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ORGANIZATION AND NATURE OF BUSINESS OPERATIONS
9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS ORGANIZATION AND NATURE OF BUSINESS OPERATIONS
B. Riley Financial, Inc. and its subsidiaries (collectively, the “Company”) provide investment banking and financial services to corporate, institutional and high net worth clients, and asset disposition, financial consulting, appraisal and capital advisory services to a wide range of retail, wholesale and industrial clients, as well as lenders, capital providers, private equity investors and professional services firms throughout the United States, Australia, Canada, and Europe and consumer Internet access and cloud communication services through its wholly-owned subsidiaries United Online, Inc. (“UOL” or “United Online”), magicJack VocalTec Ltd. (“magicJack”), and Marconi Wireless ("Marconi"), and majority ownership interest in Lingo Management, LLC (“Lingo”). The Company also has a majority ownership interest in BR Brands Holding, LLC (“BR Brands” or “Brands”), which provides licensing of trademarks.
The Company operates in six 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, institutional 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) Principal Investments - Communications and Other, through which the Company provides consumer Internet access and related subscription services from United Online, cloud communication services primarily through the magicJack devices, global cloud/unified communications and managed services from Lingo, mobile phone voice, text, and data services and devices through a mobile virtual network operator, and single source communications and cloud technology services from BullsEye Telecom (“BullsEye”); and (vi) Brands, which is focused on generating revenue through the licensing of trademarks.
On September 23, 2022, the Company's subsidiary, B. Riley Receivables II, LLC, a Delaware limited liability company, entered into a credit agreement (the “Pathlight Credit Agreement”) by and among PLC Agent, LLC in the capacity as administrative agent and Pathlight Capital Fund I LP, Pathlight Capital Fund II LP, and Pathlight Capital Fund III LP as the lenders for a five-year $148,200 term loan. The Pathlight Credit Agreement was entered in connection with the purchase of the 2022 Badcock Receivable discussed in Note 2.
On August 25, 2022, certain Company subsidiaries acquired the assets of Atlantic Coast Fibers, LLC (and related businesses), which provides residential and commercial recycling services in the New York City metropolitan area. The purchase price consideration totaled $27,541, which consisted of $14,482 in cash, $1,642 in assumed debt, and $11,416 in contingent consideration payable over approximately the next two years. In accordance with Accounting Standards Codification (“ASC”) 805, the Company used the acquisition method of accounting for this acquisition. Goodwill of $3,913 and other intangible assets of $13,080 were recorded as a result of the acquisition.
On August 16, 2022, the Company's majority-owned subsidiary, Lingo, acquired BullsEye, a single source communications and cloud technology provider. The purchase price consideration totaled $64,907, which Lingo partially funded using a $52,500 term loan that is discussed in Note 9. In accordance with ASC 805, the Company used the acquisition method of accounting for this acquisition. Goodwill of $29,284 and other intangible assets of $28,700 were recorded as a result of the acquisition. The acquisition is expected to bring revenue from multi-location enterprise business customers to Lingo, improving scale and flexibility.
On August 16, 2022, Lingo entered into a credit agreement (the “Lingo Credit Agreement”) by and among Lingo, the Company as the secured guarantor, and Banc of California, N.A. in its capacity as administrative agent and lender, for a five-year $45,000 term loan. On September 9, 2022, Lingo entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank for an incremental term loan of $7,500, increasing the principal balance of the term loan to $52,500.

On May 31, 2022, the Company's ownership interest in Lingo increased from 40% to 80% as a result of the conversion of $17,500 of debt owed by Lingo to equity. As a result of the consolidation of Lingo, the pre-existing equity investment was remeasured at fair value resulting in the recognition of a gain of $6,790, which is included in trading (losses) income and fair value adjustments on loans in the condensed consolidated statement of operations. In accordance with ASC 805,
the Company used the acquisition method of accounting. The total fair value of the acquired assets of Lingo was $115,538 and the fair value of the 20% noncontrolling interest was $8,021 at May 31, 2022. Goodwill of $33,622 and other intangible assets of $63,000 were recorded as a result of the acquisition. The acquisition is expected to expand the services offered in the Company's Principal Investments - Communications and Other segment. On January 19, 2022, the Company acquired FocalPoint Securities, LLC (“FocalPoint”), an independent investment bank headquartered in Los Angeles, California. The purchase price consideration totaled $124,479, which consisted of $64,248 in cash, $20,320 in issuance of common stock of the Company, and $39,911 in deferred cash and contingent consideration payable over the next three years. The Company used the acquisition method of accounting for this acquisition. Goodwill of $110,512 and other intangible assets of $10,780 that were recorded as a result of the acquisition will be deductible for tax purposes. The acquisition is expected to expand B. Riley Securities’ mergers and acquisitions (“M&A”) advisory business and enhance its debt capital markets and financial restructuring capabilities.