Core Viewpoint - B. Riley Financial Inc. has filed its overdue audited results for 2024 but will miss Nasdaq's September 29 deadline for delayed quarterly reports, putting its stock exchange listing in jeopardy [1][2]. Group 1: Filing Status - B. Riley informed Nasdaq that it would be unable to file the required quarterly reports by the September 29 deadline [2]. - The company is required to complete all overdue filings, including the annual Form 10-K and the first and second-quarter 10-Qs, to maintain its listing on Nasdaq [2]. Group 2: Delisting Proceedings - B. Riley plans to request a hearing from Nasdaq if delisting proceedings begin on or before September 29, where it will argue for its continued listing [3]. - The company expressed hope that the Nasdaq hearings panel will allow it to continue trading pending the hearing and grant additional time to remain listed [4]. Group 3: Financial Performance - In its annual report, B. Riley reported a net loss to common shareholders of $772 million for 2024, an increase from a loss of $108 million in 2023 [5]. - The report identified 10 "material weaknesses" in the company's internal controls [5]. Group 4: Auditor Transition - Marcum LLP completed the 2024 audit and is transitioning its duties to BDO USA, which is currently reviewing the 2025 filings [6]. - B. Riley has indicated that it has made "substantial progress" on filings for the first two quarters of this year [6].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ FORM 10-K _____________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 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 _________________________________ ...

Core Viewpoint - B. Riley Financial Inc. is facing significant challenges due to identified weaknesses in its controls, which may impact its financial reporting and regulatory compliance [1][2][3]. Group 1: Audit and Financial Reporting - B. Riley has reported 10 weaknesses in its controls, including issues related to technology and investment valuation, identified during consultations with Marcum LLP [1][2]. - The company is dismissing Marcum after the completion of the overdue 2024 annual report, which has not been given a specific completion date [2]. - Nasdaq has warned B. Riley of potential delisting on September 29 if audited results are not filed by then [3]. Group 2: Related Party Transactions - The auditor has emphasized the need for B. Riley to improve its processes for identifying and disclosing material related-party transactions, which could pose conflicts of interest [4]. Group 3: Past Issues and Investigations - The quality of B. Riley's reports came under scrutiny after the bankruptcy of Franchise Group Inc., one of its major holdings, leading to an SEC investigation [5]. Group 4: Financial Health and Future Audits - B. Riley is working on improving its balance sheet and cash flows by selling assets and refinancing debt, reporting positive net income from operating businesses for the first time since late 2023 [6]. - Marcum is currently handling the 2024 audit while preparing to transition duties to BDO USA for the 2025 filings [7]. - BDO USA has indicated it would not be independent for auditing due to prior non-audit services provided to B. Riley, which were terminated in April [8].

Group 1 - B. Riley Financial appointed BDO USA as its independent registered public accounting firm for the 2025 audit [1] - The appointment is part of the company's efforts to ensure timely financial reporting [1] - Following the announcement, shares of B. Riley Financial increased by 2.05% in pre-market trading, reaching $5.23 [1]

Core Points - B. Riley Financial has appointed BDO USA, P.C. as its independent registered public accounting firm for the 2025 audit, while continuing to work with Marcum LLP for the completion of the 2024 annual audit [1][2][3] - The company aims to regain timely financial reporting, with significant progress made on the first and second quarter 2025 Form 10-Qs [2][3] - BDO is recognized as one of the top five accounting firms globally, providing assurance, tax, and advisory services with over 12,000 professionals across 75 U.S. offices [4] Company Overview - B. Riley Financial is a diversified financial services company that offers tailored solutions across investment banking, institutional brokerage, private wealth and investment management, financial consulting, and corporate restructuring services [5] - The company leverages cross-platform expertise to provide comprehensive financial services at every stage of the business life cycle [5]

Core Insights - B. Riley Financial has made significant progress in realigning its operating businesses towards Financial Services and Capital Markets, improving its capital structure, and reducing debt [3][5]. Financial Update - The company is in the late stages of documenting the 2024 annual audit and expects to file the 10-K shortly, with the first and second quarter 10-Qs ready for auditor review after the 10-K filing [4]. Strategic Focus - The company has refocused its strategy on Financial Services, supported by strong cash flows from other subsidiaries, particularly in Telecom [5][6]. Operational Performance - Strong client retention has been achieved due to the commitment of employees, which has positively impacted the company's performance [5]. Capital Deployment - B. Riley Financial believes it is well positioned to deploy capital and leverage cash generation from its diversified operating company portfolio [6].

Summary of B. Riley Financial Conference Call Company Overview - **Company**: B. Riley Financial - **Industry**: Financial Services and Capital Markets Key Points and Arguments 1. **Strategic Progress**: B. Riley has made significant strides in realigning its operating businesses towards financial services and capital markets, improving capital structure, and reducing debt [3][5][10] 2. **Audit Status**: The company is in the late stages of documenting the 2024 annual audit and expects to file the 10-Ks shortly, with 10-Qs ready for auditor review thereafter [4][18] 3. **Debt Reduction**: The company has achieved a debt reduction of approximately $600 million since September 2024 through investments and asset sales, with net debt estimated between $800 million to $839 million as of June 30, 2025 [10][11][23] 4. **Carve-Out Success**: The carve-out of B. Riley Securities has exceeded expectations, with the management team demonstrating operational autonomy and sufficient capital for growth [5][6] 5. **Investment Highlights**: B. Riley acted as lead book runner for significant IPOs and capital raises, including a $159 million IPO for an AI infrastructure company and a $384 million capital raise for a fabless semiconductor [7] 6. **Wealth Management Strategy**: B. Riley Wealth aims to enhance its wealth platform and increase efficiencies, supported by the sale of GA Group to Oaktree funds, which also generated cash for debt reduction [8][9] 7. **Liquidation Gains**: The company earned a realized investment gain of approximately $29 million from the Jo Ann liquidation, with expectations of an additional $4 million in profit [9] 8. **Operational Adjustments**: The company is consolidating clearing arrangements and implementing a new commission system to streamline operations and reduce costs [14] 9. **AI Utilization**: B. Riley is actively identifying and deploying AI tools to enhance productivity and capabilities across the organization [16] 10. **Investment Portfolio**: The investment portfolio is estimated to be between $320 million to $355 million as of June 30, 2025, reflecting a decline due to debt paydowns and investment sales [20][21] Additional Important Information 1. **Financial Performance**: Estimated net income for the first half of 2025 is projected to be between $125 million to $145 million, driven by gains on sales and bond retirements [21][22] 2. **Future Financial Filings**: The company plans to file the third quarter financials on a normal schedule, aiming to resolve delays in the 10-K filings [20][30] 3. **Bond Exchange Program**: The bond exchange program has been crucial in reducing debt, with the company remaining active in exploring further exchanges [23][24] 4. **Regulatory Challenges**: The complexity of the operating environment and regulatory hurdles have contributed to delays in financial filings [18][28] This summary encapsulates the key insights and developments discussed during the conference call, highlighting B. Riley Financial's strategic initiatives, financial performance, and operational adjustments within the financial services industry.

[Executive Summary and Outlook](index=1&type=section&id=Executive%20Summary%20and%20Outlook) The company projects significant H1 2025 profitability and a substantial reduction in its debt profile [First Half 2025 Outlook](index=1&type=section&id=First%20Half%202025%20Outlook) The company projects H1 2025 net income of $125.0M-$145.0M and a significant debt reduction of approximately $600M H1 2025 Financial Projections | Metric | Estimated Range (H1 2025) | | :--- | :--- | | Net Income to Common Shareholders | $125.0M - $145.0M | | Diluted EPS | $4.08 - $4.74 | | Cash (as of June 30, 2025) | $268M | | Total Debt (as of June 30, 2025) | $1.46B | | Net Debt (as of June 30, 2025) | $809M - $839M | Projected Debt Reduction | Debt Reduction (Sept 30, 2024 to June 30, 2025) | Estimated Decrease | | :--- | :--- | | Total Debt | $600M | | Net Debt | $544M - $574M | [Management Commentary](index=2&type=section&id=Management%20Commentary) Management is focused on rightsizing the balance sheet while investing in core financial services, with regulatory filings expected shortly - Management's strategic focus is on **rightsizing the balance sheet** while continuing to invest in and grow the **core financial services businesses**, supported by cash flows from its Telecom segment[4](index=4&type=chunk) - The company is in the final stages of its complex 2024 audit and will file the 10-K shortly, with plans to file the **Q1 and Q2 2025 10-Qs within 30-45 days** after the 10-K[6](index=6&type=chunk) [Financial and Business Performance](index=1&type=section&id=Financial%20and%20Business%20Performance) The company's performance reflects significant strategic actions in H1 2025 and major write-downs impacting FY 2024 results [First Half 2025 Business Update & Financial Estimates](index=1&type=section&id=First%20Half%202025%20Business%20Update%20%26%20Financial%20Estimates) The company executed key strategic initiatives in H1 2025, including asset sales and debt reduction, projecting revenues of $405.0M-$425.0M - Key operational achievements in H1 2025 include: - Executed B. Riley Securities ("BRS") carve out in March 2025 - Reduced total company debt by an estimated **$600 million** from Sept 30, 2024 to June 30, 2025 - Realized approximately **$187 million in cash proceeds** from the sales of GlassRatner and Atlantic Coast Recycling - Achieved approximately **$126 million of debt reduction** through five bond exchanges[3](index=3&type=chunk) - Expected net income for H1 2025 includes estimated gains of **$53 million** from the sale of Atlantic Coast Recycling, **$66 million** from GlassRatner, and **$55 million** on senior note exchanges[9](index=9&type=chunk) H1 2025 Preliminary Unaudited Estimates | H1 2025 Preliminary Unaudited Estimates | Low Range | High Range | | :--- | :--- | :--- | | Revenue | $405.0M | $425.0M | | Net Income | $125.0M | $145.0M | | Net Income from Continuing Operations | $52.4M | $72.4M | | Operating Adj. EBITDA (Continuing Ops) | $20.0M | $26.0M | | Basic EPS | $4.10 | $4.75 | | Diluted EPS | $4.08 | $4.74 | [Preliminary Full Year 2024 Results](index=1&type=section&id=Preliminary%20Full%20Year%202024%20Results) The company reported a preliminary 2024 net loss of $772.3M, driven by significant write-downs and a decrease in total revenues - The 2024 net loss was primarily caused by write-downs of **$510.0 million** related to the equity investment in Freedom VCM Holdings LLC and a loan receivable from Vintage Capital Management, plus a **$105.4 million** impairment of goodwill and other intangible assets[11](index=11&type=chunk) - Total investments decreased by **67.3%** to **$432.6 million** at year-end 2024 from $1.32 billion at year-end 2023[12](index=12&type=chunk) FY 2024 Preliminary Results | Metric (Full Year Ended Dec 31) | 2024 (Preliminary) | 2023 | | :--- | :--- | :--- | | Total Revenues | $838.6M | $1,465.8M | | Net Loss to Common Shareholders | $(772.3)M | $(108.0)M | | Diluted Loss per Common Share | $(25.46) | $(3.69) | | Operating Adjusted EBITDA | $126.4M | $274.6M | [Preliminary Fourth Quarter 2024 Results](index=3&type=section&id=Preliminary%20Fourth%20Quarter%202024%20Results) The company reported preliminary Q4 2024 net income of $0.9M, a significant turnaround from the prior year's loss, despite a decline in Operating Adjusted EBITDA Q4 2024 Preliminary Results | Metric (Q4 Ended Dec 31) | 2024 (Preliminary) | 2023 | | :--- | :--- | :--- | | Net Income (Loss) to Common Shareholders | $0.9M | $(91.6)M | | Operating Adjusted EBITDA (Continuing Ops) | $21.5M | $59.1M | [Additional Updates](index=4&type=section&id=Additional%20Updates) The company has secured amended financing terms to enhance operational flexibility [Oaktree Capital Management Financing](index=4&type=section&id=Oaktree%20Capital%20Management%20Financing) The company amended its credit agreement with Oaktree to enhance financial flexibility through new and upsized investment baskets - The amended credit agreement with Oaktree provides incremental flexibility through several key provisions[13](index=13&type=chunk) - - A new **$100 million** investment basket for balance sheet transactions - An upsized parent company investment basket, increased from $20 million to **$30 million** - The ability to use up to **$25 million** of cash to repurchase the Company's unsecured notes[16](index=16&type=chunk) [Appendix: Preliminary Financial Statements and Reconciliations](index=7&type=section&id=Appendix%3A%20Preliminary%20Financial%20Statements%20and%20Reconciliations) This appendix provides detailed preliminary financial statements and non-GAAP reconciliations for fiscal year 2024 and H1 2025 estimates [Preliminary Condensed Consolidated Balance Sheets](index=7&type=section&id=Preliminary%20Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet shows a significant decrease in total assets and liabilities as of year-end 2024, resulting in a total equity deficit Balance Sheet Summary | Balance Sheet Item (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,783,263** | **$6,080,604** | | Cash and cash equivalents | $154,877 | $222,690 | | Securities and other investments owned | $282,325 | $809,049 | | Loans receivable, at fair value | $90,103 | $532,419 | | **Total Liabilities** | **$2,239,279** | **$5,721,038** | | Senior notes payable, net | $1,530,561 | $1,668,021 | | **Total Equity (Deficit)** | **$(456,016)** | **$359,566** | [Preliminary Consolidated Statement of Operations](index=9&type=section&id=Preliminary%20Consolidated%20Statement%20of%20Operations) The company's 2024 operating statement reflects a significant revenue decrease and a widened net loss available to common shareholders Income Statement Summary | Income Statement (Twelve Months Ended Dec 31) | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $838,597 | $1,465,777 | | Operating (Loss) Income | $(475,738) | $96,051 | | Loss from Continuing Operations | $(900,854) | $(160,161) | | Net Loss Available to Common Shareholders | $(772,334) | $(107,967) | | Diluted Loss per Common Share | $(25.46) | $(3.69) | [Non-GAAP Reconciliations](index=11&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP net loss to non-GAAP metrics, showing a 2024 Operating Adjusted EBITDA of $126.4M and projecting $20.0M-$26.0M for H1 2025 FY 2024 Non-GAAP Reconciliation | Reconciliation (Twelve Months Ended Dec 31) | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Loss from continuing operations | $(900,854) | $(160,161) | | Adjusted EBITDA | $(542,797) | $123,870 | | Operating Adjusted EBITDA | $126,399 | $274,576 | H1 2025 Estimated Non-GAAP Reconciliation | Estimated Reconciliation (Six Months Ended June 30, 2025) | Low Range (in thousands) | High Range (in thousands) | | :--- | :--- | :--- | | Net income from continuing operations | $52,400 | $72,400 | | Adjusted EBITDA | $5,400 | $40,400 | | Operating Adjusted EBITDA | $20,000 | $26,000 | [Total Investments and Net Debt](index=13&type=section&id=Total%20Investments%20and%20Net%20Debt) The company's total investments and debt levels saw significant changes in 2024, with further debt reduction projected for H1 2025 Historical Investments and Net Debt | Metric (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Investments | $432,616 | $1,323,969 | | Total Debt | $1,774,340 | $2,356,364 | | Net Debt | $1,055,659 | $756,496 | Estimated H1 2025 Investments and Net Debt | Estimated Metric (in thousands) | June 30, 2025 (Low) | June 30, 2025 (High) | | :--- | :--- | :--- | | Total Investments | $310,000 | $340,000 | | Total Debt | $1,463,000 | $1,463,000 | | Net Debt | $839,000 | $809,000 |

Core Insights - B. Riley Financial, Inc. expects net income for the first half of 2025 to be between $125 million and $145 million, translating to diluted earnings per share of $4.08 to $4.74 [1][7][26] - The company reported a preliminary net loss of $772.3 million for the full year 2024, equating to a diluted loss per share of $25.46 [1][9] - As of June 30, 2025, B. Riley anticipates cash reserves of $268 million and total debt of $1.46 billion, with net debt estimated between $809 million and $839 million [1][26] Financial Performance - Preliminary estimates for the first half of 2025 indicate revenue between $405 million and $425 million, with operating adjusted EBITDA expected to range from $20 million to $26 million [7][26] - The company achieved a total debt reduction of approximately $600 million from September 30, 2024, to June 30, 2025 [6][26] - Cash proceeds from business sales amounted to approximately $187 million, with significant gains from the sales of GlassRatner and Atlantic Coast Recycling [6][26] Strategic Actions - B. Riley has focused on aligning its balance sheet while investing in its financial services businesses, which are experiencing increased momentum due to cash flows from telecom operations [3][4] - The company executed a carve-out of B. Riley Securities in March 2025 to better serve clients and provide flexible capital for emerging priorities, particularly in AI investments [6][26] - The company has made significant changes in its management, including the hiring of a new Chief Financial Officer, Scott Yessner, to enhance its financial operations [4][6] Year-End 2024 Summary - For the year ending December 31, 2024, B. Riley reported total revenues of $838.6 million, a decrease from $1.5 billion in 2023 [9][10] - Operating adjusted EBITDA for 2024 was reported at $(542.8) million, a significant decline from $123.9 million in 2023 [10][25] - The company faced substantial write-downs, including $510 million related to equity investments and impairments of goodwill and intangible assets totaling $105.4 million [10][11]

Core Insights - B. Riley Securities Holdings, Inc. reported a significant increase in client activity and revenue in its first full quarter post-carve-out from B. Riley Financial, Inc. [1][2] - The company raised over $8 billion for AI-driven investments over the past year, indicating a strong focus on technology and innovation [2]. - The firm has strengthened its leadership and expanded its sector coverage, enhancing its capabilities in various industries [2]. Financial Performance - Total revenue for Q2 2025 was approximately $60.9 million, with adjusted net revenue at approximately $51.5 million [3]. - GAAP net income was approximately $12.5 million, while adjusted net income totaled approximately $8.6 million [3]. - The company operates with a debt-free balance sheet, with cash and securities totaling $94.5 million as of June 30, 2025 [12]. Operational and Strategic Developments - B. Riley Securities has made key strategic hires to reinforce leadership across various practice areas, including Real Estate, Healthcare, and FinTech [2]. - The firm has refocused on its strengths as a mid-market merchant bank and has begun to regain momentum in its core business lines after a challenging Q1 [2]. - The Board of Directors approved a common stock dividend of approximately $0.22 per share, totaling around $4.1 million, reflecting the company's commitment to returning capital to shareholders [12].