RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

The Company provides asset management and placement agent services to unconsolidated funds affiliated with the Company (the “Funds”). In connection with these services, the Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Funds.

As of September 30, 2023 and December 31, 2022, amounts due from related parties of $395 and $1,081, respectively, were due from the Funds for management fees and other operating expenses.

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 Phil Ahn, the Company’s Chief Financial Officer and Chief Operating Officer. Whitehawk has agreed to provide investment advisory services for two of the funds, GACP I, L.P. and GACP II, L.P. During the three and nine months ended September 30, 2022, management fees paid for investment advisory services by Whitehawk were zero and $1,173, respectively.

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 can be summarized as follows:

Babcock and Wilcox

During the three and nine months ended September 30, 2022, the Company earned $65 and $129, respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.

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, 2023. 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. In March 2022, a $1,000 performance fee was approved in accordance with the Executive Consulting Agreement.

The Company is also a party to indemnification agreements for the benefit of B&W, and the B. Riley Guaranty, each as disclosed above in Note 17 – Commitments and Contingencies.

The Arena Group Holdings, Inc. (fka the Maven, Inc.)

The Company had loans receivable due from the Arena Group Holdings, Inc. (fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $103,556 and $98,729 as of September 30, 2023 and December 31, 2022, respectively. On August 31, 2023, the Arena loan was amended for an additional $6,000 loan receivable with interest payable at 10.0% per annum and a maturity date of December 31, 2026. During the three and nine months ended September 30, 2022, the Company earned zero and $2,023, respectively, of underwriting and financial advisory and other fees from Arena in connection with Arena's capital raising activities.

Applied Digital

On May 20, 2023, the Company entered into a loan agreement with Applied Digital (“APLD”) and had a loan receivable due from APLD, which was paid off in full on July 17, 2023, and in respect of which the Company recognized interest income and loan fees of $1,447. On September 13, 2023, the Company provided APLD with an additional loan, which had a fair value of $4,879 as of September 30, 2023. Interest on these loans was payable at 9.0% per annum with a maturity date of May 20, 2025.

California Natural Resources Group, LLC

On November 1, 2021, the Company extended a $34,393 bridge promissory note bearing interest at up to 10.0% per annum to California Natural Resources Group, LLC (“CalNRG”). On January 3, 2022, CalNRG repaid the promissory note using proceeds from a new credit facility with a third party bank (the “CalNRG Credit Facility”). The Company has guaranteed CalNRG’s obligations, up to $10,375, under the CalNRG Credit Facility.

Faze Clan

On March 9, 2022, the Company loaned $10,000 to Faze Clan, Inc. (“Faze”) pursuant to a bridge credit agreement (the “Bridge Agreement”). On April 25, 2022, the Company loaned an additional $10,000 pursuant to the Bridge Agreement. All principal and accrued interest pursuant to the Bridge Agreement was repaid upon closing of Faze’s business combination (the “Business Combination”) with BRPM 150, which following the Business Combination changed its name to Faze Holdings. As a result of the Business Combination, BRPM 150 is no longer a VIE of the Company. On July 19, 2022, in connection with the Business Combination, the Company purchased 5,342,500 shares of Faze Holdings Class A common stock for $10.00 per share. During the year ended December 31, 2022, the Company earned $41,885 of incentive fees for the de-consolidation of BRPM 150 and $9,632 of underwriting and financial advisory fees from Faze and BRPM 150 in connection with the Business Combination and capital raising activities.

Lingo

On May 31, 2022, the Company converted $17,500 of a loan receivable with Lingo into equity and the Company's ownership interest in Lingo increased from 40% to 80%. On February 24, 2023, the Company acquired the remaining 20% ownership in Lingo, increasing the Company's ownership interest to 100%.

Targus

On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus for total purchase consideration of $247,546 as more fully discussed in Note 4. At the time of the acquisition, the chief executive officer of Targus was also a member of the Company’s board of directors. Upon closing the acquisition, the individual resigned from the Company’s board of directors and continues to serve as the chief executive officer of Targus.

Freedom VCM Holdings, LLC

On August 21, 2023, the Company purchased an equity investment in Freedom VCM for $281,144, resulting in a 31% voting interest. On August 21, 2023, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables, for a purchase price of $58,872 which resulted in a loss of $78. In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 11 and as consideration for the purchase price Freedom VCM Receivables entered into a note receivable in the amount of $58,872, with a stated interest rate of 19.74% and a maturity date of August 21, 2033. Principal and interest is payable based on the collateral without recourse to Freedom VCM Receivables, which includes the performance of certain consumer credit receivables. This loan receivable was measured at fair value in the amount of $50,789 as of September 30, 2023. Interest income on this loan receivable was $1,173 during the three and nine months ended September 30, 2023. As a result of this equity investment, the Company's Badcock Receivable I loan receivable as more fully described in Note 3(h) was a related party loan receivable with a fair value of $33,604 as of September 30, 2023.

Torticity, LLC

On November 2, 2023, the Company loaned $15,369 to Torticity, LLC with interest payable of 15.0% per annum and a maturity date of November 2, 2026. This will be included in the Company's loans receivable, at fair value in its condensed consolidated balance sheets in the fourth quarter of 2023.

Other

During the nine months ended September 30, 2023, the Company sold a loan receivable including accrued interest in the amount of $7,600 to two related parties. BRC Partners Opportunity Fund, LP (“BRCPOF”) purchased $3,519 of the loan receivable including accrued interest and 272 Capital L.P. (“272LP”) purchased $4,081 of the loan receivable including accrued interest; both of the partnerships are private equity funds managed by one of the Company’s subsidiaries. Our executive officers and members of our board of directors have 65.4% financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 37.9% in the BRCPOF as of September 30, 2023. Our executive officers and members of our board of directors have a 14.3% financial interest in the 272LP as of September 30, 2023.

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 September 30, 2023 and 2022, the Company earned $2,439 and $35 of fees related to these services, respectively. During the nine months ended September 30, 2023 and 2022, the Company earned $3,253 and $4,071 of fees related to these services, respectively.