RILY 10-K & 10-Q changes, risk factors and insider trading

•The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes couldprovided at the time of the original issuance could, at any timetime, be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

Conditions in the financial markets and general economic conditions have impactedimpacted, and may continue to impactimpact, our ability to generate business and revenues, which may cause significant fluctuations in our stock price.

•We have experiencedexperienced, and may experience in the futurefuture, losses in securities trading activities, or as a result of write-downs in the value of securities that we own, as a result of deteriorations in the businesses or creditworthiness of the issuers of such securities.

•We have experiencedexperienced, and may experience in the futurefuture, losses or write downs in the realizable value of our proprietary investments due to the inability of companies we invest in to repay their borrowings.

Risks Related to Legal Liability, Risk Management, Liquidity, Finance and Accounting

We face significant legal risks in our businesses. These risks include potential liability under securities laws and regulations in connection with our capital markets, asset management and other businesses. The volume and amount of damages claimed in litigation, arbitrations, regulatory enforcement actions and other adversarial proceedings against financial services firms have increased in recent years. We also are subject to claims from disputes with our employees and our former employees under various circumstances. Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time, making the amount of legal reserves related to these legal liabilities difficult to determine and subject to future revision. Legal or regulatory matters involving our directors, officers or employees in their individual capacities also may create exposure for us because we may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters to the extent permitted under applicable law. In addition, like other financial services companies, we may face the possibility of employee fraud or misconduct. The precautions we take to prevent and detect this activity may not be effective in all cases and there can be no assurance that we will be able to deter or prevent fraud or misconduct.

Exposures from and expenses incurred related to any of the foregoing actions or proceedings could have a negative impact on our results of operations and financial condition. In addition, future results of operations could be adversely affected if reserves relating to these legal liabilities are required to be increased or legal proceedings are resolved in excess of established reserves. See “Risk Factors - Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had, and may continue to have, adverse effects on our business, results of operations, reputation, and stock price” and “Legal Proceedings.”

Recent events and developments related to our prior investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have hadhad, and may continue to havehave, adverse effects on our business, results of operations, reputation, and stock price.

While we had no involvement with, or knowledge of, any of the alleged misconduct concerning that hedge fundfund, Mr. Kahn or any of his affiliates (and each of the separate review and investigations undertaken by the Audit Committee of our Board of Directors confirmed this), as a result of these matters we have experiencedexperienced, and willmay likely continue to experienceexperience, adverse impacts on our business, results of operations, reputation, and/or stock price. These adverse impacts have arisenarisen, and willmay likely continue to arisearise, out of current and future legal proceedings initiated since the November 2023 news reports, the many continuing unfounded allegations by short sellers and others, the substantial short pressure on our stock price (for further information, see the “Risk FactorFactors “—- The price of our securities may be adversely affected by third parties who raise allegations about our Company” below), and the resulting damage to certain business relationships and employee morale and increased employee attrition, among others. WeOn July 3, 2024 and November 22, 2024, each of the Company and Bryant Riley received subpoenas from the SEC requesting the production of certain documents and other information primarily related to (i) the Company’s business dealings with Mr. Kahn, (ii) certain transactions in an unrelated public company’s securities, (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries (iv) certain additional documents and information relating to the Franchise Group, Inc. The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have incurredoccurred and both the Company and Mr. Riley are responding to the subpoenas and are fully cooperating with the SEC. On November 10, 2025, news reports and a court filing by the U.S. Attorney’s Office for the District of New Jersey indicated that the U.S. Attorney’s Office has charged Kahn with securities fraud in connection with his activities as a Prophecy sub-adviser. An initial appearance, bond hearing, and plea agreement hearing was held on December 10, 2025 before the New Jersey District Court at which Mr. Kahn plead guilty to one count of conspiracy to commit securities fraud. As a result of these events, we have incurred, and will continue to incurincur, expenses in connection with these matters and any future legal proceedings arising out of these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance.

In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapterChapter 11 of the Bankruptcy Code. As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the investment in Freedom VCM (the “Freedom VCM Investment”) and the receivable due from Vintage Capital Management, LLC (“Vintage Loan Receivable.Receivable”). As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 20242024, and a value of $1.3$1.8 million to the Vintage Loan Receivable as of SeptemberDecember 16,31, 2025. For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivables were $221.0 million and $222.9 million respectively.

Prior to the filing of the FRG Chapter 11 Cases in November 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief (the “Conn's Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code. FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s, and in December 2023, the Company loaned $108.0 million to Conn’s subsequently reduced to $93.0 million due to principal repayments. The fair value of this loan receivable was $19.1 million at December 31, 2024.2024 given that in July 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. During the years ended December 31, 2025 and 2024, the Company recorded unrealized gains (losses) of $0.8 million and $(71.7) million, respectively, and additional cash payments of $19.9 million during the year ended December 31, 2025 with respects to this loan receivable. The fair value of this loan receivable was zero at December 31, 2025.

We expect that the Company may be subject to additional lawsuits and other claims related to the FRG Chapter 11 Cases and the Conn'sConn’s Chapter 11 Cases (see "Recent Developments - Conn's and FRG").Cases. These events and developments have exacerbated, and they and additional similar events and developments including additional litigation and claims will continue to exacerbate, the risk that we will continue to: (i) incur expenses in connection with these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance; (ii) harm our reputation and negatively impact employee morale, retention and hiring; and (iii) lose customers or negatively impact on our ability to attract new customers and increased competition for new clients and business; and (iv) result in additional write-downs, which may be material.business.

In addition, we are investing our own capital in our funds and funds of fundsfunds, as well as principal investing activities, and limitations on our ability to withdraw some or all of our investments in these funds or liquidate our investmentinvestment, positions, whether for legal, reputational, illiquidity or other reasons, may make it more difficult for us to control the risk exposures relating to these investments. See “Risk Factors - We have identified material weaknesses in our internal control over financial reporting, and these material weaknesses, or our failure or inability to remediate them, or our failure to otherwise design and maintain effective internal control over financial reporting, exposes us to additional risks and uncertainties and could result in loss of investor confidence, shareholder litigation or governmental proceedings or investigations, any of which could cause the market value of our securities to decline or impact our ability to access the capital markets.”

We are exposed to the risk that third parties thatwho owe us money, securities or other assets will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure, and breach of contract or other reasons. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. As an introducing broker, we could be held responsible for the defaults or misconduct of our customers. These may present credit concerns, and default risks may arise from events or circumstances that are difficult to detect, foresee or reasonably guard against. In addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, which in turn could adversely affect us. If any of the variety of instruments, processes and strategies we utilize to manage our exposure to various types of risk are not effective, we may incur losses.

Firms in the financial services industry have historically been operating in a difficult regulatory environment which we expect may become even more stringent in light of recent well-publicized failures of regulators to detect and prevent fraud.environment. The industry has historically experienced increased scrutiny from a variety of regulators, including the SEC, the NYSE, FINRA and state attorneys general. Penalties and fines sought by regulatory authorities have increased substantially over the last several years. This regulatory and enforcement environment has created uncertainty with respect to a number of transactions that had historically been entered into by financial services firms and that were generally believed to be permissible and appropriate. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, restrict or otherwise impose conditions on the right to carry on particular businesses. For example, a failure to comply with the obligations imposed by the Exchange Act on broker-dealers and the Investment Advisers Act of 1940 on investment advisers, including record-keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, or by the Investment Company Act of 1940, could result in investigations, sanctions and reputational damage. We also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or FINRA or other self-regulatory organizations that supervise the financial markets. Substantial legal liability or significant regulatory action against us could have adverse financial effects on us or cause reputational harm to us, which could harm our business prospects.

In addition, financial services firms are subject to numerous conflicts of interests or perceived conflicts. The SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest. We have adopted various policies, controls and procedures to address or limit actual or perceived conflicts and regularly review and update our policies, controls and procedures. However, appropriately addressing conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to appropriately address conflicts of interest. Our policies and procedures to address or limit actual or perceived conflicts may also result in increased costs and additional operational personnel. Failure to adhere to these policies and procedures may result in regulatory sanctions or litigation against us. For example, the research operations of investment banks have been and remain the subject of heightened regulatory scrutiny which has led to increased restrictions on the interaction between equity research analysts and investment banking professionals at securities firms. Several securities firms in the U.S. reached a global settlement in 2003 and 2004 with certain federal and state securities regulators and self-regulatory organizations to resolve investigations into the alleged conflicts of interest of research analysts, which resulted in rules that have imposed additional costs and limitations on the conduct of our business.

Asset management businesses have experienced a number of highly publicized regulatory inquiries which have resulted in increased scrutiny within the industry and new rules and regulations for mutual funds, investment advisors and broker-dealers. Our subsidiary, B. Riley Capital Management, LLC, is registered as an investment advisor with the SEC and regulatory scrutiny and rulemaking initiatives may result in an increase in operational and compliance costs or the assessment of significant fines or penalties against our asset management business, and may otherwise limit our ability to engage in certain activities. In recent years, the Company has experienced significant pricing pressures on trading margins and commissions in debt and equity trading. In the equity and fixed income markets, regulatory requirements and the increased use of electronic trading and alternative trading systems has resulted in greater price transparency, leading to increased price competition and decreased trading margins. The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading markets and our ability to access market information, and lead to the creation of new and stronger competitors. In the equity markets, we utilize certain market centers to execute orders on our behalf in exchange for payment for our order flow. Market centers are selected based on their ability to provide liquidity, price improvement, and timely execution for client orders. Increased regulatory scrutiny of payment for order flow may result in a decrease in this type of revenue. Institutional clients also have pressured financial services firms to alter "soft dollar" practices under which brokerage firms bundle the cost of trade execution with research products and services. Some institutions separate (or “unbundle”) payments for research products or services from sales commissions. Institutions subject to MiFID II were required to unbundle such payments commencing January 3, 2018. The SEC’s decision to no longer extend regulatory relief from certain arrangements required by MiFID II will increase competitive pressures from those clients which have yet to unbundle payments for research products or services from sales commissions. Should we be unable to reach agreement regarding the terms of unbundling arrangements with institutional clients who are actively seeking such arrangements, this could result in the loss of those clients, which would likely reduce the level of institutional commissions. We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins. In addition, Congress is currently considering imposing new requirements on entities that securitize assets, which could affect our credit activities. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.

Our ability to attract and retain customers and employees may be diminished to the extent our reputation is damaged. If we fail, or are perceived to fail, to address various issues that may give rise to reputational risk, we could harm our business prospects. These issues include, but are not limited to, appropriately dealing with market dynamics, potential conflicts of interest, legal and regulatory requirements, ethical issues, customer privacy, record-keeping, sales and trading practices, and the proper identification of the legal, reputational, credit, liquidity and market risks inherent in our products and services. Failure to appropriately address these issues could give rise to loss of existing or future business, financial loss, and legal or regulatory liability, including complaints, claims and enforcement proceedings against us, which could, in turn, subject us to fines, judgments and other penalties. In addition, our Capital Markets operations depend to a large extent on our relationships with our clients and reputation for integrity and high-caliber professional services to attract and retain clients. As noted aboveabove, under,under “Risk Factors - Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock priceprice,”, damage to our reputation from the matters described in that risk factor have led to negative impacts on our business relationships particularly in B. Riley Securities, Inc.'sInc.’s ("BRS'"“BRS”) Capital Markets segment and could continue to have a negative impact on our business relationships. As a result, if a client is not satisfied with our services, it may be more damaging in our business than in other businesses.

Our data and transaction processing, custody, financial, accounting and other technology and operating systems are essential to our capital markets operations. A system malfunction (due to hardware failure, capacity overload, security incident, data corruption, etc.) or mistake made relating to the processing of transactions could result in financial loss, liability to clients, regulatory intervention, reputational damage and constraints on our ability to grow. We outsource a substantial portion of our critical data processing activities, including trade processing and back office data processing. We also contract with third parties for market data and other services. In the event that any of these service providers fails to adequately perform such servicesservices, or the relationship between that service provider and us is terminated, we may experience a significant disruption in our operations, including our ability to timely and accurately process transactions or maintain complete and accurate records of those transactions.

Our underwriting and market making activities may placeincrease our capital at risk.liability.

Furthermore, our broker-dealer subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from it to B.BRC RileyGroup Financial,Holdings, Inc. As a holding company, B.BRC RileyGroup Financial,Holdings, Inc. depends on dividends, distributions and other payments from its subsidiaries to fund dividend payments, if any, and to fund all payments on its obligations, including debt obligations. As a result, regulatory actions could impede access to funds that B.BRC RileyGroup Financial,Holdings, Inc. needs to make payments on obligations, including debt obligations, or dividend payments. In addition, because B.BRC RileyGroup Financial,Holdings, Inc. holds equity interests in the firm’s subsidiaries, its rights as an equity holder to the assets of these subsidiaries may not materialize, if at all, until the claims of the creditors of these subsidiaries are first satisfied.

Even if we make an appropriate investment decision based on the intrinsic value of an enterprise, we cannot assure you that general market conditions will not cause the market value of our investments to decline. For example, a further increase in inflation, interest rates, a general decline in the stock markets, such as the recent declines in the stock markets due to the anticipated rising interest rate environment, or other market and industry conditions adverse to companies of the type in which we invest and intend to invest could result in a decline in the value of our investments or a total loss of our investment. Also, we may have to hold these investments for a longer period of time than originally planned at the time of investment. This may result in further declines in value or a total loss of our investment.

We are generally exposed to the risk that third parties that owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others. Additionally, when we guarantee or backstop the obligations of third parties, we are exposed to the risk that our guarantee or backstop may be called by the holder following a default by the primary obligor, which could cause us to incur significant losses, and, when our obligations are secured, expose us to the risk that the holder may seek to foreclose on collateral pledged by us.

For example, in December 2023, the Company loaned $108.0 million to Conn’s which loan amount was subsequently reduced to $93.0 million due to principal repayments. The fair value of this loan receivable was $19.1 million at December 31, 2024 given that in July 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. During the years ended December 31, 2025 and 2024, the Company recorded unrealized gains (losses) of $0.8 million and $(71.7) million, respectively, and additional cash payments of $19.9 million during the year ended December 31, 2025 with respects to this loan receivable. The fair value of this loan receivable was zero at December 31, 2025.

In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapter 11 of the Bankruptcy Code. As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the Freedom VCM Investment and the Vintage Loan Receivable. As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.3$1.8 million to the Vintage Loan Receivable as of SeptemberDecember 16,31, 2025. For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable were $221.0 million and $222.9 million, respectively.

In our proprietary investment activities, our concentrated holdings, illiquidity and market volatility may make it difficult to value certain of our investment securities.securities and/or to exit such investments. We have experienced, and may continue to experience in light of factors then prevailing, such as rising interest rates, general economic and market conditionsconditions, stock market volatility or changes in the financial condition of the applicable issuer, significant downward adjustments in subsequent valuations of securities on our balance sheet. In addition, at the time of any sales and settlements of these securities, the price we ultimately realize will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value. Any of these factors could require us to take write downs in the value of our investment and securities portfolio, which may have an adverse effect on our results of operations in future periods.

• a reduction in our ability or willingness to invest in receivables arising under loans to certain consumers, such as military personnel.

Risks Related to Ourour CommunicationsCommunication Related Businesses (Lingo, magicJack, Marconi Wireless and/or UOL)

Our marketing and customer retention efforts for our communicationsLingo, magicJack and Marconi Wireless businesses may not be successfulsuccessful, or may become more expensive, either of which could increase our costs and adversely impact our business, financial condition, results of operations, and cash flows.

We rely on relationships with a wide variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, Internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, direct marketers and directchannel marketers,partners, to source new customers and to promote or distribute our services and products.products for our Lingo, magicJack and Marconi Wireless businesses. In addition, in connection with the launch of new services or products for ourthese communicationscommunication businesses, we may spend a significant amount of resources on marketing.marketing or upfront commissions to channel partners. With any of our brands, services, and products, if our marketing activities are inefficient or unsuccessful, if important third-party relationships or marketing strategies, such as Internet search engine marketing and search engine optimization, become more expensive or unavailable, or are suspended, modified, or terminated, for any reason, if there is an increase in the proportion of consumers visiting our websites or purchasing our services and products by way of marketing channels with higher marketing costs as compared to channels that have lower or no associated marketing costs, or if our marketing efforts do not result in our services and products being prominently ranked in Internet search listings, or our partner commissions continue to increase, our business, financial condition, results of operations, and cash flows could be materially and adversely impacted.

Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: volatility in our revenues and results of operations; changing conditions in the financial markets; mattersand developments that may arise related to our prior investment in Freedom VCM Holdings, LLC (“Freedom VCM”) and developments related to our prior business relationship with Brian Kahn (the former CEO of Freedom VCM); the receipt by the Company and Bryant Riley of subpoenas from the SEC; material weaknesses in internal control over financial reporting; our ability to generate sufficient revenues to achieve and maintain profitability; failure to comply with the terms of our credit agreements or senior notes; the level of our indebtedness; our ability to meet future capital requirements; our exposure to credit risk; the short term nature of our engagements; failure to successfully compete in any of our businesses; the illiquidity of, and additional potential losses from, our proprietary investments; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; loss of key personnel; our ability to borrow under our credit facilities; our dependence on communications, information and other systems and third parties; the potential loss of financial institution clients; the illiquiditydiversion of,of management time on divestiture-related issues; the impact of legal proceedings, including in respect of matters related to Freedom VCM and additionalBrian potentialKahn; lossesthe from,activities of short sellers and their impact on our proprietarybusiness investmentsand reputation; changing economic and market conditions, including inflation and any actions by the Federal Reserve to address inflation, and the possibility of recession or an economic downturn; the effects of tariffs and other governmental initiatives, and related impacts including supply chain disruptions, labor shortages and increased labor costs; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; loss of key personnel; our ability to borrow under our credit facilities; failure to comply with the terms of our credit agreements or senior notes; the level of our indebtedness; our ability to meet future capital requirements; our ability to realize the benefits of our completed acquisitions, including our ability to achieve anticipated opportunities and cost savings, and accretion to reported earnings estimated to result from completed and proposed acquisitions in the time frame expected by management or at all; the diversion of management time on divestiture -related issues; the impact of legal proceedings, including in respect of matters related to Freedom VCM and Brian Kahn; the activities of short sellers and their impact on our business and reputation; and the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia’s invasion of Ukraine and conflicts in the Middle East. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

TheIn Company also opportunistically invests in and acquires companies or assets with attractive risk-adjusted return, with a focus on making operational improvements within these companies in an effortaddition to maximizeefforts freeto cashgrow flow.the However,BRC duringplatform, starting in 2024 and continuing intothrough 2025, ourwe focus hashave been focused on reducing indebtedness, including through the net proceeds from a number of strategic asset dispositions or other monetizations as described in additional detail under “—Disposition and Monetization TransactionsTransactions.”. The Company has reduced its total outstanding indebtedness from $2.4 billion at December 31, 2023 to $1.8 billion at December 31, 2024.2024 to $1.4 billion at December 31, 2025. The Company anticipates that reduction of indebtedness, including potentially through additional asset disposition or monetization transactions, will remain a key priority for the foreseeable future.

We reportmaintain oura activitiesdiverse composition of businesses that operate in sixseven reportable business segments: Capital Markets, Wealth Management, FinancialLingo, Consulting,magicJack, Communications,Marconi Wireless, UOL, and Consumer segment and E-Commerce segment.Products. The descriptions below illustrate the businesses that comprise our segments.

We maintain a diverse composition of businesses that operate in six 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 businessesbusiness’s 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.

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.

Our investment approach is value-oriented and represents a core competency of our capital markets strategy. We act as an advisor to our clients, which at times involves complex transactions consistent with our value-oriented investment philosophy. We often provide consulting, capital raising, or investment banking services for companies in which B. RileyBRC may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

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. Wealth management revenues are comprised of the following:

Consumer Products Segment – This segment is comprised of Tiger US Holdings, Inc. ("“Targus"”), which we acquired on October 18, 2022 and is a multinational company that, together with its subsidiaries, designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries. The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories.

Our operating results are primarily comprised of the operations of these businesses within our sixseven reportable operating segments. However, we also generate revenues from investment and lending entities and 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, and bebe stores inc. (“bebe”) which operates rent-to-own stores.

In prior years, we also generated operating revenues from an entity that was then a majority owned subsidiary of ours which licensed the trademarks and intellectual properties from ownership of six brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore.Lepore, Weand alsowe generated other income from dividends we received from our then equity ownership of investments that ranged from 10% to 50% in companies that license the trademark and intellectual property of the Hurley, Justice, and Scotch & Soda brands asand wellbebe asand fromBrookstone brands (equity ownership of bebe, our majority owned subsidiary bebe stores, inc. which owns the bebe and Brookstone brands.). 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. AsIn of December 31,October 2024, B.BRC Rileyentered into transactions that sold these businesses, and BRC no longer has control overcontrolled these operations and they are included asin discontinued operations in the consolidated financial statements as of December 31, 2023, and for the yearsyear ended December 31, 2024, 2023, and 2022.2024.

The faircarrying valuevalues of BadcockBabcock & Wilcox Enterprises, Inc. - common stock held as of heldDecember as31, of2025 and December 31, 2024 were $174.0 million (38.9% of total securities and Decemberother 31,investments 2023owned) wasand $45.0 million (15.9% of total securities and $40.1other million,investments owned), respectively. The change in fairthe carrying value for the year ended December 31, 20242025 iswas primarily relateddue to an increase in the public share price during the period.

The faircarrying valuevalues of our Double Down Interactive Co., Ltd common stock held as of December 31, 20242025 and December 31, 20232024 waswere $43.7$30.0 million and $30.4$43.7 million, respectively. The change in fairthe carrying value for the year ended December 31, 20242025 iswas primarily relateddriven toby ansales increaseof the securities and a decrease in the public share price during the period.

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. A detailed discussion of our risk factors was included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K/A for the year ended December 31, 2025. These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this Quarterly Report on Form 10-Q. Any of the risks described in the Annual Report on Form 10-K/A for the year ended December 31, 2025 could materially affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. Except as set forth below, there have been no material changes to the risk factors set forth in the Annual Report on Form 10-K/A for the year ended December 31, 2025.

Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: volatility in our revenues and results of operations; changing conditions in the financial markets; developments that may arise related to our prior investment in Freedom VCM Holdings, LLC (“Freedom VCMHoldings”) and prior business relationship with Brian Kahn (the former CEO of Freedom VCMHoldings); the receipt by the Company and Bryant Riley of subpoenas from the SEC; material weaknesses in internal control over financial reporting; our ability to generate sufficient revenues to achieve and maintain profitability; failure to comply with the terms of our credit agreements or senior notes; the level of our indebtedness; our ability to meet future capital requirements; our exposure to credit risk; the short term nature of our engagements; failure to successfully compete in any of our businesses; the illiquidity of, and additional potential losses from, our proprietary investments; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; loss of key personnel; our ability to borrow under our credit facilities; our dependence on communications, information and other systems and third parties; the potential loss of financial institution clients; the diversion of management time on divestiture-related issues; the impact of legal proceedings, including in respect of matters related to Freedom VCMHoldings and Brian Kahn; the activities of short sellers and their impact on our business and reputation; changing economic and market conditions, including inflation and any actions by the Federal Reserve to address inflation, and the possibility of recession or an economic downturn; the effects of tariffs and other governmental initiatives, and related impacts including supply chain disruptions, labor shortages and increased labor costs; and the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia’s invasion of Ukraine and conflicts in the Middle East. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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 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. 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 performanceperformance, 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.

Total assets under management were approximately $11.9$12.1 billion and $13.0 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively. Of these amounts, advisory assets under management totaled approximately $4.0$4.6 billion at MarchJune 31,30, 2026,2026 and $4.3 billion at December 31, 2025. Advisory revenues were 0.28%0.24% and 0.25%0.27% of average advisory assets under management during the three months ended MarchJune 31,30, 2026 and 2025, respectively and 0.25% and 0.26% for the six months ended June 30, 2026 and 2025, 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 are primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Lingo Segment – Lingo Management, LLC and its subsidiary Bullseye Telecom (together, “Lingo”) is a global cloud/unified communications (“UC”) and managed service provider to Enterprise and Small to Medium Businesses in the United States. Lingo primarily re-sells Plain Old Telephone Services (“POTS”), Broadband data services and Managed Security services in addition to the Cloud Voice, POTS Alternative and business collaboration communication services.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities, partnership interests and other investments, corporate bonds and other fixed income securities as follows at MarchJune 31,30, 2026 and December 31, 2025:

Total securities and other investments owned increased $192.8$276.9 million during the threesix months ended MarchJune 31,30, 2026 primarily due to the following:

•$229.2$213.0 million increase in the carrying values of Babcock & Wilcox Enterprises, Inc.’s (“B&W”) common stock due to an increase in the public share price during the current period.

•$(0.7)$11.3 million decrease in the carrying values of our Double Down Interactive Co., Ltd common stock primarily driven by sales of the securities andpartially aoffset decreaseby an increase in the public share price during the period.

•$(41.6)$11.1 million decrease in the carrying valuesvalue of our investmentsApplied inDigital otherCorporation private(“APLD”) equitiescommon stock was driven primarily by dispositions ofduring certainthe private securities.period.

•$13.4$8.6 million increase in the carrying values of our investments in partnership interests and other securitiespublic primarilyequities driven by net increase in market value of certain securitiesadditions during the period.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Services and Fees Revenuesfees

Total decreaseincrease in services and fees revenues during the three months ended MarchJune 31,30, 2026, compared to the same period in the prior year, was primarily due to the following:

•$(4.6)$15.3 million decreaseincrease in Wealth Management segment primarily driven by a $9.2$16.3 million declinein income from carried interest primarily related to investment funds holding positions in wealth and asset management fees following the sale of a portion of the Company’s wealth management business to Stifel Financial Corp. (“Stifel”) in April 2025,SpaceX, partially offset by $4.8a $1.3 million decrease in SpaceXadvisory SPVfees carriedand interesta revenue$0.4 million decrease in other income;

•$14.0$8.0 million increase in Capital Markets segment, driven by higher M&Aunderwriting andrevenues advisoryof $4.4 million, increased finder fees of $9.9$2.4 million, increasedhigher privatesecurities placementlending revenueslocate fees of $3.8$1.8 million, higher secondary commissions of $2.2 million, increased finder fees of $1.6$1.7 million, and higher underwritingATM revenuesand private placement revenues, net of $1.3 million, partially offset by a $5.2$3.2 million decrease in ATMM&A fees.and advisory fees; partially offset by:

•$9.5$1.2 million increasedecrease in WealthMarconi ManagementWireless segment, driven by revenuelower fromservice therevenues APLDattributable Variableto Ratean Transactionsongoing (“VRT”)decline in active customers; partially offset by

•$(0.8)$2.0 million decrease in Corporate and All Other non-reportable operating segments primarily driven by overall increaseincreases in unrealized losses for certain equity securities in the current year period.period; partially offset by:

In our Capital Markets segment, weWe have a portfolio of loans receivable that are measured at fair value with changes in fair value reported in our results of operations. The loan portfolio and fair value adjustments on loans consisted of the following:

The $14.6$3.4 million favorable variance in fair value adjustments related to our loans receivable during the three months ended MarchJune 31,30, 2026, when compared to the same period in the prior year, was primarily driven by unfavorable adjustments of $4.1 million, $2.7 million, and $3.0$1.9 million recordedin forproceeds loansrecovered receivable with Conn’s, Inc., XBP Americas, LLC (formerly Exela Technologies, Inc.), and other non-related party loans receivable, respectively, infrom the priorConn's, yearInc. periodbankruptcy with no adjustments of comparable magnitude recorded in the current year period,estate and a $6.7$1.2 million favorablefair adjustmentvalue recordedincrease inon the currentNorlin yearEV periodLimited related to the recovery of proceeds from the Conn’s, Inc. bankruptcy estate. These wereloan, partially offset by a $1.4$(1.8) million favorabledecrease adjustmentin relatedfair value adjustments on the XBP Americas, LLC loan compared to Freedom VCM Receivables, Inc. recorded in the prior year quarter with no fair value adjustments of comparable magnitude recorded in the current year period.

The $(1.5)$1.7 million decrease in interest income related to loans receivable for the three months ended MarchJune 31,30, 2026, compared to the same period in the prior year, was primarily duedriven toby declines across the XBPExela Americas,portfolios LLCof and$2.1 million, GA Group portfolios,portfolios whichof decreased$0.4 million, and Norlin EV Limited of $0.2 million, partially offset by $0.9an increase of $1.0 million anddue $0.5to million,a respectively.loan entered with Enovum NC-1 Venture, LLC during the current year period.

The $0.4$0.5 million increasedecrease in interest income related to securities lending during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by a higher volume of securities on loan, partially offset by lower average spreads earned on thoseequity loanssecurities comparedlending, topartially offset by higher average contract values across the prior period.portfolio.

The decrease in sale of goods revenue during the three months ended MarchJune 31,30, 2026, compared to the same period in the prior year, was primarily dueattributable to a $0.7 million decrease in the following:Marconi Wireless segment driven by lower product sales from an ongoing decline in active customers, partially offset by a $0.3 million increase in the Consumer Products segment.

The decrease in direct cost of services during the three months ended MarchJune 31,30, 2026, compared to the threesame monthsperiod endedin Marchthe 31,prior 2025,year, was primarily due to the following:

•$1.5$1.7 million decrease from the Lingo segment due to lower POTS unit volume, consistent with the decline in POTS revenue, partially offset by higher costs associated with the conversion to VoIP services;

•$0.3$0.2 million decrease from the magicJack segment due to lower carrier charges, reduced salarynetwork costs from restructuring,fewer active customers and lower professionalpersonnel-related servicescosts andfrom depreciation;reduced andheadcount.