What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-02-21 compared with 2025-01-14 · 417 added, 429 removed, 560 unchanged (60% of the section changed)

46 unchanged sentences

We operate through several consolidated subsidiaries (collectively, “B.

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

Riley”) that provide investment banking, brokerage, wealth management, asset management, direct lending, and business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.

The Company opportunistically invests in and acquires companies or assets with attractive risk-adjusted return profiles to benefit our shareholders.

We own and operate several uncorrelated consumer businesses and invest in brands on a principal basis.

Our approach is focused on high quality companies and assets in industries in which we have extensive knowledge and can benefit from our experience to make operational improvements and maximize free cash flow.

We own and operate several uncorrelated consumer businesses on a principal basis.

approach is focused on high quality companies and assets in industries in which we have extensive knowledge and can benefit from our experience to make operational improvements and maximize free cash flow.

Our principal investments often leverage the financial, restructuring, and operational expertise of our professionals who work collaboratively across disciplines.

We refer to B.

Riley as a “platform” because of the unique composition of our business.

Our platform has grown considerably and become more diversified over the past several years.

We have increased our market share and expanded the depth and breadth of our businesses both organically and through opportunistic acquisitions.

Our increasingly diversified platform enables us to invest opportunistically and to deliver strong long-term investment performance throughout a range of economic cycles.

Our Business Segments

We report our activities in six reportable business segments:

Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer segment.

We report our activities in five reportable business segments:

Capital Markets, Wealth Management, Financial Consulting, Communications, and Consumer segment.

The descriptions below illustrate the businesses that comprise our segments.

We maintain a diverse composition of businesses that operate in six reportable segments.

We maintain a diverse composition of businesses that operate in five reportable segments.

Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various businesses.

However, across most businesses, management primarily assesses each business’s financial performance based upon each of the business’s revenues and operating profits generated excluding non-cash charges and the impact of gains and losses related to securities and other investments held.

However, across most businesses, management primarily assesses each business’s financial performance based upon each of the businesses revenues and operating profits generated excluding non-cash charges and the impact of gains and losses related to securities and other investments held.

Management believes that gains and losses on individual investments are generally impacted by individual characteristics specific to each investment and although this has an impact on our overall financial performance the impact of these gains and losses may not be indicative of the overall strength or weakness in each of our business operations.

Additionally, in evaluating the financial performance of each of our businesses, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate.

Management recognizes that some of the Company’s businesses, such as the Auctions and Liquidations business, exhibit more volatile results due to the nature of the business having substantial revenue associated with a limited number of retail liquidation engagements.

Additionally, in evaluating the financial performance of each of our business, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate.

Management recognizes that some of the Company’s businesses exhibit more volatile results.

Capital Markets – We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors;

8 unchanged sentences

Riley may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

In our Capital Markets segment we have a portfolio of loans receivable that consisted of the following at June 30, 2024 and December 31, 2023:

Loans Receivable, at Fair Value Fair Value Adjustments on Loans

Three Months Ended

June 30, Six Months Ended

Industry or Type of Loan June 30,

2024 December 31, 2023

In our Capital Markets segment we have a portfolio of loans receivable that consisted of the following at September 30, 2024 and December 31, 2023:

Fair Value Adjustments on Loans

Loans Receivable, at Fair Value Three Months Ended

September 30, Nine Months Ended

September 30,

Industry or Type of Loan September 30, 2024 December 31, 2023

2024 2023 2024 2023

5 unchanged sentences

Badcock Corporation Consumer receivable portfolio 3,141 20,624 852 (5,185) (5,993) (5,185)

Other related party loans Services & Oil & Gas 26,933 10,695 194 226 692 (1,546)

Other related party loans Services, Oil & Gas and Industrial 19,886 10,695 2,779 107 3,470 (1,439)

Total related party 98,292 378,768 (68,768) (4,659) (265,512) (6,205)

5 unchanged sentences

Total $ 151,704 $ 532,419 $ (71,477) $ (860) $ (259,260) $ 51,623

The fair value adjustments on loans receivable for the three months ended June 30, 2024 and 2023 were $(175.6) million and $9.2 million, respectively.

The fair value adjustments on loans receivable for the six months ended June 30, 2024 and 2023 was $(187.8) million and $52.5 million, respectively.

During the three and six months ended June 30, 2024, we recorded $(151.1) million and $(168.4) million of fair value adjustments to the loan receivable from Vintage Capital Management, LLC ("VCM").

The fair value adjustments are related primarily to the decline in the equity fair value of Freedom VCM Holdings, LLC which, along with certain guarantees, is the primary collateral for this loan.

The decline in equity fair value of Freedom VCM Holdings, LLC is primarily due to increases in net debt as well as declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc.

common stock, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business units.

Subsequent to June 30, 2024, the collateral value for the VCM loan receivable was impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

The fair value of the underlying collateral for this loan subsequently decreased to a fair value of approximately $2.2 million at September 30, 2024.

The fair value adjustments on loans receivable for the three months ended September 30, 2024 and 2023 were $(71.5) million and $(0.9) million, respectively.

The fair value adjustments on loans receivable for the nine months ended September 30, 2024 and 2023 was $(259.3) million and $51.6 million, respectively.

During the three and nine months ended September 30, 2024, fair value adjustments for loans receivable from related parties totaled $(68.8) million and $(265.5) million as compared to $(4.7) million and $(6.2) million during the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2024, fair value adjustments for other loans receivable totaled $(2.7) million and $6.3 million as compared to $3.8 million and $57.8 million during the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2024, fair value adjustments for the loan receivable for Vintage Capital Management, LLC was $(54.3) million and $(222.7) million, respectively.

The fair value adjustments are related primarily to the decline in the equity fair value of Freedom VCM Holdings, LLC (“Freedom VCM”) which, along with certain guarantees, is the primary collateral for this loan.

The decline in the equity fair value of Freedom VCM is due to increases in net debt, a decrease in the operational performance of Freedom VCM various business units during 2024, and a decline in the equity value of Freedom VCM’s investment in Conn’s, Inc.

common stock which was impacted by Conn’s Inc.

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”).

Subsequent to September 30, 2024, the collateral value for the VCM loan receivable was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

These factors resulted in a decrease in the fair value of the Freedom VCM loan receivable to $2.3 million at September 30, 2024.

During the three and nine months ended September 30, 2024, we recorded $0.5 million and $(13.2) million of fair value adjustments to the loan receivable for Freedom VCM Receivables, Inc..

The fair value adjustment of $(13.2) million during the nine months ended September 30, 2024 was primarily due to a fair value adjustment of $12.0 million recorded in the second quarter of 2024 resulting from higher projected charge offs of receivables on the consumer receivable portfolio that are serviced by Conn's, Inc.

which was 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”).

During the three and nine months ended September 30, 2024, we recorded $(18.6) million and $(27.1) million of fair value adjustments to the loan receivable for Conn’s, Inc.

The Company collected principal payments $104.8 million loan receivable from Conn’s Inc.

which reduced the principal balance of the loan to $93.0 million at June 30, 2024.

All accrued interest on this loan receivable was paid through June 30, 2024.

The fair value of the Conn’s loan receivable was $63.7 million at September 30, 2024.

The fair value adjustments of $(18.6) million during the quarter ended September 30, 2024, is primarily related to Conn’s Inc.

July 23, 2024 Chapter 11 Cases.

The filing of the Chapter 11 Cases impacted the operational performance of the stores operated by Conn’s, Inc.

and the additional expenses projected to be incurred in the

Chapter 11 Cases resulted in a decline in the projected recovery value of the collateral for the Conn’s Inc.

loan receivable.

The $45.5 million of loans receivable from Core Scientific, Inc.

(“Core Scientific”) at December 31, 2023 included a loan in the amount of $42.1 million that was settled in full upon Core Scientific’s exit from Chapter 11 bankruptcy in January 2024.

The Company received common shares of Core Scientific in accordance with the bankruptcy emergence plan which became publicly traded.

The Company received Core Scientific common stock with a fair value of $50.4 million for settlement of the $42.1 million loan receivable.

The fair value of the Core Scientific common stock received was measured using an amount that approximated the share price of Core at emergence from bankruptcy as set forth in Core’s bankruptcy emergence plan and a gain in the amount of $9.1 million was recognized.

During the three and six months ended June 30, 2024, we recorded $(12.0) million and $(13.7) million of fair value adjustments to the loan receivable for Freedom VCM Receivables, Inc..

The fair value adjustments are related to higher projected charge offs of receivables on the consumer receivable portfolio that are currently serviced by Conn's, Inc.

which is expected to 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”).

During the three and six months ended June 30, 2024, we recorded $(7.2) million and $(8.5) million of fair value adjustments to the loan receivable for Conn’s, Inc..

The fair value adjustments are related to reduced value of the underlying collateral following Conn’s Inc.

voluntary petition filing on July 23, 2024 of the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court.

During the three and six months ended June 30, 2024, we recorded $(7.4) million and $(6.8) million of fair value adjustments to the loan receivable for W.S.

Badcock Corporation.

The fair value adjustments are related to higher projected charge offs of receivables on the consumer receivable portfolio, that are currently serviced by Conn's, Inc.

which is expected to be impacted by Conn’s voluntary petition filing on July 23, 2024 voluntary petition filing on July 23, 2024 of the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court.

The fair value adjustments on loans receivable were $9.2 million and $52.5 million during the three and six months ended June 30, 2023.

The fair value adjustment to the loan receivable for Core Scientific, Inc.

was $3.1 million and $35.5 million for the three and six months ended June 30, 2023.

During the three and nine months ended September 30, 2024, fair value adjustments for the loan receivable from W.S.

Badcock Corporation was $0.9 million and $(6.0) million, respectively.

During the three and nine months ended September 30, 2023, fair value adjustments for the loan receivable from W.S.

Badcock Corporation was $(5.2) million.

The fair value adjustment of $(6.0) million during the nine months ended September 30, 2024, was primarily due to fair value adjustments recorded in the second quarter of 2024 related to higher projected charge offs of receivables on the consumer receivable portfolio resulting from Conn’s, Inc.

bankruptcy and estimated costs and losses from the projected liquidation of the consumer receivable portfolio.

During the nine months ended September 30, 2024, fair value adjustments for the loan receivable from Core Scientific, Inc.

was $8.5 million.

In the prior year nine months ended September 30, 2023, fair value adjustments for the loans receivable from Core Scientific, Inc.

was $34.8 million.

Core Scientific, Inc.

2 unchanged sentences

filed Chapter 11 bankruptcy in 2022, leading to a significant mark down of the loan receivable in the fourth quarter of 2022.

Subsequent to the Chapter 11 restructuring, and during the first quarter of 2023, there was an increase in bitcoin prices resulting in significant growth and value assumptions for the Core Scientific, Inc.

loan receivable.

Subsequent to the Chapter 11 restructuring, and during the first quarter of 2023, there was a significant rebound in bitcoin prices resulting in significant growth and value assumptions.

As a result, the Core Scientific, Inc.

loan receivable received a fair value adjustment of $35.5 million for the six months ended June 30, 2023.

loan receivable had a fair value adjustment of $34.8 million for the nine months ended September 30, 2023.

Wealth Management – We provide retail brokerage, investment management, and insurance, and tax preparation services to individuals and families, small businesses, non-profits, trusts, foundations, endowments, and qualified retirement plans through a boutique private wealth and investment management firm to meet the individual financial needs and goals of our customers.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

$ 49,389 $ 50,875 $ 150,153 $ 146,660

Total assets under management were approximately $25.6 billion, $25.4 billion, and $24.9 billion at June 30, 2024, December 31, 2023, and June 30, 2023, respectively.

Of these amounts, advisory assets under management totaled approximately $8.0 billion at June 30, 2024, and December 31, 2023, and $7.7 billion at June 30, 2023.

Advisory revenues were 0.25% and 0.24% of average advisory assets under management during the three months ended June 30, 2024 and 2023, respectively, and 0.25% and 0.23% of average advisory assets under management during the six months ended June 30, 2024 and 2023, respectively.

Total assets under management were approximately $25.7 billion, $25.4 billion, and $24.0 billion at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.

Of these amounts, advisory assets under management totaled approximately $8.1 billion at September 30, 2024, and $8.0 billion at December 31, 2023, and $7.5 billion at September 30, 2023.

Advisory revenues were 0.24% of average advisory assets under management during the three months ended September 30, 2024 and 2023, respectively, and 0.25% and 0.24% of average advisory assets under management during the nine months ended September 30, 2024 and 2023, respectively.

The average revenues earned on advisory assets under management are not expected to fluctuate significantly from period to period as a percentage of advisory assets under management.

1 unchanged sentence

Other revenues is primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

On October 31, 2024, we signed a definitive agreement to sell a portion of the Company’s traditional (W-2) Wealth Management business to Stifel Financial Corp.

(“Stifel”) as more fully described in recent developments.

Financial Consulting Segment - We provide a variety of specialized advisory services spanning bankruptcy, restructuring, turnaround management, forensic accounting, crisis and litigation support, appraisal and valuation, real estate, and operations management.

On November 15, 2024, as more fully described in recent developments, the Company entered into a transaction whereby approximately 52.6% of the common equity interests of a newly formed subsidiary that included the Company’s appraisal and valuation and real estate advisory services operations along with the Company’s auction and liquidations operations was sold to an investment management firm.

These operations are expected to be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% in the business.

Auction and Liquidation Segment – We provide retail liquidation services that utilize significant industry experience and a scalable network of independent contractors and advisors to help clients quickly and efficiently dispose of under-performing assets and generate cash from excess inventory by conducting or assisting in retail store closings, going out of business sales, bankruptcy sales, and fixture sales.

Financial institutions and other capital providers rely on us to maximize recovery rates in distressed asset sales and in retail bankruptcy situations.

Additionally, we work with healthy, mature retailers that utilize our proven inventory management and strategic disposition solutions to close unproductive stores and dispose of surplus inventory and fixtures as existing stores are updated.

We often conduct large retail liquidations that

entail significant capital requirements through collaborative arrangements with other liquidators and provide services to clients on a fee, guarantee or outright purchase basis.

Our scale and pool of resources allow us to offer our services across North America as well as parts of Europe, Asia, and Australia.

On November 15, 2024, as more fully described in recent developments, the Company entered into a transaction whereby, approximately 52.6% of the common equity interests of a newly formed subsidiary that included the Company’s auction and retail liquidation operations was sold, along with the Company’s appraisal and valuation and real estate advisory services operations, to an investment management firm.

These operations are expected to be deconsolidated since B.

These operations are included in discontinued operations as discussed in Note 4 to the accompanying condensed consolidated financial statements and are expected to be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% in the business.

7 unchanged sentences

The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories that we acquired on October 18, 2022.

Our operating results are primarily comprised of the operations of these businesses within our six reportable operating segments.

Our operating results are primarily comprised of the operations of these businesses within our five reportable operating segments.

However, we also generate revenues from other businesses that we may acquire with the goal to expand their operations, drive growth, and create operational efficiencies to improve cash flows to reinvest across other business operations in our platform.

These businesses are typically in fragmented markets and include the operations of a regional environmental services business, bebe which operates rent-to-own stores, and a technology company that provides e-commerce platforms, marketing and technology services acting as a merchant for consumer brand companies.

We also generate operating revenues from our majority owned subsidiary that licenses the trademarks and intellectual properties from our ownership of six brands:

Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore.

We also generate other income from dividends we receive from our equity ownership of investments that range from 10% to 50% in companies that license the trademark and intellectual property of the Hurley, Justice, and Scotch & Soda brands and bebe and Brookstone brands (equity ownership of bebe stores, inc., our majority owned subsidiary).

We have elected to account for these equity investments using the fair value method of accounting and the fair value of these investments totaled $288.0 million and $283.1 million at June 30, 2024 and December 31, 2023, respectively.

These investments are in private companies where the fair value at each reporting date is measured using valuation models that require significant estimates made by our management where we use operational data received from each of these individual operating companies that we do not manage.

The changes in fair value for these brand investments could have a material impact on our net income that we report each reporting period.

The change in fair value of these investments include unrealized gains which are reported in other income (expense) – realized and unrealized gains (losses) on investments and totaled $4.9 million and ($9.9) million during the six months ended June 30, 2024 and 2023, respectively.

Dividends from these investments which are reported in other income (expense) – dividend income and totaled $17.6 million and $16.6 million during the six months ended June 30, 2024 and 2023, respectively.

On October 25, 2024, as more fully described below in recent developments, the Company’s majority owned subsidiary bebe stores, inc.

sold its limited liability company interests in the bebe and Brookstone brands and the Company entered into a secured financing transaction for the six brands and the equity interests owned in Hurley, Justice and Scotch & Soda which is expected to result in deconsolidation and be reported as a non-controlling equity method investment that is estimated to have nominal value.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities that are primarily comprised of our 31% investment in Freedom VCM Holdings, LLC and brand investments described above, partnership interests and other investments, corporate bonds and other fixed income securities as follows at June 30, 2024 and December 31, 2023:

In prior years, we also generated operating revenues from our majority owned subsidiary that licenses the trademarks and intellectual properties from our ownership of six brands:

Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore and we generated other income from dividends we receive from our equity ownership of investments that range from 10% to 50% in companies that license the trademark and intellectual property of the Hurley, Justice, and Scotch & Soda brands and bebe and Brookstone brands (equity ownership of bebe stores, inc., our majority owned subsidiary).

We also reported fair value adjustments from these equity investments since we elected to account for these equity investments using the fair value method of accounting.

These operations are included in discontinued operations as discussed in Note 4 to the accompanying condensed consolidated financial statements and are expected to be deconsolidated since B.

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% in the business.

These operating results are included in discontinued operations and are expected to be deconsolidated as a result of the Sale by bebe and completion of the Secured Financing of the Brand Interests as discussed in Note 4 to the accompanying condensed consolidated financial statements.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities that are primarily comprised of our 31% investment in Freedom VCM Holdings, LLC described above, partnership interests and other investments, corporate bonds and other fixed income securities as follows at September 30, 2024 and December 31, 2023:

September 30,

2024 December 31,

13 unchanged sentences

Freedom VCM Holdings, LLC — 287,043

Consumer brand investments 287,987 283,057

Other private equities 127,684 229,993

1 unchanged sentence

Total equity securities 289,279 711,577

Other Securities:

Corporate bonds 31,496 59,287

2 unchanged sentences

Total securities and other investments owned $ 341,770 $ 809,049

Securities and other investments owned was $664.1 million and $1,092.1 million as of June 30, 2024 and December 31, 2023.

Of this amount, the fair value of equity securities totaled $606.2 million and $994.6 million as of June 30, 2024 and December 31, 2023.

Of these amounts, public equity securities totaled $137.5 million and $194.5 million as of June 30, 2024 and December 31, 2023, and private equity securities totaled $468.7 million and $800.1 million as of June 30, 2024 and December 31, 2023.

Securities and other investments owned was $341.8 million and $809.0 million as of September 30, 2024 and December 31, 2023.

Of this amount, the fair value of equity securities totaled $289.3 million and $711.6 million as of September 30, 2024 and December 31, 2023.

Of these amounts, public equity securities totaled $161.6 million and $194.5 million as of September 30, 2024 and December 31, 2023, and private equity securities totaled $127.7 million and $517.0 million as of September 30, 2024 and December 31, 2023.

The fair value of Badcock & Wilcox Enterprises, Inc.

- common stock held as of held as of September 30, 2024 and December 31, 2023 was $56.0 million and $40.1 million, respectively.

The change in fair value for the nine months ended September 30, 2024 is primarily related to an increase in the public share price during the period.

The fair value of Alta Equipment Group, Inc.

1 unchanged sentence

The sale was executed to raise additional capital to fund operating activities.

The fair value of Double Down Interactive Co., Ltd common stock held as of June 30, 2024 and December 31, 2023 was $53.5 million and $30.4 million, respectively.

The change in fair value for the six months ended June 30, 2024 is primarily related to an increase in the public trading price during the period.

The fair value of the investment in Freedom VCM Holdings, LLC held as of June 30, 2024 and December 31, 2023 was $63.7 million and $287.0 million, respectively.

During the six months ended June 30, 2024, fair value adjustments were recorded in the amount of $(223.3) million primarily due to increases in net debt, declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc.

The fair value of our Double Down Interactive Co., Ltd common stock held as of September 30, 2024 and December 31, 2023 was $66.5 million and $30.4 million, respectively.

The change in fair value for the nine months ended September 30, 2024 is primarily related to an increase in the public share price during the period.

The fair value of our investment in Freedom VCM Holdings, LLC held as of September 30, 2024 and December 31, 2023 was zero and $287.0 million, respectively.

During the nine months ended September 30, 2024, we recorded fair value adjustments of $(221.0) million primarily due to increases in net debt, declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc.

common stock and impact of Conn's bankruptcy filing on July 23, 2024, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business segments.

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 approximately $(63.7) million was recorded in the quarter ended September 30, 2024.

Subsequent to September 30, 2024, the investment in Freedom VCM Holdings, LLC was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

Realized and Unrealized Gains (Losses)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

10 unchanged sentences

- common stock 6,445 (530) 9,940 (530)

The Arena Group, Inc.

- common stock — 1,866 — (20,729)

Other public equities 204 (3,244) (2,328) (16,910)

2 unchanged sentences

Freedom VCM Holdings, LLC (49,033) — (221,042) —

Consumer Brand Investments (449) (506) 4,930 (9,866)

Other private equities (1,766) (15,581) (40,966) (21,592)

Subtotal (50,799) (15,581) (262,008) (21,592)

Other Securities:

Corporate bonds (245) 628 1,141 976

1 unchanged sentence

Total $ (22,197) $ (77,287) $ (212,362) $ (77,020)

During the three and six months ended June 30, 2024, realized and unrealized losses of $(155.7) million and $(185.2) million were recorded to other income as realized and unrealized losses on investments.

During the three and nine months ended September 30, 2024, realized and unrealized losses of $(22.2) million and $(212.4) million were recorded to other income as realized and unrealized losses on investments.

These realized and unrealized losses are made up of realized and unrealized gains (losses) recorded to public equity securities, private equity securities, corporate bonds, and partnership interest and other investments.

The majority of realized and unrealized (losses) gains on investments during the three and six months ended June 30, 2024 are related to public equity securities (equity securities that trade on major exchanges), and private equity securities.

During the three and six months ended June 30, 2024, $9.2 million and $18.0 million of realized and unrealized gains were recorded for public equity securities to other income as realized and unrealized gains on investments.

Of these amounts, Double Down Interactive Co., Ltd common stock made up the majority of the gains which amounted to $7.7 million and $21.8 million during the three and six months ended June 30, 2024, which was primarily related to an increase in the public trading share price during the period.

During the three and six months ended June 30, 2024, $(164.5) million and $(206.3) million of realized and unrealized losses were recorded for private equity securities to other income as realized and unrealized losses on investments.

The majority of realized and unrealized (losses) gains on investments during the three and nine months ended September 30, 2024 are related to public equity securities (equity securities that trade on major exchanges), and private equity securities.

During the three and nine months ended September 30, 2024, $29.3 million and $47.3 million of realized and unrealized gains were recorded for public equity securities to other income as realized and unrealized gains on investments.

Of these amounts, Double Down Interactive Co., Ltd common stock made up the majority of the balances.

During the three and nine months ended September 30, 2024, we recorded $13.1 million and $35.0 million, respectively, to realized and unrealized gains related to Double Down Interactive Co., Ltd.

primarily related to public share price movements during these periods.

During the three and nine months ended September 30, 2024, $(50.8) million and $(262.0) million of realized and unrealized losses were recorded for private equity securities to other income as realized and unrealized losses on investments.

Of these amounts, our investment in Freedom VCM Holdings, LLC made up the majority of the balances.

During the three and six months ended June 30, 2024, we recorded $(139.4) million and $(172.0) million of unrealized losses related to our investment in Freedom VCM Holdings, LLC.

The decrease in fair values was primarily due to increases in net debt, declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc.

common stock, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business segments.

During the three and nine months ended September 30, 2024, we recorded $(49.0) million and $(221.0) million to realized and unrealized losses related to our investment in Freedom VCM Holdings, LLC.

The entirety of the balances were made related to fair value adjustments due primarily to increases in net debt as well as significant declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc., market-related inputs, and overall operational performance.

We are headquartered in Los Angeles, California and maintain offices throughout the U.S.

including in New York, Chicago, Metro District of Columbia, Atlanta, Boston, Dallas, Metro Detroit, Houston, Memphis, Miami, San Francisco, Boca Raton, and West Palm Beach, as well as additional offices located in Canada, Europe, Asia, and Australia.

Our diversified financial platform is affected by a variety of factors including continuing higher inflation, the actions by the Federal Reserve to address inflation, the possibility of recession or an economic downturn, Russia's invasion of Ukraine, the conflicts in the Middle East, and rising energy prices.

These factors create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods.

These developments and the impact on the financial markets and the overall economy continue to be highly uncertain and cannot be predicted.

If the financial markets and/or the overall economy continue to be impacted, our results of operations, financial position, and cash flows may be materially adversely affected.

We report our activities in five reportable business segments:

Capital Markets, Wealth Management, Financial Consulting, Communications, and Consumer Products segment.

These reportable segments are all distinct businesses, each with a different marketing strategy and management structure.

During the fourth quarter of 2023, we reassessed our previously reported Consumer segment due to organizational changes and financial information provided to the Chief

Operating Decision Maker (“CODM”).

These changes resulted in Targus’ operations being reported on a stand-alone basis in the Consumer Products segment.

Recent Developments

10 unchanged sentences

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 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.

3 unchanged sentences

Riley will record a gain of approximately $235.0 million and the operations of Great American NewCo will be deconsolidated since B.

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

Riley will no longer have control and will own a non-controlling equity investment ownership interest of 44.2% of the common units

along with the Preferred B units described above.

After the closing of the Equity Purchase Agreement, the Company will account for this equity method investment under the equity method of accounting.

16 unchanged sentences

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 $46.6 million in net proceeds (such sale, the “Sale”), with certain of such proceeds applied towards indebtedness related to the bebe holdings.

Upon closing of the Sale proceeds of $22.2 million was used to pay off the then outstanding balance of the bebe Credit Agreement in full (see note 10) and $0.2 million of loan related pay off expenses.

Upon closing of the Sale proceeds of $22.2 million was used to pay off the then outstanding balance of the bebe Credit Agreement in full (see note 11 to the accompanying condensed consolidated financial statements) and $0.2 million of loan related pay off expenses.

The Sale by bebe resulted in a subsequent fair value adjustment at September 30, 2024 in the amount of approximately $(20.0) million that was recorded during the quarter ended September 30, 2024 for the sale of the bebe Brands.

part of the Secured Financing and upon deconsolidation a loss at September 30, 2024 in the amount of approximately $(133.0) million was recorded in the quarter ending September 30, 2024.

Nomura Credit Agreement

On September 17, 2024, we entered into Amendment No.

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

On September 17, 2024, we made a payment of $85.9 million which consisted of a principal payment of $85.1 million and accrued interest of $0.7 million.

Loan fees incurred in connection with the Fourth Amendment totaled $5.9 million of which $3.5 million 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 $469.8 million to $388.1 million.

In connection with the Fourth Amendment, the revolving credit facility in the amount of $100.0 million which had no balance outstanding at September 17, 2024 was terminated and we are required to reduce the principal amount of the term loan to be no greater than $100.0 million 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 $25.0 million aggregate principal amount of the 5.50% 2026 Notes is outstanding to February 3, 2026 and permits under certain conditions an additional $10.0 million of telecommunications financing.

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 and upon deconsolidation a loss at September 30, 2024 in the amount of approximately $(133.0) million was recorded in the quarter ending September 30, 2024.

Take-Private Proposal

1 unchanged sentence

Riley, in a transaction to take the Company private, at a proposed purchase price of $7.00 per share.

Following receipt of the proposal, the Company’s Board of Directors established a special committee consisting of independent directors, which has engaged its own advisors to evaluate the proposal and determine the appropriate course of action and process.

action and process.

There can be no assurance that any definitive offer will be received, that any definitive agreement will be executed relating to the proposal or that this or any other transaction will be approved or consummated.

14 unchanged sentences

Conn’s and FRG

The Company’s second quarter results were negatively impacted by a significant non-cash markdown of $181.0 million related to its investment in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group (“FRG”).

CEO and his alleged involvement in fraudulent schemes despite the fact that these allegations are unrelated to FRG and its businesses.

The Company’s results during the three and nine months ended September 30, 2024 were negatively impacted by a significant non-cash markdown of $(54.3) million and $(222.7) million related to its investment in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group (“FRG”).

Freedom VCM’s strategy, which included the potential divestiture or monetization of certain assets, was materially negatively impacted by the unexpected announcement in November 2023 concerning FRG’s former CEO and his alleged involvement in fraudulent schemes despite the fact that these allegations are unrelated to FRG and its businesses.

In the meantime, the consumer-facing portion of the U.S.

7 unchanged sentences

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.

The fair value adjustment on the Conn’s loan receivable was $(18.6) million and $(27.1) million for the three and nine months ended September 30, 2024.

On November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed voluntary petitions for relief (the “FRG Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code.

1 unchanged sentence

The additional non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable are $118.0 million in the aggregate as of November 4, 2024.

As a result of such additional impairment we have ascribed no value to the Freedom VCM Investment and the Vintage Loan Receivable was valued at $2,250 at September 30, 2024.

Subsequent to September 30, 2024, the fair value of the underlying collateral for this loan, which is comprised of other public securities, decreased to a fair value of $2,006 at December 20, 2024.

As of the date of this Quarterly Report on Form 10-Q, we are in compliance with our Nomura credit agreement notwithstanding the aforementioned events.

The fair value adjustment for the Conn’s loan receivable was $(18.6) million for the three months ended September 30, 2024 and $(27.1) million for the nine months ended September 30, 2024.

As a result of such additional impairment we have ascribed no value to the Freedom VCM Investment and the Vintage Loan Receivable was valued at $2.3 million at September 30, 2024 which approximates the fair value of the underlying collateral for this loan which is primarily comprised of other securities.

Subsequent to September 30, 2024, the fair value of the underlying collateral for this loan, which is comprised of other public securities, decreased to a fair value of $2.2 million at February 7, 2025.

Critical Accounting Estimates

The preparation of our condensed consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities, and reported amounts of revenue and expense during the reporting period.

The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable.

The estimates and assumptions are based on historical experience and on other factors that management

believes to be reasonable.

Actual results may differ from those estimates.

3 unchanged sentences

The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2024 2023 Amount %

Services and fees $ 198,514 $ 244,096 $ (45,582) (18.7) %

Trading (loss) income (31,321) 33,158 (64,479) (194.5) %

Trading loss (1,238) (9,727) 8,489 (87.3) %

Fair value adjustments on loans (71,477) (860) (70,617) n/m

8 unchanged sentences

Restructuring charge 116 228 (112) (49.1) %

Impairment of goodwill and tradenames 27,681 1,733 25,948 n/m

Impairment of goodwill and tradenames — 35,500 (35,500) (100.0) %

Interest expense - Securities lending and loan participations sold 6,359 38,368 (32,009) (83.4) %

Total operating expenses 281,051 371,250 (90,199) (24.3) %

Operating (loss) income (220,256) 82,994 (303,250) n/m

Operating loss (81,746) (7,982) (73,764) n/m

Other income (expense):

Interest income 804 701 103 14.7 %

Interest income 1,438 180 1,258 n/m

Dividend income 675 3,373 (2,698) (80.0) %

Realized and unrealized (losses) gains on investments (155,690) 18,843 (174,533) n/m

Realized and unrealized losses on investments (22,197) (77,287) 55,090 (71.3) %

Change in fair value of financial instruments and other 476 (4,170) 4,646 (111.4) %

Income from equity investments 10 143 (133) (93.0) %

Income (loss) from equity investments 6 (308) 314 (101.9) %

Interest expense (32,996) (37,493) 4,497 (12.0) %

(Loss) income before income taxes (408,773) 65,285 (474,058) n/m

Provision for income taxes (25,008) (21,504) (3,504) 16.3 %

Net (loss) income (433,781) 43,781 (477,562) n/m

Loss from continuing operations before income taxes (134,344) (123,687) (10,657) 8.6 %

(Provision for) benefit from income taxes (14,508) 23,638 (38,146) (161.4) %

Loss from continuing operations (148,852) (100,049) (48,803) 48.8 %

(Loss) income from discontinued operations, net of income taxes (138,746) 23,741 (162,487) n/m

Net loss (287,598) (76,308) (211,290) n/m

Net loss attributable to noncontrolling interests (3,201) (2,485) (716) 28.8 %

Net (loss) income attributable to B.

Net loss attributable to B.

Riley Financial, Inc.

1 unchanged sentence

Preferred stock dividends 2,015 2,015 — — %

Net (loss) income available to common shareholders $ (435,619) $ 44,366 $ (479,985) n/m

Net loss available to common shareholders $ (286,412) $ (75,838) $ (210,574) n/m

n/m - Not applicable or not meaningful.

The table below and the discussion that follows are based on how we analyze our business.

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2024 2023 Amount %

2 unchanged sentences

Wealth Management segment 49,389 50,875 (1,486) (2.9) %

Auction and Liquidation segment 3,621 8,885 (5,264) (59.2) %

Financial Consulting segment 23,941 20,225 3,716 18.4 %

13 unchanged sentences

Sale of goods:

Auction and Liquidation segment 8,364 1,676 6,688 n/m

Communications segment 1,318 1,638 (320) (19.5) %

5 unchanged sentences

n/m - Not applicable or not meaningful.

Total revenues decreased $257.9 million to $148.4 million during the three months ended June 30, 2024 from $406.3 million during the three months ended June 30, 2023.

The decrease in revenues during the three months ended June 30, 2024 was primarily due to decreases in the fair value adjustments on loans of $184.8 million, fair value of the portfolio of securities and other investments owned of $64.5 million, interest income from loans of $16.6 million, and interest income from securities lending of $15.3 million, partially offset by increases in revenues from services and fees of $17.7 million and sale of goods of $5.6 million.

Of the $184.8 million decrease in fair value adjustments on loans, $151.1 million related to the loan to Vintage Capital Management, LLC (“VCM”), $12.0 million related to the loan to Freedom VCM, $7.4 million related to the loan to Badcock Receivables I, and $7.2 million related to the loan to Conn’s Inc.

The increase in revenue from services and fees in the three months ended June 30, 2024 consisted of increases in revenue of $15.6 million in All Other, $5.3 million in the Financial Consulting segment, $5.3 million in the Capital Markets segment, and $2.3 million in the Wealth Management segment, partially offset by decreases in revenue of $5.6 million in the Communications segment and $5.3 million in the Auction and Liquidation segment.

Revenues from services and fees in the Capital Markets segment increased $5.3 million to $50.2 million during the three months ended June 30, 2024 from $45.0 million during the three months ended June 30, 2023.

The increase in revenues was primarily due to increases of $9.4 million of corporate finance, consulting, and investment banking fees and $0.5 million in dividends, partially offset by decreases of $2.3 million in other income, $1.3 million of interest income, and $0.9 million in commission fees.

Revenues from services and fees in the Wealth Management segment increased $2.3 million to $49.6 million during the three months ended June 30, 2024 from $47.2 million during the three months ended June 30, 2023.

The increase in revenues was primarily due to increases in revenue of $1.7 million from wealth and asset management fees and $0.9 million in other income, partially offset by a decrease of $0.3 million in commission fees.

Revenues from services and fees in the Auction and Liquidation segment decreased $5.3 million to $3.6 million during the three months ended June 30, 2024 from $8.9 million during the three months ended June 30, 2023.

The decrease in revenues was primarily due to a decrease of $5.3 million in commission fees related to a decrease in the size of fee engagements.

Revenues from services and fees in the Financial Consulting segment increased $5.3 million to $36.5 million during the three months ended June 30, 2024 from $31.2 million during the three months ended June 30, 2023.

The increase in revenues was primarily due to an increase of $5.4 million within our Advisory Services and Appraisal divisions, partially offset by a decrease of $0.1 million from our Real Estate division.

Revenues from services and fees in the Communications segment decreased $5.6 million to $77.7 million during the three months ended June 30, 2024 from $83.3 million during the three months ended June 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $5.8 million, partially offset by an increase of $0.2 million in advertising, licensing and other revenue.

Total revenues decreased $164.0 million to $199.3 million during the three months ended September 30, 2024 from $363.3 million during the three months ended September 30, 2023.

The decrease in revenues during the three months ended September 30, 2024 was primarily due to decreases in fair value adjustments on loans of $70.6 million, revenues from services and fees of $45.6 million, interest income from securities lending of $35.3 million, interest income from loans of $16.1 million, and sale of goods of $4.8 million, partially offset by increases in fair value of the portfolio of securities and other investments owned of $8.5 million.

Of the $70.6 million decrease in fair value adjustments related to loans, $54.3 million related to the loan to Vintage Capital Management, LLC (“VCM”), and $18.6 million related to the loan to Conn’s Inc.

(“Conn’s”), partially offset by fair value gains of $6.0 million related to the loan to Badcock Receivables I.

The decrease in revenue of $45.6 million from services and fees in the three months ended September 30, 2024 consisted of decreases in revenue of $50.5 million in the Capital Markets segment, $15.9 million in the Communications segment, and $1.5 million in the Wealth Management segment, partially offset by increases in revenues of $18.6 million in All Other, and $3.7 million in the Financial Consulting segment.

Revenues from services and fees in the Capital Markets segment decreased $50.5 million to $30.4 million during the three months ended September 30, 2024 from $80.9 million during the three months ended September 30, 2023 related to a decrease in underwriting engagements.

The decrease in revenues was primarily due to decreases of $46.1 million of corporate finance, consulting, and investment banking fees, $1.9 million in commission fees, $1.0 million in dividends, $0.9 million in asset management fees, and $0.8 million of interest income, partially offset by an increase of $0.2 million in other income.

Revenues from services and fees in the Wealth Management segment decreased $1.5 million to $49.4 million during the three months ended September 30, 2024 from $50.9 million during the three months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in revenue of $1.6 million from wealth and asset management fees and $0.1 million in commission fees, partially offset by an increase of $0.2 million in other income.

Revenues from services and fees in the Financial Consulting segment increased $3.7 million to $23.9 million during the three months ended September 30, 2024 from $20.2 million during the three months ended September 30, 2023.

The increase in revenues was primarily due to an increase of $7.0 million from the bankruptcy and restructuring, forensic and litigation, C&W, Interface Consulting and Farber divisions offset by a decrease in revenues of $3.3 million from the automotive restructuring division.

Revenues from services and fees in the Communications segment decreased $15.9 million to $66.2 million during the three months ended September 30, 2024 from $82.2 million during the three months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $15.7 million and $0.2 million in advertising and other revenue.

We expect UOL, magicJack, and Marconi subscription revenue to continue to decline year-over-year.

Revenues from services and fees in All Other increased $15.6 million to $30.3 million during the three months ended June 30, 2024 from $14.7 million during the three months ended June 30, 2023.

Revenues from services and fees in All Other increased $18.6 million to $28.5 million during the three months ended September 30, 2024 from $9.9 million during the three months ended September 30, 2023.

These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, commission fees from Nogin Inc.

(“Nogin”) which we acquired in the second quarter of 2024, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022 and sold in the third quarter of 2023.

Revenues from services and fees in All Other increased by approximately $12.1 million related to merchandise rental fees from bebe, $5.2 million in commission fees from Nogin, and $4.4 million related to the regional environmental services business, partially offset by a decrease in revenues of $3.1 million due to the sale of the landscaping business in the fourth quarter of 2023.

Trading income (loss) decreased approximately $64.5 million to a loss of $31.3 million during the three months ended June 30, 2024 compared to income of $33.2 million during the three months ended June 30, 2023.

The loss of $31.3 million during the three months ended June 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The fair value adjustment of $175.6 million on our loans receivable during the three months ended June 30, 2024 was primarily due to $151.1 million related to VCM, $12.0 million related to Freedom VCM, $7.4 million related to Badcock Receivables I, and $7.2 million related to Conn’s.

Interest income - loans decreased $16.6 million to $18.5 million during the three months ended June 30, 2024 from $35.1 million during the three months ended June 30, 2023.

The decrease was due to a reduction in loan receivable balances from $683.8 million as of June 30, 2023 to $229.2 million as of June 30, 2024.

Interest income - securities lending decreased $15.3 million to $24.8 million during the three months ended June 30, 2024 from $40.1 million during the three months ended June 30, 2023.

The decrease was due to a decrease in the securities borrowed balance from $2,938.5 million as of June 30, 2023 to $742.9 million as of June 30, 2024.

Revenues from the sale of goods increased $5.6 million to $63.9 million during the three months ended June 30, 2024 from $58.4 million during the three months ended June 30, 2023.

The increase was primarily related to an increase of $6.7 million from the Auction and Liquidation segment due to larger international asset deals and an increase of $2.7 million in All Other consisting of $2.3 million in sales of goods from Nogin which we acquired in the second quarter of 2024 and $0.4 million in sales of goods from bebe in which we acquired a controlling interest and consolidated during the fourth

quarter of 2023, partially offset by a decrease of $3.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $0.2 million from the Communications segment.

Cost of goods sold for the three months ended June 30, 2024 increased approximately $6.4 million to $46.7 million from $40.3 million during the three months ended June 30, 2023.

The increase in cost of goods sold was primarily attributable to increases of $6.3 million from the Auction and Liquidation segment and $2.2 million from All Other consisting of $1.2 million from Nogin which we acquired in the second quarter of 2024 and $1.0 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, partially offset by decreases of $1.7 million in the Consumer Products segment and $0.4 million in the Communications segment.

Trading income (loss) increased approximately $8.5 million to a loss of $1.2 million during the three months ended September 30, 2024 compared to loss of $9.7 million during the three months ended September 30, 2023.

The loss of $1.2 million during the three months ended September 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The decrease in fair value adjustment of $70.6 million on our loans receivable during the three months ended September 30, 2024 was primarily due to $54.3 million related to VCM, and $18.6 million related to Conn’s, partially offset by an increase of $6.0 million related to Badcock Receivables I.

Interest income – loans decreased $16.1 million to $11.3 million during the three months ended September 30, 2024 from $27.4 million during the three months ended September 30, 2023 due to a reduction in loan receivable balances from $549.1 million as of September 30, 2023 to $151.7 million as of September 30, 2024.

Interest income – securities lending decreased $35.3 million to $7.0 million during the three months ended September 30, 2024 from $42.3 million during the three months ended September 30, 2023.

The decrease was due to a reduction in the securities borrowed balance from $2,782.0 million as of September 30, 2023 to $64.0 million as of September 30, 2024.

Revenues from the sale of goods decreased $4.8 million to $55.2 million during the three months ended September 30, 2024 from $60.0 million during the three months ended September 30, 2023.

The decrease was primarily related to a decrease of $8.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $0.3 million from the Communications segment, partially offset by an increase of $4.1 million in All Other consisting of $3.7 million in sales of goods from Nogin which we acquired in the second quarter of 2024 and $0.4 million in sales of goods from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Cost of goods sold for the three months ended September 30, 2024 decreased approximately $1.9 million to $40.3 million from $42.2 million during the three months ended September 30, 2023.

The decrease in cost of goods sold

was primarily attributable to decreases of $4.1 million in the Consumer Products segment and $0.4 million in the Communications segment, partially offset by an increase of $2.6 million from All Other, primarily from Nogin which we acquired in the second quarter of 2024.

Operating Expenses

Direct Cost of Services

Direct cost of services increased approximately $5.6 million to $61.6 million during the three months ended June 30, 2024 from $55.9 million during the three months ended June 30, 2023.

The increase in direct cost of services was primarily attributable to increases of $0.2 million from the Communications segment and $6.0 million from All Other due to bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023 and Nogin which we acquired in the second quarter of 2024, partially offset by a decrease of $0.6 million from the Auction and Liquidation segment due to the size of the fee deals.

Direct cost of services decreased approximately $3.0 million to $49.7 million during the three months ended September 30, 2024 from $52.6 million during the three months ended September 30, 2023.

The decrease in direct cost of services was primarily attributable to a decrease of $9.8 million from the Communications segment, partially offset by an increase of $6.8 million from All Other consisting of $3.7 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $3.0 million from Nogin which we acquired in the second quarter of 2024, and $0.1 million from the regional environmental services business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses during the three months ended June 30, 2024 and 2023 were comprised of the following:

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Selling, general and administrative expenses during the three months ended September 30, 2024 and 2023 were comprised of the following:

Three Months Ended September 30, 2024 Three Months Ended

September 30, 2023 Change

Amount % Amount % Amount %

1 unchanged sentence

Wealth Management segment 49,279 26.7 % 48,966 24.2 % 313 0.6 %

Auction and Liquidation segment 1,861 0.9 % 2,302 1.2 % (441) (19.2) %

Financial Consulting segment 19,813 10.7 % 17,925 8.9 % 1,888 10.5 %

3 unchanged sentences

Total selling, general & administrative expenses $ 184,605 100.0 % $ 202,321 100.0 % $ (17,716) (8.8) %

Total selling, general and administrative expenses increased by $20.5 million to $209.3 million during the three months ended June 30, 2024 from $188.9 million during the three months ended June 30, 2023.

The increase was primarily due to increases of $14.5 million in Corporate and All Other, $5.8 million in the Financial Consulting segment, $3.7 million in the Capital Markets segment, and $0.2 million in the Wealth Management segment, partially offset by decreases of $2.0 million in the Consumer Products segment, $1.2 million in the Communications segment, and $0.4 million in the Auction and Liquidation segment.

Total selling, general and administrative expenses decreased by $17.7 million to $184.6 million during the three months ended September 30, 2024 from $202.3 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $32.5 million in the Capital Markets segment, $6.9 million in the Communications segment, and $1.9 million in the Consumer Products segment, partially offset by increases of $21.4 million in Corporate and All Other, $1.9 million in the Financial Consulting segment, and $0.3 million in the Wealth Management segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment increased by $3.7 million to $50.6 million during the three months ended June 30, 2024 from $46.9 million during the three months ended June 30, 2023.

The increase was primarily due to an increase of $4.4 million in payroll and related expenses, which primarily related to increases in commissions paid, partially offset by decreases in share based compensation and other payroll expenses, and partially offset by a decrease of $0.7 million in consulting expenses.

Selling, general and administrative expenses in the Capital Markets segment decreased by $32.5 million to $31.3 million during the three months ended September 30, 2024 from $63.8 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $26.8 million in payroll and related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses, $4.0 million in consulting expenses of which $2.9 million related to an advisory agreement which ended in August of 2023, $0.8 million in clearing and execution costs, $0.7 million in business development activities, $0.7 million in investment banking deal expenses, $0.6 million in foreign currency fluctuation, and $0.2 million in other expenses, partially offset by an increase of $1.3 million in legal expenses.

The advisory agreement was terminated in August 2023 in connection with the FRG take private transaction as more fully described in Note 2(h) of the accompanying condensed consolidated financial statements and there was no expense during the three months ended September 30, 2024 as compared to the prior year when the expense totaled $2.9 million.

For any given reporting period in 2023, the advisory agreement would result in an expense being reported in selling, general and administrative expenses when realized and unrealized gains on certain invested balances in the Company’s broker-dealer subsidiary exceeded a minimum return on the invested balances during such period;

in addition, a decrease in the invested balance in value during such reporting period would result in the reporting of a credit to selling, general and administrative expense.

During the three months ended September 30, 2023, the Company recorded an advisory fee of $2.9 million in accordance with the advisory agreement due to the realized and unrealized gains earned.

Wealth Management

Selling, general and administrative expenses in the Wealth Management segment increased by $0.2 million to $49.2 million during the three months ended June 30, 2024 from $49.0 million during the three months ended June 30, 2023.

Auction and Liquidation

Selling, general and administrative expenses in the Auction and Liquidation segment decreased $0.4 million to $1.9 million during the three months ended June 30, 2024 from $2.3 million during the three months ended June 30, 2023.

Selling, general and administrative expenses in the Wealth Management segment increased by $0.3 million to $49.3 million during the three months ended September 30, 2024 from $49.0 million during the three months ended September 30, 2023, primarily due to payroll and related expenses.

Financial Consulting

Selling, general and administrative expenses in the Financial Consulting segment increased by $5.8 million to $28.7 million during the three months ended June 30, 2024 from $22.9 million during the three months ended June 30, 2023.

Selling, general and administrative expenses in the Financial Consulting segment increased by $1.9 million to $19.8 million during the three months ended September 30, 2024 from $17.9 million during the three months ended September 30, 2023.

The increase was primarily due to an increase of $1.6 million in payroll and related expenses related to a business acquired in the third quarter of 2023 and an increase in headcount and an increase of $0.3 million in other expenses.

Communications

Selling, general and administrative expenses in the Communications segment decreased $1.2 million to $25.5 million for the three months ended June 30, 2024 from $26.6 million for the three months ended June 30, 2023.

The decrease was primarily due to decreases of $2.7 million in payroll and related expenses and $0.3 million in other expenses, partially offset by increases $1.0 million in legal settlements and $0.7 million in legal fees.

The decrease in payroll and related expenses and other expenses was primarily due to cost savings in 2024 resulting from the implementation of cost savings programs in second half of 2023 that included a reduction in headcount and other operating expenses.

Selling, general and administrative expenses in the Communications segment decreased $6.9 million to $21.5 million for the three months ended September 30, 2024 from $28.4 million for the three months ended September 30, 2023.

The decrease was primarily due to decreases of $2.7 million in payroll and related expenses, $1.9 million in depreciation and amortization expenses, non-recurring receipt of $1.2 million refund of regulatory taxes that were overpaid in the prior year based on estimated billing, $0.8 million in communications expenses, and $0.3 million in other expenses.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $2.0 million to $17.0 million for the three months ended June 30, 2024 from $19.1 million during the three months ended June 30, 2023.

The decrease was primarily due to decreases of $1.4 million in payroll and related expenses due to reduced headcount, $0.9 million in other expenses due to efforts to reduce costs, and $0.7 million in depreciation and amortization expense due to items being fully amortized, partially offset by an increase of $0.8 million in share based compensation due to a reversal of unvested performance based shares compensation expense in the prior year.

Selling, general and administrative expenses in the Consumer Products segment decreased $1.9 million to $16.9 million for the three months ended September 30, 2024 from $18.8 million during the three months ended September 30, 2023.

The decrease was primarily due to decreases of $0.7 million in payroll and related expenses due to reduced headcount, $0.7 million in depreciation and amortization expense due to items being fully amortized, $0.7 million in currency fluctuation, and $0.6 million in other expenses due to efforts to reduce costs, partially offset by an increase of $0.8 million in professional fees.

Corporate and All Other

Selling, general and administrative expenses for Corporate and All Other increased approximately $14.5 million to $36.5 million during the three months ended June 30, 2024 from $22.1 million during the three months ended June 30, 2023.

The increase was primarily due to increases of $9.2 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $6.0 million from Nogin which we acquired in the second quarter of 2024, $2.3 million in transaction costs related to the Nogin acquisition, $1.7 million in legal settlements, and $1.0 million in other expenses, partially offset by a decrease of $5.8 million in payroll and related expenses which primarily related to decreases in share based compensation and other variable compensation.

Impairment of goodwill and tradenames.

We recognized impairment charges of $27.7 million during the three months ended June 30, 2024.

We performed an interim impairment test as of June 30, 2024, as further discussed in Note 8 of the condensed consolidated financial statements.

Based on the results of the impairment test, we recorded a non-cash impairment charge of $26.7 million related to goodwill and $1.0 million related to tradenames in the Consumer Products segment.

We recognized impairment charges of $1.7 million during the three months ended June 30, 2023 related to tradenames in the Capital Markets segment.

Selling, general and administrative expenses for Corporate and All Other increased approximately $21.4 million to $45.8 million during the three months ended September 30, 2024 from $24.4 million during the three months ended September 30, 2023.

The increase was primarily due to increases of $9.3 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $9.1 million from Nogin which we acquired in the second quarter of 2024, $3.1 million in legal expenses, $2.8 million in currency fluctuation, $2.0 million from the regional environmental services business, $1.6 million in accounting expenses, $1.0 million in transaction costs, $0.9 million in other expenses, and $0.5 million in consulting expenses, partially offset by decreases of $7.5 million in payroll and related expenses, which primarily related to decreases in share based compensation and other variable compensation, $0.9 million related to the landscaping business that was sold in 2023 and $0.7 million in outside contractor expenses.

Other Income (Expense).

Other income included interest income of $0.8 million and $0.7 million during the three months ended June 30, 2024 and 2023, respectively.

Dividend income was $9.2 million during the three months ended June 30, 2024 compared to $9.6 million during the three months ended June 30, 2023.

Realized and unrealized (losses) gains on investments was a loss of $155.7 million during the three months ended June 30, 2024 compared to a gain of $18.8 million during the three months ended June 30, 2023.

The change was primarily due to a decrease in the valuation of

our investment in Freedom VCM of $181.0 million.

Change in fair value of financial instruments and other was a loss of $0.2 million during the three months ended June 30, 2024 and a gain of $0.4 million during the three months ended June 30, 2023.

Interest expense was $42.7 million during the three months ended June 30, 2024 compared to $47.3 million during the three months ended June 30, 2023.

The decrease in interest expense was due to lower debt balances during the three months ended June 30, 2024.

The decreases in interest expense primarily consisted of $5.9 million from the Pathlight term loan, $3.8 million from the issuance of senior notes, $1.0 million from the Nomura revolving credit facility, $0.1 million and $0.7 million from the Targus term loan and revolver, respectively, and $0.4 million from the BRPAC term loan, partially offset by increases in interest expense of $7.1 million from the Nomura term loan, $0.7 million from the bebe term loan, and $0.3 million from the Nogin secured convertible promissory note.

(Loss) Income Before Income Taxes .

Loss before income taxes was $408.8 million during the three months ended June 30, 2024 compared to income before income taxes of $65.3 million during the three months ended June 30, 2023.

The change was due to a decrease in revenue of $257.9 million, a change in realized and unrealized (losses) gains on investments of $174.5 million, an increase in operating expenses of $45.3 million, a decrease in change in fair value of financial instruments and other of $0.5 million, and a decrease of $0.3 million in dividend income, partially offset by a decrease in interest expense of $4.6 million and an increase of $0.1 million in interest income.

Provision for Income Taxes.

Provision for income taxes was $25.0 million during the three months ended June 30, 2024 compared to a provision for income taxes of $21.5 million during the three months ended June 30, 2023.

The effective income tax rate was 6.1% for the three months ended June 30, 2024 as compared to 32.9% for the three months ended June 30, 2023.

Other income included interest income of $1.4 million and $0.2 million during the three months ended September 30, 2024 and 2023, respectively.

Dividend income was $0.7 million during the three months ended September 30, 2024 compared to $3.4 million during the three months ended September 30, 2023.

Realized and unrealized (losses) gains on investments was a loss of $22.2 million during the three months ended September 30, 2024 compared to a loss of $77.3 million during the three months ended September 30, 2023.

The change was primarily due to increases in the valuation of our investments in Babcock & Wilcox Enterprises, Inc.

of $43.2 million, Alta Equipment Group, Inc.

of $17.9 million, Double Down Interactive Co., Ltd of $17.3 million, partially offset by a decrease in valuation of Freedom VCM Holdings, LLC of $49.0 million.

Change in fair value of financial instruments and other was a gain of $0.5 million during the three months ended September 30, 2024 and a loss of $4.2 million during the three months ended September 30, 2023.

Interest expense was $33.0 million during the three months ended September 30, 2024 compared to $37.5 million during the three months ended September 30, 2023.

The decrease in interest expense was due to lower debt balances during the three months ended September 30, 2024.

The decreases in interest expense primarily consisted of $5.4

million from the Nomura term loan, $2.1 million from the Pathlight term loan, $2.5 million from the issuance of senior notes, $1.5 million from the Nomura revolving credit facility, $0.2 million and $0.6 million from the Targus term loan and revolver, respectively, $0.4 million from the BRPAC term loan, and $0.3 million from the Lingo term loan, partially offset by increases in interest expense of $0.7 million from the bebe term loan, and $0.4 million from the Nogin secured convertible promissory note.

Loss from Continuing Operations Before Income Taxes .

Loss from continuing operations before income taxes was $134.3 million during the three months ended September 30, 2024 compared to loss before income taxes of $123.7 million during the three months ended September 30, 2023.

The change was due to a decrease in revenue of $164.0 million, an decrease in operating expenses of $90.2 million, and a decrease of $2.7 million in dividend income, partially offset by a change in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in change in fair value of financial instruments and other of $4.6 million, a decrease in interest expense of $4.5 million and an increase of $1.3 million in interest income.

(Provision for) Benefit from Income Taxes.

Provision for income taxes was $14.5 million during the three months ended September 30, 2024 compared to a benefit from income taxes of $23.6 million during the three months ended September 30, 2023.

The effective income tax rate was 10.8% for the three months ended September 30, 2024 as compared to 19.1% for the three months ended September 30, 2023.

Loss from Continuing Operations.

Loss from continuing operations was $148.9 million during the three months ended September 30, 2024 compared to $100.0 million during the three months ended September 30, 2023.

The change was due to a decrease of $73.8 million in operating loss, change in income tax benefit to provision of $38.1 million and a decrease of $2.7 million in dividend income, partially offset by a change in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in change in fair value of financial instruments and other of $4.6 million, a decrease in interest expense of $4.5 million and an increase of $1.3 million in interest income.

(Loss) Income from Discontinued Operations, Net of Income Taxes.

On October 25, 2024, we and our subsidiary bebe stores, inc.

(“bebe”) have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds.

The results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Brands Transaction was $134.4 million during the three months ended September 30, 2024 compared to income from discontinued operations of $10.3 million during the three months ended September 30, 2023.

The loss from discontinued operations is primarily due to realized and unrealized losses incurred on the brand equity investments during the three months ended September 30, 2024 from the planned securitization transaction and Sale of equity investments by the Company’s majority owned subsidiary bebe, as more fully discussed in Note 4 to the accompanying condensed consolidated financial statements.

On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Great American Group was $4.4 million for the three months ended September 30, 2024, compared to income from discontinued operations of $13.4 million during the three months ended September 30, 2023.

Refer to Note 4 to the accompanying condensed consolidated financial statements for additional information.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests.

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests represents the proportionate share of net loss generated by membership interests of partnerships that we do not own.

The net loss attributable to noncontrolling interests was $0.2 million during the three months ended June 30, 2024 compared to net loss of $2.6 million during the three months ended June 30, 2023.

Net (Loss) Income Attributable to the Company .

Net loss attributable to the Company was $433.6 million during the three months ended June 30, 2024 compared to net income attributable to the Company of $46.4 million for the three months ended June 30, 2023.

The decrease was due to a change in operating (loss) income of $303.3 million, a decrease in realized and unrealized (losses) gains on investments of $174.5 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $2.4 million, an increase in change in fair value of financial instruments and other of $0.5 million, and a decrease of $0.3 million in dividend income, partially offset by a decrease in interest expense of $4.6 million, a change in provision for income taxes of $3.5 million, and an increase of $0.1 million in interest income.

The net loss attributable to noncontrolling interests was $3.2 million during the three months ended September 30, 2024 compared to net loss of $2.5 million during the three months ended September 30, 2023.

Net Loss Attributable to the Company .

Net loss attributable to the Company was $284.4 million during the three months ended September 30, 2024 compared to net loss attributable to the Company of $73.8 million for the three months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $73.8 million, a change in provision for income taxes of $38.1 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $0.7 million, and a decrease in realized and unrealized (losses) gains on investments of $55.1 million, a decrease of $2.7 million in dividend income, partially offset by a decrease in interest expense of $4.5 million, an increase in change in fair value of financial instruments and other of $4.6 million, and an increase of $1.3 million in interest income.

Preferred Stock Dividends .

Preferred stock dividends were $2.0 million for the three months ended June 30, 2024 and 2023.

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

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

Net (Loss) Income Available to Common Shareholders .

Net loss available to common shareholders was $435.6 million during the three months ended June 30, 2024 compared to net income available to common shareholders $44.4 million during the three months ended June 30, 2023.

Preferred stock dividends were $2.0 million for the three months ended September 30, 2024 and 2023.

Dividends on the Series A preferred paid during the three months ended September 30, 2024 and 2023

were $0.4296875 per depository share.

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

Net Loss Available to Common Shareholders .

Net loss available to common shareholders was $286.4 million during the three months ended September 30, 2024 compared to net loss available to common shareholders $75.8 million during the three months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $73.8 million, a change in provision for income taxes of $38.1 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $0.7 million, and a decrease of $2.7 million in dividend income, partially offset by a decrease in realized and unrealized (losses) gains on investments of $55.1 million, a decrease in interest expense of $4.5 million, an increase in change in fair value of financial instruments and other of $4.6 million, and an increase of $1.3 million in interest income.

Results of Operations

The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Condensed Consolidated Statements of Operations

(Dollars in thousands)

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2024 2023 Amount %

11 unchanged sentences

Restructuring charge 925 949 (24) (2.5) %

Impairment of tradenames 27,681 1,733 25,948 n/m

Impairment of goodwill and tradenames 27,681 37,233 (9,552) (25.7) %

Interest expense - Securities lending and loan participations sold 65,055 106,572 (41,517) (39.0) %

4 unchanged sentences

Dividend income 4,139 9,541 (5,402) (56.6) %

Realized and unrealized losses on investments (185,235) (9,599) (175,636) n/m

Realized and unrealized losses on investments (212,362) (77,020) (135,342) 175.7 %

Change in fair value of financial instruments and other 627 (3,998) 4,625 (115.7) %

Income from equity investments 6 133 (127) (95.5) %

Income (loss) from equity investments 12 (175) 187 (106.9) %

Interest expense (102,195) (118,630) 16,435 (13.9) %

(Loss) income before income taxes (473,817) 89,764 (563,581) n/m

Provision for income taxes (7,918) (29,423) 21,505 (73.1) %

Net (loss) income (481,735) 60,341 (542,076) n/m

Net income (loss) attributable to noncontrolling interests 1,034 (3,195) 4,229 (132.4) %

Net (loss) income attributable to B.

Loss from continuing operations before income taxes (627,591) (45,465) (582,126) n/m

Provision for income taxes (17,915) (3,045) (14,870) n/m

Loss from continuing operations (645,506) (48,510) (596,996) n/m

(Loss) income from discontinued operations, net of income taxes (123,827) 32,543 (156,370) n/m

Net loss (769,333) (15,967) (753,366) n/m

Net loss attributable to noncontrolling interests (2,167) (5,680) 3,513 (61.8) %

Net loss attributable to B.

Riley Financial, Inc.

1 unchanged sentence

Preferred stock dividends 6,045 6,042 3 — %

Net (loss) income available to common shareholders $ (486,799) $ 59,509 $ (546,308) n/m

______________________________________________

Net loss available to common shareholders $ (773,211) $ (16,329) $ (756,882) n/m

n/m - Not applicable or not meaningful.

The table below and the discussion that follows are based on how we analyze our business.

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2024 2023 Amount %

2 unchanged sentences

Wealth Management segment 150,153 146,660 3,493 2.4 %

Auction and Liquidation segment 7,181 14,329 (7,148) (49.9) %

Financial Consulting segment 69,383 52,325 17,058 32.6 %

13 unchanged sentences

Sale of goods:

Auction and Liquidation segment 10,584 1,892 8,692 n/m

Communications segment 4,079 5,145 (1,066) (20.7) %

5 unchanged sentences

n/m - Not applicable or not meaningful.

Total revenues decreased $347.0 million to $491.4 million during the six months ended June 30, 2024 from $838.4 million during the six months ended June 30, 2023.

The decrease in revenues during the six months ended June 30, 2024 was primarily due to decreases in the fair value adjustments on loans of $240.3 million, fair value of the portfolio of securities and other investments owned of $90.4 million, interest income from loans of $34.5 million, and interest income from securities lending of $14.6 million, and sale of goods of $6.6 million, partially offset by an increase in revenues from services and fees of $39.4 million.

Of the $240.3 million decrease in fair value adjustments on loans, $168.4 million related to the loan to VCM, $13.7 million related to the loan to Freedom VCM, $8.5 million related to the loan to Conn’s, and $6.8 million related to the loan to Badcock Receivables I.

The increase in revenue from services and fees in the six months

ended June 30, 2024 consisted of increases in revenue of $28.1 million in All Other, $15.4 million in the Financial Consulting segment, $7.7 million in the Capital Markets segment, and $5.0 million in the Wealth Management segment, partially offset by decreases in revenue of $9.6 million in the Communications segment and $7.1 million in the Auction and Liquidation segment.

Revenues from services and fees in the Capital Markets segment increased $7.7 million to $110.6 million during the six months ended June 30, 2024 from $102.9 million during the six months ended June 30, 2023.

The increase in revenues was primarily due to increases of $20.4 million of corporate finance, consulting, and investment banking fees and $0.5 million in asset management fees, partially offset by decreases of $6.1 million in dividends, $3.9 million of commission fees, $1.8 million in other income, and $1.4 million in interest income.

Revenues from services and fees in the Wealth Management segment increased $5.0 million to $100.8 million during the six months ended June 30, 2024 from $95.8 million during the six months ended June 30, 2023.

The increase in revenues was primarily due to increases in revenue of $4.5 million from wealth and asset management fees and $0.5 million in other income.

Revenues from services and fees in the Auction and Liquidation segment decreased $7.1 million to $7.2 million during the six months ended June 30, 2024 from $14.3 million during the six months ended June 30, 2023.

The decrease in revenues was primarily due to a decrease of $8.1 million in commission fees, partially offset by an increase of $1.0 million in service contract revenues.

The decrease in commission fees was related to a decrease in the size of fee engagements.

Revenues from services and fees in the Financial Consulting segment increased $15.4 million to $71.6 million during the six months ended June 30, 2024 from $56.2 million during the six months ended June 30, 2023.

The increase in revenues was primarily due to an increase of $13.4 million within our Advisory Services division combined with an increase of $2.0 million in Appraisal due to an increase in the number of appraisals performed.

Revenues from services and fees in the Communications segment decreased $9.6 million to $158.8 million during the six months ended June 30, 2024 from $168.4 million during the six months ended June 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $9.1 million and $0.5 million in advertising, licensing and other revenue.

Total revenues decreased $514.7 million to $637.2 million during the nine months ended September 30, 2024 from $1,151.9 million during the nine months ended September 30, 2023.

The decrease in revenues during the nine months ended September 30, 2024 was primarily due to decreases in fair value adjustments on loans of $310.9 million, in the fair value of the portfolio of securities and other investments owned of $81.9 million, interest income from loans of $50.6 million, interest income from securities lending of $50.0 million, sale of goods of $20.0 million, and revenues from services and fees of $1.2 million.

Of the $310.9 million decrease in fair value adjustments related to loans, $222.7 million related to the loan to VCM, $13.6 million related to the loan to Freedom VCM, $27.1 million related to the loan to Conn’s, and $0.8 million related to the loan to Badcock Receivables I.

The decrease in revenue from services and fees in the nine months ended September 30, 2024 consisted of decreases in revenue of $42.8 million in the Capital Markets segment, and $25.5 million in the Communications segment, partially offset by increases in revenue of $46.5 million in All Other, $17.1 million in the Financial Consulting segment, and $3.5 million in the Wealth Management segment.

Revenues from services and fees in the Capital Markets segment decreased $42.8 million to $141.0 million during the nine months ended September 30, 2024 from $183.8 million during the nine months ended September 30, 2023.

the lead manager on fewer underwriting engagements in 2024 than 2023.

The decrease in revenues was primarily due to decreases of $25.7 million of corporate finance, consulting, and investment banking fees, $7.0 million in dividends, $5.8 million in commission fees, $2.2 million of interest income, $1.8 million in other income, and $0.2 million in asset management fees.

Revenues from services and fees in the Wealth Management segment increased $3.5 million to $150.2 million during the nine months ended September 30, 2024 from $146.7 million during the nine months ended September 30, 2023.

The increase in revenues was primarily due to increases in revenue of $2.9 million from wealth and asset management fees and $1.0 million in other income, partially offset by a decrease of $0.4 million in commission fees.

Revenues from services and fees in the Financial Consulting segment increased $17.1 million to $69.4 million during the nine months ended September 30, 2024 from $52.3 million during the nine months ended September 30, 2023.

The increase in revenues was primarily due to an increase of $19.0 million from the bankruptcy and restructuring, forensic and litigation, automotive restructuring, C&W, Interface Consulting and Farber divisions offset by a decrease in revenues of $1.9 million from the risk compliance and finance, valuation and due diligence divisions.

Revenues from services and fees in the Communications segment decreased $25.5 million to $225.1 million during the nine months ended September 30, 2024 from $250.5 million during the nine months ended September 30, 2023.

The decrease in revenues was primarily due to decreases in subscription revenue of $24.7 million and $0.8 million in advertising and other revenue.

We expect UOL, magicJack, and Marconi subscription revenue to continue to decline year-over-year.

Revenues from services and fees in All Other increased $28.1 million to $56.4 million during the six months ended June 30, 2024 from $28.3 million during the six months ended June 30, 2023.

These revenues include the licensing of brand trademarks, merchandise rental fees and sales from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, commission fees from Nogin which we acquired in the second quarter of 2024, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022 and sold in the third quarter of 2023.

Revenues from services and fees in All Other increased by approximately $27.1 million related to merchandise rental fees from bebe, $3.0 million related to the regional environmental services business, $2.7 million related to commission fees from Nogin, and $0.2 million related to licensing of brand trademarks, partially offset by a decrease in revenues of $4.9 million due to the sale of the landscaping business in the fourth quarter of 2023.

Trading (loss) income decreased approximately $90.4 million to a loss of $49.0 million during the six months ended June 30, 2024 compared to income of $41.5 million during the six months ended June 30, 2023.

The loss of $49.0 million during the six months ended June 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The fair value adjustment of $187.8 million on our loans receivable during the six months ended June 30, 2024 was primarily due to $168.4 million related to VCM, $13.7 million related to the loan to Freedom VCM, $8.5 million related to Conn’s, and $6.8 million related to Badcock Receivables I.

Interest income – loans decreased $34.5 million to $40.6 million during the six months ended June 30, 2024 from $75.1 million during the six months ended June 30, 2023.

The decrease was due to a reduction in loan receivable balances from $683.8 million as of June 30, 2023 to $229.2 million as of June 30, 2024.

Interest income – securities lending decreased $14.6 million to $62.6 million during the six months ended June 30, 2024 from $77.2 million during the six months ended June 30, 2023.

The decrease was due to a decrease in the securities borrowed balance from $2,938.5 million as of June 30, 2023 to $742.9 million as of June 30, 2024.

Revenues from the sale of goods decreased $6.6 million to $119.6 million during the six months ended June 30, 2024 from $126.2 million during the six months ended June 30, 2023.

The decrease in revenues from sale of goods was attributable to a decrease of $17.8 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $0.7 million from the Communications segment, partially offset by an increase of $8.7 million from the Auction and Liquidation segment due to larger international asset deals and an increase of $3.3 million from All Other consisting of $2.3 million in sale of goods from Nogin which we acquired in the second quarter of 2024 and $1.0 million in sale of goods from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Cost of goods sold for the six months ended June 30, 2024 decreased approximately $1.6 million to $86.3 million from $87.9 million during the six months ended June 30, 2023.

The decrease in cost of goods sold was primarily attributable to decreases of $10.2 million in the Consumer Products segment and $1.2 million in the Communications segment, partially offset by increases of $7.1 million from the Auction and Liquidation segment and $2.7 million from All Other consisting of $1.6 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023 and $1.1 million from Nogin which we acquired in the second quarter of 2024.

Revenues from services and fees in All Other increased $46.5 million to $75.3 million during the nine months ended September 30, 2024 from $28.9 million during the nine months ended September 30, 2023.

These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, commission fees from Nogin which we acquired in the second quarter of 2024, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022 and sold in the third quarter of 2023.

Revenues from services and fees in All Other increased by approximately $39.1 million related to merchandise rental fees from bebe, $8.0 million in commission fees from Nogin, and $7.3 million related to the regional environmental services business, partially offset by a decrease in revenues of $8.0 million due to the sale of the landscaping business in the fourth quarter of 2023.

Trading (loss) income decreased approximately $81.9 million to a loss of $50.2 million during the nine months ended September 30, 2024 compared to income of $31.7 million during the nine months ended September 30, 2023.

The loss of $50.2 million during the nine months ended September 30, 2024 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts.

The decrease in the fair value adjustment of $310.9 million on our loans receivable during the nine months ended September 30, 2024 was primarily due to $222.7 million related to VCM, $13.6 million related to the loan to Freedom VCM, $27.1 million related to Conn’s, and $0.8 million related to Badcock Receivables I.

Interest income - loans decreased $50.6 million to $51.9 million during the nine months ended September 30, 2024 from $102.5 million during the nine months ended September 30, 2023.

The decrease was due to a reduction in loan receivable balances from $549.1 million as of September 30, 2023 to $151.7 million as of September 30, 2024.

Interest income – securities lending decreased $50.0 million to $69.6 million during the nine months ended September 30, 2024 from $119.6 million during the nine months ended September 30, 2023.

The decrease was due to a decrease in the securities borrowed balance from $2,782.0 million as of September 30, 2023 to $64.0 million as of September 30, 2024.

Revenues from the sale of goods decreased $20.0 million to $164.3 million during the nine months ended September 30, 2024 from $184.3 million during the nine months ended September 30, 2023.

The decrease in revenues from sale of goods was attributable to a decrease of $26.4 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $1.1 million from the Communications segment, partially offset by an increase of $7.4 million from All Other consisting of $6.0 million in sale of goods from Nogin which we acquired in the second quarter of 2024 and $1.4 million in sale of goods from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Cost of goods sold for the nine months ended September 30, 2024 decreased approximately $10.6 million to $118.9 million from $129.5 million during the nine months ended September 30, 2023.

The decrease in cost of goods sold was primarily attributable to decreases of $14.3 million in the Consumer Products segment and $1.6 million in the Communications segment, partially offset by increases of $5.3 million from All Other

consisting of $3.7 million from Nogin which we acquired in the second quarter of 2024 and $1.6 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.

Operating Expenses

Direct Cost of Services

Direct cost of services increased approximately $12.3 million to $122.7 million during the six months ended June 30, 2024 from $110.3 million during the six months ended June 30, 2023.

The increase in direct cost of services was primarily attributable to increases of $4.3 million from the Communications segment and $10.3 million from All Other consisting of to $8.7 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023 and $1.6 million from Nogin which we acquired in the second quarter of 2024, partially offset by a decrease of $2.3 million from the Auction and Liquidation segment due to the number and size of fee deals in prior year.

Direct cost of services increased approximately $11.6 million to $168.0 million during the nine months ended September 30, 2024 from $156.4 million during the nine months ended September 30, 2023.

The increase in direct cost of services was primarily attributable to an increase of $17.1 million from All Other consisting of $12.4 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $4.5 million from Nogin which we acquired in the second quarter of 2024, and $0.2 million from the regional environmental services business, partially offset by a decrease of $5.5 million from the Communications segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses during the six months ended June 30, 2024 and 2023 were comprised of the following:

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023 Change

Selling, general and administrative expenses during the nine months ended September 30, 2024 and 2023 were comprised of the following:

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023 Change

Amount % Amount % Amount %

1 unchanged sentence

Wealth Management segment 148,587 25.7 % 146,420 25.2 % 2,167 1.5 %

Auction and Liquidation segment 3,369 0.8 % 4,582 1.1 % (1,213) (26.5) %

Financial Consulting segment 56,553 9.8 % 43,166 7.4 % 13,387 31.0 %

3 unchanged sentences

Total selling, general & administrative expenses $ 577,377 100.0 % $ 579,964 100.0 % $ (2,587) (0.4) %

Total selling, general and administrative expenses increased by $17.4 million to $418.9 million during the six months ended June 30, 2024 from $401.5 million during the six months ended June 30, 2023.

The increase was primarily due to increases of $25.4 million in Corporate and All Other, $13.5 million in the Financial Consulting segment, and $1.9 million in the Wealth Management segment, partially offset by decreases of $9.3 million in the Capital Markets segment, $6.4 million in the Consumer Products segment, $6.5 million in the Communications segment, and $1.2 million in the Auction and Liquidation segment.

Total selling, general and administrative expenses decreased by $2.6 million to $577.4 million during the nine months ended September 30, 2024 from $580.0 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $41.8 million in the Capital Markets segment, $13.3 million in the Communications segment, and $8.3 million in the Consumer Products segment, partially offset by increases of $45.3 million in Corporate and All Other, $13.4 million in the Financial Consulting segment, and $2.2 million in the Wealth Management segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment decreased by $9.3 million to $104.5 million during the six months ended June 30, 2024 from $113.8 million during the six months ended June 30, 2023.

The decrease was primarily due to decreases of (a)$10.0 million related to an advisory agreement which ended in August of

2023, (b) $1.5 million in clearing charges, (c) $0.7 million in depreciation and amortization expenses, and (d) $0.2 million in other expenses, partially offset by an increase of $3.2 million in change in fair value of contingent consideration.

The advisory agreement was terminated in August 2023 in connection with the FRG take private transaction as more fully described in Note 2(h) and there was no expense during the six months ended June 30, 2024 as compared to the prior year when the expense totaled $10.0 million.

For any given reporting period, the advisory agreement would result in an expense being reported in selling, general and administrative expenses when realized and unrealized gains on certain invested balances in the Company’s broker-dealer subsidiary exceeded a minimum return on the invested balances during such period;

Selling, general and administrative expenses in the Capital Markets segment decreased by $41.8 million to $135.8 million during the nine months ended September 30, 2024 from $177.6 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $26.0 million in payroll and related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses, $14.1 million in consulting expenses, of which $12.9 million related to an advisory agreement which ended in August of 2023, $2.2 million in clearing and execution charges, $1.5 million in investment banking deal expenses, $0.8 million in depreciation and amortization expenses, $0.6 million in business development activities and $0.1 million in other expenses, partially offset by an increase of $3.5 million in change in fair value of contingent consideration.

The advisory agreement was terminated in August 2023 in connection with the FRG take private transaction as more fully described in Note 2(h) to the accompanying condensed consolidated financial statements and there was no expense during the nine months ended September 30, 2024 as compared to the prior year when the expense totaled $12.9 million.

in addition, a decrease in the invested balance in value during such reporting period would result in the reporting of a credit to selling, general and administrative expense.

During the six months ended June 30, 2023, the Company recorded an advisory fee of $10.0 million in accordance with the advisory agreement due to the realized and unrealized gains earned.

During the nine months ended September 30, 2023, the Company recorded an advisory fee of $12.9 million in accordance with the advisory agreement due to the realized and unrealized gains earned.

Wealth Management

Selling, general and administrative expenses in the Wealth Management segment increased by $1.9 million to $99.3 million during the six months ended June 30, 2024 from $97.5 million during the six months ended June 30, 2023.

The increase was primarily due to an increase of $3.6 million in payroll and related expenses, partially offset by a decrease of $1.7 million in other expenses.

Auction and Liquidation

Selling, general and administrative expenses in the Auction and Liquidation segment decreased $1.2 million to $3.4 million during the six months ended June 30, 2024 from $4.6 million during the six months ended June 30, 2023.

The decrease was primarily due to decreases of $1.0 million in foreign currency fluctuation and $0.2 million in other expenses.

Selling, general and administrative expenses in the Wealth Management segment increased by $2.2 million to $148.6 million during the nine months ended September 30, 2024 from $146.4 million during the nine months ended September 30, 2023.

The increase was primarily due to increases of $4.0 million in payroll and related expenses and $1.4 million in legal settlements, partially offset by decreases of $2.5 million in other expenses and $0.7 million in software and equipment expenses.

Financial Consulting

Selling, general and administrative expenses in the Financial Consulting segment increased by $13.5 million to $57.6 million during the six months ended June 30, 2024 from $44.1 million during the six months ended June 30, 2023.

The increase was primarily due to increases of $9.6 million in payroll and related expenses related to a business acquired in the third quarter of 2023, an increase in headcount, and an increase in variable compensation, $1.6 million in change in fair value of contingent consideration, $1.4 million in other expenses, and $0.8 million in travel and entertainment expenses.

Selling, general and administrative expenses in the Financial Consulting segment increased by $13.4 million to $56.6 million during the nine months ended September 30, 2024 from $43.2 million during the nine months ended September 30, 2023.

The increase was primarily due to increases of $9.6 million in payroll and related expenses related to a business acquired in the third quarter of 2023, an increase in headcount, and an increase in variable compensation, $1.4 million in change in fair value of contingent consideration, $0.9 million in legal settlements, $0.7 million in travel and entertainment expenses, $0.5 million in outside contractor expenses and $0.3 million in other expenses.

Communications

Selling, general and administrative expenses in the Communications segment decreased $6.5 million to $49.4 million for the six months ended June 30, 2024 from $55.8 million for the six months ended June 30, 2023.

The decrease was primarily due to decreases of $5.3 million in payroll and related expenses due to lower headcount and $1.2 million in depreciation and amortization expenses.

Selling, general and administrative expenses in the Communications segment decreased $13.3 million to $70.9 million for the nine months ended September 30, 2024 from $84.2 million for the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $8.1 million in payroll and related expenses due to lower headcount, $3.0 million in depreciation and amortization expenses due to items being fully amortized, $1.6 million in regulatory taxes due to receiving credits, and $0.7 million in software and equipment.

Consumer Products

Selling, general and administrative expenses in the Consumer Products segment decreased $6.4 million to $34.6 million for the six months ended June 30, 2024 from $41.0 million during the six months ended June 30, 2023.

The decrease was primarily due to decreases of $2.2 million in professional fees, $1.4 million in payroll and related expenses due to reduced headcount, $1.3 million in depreciation and amortization expense due to items being fully amortized, $1.3 million in other expenses due to efforts to reduce costs, and $0.8 million in marketing costs, partially offset by an increase of $0.4 million in share based compensation due to a reversal of performance based shares compensation expense in the prior year.

Selling, general and administrative expenses in the Consumer Products segment decreased $8.3 million to $51.5 million for the nine months ended September 30, 2024 from $59.8 million during the nine months ended September 30, 2023.

The decrease was primarily due to decreases of $1.9 million in depreciation and amortization expense due to items being fully amortized, $1.8 million in other expenses due to efforts to reduce costs, $1.5 million in professional fees partially due to large legal expense in the prior year, $1.2 million in payroll and related expenses due to reduced headcount, $0.6 million in travel and entertainment expenses, and $0.6 million in marketing costs, partially offset by an increase of $0.5 million in share based compensation due to a reversal of performance based shares in the prior year.

Corporate and All Other

Selling, general and administrative expenses for Corporate and All Other increased approximately $25.4 million to $70.1 million during the six months ended June 30, 2024 from $44.7 million for the six months ended June 30, 2023.

The increase was primarily due to increases of $19.3 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $6.0 million from Nogin which was acquired in the second quarter of 2024, $5.9 million in legal expenses, $4.3 million in accounting expenses, and $2.3 million in transaction expenses related to the

Nogin acquisition, partially offset by decreases of $9.5 million in payroll and related expenses which primarily related to decreases in share based compensation and other variable compensation and $2.8 million in foreign currency fluctuation.

Selling, general and administrative expenses for Corporate and All Other increased approximately $45.3 million to $114.1 million during the nine months ended September 30, 2024 from $68.8 million for the nine months ended September 30, 2023.

The increase was primarily due to increases of $28.6 million from bebe in which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $15.1 million from Nogin which was acquired in the second quarter of 2024, $9.0 million in legal expenses, $5.9 million in accounting expenses, $4.6 million from the regional environmental services business, $2.0 million in legal settlements, and $1.3 million in transaction costs, partially offset by decreases of $17.1 million in payroll and related expenses, which primarily related to decreases in share based compensation and other variable compensation, $2.0 million related to the landscaping business that was sold in 2023, $1.5 million in outside contractor expenses, and $0.4 million in other expenses.

Impairment of goodwill and tradenames.

We recognized impairment charges of $27.7 million during the six months ended June 30, 2024.

We performed an interim impairment test as of June 30, 2024, as further discussed in Note 8 of the condensed consolidated financial statements.

We recognized impairment charges of $27.7 million during the nine months ended September 30, 2024.

We performed an interim impairment test as of June 30, 2024, as further discussed in Note 9 of the accompanying condensed consolidated financial statements.

Based on the results of the impairment test, we recorded a non-cash impairment charge of $26.7 million related to goodwill and $1.0 million related to tradenames in the Consumer Products segment.

We recognized impairment charges of $1.7 million during the six months ended June 30, 2023 related to tradenames in the Capital Markets segment.

We recognized impairment charges of $37.2 million during the nine months ended September 30, 2023 consisting of $8.0 million in impairment of indefinite-lived tradenames and $27.5 million of impairment of goodwill in the Consumer segment and $1.7 million in impairment of tradenames in the Capital Markets segment.

Other Income (Expense).

Other income included interest income of $1.5 million and $3.3 million during the six months ended June 30, 2024 and 2023, respectively.

Dividend income was $21.0 million during the six months ended June 30, 2024 compared to $22.8 million during the six months ended June 30, 2023.

Realized and unrealized losses on investments was a loss of $185.2 million during the six months ended June 30, 2024 compared to a loss of $9.6 million during the six months ended June 30, 2023.

The change was primarily due to a decrease in the valuation of our investment in Freedom VCM of $223.4 million.

Change in fair value of financial instruments and other was a gain of $0.2 million during the six months ended June 30, 2024 and a gain of $0.2 million during the six months ended June 30, 2023.

Interest expense was $87.6 million during the six months ended June 30, 2024 compared to $94.9 million during the six months ended June 30, 2023.

The decrease in interest expense was due to lower debt balances during the six months ended June 30, 2024.

The decreases in interest expense primarily consisted of $12.3 million from the Pathlight term loan, $5.6 million from the issuance of senior notes, $2.5 million from the Nomura revolving credit facility, $0.2 million and $1.1 million from the Targus term loan and revolver, respectively, and $0.8 million from the BRPAC term loan, partially offset by increases in interest expense of $14.7 million from the Nomura term loan, $1.4 million from the bebe term loan, and $0.3 million from the Nogin secured convertible promissory note.

(Loss) Income Before Income Taxes .

Loss before income taxes was $473.8 million during the six months ended June 30, 2024 compared to income before income taxes of $89.8 million during the six months ended June 30, 2023.

The change was due to a decrease in revenue of $347.0 million, a change in realized and unrealized losses on investments of $175.6 million, an increase in operating expenses of $44.6 million, a decrease of $1.8 million in interest income, and a decrease of $1.7 million in dividend income, partially offset by a decrease in interest expense of $7.3 million.

Other income included interest income of $2.9 million and $3.5 million during the nine months ended September 30, 2024 and 2023, respectively.

Dividend income was $4.1 million during the nine months ended September 30, 2024 compared to $9.5 million during the nine months ended September 30, 2023.

Realized and unrealized losses on investments was a loss of $212.4 million during the nine months ended September 30, 2024 compared to a loss of $77.0 million during the nine months ended September 30, 2023.

The change was primarily due to a decrease in the valuation of our investment in Freedom VCM Holdings, LLC of $221.0 million, partially offset by increases of $35.3 million in Babcock & Wilcox Enterprises, Inc., $34.9 million in Double Down Interactive Co., Ltd and $21.3 million in The Arena Group, Inc.

Change in fair value of financial instruments and other was a gain of $0.6 million during the nine months ended September 30, 2024 and a loss of $4.0 million during the nine months ended September 30, 2023.

Interest expense was $102.2 million during the nine months ended September 30, 2024 compared to $118.6 million during the nine months ended September 30, 2023.

The decrease in interest expense was due to lower debt balances during the nine months ended September 30, 2024.

The decreases in interest expense primarily consisted of $14.4 million from the Pathlight term loan, $8.1 million from the issuance of senior notes, $7.5 million from the Nomura term loan, $4.0 million from the Nomura revolving credit facility, $0.4 million and $1.7 million from the Targus term loan and revolver, respectively, and $1.2 million from the BRPAC term loan, partially offset by increases in interest expense of $2.1 million from the bebe term loan, and $0.6 million from the Nogin secured convertible promissory note.

Loss from Continuing Operations Before Income Taxes .

Loss from continuing operations before income taxes was $627.6 million during the nine months ended September 30, 2024 compared to loss before income taxes of $45.5 million during the nine months ended September 30, 2023.

The change was due to a decrease in revenue of $514.7 million, a change in realized and unrealized losses on investments of $135.3 million, a decrease in operating expenses of $52.6 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a decrease in interest expense of $16.4 million.

Provision for Income Taxes.

Provision for income taxes was $7.9 million during the six months ended June 30, 2024 compared to a provision for income taxes of $29.4 million during the six months ended June 30, 2023.

The effective income tax rate was 1.7% for the six months ended June 30, 2024 as compared to 32.8% for the six months ended June 30, 2023.

Net Income (Loss) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests.

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests represents the proportionate share of net (loss) income generated by membership interests of partnerships that we do not own.

The net income attributable to noncontrolling interests was $1.0 million during the six months ended June 30, 2024 compared to net loss of $3.2 million during the six months ended June 30, 2023.

Net (Loss) Income Attributable to the Company .

Net loss attributable to the Company was $482.8 million during the six months ended June 30, 2024 compared to net income attributable to the Company of $63.5 million for the six months ended June 30, 2023.

The decrease was due to a change in operating (loss) income of $391.6 million, a decrease in realized and unrealized losses on investments of $175.6 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $4.2 million, a decrease of $1.8 million in interest income, and a decrease of $1.7 million in dividend income, partially offset by a change in provision for income taxes of $21.5 million and a decrease in interest expense of $7.3 million.

Provision for income taxes was $17.9 million during the nine months ended September 30, 2024 compared to a provision for income taxes of $3.0 million during the nine months ended September 30, 2023.

The effective income tax rate was 2.9% for the nine months ended September 30, 2024 as compared to 6.7% for the nine months ended September 30, 2023.

Loss from Continuing Operations.

Loss from continuing operations was $645.5 million during the nine months ended September 30, 2024 compared to loss of $48.5 million during the nine months ended September 30, 2023.

The change was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

(Loss) Income from Discontinued Operations, Net of Income Taxes.

On October 25, 2024, we and our subsidiary bebe stores, inc.

(“bebe”) have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds.

The results have been presented as discontinued operations for the nine months ended September 30, 2024.

Loss from discontinued operations, net of tax for Brands Transaction was $112.6 million during the nine months ended September 30, 2024 compared to income from discontinued operations of $21.7 million during the nine months ended September 30, 2023.

On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the three months ended September 30, 2024.

Loss from discontinued operations, net of tax for Great American Group was $11.2 million for the nine months ended September 30, 2023, compared to income from discontinued operations of $10.8 million during the nine months ended September 30, 2023.

Refer to Note 4 to the accompanying condensed consolidated financial statements for additional information.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests.

The net loss attributable to noncontrolling interests was $2.2 million during the nine months ended September 30, 2024 compared to net loss of $5.7 million during the nine months ended September 30, 2023.

Net Loss Attributable to the Company .

Net loss attributable to the Company was $767.2 million during the nine months ended September 30, 2024 compared to net loss attributable to the Company of $10.3 million for the nine months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $3.5 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

Preferred Stock Dividends .

Preferred stock dividends were $4.0 million for the six months ended June 30, 2024 and 2023.

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

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

Net (Loss) Income Available to Common Shareholders .

Net loss available to common shareholders was $486.8 million during the six months ended June 30, 2024 compared to net income available to common shareholders $59.5 million during the six months ended June 30, 2023.

The decrease was due to a change in operating (loss) income of $391.6

million, a decrease in realized and unrealized losses on investments of $175.6 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $4.2 million, a decrease of $1.8 million in interest income, and a decrease of $1.7 million in dividend income, partially offset by a change in provision for income taxes of $21.5 million and a decrease in interest expense of $7.3 million.

Preferred stock dividends were $6.0 million for the nine months ended September 30, 2024 and 2023.

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

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

Net Loss Available to Common Shareholders .

Net loss available to common shareholders was $773.2 million during the nine months ended September 30, 2024 compared to net loss available to common shareholders $16.3 million during the nine months ended September 30, 2023.

The decrease was due to a change in operating (loss) income of $462.1 million, a decrease in realized and unrealized losses on investments of $135.3 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $3.5 million, a decrease of $0.5 million in interest income, and a decrease of $5.4 million in dividend income, partially offset by a change in provision for income taxes of $14.9 million and a decrease in interest expense of $16.4 million.

Liquidity and Capital Resources

Our operations are funded through a combination of existing cash on hand, cash generated from operations, borrowings under our senior notes payable, term loans and credit facilities, and special purposes financing arrangements.

During the six months ended June 30, 2024 and 2023, we generated net loss of $481.7 million and net income of $60.3 million, respectively.

The Company operates a number of businesses in its segments that provide steady cash flows and operating income throughout the year, however, our cash flows and profitability are impacted by capital market engagements and retail liquidation engagements performed on a quarterly and annual basis, which may be episodic in nature, and amounts realized from the sale of our investments in marketable securities.

As of June 30, 2024, we had $236.9 million of unrestricted cash and cash equivalents, $1.7 million of restricted cash, $664.1 million of securities and other investments, at fair value, $229.2 million of loans receivable, at fair value, and $2,159.8 million of borrowings outstanding.

The borrowings outstanding of $2,159.8 million as of June 30, 2024 included $1,528.6 million from the issuance of series of senior notes that are due at various dates ranging from February 28, 2025 to August 31, 2028 with interest rates ranging from 5.00% to 6.50%, $581.4 million in term loans borrowed pursuant to the Tiger US Holdings Inc.

During the nine months ended September 30, 2024 and 2023, we generated net losses of $645.5 million and $48.5 million, respectively.

As of September 30, 2024, we had $159.2 million of unrestricted cash and cash equivalents, $1.4 million of restricted cash, $341.8 million of securities and other investments owned, at fair value, $151.7 million of loans receivable, at fair value, and $2,067.8 million of borrowings outstanding.

The borrowings outstanding of $2,067.8 million as of September 30, 2024 included $1,529.6 million from the issuance of series of senior notes that are due at various dates ranging from February 28, 2025 to August 31, 2028 with interest rates ranging from 5.00% to 6.50%, $490.7 million in term loans borrowed pursuant to the Tiger US Holdings Inc.

(“Targus”), Lingo Management, LLC (“Lingo Management”), BRPI Acquisition Co LLC (“BRPAC”), Nomura Corporate Fundings Americas, LLC (“Nomura”), and bebe credit agreements discussed below, $13.7 million of revolving credit facility under the Targus credit facility discussed below, and $29.9 million of notes payable.

We believe that our current cash and cash equivalents, securities and other investments owned, funds available under our asset based credit facility, funds available under the Targus and Nomura revolving 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.

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 $203.0 million referred to as the Great American Transaction above.

In connection with such transaction, the Company used proceeds to further reduce the outstanding balance on the Nomura credit facility from $216.6 million to $125.0 million.

The Company has $145.3 million of 6.375% Senior Notes due on February 28, 2025 that mature and will use cash on hand to repay these senior notes.

We believe that our current cash and cash equivalents, securities and other investments owned, funds available under our asset based credit facility and funds available under the Targus revolving credit facility 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.

The Company also has $217.4 million of the $1,529.6 million of Senior Notes outstanding at September 30, 2024 that are due to mature on March 31, 2026.

The Company is considering a number of additional strategic alternatives to satisfy this obligation;

which among other things, includes:

existing cash on hand;

the sale of a portion of the Company’s traditional (W-2) Wealth Management business (as more further discussed above);

the sale of non-core businesses;

and the sale or refinancing of other assets and investments.

There can be no assurance that these contemplated transactions will occur and in the event these transactions are not completed it could have a material impact on the Company’s financial condition.

Due to the fact that we are no longer a well-known seasoned issued and no longer eligible to file a short form registration statement with the SEC, accessing the capital markets could take longer and cost more than would otherwise be the case.

1 unchanged sentence

From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations.

During the six months ended June 30, 2024, we paid cash dividends on our common stock of $33.6 million.

During the nine months ended September 30, 2024, we paid cash dividends on our common stock of $33.6 million.

During the year ended December 31, 2023, we paid cash dividends on our common stock of $141.1 million.

1 unchanged sentence

The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors.

A summary of common stock dividend activity for the six months ended June 30, 2024 and the year ended December 31, 2023 was as follows:

A summary of common stock dividend activity for the nine months ended September 30, 2024 and the year ended December 31, 2023 was as follows:

Date Declared Date Paid Stockholder Record Date Amount

7 unchanged sentences

Dividends are payable quarterly in arrears, on or about the last day of January, April, July, and October.

As of June 30, 2024, dividends in arrears in respect of

the Depositary Shares were $0.8 million.

On July 9, 2024, the Company declared a cash dividend of $0.4296875 per Depositary Share, which was paid on July 31, 2024 to holders of record as of the close of business on July 22, 2024.

As of September 30, 2024, dividends in arrears in respect of the Depositary Shares were $0.8 million.

On October 16, 2024, the Company declared a cash dividend of $0.4296875 per Depositary Share, which was paid on October 31, 2024 to holders of record as of the close of business on October 28, 2024.

On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A Preferred Stock.

Unpaid dividends will accrue until paid in full.

Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share).

Dividends are payable quarterly in arrears, on or about the last day of January, April, July, and October.

As of June 30, 2024, dividends in arrears in respect of the Depositary Shares were $0.5 million.

On July 9, 2024, the Company declared a cash dividend of $0.4609375 per Depositary Share, which was paid on July 31, 2024 to holders of record as of the close of business on July 22, 2024.

As of September 30, 2024, dividends in arrears in respect of the Depositary Shares were $0.5 million.

On October 16, 2024, the Company declared a cash dividend of $0.4609375 per Depositary Share, which was paid on October 31, 2024 to holders of record as of the close of business on October 28, 2024.

A summary of preferred stock dividend activity for the six months ended June 30, 2024 and the year ended December 31, 2023 was as follows:

On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series B Preferred Stock.

Unpaid dividends will accrue until paid in full.

A summary of preferred stock dividend activity for the nine months ended September 30, 2024 and the year ended December 31, 2023 was as follows:

Stockholder Preferred Dividend per Depositary Share

Date Declared Date Paid Record Date Series A Series B

July 9, 2024 July 31, 2024 July 22, 2024 $ 0.4296875 $ 0.4609375

April 9, 2024 April 30, 2024 April 22, 2024 0.4296875 0.4609375

6 unchanged sentences

Cash Flow Summary

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

4 unchanged sentences

Effect of foreign currency on cash (1,092) (3,116)

Net increase (decrease) in cash, cash equivalents and restricted cash

$ 4,784 $ (161,024)

Cash provided by operating activities was $246.8 million during the six months ended June 30, 2024 compared to cash provided by operating activities of $77.1 million during the six months ended June 30, 2023.

Cash provided by operating activities for the six months ended June 30, 2024 consisted of the impact of net loss of $481.7 million, noncash items of $263.4 million, and changes in operating assets and liabilities of $465.2 million.

The positive cash flow impact from noncash items of $263.4 million included fair value adjustments of $189.5 million, impairment of goodwill and tradenames of $27.7 million, depreciation and amortization of $22.9 million, share-based compensation of $14.9 million, depreciation of rental merchandise of $8.2 million, deferred income taxes of $1.4 million, provision for credit losses of $1.2 million, income allocated for mandatorily redeemable noncontrolling interests of $0.8 million, effect of foreign currency of $0.3 million, partially offset by non-cash interest and other of $3.3 million, and gain on sale of business and other of $0.2 million.

Cash provided by operating activities for the six months ended June 30, 2023 consisted of the impact of net income of $60.3 million, noncash items of $12.5 million, and changes in operating assets and liabilities of $4.2 million.

The positive cash flow impact from noncash items of $12.5 million included depreciation and amortization of $25.6 million, share-based compensation of $24.2 million, deferred income taxes of $18.5 million, provision for credit losses of $3.8 million, impairment of intangibles, loss on disposal of fixed assets and other of $1.7 million, income allocated for mandatorily redeemable noncontrolling interests of $0.8 million, and dividends from equity investments of $0.1 million, partially offset by fair value adjustments of $56.6 million and noncash interest and other of $5.1 million, effect of foreign currency of $0.2 million, and income from equity investments of $0.1 million.

Cash provided by investing activities was $6.7 million during the six months ended June 30, 2024 compared to cash provided by investing activities of $216.3 million for the six months ended June 30, 2023.

During the six months ended June 30, 2024, cash provided by investing activities consisted of cash provided by loans receivable repayment of $72.4 million, and sale of loans receivable of $22.8 million, partially offset by cash used in purchases of loans receivable of $63.2 million, acquisition of businesses and minority interest, net of cash acquired of $19.1 million, purchases of property and equipment of $5.4 million, purchases of equity and other investments of $0.5 million, and sale of business, net of cash sold and other of $0.1 million.

During the six months ended June 30, 2023, cash provided by investing activities consisted of cash received from loans receivable repayment of $413.4 million, funds received from trust account of subsidiary of $175.8 million, sale of loan receivable of $7.5 million, and sale of business, net of cash sold and other of $1.5 million, partially offset by cash used for purchases of loans receivable of $360.0 million, acquisition of businesses and minority interest of $12.3 million, purchases of equity and other investments of $4.9 million, and purchases of property and equipment of $4.8 million.

Cash used in financing activities was $243.5 million during the six months ended June 30, 2024 compared to cash used in financing activities of $456.8 million during the six months ended June 30, 2023.

During the six months ended June 30, 2024, cash used in financing activities primarily consisted of $140.5 million used to redeem senior notes, $64.3 million used in payment of revolving lines of credit, $45.6 million used in the repayment of term loan, $33.6 million used to pay dividends on our common shares, $5.7 million used to repay our notes payable and other, $4.0 million used to pay dividends on our preferred shares, $3.2 million in distributions to noncontrolling interests, $3.1 million used in payment of employment taxes on vesting of restricted stock, $1.4 million used to pay contingent consideration, and $1.0 million used to pay debt issuance and offering costs, partially offset by cash provided by $40.3 million in proceeds from revolving line of credit, $15.0 million in proceeds from notes payable, $3.0 million in contributions from noncontrolling interests, and $0.7 million in proceeds from exercise of warrants.

During the six months ended June 30, 2023, cash used in financing activities primarily consisted of $175.8 million used in redemption of subsidiary temporary equity and distributions, $172.8 million used in the repayment of term loan, $80.3 million used to pay dividends on our common shares, $78.8 million used in repayment of revolving line of credit, $58.9 million used to redeem senior notes, $53.8 million used to repurchase our common shares, $11.7 million used to repay our notes payable, $8.3 million used in payment of employment taxes on vesting of restricted stock, $4.0 million used to pay dividends on our preferred shares, $3.2 million used in the payment of debt issuance and offering costs, $2.5 million in distributions to noncontrolling interests, and $1.3 million used in the payment of contingent consideration, partially offset by cash provided by $128.2 million in proceeds from term loans, $62.0 million in proceeds from revolving line of credit, $4.0 million in contributions from noncontrolling interests, and $0.5 million in proceeds from issuance of preferred stock.

Net decrease in cash, cash equivalents and restricted cash $ (63,991) $ (16,578)

Cash provided by operating activities was $266.3 million during the nine months ended September 30, 2024 compared to cash used in operating activities of $41.0 million during the nine months ended September 30, 2023.

Cash provided by operating activities for the nine months ended September 30, 2024 consisted of the impact of net loss of $769.3 million, noncash items of $394.9 million, and changes in operating assets and liabilities of $640.7 million.

The positive cash flow impact from noncash items of $394.9 million included fair value adjustments of $261.4 million, loss on disposal of discontinued operations of $39.5 million , depreciation and amortization of $34.1 million, impairment of goodwill and tradenames of $27.7 million, deferred income taxes of $20.5 million, share-based compensation of $17.6 million, depreciation of rental merchandise of $11.7 million, provision for credit losses of $2.5 million, income allocated for mandatorily redeemable noncontrolling interests of $1.4 million, effect of foreign currency of $0.3 million, partially offset by non-cash interest and other of $26.3 million, and gain on sale of business, disposal of fixed assets, and other of $0.7 million.

Cash used in operating activities for the nine months ended September 30, 2023 consisted of the impact of net loss of $16.0 million, noncash items of $40.9 million, and changes in operating assets and liabilities of $65.9 million.

The positive cash flow impact from noncash items of $40.9 million included depreciation and amortization of $38.1 million, share-based compensation of $35.3 million, provision for credit losses of $5.9 million, impairment of goodwill and tradenames of $37.2 million, loss on extinguishment of debt of $5.3 million , income allocated for mandatorily redeemable noncontrolling interests of $1.3 million, effect of foreign currency of $0.7 million, income from equity investments of $0.2 million and dividends from equity investments of $0.2 million, partially offset by fair value adjustments of $42.8 million, deferred income taxes of $21.4 million, gain on sale of businesses, disposal of fixed assets, and other of $9.6 million, and noncash interest and other of $9.4 million.

Cash provided by investing activities was $25.5 million during the nine months ended September 30, 2024 compared to cash provided by investing activities of $313.0 million for the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, cash provided by investing activities consisted of cash provided by loans receivable

repayment of $105.3 million, sale of loans receivable of $22.8 million, and proceeds from sale of loan participations of $4.0 million, partially offset by cash used in purchases of loans receivable of $79.9 million, acquisition of businesses and minority interest, net of cash acquired of $19.1 million, purchases of property and equipment of $6.7 million, purchases of equity and other investments of $1.1 million, and sale of business, net of cash sold and other of $0.3 million.

During the nine months ended September 30, 2023, cash provided by investing activities consisted of cash received from loans receivable repayment of $543.6 million, funds received from trust account of subsidiary of $175.8 million, proceeds from sale of business, net of cash sold and other of $17.3 million, and sale of loan receivable of $7.5 million, partially offset by cash used for purchases of loans receivable of $405.4 million, acquisition of businesses and minority interest of $15.3 million, purchases of equity and other investments of $4.9 million, and purchases of property and equipment of $5.8 million.

Cash used in financing activities was $354.7 million during the nine months ended September 30, 2024 compared to cash used in financing activities of $285.5 million during the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, cash used in financing activities primarily consisted of $140.5 million used to redeem senior notes, $94.2 million used in payment of revolving lines of credit, $138.6 million used in the repayment of term loan, $33.6 million used to pay dividends on our common shares, $6.2 million used to repay our notes payable and other, $6.0 million used to pay dividends on our preferred shares, $7.4 million used to pay contingent consideration, $4.6 million in distributions to noncontrolling interests, $3.5 million used to pay debt issuance and offering costs, and $3.1 million used in payment of ESPP and employment taxes on vesting of restricted stock, partially offset by cash provided by $64.1 million in proceeds from revolving line of credit, $15.0 million in proceeds from notes payable, $3.2 million in contributions from noncontrolling interests, and $0.7 million in proceeds from exercise of warrants.

During the nine months ended September 30, 2023, cash used in financing activities primarily consisted of $175.8 million used in redemption of subsidiary temporary equity and distributions, $504.2 million used in the repayment of term loan, $111.0 million used to pay dividends on our common shares, $261.7 million used in repayment of revolving line of credit, $58.9 million used to redeem senior notes, $53.7 million used to repurchase our common shares, $27.2 million used in the payment of debt issuance and offering costs, $11.9 million used to repay our notes payable and other, $8.6 million used in payment of ESPP and employment taxes on vesting of restricted stock, $6.0 million used to pay dividends on our preferred shares, $4.0 million in distributions to noncontrolling interests, and $1.9 million used in the payment of contingent consideration, partially offset by cash provided by $628.2 million in proceeds from term loans, $191.3 million in proceeds from revolving line of credit, $4.3 million in contributions from noncontrolling interests, and $0.5 million in proceeds from issuance of preferred stock.

Credit Agreements

9 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.

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.

Amendment No.

3 unchanged sentences

On June 27, 2024 we entered into Amendment No.

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

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

On August 14, 2024, we contributed $1.6 million 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.

5 unchanged sentences

4 to the Targus Credit Agreement, the Company repaid the outstanding balance of the term loan in full with $2.1 million of revolver loan advances and $7.5 million of cash from the Company.

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

The term loan bears interest on the outstanding principal amount equal to the Term Secured Overnight Financing Rate (“SOFR”) rate plus an applicable margin of 5.75%.

2 unchanged sentences

Quarterly installments from September 30, 2024 to December 31, 2025 are in the amount of $2.1 million per quarter and the remaining principal balance is due on March 31, 2026.

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $13.0 million (net of unamortized debt issuance costs of $0.3 million) and $17.8 million (net of unamortized debt issuance costs of $0.4 million), respectively, and the outstanding balance on the revolver loan was $19.8 million and $43.8 million, respectively.

Interest expense on these loans during the three and six months ended June 30, 2024 was $1.1 million (including amortization of deferred debt issuance costs of $0.2 million and unused commitment fees of $0.03 million) and $2.4 million (including amortization of deferred debt issuance costs of $0.4 million and unused commitment fees of $0.1 million), respectively.

Interest expense on these loans during the three and six months ended June 30, 2023 was $2.1 million (including amortization of deferred debt issuance costs of $0.2 million and unused commitment fees of $0.02 million) and $3.8 million (including amortization of deferred debt issuance costs of $0.3 million and unused commitment fees of $0.04 million), 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% to 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.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $11.5 million (net of unamortized debt issuance costs of $0.2 million) and $17.8 million (net of unamortized debt issuance costs of $0.4 million), respectively, and the outstanding balance on the revolver loan was $13.7 million and $43.8 million, respectively.

Interest expense on these loans during the three and nine months ended September 30, 2024 was $1.0 million (including amortization of deferred debt issuance costs of $0.2 million and unused commitment fees of $0.02 million) and $3.4 million (including amortization of deferred debt issuance costs of $0.6 million and unused commitment fees of $0.1 million), respectively.

Interest expense on these loans during the three and nine months ended September 30, 2023 was $1.8 million (including amortization of deferred debt issuance costs of $0.1 million and unused commitment fees of $0.02 million) and $5.5 million (including amortization of deferred debt issuance costs of $0.4 million and unused commitment fees of $0.06 million), respectively.

The interest rate on the term loan was 11.18% and 10.20% and the interest rate on the revolver loan ranged between 8.96% to 11.25% and between 8.45% to 11.25% as of September 30, 2024 and December 31, 2023, respectively.

The weighted average interest rate on the revolver loan was 9.04% and 8.53% as of September 30, 2024 and December 31, 2023, respectively.

Lingo Credit Agreement

4 unchanged sentences

On November 10, 2022, Lingo entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $20.5 million, increasing the principal balance of the term loan to $73.0 million.

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

applicable spread adjustment.

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

As of September 30, 2024 and December 31, 2023, the interest rate on the Lingo Credit Agreement was 8.59% 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 which totals approximately $230.1 million defined in the Lingo Credit Agreement.

2 unchanged sentences

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

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

We are in compliance with all financial covenants in the Lingo Credit Agreement as of June 30, 2024.

We received a series of extensions under our credit agreement with Banc of California, N.A.

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

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.

We are in compliance with all financial covenants in the Lingo Credit Agreement as of September 30, 2024.

Principal outstanding is due in quarterly installments.

The quarterly installments from September 30, 2024 to December 31, 2024 are in the amount of $2.7 million per quarter, quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $3.7 million, 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 $57.8 million (net of unamortized debt issuance costs of $0.6 million) and $63.2 million (net of unamortized debt issuance costs of $0.7 million), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2024 was $1.4 million (including amortization of deferred debt issuance costs of $0.1 million) and $2.9 million (including amortization of deferred debt issuance costs of $0.1 million), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2023 was $1.6 million (including amortization of deferred debt issuance costs of $0.1 million) and $3.2 million (including amortization of deferred debt issuance costs of $0.1 million), respectively.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $55.0 million (net of unamortized debt issuance costs of $0.6 million) and $63.2 million (net of unamortized debt issuance costs of $0.7 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2024 was $1.4 million (including amortization of deferred debt issuance costs of $0.1 million) and $4.3 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2023 was $1.6 million (including amortization of deferred debt issuance costs of $0.1 million) and $4.8 million (including amortization of deferred debt issuance costs of $0.2 million), 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.

1 unchanged sentence

bebe Credit Agreement

As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $25.0 million -year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt.

As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $25.0 million five-year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt.

The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 5.50% to 6.00% per annum, depending on the total fixed charge coverage ratio as defined in the bebe Credit Agreement.

As of June 30, 2024 and December 31, 2023, the interest rate on the bebe Credit Agreement was 11.11% and 11.14%, respectively.

As of September 30, 2024 and December 31, 2023, the interest rate on the bebe Credit Agreement was 10.78% 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 $110.9 million.

2 unchanged sentences

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.

We are in compliance with all financial covenants in the bebe Credit Agreement as of June 30, 2024.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $21.7 million (net of unamortized debt issuance costs of $0.5 million) and $22.5 million (net of unamortized debt issuance costs of $0.6 million), respectively.

Interest expense on the term loan during the three and nine months ended September 30, 2024 was $0.7 million (including amortization of deferred debt issuance costs of $0.1 million) and $2.1 million (including amortization of deferred debt issuance costs of $0.2 million), respectively.

Principal outstanding is due in quarterly installments through June 30, 2026 in the amount of $0.3 million per quarter and the remaining principal balance of $20.0 million is due at final maturity on August 24, 2026.

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $22.0 million (net of unamortized debt issuance costs of $0.5 million) and $22.5 million (net of unamortized debt issuance costs of $0.6 million), respectively.

Interest expense on the term loan during the three and six months ended June 30, 2024 was $0.7

million (including amortization of deferred debt issuance costs of $0.1 million) and $1.4 million (including amortization of deferred debt issuance costs of $0.1 million), respectively.

On October 25, 2024, upon the closing of the Brands Transaction as described in Note 21 – Subsequent Events proceeds of $22.2 million was used to pay off the then outstanding balance of the loan in full and $0.2 million of loan payoff expenses.

On October 25, 2024, upon the closing of the Brands Transaction as described in Note 4 – Discontinued Operations of the accompanying condensed consolidated financial statements, proceeds of $22.2 million was used to pay off the then outstanding balance of the loan in full and $0.2 million of loan payoff expenses.

Nomura Credit Agreement

We and our wholly owned subsidiaries, BR Financial Holdings, LLC, and BR Advisory & Investments, LLC had entered into a credit agreement dated June 23, 2021 (as amended, the “Prior Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year $300.0 million secured term loan credit facility (the “Prior Term Loan Facility”) and a four-year $80.0 million secured revolving loan credit facility (the “Prior Revolving Credit Facility”) with a maturity date of June 23, 2025.

On August 21, 2023, we and our wholly owned subsidiary, BR Financial Holdings, LLC (the “Borrower”), and certain direct and indirect subsidiaries of the Borrower (the “Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $500.0 million secured term loan credit facility (the “New Term Loan Facility”) and a four-year $100.0 million secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”).

On August 21, 2023, we and our wholly owned subsidiary, BR Financial Holdings, LLC (the “Borrower”), and certain direct and indirect subsidiaries of the Borrower (the “Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $500.0 million secured term loan credit facility (the “New Term Loan Facility”) and a four-year $100.0 million secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”).

The purpose of the Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Term Loan Facility and Prior Revolving Credit Facility with an aggregate outstanding balance of $347.9 million, which included $342.0 million in principal and $5.9 million in interest and fees, (iii) fund a dividend reserve in an amount not less than $65.0 million, (iv) pay related fees and expenses, and (v) for general corporate purposes.

3 unchanged sentences

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 $190.7 million (which is included in the total loans receivable, at fair value balance of $229.2 million reported in our condensed consolidated balance sheet at June 30, 2024) and $375.8 million (which is included in the total loans receivable, at fair value balance of $532.4 million reported in our condensed consolidated balance sheet at December 31, 2023) and investments in the amount of $680.1 million (which is included in the total securities and other investments owned, at fair value of $664.1 million reported in our condensed consolidated balance sheet at June 30, 2024) and $786.7 million (which is included in the total securities and other investments owned, at fair value of $1,092.1 million reported in our condensed consolidated balance sheet at December 31, 2023) as of June 30, 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 $209.9 million (which is included in the total loans receivable, at fair value balance of $151.7 million reported in our condensed consolidated balance sheet at September 30, 2024) and $375.8 million (which is included in the total loans receivable, at fair value balance of $532.4 million reported in our condensed consolidated balance sheet at December 31, 2023) and investments in the amount of $706.7 million (which is included in the total securities and other investments owned, at fair value of $341.8 million reported in our condensed consolidated balance sheet at September 30, 2024) and $786.7 million (which is included in the total securities and other investments owned, at fair value of $809.0 million reported in our condensed consolidated balance sheet at December 31, 2023) as of September 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.We are in compliance with all financial covenants in the Credit Agreement as of June 30, 2024.

We are in compliance with all financial covenants in the Credit Agreement as of September 30, 2024.

On September 17, 2024, we entered into Amendment No.

3 unchanged sentences

After giving effect to these amounts, the outstanding principal balance on the term loan was reduced from $469.8 million to $388.1 million.

In connection with the Fourth Amendment, the revolving credit facility in the amount of $100.0 million which had no balance outstanding at September 17, 2024 was terminated and

we are required to reduce the principal amount of the term loan to be no greater than $100.0 million 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.

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;

2 unchanged sentences

As of June 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $452.5 million (net of unamortized debt issuance costs of $17.2 million) and $475.1 million (net of unamortized debt issuance costs of $18.7 million), respectively.

Interest on the term loan during the three months ended June 30, 2024 and 2023 was $14.6 million (including amortization of deferred debt issuance costs of $1.1 million) and $7.6 million (including amortization of deferred debt issuance costs of $0.5 million), respectively, and during the six months ended June 30, 2024 and 2023 was $29.6 million (including amortization of deferred debt issuance costs of $2.2 million) and $14.9 million (including amortization of deferred debt issuance costs of $1.1 million), respectively.

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

We 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 $0.5 million (including unused commitment fees of $0.2 million and amortization of deferred financing costs of $0.3 million) and $1.5 million (including unused commitment fees of $0.03 million and amortization of deferred financing costs of $0.2 million), respectively, and during the six months ended June 30, 2024 and 2023 was $1.0 million (including unused commitment fees of $0.5 million and amortization of deferred financing costs of $0.5 million) and $3.5 million (including unused commitment fees of $0.03 million and amortization of deferred financing costs of $0.3 million), respectively.

The interest rate on the Revolving Credit Facility as of June 30, 2024 and December 31, 2023 was 11.37%.

Wells Fargo Credit Agreement

We are party to a credit agreement (as amended, the “Credit Agreement”) governing our asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) with a maximum borrowing limit of $200.0 million and a maturity date of April 20, 2027.

Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion.

The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts.

All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding.

The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract.

The interest rate for each revolving credit advance under the related credit agreement is, subject to certain terms and conditions, equal to the SOFR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.

The credit facility provides for success fees in the amount of 1.0% to 10.0% of the net profits, if any, earned on liquidation engagements that are financed under the credit facility as set forth in the related Credit Agreement.

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 $0.02 million during the three months ended June 30, 2024 and 2023, and $0.04 million 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 and December 31, 2023, there were no open letters of credit outstanding.

We are in compliance with all covenants in the asset based credit facility as of June 30, 2024.

We received a

series of extensions under our Wells Fargo Bank credit agreement with the most recent being dated September 27, 2024 to extend the required time to deliver our 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.

On January 3, 2025, we entered into Amendment No.

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

Sixth Amendment agreed to permit under certain conditions the contribution by BRPI of 100% of the equity interests in Lingo to BRPAC in connection with the entry into the BRPAC Credit Agreement.

There was no fee charged in connection with the Sixth Amendment.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $369.5 million (net of unamortized debt issuance costs of $18.8 million) and $475.1 million (net of unamortized debt issuance costs of $18.7 million), respectively.

Interest on the term loan during the three months ended September 30, 2024 and 2023 was $6.1 million (including amortization of deferred debt issuance costs of $1.4 million) and $11.3 million (including amortization of deferred debt issuance costs of $0.8 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $18.8 million (including amortization of deferred debt issuance costs of $3.6 million) and $26.1 million (including amortization of deferred debt issuance costs of $1.8 million), respectively.

The interest rate on the term loan as of September 30, 2024 and December 31, 2023 was 12.13% and 11.37%, respectively.

We had an outstanding balance of zero under the revolving facility as of September 30, 2024 and December 31, 2023.

Interest on the revolving facility during the three months ended September 30, 2024 and 2023 was $0.4 million (including unused commitment fees of $0.2 million and amortization of deferred financing costs of $0.2 million) and $1.9 million (including unused commitment fees of $0.05 million and amortization of deferred financing costs of $0.2 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $1.4 million (including unused commitment fees of $0.7 million and amortization of deferred financing costs of $0.7 million) and $5.4 million (including unused commitment fees of $0.08 million and amortization of deferred financing costs of $0.5 million), respectively.

The interest rate on the Revolving Credit Facility as of September 30, 2024 and December 31, 2023 was 11.37%.

BRPAC Credit Agreement

14 unchanged sentences

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

We are in compliance with all financial covenants in the BRPAC Credit Agreement as of June 30, 2024.

We received a series of extensions under our credit agreement with Banc of California, N.A.

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

We are in compliance with all financial covenants in the BRPAC Credit Agreement as of September 30, 2024.

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

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

As of September 30, 2024 and December 31, 2023, the interest rate on the BRPAC Credit Agreement was 8.10% and 8.46%, respectively.

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

The quarterly installments from September 30, 2024 to December 31, 2026 are in the amount of $3.2 million per quarter, the quarterly installment on March 31, 2027 is in the amount of $2.4 million, 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 $36.0 million (net of unamortized debt issuance costs of $0.4 million) and $46.6 million (net of unamortized debt issuance costs of $0.4 million), respectively.

Interest expense on the term loan during the three months ended June 30, 2024 and 2023 was $0.9 million (including amortization of deferred debt issuance costs of $0.1 million) and $1.3 million (including amortization of deferred debt issuance costs of $0.1 million), respectively, and during the six months ended June 30, 2024 and 2023 was $2.0 million (including amortization of deferred debt issuance costs of $0.1 million) and $2.8 million (including amortization of deferred debt issuance costs of $0.1 million), respectively.

As of September 30, 2024 and December 31, 2023, the outstanding balance on the term loan was $32.9 million (net of unamortized debt issuance costs of $0.4 million) and $46.6 million (net of unamortized debt issuance costs of $0.4 million), respectively.

Interest expense on the term loan during the three months ended September 30, 2024 and 2023 was $0.8 million (including amortization of deferred debt issuance costs of $0.1 million) and $1.2 million (including amortization of deferred debt issuance costs of $0.1 million), respectively, and during the nine months ended September 30, 2024 and 2023 was $2.8 million (including amortization of deferred debt issuance costs of $0.2 million) and $4.0 million (including amortization of deferred debt issuance costs of $0.2 million), 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.

17 unchanged sentences

Senior Note Offerings

During the three months ended June 30, 2024 and 2023, we issued zero and $0.2 million, and during the six months ended June 30, 2024 and 2023 we issued zero and $0.2 million, respectively, of senior notes.

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

During the nine months ended September 30, 2024, we did not issue any new senior notes.

During the nine months ended September 30, 2023, we issued $0.2 million of senior notes.

The maturity dates of outstanding senior notes ranged from February 2025 to August 2028.

On February 28, 2025, the maturity date of all of the 6.375% Senior Notes due February 28, 2025 are due and payable which includes $145.3 million of principal amount that will be funded from cash and cash equivalents on hand.

All of the senior notes have been issued pursuant to At the Market Issuance Sales Agreements with B.

Riley Securities, Inc.

6 unchanged sentences

On February 29, 2024, we redeemed $115.5 million aggregate principal amount of our 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 100.00% of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date.

The redemption price was equal to 100.00% of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date.

The total redemption payment included approximately $0.6 million in accrued interest.

3 unchanged sentences

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, the total senior notes outstanding was $1,528.6 million (net of unamortized debt issue costs of $11.0 million) and $1,668.0 million (net of unamortized debt issue costs of $13.1 million), respectively, with a weighted average interest rate of 5.62% and 5.71%, respectively.

As of September 30, 2024 and December 31, 2023, the total senior notes outstanding was $1,529.7 million (net of unamortized debt issue costs of $10.0 million) and $1,668.0 million (net of unamortized debt issue costs of $13.1 million), respectively, with a weighted average interest rate of 5.62% and 5.71%, respectively.

The Company has $145.3 million of Senior Notes that are due to mature on February 28, 2025, $722.7 million due to mature in 2026, and $671.5 million due to mature in 2028.

Interest on senior notes is payable on a quarterly basis.

Interest expense on senior notes totaled $23.0 million and $26.8 million during the three months ended June 30, 2024 and 2023, respectively and $47.4 million and $53.0 million during the six months ended June 30, 2024 and 2023, respectively.

Interest expense on senior notes totaled $22.6 million and $25.1 million during the three months ended September 30, 2024 and 2023, respectively and $70.0 million and $78.1 million during the nine months ended September 30, 2024 and 2023, respectively.

Other Notes Payable

As of June 30, 2024 and December 31, 2023, the outstanding balance for the other notes payable was $30.0 million and $19.4 million, respectively.

As of September 30, 2024 and December 31, 2023, the outstanding balance for the other notes payable was $29.9 million and $19.4 million, 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 $15.0 million 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 $0.4 million and $0.1 million during the three months ended June 30, 2024 and 2023, respectively, and $0.5 million and $0.3 million during the six months ended June 30, 2024 and 2023, respectively.

Interest expense was $0.5 million and $0.1 million during the three months ended September 30, 2024 and 2023, respectively, and $1.1 million and $0.5 million during the nine months ended September 30, 2024 and 2023, respectively.

Recent Accounting Standards

1 unchanged sentence

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 2. Management’s Discussion and Analysis