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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
Or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-37503
B. RILEY FINANCIAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware27-0223495
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
11100 Santa Monica Blvd., Suite 800
Los Angeles, CA
90025
(Address of Principal Executive Offices)(Zip Code)
(310) 966-1444
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareRILYNasdaq Global Market
Depositary Shares, each representing a 1/1000th
 fractional interest in a 6.875% share of Series A
 Cumulative Perpetual Preferred Stock		RILYPNasdaq Global Market
Depositary Shares, each representing a 1/1000th
 fractional interest in a 7.375% share of Series B
 Cumulative Perpetual Preferred Stock		RILYLNasdaq Global Market
6.50% Senior Notes due 2026RILYNNasdaq Global Market
6.375% Senior Notes due 2025RILYMNasdaq Global Market
6.75% Senior Notes due 2024RILYONasdaq Global Market
6.00% Senior Notes due 2028RILYTNasdaq Global Market
5.50% Senior Notes due 2026RILYKNasdaq Global Market
5.25% Senior Notes due 2028RILYZNasdaq Global Market
5.00% Senior Notes due 2026RILYGNasdaq Global Market
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 filerxAccelerated filer o
Non-accelerated filer oSmaller reporting company o
Emerging growth companyo
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 May 2, 2023, there were 28,135,636 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

B. Riley Financial, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2023
Table of Contents
Page
 
Explanatory Note
As previously disclosed in the Explanatory Note of the 2022 Annual Report on Form 10-K, we restated our audited consolidated financial statements as of and for the years ended December 31, 2020 and 2021 and each of our unaudited condensed consolidated financial statements for the quarterly and year-to-date periods during 2021 and for the first three quarters of the year ending 2022. The restatement of these periods was effective with the filing of our Annual Report on Form 10-K for the year ended December 31, 2022. See Note 2 to the consolidated financial statements in our 2022 Annual Report on Form 10-K for additional information related to the restatement.
Additionally, as previously disclosed in our 2022 Annual Report on Form 10-K, we restated the relevant unaudited financial information for the three months ended March 31, 2022, three and six months ended June 30, 2022, and three and nine months ended September 30, 2022. Accordingly, the condensed consolidated financial statements as of and for the three months ended March 31, 2022 included in this Quarterly Report on Form 10-Q have been restated to reflect the restatement adjustments as described in the 2022 Form 10-K. See also Note 2 to our condensed consolidated financial

statements for further information on the impact of the restatement adjustments on the condensed consolidated financial statements as of and for the quarterly period ended March 31, 2022.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value)
March 31,
2023		December 31,
2022
(Unaudited)  
ASSETS
Assets:
Cash and cash equivalents$209,971 $268,618 
Restricted cash2,351 2,308 
Due from clearing brokers19,145 48,737 
Securities and other investments owned, at fair value1,049,230 1,129,268 
Securities borrowed2,942,843 2,343,327 
Accounts receivable, net120,853 149,110 
Due from related parties372 1,081 
Loans receivable, at fair value (includes $97,062 and $98,729 from related parties as of March 31, 2023 and December 31, 2022, respectively)
772,085 701,652 
Prepaid expenses and other assets491,872 460,696 
Operating lease right-of-use assets88,989 88,593 
Property and equipment, net27,577 27,141 
Goodwill523,997 512,595 
Other intangible assets, net366,060 374,098 
Deferred income taxes2,845 3,978 
Total assets$6,618,190 $6,111,202 
LIABILITIES AND EQUITY  
Liabilities:  
Accounts payable$59,969 $81,384 
Accrued expenses and other liabilities263,335 322,974 
Deferred revenue84,019 85,441 
Deferred income taxes34,274 29,548 
Due to related parties and partners431 2,210 
Due to clearing brokers6,033 19,307 
Securities sold not yet purchased7,806 5,897 
Securities loaned2,937,982 2,334,031 
Operating lease liabilities100,075 99,124 
Notes payable19,882 25,263 
Revolving credit facility139,463 127,678 
Term loans, net626,613 572,079 
Senior notes payable, net1,722,977 1,721,751 
Total liabilities6,002,859 5,426,687 
Commitments and contingencies (Note 17)
Redeemable noncontrolling interests in equity of subsidiaries174,967 178,622 
B. Riley Financial, Inc. equity:  
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 4,563 and 4,545 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively; and liquidation preference of $114,082 and $113,615 as of March 31, 2023 and December 31, 2022, respectively
— — 
Common stock, $0.0001 par value; 100,000,000 shares authorized; 28,135,636 and 28,523,764 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
3 3 
Additional paid-in capital445,352 494,201 
Accumulated deficit(62,566)(45,220)
Accumulated other comprehensive loss(1,604)(2,470)
Total B. Riley Financial, Inc. stockholders’ equity381,185 446,514 
Noncontrolling interests59,179 59,379 
Total equity440,364 505,893 
Total liabilities and equity$6,618,190 $6,111,202 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except share data)
Three Months Ended
March 31,
20232022
Revenues:As Restated
Services and fees$235,559 $202,814 
Trading income (loss) and fair value adjustments on loans51,568 (19,278)
Interest income - Loans and securities lending77,186 61,426 
Sale of goods67,777 1,878 
Total revenues432,090 246,840 
Operating expenses:
Direct cost of services54,397 11,651 
Cost of goods sold47,626 2,251 
Selling, general and administrative expenses212,627 175,199 
Restructuring charge93 — 
Interest expense - Securities lending and loan participations sold32,424 11,766 
Total operating expenses347,167 200,867 
Operating income84,923 45,973 
Other income (expense):  
Interest income2,574 67 
Dividend income13,204 7,861 
Realized and unrealized losses on investments(28,442)(49,112)
Change in fair value of financial instruments and other(209)5,981 
(Loss) income from equity investments(10)6,775 
Interest expense(47,561)(30,436)
Income (loss) before income taxes24,479 (12,891)
(Provision for) benefit from income taxes(7,919)3,695 
Net income (loss) 16,560 (9,196)
Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests(595)866 
Net income (loss) attributable to B. Riley Financial, Inc.17,155 (10,062)
Preferred stock dividends2,012 2,002 
Net income (loss) available to common shareholders$15,143 $(12,064)
Basic income (loss) per common share$0.53 $(0.43)
Diluted income (loss) per common share$0.51 $(0.43)
Weighted average basic common shares outstanding28,585,337 27,855,033 
Weighted average diluted common shares outstanding29,513,435 27,855,033 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
20232022
Net income (loss) $16,560 $(9,196)
Other comprehensive income (loss):  
Change in cumulative translation adjustment866 (488)
Other comprehensive income (loss), net of tax866 (488)
Total comprehensive income (loss) 17,426 (9,684)
Comprehensive (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests(449)866 
Comprehensive income (loss) attributable to B. Riley Financial, Inc.$17,875 $(10,550)
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
(Unaudited)
(Dollars in thousands, except share data)
For the Three Months Ended March 31, 2023 and 2022
4
Preferred StockCommon StockAdditional
Paid-in
Capital 		(Accumulated Deficit) Retained
Earnings 		Accumulated
Other
Comprehensive
Loss 		Noncontrolling
Interests 		Total
Equity
SharesAmountShares Amount
Balance, January 1, 20234,545 $— 28,523,764 $3 $494,201 $(45,220)$(2,470)$59,379 $505,893 
Preferred stock issued18 — — — 467 — — — 467 
Vesting of restricted stock and other, net of shares withheld for employer taxes— — 1,012,751 — (4,819)— — — (4,819)
Common stock repurchased and retired— — (1,452,831)— (53,803)— — — (53,803)
Shares issued for the acquisition of a business— — 51,952 — 2,111 — — — 2,111 
Remeasurement of Lingo redeemable minority interest— — — — (6,483)— — — (6,483)
Share based payments— — — — 13,678 — — — 13,678 
Dividends on common stock ($1.00 per share)
— — — — — (31,291)— — (31,291)
Dividends on preferred stock— — — — — (2,012)— — (2,012)
Net income— — — — — 17,155 — (449)16,706 
Distributions to noncontrolling interests— — — — — — — (720)(720)
Contributions from noncontrolling interests— — — — — — — 431 431 
Remeasurement of B. Riley Principal 250 Merger Corporation subsidiary temporary equity— — — — — (1,198)— — (1,198)
Acquisition of noncontrolling interest— — — — — — — 538 538 
Other comprehensive income— — — — — — 866 — 866 
Balance, March 31, 2023
4,563 $— 28,135,636 $3 $445,352 $(62,566)$(1,604)$59,179 $440,364 
        
Balance, January 1, 20224,512 $— 27,591,028 $3 $413,486 $248,862 $(1,080)$43,930 $705,201 
Preferred stock issued23 — — — 639 — — — 639 
Vesting of restricted stock and other, net of shares withheld for employer taxes— — 32,328 — (1,294)— — — (1,294)
Shares issued for the acquisition of FocalPoint— — 304,878 — 20,320 — — — 20,320 
Share based payments— — — — 17,013 — — — 17,013 
Dividends on common stock ($1.00 per share)
— — — — — (31,033)— — (31,033)
Dividends on preferred stock— — — — — (2,002)— — (2,002)
Net loss— — — — — (10,062)— 866 (9,196)
Distributions to noncontrolling interests— — — — — — — (935)(935)
Contributions from noncontrolling interests— — — — — — — 1,770 1,770 
Acquisition of noncontrolling interests— — — — — — — 182 182 
Other comprehensive loss— — — — — — (488)— (488)
Balance, March 31, 2022
4,535 $— 27,928,234 $3 $450,164 $205,765 $(1,568)$45,813 $700,177 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
20232022
Cash flows from operating activities:
Net income (loss)$16,560 $(9,196)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization13,077 7,848 
Provision for doubtful accounts3,173 405 
Share-based compensation13,746 17,013 
Fair value adjustments, non-cash(46,050)(15,816)
Non-cash interest and other(1,141)(3,596)
Effect of foreign currency on operations271 (34)
Loss (income) from equity investments10 (6,775)
Dividends from equity investments129 774 
Deferred income taxes5,807 (41,900)
Loss on loans receivable and disposal of fixed assets5 257 
Gain on extinguishment of loan— (1,102)
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests308 215 
Change in operating assets and liabilities:  
Amounts due to/from clearing brokers16,318 (80,091)
Securities and other investments owned95,037 215,973 
Securities borrowed(599,516)461,193 
Accounts receivable25,083 6,355 
Prepaid expenses and other assets(25,705)1,701 
Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities(67,536)(82,962)
Amounts due to/from related parties and partners(1,070)594 
Securities sold, not yet purchased1,909 (21,125)
Deferred revenue(1,749)4,924 
Securities loaned603,951 (469,553)
Net cash provided by (used in) operating activities52,617 (14,898)
Cash flows from investing activities:  
Purchases of loans receivable(311,970)(93,853)
Repayments of loans receivable260,587 101,000 
Sale of loan receivable7,500 — 
Acquisition of businesses and minority interest, net of $234 and $26,076 cash acquired for 2023 and 2022, respectively
(12,287)(40,047)
Purchases of property, equipment and intangible assets(1,696)(176)
Proceeds from sale of property, equipment, intangible assets, and other1,364 2 
Purchase of equity and other investments(662)(2,439)
Net cash used in investing activities(57,164)(35,513)
Cash flows from financing activities:  
6
Proceeds from revolving line of credit29,021 — 
Repayment of revolving line of credit(17,237)— 
Repayment of notes payable(11,510)(357)
Repayment of term loan(72,924)(4,116)
Proceeds from term loan128,187 — 
Proceeds from issuance of senior notes— 20,037 
Payment of debt issuance and offering costs(1,957)— 
Payment of contingent consideration(1,302)(181)
Payment of employment taxes on vesting of restricted stock(4,819)(1,294)
Common dividends paid(46,856)(27,886)
Preferred dividends paid(2,012)(2,002)
Repurchase of common stock(53,803)— 
Distribution to noncontrolling interests(1,023)(1,051)
Contribution from noncontrolling interests431 1,770 
Proceeds from issuance of preferred stock467 639 
Net cash used in financing activities(55,337)(14,441)
Decrease in cash, cash equivalents and restricted cash(59,884)(64,852)
Effect of foreign currency on cash, cash equivalents and restricted cash1,280 (496)
Net decrease in cash, cash equivalents and restricted cash(58,604)(65,348)
Cash, cash equivalents and restricted cash, beginning of period270,926 279,860 
Cash, cash equivalents and restricted cash, end of period$212,322 $214,512 
Supplemental disclosures:  
Interest paid$81,423 $38,272 
Taxes paid$2,932 $73 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS
B. Riley Financial, Inc. and its subsidiaries (collectively, the “Company”) provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals. The Company also has a portfolio of communication related businesses that provide consumer Internet access and cloud communication services and consumer related businesses that consist of a brands portfolio, which provides licensing of trademarks and brand investments, and Targus Cayman Holdco Limited (“Targus”), which designs and sells laptop and computer accessories.
The Company operates in six reportable operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, research, sales and trading services to corporate and institutional clients; (ii) Wealth Management, through which the Company provides wealth management and tax services to corporate and high-net-worth clients; (iii) Auction and Liquidation, through which the Company provides 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; (iv) Financial Consulting, through which the Company provides bankruptcy, financial advisory, forensic accounting, real estate consulting and valuation and appraisal services; (v) Communications, through which the Company provides consumer Internet access and related subscription services, cloud communication services, and mobile phone voice, text, and data services and devices; and (vi) Consumer, including brands, which generates revenue through the licensing of trademarks, and Targus, which generates revenue through sales of laptop and computer accessories.
During the fourth quarter of 2022, the Company realigned its segment reporting structure to reflect organizational changes from recent acquisitions and the manner in which capital is allocated. The Consumer segment includes the previously reported Brands segment and Targus, which the Company acquired in the fourth quarter of 2022. The Company has also re-aligned its previously reported Principal Investments - Communications and Other segment into the Communications segment and the All Other category that is reported with Corporate and Other.
NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

In connection with the preparation of the consolidated financial statements for the year ended December 31, 2022, the Company identified a classification error of dividend income and realized and unrealized gains (losses) on certain investments within revenue. The following tables summarize the effects of the correction of the classification error on the Company’s restated condensed consolidated statements of operations for the three months ended March 31, 2022. The classification error had no impact on the Company's condensed consolidated balance sheet, condensed consolidated statements of equity, cash flows, net income, or earnings per share.

The following tables present the corrections by financial statement line item within the condensed consolidated statement of operations for all periods presented:

8
Three Months Ended March 31, 2022
As Previously
Reported		Restatement AdjustmentsRestatement ReferenceAs Restated
Statement of Operations
Revenues:
Services and fees$210,675 $(7,861)(a)$202,814 
Trading (loss) income and fair value adjustments on loans(68,390)49,112 (b)(19,278)
Interest income - Loans and securities lending61,426 — 61,426 
Sale of goods1,878 — 1,878 
Total revenues205,589 41,251 246,840 
Operating expenses:
Direct cost of services11,651 — 11,651 
Cost of goods sold2,251 — 2,251 
Selling, general and administrative expenses175,199 — 175,199 
Interest expense - Securities lending and loan participations sold11,766 — 11,766 
Total operating expenses200,867 — 200,867 
Operating income4,722 41,251 45,973 
Other income (expense):
Interest income67