B. Riley Financial, Inc.

Previous wording

Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “B. Riley,” “B. Riley Financial,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries.

Current wording

Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “B. Riley,” “B. Riley Financial,” “BRC,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries.

Previous wording

We report our activities in five reportable business segments: Capital Markets, Wealth Management, Communications, Consumer, and E-Commerce segment. The descriptions below illustrate the businesses that comprise our segments.

Current wording

We maintain a diverse composition of businesses that operate in five reportable segments: Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce segment. The descriptions below illustrate the businesses that comprise our segments.

Previous wording

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 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 exhibit more volatile results.

Current wording

Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various business segments. 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 exhibit more volatile results.

Previous wording

Capital Markets –We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors; fund and asset management services to institutional and high-net-worth individual investors; and direct lending services to middle market companies. We also trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. We maintain an investment portfolio comprised of public and private equities and debt securities. We also opportunistically provide loans to our clients, and we engage in securities-based lending which involves the borrowing and lending of equity and fixed income securities.

Current wording

Capital Markets Segment –We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors; fund and asset management services to institutional and high-net-worth individual investors; and direct lending services to middle market companies. We also trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. We maintain an investment portfolio comprised of public and private equities and debt securities. We also opportunistically provide loans to our clients, and we engage in securities-based lending which involves the borrowing and lending of equity and fixed income securities.

Previous wording

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. Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions. Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions.

Current wording

Wealth Management Segment –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. Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions. Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions.

Previous wording

front-to-back-end operations of the e-commerce stores and also provides marketing services to their clients. The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis.

Current wording

E-Commerce Segment –This segment is comprised of Nogin, Inc. (“Nogin”), which is a technology platform operating e-commerce stores that delivers Commerce-as-a-Service (“CaaS”) solutions for apparel brands and other retailers. The Company manages clients’ front-to-back-end operations of the e-commerce stores and also provides marketing services to their clients. The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis.

Previous wording

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 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 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements.

Current wording

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. (“bebe”), 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 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 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements.

Previous wording

Securities and other investments owned was $231.8 million and $282.3 million as of March 31, 2025 and December 31, 2024. Of this amount, the carrying value of equity securities totaled $177.4 million and $232.5 million as of March 31, 2025 and December 31, 2024. Of these amounts, public equity securities totaled $79.7 million and $124.9 million as of March 31, 2025 and December 31, 2024, and private equity securities totaled $97.7 million and $107.6 million as of March 31, 2025 and December 31, 2024.

Current wording

Securities and other investments owned was $242.4 million and $282.3 million as of June 30, 2025 and December 31, 2024, respectively. Of this amount, the carrying value of equity securities totaled $186.9 million and $232.5 million as of June 30, 2025 and December 31, 2024, respectively. Of these amounts, public equity securities totaled $88.9 million and $124.9 million as of June 30, 2025 and December 31, 2024, and private equity securities totaled $97.9 million and $107.6 million as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

The carrying value of Badcock & Wilcox Enterprises, Inc. - common stock held as of held as of March 31, 2025 and December 31, 2024 was $18.5 million and $45.0 million, respectively. The change in the carrying value for the three months ended March 31, 2025 was due to a decrease in the public share price during the period.

Current wording

The carrying value of Babcock & Wilcox Enterprises, Inc’s (“B&W”). - common stock held as of June 30, 2025 and December 31, 2024 was $26.4 million and $45.0 million, respectively. The change in the carrying value for the six months ended June 30, 2025 was due to a decrease in the public share price during the period.

Previous wording

The carrying value of our Double Down Interactive Co., Ltd common stock held as of March 31, 2025 and December 31, 2024 was $41.8 million and $43.7 million, respectively. The change in the carrying value for the three months ended March 31, 2025 was primarily due to a decrease in the public share price during the period.

Current wording

The carrying value of our Double Down Interactive Co., Ltd common stock held as of June 30, 2025 and December 31, 2024 was $34.5 million and $43.7 million, respectively. The change in the carrying value for the six months ended June 30, 2025 was primarily driven by sales of the securities and, to a lesser extent, a decrease in the public share price during the period.

Previous wording

The carrying value of our investments in other public equities held as of March 31, 2025 and December 31, 2024 was $15.0 million and $27.4 million, respectively. The change in the carrying value for the three months ended March 31, 2025 was driven by sales of certain other public equity securities and, to a lesser extent, decreases in the public share prices during the period.

Current wording

The carrying value of our investments in other public equities held as of June 30, 2025 and December 31, 2024 was $24.7 million and $27.4 million, respectively. The change in the carrying value for the six months ended June 30, 2025 was driven by sales of certain other public equity securities and, to a lesser extent, decreases in the public share prices during the period.

Previous wording

The carrying value of our investments in other private equities held as of March 31, 2025 and December 31, 2024 was $97.7 million and $107.6 million, respectively. The decrease in the carrying value for the three months ended March 31, 2025 was driven by sales of certain private securities and, to a lesser extent, decreases in fair values during the period.

Current wording

The carrying value of our investments in other private equities held as of June 30, 2025 and December 31, 2024 was $97.9 million and $107.6 million, respectively. The decrease in the carrying value for the six months ended June 30, 2025 was driven by sales of certain private securities and, to a lesser extent, decreases in fair values during the period.

Previous wording

As discussed in more detail in Note 11 - Senior Notes Payable, from April 7, 2025 to July 11, 2025, we completed four private exchange transactions with institutional investors pursuant to which aggregate principal amounts of approximately $29.5 million of the 5.50% Senior Notes due March 2026, $2.1 million of the 6.50% Senior Notes Payable due September 2026, $109.7 million of the 5.00% Senior Notes due December 2026, $51.1 million of the 6.00% Senior Notes due January 2028, and $39.5 million of the 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $140.7 million aggregate principal amount of 8.00% Senior Secured Second Lien Notes due 2028 (the "New Notes"), whereupon the Exchanged Notes were cancelled.

Current wording

As discussed in more detail in Note 12 - Senior Notes Payable with respect to prior private exchange transactions, on July 11, 2025, the Company completed private exchange transactions with institutional investors pursuant to which aggregate principal amounts of approximately $2.1 million of the 6.50% Senior Notes Payable due September 30, 2026, $19.7 million of the 5.00% Senior Notes due December 2026, $4.7 million of the 6.00% Senior Notes due January 2028, and $16.4 million of the 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $24.6 million aggregate principal amount of newly-issued 8.00% Senior Secured Second Lien Notes due 2028 (the “New Notes”), whereupon the Exchanged Notes were cancelled.

Previous wording

On August 20, 2025, the Targus ("Targus Borrower") and certain of its direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement (as more fully discussed in Note 10 — Term Loans and Revolving Credit Facility) with PNC Bank, National Association ("PNC"). The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028. The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term Secured Overnight Financing Rate for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee. The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI 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 uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement. As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC ("BRCC"), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.

Current wording

On August 20, 2025, Targus (“Targus Borrower”) and certain of its direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement (as more fully discussed in Note 11 — Term Loans and Revolving Credit Facility) with PNC Bank, National Association (“PNC”). The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028. The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term Secured Overnight Financing Rate for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee. The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI 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 uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement. As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC (“BRCC”), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.

Previous wording

Total revenues decreased $111.5 million to $186.1 million during the three months ended March 31, 2025 from $297.6 million during the three months ended March 31, 2024. The decrease in revenues during the three months ended March 31, 2025 was primarily due to decreases in revenues from services and fees of $55.2 million, interest income from securities lending of $37.0 million, interest income from loans of $18.9 million, sale of goods of $6.0 million, partially offset by increases in revenue from fair value adjustments on loans of $4.1 million, and in the fair value of the portfolio of securities and other investments owned of $1.5 million. The $4.1 million favorable variance in fair value adjustments related to loans was primarily driven by $17.5 million related to the loan to Vintage Capital Management, LLC ("VCM"), $3.1 million related to the loan to Freedom VCM Receivables, Inc. ("Freedom VCM"), partially offset by unfavorable variances of $8.5 million related to the loan to Core Scientific, Inc. ("Core Scientific"), $2.9 million related to the loan to Exela Technologies, Inc. ("Exela"), $2.8 million related to the loan to Conn’s, Inc. ("Conn's"), and $2.3 million from all other loans receivable. The decrease in revenue from services and fees in the three months ended March 31, 2025 consisted of decreases in revenue of $35.1 million in the Capital Markets segment, and $17.9 million in the Communications segment, $4.5 million in the Wealth Management segment, and $1.2 million in All Other, partially offset by an increase in revenue of $3.5 million in the E-Commerce segment.

Current wording

Total revenues increased $130.4 million to $225.3 million during the three months ended June 30, 2025 from $94.9 million during the three months ended June 30, 2024. The increase in revenues during the three months ended June 30, 2025 was primarily due to increases in fair value adjustments on loans of $176.4 million, and increases in fair value of the portfolio of securities and other investments owned of $59.0 million, partially offset by decreases in revenues from services and fees of $57.1 million, interest income from securities lending of $22.7 million, interest income from loans of $14.7 million, and sale of goods of $10.5 million. Of the $176.4 million increase in fair value adjustments related to loans, $150.3 million related to the loan to Vintage Capital Management, LLC (“VCM”), $12.0 million related to Freedom VCM Receivables, Inc. (“Freedom VCM”), $7.4 million related to W.S. Badcock Corporation (“Badcock”) and $7.2 million related to the loan to Conn’s Inc. (“Conn’s”). The decrease in revenue of $57.1 million from services and fees in the three months ended June 30, 2025 consisted of decreases in revenue of $17.0 million in the Communications segment, $16.2 million in the Wealth Management segment, $11.1 million in the Capital Markets segment, $10.1 million in All Other, and $2.7 million in the E-Commerce segment.

Previous wording

Revenues from services and fees in the Capital Markets segment decreased $35.1 million to $25.2 million during the three months ended March 31, 2025 from $60.3 million during the three months ended March 31, 2024. The decrease in revenues was primarily due to decreases in revenue of $32.4 million in corporate finance, consulting, and investment banking fees, $2.9 million in commission fees, $1.0 million in dividends, $0.9 million in interest income, $0.3 million in other income and $0.2 million in asset management fees, partially offset by an increase of $2.7 million in contingent accrued management fees. The decrease in investment banking revenues is related to the episodic nature of this business and the decline in business due to the late SEC filings of the parent company. The decreases in investment banking revenues were $11.3 million in mergers and acquisitions advisory fees, $10.6 million in at the market fees, $7.6 million in investment banking underwriting fees, and $3.7 million in private placement fees.

Current wording

Revenues from services and fees in the Capital Markets segment decreased $11.1 million to $39.1 million during the three months ended June 30, 2025 from $50.2 million during the three months ended June 30, 2024. The decrease in revenues was primarily due to decreases of $7.7 million of corporate finance, consulting, and investment banking fees, $2.4 million in commission fees, $1.7 million of interest income, $0.4 million in asset management fees, and $0.4 million in dividends, partially offset by an increase of $1.5 million in other income. The decrease in investment banking revenues is related to the episodic nature of this business and the decline in business due to the late SEC filings of the parent company. The decreases in investment banking revenues were $22.9 million in at the market fees, $9.4 million in mergers and acquisitions advisory fees, $5.2 million in investment banking underwriting fees, and $2.9 million in private placement fees.

Previous wording

Revenues from services and fees in the Wealth Management segment decreased $4.5 million to $46.7 million during the three months ended March 31, 2025 from $51.2 million during the three months ended March 31, 2024. The decrease in revenues was primarily due to decreases in revenue of $8.8 million from wealth and asset management fees due to a reduction in AUM in December 2024, driven by a loss of headcount, $0.3 million in other income, and $0.3 million in commission fees, partially offset by an increase of $4.9 million in contingent accrued management fees for companies in the process of going public. Total assets under management were approximately $18.4 billion, $20.7 billion, and $25.8 billion at March 31, 2025, December 31, 2024, and March 31, 2024, respectively. Of these amounts, advisory assets under management totaled approximately $6.5 billion at March 31, 2025, and $6.9 billion at December 31, 2024, and $8.0 billion at March 31, 2024. Advisory revenues were 0.25% and 0.24% of average advisory assets under management during the three months ended March 31, 2025 and 2024, 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. Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets. Other revenues is primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Current wording

Revenues from brokerage and advisory decreased $15.5 million to $27.5 million during the three months ended June 30, 2025 from $43.0 million during the three months ended June 30, 2024. The decrease in revenues was primarily due to decreases in revenue of from wealth and asset management fees due to a reduction in AUM which was driven by a loss of headcount of wealth management advisors and the Stifel transaction in April 2025. Refer to Note 4 to the accompanying unaudited condensed consolidated financial statements for additional information. Total assets under management were approximately $13.7 billion and $25.6 billion at June 30, 2025 and June 30, 2024, respectively. Of these amounts, advisory assets under management totaled approximately $4.6 billion at June 30, 2025 and $8.0 billion at June 30, 2024. Advisory revenues were 0.27% and 0.25% of average advisory assets under management during the three months ended June 30, 2025 and 2024, 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. Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets. Other revenues is primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Previous wording

Revenues from services and fees in the Communications segment decreased $17.9 million to $63.2 million during the three months ended March 31, 2025 from $81.1 million during the three months ended March 31, 2024. The decrease in revenues was primarily due to decreases in subscription revenue of $17.6 million, $12.4 million of which related to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024. Of the remaining $5.2 million decrease in subscription revenue, $2.9 million was from Lingo, $1.1 million was from magicJack, $1.0 million was from Marconi Wireless, and $0.2 million was from UOL. We expect Lingo, magicJack, Marconi Wireless and UOL subscription revenue to continue to decline year-over-year as landline and VoIP technologies are older and cellular services have a higher customer acquisition cost than profitability.

Current wording

Revenues from services and fees in the Communications segment decreased $17.0 million to $60.7 million during the three months ended June 30, 2025 from $77.7 million during the three months ended June 30, 2024. The decrease in revenues was primarily due to decreases in subscription revenue of $16.7 million, $10.7 million of which related to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024. Of the remaining $6.0 million decrease in subscription revenue, $3.4 million was from Lingo, $1.4 million was from Marconi Wireless, $0.8 million was from magicJack, and $0.4 million was from UOL. We expect Lingo, magicJack, Marconi Wireless and UOL subscription revenue to continue to decline year-over-year as landline and VoIP technologies are older and cellular services are offered in a highly competitive marketplace.

Previous wording

Revenues from services and fees in All Other decreased $1.2 million to $20.3 million during the three months ended March 31, 2025 from $21.5 million during the three months ended March 31, 2024. These revenues include merchandise rental fees and sales from bebe and the operations of a regional environmental services business. Revenues from services and fees in All Other decreased by $1.8 million related to merchandise rental fees from bebe, and $0.5 million due to the operations of a regional environmental services business, partially offset by increases in revenues of $1.1 million in other income.

Current wording

Revenues from services and fees in All Other decreased $10.1 million to $12.5 million during the three months ended June 30, 2025 from $22.6 million during the three months ended June 30, 2024. These revenues include merchandise rental fees and sales from bebe, and the operations of a regional environmental services business, which was sold in the first quarter of 2025. Revenues from services and fees in All Other decreased by $9.5 million related to the regional environmental services business, and $1.1 million related to merchandise rental fees from bebe, partially offset by an increase in revenues of $0.6 million in other revenue.

Previous wording

The fair value adjustments on loans receivable for the three months ended March 31, 2025 and 2024, were $(8.1) million and $(12.2) million, respectively. During the three months ended March 31, 2025 and 2024, fair value adjustments for loans receivable from related parties totaled $(2.1) million and $(19.1) million, respectively. During the three months ended March 31, 2025 and 2024, fair value adjustments for other loans receivable totaled $(6.0) million and $6.9 million, respectively.

Current wording

The fair value adjustments on loans receivable for the three months ended June 30, 2025 and 2024, were $0.8 million and $(175.6) million, respectively. During the three months ended June 30, 2025 and 2024, fair value adjustments for other loans receivable totaled $1.8 million and $2.0 million, respectively.

Previous wording

Interest income from loans decreased $18.9 million to $3.2 million during the three months ended March 31, 2025 from $22.1 million during the three months ended March 31, 2024. The decrease was primarily due to non-accrual of interest on the following adjusted loans: $6.1 million for VCM, $4.1 million for Conn's, $2.2 million for Freedom VCM, which was sold in February 2025, and $1.8 million for Nogin, as well as a reduction in loan receivable balances from $452.5 million as of March 31, 2024 to $98.6 million as of March 31, 2025.

Current wording

Interest income from loans decreased $14.7 million to $3.9 million during the three months ended June 30, 2025 from $18.5 million during the three months ended June 30, 2024. The decrease was primarily due to non-accrual of interest on the following adjusted loans: $6.1 million for VCM, $3.4 million for Conn’s, $2.2 million for Freedom VCM, which was sold in February 2025, and $1.6 million for Nogin, as well as a reduction in loan receivable balances from $229.2 million as of June 30, 2024 to $49.0 million as of June 30, 2025.

Previous wording

Interest income from securities lending decreased $37.0 million to $0.8 million during the three months ended March 31, 2025 from $37.8 million during the three months ended March 31, 2024. The decrease was due to a decrease in the securities borrowed balance from $2.1 billion as of March 31, 2024 to $40.9 million as of March 31, 2025 and decreases of revenue from business decline due to counterparties constraining their business activity.

Current wording

Interest income from securities lending decreased $22.7 million to $2.1 million during the three months ended June 30, 2025 from $24.8 million during the three months ended June 30, 2024. The decrease was due to a reduction in the securities borrowed balance from $743.0 million as of June 30, 2024 to $72.3 million as of June 30, 2025 and decreases of revenue from business decline due to counterparties constraining their business activity.

Previous wording

Direct cost of services decreased $17.0 million to $42.7 million during the three months ended March 31, 2025 from $59.7 million during the three months ended March 31, 2024. The decrease in direct cost of services was primarily attributable to decreases of $16.2 million from the Communications segment, $13.4 million of which was attributable to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024, and $2.3 million from All Other consisting of $0.7 million from bebe, and $1.6 million from the regional environmental services business, partially offset by an increase of $1.6 million from the E-Commerce segment consisting of Nogin, which we acquired in the second quarter of 2024.

Current wording

Direct cost of services decreased $25.5 million to $33.2 million during the three months ended June 30, 2025 from $58.7 million during the three months ended June 30, 2024. The decrease in direct cost of services was primarily attributable to a decrease of $16.7 million from the Communications segment, $11.4 million of which was attributable to divestiture of the Lingo wholesale carrier business in the third quarter of fiscal year 2024, $7.2 million from All Other, consisting of $6.5 million from the regional environmental services business that was sold in the first quarter of 2025, and $0.7 million from bebe, and $1.6 million from the E-Commerce segment, consisting of Nogin which was deconsolidated in the first quarter of 2025.

Previous wording

Total selling, general and administrative expenses decreased by $11.6 million to $167.4 million during the three months ended March 31, 2025 from $178.9 million during the three months ended March 31, 2024. The decrease was primarily due to decreases of $12.2 million in the Capital Markets segment, $4.5 million in the Wealth Management segment, $3.2 million in the Communications segment, and $1.9 million in the Consumer Products segment, partially offset by increases of $8.4 million in the E-Commerce segment and $1.9 million in Corporate and All Other.

Current wording

Total selling, general and administrative expenses decreased by $35.6 million to $142.4 million during the three months ended June 30, 2025 from $178.0 million during the three months ended June 30, 2024. The decrease was primarily due to decreases of $9.3 million in the Wealth Management segment, $6.4 million in Corporate and All Other, $6.0 million in the E-Commerce segment $5.9 million in the Capital Markets segment, $5.5 million in the Communications segment and $2.4 million in the Consumer Products segment.

Previous wording

Selling, general and administrative expenses in the Capital Markets segment decreased by $12.2 million to $41.8 million during the three months ended March 31, 2025 from $54.0 million during the three months ended March 31, 2024. The decrease was primarily due to decreases of $16.8 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses largely related to reduced revenue and loss of headcount, and $0.1 million in other expenses, partially offset by increases of $3.4 million in write-offs of receivables and $1.3 million in professional services.

Current wording

Selling, general and administrative expenses in the Capital Markets segment decreased by $5.9 million to $44.6 million during the three months ended June 30, 2025 from $50.6 million during the three months ended June 30, 2024. The decrease was primarily due to decreases of $4.9 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, share based compensation and other payroll expenses largely related to reduced revenue and loss of headcount, and $1.3 million in other expenses, $0.3 million in occupancy-related costs, partially offset by an increase of $0.6 million in professional services.

Previous wording

Selling, general and administrative expenses in the Communications segment decreased $3.2 million to $20.7 million for the three months ended March 31, 2025 from $23.9 million for the three months ended March 31, 2024. The decrease was primarily due to decreases of $2.0 million in employee compensation and benefit related expenses due to lower headcount, lower commissions and sale of the Lingo carrier business in the third quarter of 2024, and $1.2 million in depreciation and amortization expenses due to items being fully amortized in 2024.

Current wording

Selling, general and administrative expenses in the Communications segment decreased $5.5 million to $19.9 million for the three months ended June 30, 2025 from $25.5 million for the three months ended June 30, 2024. The decrease was primarily due to decreases of $1.8 million in employee compensation and benefit related expenses due to lower headcount, lower commissions and sale of the Lingo carrier business in the third quarter of 2024, $1.1 million in depreciation and amortization expenses due to items being fully amortized in 2024, $1.0 million in professional services, $0.8 million in other expenses, and $0.8 million in occupancy-related costs.

Previous wording

Selling, general and administrative expenses in the Consumer Products segment decreased $1.9 million to $15.6 million for the three months ended March 31, 2025 from $17.5 million during the three months ended March 31, 2024. The decrease was primarily due to decreases of $0.6 million in professional fees partially due to nonrecurring legal expenses in the prior year, $0.5 million in employee compensation and benefit related expenses due to reduced headcount, and $0.5 million in marketing costs, and $0.3 million in other expenses due to efforts to reduce costs.

Current wording

Selling, general and administrative expenses in the Consumer Products segment decreased $2.4 million to $14.6 million for the three months ended June 30, 2025 from $17.0 million during the three months ended June 30, 2024. The decrease was primarily due to decreases of $1.4 million in professional services, $0.8 million in employee compensation and benefit related expenses due to reduced headcount, and $0.2 million in other expenses due to efforts to reduce costs.

Previous wording

Other Income (Expense). Other income included interest income of $1.5 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively. Dividend income was $0.1 million during the three months ended March 31, 2025 compared to $3.0 million during the three months ended March 31, 2024.

Current wording

Other Income (Expense). Other income included interest income of $0.5 million and $0.8 million during the three months ended June 30, 2025 and 2024, respectively. Dividend income was $0.1 million during the three months ended June 30, 2025 compared to $0.5 million during the three months ended June 30, 2024. Realized and unrealized (losses) gains on investments was a gain of $10.2 million during the three months ended June 30, 2025 compared to a loss of $155.2 million during the three months ended June 30, 2024, which is comprised of the following:

Previous wording

Other income (expense) also includes change in fair value of financial instruments and other was a gain of $0.9 million during the three months ended March 31, 2025 and a gain on sale and deconsolidation of businesses of $80.8 million during the three months ended March 31, 2025 primarily related to $52.4 million net gain on the sale of Atlantic Coast Recycling and $28.4 million net gain on the disposition of Nogin. The gain on senior note exchange was $10.5 million during the three months ended March 31, 2025. The loss on extinguishment of debt was $10.4 million during the three months ended March 31, 2025.

Current wording

Other income (expense) also includes change in fair value of financial instruments and other was a gain of $11.9 million during the three months ended June 30, 2025. Gain on senior note exchange was $44.5 million during the three months ended June 30, 2025. Income from equity investments was $25.6 million during the three months ended June 30, 2025. Loss on extinguishment of debt during the three months ended June 30, 2025 was $10.3 million compared to a gain of $0.1 million during the three months ended June 30, 2024.

Previous wording

$1.4 million from the Lingo term loan, $0.5 million from the Nomura revolving credit facility, and $0.5 million and $0.4 million from the Targus term loan and revolver, respectively, partially offset by increases in interest expense of $3.2 million from the Oaktree term loan, $0.5 million from the BRPAC term loan, and $0.4 million from the Nogin secured convertible promissory note.

Current wording

Interest expense was $24.0 million during the three months ended June 30, 2025 compared to $33.5 million during the three months ended June 30, 2024. The decrease in interest expense was due to lower debt balances during the three months ended June 30, 2025. The decreases in interest expense primarily consisted of $6.2 million from the Nomura term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Nomura Term Loan”), $5.7 million from the issuance of New Notes, $1.4 million from the Lingo term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Lingo Term Loan”), $0.5 million from the Nomura revolving credit facility as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Nomura Revolver”), $0.5 million and $0.1 million from the Targus term loan and revolver, respectively (each as described in Note 11 to the accompanying unaudited condensed consolidated financial statements, the “Targus Term Loan” and the “Targus Revolver”), $0.2 million from the Nogin secured convertible promissory note as described in Note 10 to the accompanying unaudited condensed consolidated financial statements (“Nogin Note”), and partially offset by increases in interest expense of $4.6 million from the Oaktree term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“Oaktree Term Loan”), and $0.6 million from the BRPAC term loan as described in Note 11 to the accompanying unaudited condensed consolidated financial statements (“BRPAC Term Loan”).

Previous wording

Income from Discontinued Operations, Net of Income Taxes. On October 25, 2024, we and our subsidiary bebe stores, inc. (“bebe”) 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 March 31, 2024. Income from discontinued operations, net of tax for Brands Transaction was $13.1 million during the three months ended March 31, 2024. The income from discontinued operations is primarily due to realized and unrealized losses incurred on the brand equity investments during the three months ended March 31, 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 3 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements.

Current wording

(Loss) Income from Discontinued Operations, Net of Income Taxes. On October 25, 2024, we and our subsidiary bebe 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 June 30, 2024. Income from discontinued operations, net of tax, for Brands Transaction, as described in Note 4 to the accompanying unaudited condensed consolidated financial statements, was $15.5 million during the three months ended June 30, 2024.

Previous wording

Preferred Stock Dividends. Preferred stock dividends were $2.0 million for the three months ended March 31, 2025 and 2024. Dividends on the Series A preferred paid during the three months ended March 31, 2024 were $0.4296875 per depository share. Dividends on the Series B preferred paid during the three months ended March 31, 2024 were $0.4609375 per depository share. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A and B Preferred Stock. Unpaid dividends will accrue until paid in full.

Current wording

Preferred Stock Dividends. Preferred stock dividends include $2.0 million of unpaid dividends for the three months ended June 30, 2025 and in the comparable prior year period include paid dividends of $2.0 million. On January 21, 2025, the Company announced that we had temporarily suspended dividends on our Series A and B Preferred Stock. Unpaid dividends will accrue until paid in full.

Previous wording

Revenues from services and fees in the E-Commerce segment were $3.5 million during the three months ended March 31, 2025. These revenues consisted of commission fees from Nogin which we acquired in the second quarter of 2024.

Current wording

Revenues from services and fees in the E-Commerce segment were $3.5 million during the six months ended June 30, 2025. This segment consisted of Nogin which we deconsolidated in the first quarter of 2025. Refer to Note 3 to the accompanying unaudited condensed consolidated financial statements for additional information.

Previous wording

Trading gains (losses), net decreased $1.5 million to a loss of $16.2 million during the three months ended March 31, 2025 compared to loss of $17.7 million during the three months ended March 31, 2024. The loss of $16.2 million during the three months ended March 31, 2025 was primarily due to realized and unrealized losses on investments made in our proprietary trading accounts, primarily $15.1 million on B&W driven by a decrease in share price.

Current wording

Trading gains (losses), net increased $60.5 million to income of $11.5 million during the six months ended June 30, 2025 compared to a loss of $49.0 million during the six months ended June 30, 2024. The income of $11.5 million during the six months ended June 30, 2025 was primarily due to realized and unrealized income on investments made in our proprietary trading accounts, primarily $13.4 million for APLD, and $4.0 million for Channell, partially offset by losses of $10.6 million for B&W.

Previous wording

Revenues from the sale of goods decreased $6.0 million to $47.5 million during the three months ended March 31, 2025 from $53.4 million during the three months ended March 31, 2024. The decrease in revenues from sale of goods was attributable to decreases of $9.4 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide due to market conditions and $0.1 million in All Other, consisting of sale of goods from bebe, partially offset by an increase of $3.5 million from the E-Commerce segment consisting of sale of goods from Nogin, which we acquired in the second quarter of 2024.

Current wording

Revenues from the sale of goods decreased $16.5 million to $92.5 million during the six months ended June 30, 2025 from $109.0 million during the six months ended June 30, 2024. The decrease in revenues from sale of goods was attributable to decreases of $17.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide, and $0.2 million from All Other consisting of sale of goods from bebe, partially offset by an increase of $1.3 million from Nogin in the E-Commerce segment.

Previous wording

Cost of goods sold for the three months ended March 31, 2025 decreased $2.1 million to $36.7 million from $38.8 million during the three months ended March 31, 2024. The decrease in cost of goods sold was primarily attributable to decreases of $5.3 million in the Consumer Products segment, due to lower sales volume, $0.2 million in the Communications segment and $0.1 million from All Other consisting of bebe, partially offset by an increase of $3.1 million from the E-Commerce segment, consisting of Nogin which we acquired in the second quarter of 2024.

Current wording

Cost of goods sold for the six months ended June 30, 2025 decreased $6.7 million to $71.8 million from $78.6 million during the six months ended June 30, 2024. The decrease in cost of goods sold was primarily attributable to decreases of $8.2 million in the Consumer Products segment, due to lower sales volume, and $0.3 million from All Other consisting of bebe, partially offset by increases of $1.5 million from the E-Commerce segment, consisting of Nogin which we acquired in the second quarter of 2024 and deconsolidated in the first quarter of 2025, and $0.3 million in the Communications segment.

Previous wording

Selling, general and administrative expenses in the Wealth Management segment decreased by $4.5 million to $45.6 million during the three months ended March 31, 2025 from $50.1 million during the three months ended March 31, 2024. The decrease was primarily due to a decrease of $6.8 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, bonuses and other payroll expenses due to a decrease in headcount, which aligns with the decrease in revenue, partially offset by increases of $1.8 million in arbitration settlements and $0.4 million in other expenses.

Current wording

Selling, general and administrative expenses in the Wealth Management segment decreased by $13.8 million to $85.5 million during the six months ended June 30, 2025 from $99.3 million during the six months ended June 30, 2024. The decrease was primarily due to a decrease of $16.6 million in employee compensation and benefit related expenses, which primarily related to decreases in commissions paid, bonuses and other payroll expenses due to a decrease in headcount, which aligns with the decrease in revenue, and $0.7 million in depreciation and amortization, partially offset by increases of $1.9 million in occupancy-related costs, due to multiple office closures and lease impairments as a result of the Stifel transaction, and $1.6 million in other expenses.

Previous wording

Selling, general and administrative expenses for Corporate and All Other increased $1.9 million to $35.3 million during the three months ended March 31, 2025 from $33.4 million for the three months ended March 31, 2024. The increase was primarily due to increases of $6.0 million in transaction costs, of which $4.4 million were from the regional environmental services business which was sold this quarter, $1.5 million in foreign currency fluctuation, and $0.9 million in legal settlements, partially offset by decreases of $3.6 million in employee compensation and benefit related expenses primarily driven by a decrease in share based compensation, $2.0 million in occupancy-related costs, $0.6 million in professional services and $0.3 million in other expenses.

Current wording

Selling, general and administrative expenses for Corporate and All Other decreased $4.6 million to $58.6 million during the six months ended June 30, 2025 from $63.1 million for the six months ended June 30, 2024. The decrease was primarily due to decreases of $6.5 million in employee compensation and benefit related expenses primarily driven by decreases in share based compensation and from the regional environmental services business which was sold in the first quarter of 2025, $4.0 million in other expenses, and $1.8 million in occupancy-related costs, partially offset by increases of $4.4 million in transaction costs from the regional environmental services business which was sold in the first quarter of 2025, $2.0 million in foreign currency fluctuation, and $1.3 million in professional services.

Previous wording

Interest Expense - Securities Lending and Loan Participations Sold. Interest expense - securities lending and loan participations sold decreased $34.7 million to $0.7 million during the three months ended March 31, 2025 from $35.4 million for the three months ended March 31, 2024. The decrease was due to a decrease in the securities loaned and loan participations sold balances from $2.0 billion as of March 31, 2024 to $33.0 million as of March 31, 2025.

Current wording

Interest Expense - Securities Lending and Loan Participations Sold. Interest Expense - Securities Lending and Loan Participations Sold decreased $56.0 million to $2.7 million during the six months ended June 30, 2025 from $58.7 million for the six months ended June 30, 2024. The decrease was due to a decrease in the securities loaned and loan participations sold balances from $733.6 million as of June 30, 2024 to $65.1 million as of June 30, 2025.

Previous wording

Realized and unrealized losses on investments was a loss of $14.5 million during the three months ended March 31, 2025 compared to a loss of $34.9 million during the three months ended March 31, 2024, which is comprised of the following:

Current wording

Other Income (Expense). Other income included interest income of $2.0 million and $1.5 million during the six months ended June 30, 2025 and 2024, respectively. Dividend income was $0.3 million during the six months ended June 30, 2025 compared to $3.5 million during the six months ended June 30, 2024. Realized and unrealized losses on investments was a loss of $4.3 million during the six months ended June 30, 2025 compared to a loss of $190.2 million during the six months ended June 30, 2024, which is comprised of the following: