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Item 1. Financial Statements

2025-01-14 compared with 2024-05-15 · 800 added, 363 removed, 1117 unchanged (51% of the section changed)

10 unchanged sentences

Securities borrowed 742,940 2,870,939

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

Accounts receivable, net of allowance for credit losses of $ 7,253 and $ 7,339 as of June 30, 2024 and December 31, 2023, respectively

115,681 115,496

Due from related parties 905 172

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

Loans receivable, at fair value (includes $ 171,748 and $ 378,768 from related parties as of June 30, 2024 and December 31, 2023, respectively)

229,199 532,419

Prepaid expenses and other assets 246,402 237,327

Prepaid expenses and other assets (includes $ 24,579 and $ 11,802 from related parties as of June 30, 2024 and December 31, 2023, respectively)

221,464 237,327

Operating lease right-of-use assets 83,763 87,605

4 unchanged sentences

Total assets $ 3,236,282 $ 6,074,378

LIABILITIES AND EQUITY

LIABILITIES AND EQUITY (DEFICIT)

Accounts payable $ 58,932 $ 44,550

12 unchanged sentences

Riley Financial, Inc.

equity (deficit):

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

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

4,563 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively;

and liquidation preference of $ 114,082 as of June 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

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

30,499,931 and 29,937,067 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 585,493 572,170

2 unchanged sentences

Riley Financial, Inc.

stockholders’ equity 228,449 291,117

stockholders’ equity (deficit) ( 218,336 ) 291,117

Noncontrolling interests 75,233 68,449

Total equity 299,657 359,566

Total liabilities and equity $ 4,997,644 $ 6,074,378

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

Total equity (deficit) ( 143,103 ) 359,566

Total liabilities and equity (deficit) $ 3,236,282 $ 6,074,378

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

RILEY FINANCIAL, INC.

3 unchanged sentences

Three Months Ended

Services and fees $ 257,303 $ 235,559

Trading (loss) income and fair value adjustments on loans ( 29,868 ) 51,568

Interest income - Loans and securities lending 59,944 77,186

June 30, Six Months Ended

2024 2023 2024 2023

Services and fees (includes $ 3,357 and $ 547 for the three months ended June 30, 2024 and 2023 and $ 5,870 and $ 2,777 for the six months ended June 30, 2024 and 2023 from related parties, respectively)

$ 248,025 $ 230,327 $ 505,328 $ 465,886

Trading (loss) income ( 31,321 ) 33,158 ( 48,988 ) 41,450

Fair value adjustments on loans (includes $( 177,618 ) and $ 226 for the three months ended June 30, 2024 and 2023 and $( 196,743 ) and $( 1,546 ) for the six months ended June 30, 2024 and 2023 from related parties, respectively)

( 175,582 ) 9,207 ( 187,783 ) 52,483

Interest income - loans (includes $ 13,439 and $ 3,042 for the three months ended June 30, 2024 and 2023 and $ 27,403 and $ 5,871 for the six months ended June 30, 2024 and 2023 from related parties, respectively)

18,508 35,126 40,643 75,138

Interest income - securities lending

24,798 40,073 62,607 77,247

Sale of goods 63,937 58,387 119,590 126,164

5 unchanged sentences

Restructuring charge 20 628 809 721

Impairment of goodwill and tradenames 27,681 1,733 27,681 1,733

Interest expense - Securities lending and loan participations sold 23,313 35,780 58,696 68,204

4 unchanged sentences

Dividend income 9,209 9,555 21,024 22,759

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

Realized and unrealized (losses) gains on investments ( 155,690 ) 18,843 ( 185,235 ) ( 9,599 )

Change in fair value of financial instruments and other ( 163 ) 381 151 172

Loss from equity investments ( 4 ) ( 10 )

Income from equity investments 10 143 6 133

Interest expense ( 42,687 ) ( 47,332 ) ( 87,551 ) ( 94,893 )

(Loss) income before income taxes ( 408,773 ) 65,285 ( 473,817 ) 89,764

Benefit from (provision for) income taxes 17,090 ( 7,919 )

Provision for income taxes ( 25,008 ) ( 21,504 ) ( 7,918 ) ( 29,423 )

Net (loss) income ( 433,781 ) 43,781 ( 481,735 ) 60,341

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

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests ( 177 ) ( 2,600 ) 1,034 ( 3,195 )

Net (loss) income attributable to B.

7 unchanged sentences

Weighted average diluted common shares outstanding 30,352,054 28,654,246 30,170,819 29,082,885

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

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

RILEY FINANCIAL, INC.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net (loss) income $ ( 433,781 ) $ 43,781 $ ( 481,735 ) $ 60,341

7 unchanged sentences

$ ( 434,848 ) $ 47,388 $ ( 487,885 ) $ 65,263

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

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

RILEY FINANCIAL, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

Condensed Consolidated Statements of Equity (Deficit)

(Dollars in thousands, except share data)

For the Three Months Ended March 31, 2024 and 2023

For the Three Months Ended June 30, 2024 and 2023

Preferred Stock Common Stock Additional

Capital (Accumulated Deficit) Retained

Earnings Accumulated

Capital Accumulated Deficit Accumulated

Comprehensive

Loss Noncontrolling

Interests Total Equity

Shares Amount Shares Amount

Balance, April 1, 2024 4,563 $ — 30,095,303 $ 3 $ 579,647 $ ( 347,558 ) $ ( 3,643 ) $ 71,208 $ 299,657

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 167,725 — ( 1,966 ) — — — ( 1,966 )

Common stock issued upon exercise of warrants — — 200,000 — 653 — — — 653

Common stock issued in extinguishment of senior notes — — 36,903 — 1,011 — — — 1,011

Share based payments — — — — 6,112 — — — 6,112

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

Dividends on common stock ($ 0.50 per share)

— — — — — ( 15,768 ) — — ( 15,768 )

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

Net loss — — — — — ( 433,604 ) — ( 177 ) ( 433,781 )

Distributions to noncontrolling interests — — — — — — — ( 903 ) ( 903 )

Contributions from noncontrolling interests — — — — — — — 454 454

Acquisition of noncontrolling interests — — — — — — — 4,651 4,651

Other comprehensive loss — — — — — — ( 1,244 ) — ( 1,244 )

Balance, June 30, 2024

4,563 $ — 30,499,931 $ 3 $ 585,493 $ ( 798,945 ) $ ( 4,887 ) $ 75,233 $ ( 143,103 )

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

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

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

Dividends on common stock ($ 1.00 per share)

— — — — — ( 30,144 ) — — ( 30,144 )

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

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

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

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

Remeasurement of B.

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

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

Balance, June 30, 2023

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

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

For the Six Months Ended June 30, 2024 and 2023

Preferred Stock Common Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Income (Loss) Noncontrolling

Interests Total

Equity (Deficit)

Shares Amount Shares Amount

1 unchanged sentence

Vesting of restricted stock and other, net of shares withheld for employer taxes — — 325,961 — ( 3,136 ) — — — ( 3,136 )

Common stock issued upon exercise of warrants — — 200,000 — 653 — — — 653

Common stock issued in extinguishment of senior notes — — 36,903 — 1,011 — — — 1,011

Share based payments — — — — 14,723 — — — 14,723

3 unchanged sentences

Dividends on preferred stock — — — — — ( 4,030 ) — — ( 4,030 )

Net loss — — — — — ( 49,165 ) — 1,211 ( 47,954 )

Net (loss) income — — — — — ( 482,769 ) — 1,034 ( 481,735 )

Distributions to noncontrolling interests — — — — — — — ( 1,858 ) ( 1,858 )

Contributions from noncontrolling interests — — — — — — — 2,957 2,957

Acquisition of noncontrolling interests — — — — — — — 4,651 4,651

Other comprehensive loss — — — — — — ( 5,116 ) — ( 5,116 )

Balance, March 31, 2024

Balance, June 30, 2024

4,563 $ — 30,499,931 $ 3 $ 585,493 $ ( 798,945 ) $ ( 4,887 ) $ 75,233 $ ( 143,103 )

1 unchanged sentence

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

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

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

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

5 unchanged sentences

Dividends on preferred stock — — — — — ( 4,027 ) — — ( 4,027 )

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

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

Remeasurement of B.

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

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

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

Remeasurement of B.

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

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

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

Balance, March 31, 2023

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

Balance, June 30, 2023

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

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

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

RILEY FINANCIAL, INC.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net (loss) income $ ( 481,735 ) $ 60,341

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

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

Depreciation and amortization 22,936 25,611

1 unchanged sentence

Share-based compensation 14,865 24,238

Fair value and remeasurement adjustments, non-cash 13,651 ( 46,050 )

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

Fair value and remeasurement adjustments, non-cash (includes $ 196,743 and $ 2,288 from related parties for 2024 and 2023, respectively)

189,507 ( 56,634 )

Non-cash interest and other (includes $( 5,916 ) and $( 484 ) from related parties for 2024 and 2023, respectively)

( 3,325 ) ( 5,117 )

Depreciation of rental merchandise 8,221 —

Effect of foreign currency on operations 347 ( 224 )

Loss from equity investments 4 10

Income from equity investments ( 6 ) ( 133 )

Dividends from equity investments 74 129

Deferred income taxes 1,445 18,516

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

Impairment of goodwill and tradenames 27,681 1,733

Gain on sale of business, disposal of fixed assets, and other ( 227 ) ( 150 )

Gain on extinguishment of debt ( 120 ) —

Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests 785 778

4 unchanged sentences

Accounts receivable ( 759 ) 26,381

Prepaid expenses and other assets ( 6,761 ) ( 25,705 )

Prepaid expenses and other assets (includes $( 12,777 ) and $ 140 from related parties for 2024 and 2023, respectively)

3,789 ( 13,834 )

Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities ( 16,940 ) ( 74,185 )

5 unchanged sentences

Cash flows from investing activities:

Purchases of loans receivable ( 42,903 ) ( 311,970 )

Repayments of loans receivable 39,493 260,587

Purchases of loans receivable (includes $( 14,359 ) and $( 193,058 ) from related parties for 2024 and 2023, respectively)

( 63,203 ) ( 359,957 )

Repayments of loans receivable (includes $ 30,553 and $ 261,909 from related parties for 2024 and 2023, respectively)

72,373 413,417

Sale of loans receivable 22,785 7,500

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

Acquisition of businesses and minority interest, net of $ 604 and $ 234 cash acquired for 2024 and 2023, respectively

( 19,142 ) ( 12,287 )

Sale of business, net of cash sold and other ( 135 ) 1,511

Purchases of property, equipment and intangible assets ( 5,441 ) ( 4,757 )

Funds received from trust account of subsidiary — 175,763

Purchase of equity and other investments ( 533 ) ( 4,871 )

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

Net cash provided by investing activities 6,704 216,319

Cash flows from financing activities:

1 unchanged sentence

Repayment of revolving line of credit ( 64,304 ) ( 78,834 )

Proceeds from note payable 15,000 —

Repayment of notes payable and other ( 5,690 ) ( 11,728 )

1 unchanged sentence

Proceeds from term loan — 128,187

Proceeds from issuance of senior notes — 185

Redemption of senior notes ( 140,491 ) ( 58,924 )

1 unchanged sentence

Payment of contingent consideration ( 1,406 ) ( 1,339 )

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

ESPP and payment of employment taxes on vesting of restricted stock ( 3,136 ) ( 8,342 )

Common dividends paid ( 33,627 ) ( 80,348 )

3 unchanged sentences

Contributions from noncontrolling interests 2,957 4,010

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

Proceeds from exercise of warrants 653 —

Proceeds from issuance of preferred stock — 467

Net cash used in financing activities ( 243,526 ) ( 456,795 )

Decrease in cash, cash equivalents and restricted cash ( 37,298 ) ( 59,884 )

Increase (decrease) in cash, cash equivalents and restricted cash 10,017 ( 163,371 )

Effect of foreign currency on cash, cash equivalents and restricted cash ( 5,233 ) 2,347

Net decrease in cash, cash equivalents and restricted cash ( 41,260 ) ( 58,604 )

Net increase (decrease) in cash, cash equivalents and restricted cash 4,784 ( 161,024 )

Cash, cash equivalents and restricted cash, beginning of period 233,839 270,926

3 unchanged sentences

Taxes paid $ 3,807 $ 6,040

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

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

RILEY FINANCIAL, INC.

17 unchanged sentences

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

On February 29, 2024, the Company announced that an independent financial advisor was engaged to assist in the review of strategic alternatives for the Appraisal and Valuation Services, and Retail, Wholesale & Industrial Solutions businesses (collectively formerly known as “Great American Group”), which could include a potential sale or other transaction.

As part of this process, the Company anticipated that proceeds may be used in a variety of ways including, among other things, de-levering our balance sheet.

A solicitation process for the strategic review began in April 2024.

For the six months ended June 30, 2024, the Company incurred a net loss of $( 482,769 ) which is primarily related to fair value adjustments totaling $ 391,754 related to the Company’s equity investment in Freedom VCM Holdings, LLC and the loan to Vintage Capital Management, LLC which are included in the asset collateral pool securing the Company’s credit facility with Nomura Corporate Funding Americas, LLC (“Nomura”).

As more fully described in Note 10 – Terms Loans and Revolving Credit Facility, the Company entered into a loan amendment in September 2024 to the credit facility with Nomura Corporate Funding Americas, LLC, which requires the Company to reduce the principal amount of the term loan to be no greater than $ 100,000 on or prior to September 30, 2025.

In conjunction with the amendment, the Company made a principal payment of $ 85,146 thereby reducing the outstanding principal balance on the credit facility from $ 469,750 to $ 388,127 .

After amending the credit facility, the strategic review process continued and in October 2024, the Company entered into a secured financing transaction for it’s brand operations and brand’s equity investments receiving proceeds of $ 189,331 , see Note 21 Subsequent Events.

From these proceeds, the Company repaid $ 171,480 on the Nomura credit facility reducing the outstanding principal balance from $ 388,127 to $ 216,647 .

In November 2024, the Company also entered into a transaction whereby all of its interests in the Great American Group businesses was contributed to a newly formed subsidiary and issued preferred and common units to an investor for a purchase price of approximately $ 203,000 (the “Great American Group Transaction”), see Note 21 – Subsequent Events.

connection with such transaction, the Company used proceeds to further reduce the outstanding balance on the Nomura credit facility from $ 216,647 to $ 125,000 .

The Company believes that the current cash and cash equivalents, securities and other investments owned, funds available under our credit facilities, and cash expected to be generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

11 unchanged sentences

These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 24, 2024.

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.

The results of operations for the three and six months ended June 30, 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

5 unchanged sentences

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

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

Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $ 23,313 and $ 35,780 during the three months ended June 30, 2024 and 2023, respectively, and $ 58,696 and $ 68,204 during the six months ended June 30, 2024 and 2023, respectively.

(d) Concentration of Risk

10 unchanged sentences

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

(“Conn’s”) as more fully described in Note 19.

(“Conn’s”) as more fully described in Note 19 under the Term Loan and Security Agreement, dated as of December 18, 2023 (the “Conn’s Term Loan”), among Conn’s, W.S.

Badcock LLC ("WS Badcock"), as borrowers, and an affiliate of the Company, as administrative agent, collateral agent, and lender.

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.

This loan combined with two other existing loans receivable with a fair value of $ 30,389 and $ 62,808 as of June 30, 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 $ 112,694 and $ 167,568 or 49.2 % and 31.5 % of the loan portfolio as of June 30, 2024 and December 31, 2023, respectively, and are concentrated in the retail industry.

The fair value of these loans at June 30, 2024 has been impacted by a deterioration in Conn’s operating results in the second quarter of 2024, which culminated in the Conn's Chapter 11 bankruptcy filing on July 23, 2024 as more fully discussed in Note 2(h) below.

The Company also has a loan receivable with a principal amount of $ 200,506 as of June 30, 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.

The interest receivable on the loan was $ 21,053 and $ 8,889 as of June 30, 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 equity interests owned by Brian Kahn as more fully described in Note 2(h) below.

The fair value of the loan receivable was $ 32,121 and $ 200,506 or 14.0 % and 37.7 % of the total loan portfolio as of June 30, 2024 and December 31, 2023, respectively.

Continued 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.

At June 30, 2024, the maximum amount of loss that the Company is exposed to loss from loans receivable concentration is an amount equivalent to the fair value of these loans which totaled $ 144,815 .

The Company is also exposed to a concentration of risk related to Freedom VCM which totaled $ 121,622 as of June 30, 2024.

The exposure includes the amounts directly related to Freedom VCM from the investment in Freedom VCM that had a fair value of $ 63,674 and the Freedom VCM Receivables, Inc.

loan receivable of $ 25,827 at June 30, 2024 and additional exposure from the loan receivable in the amount of $ 32,121 as described above where the primary security includes Freedom VCM equity interests owned by Brian Kahn.

(e) Advertising Expenses

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

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

Advertising costs totaled $ 2,736 and $ 2,969 during the three months ended June 30, 2024 and 2023, respectively, and $ 5,146 and $ 5,906 during the six months ended June 30, 2024 and 2023.

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

2 unchanged sentences

(g) Restricted Cash

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

As of June 30, 2024 and December 31, 2023, restricted cash included $ 1,728 and $ 1,875 , respectively, primarily consisting of cash collateral for leases.

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

4 unchanged sentences

(h) Loans Receivable

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

Under Accounting Standards Codification (“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.

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

Loans receivable, at fair value totaled $ 229,199 and $ 532,419 as of June 30, 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.

As of June 30, 2024 and December 31, 2023, the historical cost of loans receivable accounted for under the fair value option was $ 447,013 and $ 555,882 , respectively, which included principal balances of $ 451,138 and $ 563,637 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $ 4,125 and $ 7,755 , respectively.

The principal balance of loans receivable exceeded the fair value of loans by $ 217,814 and $ 23,463 as of June 30, 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.

During the three months ended June 30, 2024 and 2023, the Company recorded net unrealized losses of $ 175,582 and net unrealized gains of $ 9,207 , respectively, and net unrealized losses of $ 194,352 and net unrealized gains of $ 52,666 during the six months ended June 30, 2024 and 2023, respectively, on loans receivable, at fair value, which is included in 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 June 30, 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.

Interest income for loans on non-accrual and/or 90 days or greater past due is recognized separately from changes in fair value adjustments on loans 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 $( 176,078 ) and $ 8,621 during the three months ended June 30, 2024 and 2023, respectively, and $( 187,417 ) and $ 46,109 during the six months ended June 30, 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 March 31, 2024, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc.

As of June 30, 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.

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 June 30, 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.

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.

6 unchanged sentences

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.

Kahn and his spouse was $ 51,478 and $ 232,065 as of June 30, 2024 and December 31, 2023, respectively.

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

5 unchanged sentences

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.

Other factors leading to continued 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 further impact the ultimate collection of principal and interest.

To the extent the loan balance and accrued interest exceed the underlying collateral value of the loan, as was the case as of June 30, 2024, the fair value of the loan has been and will be impacted and has resulted and will result in an unrealized loss being recorded in the condensed consolidated statements of operations.

Subsequent to June 30, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024 which impacts the collateral for this loan receivable.

The fair value of the underlying collateral for this loan decreased to a fair value of $ 2,006 at December 20, 2024.

The $ 2,006 is comprised of other public securities.

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 June 30, 2024, loans receivable had an aggregate remaining contractual principal balance of $ 451,138 , an aggregate fair value of $ 229,199 , and the contractual principal balance exceeded the fair value by $ 221,939 .

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 .

The Company’s has a loan receivable with a principal amount of $ 93,000 outstanding from Conn’s and two loans with a fair value of $ 30,389 outstanding which are discussed below, (the Badcock Receivables I and Freedom VCM Receivables loans receivable, each as defined below), which are serviced by Conn’s.

These loans were all current in the payment of principal and interest as of June 30, 2024.

Of the $ 30,389 balance at fair value at June 30, 2024, the Company has continued to receive payments of $ 27,414 subsequent to June 30, 2024 and through December 30, 2024 on the Badcock Receivables I and Freedom VCM Receivables loans receivable.

The Company also collected the June 30, 2024 interest payment that was due on the Conn’s $ 93,000 loan receivable in July 2024.

Future collection of the $ 93,000 Conn’s loan receivable is expected to be paid from the sale of assets and servicing of a pool consumer receivables that serve as collateral for the loan where we have a second lien on these assets.

These proceeds are expected to be collected over the next year and will be impacted by Conn’s voluntary petition filing on July 23, 2024 for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

The commencement of the Chapter 11 Cases constitutes an event of default that accelerates the repayment obligations under the $ 93,000 loan receivable to Conn’s.

Any efforts to enforce repayment obligations under the Conn’s $ 93,000 loan receivable are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of this loan are subject to the applicable provisions of the Bankruptcy Code.

Badcock Loan Receivable

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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 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.

The Company paid $ 400,000 in cash to WSBC for the purchase of certain consumer credit receivables which are small consumer loans issued by WSBC to consumers for the purchase of merchandise sold at WSBC's stores.

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.

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

The collateral for these loans receivables are the individual consumer credit receivables that were originally issued to WSBC consumers for merchandise sold in WSBC stores and the total amount of collections on these loan receivables is dependent upon their credit performance.

These loan receivables are measured at fair value.

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(“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.

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 the Freedom Receivables Note (as defined below) 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 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.

As of June 30, 2024 and December 31, 2023, the Badcock Receivables I loan receivable in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $ 4,562 and $ 20,624 , respectively.

As of June 30, 2024 and December 31, 2023, the Freedom Receivables Note was included in the Company's condensed consolidated balance sheets in loans receivable, at fair value in the amount of $ 25,827 and $ 42,183 , respectively.

Nogin Loan and Loan Commitment

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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 .

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

An additional $ 3,000 of DIP financing was funded in the second quarter of 2024, for total DIP financing (inclusive of $ 1,700 in fees payable in kind) of $ 37,700 , which was extinguished upon the Company's acquisition of Nogin on May 3, 2024.

On May 3, 2024, the Company funded an additional $ 18,670 in cash to complete the acquisition of Nogin of which $ 15,500 was a payment to the Consenting Noteholders.

See Note 3 for more details on the Nogin acquisition.

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

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

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:

As of June 30, 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.

In accordance with ASC - 321 Equity Securities unrealized gains (losses) on equity securities held at June 30, 2024, includes unrealized gains (losses) of $( 153,027 ) and $ 4,318 for the three months ended June 30, 2024 and 2023, respectively, and $( 185,519 ) and $( 13,530 ) for the six months ended June 30, 2024 and 2023, respectively, reported in other income (loss) - realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations.

The Brand Investments

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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,

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

income statement amounts during the three and six months ended March 31, 2024 and 2023 correspond to amounts during the three and six months ended June 30, 2024 and 2023, respectively, of the Company), which is the period in which the most recent financial information is available:

March 31, September 30,

Current assets $ 51,858 $ 51,588

4 unchanged sentences

Noncontrolling interest $ 2,769 $ 2,876

For the three months ended December 31,

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

2023 2024 (1)

Revenues $ 40,478 $ 16,457 $ 74,444 $ 44,428

2 unchanged sentences

(1) - Financial information for 2024 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.

As of June 30, 2024 and December 31, 2023, the fair value of these five investments totaled $ 287,987 and $ 283,057 , respectively, and are included in securities and other investments owned, at fair value in the condensed consolidated balance sheets.

As described in Note 21 – Subsequent Events, on October 25, 2024 the Company entered into a series of transactions which transferred and contributed three of the five Brand Investments (HRLY Brand Management LLC, Justice Brand Management LLC, and S&S Brand Management LLC) and the majority 80 % ownership of ownership of BR Brand Holdings LLC into a newly formed subsidiary for the purpose of being a securitization financing vehicle.

The Company's majority owned subsidiary bebe also sold the remaining two Brand Investments on October 25, 2024 as fully described in Note 21- Subsequent Events.

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

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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.

Following these transactions, the Company owns an equity interest of $ 281,144 (based on the transaction price in the FRG take-private transaction) 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.

On December 18, 2023, a wholly owned subsidiary of Freedom VCM entered into a transaction that resulted in the sale of all of the operations of WS Badcock to Conn’s in exchange for the issuance by Conn’s of 1,000,000 shares of Conn’s preferred stock (the “Preferred Shares”).

The Preferred Shares issued by Conn’s to Freedom VCM, subject to the terms set forth in the Certificate of Designation, are nonvoting and are convertible into an aggregate of approximately 24,540,295 shares of non-voting common stock of Conn’s, which represented 49.99 % of the issued and outstanding shares of common stock of Conn’s which resulted in consideration received by Freedom VCM of approximately $ 69,900 .

As a result of the convertible preferred stock having a conversion feature into 49.99 % of the common stock of Conn’s, Freedom VCM is considered to have significant influence over Conn’s in accordance with ASC 323 – Investments – Equity Method and Joint Ventures .

On July 23, 2024, Conn’s filed a Chapter 11 Case under the Bankruptcy Code in the Bankruptcy Court as more fully discussed in Note 2(h).

The $ 69,900 of consideration that Freedom VCM received from the WS Badcock is still held by Freedom VCM at June 30, 2024 and is expected to be impaired as a result of Conn’s bankruptcy filing.

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 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

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

income statement amounts during the three and six months ended March 31, 2024 correspond to amounts during the three and six months ended June 30, 2024 of the Company), which is the period in which the most recent financial information is available:

March 31, 2024 September 30, 2023

Current assets $ 940,220 $ 1,219,682

3 unchanged sentences

Equity attributable to investee $ 710,827 $ 917,003

For the three months ended December 31,

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

Revenues $ 809,717 $ 1,615,946

2 unchanged sentences

Net loss attributable to investees $ ( 19,256 ) $ ( 188,839 )

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.

As of June 30, 2024 and December 31, 2023, the fair value of the investment in Freedom VCM totaled $ 63,674 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 $ 180,964 and $ 223,369 for the three and six months ended June 30, 2024, respectively.

Subsequent to June 30, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024 which impacts the future fair value of the investment in Freedom VCM.

The fair value of the investment in Freedom VCM was reduced to zero at September 30, 2024 and a fair value adjustment of $( 63,674 ) was recorded in the quarter ended September 30, 2024.

Babcock and Wilcox Enterprises, Inc, Equity Investment

The Company owns a 30 % 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

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

March 31, 2024 September 30, 2023

Current assets $ 482,223 $ 542,300

4 unchanged sentences

Noncontrolling interest $ 544 $ 626

For the three months ended December 31,

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

2024 2023 2024 2023

Revenues $ 207,556 $ 241,258 $ 434,723 $ 477,682

1 unchanged sentence

Loss from continuing operations $ ( 15,799 ) $ ( 12,686 ) $ ( 70,065 ) $ ( 14,975 )

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.

Net loss $ ( 16,791 ) $ ( 12,475 ) $ ( 79,515 ) $ ( 6,815 )

Net loss attributable to investees $ ( 16,833 ) $ ( 12,496 ) $ ( 83,287 ) $ ( 10,475 )

As of June 30, 2024 and December 31, 2023, the fair value of the investment in B&W totaled $ 39,797 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.

As of June 30, 2024, the Company had a voting interest of 13 % 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;

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

Synchronoss Technologies, Inc.

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Current assets $ 73,896 $ 85,903

4 unchanged sentences

Synchronoss Technologies, Inc.

For the three months ended December 31,

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

2024 2023 2024 2023

Revenues $ 42,965 $ 41,985 $ 84,367 $ 83,237

Cost of revenues $ 10,223 $ 10,960 $ 20,515 $ 22,959

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.

Net income (loss) attributable to investees $ 2,341 $ ( 13,391 ) $ ( 32,660 ) $ ( 29,318 )

As of June 30, 2024 and December 31, 2023, the fair value of the equity investment in Synchronoss Technologies, Inc.

was $ 13,149 and $ 8,780 , respectively.

1 unchanged sentence

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.

As of June 30, 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

These equity investments are comprised of equity investments in five private companies at June 30, 2024 and six private companies at December 31, 2023.

The following table contains summarized financial information for these companies, included below for purposes of the disclosure a quarter in arrears (balance sheet

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

2024 September 30,

Current assets $ 257,355 $ 281,610

4 unchanged sentences

Equity attributable to investee $ 417,198 $ 477,216

For the three months ended December 31,

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

2024 2023 2024 2023

Revenues $ 109,929 $ 37,512 $ 255,903 $ 75,435

Cost of revenues $ 79,033 $ 19,689 $ 206,381 $ 52,751

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.

Net (loss) income attributable to investees $ ( 5,469 ) $ 10,728 $ ( 15,974 ) $ ( 2,886 )

As of June 30, 2024 and December 31, 2023, the fair value of these five investments totaled $ 38,416 and six investments totaled $ 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.

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.

As of June 30, 2024 and December 31, 2023, partnership and investment fund interests valued at NAV of $ 15,609 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.

2 unchanged sentences

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.

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:

The following table presents, as of June 30, 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,

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

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

The Company did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition as of June 30, 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 June 30, 2024 and December 31, 2023.

Financial Assets and Liabilities Measured at Fair Value on a

Recurring Basis as of March 31, 2024 Using

Fair value as of March 31, 2024

Recurring Basis as of June 30, 2024 Using

Fair value as of June 30, 2024

Quoted prices in active markets

39 unchanged sentences

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

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.

As of June 30, 2024 and December 31, 2023, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $ 632,168 and $ 1,268,057 , respectively, or 19.5 % 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 March 31, 2024 and December 31, 2023:

Fair value at March 31,

Fair value at June 30,

2024 Valuation

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Market price of related security $ 0.02 - $ 11.35

58,579 Discounted cash flow Market interest rate 20.2 % - 21.3 %

9,339 Option pricing model Annualized volatility 30.0 % - 130.0 %

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40,017 Market approach Market price of related security $ 16.57 $ 16.57

Multiple of Sales 0.6 x - 0.7 x

Multiple of Sales 0.7 x

Total level 3 assets measured at fair value $ 632,168

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 5,304 Market approach Operating income multiple 6.0 x

Contingent consideration 29,322 Discounted cash flow EBITDA volatility 70.0 % 70.0 %

Asset volatility 69.0 % 69.0 %

Contingent consideration 29,303 Discounted cash flow Asset volatility 69.0 % 69.0 %

Market interest rate 8.5 % 8.5 %

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

Revenue volatility 5.0 % - 6.3 %

Total level 3 liabilities measured at fair value $ 34,607

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

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(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:

The changes in Level 3 fair value hierarchy during the three months ended June 30, 2024 and 2023 were as follows:

Period Level 3 Changes During the Period Level 3

Period Change in unrealized gains/(losses) (2)

Adjustments (1) Relating to

Undistributed

Earnings Purchases,

Settlements Transfer in

Three Months Ended March 31, 2024

Earnings Purchases/ Originations Sales Settlements/ Repayments Transfer in

Three Months Ended June 30, 2024

Equity securities $ 674,679 $ ( 203,022 ) $ 8 $ 181 $ ( 68,874 ) $ — $ ( 3 ) $ 402,969 $ 203,129

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Contingent consideration 29,322 264 — 1,055 — ( 1,338 ) — 29,303 —

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Equity securities $ 359,041 $ 17,287 $ 12 $ 44,923 $ ( 34,005 ) $ — $ ( 128 ) $ 387,130 $ ( 626 )

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

(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 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.

(1) - Fair value adjustments during the three months ended June 30, 2024 includes the following:

$( 203,022 ) of realized and unrealized gains (losses) on equity securities is comprised of $( 39,115 ) of realized and unrealized gains (losses) included in fair value adjustments on loans and $( 163,907 ) of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $( 175,582 ) of fair value adjustments on loans included in fair value adjustments on loans, and $ 264 related to contingent consideration included in selling, general and administrative expenses in the condensed consolidated statement of operations.

Fair value adjustments during the three months ended June 30, 2023 includes the following:

$ 17,287 of realized and unrealized gains (losses) on equity securities is comprised of $ 13,932 relating to equity securities included in fair value adjustments on loans and $ 3,355 of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $ 9,207 of fair value adjustments on loans included in fair value adjustments on loans, and $( 1,123 ) related to contingent consideration included in selling, general and administrative expenses in the condensed consolidated statement of operations.

(2) - For the three months ended June 30, 2024 and 2023, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period.

The changes in Level 3 fair value hierarchy during the six months ended June 30, 2024 and 2023 were as follows:

Year Level 3 Changes During the Period Level 3

Period Change in unrealized gains/(losses) (2)

Adjustments (1) Relating to

Undistributed

Earnings Purchases/ Originations Sales Settlements/ Repayments Transfer in

Six Months Ended June 30, 2024

Equity securities $ 735,638 $ ( 254,031 ) $ 20 $ 616 $ ( 78,197 ) $ — $ ( 1,077 ) $ 402,969 $ 257,224

Loans receivable at fair value 532,419 ( 187,783 ) 4,262 38,105 ( 22,785 ) ( 135,019 ) — 229,199 196,240

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 5,835 — 785 — — ( 1,316 ) — 5,304 —

Contingent consideration 27,985 1,671 — 1,055 — ( 1,408 ) — 29,303 —

Six Months Ended June 30, 2023

Equity securities $ 368,465 $ 8,271 $ 12 $ 51,447 $ ( 34,042 ) $ — $ ( 7,023 ) $ 387,130 $ ( 10,009 )

Loans receivable at fair value 701,652 52,483 ( 1,050 ) 355,546 ( 7,499 ) ( 417,055 ) ( 250 ) 683,827 52,522

Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,648 — 778 — — ( 1,074 ) — 4,352 —

Contingent consideration 31,046 ( 4,570 ) — 2,586 — ( 1,338 ) — 27,724 —

(1) - Fair value adjustments during the six months ended June 30, 2024 includes the following:

$( 254,031 ) of realized and unrealized gains (losses) on equity securities is comprised of $( 49,505 ) of realized and unrealized gains (losses) included in fair value adjustments on loans and $( 204,526 ) of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $( 187,783 ) of fair value adjustments on loans included in fair value adjustments on loans, and $ 1,671 related to contingent consideration included in selling, general and administrative expenses in the condensed consolidated statement of operations.

Fair value adjustments during the six months ended June 30, 2023 includes the following:

$ 8,271 of realized and unrealized gains (losses) on equity securities is comprised of $ 13,920 relating to equity securities included in fair value adjustments on loans and $( 5,649 ) of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $ 52,483 of fair value adjustments on loans included in fair value adjustments on loans, and $( 4,570 ) related to contingent consideration included in selling, general and administrative expenses in the condensed consolidated statement of operations.

(2) - For the six months ended June 30, 2024 and 2023, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period.

The amount reported in the table above during the three and six months ended June 30, 2024 and 2023 included the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

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

As of June 30, 2024 and December 31, 2023, the senior notes payable had a carrying amount of $ 1,528,565 and $ 1,668,021 , respectively, and fair value of $ 1,124,630 and $ 1,127,503 , respectively.

The aggregate carrying amount of the Company's notes payable, revolving credit facility, and term loans of $ 631,243 and $ 688,343 as of June 30, 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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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.

The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of June 30, 2024 and December 31, 2023.

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

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(Level 2) Significant unobservable inputs

As of March 31, 2024

As of June 30, 2024

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

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

Transaction gains were $ 694 and losses were $ 353 during the three months ended June 30, 2024 and 2023, respectively, and $ 2,962 gains and losses were $ 587 during the six months ended June 30, 2024 and 2023, respectively.

These amounts were included in selling, general and administrative expenses in the Company’s 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.

As of June 30, 2024 and December 31, 2023, an equity investment that is accounted for under the equity method of accounting had a carrying value of $ 2,551 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 $ 10 and $ 143 during the three months ended June

30, 2024 and 2023, respectively, and $ 6 and $ 133 during the six months ended June 30, 2024 and 2023, respectively, in the accompanying condensed consolidated statements of operations.

bebe stores, inc.

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.

As of June 30, 2023, the Company owned a 47.5 % 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 June 30, 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 %.

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(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;

During the six months ended June 30, 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, $ 42,077 related to a loan receivable, at fair value that converted into equity securities, and DIP loan conversion to purchase consideration equity for the purchase of Nogin in the amount of $ 37,700 .

During the six months ended June 30, 2024, there was non-cash financing activity related to the Company's redemption of its 6.375 % Senior Notes due 2025 in the aggregate principal amount of $ 1,130 in exchange for 36,903 shares of its common stock at fair value of $ 1,011 for a net gain on extinguishment of debt of $ 120 .

During the six months ended June 30, 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 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.

During the six months ended June 30, 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

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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.

As of June 30, 2024 and December 31, 2023, the maximum amount of loss exposure to the VIE on a fair value basis was $ 53,174 and $ 209,395 , respectively.

Subsequent to June 30, 2024, a loss for substantially all of the exposure of $ 53,174 was recorded in the third quarter ended September 30, 2024 as a result of Freedom VCM's voluntary petition for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024 as discussed in Note 2(h).

The Company has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance.

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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 $ 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.

Placement agent fees attributable to such arrangements were $ 494 and $ 399 during the three months ended June 30, 2024 and 2023, respectively, and $ 866 and $ 399 during the six months ended June 30, 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.

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Maximum exposure to loss $ 98,704 $ 290,792

Bicoastal Alliance, LLC (“Bicoastal”)

On May 3, 2024, as part of the acquisition of Nogin, the Company acquired a 50 % equity interest in Bicoastal Alliance, LLC (“Bicoastal”) through a wholly owned subsidiary of Nogin.

Bicoastal is a holding company designed to manage the investments, including strategy and operations, for two brand apparel operating companies.

The Company determined Bicoastal is a variable interest entity as it does not have sufficient resources to carry out its management activities without additional financial support.

The Company determined that it has the power to direct the activities that most significantly impact Bicoastal’s economic performance, has more equity capital at risk, and is expected to continue to fund operations.

Therefore, the Company determined that it is the primary beneficiary of Bicoastal and has consolidated its results into the Company’s financial statements.

On August 14, 2024, Bicoastal entered into an agreement to acquire the remaining 50 % equity interest upon paydown of a $ 700 note payable to the noncontrolling interest noteholder with a final repayment date and equity ownership interest transfer date of June 30, 2025.

Riley Principal 250 Merger Corporation (“BRPM”)

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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.

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.

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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 was no longer a VIE.

(o) Recent Accounting Standards

(o) Contingent Consideration

Contingent consideration is comprised of contractual earnouts or milestones in connection with the Company's purchase of businesses and is initially recorded as purchase consideration in the purchase price allocation with a corresponding liability at the acquisition date measured at fair value with valuation methodologies as described in Note 2(j).

Subsequent changes in the fair value of contingent consideration during the reporting period are recognized in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

(p) Recent Accounting Standards

Not yet adopted

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To fund the $ 18,670 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.

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.

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

Goodwill of $ 56,028 and other intangible assets of $ 17,350 were recorded as a result of the acquisition.

The acquisition complements the Company's principal investments strategy and offers potential growth to the Company's portfolio of principal investments.

The assets and liabilities of Nogin, both tangible and intangible, were recorded at their estimated fair values as of the May 3, 2024 acquisition date.

Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Nogin, were charged against earnings in the amount of $ 2,276 and included in selling, general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

Nogin 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 $ 18,670

Credit bid - Settlement of DIP Facility 37,700

Total Consideration $ 56,370

Assets acquired and liabilities assumed:

Cash and cash equivalents $ 604

Accounts receivable 421

Prepaid and other assets 6,826

Operating lease right-of-use assets 740

Property and equipment 400

Other intangible assets 17,350

Deferred income taxes 227

Accounts payable ( 9,731 )

Accrued expenses and other liabilities ( 10,309 )

Deferred revenue ( 95 )

Operating lease liabilities ( 740 )

Note payable ( 700 )

Net tangible assets acquired and assumed 4,993

Goodwill 56,028

Noncontrolling interest ( 4,651 )

Total $ 56,370

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 $ 10,300

Internally developed software and other intangibles 8 Years 3,950

Trademarks 10 Years 3,100

Total $ 17,350

As described in Note 2(h), the Company had entered into a Chapter 11 RSA with Nogin prior to the acquisition date.

As part of Nogin's Chapter 11 restructuring activities, it ceased the sale of brand apparel merchandise and eliminated warehousing and other costs associated with the inventory, among other things.

The Company has determined that the preparation of pro forma financial information would be impracticable due to the significant estimates of amounts needed to reflect Nogin's historical financial information with its operations emerging from bankruptcy.

2023 Acquisitions

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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 unaudited pro-forma financial information for the three and six months ended June 30, 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.

equity interest.

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 March 31, 2023

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Revenues $ 406,278 $ 838,368

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Riley Financial, Inc.

$ 44,096 $ 58,965

Net income attributable to common shareholders $ 42,081 $ 54,938

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Weighted average diluted shares outstanding 30,745,155 31,173,794

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 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, trademarks, and developed technology.

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

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

Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

NOTE 4 — RESTRUCTURING CHARGE

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:

During the three and six months ended June 30, 2024, the Company recognized restructuring charges of $ 20 and $ 809 , respectively, primarily related to reorganization and consolidation activities in the Communications segment and Consumer Products segment, which consisted of reductions in workforce.

During the three and six months ended June 30, 2023, the Company recognized restructuring charges of $ 628 and $ 721 , respectively, primarily related to reorganization and consolidation activities in the Wealth Management segment, Communications segment, and Consumer Products segment, which consisted of reductions in workforce and facility closures.

The following tables summarize the changes in accrued restructuring charge during the three and six months ended months ended June 30, 2024 and 2023:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Balance, beginning of period $ 1,467 $ 1,996 $ 2,542 $ 2,335

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Balance, end of period $ 1,047 $ 1,792 $ 1,047 $ 1,792

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

The following table summarizes the restructuring activities by reportable segment during the three months ended June 30, 2024 and 2023.

Wealth Management Communications Consumer Products Total

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

Restructuring charges for the three months ended June 30, 2024:

Employee termination $ — $ — $ 20 $ 20

Total restructuring charge $ — $ — $ 20 $ 20

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

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

Employee termination $ — $ 197 $ 403 $ 600

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Total restructuring charge $ 28 $ 197 $ 403 $ 628

The following table summarizes the restructuring activities by reportable segment during the six months ended June 30, 2024 and 2023.

Wealth Management Communications Consumer Products Total

Restructuring charges for the six months ended June 30, 2024:

Employee termination $ — $ 263 $ 546 $ 809

Total restructuring charge $ — $ 263 $ 546 $ 809

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

Employee termination $ — $ 257 $ 403 $ 660

Facility closure and consolidation 61 — — 61

Total restructuring charge $ 61 $ 257 $ 403 $ 721

NOTE 5 — SECURITIES LENDING

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

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of June 30, 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 March 31, 2024

As of June 30, 2024

Securities borrowed $ 742,940 $ — $ 742,940 $ 742,940 $ —

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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 March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Remaining contractual maturity Remaining contractual maturity

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Balance, beginning of period $ 7,122 $ 6,324 $ 7,339 $ 3,664

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Inventory $ 83,178 $ 93,853

Rental merchandise, net 14,235 16,629

Equity method investments 2,551 2,087

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NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS

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:

Goodwill was $ 502,341 and $ 472,326 as of June 30, 2024 and December 31, 2023, respectively.

The increase in goodwill during the six months ended June 30, 2024 was primarily due to $ 56,028 from the acquisition of Nogin in the All Other category and $ 1,431 from an immaterial acquisition in the Financial Consulting segment, partially offset by $ 26,681 from goodwill impairment in the Consumer Products segment.

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:

Segment Wealth

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

Acquisition of other businesses — — — 1,431 — — 56,028 57,459

Goodwill impairment — — — — — ( 26,681 ) — ( 26,681 )

Other ( 532 ) — — ( 231 ) — — — ( 763 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ 161,486 $ 51,195 $ 1,975 $ 34,510 $ 193,867 $ — $ 59,308 $ 502,341

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.

During the six months ended June 30, 2024, the changes in goodwill included $( 231 ) of foreign currency translation amounts and $( 532 ) related to the sale of certain assets.

Intangible assets consisted of the following:

As of March 31, 2024

As of June 30, 2024

As of December 31, 2023

Useful Life Gross Carrying Value Accumulated Amortization Intangibles Net Gross Carrying Value Accumulated Amortization Intangibles Net

Estimated Useful Life in Years Gross Carrying Value Accumulated Amortization Intangibles Net Gross Carrying Value Accumulated Amortization Intangibles Net

Amortizable assets:

Customer relationships 1.0 to 16 Years

Customer relationships 1 to 16

$ 281,008 $ ( 131,654 ) $ 149,354 $ 272,399 $ ( 117,228 ) $ 155,171

Domain names 7 years 176 ( 173 ) 3 185 ( 183 ) 2

Advertising relationships 8 years 100 ( 96 ) 4 100 ( 94 ) 6

Internally developed software and other intangibles 0.5 to 10 Years

Domain names 7 175 ( 173 ) 2 185 ( 183 ) 2

Advertising relationships 8 100 ( 100 ) — 100 ( 94 ) 6

Internally developed software and other intangibles 0.5 to 10

32,935 ( 21,430 ) 11,505 28,985 ( 19,613 ) 9,372

Trademarks 3 to 10 Years

Trademarks 3 to 10

24,025 ( 9,342 ) 14,683 20,821 ( 8,133 ) 12,688

3 unchanged sentences

Total intangible assets $ 482,019 $ ( 162,699 ) $ 319,320 $ 467,265 $ ( 145,251 ) $ 322,014

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.

Amortization expense was $ 9,298 and $ 10,103 during the three months ended June 30, 2024 and 2023, respectively, and $ 18,294 and $ 20,576 during the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, estimated future amortization expense was $ 16,728 , $ 32,066 , $ 28,939 , $ 26,694 , and $ 23,188 for the years ended December 31, 2024 (remaining six months), 2025, 2026, 2027 and 2028, respectively.

The estimated future amortization expense after December 31, 2028 was $ 47,929 .

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

reporting units below their carrying values.

As a result of the current financial performance of the Company’s Targus subsidiary which is included in the Consumer Products segment as well as current market conditions that continued to 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 June 30, 2024, and based on the results of the analysis, the Company recorded a non-cash impairment charge of $ 27,681 consisting of a goodwill impairment charge of $ 26,681 and a tradename impairment charge of $ 1,000 , which was recorded in impairment of goodwill and tradenames in the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2024.

Goodwill and tradename of the Company’s Targus subsidiary was measured at fair value on a nonrecurring basis as of June 30, 2024.

The estimated fair value of goodwill was reduced to zero and the estimated fair value of tradename was $ 18,500 as of June 30, 2024.

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 4 % growth rate to calculate the terminal value, a discount rate of 16 %, 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 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.

Interest expense totaled $ 18 during the three months ended June 30, 2024 and 2023, and $ 36 during the six months ended June 30, 2024 and 2023.

There was no outstanding balance on this credit facility as of June 30, 2024 and December 31, 2023.

As of June 30, 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 June 30, 2024.

The Company received a series of extensions under its Wells Fargo Bank credit agreement with the most recent being dated September 27, 2024 to extend the required time to deliver its second quarter unaudited condensed financial statements to November 19, 2024.

On November 15, 2024, in connection with the GA Group Transaction as described in Note 21 – Subsequent Events the credit agreement which had no borrowings outstanding with Wells Fargo Bank was terminated.

Other Notes Payable

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.

As of June 30, 2024 and December 31, 2023, the outstanding balance for the other notes payable was $ 30,039 and $ 19,391 , respectively.

On May 3, 2024, upon closing of the acquisition of Nogin, Nogin entered into a secured convertible promissory note agreement with a principal amount of $ 15,000 with an annual interest rate of 10.0 % and a maturity date of May 3, 2027.

The remaining 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.

Interest expense was $ 401 and $ 144 during the three months ended June 30, 2024 and 2023, respectively, and $ 545 and $ 318 during the six months ended June 30, 2024 and 2023, respectively.

NOTE 10 — TERM LOANS AND REVOLVING CREDIT FACILITY

3 unchanged sentences

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 Targus Credit Agreement is secured by substantially all Targus assets as collateral defined in the Targus Credit Agreement which totals approximately $ 216,918 .

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.

3 unchanged sentences

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.

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 (“EBITDA”) requirements which waived the financial covenant breaches for the periods ended September 30, 2023 and December 31, 2023, respectively.

Amendment No.

2 also provided, among other things, with a cure right for the Company to provide a capital contribution to Targus in the event of a financial covenant breach.

For the period ended September 30, 2023, the Fixed Charge Coverage Ratio “FCCR” covenant was not fulfilled in accordance with the Targus Credit Agreement and for the period ended December 31, 2023, the FCCR and minimum EBITDA covenant was not fulfilled in accordance with the Targus Credit Agreement.

However, the amendments to the Targus Credit Agreement and the capital contributions made to the subsidiary cured the covenant breaches.

On June 27, 2024 the Company entered into Amendment No.

3 to the Targus Credit Agreement to replace the terminating Canadian benchmark interest rate with the Term CORRA Reference Rate.

For the period ended June 30, 2024, the minimum EBITDA covenant was also breached.

On August 14, 2024, the Company contributed $ 1,602 to Targus to cure a minimum EBITDA financial covenant requirement for the period ended June 30, 2024.

For the period ended September 30, 2024, the minimum EBITDA covenant was also breached.

On November 7, 2024, the Company entered into Amendment No.

4 to the Targus Credit Agreement, which among other things, reduced revolving loan sublimits, modified the FCCR covenant, removed the minimum EBITDA requirement, imposed a minimum undrawn availability covenant, and modified the terms of the Keepwell.

Amendment No.

4 to the Targus Credit Agreement also waived the September 30, 2024 minimum EBITDA covenant breach.

Concurrently with the effectiveness of Amendment No.

4 to the Targus Credit Agreement, the Company repaid the outstanding balance of the term loan in full with $ 2,100 of revolver loan advances and $ 7,500 of cash from the Company.

After Amendment No.4 to the Targus Credit Agreement that included a waiver, the Company is in compliance with the Targus Credit Agreement.

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

1 unchanged sentence

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.

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 13,035 (net of unamortized debt issuance costs of $ 265 ) and $ 17,834 (net of unamortized debt issuance costs of $ 366 ), respectively, and the outstanding balance on the revolver loan was $ 19,809 and $ 43,801 , respectively.

Interest expense on these loans during the three and six months ended June 30, 2024 was $ 1,086 (including amortization of deferred debt issuance costs of $ 187 and unused commitment fees of $ 26 ) and $ 2,446 (including amortization of deferred debt issuance costs of $ 371 and unused commitment fees of $ 53 ), respectively.

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

$ 20 ) and $ 3,757 (including amortization of deferred debt issuance costs of $ 305 and unused commitment fees of $ 39 ), respectively.

The interest rate on the term loan was 11.18 % 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 June 30, 2024 and December 31, 2023, respectively.

The weighted average interest rate on the revolver loan was 10.21 % and 8.53 % as of June 30, 2024 and December 31, 2023, respectively.

Pathlight Credit Agreement

4 unchanged sentences

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

On August 21, 2023, in connection with the sale of all of the equity interests in BRRII to Freedom VCM Receivables as more fully described in Note 2(h), the Company was released from all obligations,

guarantees and covenants related to 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 %.

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 ).

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

Lingo Credit Agreement

5 unchanged sentences

The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus a margin of 3.00 % to 3.75 % per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment.

As of March 31, 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.

As of June 30, 2024 and December 31, 2023, the interest rate on the Lingo Credit Agreement was 8.70 %.

The Lingo Credit Agreement is guaranteed by the Company and Lingo's subsidiaries and secured by certain Lingo assets and equity interests as collateral which totals approximately $ 238,461 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.

2 unchanged sentences

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

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

The Company is in compliance with all financial covenants in the Lingo Credit Agreement as of June 30, 2024.

The Company received a series of extensions under its credit agreement with Banc of California, N.A.

with the most recent being dated December 18, 2024 to extend the required time to deliver its second quarter unaudited condensed consolidated financial statements to January 21, 2025.

Principal outstanding is due in quarterly installments.

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 ).

The quarterly installments from September 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 June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 57,776 (net of unamortized debt issuance costs of $ 623 ) and $ 63,153 (net of unamortized debt issuance costs of $ 722 ), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2024 was $ 1,413 (including amortization of deferred debt issuance costs of $ 72 ) and $ 2,885 (including amortization of deferred debt issuance costs of $ 142 ), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2023 was $ 1,626 (including amortization of deferred debt issuance costs of $ 74 ) and $ 3,187 (including amortization of deferred debt issuance costs of $ 149 ), respectively.

On January 6, 2025, as discussed below BRPAC entered into an amended and restated credit agreement (the “BRPAC Amended Credit Agreement”) with the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time.

A portion of the proceeds from the BRPAC Amended Credit Agreement were used to pay all outstanding principal amounts and accrued interest under the Lingo Credit Agreement and the Lingo Credit Agreement was effectively terminated upon repayment on January 6, 2025.

bebe Credit Agreement

1 unchanged sentence

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.

As of June 30, 2024 and December 31, 2023, the interest rate on the bebe Credit Agreement was 11.11 % 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 which totals approximately $ 129,801 .

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.

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 June 30, 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 ).

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 21,987 (net of unamortized debt issuance costs of $ 513 ) and $ 22,487 (net of unamortized debt issuance costs of $ 638 ), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2024 was $ 699 (including amortization of deferred debt issuance costs of $ 60 ) and $ 1,412 (including amortization of deferred debt issuance costs of $ 125 ), respectively.

On October 25, 2024, upon the closing of the Brands Transaction as described in Note 21 – Subsequent Events proceeds of $ 22,188 was used to pay off the then outstanding balance of the loan in full and $ 224 of loan payoff expenses.

Nomura Credit Agreement

2 unchanged sentences

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

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

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

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

1 unchanged sentence

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 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 $ 190,688 (which is included in the total loans receivable, at fair value balance of $ 229,199 reported in our condensed consolidated balance sheet at June 30, 2024) and $ 375,814 (which is included in the total loans receivable, at fair value balance of $ 532,419 reported in our condensed consolidated balance sheet at December 31, 2023) and investments in the amount of $ 680,105 (which is included in the total securities and other investments owned, at fair value of $ 664,070 reported in our condensed consolidated balance sheet at June 30, 2024) and $ 786,714 (which is included in the total securities and other investments owned, at fair value of $ 1,092,106 reported in our condensed consolidated balance sheet at December 31, 2023) as of June 30, 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 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 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 %.

The Company is in compliance with all financial covenants in the Credit Agreement as of June 30, 2024.

On September 17, 2024, the Company entered into Amendment No.

4 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fourth Amendment”).

On September 17, 2024, the Company made a payment of $ 85,857 which consisted of a principal payment of $ 85,146 and accrued interest of $ 711 .

Loan fees incurred in connection with the Fourth Amendment totaled $ 5,869 of which $ 3,523 was added to the principal balance of the term loan.

After giving effect to these amounts, the outstanding principal balance on the term loan was reduced from $ 469,750 to $ 388,127 .

In connection with the Fourth Amendment, the revolving credit facility in the amount of $ 100,000 which had no balance outstanding at September 17, 2024 was terminated and the Company is required to reduce the principal amount of the term loan to be no greater than $ 100,000 on or prior to September 30, 2025.

The maturity date of the term loan is August 21, 2027 and all outstanding principal is required to be paid.

The Fourth Amendment contains certain provisions related to borrowing base, including specific treatment for certain assets in the calculation of borrowing base and also includes mandatory prepayment provisions regarding asset sales.

Interest on the term loan increased to SOFR loans will accrue interest at the adjusted term SOFR plus an applicable margin of 7.00 % cash interest or, at the election of the Company, at the adjusted term SOFR determined plus an applicable margin of 6.00 % cash interest plus 1.50 % paid-in-kind interest;

and base rate loans will accrue interest at the base rate plus an applicable margin of 6.00 % cash interest or, at the election of the Company, at the adjusted term SOFR determined for such day plus an applicable margin of 5.00 % cash interest plus 1.50 % PIK Interest.

On December 9, 2024, the Company entered into Amendment No.

5 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fifth Amendment”).

The Fifth Amendment extended the springing maturity date of the term loans if more than $ 25,000 aggregate principal amount of the 5.50 % 2026 Notes is outstanding to February 3, 2026 and permits under certain conditions an additional $ 10,000 of telecommunications financing.

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 452,548 (net of unamortized debt issuance costs of $ 17,202 ) and $ 475,056 (net of unamortized debt issuance costs of $ 18,694 ), respectively.

Interest expense on the term loan during the three months ended June 30, 2024 and 2023 was $ 14,609 (including amortization of deferred debt issuance costs of $ 1,087 ) and $ 7,557 (including amortization of deferred debt issuance costs of $ 536 ), respectively, and during the six months ended June 30, 2024 and 2023 was $ 29,593 (including amortization of deferred debt issuance costs of $ 2,152 ) and $ 14,857 (including amortization of deferred debt issuance costs of $ 1,062 ), respectively.

The interest rate on the term loan as of June 30, 2024 and December 31, 2023 was 11.33 % and 11.37 %, respectively.

The Company had an outstanding balance of zero under the revolving facility as of June 30, 2024 and December 31, 2023.

Interest on the revolving facility during the three months ended June 30, 2024 and 2023 was $ 495 (including unused

commitment fees of $ 239 and amortization of deferred financing costs of $ 256 ) and $ 1,527 (including unused commitment fees of $ 28 and amortization of deferred financing costs of $ 151 ), respectively, and during the six months ended June 30, 2024 and 2023 was $ 992 (including unused commitment fees of $ 484 and amortization of deferred financing costs of $ 508 ) and $ 3,483 (including unused commitment fees of $ 28 and amortization of deferred financing costs of $ 301 ), respectively.

The interest rate on the revolving facility as of June 30, 2024 and December 31, 2023 was 11.37 %.

BRPAC Credit Agreement

6 unchanged sentences

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

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

The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties which totals approximately $ 185,815 , including a pledge of (a) 100 % of the equity interests of the Credit Parties;

(b) 65 % of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India;

and (c) 65 % of the equity interests in magicJack VoIP Services, LLC, a Delaware corporation.

and (c) 65 % of the equity interests in magicJack VocalTec Ltd., an Israel corporation.

Such security interests are evidenced by pledge, security, and other related agreements.

3 unchanged sentences

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

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

The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of June 30, 2024.

The Company received a series of extensions under its credit agreement with Banc of California, N.A.

with the most recent being dated December 18, 2024 to extend the required time to deliver its second quarter unaudited condensed consolidated financial statements to January 21, 2025.

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

1 unchanged sentence

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

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

As of June 30, 2024 and December 31, 2023, the interest rate on the BRPAC Credit Agreement was 8.20 % and 8.46 %, respectively.

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

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.

The quarterly installments from September 30, 2024 to December 31, 2026 are in the amount of $ 3,169 per quarter, the quarterly installment on March 31, 2027 is in the amount of $ 2,377 , and the remaining principal balance is due at final maturity on June 30, 2027.

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $ 36,049 (net of unamortized debt issuance costs of $ 395 ) and $ 46,621 (net of unamortized debt issuance costs of $ 429 ), respectively.

Interest expense on the term loan during the three months ended June 30, 2024 and 2023 was $ 914 (including amortization of deferred debt issuance costs of $ 67 ) and $ 1,348 (including amortization of deferred debt issuance costs of $ 70 ), respectively, and during the six months ended June 30, 2024 and 2023 was $ 1,974 (including amortization of deferred debt issuance costs of $ 124 ) and $ 2,791 (including amortization of deferred debt issuance costs of $ 144 ), respectively.

On January 6, 2025 (the “Closing Date”), BRPAC entered into the BRPAC Amended Credit Agreement with certain subsidiaries of the Company, the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time.

The Company’s subsidiary Lingo was added as a Borrower to the BRPAC Amended Credit Agreement.

Pursuant to the BRPAC Amended Credit Agreement, the lenders made a new five-year $ 80,000 term loan to the Borrowers, the proceeds of which were used to repay in full the obligations under the original BRPAC Credit Agreement dated December 18, 2018 and the Lingo Credit Agreement.

In connection with the BRPAC Amended Credit Agreement, the Borrowers also made certain distributions to the parent company of the Borrowers from existing cash on hand.

The BRPAC Amended Credit Agreement also builds in provisions for incremental term loans up to $ 40,000 allowing certain distributions to the parent company of the Borrowers from the proceeds of such incremental term loans.

The Borrowers’ U.S.

subsidiaries are guarantors of all obligations under the BRPAC Amended Credit Agreement.

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

(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., an Israel corporation.

Such security interests are evidenced by pledge, security, and other related agreements.

The borrowings under the BRPAC Amended 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 Amended Credit Agreement.

The interest rate is subject to a margin level of 3.25 %.

As of the Closing Date, the outstanding principal amount was $ 80,000 with quarterly installments of principal due in the amount of $ 4,000 , and any remaining principal balance is due at final maturity on January 6, 2030.

The BRPAC Amended Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’, 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 BRPAC Amended Credit Agreement requires the Credit Parties to maintain certain financial ratios.

The BRPAC Amended 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 outstanding amounts due under the BRPAC Amended Credit Agreement.

NOTE 11 — SENIOR NOTES PAYABLE

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$ 1,528,565 $ 1,668,021

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.

which governs the program of at-the-market sales of the Company’s senior notes.

The Company issued zero and $ 185 during the three months ended June 30, 2024 and 2023, respectively, and zero and $ 185 during the six months ended June 30, 2024 and 2023, respectively, of senior notes.

The maturity dates of senior notes ranged from February 2025 to August 2028 pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc., which governs the program of at-the-market sales of the Company’s senior notes.

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

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

On February 29, 2024, the Company partially redeemed $ 115,492 aggregate principal amount of its 6.75 % Senior Notes due 2024 (the “ 6.75 % 2024 Notes”) pursuant to the seventh supplemental indenture dated December 3, 2021.

On February 29, 2024, the Company 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.

On May 31, 2024, the Company redeemed the remaining $ 25,000 aggregate principal amount of the 6.75 % 2024 Notes.

The redemption price was equal to 100 % of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date.

The total redemption payment included approximately $ 145 in accrued interest.

In connection with the full redemption, the 6.75 % 2024 Notes, which were listed on NASDAQ under the ticker symbol “RILYO,” were delisted from NASDAQ and ceased trading on the redemption date.

As of June 30, 2024 and December 31, 2023, total senior notes outstanding was $ 1,528,565 (net of unamortized debt issue costs of $ 10,964 ) and $ 1,668,021 (net of unamortized debt issue costs of $ 13,130 ), respectively, with a weighted average interest rate of 5.62 % and 5.71 %, respectively.

Interest on senior notes is payable on a quarterly basis.

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

Interest expense on senior notes totaled $ 22,977 and $ 26,776 during the three months ended June 30, 2024 and 2023, respectively and $ 47,415 and $ 53,003 during the six months ended June 30, 2024 and 2023, respectively.

NOTE 12 — ACCRUED EXPENSES AND OTHER LIABILITIES

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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 months ended March 31, 2024 and 2023 was as follows:

Revenue from contracts with customers by the Company's six reportable operating segments and the All Other category during the three and six months ended months ended June 30, 2024 and 2023 was as follows:

Segment Wealth

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Segment Financial

Segment Communications Segment Consumer Products

Segment Communications

Segment Consumer Products

Segment All Other Total

Revenues for the three months ended March 31, 2024

Revenues for the three months ended June 30, 2024

Corporate finance, consulting and investment banking fees $ 40,082 $ — $ — $ 24,036 $ — $ — $ — $ 64,118

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Subscription services — — — — 76,389 — — 76,389

Sale of goods — — 8,364 — 1,465 51,424 2,684 63,937

Advertising, licensing and other — — — — 1,355 — 30,303 31,658

Total revenues from contracts with customers 48,478 48,903 11,985 36,533 79,209 51,424 32,987 309,519

Trading (loss) income

( 32,612 ) 1,291 — — — — — ( 31,321 )

Fair value adjustments on loans

( 175,582 ) — — — — — — ( 175,582 )

Interest income - loans 18,508 — — — — — — 18,508

Interest income - securities lending 24,798 — — — — — — 24,798

Other 1,764 679 — — — — — 2,443

Total revenues $ ( 114,646 ) $ 50,873 $ 11,985 $ 36,533 $ 79,209 $ 51,424 $ 32,987 $ 148,365

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer Products

Segment All Other Total

Revenues for the three months ended June 30, 2023

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

Wealth and asset management fees 1,258 44,449 — — — — — 45,707

Commissions, fees and reimbursed expenses 7,946 3,006 8,885 12,068 — — — 31,905

Subscription services — — — — 82,183 — — 82,183

Sale of goods — — 1,676 — 1,640 55,071 — 58,387

Advertising, licensing and other

— — — — 1,133 — 14,710 15,843

Total revenues from contracts with customers 39,931 47,455 10,561 31,212 84,956 55,071 14,710 283,896

Trading (loss) income

32,685 473 — — — — — 33,158

Fair value adjustments on loans

9,207 — — — — — — 9,207

Interest income - loans 35,126 — — — — — — 35,126

Interest income - securities lending 40,073 — — — — — — 40,073

Other 5,030 ( 212 ) — — — — 4,818

Total revenues $ 162,052 $ 47,716 $ 10,561 $ 31,212 $ 84,956 $ 55,071 $ 14,710 $ 406,278

Segment Wealth

Segment Auction and

Segment Financial

Segment Communications

Segment Consumer Products

Segment All Other Total

Revenues for the six months ended June 30, 2024

Corporate finance, consulting and investment banking fees $ 90,245 $ — $ — $ 47,020 $ — $ — $ — $ 137,265

Wealth and asset management fees 2,425 92,230 — — — — — 94,655

Commissions, fees and reimbursed expenses 13,285 6,618 6,201 24,598 — — — 50,702

Subscription services — — — — 156,126 — — 156,126

Service contract revenues — — 980 — — — — 980

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Advertising, licensing and other

— — — — 2,688 — 56,362 59,050

Total revenues from contracts with customers 105,955 98,848 17,765 71,618 161,575 102,946 59,661 618,368

Interest income - Loans and securities lending 59,944 — — — — — — 59,944

Trading (losses) gains on investments ( 18,267 ) 600 — — — — — ( 17,667 )

Fair value adjustment on loans ( 12,201 ) — — — — — — ( 12,201 )

Trading (loss) income ( 50,879 ) 1,891 — — — — — ( 48,988 )

Fair value adjustments on loans ( 187,783 ) — — — — — — ( 187,783 )

Interest income - loans 40,643 — — — — — — 40,643

Interest income - securities lending 62,607 — — — — — — 62,607

Other 4,634 1,916 — — — — — 6,550

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Segment Financial

Segment Communications Segment Consumer Products

Segment Communications

Segment Consumer Products

Segment All Other Total

Revenues for the three months ended March 31, 2023

Revenues for the six months ended June 30, 2023

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

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Total revenues from contracts with customers 88,963 94,694 16,221 56,222 171,875 120,765 28,292 577,032

Interest income - Loans and securities lending 77,186 — — — — — — 77,186

Trading gains on investments 7,020 1,272 — — — — — 8,292

Fair value adjustment on loans 43,276 — — — — — — 43,276

Trading (loss) income 39,705 1,745 — — — — — 41,450

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

Interest income - loans 75,138 — — — — — — 75,138

Interest income - securities lending 77,247 — — — — — — 77,247

Other 13,927 1,091 — — — — — 15,018

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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 $ 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.

Receivables related to revenues from contracts with customers totaled $ 115,681 and $ 115,496 as of June 30, 2024 and December 31, 2023, respectively.

The Company had no significant impairments related to these receivables during the three and six months ended months ended June 30, 2024 and 2023.

The Company also has $ 13,414 and $ 13,402 of unbilled receivables included in prepaid expenses and other assets as of June 30, 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 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.

Deferred revenue as of June 30, 2024 and December 31,

2023 was $ 65,421 and $ 71,504 , respectively.

The Company expects to recognize the deferred revenue of $ 65,421 as of June 30, 2024 as service and fee revenues when the performance obligation is met during the years ended December 31, 2024 (remaining six months), 2025, 2026, 2027 and 2028 in the amount of $ 42,613 , $ 11,279 , $ 5,316 , $ 2,220 , and $ 1,270 , respectively.

The Company expects to recognize the deferred revenue of $ 2,723 after December 31, 2028.

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.

During the three months ended June 30, 2024 and 2023, the Company recognized revenue of $ 9,281 and $ 11,665 , respectively, that was recorded as deferred revenue at the beginning of the respective year.

During the six months ended June 30, 2024 and 2023, the Company recognized revenue of $ 30,578 and $ 34,167 , respectively, 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 $ 7,338 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.

The capitalized costs to fulfill a contract were $ 7,020 and $ 8,131 as of June 30, 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 June 30, 2024 and 2023, the Company recognized expenses of $ 1,142 and $ 1,258 related to capitalized costs to fulfill a contract, respectively.

For the six months ended June 30, 2024 and 2023, the Company recognized expenses of $ 2,679 and $ 2,273 related to capitalized costs to fulfill a contract, respectively.

There were no significant impairment charges recognized in relation to these capitalized costs during the three and six months ended months ended June 30, 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 March 31, 2024.

Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of March 31, 2024.

The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of June 30, 2024.

NOTE 14 — INCOME TAXES

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.

The state net operating loss carryforwards will expire in the tax years commencing in December 31, 2030.

The Company’s effective income tax rate was a provision of 6.1 % for the three months ended June 30, 2024 as compared to a provision of 32.9 % for the three months ended June 30, 2023.

The Company’s effective income tax rate was a provision of 1.7 % for the six months ended June 30, 2024, as compared to a provision of 32.8 % for the six months ended June 30, 2023.

During the three months ended June 30, 2024, the Company had a provision for income taxes of $ 25,008 resulting primarily from the impact of recording a valuation allowance on deferred tax assets as of June 30, 2024.

The change in the effective tax rate compared to the prior year is primarily due to the impact of the valuation allowance recorded on deferred tax assets as of June 30, 2024.

During the six months ended June 30, 2024, the Company had a provision for income taxes of $ 7,918 resulting primarily from the impact of a valuation allowance on deferred tax assets.

As of June 30, 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 income tax return has federal net operating loss carryforwards of $ 298,416 and state net operating loss carryforwards of $ 222,585 available to utilize against future taxable income of the majority-owner subsidiary.

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

The state net operating loss carryforwards will expire in the tax years commencing on December 31, 2030.

The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits of operating loss, capital loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances.

Tax benefits of operating loss, capital loss and tax

credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances.

The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue Code Section 382.

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

As of March 31, 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.

As of June 30, 2024, the Company believes that the existing federal and state net operating loss carryforwards will not be fully utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will not be sufficient to realize its deferred tax assets and has provided a valuation allowance in the amount of $ 16,012 against these deferred tax assets.

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

During the three months ended June 30, 2024, the Company also performed additional analysis of deferred tax assets that relate to tax benefits in future periods from unrealized losses on investments and loans receivable and other debt instruments.

The Company believes that it is more-likely-than-not that the Company will not be able to utilize the tax benefits from unrealized losses from these investments and loans receivable and other debt instruments and has provided valuation allowances in the amounts of $ 62,039 and $ 48,440 , respectively, against these deferred tax assets.

The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions.

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

Securities that could potentially dilute basic net income (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.

Potential common shares that were not included in the computation of diluted loss per share because the effect was antidilutive was 2,781,112 as of June 30, 2024.

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

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net (loss) income attributable to B.

23 unchanged sentences

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 July 9, 2024, a putative class action was filed by Brian Gale, Mark Noble, Terry Philippas and Lawrence Bass in the Delaware Chancery Court against Freedom VCM, Mr.

Kahn, Andrew Laurence, Matthew Avril, and the Company.

This complaint alleges that former shareholders of FRG suffered damages due to alleged breaches of fiduciary duties by officers, directors and other participants in the August 2023 management-led take private transaction of FRG and that the Company aided and abetted those alleged breaches of fiduciary duties.

The claim seeks an award of unspecified damages, rescissory damages and/or quasi-appraisal damages, disgorgement of profits, attorneys’ fees and expenses, and interest thereon.

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

On July 3, 2024, each of the Company and Bryant Riley, Chairman and Co-Chief Executive Officer, received a subpoena from the U.S.

Securities and Exchange Commission (the “SEC”) requesting the production of certain documents and other information primarily related to (i) the Company’s business dealings with Brian Kahn, (ii) certain transactions in an unrelated public company’s securities, and (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries.

On November 22, 2024, each of the Company and Mr.

Riley received an additional SEC subpoena requesting the production of certain additional documents and information relating to Franchise Group, Inc.

(including its holding company, Freedom VCM Holdings, LLC) as well as Mr.

Riley’s personal loan and his pledge of shares of the Company’s common stock as collateral for such loan.

As previously disclosed on April 23, 2024, the Audit Committee of the Company’s Board of Directors, with the assistance of Sullivan & Cromwell LLP, the Company’s legal counsel, conducted an internal review, and separately the Audit Committee retained Winston & Strawn LLP, independent legal counsel, to conduct an independent investigation, to review transactions among Mr.

Kahn (and his affiliates) and the Company (and its affiliates).

The review and the investigation both confirmed that the Company and its

executives, including Mr.

Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Mr.

Kahn or any of his affiliates.

The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred.

Both the Company and Mr.

Riley are responding to the subpoenas and are fully cooperating with the SEC.

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 complaint alleged that defendants knew or should have known that Mr.

Kahn was engaged in illegal activities, including an alleged conspiracy to commit fraud.

On September 27, 2024, the plaintiff filed an amended complaint.

The amended complaint also asserts claims under §§ 11, 12, and 15 of the Securities Act of 1933, as amended, and alleges that defendants knew or should have known that the risk to the Company from its investments in businesses affiliated with Mr.

Kahn and loans to Mr.

Kahn and his affiliates was greater than disclosed in the offering documents used in connection with the Note Offerings.

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”).

Federal District Court, Central District of California, against the Company, Mr.

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.

The complaint alleges that (a) the Company failed to disclose to investors that (i) Mr.

Kahn, had been implicated in a conspiracy to defraud third party investors, and (ii) the Company financed Mr.

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 Kamholz complaint further alleges that Defendants knew or should have known that Mr.

Kahn was engaged in illegal activities, including a conspiracy to commit fraud, and nonetheless proceeded with the FRG going-private transaction.

On August 8, 2024, the Court entered an order consolidating the two actions.

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.

4 unchanged sentences

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.

In light of the significant factual issues to be resolved with respect to the asserted claims and other proceedings described above and uncertainties regarding unasserted claims described above, at the present time reasonably possible losses cannot be estimated with respect to the asserted and unasserted claims described in the preceding paragraphs.

(b) Babcock & Wilcox Commitments and Guarantees

1 unchanged sentence

(“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.

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.

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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.

As of June 30, 2024, the Cash Collateral Provider Guaranty was up to $ 1,650 of B&W obligations after B&W made paydowns of $ 88,350 during the six months ended June 30, 2024.

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

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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 $ 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 .

Under the 2021 Stock Incentive Plan (the “2021 Plan”), share-based compensation expense for restricted stock units under the Company’s 2021 Plan was $ 6,042 and $ 10,231 during the three months ended June 30, 2024 and 2023, respectively, and $ 14,416 and $ 23,543 during the six months ended June 30, 2024 and 2023, respectively.

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

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

3 unchanged sentences

(b) Employee Stock Purchase Plan

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.

In connection with the Company’s Employee Stock Purchase Plan (the “Purchase Plan”), share based compensation was $ 70 and $ 126 for the three months ended June 30, 2024 and 2023, respectively, and $ 307 and $ 424 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, there were 236,949 shares reserved for issuance under the Purchase Plan.

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

During the three months ended March 31, 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.

During the six months ended June 30, 2024, the Company repurchased zero shares of its common stock.

During the six months ended June 30, 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.

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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.

As of June 30, 2024 and December 31, 2023, $ 34,206 remain 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.

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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 .

As of June 30, 2024 and December 31, 2023, zero and 200,000 BR Brands warrants were outstanding, respectively.

(d) Preferred Stock

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.

During the six months ended June 30, 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 June 30, 2024 and December 31, 2023.

Total liquidation preference for the Series A Preferred Stock as of June 30, 2024 and December 31, 2023 was $ 70,854 .

Dividends on the Series A preferred paid during the six months ended June 30, 2024 and 2023 were $ 0.4296875 per depository share.

During the six months ended June 30, 2024 and 2023, the Company issued zero and 18 depository shares of the Series B Preferred Stock, respectively.

There were 1,729 shares issued and outstanding as of June 30, 2024 and December 31, 2023.

Total liquidation preference for the Series B Preferred Stock as of June 30, 2024 and December 31, 2023 was $ 43,228 .

Dividends on the Series B preferred paid during the six months ended June 30, 2024 and 2023 were $ 0.4609375 per depository share.

NOTE 18 — NET CAPITAL REQUIREMENTS

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

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 ;

As of June 30, 2024, BRS had net capital of $ 68,910 , which was $ 65,363 in excess of required minimum net capital of $ 3,547 ;

and BRWM had net capital of $ 16,459 , which was $ 14,667 in excess of required minimum net capital of $ 1,792 .

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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.

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 .

Management fees from the Funds during the three months ended June 30, 2024 and 2023 totaled $ 28 and $ 484 , respectively, and during the six months ended June 30, 2024 and 2023 totaled $ 143 and $ 694 , respectively.

As of June 30, 2024 and December 31, 2023, amounts due from related parties were $ 905 and $ 172 , respectively, of which $ 161 and $ 172 , respectively, were due from the Funds for management fees and other operating expenses.

As of June 30, 2024, $ 744 were due from certain of the Company's brand investments to Nogin for e-commerce related services.

As of June 30, 2024 and December 31, 2023, amounts due to related parties were $ 2,067 and $ 2,731 , respectively, of which $ 1,249 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.

As of June 30, 2024, $ 818 were due to certain of the Company's brand investments from Nogin for sales transactions settled by Nogin as part of its e-commerce related services to the Company’s brand investments.

During the three and six months ended June 30, 2024, royalty fees, marketing, and IT services charged to bebe by Freedom VCM totaled $ 1,235 and $ 2,525 , respectively, and inventory purchases by bebe from Freedom VCM totaled $ 3,220 and $ 6,759 , respectively.

During the three and six months ended June 30, 2024, Nogin recognized revenues of $ 1,754 from clients that are part of the Company’s brand investments.

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

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and GACP II, L.P.

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

During the three months ended June 30, 2024 and 2023, management fees paid for investment advisory services by Whitehawk were zero .

During the six months ended June 30, 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 .

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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.

On September 20, 2024, Kenny Young resigned from his position as the President of the Company and the Executive Consulting Agreement with B&W was terminated.

Young entered into a one-year consulting agreement concurrently to provide services to the Company, pursuant to which he will be paid an annual fee of $ 250 paid monthly.

During the three months ended June 30, 2024 and 2023, the Company earned $ 968 and zero , respectively, and during the six months ended June 30, 2024 and 2023, the Company earned $ 1,716 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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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.

Interest income on the loan receivable was $ 3,042 and $ 5,871 during the three and six months ended June 30, 2023, respectively.

There were no fees earned from Arena by the Company during the three and six months ended June 30, 2023.

Applied Digital

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California Natural Resources Group, LLC.

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.

California Natural Resources Group, LLC (“CalNRG”) was a related party as a result of the Company's approximately 25.0 % equity ownership.

On May 23, 2024, the Company sold its equity interest in CalNRG for $ 9,272 resulting in a realized gain of $ 254 , and no commitments remain.

Freedom VCM Holdings, LLC

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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.

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.

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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 $ 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.

Payments of principal and interest on the note were limited solely to the performance of certain receivables held by BRRII.

Principal and interest was 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 $ 25,827 and $ 42,183 as of June 30, 2024 and December 31, 2023.

Interest income on the loan receivable was $ 2,238 and $ 4,392 during the three and six months ended June 30, 2024, respectively.

On October 9, 2024, the Promissory Note was cancelled and certain of the receivables owned by BRRII were transferred to BRRI, all in accordance with the terms of that certain amended and restated funding agreement, dated December 18, 2023, by and among Freedom VCM Interco Holdings, Inc., Freedom VCM Receivables, Inc., BRRII, the Company and certain other parties thereto.

As more fully described in Note 2(h), the Company also has a related party loan receivable with a fair value of approximately $ 4,562 and $ 20,624 at June 30, 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 December 18, 2023, Badcock was sold by Freedom VCM to Conn’s and the Company loaned Conn’s $ 108,000 pursuant to the Conn’s Term Loan 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 .

During the three and six months ended June 30, 2024, interest income on these loans totaled $ 3,387 and $ 7,538 , respectively.

The commencement of the Chapter 11 Cases constitute an event of default that accelerated the obligations under the Conn’s Term Loan.

As of the date of the filing of the Chapter 11 Cases, $ 93,000 in outstanding borrowings existed under the Conn’s Term Loan.

Any efforts to enforce payment obligations under the Conn’s Term Loan are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of the Conn’s Term Loan are subject to the applicable provisions of the Bankruptcy Code.

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.

On June 27, 2024, Conn’s entered into a Consulting Agreement, as subsequently amended on July 19, 2024 (the “Consulting Agreement”), with an affiliate of the Company.

Pursuant to the Consulting Agreement, Conn’s engaged the Company to sell merchandise and furniture, fixtures, & equipment (“FF&E”) as well as additional goods at Conn’s and Badcock stores, headquarters, distribution centers, and cross-dock locations.

The Company will receive a fee of 1.75 % of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is below 105 % of cost, 2.0 % of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is between 105.1 % of cost and 109.9 % of cost, and 2.25 % of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is 110 % of cost or more.

The Company will also receive a fee equal to 15 % of the gross proceeds of FF&E sales and 92.5 % of the gross proceeds from the sale of additional goods.

In connection with the Chapter 11 Cases, the Consulting Agreement was assumed by the Conn’s debtors on an interim basis, and on August 22, 2024, the Consulting Agreement was assumed by the Conn’s debtors on a final basis.

Vintage Capital Management - Brian Kahn

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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.

Interest income

was $ 6,082 and $ 12,164 during the three and six months ended June 30, 2024, respectively.

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.

Kahn and his spouse was $ 51,478 and $ 232,065 as of June 30, 2024 and December 31, 2023, respectively.

On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code which impacts the collateral for this loan receivable.

The fair value of the underlying collateral for this loan decreased to a fair value of $ 2,006 at December 20, 2024.

The $ 2,006 is comprised of other public securities.

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.

Kahn are related parties as of June 30, 2024 and December 31, 2023.

Torticity, LLC

On November 2, 2023, the Company loaned $ 15,369 to Torticity, LLC, of which $ 6,690 was drawn upon with $ 8,679 remaining, with interest payable of 15.0 % per annum and a maturity date of November 2, 2026.

Interest income was $ 1,209 during the three months ended March 31, 2024.

On November 2, 2023, the Company agreed to lend up to $ 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 $ 1,256 and $ 2,465 during the three and six months ended June 30, 2024, respectively.

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.

The loan receivable had a fair value of $ 17,170 and $ 6,791 as of June 30, 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.

On November 21, 2023, the Company agreed to lend up to $ 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 $ 476 and $ 844 during the three and six months ended June 30, 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.

The loan receivable had a fair value of $ 9,762 and $ 3,904 as of June 30, 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 2, 2021, the Company purchased a $ 2,400 minority equity interest in Dash Medical Holdings, LLC ("Dash") and one of the board of directors of the Company is a member of the board of directors of Dash.

On June 13, 2024, the Company sold its equity interest in Dash for $ 2,760 , resulting in a realized gain of $ 360 .

In December 2024, the Company earned an advisory fee of $ 2,650 for services in connection with sale of Q-mation, Inc.

where one of the board of directors of the Company is the president of Q-mation, Inc.

On March 10, 2023, the Company sold a loan receivable including accrued interest in the amount of $ 7,600 to two related parties.

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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 have a 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 June 30, 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.

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

During the three months ended March 31, 2024 and 2023, the Company earned $ 179 and $ 784 of fees related to these services, respectively.

During the three months ended June 30, 2024 and 2023, the Company earned $ 369 and $ 30 of fees related to these services, respectively.

During the six months ended June 30, 2024 and 2023, the Company earned $ 548 and $ 814 of fees related to these services, respectively.

NOTE 20 — BUSINESS SEGMENTS

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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.

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.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Capital Markets segment:

Revenues - Services and fees $ 50,242 $ 44,961 $ 110,589 $ 102,890

Trading (loss) income and fair value adjustments on loans ( 30,468 ) 50,296

Interest income - Loans and securities lending 59,944 77,186

Trading (loss) income ( 32,612 ) 32,685 ( 50,879 ) 39,705

Fair value adjustments on loans ( 175,582 ) 9,207 ( 187,783 ) 52,483

Interest income - loans 18,508 35,126 40,643 75,138

Interest income - securities lending 24,798 40,073 62,607 77,247

Total revenues ( 114,646 ) 162,052 ( 24,823 ) 347,463

Selling, general and administrative expenses ( 49,806 ) ( 45,870 ) ( 103,030 ) ( 111,581 )

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

Interest expense - Securities lending and loan participations sold ( 23,313 ) ( 35,780 ) ( 58,696 ) ( 68,204 )

Depreciation and amortization ( 745 ) ( 993 ) ( 1,516 ) ( 2,249 )

Segment income 445 86,020

Segment (loss) income ( 188,510 ) 77,676 ( 188,065 ) 163,696

Wealth Management segment:

Revenues - Services and fees 49,582 47,243 100,764 95,785

Trading income and fair value adjustments on loans 600 1,272

Trading income 1,291 473 1,891 1,745

Total revenues 50,873 47,716 102,655 97,530

2 unchanged sentences

Depreciation and amortization ( 1,048 ) ( 1,082 ) ( 2,103 ) ( 2,168 )

Segment income 1,679 1,373

Segment income (loss) 1,668 ( 1,358 ) 3,347 15

Auction and Liquidation segment:

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Restructuring charge ( 20 ) ( 403 ) ( 546 ) ( 403 )

Impairment of goodwill and tradenames ( 27,681 ) — ( 27,681 ) —

Segment loss ( 29,310 ) ( 2,048 ) ( 32,716 ) ( 3,662 )

Consolidated operating income from reportable segments 14,936 100,545

Consolidated operating (loss) income from reportable segments ( 202,151 ) 96,758 ( 187,215 ) 197,303

Revenues - Services and fees 30,303 14,710 56,362 28,292

6 unchanged sentences

Dividend income 9,209 9,555 21,024 22,759

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

Realized and unrealized (losses) gains on investments ( 155,690 ) 18,843 ( 185,235 ) ( 9,599 )

Change in fair value of financial instruments and other ( 163 ) 381 151 172

Loss on equity investments ( 4 ) ( 10 )

Income from equity investments 10 143 6 133

Interest expense ( 42,687 ) ( 47,332 ) ( 87,551 ) ( 94,893 )

(Loss) income before income taxes ( 408,773 ) 65,285 ( 473,817 ) 89,764

Benefit from (provision for) income taxes 17,090 ( 7,919 )

Provision for income taxes ( 25,008 ) ( 21,504 ) ( 7,918 ) ( 29,423 )

Net (loss) income ( 433,781 ) 43,781 ( 481,735 ) 60,341

7 unchanged sentences

Three Months Ended

Revenues - Services and fees

Six Months Ended

2024 2023 2024 2023

Services and fees

North America $ 247,256 $ 229,911 $ 503,986 $ 464,841

1 unchanged sentence

Total Revenues - Services and fees 248,025 230,327 505,328 465,886

Trading income and fair value adjustments on loans

Trading (loss) income

North America ( 31,321 ) 33,158 ( 48,988 ) 41,450

Revenues - Sale of goods

Fair value adjustments on loans

North America ( 175,582 ) 9,207 ( 187,783 ) 52,483

Interest income - loans

North America 18,508 35,126 40,643 75,138

Interest income - securities lending

North America 24,798 40,073 62,607 77,247

Sale of goods

North America 29,088 29,407 57,982 67,354

Australia 3,837 3,171 6,461 6,630

3 unchanged sentences

Total Revenues - Sale of goods 63,937 58,387 119,590 126,164

Revenues - Interest income - Loans and securities lending

North America 59,944 77,186

Total Revenues

6 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Long-lived Assets - Property and Equipment, net:

5 unchanged sentences

Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of the segments and therefore, total segment assets have not been disclosed.

NOTE 21 — SUBSEQUENT EVENTS

Brands Transaction

On October 25, 2024, our wholly-owned subsidiary, B.

Riley Brand Management LLC (“B.

Riley Brand Management”), entered into a transfer and contribution agreement, dated October 25, 2024 (the “Transfer and Contribution Agreement”), by and between B.

Riley Brand Management and BR Funding Holdings 2024-1, LLC, a Delaware limited liability company and, prior to the consummation of the transactions described herein, wholly-owned subsidiary of B.

Riley Brand Management (“Holdings”), pursuant to which, among other things, B.

Riley Brand Management transferred and contributed its limited liability company interests in (i) BR Brand Holdings LLC, a New York limited liability company, (ii) HRLY Brand Management LLC, a Delaware limited liability company, (iii) Justice Brand Management LLC, a New York limited liability company, and (iv) S&S Brand Management LLC, a New York limited liability company (such limited liability interests collectively, the “Brands Interests,” and such transfer, the “Transfer”).

In connection with the transactions contemplated by the Transfer and Contribution Agreement, Holdings transferred and contributed the Brand Interests to its subsidiary, BR Funding 2024-1, LLC, a Delaware limited liability company and securitization financing vehicle (“Issuer”) and Issuer issued notes and preferred stock secured by the Brands Interests (the “Secured Financing”) to a third party purchaser, HBN 101, LLC, a Delaware limited liability company (the "Purchaser"), the proceeds of which were used to fund an upfront payment to the Company of approximately $ 189,300 .

Additionally, in connection with the Transfer and Contribution Agreement, bebe stores, inc., a California corporation and majority owned subsidiary of the Company (“bebe”), entered into a membership interest purchase agreement, dated October 25, 2024 (the “bebe Purchase Agreement”), by and among bebe, HBN 120, LLC, a Delaware limited liability company (“Buyer”), BB Brand Holdings LLC, a Delaware limited liability company (“BB Brand Holdings”), and BKST Brand Management LLC, a New York limited liability company (“BKST Brand Management” and together with BB Brand Holdings, the “bebe Brands”), pursuant to which, among other things, bebe sold its limited liability company interests in the bebe Brands to Buyer, an affiliate of the Purchaser for approximately $ 46,624 in net proceeds (such sale, the “Sale”).

Upon closing of the Sale proceeds of $ 22,188 was used to pay off the then outstanding balance of the bebe Credit Agreement in full (see Note 10) and $ 224 of loan related pay off expenses.

The Sale by bebe resulted in a fair value adjustment at September 30, 2024 in the amount of approximately $( 20,043 ) that was recorded in the quarter ended September 30, 2024.

In addition, upon completion of the Secured Financing of the Brand Interests, the Company will deconsolidate the ownership of the Brand Interests and the Company’s ownership in the Brand Interest will be reported as a non-controlling equity method investment that is estimated to have nominal value as a result of the liquidation preferences and notes that were issued as part of the Secured Financing.

The Brands Interests transaction resulted in a fair value adjustment at September 30, 2024 in the amount of approximately $( 133,000 ) was recorded in the quarter ending September 30, 2024.

Great American Group Transaction

On November 15, 2024 the Company and BR Financial Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“BR Financial”), consummated the transactions contemplated by an equity purchase agreement, dated October 13, 2024 (the “Equity Purchase Agreement”), by and among OCM SSF III Great American PT, L.P., a Delaware limited partnership (“Investor 1”), Opps XII Great American Holdings, LLC, a Delaware limited liability company (“Investor 2”), and VOF Great American Holdings, L.P., a Delaware limited partnership

(“Investor 3,” and, together with Investor 1 and Investor 2, the “Investors”), Great American Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Great American NewCo”), and certain other parties identified therein, with respect to the ownership of Great American NewCo by the Investors and the Company.

The Investors are affiliates of Oaktree Capital Management, L.P.

Pursuant to, and subject to the terms and conditions set forth in, the Equity Purchase Agreement, the Company conducted an internal reorganization and contributed all of the interests in the Company’s Appraisal and Valuation Services, Retail, Wholesale & Industrial Solutions and Real Estate businesses (collectively, the “Great American Group”), to Great American NewCo.

At the Closing, (i) the Investors received (a) all of the outstanding class A preferred limited liability units of Great American NewCo (which will have a 7.5 % cash coupon and a 7.5 % payment-in-kind coupon) (the “Class A Preferred Units”) and (b) common limited liability units of Great American NewCo (the “Common Units”) representing 52.6 % of the issued and outstanding common limited liability units in Great American NewCo for a purchase price of approximately $ 203,000 (with an initial liquidation preference of approximately $ 203,000 ).

BR Financial retains (a) 93.2 % of the issued and outstanding class B preferred limited liability company units of Great American NewCo (which will have a 2.3 % payment-in-kind coupon and an initial aggregate liquidation preference of approximately $ 183,000 ) (the “Class B Preferred Units”) and (b) 44.2 % of the issued and outstanding Common Units.

The remaining 6.8 % of issued and outstanding Class B Preferred Units and 3.2 % of issued and outstanding Common Units will be held by certain minority investors.

The investors in Great American NewCo will also be entitled to certain quarterly tax distributions pursuant to the Great American NewCo LLCA (defined below).

At the closing, (i) BR Financial, the Investors and the other minority investors entered into an Amended and Restated Limited Liability Company Agreement of Great American NewCo (the “Great American NewCo LLCA”), (ii) BR Financial and Great American NewCo entered into a Transition Services Agreement, pursuant to which BR Financial will provide certain transition services to Great American NewCo relating for the Great American Group for a period of up to one year from the Closing, subject to certain exceptions, and (iii) an affiliate of the Company, Great American NewCo and certain subsidiary guarantors of Great American NewCo entered into a credit agreement, pursuant to which an affiliate of the Company, as lender, will provide to Great American NewCo, as borrower, a first lien secured revolving credit facility of up to $ 25,000 for general corporate purposes, subject to the terms and conditions set forth therein, which had an outstanding balance of $ 1,751 at closing, and (iv) entered into promissory notes which totaled $ 15,332 related to capital requirements for certain retail liquidation engagements that were ongoing as of closing.

Under the Great American NewCo LLCA, Great American NewCo will initially have a five -member board of directors that will oversee the day-to-day management of Great American NewCo, subject to certain approval rights reserved for the Investors and/or BR Financial, as applicable.

The Investors will be entitled to appoint a majority of the directors of the board for so long as they collectively hold at least 25% of their combined amount of Common Units owned immediately following the Closing.

The Great American NewCo LLCA will also contain certain protections for BR Financial, including, but not limited to, requiring BR Financial approval for certain fundamental actions.

The Investors will have certain drag-along rights following the second-year anniversary of the Closing Date and certain call rights exercisable starting on the fifth-year anniversary of the Closing Date.

The Great American NewCo LLCA sets forth distribution mechanics pursuant to which Great American NewCo will make distributions in cash and payment-in-kind at any time the board of directors may authorize, with the Class A Preferred Units having priority in any such distribution over Class B Preferred Units.

In addition, the Great American NewCo LLCA will contain certain transfer restrictions and other transfer rights and obligations that apply to BR Financial, the Investors and other unitholders, as applicable, in certain circumstances.

Upon closing the Equity Purchase Agreement on November 15, 2024, B.

Riley will record a gain of approximately $ 235,000 and the operations of Great American NewCo will be deconsolidated since B.

Riley will no longer have control and will a non-controlling equity investment ownership interest of 44.2 % of the common units along with the Preferred B units described above.

Wealth Management

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s traditional (W-2) Wealth Management business to Stifel for estimated net consideration of $ 27,000 to $ 35,000 in cash.

Subject to the terms of the agreement, the final consideration will be based on the number of advisors that join Stifel at closing, among other things.

The transaction is expected to include up to 15 % of the wealth management advisors, along with the associated customer accounts.

The accounts managed by these advisors represents up to $ 4.5 billion total assets under management (AUM) as of September 30, 2024.

The transaction has been approved by the Board of Directors of the Company and is subject to the receipt of required regulatory approvals and other customary closing conditions.

It is expected to close early in the second quarter of 2025.

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