Strong H1 2026 profit as BRC Group Holdings (NASDAQ: RILY) reduces notes
BRC Group Holdings, Inc. reported strong profitability for the six months ended June 30, 2026, with total revenues of 591,177 (dollars in thousands) and net income of 243,756, compared with 411,365 and 124,432 a year earlier. Diluted income per common share from continuing operations was 6.47 for the six-month period and 0.45 for the quarter.
Total assets rose to 1,967,538, while stockholders’ equity improved to 142,169 from a deficit of 171,533 at December 31, 2025, aided by redeeming 95,991 of 5.50% Senior Notes due 2026 and exchanging 69,054 of senior notes for 8,358,495 common shares. Senior notes payable, net, declined to 1,129,966. Cash, cash equivalents and restricted cash were 155,642, and management states existing liquidity and credit facilities are expected to cover obligations for the next 12 months. The investment portfolio is concentrated, including a 386,996 equity stake in Babcock & Wilcox Enterprises, Inc. and sizable loans to XBP Americas, LLC and Enovum NC-1 Venture, LLC.
Positive
- Profitability and equity turnaround: Six-month net income was 243,756 (vs. 124,432 a year earlier), and stockholders’ equity moved from a deficit of 171,533 at December 31, 2025 to positive equity of 142,169 at June 30, 2026.
- Debt reduction via redemptions and exchanges: The company fully redeemed 95,991 of 5.50% Senior Notes due 2026 and exchanged an additional 69,054 of senior notes into 8,358,495 common shares, lowering senior notes payable, net, to 1,129,966.
Negative
- Concentrated investment risk: Securities and other investments owned include positions in two public companies of 386,996 (53.5%) and 80,040 (11.1%) of the portfolio, including Babcock & Wilcox Enterprises, Inc., which reports deficit equity and recent net losses.
- Debt trading at a discount: Senior notes payable had a carrying amount of 871,036 and estimated fair value of 734,696, while New Notes payable carried 258,930 with fair value 202,511, indicating the notes are valued below their carrying amounts in the market.
Filing Explained
As of August 3, 40,199,755 shares were outstanding after completed note exchanges, reducing existing holders’ percentage ownership absent offsets.
This Form 10-Q, an unaudited quarterly report, records the company’s interim position at
During the six months, the company issued
The company’s Babcock & Wilcox Enterprises position changed from a
The filing measures that position under the fair-value option and reports that B&W had a
Key Figures
Total revenues (six months): 591,177
Net income (six months): 243,756
Diluted EPS from continuing operations: 6.47
+5 more
8 metrics
Total revenues (six months)
591,177
Dollars in thousands; six months ended June 30, 2026
Net income (six months)
243,756
Dollars in thousands; six months ended June 30, 2026
Diluted EPS from continuing operations
6.47
Six months ended June 30, 2026, net income per common share
Total assets
1,967,538
Dollars in thousands; balance sheet as of June 30, 2026
Senior notes payable, net
1,129,966
Dollars in thousands; balance sheet as of June 30, 2026
Cash, cash equivalents and restricted cash
155,642
Dollars in thousands; end of period June 30, 2026
Common shares outstanding
40,199,755
Shares outstanding as of August 3, 2026
Senior notes exchanged for equity
69,054
Aggregate principal amount of senior notes exchanged for 8,358,495 common shares in H1 2026
Key Terms
Section 3(a)(9) Exchanges, variable interest entity, fair value option, measurement alternative, +1 more
5 terms
Section 3(a)(9) Exchanges regulatory
"completed a series of exchanges in accordance with Section 3(a)(9) of the Securities Act"
variable interest entity financial
"whether its variable interest or interests give it a controlling financial interest in a variable interest entity"
A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.
fair value option financial
"The Company has elected to account for its equity investment in the SPE under the fair value option."
An accounting election that lets a company measure eligible financial assets and liabilities at their current market price, recording gains and losses in the income statement as those prices move. For investors it matters because choosing the fair value option makes reported profits and asset values respond immediately to market swings—like revaluing a house to today’s sale price—so it can increase earnings volatility while giving a more up‑to‑date view of value.
measurement alternative financial
"nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in realized and unrealized gains (losses) on investments"
Accumulated other comprehensive loss financial
"Accumulated other comprehensive loss | ( 8,468 ) | ( 6,272 )"
Accumulated other comprehensive loss is the running negative total of certain gains and losses that companies record outside their regular profit-and-loss statement, such as changes in the value of some investments, pension adjustments, or currency translation effects. It matters to investors because it reduces shareholders’ equity and reveals economic swings that haven’t affected reported net income yet — like a side ledger showing pending ups and downs that could influence future cash flow or balance-sheet strength.
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FAQ
How did BRC Group Holdings (RILY) perform for the six months ended June 30, 2026?
BRC Group Holdings generated revenues of 591,177 and net income of 243,756 (dollars in thousands) for the six months ended June 30, 2026, compared with 411,365 and 124,432 in the prior-year period, with diluted income per common share from continuing operations of 6.47.
What debt reduction steps did BRC Group Holdings (RILY) take in early 2026?
The company fully redeemed 95,991 of 5.50% Senior Notes due 2026 and completed Section 3(a)(9) exchanges of 69,054 of senior notes for 8,358,495 common shares, after which the exchanged notes were cancelled or redeemed and senior notes payable, net, declined to 1,129,966.
What is BRC Group Holdings (RILY)’s liquidity position as of June 30, 2026?
As of June 30, 2026, cash, cash equivalents and restricted cash totaled 155,642, and securities and other investments owned were 723,715. Management states that current cash, investments and available credit facilities are expected to meet working capital and debt service needs for the next 12 months.
How many BRC Group Holdings (RILY) shares are outstanding?
As of August 3, 2026, BRC Group Holdings had 40,199,755 common shares outstanding. Weighted average diluted common shares outstanding were 38,422,185 for the quarter and 35,311,001 for the six months ended June 30, 2026, reflecting issuances tied to senior note redemptions and warrant exercises.
What concentration risks does BRC Group Holdings (RILY) disclose?
Loans receivable at fair value include 15,041 to XBP Americas, LLC and 19,794 to Enovum NC-1 Venture, LLC, representing 38.8% and 51.0% of loans, respectively. Securities and other investments owned include two public-company positions of 386,996 and 80,040, together over 60% of that portfolio.
How did discontinued operations affect BRC Group Holdings (RILY)’s prior-year results?
For 2025, discontinued operations contributed 72,707 of income for the six months ended June 30, 2025, including a 66,795 gain on disposal, mainly from selling GlassRatner and Farber. In the current 2026 periods, income from discontinued operations is zero, and results reflect continuing operations only.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2026
Or
For the transition period from to
Commission File Number 001-37503
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
fractional interest in a 6.875% share of Series A Cumulative Perpetual Preferred Stock | ||||||||||||||
fractional interest in a 7.375% share of Series B Cumulative Perpetual Preferred Stock | ||||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | x | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 3, 2026, there were 40,199,755 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.
Table of Contents
BRC Group Holdings, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2026
Table of Contents
| Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Condensed Consolidated Financial Statements | 1 | ||||||
Condensed Consolidated Balance Sheets | 1 | |||||||
Condensed Consolidated Statements of Operations | 3 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 5 | |||||||
Condensed Consolidated Statements of Equity (Deficit) | 6 | |||||||
Condensed Consolidated Statements of Cash Flows | 8 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 11 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 74 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 101 | ||||||
Item 4. | Controls and Procedures | 101 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 102 | ||||||
Item 1A. | Risk Factors | 102 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 104 | ||||||
Item 3. | Defaults Upon Senior Securities | 104 | ||||||
Item 4. | Mine Safety Disclosures | 104 | ||||||
Item 5. | Other Information | 104 | ||||||
Item 6. | Exhibits | 105 | ||||||
SIGNATURES | 107 | |||||||
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
BRC GROUP HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and par value)
| June 30, 2026 | December 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Assets: | |||||||||||
Cash and cash equivalents(1) | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Due from clearing brokers | |||||||||||
Securities and other investments owned ($ | |||||||||||
| Securities borrowed | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Loans receivable, at fair value ($ | |||||||||||
| Equity investments | |||||||||||
Prepaid expenses and other assets(1) | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Deferred income taxes | |||||||||||
Assets of discontinued operations (Note 4) | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY (DEFICIT) | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
Accrued expenses and other liabilities ($ | |||||||||||
| Deferred revenue | |||||||||||
| Deferred income taxes | |||||||||||
| Securities sold not yet purchased, at fair value | |||||||||||
| Securities loaned | |||||||||||
| Operating lease liabilities | |||||||||||
| Revolving credit facilities | |||||||||||
| Term loans, net | |||||||||||
| Senior notes payable, net | |||||||||||
Liabilities of discontinued operations (Note 4) | |||||||||||
| Total liabilities | $ | $ | |||||||||
Commitments and contingencies (Note 26) | |||||||||||
1
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| BRC Group Holdings, Inc. stockholders’ equity (deficit): | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total BRC Group Holdings, Inc. stockholders’ equity (deficit) | ( | ||||||||||
Noncontrolling interests(1) | |||||||||||
| Total equity (deficit) | ( | ||||||||||
| Total liabilities and equity (deficit) | $ | $ | |||||||||
(1) At June 30, 2026 and December 31, 2025 the balance sheet includes cash of $183 and $446 , securities and other investments owned, at fair value of $713 and $682 , prepaid and other expenses of $3,678 and $3,737 , accrued expenses and other liabilities of $28 and $28 , and noncontrolling interest of $3,939 and $4,192 , respectively, of consolidated variable interest entities (see Note 3 - Variable Interest Entities).
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
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BRC GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except share and per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
Services and fees ($ | $ | $ | $ | $ | |||||||||||||||||||
| Trading gains, net | |||||||||||||||||||||||
Fair value adjustments on loans ($ | ( | ||||||||||||||||||||||
Interest income - loans ($ | |||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Direct cost of services | |||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Restructuring charge (Note 18) | |||||||||||||||||||||||
| Impairment of tradename | |||||||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income (loss) | ( | ||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Dividend income | |||||||||||||||||||||||
| Realized and unrealized gains (losses) on investments | ( | ||||||||||||||||||||||
| Change in fair value of financial instruments and other | ( | ||||||||||||||||||||||
| Gain on sale and deconsolidation of businesses | |||||||||||||||||||||||
| Gain on senior note exchange | |||||||||||||||||||||||
| (Loss) income from equity investments | ( | ( | |||||||||||||||||||||
| (Loss) gain on extinguishment of debt | ( | ( | ( | ||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Income from continuing operations before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income from continuing operations | |||||||||||||||||||||||
| Income from discontinued operations, net of income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ||||||||||||||||||||||
| Net income attributable to BRC Group Holdings, Inc. | |||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
3
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| Basic net income per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Discontinued operations | |||||||||||||||||||||||
| Basic income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Discontinued operations | |||||||||||||||||||||||
| Diluted income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average basic common shares outstanding | |||||||||||||||||||||||
| Weighted average diluted common shares outstanding | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
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BRC GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Dollars in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in cumulative translation adjustment | ( | ( | |||||||||||||||||||||
| Other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||||||||
| Total comprehensive income | |||||||||||||||||||||||
| Comprehensive income (loss) attributable to noncontrolling interests | ( | ||||||||||||||||||||||
| Comprehensive income attributable to BRC Group Holdings, Inc. | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
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BRC GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Equity (Deficit)
(Unaudited)
(Dollars in thousands, except share and per share data)
For the Three Months Ended June 30, 2026 and 2025
| Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, April 1, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with redemption of Senior Notes | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with the exercise of warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock, net of shares withheld for employer taxes | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments in equity of subsidiary | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests and other | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, April 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with employment agreement | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments in equity of subsidiary | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividend forfeitures on unvested equity awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
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For the Six Months Ended June 30, 2026 and 2025
| Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with redemption of Senior Notes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with the exercise of warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| RSU equity awards reclassified from liability | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock, net of shares withheld for employer taxes | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments in equity of subsidiary | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of shares in equity of subsidiary | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests and other | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued, in connection with employment agreement | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| RSU equity awards reclassified to liability | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock forfeited | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments in equity of subsidiary | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of shares in equity of subsidiary | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Dividend forfeitures on unvested equity awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance in equity of subsidiary | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Disposition from sale and deconsolidation of businesses | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Initial consolidation of VIE | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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BRC GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Cash flows from operating activities(1): | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for losses on accounts receivable | |||||||||||
| Share-based compensation | |||||||||||
Fair value and remeasurement adjustments ($( | ( | ( | |||||||||
Non-cash interest and other (includes $ | |||||||||||
| Depreciation of rental merchandise | |||||||||||
| Net foreign currency losses (gains) | ( | ||||||||||
| Loss (income) from equity investments | ( | ||||||||||
| Dividends from equity investments | |||||||||||
| Deferred income taxes | |||||||||||
| Impairment of tradename | |||||||||||
| Gain on disposal of discontinued operations | ( | ||||||||||
| Loss (gain) on sale or disposal of fixed assets and other | ( | ||||||||||
| Gain on sale and deconsolidation of businesses | ( | ||||||||||
| (Gain) loss on extinguishment of debt | ( | ||||||||||
| Gain on senior note exchange | ( | ||||||||||
| Change in operating assets and liabilities: | |||||||||||
| Amounts due to/from clearing brokers | ( | ||||||||||
| Securities and other investments owned | ( | ||||||||||
| Securities borrowed | ( | ( | |||||||||
| Accounts receivable | ( | ||||||||||
Prepaid expenses and other assets ($ | |||||||||||
| Accounts payable, accrued expenses and other liabilities | ( | ||||||||||
| Amounts due to/from related parties and partners | ( | ||||||||||
| Securities sold not yet purchased | ( | ||||||||||
| Deferred revenue | ( | ( | |||||||||
| Securities loaned | |||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities(1): | |||||||||||
Purchases of loans receivable ($ | ( | ( | |||||||||
Repayments of loans receivable ($ | |||||||||||
Proceeds from sale of loans receivable ($ | |||||||||||
| Proceeds from loan participations sold | |||||||||||
| Proceeds from sale of business, net of cash sold and other | |||||||||||
| Purchases of property, equipment, and intangible assets | ( | ( | |||||||||
| Proceeds from sale of property, equipment, intangible assets, and other | |||||||||||
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| Distributions from equity investments | |||||||||||
| Purchases of equity and other investments | ( | ||||||||||
| Consolidation of VIE | |||||||||||
| Proceeds from sale of discontinued operations, net of cash sold | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities(1): | |||||||||||
| Proceeds from revolving lines of credit | |||||||||||
| Repayment of revolving lines of credit | ( | ( | |||||||||
| Proceeds from note payable | |||||||||||
| Repayment of notes payable and other | ( | ( | |||||||||
| Repayment of term loans | ( | ( | |||||||||
| Proceeds from term loans | |||||||||||
| Redemption of senior notes, net | ( | ( | |||||||||
| Repurchases and payments on senior notes | ( | ||||||||||
| Payment of debt issuance and offering costs | ( | ( | |||||||||
| Payment of contingent consideration | ( | ||||||||||
| Payment of employment taxes on vesting of restricted stock | ( | ||||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
(Decrease) increase in cash, cash equivalents and restricted cash(1) | ( | ||||||||||
Effect of foreign currency on cash, cash equivalents and restricted cash(1) | ( | ||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash(1) | ( | ||||||||||
| Cash, cash equivalents and restricted cash from continuing operations, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash from continuing operations, end of period | |||||||||||
| Cash, cash equivalents and restricted cash from discontinued operations, end of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
| Reconciliation of cash, cash equivalents and restricted cash to amounts reported in the condensed consolidated balance sheets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Taxes paid | |||||||||||
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| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
| Transfer of loans to held for sale from loans receivable at fair value | $ | $ | |||||||||
| Issuance of common stock in equity of subsidiary | |||||||||||
| Issuance of warrants for term loan | |||||||||||
| Recognition of derivative liability for term loan springing maturity | |||||||||||
| Recognition of derivative liability for term loan exit fee | |||||||||||
| Disposition of noncontrolling interests through sale and deconsolidation of businesses | |||||||||||
| Capital from noncontrolling interest upon initial consolidation of VIE | |||||||||||
| Reclassification of restricted stock units from liability to equity | |||||||||||
| Reclassification of restricted stock units from equity to liability | |||||||||||
| Issuance of common stock in connection with redemption of senior notes | |||||||||||
| Issuance of warrants for senior notes | |||||||||||
| Settlement of warrant liability upon cashless exercise | |||||||||||
| Exchange of preferred stock investment for loan receivable | |||||||||||
(1) Amounts presented contain results from both continuing and discontinued operations. Refer to Note 4 – Discontinued Operations and Assets Held for Sale for additional information regarding cash flow associated with the results of discontinued operations.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRC GROUP HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share data)
NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS
BRC Group Holdings, Inc. and its subsidiaries (collectively, the “Company”) provide investment banking, brokerage, wealth management, asset management, direct lending, and business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals. The Company’s telecom businesses provide consumer and business services including traditional, mobile and cloud phone, internet and data, security, and email, and its retail companies provide mobile computing accessories and home furnishings.
The Company operates in seven
Liquidity and Capital Resources
For the six months ended June 30, 2026, the Company generated net income of $243,756 . During the six months ended June 30, 2026, the Company fully redeemed the $95,991 of outstanding 5.50 % Senior Notes due 2026 on March 30, 2026.
As discussed in more detail in Note 15 - Senior Notes Payable, during the six months ended June 30, 2026, the Company completed a series of exchanges in accordance with Section 3(a)(9) of the Securities Act of 1933 (“Section 3(a)(9) Exchanges”) with DBA Trading, LLC (the “Investor”) whereby the Company exchanged an aggregate principal amount of $69,054 of senior notes which included (i) $11,002 of the 5.50 % Senior Notes which were due March 31, 2026, (ii) $36,133 of the 6.50 % Senior Notes due September 30, 2026, (iii) $8,945 of the 5.00 % Senior Notes due December 31, 2026, (iv) $6,383 of the 6.00 % Senior Notes due January 31, 2028, and (v) $6,591 of the 5.25 % Senior Notes due August 31, 2028 for an aggregate of 8,358,495 shares of the Company’s common stock. The Investor owns more than five percent of the Company’s common stock. Such senior notes were then cancelled or redeemed following each such Section 3(a)(9) Exchange.
The Company believes that its current cash and cash equivalents, securities and other investments owned, and funds available under our credit facilities will be sufficient to meet our expected working capital, capital expenditure requirements, and debt service obligations due during the next 12 months following the issuance date of the accompanying unaudited condensed consolidated financial statements.
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NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated financial statements include the accounts of BRC Group Holdings, Inc. and its wholly owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated upon consolidation.
The Company consolidates all entities that it controls through a majority voting interest. In addition, the Company performs an analysis to determine whether its variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”) including ongoing reassessments of whether it is the primary beneficiary of a VIE. See Note 2(e) - Variable Interest Entities.
The unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to interim financial reporting guidelines and the rules and regulations of the SEC. The condensed consolidated balance sheet at December 31, 2025 was derived from our audited annual consolidated financial statements. Certain information and footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented have been included. The disclosures presented in our notes to the unaudited condensed consolidated financial statements are presented on a continuing operations basis. These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2025. The unaudited results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.
The Company has provided a discussion of significant accounting policies, estimates, and judgments in the Company’s audited annual consolidated financial statements. There have been no changes to the Company’s significant accounting policies since December 31, 2025 which are expected to have a material impact on the Company’s financial position, results of operations, or cash flows.
(b) Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, allowance for credit losses, the fair value of loans receivables, intangible assets and goodwill, share-based arrangements, embedded derivatives, warrant and warrant liabilities, accounting for income tax valuation allowances, and sales returns and allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may significantly differ.
(c) Concentration of Risk
Revenues in the Capital Markets, Wealth Management, Lingo, magicJack, Marconi Wireless, and UOL segments are primarily generated in the United States. Revenues in the Consumer Products segment are primarily generated in the United States, Canada, and Europe.
A significant portion of Lingo’s revenues consists of reselling legacy Plain Old Telephone Services (“POTS”) copper lines from four major nationwide Incumbent Local Exchange Carriers (“ILECs”) to its customers. As ILECs have been decommissioning POTS lines and halting new POTS, there is a concentration of risk related to Lingo’s ability to attract new POTS customers which adversely affects Lingo’s financial condition, results of operations, and cash flows. To mitigate this, Lingo has made concerted efforts to transition POTS customers to alternative solutions offered by Lingo.
The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a
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concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts and mitigates this risk by utilizing financial institutions of high credit quality.
At June 30, 2026, the Company had concentrations in loans receivable at fair value that includes two loans to XBP Americas, LLC totaling $15,041 , or 38.8 % of total loans receivable, and one loan to Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company, totaling $19,794 , or 51.0 % of total loans receivable (see Note 9 - Loans Receivable, at Fair Value). Additionally, the Company had a concentration in securities and other investments owned at June 30, 2026 that includes investments in two publicly traded companies individually in the amounts of $386,996 or 53.5 % and $80,040 or 11.1 % of total securities and other investments owned (see Note 6 - Securities And Other Investments Owned And Securities Sold Not Yet Purchased).
(d) Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
(e) Variable Interest Entities
The Company holds interests in various entities that meet the characteristics of a VIE. Interests in these entities are generally in the form of equity interests, loans receivable, or fee arrangements.
The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties.
(f) Fair Value Measurements
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable, and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
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The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate bonds, and investments in partnerships. Investments in common stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also holds loans receivable valued at fair value, nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company also invests in priority investment funds, and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds; the value for these investments is derived from the most recent statements received from the general partner or fund administrator. These partnership and investment fund interests are valued at net asset value (“NAV”) and are excluded from the fair value hierarchy in the table in Note 5 - Fair Value Measurements.
The investments in nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in realized and unrealized gains (losses) on investments in the accompanying unaudited condensed consolidated statements of operations. These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another observable transaction occurs. Therefore, the determination of fair values of these investments in nonpublic entities that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments. Investments in nonpublic entities that do not report NAV are subject to a qualitative assessment for indicators of impairment. If indicators of impairment are present, the Company is required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
The Company measures certain assets at fair value on a nonrecurring basis. These assets include equity method investments for which the measurement alternative has been elected, adjusted to fair value based on observable price changes or impairment, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired.
The Company has elected to measure certain loans and equity investments at fair value to provide management with a more relevant representation for evaluating risk, performance reporting, market conditions, and economic events in earnings on a more timely basis and to provide reporting of the current value of those assets in the accompanying unaudited condensed consolidated balance sheets.
(g) Securities and Other Investments Owned and Securities Sold Not Yet Purchased
Securities and other investments owned consist of equity securities including common and preferred stocks, warrants, and options, corporate bonds, and other fixed income securities including government and agency bonds, loans receivable valued at fair value, and investments in partnerships that are accounted for at fair value (see Note 2(f) - Fair Value Measurements). Equity securities also include investments in public and private companies that are accounted for under the fair value option where the Company would otherwise use the equity method of accounting. Investments become subject to the equity method of accounting when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. Refer to Note 2(k) - Equity Method Investments for more information regarding equity method investments. Dividend income received from equity investments accounted for under the fair value option are recorded to other income in the accompanying unaudited condensed consolidated statements of operations.
Securities sold, but not yet purchased are securities the Company has sold that it does not own (i.e., securities sold short) and, therefore, the Company is obligated to purchase such securities at a future date. The Company has recorded this obligation on its unaudited condensed consolidated balance sheets at the fair value of the securities borrowed. There is an element of off-balance sheet risk in that, if the securities sold short increase in value, it will be necessary to purchase the securities sold short at a cost in excess of the obligation reflected on the accompanying unaudited condensed consolidated
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balance sheets. Changes in the fair value of securities sold short are recognized in the results of operations in the period in which they occur.
(h) Accounts Receivable
(i) Securities Borrowed and Securities Loaned
Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate.
(j) Loans Receivable
The Company elected the fair value option for all outstanding loans receivable. Management evaluates the performance of the loan portfolio on a fair value basis. Under the fair value option, loans receivable are measured at each reporting period based upon their exit value in an orderly transaction, and unrealized gains or losses are included in the “Fair value adjustments on loans” line item in the accompanying unaudited condensed consolidated statements of operations. At the time of origination, the Company’s loans receivable are collateralized by the assets of borrowers and other pledged collateral and may have guarantees to provide for protection of the payments due on loans receivable.
Interest income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance and is included in the “Interest income - loans” line item in the accompanying unaudited condensed consolidated statements of operations.
(k) Equity Method Investments
Equity investments are accounted for under the equity method if the Company is able to exercise significant influence, but not control, over an investee. The ability to exercise significant influence is presumed when the Company possesses more than 20% of the voting interests of the investee. However, the Company may have the ability to exercise significant influence over the investee when the Company owns less than 20% of the voting interests of the investee depending on the facts and circumstances that demonstrate that the ability to exercise influence is present, such as when the Company has
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representation on the board of directors of such investee. Equity investments that are accounted for under the equity method of accounting are included in the “Equity investments” line item in the accompanying unaudited condensed consolidated balance sheets. The Company’s share of earnings or losses from equity method investees are included in the “Income from equity investments” line item in the accompanying unaudited condensed consolidated statements of operations. The investments are evaluated for impairment annually and when facts and circumstances indicate that the carrying value may not be recoverable. If a decline in fair value below the carrying value is determined to be not recoverable, an impairment charge is recorded in “Change in fair value of financial instruments and other” line item in the accompanying unaudited condensed consolidated statements of operations.
(l) Inventories
Inventories are substantially all finished goods from the Consumer Products, magicJack, Marconi Wireless and UOL segments and are stated at the lower of cost, determined on the first-in, first-out basis, or net realizable value. The Company maintains an allowance for excess and obsolete inventories to reflect its estimate of realizable value of the inventory based on historical sales and recoveries. Inventories are included in prepaid and other assets in the accompanying unaudited condensed consolidated balance sheets. Refer to Note 11 - Prepaid Expenses and Other Assets.
(m) Rental Merchandise
(n) Noncontrolling Interests
Non-redeemable noncontrolling interest represents the portion of equity in a subsidiary that is not attributable, directly or indirectly, to the Company. The Company’s non-redeemable noncontrolling interest relates to the equity ownership interest of consolidated subsidiaries that it does not own.
The initial fair value of the noncontrolling interest is determined by a weighing of the discounted cash flow method and market approach. The discounted cash flow method utilized five-year discrete projections of the operating results, working capital and depreciation and capital expenditures, along with a residual value subsequent to the discrete period. The five-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and operational strategies. The discount rates for the calculations represented the estimated required return on equity for market participants at the time of the analysis. The market approach included significant estimates using guideline public company data to identify an appropriate market multiple of earnings before income taxes in estimating the fair value of the noncontrolling interest. Refer to Note 16 - Noncontrolling Interests.
(o) Recent Accounting Standards
Not yet adopted
In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other Internal Use Software. This ASU was issued to modernize the accounting for software costs by removing references to prescriptive and sequential software development stages and providing an updated framework for capitalizing internal software costs. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial position and results of operations.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses. This ASU requires additional expense disclosures by public entities in the notes to the financial statements. The ASU outlines the specific costs that are required
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to be disclosed which include such costs as: purchases of inventory, employee compensation, depreciation, intangible asset amortization, selling costs, and depreciation, depletion, and amortization related to oil and gas production. It also requires qualitative descriptions of the amounts remaining in the relevant expense income statement captions that are not separately disaggregated quantitatively in the notes to the financial statements and the entity’s definition of selling expenses. The disclosures are required for each interim and annual reporting period. In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Claiming the Effective Date, which clarified the effective date for entities that do not have an annual reporting period that ends on December 31st. The guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial position and results of operations.
Recently adopted
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses - Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient that simplifies the estimation of credit losses on accounts receivable and contract assets arising from transactions accounted for under ASC 606 - Revenue from Contracts with Customers by assuming that current conditions as of the balance sheet date do not change for the remaining life of these assets when estimating expected credit losses. The Company adopted this ASU effective January 1, 2026, and the adoption did not have a material impact on the Company’s financial position, results of operations, or cash flows.
NOTE 3 — VARIABLE INTEREST ENTITIES
On August 21, 2023, in connection with the Franchise Group, Inc. (“FRG”) take-private transaction, one of the Company’s subsidiaries (the “Lender”) and an affiliate of Mr. Kahn (the “Borrower”) entered into an amended and restated promissory note as discussed further in Note 9 - Loans Receivable, at Fair Value. The Company was not involved in the design of the Borrower, has no equity financial interest, and has no rights to make decisions or participate in the management of the Borrower that significantly impact the economics of the Borrower. Since the Company does not have the power to direct the activities of the Borrower, the Company is not the primary beneficiary and therefore does not consolidate the Borrower. The promissory note is included in the “Loans receivable, at fair value” line item in the accompanying unaudited condensed consolidated balance sheets and is a variable interest in accordance with the accounting guidance at December 31, 2025, and the maximum amount of loss exposure to the VIE on a fair value basis was $1,835 . In February 2026, the Company collected proceeds in the amount of $1,855 from the sale of collateral related to the promissory note and does not expect to collect any further amounts. As such, there is no balance remaining for the promissory note that is included in Loans receivable, at fair value in the Company’s accompanying unaudited condensed consolidated balance sheets at June 30, 2026 and the promissory note is no longer a variable interest.
On April 14, 2026, the Company invested $750 in a Special Purpose Entity (“SPE”) that owns a publicly traded equity security. The SPE is managed by a third party that serves as the investment manager. The Company owns approximately 7 % of the SPE in the form of a Class A membership interest in the limited liability company. The SPE governing documents do not provide any kick-out or participating rights. Since the Company does not have the power to direct the SPE’s activities, the Company is not the primary beneficiary and therefore does not consolidate the SPE. However, the Company is presumed to have the ability to exercise significant influence since the investment is more than minor and the limited liability company is required to maintain specific ownership accounts for each member. The Company has elected to account for its equity investment in the SPE under the fair value option. The Class A membership interest is included as an equity security at fair value in the “Securities and other investments owned, at fair value” line item in the accompanying unaudited condensed consolidated balance sheet at June 30, 2026 and is a variable interest in accordance with the accounting guidance. As of June 30, 2026, the maximum amount of loss exposure to the VIE was $1,294 .
On May 26, 2026, a strategic asset company assigned a $20,000 advance under an existing facility with Enovum NC-1 Venture, LLC (“Enovum”), to the Company’s wholly owned subsidiary B. Riley Securities, Inc. (“BRS”) for consideration of $19,400 , and Enovum issued a promissory note to BRS on the same economic terms as the original lender, as discussed further in Note 9 - Loans Receivable, at Fair Value. The Company determined that Enovum is a variable interest entity because its equity at risk is insufficient to finance its activities without additional subordinated financial support. Since the Company does not have the power to direct the activities of Enovum, the Company is not the primary beneficiary and therefore does not consolidate Enovum. The promissory note is included in the “Loans receivable, at fair value” line item in the accompanying unaudited condensed consolidated balance sheet at June 30, 2026 and is a variable interest in
17
accordance with the accounting guidance. As of June 30, 2026, the maximum amount of loss exposure to the VIE on a fair value basis was $20,545 .
The carrying amounts included in the Company’s accompanying unaudited condensed consolidated balance sheets related to variable interests in VIEs that were not consolidated are shown below.
| June 30, 2026 | December 31, 2025 | ||||||||||
| Securities and other investments owned, at fair value | $ | $ | |||||||||
| Loans receivable, at fair value | |||||||||||
| Other assets | |||||||||||
| Maximum exposure to loss | $ | $ | |||||||||
Bicoastal Alliance, LLC (“Bicoastal”)
On May 3, 2024, as part of the acquisition of Nogin, the Company acquired a 50 % equity interest in Bicoastal through a wholly owned subsidiary of Nogin. Bicoastal is a holding company designed to manage the investments, including strategy and operations, for two brand apparel operating companies. The Company determined Bicoastal is a variable interest entity as it does not have sufficient resources to carry out its management activities without additional financial support. The Company determined that it has the power to direct the activities that most significantly impact Bicoastal’s economic performance, has more equity capital at risk, and is expected to continue to fund operations. Therefore, the Company determined that it is the primary beneficiary of Bicoastal and has reported its investment in the assets and liabilities in the accompanying unaudited condensed consolidated balance sheets and consolidated its results into the Company’s accompanying unaudited condensed consolidated statements of operations.
On August 14, 2024, Bicoastal entered into an agreement to acquire the remaining 50 % equity interest upon paydown of a $700 note payable to the noncontrolling interest noteholder with a final repayment date and equity ownership interest transfer date of June 30, 2025.
On March 31, 2025, the Company signed a Deed of Assignment for the Benefit of Creditors (“ABC”), (i) pursuant to which all of the assets of Nogin were transferred to an assignee for the benefit of Nogin’s creditors, and (ii) which provided the assignee the right to, among other things, sell or dispose of such assets and settle all claims against Nogin. The Company no longer controls or owns the assets of Nogin or has any remaining or future obligations to Nogin’s creditors. The results of operations were deconsolidated on March 31, 2025 and are no longer reported in the Company’s financial statements after March 31, 2025. Management does not expect any recovery of the Company’s investment in Nogin. Subsequent to March 31, 2025, certain of Nogin’s creditors filed an involuntary petition for relief under chapter 7 of title 11 of the United States Code in the United States Bankruptcy Court for the District of New York and an order for relief was entered to move the ABC to a liquidation. A gain of $28,411 was recognized during the six months ended June 30, 2025 from deconsolidation of Nogin, which is included in the “Gain on sale and deconsolidation of businesses” line item in the accompanying unaudited condensed consolidated statements of operations.
BRC Partners Opportunities Trust (“BRC Trust”)
BRC Trust was formed on January 6, 2025, for the purpose of transferring the assets and liabilities of BRC Partners Opportunity Fund, L.P., a Delaware limited partnership (“BRCPOF”), and liquidating the transferred net assets. BRCPOF transferred its assets and liabilities upon formation of the BRC Trust. The Company determined that the BRC Trust is a variable interest entity as the investors in the BRC Trust do not have voting rights and substantially all of the activities are conducted on behalf of the Company and its related parties which own 13.3 % and 58.2 % (see Note 24 - Related Party Transactions), respectively, of the equity interest in the BRC Trust. As the Company has the power to direct all of the activities of the BRC Trust, the Company is the primary beneficiary of the Trust and, therefore, consolidates the BRC Trust upon formation on January 6, 2025. Additionally, the BRC Trust does not meet the definition of a business and the initial consolidation of the BRC Trust did not result in a gain or loss upon initial consolidation.
18
The carrying amounts and classification of the assets, liabilities and noncontrolling interest of the BRC Trust as of June 30, 2026 and December 31, 2025, are as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Securities and other investments owned, at fair value | |||||||||||
| Prepaid expenses and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Accrued expenses and other liabilities | $ | $ | |||||||||
| Total liabilities | $ | $ | |||||||||
| Noncontrolling interest | $ | $ | |||||||||
B. Riley Securities Holdings, Inc. (“BRSH”)
On March 10, 2025, a merger subsidiary of the Company’s wholly-owned subsidiary BRSH merged with a shell corporation traded on the OTC exchange. The shell corporation survived the transaction as a wholly-owned subsidiary of BRSH as more fully described in Note 16 – Noncontrolling interests.
The shell corporation did not meet the definition of a business, since it did not have any assets, liabilities, or operations. The Company concluded that it has a variable interest in the shell corporation on the basis the Company owns substantially all the outstanding common stock in the shell corporation. The shell corporation is a variable interest entity since its equity at risk is considered insufficient to finance its activities without additional support. As a result, the Company was determined to be the primary beneficiary and consolidates the shell corporation. The shell remains dormant, and the Company does not have any obligations to the shell corporation to provide financial support. The consideration paid in connection with the merger consisted of $1,575 of common stock of BRSH, which represented the fair value of the 0.6 % of outstanding common stock of BRSH. The Company recognized a loss of $1,575 on the initial recognition of a variable interest entity, which represented the fair value of the noncontrolling interest in BRSH that was issued to the investors in the shell corporation on March 10, 2025.
NOTE 4 — DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Assets Held For Sale
Wealth Management
On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel Financial Corp. (“Stifel”) for estimated net consideration based on the number of advisors that join Stifel at closing, among other things. Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26,037 , representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 23.6 %, of total assets under management as of the close of the transaction. A gain of $5,372
19
Atlantic Coast Recycling
On March 3, 2025, the Company, BR Financial Holdings, LLC (“BRFH”), B. Riley Environmental Holdings, LLC and other indirect subsidiaries of the Company which included Atlantic Coast Recycling, LLC and Atlantic Coast Recycling of Ocean County, LLC entered into the Membership Interest Purchase Agreement (“MIPA”), whereby the interests owned by BRFH and the minority holders were sold to a third party in accordance with the terms of the MIPA on March 3, 2025. The interests were sold to the third party on March 3, 2025 for a purchase price of $102,478 , subject to certain adjustments and a holdback amount pending receipt of a certain third party consent, resulting in cash proceeds of $68,638 to the Company after adjustments for amounts allocated to noncontrolling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. Of the $68,638 of cash proceeds received by the Company, approximately $22,610 was used to pay interest, fees, and principal on the Credit Facility entered into with Oaktree Capital Management L.P. (“Oaktree”) on February 26, 2025. A gain of $52,430 was recognized during the six months ended June 30, 2025 from this sale, which is included in the “Gain on sale and deconsolidation of businesses” line item in the accompanying unaudited condensed consolidated statements of operations.
Operating results from the sale of the Wealth Management business and Atlantic Coast Recycling businesses contributed to the operating incomes of the Wealth Management segment and Corporate and All Other category, respectively, for the six months ended June 30, 2025.
Discontinued Operations
The Company presents a disposition of a component, being an operating or reportable segment, business unit, subsidiary or asset group, that represents a strategic shift that has or will have a major effect on the Company’s operations and financial results as discontinued operations when the components meet the criteria to be classified as held for sale. The following operations have been presented as discontinued operations.
GlassRatner and Farber
On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber from the Company’s Financial Consulting reportable segment. The aggregate cash consideration paid by the buyers for the interests of GlassRatner and shares of Farber was $117,800 , which was based on a target closing working capital amount that was subject to adjustment within 180 days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.
The major classes of assets and liabilities included in discontinued operations were as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
| Prepaid expenses and other assets | $ | $ | |||||||||
| Total assets | $ | $ | |||||||||
| Liabilities: | |||||||||||
| Accrued expenses and other liabilities | $ | $ | |||||||||
| Total liabilities | $ | $ | |||||||||
20
Revenues, expenses and income from discontinued operations for the three and six months ended June 30, 2025 were as follows:
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, 2025 | June 30, 2025 | ||||||||||
| Revenues: | |||||||||||
| Services and fees | $ | $ | |||||||||
| Operating expenses: | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Operating income | |||||||||||
| Other income: | |||||||||||
| Interest income | |||||||||||
| Gain on disposal of discontinued operations before income taxes | |||||||||||
| Income from discontinued operations before income taxes | |||||||||||
| Provision for income taxes | ( | ( | |||||||||
| Income from discontinued operations, net of income taxes | $ | $ | |||||||||
Cash flows from discontinued operations were as follows:
| Six Months Ended | |||||
| June 30, 2025 | |||||
| Net cash from discontinued operations provided by (used in): | |||||
| Operating activities | $ | ||||
| Investing activities | |||||
| Financing activities | ( | ||||
| Effect of foreign currency on cash | |||||
| Net decrease in cash and cash equivalents | $ | ( | |||
Supplemental disclosures from cash flows were as follows:
| Six Months Ended | |||||
| June 30, 2025 | |||||
| Interest paid - Continuing Operations | $ | ||||
| Interest paid - Discontinued Operations | |||||
| Interest paid - Total | $ | ||||
| Taxes paid - Continuing Operations | $ | ||||
| Taxes paid - Discontinued Operations | |||||
| Taxes paid - Total | $ | ||||
21
NOTE 5 — FAIR VALUE MEASUREMENTS
The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2026 and December 31, 2025.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2026 Using | |||||||||||||||||||||||
Fair value as of June 30, 2026 | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Securities and other investments owned: | |||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Partnership interests and other investments | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Other fixed income securities | |||||||||||||||||||||||
| Total securities and other investments owned | |||||||||||||||||||||||
| Loans receivable, at fair value | |||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Securities sold not yet purchased: | |||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Total securities sold not yet purchased | |||||||||||||||||||||||
| Embedded derivatives, included in accrued expenses and other liabilities | |||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
22
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2025 Using | |||||||||||||||||||||||
Fair value at December 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Securities and other investments owned: | |||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Partnership interests and other investments | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Other fixed income securities | |||||||||||||||||||||||
| Total securities and other investments owned | |||||||||||||||||||||||
| Loans receivable, at fair value | |||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Securities sold not yet purchased: | |||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Total securities sold not yet purchased | |||||||||||||||||||||||
| Liability-classified warrants | |||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
As of June 30, 2026 and December 31, 2025, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $230,876 and $137,608 , respectively, or 11.7 % and 8.1 %, respectively, of the Company’s total assets. In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity. The fair value for individual Level 3 financial assets and liabilities have various financial inputs which include multiple of sales, multiple of EBITDA and indexes, the market price of related securities, annualized volatility, carried interest %, discount rates, recovery rates and expected term inputs that may change at each reporting period and result in an increase or decrease in the valuation of Level 3 financial assets and liabilities.
23
The following tables summarize the significant unobservable inputs in the fair value measurement of Level 3 financial assets and liabilities by category of investment and valuation technique as of June 30, 2026 and December 31, 2025:
| Fair value at June 30, 2026 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Equity securities | $ | Market approach | Multiple of EBITDA and indexes | ||||||||||||||||||||||||||
| Multiple of sales | |||||||||||||||||||||||||||||
| Market price of related security | $ | $ | |||||||||||||||||||||||||||
| Monte Carlo simulation | Annualized volatility | ||||||||||||||||||||||||||||
| Option pricing model | Annualized volatility | ||||||||||||||||||||||||||||
| Partnership interests and other investments | Market approach | Carried interest sharing | |||||||||||||||||||||||||||
| Loans receivable at fair value | Discounted cash flow | Discount rate | |||||||||||||||||||||||||||
| Recovery rate | |||||||||||||||||||||||||||||
| Total level 3 assets measured at fair value | $ | ||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Embedded derivatives, included in accrued expenses and other liabilities | $ | Discounted cash flow | Discount rate | ||||||||||||||||||||||||||
| Monte Carlo simulation | Annualized volatility | ||||||||||||||||||||||||||||
| Total level 3 liabilities measured at fair value | $ | ||||||||||||||||||||||||||||
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
24
| Fair value at December 31, 2025 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Equity securities | $ | Market approach | Multiple of sales | ||||||||||||||||||||||||||
| Market price of related security | $ | $ | |||||||||||||||||||||||||||
| Monte Carlo simulation | Annualized volatility | ||||||||||||||||||||||||||||
| Option pricing model | Annualized volatility | ||||||||||||||||||||||||||||
| Partnership interests and other investments | Market approach | Discount rate | |||||||||||||||||||||||||||
| Market price of related security | $ | $ | |||||||||||||||||||||||||||
| Loans receivable at fair value | Discounted cash flow | Discount rate | |||||||||||||||||||||||||||
| Market approach | Market price of related security | $ | $ | ||||||||||||||||||||||||||
| Total Level 3 assets measured at fair value | $ | ||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Liability-classified warrants | $ | Monte Carlo simulation and Black-Scholes option pricing model | Annualized volatility | ||||||||||||||||||||||||||
| Discount for lack of marketability | |||||||||||||||||||||||||||||
| Total Level 3 liabilities measured at fair value | $ | ||||||||||||||||||||||||||||
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
25
The changes in Level 3 fair value hierarchy during the three months ended June 30, 2026 and 2025 were as follows:
| Equity Securities | Partnership Interests And Other Investments | Loans Receivable at Fair Value | Contingent Consideration | Liability-Classified Warrants(4) | Embedded Derivatives | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Level 3 balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value adjustments(1) | |||||||||||||||||||||||||||||||||||
| Relating to undistributed earnings | |||||||||||||||||||||||||||||||||||
| Purchases/originations | |||||||||||||||||||||||||||||||||||
| Settlements/repayments | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Level 3 balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Change in unrealized gains (losses)(2) | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Level 3 balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value adjustments(3) | ( | ( | |||||||||||||||||||||||||||||||||
| Purchases/originations | |||||||||||||||||||||||||||||||||||
| Sales | ( | ||||||||||||||||||||||||||||||||||
| Settlements/repayments | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Level 3 balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Change in unrealized gains (losses)(2) | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
(1) | Fair value adjustments during the three months ended June 30, 2026 include the following: $ | ||||
(2) | For the three months ended June 30, 2026 and 2025, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period. | ||||
(3) | Fair value adjustments during the three months ended June 30, 2025 include the following: $ | ||||
(4) | On May 28, 2026, immediately prior to exercise, the Oaktree Warrants were remeasured to fair value, resulting in a fair value of $ | ||||
26
The changes in Level 3 fair value hierarchy during the six months ended June 30, 2026 and 2025 were as follows:
| Equity Securities | Partnership Interests And Other Investments | Loans Receivable at Fair Value | Contingent Consideration | Liability-Classified Warrants | Embedded Derivatives | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Level 3 balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value adjustments(1) | |||||||||||||||||||||||||||||||||||
| Relating to undistributed earnings | |||||||||||||||||||||||||||||||||||
| Purchases/originations | |||||||||||||||||||||||||||||||||||
| Settlements/repayments | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Level 3 balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Change in unrealized gains (losses)(2) | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Level 3 balance at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value adjustments(3) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Purchases/originations | |||||||||||||||||||||||||||||||||||
| Sales | ( | ( | |||||||||||||||||||||||||||||||||
| Settlements/repayments | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Level 3 balance at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Change in unrealized gains (losses)(2) | $ | ( | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||
(1) | Fair value adjustments during the six months ended June 30, 2026 include the following: $ | ||||
(2) | For the six months ended June 30, 2026 and 2025, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period. | ||||
(3) | Fair value adjustments during the six months ended June 30, 2025 include the following: $( | ||||
Partnership and investment fund interests valued at NAV were $2,374 and $1,833 as of June 30, 2026 and December 31, 2025, respectively.
Beginning in April 2025, the Company entered into purchase agreements with public companies that allow the counterparties to put their convertible preferred stock to the Company from time to time at its discretion (the “Written
27
Puts”) (see Note 26 – Commitments and Contingencies). The Written Puts are recognized at fair value on a recurring basis within the “Accrued expenses and other liabilities” line item on the accompanying unaudited condensed consolidated balance sheets, with changes in fair value recognized in earnings.
As of June 30, 2026 and December 31, 2025, the Company determined that the fair value of the Written Put liability was de minimis due to its discount to market prices being advantageous to the Company, and no liability or changes in earnings were recorded on the accompanying unaudited condensed consolidated balance sheets or accompanying unaudited condensed consolidated statements of operations. The Company holds the Written Puts as investments to advantageously monetize the underlying stock and provide capital raising activities for customers. The Company’s exposure is driven primarily by movements in the Issuer’s common stock price, the put writer’s credit by assumptions regarding the likelihood and timing of exercise and the April 2026 agreement which was amended to allow for the Issuer’s creditor to exercise the Written Put upon the Issuer’s Event of Default under the terms of its credit agreement. The amendment had a de minimis impact on the fair value of the Written Put.
Assets and Liabilities Not Measured at Fair Value
The carrying amounts reported in the unaudited condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments.
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Fair Value Hierarchy Level | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||
| Revolving credit facilities | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Term loans, net | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Senior notes payable | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| New Notes payable | Level 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
The fair value of the Company's revolving credit facilities and term loans was estimated using a discounted cash flow approach, whereby contractual cash flows were discounted using current market interest rates and applicable credit spreads. The Company used a market approach for estimating the fair value of senior notes payable as they are listed and actively traded on the Nasdaq with sufficient frequency and volume to utilize quoted market prices. The fair value of the Company’s New Notes payable was estimated using a discounted cash flow approach, whereby contractual cash flows were discounted using a credit spread based on significant unobservable inputs, including the Company's estimated cost of borrowing of approximately 15.0 %.
Nonrecurring Fair Value Measurement
The following table presents the carrying amounts of equity securities valued under the measurement alternative that were still held as of the balance sheet date for which a nonrecurring fair value measurement was recorded during the period:
| Fair Value | Level 2 | Level 3 | |||||||||||||||
| As of June 30, 2026 | |||||||||||||||||
| Non-marketable equity securities measured using the measurement alternative | $ | $ | $ | ||||||||||||||
| As of December 31, 2025 | |||||||||||||||||
| Non-marketable equity securities measured using the measurement alternative | $ | $ | $ | ||||||||||||||
28
NOTE 6 — SECURITIES AND OTHER INVESTMENTS OWNED AND SECURITIES SOLD NOT YET PURCHASED
The Company’s securities and other investments owned and securities sold not yet purchased consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Securities and other investments owned: | |||||||||||
| Securities and other investments owned at fair value: | |||||||||||
| Equity securities | $ | $ | |||||||||
| Partnership interests and other investments | |||||||||||
| Corporate bonds | |||||||||||
| Other fixed income securities | |||||||||||
| Total securities and other investments owned at fair value | |||||||||||
| Partnership interests and other investments at net asset value | |||||||||||
| Equity securities valued under the measurement alternative | |||||||||||
| Total securities and other investments owned | $ | $ | |||||||||
| Securities sold not yet purchased, at fair value: | |||||||||||
| Equity securities | $ | $ | |||||||||
| Corporate bonds | |||||||||||
| Total securities sold not yet purchased, at fair value | $ | $ | |||||||||
Unrealized gains (losses) on equity securities held at June 30, 2026 include unrealized gains of $2,404 and $2,855 for the three months ended June 30, 2026 and 2025 respectively, and unrealized gains (losses) of $98,394 and $(13,127 ) for the six months ended June 30, 2026 and 2025, respectively, which is included in the “Realized and unrealized gains (losses) on investments” line item on the accompanying unaudited condensed consolidated statements of operations.
The following table presents the related adjustments recorded during the three and six months ended June 30, 2026 and 2025 for equity securities measured under the measurement alternative and for those securities with observable price changes:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
Upward carrying value changes(1) | $ | $ | |||||||||||||||||||||||||||||||||
Downward carrying value changes/impairment(2) | $ | ( | $ | ( | ( | ||||||||||||||||||||||||||||||
_________________________
(1)The cumulative upward carrying value changes between September 6, 2019 and June 30, 2026 were $12,533 .
(2)The cumulative downward carrying value changes/impairment between September 6, 2019 and June 30, 2026 were $(13,553 ).
Certain equity securities investments in public and private companies are accounted for under the fair value option where the Company would otherwise use the equity method of accounting. The Company accounts for these equity investments at fair value to provide management with a more relevant representation for evaluating risk, performance reporting, market conditions and economic events in earnings on a more timely basis and to provide reporting of the current value of those assets in the accompanying unaudited condensed consolidated balance sheets. The related summarized financial information included below for purposes of disclosure are presented a quarter in arrears where balance sheet amounts as of March 31, 2026 and September 30, 2025 correspond to amounts as of June 30, 2026 and December 31, 2025, respectively, and income statement amounts for the three and six months ended March 31, 2026 and 2025 correspond to amounts for the three and six months ended June 30, 2026 and 2025 of the Company, respectively.
29
Babcock and Wilcox Enterprises, Inc, Equity Investment
The Company owned a 19 % and 25 % voting interest in Babcock & Wilcox Enterprises, Inc. (“B&W”) as of June 30, 2026 and December 31, 2025, respectively, whereby the Company has elected to account for this investment under the fair value option. The following tables contain summarized financial information with respect to B&W:
| March 31, 2026 | September 30, 2025 | ||||||||||
| Current assets | $ | $ | |||||||||
| Noncurrent assets | $ | $ | |||||||||
| Current liabilities | $ | $ | |||||||||
| Noncurrent liabilities | $ | $ | |||||||||
| Deficit attributable to investee | $ | ( | $ | ( | |||||||
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Net loss attributable to investees | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
As of June 30, 2026 and December 31, 2025, the fair value of the investment in B&W totaled $386,996 and $174,011 , respectively, and is included in the “Securities and other investments owned, at fair value” line item in the accompanying unaudited condensed consolidated balance sheets.
Other Equity Investments
As of June 30, 2026, the Company had other equity investments where the Company is considered to have the ability to exercise influence since the Company has representation on the board of directors or the Company is presumed to have the ability to exercise significant influence since the investment is more than minor, and the limited liability company is required to maintain specific ownership accounts for each member. The Company has elected to account for these equity investments under the fair value option. These equity investments are comprised of equity investments in four private companies as of June 30, 2026 and December 31, 2025, respectively.
The following table contains summarized financial information for these companies:
| March 31, 2026 | September 30, 2025 | ||||||||||
| Current assets | $ | $ | |||||||||
| Noncurrent assets | $ | $ | |||||||||
| Current liabilities | $ | $ | |||||||||
| Noncurrent liabilities | $ | $ | |||||||||
| Equity attributable to investee | $ | $ | |||||||||
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| For the Three Months Ended March 31, | For the Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Net income attributable to investees | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
NOTE 7 — SECURITIES LENDING
The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of June 30, 2026 and December 31, 2025:
| Gross amounts recognized | Gross amounts offset in the consolidated balance sheets(1) | Net amounts included in the consolidated balance sheets | Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default(2) | Net amounts | |||||||||||||||||||||||||
As of June 30, 2026 | |||||||||||||||||||||||||||||
| Securities borrowed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Securities loaned | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
As of December 31, 2025 | |||||||||||||||||||||||||||||
| Securities borrowed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Securities loaned | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
_________________________
(1)Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(2)Represents the fair value of collateral held/posted which is comprised of financial instruments.
The following table presents the contract value of securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties as of June 30, 2026 and December 31, 2025:
| Remaining contractual maturity - | ||||||||||||||
| Overnight and continuous | ||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Securities lending transactions: | ||||||||||||||
| Corporate securities - fixed income | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||
| Total securities borrowed | $ | $ | ||||||||||||
The Company’s securities lending transactions require us to pledge collateral based on the terms of each contract which is generally denominated in U.S. dollars and marked to market on a daily basis. If the fair value of the collateral pledged for these transactions declines, the Company could be required to provide additional collateral to the counterparty, therefore decreasing the amount of assets available for other liquidity needs that may arise. The Company’s liquidity risk is mitigated by maintaining offsetting securities borrowed transactions in which the Company receives cash from the counterparty which, in general, is equal to or greater than the cash the Company posts on securities lending transactions.
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Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Such expense is incurred from equity and fixed income securities that are loaned to the Company and totaled $906 and $1,968 during the three months ended June 30, 2026 and 2025, respectively, and $1,623 and $2,687 during the six months ended June 30, 2026 and 2025, respectively.
NOTE 8 — ACCOUNTS RECEIVABLE
The components of accounts receivable, net, from revenue from contracts with customers include the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Investment banking fees, commissions and other receivables | |||||||||||
| Total accounts receivable | |||||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
Additions and changes to the allowance for credit losses consist of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Changes to reserve | |||||||||||||||||||||||
| Other adjustments and write-offs | ( | ( | ( | ( | |||||||||||||||||||
| Recoveries | ( | ||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | |||||||||||||||||||
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NOTE 9 — LOANS RECEIVABLE, AT FAIR VALUE
Loans receivable consist of the following:
| At Fair Value | Outstanding Principal Balance, Net of Discounts | Outstanding Principal Balance in Excess of Fair Value | |||||||||||||||||||||||||||||||||||||||
| Maturity | June 30, | December 31, | June 30, | December 31, | June 30, | December 31, | |||||||||||||||||||||||||||||||||||
| Dates | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Related Party Loans Receivable: | |||||||||||||||||||||||||||||||||||||||||
| Vintage Capital Management, LLC | December 2027 | n/a | $ | n/a | $ | n/a | $ | ||||||||||||||||||||||||||||||||||
Conn’s, Inc. | February 2027 | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||
| Torticity, LLC | November 2026 | ||||||||||||||||||||||||||||||||||||||||
| Other related party loans | Various through August 2027 | ||||||||||||||||||||||||||||||||||||||||
| Total related party loans receivable | |||||||||||||||||||||||||||||||||||||||||
| XBP Americas, LLC | September 2026 | ||||||||||||||||||||||||||||||||||||||||
| Norlin EV Limited | December 2025 | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||
| Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company | August 2026 | ||||||||||||||||||||||||||||||||||||||||
| Other loans receivable | Various | ||||||||||||||||||||||||||||||||||||||||
| Total loans receivable | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
The Company has elected to measure loans at fair value to provide management with a more relevant representation for evaluating risk, performance reporting, market conditions and economic events in earnings on a more timely basis and to provide reporting of the current value of those assets in the accompanying unaudited condensed consolidated balance sheets. During the three months ended June 30, 2026 and 2025 the Company recorded realized and unrealized gains of $4,245 and $800 , respectively, and net realized and unrealized gains and (losses) of $10,790 and $(7,296 ) during the six months ended June 30, 2026 and 2025, respectively, on loans receivable at fair value. Net realized and unrealized gains and losses on loans receivable are reflected in the “Fair value adjustments on loans” line item in the accompanying unaudited condensed consolidated statements of operations.
Loans receivable at fair value on non-accrual and 90 days or greater past due was zero and $1,835 , which represented approximately zero and 7.0 % of total loans receivable at fair value as of June 30, 2026 and December 31, 2025, respectively. The principal balances of loans receivable on non-accrual and 90 days or greater past due was $21,276 and $320,285 as of June 30, 2026 and December 31, 2025, respectively.
Interest income for loans receivable on non-accrual and/or 90 days or greater past due is recognized separately from the “Fair value adjustments on loans” line item in the accompanying unaudited condensed consolidated statements of operations. The amount of gains (losses) included in earnings attributable to changes in instrument-specific credit risk was $2,155 and $800 during the three months ended June 30, 2026 and 2025, respectively, and $2,008 and $(7,296 ) for the six months ended June 30, 2026 and 2025, respectively. The gains or losses attributable to changes in instrument-specific risk were determined by management based on an estimate of the fair value change during the period specific to each loan receivable.
The Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending clients. As of June 30, 2026, the Company has outstanding limited guarantee arrangements with respect to B&W as further described in Note 26(b) - Babcock & Wilcox Commitments and Guarantees. In accordance with the credit loss standard, the Company evaluates the need to record an allowance for credit losses for these loan guarantees since they have off-balance sheet credit exposures. On June 18, 2025, an amendment was made to the Axos Guaranty, as defined in Note 26 - Commitments and Contingencies, whereby the Company’s obligations as guarantor were suspended
33
until January 1, 2027. On February 25, 2026, the Axos Guaranty was terminated and is of no further force and effect as further discussed in Note 26 - Commitments and Contingencies - (b) Babcock & Wilcox Commitments and Guarantees.
Vintage Capital Management, LLC Loan Receivable
On August 21, 2023, one of the Company’s subsidiaries and Vintage Capital Management, LLC (“VCM”), an affiliate of Brian Kahn (“Mr. Kahn”), amended and restated a promissory note (the “Amended and Restated Note”), pursuant to which VCM owes the Company’s subsidiary the aggregate principal amount of $200,506 , which bears interest at the rate of 12.00 % per annum paid-in-kind with a maturity date of December 31, 2027. The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr. Kahn or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM, Inc. (“Freedom VCM”) in an amount equal to the greater of (i) 80 % of the net after-tax proceeds, and (ii) 50 % of gross proceeds. Amounts owing under the Amended and Restated Note may be repaid at any time without penalty. The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr. Kahn, the chief executive officer (“CEO”) and a member of the board of directors of Freedom VCM as of December 31, 2023, and his spouse with a value, based on the transaction price of the take private transaction that included the acquisition of FRG by a buyer group that included members of senior management of FRG, led by Mr. Kahn, FRG’s then CEO (the “FRG take-private transaction”), of $227,296 as of August 21, 2023.
On January 22, 2024, Mr. Kahn resigned as CEO and a member of the board of directors of Freedom VCM. On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 (“Chapter 11 Cases”) of Title 11 of the United States Bankruptcy Code (“Bankruptcy Code”), which impacted the collateral for this loan receivable. To the extent the loan balance and accrued interest exceed the underlying collateral value of the loan, an unrealized loss will be recorded in the accompanying unaudited condensed consolidated statements of operations. On a quarterly basis, the Company will continue to obtain third party appraisals to evaluate the value of the collateral of the loan since the repayment of the loan and accrued interest will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral.
On June 1, 2025, the United States Bankruptcy Court for the District of Delaware entered an Order Confirming the Ninth Amended Joint Chapter 11 Plan of Franchise Group, Inc. and its affiliated debtors (the “FRG Plan”). Under the FRG Plan, all equity interests and claims related thereto were cancelled and such equity interest holders, including Freedom VCM as an equity holder of Franchise Group, Inc., will not receive any property or distributions under the FRG Plan. As a result of the FRG Plan, the Company does not expect to receive any proceeds or distributions from the Freedom VCM equity interests owned by Mr. Kahn and his spouse that collateralize the VCM loan receivable.
On September 29, 2025, the SEC filed a complaint in the U.S. District Court for the District of New Jersey against Prophecy Asset Management LP (“Prophecy”), Prophecy’s CEO, and Mr. Kahn alleging violations of certain of the antifraud provisions of federal securities laws. 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. On December 10, 2025, Mr. Kahn pleaded guilty to one count of conspiracy to commit securities fraud. Mr. Kahn is awaiting sentencing.
In February 2026, the Company collected proceeds of $1,855 on the loan receivable from the sale of all of the collateral that the Company held for the Vintage loan. No additional collections are expected on the loan receivable.
Conn’s, Inc. Loan Receivable
On December 18, 2023, W.S. Badcock Corporation, a Florida corporation was sold by Freedom VCM to Conn’s, Inc. (“Conn’s”) whereby the Company loaned Conn’s $108,000 pursuant to the “Conn’s Term Loan” which bears interest at an aggregate rate per annum equal to the Term Secured Overnight Financing Rate (“SOFR”) Rate (as defined in the Conn’s Term Loan), subject to a 4.80 % floor, plus a margin of 8.00 % and matures on February 20, 2027. Future collection of the Conn’s loan receivable is expected to be paid from the sale of assets and servicing of a pool of consumer receivables that serve as collateral for the loan where the Company has a second lien on these assets.
On July 23, 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 Cases of Title 11 of the Bankruptcy Code in the Southern District of Texas. The commencement of the Chapter 11 Cases constitutes an event of default that accelerates the repayment obligations of the loan receivable issued to Conn’s. Any efforts to enforce repayment obligations under the Conn’s loan are automatically stayed as a result of the Chapter 11 Cases and the
34
Company’s rights of enforcement in respect of this loan are subject to the applicable provisions of the Bankruptcy Code. As a result of the Chapter 11 Cases, the Conn’s loan receivable was placed on non-accrual status.
The loan had a fair value of zero as of December 31, 2025, and was written off effective January 1, 2026. At the time of the write-off, Conn’s was no longer considered a related party of the Company. During the six months ended June 30, 2026, the Company recovered $8,600 of proceeds from the collateral for the loan receivable which is included in “Fair value adjustments on loans” line item in the accompanying unaudited condensed consolidated statements of operations.
Torticity, LLC Loan Receivable
On November 2, 2023, B. Riley Principal Investments, LLC (“BRPI”), a wholly owned subsidiary of the Company, along with other lenders, entered into a loan receivable with Torticity, LLC for an aggregate principal amount of $25,000 , of which $15,000 was BRPI’s total principal commitment. On November 20, 2023, BRPI transferred the promissory note to B. Riley Commercial Capital, LLC (“BRCC”), another wholly owned subsidiary of the Company. The loan receivable bore interest at 15.00 % per annum paid quarterly at 7.50 % per annum in cash and 7.50 % per annum payment-in-kind to be capitalized and added to the outstanding principal balance. Subsequent to December 31, 2024, there were amendments to the loan. However, the entire loan remained impaired with no fair value at June 30, 2026, and there has been no
XBP Americas, LLC (formerly Exela Technologies, Inc. (“Exela”)) Loans Receivable
As of June 30, 2026, the Company had a loan receivable and an accounts receivable facility with XBP Americas, LLC (“XBP Americas”), with fair value balances of $9,430 and $5,611 , respectively. As of December 31, 2025, the Company had a loan receivable, accounts receivable facility, and unsecured note with XBP Americas, with fair value balances of $15,459 , $1,440 , and $4,516 , respectively.
Exela Loan
On February 27, 2023, BRCC loaned Exela Receivables 3 Holdco, LLC (“Holdco”) $31,500 , and on August 18, 2023, assigned the loan receivables to BRF Finance Co., LLC, a wholly owned subsidiary of the Company (the “Exela Loan”). The Exela Loan bears interest at a rate equal to Term SOFR plus 7.50 %, with interest payable monthly in arrears.
The obligations under the Exela Loan are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of XBP Americas. The loan is secured by liens on substantially all assets of XBP Americas and certain guarantors, including accounts receivable, inventory, cash and deposit accounts, equipment, equity interests in subsidiaries, general intangibles and related assets. The Company’s liens are subordinated to the liens securing XBP Americas’ senior debt facilities.
On July 29, 2025, the Company amended the Exela Loan to, among other things, reassign the loan receivable to XBP Americas, a subsidiary under common control with Holdco, as borrower, provide for an option to extend the maturity date, include additional events of default, and require mandatory principal repayments. The borrower exercised this extension option on March 27, 2026, extending the maturity date to September 30, 2026.
Pursuant to the amended terms, the borrower is required to make a one-time prepayment of $1,250 on the earlier of (i) sixty days following the fourth and final Monthly Purchase and (ii) the third Business Day following the termination of the Exela AR Facility (as defined below) upon achievement of the applicable collections milestone, which was achieved in January 2026. In addition, commencing February 6, 2026, the borrower is required to make monthly principal payments of $1,000 on the fifth Business Day of each month until the loan is repaid in full. During the three and six months ended June 30, 2026, the borrower made $3,000 and $6,250 of such mandatory principal repayments.
As of June 30, 2026 and December 31, 2025, the outstanding principal balance of the Exela Loan was $9,525 and $15,775 , respectively.
Exela AR Facility
On February 12, 2024, BR Exar, LLC (“BREL”), an affiliate of BRCC, entered into a receivables purchase agreement with Exela BR SPV, a subsidiary under common control with XBP Americas (as subsequently amended, the “Exela AR Facility”), pursuant to which BREL purchased certain existing receivables and future receivables until the achievement of a
35
specified collection milestone. As of December 31, 2025, the Exela AR Facility had an outstanding balance of $1,440 , which was repaid in full on January 12, 2026.
On December 31, 2025, the Company entered into an unsecured promissory note with Exela in the principal amount of $5,000 . The note bore no interest and included an original issue discount of $500 . The unsecured promissory note matured on January 21, 2026, following full collection under the Exela AR Facility. The borrower repaid $5,000 to fully extinguish the unsecured promissory note on the maturity date.
On January 21, 2026, BREL entered into an amended and restated receivables purchase agreement with certain subsidiaries of XBP Americas (including subsequent amendments, the “Amended Exela AR Facility”). On May 14, 2026, BREL entered into an amendment which increased the aggregate receivables to be purchased by $4,625 , for a total amount of up to $24,625 of receivables.
In connection with the Amended Exela AR Facility, the Company provided total consideration of $22,623 .
During the three and six months ended June 30, 2026, the Company collected $8,696 and $18,986 under the Amended Exela AR Facility, respectively, and as of June 30, 2026, $5,639 remained outstanding under the Amended Exela AR Facility.
Enovum Loan Receivable
On May 26, 2026, the Company purchased from a strategic asset company $20,000 of a Delayed Draw Term Loan Facility and Security Agreement to Enovum, a subsidiary of a public AI infrastructure company. Enovum received consideration of $19,400 and the Company received a Term Loan Note in the amount of $20,000 , which included all of the existing rights and obligations of the original lender (the “Enovum Loan”). The Company funded the Enovum Loan on May 27, 2026.
This Loan bears interest at a rate of 9.50 % per annum, which the borrower may elect to pay in cash or in kind, and steps down to 8.00 % per annum upon the occurrence of a defined rate step down event with a maturity date of August 24, 2026, subject to a 30-day extension only upon the written agreement of the borrower, the Company, and the guarantor. In addition to principal and interest, the borrower is obligated to pay a minimum multiple on invested capital amount (the “MOIC”) at maturity, such that the aggregate payments to the Company on the advance are no less than 1.1 multiplied by the stated principal amount of the advance (excluding any original issue discount), or $22,000 . The MOIC is not reduced by any prepayment of the loan.
The obligations under the Enovum Loan are guaranteed by another subsidiary of the public AI infrastructure company (the “Guarantor”) and secured by a first priority lien and security interest in all of the equity interests of an affiliate of the AI infrastructure company. The guaranty and the collateral are released upon the occurrence of a collateral step down event, defined as the date upon which an affiliate of Enovum obtains term loan B or other permanent financing in respect of the development of Enovum’s data center located in Madison, North Carolina.
As of June 30, 2026, the Enovum Loan had a fair value of $19,794 and an unpaid principal balance in excess of fair value of $206 . The economic effects of the MOIC and the original issue discount are captured through the periodic remeasurement of the loan to fair value, with the resulting change reported in “Fair value adjustments on loans” in the accompanying unaudited condensed consolidated statements of operations.
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NOTE 10 — EQUITY METHOD INVESTMENTS
Equity investments accounted for under the equity method of accounting consist of the following:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Percentage Ownership | Investment Balance | Percentage Ownership | Investment Balance | |||||||||||||||||||||||
| Investments accounted for under the equity method: | ||||||||||||||||||||||||||
| Great American Holdings, LLC | % | $ | % | $ | ||||||||||||||||||||||
| SW-B. Riley Retail Opportunity Fund | % | % | ||||||||||||||||||||||||
| Total equity method investments | $ | $ | ||||||||||||||||||||||||
Equity investments that are accounted for under the equity method of accounting are included in the “Equity investments” line item in the accompanying unaudited condensed consolidated balance sheets. The Company’s share of earnings or losses from equity method investees is included in the “(Loss) income from equity investments” line item in the accompanying unaudited condensed consolidated statements of operations.
The summarized financial information with respect to the equity method investments noted below for purposes of disclosure are presented a quarter in arrears whereas balance sheet and income statement amounts as of and for the quarter ended December 31, 2025 correspond to amounts as of and for the quarter ended June 30, 2026.
Great American Holdings, LLC (“GA Holdings”)
On November 15, 2024, the Company completed the sale of a majority interest in GA Holdings to Oaktree (the “Great American Transaction”). Upon completion of the sale, the Company retained a minority ownership interest in the Class A common units of GA Holdings. GA Holdings operations include appraisal and valuation services, real estate, and retail, wholesale & industrial auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property. GA Holdings has three classes of equity interests which include common interests, Class A preferred interests and Class B preferred interests. The Company accounts for its investment in GA Holdings under the equity method of accounting with a three-month lag.
Under the equity method of accounting, the Company records its proportionate share of earnings or losses; however, given the capital structure of GA Holdings the Company applies the Hypothetical Liquidation at Book Value (“HLBV”) method on a three-month lag to determine the allocation of profits and losses since the liquidation rights and priorities, as defined by the limited liability agreement of GA Holdings, differ from the Company’s underlying ownership interest. The HLBV method calculates the proceeds that would be attributable to each partner based on the liquidation provisions of the limited liability agreement as if GA Holdings was to be liquidated at book value as of the balance sheet date. Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions.
Based on the terms of the limited liability agreement, we recorded equity in the net (loss) income attributable to GA Holdings using the HLBV method of $(5,828 ) and $3,190 for the three months ended June 30, 2026 and 2025, respectively, and $(5,505 ) and $3,639 for the six months ended June 30, 2026 and 2025, respectively.
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The following tables contain summarized financial information with respect to GA Holdings:
| March 31, 2026 | September 30, 2025 | |||||||||||||
| Current assets | $ | $ | ||||||||||||
| Noncurrent assets | $ | $ | ||||||||||||
| Current liabilities | $ | $ | ||||||||||||
| Noncurrent liabilities | $ | $ | ||||||||||||
| Mezzanine equity - preferred units | $ | $ | ||||||||||||
| Equity attributable to investee | $ | $ | ||||||||||||
| For the Three Months Ended March 31, | For the Six Months Ended March 31, 2026 | Period from November 15, 2024 to March 31, 2025 | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of revenue and expenses | $ | $ | $ | $ | ||||||||||||||||||||||
| Net income attributable to investee | $ | $ | $ | $ | ||||||||||||||||||||||
GA Joann Retail Partnership, LLC (“Joann Retail”)
On February 27, 2025, the Company contributed capital and certain financial support in the form of cash and subordinated debt in exchange for a 47.4 % minority ownership interest in Joann Retail. Joann Retail’s operations include the acquisition and liquidation of Joann Inc’s (and its subsidiaries) retail assets. Joann Retail has two classes of equity interest which include voting Class A and nonvoting Class B interests.
As of June 30, 2026, the Company’s investment in Joann Retail was zero as the Company had fully recovered its initial investment of $6,163 in Joann Retail during the second quarter of 2025. Prior to the recovery of the Company’s initial investment, the investment in Joann Retail was adjusted for the Company’s proportionate share of equity method income or losses and of cash distributions received. The Company received $1,210 and $30,420 in excess of the Company’s investment balance during the six months ended June 30, 2026 and 2025, and the distributions received in excess of the investment balance are recognized as other income and included in the “(Loss) income from equity investments” line item in the accompanying unaudited condensed consolidated statements of operations.
The following tables contain summarized financial information with respect to Joann Retail:
| March 31, 2026 | September 30, 2025 | |||||||||||||
| Current assets | $ | $ | ||||||||||||
| Current liabilities | $ | $ | ||||||||||||
| Three Months Ended | Period from February 27, 2025 to March 31, 2025 | Six Months Ended | Period from February 27, 2025 to March 31, 2025 | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2026 | |||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of revenue and expenses | ||||||||||||||||||||||||||
| Net income (loss) attributed to investee | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
SW-B. Riley Retail Opportunity Fund (“SW-B. Retail”)
After the consolidation of BRC Trust as discussed in Note 3 - Variable Interest Entities and Note 16 - Noncontrolling Interests, the Company’s ownership percentage in SW-B. Retail is 22.6 %. During the three months ended June 30, 2026
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NOTE 11 — PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets consist of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Inventory, net | $ | $ | |||||||||
| Rental merchandise, net | |||||||||||
| Prepaid expenses | |||||||||||
| Unbilled receivables | |||||||||||
| Income tax receivable | |||||||||||
| Other receivables, net | |||||||||||
| Other assets | |||||||||||
| Prepaid expenses and other assets | $ | $ | |||||||||
NOTE 12 — GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying amount of goodwill at June 30, 2026 and December 31, 2025 was $392,687 158,834 37,334 71,551 106,461 128 15,727 2,652 137,445 , of which $79,781 and $57,664 were recorded in the Consumer Products and Corporate and All Other category, respectively.
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Intangible assets consisted of the following:
As of June 30, 2026 | As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Estimated Useful Life in Years | Gross Carrying Value | Accumulated Amortization | Intangibles, Net | Gross Carrying Value | Accumulated Amortization | Intangibles, Net | |||||||||||||||||||||||||||||||||||
| Amortizable assets: | |||||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Domain names | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Franchise rights and advertising relationships | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Internally developed software and other intangibles | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Trademarks | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Non-amortizable assets: | |||||||||||||||||||||||||||||||||||||||||
| Tradenames | — | — | |||||||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Intangible assets related to tradenames is net of accumulated impairment losses of $26,000 , which were recorded in the Consumer Products segment.
Amortization expense was $6,172 and $6,811 during the three months ended June 30, 2026 and 2025, respectively and $12,424 and $14,453 during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, estimated future amortization expense was $12,134 , $23,272 , $20,096 , $15,470 , and $11,167 for the years ended December 31, 2026 (remaining six months), 2027, 2028, 2029 and 2030, respectively. The estimated future amortization expense after December 31, 2030 was $9,128 .
The Company performs impairment tests for goodwill and intangible assets with an indefinite life as of December 31 of each year and between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair values of the Company’s reporting units or intangible assets below their carrying values. As a result of the current financial performance of the Company’s Targus subsidiary which comprises the reporting unit of all operations within the Consumer Products segment as well as current market conditions in the personal computer market for computers and accessories, the Company updated its long-term forecasts for the reporting unit. The Company performed an interim quantitative assessment of intangible assets with an indefinite life as of June 30, 2026. Prior to the impairment charge, the carrying value of the Targus tradename was $13,000 . Based on the results of the analysis, the Company recorded a non-cash impairment charge related to the Targus tradename of $4,000
The Targus tradename was measured at fair value on a nonrecurring basis as of June 30, 2026 using the relief-from-royalty method. The estimated fair value of the Targus tradename was $9,000 as of June 30, 2026, which is a reduction from the carrying value of $13,000 at December 31, 2025, resulting in the $4,000 1.0 %, a long-term growth rate of 3.0 %, and a discount rate of 22.0 %.
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NOTE 13 — ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accrued payroll and related expenses | $ | $ | |||||||||
| Dividends payable | |||||||||||
| Income taxes payable | |||||||||||
| Other tax liabilities | |||||||||||
| Accrued expenses | |||||||||||
| Other liabilities | |||||||||||
| Accrued expenses and other liabilities | $ | $ | |||||||||
Other tax liabilities primarily consist of uncertain tax positions, sales and VAT taxes payable, and other non-income tax liabilities. Accrued expenses primarily consist of accrued trade payables, investment banking payables and legal settlements. Other liabilities primarily consist of interest payables, accrued legal fees and finance lease liabilities.
NOTE 14 — TERM LOANS AND REVOLVING CREDIT FACILITIES
Term loans and revolving credit facilities are comprised of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
Interest Rate | Principal | Interest Rate | Principal | ||||||||||||||||||||
Term Loans: | |||||||||||||||||||||||
BRPAC Term Loan | % | $ | % | $ | |||||||||||||||||||
Oaktree Term Loan | % | % | |||||||||||||||||||||
Subtotal | |||||||||||||||||||||||
Less: Unamortized debt issuance costs and discount | ( | ( | |||||||||||||||||||||
Total Term Loans | $ | $ | |||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
Weighted Average | Weighted Average | ||||||||||||||||||||||
Interest Rate | Principal | Interest Rate | Principal | ||||||||||||||||||||
| Revolver Loans: | |||||||||||||||||||||||
Targus Revolver Loan | % | $ | % | $ | |||||||||||||||||||
| BRPAC Revolver Loan | % | % | |||||||||||||||||||||
| Total Revolver Loans | $ | $ | |||||||||||||||||||||
Oaktree Credit Agreement
On February 26, 2025, the Company and BRFH (“BRFH Borrower”) entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent. The new credit agreement provided for (i) a three-year $125,000 secured term loan credit facility (the “Oaktree Term Loan”) and (ii) a four-month $35,000 secured delayed draw term loan credit facility (the “Delayed Draw Facility” and, together with the Oaktree Term Loan, the “Oaktree Credit Facility”). The Oaktree Term Loan matures on the earliest of (i) February 26, 2028, and (ii) a springing maturity date 91 days prior to the maturity of any series of bonds, notes or bank indebtedness of the Company or the BRFH Borrower outstanding on such date with an aggregate amount exceeding $10,000 . The proceeds from the Oaktree Term Loan were primarily used (a) to
41
repay the existing indebtedness under the Nomura Credit agreement (b) for working capital and general corporate purposes and (c) to pay transaction fees and expenses. The proceeds of the Delayed Draw Facility were used (a) to fund obligations relating to the liquidation of substantially all of the assets of JOANN, Inc. and its subsidiaries and (b) for working capital and general corporate purposes.
The Oaktree Credit Facility accrues interest at the adjusted term SOFR rate (as defined in the Oaktree Credit Facility) with an applicable margin of 8.00 % or interest at the base rate as defined in the Oaktree Credit Facility plus an applicable margin of 7.00 %. In addition to paying interest on outstanding borrowings under the Oaktree Credit Facility, the Company was required to pay (i) a closing fee of 3.00 % of the aggregate principal amount of the loans under the Oaktree Term Loan and 2.00 % of the aggregate principal amount of the loans under the Delayed Draw Facility, and (ii) an exit fee upon the prepayment or repayment of the Oaktree Credit Facility of 5.00 5.00
At June 30, 2026, under the Oaktree Credit Agreement, certain assets with a total carrying value of $304,400 collateralize the $62,500 outstanding balance of the Oaktree Term Loan, and these assets primarily consist of the common and preferred equity interest in GA Holdings and certain other designated loans receivable and equity investments held by the BRFH Borrower. The collateral for the Oaktree Credit Agreement also includes the equity interests in the BRFH Borrower’s subsidiaries, and the Oaktree Credit Agreement covenants, among other things, limit the Company’s, the BRFH Borrower’s and the BRFH Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness, and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests. The Company is in compliance with all financial covenants in the Oaktree Credit Agreement as of June 30, 2026.
Subject to certain eligibility requirements, certain assets of the BRFH Borrower are placed into a borrowing base (the “Borrowing Base”), which serves to limit the borrowings under the Oaktree Credit Facility. The sale of an asset in the Borrowing Base requires the BRFH Borrower to make a prepayment in an amount equal to the proceeds of such disposition multiplied by the percentage “credit” that is assigned to such asset in the Borrowing Base. The BRFH Borrower may be obligated to prepay the loans or post cash in a controlled account in the event the Borrowing Base falls below a certain level as defined in the Oaktree Credit Facility. The Company recorded a derivative liability of $11,244 related to a mandatory repayment feature in the Oaktree Credit Facility at the inception of the Oaktree Credit Facility (see Note 5 - Fair Value Measurements). The Company sold certain assets in the Borrowing Base that required the Company to repay $62,500 of principal on the Oaktree Term Loan and $35,000 on the Delayed Draw Facility. These principal repayments reduced the outstanding balance on the Oaktree Term Loan from $125,000 to $62,500 and paid the Delayed Draw Facility off in full. In accordance with paydowns on the Oaktree Credit Facility, the Company recorded a loss on debt extinguishment of $10,266 and $15,639 during the three and six months ended June 30, 2025, respectively, which were included in the “(Loss) gain on extinguishment of debt” line item in the unaudited condensed consolidated statements of operations. Interest expense on the Oaktree Credit Facility during the three months ended June 30, 2026 and 2025 was $3,320 and $4,578 , respectively. Interest expense on the Oaktree Credit Facility during the six months ended June 30, 2026 and 2025 was $6,441 and $7,759 , respectively.
The Company issued warrants (“Oaktree Warrants”) to certain affiliates of Oaktree Capital Management, L.P. (the “Oaktree Holders”) in connection with the Oaktree Term Loan to purchase approximately 1,832,290 shares (or 6 % on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. The Oaktree Warrants contained certain anti-dilution provisions pursuant to which, under certain circumstances, the warrant holders would be entitled to exercise the warrants for up to 19.9 % of the then-outstanding shares of the Company’s common stock. The Company determined the Oaktree Warrants met the criteria for liability classification under ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity and recorded an initial warrant liability of $7,860 . On May 28, 2026, the Oaktree Holders sent a cashless exercise notice to the Company in accordance with the terms of the Oaktree Warrants. On May 29, 2026, the Company issued an aggregate of 915,251 shares of common stock to the Oaktree Holders in exchange for the surrender by the Oaktree Holders of 917,039 shares of the Company’s common stock. The shares underlying the Oaktree Warrants are registered for resale on Form S-1 (which was subsequently amended by a Post-Effective Amendment) (Reg. No. 333-293348). As of May 29, 2026, the Oaktree Warrants have been fully exercised and are no longer outstanding.
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The initial measurement of the embedded derivative and warrant liability creates a discount on the carrying amount of the long-term debt, which together with the original issue discount, debt issuance costs, are amortized via the effective interest method under ASC 835-30, Interest – Imputation of Interest. Subsequent changes in fair value of the embedded derivative and warrant liability are reported in the “Other income (expense)” section in our accompanying unaudited condensed consolidated statements of operations. Refer to Note 22(a) - Common Stock Warrants. During the quarter ended June 30, 2026, the Company determined that the occurrence of the springing maturity, a component of the embedded derivative, was probable which could result in the repayment of the Oaktree Debt on October 4, 2027. As of June 30, 2026, the embedded derivative has a fair value of $797 (See Note 5 – Fair Value Measurement). As a result of the change in probability of the springing maturity, the Company revised the estimated amortization period of the Oaktree Term Loan. The amortization of the debt discount and third-party costs was accelerated prospectively.
On March 24, 2025, the Company and the BRFH Borrower entered into Amendment No. 1 to the Oaktree Credit Facility which, among other things, removed certain pledged stock from the collateral and adjusted mandatory prepayment provisions in connection with dispositions of borrowing base assets. On July 8, 2025, the Company and the BRFH Borrower entered into Amendment No. 2 to the Oaktree Credit Facility which, among other things, amended the borrowing base to include certain first lien term loans extended to certain subsidiaries of the Company and made certain changes to the negative covenants. On October 8, 2025, the Company and the BRFH Borrower entered into Amendment No. 3 to the Oaktree Credit Facility with Oaktree which provided that the springing maturity date of the Oaktree Term Loan shall in no event occur prior to March 31, 2027, thereby extending the earliest possible maturity date for the Oaktree Term Loan. On January 14, 2026, the Company and the BRFH Borrower entered into Amendment No. 4 to the Oaktree Credit Facility, which added an additional carve-out with respect to limitation on investments and allows the Company to repurchase unsecured notes on or prior to June 30, 2026 in an aggregate outstanding amount not to exceed $25,000 .
Targus/FGI Credit Agreement
On August 20, 2025, Targus (“Targus Borrower”) and certain of the Targus Borrower’s 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 $30,000 revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the Targus Credit Agreement with PNC Bank, National Association, dated October 18, 2022 (the “Prior Targus Credit Agreement”). 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 SOFR for a period of one month plus 10 basis points, plus (c) 0.30 % per month collateral management fee. The average borrowings under the revolving loan facility was $11,551 during the six months ended June 30, 2026. The amount available for borrowings under the Targus/FGI Credit Agreement was $17,635 at June 30, 2026. Interest expense on these loans during the three and six months ended June 30, 2026 was $348 and $583 , respectively. Under the Prior Targus Credit Agreement, the average borrowings under the revolver loan was $14,424 during the six months ended June 30, 2025. Interest expense on the revolver loan during the three and six months ended June 30, 2025 was $380 and $782 , respectively.
The Targus/FGI Credit Agreement includes certain embedded features, such as a receivable purchase arrangement, default interest of 3.00 %, certain cost reimbursements, and optional and mandatory prepayments that could result in an acceleration of the Company’s obligations. The mandatory prepayments are triggered by asset disposition, event of loss, over advances and upon an event of default. Certain cost reimbursements and default interest upon a non-credit risk event of default were determined to be embedded derivatives. The Company determined their value was de minimis for the period.
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 Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement was secured by substantially all Targus assets as collateral defined in the Targus/FGI Credit Agreement, which assets had an aggregate value of approximately $149,409 , including $35,846 of accounts receivable and $44,355 of inventory as of June 30, 2026. 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
43
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. The Company is in compliance with all financial covenants in the Targus/FGI Credit Agreement as of June 30, 2026.
As required upon the closing of the Targus/FGI Credit Agreement, one of the Company’s subsidiaries was required to invest an additional $5,000 in Targus in the form of an intercompany subordinated loan. In addition, on March 13, 2026, the Company’s subsidiary agreed to invest an additional $2,000 in accordance with provisions of the Targus/FGI Credit Agreement which increased the balance of the intercompany subordinated loan.
On June 30, 2026, the FGI Loan Parties entered into a First Amendment to Credit Agreement, Limited Waiver, and Omnibus Joinder Agreement (the “First Amendment”) with FGI. Among other things, the First Amendment (i) joined Targus Australia Pty. Ltd. as an additional guarantor and loan party under the Targus/FGI Credit Agreement, (ii) extended the FCCR Conversion Date (the date on which the financial covenant transitions from a minimum Adjusted Consolidated EBITDA test to a fixed charge coverage ratio test) from December 31, 2026 to October 31, 2027, (iii) restructured the measurement period for the Adjusted Consolidated EBITDA financial covenant, resetting the look-back to a one-month trailing period for the test period ending June 30, 2026 and stepping up to a six-month trailing period by November 30, 2026, and (iv) granted a limited waiver of certain defaults that had occurred and were continuing under the Targus/FGI Credit Agreement as of June 30, 2026.
Nomura Credit Agreement
On August 21, 2023, the Company, the BRFH Borrower, and certain direct and indirect subsidiaries of the BRFH Borrower, entered into a credit agreement (the “Nomura Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent (“Nomura”), and Computershare Trust Company, N.A., as collateral agent, for a four-year $500,000 secured term loan credit facility and a four-year $100,000 secured revolving loan credit facility. The Nomura Credit Agreement replaced the prior credit agreement with Nomura and Wells Fargo Bank, N.A., as collateral agent, dated June 23, 2021, that had a maturity date of June 23, 2025 (the “Prior Nomura Credit Agreement”). The purpose of the Nomura Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Nomura Credit Agreement with an aggregate outstanding balance of $347,877 , which included $342,000 in principal and $5,877 in interest and fees, (iii) fund a dividend reserve in an amount not less than $65,000 , (iv) pay related fees and expenses, and (v) for general corporate purposes.
On September 17, 2024, the Company entered into Amendment No. 4 to the Nomura Credit Agreement (the “Fourth Nomura Amendment”), and after payment on principal and the addition of loan fees to principal, the outstanding principal balance on the term loan was reduced from $469,750 to $388,127 . In connection with the Fourth Nomura Amendment, the revolving credit facility in the amount of $100,000 , which had no balance outstanding at September 17, 2024, was terminated and the Company was required to reduce the principal amount of the term loan to be no greater than $100,000 on or prior to September 30, 2025. The scheduled maturity date of the term loan was August 21, 2027.
In connection with the Fourth Nomura Amendment, interest on the term loan increased to SOFR loans accrued interest at the adjusted term SOFR plus an applicable margin of 7.00 % cash interest or, at the election of the Company, at the adjusted term SOFR determined plus an applicable margin of 6.00 % cash interest plus 1.50 % paid-in-kind interest; and base rate loans accrued interest at the base rate plus an applicable margin of 6.00 % cash interest or, at the election of the Company, at the adjusted term SOFR determined for such day plus an applicable margin of 5.00 % cash interest plus 1.50 % PIK Interest. Interest expense on the term loan during the six months ended June 30, 2025 was $2,457 .
As fully discussed in “Oaktree Credit Agreement” above, on February 26, 2025, the Company used proceeds from the Oaktree Credit Facility to repay the outstanding principal balance under the Nomura Credit Agreement and the Nomura Credit Agreement was terminated. Upon repayment, the Company recorded a loss on extinguishment of debt in the amount of $4,666 , which was included in the “(Loss) gain on extinguishment of debt” line item in the unaudited condensed consolidated statements of operations during the six months ended June 30, 2025.
BRPAC Credit Agreement
On January 6, 2025, BRPAC, Lingo, UOL and YMAX Corporation (collectively, the “BRPAC Borrowers”), indirect wholly owned subsidiaries of the Company, in the capacity as borrowers, entered into an amended and restated credit agreement (the “BRPAC Credit Agreement”), with the Banc of California, in its capacity as sole lead arranger, sole book manager, administrative agent and lender (the “Agent”) and the lenders party thereto from time to time to amend and
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restate the prior BRPAC credit agreement, dated December 19, 2018 (the “Prior BRPAC Credit Agreement”) and replace the prior Lingo credit agreement, dated August 16, 2022 (the “Prior Lingo Credit Agreement”). Certain of the BRPAC Borrowers’ U.S. subsidiaries are parties to and guarantors of all obligations under the BRPAC Credit Agreement (collectively, the “Secured Guarantors”; and together with the BRPAC Borrowers, the “Credit Parties”). In addition, the Company and B. Riley Principal Investments, LLC, the parent company of BRPAC and a subsidiary of the Company, are guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the outstanding membership interests of BRPAC are pledged as collateral.
Pursuant to the BRPAC Credit Agreement, the lenders made a five-year $80,000 term loan to the BRPAC Borrowers, the proceeds of which were used to repay in full the obligations under the Prior BRPAC Credit Agreement and the Prior Lingo Credit Agreement. The BRPAC Credit Agreement also builds in provisions for incremental term loans up to $40,000 allowing certain distributions to the parent company of the BRPAC Borrowers from the proceeds of such incremental term loans. Upon repayment of the Prior Credit Agreement and the Lingo Credit Agreement, the Company recorded a loss on extinguishment of debt in the amount of $389 , which was included in the “(Loss) gain on extinguishment of debt” line item in the accompanying unaudited condensed consolidated statements of operations during the six months ended June 30, 2025. The remaining debt modification was accounted for as a troubled debt restructuring. As the future undiscounted cash payments under the terms of the modified debt exceeded the carrying amount of the old debt on the modification date, the Company accounted for the restructuring on a prospective basis using the revised effective interest rate established under the BRPAC Credit Agreement.
On April 8, 2026 (“Amendment Effective Date”), the BRPAC Borrowers entered into the Third Amendment to the BRPAC Credit Agreement (the “Third Amendment”) with the Agent. In connection with the Third Amendment, the lenders made a new term loan to the BRPAC Borrowers in an aggregate original principal amount of $60,000 , the proceeds of which were used to repay in full the outstanding principal balance and accrued interest on the previously outstanding term loans under the BRPAC Credit Agreement. The Third Amendment established a new revolving credit facility with aggregate commitments of $20,000 (the “Revolving Credit Facility”), which was not available under the prior facility. The Revolving Credit Facility matures on January 6, 2030. On April 8, 2026, the BRPAC Borrowers drew $16,000 on the Revolving Credit Facility, which remained outstanding as of June 30, 2026. The new term loan is repayable in quarterly installments of $2,250 beginning June 30, 2026, with the remaining outstanding balance due at maturity on January 6, 2030. In connection with the Third Amendment, the BRPAC Borrowers are permitted to make an aggregate cash dividend of up to $28,000 to the Company’s parent entities on or within two months of the Amendment Effective Date. The BRPAC Credit Agreement, as amended by the Third Amendment, requires the BRPAC Borrowers to maintain (i) a Consolidated Total Funded Debt Ratio not to exceed 2.00 x through September 30, 2026, with step-downs to 1.50 x, 1.25 x, and 1.00 x in subsequent periods, and (ii) a Consolidated Fixed Charge Coverage Ratio of not less than 1.20 x, tested quarterly beginning March 31, 2026. For accounting purposes, the Third Amendment was considered a troubled debt restructuring. As the future undiscounted cash payments under the terms of the modified debt exceeded the carrying amount of the debt on the modification date, no gain or loss was recognized, and the Company accounted for the restructuring on a prospective basis using the revised effective interest rate established under the Third Amendment.
The borrowings under the BRPAC Credit Agreement bear interest at the greater of (i) the one-month Term SOFR rate plus a margin of 2.75 % to 3.50 % per annum, depending on the BRPAC Borrowers’ Consolidated Total Funded Debt Ratio, or (ii) a 3.25 % per annum floor per annum.
Interest expense on the term loan during the three months ended June 30, 2026 and 2025 was $1,080 and $1,561 , respectively. Interest expense on the term loan during the six months ended June 30, 2026 and 2025 was $2,261 and $3,151 , respectively.
The average borrowings under the Revolving Credit Facility was $16,000 during the six months ended June 30, 2026. The amount available for borrowings under the Revolving Credit Facility was $4,000 at June 30, 2026. Interest expense on the Revolving Credit Facility during the six months ended June 30, 2026 was $254 . Interest expense on the term loan under the Prior Lingo Credit Agreement during the six months ended June 30, 2025 was $62 .
The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first-priority security interests in, substantially all of the assets of the BRPAC Borrowers totaling approximately $292,723 as of June 30, 2026 (which includes $12,828 of accounts receivable and $2,848 of inventory), including a pledge of (a) 100 % of the equity interests of the BRPAC Borrowers; (b) 65 % of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65 % of the equity interests in magicJack
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VocalTec Ltd., an Israel corporation. Such security interests are evidenced by pledge, security, and other related agreements.
The BRPAC Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’, ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of outstanding amounts due under the BRPAC Credit Agreement. The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of June 30, 2026.
NOTE 15 — SENIOR NOTES PAYABLE
Senior notes payable, net, are comprised of the following:
| Effective Interest Rate | June 30, 2026 | December 31, 2025 | |||||||||||||||
| Senior Notes Payable, Net of Debt Discount: | |||||||||||||||||
| $ | $ | ||||||||||||||||
| % | |||||||||||||||||
| % | |||||||||||||||||
| % | |||||||||||||||||
| % | |||||||||||||||||
| % | |||||||||||||||||
Total Senior Notes Payable, Net | $ | $ | |||||||||||||||
As of June 30, 2026 and December 31, 2025, the senior notes had a weighted average interest rate of 5.59 % and 5.60 %, respectively. Interest on senior notes is payable on a quarterly basis. Interest expense on senior notes totaled $12,905 and $17,236 during the three months ended June 30, 2026 and 2025, respectively. Interest expense on senior notes totaled $27,909 and $38,890 during the six months ended June 30, 2026 and 2025, respectively.
The senior notes are unsecured obligations and are not secured by any of the Company’s or its subsidiaries’ assets and therefore are effectively subordinated to any existing and future secured indebtedness to the extent of the collateral securing such indebtedness.
During the six months ended June 30, 2026, the Company completed a series of Section 3(a)(9) Exchanges with the Investor. During the three and six months ended June 30, 2026, the Company exchanged aggregate principal amounts of $32,965 and $69,054 , respectively of senior notes, including $9,297 and $42,490 , respectively related to troubled debt restructurings, for 3,804,629 and 8,358,495 of the Company’s common stock. The shares issued had aggregate fair values of $34,284 and $67,784 , respectively, based on the closing market price of the Company's common stock on the applicable settlement dates, which ranged from $6.60 to $9.34 per share. As a result of these exchanges, the carrying amount of the senior notes, together with related accrued interest, was reduced by $33,155 and $69,366 during the three and six months ended June 30, 2026, respectively. The Company recognized a net loss on extinguishment of debt of $1,283 for the three months ended June 30, 2026, and a net gain on extinguishment of debt of $1,338 for the six months ended June 30, 2026, which is included in the “(Loss) gain on extinguishment of debt” line item in the accompanying condensed consolidated statements of operations. During the three and six months ended June 30, 2026, the net loss and net gain consisted of troubled debt restructuring gains of $805 and $3,509 , respectively, offset by losses on extinguishment of $2,088 and $2,171 , respectively.
On March 10, 2026, the Company repurchased $4,293 of the 5.00 % Senior Notes due December 31, 2026 from the open market for $4,035 . The repurchase was accounted for as a debt extinguishment, and the Company recognized a gain
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of $269 in the “(Loss) gain on extinguishment of debt” line item in the accompanying condensed consolidated statements of operations during six months ended June 30, 2026.
On March 30, 2026, the Company redeemed all of the $95,991 of issued and outstanding 5.50 % Senior Notes due March 31, 2026 (the “5.50 % 2026 Notes”). The redemption price was equal to 100 % of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date. In connection with the full redemption, the 5.50 % 2026 Notes, which were listed on Nasdaq under the ticker symbol “RILYK,” were delisted from Nasdaq and ceased trading on the redemption date.
During the six months ended June 30, 2025, the Company completed four private exchange transactions with institutional investors pursuant to which the investors exchanged senior notes for the New Notes, whereupon the exchanged notes were cancelled. The Company recorded a gain on the debt restructuring of $44,784 and $55,316 in the “Gain on senior note exchange” line item in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2025, respectively. Each of the exchanges represented a troubled debt restructuring.
The New Notes were issued pursuant to an indenture, dated as of March 26, 2025 (the “New Notes Indenture”), governing the issuance of New Notes dated March 26, 2025, April 7, 2025, May 21, 2025, June 30, 2025, and July 11, 2025 for the five
The New Notes mature on January 1, 2028 and accrue interest at a rate of 8.00 % per annum, payable semi-annually in arrears on April 30 and October 31, beginning on October 31, 2025. The Company is required to pay default interest of 8.00 % on accrued interest if the Company fails to pay interest when due.
The Company has the right to redeem the New Notes at any time, in whole or in part. If the New Notes are redeemed, including by a tender offer, the Company may repay the New Notes at principal plus accrued and unpaid interest if any, but excluding the redemption date.
The New Notes include a change of control provision, where the holders of the New Notes have the right to require the Company to repurchase all or a portion of the New Notes at a purchase price, in cash, equal to 101 % of the principal amount thereof, plus accrued and unpaid interest if the Company does not exercise its redemption option.
The New Notes also contain certain other events of default that could result in an acceleration of the Company’s obligations under the New Notes.
In addition, if the Company or its restricted subsidiaries engage in certain asset sales and do not invest such proceeds or permanently reduce certain debt within a specified period of time, the Company may be required to use a portion of the proceeds of such asset sales above a specified threshold to make an offer to purchase the New Notes at a price equal to 100 % of the principal amount of the New Notes being purchased, plus accrued and unpaid interest.
The New Notes Indenture contains certain covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
In connection with the issuance of warrants in conjunction with the private exchange transactions during 2025 (further described in Note 22 - Stockholders’ Equity), the Company entered into registration rights agreements with the investors, pursuant to which the Company granted such investors (i) certain shelf registration rights whereby the Company will register resales of the shares of Common Stock issued upon exercise of the warrants and (ii) certain piggyback registration rights, in each case subject to the terms and conditions set forth in the registration rights agreements. The Company registered the shares of Common Stock underlying such warrants pursuant to a Registration Statement on Form S-1 (which was subsequently amended by a Post-Effective Amendment) (Reg. No. 333-293348) and declared effective by the Securities and Exchange Commission in April 2026.
47
NOTE 16 — NONCONTROLLING INTERESTS
BRSH
On March 10, 2025, a merger subsidiary of the Company’s wholly-owned subsidiary BRSH, which is primarily comprised of the broker dealer operations within the Capital Markets segment, merged with a shell corporation and issued 0.6 % of the equity in BRSH to certain investors in the shell corporation. Upon completion of the transaction, the investors in the shell corporation became minority stockholders of BRSH. The Company also issued restricted stock awards as more fully described in Note 21(c) - BRSH Stock Incentive Plan and assuming the full issuance of the restricted stock awards are vested, the Company owned 89.4 % majority-interest in BRSH as of the date of the merger. As of June 30, 2026 and December 31, 2025, the Company owned 92.9 % and 90.7 %, respectively.
The shell corporation that merged with BRSH on March 10, 2025 did not meet the definition of a business, since it did not have any assets, liabilities, or operations and was treated as the initial recognition of a variable interest entity, as more fully described in Note 3 - Variable Interest Entities.
BRC Trust
BRC Trust was formed on January 6, 2025, and is a variable interest entity as more fully described in Note 3 - Variable Interest Entities. The noncontrolling interest of BRC Trust that is not owned by the Company includes 86.6 % of the equity interests in the BRC Trust. Of the 86.6 % equity interests not owned by the Company, 58.2 % is owned by related parties as more fully described in Note 24 - Related Party Transactions.
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NOTE 17 — REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers from the Company’s seven
| Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Corporate & All Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
Revenues for the three months ended June 30, 2026: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate finance, consulting and investment banking fees(1) | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Wealth and asset management fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions, fees and reimbursed expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising and other(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains (losses), net | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
(1) Corporate finance, consulting and investment banking fees for the Corporate & All Other category represents intercompany sales.
(2) Advertising and other revenues for the Corporate and All Other category primarily consist of bebe’s revenues from merchandise rental fees.
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| Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Corporate & All Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
Revenues for the three months ended June 30, 2025: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate finance, consulting and investment banking fees | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Wealth and asset management fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions, fees and reimbursed expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising and other(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
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| Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Corporate & All Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
Revenues for the six months ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate finance, consulting and investment banking fees(1) | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Wealth and asset management fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions, fees and reimbursed expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising and other(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains (losses), net | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
(1) Corporate finance, consulting and investment banking fees for the Corporate & All Other category represents intercompany sales.
(2) Advertising and other revenues for the Corporate and All Other category primarily consist of bebe’s revenues from merchandise rental fees.
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| Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Corporate & All Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Revenues for the six months ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate finance, consulting and investment banking fees(1) | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Wealth and asset management fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions, fees and reimbursed expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscription services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising and other(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments on loans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
(1) Corporate finance, consulting and investment banking fees for the Corporate and All Other category represents intercompany sales.
(2) Advertising and other revenues for the Corporate and All Other category primarily consist of bebe’s revenues from merchandise rental fees. These also include recycling processing fees for a regional environmental services business, which was sold in March 2025, and managed service fees for Nogin, an e-commerce, technology platform provider, through March 31, 2025.
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Contract Balances
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligation(s) are satisfied. The Company’s deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, financial consulting engagements, and subscription services where the performance obligation has not yet been satisfied.
The following table presents changes in deferred revenue during the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | ||||||||||
| Balance, beginning of period | $ | $ | |||||||||
| Additions to deferred revenue during the period | |||||||||||
| Reductions to deferred revenue for revenue recognized during the period | ( | ( | |||||||||
| Balance, end of period | $ | $ | |||||||||
During the six months ended June 30, 2026 and 2025 the Company recognized revenue of $22,581 and $25,033 that was recorded as deferred revenue at the beginning of the period.
The Company expects to recognize the deferred revenue of $46,985 as of June 30, 2026 as service and fee revenues when the performance obligation is met during the years ended December 31, 2026 (remaining six months), 2027, 2028, 2029 and 2030 in the amount of $30,491 , $8,008 , $4,194 , $1,350 , and $772 , respectively. The Company expects to recognize the deferred revenue of $2,170 after December 31, 2030.
The following table contains a rollforward of unbilled receivables, which are included in prepaid expenses and other assets, for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | ||||||||||
| Balance, beginning of period | $ | $ | |||||||||
| Additional unbilled revenue recognized | |||||||||||
| Less: Amounts billed to customers | ( | ( | |||||||||
| Balance, end of period | $ | $ | |||||||||
Contract Costs
The Company capitalizes: (1) costs to fulfill contracts associated with corporate finance and investment banking engagements are capitalized where the revenue is recognized at a point in time and the costs are determined to be recoverable and; (2) commissions paid to obtain magicJack contracts which are recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably over the service period.
The capitalized costs to fulfill a contract were $4,645 and $4,550 as of June 30, 2026 and December 31, 2025, respectively, and are recorded in the “Prepaid expenses and other assets” line item in the accompanying unaudited condensed consolidated balance sheets. For the three months ended June 30, 2026 and 2025, the Company recognized expenses of $785 and $1,034 related to capitalized costs to fulfill a contract, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized expenses of $1,637 and $2,094 related to capitalized costs to fulfill a contract, respectively. There were no
53
Remaining Performance Obligations and Revenue Recognized from Past Performance
The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of June 30, 2026. Corporate finance and investment banking fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of June 30, 2026.
During the three and six months ended June 30, 2026, and 2025, revenues recognized for customer contracts for performance obligations that are satisfied at a point in time and over time were:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Revenue recognized at a point in time | $ | $ | $ | $ | |||||||||||||||||||
Revenue recognized over time | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
NOTE 18 — RESTRUCTURING CHARGE
The Company recorded restructuring charges of $1,914 321
The $1,914 1,757 128 29
The $321 285 36
The following table summarizes the changes in accrued restructuring charge during the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Restructuring charge | |||||||||||||||||||||||
| Cash paid | ( | ( | ( | ( | |||||||||||||||||||
| Non-cash items | ( | ( | |||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | |||||||||||||||||||
54
NOTE 19 — INCOME TAXES
The Company’s effective income tax rate was a provision of 21.6 % for the three months ended June 30, 2026, as compared to a provision of 4.1 % for the three months ended June 30, 2025. The Company’s effective income tax rate was a provision of 8.6 % for the six months ended June 30, 2026, as compared to a provision of less than 1.0 % for the six months ended June 30, 2025. During the three months ended June 30, 2026, the Company had a provision for income taxes from continuing operations of $5,950 , which is primarily comprised of the estimated federal, state, and foreign taxes based on the expected annual effective income tax rate for 2026 that includes the impact of the utilization of net operating loss carryforwards and disallowed interest expense carried forward from prior years. During the three months ended June 30, 2025, the provision for income taxes from continuing operations of $3,053 resulted primarily from the impact of recording uncertain tax positions for state and foreign taxes, interest and penalties. During the six months ended June 30, 2026, the Company had a provision for income taxes from continuing operations of $22,841 . During the six months ended June 30, 2025, the Company had a provision for income taxes from continuing operations of $11 . The effective income tax rate for the six months ended June 30, 2026 is less than the federal statutory tax rate of 21%, primarily due to the expected utilization of net operating losses, carryforwards, disallowed interest expense carried forward from prior years and the Company continuing to have a full valuation allowance. The effective income tax rate for the six months ended June 30, 2025 was less than the federal statutory tax rate of 21% primarily due to the utilization of capital loss carryforwards to offset the gain on sale and deconsolidation of businesses and the Company having a full valuation allowance.
As of December 31, 2025, the Company had federal net operating loss carryforwards of $602,913 and state net operating loss carryforwards of $688,239 , which are available to offset taxable income. The Company has $39,319 of state capital loss carryovers as of December 31, 2025 that is available for carryforwards and will start to expire December 31, 2028. The Company’s federal net operating loss carryforwards generated in 2023 through 2025 of $278,310 will be limited to offsetting 80% of taxable income but do not expire. The remaining federal net operating loss carryforwards will expire in the tax years commencing on December 31, 2033, through December 31, 2038. The state net operating loss carryforwards will expire in the tax years commencing on December 31, 2030.
The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits of operating loss, capital loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue Code Section 382. Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income. As of June 30, 2026 and December 31, 2025, a full valuation allowance has been recorded since it is more likely than not that the Company will not be able to utilize tax benefits before they expire. The Company reassesses the need for a valuation allowance on an ongoing basis.
The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions. The Company is currently under audit by certain state and local and foreign tax authorities. The audits are in varying stages of completion. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, case law developments and closing of statutes of limitations. Such adjustments are reflected in the provision for income taxes, as appropriate. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2022 to 2025.
The Company intends to indefinitely reinvest foreign earnings and cash unless such repatriation results in no or minimal tax costs. It is not practicable to determine the amount of an unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries.
55
NOTE 20 — EARNINGS PER SHARE
Basic earnings per share is calculated by dividing income from continuing operations, income from discontinued operations, or net income by the weighted-average number of shares outstanding during the period, including contingently issuable shares. Diluted earnings per share is calculated by dividing income from continuing operations, income from discontinued operations, or net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Dilutive potential common shares include shares that may be issued under warrants, including warrants issued in connection with the Oaktree Credit Agreement and private debt exchange transactions, and restricted stock and stock option awards. As of May 29, 2026, the Oaktree Warrants issued in connection with the Oaktree Credit Agreement were exercised and are no longer outstanding.
Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share as the effect would be anti-dilutive were 1,350,215 3,229,165
Basic and diluted earnings per share were calculated as follows:
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | |||||||||||||||||||||||||||||||||||
| Net income attributable to Registrant | |||||||||||||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Add back: Change in fair value of warrants and gain on warrant exercise | ( | ( | |||||||||||||||||||||||||||||||||
| Diluted net income attributable to common stockholders | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
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| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||||||||||||||
| Net income attributable to Registrant | |||||||||||||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Add back: Change in fair value of warrants and gain on warrant exercise | ( | ( | |||||||||||||||||||||||||||||||||
| Diluted net income attributable to common stockholders | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Effect of dilutive potential common shares: | |||||||||||||||||||||||
| Restricted stock units, stock options and warrants | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Basic net income per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Discontinued operations | |||||||||||||||||||||||
| Basic income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted net income per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Discontinued operations | |||||||||||||||||||||||
| Diluted income per common share | $ | $ | $ | $ | |||||||||||||||||||
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NOTE 21 — SHARE-BASED PAYMENTS
(a) Employee Stock Incentive Plans
Under the Company’s 2021 Stock Incentive Plan, share-based compensation expense for restricted stock units was:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Share-based compensation expense for restricted stock units for continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Share-based compensation expense for restricted stock units for discontinued operations | |||||||||||||||||||||||
| Total share-based compensation expense for restricted stock units | $ | $ | $ | $ | |||||||||||||||||||
On April 3, 2026, the Company granted 308,514 restricted stock units (“RSUs”), with a grant date fair value of $2,099 to its six non-employee directors under the Company’s 2021 Stock Incentive Plan. The awards consisted of: (i) 21,960 RSUs that vested immediately on the grant date; (ii) 88,170 RSUs that vested on the earlier of the Company's 2026 Annual Meeting of Stockholders or December 1, 2026 subject to the director's continued service, which vested on May 19, 2026, the date of the 2026 Annual Meeting of Stockholders; and (iii) 198,384 RSUs that vest on the one-year anniversary of the grant date, subject to continued service. For five of the six non-employee directors, the post-grant service period associated with the third award was determined to be non-substantive because those directors were retirement-eligible under the terms of the award following the 2026 Annual Meeting of Stockholders; accordingly, those awards were considered vested and the resulting share-based expense was accelerated for accounting purposes on May 19, 2026. The grant-date fair value of the RSUs was based on the closing market price of the Company's common stock on the trading day prior to the grant date. During the six months ended June 30, 2026, 17,405 RSUs were forfeited. Share-based compensation expense is recorded in the “Selling, general and administrative expenses” line item in the accompanying unaudited condensed consolidated statements of operations.
(b) Employee Stock Purchase Plan
In connection with the Company’s Employee Stock Purchase Plan (the “Purchase Plan”), there was no 236,949 shares reserved for issuance under the Purchase Plan.
(c) BRSH Stock Incentive Plan
On March 10, 2025, the Company’s majority-owned subsidiary approved the BRSH Stock Incentive Plan which allows for issuance of up to 4,000,000 restricted stock awards of BRSH. No restricted stock awards of BRSH were granted during the six months ended June 30, 2026 and there is no intention to issue restricted stock awards of BRSH after the date hereof.
The restricted stock awards granted generally vest over a period of four to five years , based on continued service. The restricted stock awards vest for common stock of BRSH and increase the noncontrolling interest in BRSH, when vested. During the three months ended June 30, 2026 and 2025, share-based compensation expense of $365 and $1,277 , respectively, and during the six months ended June 30, 2026 and 2025, share-based compensation expense of $1,121 and $1,570 , respectively, related to the BRSH restricted stock awards was recorded in the “Selling, general and administrative expenses” line item in the accompanying unaudited condensed consolidated statements of operations.
During the six months ended June 30, 2026, 272,157 restricted stock awards vested, of which 107,071 shares valued at $1,902 were withheld to satisfy tax withholding obligations, resulting in the net issuance of 165,086 shares. During the six months ended June 30, 2026, 339,530 awards were forfeited. This activity, including shares withheld to satisfy tax
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withholding obligations, contributed to changes in noncontrolling interest, as more fully described in Note 16 – Noncontrolling Interest.
(d) Common Stock and Stock Options Issued
NOTE 22 — STOCKHOLDERS’ EQUITY
(a) Common Stock Warrants
In connection with the Oaktree Credit Agreement, on February 26, 2025 (refer to Note 14 - Term Loans and Revolving Credit Facilities), the Company issued seven-year warrants to the Oaktree Holders to purchase approximately 1,832,290 shares (or 6 % on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. The Oaktree Warrants contain certain anti-dilution provisions pursuant to which, under certain circumstances, the Oaktree Holders would be entitled to exercise the warrants for up to 19.9 % of the then-outstanding shares of common stock. The Oaktree Warrants were classified as a liability. The shares underlying the Oaktree Warrants are registered for resale on Form S-1 (which was subsequently amended by a Post-Effective Amendment) (Reg. No. 333-293348).
On May 28, 2026, immediately prior to exercise, the Oaktree Warrants were remeasured to fair value, resulting in a fair value of $15,810 . The Oaktree Holders exercised the Oaktree Warrants through a cashless exercise in accordance with the terms of the warrants, resulting in the issuance of an aggregate of 915,251 shares of the Company’s common stock to the Oaktree Holders in full settlement of the warrants. Upon settlement, the Company recognized a gain on settlement of the warrants of $6,410 , representing the difference between the fair value of the Oaktree Warrants immediately prior to exercise of $15,810 and the fair value of the Company's common stock issued in settlement of the warrants of $9,400 , based on the Company's closing stock price of $10.27 per share on the settlement date. The gain is included in the "Change in fair value of financial instruments and other" line item in the accompanying unaudited condensed consolidated statements of operations. As a result of the exercise, the Oaktree Warrants were settled and no warrant liability remained outstanding as of June 30, 2026.
The warrant liability had an estimated fair value of $6,400 as of December 31, 2025 which is included in other liabilities in Note 13 - Accrued Expenses and Other Liabilities. During the three and six months ended June 30, 2026, the change in the fair value of the warrant liability, including the final remeasurement immediately prior to exercise, resulted in a loss of $4,730 and $9,410 , respectively, and a gain of $1,000 and $3,700 during the three and six months ended June 30, 2025, respectively, and is included in the “Change in fair value of financial instruments and other” line item in the accompanying unaudited condensed consolidated statements of operations. See Note 5 - Fair Value Measurements further details.
In conjunction with the debt exchanges (see Note 15 - Senior Notes Payable), the Company issued seven-year warrants to the investors to purchase up to 913,692 shares of common stock at an exercise price of $10.00
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(b) Preferred Stock
There were 2,834 78,161 (inclusive of cumulative unpaid dividends of $7,307 ) and $75,725 (inclusive of cumulative unpaid dividends of $4,871 ), respectively. There were no
There were 1,729 48,011 (inclusive of cumulative unpaid dividends of $4,782 ) and $46,416 (inclusive of cumulative unpaid dividends of $3,188 ), respectively. There were no
On April 30, 2026, the Company did not pay the quarterly dividend that would otherwise have been payable on its Series A Preferred Stock and Series B Preferred Stock for the Dividend Period (as defined in the applicable Certificate of Designation) ended April 30, 2026. This was the sixth quarterly Dividend Period for which dividends on the Series A Preferred Stock and Series B Preferred Stock have not been paid since the Company’s announcement on January 21, 2025 of the temporary suspension of preferred dividends. As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation. Pursuant to each Certificate of Designation, upon the occurrence of a Preferred Dividend Default, the size of the Company’s Board of Directors is automatically increased by two seats, and the holders of the Series A Preferred Stock and the Series B Preferred Stock (voting together as a single class with the holders of any other parity preferred stock with similar voting rights then exercisable) become entitled to elect two additional directors to the Board of Directors (the “Preferred Directors”) until all dividends accumulated and unpaid on the Series A Preferred Stock and Series B Preferred Stock for all past Dividend Periods shall have been fully paid. The election of Preferred Directors will take place at (i) either (A) a special meeting called in accordance with the Certificate of Designation requirements and the Company’s by-laws if the request is received more than 90 days before the date fixed for the Corporation’s next annual or special meeting of stockholders or (B) the next annual or special meeting of stockholders if the request is received within 90 days of the date fixed for the Corporation’s next annual or special meeting of stockholders, and (ii) at each subsequent annual meeting of stockholders, or special meeting at which Preferred Directors are to be elected, until the right of holders of Series A Preferred Stock and Series B Preferred Stock to elect Preferred Directors shall have terminated. As of the date of this Quarterly Report, the Company has not received a written demand from holders that satisfies the requirements of the Company’s Certificates of Designation and by-laws of the Series A Preferred Stock or Series B Preferred Stock to call a special meeting for the election of Preferred Directors.
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NOTE 23 — NET CAPITAL REQUIREMENTS
BRS and B. Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Company’s broker-dealer subsidiaries are subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, to not exceed 15 to 1. As such, they are subject to the minimum net capital requirements promulgated by the SEC.
| June 30, 2026 | December 31, 2025 | ||||||||||
| BRS: | |||||||||||
| Net capital | $ | $ | |||||||||
| Excess capital | $ | $ | |||||||||
| Net capital requirement | $ | $ | |||||||||
| BRWM: | |||||||||||
| Net capital | $ | $ | |||||||||
| Excess capital | $ | $ | |||||||||
| Net capital requirement | $ | $ | |||||||||
NOTE 24 — RELATED PARTY TRANSACTIONS
For bebe’s rent to own stores that are franchised through Freedom VCM, during the three and six months ended June 30, 2025, royalty fees, marketing, and IT services charged to bebe by Freedom VCM totaled $1,068 and $2,285 respectively, and inventory purchases by bebe from Freedom VCM totaled $2,478 and $5,339 , respectively.
In June 2020, the Company entered into an investment advisory services agreement with Whitehawk Capital Partners, L.P. (“Whitehawk”), a limited partnership controlled by Mr. J. Ahn, who is the brother of one of the Company’s executive officers who was the Company’s Chief Financial Officer and Chief Operating Officer until the executive officer’s departure on June 3, 2025. Whitehawk agreed to provide investment advisory services for GACP I, L.P. and GACP II, L.P. There were no management fees paid to Whitehawk during 2025. Whitehawk is no longer a related party upon the departure of the executive officer on June 3, 2025.
The Company periodically participates in loans and financing arrangements for which the Company has an equity ownership and representation on the board of directors (or similar governing body). The Company may also provide consulting services or investment banking services to raise capital for these companies. These transactions are summarized as follows:
Babcock and Wilcox
B&W is a related party as a result of the Company’s equity investment as more fully described in Note 6 - Securities and Other Investments Owned and Securities Sold Not Yet Purchased for which the Company is deemed to have significant influence. One of the Company’s wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the Company to serve as the Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”), unless terminated by either party with thirty days written notice. The agreement was extended through December 31, 2028. Under this agreement, fees for services provided are $750 per annum, paid monthly. In addition, subject to the achievement of certain performance objectives as determined by B&W’s compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company. On September 20, 2024, Kenny Young resigned from his position as the President of the Company, the Executive Consulting Agreement with B&W was terminated, and concurrently, Kenny Young entered into a one-year consulting agreement to provide services to the Company, pursuant to which he was paid an annual fee of $250 paid on a monthly basis, subject to deduction of
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damages, fees and expenses that he may owe to the Company pursuant to this agreement. The consulting agreement expired on September 20, 2025 in accordance with its original terms.
During the three months ended June 30, 2026 and 2025, the Company earned $6,576 and $2,982 , respectively, and during the six months ended June 30, 2026 and 2025, the Company earned $12,499 and $3,818 , respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities which are included in services and fees in the accompanying unaudited condensed consolidated statements of operations.
The Company is also a party to indemnification agreements for the benefit of B&W and the B. Riley Guaranty, each as disclosed in Note 26 – Commitments and Contingencies.
Vintage Capital Management - Brian Kahn
In connection with the completion of the FRG take-private transaction, one of the Company’s subsidiaries and VCM, an affiliate of Brian Kahn, entered into the Amended and Restated Note. The Amended and Restated Note in the aggregate principal amount of $200,506 bears interest at the rate of 12 % per annum paid-in-kind with a maturity date of December 31, 2027. The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr. Kahn, or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM in amount equal to the greater of (i) 80 % of the net after-tax proceeds, and (ii) 50 % of gross proceeds. The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr. Kahn and his spouse with a value (based on the transaction price in the FRG take-private transaction) of $227,296 as of the closing of the FRG Take-private transaction. On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code which impacted the Freedom VCM equity interest, which served as the collateral for this loan receivable. Fair value adjustments on the VCM loan receivable were zero and a decrease of $(866 ) during the three months ended June 30, 2026 and 2025, respectively. Fair value adjustments on the VCM loan receivable were an increase and (decrease) of $20 and $(589 ) during the six months ended June 30, 2026 and 2025, respectively. In light of the Company’s determination that any repayment of the Amended and Restated Note would have been paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying Freedom VCM equity interest and other collateral provided by Mr. Kahn and his spouse, the Company has determined that both VCM and Mr. Kahn are related parties as of June 30, 2026 and December 31, 2025. There was no 1,855 on the loan receivable from the sale of all of the collateral that the company held for the Vintage loan. No additional collections are expected on the loan receivable.
Torticity, LLC
Torticity is a related party as a result of the Company’s equity ownership in the limited liability company and BRC’s representation on the board of directors (board representation through January 12, 2025). On November 2, 2023, the Company agreed to lend up to $15,369 to Torticity, LLC, of which $6,690 was drawn upon with $8,679 remaining, with interest payable of 15.0 % per annum and a maturity date of November 2, 2026. There were amendments to the loan during 2025; however, the entire loan receivable remains impaired with no fair value at June 30, 2026. There was no
GA Holdings
GA Holdings is a related party as a result of the Company’s equity investment as fully described in Note 10 - Equity Method Investments and BRC’s representation on the board of directors. The Company provided GA Holdings with a $25,000 secured revolving credit facility upon closing the Great American Transaction on November 15, 2024, which had an initial outstanding balance of $1,698 . As subsequently amended, the revolving commitment was revised to $40,000 for the period from March 10, 2025 to June 30, 2025 and reduced back to $25,000 from July 1, 2025 until the maturity date of November 15, 2025. The secured revolving credit facility was secured by all of the assets of GA Holdings and accrued interest at the annual rate of SOFR plus 4.75 %. Interest income recorded on the loan receivable was $394 and $701 during the three and six months ended June 30, 2025, respectively. On October 16, 2025, all outstanding amounts due and owing under this facility were repaid in full to BRF and the facility was terminated.
During the period from November 15, 2024 to October 16, 2025, the Company provided services to GA Holdings in accordance with a transition services agreement for accounting, information technology and other administration services. During the three and six months ended June 30, 2025, the Company recorded fee revenues for these services in the amount
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of $563 and $1,694 , respectively. Pursuant to an existing consulting arrangement, as amended on December 31, 2025 to extend the term through December 31, 2026, the Company also paid $12 and $105 respectively, of consulting fees to the consultant, who was hired in July 2025 as the chief executive officer of GA Holdings, during the three and six months ended June 30, 2026.
GA Joann Retail Partnership, LLC
GA Joann Retail Partnership, LLC, formed in February 2025, is a related party as a result of the Company’s equity investment as more fully described in Note 10 - Equity Method Investments for which the Company is deemed to have significant influence. On February 27, 2025, BRF, along with other lenders, entered into a credit agreement with GA Joann Retail Partnership, LLC for an aggregate commitment of $52,000 , of which BRF is committed to $24,653 . The credit agreement bore interest at 10.00 % to be paid monthly as payment-in-kind and capitalized into the outstanding principal balance and had a maturity date of November 26, 2025. This loan receivable was paid in full on April 7, 2025. Interest income recorded on the loan receivable was $9 and $223 during the three and six months ended June 30, 2025, respectively.
Other
The Company often provides consulting or investment banking services to raise capital for companies in which the Company has significant influence through equity ownership, representation on the board of directors (or similar governing body), or both. During the three months ended June 30, 2026 and 2025, the Company earned $400 and $1,964 of fees related to these services, respectively. During the six months ended June 30, 2026 and 2025, the Company earned $400 and $2,621 of fees related to these services, respectively.
The Company established BRC Trust on January 6, 2025, for the purpose of transferring and liquidating the assets of BRCPOF. After the formation of the BRC Trust, BRCPOF transferred its assets and liabilities to the BRC Trust. The Company determined the BRC Trust is a variable interest entity as the investors in the BRC Trust do not have voting rights, and substantially all of the activities are conducted on behalf of the Company which owns 13.3 %, and related parties of the Company which include executive officers and members of the board of directors of the Company owning 58.2 % of the equity interest in the Trust. As the Company has the power to direct all of the activities of the BRC Trust, the Company is the primary beneficiary of the Trust and, therefore, consolidated the BRC Trust upon its formation.
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NOTE 25 — BUSINESS SEGMENTS
The following is a summary of certain financial data for each of the Company’s reportable segments:
| Three Months Ended June 30, 2026 | Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Total Reportable Segments | Corporate & All Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues - Services and fees(2) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains (losses), net | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment on loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues - Sale of goods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct cost of services | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee compensation and benefits | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional services | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy-related costs | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other selling, general and administrative expenses(3) | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of tradename | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment income (loss) | $ | $ | $ | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Corporate and All Other consists of general corporate administrative functions not allocable to reportable segments and operating segments and entities that individually, or in aggregate, do not meet the criteria of a separate reportable segment including bebe, and individual investment and lending entities. | ||||
(2) | Revenues - Services and fees for the Corporate and All Other category includes intersegment eliminations. | ||||
(3) | Other selling, general and administrative expenses for the Corporate and All Other category includes intersegment eliminations and corporate expense allocations to segments. | ||||
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| Three Months Ended June 30, 2025 | Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Total Reportable Segments | Corporate & All Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues - Services and fees(2) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment on loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues - Sale of goods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct cost of services | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee compensation and benefits | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional services | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy-related costs | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other selling, general and administrative expenses(3) | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of tradename | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment income (loss) | $ | $ | ( | $ | $ | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Corporate and All Other consists of general corporate administrative functions not allocable to reportable segments and operating segments and entities that individually, or in aggregate, do not meet the criteria of a separate reportable segment including bebe, and individual investment and lending entities. | ||||
(2) | Revenues - Services and fees for the Corporate and All Other category includes intersegment eliminations. | ||||
(3) | Other selling, general and administrative expenses for the Corporate and All Other category includes intersegment eliminations and corporate expense allocations to segments. | ||||
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| Six Months Ended June 30, 2026 | Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Total Reportable Segments | Corporate & All Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues - Services and fees(2) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains (losses), net | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment on loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues - Sale of goods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct cost of services | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee compensation and benefits | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional services | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy-related costs | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other selling, general and administrative expenses(3) | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of tradename | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment income (loss) | $ | $ | $ | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Corporate and All Other consists of general corporate administrative functions not allocable to reportable segments and operating segments and entities that individually, or in aggregate, do not meet the criteria of a separate reportable segment including bebe, and individual investment and lending entities. | ||||
(2) | Revenues - Services and fees for the Corporate and All Other category includes intersegment eliminations. | ||||
(3) | Other selling, general and administrative expenses for the Corporate and All Other category includes intersegment eliminations and corporate expense allocations to segments. | ||||
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| Six Months Ended June 30, 2025 | Capital Markets | Wealth Management | Lingo | magicJack | Marconi Wireless | UOL | Consumer Products | Total Reportable Segments | Corporate & All Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues - Services and fees(2) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading gains, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustment on loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income - securities lending | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues - Sale of goods | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct cost of services | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee compensation and benefits | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional services | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Occupancy-related costs | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other selling, general and administrative expenses(3) | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring charge | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of tradename | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment (loss) income | $ | ( | $ | $ | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||
(1) | Corporate and All Other consists of general corporate administrative functions not allocable to reportable segments and operating segments and entities that individually, or in aggregate, do not meet the criteria of a separate reportable segment including bebe, Nogin (deconsolidated in March 2025), Atlantic Coast Recycling (sold in March 2025), and individual investment and lending entities. | ||||
(2) | Revenues - Services and fees for the Corporate and All Other category includes intersegment eliminations. | ||||
(3) | Other selling, general and administrative expenses for the Corporate and All Other category includes intersegment eliminations and corporate expense allocations to segments. | ||||
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Reconciliation of Segment Income (Loss) to Net Income:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Segment income (loss) | $ | $ | $ | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Dividend income | |||||||||||||||||||||||
| Realized and unrealized gains (losses) on investments | ( | ||||||||||||||||||||||
| Change in fair value of financial instruments and other | ( | ||||||||||||||||||||||
| Gain on sale and deconsolidation of businesses | |||||||||||||||||||||||
| Gain on senior note exchange | |||||||||||||||||||||||
| (Loss) income from equity investments | ( | ( | |||||||||||||||||||||
| (Loss) gain on extinguishment of debt | ( | ( | ( | ||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||
| Capital Markets segment | ( | ||||||||||||||||||||||
| Lingo segment | ( | ||||||||||||||||||||||
| Consumer Products segment | ( | ( | ( | ( | |||||||||||||||||||
| Corporate and All Other | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Income from continuing operations before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income from continuing operations | |||||||||||||||||||||||
| Income from discontinued operations, net of income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ||||||||||||||||||||||
| Net income attributable to BRC Group Holdings, Inc. | |||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
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The following table presents revenues by geographical area:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Services and fees | |||||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Trading gains, net | |||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Fair value adjustments on loans | |||||||||||||||||||||||||||||||||||
| North America | ( | ||||||||||||||||||||||||||||||||||
| Interest income - loans | |||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Interest income - securities lending | |||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Sale of goods | |||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||
| Australia | |||||||||||||||||||||||||||||||||||
| Europe, Middle East, and Africa | |||||||||||||||||||||||||||||||||||
| Asia | |||||||||||||||||||||||||||||||||||
| Latin America | |||||||||||||||||||||||||||||||||||
| Total - Sale of goods | $ | $ | |||||||||||||||||||||||||||||||||
| Total Revenues | |||||||||||||||||||||||||||||||||||
| North America | $ | $ | |||||||||||||||||||||||||||||||||
| Australia | |||||||||||||||||||||||||||||||||||
| Europe, Middle East, and Africa | |||||||||||||||||||||||||||||||||||
| Asia | |||||||||||||||||||||||||||||||||||
| Latin America | |||||||||||||||||||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
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The following table presents long-lived assets, which consists of property and equipment, net, by geographical area:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Long-lived Assets - Property and Equipment, net: | |||||||||||
| North America | $ | $ | |||||||||
| Europe | |||||||||||
| Asia Pacific | |||||||||||
| Australia | |||||||||||
| Total | $ | $ | |||||||||
Segment assets are not reported to, or used by, the Company’s CODM to allocate resources to, or assess performance of the segments and therefore, total segment assets have not been disclosed.
NOTE 26 — COMMITMENTS AND CONTINGENCIES
(a) Legal Matters
The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In addition to such legal and other claims, reviews, investigations, and proceedings, the Company and its subsidiaries are subject to the risk of unasserted claims, including, among others, as it relates to matters related to Mr. Kahn and our investment in Freedom VCM. If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit. The Company has not accrued for any such contingent liabilities, but such contingent liabilities could be realized which could have a material adverse impact on the Company’s financial condition.
On February 2, 2026, a stockholder derivative complaint was filed by Adrian Rubio in the U.S. Federal District Court, Central District of California on behalf of the Company and against the members of the Company’s Board of Directors and certain of the Company’s executive officers. The complaint alleges that certain of the Company’s officers and the board of directors substantially damaged the Company by filing false and misleading statements that omitted material adverse facts regarding Brian Kahn’s involvement in the Prophecy fraud and the regulatory scrutiny that the Company would face because of its entanglements with Kahn and Franchise Group. Claims include breach of fiduciary duties and unjust enrichment. The parties have agreed to stay this action pending decisions in the other derivative matters, and a stipulation to that effect has been accepted by the court. The Company believes that these claims are meritless and intends to defend this action.
On January 2, 2026, a stockholder derivative complaint was filed by Joel Friedman in the U.S. Federal District Court, Central District of California on behalf of the Company and against the members of the Company’s Board of Directors and certain of the Company’s executive officers. The complaint alleges that certain of the Company’s officers and the board of directors substantially damaged the Company by filing false and misleading statements that omitted material adverse facts regarding Brian Kahn’s involvement in the Prophecy fraud and the regulatory scrutiny that the Company would face because of its entanglements with Kahn and Franchise Group. Claims include breach of fiduciary duties, waste of corporate assets, and unjust enrichment. The parties have agreed to stay this action pending decisions in the other derivative matters, and a stipulation to that effect has been submitted to the court. The Company believes that these claims are meritless and intends to defend this action.
On July 11, 2025, the Company’s subsidiary, BRS, received a demand letter from certain parties that invested in a special purpose entity that in turn invested in the going private transaction (the “Transaction”) in August 2023 of Franchise Group, Inc. An arbitration demand (the “Demand”) was filed by such parties with the American Arbitration Association on October 10, 2025 against BRS and related entities (the “BR Defendants”). The Demand alleges that the BR Defendants (i) failed to disclose certain material facts regarding FRG and the Transaction in violation of certain securities laws, (ii) committed fraud and/or civil conspiracy, and (iii) breached fiduciary duties and aided and abetted the breach of fiduciary
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duties. Such investors seek rescission of the aggregate investment amount of $37,500 plus interest thereon and related fees and expenses. The Company believes such claims are meritless and intends to defend such action.
On February 14, 2025, a stockholder derivative complaint was filed by Michael Marchner in the Delaware Chancery Court on behalf of the Company and against the members of the Company’s Board of Directors. The complaint alleges that certain of the Company’s officers and the board of directors (i) breached their fiduciary duties related to the Company’s involvement with Mr. Kahn and subsequent legal issues, (ii) engaged in misconduct, and (iii) wasted corporate assets, including the approval of improper compensation. On March 30, 2026, the Court of Chancery dismissed the complaint in full. On April 29, 2026, Marchner filed an appeal to the Delaware Supreme Court.
On January 22, 2025, a stockholder derivative complaint was filed by James Smith in the Superior Court for Los Angeles County against the Company, certain of the Company’s executive officers and the members of the Company’s Board of Directors. The complaint alleges that certain of the Company’s officers and directors (i) breached their fiduciary duties related to the Company’s involvement with Mr. Kahn and subsequent legal issues, (ii) engaged in a waste of corporate assets, and (iii) received unjust enrichment. The Company believes that these claims are meritless and intends to defend this action.
On July 19, 2024, the Company received a demand from two stockholders, Renato Rene Amio and Stephen Edwards, to inspect certain of the Company’s books and records pursuant to Section 220 of the Delaware General Corporation Law, focused on the Company’s business dealings with Mr. Kahn and the FRG take-private transaction, and the Company produced documents in response. On January 16, 2026, the same stockholders delivered a pre-suit litigation demand to the Company’s Board of Directors demanding that the Board pursue claims against certain officers and directors for alleged breaches of fiduciary duty, citing Mr. Kahn’s December 2025 guilty plea, alleging that the Board knew or should have known of Mr. Kahn’s history, criticizing the Company’s internal investigations, and seeking disgorgement of compensation, personnel action, and corporate governance reforms. The demand does not specify an amount of alleged damages. The Company believes any resulting claims would be without merit and intends to respond in due course.
On July 9, 2024, a putative class action was filed by Brian Gale, Mark Noble, Terry Philippas and Lawrence Bass in the Delaware Chancery Court against Freedom VCM, Mr. Kahn, Andrew Laurence, Matthew Avril, and the Company. This complaint alleges that former shareholders of FRG suffered damages due to alleged breaches of fiduciary duties by officers, directors and other participants in the August 2023 management-led take private transaction of FRG and that the Company aided and abetted those alleged breaches of fiduciary duties. The claim seeks an award of unspecified damages, rescissory damages and/or quasi-appraisal damages, disgorgement of profits, attorneys’ fees and expenses, and interest thereon. The Company believes these claims are meritless and intends to defend this action.
On July 3, 2024, each of the Company and Bryant Riley, Chairman and Co-Chief Executive Officer, received a subpoena from the 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, and (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries. On November 22, 2024, each of the Company and Mr. Riley received an additional SEC subpoena requesting the production of certain additional documents and information relating to Franchise Group, Inc. (including its holding company, Freedom VCM Holdings, LLC) as well as Mr. Riley’s personal loan and his pledge of shares of the Company’s common stock as collateral for such loan. In June 2026, the SEC issued subpoenas to certain current and former employees seeking their testimony. As previously disclosed on April 23, 2024, the Audit Committee of the Company’s Board of Directors, with the assistance of Sullivan & Cromwell LLP, the Company’s legal counsel, conducted an internal review, and separately the Audit Committee retained Winston & Strawn LLP, independent legal counsel, to conduct an independent investigation, to review transactions among Mr. Kahn (and his affiliates) and the Company (and its affiliates). The review and the investigation both confirmed that the Company and its executives, including Mr. Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates. The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred. Both the Company and Mr. Riley are responding to the subpoenas and are fully cooperating with the SEC.
On May 2, 2024, a putative class action was filed by Ted Donaldson in the Superior Court for the State of California, County of Los Angeles on behalf of all persons who acquired the Company’s senior notes pursuant to the shelf registration statement filed with the SEC on Form S-3 dated January 28, 2021, and the prospectuses filed and published on August 4, 2021 and December 2, 2021 (the “Offerings”). The action asserts claims under §§ 11, 12, and 15 of the Securities Act of 1933 against the Company, some of the Company’s current and former officers and directors, and the financial institutions that served as underwriters and book runners for the Offerings. An amended complaint was filed on September 27, 2024. The amended complaint alleges that the offering documents failed to advise investors that Brian Kahn and/or one or more
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of his controlled entities was engaged in illicit business activities, that the Company, despite the foregoing, continued to finance transactions for Kahn, eventually enabling him and others to take FRG private, and that the foregoing was reasonably likely to draw regulatory scrutiny and reputational harm to the Company. The Company believes these claims are meritless and intends to defend this action.
On January 24, 2024, a putative securities class action complaint was filed by Mike Coan in U.S. Federal District Court, Central District of California, against the Company, Mr. Riley, Tom Kelleher and Phillip Ahn. The purported class includes persons and entities that purchased shares of the Company’s common stock between May 10, 2023 and November 9, 2023. A second putative class action lawsuit was filed on March 15, 2024 by the KL Kamholz Joint Revocable Trust (“Kamholz”). On August 8, 2024, this matter was consolidated with the Kamholz matter and an amended complaint was then filed on April 21, 2025. The amended complaint alleges that the Company failed to disclose to investors material financial details concerning a going private transaction involving FRG, and that the Company made false or misleading statements concerning the Company’s lending practices, its high concentration of risk in transactions involving Mr. Kahn and his affiliates, the condition and composition of the Company’s loan portfolio, the Company’s due diligence and risk management procedures, and the Company’s level of concern and internal scrutiny concerning Mr. Kahn after it learned he was potentially implicated in a fraud involving an unrelated third party. The amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On December 12, 2025, the District Court granted in part and denied in part the Company’s motion to dismiss the consolidated amended complaint. The matter will now move into discovery and class certification proceedings. The Company cannot estimate the amount of potential liability, if any, that could arise from these matters and believes these claims are meritless and intends to defend these actions.
On September 21, 2023, BRCC, a wholly owned subsidiary of the Company, received a demand alleging that certain payments to BRCC in the aggregate amount of approximately $32,166 made by Sorrento Therapeutics, Inc. (“Sorrento”), a Chapter 11 debtor in U.S. Bankruptcy Court, Southern District of Texas (the “Court”), pursuant to that certain Bridge Loan Agreement dated September 30, 2022 between Sorrento and BRCC, are avoidable as preferential transfers (the “Alleged Preferences”). On June 16, 2025, the liquidating trustee (the “Trustee”) on behalf of the Sorrento Liquidating Trust filed a complaint with the Court in an adversary proceeding seeking to avoid and recover the Alleged Preferences. On September 12, 2025, the Court denied BRCC’s motion to dismiss. The Company believes that the Trustee’s claims lack merit and intends to continue to assert its statutory defenses to defeat such claims.
In light of the significant factual issues to be resolved with respect to the asserted claims and other proceedings described above and uncertainties regarding unasserted claims described above, at the present time reasonably possible losses cannot be estimated with respect to the asserted and unasserted claims described in the preceding paragraphs.
(b) Babcock & Wilcox Commitments and Guarantees
On January 18, 2024, the Company entered into a guaranty (the “Axos Guaranty”) in favor of (i) Axos Bank, in its capacity as administrative agent (the “Administrative Agent”) for the secured parties under that certain credit agreement, dated as of January 18, 2024, among B&W, the guarantors party thereto, the lenders party thereto and the Administrative Agent (the “B&W Axos Credit Agreement”), and (ii) the secured parties. Subject to the terms and conditions of the Axos Guaranty, the Company has guaranteed certain obligations of B&W (subject to certain limitations) under the B&W Axos Credit Agreement, including the obligation to repay outstanding loans and letters of credit and to pay earned interest, fees costs and expenses of enforcing the Axos Guaranty, provided however, that the Company’s obligations with respect to the principal amount of credit extensions and unreimbursed letter of credit obligations under the B&W Axos Credit Agreement shall not at any time exceed $150,000 in the aggregate, which is the maximum potential amount of future payments under the guaranty. In consideration for the agreements and commitments under the Axos Guaranty and pursuant to a separate fee and reimbursement agreement, B&W has agreed to pay the Company a fee equal to 2.00 % of the aggregate revolving commitments (as defined in the B&W Axos Credit Agreement) under the B&W Axos Credit Agreement, payable quarterly and, at B&W’s election, in cash in full or 50 % in cash and 50 % in the form of penny warrants. On June 18, 2025, an amendment was made to the Axos Guaranty whereby the Company’s obligations as guarantor were suspended until January 1, 2027. On February 25, 2026, the Axos Guaranty was terminated and is of no further force and effect.
On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties. Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a €30,000 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W. Under the agreement, the performance bond amount was reduced upon the satisfaction of specified
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contractual performance obligations. As of June 30, 2026, the Company’s indemnity obligation under the performance bond was €5,000 .
(c) Other Commitments
In the normal course of business, the Company enters into commitments to its clients in connection with capital raising transactions, such as firm commitment underwritings, equity lines of credit, or other commitments to provide financing on specified terms and conditions. Securities underwriting exposes the Company to market and credit risk, primarily in the event that, for any reason, securities purchased by the Company cannot be distributed at the anticipated price and to balance sheet risk in the event that debt or equity financing commitments cannot be syndicated.
The Company entered into two 15,000 of the Issuer’s convertible preferred stock prior to March 24, 2027 and (ii) $2,000,000 of the Issuer’s convertible preferred stock prior to August 27, 2029, subject to limitations. The maximum put notice is (i) $500 per week in the aggregate and (ii) $150,000 per issuance and no more than one put notice a week, respectively. Conversion of the preferred stock is subject to a 19.99 % conversion limitation pursuant to the applicable Nasdaq Listing Rules.
If exercised, the Company would remit cash and receive preferred shares at a discount to their stated value, with the preferred stock convertible at the Company’s option into common shares of the Issuer based on a formula tied to market prices. The preferred stock also includes a contingent redemption feature if the Issuer’s common stock declines below a specified price threshold.
During the three and six months ended June 30, 2026, the Company purchased an aggregate of $225,000 and $375,000 of preferred shares pursuant to the April 2025 agreement. As of June 30, 2026, future commitments for the Written Puts include: (i) $12,700 , which does not meet the requirements to be put by one Issuer, due to a decrease in stock price below the required floor as of the balance sheet date and (ii) $960,000 , which remained outstanding from another Issuer and had not been exercised, and no amounts were due (see Note 5 - Fair Value Measurements).
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “seek,” “likely,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. Except as required by law, we are under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report to conform such statements to actual results or to changes in our expectations.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part II of this Quarterly Report under the caption “Risk Factors.”
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 Holdings”) and prior business relationship with Brian Kahn (the former CEO of Freedom Holdings); 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 Holdings 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.
Except as otherwise required by the context, references in this Quarterly Report to the “Company,” “BRCGH,” “BRC,” “BRC Group Holdings,” “we,” “us” or “our” refer to the combined business of BRC Group Holdings, Inc. and all of its subsidiaries.
Overview
Description of the Company
BRC Group Holdings, Inc. (Nasdaq: RILY) (the “Company” or “BRCGH”), which changed its name from B. Riley Financial, Inc. effective January 1, 2026, is a diversified holding company offering a platform of businesses, including financial services (with complementary banking and wealth management businesses), telecom, retail, and investments in equity, debt and venture capital. We refer to BRCGH as having a “platform” because of the unique composition of our financial services businesses and diversification of its operations. Our core financial services platform provides small cap and middle market companies customized end-to-end solutions at every stage of the enterprise life cycle. Our complementary banking business offers comprehensive services in capital markets, sales, trading, research, merchant banking, M&A, and restructuring. Our complementary wealth management business offers wealth management and financial planning services including brokerage, investment management, insurance, and tax preparation. Our telecom
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businesses provide consumer and business services including traditional, mobile and cloud phone, internet and data, security, and email. Our consumer products and retail companies provide mobile computing accessories and home furnishings. BRCGH, through its investment business, deploys its capital inside and outside its core financial services business to generate shareholder value through opportunistic investments.
The Company 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 effort to maximize free cash flow.
We are headquartered in Los Angeles, California and maintain offices throughout the U.S., including in New York, New Jersey, Chicago, Metro District of Columbia, Boston, Dallas, Memphis, Miami, San Francisco, Boca Raton, and Palm Beach Gardens, as well as an office located in India.
Our Business Segments
We maintain a diverse composition of businesses that operate in seven reportable business segments: Capital Markets, Wealth Management, Lingo, magicJack, Marconi Wireless, UOL, and Consumer Products. The descriptions below illustrate the businesses that comprise our 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 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 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; 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 BRC 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.
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Revenues from the Wealth Management segment are comprised of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenues - Services and fees | |||||||||||||||||||||||||||||||||||
| Brokerage revenues | $ | 16,101 | $ | 15,369 | $ | 31,762 | $ | 33,715 | |||||||||||||||||||||||||||
| Advisory revenues | 10,830 | 12,163 | 21,801 | 28,597 | |||||||||||||||||||||||||||||||
| Other | 21,771 | 5,889 | 37,218 | 17,775 | |||||||||||||||||||||||||||||||
Total services and fees revenue | 48,702 | 33,421 | 90,781 | 80,087 | |||||||||||||||||||||||||||||||
| Trading gains, net | 9,251 | 5,200 | 19,347 | 5,812 | |||||||||||||||||||||||||||||||
Total revenues | $ | 57,953 | $ | 38,621 | $ | 110,128 | $ | 85,899 | |||||||||||||||||||||||||||
Total assets under management were approximately $12.1 billion and $13.0 billion at June 30, 2026 and December 31, 2025, respectively. Of these amounts, advisory assets under management totaled approximately $4.6 billion at June 30, 2026 and $4.3 billion at December 31, 2025. Advisory revenues were 0.24% and 0.27% of average advisory assets under management during the three months ended June 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 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.
magicJack Segment – magicJack VoIP Services, LLC and related subsidiaries (together, “magicJack”) is a non-interconnected Voice-over-IP (“VoIP”) cloud-based communications service provider that offers related devices and subscription services within the United States and Canada. The magicJack services allow its subscribers to stay connected at low costs.
Marconi Wireless Segment – Marconi Wireless Holdings, LLC (“Marconi Wireless”) is a mobile virtual network operator that provides mobile phone voice, text, and data services and devices using the Credo Mobile brand.
UOL Segment – United Online, Inc. (“UOL”) is an Internet access provider that offers dial-up and digital subscriber line (“DSL”) services under the NetZero and Juno brands across the United States. UOL also provides paid and free e-mail subscription services that also generate advertising revenues.
Consumer Products Segment – This segment is comprised of Tiger US Holdings, Inc. (“Targus”), which 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 seven 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, which was sold in March 2025 and bebe stores inc. (“bebe”) which operates rent-to-own stores.
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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 June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Public Equity Securities: | ||||||||||||||
| Babcock & Wilcox Enterprises, Inc. - common stock | $ | 386,996 | $ | 174,011 | ||||||||||
| Double Down Interactive Co., Ltd - common stock | 18,751 | 30,010 | ||||||||||||
| Applied Digital Corporation - common stock | 1,008 | 12,137 | ||||||||||||
| Other public equities | 25,641 | 17,041 | ||||||||||||
| Total public equity securities | 432,396 | 233,199 | ||||||||||||
| Private Equity Securities: | ||||||||||||||
| Applied Digital Corporation - preferred stock | 80,040 | 41,115 | ||||||||||||
| Other private equities | 92,538 | 94,490 | ||||||||||||
| Total private equity securities | 172,578 | 135,605 | ||||||||||||
| Total equity securities | 604,974 | 368,804 | ||||||||||||
| Corporate bonds | 28,166 | 31,751 | ||||||||||||
| Other fixed income securities | 5,175 | 4,373 | ||||||||||||
| Partnership interests - investment funds holding SpaceX positions | 83,026 | 40,082 | ||||||||||||
| Partnership interest and other | 2,374 | 1,833 | ||||||||||||
| Total securities and other investments owned | $ | 723,715 | $ | 446,843 | ||||||||||
Total securities and other investments owned increased $276.9 million during the six months ended June 30, 2026 primarily due to the following:
•$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.
•$11.3 million decrease in the carrying values of our Double Down Interactive Co., Ltd common stock primarily driven by sales of the securities partially offset by an increase in the public share price during the period.
•$11.1 million decrease in the carrying value of our Applied Digital Corporation (“APLD”) common stock was driven by dispositions during the period.
•$8.6 million increase in the carrying values of our investments in other public equities driven by net additions during the period.
•$38.9 million increase in the carrying values of our investments in APLD preferred stock is due to additions in the current period.
•$2.0 million decrease in the carrying values of our investments in other private equities driven primarily by net dispositions and, to a lesser extent, a decrease in market value of certain private securities during the period.
•$3.6 million decrease in the carrying values of our investments in corporate bonds driven primarily by decrease in the public per unit price, partially offset by net additions during the period.
•$0.8 million increase in the carrying values of our investments in other fixed income securities driven primarily by net additions during the period.
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•$42.9 million increase in the carrying value of our partnership interest from carried interest related to investment funds holding positions in SpaceX driven by an increase in market value.
•$0.5 million increase in the carrying values of our investments in other partnership interests and other securities primarily driven by net increase in market value of certain securities during the period.
Critical Accounting Estimates
The preparation of our unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities, and reported amounts of revenue and expense during the reporting period. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may significantly differ from those estimates. Critical accounting estimates represent the areas where more significant judgments and estimates are used in the preparation of our unaudited condensed consolidated financial statements. A discussion of such critical accounting estimates, which include fair value measurements, goodwill and other intangible assets, and accounting for income tax valuation allowances can be found in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025.
At June 30, 2026, as a result of the current financial performance of the Targus subsidiary, which comprises the reporting unit of all operations within the Consumer Products segment, and current market conditions, the Company performed an interim quantitative impairment assessment of the Targus tradename. The Company utilized the relief-from-royalty method to estimate the fair value of the Targus tradename, with key inputs including a long-term revenue growth rate of 3.0%, a discount rate of 22.0%, and a royalty rate of 1.0%. This resulted in an impairment charge for the Targus tradename in the amount of $4.0 million at June 30, 2026. Changes in these estimates and assumptions could materially affect the determination of fair value and any impairment charge for the tradename. Any changes from our current estimates and assumptions that result in materially different estimates and assumptions in the future in response to changing economic conditions, changes in our business, or for other reasons could result in the recognition of additional impairment charges in future periods. There were no impairments of goodwill or indefinite-lived intangibles of other reporting units identified on an interim basis during the six months ended June 30, 2026.
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Results of Operations
The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Condensed Consolidated Statements of Operations
(Dollars in thousands)
| Three Months Ended June 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Services and fees | $ | 173,595 | $ | 145,772 | $ | 27,823 | 19.1 | % | |||||||||||||||
| Trading gains, net | 12,874 | 27,680 | (14,806) | (53.5) | % | ||||||||||||||||||
| Fair value adjustments on loans | 4,245 | 800 | 3,445 | 430.6 | % | ||||||||||||||||||
| Interest income - loans | 2,171 | 3,853 | (1,682) | (43.7) | % | ||||||||||||||||||
| Interest income - securities lending | 1,632 | 2,124 | (492) | (23.2) | % | ||||||||||||||||||
| Sale of goods | 44,600 | 45,073 | (473) | (1.0) | % | ||||||||||||||||||
| Total revenues | 239,117 | 225,302 | 13,815 | 6.1 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Direct cost of services | 29,364 | 33,216 | (3,852) | (11.6) | % | ||||||||||||||||||
| Cost of goods sold | 31,361 | 35,113 | (3,752) | (10.7) | % | ||||||||||||||||||
| Selling, general and administrative expenses | 133,377 | 142,369 | (8,992) | (6.3) | % | ||||||||||||||||||
| Restructuring charge | 1,914 | 321 | 1,593 | 496.3 | % | ||||||||||||||||||
| Impairment of tradename | 4,000 | 1,500 | 2,500 | 166.7 | % | ||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | 906 | 1,968 | (1,062) | (54.0) | % | ||||||||||||||||||
| Total operating expenses | 200,922 | 214,487 | (13,565) | (6.3) | % | ||||||||||||||||||
| Operating income | 38,195 | 10,815 | 27,380 | 253.2 | % | ||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | 339 | 492 | (153) | (31.1) | % | ||||||||||||||||||
| Dividend income | 133 | 122 | 11 | 9.0 | % | ||||||||||||||||||
| Realized and unrealized gains on investments | 12,092 | 10,216 | 1,876 | 18.4 | % | ||||||||||||||||||
| Change in fair value of financial instruments and other | 1,546 | 11,884 | (10,338) | (87.0) | % | ||||||||||||||||||
| Gain on sale and deconsolidation of businesses | — | 5,372 | (5,372) | n/m | |||||||||||||||||||
| Gain on senior note exchange | — | 44,454 | (44,454) | n/m | |||||||||||||||||||
| (Loss) income from equity investments | (5,459) | 25,603 | (31,062) | n/m | |||||||||||||||||||
| Loss on extinguishment of debt | (1,283) | (10,266) | 8,983 | (87.5) | % | ||||||||||||||||||
| Interest expense | (18,016) | (23,952) | 5,936 | (24.8) | % | ||||||||||||||||||
| Income from continuing operations before income taxes | 27,547 | 74,740 | (47,193) | (63.1) | % | ||||||||||||||||||
| Provision for income taxes | (5,950) | (3,053) | (2,897) | 94.9 | % | ||||||||||||||||||
| Income from continuing operations | 21,597 | 71,687 | (50,090) | (69.9) | % | ||||||||||||||||||
| Income from discontinued operations, net of income taxes | — | 69,312 | (69,312) | n/m | |||||||||||||||||||
| Net income | 21,597 | 140,999 | (119,402) | (84.7) | % | ||||||||||||||||||
| Net income attributable to noncontrolling interests | 1,048 | 1,528 | (480) | (31.4) | % | ||||||||||||||||||
| Net income attributable to BRC Group Holdings, Inc. | 20,549 | 139,471 | (118,922) | (85.3) | % | ||||||||||||||||||
| Preferred stock dividends | 2,015 | 2,015 | — | — | % | ||||||||||||||||||
| Net income available to common shareholders | $ | 18,534 | $ | 137,456 | $ | (118,922) | (86.5) | % | |||||||||||||||
_____________________________________________
n/m - Not applicable or not meaningful.
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Revenues
The table below, and the discussion that follows, are based on how we analyze our business.
| Three Months Ended June 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Services and fees: | |||||||||||||||||||||||
| Capital Markets segment | $ | 45,939 | $ | 37,919 | $ | 8,020 | 21.2 | % | |||||||||||||||
| Wealth Management segment | 48,702 | 33,421 | 15,281 | 45.7 | % | ||||||||||||||||||
| Lingo segment | 38,788 | 39,907 | (1,119) | (2.8) | % | ||||||||||||||||||
| magicJack segment | 8,281 | 9,473 | (1,192) | (12.6) | % | ||||||||||||||||||
| Marconi Wireless segment | 6,878 | 8,065 | (1,187) | (14.7) | % | ||||||||||||||||||
| UOL segment | 2,881 | 3,287 | (406) | (12.4) | % | ||||||||||||||||||
| Corporate and All Other | 22,126 | 13,700 | 8,426 | 61.5 | % | ||||||||||||||||||
| Subtotal | 173,595 | 145,772 | 27,823 | 19.1 | % | ||||||||||||||||||
| Trading gains (losses), net: | |||||||||||||||||||||||
| Capital Markets segment | 4,363 | 21,249 | (16,886) | (79.5) | % | ||||||||||||||||||
| Wealth Management segment | 9,251 | 5,200 | 4,051 | 77.9 | % | ||||||||||||||||||
| Corporate and All Other | (740) | 1,231 | (1,971) | (160.1) | % | ||||||||||||||||||
| Subtotal | 12,874 | 27,680 | (14,806) | (53.5) | % | ||||||||||||||||||
| Fair value adjustments on loans: | |||||||||||||||||||||||
| Capital Markets segment | 751 | — | 751 | n/m | |||||||||||||||||||
| Corporate and All Other | 3,494 | 800 | 2,694 | 336.8 | % | ||||||||||||||||||
| Subtotal | 4,245 | 800 | 3,445 | 430.6 | % | ||||||||||||||||||
| Interest income - loans: | |||||||||||||||||||||||
| Capital Markets segment | 1,027 | — | 1,027 | n/m | |||||||||||||||||||
| Corporate and All Other | 1,144 | 3,853 | (2,709) | (70.3) | % | ||||||||||||||||||
| Subtotal | 2,171 | 3,853 | (1,682) | (43.7) | % | ||||||||||||||||||
| Interest income - securities lending: | |||||||||||||||||||||||
| Capital Markets segment | 1,632 | 2,124 | (492) | (23.2) | % | ||||||||||||||||||
| Sale of goods: | |||||||||||||||||||||||
| magicJack segment | 286 | 304 | (18) | (5.9) | % | ||||||||||||||||||
| Marconi Wireless segment | 490 | 1,167 | (677) | (58.0) | % | ||||||||||||||||||
| Consumer Products segment | 43,537 | 43,284 | 253 | 0.6 | % | ||||||||||||||||||
| Corporate and All Other | 287 | 318 | (31) | (9.7) | % | ||||||||||||||||||
| Subtotal | 44,600 | 45,073 | (473) | (1.0) | % | ||||||||||||||||||
| Total revenues | $ | 239,117 | $ | 225,302 | $ | 13,815 | 6.1 | % | |||||||||||||||
n/m - Not applicable or not meaningful.
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Services and fees
Total increase in services and fees revenues during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$15.3 million increase in Wealth Management segment primarily driven by $16.3 million in income from carried interest primarily related to investment funds holding positions in SpaceX, partially offset by a $1.3 million decrease in advisory fees and a $0.4 million decrease in other income;
•$8.4 million increase in Corporate and All Other non-reportable operating segments driven by income of $12.9 million from carried interest primarily related to investment funds holding positions in SpaceX, partially offset by a reduction in commissions related to APLD finder fees of $2.4 million and a decline at bebe of $1.0 million;
•$8.0 million increase in Capital Markets segment, driven by higher underwriting revenues of $4.4 million, increased finder fees of $2.4 million, higher securities lending locate fees of $1.8 million, higher secondary commissions of $1.7 million, and higher ATM and private placement revenues, net of a $3.2 million decrease in M&A and advisory fees; partially offset by:
•$1.2 million decrease in magicJack segment, driven by fewer active customers resulting in lower renewal revenues and lower device service revenues;
•$1.2 million decrease in Marconi Wireless segment, driven by lower service revenues attributable to an ongoing decline in active customers;
•$1.1 million decrease in Lingo segment, driven by fewer POTS and broadband subscribers as customers migrated to VoIP services, partially offset by VoIP growth from those same conversions;
•$0.4 million decrease in UOL segment, driven by declines in internet access subscribers in addition to discontinuing telecom resale services.
Trading gains, net
Total decrease in net trading gains (losses) during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$16.9 million decrease in Capital Markets segment, primarily driven by lower net trading gains in the current year period, driven by gains of $8.0 million with APLD, $2.6 million with U.S. Treasuries, $1.7 million with certain equity and various other securities, partially offset by a $9.2 million loss with B&W, compared to net trading gains in the prior year period of $4.4 million with B&W, $4.1 million with APLD, $6.5 million with certain equity securities, $2.2 million with U.S. Treasuries, and net gains from various other securities;
•$2.0 million decrease in Corporate and All Other non-reportable operating segments primarily driven by increases in unrealized losses for certain securities in the current year period; partially offset by:
•$4.1 million increase in Wealth Management segment, driven by revenue from the Variable Rate Transactions (“VRT”) of $2.7 million, net gains on certain equity securities of $0.6 million, and net gains from bond and structured trading activity.
Fair value adjustments on loans
We 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:
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| Fair Value Adjustments on Loans Receivable | ||||||||||||||||||||||||||||||||
| At Fair Value | Three Months Ended June 30, | |||||||||||||||||||||||||||||||
| Industry or Type of Loan | June 30, 2026 | December 31, 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Related Party Loans Receivable: | ||||||||||||||||||||||||||||||||
| Vintage Capital Management, LLC | Retail / consumer | n/a | $ | 1,835 | $ | — | $ | (866) | ||||||||||||||||||||||||
Conn’s, Inc.(1) | Retail / consumer | n/a | — | n/a | — | |||||||||||||||||||||||||||
| Other related party loans | Services, oil & gas and industrial | 1,035 | 1,000 | 82 | (126) | |||||||||||||||||||||||||||
| Total related party loans receivable | 1,035 | 2,835 | 82 | (992) | ||||||||||||||||||||||||||||
| XBP Americas, LLC | Technology | 15,041 | 21,415 | 287 | 2,049 | |||||||||||||||||||||||||||
| Norlin EV Limited | Real estate | n/a | 10 | 1,201 | (257) | |||||||||||||||||||||||||||
Conn’s, Inc.(1) | Retail / consumer | — | n/a | 1,930 | n/a | |||||||||||||||||||||||||||
| Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company | Internet Services and Infrastructure | 19,794 | — | 161 | — | |||||||||||||||||||||||||||
| Other loans receivable | Various | 2,932 | 2,043 | 584 | — | |||||||||||||||||||||||||||
| Total loans receivable | $ | 38,802 | $ | 26,303 | $ | 4,245 | $ | 800 | ||||||||||||||||||||||||
(1) The Conn’s, Inc. loan receivable was written off in January 2026 and is no longer a related party loan receivable. Recovery of proceeds from the loan receivable is contingent upon collecting amounts from the Conn’s bankruptcy estate. During the three months ended June 30, 2026, the Company recovered $1,930 of proceeds from the Conn’s bankruptcy estate, and it is reported as a fair value adjustment. | ||||||||||||||||||||||||||||||||
The $3.4 million favorable variance in fair value adjustments related to our loans receivable during the three months ended June 30, 2026, when compared to the same period in the prior year, was primarily driven by $1.9 million in proceeds recovered from the Conn's, Inc. bankruptcy estate and a $1.2 million fair value increase on the Norlin EV Limited loan, partially offset by a $(1.8) million decrease in fair value adjustments on the XBP Americas, LLC loan compared to the prior year period.
Interest income - loans
The $1.7 million decrease in interest income related to loans receivable for the three months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by declines across the Exela portfolios of $2.1 million, GA Group portfolios of $0.4 million, and Norlin EV Limited of $0.2 million, partially offset by an increase of $1.0 million due to a loan entered with Enovum NC-1 Venture, LLC during the current year period.
Interest income - securities lending
The $0.5 million decrease 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 lower average spreads earned on equity securities lending, partially offset by higher average contract values across the portfolio.
Sale of goods
The decrease in sale of goods revenue during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily attributable to a $0.7 million decrease in the 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.
Operating expenses
Direct cost of services
The decrease in direct cost of services during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
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•$1.7 million decrease from the Lingo segment due to lower POTS unit volume, partially offset by higher costs associated with the conversion to VoIP services;
•$1.5 million decrease from the Marconi Wireless segment due to fewer active lines and migration of its customer base to a lower-cost third-party network;
•$0.4 million decrease from the Corporate and All Other category was due to a decline at bebe driven by a reduction in store count and lower inventory levels in the current period, and
•$0.2 million decrease from the magicJack segment due to lower network costs from fewer active customers and lower personnel-related costs from reduced headcount.
Cost of goods sold
The decrease in cost of goods sold during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $2.7 million decrease from the Consumer Products segment attributable to higher inventory reserve charges recorded in the prior year period, and a $0.9 million decrease from the Marconi Wireless segment driven by lower product costs resulting from a decrease in the quantity of phones sold.
Selling, general and administrative expenses
Selling, general and administrative expenses during the three months ended June 30, 2026 and 2025 were comprised of the following:
| Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Change | |||||||||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||
| Capital Markets segment | $ | 37,931 | 28.5 | % | $ | 42,417 | 29.7 | % | $ | (4,486) | (10.6) | % | |||||||||||||||||||||||
| Wealth Management segment | 40,406 | 30.3 | % | 39,940 | 28.1 | % | 466 | 1.2 | % | ||||||||||||||||||||||||||
| Lingo segment | 12,163 | 9.1 | % | 14,023 | 9.8 | % | (1,860) | (13.3) | % | ||||||||||||||||||||||||||
| magicJack segment | 2,422 | 1.8 | % | 2,503 | 1.8 | % | (81) | (3.2) | % | ||||||||||||||||||||||||||
| Marconi Wireless segment | 1,663 | 1.2 | % | 2,288 | 1.6 | % | (625) | (27.3) | % | ||||||||||||||||||||||||||
| UOL segment | 508 | 0.4 | % | 726 | 0.5 | % | (218) | (30.0) | % | ||||||||||||||||||||||||||
| Consumer Products segment | 14,819 | 11.1 | % | 14,621 | 10.3 | % | 198 | 1.4 | % | ||||||||||||||||||||||||||
| Corporate and All Other | 23,465 | 17.6 | % | 25,851 | 18.2 | % | (2,386) | (9.2) | % | ||||||||||||||||||||||||||
| Total selling, general & administrative expenses | $ | 133,377 | 100.0 | % | $ | 142,369 | 100.0 | % | $ | (8,992) | (6.3) | % | |||||||||||||||||||||||
Capital Markets
The decrease in selling, general and administrative expenses in the Capital Markets segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$2.3 million decrease in other selling, general and administrative expenses driven by a $1.1 million decrease in business license tax accrual recorded in the prior year period, lower investment banking deal expenses of $0.7 million, and lower corporate allocations of $0.6 million;
•$1.1 million decrease in employee compensation and benefits primarily due to a $1.5 million decrease in share-based compensation expense resulting from the vesting of prior year grants, and lower fixed compensation from reduced headcount, partially offset by a $0.9 million increase in commissions driven by higher investment banking activity;
•$0.6 million decrease in professional services primarily due to lower legal costs; and
•$0.5 million decrease in depreciation and amortization attributable to certain leasehold improvements and intangible assets being fully depreciated.
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Wealth Management
The increase in selling, general and administrative expenses in the Wealth Management segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$3.8 million increase in employee compensation and benefits driven by VRT bonuses, commissions due to the income from carried interest primarily related to investment funds holding positions in SpaceX, and higher allocated costs from affiliates; partially offset by:
•$2.6 million and $0.4 million decreases in occupancy-related costs and other selling, general and administrative expenses, respectively, primarily driven by the sale of a portion of the Company's wealth management business to Stifel in April 2025; and
•$0.3 million decrease in professional services driven by lower legal and other consulting fees.
Lingo
The decrease in selling, general and administrative expenses in the Lingo segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$0.9 million decrease in employee compensation and benefits primarily due to a reduction in headcount, partially offset by higher allocated personnel costs from affiliates and higher accrued bonuses;
•$0.5 million decrease in other selling, general and administrative expenses primarily due to lower bad debt expense, lower filing and regulatory fees driven by lower sales, and lower business development expenses; and
•$0.2 million decrease in occupancy-related costs primarily due to reduced IT software and licensing costs associated with cost reduction initiatives.
Marconi Wireless
The decrease in selling, general and administrative expenses in the Marconi Wireless segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$0.4 million decrease in employee compensation and benefits primarily due to higher personnel cost allocations to affiliates and net headcount reductions; and
•$0.2 million decrease in occupancy-related costs primarily due to lower customer care costs reflecting reduced third-party agent needs as a result of fewer active customers and the completion of the network migration in 2025.
UOL
The decrease in selling, general and administrative expenses in the UOL segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.2 million decrease in employee compensation and benefits attributable to a reduction in headcount.
Consumer Products
The increase in selling, general and administrative expenses in the Consumer Products segment during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$0.4 million increase in employee compensation and benefits due to planned management bonus accruals in the current period and the absence of a severance accrual reversal recorded in the prior year period;
•$0.4 million increase in professional services primarily due to the reversal of a legal accrual recorded in the prior year period; partially offset by:
•$0.3 million decrease in occupancy-related costs due to a decrease in accrued costs associated with office space in the current period;
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•$0.3 million decrease in depreciation and amortization primarily due to certain fixed and intangible assets that became fully depreciated or amortized in the prior year, resulting in lower charges in the current period; and
•$0.2 million decrease in other selling, general and administrative expenses due to lower marketing and insurance expenses, partially offset by higher bank charges.
Corporate and All Other
The decrease in selling, general and administrative expenses in the Corporate and All Other category during the three months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$2.1 million decrease in employee compensation and benefits primarily due to a reduction in headcount;
•$1.7 million decrease in occupancy-related costs primarily due to a decline at bebe resulting from a reduction in store count; partially offset by:
•$0.9 million increase in professional services primarily due to share-based compensation issued to the board of directors in the current period, partially offset by lower legal and other consulting fees; and
•$0.6 million increase in other selling, general and administrative expenses primarily due to a decrease in intersegment related expenses that eliminate upon consolidation, partially offset by lower transaction costs in the current period.
Restructuring charge
Restructuring charges of $1.9 million were recorded during the three months ended June 30, 2026, compared to $0.3 million during the three months ended June 30, 2025. The increase was primarily due to organizational realignments consisting of severance and related costs within the Capital Markets segment, compared to workforce reductions primarily within the Corporate and All Other category in the prior year period.
Impairment of tradename
Non-cash impairment charges of $4.0 million were recorded during the three months ended June 30, 2026, compared to $1.5 million during the three months ended June 30, 2025, both related to tradenames in the Consumer Products segment.
Interest expense - Securities lending and loan participations sold
Interest expense related to securities lending and loan participations was $0.9 million during the three months ended June 30, 2026, compared to $2.0 million during the three months ended June 30, 2025. The decrease was primarily due to lower average spreads in equity securities lending, partially offset by higher average contract values compared to the prior year period.
Other income (expense)
Realized and unrealized gains on investments
Realized and unrealized gains on investments was $12.1 million during the three months ended June 30, 2026 compared to a gain of $10.2 million during the three months ended June 30, 2025, which is comprised of the following:
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| Realized and Unrealized Gains (Losses) | |||||||||||
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Other Income (Expense) - Realized & Unrealized Gains (Losses) | |||||||||||
| Public Equity Securities: | |||||||||||
| Babcock & Wilcox Enterprises, Inc. - common stock | $ | (7,005) | $ | 3,440 | |||||||
| Babcock & Wilcox Enterprises, Inc. - preferred stock | — | 289 | |||||||||
| Double Down Interactive Co., Ltd - common stock | 10,633 | (1,847) | |||||||||
| Applied Digital Corporation - common stock | 4,467 | 5,383 | |||||||||
| Other public equities | 2,794 | (803) | |||||||||
| Subtotal | 10,889 | 6,462 | |||||||||
| Private Equity Securities: | |||||||||||
| Applied Digital Corporation - preferred stock | 3,607 | — | |||||||||
| Other private equities | (520) | 415 | |||||||||
| Subtotal | 3,087 | 415 | |||||||||
| Corporate bonds | (1,884) | 3,339 | |||||||||
| Total | $ | 12,092 | $ | 10,216 | |||||||
The $1.9 million increase in net realized and unrealized gains for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by unrealized gains on Double Down Interactive Co., Ltd. common stock of $12.5 million and unrealized gains on Applied Digital Corporation preferred stock of $3.6 million, partially offset by unrealized losses on Babcock & Wilcox Enterprises, Inc. common stock of $10.4 million and a shift from gains to losses on corporate bonds of $5.2 million.
Change in fair value of financial instruments and other
Change in fair value of financial instruments and other was a gain of $1.5 million during the three months ended June 30, 2026, compared to a gain of $11.9 million during the three months ended June 30, 2025. The decrease was primarily due to realized and unrealized losses recognized in the current period compared to unrealized gains recognized in the prior year period on embedded derivatives and liability-classified warrants, partially offset by a gain recognized upon the cashless exercise of the Oaktree Warrants during the three months ended June 30, 2026.
Gain on sale and deconsolidation of businesses
There was no gain on sale and deconsolidation of business during the three months ended June 30, 2026, compared to a gain of $5.4 million during the three months ended June 30, 2025 due to the sale of a portion of the Company’s wealth management business to Stifel.
Gain on senior note exchange
There was no gain on senior note exchange during the three months ended June 30, 2026, compared to a gain of $44.5 million during the three months ended June 30, 2025, as the prior year period included gains recognized in connection with troubled debt restructurings involving the exchange of senior notes for New Notes at favorable terms, with no such transactions occurring in the current year period, as more fully discussed in Note 15 - Senior Notes Payable.
(Loss) income from equity investments
Loss from equity investments was $5.5 million during the three months ended June 30, 2026, compared to income of $25.6 million during the three months ended June 30, 2025. The decrease was primarily due to a loss recorded on the Company's investment in Great American Holdings, LLC (“GA Holdings”) under the HLBV method during the current year period, compared to income from GA Holdings and distributions received from GA Joann Retail Partnership, LLC in excess of the Company's investment balance in the prior year period.
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(Loss) gain on extinguishment of debt
Loss on extinguishment of debt during the three months ended June 30, 2026 was $1.3 million compared to a loss of $10.3 million during the three months ended June 30, 2025. The current year loss was in connection with the Section 3(a)(9) Exchanges of senior notes for shares of the Company's common stock, compared to the prior year loss which was attributable to principal repayments on the Oaktree Credit Facility, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.
Interest expense
Interest expense was $18.0 million during the three months ended June 30, 2026, compared to $24.0 million during the three months ended June 30, 2025. The decrease in interest expense was primarily attributable to Corporate and All Other, driven by lower senior notes interest expense due to reduced outstanding principal balances resulting from the Section 3(a)(9) Exchanges and redemption of the 5.50% Senior Notes, as well as lower interest expense on the Oaktree Credit Facility due to principal paydowns, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.
Provision for income taxes
Provision for income taxes was $6.0 million during the three months ended June 30, 2026, compared to $3.1 million during the three months ended June 30, 2025. The effective income tax rate was 21.6% for the three months ended June 30, 2026, compared to 4.1% for the three months ended June 30, 2025. The current year provision is primarily comprised of estimated federal, state, and foreign taxes based on the expected annual effective tax rate for 2026, including the impact of the utilization of net operating loss carryforwards and disallowed interest expense carried forward from prior years. The prior year provision primarily reflected uncertain tax positions for state and foreign taxes, including interest and penalties.
Income from discontinued operations, net of income taxes
On June 27, 2025, we signed an equity purchase agreement to sell all of the membership interests of GlassRatner Advisory & Capital Group, LLC (“GlassRatner”) and B. Riley Farber Advisory Inc. (“Farber”), and their results have been presented as discontinued operations for the three months ended June 30, 2025. Income from discontinued operations, net of tax, for GlassRatner and Farber was $69.3 million for the three months ended June 30, 2025. Refer to Note 4 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.
Preferred stock dividends
Preferred stock dividends accrued were $2.0 million for the three months ended June 30, 2026 and 2025. 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.
On April 30, 2026, the sixth quarterly Dividend Period (as defined in the applicable Certificate of Designation) for which dividends on our Series A Preferred Stock and Series B Preferred Stock have not been paid since the suspension occurred, resulting in a “Preferred Dividend Default” under each Certificate of Designation. See Note 22 – Stockholders’ Equity.
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Results of Operations
The following period to period comparisons of our financial results and our interim results are not necessarily indicative of future results.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Condensed Consolidated Statements of Operations
(Dollars in thousands)
| Six Months Ended June 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Services and fees | $ | 325,717 | $ | 304,611 | $ | 21,106 | 6.9 | % | |||||||||||||||
| Trading gains, net | 157,935 | 11,509 | 146,426 | n/m | |||||||||||||||||||
| Fair value adjustments on loans | 10,790 | (7,296) | 18,086 | n/m | |||||||||||||||||||
| Interest income - loans | 3,885 | 7,049 | (3,164) | (44.9) | % | ||||||||||||||||||
| Interest income - securities lending | 2,883 | 2,964 | (81) | (2.7) | % | ||||||||||||||||||
| Sale of goods | 89,967 | 92,528 | (2,561) | (2.8) | % | ||||||||||||||||||
| Total revenues | 591,177 | 411,365 | 179,812 | 43.7 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Direct cost of services | 61,066 | 75,916 | (14,850) | (19.6) | % | ||||||||||||||||||
| Cost of goods sold | 63,726 | 71,846 | (8,120) | (11.3) | % | ||||||||||||||||||
| Selling, general and administrative expenses | 267,725 | 309,757 | (42,032) | (13.6) | % | ||||||||||||||||||
| Restructuring charge | 1,914 | 321 | 1,593 | 496.3 | % | ||||||||||||||||||
| Impairment of tradename | 4,000 | 1,500 | 2,500 | 166.7 | % | ||||||||||||||||||
| Interest expense - Securities lending and loan participations sold | 1,623 | 2,687 | (1,064) | (39.6) | % | ||||||||||||||||||
| Total operating expenses | 400,054 | 462,027 | (61,973) | (13.4) | % | ||||||||||||||||||
| Operating income (loss) | 191,123 | (50,662) | 241,785 | n/m | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | 697 | 1,978 | (1,281) | (64.8) | % | ||||||||||||||||||
| Dividend income | 802 | 257 | 545 | 212.1 | % | ||||||||||||||||||
| Realized and unrealized gains (losses) on investments | 117,192 | (4,284) | 121,476 | n/m | |||||||||||||||||||
| Change in fair value of financial instruments and other | (2,881) | 12,806 | (15,687) | n/m | |||||||||||||||||||
| Gain on sale and deconsolidation of businesses | — | 86,213 | (86,213) | n/m | |||||||||||||||||||
| Gain on senior note exchange | — | 54,986 | (54,986) | n/m | |||||||||||||||||||
| (Loss) income from equity investments | (4,133) | 25,051 | (29,184) | n/m | |||||||||||||||||||
| Income (loss) on extinguishment of debt | 1,607 | (20,693) | 22,300 | n/m | |||||||||||||||||||
| Interest expense | (37,810) | (53,916) | 16,106 | (29.9) | % | ||||||||||||||||||
| Income from continuing operations before income taxes | 266,597 | 51,736 | 214,861 | 415.3 | % | ||||||||||||||||||
| Provision for income taxes | (22,841) | (11) | (22,830) | n/m | |||||||||||||||||||
| Income from continuing operations | 243,756 | 51,725 | 192,031 | 371.3 | % | ||||||||||||||||||
| Income from discontinued operations, net of income taxes | — | 72,707 | (72,707) | n/m | |||||||||||||||||||
| Net income | 243,756 | 124,432 | 119,324 | 95.9 | % | ||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 9,934 | (5,064) | 14,998 | n/m | |||||||||||||||||||
| Net income attributable to BRC Group Holdings, Inc. | 233,822 | 129,496 | 104,326 | 80.6 | % | ||||||||||||||||||
| Preferred stock dividends | 4,030 | 4,030 | — | — | % | ||||||||||||||||||
| Net income available to common shareholders | $ | 229,792 | $ | 125,466 | $ | 104,326 | 83.2 | % | |||||||||||||||
_____________________________________________
n/m - Not applicable or not meaningful.
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Revenues
The table below and the discussion that follows are based on how we analyze our business.
| Six Months Ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||||||||||||
| Services and fees: | ||||||||||||||||||||||||||
| Capital Markets segment | $ | 81,489 | $ | 59,511 | $ | 21,978 | 36.9 | % | ||||||||||||||||||
| Wealth Management segment | 90,781 | 80,087 | 10,694 | 13.4 | % | |||||||||||||||||||||
| Lingo segment | 79,578 | 81,460 | (1,882) | (2.3) | % | |||||||||||||||||||||
| magicJack segment | 16,754 | 18,919 | (2,165) | (11.4) | % | |||||||||||||||||||||
| Marconi Wireless segment | 13,904 | 16,606 | (2,702) | (16.3) | % | |||||||||||||||||||||
| UOL segment | 5,702 | 6,920 | (1,218) | (17.6) | % | |||||||||||||||||||||
| Corporate and All Other | 37,509 | 41,108 | (3,599) | (8.8) | % | |||||||||||||||||||||
| Subtotal | 325,717 | 304,611 | 21,106 | 6.9 | % | |||||||||||||||||||||
| Trading gains (losses), net: | ||||||||||||||||||||||||||
| Capital Markets segment | 139,666 | 3,983 | 135,683 | n/m | ||||||||||||||||||||||
| Wealth Management segment | 19,347 | 5,812 | 13,535 | 232.9 | % | |||||||||||||||||||||
| Corporate and All Other | (1,078) | 1,714 | (2,792) | n/m | ||||||||||||||||||||||
| Subtotal | 157,935 | 11,509 | 146,426 | n/m | ||||||||||||||||||||||
| Fair value adjustments on loans: | ||||||||||||||||||||||||||
| Capital Markets segment | 751 | (3,131) | 3,882 | n/m | ||||||||||||||||||||||
| Corporate and All Other | 10,039 | (4,165) | 14,204 | n/m | ||||||||||||||||||||||
| Subtotal | 10,790 | (7,296) | 18,086 | n/m | ||||||||||||||||||||||
| Interest income - loans: | ||||||||||||||||||||||||||
| Capital Markets segment | 1,034 | 65 | 969 | n/m | ||||||||||||||||||||||
| Corporate and All Other | 2,851 | 6,984 | (4,133) | (59.2) | % | |||||||||||||||||||||
| Subtotal | 3,885 | 7,049 | (3,164) | (44.9) | % | |||||||||||||||||||||
| Interest income - securities lending: | ||||||||||||||||||||||||||
| Capital Markets segment | 2,883 | 2,964 | (81) | (2.7) | % | |||||||||||||||||||||
| Sale of goods: | ||||||||||||||||||||||||||
| magicJack segment | 596 | 659 | (63) | (9.6) | % | |||||||||||||||||||||
| Marconi Wireless segment | 1,001 | 2,113 | (1,112) | (52.6) | % | |||||||||||||||||||||
| Consumer Products segment | 87,652 | 85,387 | 2,265 | 2.7 | % | |||||||||||||||||||||
| Corporate and All Other | 718 | 4,369 | (3,651) | (83.6) | % | |||||||||||||||||||||
| Subtotal | 89,967 | 92,528 | (2,561) | (2.8) | % | |||||||||||||||||||||
| Total revenues | $ | 591,177 | $ | 411,365 | 179,812 | 43.7 | % | |||||||||||||||||||
_____________________________________________
n/m - Not applicable or not meaningful.
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Services and fees
Total increase in services and fees revenues during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$22.0 million increase in Capital Markets segment, driven by higher M&A and advisory fees of $6.8 million, higher underwriting revenues of $5.7 million, increased private placement revenues of $3.9 million, increased finder fees of $3.9 million, higher secondary commissions of $3.3 million, and increased securities lending locate fees of $2.5 million, partially offset by a $5.0 million decrease in ATM revenues;
•$10.7 million increase in Wealth Management segment driven by $21.2 million in income from carried interest primarily related to investment funds holding positions in SpaceX and other funds carried interest revenue, net of a $6.8 million decrease in advisory fees primarily attributable to the sale of a portion of the Company's wealth management business to Stifel Financial Corp. in April 2025, a $2.0 million decrease in commissions and fees, and a $1.7 million decrease in tax service fees and other income; partially offset by:
•$3.6 million decrease in Corporate and All Other non-reportable operating segments primarily driven by decreases of $7.0 million due to the sale of Atlantic Coast Recycling in the prior year period, $3.5 million due to the deconsolidation of our investment in Nogin, $2.4 million due to higher finders fee expense related to increased APLD transactions, $1.9 million due to a decline at bebe driven by a reduction in store count, $1.7 million due to lower upfront and structuring fees resulting from the expiration of the management services agreement with B&W, $1.6 million driven by lower managed services and advisory fees across subsidiaries, and $1.4 million due to fees recognized under a transition services agreement with GA Holdings in the prior year period, partially offset by increases of $14.1 million due to income from carried interest primarily related to investment funds holding positions in SpaceX and $1.9 million due to upfront fees from Exela loans.
•$2.7 million decrease in Marconi Wireless segment, driven by lower service revenues attributable to an ongoing decline in active customers;
•$2.2 million decrease in magicJack segment, driven by fewer active customers driving lower renewal revenues, fewer device sales and first-year service customers, and a decline in ancillary services such as porting, number services, and termination fees;
•$1.9 million decrease in Lingo segment, driven by fewer POTS and broadband subscribers as customers migrated to VoIP services, partially offset by VoIP growth from those same conversions; and
•$1.2 million decrease in UOL segment, driven by declines in internet access subscribers in addition to discontinuing telecom resale services.
Trading gains, net
Total increase in net trading gains (losses) during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$135.7 million increase in Capital Markets segment, driven by gains of $120.8 million with B&W, $11.9 million with APLD, $4.9 million with U.S. Treasuries, and $1.3 million with certain equity securities in the current year period, compared to $4.0 million in net gains in the prior year period;
•$13.5 million increase in Wealth Management segment, driven primarily by revenue from VRT of $12.5 million and net gains from certain equity securities and bond and structured trading activity, partially offset by decreases in other equity securities and warrant valuations; partially offset by:
•$2.8 million decrease in Corporate and All Other non-reportable operating segments driven by increases in unrealized losses for certain equity securities in the current year period.
Fair value adjustments on loans
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We 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:
| Fair Value Adjustments on Loans Receivable | ||||||||||||||||||||||||||||||||
| At Fair Value | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| Industry or Type of Loan | June 30, 2026 | December 31, 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Related Party Loans Receivable: | ||||||||||||||||||||||||||||||||
| Vintage Capital Management, LLC | Retail / consumer | n/a | $ | 1,835 | $ | 20 | $ | (589) | ||||||||||||||||||||||||
| W.S. Badcock Corporation | Consumer receivable portfolio | — | — | — | 250 | |||||||||||||||||||||||||||
| Freedom VCM Receivables, Inc. | Consumer receivable portfolio | — | — | — | 1,393 | |||||||||||||||||||||||||||
Conn’s, Inc.(1) | Retail / consumer | n/a | — | — | (4,065) | |||||||||||||||||||||||||||
| Other related party loans | Services, oil & gas and industrial | 1,035 | 1,000 | 36 | (126) | |||||||||||||||||||||||||||
| Total related party loans receivable | 1,035 | 2,835 | 56 | (3,137) | ||||||||||||||||||||||||||||
| XBP Americas, LLC | Technology | 15,041 | 21,415 | 192 | (630) | |||||||||||||||||||||||||||
| Norlin EV Limited | Real estate | n/a | 10 | 1,223 | (484) | |||||||||||||||||||||||||||
Conn’s, Inc.(1) | Retail / consumer | — | n/a | 8,600 | n/a | |||||||||||||||||||||||||||
| Enovum NC-1 Venture, LLC, a subsidiary of a public AI Infrastructure company | Internet Services and Infrastructure | 19,794 | — | 161 | — | |||||||||||||||||||||||||||
| Other loans receivable | Various | 2,932 | 2,043 | 558 | (3,045) | |||||||||||||||||||||||||||
| Total loans receivable | $ | 38,802 | $ | 26,303 | $ | 10,790 | $ | (7,296) | ||||||||||||||||||||||||
(1) The Conn’s, Inc. loan receivable was written off in January 2026 and is no longer a related party loan receivable. Recovery of proceeds from the loan receivable is contingent upon collecting amounts from the Conn’s bankruptcy estate. During the six months ended June 30, 2026, the Company recovered $8,600 of proceeds from the Conn’s bankruptcy estate, and it is reported as a fair value adjustment. | ||||||||||||||||||||||||||||||||
The $18.1 million favorable variance in fair value adjustments related to our loans receivable during the six months ended June 30, 2026, when compared to the same period in the prior year, was primarily driven by $8.6 million in proceeds recovered from the Conn's, Inc. bankruptcy estate and a $1.7 million favorable swing in fair value adjustments on the Norlin EV Limited loan, compared to net unfavorable fair value adjustments of $7.3 million across the loan portfolio in the prior year period.
Interest income - loans
The $3.2 million decrease in interest income related to loans receivable for the six months ended June 30, 2026, compared to the same period in the prior year, was primarily driven by declines across the Exela portfolios of $2.9 million, GA Group portfolios of $0.9 million, and Norlin EV Limited of $0.4 million, partially offset by an increase of $1.0 million due to a loan entered with Enovum NC-1 Venture, LLC during the current year period.
Sale of goods
The decrease in sale of goods revenue during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$3.7 million decrease in the Corporate and All Other non-reportable operating segments driven primarily by a $3.5 million decrease due to the deconsolidation of Nogin in the prior year period;
•$1.1 million decrease in the Marconi Wireless segment, driven by lower product sales attributable to an ongoing decline in active customers; partially offset by:
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•$2.3 million increase in the Consumer Products segment, driven by stronger distributor demand ahead of anticipated price increases from rising transportation costs, compared to an unusually weak prior period impacted by tariff uncertainty.
Operating expenses
Direct cost of services
The decrease in direct cost of services during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$7.2 million decrease from the Corporate and All Other category primarily driven by decreases of $4.9 million due to the sale of Atlantic Coast Recycling and $1.6 million due to the deconsolidation of Nogin in the prior year period, with the remainder attributable to a decline at bebe by a reduction in store count and lower inventory levels;
•$3.6 million decrease from the Marconi Wireless segment due to fewer active lines and migration of its customer base to a lower-cost third-party network;
•$3.2 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;
•$0.5 million decrease from the magicJack segment due to lower network costs driven by fewer active customers and lower personnel costs due to reduced headcount; and
•$0.4 million decrease from the UOL segment due to lower telecom costs from declines in internet access subscribers and the discontinuation of telecom resale services.
Cost of goods sold
The decrease in cost of goods sold during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$3.3 million decrease from the Corporate and All Other category primarily due to a $3.1 million decrease from the deconsolidation of Nogin in the prior year period, with the remainder attributable to a decline at bebe driven by a reduction in store count and lower inventory levels;
•$3.2 million decrease from the Consumer Products segment due to higher inventory reserve charges recorded in the prior year period; and
•$1.6 million decrease from the Marconi Wireless segment due to lower product costs resulting from a decrease in the quantity of phones sold.
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Selling, general and administrative expenses
Selling, general and administrative expenses during the six months ended June 30, 2026 and 2025 were comprised of the following:
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Change | |||||||||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||||||||||
| Capital Markets segment | $ | 72,090 | 26.8 | % | $ | 79,766 | 25.8 | % | $ | (7,676) | (9.6) | % | |||||||||||||||||||||||
| Wealth Management segment | 76,597 | 28.6 | % | 85,494 | 27.6 | % | (8,897) | (10.4) | % | ||||||||||||||||||||||||||
| Lingo segment | 25,526 | 9.5 | % | 28,013 | 9.0 | % | (2,487) | (8.9) | % | ||||||||||||||||||||||||||
| magicJack segment | 4,965 | 1.9 | % | 5,364 | 1.7 | % | (399) | (7.4) | % | ||||||||||||||||||||||||||
| Marconi Wireless segment | 3,377 | 1.3 | % | 4,552 | 1.5 | % | (1,175) | (25.8) | % | ||||||||||||||||||||||||||
| UOL segment | 961 | 0.4 | % | 1,331 | 0.4 | % | (370) | (27.8) | % | ||||||||||||||||||||||||||
| Consumer Products segment | 30,397 | 11.4 | % | 30,236 | 9.8 | % | 161 | 0.5 | % | ||||||||||||||||||||||||||
| Corporate and All Other | 53,812 | 20.1 | % | 75,001 | 24.2 | % | (21,189) | (28.3) | % | ||||||||||||||||||||||||||
| Total selling, general & administrative expenses | $ | 267,725 | 100.0 | % | $ | 309,757 | 100.0 | % | $ | (42,032) | (13.6) | % | |||||||||||||||||||||||
Capital Markets
The decrease in selling, general and administrative expenses in the Capital Markets segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$9.2 million decrease in other selling, general and administrative expenses due to lower transaction costs and other nonrecurring expenses recorded in the prior year period, lower corporate allocations, lower investment banking deal expenses, lower bad debt expense, decrease in business license tax accrual recorded in the prior year period, and lower business development expenses;
•$0.9 million decrease in depreciation and amortization due to the expiration of an office lease, resulting in no further amortization of leasehold improvements for that location, and certain intangible assets becoming fully amortized during the current period;
•$0.6 million decrease in professional services primarily due to lower litigation-related expenses;
•$0.4 million decrease in occupancy-related costs primarily due to lower rent expense resulting from an office relocation during the current period; partially offset by:
•$3.4 million increase in employee compensation and benefits due to higher primary commissions resulting from increased investment banking and VRT trading revenues during the period, partially offset by a decrease in other bonuses driven by additional nonrecurring profit sharing recorded in the prior year period.
Wealth Management
The decrease in selling, general and administrative expenses in the Wealth Management segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$5.2 million decrease in other selling, general and administrative expenses, $3.9 million decrease in occupancy-related costs, and $0.6 million decrease in depreciation and amortization, each primarily resulting from the sale of a portion of the Company’s wealth management business to Stifel in April 2025;
•$0.5 million decrease in professional services primarily due to fewer legal cases and lower consulting fees; partially offset by:
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•$1.3 million increase in employee compensation and benefits due to VRT bonuses, commissions due to the income from carried interest primarily related to investment funds holding positions in SpaceX, and higher cost allocations from affiliates.
Lingo
The decrease in selling, general and administrative expenses in the Lingo segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$1.1 million decrease in employee compensation and benefits primarily due to a reduction in headcount, partially offset by higher allocated personnel costs from affiliates and higher bonus accruals and severance expenses;
•$0.5 million decrease in other selling, general and administrative expenses due to lower sales resulting in decreased filing and regulatory fees, business development expenses, and outsourced services, partially offset by higher allocated costs from affiliates and increased bad debt expense;
•$0.4 million decrease in occupancy-related costs primarily due to lower IT software and licensing costs associated with cost reduction initiatives, partially offset by higher postage and facility-related charges;
•$0.3 million decrease in professional services primarily due to lower audit-related costs and legal fees; and
•$0.2 million decrease in depreciation and amortization primarily due to certain software assets becoming fully amortized in 2025.
magicJack
The decrease in selling, general and administrative expenses in the magicJack segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.2 million decrease in professional services attributable to the termination of outside consulting arrangements in the prior year.
Marconi Wireless
The decrease in selling, general and administrative expenses in the Marconi Wireless segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$0.8 million decrease in employee compensation and benefits primarily due to higher personnel cost allocations to affiliates and net headcount reductions; and
•$0.3 million decrease in occupancy-related costs primarily due to lower customer care costs reflecting reduced third-party agent needs as a result of fewer active customers and the completion of the network migration in 2025.
UOL
The decrease in selling, general and administrative expenses in the UOL segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to a $0.3 million decrease in employee compensation and benefits attributable to a reduction in headcount.
Consumer Products
The increase in selling, general and administrative expenses in the Consumer Products segment during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$0.9 million increase in professional services primarily due to legal and audit fees incurred in connection with a revolving credit agreement with FGI Worldwide LLC (the “Targus/FGI Credit Agreement”) and the reversal of certain accrued legal costs in the prior year period that did not recur, partially offset by a decrease in loan fees associated with the repayment of the prior credit facility; partially offset by:
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•$0.5 million decrease in depreciation and amortization primarily due to certain fixed and intangible assets that became fully depreciated or amortized in the prior year, resulting in lower charges in the current period;
•$0.2 million decrease in occupancy-related costs primarily due to a decrease in accrued costs associated with office space in the current period; and
•$0.2 million decrease in employee compensation and benefits primarily due to a reversal of accrued severance costs recorded in the prior year period, partially offset by higher bonus accruals in the current period.
Corporate and All Other
The decrease in selling, general and administrative expenses in the Corporate and All Other category during the six months ended June 30, 2026, compared to the same period in the prior year, was primarily due to the following:
•$8.4 million decrease due to the deconsolidation of Nogin in the prior year period;
•$4.8 million decrease due to the sale of Atlantic Coast Recycling;
•$5.1 million decrease in other selling, general and administrative expenses primarily due to lower transaction costs in the current period and an increase in intersegment related expenses that eliminate upon consolidation; and
•$3.7 million decrease in employee compensation and benefits primarily due to a reduction in headcount, lower share-based compensation expense resulting from the vesting of previously granted awards with no replacement grants, and lower bebe compensation costs due to a reduction in store count.
Restructuring charge
Restructuring charges were $1.9 million during the six months ended June 30, 2026, compared to $0.3 million during the six months ended June 30, 2025. The increase was primarily due to organizational realignments consisting of severance and related costs within the Capital Markets segment, compared to workforce reductions primarily within the Corporate and All Other category in the prior year period.
Impairment of tradename
Non-cash impairment charges of $4.0 million were recorded during the six months ended June 30, 2026, compared to $1.5 million during the six months ended June 30, 2025, both related to tradenames in the Consumer Products segment.
Interest expense - Securities lending and loan participations sold
Interest expense related to securities lending and loan participations was $1.6 million during the six months ended June 30, 2026, compared to $2.7 million during the six months ended June 30, 2025. The decrease was primarily due to lower average spreads in equity securities lending, partially offset by higher average contract values compared to the prior year period.
Other income (expense)
Realized and unrealized gains (losses) on investments
Realized and unrealized (losses) gains on investments was a gain of $117.2 million during the six months ended June 30, 2026 compared to a loss of $4.3 million during the six months ended June 30, 2025, which is comprised of the following:
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| Realized and Unrealized Gains (Losses) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Other Income (Expense) - Realized & Unrealized Gains (Losses) | |||||||||||
| Public Equity Securities: | |||||||||||
| Babcock & Wilcox Enterprises, Inc. - common stock | $ | 92,136 | $ | (8,049) | |||||||
| Babcock & Wilcox Enterprises, Inc. - preferred stock | — | (173) | |||||||||
| Double Down Interactive Co., Ltd - common stock | 9,953 | (3,925) | |||||||||
| Applied Digital Corporation - common stock | 7,720 | 5,383 | |||||||||
| Other public equities | 9,033 | (1,011) | |||||||||
| Subtotal | 118,842 | (7,775) | |||||||||
| Private Equity Securities: | |||||||||||
| Applied Digital Corporation - preferred stock | 2,205 | — | |||||||||
| Other private equities | (1,110) | (1,205) | |||||||||
| Subtotal | 1,095 | (1,205) | |||||||||
| Corporate bonds | (2,745) | 4,696 | |||||||||
| Total | $ | 117,192 | $ | (4,284) | |||||||
The $121.5 million increase in net realized and unrealized gains for the six months ended June 30, 2026 compared to the same period in 2025 was primarily driven by unrealized gains on Babcock & Wilcox Enterprises, Inc. common stock of $100.2 million, unrealized gains on Double Down Interactive Co., Ltd. common stock of $13.9 million, unrealized gains on other public equity securities of $10.0 million, and unrealized gains on Applied Digital Corporation common stock of $2.3 million, partially offset by a shift from gains to losses on corporate bonds of $7.4 million.
Change in fair value of financial instruments and other
Change in fair value of financial instruments and other was a loss of $2.9 million during the six months ended June 30, 2026, compared to a gain of $12.8 million during the six months ended June 30, 2025. The decrease was primarily due to realized and unrealized losses on embedded derivatives and liability-classified warrants in the current year period compared unrealized gains recognized in the prior year period, partially offset by a gain recognized upon the cashless exercise of the Oaktree Warrants during the six months ended June 30, 2026.
Gain on sale and deconsolidation of businesses
Gain on sale and deconsolidation of businesses of $86.2 million during the six months ended June 30, 2025 was primarily related to $52.4 million net gain on the sale of Atlantic Coast Recycling, $28.4 million related to the deconsolidation of Nogin, and $5.4 million due to the sale of a portion of the Company’s wealth management business to Stifel, as more fully discussed in Note 4 - Discontinued Operations and Assets Held For Sale.
Gain on senior note exchange
There was no gain on senior note exchange during the six months ended June 30, 2026, compared to a gain of $55.0 million during the six months ended June 30, 2025, as the prior year period included gains recognized in connection with troubled debt restructurings involving the exchange of senior notes for New Notes at favorable terms, with no such transactions occurring in the current year period, as more fully discussed in Note 15 - Senior Notes Payable.
(Loss) income from equity investments
Loss from equity investments was $4.1 million during the six months ended June 30, 2026, compared to income of $25.1 million during the six months ended June 30, 2025. The decrease was primarily due to a loss recorded on the
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Company's investment in GA Holdings under the HLBV method and lower distributions received from GA Joann Retail Partnership, LLC in excess of the Company's investment balance during the current year period compared to the prior year period.
(Loss) gain on extinguishment of debt
Gain on extinguishment of debt was $1.6 million during the six months ended June 30, 2026, compared to a loss of $20.7 million during the six months ended June 30, 2025. The current year gain was in connection with the Section 3(a)(9) Exchanges of senior notes for shares of the Company's common stock, compared to the prior year loss which was attributable to principal repayments and amendments to the Oaktree, Nomura, and BRPAC credit facilities, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.
Interest expense
Interest expense was $37.8 million during the six months ended June 30, 2026, compared to $53.9 million during the six months ended June 30, 2025. The decrease in interest expense was primarily attributable to Corporate and All Other, driven by lower senior notes interest expense due to reduced outstanding principal balances resulting from the Section 3(a)(9) Exchanges and redemption of the 5.50% Senior Notes, as well as lower interest expense on the Oaktree Credit Facility due to principal paydowns and the termination of the Nomura Credit Agreement in February 2025, as more fully discussed in Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable.
Provision for income taxes
Provision for income taxes was $22.8 million during the six months ended June 30, 2026, compared to less than $0.1 million during the six months ended June 30, 2025. The effective income tax rate was 8.6% for the six months ended June 30, 2026, compared to less than 1.0% for the six months ended June 30, 2025. The increase was primarily due to higher pre-tax income in the current year period, including the impact of the utilization of net operating loss carryforwards and disallowed interest expense carried forward from prior years, compared to the prior year period which benefited from the utilization of capital loss carryforwards to offset gains on the sale and deconsolidation of businesses.
Income from discontinued operations, net of income taxes
On June 27, 2025, we signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber, and their results have been presented as discontinued operations for the six months ended June 30, 2025. Income from discontinued operations, net of tax, for GlassRatner and Farber was $72.7 million for the six months ended June 30, 2025. Refer to Note 4 - Discontinued Operations and Assets Held for Sale to the accompanying unaudited condensed consolidated financial statements for additional information.
Net income (loss) attributable to noncontrolling interests
Net income attributable to noncontrolling interests was $9.9 million during the six months ended June 30, 2026, compared to a net loss of $5.1 million during the six months ended June 30, 2025. The increase was primarily due to higher net income attributable to the noncontrolling interest in B. Riley Securities Holdings, Inc. during the current year period compared to the prior year period.
Preferred stock dividends
Preferred stock dividends accrued were $4.0 million for the six months ended June 30, 2026 and 2025. 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.
On April 30, 2026, the sixth quarterly Dividend Period (as defined in the applicable Certificate of Designation) for which dividends on our Series A Preferred Stock and Series B Preferred Stock have not been paid since the suspension occurred, resulting in a “Preferred Dividend Default” under each Certificate of Designation. See Note 22 – Stockholders’ Equity.
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Liquidity and Capital Resources
Our operations and debt obligations are funded through a combination of existing cash on hand, cash generated from operations, monetization of investments and asset sales, borrowings under our senior notes payable, term loans and credit facilities, other financing arrangements, and obligations under operating leases. The Company operates multiple business segments that provide sources of cash flow and operating income, which include a mix of businesses with recurring revenue models and transactional businesses with uneven cash flows. With our primary business in capital markets and investment banking, we have expertise in accessing public and private capital markets and in transacting investments and operating companies. We use our expertise to buy and sell assets and investments on our balance sheet and to access private and public capital, which are described in the 2026 activity summarized below.
During the six months ended June 30, 2026, the Company’s sources and uses of cash from investing, financing and operations included the following. The Company fully redeemed the $96.0 million of outstanding 5.50% Senior Notes due 2026 on the day prior to their maturity date. During the six months ended June 30, 2026, the Company completed a series of Section 3(a)(9) Exchanges with the Investor whereby the Company exchanged an aggregate principal amount of approximately $69.1 million of senior notes which included (i) $11.0 million of the 5.50% Senior Notes which were due March 31, 2026, (ii) $36.1 million of the 6.50% Senior Notes due September 30, 2026, (iii) $8.9 million of the 5.00% Senior Notes due December 31, 2026, (iv) $6.4 million of the 6.00% Senior Notes due January 31, 2028, and (v) $6.6 million of the 5.25% Senior Notes due August 31, 2028 for an aggregate of 8,358,495 shares of the Company’s common stock. As disclosed in the Investor’s 13G filed on April 22, 2026, the Investor owns more than five percent of the Company’s common stock. Additionally, from our securities and investments owned we had net proceeds of approximately $25.3 million, which excludes certain trading activity related to broker dealer operations and approximately $0.1 million in net proceeds from loans receivable. Net cash provided by operating activities was $19.9 million inclusive of a balance sheet increase in Securities and other investments owned of $278.6 million in operating assets.
In the next 12 months, in addition to funding the Company’s operations, several debt obligations will be due including approximately $306.0 million in Senior Note maturities (RILYN in September 2026 and RILYG in December 2026) and a total of $9.0 million in term loan amortization payments. The Company also has approximately $10.3 million of obligations due under operating leases, along with operational expenditures and investment opportunities in the ordinary course of business. For additional information regarding our debt obligations and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements. The Company expects capital expenditures to be approximately $6.3 million for the next 12 months.
To fund the short-term obligations due in the next 12 months, management plans to use a combination of existing cash on hand, cash generated from continuing operations, proceeds from investment and assets sales, and public and private capital market options. As of June 30, 2026, the Company had $154.1 million of unrestricted cash and cash equivalents, $1.5 million of restricted cash, $723.7 million of securities and other investments owned, and $38.8 million of loans receivable, at fair value. Additionally, the Company will evaluate external sources of liquidity including public and private debt refinancing, bond swaps, buybacks or exchanges, and equity capital raises. Among many factors, the Company considers the timing of debt obligation payoffs, the cost of capital, and future value of assets when determining the sources used to fund debt obligations. We believe these liquidity sources provide sufficient cash resources to meet our debt obligation and operating cash flow requirements in the next 12 months.
Our long-term debt obligations beyond 12 months include approximately $565.1 million on Senior Notes, $258.9 million Senior Secured Second Lien Notes due 2028 and $62.5 million in Oaktree term loans. Additionally, the Company’s term loan through Banc of California has $9.0 million annually in amortization payments due through maturity in January 2030 with approximately $21.8 million of obligations due under operating leases. As of June 30, 2026, the Company has $31.3 million outstanding through revolving credit facilities under the Targus/FGI Credit Agreement, which has a maturity date of August 20, 2028 and BRPAC Credit Agreement, which has a maturity date of January 6, 2030. The Company expects capital expenditures to be approximately $6.3 million annually.
The Company will fund long-term obligations beyond 12 months using the same tactics described in the short-term liquidity. Additionally, the Company will evaluate operating company sales as a source of long-term liquidity. As with short-term obligations, the Company considers many factors including timing of debt obligation payoffs, the cost of capital, and future value when determining the source used to fund debt obligations. As long-term capital planning is a continual process, the Company may also choose to address certain long-term capital and obligations over the next 12 months.
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The Company’s debt structure as of June 30, 2026 included borrowings of $1.3 billion primarily comprised of $1.1 billion of Senior Notes and Senior Secured Second Lien Notes with varying maturity dates from September 30, 2026 through August 31, 2028, with fixed interest rates ranging from 5.00% to 8.00%. Additionally, we have $115.8 million in outstanding term loans borrowed pursuant to the Oaktree Capital Management, L.P. and BRPAC credit agreements, and $31.3 million outstanding under revolving credit facilities under the Targus/FGI and BRPAC credit agreements, which are all subject to variable rates. The Company is compliant with its debt obligation requirements and maintains processes to monitor ongoing compliance. For additional information regarding our debt obligations, covenant compliance, and related agreements, refer to Note 14 - Term Loans and Revolving Credit Facilities and Note 15 - Senior Notes Payable in the accompanying unaudited condensed consolidated financial statements.
The Company believes it has sufficient excess liquidity to meet our short-term obligations within the next 12 months and will pursue capital market options to reduce long-term debt, extend maturities, or remix our capital structure when advantageous. There is no assurance on favorable refinancing terms, which will be subject to market conditions and our credit profile.
Dividends
From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. During the three months ended June 30, 2026, we did not pay any cash dividends on our common stock. In August 2024, we announced the suspension of our common stock dividend as we prioritize reducing our debt. The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our board of directors.
Holders of Series A Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends are payable quarterly in arrears. As of June 30, 2026, dividends in arrears in respect of the Depositary Shares were $7.3 million. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A Preferred Stock. Unpaid dividends will accrue until paid in full.
Holders of Series B Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends are payable quarterly in arrears. As of June 30, 2026, dividends in arrears in respect of the Depositary Shares were $4.8 million. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series B Preferred Stock. Unpaid dividends will accrue until paid in full.
On April 30, 2026, the sixth quarterly Dividend Period for which dividends on the Series A Preferred Stock and Series B Preferred Stock have not been paid since the January 21, 2025 suspension occurred. As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation. See Note 22 – Stockholders’ Equity.
Our principal sources of liquidity to finance our business are our existing cash on hand, cash flows generated from operating activities, funds available under revolving credit facilities and special purpose financing arrangements.
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Cash Flow Summary
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Dollars in thousands) | |||||||||||
Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 19,883 | $ | (25,375) | |||||||
| Investing activities | (820) | 289,220 | |||||||||
| Financing activities | (90,510) | (252,424) | |||||||||
| Effect of foreign currency on cash | (2,188) | 546 | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (73,635) | $ | 11,967 | |||||||
The change of $45.3 million in cash flows from operating activities during the six months ended June 30, 2026, resulting in net cash provided by operating activities compared to net cash used in operating activities during the same period in the prior year, was primarily due to the following:
•An increase of $319.4 million in net income, net of non-cash items, partially offset by a $317.7 million decrease in cash flows from securities and other investments owned, primarily driven by increased investment activity in equity securities, with higher period-end valuations also contributing to the period-over-period change; and
•An increase in cash provided by other working capital changes of $43.6 million, primarily driven by a decrease in amounts due from clearing brokers reflecting changes in trading position and settlement balances.
The change of $290.0 million in cash flows from investing activities during the six months ended June 30, 2026, resulting in net cash used in investing activities compared to net cash provided by investing activities during the same period in the prior year, was primarily due to the following:
•Proceeds of approximately $209.0 million received from the sale of businesses in the prior-year period with no comparable activity in the current period, including $114.0 million received from the sale of the GlassRatner and Farber business, $68.9 million received from the sale of the Atlantic Coast Recycling business, and $26.0 million received from the sale of the Wealth Management business;
•A decrease in loans receivable activity of $48.9 million, reflecting lower loan purchases and repayments in the current period and the absence of loan sales that occurred in the prior-year period. The decrease was primarily driven by the repayment of certain loans outstanding in the prior-year period that did not recur, with current period activity consisting of additions of the XBP Americas, LLC facility and Enovum NC-1 Venture, LLC loan, and recovery of proceeds from the Conn’s, Inc. bankruptcy estate. Refer to Note 9 - Loans Receivable, at Fair Value in the accompanying unaudited condensed consolidated financial statements for further details.
•A $33.7 million decrease in distributions received from the Joann Retail equity investment.
The decrease of $161.9 million in net cash used in financing activities during the six months ended June 30, 2026 was primarily due to the following:
•A $174.7 million net decrease in debt proceeds and $336.2 million net decrease in debt-related payments, primarily due to the absence of term loan issuances and related repayments from the prior-year period, an increase in revolving credit facility borrowings and related repayments, and lower cash paid for the redemption of senior notes.
Recent Accounting Standards
See Note 2(o) - Recent Accounting Standards to the accompanying unaudited condensed consolidated financial statements for recent accounting standards.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, the Company is not required to provide the information called for by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Under the supervision and with the participation of our management, including our Co-Chief Executive Officers and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. Based upon the foregoing evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that as of June 30, 2026 our disclosure controls and procedures were not effective at the reasonable assurance level because of certain material weaknesses in internal control over financial reporting, as described in Item 9A, “Controls and Procedures” of our December 31, 2025 Form 10-K/A.
Changes in Internal Control Over Financial Reporting
Other than as set forth in Item 9A, “Controls and Procedures” of our December 31, 2025 Form 10-K/A, under “Remediation Efforts and Status,” there have been no changes to our internal control over financial reporting during the fiscal quarter covered by this Quarterly Report, as of June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In addition to such legal and other claims, reviews, investigations, and proceedings, the Company and its subsidiaries are subject to the risk of unasserted claims, including, among others, as it relates to matters related to Mr. Kahn and our investment in Freedom Holdings. If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit. The Company has not accrued for any such contingent liabilities, but such contingent liabilities could be realized which could have a material adverse impact on the Company’s financial condition.
Other than the matters disclosed in “Note 26 – Commitments and Contingencies – (a) Legal Matters” in the accompanying unaudited condensed consolidated financial statements, there are no material changes to pending legal proceedings against the Company that are required to be disclosed pursuant to Item 103 of Regulation S-K for the quarter ended June 30, 2026.
Item 1A. Risk Factors.
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.
There has been recent dilution and there may continue to be additional future dilution of our Common Stock, including as a result of the Company’s recent Section 3(a)(9) exchanges and potential future exchanges, which could adversely affect the market price of shares of our Common Stock.
As of June 30, 2026, the Company executed nine Section 3(a)(9) exchanges whereby they exchanged outstanding units of various series of senior notes for shares of the Company’s Common Stock in an effort to decrease the Company’s outstanding indebtedness. As a result of these Section 3(a)(9) exchanges, the outstanding shares of our Common Stock increased by 8,358,495 shares. We may issue additional shares of Common Stock in similar Section 3(a)(9) exchanges or other capital raising transactions to further pay down the Company’s outstanding indebtedness. Additional issuances will dilute the ownership interest of our common stockholders. Investors who purchase our shares will likely pay different prices, and so may experience different outcomes in their investment results. Investors may experience declines in the value of their shares as a result of share sales made at prices lower than the prices they paid. In addition, future issuances of Common Stock could depress the market price of our common stock and impair our ability to raise capital. We cannot predict the effect that future issuances of our common stock would have on the market price of our common stock.
As a result of the Section 3(a)(9) exchanges and other issuances of Common Stock during the quarter, the aggregate beneficial ownership of our executive officers, directors and their affiliates declined from approximately 25.4% as reported in our Annual Report on Form 10-K/A to approximately 21.4% of our outstanding Common Stock as of August 3, 2026.
We may not pay dividends regularly or at all in the future.
During 2024 we suspended paying dividends on our common stock, and in early 2025, we also suspended paying dividends on our Existing Preferred Stock. We may not pay dividends in the near future on our common or preferred stock. Even if we were to reinitiate dividends, our Board of Directors may reduce or discontinue dividends at any time for any reason it deems relevant and there can be no assurances that we will continue to generate sufficient cash to pay dividends, or that we will continue to pay dividends with the cash that we do generate. The determination regarding the payment of dividends is subject to the discretion of our Board of Directors and compliance with applicable laws, and there can be no
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assurances that we will generate sufficient cash to pay dividends, or that we will pay dividends in future periods. Voting rights for holders of Depositary Shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of the Company’s preferred stock, or Depositary Shares representing interests in the Company’s preferred stock, or additional series of preferred stock the Company may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to the Company’s Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Existing Preferred Stock are in arrears. On April 30, 2026, the Company did not pay the quarterly dividend that would otherwise have been payable on its Series A Preferred Stock and Series B Preferred Stock for the Dividend Period (as defined in the applicable Certificate of Designation) ended April 30, 2026. This was the sixth quarterly Dividend Period for which dividends on the Series A Preferred Stock and Series B Preferred Stock have not been paid since the Company’s temporary suspension of preferred dividends. As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation. See “Risk Factors - Holders of Depositary Shares have extremely limited voting rights.”
Holders of Depositary Shares have extremely limited voting rights.
The voting rights of holders of Depositary Shares are limited. The Company’s common stock is the only class of the Company’s securities that carries full voting rights. Voting rights for holders of Depositary Shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of the Company’s preferred stock, or Depositary Shares representing interests in the Company’s preferred stock, or additional series of preferred stock the Company may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to the Company’s Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Existing Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s certificate of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of the Company’s preferred stock as a single class) that materially and adversely affect the rights of the holders of Depositary Shares (and other series of preferred stock, as applicable) or create additional classes or series of the Company’s stock that are senior to the Existing Preferred Stock, provided that in any event adequate provision for redemption has not been made. Other than the limited circumstances described herein, holders of Depositary Shares will not have any voting rights. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Existing Preferred Stock. On April 30, 2026, the Company did not pay the quarterly dividend that would otherwise have been payable on its Series A Preferred Stock and Series B Preferred Stock for the Dividend Period (as defined in the applicable Certificate of Designation) ended April 30, 2026. This was the sixth quarterly Dividend Period for which dividends on the Series A Preferred Stock and Series B Preferred Stock have not been paid since the Company’s announcement on January 21, 2025 of the temporary suspension of preferred dividends. As a result, a “Preferred Dividend Default” has occurred under each Certificate of Designation and the voting rights to elect two directors to the Company’s Board of Directors subject to compliance with the procedures and process outlined in the each Certificate of Designation and the Company’s by-laws will continue until all dividends accumulated and unpaid on the Series A Preferred Stock and Series B Preferred Stock for all past Dividend Periods shall have been fully paid.
Our use of artificial intelligence (“AI”) technology and the incorporation of AI technology carry risks and challenges that could adversely affect our business, financial condition, results of operations, and prospects.
We have and are increasingly incorporating AI capabilities into our business operations and internal processes to enable our employees to improve efficiency, scalability, and productivity. The integration of AI presents risks and challenges, including that we may be unable to integrate AI technologies when or as we expect, that our clients do not welcome or realize the anticipated benefits of such technologies, that new AI technologies may disrupt our industry adding market pressure, that our AI-based solutions or output could produce inaccurate results or have other unintended consequences. Additionally, artificial intelligence algorithms or training methodologies may be flawed, and datasets may contain irrelevant, insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, damage our reputation, and materially harm our business.
While AI technologies may offer significant benefits, they also create risks and challenges. Use of AI tools that introduce bias, errors, hallucinations (false, misleading, or fabricated text purporting to be factual), as well as any failure by our employees, contractors, or partners to adhere to AI policies we develop, or inappropriate use of AI, could result in violations of confidentiality obligations, ethical considerations, laws, or regulations, jeopardize our intellectual property rights, or expose our solutions or business systems to defects and malware, any of which could adversely affect our business, financial condition, results of operations, and prospects.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended June 30, 2026, the Company completed a series of Section 3(a)(9) Exchanges on April 30, 2026, May 1, 2026, May 14, 2026 and June 4, 2026 with the Investor whereby the Company issued an aggregate of 3,804,629 shares of its common stock in exchange for an aggregate of 991,172 units of 6.50% Senior Notes due 2026 (RILYN), 250,477 units of 5.00% Senior Notes due 2026 (RILYG), 46,625 units of 5.25% Senior Notes due 2028 (RILYZ) and 30,332 units of 6.00% Senior Notes due 2028 (RILYT). As disclosed in the Investor’s 13G filed on April 22, 2026, the Investor owns more than five percent of the Company’s common stock. The shares of common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9), as the securities were exchanged for the Company’s senior notes with an existing security holder and no commission or other remuneration was paid for soliciting the exchange.
In connection with the Oaktree Credit Agreement, on February 26, 2025, the Company issued seven-year warrants (“Oaktree Warrants”) to certain affiliates of Oaktree (the “Oaktree Holders”) to purchase approximately 1,832,290 shares (or 6% on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. On May 28, 2026, the Oaktree Holders sent a cashless exercise notice to the Company in accordance with the terms of the Oaktree Warrants. On May 29, 2026, the Company issued an aggregate of 915,251 shares of common stock to the Oaktree Holders in exchange for the surrender by the Oaktree Holders of 917,039 shares of the Company’s common stock. The shares underlying the Oaktree Warrants are registered for resale on Form S-1 (which was subsequently amended by a Post-Effective Amendment) (Reg. No. 333-293348). As of June 30, 2026, the Oaktree Warrants have been fully exercised and are no longer outstanding.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a)As previously disclosed in Item 5(a) of the Company’s quarterly report on Form 10-Q filed on May 7, 2026, Fred Knopf (“Executive”) was appointed to the position of Executive Vice President, General Counsel and Secretary of the Company upon the retirement of Alan N. Forman. In connection with the Executive’s appointment, the Company entered into an Employment Agreement with the Executive, effective as of July 1, 2026 (the “Employment Agreement”). The Employment Agreement provides for a base salary of $425,000, an annual bonus to be determined by the Company in its sole discretion with a target bonus of $350,000 and eligibility for an annual equity award to be determined by the Company’s Compensation Committee of the Board of Directors. The Employment Agreement also provides for a severance payment equal to one (1) times the Executive’s base salary. The Employment Agreement also provides for reimbursement of a portion of the executive’s COBRA premiums for up to twelve months following a qualifying termination. Qualifying terminations include (i) terminate without Cause by the Company, (ii) termination due to death or disability and (iii) resignation for Good Reason, as such term is defined in the Employment Agreement. Upon a qualifying termination or a change of control, all unvested equity-based awards will become fully vested. The foregoing summary of the material terms of the Employment Agreement is qualified in its entirety by reference to the Employment Agreement, a copy of which is filed as Exhibit 10.3, and is hereby incorporated by reference to, this Form 10-Q. The Company and the Executive also entered into the Company’s standard form of indemnification agreement, the form of which is filed as Exhibit 10.28 to the Company’s Form 10-K/A for the period ended December 31, 2025.
(b) None.
(c) During the three months ended June 30, 2026, no director or officer of the Company adopted terminated
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Item 6. Exhibits.
The exhibits filed as part of this Quarterly Report are listed in the index to exhibits immediately preceding such exhibits, which index to exhibits is incorporated herein by reference.
Exhibit Index
| Incorporated by Reference | ||||||||||||||||||||||||||
| Exhibit No. | Description | Form | Exhibit | Filing Date | ||||||||||||||||||||||
| 10.1* | Third Amendment to Credit Agreement among BRPI Acquisition Co LLC, Lingo Management, LLC, United Online, Inc., YMAX Corporation and Banc of California, dated as of April 8, 2026. | 10-Q | 10.4 | 05/07/2026 | ||||||||||||||||||||||
| 10.2#* | 2021 Stock Incentive Plan – Form of Special Restricted Stock Unit Award Agreement. | |||||||||||||||||||||||||
| 10.3#* | Employment Agreement effective as of July 1, 2026 by and between the Registrant and Fred Knopf. | |||||||||||||||||||||||||
| 10.4§ * | First Amendment to Credit Agreement, Limited Waiver and Omnibus Joinder Agreement by and among Targus International, LLC, Targus US LLC, Hyper Products, Inc., Targus (Canada) Ltd., Tiger US Holdings, Inc., Targus US Newco, Inc., Targus Spain S.L., Targus Asia Pacific (Singapore) PTE Ltd., Targus Deutschland GMBH, Targus International Holdco (UK) Limited, Targus Group (UKO Limited, Targus Europe Limited, Targus Asia Pacific Limited, Targus Australia PTY. Ltd., and FGI Worldwide as agent for Lenders, dated as of June 30, 2026. | |||||||||||||||||||||||||
| 31.1* | Certification of Co-Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934 | |||||||||||||||||||||||||
| 31.2* | Certification of Co-Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934 | |||||||||||||||||||||||||
| 31.3* | Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934 | |||||||||||||||||||||||||
| 32.1** | Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||
| 32.2** | Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||
| 32.3** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||
| 101.INS* | Inline XBRL Instance Document. | |||||||||||||||||||||||||
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| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||||||||||||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||||||||||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||||||||||||||||||
_______________________________________________
| * | Filed herewith. | ||||
| ** | Furnished herewith. | ||||
| # | Management contract or compensatory plan or arrangement. | ||||
| § | In accordance with Item 601(a)(5) of Regulation S-K, certain schedules and exhibits have not been filed. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BRC Group Holdings, Inc. | ||||||||
Date: August 6, 2026 | By: | /s/ SCOTT YESSNER | ||||||
| Name: | Scott Yessner | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||
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