM 150 and BRPM 250.

Under the terms of the BRPM 150 and BRPM 250 initial public offerings, BRPM 150 and BRPM 250 are required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of their respective initial public offerings.

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

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

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

As such, the Company has determined that it is the primary beneficiary of BRPM 150 and BRPM 250 as it has the right to receive benefits or the obligation to absorb losses of each of the entities, as well as the power to direct a majority of the activities that significantly impact BRPM 150 and BRPM 250’s economic performance.

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

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

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

In connection with the de-consolidation of BRPM 150, among other items, prepaid expenses and other assets decreased by $ 172,584 related to funds held in a trust account and redeemable noncontrolling interests in equity of subsidiaries decreased by $ 172,500 .

During the year ended December 31, 2022, the Company recognized incentive fees of $ 41,885 , which was included in services and fees in the consolidated statement of operations.

treasury securities in accordance with the governing documents of BRPM 250.

Under the terms of the BRPM 250 initial public offering, BRPM 250 was required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of its initial public offering.

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

BRPM 250 was determined to be a VIE because it did not have enough equity at risk to finance its activities without additional subordinated financial support.

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

As such, the Company had determined that it is the primary beneficiary of BRPM 250 as it has the right to receive benefits or the obligation to absorb losses, as well as the power to direct a majority of the activities that significantly impact BRPM 250’s economic performance.

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

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.

(p) Recent Accounting Standards

(o) Recent Accounting Standards

Not yet adopted

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

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

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

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

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

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

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

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

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

Recently adopted

In 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.

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 Company adopted the ASU effective January 1, 2023.

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

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.

NOTE 3 — ACQUISITIONS

2024 Acquisitions

Acquisition of Targus

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus in a transaction pursuant to a purchase agreement among Targus, the sellers identified therein, and the other parties thereto.

The purchase price consideration totaled $ 247,546 , which consisted of cash in the amount of $ 112,686 , seller financing of $ 54,000 , the issuance of $ 59,016 in 6.75 % senior notes due 2024, the issuance of $ 15,329 of the Company’s common stock and stock options, and deferred payments of $ 6,515 .

In accordance with ASC 805, the Company used the acquisition method of accounting for this acquisition.

Goodwill of $ 79,421 and other intangible assets of $ 89,000 were recorded as a result of the acquisition.

The acquisition complements the Company’s existing investments and offers potential growth to the Company’s operations in the Consumer segment.

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

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

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

The fair value of acquisition consideration and preliminary purchase price allocation was as follows:

Consideration paid:

Cash $ 112,686

Fair value of seller financing 54,000

Fair value of 2,400,000 RILYO shares issued in senior notes at $ 24.59 per share

Fair value of 227,491 B.

Riley common shares issued at $ 42.11 per share

Fair value of 215,876 stock options attributable to service period prior to acquisition

Fair value of deferred payments 6,515

Total consideration $ 247,546

Assets acquired and liabilities assumed:

Cash and cash equivalents $ 18,810

Accounts receivable 91,039

Prepaid and other assets 90,289

Right-of-use assets 7,665

Property and equipment 8,320

Other intangible assets 89,000

Accounts payable ( 54,553 )

Accrued expenses and other liabilities ( 62,579 )

Deferred income taxes ( 9,989 )

Contingent consideration ( 2,212 )

Lease liability ( 7,665 )

Net tangible assets acquired and liabilities assumed 168,125

Goodwill 79,421

Total $ 247,546

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

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

Category Useful life Fair Value

Customer relationships 9 years $ 50,000

Internally developed software and other intangibles 1 to 3 years

Tradenames N/A 35,000

Total $ 89,000

Unaudited Pro Forma Information

Acquisition of Targus

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of Targus as if it had occurred on January 1, 2021.

On May 3, 2024, one of the Company’s wholly owned subsidiaries completed the acquisition of Nogin for a total purchase consideration of approximately $ 59,000 , which consisted of $ 37,700 in DIP financing (see Note 2(h)) and an additional $ 21,300 in cash consideration.

To fund the $ 21,300 in cash consideration, contemporaneous with the closing, the acquired company issued $ 15,000 of convertible debt.

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

2023 Acquisitions

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 three months ended March 31, 2023 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 the year on January 1, 2023.

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)

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

Three Months Ended March 31, 2023

Revenues $ 432,090

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

Net income (loss) attributable to B.

Net income attributable to B.

Riley Financial, Inc.

$ 55,380 $ ( 91,764 )

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

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

Other Acquisitions

During the year ended December 31, 2022, the Company converted $ 17,500 of a loan receivable with Lingo into equity and the Company's ownership interest in Lingo increased from 40 % to 80 %.

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

Upon the consolidation of Lingo on May 31, 2022, the total fair value of the assets of Lingo was $ 116,500 and the fair value of the 20 % noncontrolling interest was $ 8,021 .

As part of the acquisition, the Company assumed liabilities in the amount of $ 32,172 and recorded goodwill of $ 34,412 and other intangible assets of $ 63,000 were recorded in the accompanying consolidated balance sheet.

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

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

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.

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

Valuation Assumptions for Purchase Price Allocation

Our valuation assumptions used to value the acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets, inventories, property and equipment, and deferred income taxes.

In determining the fair value of intangible assets acquired, the Company must make assumptions about the future performance of the acquired businesses, including among other things, the forecasted revenue growth attributable to the asset groups and projected operating expenses inclusive of expected synergies, future cost savings, and other benefits expected to be achieved by combining the businesses acquired with the Company.

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

The Company utilized 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.

Net income attributable to common shareholders $ 12,858

Basic income per share $ 0.42

Diluted income per share $ 0.41

Weighted average basic shares outstanding 30,676,246

Weighted average diluted shares outstanding 31,604,344

NOTE 4 — RESTRUCTURING CHARGE

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

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

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

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

During the three months ended March 31, 2024, the Company recognized restructuring charges of $ 789 primarily related to reorganization and consolidation activities in the Communications segment and Consumer Products segment, which consisted of reductions in workforce.

During the three months ended March 31, 2023, the Company recognized restructuring charges of $ 93 primarily related to reorganization and consolidation activities in the Wealth Management segment and Communications segment, which consisted of reductions in workforce and facility closures.

The following tables summarize the changes in accrued restructuring charge during the three months ended March 31, 2024 and 2023:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Balance, beginning of period $ 2,542 $ 2,335

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Balance, end of period $ 1,467 $ 1,996

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

Wealth Management Communications Consumer Total

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

Employee termination $ — $ 145 $ 83 $ 228

Total restructuring charge $ — $ 145 $ 83 $ 228

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

The following table summarizes the restructuring activities by reportable segment during the three months ended March 31, 2024 and 2023.

Wealth Management Communications Consumer Products Total

Restructuring charges for the three months ended March 31, 2024:

Employee termination $ — $ 263 $ 526 $ 789

Facility closure and consolidation 61 — — 61

Total restructuring charge $ — $ 263 $ 526 $ 789

Wealth Management Communications Total

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

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

Employee termination $ — $ 60 $ — $ 60

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

Facility closure and consolidation 33 — — 33

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NOTE 5 — SECURITIES LENDING

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

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of March 31, 2024 and December 31, 2023:

Gross amounts recognized Gross amounts offset in the consolidated balance

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

As of September 30, 2023

As of March 31, 2024

Securities borrowed $ 2,050,079 $ — $ 2,050,079 $ 2,050,079 $ —

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Remaining contractual maturity Remaining contractual maturity

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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.

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.

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

September 30,

2024 December 31,

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Total accounts receivable 130,919 122,835

Allowance for doubtful accounts ( 6,927 ) ( 3,664 )

Allowance for credit losses ( 7,122 ) ( 7,339 )

Accounts receivable, net $ 123,797 $ 115,496

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:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Balance, beginning of period $ 7,339 $ 3,664

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Prepaid expenses and other assets consist of the following:

September 30,

2024 December 31,

Funds held in trust account for BRPM 250 to redeem noncontrolling interests in equity of subsidiaries $ — $ 174,437

Inventory $ 105,397 $ 110,482

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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 receivables primarily consist of interest receivables on loans and loans receivables that are held at cost.

Other assets primarily consist of deposits, real estate held for investment, deferred financing costs, and finance lease assets.

NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS

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

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

Goodwill was $ 471,636 and $ 472,326 as of March 31, 2024 and December 31, 2023, respectively.

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 were as follows:

Segment Wealth

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Segment Communications

Segment Consumer Segment All Other Total

Segment Consumer Products Segment All Other Total

Balance as of December 31, 2023

$ 162,018 $ 51,195 $ 1,975 $ 33,310 $ 193,867 $ 26,681 $ 3,280 $ 472,326

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

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

Other ( 532 ) — — ( 158 ) — — — ( 690 )

Balance as of September 30, 2023

Balance as of March 31, 2024

$ 161,486 $ 51,195 $ 1,975 $ 33,152 $ 193,867 $ 26,681 $ 3,280 $ 471,636

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

During the three months ended March 31, 2024, the changes in goodwill included $( 158 ) of foreign currency translation amounts and $( 532 ) related to the sale of certain assets.

Intangible assets consisted of the following:

As of September 30, 2023

As of March 31, 2024

As of December 31, 2023

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Total intangible assets $ 465,251 $ ( 153,401 ) $ 311,850 $ 467,265 $ ( 145,251 ) $ 322,014

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

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

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

Amortization expense was $ 8,996 and $ 10,473 during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, estimated future amortization expense was $ 24,664 , $ 30,002 , $ 26,874 , $ 24,648 , and $ 21,161 for the years ended December 31, 2024 (remaining nine months), 2025, 2026, 2027 and 2028, respectively.

The estimated future amortization expense after December 31, 2028 was $ 39,726 .

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

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

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

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

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

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

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

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

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

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

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

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

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

NOTE 9 — NOTES PAYABLE

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

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

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

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

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

Interest expense totaled $ 18 during the three months ended March 31, 2024 and 2023.

There was no outstanding balance on this credit facility as of March 31, 2024 and December 31, 2023.

As of March 31, 2024, there were no open letters of credit outstanding.

The Company is in compliance with all covenants in the asset based credit facility as of March 31, 2024.

Other Notes Payable

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

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

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

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

As of March 31, 2024 and December 31, 2023, the outstanding balance for the other notes payable was $ 14,325 and $ 19,391 , respectively.

Interest expense was $ 144 and $ 174 during the three months ended March 31, 2024 and 2023, respectively.

Notes payable primarily consisted of additional deferred cash consideration owed to the sellers of FocalPoint and a promissory note related to the Lingo minority interest purchase, which was paid in full on January 2, 2024.

NOTE 10 — TERM LOANS AND REVOLVING CREDIT FACILITY

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(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 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 final maturity date is October 18, 2027.

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

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

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

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 all financial covenants in the Targus Credit Agreement as of March 31, 2024.

The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus an applicable margin of 5.75 %.

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

Quarterly installments from December 31, 2023 to September 30, 2027 are in the amount of $ 1,400 per quarter and the remaining principal balance is due at final maturity on October 18, 2027.

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

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

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

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 3.00 % and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 4.00 %.

Principal outstanding for the term loan under the amended Targus Credit Agreement is due in quarterly installments.

The quarterly installment on June 30, 2024 is in the amount of $ 1,400 .

Quarterly installments from September 30, 2024 to December 31, 2025 are in the amount of $ 2,100 per quarter and the remaining principal balance is due on March 31, 2026.

As of March 31, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 14,356 (net of unamortized debt issuance costs of $ 344 ) and $ 17,834 (net of unamortized debt issuance costs of $ 366 ), respectively, and the outstanding balance on the revolver loan was $ 22,197 and $ 43,801 , respectively.

Interest expense on these loans during the three months ended March 31, 2024 and 2023 was $ 1,360 (including amortization of deferred debt issuance costs of $ 184 and unused commitment fees of $ 27 ) and $ 1,843 (including amortization of deferred debt issuance costs of $ 154 and unused commitment fees of $ 19 ), respectively.

The interest rate on the term loan was 11.16 % and 10.20 % and the interest rate on the revolver loan ranged between 9.19 % and 11.50 % and between 8.45 % to 11.25 % as of March 31, 2024 and December 31, 2023, respectively.

The weighted average interest rate on the revolver loan was 9.77 % and 8.53 % as of March 31, 2024 and December 31, 2023, respectively.

Pathlight Credit Agreement

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

On 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.

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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 3(h), the Company was released from all

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

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

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(h), 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 %.

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

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

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

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

Lingo Credit Agreement

On August 16, 2022, the Company's subsidiary, Lingo (the “Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Borrower, the Company as the secured guarantor, and Banc of California, N.A.

On August 16, 2022, the Company's subsidiary, Lingo, a Delaware limited liability company (the “Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Borrower, the Company as the secured guarantor, and Banc of California, N.A.

in its capacity as administrative agent and lender, for a five-year $ 45,000 term loan.

This loan was used to finance part of the purchase of Bullseye by Lingo.

On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank (the “New Lender”) for an incremental term loan of $ 7,500 , increasing the principal balance of the term loan to $ 52,500 .

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

The Lingo Credit Agreement contains certain covenants, including those limiting the Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of its businesses, engage in transactions with related parties, make certain investments or pay dividends.

As of March 31, 2024 and December 31, 2023, the interest rate on the Lingo Credit Agreement was 8.69 % and 8.70 %, 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.

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

In addition, the Lingo Credit Agreement requires the Borrower to maintain certain financial ratios.

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

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

The Company is in compliance with all financial covenants in the Lingo Credit Agreement as of March 31, 2024.

Principal outstanding is due in quarterly installments.

The quarterly installment for December 31, 2023 is in the amount of $ 2,281 , quarterly installments from March 31, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $ 3,650 , and the remaining principal balance is due at final maturity on August 16, 2027.

As of September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 67,644 (net of unamortized debt issuance costs of $ 793 ) and $ 71,985 (net of unamortized debt issuance costs of $ 1,016 ), respectively.

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

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

The quarterly installments from June 30, 2024 to December 31, 2024 are in the amount of $ 2,738 per quarter, quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $ 3,650 , and the remaining principal balance is due at final maturity on August 16, 2027.

As of March 31, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 60,442 (net of unamortized debt issuance costs of $ 695 ) and $ 63,153 (net of unamortized debt issuance costs of $ 722 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2024 was $ 1,472 (including amortization of deferred debt issuance costs of $ 70 ).

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

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 March 31, 2024 and December 31, 2023, the interest rate on the bebe Credit Agreement was 11.10 % and 11.14 %, respectively.

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 agreement also contains customary representations and warranties, affirmative covenants, and

events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.

The Company is in compliance with all financial covenants in the bebe Credit Agreement as of March 31, 2024.

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 March 31, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 22,240 (net of unamortized debt issuance costs of $ 573 ) and $ 22,487 (net of unamortized debt issuance costs of $ 638 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2024 was $ 713 (including amortization of deferred debt issuance costs of $ 65 ).

Nomura Credit Agreement

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

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

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

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.

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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 $ 349,185 and $ 375,814 and investments in the amount of $ 658,627 and $ 786,714 as of March 31, 2024 and December 31, 2023, respectively.

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 September 30, 2023.

The Company is in compliance with all financial covenants in the Credit Agreement as of March 31, 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 December 31, 2023 to June 30, 2027 are in the amount of $ 3,125 per quarter.

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

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

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

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

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

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

Quarterly installments from June 30, 2024 to June 30, 2027 are in the amount of $ 3,125 per quarter.

As of March 31, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 456,121 (net of unamortized debt issuance costs of $ 17,629 ) and $ 475,056 (net of unamortized debt issuance costs of $ 18,694 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2024 and 2023 was $ 14,984 (including amortization of deferred debt issuance costs of $ 1,065 ) and $ 7,300 (including amortization of deferred debt

issuance costs of $ 527 ), respectively.

The interest rate on the term loan as of March 31, 2024 and December 31, 2023 was 11.31 % and 11.37 %, respectively.

The Company had an outstanding balance of zero under the revolving facility as of March 31, 2024 and December 31, 2023.

Interest on the revolving facility during the three months ended March 31, 2024 and 2023 was $ 497 (including unused commitment fees of $ 245 and amortization of deferred financing costs of $ 252 ) and $ 1,956 (including amortization of deferred financing costs of $ 150 ), respectively.

The interest rate on the revolving facility as of March 31, 2024 and December 31, 2023 was 11.37 %.

BRPAC Credit Agreement

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(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.

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

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

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

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

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of March 31, 2024.

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

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

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

As of March 31, 2024 and December 31, 2023, the interest rate on the BRPAC Credit Agreement was 8.44 % and 8.46 %, respectively.

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

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

As of September 30, 2023 and December 31, 2022, the outstanding balance on the term loan was $ 50,916 (net of unamortized debt issuance costs of $ 491 ) and $ 68,674 (net of unamortized debt issuance costs of $ 701 ), respectively.

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

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

As of March 31, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 43,103 (net of unamortized debt issuance costs of $ 462 ) and $ 46,621 (net of unamortized debt issuance costs of $ 429 ), respectively.

Interest expense on the term loan during the three months ended March 31, 2024 and 2023 was $ 1,060 (including amortization of deferred debt issuance costs of $ 57 ) and $ 1,443 (including amortization of deferred debt issuance costs of $ 74 ), respectively.

NOTE 11 — SENIOR NOTES PAYABLE

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

September 30,

2024 December 31,

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$ 1,553,616 $ 1,668,021

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

The Company issued no senior notes during the three months ended March 31, 2024 and 2023.

The maturity dates of senior notes ranged from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc.

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

As of September 30, 2023 and December 31, 2022, total senior notes outstanding was $ 1,667,088 (net of unamortized debt issue costs of $ 14,063 ) and $ 1,721,751 (net of unamortized debt issue costs of $ 18,140 ), respectively, with a weighted average interest rate of 5.71 % and 5.75 %, respectively.

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.

On May 1, 2024, the Company announced that it has called for the full redemption equal to $ 25,000 aggregate principal amount of its 6.75 % Senior Notes due 2024 (the “ 6.75 % 2024 Notes”) on May 31, 2024.

The redemption price is equal to 100 % of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the Redemption Date, as set forth in each notice of redemption delivered to noteholders on May 1, 2024.

As of March 31, 2024 and December 31, 2023, total senior notes outstanding was $ 1,553,616 (net of unamortized debt issue costs of $ 12,043 ) and $ 1,668,021 (net of unamortized debt issue costs of $ 13,130 ), respectively, with a weighted average interest rate of 5.63 % and 5.71 %, respectively.

Interest on senior notes is payable on a quarterly basis.

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

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

The most recent sales agreement prospectus was filed by the Company with the SEC on January 5, 2022 (the “Sales Agreement Prospectus”).

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

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

Interest expense on senior notes totaled $ 24,438 and $ 26,227 during the three months ended March 31, 2024 and 2023, respectively.

NOTE 12 — ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:

September 30,

2024 December 31,

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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 13 — REVENUE FROM CONTRACTS WITH CUSTOMERS

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

Revenue from contracts with customers by the Company's six reportable operating segments and the All Other category during the three months ended March 31, 2024 and 2023 was as follows:

Segment Wealth

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Segment Financial

Segment Communications Segment Consumer

Segment Communications Segment Consumer Products

Segment All Other Total

Revenues for the three months ended September 30, 2023

Revenues for the three months ended March 31, 2024

Corporate finance, consulting and investment banking fees $ 50,163 $ — $ — $ 22,984 $ — $ — $ — $ 73,147

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Subscription services — — — — 79,738 — — 79,738

Service contract revenues — — 980 — — — — 980

Sale of goods — — 2,220 — 1,296 51,522 615 55,653

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Segment Financial

Segment Communications Segment Consumer

Segment All Other Total

Revenues for the three months ended September 30, 2022

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

Wealth and asset management fees 3,280 44,322 — — — — — 47,602

Commissions, fees and reimbursed expenses 8,827 1,728 1,949 10,493 — — — 22,997

Subscription services — — — — 70,152 — — 70,152

Sale of goods — — 2,550 — 1,580 — — 4,130

Advertising, licensing and other

— — — — 2,092 5,023 4,072 11,187

Total revenues from contracts with customers 53,409 46,050 4,499 22,835 73,824 5,023 4,072 209,712

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

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

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

Other 50,633 1,095 — — — — 51,728

Total revenues $ 151,152 $ 48,172 $ 7,039 $ 22,835 $ 73,824 $ 5,023 $ 4,072 $ 312,117

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer

Segment Communications Segment Consumer Products

Segment All Other Total

Revenues for the nine months ended September 30, 2023

Revenues for the three months ended March 31, 2023

Corporate finance, consulting and investment banking fees $ 39,149 $ — $ — $ 14,515 $ — $ — $ — $ 53,664

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Total revenues $ 185,411 $ 49,814 $ 5,660 $ 25,010 $ 86,919 $ 65,694 $ 13,582 $ 432,090

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer

Segment All Other Total

Revenues for the nine months ended September 30, 2022

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

Wealth and asset management fees 8,199 161,835 — — — — — 170,034

Commissions, fees and reimbursed expenses 32,208 17,889 7,792 28,123 — — — 86,012

Subscription services — — — — 135,774 — — 135,774

Sale of goods — — 2,550 — 5,345 — — 7,895

Advertising, licensing and other

— — — — 6,592 14,754 5,382 26,728

Total revenues from contracts with customers 158,855 179,724 10,342 73,081 147,711 14,754 5,382 589,849

Interest income - Loans and securities lending 178,879 — 3,976 — — — — 182,855

Trading (losses) gains on investments ( 127,852 ) 3,077 — — — — — ( 124,775 )

Fair value adjustment on loans ( 19,183 ) — — — — — — ( 19,183 )

Other 64,593 5,239 — — — — — 69,832

Total revenues $ 255,292 $ 188,040 $ 14,318 $ 73,081 $ 147,711 $ 14,754 $ 5,382 $ 698,578

Contract Balances

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

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

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

The Company also has $ 18,939 and $ 14,144 of unbilled receivables included in prepaid expenses and other assets as of September 30, 2023 and December 31, 2022, respectively.

Receivables related to revenues from contracts with customers totaled $ 123,797 and $ 115,496 as of March 31, 2024 and December 31, 2023, respectively.

The Company had no significant impairments related to these receivables during the three months ended March 31, 2024 and 2023.

The Company also has $ 16,097 and $ 13,402 of unbilled receivables included in prepaid expenses and other assets as of March 31, 2024 and December 31, 2023, respectively.

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

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

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

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

Deferred revenue as of March 31, 2024 and

December 31, 2023 was $ 68,643 and $ 71,504 , respectively.

The Company expects to recognize the deferred revenue of $ 68,643 as of March 31, 2024 as service and fee revenues when the performance obligation is met during the years ended December 31, 2024 (remaining nine months), 2025, 2026, 2027 and 2028 in the amount of $ 44,986 , $ 11,438 , $ 5,415 , $ 2,452 , and $ 1,431 , respectively.

The Company expects to recognize the deferred revenue of $ 2,921 after December 31, 2028.

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

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

During the three months ended March 31, 2024 and 2023, the Company recognized revenue of $ 21,297 and $ 22,502 that was recorded as deferred revenue at the beginning of the respective year.

Contract Costs

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

The capitalized costs to fulfill a contract were $ 7,769 and $ 5,990 as of September 30, 2023 and December 31, 2022, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended September 30, 2023 and 2022, the Company recognized expenses of $ 1,180 and $ 723 related to capitalized costs to fulfill a contract, respectively.

For the nine months ended September 30, 2023 and 2022, the Company recognized expenses of $ 3,453 and $ 1,813 related to capitalized costs to fulfill a contract, respectively.

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

The capitalized costs to fulfill a contract were $ 7,338 and $ 8,131 as of March 31, 2024 and December 31, 2023, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets.

For the three months ended March 31, 2024 and 2023, the Company recognized expenses of $ 1,537 and $ 1,015 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three months ended March 31, 2024 and 2023.

Remaining Performance Obligations and Revenue Recognized from Past Performance

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

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

Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of September 30, 2023.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of March 31, 2024.

NOTE 14 — INCOME TAXES

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

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

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

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

The Company’s effective income tax rate was a benefit of 26.3 % for the three months ended March 31, 2024 as compared to a provision of 32.4 % for the three months ended March 31, 2023.

During the three months ended March 31, 2024, the Company had a loss before income taxes of $ 65,044 and a benefit from income taxes of $ 17,090 resulting from the impact of items that are not tax deductible.

The change in the effective tax rate compared to the prior year is primarily due to the impact of items that are not tax deductible on the loss of $ 65,044 before income taxes.

As of March 31, 2024, the Company had federal net operating loss carryforwards of $ 46,384 and state net operating loss carryforwards of $ 64,247 , respectively.

In addition one of the Company’s majority-owned subsidiaries that is not included in the Company’s consolidated federal has federal net operating loss carryforwards of $ 298,416 and state net operating loss carryforwards of $ 225,585 available to utilize against future taxable income of the majority-owner subsidiary.

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

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

As of September 30, 2023, the Company believes that the existing net operating loss carryforwards will be utilized

in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance.

As of March 31, 2024, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be

sufficient to realize its deferred tax assets and has not provided a valuation allowance.

The Company does not believe that it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $ 41,751 against these deferred tax assets.

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The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2020 to 2023.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into law.

The IR Act provides for, among other things, a new U.S.

federal excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and certain U.S.

domestic subsidiaries of public traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of Treasury has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

The Company does not expect the IR Act to have a material impact on its financial position and result of operations.

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 15 — EARNINGS PER SHARE

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Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period.

Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend (see Note 3(l)).

Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend.

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

Securities that could potentially dilute basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share were 1,169,913 and 1,721,132 during the three months ended September 30, 2023 and 2022, respectively, and 1,718,209 and 1,609,425 during the nine months ended September 30, 2023 and 2022, respectively, because to do so would have been anti-dilutive.

Securities that could potentially dilute basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share were 3,282,390 and 1,999,273 during the three months ended March 31, 2024 and 2023, respectively, because to do so would have been anti-dilutive.

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income attributable to B.

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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 May 2, 2024, a putative class action was filed by Ted Donaldson in the Superior Court for the State of California, County of Los Angeles on behalf of all persons who acquired the Company’s senior notes pursuant to the shelf registration statement filed with the SEC on Form S-3 dated January 28, 2021, and the prospectuses filed and published on August 4, 2021 and December 2, 2021 (the “Note Offerings”).

The action asserts claims under §§ 11, 12, and 15 of the Securities Act of 1933, as amended, against the Company, certain of the Company's officers and directors, and the underwriters of the Note Offerings.

The complaint alleges that defendants knew or should have known that Brian Kahn was engaged in illegal activities, including an alleged conspiracy to commit fraud.

The Company believes these claims are meritless and intends to defend this action.

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 Guarantees

On June 30, 2021, the Company agreed to guaranty (the “B.

Riley Guaranty”) up to $ 110,000 of obligations that 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.

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 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, 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.

As of March 31, 2024, the Cash Collateral Provider Guaranty was in respect of up to $ 67,500 of B&W obligations after B&W made paydowns of $ 22,500 during the three months ended March 31, 2024.

On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties.

Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a € 30,000 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W.

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

On August 10, 2020, the Company entered into a project specific indemnity rider to a general agreement of indemnity made by B&W in favor of one of its sureties.

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

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

On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties.

Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a 30,000 € payment and performance bond issued by the surety in connection with a construction project

undertaken by B&W.

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

During the year ended December 31, 2023, the indemnity rider was reduced to $ 5,994 .

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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

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(a) Employee Stock Incentive Plans

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

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

During the nine months ended September 30, 2022, in connection with employee stock incentive plans, the Company granted 559,168 restricted stock units with a grant date fair value of $ 31,859 and 65,000 performance based restricted stock units with a grant date fair value of $ 2,329 .

Under the 2021 Stock Incentive Plan (the “2021 Plan”), share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 8,374 and $ 13,312 during the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, in connection with employee stock incentive plans, the Company granted 1,223,263 restricted stock units with a grant date fair value of $ 16,181 .

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

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

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(b) Employee Stock Purchase Plan

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

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

In connection with the Company’s Employee Stock Purchase Plan (the “Purchase Plan”), share based compensation was $ 237 and $ 298 for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, there were 236,949 shares reserved for issuance under the Purchase Plan.

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

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

prices or in privately negotiated transactions.

During the nine months ended September 30, 2023 and 2022, the Company repurchased 1,452,831 shares of its common stock for $ 53,688 , which represents an average price of $ 36.95 per common share, and 571 shares of its common stock for $ 27 , respectively.

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

During the three months ended March 31, 2024, the Company did not repurchase any shares of its common stock.

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

The shares repurchased under the program are retired.

In November 2023, the share repurchase program was reauthorized by the Board of Directors for share repurchases up to $ 50,000 of the Company's outstanding common shares and the reauthorized program expires in October 2024.

Amounts purchased prior to November 2023 relate to the previously authorized share repurchase program.

As of March 31, 2024 and 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.

On October 28, 2019, the Company issued 200,000 warrants to purchase common stock of the Company (the “BR Brands Warrants”) in connection with the acquisition of a majority ownership interest in BR Brand Holdings LLC.

The BR Brands Warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at an exercise price of $ 26.24 per share.

One-third of the BR Brands Warrants immediately vested and became exercisable upon issuance, and the remaining two-thirds of warrants vested and became exercisable on the second anniversary of the closing, upon the BR Brands’ satisfaction of specified financial performance targets.

The BR Brands warrants expire in February 2025.

As of March 31, 2024 and 2023, 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 .

(d) Preferred Stock

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

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

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

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

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

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

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

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

During the three months ended March 31, 2024 and 2023, the Company issued zero depository shares of the Series A Preferred Stock.

There were 2,834 shares issued and outstanding as of March 31, 2024 and December 31, 2023.

Total liquidation preference for the Series A Preferred Stock as of March 31, 2024 and December 31, 2023 was $ 70,854 .

Dividends on the Series A preferred paid during the three months ended March 31, 2024 and 2023 were $ 0.4296875 per depository share.

During the three months ended March 31, 2024 and 2023, the Company issued zero and 18 depository shares of the Series B Preferred Stock.

There were 1,729 shares issued and outstanding as of March 31, 2024 and December 31, 2023.

Total liquidation preference for the Series B Preferred Stock as of March 31, 2024 and December 31, 2023 was $ 43,228 .

Dividends on the Series B preferred paid during the three months ended March 31, 2024 and 2023 were $ 0.4609375 per depository share.

NOTE 18 — 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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As such, they are subject to the minimum net capital requirements promulgated by the SEC.

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

As of March 31, 2024, BRS had net capital of $ 115,953 , which was $ 112,151 in excess of required minimum net capital of $ 3,802 ;

and BRWM had net capital of $ 13,996 , which was $ 12,253 in excess of required minimum net capital of $ 1,743 .

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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 September 30, 2023 and December 31, 2022, amounts due from related parties of $ 395 and $ 1,081 , respectively, were due from the Funds for management fees and other operating expenses.

Management fees from the Funds during the three months ended March 31, 2024 and 2023 totaled $ 115 and $ 210 , respectively.

As of March 31, 2024 and December 31, 2023, amounts due from related parties of $ 92 and $ 172 , respectively, were due from the Funds for management fees and other operating expenses.

As of March 31, 2024 and December 31, 2023, amounts due to related parties were $ 1,763 and $ 2,731 , respectively, of which $ 1,763 and $ 2,480 , respectively, 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.

During the three months ended March 31, 2024, royalty fees, marketing, and IT services charged to bebe by Freedom VCM totaled $ 1,290 and inventory purchases by bebe from Freedom VCM totaled $ 3,539 .

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

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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 two of the funds, GACP I, L.P.

Whitehawk has agreed to provide investment advisory services for GACP I, L.P.

and GACP II, L.P.

During the three and nine months ended September 30, 2022, management fees paid for investment advisory services by Whitehawk were zero and $ 1,173 , respectively.

During the three months ended March 31, 2024 and 2023, management fees paid for investment advisory services by Whitehawk were $ 1,237 and $ 1,142 , 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

During the three and nine months ended September 30, 2022, the Company earned $ 65 and $ 129 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

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

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In March 2022, a $ 1,000 performance fee was approved in accordance with the Executive Consulting Agreement.

During the three months ended March 31, 2024 and 2023, the Company earned $ 610 and zero , 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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The Company had loans receivable due from The Arena Group Holdings, Inc.

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

(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.

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

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 $ 2,829 during the three months ended March 31, 2023.

There were no fees earned from Arena by the Company during the three months ended March 31, 2023.

Applied Digital

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

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

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

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 .

On February 5, 2024, the loan was terminated and no commitments remain.

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.

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

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

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

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

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

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

During the year ended December 31, 2022, the Company earned $ 41,885 of incentive fees for the de-consolidation of BRPM 150 and $ 9,632 of underwriting and financial advisory fees from Faze and BRPM 150 in connection with the Business Combination and capital raising activities.

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

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 4.

At the time of the acquisition, the chief executive officer of Targus was also a member of the Company’s board of directors.

Upon closing the acquisition, the individual resigned from the Company’s board of directors and continues to serve as the chief executive officer of Targus.

California Natural Resources Group, LLC (“CalNRG”) is a related party as a result of the Company's approximately 25.0 % equity ownership.

As of March 31, 2024, the Company has guaranteed CalNRG’s obligations, up to $ 3,830 , under the CalNRG Credit Facility.

Freedom VCM Holdings, LLC

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

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

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

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(i).

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(i).

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.

Kahn (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(h).

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 10 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 $ 50,789 as of September 30, 2023.

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

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

This loan receivable was measured at fair value in the amount of $ 42,482 and $ 42,183 as of March 31, 2024 and December 31, 2023.

Interest income on the loan receivable was $ 2,154 during the three months ended March 31, 2024.

As more fully described in Note 2(h), the Company also has a related party loan receivable with a fair value of approximately $ 15,868 and $ 20,624 at March 31, 2024 and 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 the Company loaned Conn’s $ 108,000 which bears interest at an aggregate rate per annum equal to the Term SOFR Rate (as defined in the Conn’s Term Loan), subject to a 4.80 % floor, plus a margin of 8.00 % and matures on February 20, 2027.

On February 14, 2024, the Company collected $ 15,000 of principal payments which reduced the loan balance to $ 93,000 .

Badcock now operates as a wholly owned subsidiary of Conn’s.

During the three months ended March 31, 2024, interest income on these loans totaled $ 4,151 .

These loan receivables are reported as related party loan receivables 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.

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 12.00 % 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 $ 197,782 and $ 232,065 as of March 31, 2024 and December 31, 2023, respectively.

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 March 31, 2024 and December 31, 2023.

Torticity, LLC

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

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

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

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 $ 1,209 during the three months ended March 31, 2024.

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 $ 16,475 and $ 6,791 as of March 31, 2024 and December 31, 2023, respectively, and is included in the Company's loans receivable, at fair value in the condensed 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 $ 368 during the three months ended March 31, 2024.

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 $ 7,914 and $ 3,904 as of March 31, 2024 and December 31, 2023, respectively, and is included in the Company's loans receivable, at fair value in the condensed 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 by one of the Company’s subsidiaries.

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

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

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 March 31, 2024 and December 31, 2023.

Our executive officers and members of our board of directors had 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.

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

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

During the three months ended March 31, 2024 and 2023, the Company earned $ 179 and $ 784 of fees related to these services, respectively.

NOTE 20 — BUSINESS SEGMENTS

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.

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.

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.

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:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Capital Markets segment:

(As Restated) (As Restated)

Revenues - Services and fees $ 60,347 $ 57,929

3 unchanged sentences

Selling, general and administrative expenses ( 53,224 ) ( 65,711 )

Impairment of tradenames — — ( 1,733 ) —

Interest expense - Securities lending and loan participations sold ( 35,383 ) ( 32,424 )

8 unchanged sentences

Depreciation and amortization ( 1,055 ) ( 1,086 )

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

Segment income 1,679 1,373

Auction and Liquidation segment:

1 unchanged sentence

Revenues - Sale of goods 2,220 216

Interest Income - Loan — 2,540 — 3,976

Total revenues 5,780 5,660

18 unchanged sentences

Segment income 8,050 10,783

Consumer segment:

Revenues - Services and fees 4,304 5,023 13,654 14,754

Consumer Products segment:

Revenues - Sale of goods 51,522 65,694

Total revenues 62,695 5,023 192,810 14,754

Cost of goods sold ( 36,880 ) ( 45,406 )

2 unchanged sentences

Restructuring charge ( 526 ) —

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

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

Segment loss ( 3,406 ) ( 1,614 )

Consolidated operating income from reportable segments 14,936 100,545

Revenues - Services and fees 26,059 13,582

Revenues - Sale of goods 615 —

Total revenues 26,674 13,582

Direct cost of services ( 10,851 ) ( 6,536 )

Cost of goods sold ( 588 ) —

Corporate and other expenses ( 33,600 ) ( 22,668 )

1 unchanged sentence

Dividend income 11,815 13,204

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

Realized and unrealized losses on investments ( 29,545 ) ( 28,442 )

Change in fair value of financial instruments and other 314 ( 209 )

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

Loss on equity investments ( 4 ) ( 10 )

Interest expense ( 44,864 ) ( 47,561 )

2 unchanged sentences

Net (loss) income ( 47,954 ) 16,560

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

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 1,211 ( 595 )

Net (loss) income attributable to B.

5 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(As Restated) (As Restated)

Revenues - Services and fees

2 unchanged sentences

Total Revenues - Services and fees 257,303 235,559

Trading (loss) income and fair value adjustments on loans

Trading income and fair value adjustments on loans

North America ( 29,868 ) 51,568

8 unchanged sentences

North America 59,944 77,186

Europe — 2,540 — 3,976

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

Total Revenues

6 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Long-lived Assets - Property and Equipment, net:

6 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements