10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
Or
☐	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)

Delaware	27-0223495
(State or Other Jurisdiction of  Incorporation or Organization)	(I.R.S. Employer Identification No.)
21255 Burbank Boulevard, Suite 400  Woodland Hills, CA	91367
(Address of Principal Executive Offices)	(Zip Code)

(818) 884-3737
(Registrant’s telephone number, including area code)

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 ☒   No ☐

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 ☒   No ☐

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. (Check one)

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of November 5, 2018, there were 26,554,205 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 Quarter Ended September 30, 2018 

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	3
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018 and 2017	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017	5
	Condensed Consolidated Statements of Equity for the nine months ended September 30, 2018 and 2017	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	58
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	61
	Signatures	64

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements. 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES 

Condensed Consolidated Balance Sheets 

(Dollars in thousands, except par value)

	September 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Assets
Cash and cash equivalents	$	233,918		$	132,823
Restricted cash		468			19,711
Due from clearing brokers		54,891			31,479
Securities and other investments owned, at fair value		222,521			145,360
Securities borrowed		1,042,295			807,089
Accounts receivable, net		38,958			20,015
Due from related parties		9,921			5,689
Advances against customer contracts		21,405			5,208
Loans receivable		37,147			—
Prepaid expenses and other assets		50,193			22,605
Property and equipment, net		11,143			11,977
Goodwill		120,129			98,771
Other intangible assets, net		51,011			56,948
Deferred income taxes		26,901			29,229
Total assets	$	1,920,901		$	1,386,904
Liabilities and Equity
Liabilities
Accounts payable	$	2,278		$	2,650
Accrued expenses and other liabilities		87,901			71,685
Deferred revenue		3,205			3,141
Due to partners		1,428			1,578
Securities sold not yet purchased		59,672			28,291
Securities loaned		1,035,408			803,371
Mandatorily redeemable noncontrolling interests		4,409			4,478
Notes payable		1,671			2,243
Senior notes payable		455,783			203,621
Total liabilities		1,651,755			1,121,058
Commitments and contingencies
B. Riley Financial, Inc. stockholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued		—			—
Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,526,445 and 26,569,462 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		2			2
Additional paid-in capital		255,236			259,980
Retained earnings		14,842			6,582
Accumulated other comprehensive loss		(1,696	)		(534	)
Total B. Riley Financial, Inc. stockholders’ equity		268,384			266,030
Noncontrolling interests		762			(184	)
Total equity		269,146			265,846
Total liabilities and equity	$	1,920,901		$	1,386,904

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES 

Condensed Consolidated Statements of Income 

(Unaudited) 

(Dollars in thousands, except share data) 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues:
Services and fees	$	90,655		$	85,450		$	297,986		$	202,663
Interest income - Securities lending		8,954			6,897			22,836			9,115
Sale of goods		72			79			138			221
Total revenues		99,681			92,426			320,960			211,999
Operating expenses:
Direct cost of services		8,156			10,138			33,733			46,224
Cost of goods sold		52			124			142			313
Selling, general and administrative expenses		71,782			70,962			216,603			132,836
Restructuring charge		428			4,896			2,247			11,484
Interest expense - Securities lending		6,425			4,950			16,317			6,515
Total operating expenses		86,843			91,070			269,042			197,372
Operating income		12,838			1,356			51,918			14,627
Other income (expense):
Interest income		442			76			736			358
Income (loss) from equity investments		828			(157	)		5,049			(157	)
Interest expense		(9,340	)		(2,510	)		(23,926	)		(5,195	)
Income (loss) before income taxes		4,768			(1,235	)		33,777			9,633
(Provision for) benefit from income taxes		(2,046	)		1,357			(8,412	)		7,753
Net income		2,722			122			25,365			17,386
Net (loss) income attributable to noncontrolling interests		(92	)		(246	)		1,051			(283	)
Net income attributable to B. Riley Financial, Inc.	$	2,814		$	368		$	24,314		$	17,669
Basic income per share	$	0.11		$	0.01		$	0.94		$	0.80
Diluted income per share	$	0.10		$	0.01		$	0.91		$	0.76
Cash dividends per share	$	0.30		$	0.13		$	0.58		$	0.55
Weighted average basic shares outstanding		25,968,997			26,059,490			25,856,339			22,180,808
Weighted average diluted shares outstanding		26,854,261			27,639,862			26,776,133			23,385,014

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES 

Condensed Consolidated Statements of Comprehensive Income 

(Unaudited) 

(Dollars in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net income	$	2,722		$	122		$	25,365		$	17,386
Other comprehensive (loss) income:
Change in cumulative translation adjustment		(77	)		345			(1,162	)		1,391
Other comprehensive (loss) income, net of tax		(77	)		345			(1,162	)		1,391
Total comprehensive income		2,645			467			24,203			18,777
Comprehensive (loss) income attributable to noncontrolling interests		(92	)		(246	)		1,051			(283	)
Comprehensive income attributable to B. Riley Financial, Inc.	$	2,737		$	713		$	23,152		$	19,060

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES 

Condensed Consolidated Statements of Equity 

(Unaudited) 

(Dollars in thousands)

																Accumulated
										Additional						Other
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Interests			Equity
Balance, January 1, 2017		—	$	—		19,140,342		$	2	$	141,170		$	9,887		$	(1,712	)	$	1,045		$	150,392
Issuance of common stock for acquisition of MK Capital, LLC - contingent equity consideration on February 2, 2017		—		—		166,666			—		1,151			—			—			—			1,151
Issuance of common stock for acquisition of  Dialectic general partner interests on April 13, 2017		—		—		158,484			—		1,952			—			—			—			1,952
Issuance of common stock for acquisition of  FBR & Co. on June 1, 2017		—		—		4,779,354			—		73,472			—			—			—			73,472
Issuance of common stock and common stock warrants  for acquisition of Wunderlich on July 3, 2017		—		—		1,974,812			—		36,306			—			—			—			36,306
Vesting of restricted stock, net of shares withheld for employer taxes		—		—		241,910			—		(2,683	)		—			—			—			(2,683	)
Share based payments		—		—		—			—		7,679			—			—			—			7,679
Dividends on common stock		—		—		—			—		—			(11,600	)		—			—			(11,600	)
Net income for the nine months  ended September 30, 2017		—		—		—			—		—			17,669			—			(170	)		17,499
Distribution to noncontrolling interest		—		—		—			—		—			—			—			(922	)		(922	)
Foreign currency translation adjustment		—		—		—			—		—			—			1,391			—			1,391
Balance, September 30, 2017		—	$	—		26,461,568		$	2	$	259,047		$	15,956		$	(321	)	$	(47	)	$	274,637
Balance, January 1, 2018		—	$	—		26,569,462		$	2	$	259,980		$	6,582		$	(534	)	$	(184	)	$	265,846
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC		—		—		405,817			—		8,050			—			—			—			8,050
Vesting of restricted stock, net of shares withheld for employer taxes		—		—		522,399			—		(4,106	)		—			—			—			(4,106	)
Common shares cancelled - resolution of escrow claim		—		—		(21,233	)		—		—			—			—			—			—
Stock repurchased and retired		—		—		(950,000	)		—		(17,338	)		—			—			—			(17,338	)
Share based payments		—		—		—			—		8,650			—			—			—			8,650
Dividends on common stock		—		—		—			—		—			(16,054	)		—			—			(16,054	)
Net income for the nine months  ended September 30, 2018		—		—		—			—		—			24,314			—			946			25,260
Foreign currency translation adjustment		—		—		—			—		—			—			(1,162	)		—			(1,162	)
Balance, September 30, 2018		—	$	—		26,526,445		$	2	$	255,236		$	14,842		$	(1,696	)	$	762		$	269,146

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES 

Condensed Consolidated Statements of Cash Flows 

(Unaudited) 

(Dollars in thousands)

	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities:
Net income	$	25,365		$	17,386
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		9,768			7,705
Provision for doubtful accounts		840			827
Share-based compensation		8,650			7,679
Recovery of key man life insurance		—			(6,000	)
Non-cash interest and other		1,384			319
Effect of foreign currency on operations		(352	)		(1,022	)
(Income) loss from equity investments		(5,049	)		157
Deferred income taxes		7			(24,560	)
Impairment of leaseholds, lease loss accrual and loss on disposal of fixed assets		1,718			2,838
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests		847			10,766
Change in operating assets and liabilities:
Due from clearing brokers		(23,412	)		13,258
Securities and other investments owned		(77,161	)		(41,350	)
Securities borrowed		(235,206	)		129,998
Accounts receivable and advances against customer contracts		(35,982	)		1,635
Prepaid expenses and other assets		(19,418	)		15,522
Accounts payable, accrued payroll and related expenses, accrued value added tax payable and other accrued expenses		10,111			(38,597	)
Amounts due to/from related parties and partners		(4,487	)		(12,313	)
Securities sold, not yet purchased		31,381			7,700
Deferred revenue		64			(1,302	)
Securities loaned		232,037			(139,425	)
Net cash used in operating activities		(78,895	)		(48,779	)
Cash flows from investing activities:
Purchases of loans receivable		(35,111	)		—
Acquisition of Wunderlich, net of cash acquired $4,259		—			(25,478	)
Cash acquired from acquisition of FBR & Co.		—			15,738
Acquisition of other businesses		(4,000	)		(2,052	)
Acquisition consideration payable -United Online		—			(10,381	)
Purchases of property and equipment and intangible assets		(2,314	)		(550	)
Proceeds from key man life insurance		—			6,000
Proceeds from sale of property and equipment and intangible assets		37			619
Equity investments		(6,856	)		(1,015	)
Dividends from equity investment		1,695			—
Net cash used in investing activities		(46,549	)		(17,119	)
Cash flows from financing activities:
Proceeds from asset based credit facility		300,000			65,987
Repayment of asset based credit facility		(300,000	)		(65,987	)
Payment of contingent consideration		—			(1,250	)
Proceeds from notes payable		51,020			—
Repayment of notes payable		(51,591	)		(8,214	)
Proceeds from issuance of senior notes		255,290			89,330
Payment of debt issuance costs		(6,356	)		(2,093	)
Payment of employment taxes on vesting of restricted stock		(4,106	)		(2,683	)
Dividends paid		(17,912	)		(13,493	)
Repurchase of common stock		(17,338	)		—
Distribution to noncontrolling interests		(915	)		(2,878	)
Net cash provided by financing activities		208,092			58,719
Increase (decrease) in cash, cash equivalents and restricted cash		82,648			(7,179	)
Effect of foreign currency on cash, cash equivalents and restricted cash		(796	)		3,458
Net increase (decrease) in cash, cash equivalents and restricted cash		81,852			(3,721	)
Cash, cash equivalents and restricted cash, beginning of  year		152,534			115,399
Cash, cash equivalents and restricted cash, end of period	$	234,386		$	111,678
Supplemental disclosures:
Interest paid	$	35,289		$	11,513
Taxes paid	$	2,455		$	11,668

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 and financial services to corporate, institutional and high net worth clients, and asset disposition, valuation and 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 with the acquisition of United Online, Inc. (“UOL”) on July 1, 2016, provide consumer Internet access and related subscription services.

The Company operates in four operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, consulting, research, sales and trading and wealth management services to corporate, institutional and high net worth clients; (ii) 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; (iii) Valuation and Appraisal, through which the Company provides valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs; and (iv) Principal Investments - United Online, through which the Company provides consumer Internet access and related subscription services.

On November 9, 2017, the Company entered into an Agreement and Plan of Merger with B. R. Acquisition Ltd., an Israeli corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and magicJack VocalTec Ltd., an Israeli corporation (“magicJack”), pursuant to which Merger Sub will merge with and into magicJack, with magicJack continuing as the surviving corporation and as an indirect subsidiary of the Company. Subject to the terms and conditions of the Agreement and Plan of Merger, each outstanding share of magicJack will be converted into the right to receive $8.71 in cash without interest, representing approximately $143,500 in aggregate merger consideration. The closing of the transaction is subject to the receipt of certain regulatory approvals and the satisfaction of other closing conditions. It is anticipated that the acquisition of magicJack will close in the fourth quarter of 2018.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“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 presentation of the financial position and the results of operations for the periods presented have been included. These 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 for the year ended December 31, 2017, filed with the SEC on March 14, 2018. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

(b) Use of Estimates

The preparation of the 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 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, reserves for accounts receivable and slow moving goods held for sale or auction, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share-based arrangements, fair value of contingent consideration in business combinations and accounting for income tax valuation 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 differ.

8

(c) Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services.

Revenues from contracts with customers in the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment, and Principal Investments – United Online segment are primarily comprised of the following:

Capital Markets Segment - Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.

Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.

Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research.

Auction and Liquidation Segment - Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer. The commission and fees earned for these services are included in revenues in the accompanying condensed consolidated statements of income. Under these types of arrangements, revenues also include contractual reimbursable costs.

Revenues earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized over time when the performance obligation is satisfied. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of services to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or decrease the transaction price upon completion of our performance obligations under the contract. Estimated amounts are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not occur. Our estimates of variable consideration and determination of whether or not to include estimated amounts in the transaction price are based on an assessment of our anticipated performance under the contract taking into consideration all historical, current and forecasted information that is reasonably available to us. Costs that directly relate to the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in the accompanying condensed consolidated balance sheets. These costs are amortized as the services are transferred to the customer over the contract period, which generally does not exceed six months, and the expense is recognized a component of direct cost of services. If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

9

Valuation and Appraisal Segment - Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the completed services to the customer. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs.

Principal Investments – United Online Segment - Revenues in the Principal Investments - United Online segment include subscription service revenues that are derived primarily from fees charged to pay accounts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Payments from pay accounts received in advance of our performance obligations are recorded in the condensed consolidated balance sheets as deferred revenue. 

Advertising revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available.

Sale of product revenues are derived primarily from the sale of mobile broadband service devices to customers and includes the related shipping and handling fees.

Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders, (iii) trading activities from our principal investments in equity and other securities for the Company’s account, and (iv) other income.

Interest income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned.

Other revenues includes (i) net trading gains and losses from market making activities in our fixed income group, (ii) carried interest from our asset management recognized as earnings from financial assets within the scope of ASC 323 - Investments - Equity Method and Joint Ventures, and therefore will not be in the scope of ASC 606 - Revenue from Contracts with Customers. In accordance with ASC 323 - Investments - Equity Method and Joint Ventures, the Company will record equity method income (losses) as a component of investment income based on the change in our proportionate claim on net assets of the investment fund, including performance-based capital allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements, and (iii) other miscellaneous income.

(d) Direct Cost of Services

Direct cost of services relate to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to auction and liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments - United Online segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks and data centers, depreciation of network computers and equipment, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs.

10

(e) Interest Expense - Securities Lending Activities

Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company.

(f) Concentration of Risk

Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments – United Online segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe.

The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts operations with third parties through collaborative arrangements.

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 concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements.

(g) Advertising Expenses

The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $371 and $183 for the three months ended September 30, 2018 and 2017, respectively, and $1,656 and $1,227 for the nine months ended September 30, 2018 and 2017, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of income.

(h) Share-Based Compensation

The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period.

(i) Restructuring Charge

The Company recorded a restructuring charge in the amount of $428 and $4,896 for the three months ended September 30, 2018 and 2017, respectively, and $2,247 and $11,484, for the nine months ended September 30, 2018 and 2017, respectively.

The restructuring charge of $428 and $2,247 during the three and nine months ended September 30, 2018, respectively, was primarily related to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

The restructuring charge of $4,896 and $11,484 during the three and nine months ended September 30, 2017, respectively, was primarily related to costs savings measures taking into account the planned synergies as a result of the acquisitions of FBR & Co. (“FBR”) and Wunderlich Investment Company, Inc. (“Wunderlich”), which included a reduction in workforce for some of the corporate executives of FBR and Wunderlich and a restructuring to integrate FBR’s and Wunderlich’s operations with the Company’s operations in the Capital Markets segment.

11

The following table summarizes the changes in accrued restructuring charge during the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	1,827			3,287			2,600			694
Restructuring charge		428			4,896			2,247			11,484
Cash paid		(504	)		(3,092	)		(2,954	)		(4,880	)
Non-cash items		(1	)		(1,732	)		(143	)		(3,939	)
Balance, end of period	$	1,750		$	3,359		$	1,750		$	3,359

The following table summarizes the restructuring activities during the three months ended September 30, 2018 and 2017:

	Three Months Ended September 30,
	2018								2017
			Principal								Principal
			Investments -								Investments -
	Capital		United						Capital		United
	Markets		Online		Corporate		Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	76		—		—	$	76	$	2,285	$	150	$	1,102	$	3,537
Facility closure and consolidation charge		352		—		—		352		1,037		—		322		1,359
Total restructuring charge	$	428	$	—	$	—	$	428	$	3,322	$	150	$	1,424	$	4,896

The following table summarizes the restructuring activities during the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018									2017
			Principal									Principal
			Investments -									Investments -
	Capital		United							Capital		United
	Markets		Online		Corporate			Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	729		—		—		$	729	$	4,819	$	633	$	3,284	$	8,736
Facility closure and consolidation charge (recovery)		1,728		—		(210	)		1,518		2,426		—		322		2,748
Total restructuring charge	$	2,457	$	—	$	(210	)	$	2,247	$	7,245	$	633	$	3,606	$	11,484

(j) Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense.

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The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, provides an exemption from U.S. federal tax for dividends received from foreign subsidiaries, and creates new taxes on certain foreign sourced earnings. As of the completion of these financial statements and related disclosures, we have not completed our accounting for the tax effects of the Tax Reform Act; however, as described below, we have made a reasonable estimate of such effects and recorded a provisional tax expense of $13,052, which is included as a component of income tax expense in the fourth quarter of 2017. This provisional tax expense incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act, and may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Reform Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Reform Act no later than the fourth quarter of 2018. Future adjustments made to the provisional effects will be reported as a component of income tax expense from continuing operations in the reporting period in which any such adjustments are determined.

(k) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

(l) Restricted Cash

As of September 30, 2018, restricted cash balance of $468 is cash collateral for one of our telecommunication suppliers. As of December 31, 2017, restricted cash balance of $19,711 included $19,197 of cash collateral related to a retail liquidation engagement and $514 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication suppliers.

(m) 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.

The Company accounts for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets.

(n) Due from/to Brokers, Dealers, and Clearing Organizations

The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker.

(o) Accounts Receivable

Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and Principal Investments - United Online segment customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. Bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2018 and 2017 are included in Note 5.

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(p) Advances Against Customer Contracts

Advances against customer contracts represent advances of contractually reimbursable funds incurred prior to, and during the term of the auction and liquidation services contract. On April 18, 2018, the Company entered into an agency agreement to participate in the right to liquidate certain assets of The Bon-Ton Stores, Inc. (the “Agency Agreement”). There are three parties to the Agency Agreement which were granted the right to act as the exclusive agent to conduct the sale of substantially all of the assets of The Bon-Ton Stores, Inc. (the “Bon-Ton Transaction”). The Company initially advanced $407,426 in connection with Agency Agreement.  As of September 30, 2018, $21,405 remained outstanding and is included in the advances against customer contracts.  Management expects the outstanding advance continue to be repaid from proceeds generated from the liquidation of the assets related to the Bon-Ton Transaction. 

(q) Loans Receivable

Loans are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and for purchased loans, net of any unamortized premiums or discounts. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to interest income using a level yield methodology. Loans receivable at September 30, 2018, consists of one loan in the amount of $15,000 that was fully repaid in October 2018 and the other loan in the amount of $22,147 which is due in May 2020.

(r) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $1,005 and $1,243 for the three months ended September 30, 2018 and 2017, respectively, and $3,369 and $2,458 for the nine months ended September 30, 2018 and 2017, respectively.

(s) Securities Owned and Securities Sold Not Yet Purchased

Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices.  Changes in the value of these securities are reflected currently in the results of operations.

As of September 30, 2018 and December 31, 2017, the Company’s securities and other investments owned and securities sold not yet purchased measured at fair value consisted of the following securities and investments:

	September 30,		December 31,
	2018		2017
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	67,306
Corporate bonds		18,909		6,539
Fixed income securities		4,467		2,329
Loans receivable		36,587		33,713
Partnership interests and other		56,241		35,473
	$	222,521	$	145,360
Securities sold not yet purchased:
Common stocks	$	47,929	$	19,145
Corporate bonds		6,381		1,175
Fixed income securities		598		699
Partnership interests and other		4,764		7,272
	$	59,672	$	28,291

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(t) 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 falls 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.

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, loans receivable 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 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’s partnership interests are valued based on the Company’s proportionate share of the net assets of the partnership which is derived from the most recent statements received from the general partner which are included in Level 3 of the fair value hierarchy. The Company also invests in certain proprietary investment funds that are valued at net asset value (“NAV”) determined by the fund administrator. The underlying securities held by these investment companies are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. As a practical expedient, the Company relies on the NAV of these investments as their fair value. The NAVs that have been provided by the fund administrators are derived from the fair values of the underlying investments as of the reporting date. In accordance with ASC “Topic 820: Fair Value Measurements,” these investment funds are not categorized within the fair value hierarchy.

The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

15

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2018 and December 31, 2017:

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at September 30, 2018 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	September 30,		identical assets		inputs		inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	72,153	$	25,207	$	8,957
Corporate bonds		18,909		—		18,909		—
Fixed income securities		4,467		—		4,467		—
Loans receivable		36,587		—		—		36,587
Partnership interests and other		54,114		1,280		10		52,824
Total assets measured at fair value	$	220,394	$	73,433	$	48,593	$	98,368
Liabilities:
Securities sold not yet purchased:
Common stocks	$	47,929	$	47,929	$	—	$	—
Corporate bonds		6,381		—		6,381
Fixed income securities		598		—		598		—
Partnership interests and other		4,764		4,764		—		—
Total securities sold not yet purchased		59,672		52,693		6,979		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,409		—		—		4,409
Total liabilities measured at fair value	$	64,081	$	52,693	$	6,979	$	4,409

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	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at December 31, 2017 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	67,306	$	38,960	$	—	$	28,346
Corporate bonds		6,539		—		6,539		—
Fixed income securities		2,329		—		2,329		—
Loans receivable		33,713		—		—		33,713
Partnership interests and other		31,883		686		5,093		26,104
Total assets measured at fair value	$	141,770	$	39,646	$	13,961	$	88,163
Liabilities:
Securities sold not yet purchased:
Common stocks	$	19,145	$	19,145	$	—	$	—
Corporate bonds		1,175		—		1,175		—
Fixed income securities		699		—		699		—
Partnership interests and other		7,272		7,272		—		—
Total securities sold not yet purchased		28,291		26,417		1,874		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—		—		4,478
Total liabilities measured at fair value	$	32,769	$	26,417	$	1,874	$	4,478

As of September 30, 2018, securities and other investments owned included $2,127 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $222,521 in the condensed consolidated balance sheets at September 30, 2018 included investments in investment funds of $2,127 and securities and other investments owned in the amount of $220,394 as outlined in the fair value table above.

As of December 31, 2017, securities and other investments owned included $3,590 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $145,360 in the condensed consolidated balance sheets at December 31, 2017 included investments in investment funds of $3,590 and securities and other investments owned in the amount of $141,770 as outlined in the fair value table above.

As of September 30, 2018 and December 31, 2017, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $98,368 and $88,163, respectively, or 5.1% and 6.4%, 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 following table summarizes 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 September 30, 2018:

	Fair value at
	September 30,						Weighted
	2018		Valuation Technique	Unobservable Input	Range		Average
Assets:
Common stocks and warrants	$	8,957	Market approach	Over-the-counter trading activity		$10.00-$10.50/share	$	10.29
			Market approach	Market price of related security		$0.61/share	$	0.61
			Pending transaction	Discount		50%		50%
Loans receivable		36,587	Market approach	Revenue multiple		1.4x		1.4x
Partnership interests and other		52,824	Market approach	Revenue multiple		1.4x		1.4x
Total level 3 assets measured at fair value	$	98,368
Liabilities:
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	$	4,409	Market approach	Operating income multiple		6.0x		6.0x

17

The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2018 and 2017 are as follows:

	Level 3		Level 3 Changes During the Period												Level 3
	Balance at		Fair			Relating to			Purchases,			Transfer in			Balance at
	Beginning of		Value			Undistributed			Sales and			and/or out			End of
	Year		Adjustments			Earnings			Settlements			of Level 3			Period
Nine Months Ended September 30, 2018
Common stocks and warrants	$	28,346	$	(3,247	)	$	578		$	4,250		$	(20,970	)	$	8,957
Loans receivable		33,713		(11	)		100			2,785			—			36,587
Partnership interests and other		26,104		1,411			(2,735	)		28,044			—			52,824
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—			(69	)		—			—			4,409
Nine Months Ended September 30, 2017
Common stocks and warrants	$	299	$	(463	)	$	—		$	10,146		$	—		$	9,982
Corporate bonds		160		—			—			—			(160	)		—
Loans receivable		—		1,375			—			25,493			—			26,868
Partnership interests and other		13,426		2,820			—			(4,390	)		—			11,856
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		3,214		9,000			(190	)		—			806			12,830
Contingent consideration		1,242		8			—			(1,250	)		—			—

The fair value adjustment for contingent consideration of $8 represents imputed interest for the nine months ended September 30, 2017. During the second quarter of 2017, the Company had a triggering event for the mandatorily redeemable noncontrolling interests that resulted in a fair value adjustment of $6,250 of the total fair value adjustment of $9,000 for the nine months ended September 30, 2017. In connection with this event, the Company received proceeds of $6,000 from key man life insurance. These amounts have been recorded in the condensed consolidated statements of income in selling, general and administrative expenses in the Corporate and Other segment. The amount reported in the table above also for the nine months ended September 30, 2018 and 2017 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the 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.

The carrying amount of the senior notes payable approximates fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk.

During the nine months ended September 30, 2018 and 2017, there were no assets or liabilities measured at fair value on a non-recurring basis.

(u) Derivative and Foreign Currency Translation

The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain auction and liquidation engagements with operations outside the United States. During the nine months ended September 30, 2018, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $54,406 Canadian dollars that were settled during the first and second quarter of 2018 and (b) $1,500 Euro’s that was settled in March 2018. During the nine months ended September 30, 2017, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of $25,000 Australian dollars that was settled on January 31, 2017. The forward exchange contract was entered into to improve the predictability of cash flows related to a retail store liquidation engagement that was completed in December 2016. The net loss from forward exchange contracts was $33 during the three months ended September 30, 2017 and net loss from forward exchange contracts was $91 and $103 during the nine months ended September 30, 2018 and 2017, respectively. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of income.

18

The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets. Transaction losses were $51 and $389 during the three months ended September 30, 2018 and 2017, respectively. Transactions gains were $843 during the nine months ended September 30, 2018 compared to transaction losses of $919 during the same 2017 period. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of income.

(v) Common Stock Warrants

The Company issued 821,816 warrants to purchase common stock of the Company in connection with the acquisition of Wunderlich on July 3, 2017. The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022.

(w) Equity Investment

At December 31, 2017, the Company had a loan receivable from bebe stores, inc. (“bebe”) with a fair value of $16,867 included in securities and other investments owned. On January 12, 2018, the loan receivable in the amount of $16,867 plus accrued interest of $51 was converted into 2,819,528 shares of common stock of bebe, representing a conversion price at $6.00 per share. On January 12, 2018, the Company also purchased 500,000 shares of bebe common stock at $6.00 per share of which 250,000 shares were newly issued common stock by bebe and 250,000 shares were purchased from the majority shareholder of bebe. At September 30, 2018, the Company had an ownership of approximately 30.1% of bebe’s outstanding common shares.

The equity ownership in bebe is accounted for under the equity method of accounting. The carrying value for the bebe investment at September 30, 2018 was $26,012 and is included in prepaid expenses and other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2018, the equity income from bebe was $1,062 and $7,144, respectively, and is included in income from equity investments on the condensed consolidated statements of income.

(x) Statements of Cash Flows – Supplemental Non-cash Disclosures

During the nine months ended September 30, 2018, non-cash investing activities included the conversion of a loan receivable in the amount of $16,867 and accrued interest receivable of $51 into an equity investment that totaled $16,918 as more fully discussed in Note 2(v) above.

(y) Variable Interest Entity

In January 2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations. The Company’s investment in the Partnership is a Variable Interest Entity (“VIE”) since the unaffiliated limited partners do not have substantive kick-out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership. The Company has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant. 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. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed.

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The carrying value of the Company’s investments in the VIE that was not consolidated is shown below.

	September 30, 2018
Partnership investments	$	5,179
Due from related party		1,071
Maximum exposure to loss	$	6,250

(z) Reclassification

The Company reclassified $262 of revenues that was reported as interest income – securities lending during the three months ended March 31, 2018 to revenues – services and fees. The previously reported amount of $7,553 as interest income – securities lending was reduced by $262 to $7,291 for the three months ended March 31, 2018 and the previously reported amount of $52,776 as revenues – services and fees was increased by $262 to $53,038 for the three months ended March 31, 2018.

The Company reclassified $309 of revenues that was reported as interest income – securities lending during the three months ended September 30, 2017 to revenues – services and fees. The previously reported amount of $7,206 and $9,424 as interest income – securities lending for the three and nine months ended September 30, 2017, respectively, was reduced by $309, to $6,897 and $9,115, respectively. The previously reported amount of $85,141 and $202,354 as revenues – services and fees for the three and nine months ended September 30, 2017, respectively, was increased by $309, to $85,450 and $202,663.

The impact of these reclassifications is reflected in the revenues as reported in the condensed consolidated statements of income for the three and nine months ended September 30, 2018 and 2017. The impact of this reclassification on the amounts reported during the periods was deemed to be immaterial.

(aa) Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13: Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in this update change the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company early adopted ASU 2018-13 in the third quarter of 2018 and the adoption did not have a material impact on our consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. This ASU also discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will continue to evaluate indicators that may give rise to a change in our tax provision as a result of the Tax Reform Act. See Note 10 for additional information on the Tax Reform Act.

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued ASU 2018-10: Codification Improvements to Topic 842, Leases, which provides narrow-scope improvements to the lease standard. ASU 2016-02 and ASU 2018-10 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of these updates on the consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income that provides for the reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Reform Act. The accounting update is effective for the fiscal year beginning after December 15, 2018 and early adoption is permitted. The accounting update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. We are currently evaluating the impact of the accounting update, but the adoption is not expected to have a material impact on our consolidated financial statements.

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In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal year 2019, but early application is permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet adopted this update and currently evaluating the effect this new standard will have on its financial condition and results of operations

On January 1, 2018, we adopted ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) using the retrospective method which requires adjustment to prior periods in the statement of cash flows. ASU 2016-18 clarifies how restricted cash should be presented on the statement of cash flows and requires companies to include restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period totals on the statement of cash flows. Restricted cash previously classified under investing activities is now included in the reconciliation of beginning and ending cash on the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on the Company’s financial condition and results of operations.

On January 1, 2018, we adopted ASC 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 9 for additional information on the adoption of this standard.

NOTE 3— ACQUISITIONS

Acquisition of Wunderlich Investment Company, Inc.

On May 17, 2017, the Company entered into a Merger Agreement (the “Wunderlich Merger Agreement”) with Wunderlich. Pursuant to the Wunderlich Merger Agreement, customary closing conditions were satisfied and the acquisition was completed on July 3, 2017. The total consideration of $65,118 paid to Wunderlich shareholders in connection with the Wunderlich acquisition was comprised of (a) cash in the amount of $29,737; (b) 1,974,812 newly issued shares of the Company’s common stock at closing which were valued at $31,495 for accounting purposes determined based on the closing market price of the Company’s shares of common stock on the acquisition date on July 3, 2017, less a 13.0% discount for lack of marketability as the shares issued are subject to certain escrow provisions and restrictions that limit their trade or transfer; and (c) 821,816 newly issued common stock warrants with an estimated fair value of $3,886. The common stock and common stock warrants issued includes 387,365 common shares and 167,352 common stock warrants that are held in escrow and subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition. The Company believes that the acquisition of Wunderlich will allow the Company to benefit from wealth management, investment banking, corporate finance, and sales and trading services provided by Wunderlich. The acquisition of Wunderlich is accounted for using the purchase method of accounting. The Company also entered into a registration rights agreement with certain shareholders of Wunderlich (the “Registration Rights Agreement”) on July 3, 2017 for the shares issued in connection with the Wunderlich Merger Agreement. The Registration Rights Agreement provides the Wunderlich shareholders with the right to notice of and, subject to certain conditions, the right to register shares of the Company’s common stock in certain future registered offerings of shares of the Company’s common stock.

The assets and liabilities of Wunderlich, both tangible and intangible, were recorded at their estimated fair values as of the July 3, 2017 acquisition date for Wunderlich. The application of the purchase method of accounting resulted in goodwill of $37,200 which represents the benefits from synergies with our existing business and acquired workforce. For the nine months ended September 30, 2018, acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Wunderlich, were charged against earnings in the amount of $12 are included in selling, general and administrative expenses in the condensed consolidated statements of income. The purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes.

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The purchase price allocation was as follows:

Consideration paid by B. Riley:
Cash paid	$	29,737
Fair value of 1,974,812 B. Riley common shares issued		31,495
Fair value of 821,816 B. Riley common stock warrants issued		3,886
Total consideration	$	65,118

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	4,259
Securities owned		1,413
Accounts receivable		3,193
Due from clearing broker		15,133
Prepaid expenses and other assets		10,103
Property and equipment		2,315
Deferred taxes		5,456
Accounts payable		(1,718	)
Accrued payroll and related expenses		(6,387	)
Accrued expenses and other liabilities		(10,223	)
Securities sold, not yet purchased		(1,707	)
Notes payable		(10,579	)
Customer relationships		15,320
Trademarks		1,340
Goodwill		37,200
Total	$	65,118

The revenue and earnings of Wunderlich included in our condensed consolidated financial statements for the three months ended September 30, 2018 were $17,239 and $276, respectively. During the nine months ended September 30, 2018, revenue and loss of Wunderlich included in our condensed consolidated financial statements were $60,578 and $844, respectively. The earnings (loss) from Wunderlich of $276 and ($844) for the three and nine months ended September 30, 2018, respectively, included restructuring charges in the amount of $317 and $1,083, respectively, related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

The revenue and loss of Wunderlich included in our condensed consolidated financial statements for the period from July 3, 2017 (the date of acquisition) through September 30, 2017 were $20,412 and $1,928, respectively. The loss from Wunderlich of $1,928 included a restructuring charge in the amount of $1,387 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

Acquisition of FBR & Co.

On February 17, 2017, the Company entered into an Agreement and Plan of Merger (the “FBR Merger Agreement”) with FBR, pursuant to which FBR was to merge with and into the Company (or a subsidiary of the Company), with the Company (or its subsidiary) as the surviving corporation (the “Merger”). On May 1, 2017, the Company and FBR filed a registration statement for the planned Merger. The stockholders of the Company and FBR approved the acquisition on June 1, 2017, customary closing conditions were satisfied and the acquisition was completed on June 1, 2017. Subject to the terms and conditions of the FBR Merger Agreement, each outstanding share of FBR common stock (“FBR Common Stock”) was converted into the right to receive 0.671 of a share of the Company’s common stock as summarized below. The Company believes that the acquisition of FBR will allow the Company to benefit from investment banking, corporate finance, securities lending, research, and sales and trading services provided by FBR and planned synergies from the elimination of duplicate corporate overhead and management functions with the Company. The acquisition of FBR is accounted for using the purchase method of accounting.

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The assets and liabilities of FBR, both tangible and intangible, were recorded at their estimated fair values as of the June 1, 2017 acquisition date for FBR. The application of the purchase method of accounting resulted in goodwill of $11,336 which represents expected overhead synergies and acquired workforce. The purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes.

The purchase price allocation was as follows:

Consideration paid by B. Riley:
Number of FBR Common Shares outstanding at June 1, 2017		7,099,511
Stock merger exchange ratio		0.671
Number of B. Riley common shares		4,763,772
Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards		67,861
Total number of B. Riley common shares to be issued		4,831,633
Closing market price of B. Riley common shares on December 31, 2016	$	14.70
Total value of B. Riley common shares		71,025
Fair value of RSU’s attributable to service period prior to June 1, 2017 (a)		2,446
Total consideration	$	73,471

(a) Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the FBR Merger Agreement with the right to receive 0.671 shares of the Company’s common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company’s common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period.

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	15,738
Securities owned		11,188
Securities borrowed		861,197
Accounts receivable		4,341
Due from clearing broker		29,169
Prepaid expenses and other assets		5,486
Property and equipment		8,663
Deferred taxes		17,706
Accounts payable		(1,524	)
Accrued payroll and related expenses		(7,182	)
Accrued expenses and other liabilities		(22,411	)
Securities loaned		(867,626	)
Customer relationships		5,600
Tradename and other intangibles		1,790
Goodwill		11,336
Total	$	73,471

The revenue and loss of FBR included in our condensed consolidated financial statements for the period from June 1, 2017 (the date of acquisition) through September 30, 2017 were $37,745 and $12,706, respectively. The loss from FBR of $12,706 includes transaction costs of $3,551 related to an employment agreement with the former Chief Executive Officer of FBR and restructuring charges in the amount of $9,096 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

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Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of the Company, Wunderlich and FBR, as though the acquisitions had occurred as of January 1 of the respective periods presented. The pro forma financial information presented includes the effects of adjustments related to the amortization charges from the acquired intangible assets and the elimination of certain activities excluded from the transaction and transaction related costs. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results.

	Pro Forma (Unaudited)
	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Revenues	$	92,461		$	320,546
Net (loss) income attributable to B. Riley Financial, Inc.	$	(42	)	$	11,785
Basic (loss) earnings per share	$	(0.00	)	$	0.46
Diluted (loss) earnings per share	$	(0.00	)	$	0.43
Weighted average basic shares outstanding		26,094,000			25,888,446
Weighted average diluted shares outstanding		26,094,000			27,137,419

NOTE 4— SECURITIES LENDING

As a result of the acquisition of FBR, the Company has an active securities borrowed and loaned business in which it borrows securities from one party and lends them to another. 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.

The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2018 and December 31, 2017:

							Amounts not
							offset in the
							consolidated balance
			Gross amounts		Net amounts		sheets but eligible
			offset in the		included in the		for offsetting
	Gross amounts		consolidated		consolidated		upon counterparty
	recognized		balance sheets (1)		balance sheets		default(2)		Net amounts
As of September 30, 2018
Securities borrowed	$	1,042,295	$	—	$	1,042,295	$	1,042,295	$	—
Securities loaned	$	1,035,408	$	—	$	1,035,408	$	1,035,408	$	—
As of December 31, 2017
Securities borrowed	$	807,089	$	—	$	807,089	$	807,089	$	—
Securities loaned	$	803,371	$	—	$	803,371	$	803,371	$	—

(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)	Includes the amount of cash collateral held/posted.

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NOTE 5— ACCOUNTS RECEIVABLE

The components of accounts receivable, net, include the following:

	September 30,			December 31,
	2018			2017
Accounts receivable	$	22,597		$	15,593
Investment banking fees, commissions and other receivables		16,219			4,199
Unbilled receivables		966			1,023
Total accounts receivable		39,782			20,815
Allowance for doubtful accounts		(824	)		(800	)
Accounts receivable, net	$	38,958		$	20,015

Additions and changes to the allowance for doubtful accounts consist of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	796		$	599		$	800		$	255
Add:  Additions to reserve		192			123			840			827
Less:  Write-offs		(164	)		(94	)		(816	)		(262	)
Less:  Recoveries		—			—			—			(192	)
Balance, end of period	$	824		$	628		$	824		$	628

Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service based auction and liquidation contracts.

NOTE 6— GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $120,129 and $98,771 at September 30, 2018 and December 31, 2017, respectively. The increase in goodwill of $21,358 is due to $2,562 from the finalization of the purchase price accounting for Wunderlich and $18,796 from the acquisition of a business consulting firm in the third quarter of 2018. At September 30, 2018, goodwill is comprised of $98,714 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $15,727 in the Principal Investments - United Online segment. At December 31, 2017, goodwill is comprised of $77,356 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $15,727 in the Principal Investments - United Online segment.

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Intangible assets consisted of the following:

		As of September 30, 2018						As of December 31, 2017
		Gross						Gross
		Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Useful Life	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Customer relationships	4 to 16 Years	$	58,330	$	14,440	$	43,890	$	58,330	$	9,100	$	49,230
Domain names	7 Years		237		75		162		287		61		226
Advertising relationships	8 Years		100		28		72		100		19		81
Internally developed software and other intangibles	0.5 to 4 Years		3,373		2,035		1,338		3,373		1,445		1,928
Trademarks	7 to 8 Years		4,190		881		3,309		4,190		447		3,743
Total			66,230		17,459		48,771		66,280		11,072		55,208
Non-amortizable assets:
Tradenames			2,240		—		2,240		1,740		—		1,740
Total intangible assets		$	68,470	$	17,459	$	51,011	$	68,020	$	11,072	$	56,948

Amortization expense was $2,093 and $2,172 for the three months ended September 30, 2018 and 2017, respectively, and $6,399 and $5,248 for the nine months ended September 30, 2018 and 2017, respectively. At September 30, 2018, estimated future amortization expense is $2,093, $8,369, $7,987, $7,605 and $7,585 for the years ended December 31, 2018 (remaining three months), 2019, 2020, 2021 and 2022, respectively. The estimated future amortization expense after December 31, 2022 is $15,132.

NOTE 7— CREDIT FACILITIES

Credit facilities consist of the following arrangements:

(a) $200,000 Asset Based Credit Facility

On April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $100,000 to $200,000. Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022. On April 19, 2018, the Company entered into an amended and restated consent to the Credit Agreement, pursuant to which Wells Fargo Bank increased the maximum borrowing limit solely for the purposes of the Bon-Ton Transaction from $200,000 to $300,000, and reverts back to $200,000 upon repayment of the amounts borrowed in connection with the Bon-Ton Transaction. The amounts borrowed in connection with the Bon-Ton Transaction were fully repaid as of September 30, 2018 and the maximum borrowing limit under the Credit Agreement reverted back to $200,000. The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom. Such facility allows the Company to borrow up to 50 million British Pounds. Any borrowings on the UK Credit Agreement reduce the availability on the asset based $200,000 credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion. The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more fully described in Note 2(c). All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding. The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. The Company paid Wells Fargo Bank a closing fee in the amount of $500 in connection with the April 2017 amendment to the Credit Agreement. The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. Interest expense totaled $809 and $168 for the three months ended September 30, 2018 and 2017, respectively, and for the nine months ended September 30, 2018 and 2017, $4,138 and $863, respectively. At December 31, 2017, there was $18,505 of letters of credit outstanding under the credit facility.

The Credit Agreement governing the credit facility contains certain covenants, including covenants that limit or restrict the Company’s ability to incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. Upon the occurrence of an event of default under the Credit Agreement, the lender may cease making loans, terminate the Credit Agreement and declare all amounts outstanding under the Credit Agreement to be immediately due and payable. The Credit Agreement specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, nonpayment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, and material judgment defaults.

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(b) $20,000 UOL Line of Credit

On April 13, 2017, UOL, in the capacity as borrower, entered into a credit agreement (the “UOL Credit Agreement”) with Banc of California, N.A. in the capacity as agent and lender. The UOL Credit Agreement provides for a revolving credit facility under which UOL may borrow (or request the issuance of letters of credit) up to $20,000 which amount is reduced by $1,500 commencing on June 30, 2017 and on the last day of each calendar quarter thereafter. The final maturity date is April 13, 2020.  The proceeds of the UOL Credit Agreement can be used (a) for working capital and general corporate purposes and/or (b) to pay dividends or permitted tax distributions to its parent company, subject to the terms of the UOL Credit Agreement. Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans.

UOL paid a commitment fee equal to 1.00% of the aggregate commitments upon the closing of the UOL Credit Agreement. The UOL Credit Agreement also provides for an unused line fee payable quarterly, in arrears, in an amount equal to: (a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank). Any amounts outstanding under the UOL Credit Facility are due at maturity. Interest expense for the three and nine months ended September 30, 2018, totaled $62 (including amortization of deferred loan fees of $34) and $228 (including amortization of deferred loan fees of $102) respectively. At September 30, 2018 and December 31, 2017, there was no outstanding balances under the UOL Credit Agreement.

Each of UOL’s U.S. subsidiaries is a guarantor of all obligations under the UOL Credit Agreement and are parties to the UOL Credit Agreement in such capacity (collectively, the “Secured Guarantors”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of UOL and a subsidiary of the Company, are guarantors of the obligations under the UOL Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares of outstanding capital stock of UOL are pledged as collateral. The obligations under the UOL Credit Agreement are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of UOL and the Secured Guarantors, including a pledge of (a) 100% of the equity interests of the Secured Guarantors and (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India. Such security interests are evidenced by pledge, security and other related agreements.

The UOL Credit Agreement contains certain negative covenants, including those limiting UOL’s and its 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 UOL Credit Agreement requires UOL and its subsidiaries to maintain certain financial ratios. We are in compliance with all covenants in the UOL Credit Agreement at September 30, 2018.

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NOTE 8—NOTES PAYABLE

Senior Notes Payable

Senior notes payable, net, is comprised of the following as of September 30, 2018 and December 31, 2017:

	September 30,			December 31,
	2018			2017
7.50% Senior notes due October 31, 2021	$	46,407		$	35,231
7.50% Senior notes due May 31, 2027		107,429			92,490
7.25% Senior notes due December 31, 2027		100,441			80,500
7.375% Senior notes due May 31, 2023		109,183			—
6.875% Senior notes due September 30, 2023		100,050			—
		463,510			208,221
Less: Unamortized debt issuance costs		(7,727	)		(4,600	)
	$	455,783		$	203,621

(a) $46,407 Senior Notes Payable due October 31, 2021

At September 30, 2018, the Company had $46,407 of Senior Notes Payable (“2021 Notes”) due in 2021, interest payable quarterly at 7.50%. On November 2, 2016, the Company issued $28,750 of the 2021 Notes and during the second half of 2017, the Company issued an additional $6,481 of the 2021 Notes pursuant to the At the Market Issuance Sales Agreement (the “Sales Agreement”) as further discussed below. During the nine months ended September 30, 2018, the Company issued an additional $11,176 of the 2021 Notes. The 2021 Notes are unsecured and due and payable in full on October 31, 2021. In connection with the issuance of the 2021 Notes, the Company received net proceeds of $45,502 (after underwriting commissions, fees and other issuance costs of $905). The outstanding balance of the 2021 Notes was $45,885 (net of unamortized debt issue costs and premiums of $522) and $34,483 (net of unamortized debt issue costs and premiums of $748) at September 30, 2018 and December 31, 2017, respectively. Interest expense on the 2021 Notes totaled $898 and $643 for the three months ended September 30, 2018 and 2017, respectively, and $2,380 and $1,829 for the nine months ended September 30, 2018 and 2017, respectively.

(b) $107,429 Senior Notes Payable due May 31, 2027

At September 30, 2018, the Company had $107,429 of Senior Notes Payable (“2027 Notes”) due in 2027, interest payable quarterly at 7.50%. On May 31, 2017, the Company issued $60,375 of the 7.5% 2027 Notes and during the second half of 2017, the Company issued an additional $32,115 of the 7.50% 2027 Notes pursuant to the Sales Agreement. During the nine months ended September 30, 2018, the Company issued an additional $14,939 of the 7.50% 2027 Notes. The 2027 Notes are unsecured and due and payable in full on May 31, 2027. In connection with the issuance of the 7.50% 2027 Notes, the Company received net proceeds of $105,621 (after underwriting commissions, fees and other issuance costs of $1,808). The outstanding balance of the 7.50% 2027 Notes at September 30, 2018 and December 31, 2017 was $105,860 (net of unamortized debt issue costs and premium of $1,569) and $90,904 (net of unamortized debt issuance costs and premium of $1,586), respectively. Interest expense on the 2027 Notes totaled $2,034 and $1,407 for the three months ended September 30, 2018 and 2017, respectively, and $5,672 and $1,810 for the nine months ended September 30, 2018 and 2017, respectively.

(c) $100,441 Senior Notes Payable due December 31, 2027

At September 30, 2018, the Company had $100,441 of Senior Notes Payable (“7.25% 2027 Notes”) due in December 2027, interest payable quarterly at 7.25%. In December 2017, the Company issued $80,500 of the 7.25% 2027 Notes and during the nine months ended September 30, 2018, the Company issued an additional $19,941 of the 7.25% 2027 Notes pursuant to the Sales Agreement. The 7.25% 2027 Notes are unsecured and due and payable in full on December 31, 2027. In connection with the issuance of the 7.25% 2027 Notes, the Company received net proceeds of $97,825 (after underwriting commissions, fees and other issuance costs of $2,616). The outstanding balance of the 7.25% 2027 Notes was $98,023 (net of unamortized debt issue costs and premium of $2,418) and $78,234 (net of unamortized debt issue costs of $2,266) at September 30, 2018 and December 31, 2017, respectively. Interest expense on the 7.25% 2027 Notes totaled $1,871 and $5,155 for the three and nine months ended September 30, 2018, respectively.

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(d) $109,183 Senior Notes Payable due May 31, 2023

At September 30, 2018, the Company had $109,183 of Senior Notes Payable (“May 2023 Notes”) due in May 2023, interest payable quarterly at 7.375%. In May 2018, the Company issued $100,050 of the May 2023 Notes and during the second and third quarter of 2018, the Company issued an additional $9,133 of the May 2023 Notes pursuant to the Sales Agreement. The May 2023 Notes are unsecured and due and payable in full on May 31, 2023. In connection with the issuance of the May 2023 Notes, the Company received net proceeds of $107,248 (after underwriting commissions, fees and other issuance costs of $1,935). The outstanding balance of the May 2023 Notes was $107,396 (net of unamortized debt issue costs and premium of $1,787) at September 30, 2018. Interest expense on the May 2023 Notes totaled $2,047 and $3,023 for the three and nine months ended September 30, 2018, respectively.

(e) $100,050 Senior Notes Payable due September 30, 2023

At September 30, 2018, the Company had $100,050 of Senior Notes Payable (“September 2023 Notes”) due in September 2023, interest payable quarterly at 6.875%. The September 2023 notes were issued in September 2018. The September 2023 Notes are unsecured and due and payable in full on September 30, 2023. In connection with the issuance of the September 2023 Notes, the Company received net proceeds of $98,603 (after underwriting commissions, fees and other issuance costs of $1,447). The outstanding balance of the September 2023 Notes was $98,619 (net of unamortized debt issue costs of $1,431) at September 30, 2018. Interest expense on the September 2023 Notes totaled $398 for the three and nine months ended September 30, 2018.

(f)       At Market Issuance Sales Agreement to Issue Up to Aggregate of $50,000 of 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes or May 2023 Notes

On June 5, 2018, the Company filed a prospectus supplement pursuant to which the Company may sell from time to time, at the Company’s option up to an aggregate of $50,000, including notes offered pursuant to the prior prospectus supplement, of the 2021 Notes, the 7.50% 2027 Notes, the 7.25% 2027 Notes and the May 2023 Notes. On December 19, 2017, the Company previously entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc., pursuant to which the Company may offer to sell, from time to time, the 2021 Notes, the 7.50% 2027 Notes and the 7.25% 2027 Notes. As of June 5, 2018, the Company sold Notes having an aggregate offering price of $6,343 under the prior prospectus supplement dated April 25, 2018, leaving up to $43,657 available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes sold pursuant to the Sales Agreement on or following June 5, 2018 will be issued pursuant to a prospectus dated April 6, 2018, as supplemented by a prospectus supplement dated June 5, 2018, in each case filed with the SEC pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-223789), which was declared effective by the SEC on April 6, 2018. As of September 30, 2018, the Company sold Notes pursuant to the June 5, 2018 prospectus having an aggregate offering price of $36,903 (inclusive of the $6,300 sold under the April 25, 2018 prospectus supplement), leaving up to $13,097 available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes will be issued pursuant to the Indenture, dated as of November 2, 2016, as supplemented by a First Supplemental Indenture, dated as of November 2, 2016, the Second Supplemental Indenture, dated as of May 31, 2017, and the Third Supplemental Indenture, dated as of December 13, 2017 and the Fourth Supplemental Indenture, dated as of May 17, 2018, each between the Company and U.S. Bank, National Association, as trustee. Future sales of the 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes and May 2023 Notes pursuant to the Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the notes and the Company’s capital needs. At September 30, 2018, the Company had an additional $12,997 of 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes or May 2023 Notes that may be sold pursuant to the Sales Agreement. There can be no assurance that the Company will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that the Company may deem appropriate.

Notes Payable

Notes payable include notes payable to a clearing organization for one of the Company’s broker dealers. The notes payable accrue interest at rates set at each anniversary date, ranging from prime rate plus 0.25% to 2.0% (5.25% to 6.50% at September 30, 2018). Interest is payable annually. The principal payments on the notes payable are due annually in the amount of $357 on January 31, $214 on September 30, and $121 on October 31. The notes payable mature at various dates from September 30, 2018 through January 31, 2022. At September 30, 2018 and December 31, 2017, the outstanding balance for the notes payable was $1,671 and $2,243, respectively. Interest expense was $29 and $86 for the three and nine months ended September 30, 2018. Interest expense was $34 during the period from July 3, 2017 (date of acquisition) to September 30, 2017.

On April 19, 2018, the Company borrowed $51,020 from GACP II, L.P., a direct lending fund managed by Great American Capital Partners, LLC, a wholly owned subsidiary of the Company. In accordance with the note payable, the Company was advanced $50,000 and the note payable included an origination fee of $1,020 that increased the face value of the note payable to $51,020. Interest accrued at the three-month LIBOR rate plus 9%. The note payable was due in September 2018 and was fully repaid in August 2018. The note was collateralized by the proceeds generated from the joint venture liquidation of inventory and real estate related to a retail liquidation agreement. Interest expense was $1,103 (including amortization of deferred loan fees of $620) and $2,721 (including amortization of deferred loan fees of $1,110) for three and nine months ended September 30, 2018, respectively.

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NOTE 9— REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers by reportable segment for the three months ended September 30, 2018 is as follows:

	Three Months Ended September 30, 2018
	Reportable Segment
								Principal
				Auction and		Valuation and		Investments -
	Capital Markets			Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	35,902		$	—	$	—	$	—	$	35,902
Wealth and asset management fees		19,171			—		—		—		19,171
Commissions, fees and reimbursed expenses		10,533			2,399		9,404		—		22,336
Subscription services		—			—		—		9,151		9,151
Service contract revenues		—			108		—		—		108
Advertising and other		—			—		—		2,276		2,276
Total revenues from contracts with customers		65,606			2,507		9,404		11,427		88,944
Other sources of revenue:
Interest income - Securities lending		8,954			—		—		—		8,954
Trading loss on investments		(3,462	)		—		—		—		(3,462	)
Other		5,245			—		—		—		5,245
Total revenues	$	76,343		$	2,507	$	9,404	$	11,427	$	99,681

Revenue from contracts with customers by reportable segment for the nine months ended September 30, 2018 is as follows:

	Nine Months Ended September 30, 2018
	Reportable Segment
							Principal
			Auction and		Valuation and		Investments -
	Capital Markets		Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	84,927	$	—	$	—	$	—	$	84,927
Wealth and asset management fees		56,928		—		—		—		56,928
Commissions, fees and reimbursed expenses		31,546		33,212		27,383		—		92,141
Subscription services		—		—		—		27,335		27,335
Service contract revenues		—		11,648		—		—		11,648
Advertising and other		—		—		—		6,925		6,925
Total revenues from contracts with customers		173,401		44,860		27,383		34,260		279,904
Other sources of revenue:
Interest income - Securities lending		22,836		—		—		—		22,836
Trading gain on investments		1,449		—		—		—		1,449
Other		16,771		—		—		—		16,771
Total revenues	$	214,457	$	44,860	$	27,383	$	34,260	$	320,960

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. Revenues by geographic region by segment is included in Note 16 – Business Segments.

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The following provides detailed information on the recognition of our revenues from contracts with customers:

Corporate finance and investment banking fees. Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.

Wealth and asset management fees. Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.

Commissions, fees and reimbursed expenses. Commissions and other fees from clients for trading activities are earned from equity securities transactions executed as agent or principal are recorded at a point in time on a trade date basis. Commission, fees and reimbursed expenses earned on the sale of goods at auction and liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer. Revenues from fees and reimbursed expenses for valuation services to clients are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the completed services to the customer.

Subscription services. Subscription service revenues are derived primarily from fees charged to pay accounts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period.

Service contract revenues. Service contract revenues are primarily earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized over time when the performance obligation is satisfied. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of services to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or decrease the transaction price upon completion of our performance obligations under the contract. Estimated amounts are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not occur. Our estimates of variable consideration and determination of whether or not to include estimated amounts in the transaction price are based on an assessment of our anticipated performance under the contract taking into consideration all historical, current and forecasted information that is reasonably available to us.

Advertising and other. Advertising and other revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements and the sale of product revenues from the sale of mobile broadband service devices to customers. Advertising revenues are recognized in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available. Sale of product revenues also includes the related shipping and handling fees.

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Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do 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 at September 30, 2018. Corporate finance and investment banking fees and retail liquidation engagement 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 at September 30, 2018.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied. Receivables related to revenues from contracts with customers totaled $38,958 and $20,015 at September 30, 2018 and December 31, 2017, respectively. We had no significant impairments related to these receivables during the three and nine months ended September 30, 2018. Our deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, valuation and appraisal engagements and subscription services where the performance obligation has not yet been satisfied. Deferred revenue at September 30, 2018 and December 31, 2017 was $3,205 and $3,141, respectively. During the three and nine months ended September 30, 2018, we recognized revenue of $5,423 and $9,889, respectively, that was recorded as deferred revenue at the beginning of the period.

Contract Costs

Contract costs include: (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) costs to fulfill auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue is recognized over time when the performance obligation is satisfied.

At September 30, 2018, capitalized costs to fulfill a contract were $2,387, which is recorded in prepaid expenses and other assets in the condensed consolidated balance sheet. For the three and nine months ended September 30, 2018, we recognized expenses and related capitalized costs to fulfill a contract of $0 and $602, respectively. There were no significant impairment charges recognized in relation to these capitalized costs during the three and nine months ended September 30, 2018.

NOTE 10— INCOME TAXES

The Tax Reform Act was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, provides an exemption from U.S. federal tax for dividends received from foreign subsidiaries, and creates new taxes on certain foreign sourced earnings. As of the completion of these financial statements and related disclosures, we have not completed our accounting for the tax effects of the Tax Reform Act; however, we have made a reasonable estimate of such effects and recorded a provisional tax expense of $13,052, which is included as a component of income tax expense in the fourth quarter of 2017 and is comprised of (a) $12,954 related to the remeasurement of deferred tax assets and liabilities in the United States and (b) $98 related to the transition tax on foreign earnings. This provisional tax expense incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act, and may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Reform Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Reform Act no later than the fourth quarter of 2018. Future adjustments made to the provisional effects will be reported as a component of income tax expense in the reporting period in which any such adjustments are determined.

The Company’s effective income tax rate was a provision of 24.9% and a benefit of 80.5% for the nine months ended September 30, 2018 and 2017, respectively. During the nine months ended September 30, 2017, the Company elected to treat the acquisition of UOL as a taxable business combination for income tax purposes in accordance with Internal Revenue Code Section 338(g) (“IRS Code Section 338(g)”). This resulted in the Company foregoing the income tax attributes of UOL that existed at the acquisition date which included net operating loss carryforwards, capital loss carryforwards and foreign tax credits. The income tax election in accordance with IRS Code Section 338(g) provides the Company with a tax step-up in the basis of the intangible assets and goodwill acquired for tax purposes. In accordance with ASC 740, the impact of the election in accordance with IRS Code Section 338(g) on deferred income taxes resulted in the recording of a tax benefit in the amount of $8,389 during the nine months ended September 30, 2017.

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As of September 30, 2018, the Company had federal net operating loss carryforwards of approximately $63,445 and state net operating loss carryforwards of $76,978. The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2029 through December 31, 2034. The state net operating loss carryforwards will expire in the tax years commencing in December 31, 2029.

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 September 30, 2018, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance. The Company believes that it is more likely than not that the Company will not be able to utilize the benefits related to certain state net operating loss and capital loss carryforwards and has provided a full valuation allowance in the amount of $4,694 against these deferred tax assets.

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 federal, 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, 2014 to 2017.

NOTE 11— EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic common shares outstanding exclude 387,365 common shares in 2018 and 453,365 common shares in 2017 that are held in escrow and subject to forfeiture. The common shares held in escrow includes 387,365 common shares that are subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition of Wunderlich, and in 2017 excluded 66,000 common shares held in escrow issued to the former members of Great American Group, LLC that were subject to forfeiture upon the final settlement of claims for goods held for sale in connection with the transaction with Alternative Asset Management Acquisition Corp. in 2009. In August 2018, the shares held in escrow issued to the former members of Great American Group, LLC were released and 21,233 of the 66,000 shares held in escrow were cancelled to satisfy the resolution of escrow claims. The shares that remain in escrow are subject to forfeiture upon the final settlement of claims as more fully described in the related escrow instructions. Dilutive common shares outstanding includes contingently issuable shares that are currently in escrow and subject to release if the conditions for the final settlement of claims in accordance with the escrow instructions were satisfied at the end of the respective periods.

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Basic and diluted earnings per share was calculated as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net income attributable to B. Riley Financial, Inc.	$	2,814	$	368	$	24,314	$	17,669
Weighted average shares outstanding:
Basic		25,968,997		26,059,490		25,856,339		22,180,808
Effect of dilutive potential common shares:
Restricted stock units and warrants		705,557		1,193,007		740,087		816,841
Contingently issuable shares		179,707		387,365		179,707		387,365
Diluted		26,854,261		27,639,862		26,776,133		23,385,014
Basic income per share	$	0.11	$	0.01	$	0.94	$	0.80
Diluted income per share	$	0.10	$	0.01	$	0.91	$	0.76

NOTE 12— COMMITMENTS AND CONTINGENCIES

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 our 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 our business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In view of the number and diversity of claims against our company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, we cannot state with certainty what the eventual outcome of pending litigation or other claims will be.  Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

On January 5, 2017, complaints filed in November 2015 and May 2016 naming MLV & Co. (“MLV”), a broker-dealer subsidiary of FBR, as a defendant in putative class action lawsuits alleging claims under the Securities Act, in connection with the offerings of Miller Energy Resources, Inc. (“Miller”) have been consolidated. The Master Consolidated Complaint, styled Gaynor v. Miller et al., is pending in the United States District Court for the Eastern District of Tennessee, and, like its predecessor complaints, continues to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged material misrepresentations and omissions in the registration statement and prospectuses issued in connection with six offerings (February 13, 2013; May 8, 2013; June 28, 2013; September 26, 2013; October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate offering price of approximately $151,000. The plaintiffs seek unspecified compensatory damages and reimbursement of certain costs and expenses. In August 2017, the Court granted Defendant’s Motion to Dismiss on Section 12 claims and found that the plaintiffs had not sufficiently alleged a corrective disclosure prior to August 6, 2015, when an SEC civil action was announced. Defendants’ answer was filed on September 25, 2017. Plaintiffs have filed motions for class certification and to remand the case to state court following a positive ruling in an unrelated case by the U.S. Supreme Court. Although MLV is contractually entitled to be indemnified by Miller in connection with this lawsuit, Miller filed for bankruptcy in October 2015 and this likely will decrease or eliminate the value of the indemnity that MLV receives from Miller.

In February 2017, certain former employees filed an arbitration claim with FINRA against WSI alleging misrepresentations in the recruitment of claimants to join WSI. Claimants also allege that WSI failed to support their mortgage trading business resulting in the loss of opportunities during their employment with WSI. Claimants are seeking $10,000 in damages. WSI has counterclaimed alleging that claimants misrepresented their process for doing business, particularly their capital needs, resulting in substantial losses to WSI. WSI believes the claims are meritless and intends to vigorously defend the action.

In March 2017, United Online, Inc. received a letter from PeopleConnect, Inc. (formerly, Classmates, Inc.) (“Classmates”) regarding a notice of investigation received from the Consumer Protection Divisions of the District Attorneys’ offices of four California counties (“California DAs”). These entities suggest that Classmates may be in violation of California codes relating to unfair competition, false or deceptive advertising, and auto-renewal practices. Classmates asserts that these claims are indemnifiable claims under the purchase agreement between United Online, Inc. and the buyer of Classmates. A tolling agreement with certain California District Attorneys has been signed and informal discovery and production is in process. At the present time, the financial impact to the Company, if any, cannot be estimated.

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In July 2017, an arbitration claim was filed with FINRA by Dominick & Dickerman LLC and Michael Campbell against WSI and Gary Wunderlich with respect to the acquisition by Wunderlich Investment Company, Inc. (“WIC”) (the parent corporation of WSI) of certain assets of Dominick & Dominick LLC in 2015. The Claimants allege that respondents overvalued WIC so that the purchase price paid to the Claimants in shares of WIC stock was artificially inflated. The Statement of Claim includes claims for common law fraud, negligent misrepresentation, and breach of contract. Claimants are seeking damages of approximately $8,000 plus unspecified punitive damages. Respondents believe the claims are meritless and intend to vigorously defend the action.

In September 2017, Frontier State Bank (“Frontier”) filed a lawsuit against Wunderlich Loan Capital Corp., a subsidiary of WIC (“WLCC”), seeking rescission of the purchase a residential mortgage in the amount of $1,300. Vanguard Funding, LLC (“Vanguard”) sold the mortgage to WLCC who then assigned its rights to Frontier. Shortly after closing, Frontier was advised that the mortgage had been previously pledged to another lender. In the lawsuit against WLCC, it is alleged that WLCC did not deliver the mortgage to Frontier with clear title. In September 2018, the matter was settled and general releases were exchanged.

NOTE 13— SHARE-BASED PAYMENTS

(a) Amended and Restated 2009 Stock Incentive Plan

During the nine months ended September 30, 2018, the Company granted restricted stock units representing 424,235 shares of common stock with a total fair value of $8,855 to certain employees and directors of the Company under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “Plan”). During the year ended December 31, 2017, the Company granted restricted stock units representing 486,049 shares of common stock with a total fair value of $7,732 to certain employees and directors of the Company under the Plan. Share-based compensation expense for such restricted stock units was $1,714 and $1,410 for the three months ended September 30, 2018 and 2017, respectively, and $4,085 and $3,624 for nine months ended September 30, 2018 and 2017, respectively.

The restricted stock units generally vest over a period of one to three years based on continued service. In determining the fair value of restricted stock units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S. Treasuries for a maturity matching the expected holding period.

As of September 30, 2018, the expected remaining unrecognized share-based compensation expense of $12,661 will be expensed over a weighted average period of 2.2 years.

A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		792,264		$	13.30
Granted		424,235			20.87
Vested		(304,599	)		13.17
Forfeited		(9,057	)		12.49
Nonvested at September 30, 2018		902,843		$	16.91

The per-share weighted average grant-date fair value of restricted stock units was $20.87 during the nine months ended September 30, 2018. There were 304,599 restricted stock units with a fair value of $4,012 that vested during the nine months ended September 30, 2018 under the Plan.

(b) Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan

In connection with the acquisition of FBR on June 1, 2017, the equity awards previously granted or available for issuance under the FBR & Co. 2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”) may be issued under the Plan. During the nine months ended September 30, 2018, the Company granted restricted stock units representing 186,662 shares of common stock with a total grant date fair value of $3,869 under the FBR Stock Plan. During the year ended December 31, 2017, the Company granted restricted stock units representing 871,317 shares of common stock with a total fair value of $14,577 to certain employees under the FBR Stock Plan. Share-based compensation expense was $1,321 and $4,509 for the three and nine months ended September 30, 2018, respectively. Share-based compensation was $1,383 and $1,687 for the three and nine months ended September 30, 2017, respectively. As of September 30, 2018, the expected remaining unrecognized share-based compensation expense of $9,468 will be expensed over a weighted average period of 2.3 years.

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A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		1,066,133		$	16.15
Granted		186,662			20.73
Vested		(347,265	)		15.33
Forfeited		(84,238	)		15.85
Nonvested at September 30, 2018		821,292		$	17.57

The per-share weighted average grant-date fair value of restricted stock units was $20.73 during the nine months ended September 30, 2018. There were 347,265 restricted stock units with a fair value of $5,324 that vested during the nine months ended September 30, 2018 under the FBR Stock Plan.

NOTE 14— NET CAPITAL REQUIREMENTS

B. Riley & Co., LLC (“BRC”), B. Riley FBR, MLV and B. Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and are 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 subsidiaries to maintain minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, they are subject to the minimum net capital requirements promulgated by the SEC. As of September 30, 2018, BRC had net capital of $350, which was $100 in excess of its required net capital of $250 (net capital ratio of 3.50 to 1); B. Riley FBR had net capital of $76,053, which was $74,059 in excess of its required net capital of $1,994 (net capital ratio of 1.03 to 1); MLV had net capital of $657, which was $557 in excess of its required net capital of $100 (net capital ratio of 1.18 to 1), and BRWM had net capital of $4,128, which was $3,514 in excess of its required net capital of $614 (net capital ratio of 1.17 to 1).

NOTE 15— RELATED PARTY TRANSACTIONS

At September 30, 2018, amounts due from related parties include $6,807 from GACP I, L.P. (“GACP I”) and $1,943 from GACP II, L.P. (“GACP II”) for management fees, incentive fees and other operating expenses and $1,171 due from CA Global Partners (“CA Global”) for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Ptrs. At December 31, 2017, amounts due from related parties include $5,585 from GACP I, $52 from GACP II, and $52 from CA Global for management fees, incentive fees and other operating expenses.

On April 19, 2018, the Company borrowed $51,020 from GACP II, L.P., a direct lending fund managed by Great American Capital Partners, LLC, a wholly owned subsidiary of the Company. The note was fully repaid as of September 30, 2018. Interest expense was $1,103 (including amortization of deferred loan fees of $620) and $2,721 (including amortization of deferred loan fees $1,110) for three and nine months ended September 30, 2018, respectively. See Note 8 for additional information.

NOTE 16— BUSINESS SEGMENTS

The Company’s operating segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance internally. The Company has several operating subsidiaries through which it delivers specific services. The Company provides investment banking, corporate finance, securities lending, restructuring, consulting, research, sales and trading and wealth management services to corporate, institutional and high net worth clients. The Company also 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 and valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs. As a result of the acquisition of UOL on July 1, 2016, the Company provides consumer services and products over the Internet.

The Company’s business is classified into the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment and Principal Investments - United Online segment. These reportable segments are all distinct businesses, each with a different marketing strategy and management structure.

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The following is a summary of certain financial data for each of the Company’s reportable segments:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Capital Markets reportable segment:
Revenues - Services and fees	$	67,389		$	56,782		$	191,621		$	96,181
Interest income - Securities lending		8,954			6,897			22,836			9,115
Total revenues		76,343			63,679			214,457			105,296
Selling, general, and administrative expenses		(57,207	)		(53,955	)		(168,559	)		(87,753	)
Restructuring charge		(428	)		(3,322	)		(2,457	)		(7,245	)
Interest expense - Securities lending		(6,425	)		(4,950	)		(16,317	)		(6,515	)
Depreciation and amortization		(1,309	)		(1,636	)		(4,428	)		(2,167	)
Segment income (loss)		10,974			(184	)		22,696			1,616
Auction and Liquidation reportable segment:
Revenues - Services and fees		2,459			7,376			44,812			43,179
Revenues - Sale of goods		48			1			48			1
Total revenues		2,507			7,377			44,860			43,180
Direct cost of services		(838	)		(3,385	)		(12,263	)		(25,482	)
Cost of goods sold		(24	)		(2	)		(41	)		(2	)
Selling, general, and administrative expenses		(1,289	)		(1,963	)		(7,787	)		(6,562	)
Depreciation and amortization		(7	)		(5	)		(23	)		(15	)
Segment income		349			2,022			24,746			11,119
Valuation and Appraisal reportable segment:
Revenues - Services and fees		9,404			9,043			27,383			24,799
Direct cost of services		(4,067	)		(3,778	)		(12,388	)		(11,031	)
Selling, general, and administrative expenses		(2,379	)		(2,253	)		(7,138	)		(6,395	)
Depreciation and amortization		(56	)		(43	)		(159	)		(130	)
Segment income		2,902			2,969			7,698			7,243
Principal Investments - United Online segment:
Revenues - Services and fees		11,403			12,249			34,170			38,504
Revenues - Sale of goods		24			78			90			220
Total revenues		11,427			12,327			34,260			38,724
Direct cost of services		(3,251	)		(2,975	)		(9,082	)		(9,711	)
Cost of goods sold		(28	)		(122	)		(101	)		(311	)
Selling, general, and administrative expenses		(2,348	)		(2,433	)		(6,321	)		(8,536	)
Depreciation and amortization		(1,682	)		(1,703	)		(5,040	)		(5,313	)
Restructuring charge		—			(150	)		—			(633	)
Segment income		4,118			4,944			13,716			14,220
Consolidated operating income from reportable segments		18,343			9,751			68,856			34,198
Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018; and restructuring charge of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively.		(5,505	)		(8,395	)		(16,938	)		(19,571	)
Interest income		442			76			736			358
Income (loss) on equity investments		828			(157	)		5,049			(157	)
Interest expense		(9,340	)		(2,510	)		(23,926	)		(5,195	)
Income (loss) before income taxes		4,768			(1,235	)		33,777			9,633
(Provision for) benefit from income taxes		(2,046	)		1,357			(8,412	)		7,753
Net income		2,722			122			25,365			17,386
Net (loss) income attributable to noncontrolling interests		(92	)		(246	)		1,051			(283	)
Net income attributable to B. Riley Financial, Inc.	$	2,814		$	368		$	24,314		$	17,669

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The following table presents revenues by geographical area:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenues:
Revenues - Services and fees:
North America	$	90,649	$	85,437	$	296,718	$	200,809
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues - Services and fees	$	90,655	$	85,450	$	297,986	$	202,663
Revenues - Sale of goods
North America	$	72	$	79	$	138	$	221
Revenues - Interest income - Securities lending:
North America	$	8,954	$	6,897	$	22,836	$	9,115
Total Revenues:
North America	$	99,675	$	92,413	$	319,692	$	210,145
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues	$	99,681	$	92,426	$	320,960	$	211,999

The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area:

	September 30,		December 31,
	2018		2017
Long-lived Assets - Property and Equipment, net:
North America	$	11,143	$	11,977
Australia		—		—
Europe		—		—
Total	$	11,143	$	11,977

Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed.

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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, assume responsibility for the accuracy and completeness of the forward-looking statements. 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 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.”

Risk factors that could cause actual results to differ from those contained in the forward-looking statements include but are not limited to risks related to: volatility in our revenues and results of operations; changing conditions in the financial markets; our ability to generate sufficient revenues to achieve and maintain profitability; the short term nature of our engagements; the accuracy of our estimates and valuations of inventory or assets in “guarantee” based engagements; competition in the asset management business; potential losses related to our auction or liquidation engagements; our dependence on communications, information and other systems and third parties; potential losses related to purchase transactions in our auction and liquidations business; the potential loss of financial institution clients; potential losses from or illiquidity of our proprietary investments; changing economic and market conditions; 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; failure to successfully compete in any of our segments; loss of key personnel; our ability to borrow under our credit facilities or at-the-market offering as necessary; failure to comply with the terms of our credit agreements or senior notes; our ability to meet future capital requirements; our ability to realize the benefits of our completed acquisitions, including our ability to achieve anticipated opportunities and operating cost savings, and accretion to reported earnings estimated to result from completed and proposed acquisitions in the time frame expected by management or at all; the possibility that our proposed acquisition of magicJack VocalTee Ltd. (“magicJack”) does not close when expected or at all; our ability to promptly and effectively integrate our business with that of magicJack if such transaction closes; the reaction to the magicJack acquisition of our and magicJack’s customers, employees and counterparties; and the diversion of management time on acquisition-related issues. 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,” “B. Riley,” “B. Riley Financial,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries.

Overview

B. Riley Financial, Inc. (NASDAQ: RILY) and its subsidiaries provide collaborative financial services and solutions through several operating subsidiaries, including:

● B. Riley FBR, Inc. (“B. Riley FBR”) is a leading, full service investment bank providing financial advisory, corporate finance, research, securities lending and sales & trading services to corporate, institutional and high net worth individual clients. B. Riley FBR was formed in November 2017 through the merger of B. Riley & Co, LLC (“BRC”) and FBR Capital Markets & Co.; the name of the combined broker dealer was subsequently changed to B. Riley FBR, Inc. FBR Capital Markets & Co. was acquired by B. Riley Financial in June 2017.

● Wunderlich Securities, Inc., acquired by B. Riley Financial in July 2017, provides comprehensive wealth management and brokerage services to individuals and families, corporations and non-profit organizations, including qualified retirement plans, trusts, foundations and endowments. In June 2018, Wunderlich Securities, Inc. changed its name to B. Riley Wealth Management, Inc.

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● B. Riley Capital Management, LLC, a Securities and Exchange Commission (“SEC”) registered investment advisor, which includes:

○ B. Riley Asset Management, an advisor to certain private funds and to institutional and high net worth investors;

○ B. Riley Wealth Management, a multi-family office practice and wealth management firm focused on the needs of ultra-high net worth individuals and families; and

○ Great American Capital Partners, LLC (“GACP”), the general partner of two private funds, GACP I, L.P. and GACP II, L.P., both direct lending funds that provide senior secured loans and second lien secured loan facilities to middle market public and private U.S. companies.

● GlassRatner Advisory & Capital Group LLC (“GlassRatner”), a specialty financial advisory services firm we acquired on July 31, 2018, provides consulting services to shareholders, creditors and companies, including due diligence, fraud investigations, corporate litigation support, crisis management and bankruptcy services. The addition of GlassRatner, strengthens B. Riley’s diverse platform and compliments the restructuring services provided by B. Riley FBR.

● Great American Group, LLC, a leading provider of asset disposition and auction solutions to a wide range of retail and industrial clients.

● Great American Group Advisory and Valuation Services, LLC, a leading provider of appraisal and valuation services for asset based lenders, private equity firms and corporate clients.

We also pursue a strategy of investing in or acquiring companies which we believe have attractive investment return characteristics. On July 1, 2016, we acquired United Online, Inc. (“UOL”) as part of our principal investment strategy.

● UOL is a communications company that offers subscription services and products, consisting of Internet access services and devices under the NetZero and Juno brands primarily sold in the United States.

We are headquartered in Los Angeles with offices in major cities throughout the United States including New York, Chicago, Boston, Memphis, and Metro Washington D.C.

For financial reporting purposes we classify our businesses into four segments: (i) Capital Markets; (ii) Auction and Liquidation; (iii) Valuation and Appraisal; and (iv) Principal Investments – United Online.

Capital Markets Segment. Our Capital Markets segment provides a full array of investment banking, corporate finance, consulting, research, securities lending, wealth management, sales and trading services to corporate, institutional and high net worth clients. Our corporate finance and investment banking services include merger and acquisitions as well as restructuring advisory services to public and private companies, initial and secondary public offerings, and institutional private placements. In addition, we trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. Our Capital Markets segment also includes our asset management businesses that manage various private and public funds for institutional and individual investors.

Auction and Liquidation Segment. Our Auction and Liquidation segment utilizes our significant industry experience, a scalable network of independent contractors and industry-specific advisors to tailor our services to the specific needs of a multitude of clients, logistical challenges and distressed circumstances. Furthermore, our scale and pool of resources allow us to offer our services across North American as well as parts of Europe, Asia and Australia. Our Auction and Liquidation segment operates through two main divisions, retail store liquidations and wholesale and industrial assets dispositions. Our wholesale and industrial assets dispositions division operates through limited liability companies that are controlled by us.

Valuation and Appraisal Segment. Our Valuation and Appraisal segment provides valuation and appraisal services to financial institutions, lenders, private equity firms and other providers of capital. These services primarily include the valuation of assets (i) for purposes of determining and monitoring the value of collateral securing financial transactions and loan arrangements and (ii) in connection with potential business combinations. Our Valuation and Appraisal segment operates through limited liability companies that are majority owned by us.

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Principal Investments – United Online Segment. Our Principal Investments - United Online segment consists of businesses which have been acquired primarily for attractive investment return characteristics. Currently, this segment includes UOL, a company that offers consumer subscription services consisting of Internet access under the NetZero and Juno brands. Internet access includes paid dial-up, mobile broadband and DSL subscription services. We also offer email, Internet security, web hosting services, and other services.

Recent Developments

On September 6, 2018, we entered into an underwriting agreement (the “Underwriting Agreement”) with B. Riley FBR, as representative of several underwriters named in the Underwriting Agreement, pursuant to which we agreed to sell to the underwriters up to an aggregate principal amount of $87,000,000 of the September 2023 Notes, plus an additional $13,050,000 aggregate principal amount to cover underwriter overallotments. As of September 30, 2018, the Company sold $100,050,000 of the September 2023 Notes. The September 2023 Notes were issued pursuant to the Indenture, dated as of November 2, 2016, as supplemented by a First Supplemental Indenture, dated as of November 2, 2016, a Second Supplemental Indenture, dated as of May 31, 2017, a Third Supplemental Indenture, dated as of December 13, 2017, a Fourth Supplemental Indenture, dated as of May 17, 2018, and a Fifth Supplemental Indenture, dated as of September 11, 2018 (as supplemented, the “Indenture”), each between the Company and U.S. Bank, National Association, as trustee. The September 2023 Notes sold under the Underwriting Agreement were issued pursuant to a prospectus dated April 6, 2018, as supplemented by a prospectus supplement dated September 7, 2018, each filed with the SEC pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-223789), which was declared effective by the SEC on April 6, 2018.

On June 17, 2018, we entered into various agreements pursuant to which we agreed to provide financial support to Vintage Capital Management, LLC (“Vintage Capital”) in an indirect acquisition of Rent-A-Center, Inc. (“Rent-A-Center”). Specifically, Vintage Capital, through its affiliates Vintage Rodeo Parent, LLC, a Delaware limited liability company (the “Parent”), and Vintage Rodeo Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of the Parent (the “Merger Sub”), entered into an Agreement and Plan of Merger with Rent-A-Center, dated as of June 17, 2018 (the “Merger Agreement”), pursuant to which the Merger Sub will merge with and into Rent-A-Center, whereby Rent-A-Center will be the surviving corporation and become a wholly-owned subsidiary of the Parent.  Vintage Capital agreed to pay $15.00 per share in cash for each common share of Rent-A-Center, which including the assumption of net debt, represents a total transaction value of approximately $1.365 billion. We, along with Vintage Capital, our subsidiary GACP, and affiliates of Guggenheim Corporate Funding, LLC (“Guggenheim”), entered into a Debt Commitment Letter dated June 17, 2018, pursuant to which we agreed to provide an aggregate principal amount of approximately $1.1 billion in debt to finance the transaction. We also entered into an Equity Commitment Letter, dated as of June 17, 2018, with Vintage Rodeo, L.P. (the “Partnership”) and the Parent, pursuant to which we agreed to contribute equity in an amount of up to $429 million (the “Equity Commitment”). Additionally, we entered into a corresponding Subscription Agreement and Side Letter Agreement, each dated as of June 17, 2018, pursuant to which the Equity Commitment will be allocated to cash subscriptions of limited partnership interest for up to (i) $315 million of common limited partnership interests of the Partnership, and (ii) $114 million of 13% PIK preferred limited partnership interests of the Partnership.  Further, we entered into a Limited Guarantee on June 17, 2018, in favor of Rent-A-Center, pursuant to which we, together with Vintage RTO, L.P., agreed to guarantee, jointly and severally, the due and punctual payment, performance and discharge when required by the Parent or the Merger Sub to Rent-A-Center of all of the liabilities and obligations of the Parent or Merger Sub under the Merger Agreement. We are also parties to a Mutual Indemnity/Contribution Agreement, dated as of June 17, 2018, pursuant to which (i) we agreed to indemnify and hold harmless Vintage RTO, L.P. and Samjor Family, LP (collectively, the “Vintage Guarantors”) from damages and liabilities arising out of obligations under the Limited Guarantee caused by a default in funding by us or our affiliates, and (ii) the Vintage Guarantors agreed, jointly and severally, to indemnify and hold harmless us and our affiliates from damages and liabilities arising out of all other obligations under the Limited Guarantee.

On June 5, 2018, the Company filed a prospectus supplement pursuant to which the Company may sell from time to time, at the Company’s option up to an aggregate of $50.0 million, including notes offered pursuant to the prior prospectus supplement, of the 2021 Notes, the 7.50% 2027 Notes, the 7.25% 2027 Notes and the May 2023 Notes. On December 19, 2017, the Company previously entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc., pursuant to which the Company may offer to sell, from time to time, the 2021 Notes, the 7.50% 2027 Notes and the 7.25% 2027 Notes. As of June 5, 2018, the Company sold Notes having an aggregate offering price of $6.3 million under the prior prospectus supplement dated April 25, 2018, leaving up to $43.7 million available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes sold pursuant to the Sales Agreement on or following June 5, 2018 will be issued pursuant to a prospectus dated April 6, 2018, as supplemented by a prospectus supplement dated June 5, 2018, in each case filed with the SEC pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-223789), which was declared effective by the SEC on April 6, 2018. As of September 30, 2018, the Company sold Notes pursuant to the June 5, 2018 prospectus having an aggregate offering price of $36.9 million (inclusive of the 6.3 million sold under the April 25, 2018 prospectus supplement), leaving up to $13.1 million available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes will be issued pursuant to the Indenture. Future sales of the 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes and the May 2023 Notes pursuant to the Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the notes and the Company’s capital needs.

On April 18, 2018, the United States Bankruptcy Court for the District of Delaware issued an order (the “Order”) approving the sale of certain rights to the assets of The Bon-Ton Stores, Inc. and its affiliates (the “Debtors”) and granted certain other relief to GA Retail, Inc. (“GA”), an indirect wholly owned subsidiary of the Company, Tiger Capital Group, LLC (“Tiger”), and the indenture trustee (the “Indenture Trustee”; together with GA and Tiger, the “Joint Venture”) under the Second Lien Indenture (as defined in the Order). Among other things, the Order approved the Joint Venture’s right to act as the Debtors’ exclusive agent to conduct the sale of substantially all of the Debtors’ assets on the terms and conditions set forth in that certain agency agreement dated April 18, 2018 by and among the Debtors and the Joint Venture (the “Agency Agreement” and the related transactions, the “Bon-Ton Transactions”).

Pursuant to the Agency Agreement, the Joint Venture agreed to pay (a) a cash purchase price of approximately $560.0 million (the “Cash Purchase Price”), which includes all amounts due and owing by the Debtors to the lenders under that certain debtor in possession financing facility, the cash amounts used to collateralize certain letters of credit and an amount to fund the payment of certain fees and expenses incurred by the Debtors’ professionals, (b) a credit bid of $125.0 million, and (c) $93.8 million to pay for certain administrative expenses of the Debtors as reflected in an agreed upon wind down budget. In exchange for such payments and the payment of certain expenses, the Joint Venture received the right to receive all proceeds (cash or otherwise) of any of the Debtors’ Assets except as otherwise set forth in the Agency Agreement (the “Proceeds”). The sale of inventory and certain of the assets of Bon-Ton through a going-out-of-business sale was completed on August 31, 2018. The Joint Venture continues to wind down the business activities of Bon-Ton and sale of certain real property, among other items, in accordance with the Agency Agreement.

41

To fund GA’s portion of the Cash Purchase Price, GA borrowed (i) $300.0 million from Wells Fargo Bank, N.A. (“Wells Fargo Bank”) pursuant to an amended and restated consent dated April 19, 2018 to that certain credit agreement among GA, its affiliates and Wells Fargo Bank, as amended (the “Credit Agreement”), and (ii) approximately $51.0 million from GACP II, L.P., a direct lending fund managed by GACP, an affiliate of GA and a wholly owned subsidiary of the Company. Each of these loans is to be repaid from the Proceeds after the payment of certain expenses incurred by the Joint Venture in connection with the sale. In connection with the borrowing from Wells Fargo Bank, the maximum borrowing limit under the Credit Agreement was increased solely for purposes of the Bon-Ton Transactions from $200.0 million to $300.0 million and reverted back to $200.0 million upon repayment of the amounts borrowed in connection with the Bon-Ton Transactions. The amounts borrowed in connection with the Bon-Ton Transaction were fully repaid as of September 30, 2018.

On March 15, 2018, the Company was a party to a Secondary Stock Purchase Agreement with ACP BD Investments, LLC (“ACP”) which required the Company to purchase 950,000 shares of the Company’s common stock at $18.25 per share or approximately $17.3 million in cash. The stock was repurchased from ACP on April 2, 2018 and retired by the Company.

On January 12, 2018, the Company converted a loan receivable from bebe stores, inc. (“bebe”) in the amount of $16.9 million in principal and accrued interest into 2,819,528 shares of common stock of bebe, representing a conversion price at $6.00 per share. On January 12, 2018, the Company also purchased 500,000 shares of bebe common stock at $6.00 per share of which 250,000 shares were newly issued common stock by bebe and 250,000 shares were purchased from the majority shareholder of bebe. In total, the Company acquired 3,319,528 shares of bebe common stock. In connection with such transactions, bebe fixed the size of its board of directors at five members of which two employees of the Company were newly appointed to the bebe board. At September 30, 2018, the Company had an ownership of approximately 30.1% of bebe’s outstanding common shares.

On November 9, 2017, the Company entered into an Agreement and Plan of Merger with B. R. Acquisition Ltd., an Israeli corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and magicJack VocalTec Ltd., an Israeli corporation (“magicJack”), pursuant to which Merger Sub will merge with and into magicJack, with magicJack continuing as the surviving corporation and as an indirect subsidiary of the Company. Subject to the terms and conditions of the Agreement and Plan of Merger, each outstanding share of magicJack will be converted into the right to receive $8.71 in cash without interest, representing approximately $143.5 million in aggregate merger consideration. The closing of the transaction is subject to the receipt of certain regulatory approvals and the satisfaction of other closing conditions. It is anticipated that the acquisition of magicJack will close in the fourth quarter of 2018.

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may differ from those estimates. Critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our condensed consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, reserves for accounts receivable, the carrying value of goodwill and other intangible assets, fair value measurements, share-based compensation and accounting for income tax valuation allowances can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 9 for additional information on the adoption of this standard.

42

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 September 30, 2018 Compared to Three Months Ended September 30, 2017

Condensed Consolidated Statements of Income

(Dollars in thousands)

	Three Months Ended						Three Months Ended
	September 30, 2018						September 30, 2017
	Amount			%			Amount			%
Revenues:
Services and fees	$	90,655			90.9	%	$	85,450			92.5	%
Interest income - Securities lending		8,954			9.0	%		6,897			7.5	%
Sale of goods		72			0.1	%		79			0.1	%
Total revenues		99,681			100.0	%		92,426			100.0	%
Operating expenses:
Direct cost of services		8,156			8.2	%		10,138			11.0	%
Cost of goods sold		52			0.1	%		124			0.1	%
Selling, general and administrative expenses		71,782			72.0	%		70,962			76.8	%
Restructuring charge		428			0.4	%		4,896			5.3	%
Interest expense - Securities lending		6,425			6.4	%		4,950			5.4	%
Total operating expenses		86,843			87.1	%		91,070			98.5	%
Operating income		12,838			12.9	%		1,356			1.5	%
Other income (expense):
Interest income		442			0.4	%		76			0.1	%
Income (loss) from equity investment		828			0.8	%		(157	)		(0.2	%)
Interest expense		(9,340	)		(9.4	%)		(2,510	)		(2.7	%)
Income (loss) before income taxes		4,768			4.8	%		(1,235	)		(1.3	%)
(Provision for) benefit from income taxes		(2,046	)		(2.1	%)		1,357			1.5	%
Net income		2,722			2.7	%		122			0.1	%
Net loss attributable to noncontrolling interests		(92	)		(0.1	%)		(246	)		(0.3	%)
Net income attributable to B. Riley Financial, Inc.	$	2,814			2.8	%	$	368			0.4	%

43

Revenues

The table below and the discussion that follows are based on how we analyze our business.

	Three Months Ended					Three Months Ended
	September 30, 2018					September 30, 2017					Change
	Amount		%			Amount		%			Amount			%
Revenues - Services and fees:
Capital Markets segment	$	67,389		67.6	%	$	56,782		61.4	%	$	10,607			18.7	%
Auction and Liquidation segment		2,459		2.5	%		7,376		8.0	%		(4,917	)		-66.7	%
Valuation and Appraisal segment		9,404		9.4	%		9,043		9.8	%		361			4.0	%
Principal Investments - United Online segment		11,403		11.4	%		12,249		13.3	%		(846	)		-6.9	%
Subtotal		90,655		90.9	%		85,450		92.4	%		5,205			6.1	%
Revenues - Sale of goods:
Auction and Liquidation segment		48		0.0	%		1		0.0	%		47			n/m
Principal Investments - United Online segment		24		0.0	%		78		0.1	%		(54	)		-69.2	%
Subtotal		72		0.1	%		79		0.1	%		(7	)		-8.9	%
Interest income - Securities lending:
Capital Markets segment		8,954		9.0	%		6,897		7.5	%		2,057			29.8	%
Total revenues	$	99,681		100.0	%	$	92,426		100.0	%	$	7,255			7.8	%

n/m - Not applicable or not meaningful.

Total revenues increased $7.3 million to $99.7 million during the three months ended September 30, 2018 from $92.4 million during the three months ended September 30, 2017. The increase in revenues during the three months ended September 30, 2018 was primarily due to an increase in revenues from services and fees of $5.2 million and an increase in revenues from interest income – securities lending of $2.1 million. The increase in revenues from services and fees of $5.2 million in 2018 was primarily due to an increase in revenues of $10.6 million in the Capital Markets segment and $0.4 million in the Valuation and Liquidation segment, offset by a decrease in revenues of $4.9 million in the Auction and Liquidation segment and $0.8 million in the Principal Investments – United Online segment.

Revenues from services and fees in the Capital Markets segment increased $10.6 million, to $67.4 million during the three months ended September 30, 2018 from $56.8 million during the three months ended September 30, 2017. The increase in revenues was primarily due to an increase in revenue of $8.7 million from investment banking fees, an increase in revenue of $5.1 million from consulting fees as a result of the acquisition of GlassRatner on July 31, 2018, an increase of $1.0 million from commissions and fees revenue, and an increase in revenue of $0.6 million from wealth management services, offset by a decrease in revenues of $4.7 million from sales and trading and a decrease of $0.1 million of other revenues.

Revenues from services and fees in the Valuation and Appraisal segment increased $0.4 million, to $9.4 million during the three months ended September 30, 2018 from $9.0 million during the three months ended September 30, 2017. The increase in revenues was primarily due to $0.3 million increase related to appraisal engagements where we perform valuations of intellectual property and business valuations, and $0.1 million increase related to appraisal engagements where we perform valuations for the monitoring of collateral for financial institutions, lenders, and private equity investors.

Revenues from services and fees in the Auction and Liquidation segment decreased $4.9 million to $2.5 million during the three months ended September 30, 2018 from $7.4 million during the three months ended September 30, 2017. The decrease in revenues of $4.9 million was primarily due to a decrease in revenues of $4.5 million from services and fees from retail liquidation engagements and a decrease in revenues of $0.4 million from services and fees in our wholesale and industrial auction division.

Revenues from services and fees in the Principal Investments - United Online segment decreased $0.8 million to $11.4 million during the three months ended September 30, 2018 from $12.2 million during the three months ended September 30, 2017. The decrease in revenues was primarily due to lower paid subscribers to our services and lower advertising impressions as a result of a decline in active accounts. Services revenues primarily from customer paid accounts related to our Internet access and related subscription services decreased approximately $0.1 million to $9.2 million during the three months ended September 30, 2018 from $9.3 million during the three months ended September 30, 2017. Advertising revenues from Internet display advertising and search related to our email and Internet access services decreased $0.6 million to $2.3 million during the three months ended September 30, 2018 from $2.9 million during the three months ended September 30, 2017. Over the past several years revenues from paid subscription services have declined year over year as a result of a decline in the number of paid subscribers for our services. Management believes the decline in paid subscriber accounts is primarily attributable to the industry trends of consumers switching from dial-up Internet access to high speed Internet access such as cable and DSL. Management expects revenues in the Principal Investments - United Online segment to continue to decline year over year.

44

Operating Expenses

Direct Cost of Services. Direct cost of services and direct cost of services measured as a percentage of revenues – services and fees by segment during the three months ended September 30, 2018 and 2017 are as follows:

	Three Months Ended September 30, 2018											Three Months Ended September 30, 2017
							Principal											Principal
	Auction and			Valuation and			Investments -					Auction and			Valuation and			Investments -
	Liquidation			Appraisal			United Online					Liquidation			Appraisal			United Online
	Segment			Segment			Segment			Total		Segment			Segment			Segment			Total
Revenues - Services and fees	$	2,459		$	9,404		$	11,403				$	7,376		$	9,043		$	12,249
Direct cost of services		838			4,067			3,251		$	8,156		3,385			3,778			2,975		$	10,138
Gross margin on services and fees	$	1,621		$	5,337		$	8,152				$	3,991		$	5,265		$	9,274
Gross margin percentage		65.9	%		56.8	%		71.5	%				54.1	%		58.2	%		75.7	%

Total direct costs of services decreased approximately $1.9 million, to $8.2 million during the three months ended September 30, 2018 from $10.1 million during the three months ended September 30, 2017. Direct costs of services decreased by $2.5 million in the Auction and Liquidation segment, offset by an increase of $0.3 million in the Principal Investments - United Online segment and an increase of $0.3 million in the Valuation and Appraisal segment. The decrease in direct costs in the Auction and Liquidation segment was primarily due to mix of engagement types performed during the three months ended September 30, 2018 as compared to the same 2017 period. The increase in direct costs in the Principal Investments – United Online was primarily due to an increase in telecommunication usage associated with the telecommunication resale business. The increase in direct costs of services in the Valuation and Appraisal segment was primarily due to an increase in payroll and related expenses in 2018 as compared to the same period in 2017.

Gross margin in the Auction and Liquidation segment for services and fees increased 11.8% to 65.9% of revenues during the three months ended September 30, 2018, as compared to 54.1% of revenues during the three months ended September 30, 2017. The increase in margin in the Auction and Liquidation segment is due to the mix of engagement types between guarantee and commission and fees engagements performed during the three months ended September 30, 2018 as compared to the same 2017 period.

Gross margin in the Valuation and Appraisal segment for services and fees decreased 1.4% to 56.8% of revenues during the three months ended September 30, 2018, from 58.2% of revenues during the three months ended September 30, 2017. The decrease in margin in the Valuation and Appraisal segment is primarily due to impact of the increase in revenues in 2018 as compared to the same 2017 period.

Gross margin in the Principal Investments – United Online segment for services and fees decreased 4.2% to 71.5% of revenues during the three months ended September 30, 2018, from 75.7% of revenues during the three months ended September 30, 2017. The decrease in margin in the Principal Investments – United Online segment is primarily due to the mix of revenues of services and fees.

45

Selling, General and Administrative Expenses. Selling, general and administrative expenses during the three months ended September 30, 2018 and 2017 were comprised of the following:

Selling, General and Administrative Expenses

	Three Months Ended					Three Months Ended
	September 30, 2018					September 30, 2017					Change
	Amount		%			Amount		%			Amount			%
Capital Markets segment	$	58,516		81.5	%	$	55,591		78.4	%	$	2,925			5.3	%
Auction and Liquidation segment		1,296		1.8	%		1,968		2.8	%		(672	)		(34.1	%)
Valuation and Appraisal segment		2,435		3.4	%		2,296		3.2	%		139			6.1	%
Principal Investments - United Online segment		4,030		5.6	%		4,136		5.8	%		(106	)		(2.6	%)
Corporate and Other segment		5,505		7.7	%		6,971		9.8	%		(1,466	)		(21.0	%)
Total selling, general & administrative expenses	$	71,782		100.0	%	$	70,962		100.0	%	$	820			1.2	%

Total selling, general and administrative expenses was $71.8 million during the three months ended September 30, 2018 compared to $71.0 million for the three months ended September 30, 2017. The increase of $0.8 million was due to an increase in selling, general and administrative expenses of $2.9 million in the Capital Markets segment and $0.1 million in the Valuation and Appraisal segment, offset by decreases in selling, general and administrative expenses of $1.5 million in the Corporate and Other segment, $0.7 million in the Auction and Liquidation segment and $0.1 million in the Principal Investments - United Online segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment increased by $2.9 million to $58.5 million during the three months ended September 30, 2018 from $55.6 million during the three months ended September 30, 2017. The increase in expenses was primarily due to an increase of $3.8 million as a result of the acquisition of GlassRatner on July 31, 2018, an increase of $0.3 million in rent and occupancy expense, and an increase of $0.5 million in payroll and related expenses, offset by a decrease of $0.5 million in legal and professional fees and a decrease of $1.1 million in market data and other communication expenses. Of the $3.7 million increase as a result of the acquisition of GlassRatner, $2.7 million was payroll and related expenses.

Auction and Liquidation

Selling, general and administrative expenses in the Auction and Liquidation segment decreased $0.7 million to $1.3 million during the three months ended September 30, 2018 from $2.0 million for the three months ended September 30, 2017. The decrease in expenses of $0.7 million was primarily due to a decrease of $0.5 million in transaction losses from foreign currency translation adjustment and a decrease of $0.2 million in bad debt expense.

Valuation and Appraisal

Selling, general and administrative expenses in the Valuation and Appraisal segment increased $0.1 million to $2.4 million during the three months ended September 30, 2018 from $2.3 million for the three months ended September 30, 2017.

Principal Investments - United Online

Selling, general and administrative expenses in the Principal Investments - United Online segment decreased $0.1 million to $4.0 million during the three months ended September 30, 2018 from $4.1 million during the three months ended September 30, 2017.

Corporate and Other

Selling, general and administrative expenses in the Corporate and Other segment decreased $1.5 million to $5.5 million during the three months ended September 30, 2018 from $7.0 million for the three months ended September 30, 2017. The decrease is primarily due to a fair value adjustment on mandatorily redeemable noncontrolling interest of $2.8 million in the three months ended September 30, 2017 and a decrease of $0.5 million of other general administrative expenses, offset by an increase of $0.8 million in payroll and related incentive compensation due to increase profitability during the three months ended September 30, 2018 compared to the same period in 2017 and an increase of $1.0 million in legal and professional fees.

46

Restructuring Charge. During the three months ended September 30, 2018, we incurred restructuring charge of $0.4 million compared to restructuring charge of $4.9 million during the same period in 2017. Restructuring charge of $0.4 million during the 2018 period was primarily comprised of lease loss accruals for the consolidation of office space and severance expense related to operations in the Capital Markets segment. Restructuring charge of $4.9 million during the three months ended September 30, 2017 was related to the implementation of costs savings measures taking into account the planned synergies as a result of the acquisitions of FBR and Wunderlich.

Other Income (Expense). Other income included interest income of $0.4 million and less than $0.1 million during the three months ended September 30, 2018 and 2017, respectively. Interest expense was $9.3 million during the three months ended September 30, 2018 as compared to $2.5 million during the three months ended September 30, 2017. The increase in interest expense of $6.8 million during the three months ended September 30, 2018 compared to the same period in 2017 was primarily due to an increase in interest expense of $5.2 million from the issuances of senior notes due in 2021, 2023 and 2027; and approximately $1.8 million interest expense incurred during the three month ended September 30, 2018 related to borrowings in connection with retail liquidation engagements, offset by a decrease in other interest expense of $0.2 million. Other income in the three months ended September 30, 2018 included $0.8 million income on equity investments compared to a loss on equity investment of $0.2 million during the same period in 2017.

Income (Loss) Before Income Taxes. Income before income taxes increased $6.0 million to income before income taxes of $4.8 million during the three months ended September 30, 2018 from a loss before income taxes of $1.2 million during the three months ended September 30, 2017. The increase in income before income taxes of $6.0 million was due to an increase in revenues of $7.3 million, a decrease in operating expenses of $4.2 million, an increase in income from equity investments of $1.0 million, an increase in interest income of $0.3 million, offset by an increase in interest expense of $6.8 million.

(Provision for) Benefit from Income Taxes. Provision for income taxes was $2.0 million during the three months ended September 30, 2018 compared to a benefit from income taxes of $1.4 million during the three months ended September 30, 2017. The effective income tax rate was a provision of 42.9% for the three months ended September 30, 2018 as compared to a benefit of 109.9% for the three months ended September 30, 2017.

Net Income (Loss) Attributable to Noncontrolling Interest. Net income (loss) attributable to noncontrolling interests represents the proportionate share of net income (loss) generated by Great American Global Partners, LLC, in which we have a 50% membership interest that we do not own. The net loss attributable to noncontrolling interests was $0.1 million during the three months ended September 30, 2018 compared to net loss attributable to noncontrolling interests of $0.2 million during the three months ended September 30, 2017.

Net Income Attributable to the Company. Net income attributable to the Company for the three months ended September 30, 2018 was $2.8 million, an increase of approximately $2.4 million, from net income attributable to the Company of $0.4 million for the three months ended September 30, 2017. The increase in net income attributable to the Company during the three months ended September 30, 2018 of approximately $2.4 million was primarily due to an increase in total revenues of $7.3 million, a decrease in operating expenses of $4.2 million and an increase in income from equity investments of $1.0 million, offset by an increase in interest expense of $6.8 million and an increase in provision for income taxes of $3.4 million.

47

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017

Condensed Consolidated Statements of Income

(Dollars in thousands)

	Nine Months Ended						Nine Months Ended
	September 30, 2018						September 30, 2017
	Amount			%			Amount			%
Revenues:
Services and fees	$	297,986			92.8	%	$	202,663			95.6	%
Interest income - Securities lending		22,836			7.1	%		9,115			4.3	%
Sale of goods		138			0.0	%		221			0.1	%
Total revenues		320,960			100.0	%		211,999			100.0	%
Operating expenses:
Direct cost of services		33,733			10.5	%		46,224			21.8	%
Cost of goods sold		142			0.0	%		313			0.1	%
Selling, general and administrative expenses		216,603			67.5	%		132,836			62.7	%
Restructuring charge		2,247			0.7	%		11,484			5.4	%
Interest expense - Securities lending		16,317			5.1	%		6,515			3.1	%
Total operating expenses		269,042			83.8	%		197,372			93.1	%
Operating income		51,918			16.2	%		14,627			6.9	%
Other income (expense):
Interest income		736			0.2	%		358			0.2	%
Income (loss) from equity investment		5,049			1.6	%		(157	)		(0.1	%)
Interest expense		(23,926	)		(7.5	%)		(5,195	)		(2.5	%)
Income before income taxes		33,777			10.5	%		9,633			4.5	%
(Provision for) benefit from income taxes		(8,412	)		(2.6	%)		7,753			3.7	%
Net income		25,365			7.9	%		17,386			8.2	%
Net income (loss) attributable to noncontrolling interests		1,051			0.3	%		(283	)		(0.1	%)
Net income attributable to B. Riley Financial, Inc.	$	24,314			7.6	%	$	17,669			8.3	%

Revenues

The table below and the discussion that follows are based on how we analyze our business.

	Nine Months Ended					Nine Months Ended
	September 30, 2018					September 30, 2017					Change
	Amount		%			Amount		%			Amount			%
Revenues - Services and fees:
Capital Markets segment	$	191,621		59.7	%	$	96,181		45.4	%	$	95,440			99.2	%
Auction and Liquidation segment		44,812		14.0	%		43,179		20.4	%		1,633			3.8	%
Valuation and Appraisal segment		27,383		8.5	%		24,799		11.7	%		2,584			10.4	%
Principal Investments - United Online segment		34,170		10.7	%		38,504		18.2	%		(4,334	)		-11.3	%
Subtotal		297,986		92.9	%		202,663		95.6	%		95,323			47.0	%
Revenues - Sale of goods:
Auction and Liquidation segment		48		0.0	%		1		0.0	%		47			n/m
Principal Investments - United Online segment		90		0.0	%		220		0.1	%		(130	)		-59.1	%
Subtotal		138		0.0	%		221		0.1	%		(83	)		-37.6	%
Interest income - Securities lending:
Capital Markets segment		22,836		7.1	%		9,115		4.3	%		13,721			150.5	%
Total revenues	$	320,960		100.0	%	$	211,999		100.0	%	$	108,961			51.4	%

n/m - Not applicable or not meaningful.

48

Total revenues increased $109.0 million to $321.0 million during the nine months ended September 30, 2018 from $212.0 million during the nine months ended September 30, 2017. The increase in revenues of $109.0 million during the nine months ended September 30, 2018 was primarily due to an increase in revenues from services and fees of $95.3 million and an increase in revenues from interest income – securities lending of $13.7 million. The increase in revenues from services and fees of $95.3 million in 2018 was primarily due to an increase in revenues of $95.4 million in the Capital Markets segment, $2.6 million in the Valuation and Appraisal segment, and $1.6 million in the Auction and Liquidation segment, offset by a decrease in revenues of $4.3 million in the Principal Investments – United Online segment.

Revenues from services and fees in the Capital Markets segment increased $95.4 million, to $191.6 million during the nine months ended September 30, 2018 from $96.2 million during the nine months ended September 30, 2017. The increase in revenues was due to an increase in revenue of $38.2 million from investment banking fees primarily due to operations of FBR that we acquired on June 1, 2017, an increase of $35.1 million from wealth management services as a result of the acquisition of Wunderlich on July 3, 2017, an increase of $11.5 million from commissions and fees, an increase of $5.1 million from consulting fees as a result of the acquisition of GlassRatner on July 31, 2018, and an increase of $8.5 million in other income as a result of the acquisitions of Wunderlich and FBR, offset by a decrease in revenues of $3.0 million from sales and trading.

Revenues from services and fees in the Valuation and Appraisal segment increased $2.6 million, to $27.4 million during the nine months ended September 30, 2018 from $24.8 million during the nine months ended September 30, 2017. The increase in revenues was primarily due to $2.2 million increase related to appraisal engagements where we perform valuations for the monitoring of collateral for financial institutions, lenders, and private equity investors, and $0.7 million increase related to appraisal engagements where we perform valuations of intellectual property and business valuations, offset $0.3 million decrease related to appraisal engagements where we perform valuations of machinery and equipment.

Revenues from services and fees in the Auction and Liquidation segment increased $1.6 million, to $44.8 million during the nine months ended September 30, 2018 from $43.2 million during the nine months ended September 30, 2017. The increase in revenues of $1.6 million was primarily due to an increase in revenues of $1.8 million from services and fees in our wholesale and industrial auction division, offset by a decrease in revenues of $0.2 million from services and fees from retail liquidation engagements.

Revenues from services and fees in the Principal Investments - United Online segment decreased $4.3 million, to $34.2 million during the nine months ended September 30, 2018 from $38.5 million during the nine months ended September 30, 2017. The decrease in revenues was primarily due to lower paid subscribers to our services and lower advertising impressions as a result of a decline in active accounts. Services revenues primarily from customer paid accounts related to our Internet access and related subscription services decreased $2.5 million to $27.3 million during the nine months ended September 30, 2018 from $29.8 million during the nine months ended September 30, 2017. Advertising revenues from Internet display advertising and search related to our email and Internet access services decreased $1.8 million to $6.9 million during the nine months ended September 30, 2018 from $8.7 million during the nine months ended September 30, 2017. Over the past several years revenues from paid subscription services have declined year over year as a result of a decline in the number of paid subscribers for our services. Management believes the decline in paid subscriber accounts is primarily attributable to the industry trends of consumers switching from dial-up Internet access to high speed Internet access such as cable and DSL. Management expects revenues in the Principal Investments - United Online segment to continue to decline year over year.

Operating Expenses

Direct Cost of Services. Direct cost of services and direct cost of services measured as a percentage of revenues – services and fees by segment during the nine months ended September 30, 2018 and 2017 are as follows:

	Nine Months Ended September 30, 2018											Nine Months Ended September 30, 2017
							Principal											Principal
	Auction and			Valuation and			Investments -					Auction and			Valuation and			Investments -
	Liquidation			Appraisal			United Online					Liquidation			Appraisal			United Online
	Segment			Segment			Segment			Total		Segment			Segment			Segment			Total
Revenues - Services and fees	$	44,812		$	27,383		$	34,170				$	43,179		$	24,799		$	38,504
Direct cost of services		12,263			12,388			9,082		$	33,733		25,482			11,031			9,711		$	46,224
Gross margin on services and fees	$	32,549		$	14,995		$	25,088				$	17,697		$	13,768		$	28,793
Gross margin percentage		72.6	%		54.8	%		73.4	%				41.0	%		55.5	%		74.8	%

Total direct costs of services decreased approximately $12.5 million to $33.7 million during the nine months ended September 30, 2018 from $46.2 million during the nine months ended September 30, 2017. Direct costs of services decreased by $13.2 million in the Auction and Liquidation segment and $0.6 million in the Principal Investments - United Online segment, offset by an increase of $1.4 million in the Valuation and Appraisal segment. The decrease in direct costs in the Auction and Liquidation segment was primarily due to mix of engagement types performed during the nine months ended September 30, 2018 as compared to the same 2017 period. The decrease in direct costs in the Principal Investments – United Online was primarily due to a decrease in costs to support the lower number of subscribers for dial-up Internet service in 2018 as compared to the same period in 2017. The increase in direct costs of services in the Valuation and Appraisal segment was primarily due to an increase in payroll and related expenses in 2018 as compared to the same period in 2017. 

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Gross margin in the Auction and Liquidation segment for services and fees increased 31.6% to 72.6% of revenues during the nine months ended September 30, 2018, as compared to 41.0% of revenues during the nine months ended September 30, 2017. The increase in margin in the Auction and Liquidation segment is due to the mix of engagement types between guarantee and commission and fees engagements performed during the nine months ended September 30, 2018 as compared to the same 2017 period.

Gross margin in the Valuation and Appraisal segment for services and fees decreased 0.7% to 54.8% of revenues during the nine months ended September 30, 2018, from 55.5% of revenues during the nine months ended September 30, 2017. The decrease in margin in the Valuation and Appraisal segment is primarily due to increase in payroll and related expenses in 2018 as compared to the same 2017 period.

Gross margin in the Principal Investments – United Online segment for services and fees decreased 1.4% to 73.4% during the nine months ended September 30, 2018, from 74.8% of revenues during the nine months ended September 30, 2017.

Selling, General and Administrative Expenses. Selling, general and administrative expenses during the nine months ended September 30, 2018 and 2017 were comprised of the following:

Selling, General and Administrative Expenses

	Nine Months Ended					Nine Months Ended
	September 30, 2018					September 30, 2017					Change
	Amount		%			Amount		%			Amount			%
Capital Markets segment	$	172,987		79.9	%	$	89,920		67.7	%	$	83,067			92.4	%
Auction and Liquidation segment		7,810		3.6	%		6,577		5.0	%		1,233			18.7	%
Valuation and Appraisal segment		7,297		3.4	%		6,525		4.9	%		772			11.8	%
Principal Investments - United Online segment		11,361		5.2	%		13,849		10.4	%		(2,488	)		(18.0	%)
Corporate and Other segment		17,148		7.9	%		15,965		12.0	%		1,183			7.4	%
Total selling, general & administrative expenses	$	216,603		100.0	%	$	132,836		100.0	%	$	83,767			63.1	%

Total selling, general and administrative expenses increased $83.8 million, to $216.6 million during the nine months ended September 30, 2018 from $132.8 million for the nine months ended September 30, 2017. The increase was primarily due to an increase in selling, general and administrative expenses of $83.1 million in the Capital Markets segment, $1.2 million in the Auction and Liquidation segment, approximately $1.1 million in the Corporate and Other segment and $0.8 million in the Valuation and Appraisal segment, offset by a decrease of approximately $2.4 million in the Principal Investments – United Online segment.

Capital Markets

Selling, general and administrative expenses in the Capital Markets segment increased by $83.1 million to $173.0 million during the nine months ended September 30, 2018 from $89.9 million during the nine months ended September 30, 2017. The increase in expenses was primarily due to the acquisitions of Wunderlich on July 3, 2017, FBR on June 1, 2017 and GlassRatner on July 31, 2018. Of the $83.1 million increase in expenses, $39.4 million was due to the acquisition of Wunderlich and $3.8 million was due to the acquisition of GlassRatner. The increase in expenses was primarily due to an increase in (a) payroll and related expenses of $58.7 million, (b) occupancy expenses of $6.9 million, (c) legal and professional fees of $2.2 million, (d) depreciation and amortization of expense of $2.3 million, (e) market data and other communication expenses of $8.3 million, (f) share-based compensation of $2.4 million, and (g) other administrative expenses of $2.3 million.

Auction and Liquidation

Selling, general and administrative expenses in the Auction and Liquidation segment increased $1.2 million, to $7.8 million during the nine months ended September 30, 2018 from $6.6 million for the nine months ended September 30, 2017. The increase in expenses was primarily due to an increase in (a) payroll and related expenses in the amount of $1.5 million, (b) bad debt expense of $0.5 million, (c) legal and professional fees of $0.1 million, and (d) other expenses of $0.2 million, offset by a decrease in transaction losses from foreign currency translation adjustment of $1.1 million.

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Valuation and Appraisal

Selling, general and administrative expenses in the Valuation and Appraisal segment increased $0.8 million, to $7.3 million during the nine months ended September 30, 2018 from $6.5 million for the nine months ended September 30, 2017. The increase of $0.8 million during the nine months ended September 30, 2018 was primarily due to an increase in payroll and related expenses.

Principal Investments - United Online

Selling, general and administrative expenses in the Principal Investments - United Online segment decreased approximately $2.4 million, to $11.4 million during the nine months ended September 30, 2018 from $13.8 million during the nine months ended September 30, 2017. For the nine months ended September 30, 2018, these expenses include $3.0 million of technology and development expenses, $0.8 million of sales and marketing expenses, $3.7 million of general and administrative expenses and $3.9 million of amortization of intangibles. For the nine months ended September 30, 2017, these expenses include $3.6 million of technology and development expenses, $0.9 million of sales and marketing expenses, $5.2 million of general and administrative expenses and $4.1 million of amortization of intangibles. Technology and development expenses include expenses for product development, maintenance of existing software, technology and websites. Sales and marketing expenses include expenses associated personnel and overhead-related expenses for marketing, customer service, and advertising sales personnel to acquire and retain paid subscribers. Expenses associated with generating advertising revenues include sales commissions and personnel-related expenses. General and administrative expenses consist of personnel-related expenses for management in the Principal Investments - United Online segment, facilities, internal customer support personnel, personnel associated with operating our corporate systems and insurance recoveries. Amortization of intangibles includes amortization expense related to customer lists, advertising relationships, domain names and internally developed software.

Corporate and Other

Selling, general and administrative expenses in the Corporate and Other segment increased approximately $1.1 million, to $17.1 million during the nine months ended September 30, 2018 from $16.0 million for the nine months ended September 30, 2017. The increase of expenses in the Corporate and Other segment for the nine months ended September 30, 2018 is primarily due to an increase of $4.9 million in payroll and related expenses and an increase of $1.5 million in legal and professional fees, offset by a decrease of $2.3 million in other general expenses and a decrease of $3.0 million primarily related to the fair value adjustment and insurance recovery from key man life insurance related to one of our executives in our appraisal segment.

Restructuring Charge.  During the nine months ended September 30, 2018, we incurred a restructuring charge of $2.2 million, which was primarily comprised of lease loss accruals for the planned consolidation of office space and severance expense related to operations in the Capital Markets segment. During the nine months ended September 30 2017, we incurred a restructuring charge of $11.5 million primarily related to costs savings measures taking into account the planned synergies as a result of the acquisitions of FBR and Wunderlich which included a reduction in workforce for some of the corporate executives of FBR and Wunderlich and a restructuring to integrate FBR’s and Wunderlich’s operations with our operations in the Capital Market’s segment.

Other Income (Expense).  Other income included interest income of $0.7 million during the nine months ended September 30, 2018 compared to $0.4 million during the same 2017 period. Interest expense was $23.9 million during the nine months ended September 30, 2018 as compared to $5.2 million during the nine months ended September 30, 2017. The increase in interest expense of $18.7 million during the nine months ended September 30, 2018 was primarily due to an increase in interest expense of $13.0 million from the issuances of senior notes due in 2021, 2023 and 2027 and $6.6 million interest expense incurred during the nine months ended September 30, 2018 related to one of our valuation and appraisal engagements, offset by a decrease in other interest expense. Other income during the nine months ended September 30, 2018 included $5.0 million income on equity investments compared to loss on equity investments of $0.2 million during the same period in 2017.

Income Before Income Taxes.  Income before income taxes increased approximately $24.2 million to income before income taxes of $33.8 million during the nine months ended September 30, 2018 from an income before income taxes of $9.6 million during the nine months ended September 30, 2017. The increase in income before income taxes of $24.2 million was primarily due to an increase in revenues of $109.0 million, an increase in income from equity investments of $5.2 million, and an increase in interest income of $0.4 million, offset by an increase in operating expenses of approximately $71.7 million and an increase in interest expense of $18.7 million.

Provision for Income Taxes.  Provision for income taxes was $8.4 million during the nine months ended September 30, 2018 compared to a benefit from income taxes of $7.8 million during the nine months ended September 30, 2017. The effective income tax rate was a provision of 24.9% for the nine months ended September 30, 2018 as compared to a benefit of 80.5% for the nine months ended September 30, 2017. The benefit for income taxes during the nine months ended September 30, 2017 includes a tax benefit of $8.4 million related to our election to treat the acquisition of UOL as a taxable business combination for income tax purposes in accordance with Internal Revenue Code Section 338(g) as more fully discussed in note 10 in the condensed consolidated financial statements. The tax provision during the nine months ended September 30, 2017 also includes a tax benefit due to a non-taxable insurance recovery in the amount of $6.0 million that was received in the second quarter of 2017.

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Net Income (Loss) Attributable to Noncontrolling Interest.  Net income (loss) attributable to noncontrolling interests represents the proportionate share of net income (loss) generated by Great American Global Partners, LLC, in which we have a 50% membership interest that we do not own. The net income attributable to noncontrolling interests was $1.1 million during the nine months ended September 30, 2018 compared to net loss attributable to noncontrolling interests of $0.3 million during the nine months ended September 30, 2017.

Net Income Attributable to the Company. Net income attributable to the Company for the nine months ended September 30, 2018 was $24.3 million, an increase of net income of $6.6 million, from net income attributable to the Company of $17.7 million for the nine months ended September 30, 2017. The increase in net income attributable to the Company of $6.6 million during the nine months ended September 30, 2018 as compared to the same period in 2017 was primarily due to an increase in revenues of $109.0 million, an increase in income from equity investments of $5.2 million, and an increase in interest income of $0.4 million, offset by an increase in operating expenses of approximately $71.7 million, an increase in interest expense of $18.7 million, an increase in provision for income taxes of $16.2 million and an increase in net income attributable to noncontrolling interests of $1.3 million.

Liquidity and Capital Resources

Our operations are funded through a combination of existing cash on hand, cash generated from operations, proceeds from the issuance of common stock, and borrowings under our senior notes payable, credit facility and special purposes financing arrangements. On November 2, 2016, we issued $28.8 million of Senior Notes due in 2021 (the “2021 Notes”), and during the second half of 2017, we issued an additional $6.5 million of 2021 Notes. During the nine months ended September 30, 2018, we issued an additional $11.2 million of 2021 Notes. Interest on the 2021 Notes is payable quarterly at 7.50% commencing January 31, 2017. The 2021 Notes are unsecured and due and payable in full on October 31, 2021. In connection with the issuance of the 2021 Notes, we received net proceeds of $45.5 million (after underwriting commissions, fees and other issuance costs of $0.9 million). On May 31, 2017, we issued $60.4 million of Senior Notes due in May 2027 (the “7.50% 2027 Notes”), and during the second half of 2017, we issued an additional $32.1 million of the 7.50% 2027 Notes. During the nine months ended September 30, 2018, we issued an additional $14.9 million of 7.50% 2027 Notes. Interest is payable quarterly at 7.50% commencing July 31, 2017. The 2027 Notes are unsecured and due and payable in full on May 31, 2027. In connection with the issuance of the 7.50% 2027 Notes, we received net proceeds of approximately $105.6 million (after underwriting commissions, fees and other issuance costs of $1.8 million). In December 2017, we issued $80.5 million of Senior Notes due in December 2027 (the “7.25% 2027 Notes”). During the nine months ended September 30, 2018, we issued an additional $19.9 million of 7.25% 2027 Notes. Interest is payable quarterly at 7.25% commencing January 31, 2018. The 7.25% 2027 Notes are unsecured and due and payable in full on December 31, 2027. In connection with the issuance of the 7.25% 2027 Notes, we received net proceeds of $97.8 million (after underwriting commissions, fees and other issuance costs of $2.6 million). In May 2018, we issued approximately $100.1 million of Senior Notes due in May 2023 (the “May 2023 Notes”). During the second and third quarter of 2018, we issued an additional $9.1 million of May 2023 Notes. Interest is payable quarterly at 7.375% commencing July 31, 2018. The May 2023 Notes are unsecured and due and payable in full on May 31, 2023. In connection with the issuance of the May 2023 Notes, we received net proceeds of $107.2 million (after underwriting commissions, fees and other issuance costs of $1.9 million). In September 2018, we issued approximately $100.1 million of Senior Notes due in September 2023 (the “September 2023 Notes”). Interest is payable quarterly at 6.875% commencing October 31, 2018. The September 2023 Notes are unsecured and due and payable in full on September 30, 2023. In connection with the issuance of the September 2023 Notes, we received net proceeds of $98.6 million (after underwriting commissions, fees and other issuance costs of $1.4 million).

As of September 30, 2018, we had $233.9 million of unrestricted cash and cash equivalents, $0.5 million of restricted cash, $222.5 million of investments in securities and other investments, $37.1 million of loans receivable, and $457.5 million of borrowings outstanding. The borrowings outstanding of $457.5 million at September 30, 2018 included (a) $45.9 million of borrowings from the issuance of the 2021 Notes, (b) $105.9 million of borrowings from the issuance of the 7.50% 2027 Notes, (c) $98.0 million of borrowings from the issuance of the 7.25% 2027 Notes, (d) $107.4 million of borrowings from the issuance of the May 2023 Notes, (e) $98.6 million of borrowings from the issuance of the September 2023 Notes, and (f) $1.7 million of notes payable. We believe that our current cash and cash equivalents, securities and other investments owned, funds available under our asset based credit facility, UOL line of credit and cash expected to be generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements. We continue to monitor our financial performance to ensure sufficient liquidity to fund operations and execute on our business plan.

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From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. On November 5, 2018, the Company declared a regular dividend of $0.08 per share and a special dividend of $0.08 per share which will be paid by the Company on or about November 30, 2018 to stockholders of record as of November 16, 2018. On August 2, 2018, the Company declared a regular dividend of $0.08 per share and a special dividend of $0.22 per share which was paid by the Company on August 29, 2018 to stockholders of record as of August 16, 2018. On May 7, 2018, the Company declared a regular dividend of $0.08 per share and a special dividend of $0.04 per share which was paid by the Company on June 5, 2018 to stockholders of record as of May 21, 2018. On March 7, 2018, the Company declared a regular dividend of $0.08 per share and a special dividend of $0.08 per share which was paid by the Company on April 3, 2018. During the nine months ended September 30, 2018 and the year ended December 31, 2017, we paid cash dividends of $16.1 million and $14.9 million on our common stock, respectively. While it is the Board’s current intention to make regular dividend payments of $0.08 per share each quarter and special dividend payments dependent upon exceptional circumstances from time to time, our Board of Directors may reduce or discontinue the payment of dividends at any time for any reason it deems relevant. 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.

Our principal sources of liquidity to finance our business is our existing cash on hand, cash flows generated from operating activities, funds available under revolving credit facilities and special purpose financing arrangements.

Cash Flow Summary

	Nine Months Ended
	September 30,
	2018			2017
	(Dollars in thousands)
Net cash (used in) provided by:
Operating activities	$	(78,895	)	$	(48,779	)
Investing activities		(46,549	)		(17,119	)
Financing activities		208,092			58,719
Effect of foreign currency on cash		(796	)		3,458
Net increase (decrease) in cash, cash equivalents and restricted cash	$	81,852		$	(3,721	)

Cash used in operating activities was $78.9 million for the nine months ended September 30, 2018, an increase of $30.1 million, from cash used in operating activities of $48.8 million for the nine months ended September 30, 2017. Cash used in operating activities for the nine months ended September 30, 2018 included net income of $25.4 million adjusted for noncash items and changes in operating assets and liabilities. The increase in cash used in operating activities of $30.1 million was primarily due to changes in operating assets and liabilities that resulted in a decrease of $122.1 million in cash flows from operations during the nine months ended September 30, 2018, offset by (a) an increase in net income of $8.0 million to $25.4 million during the nine months ended September 30, 2018 from $17.4 million during the nine months ended September 30, 2017, and (b) an increase in non-cash charges and other items of $17.8 million, which included depreciation and amortization of $9.8 million, share-based compensation of $8.7 million, income on equity investments of $5.0 million, provision for doubtful accounts of $0.8 million, impairment of leaseholds, lease loss accrual and loss on disposal of fixed assets of $1.7 million, income allocated for mandatorily redeemable noncontrolling interests of $0.8 million and other non-cash items and effects of foreign currency on operations of $1.0 million.

Cash used in investing activities was $46.5 million during the nine months ended September 30, 2018 compared to cash used in investing activities of $17.1 million for the nine months ended September 30, 2017. During the nine months ended September 30, 2018, cash used in investing activities consisted of cash used to purchase loans receivable of $35.1 million, cash use for equity investments of $6.9 million, cash use of $4.0 million to acquire a business and cash use of $2.3 million for purchases of property and equipment, offset by $1.7 million dividends received from equity investment. During the nine months ended September 30, 2017, cash used in investing activities consisted of (a) cash used to purchase Wunderlich and United Online in the amounts of $25.4 million and $10.4 million, respectively, (b) cash use of $2.1 million for the acquisition of other businesses, (c) cash use of $1.0 million for an equity investment, and (e) cash use of $0.6 million for purchases of property and equipment, offset by (a) cash acquired from the acquisition of FBR of $15.7 million, (b) proceeds from key man life insurance of $6.0 million, and (c) proceeds from sale of property, equipment and other intangibles of $0.6 million.

Cash provided by financing activities was $208.1 million during the nine months ended September 30, 2018 compared to cash provided by financing activities of $58.7 million during the nine months ended September 30, 2017. During the nine months ended September 30, 2018, cash provided by financing activities primarily consisted of (a) $255.3 million proceeds from issuance of senior notes, (b) $300.0 million proceeds from our asset based credit facility, and (c) $51.0 million proceeds from notes payable, offset by (a) $300.0 million used for repayment of borrowings from our asset based credit facility, (b) $51.6 million repayment of notes payable, (c) $17.9 million used to pay cash dividends, (d) $17.3 million used to repurchase our common stock, (e) $6.4 million used for payment of debt issuance costs, (f) $4.1 million used for payment of employment taxes on vesting of restricted stock, and (g) $0.9 million distribution to noncontrolling interests. During the nine months ended September 30, 2017, cash provided by financing activities primarily consisted of (a) $66.0 million proceeds from asset based credit facility and (b) $89.3 million proceeds from issuance of senior notes, offset by (a) $66.0 million used to repay the asset based credit facility, (b) $13.5 million used to pay cash dividends, (c) $8.2 million used to repay other notes payable in connection with the acquisition of Wunderlich, (d) $2.9 million distributions to noncontrolling interests, (e) $2.0 million used for debt issuance costs, (f) $1.3 million used for the payment of contingent consideration, and (g) $2.7 million used for the payment of employment taxes on vesting of restricted stock.

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Credit Agreements

On April 21, 2017, we amended the Credit Agreement governing our asset based credit facility with Wells Fargo Bank to increase the maximum borrowing limit from $100.0 million to $200.0 million. Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022. On April 19, 2018, the Company entered into an amended and restated consent to the Credit Agreement, pursuant to which Wells Fargo Bank increased the maximum borrowing limit solely for the purposes of the Bon-Ton Transactions from $200.0 million to $300.0 million and reverted back to $200.0 million upon repayment of the amounts borrowed in connection with the Bon-Ton Transactions. The amounts borrowed in connection with the Bon Ton Transaction were fully repaid as of September 30, 2018 and the maximum borrowing limit under the Credit Agreement reverted back to $200.0 million. The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom with borrowings up to 50.0 million British Pounds. Any borrowing on the UK Credit Agreement reduce the availability of the asset based $300.0 million credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. The Credit Agreement continues to include the addition of our Canadian subsidiary, from the October 5, 2016 amendment to the Credit Agreement, to facilitate borrowings to fund retail liquidation transactions in Canada. From time to time, we utilize this credit facility to fund costs and expenses incurred in connection with liquidation engagements. We also utilize this credit facility in order to issue letters of credit in connection with liquidation engagements conducted on a guaranteed basis. Subject to certain limitations and offsets, we are permitted to borrow up to $200.0 million under the credit facility, less the aggregate principal amount borrowed under the UK Credit Agreement (if in effect). Borrowings under the credit facility are only made at the discretion of the lender and are generally required to be repaid within 180 days. The interest rate for each revolving credit advance under the related credit agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. The credit facility is secured by the proceeds received for services rendered in connection with the liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract, if any. The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on liquidation engagements that are financed under the credit facility as set forth in the related credit agreement. We typically seek borrowings on an engagement-by- engagement basis. The credit agreement governing the credit facility contains certain covenants, including covenants that limit or restrict our ability to incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. At December 31, 2017, there was $18.5 million of letters of credit outstanding under the credit facility.

On April 13, 2017, UOL, in the capacity as borrower, entered into a credit agreement (the “UOL Credit Agreement”) with the Banc of California, N.A. in the capacity as agent and lender. The UOL Credit Agreement provides for a revolving credit facility under which UOL may borrow (or request the issuance of letters of credit) up to $20.0 million which amount is reduced by $1.5 million commencing on June 30, 2017 and on the last day of each calendar quarter thereafter. The final maturity date is April 13, 2020.  The proceeds of the UOL Credit Agreement can be used (a) for working capital and general corporate purposes and/or (b) to pay dividends or permitted tax distributions to its parent company, subject to the terms of the UOL Credit Agreement. Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans.

UOL paid a commitment fee equal to 1.00% of the aggregate commitments upon the closing of the UOL Credit Agreement. The UOL Credit Agreement also provides for an unused line fee payable quarterly, in arrears, in an amount equal to: (a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank). Any amounts outstanding under the UOL Credit Facility are due at maturity. At September 30, 2018 and December 31, 2017, there was no outstanding balances under the UOL Credit Agreement.

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Senior Note Offerings

On November 2, 2016, we issued $28.8 million Senior Notes (the “2021 Notes”) and during the second half of 2017, we issued an additional $6.5 million of the 2021 Notes pursuant to the At the Market Issuance Sales Agreement (the “Sales Agreement”) as further discussed below. During the nine months ended September 30, 2018, we issued an additional $11.2 million of the 2021 Notes. The 2021 Notes are unsecured and due and payable in full on October 31, 2021. In connection with the issuance of the 2021 Notes, we received net proceeds of $45.5 million (after underwriting commissions, fees and other issuance costs of $0.9 million). The outstanding balance of the 2021 Notes was $45.9 million (net of unamortized debt issue costs and premiums of $0.5 million) at September 30, 2018.

On May 31, 2017, we issued $60.4 million of Senior Notes (the “7.50% 2027 Notes”) and during the second half of 2017, we issued an additional $32.1 million of the 7.50% 2027 Notes pursuant to the Sales Agreement. During the nine months ended September 30, 2018, we issued an additional $14.9 million of the 7.50% 2027 Notes. The 7.50% 2027 Notes are unsecured and due and payable in full on May 31, 2027. In connection with the issuance of the 7.50% 2027 Notes, we received net proceeds of $105.6 million (after underwriting commissions, fees and other issuance costs of $1.8 million). The outstanding balance of the 7.50% 2027 Notes was $105.9 million (net of unamortized debt issue costs and premium of $1.6 million) at September 30, 2018.

In December 2017, we issued $80.5 million of the 7.25% 2027 Notes and during the nine months ended September 30, 2018, we issued an additional $19.9 million of the 7.25% 2027 Notes pursuant to the Sales Agreement. The 7.25% 2027 Notes are unsecured and due and payable in full on December 31, 2027. In connection with the issuance of the 7.25% 2027 Notes, we received net proceeds of $97.8 million (after underwriting commissions, fees and other issuance costs of $2.6 million). The outstanding balance of the 7.25% 2027 Notes was $98.0 million (net of unamortized debt issue costs and premium of $2.4 million) at September 30, 2018.

In May 2018, we issued approximately $100.1 million of the May 2023 Notes and during the second and third quarter of 2018, we issued approximately an additional $9.1 million of the May 2023 Notes pursuant to the Sales Agreement. The May 2023 Notes are unsecured and due and payable in full on May 31, 2023. In connection with the issuance of the May 2023 Notes, we received net proceeds of $107.2 million (after underwriting commissions, fees and other issuance costs of $1.9 million). The outstanding balance of the May 2023 Notes was $107.4 million (net of unamortized debt issue costs and premium of $1.8 million) at September 30, 2018.

In September 2018, we issued approximately $100.1 million of the September 2023 Notes. The September 2023 Notes are unsecured and due and payable in full on September 30, 2023. In connection with the issuance of the September 2023 Notes, we received net proceeds of $98.6 million (after underwriting commissions, fees and other issuance costs of $1.4 million). The outstanding balance of the September 2023 Notes was $98.6 million (net of unamortized debt issue costs and premium of $1.4 million) at September 30, 2018.

On June 5, 2018, we filed a prospectus supplement pursuant to which we may sell from time to time, at our option up to an aggregate of $50.0 million, including notes offered pursuant to the prior prospectus supplement, of the 2021 Notes, the 7.50% 2027 Notes, the 7.25% 2027 Notes and the 2023 Notes. We previously entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) on December 19, 2017 with B. Riley FBR, pursuant to which we may offer to sell, from time to time, the 2021 Notes, the 7.50% 2027 Notes and the 7.25% 2027 Notes. As of June 5, 2018, we sold Notes having an aggregate offering price of $6.3 million under the prior prospectus supplement dated April 25, 2018, leaving up to $43.7 million available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes sold pursuant to the Sales Agreement on or following June 5, 2018 will be issued pursuant to a prospectus dated April 6, 2018, as supplemented by a prospectus supplement dated June 5, 2018, in each case filed with the SEC pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-223789), which was declared effective by the SEC on April 6, 2018. As of September 30, 2018, the Company sold Notes pursuant to the June 5, 2018 prospectus having an aggregate offering price of $36.9 million (inclusive of the $6.3 million sold under the April 25, 2018 prospectus supplement), leaving up to $13.1 million available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes will be issued pursuant to the Indenture. Future sales of the 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes and the May 2023 Notes pursuant to the Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the notes and the Company’s capital needs. There can be no assurance we will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that we may deem appropriate.

Other Borrowings

Notes payable include notes payable to a clearing organization for one of our broker dealers. The notes payable accrue interest at rates set at each anniversary date, ranging from prime rate plus 0.25% to 2.0% (5.25% to 6.50% at September 30, 2018). Interest is payable annually. The principal payments on the notes payable are due annually in the amount of $0.4 million on January 31, $0.2 million on September 30, and $0.1 million on October 31. The notes payable mature at various dates from September 30, 2018 through January 31, 2022. At September 30, 2018 the outstanding balance for the notes payable was $1.7 million.

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On April 19, 2018, we borrowed approximately $51.0 million from GACP II, L.P., a direct lending fund managed by Great American Capital Partners, LLC, a wholly owned subsidiary of the Company. In accordance with the note payable, we were advanced $50.0 million and the note payable included an origination fee of $1.0 million that increased the face value of the note payable to $51.0 million. Interest accrued at the three-month LIBOR rate plus 9%. The note payable was due in September 2018 and was fully repaid in August 2018. The note was collateralized by the proceeds generated from the joint venture liquidation of inventory and real estate related to a retail liquidation agreement.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements and do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, established for the purpose of facilitating off-balance sheet arrangements. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13: Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in this update change the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company early adopted ASU 2018-13 in the third quarter of 2018 and the adoption did not have a material impact on our consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments in this update provide guidance on when to record fand disclose provisional amounts for certain income tax effects of the Tax Cuts and Jobs Act (“Tax Reform Act”). The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. This ASU also discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will continue to evaluate indicators that may give rise to a change in our tax provision as a result of the Tax Reform Act. See Note10 to our condensed consolidated financial statements for additional information on the Tax Reform Act.

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued ASU 2018-10: Codification Improvements to Topic 842, Leases, which provides narrow-scope improvements to the lease standard. ASU 2016-02 and ASU 2018-10 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of these updates on the consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income that provides for the reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Reform Act. The accounting update is effective for the fiscal year beginning after December 15, 2018 and early adoption is permitted. The accounting update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. We are currently evaluating the impact of the accounting update, but the adoption is not expected to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal year 2019, but early application is permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet adopted this update and currently evaluating the effect this new standard will have on its financial condition and results of operations

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On January 1, 2018, we adopted ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) using the retrospective method which requires adjustment to prior periods in the statement of cash flows. ASU 2016-18 clarifies how restricted cash should be presented on the statement of cash flows and requires companies to include restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period totals on the statement of cash flows. Restricted cash previously classified under investing activities is now included in the reconciliation of beginning and ending cash on the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on the Company’s financial condition and results of operations.

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 9 for additional information on the adoption of this standard.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

B. Riley’s primary exposure to market risk consists of risk related to changes in interest rates. B. Riley has not used derivative financial instruments for speculation or trading purposes.

Interest Rate Risk

Our primary exposure to market risk consists of risk related to changes in interest rates. We utilize borrowings under our senior notes payable and credit facilities to fund costs and expenses incurred in connection with our acquisitions and retail liquidation engagements. Borrowings under our senior notes payable are at fixed interest rates and borrowings under our credit facilities bear interest at a floating rate of interest. In our portfolio of securities owned we invest in loans receivable that primarily bear interest at a floating rate of interest.

The primary objective of our investment activities is to preserve capital for the purpose of funding operations while at the same time maximizing the income we receive from investments without significantly increasing risk. To achieve these objectives, our investments allow us to maintain a portfolio of cash equivalents, short-term investments through a variety of securities owned that primarily includes common stocks, loans receivable and investments in partnership interests. Our cash and cash equivalents through September 30, 2018 included amounts in bank checking and liquid money market accounts. We may be exposed to interest rate risk through trading activities in convertible and fixed income securities as well as U.S. Treasury securities, however, based on our daily monitoring of this risk, we believe we currently have limited exposure to interest rate risk in these activities.

Foreign Currency Risk

The majority of our operating activities are conducted in U.S. dollars. Revenues generated from our foreign subsidiaries totaled $1.3 million for the nine months ended September 30, 2018 or less than 1% of our total revenues of $321.0 million during the nine months ended September 30, 2018. The financial statements of our foreign subsidiaries are translated into U.S. dollars at period-end rates, with the exception of revenues, costs and expenses, which are translated at average rates during the reporting period. We include gains and losses resulting from foreign currency transactions in income, while we exclude those resulting from translation of financial statements from income and include them as a component of accumulated other comprehensive income (loss). Transaction gains (losses), which were included in our consolidated statements of income, amounted to a gain of $0.8 million and a loss of $0.9 million during the nine months ended September 30, 2018 and 2017, respectively. We may be exposed to foreign currency risk; however, our operating results during the nine months ended September 30, 2018 included $1.3 million of revenues from our foreign subsidiaries and a 10% appreciation of the U.S. dollar relative to the local currency exchange rates would result in approximately $0.1 million increase in our operating income and a 10% depreciation of the U.S. dollar relative to the local currency exchange rates would have resulted in a net decrease in our operating income of approximately $0.1 million for the nine months ended September 30, 2018.

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 September 30, 2018 our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the fiscal quarter covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Inherent Limitation 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 our 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 our business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In view of the number and diversity of claims against our company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, we cannot state with certainty what the eventual outcome of pending litigation or other claims will be.  Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

On January 5, 2017, complaints filed in November 2015 and May 2016 naming MLV & Co. (“MLV”), a broker-dealer subsidiary of FBR, as a defendant in putative class action lawsuits alleging claims under the Securities Act, in connection with the offerings of Miller Energy Resources, Inc. (“Miller”) have been consolidated. The Master Consolidated Complaint, styled Gaynor v. Miller et al., is pending in the United States District Court for the Eastern District of Tennessee, and, like its predecessor complaints, continues to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged material misrepresentations and omissions in the registration statement and prospectuses issued in connection with six offerings (February 13, 2013; May 8, 2013; June 28, 2013; September 26, 2013; October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate offering price of approximately $151.0 million. The plaintiffs seek unspecified compensatory damages and reimbursement of certain costs and expenses. In August 2017, the Court granted Defendant’s Motion to Dismiss on Section 12 claims and found that the plaintiffs had not sufficiently alleged a corrective disclosure prior to August 6, 2015, when an SEC civil action was announced. Defendants’ answer was filed on September 25, 2017. Plaintiffs have filed motions for class certification and to remand the case to state court following a positive ruling in an unrelated case by the U.S. Supreme Court. Although MLV is contractually entitled to be indemnified by Miller in connection with this lawsuit, Miller filed for bankruptcy in October 2015 and this likely will decrease or eliminate the value of the indemnity that MLV receives from Miller.

In February 2017, certain former employees filed an arbitration claim with FINRA against WSI alleging misrepresentations in the recruitment of claimants to join WSI. Claimants also allege that WSI failed to support their mortgage trading business resulting in the loss of opportunities during their employment with WSI. Claimants are seeking $10.0 million in damages. WSI has counterclaimed alleging that claimants misrepresented their process for doing business, particularly their capital needs, resulting in substantial losses to WSI. WSI believes the claims are meritless and intends to vigorously defend the action.

In March 2017, United Online, Inc. received a letter from PeopleConnect, Inc. (formerly, Classmates, Inc.) (“Classmates”) regarding a notice of investigation received from the Consumer Protection Divisions of the District Attorneys’ offices of four California counties (“California DAs”). These entities suggest that Classmates may be in violation of California codes relating to unfair competition, false or deceptive advertising, and auto-renewal practices. Classmates asserts that these claims are indemnifiable claims under the purchase agreement between United Online, Inc. and the buyer of Classmates. A tolling agreement with certain California District Attorneys has been signed and informal discovery and production is in process. At the present time, the financial impact to the Company, if any, cannot be estimated.

In July 2017, an arbitration claim was filed with FINRA by Dominick & Dickerman LLC and Michael Campbell against WSI and Gary Wunderlich with respect to the acquisition by Wunderlich Investment Company, Inc. (“WIC”) (the parent corporation of WSI) of certain assets of Dominick & Dominick LLC in 2015. The Claimants allege that respondents overvalued WIC so that the purchase price paid to the Claimants in shares of WIC stock was artificially inflated. The Statement of Claim includes claims for common law fraud, negligent misrepresentation, and breach of contract. Claimants are seeking damages of approximately $8.0 million plus unspecified punitive damages. Respondents believe the claims are meritless and intend to vigorously defend the action.

In September 2017, Frontier State Bank (“Frontier”) filed a lawsuit against Wunderlich Loan Capital Corp., a subsidiary of WIC (“WLCC”), seeking rescission of the purchase a residential mortgage in the amount of $1.3 million. Vanguard Funding, LLC (“Vanguard”) sold the mortgage to WLCC who then assigned its rights to Frontier. Shortly after closing, Frontier was advised that the mortgage had been previously pledged to another lender. In the lawsuit against WLCC, it is alleged that WLCC did not deliver the mortgage to Frontier with clear title. In September 2018, the matter was settled and general releases were exchanged.

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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 for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 14, 2018. 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 for the year ended December 31, 2017 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 for the year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.

Changes in tax laws or regulations, or to interpretations of existing tax laws or regulations, to which we are subject could adversely affect our financial condition and cash flows.

We are subject to taxation in the United States and in some foreign jurisdictions. Our financial condition and cash flows are impacted by tax policy implemented at each of the federal, state, local and international levels.  We cannot predict whether any changes to tax laws or regulations, or to interpretations of existing tax laws or regulations, will be implemented in the future or whether any such changes would have a material adverse effect on our financial condition and cash flows.  However, future changes to tax laws or regulations, or to interpretations of existing tax laws or regulations, could increase our tax burden or otherwise adversely affect our financial condition and cash flows. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report are set forth on the Exhibit Index.

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Exhibit Index

		Incorporated by Reference
Exhibit  No.	Description	Form	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation, as amended, dated as of August 17, 2015	10-Q	3.1	8/3/2018
4.1	Base Indenture, dated as of November 2, 2016, by and between the registrant and U.S. Bank National Association, as Trustee	8-K	4.1	11/2/2016
4.2	First Supplemental Indenture, dated as of November 2, 2016, by and between the registrant and U.S. Bank National Association, as Trustee	8-K	4.2	11/2/2016
4.3	Form of 7.50% Senior Note due 2021	8-K	4.2	11/2/2016
4.4	Second Supplemental Indenture, dated as of May 31, 2017, by and between the registrant and U.S. Bank National Association, as Trustee	8-K	4.1	5/31/2017
4.5	Form of 7.50% Senior Note due 2027	8-K	4.1	5/31/2017
4.6	Third Supplemental Indenture, dated as of December 13, 2017, by and between the registrant and U.S. Bank National Association, as Trustee	8-K	4.1	12/13/2017
4.7	Form of 7.25% Senior Note due 2027	8-K	4.1	12/13/2017
4.8	Fourth Supplemental Indenture, dated as of May 17, 2018, by and between the Company and U.S. Bank National Association, as Trustee	8-K	4.1	5/17/2018
4.9	Form of 7.375% Senior Note due 2023	8-K	4.2	5/17/2018
4.10	Fifth Supplemental Indenture, dated as of September 11, 2018, by and between the Company and U.S. Bank National Association, as Trustee	8-K	4.1	9/11/2018
4.11	Form of 6.875% Senior Note due 2023	8-K	Exhibit A to Exhibit 4.1	9/11/2018
10.1	2018 Employee Stock Purchase Plan	8-K	10.1	7/31/2018
10.2#	Employment Agreement, dated as of July 10, 2018, by and between the Company and Kenneth M. Young	8-K	10.1	7/16/2018
10.3#	Employment Agreement, dated as of July 10, 2018, by and between B. Riley FBR, Inc. and Andrew Moore	8-K	10.2	7/16/2018

62

10.4#	Amendment No. 1 to Employment Agreement, dated as of July 10, 2018, by and between the registrant and Bryant R. Riley	8-K	10.3	7/16/2018
10.5#	Amendment No. 1 to Employment Agreement, dated as of July 10, 2018, by and between the registrant and Thomas Kelleher	8-K	10.4	7/16/2018
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*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
*	Filed herewith.
**	Furnished herewith.
#	Management contract or compensatory plan or arrangement

63

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.

Date: November 5, 2018		B. Riley Financial, Inc.
	By:	/s/ PHILLIP J. AHN
		Name: Phillip J. Ahn
		Title: Chief Financial Officer and Chief Operating Officer (Principal Financial Officer)

64

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bryant R. Riley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of B. Riley Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2018

/s/ BRYANT R. RILEY

Bryant R. Riley

Chairman and Co-Chief Executive Officer
(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Kelleher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of B. Riley Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2018

/s/ THOMAS J. KELLEHER

Thomas J. Kelleher

Co-Chief Executive Officer
(Principal Executive Officer)

EX-31.3

EXHIBIT 31.3

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Phillip J. Ahn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of B. Riley Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2018

/s/ PHILLIP J. AHN

Phillip J. Ahn

Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of B. Riley Financial, Inc. (the “Company”) for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryant R. Riley, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRYANT R. RILEY

Bryant R. Riley

Chairman and Co-Chief Executive Officer

November 5, 2018

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of B. Riley Financial, Inc. (the “Company”) for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Kelleher, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ THOMAS J. KELLEHER

Thomas J. Kelleher

Co-Chief Executive Officer

November 5, 2018

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of B. Riley Financial, Inc. (the “Company”) for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Phillip J. Ahn, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ PHILLIP J. AHN

Phillip J. Ahn

Chief Financial Officer and Chief Operating Officer

November 5, 2018

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 05, 2018
Document And Entity Information
Entity Registrant Name	B. Riley Financial, Inc.
Entity Central Index Key	0001464790
Document Type	10-Q
Trading Symbol	RILY
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity's Reporting Status Current	Yes
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,554,205
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2018		Dec. 31, 2017
Assets
Cash and cash equivalents	$ 233,918		$ 132,823
Restricted cash	468		19,711
Due from clearing brokers	54,891		31,479
Securities and other investments owned, at fair value	222,521		145,360
Securities borrowed	1,042,295	[1]	807,089
Accounts receivable, net	38,958		20,015
Due from related parties	9,921		5,689
Advances against customer contracts	21,405		5,208
Loans receivable	37,147
Prepaid expenses and other assets	50,193		22,605
Property and equipment, net	11,143		11,977
Goodwill	120,129		98,771
Other intangible assets, net	51,011		56,948
Deferred income taxes	26,901		29,229
Total assets	1,920,901		1,386,904
Liabilities
Accounts payable	2,278		2,650
Accrued expenses and other liabilities	87,901		71,685
Deferred revenue	3,205		3,141
Due to partners	1,428		1,578
Securities sold not yet purchased	59,672		28,291
Securities loaned	1,035,408	[1]	803,371
Mandatorily redeemable noncontrolling interests	4,409		4,478
Notes payable	1,671		2,243
Senior notes payable	455,783		203,621
Total liabilities	1,651,755		1,121,058
Commitments and contingencies
B. Riley Financial, Inc. stockholders' equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued
Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,526,445 and 26,569,462 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	2		2
Additional paid-in capital	255,236		259,980
Retained earnings	14,842		6,582
Accumulated other comprehensive loss	(1,696)		(534)
Total B. Riley Financial, Inc. stockholders' equity	268,384		266,030
Noncontrolling interests	762		(184)
Total equity	269,146		265,846
Total liabilities and equity	$ 1,920,901		$ 1,386,904

[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.

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	1,000,000	1,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	26,526,445	26,569,462
Common stock, outstanding	26,526,445	26,569,462

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues:
Total revenues	$ 99,681	$ 92,426	$ 320,960	$ 211,999
Operating expenses:
Direct cost of services	8,156	10,138	33,733	46,224
Cost of goods sold	52	124	142	313
Selling, general and administrative expenses	71,782	70,962	216,603	132,836
Restructuring charge	428	4,896	2,247	11,484
Interest expense - Securities lending	6,425	4,950	16,317	6,515
Total operating expenses	86,843	91,070	269,042	197,372
Operating income	12,838	1,356	51,918	14,627
Other income (expense):
Interest income	442	76	736	358
Income (loss) from equity investments	828	(157)	5,049	(157)
Interest expense	(9,340)	(2,510)	(23,926)	(5,195)
Income (loss) before income taxes	4,768	(1,235)	33,777	9,633
(Provision for) benefit from income taxes	(2,046)	1,357	(8,412)	7,753
Net income	2,722	122	25,365	17,386
Net (loss) income attributable to noncontrolling interests	(92)	(246)	1,051	(283)
Net income attributable to B. Riley Financial, Inc.	$ 2,814	$ 368	$ 24,314	$ 17,669
Basic income per share	$ 0.11	$ 0.01	$ 0.94	$ 0.8
Diluted income per share	0.1	0.01	0.91	0.76
Cash dividends per share	$ 0.3	$ 0.13	$ 0.58	$ 0.55
Weighted average basic shares outstanding	25,968,997	26,059,490	25,856,339	22,180,808
Weighted average diluted shares outstanding	26,854,261	27,639,862	26,776,133	23,385,014
Services And Fees [Member]
Revenues:
Total revenues	$ 90,655	$ 85,450	$ 297,986	$ 202,663
Interest Income - Securities lending [Member]
Revenues:
Total revenues	8,954	6,897	22,836	9,115
Sale Of Goods [Member]
Revenues:
Total revenues	$ 72	$ 79	$ 138	$ 221

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 2,722	$ 122	$ 25,365	$ 17,386
Other comprehensive (loss) income:
Change in cumulative translation adjustment	(77)	345	(1,162)	1,391
Other comprehensive (loss) income, net of tax	(77)	345	(1,162)	1,391
Total comprehensive income	2,645	467	24,203	18,777
Comprehensive (loss) income attributable to noncontrolling interests	(92)	(246)	1,051	(283)
Comprehensive income attributable to B. Riley Financial, Inc.	$ 2,737	$ 713	$ 23,152	$ 19,060

XML

Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Noncontrolling Interests [Member]	Total
Balance at Beginning at Dec. 31, 2016		$ 2	$ 141,170	$ 9,887	$ (1,712)	$ 1,045	$ 150,392
Balance at Beginning (in shares) at Dec. 31, 2016		19,140,342
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for acquisition of MK Capital, LLC - contingent equity consideration on February 2, 2017			1,151				1,151
Issuance of common stock for acquisition of MK Capital, LLC - contingent equity consideration on February 2, 2017 (in shares)		166,666
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017			1,952				1,952
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 (in shares)		158,484
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017			$ 73,472				$ 73,472
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 (in shares)		4,779,354
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017			36,306				36,306
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 (in shares)		$ 1,974,812
Vesting of restricted stock, net of shares withheld for employer taxes			$ (2,683)				$ (2,683)
Vesting of restricted stock, net of shares withheld for employer taxes (in shares)		241,910
Common shares cancelled - resolution of escrow claim
Common shares cancelled - resolution of escrow claim (in shares)
Stock repurchased and retired
Stock repurchased and retired (in shares)
Share based payments			7,679				7,679
Dividends on common stock				(11,600)			(11,600)
Net income				17,669		(170)	17,386
Distribution to noncontrolling interest						(922)	(922)
Foreign currency translation adjustment					1,391		1,391
Balance at End at Sep. 30, 2017		$ 2	259,047	15,956	(321)	(47)	274,637
Balance at End (in shares) at Sep. 30, 2017		26,461,568
Balance at Beginning at Dec. 31, 2017		$ 2	259,980	6,582	(534)	(184)	265,846
Balance at Beginning (in shares) at Dec. 31, 2017		26,569,462
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for acquisition of MK Capital, LLC - contingent equity consideration on February 2, 2017
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 (in shares)
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 (in shares)
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 (in shares)
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC			$ 8,050				$ 8,050
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC (in shares)		405,817
Vesting of restricted stock, net of shares withheld for employer taxes			(4,106)				(4,106)
Vesting of restricted stock, net of shares withheld for employer taxes (in shares)		522,399
Common shares cancelled - resolution of escrow claim
Common shares cancelled - resolution of escrow claim (in shares)		(21,233)
Stock repurchased and retired			(17,338)				(17,338)
Stock repurchased and retired (in shares)		(950,000)
Share based payments			8,650				8,650
Dividends on common stock				(16,054)			(16,054)
Net income				24,314		946	25,365
Foreign currency translation adjustment					(1,162)		(1,162)
Balance at End at Sep. 30, 2018		$ 2	$ 255,236	$ 14,842	$ (1,696)	$ 762	$ 269,146
Balance at End (in shares) at Sep. 30, 2018		26,526,445

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 2,722	$ 122	$ 25,365	$ 17,386
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			9,768	7,705
Provision for doubtful accounts	343	379	840	827
Share-based compensation			8,650	7,679
Recovery of key man life insurance				(6,000)
Non-cash interest and other			1,384	319
Effect of foreign currency on operations			(352)	(1,022)
(Income) loss from equity investments	(828)	157	(5,049)	157
Deferred income taxes			7	(24,560)
Impairment of leaseholds, lease loss accrual and loss on disposal of fixed assets			1,718	2,838
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests			847	10,766
Change in operating assets and liabilities:
Due from clearing brokers			(23,412)	13,258
Securities and other investments owned			(77,161)	(41,350)
Securities borrowed			(235,206)	129,998
Accounts receivable and advances against customer contracts			(35,982)	1,635
Prepaid expenses and other assets			(19,418)	15,522
Accounts payable, accrued payroll and related expenses, accrued value added tax payable and other accrued expenses			10,111	(38,597)
Amounts due to/from related parties and partners			(4,487)	(12,313)
Securities sold, not yet purchased			31,381	7,700
Deferred revenue			64	(1,302)
Securities loaned			232,037	(139,425)
Net cash used in operating activities			(78,895)	(48,779)
Cash flows from investing activities:
Purchases of loans receivable			(35,111)
Acquisition of Wunderlich, net of cash acquired $4,259				(25,478)
Cash acquired from acquisition of FBR & Co.				15,738
Acquisition of other businesses			(4,000)	(2,052)
Acquisition consideration payable -United Online				(10,381)
Purchases of property and equipment and intangible assets			(2,314)	(550)
Proceeds from key man life insurance				6,000
Proceeds from sale of property and equipment and intangible assets			37	619
Equity investments			(6,856)	(1,015)
Dividends from equity investment			1,695
Net cash used in investing activities			(46,549)	(17,119)
Cash flows from financing activities:
Proceeds from asset based credit facility			300,000	65,987
Repayment of asset based credit facility			(300,000)	(65,987)
Payment of contingent consideration				(1,250)
Proceeds from notes payable			51,020
Repayment of notes payable			(51,591)	(8,214)
Proceeds from issuance of senior notes			255,290	89,330
Payment of debt issuance costs			(6,356)	(2,093)
Payment of employment taxes on vesting of restricted stock			(4,106)	(2,683)
Dividends paid			(17,912)	(13,493)
Repurchase of common stock			(17,338)
Distribution to noncontrolling interests			(915)	(2,878)
Net cash provided by financing activities			208,092	58,719
Increase (decrease) in cash, cash equivalents and restricted cash			82,648	(7,179)
Effect of foreign currency on cash, cash equivalents and restricted cash			(796)	3,458
Net increase (decrease) in cash, cash equivalents and restricted cash			81,852	(3,721)
Cash, cash equivalents and restricted cash, beginning of year			152,534	115,399	$ 115,399
Cash, cash equivalents and restricted cash, end of period	$ 234,386	$ 111,678	234,386	111,678	$ 152,534
Supplemental disclosures:
Interest paid			35,289	11,513
Taxes paid			$ 2,455	$ 11,668

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Statement of Cash Flows [Abstract]
Net of cash acquired		$ 4,259

XML

ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1—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, valuation and 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 with the acquisition of United Online, Inc. (“UOL”) on July 1, 2016, provide consumer Internet access and related subscription services.

The Company operates in four operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, consulting, research, sales and trading and wealth management services to corporate, institutional and high net worth clients; (ii) 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; (iii) Valuation and Appraisal, through which the Company provides valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs; and (iv) Principal Investments - United Online, through which the Company provides consumer Internet access and related subscription services.

On November 9, 2017, the Company entered into an Agreement and Plan of Merger with B. R. Acquisition Ltd., an Israeli corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and magicJack VocalTec Ltd., an Israeli corporation (“magicJack”), pursuant to which Merger Sub will merge with and into magicJack, with magicJack continuing as the surviving corporation and as an indirect subsidiary of the Company. Subject to the terms and conditions of the Agreement and Plan of Merger, each outstanding share of magicJack will be converted into the right to receive $8.71 in cash without interest, representing approximately $143,500 in aggregate merger consideration. The closing of the transaction is subject to the receipt of certain regulatory approvals and the satisfaction of other closing conditions. It is anticipated that the acquisition of magicJack will close in the fourth quarter of 2018.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“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 presentation of the financial position and the results of operations for the periods presented have been included. These 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 for the year ended December 31, 2017, filed with the SEC on March 14, 2018. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

(b) Use of Estimates

The preparation of the 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 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, reserves for accounts receivable and slow moving goods held for sale or auction, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share-based arrangements, fair value of contingent consideration in business combinations and accounting for income tax valuation 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 differ. 

(c) Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services.

Revenues from contracts with customers in the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment, and Principal Investments – United Online segment are primarily comprised of the following:

Capital Markets Segment - Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.

Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.

Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research.

Auction and Liquidation Segment - Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer. The commission and fees earned for these services are included in revenues in the accompanying condensed consolidated statements of income. Under these types of arrangements, revenues also include contractual reimbursable costs.

Revenues earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized over time when the performance obligation is satisfied. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of services to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or decrease the transaction price upon completion of our performance obligations under the contract. Estimated amounts are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not occur. Our estimates of variable consideration and determination of whether or not to include estimated amounts in the transaction price are based on an assessment of our anticipated performance under the contract taking into consideration all historical, current and forecasted information that is reasonably available to us. Costs that directly relate to the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in the accompanying condensed consolidated balance sheets. These costs are amortized as the services are transferred to the customer over the contract period, which generally does not exceed six months, and the expense is recognized a component of direct cost of services. If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined. 

Valuation and Appraisal Segment - Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the completed services to the customer. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs.

Principal Investments – United Online Segment - Revenues in the Principal Investments - United Online segment include subscription service revenues that are derived primarily from fees charged to pay accounts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Payments from pay accounts received in advance of our performance obligations are recorded in the condensed consolidated balance sheets as deferred revenue. 

Advertising revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available.

Sale of product revenues are derived primarily from the sale of mobile broadband service devices to customers and includes the related shipping and handling fees.

Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders, (iii) trading activities from our principal investments in equity and other securities for the Company’s account, and (iv) other income.

Interest income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned.

Other revenues includes (i) net trading gains and losses from market making activities in our fixed income group, (ii) carried interest from our asset management recognized as earnings from financial assets within the scope of ASC 323 - Investments - Equity Method and Joint Ventures, and therefore will not be in the scope of ASC 606 - Revenue from Contracts with Customers. In accordance with ASC 323 - Investments - Equity Method and Joint Ventures, the Company will record equity method income (losses) as a component of investment income based on the change in our proportionate claim on net assets of the investment fund, including performance-based capital allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements, and (iii) other miscellaneous income.

(d) Direct Cost of Services

Direct cost of services relate to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to auction and liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments - United Online segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks and data centers, depreciation of network computers and equipment, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs.

(e) Interest Expense - Securities Lending Activities

Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company.

(f) Concentration of Risk

Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments – United Online segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe.

The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts operations with third parties through collaborative arrangements.

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 concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements.

(g) Advertising Expenses

The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $371 and $183 for the three months ended September 30, 2018 and 2017, respectively, and $1,656 and $1,227 for the nine months ended September 30, 2018 and 2017, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of income.

(h) Share-Based Compensation

The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period.

(i) Restructuring Charge

The Company recorded a restructuring charge in the amount of $428 and $4,896 for the three months ended September 30, 2018 and 2017, respectively, and $2,247 and $11,484, for the nine months ended September 30, 2018 and 2017, respectively.

The restructuring charge of $428 and $2,247 during the three and nine months ended September 30, 2018, respectively, was primarily related to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

The restructuring charge of $4,896 and $11,484 during the three and nine months ended September 30, 2017, respectively, was primarily related to costs savings measures taking into account the planned synergies as a result of the acquisitions of FBR & Co. (“FBR”) and Wunderlich Investment Company, Inc. (“Wunderlich”), which included a reduction in workforce for some of the corporate executives of FBR and Wunderlich and a restructuring to integrate FBR’s and Wunderlich’s operations with the Company’s operations in the Capital Markets segment. 

The following table summarizes the changes in accrued restructuring charge during the three and nine months ended September 30, 2018 and 2017: 

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	1,827			3,287			2,600			694
Restructuring charge		428			4,896			2,247			11,484
Cash paid		(504	)		(3,092	)		(2,954	)		(4,880	)
Non-cash items		(1	)		(1,732	)		(143	)		(3,939	)
Balance, end of period	$	1,750		$	3,359		$	1,750		$	3,359

The following table summarizes the restructuring activities during the three months ended September 30, 2018 and 2017:

	Three Months Ended September 30,
	2018								2017
			Principal								Principal
			Investments -								Investments -
	Capital		United						Capital		United
	Markets		Online		Corporate		Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	76		—		—	$	76	$	2,285	$	150	$	1,102	$	3,537
Facility closure and consolidation charge		352		—		—		352		1,037		—		322		1,359
Total restructuring charge	$	428	$	—	$	—	$	428	$	3,322	$	150	$	1,424	$	4,896

The following table summarizes the restructuring activities during the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018									2017
			Principal									Principal
			Investments -									Investments -
	Capital		United							Capital		United
	Markets		Online		Corporate			Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	729		—		—		$	729	$	4,819	$	633	$	3,284	$	8,736
Facility closure and consolidation charge (recovery)		1,728		—		(210	)		1,518		2,426		—		322		2,748
Total restructuring charge	$	2,457	$	—	$	(210	)	$	2,247	$	7,245	$	633	$	3,606	$	11,484

(j) Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense.

The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, provides an exemption from U.S. federal tax for dividends received from foreign subsidiaries, and creates new taxes on certain foreign sourced earnings. As of the completion of these financial statements and related disclosures, we have not completed our accounting for the tax effects of the Tax Reform Act; however, as described below, we have made a reasonable estimate of such effects and recorded a provisional tax expense of $13,052, which is included as a component of income tax expense in the fourth quarter of 2017. This provisional tax expense incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act, and may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Reform Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Reform Act no later than the fourth quarter of 2018. Future adjustments made to the provisional effects will be reported as a component of income tax expense from continuing operations in the reporting period in which any such adjustments are determined.

(k) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

(l) Restricted Cash

As of September 30, 2018, restricted cash balance of $468 is cash collateral for one of our telecommunication suppliers. As of December 31, 2017, restricted cash balance of $19,711 included $19,197 of cash collateral related to a retail liquidation engagement and $514 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication suppliers.

(m) 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.

The Company accounts for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets.

(n) Due from/to Brokers, Dealers, and Clearing Organizations

The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker.

(o) Accounts Receivable

Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and Principal Investments - United Online segment customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. Bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2018 and 2017 are included in Note 5. 

(p) Advances Against Customer Contracts

Advances against customer contracts represent advances of contractually reimbursable funds incurred prior to, and during the term of the auction and liquidation services contract. On April 18, 2018, the Company entered into an agency agreement to participate in the right to liquidate certain assets of The Bon-Ton Stores, Inc. (the “Agency Agreement”). There are three parties to the Agency Agreement which were granted the right to act as the exclusive agent to conduct the sale of substantially all of the assets of The Bon-Ton Stores, Inc. (the “Bon-Ton Transaction”). The Company initially advanced $407,426 in connection with Agency Agreement.  As of September 30, 2018, $21,405 remained outstanding and is included in the advances against customer contracts.  Management expects the outstanding advance continue to be repaid from proceeds generated from the liquidation of the assets related to the Bon-Ton Transaction. 

(q) Loans Receivable

Loans are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and for purchased loans, net of any unamortized premiums or discounts. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to interest income using a level yield methodology. Loans receivable at September 30, 2018, consists of one loan in the amount of $15,000 that was fully repaid in October 2018 and the other loan in the amount of $22,147 which is due in May 2020.

(r) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $1,005 and $1,243 for the three months ended September 30, 2018 and 2017, respectively, and $3,369 and $2,458 for the nine months ended September 30, 2018 and 2017, respectively.

(s) Securities Owned and Securities Sold Not Yet Purchased

Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices.  Changes in the value of these securities are reflected currently in the results of operations.

As of September 30, 2018 and December 31, 2017, the Company’s securities and other investments owned and securities sold not yet purchased measured at fair value consisted of the following securities and investments: 

	September 30,		December 31,
	2018		2017
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	67,306
Corporate bonds		18,909		6,539
Fixed income securities		4,467		2,329
Loans receivable		36,587		33,713
Partnership interests and other		56,241		35,473
	$	222,521	$	145,360
Securities sold not yet purchased:
Common stocks	$	47,929	$	19,145
Corporate bonds		6,381		1,175
Fixed income securities		598		699
Partnership interests and other		4,764		7,272
	$	59,672	$	28,291

(t) 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 falls 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.

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, loans receivable 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 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’s partnership interests are valued based on the Company’s proportionate share of the net assets of the partnership which is derived from the most recent statements received from the general partner which are included in Level 3 of the fair value hierarchy. The Company also invests in certain proprietary investment funds that are valued at net asset value (“NAV”) determined by the fund administrator. The underlying securities held by these investment companies are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. As a practical expedient, the Company relies on the NAV of these investments as their fair value. The NAVs that have been provided by the fund administrators are derived from the fair values of the underlying investments as of the reporting date. In accordance with ASC “Topic 820: Fair Value Measurements,” these investment funds are not categorized within the fair value hierarchy.

The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2018 and December 31, 2017:

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at September 30, 2018 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	September 30,		identical assets		inputs		inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	72,153	$	25,207	$	8,957
Corporate bonds		18,909		—		18,909		—
Fixed income securities		4,467		—		4,467		—
Loans receivable		36,587		—		—		36,587
Partnership interests and other		54,114		1,280		10		52,824
Total assets measured at fair value	$	220,394	$	73,433	$	48,593	$	98,368
Liabilities:
Securities sold not yet purchased:
Common stocks	$	47,929	$	47,929	$	—	$	—
Corporate bonds		6,381		—		6,381
Fixed income securities		598		—		598		—
Partnership interests and other		4,764		4,764		—		—
Total securities sold not yet purchased		59,672		52,693		6,979		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,409		—		—		4,409
Total liabilities measured at fair value	$	64,081	$	52,693	$	6,979	$	4,409

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at December 31, 2017 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	67,306	$	38,960	$	—	$	28,346
Corporate bonds		6,539		—		6,539		—
Fixed income securities		2,329		—		2,329		—
Loans receivable		33,713		—		—		33,713
Partnership interests and other		31,883		686		5,093		26,104
Total assets measured at fair value	$	141,770	$	39,646	$	13,961	$	88,163
Liabilities:
Securities sold not yet purchased:
Common stocks	$	19,145	$	19,145	$	—	$	—
Corporate bonds		1,175		—		1,175		—
Fixed income securities		699		—		699		—
Partnership interests and other		7,272		7,272		—		—
Total securities sold not yet purchased		28,291		26,417		1,874		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—		—		4,478
Total liabilities measured at fair value	$	32,769	$	26,417	$	1,874	$	4,478

As of September 30, 2018, securities and other investments owned included $2,127 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $222,521 in the condensed consolidated balance sheets at September 30, 2018 included investments in investment funds of $2,127 and securities and other investments owned in the amount of $220,394 as outlined in the fair value table above.

As of December 31, 2017, securities and other investments owned included $3,590 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $145,360 in the condensed consolidated balance sheets at December 31, 2017 included investments in investment funds of $3,590 and securities and other investments owned in the amount of $141,770 as outlined in the fair value table above.

As of September 30, 2018 and December 31, 2017, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $98,368 and $88,163, respectively, or 5.1% and 6.4%, 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 following table summarizes 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 September 30, 2018: 

	Fair value at
	September 30,						Weighted
	2018		Valuation Technique	Unobservable Input	Range		Average
Assets:
Common stocks and warrants	$	8,957	Market approach	Over-the-counter trading activity		$10.00-$10.50/share	$	10.29
			Market approach	Market price of related security		$0.61/share	$	0.61
			Pending transaction	Discount		50%		50%
Loans receivable		36,587	Market approach	Revenue multiple		1.4x		1.4x
Partnership interests and other		52,824	Market approach	Revenue multiple		1.4x		1.4x
Total level 3 assets measured at fair value	$	98,368
Liabilities:
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	$	4,409	Market approach	Operating income multiple		6.0x		6.0x

The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2018 and 2017 are as follows:

	Level 3		Level 3 Changes During the Period												Level 3
	Balance at		Fair			Relating to			Purchases,			Transfer in			Balance at
	Beginning of		Value			Undistributed			Sales and			and/or out			End of
	Year		Adjustments			Earnings			Settlements			of Level 3			Period
Nine Months Ended September 30, 2018
Common stocks and warrants	$	28,346	$	(3,247	)	$	578		$	4,250		$	(20,970	)	$	8,957
Loans receivable		33,713		(11	)		100			2,785			—			36,587
Partnership interests and other		26,104		1,411			(2,735	)		28,044			—			52,824
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—			(69	)		—			—			4,409
Nine Months Ended September 30, 2017
Common stocks and warrants	$	299	$	(463	)	$	—		$	10,146		$	—		$	9,982
Corporate bonds		160		—			—			—			(160	)		—
Loans receivable		—		1,375			—			25,493			—			26,868
Partnership interests and other		13,426		2,820			—			(4,390	)		—			11,856
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		3,214		9,000			(190	)		—			806			12,830
Contingent consideration		1,242		8			—			(1,250	)		—			—

The fair value adjustment for contingent consideration of $8 represents imputed interest for the nine months ended September 30, 2017. During the second quarter of 2017, the Company had a triggering event for the mandatorily redeemable noncontrolling interests that resulted in a fair value adjustment of $6,250 of the total fair value adjustment of $9,000 for the nine months ended September 30, 2017. In connection with this event, the Company received proceeds of $6,000 from key man life insurance. These amounts have been recorded in the condensed consolidated statements of income in selling, general and administrative expenses in the Corporate and Other segment. The amount reported in the table above also for the nine months ended September 30, 2018 and 2017 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the 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.

The carrying amount of the senior notes payable approximates fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk.

During the nine months ended September 30, 2018 and 2017, there were no assets or liabilities measured at fair value on a non-recurring basis.

(u) Derivative and Foreign Currency Translation

The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain auction and liquidation engagements with operations outside the United States. During the nine months ended September 30, 2018, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $54,406 Canadian dollars that were settled during the first and second quarter of 2018 and (b) $1,500 Euro’s that was settled in March 2018. During the nine months ended September 30, 2017, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of $25,000 Australian dollars that was settled on January 31, 2017. The forward exchange contract was entered into to improve the predictability of cash flows related to a retail store liquidation engagement that was completed in December 2016. The net loss from forward exchange contracts was $33 during the three months ended September 30, 2017 and net loss from forward exchange contracts was $91 and $103 during the nine months ended September 30, 2018 and 2017, respectively. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of income.

The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets. Transaction losses were $51 and $389 during the three months ended September 30, 2018 and 2017, respectively. Transactions gains were $843 during the nine months ended September 30, 2018 compared to transaction losses of $919 during the same 2017 period. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of income.

(v) Common Stock Warrants

The Company issued 821,816 warrants to purchase common stock of the Company in connection with the acquisition of Wunderlich on July 3, 2017. The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022.

(w) Equity Investment

At December 31, 2017, the Company had a loan receivable from bebe stores, inc. (“bebe”) with a fair value of $16,867 included in securities and other investments owned. On January 12, 2018, the loan receivable in the amount of $16,867 plus accrued interest of $51 was converted into 2,819,528 shares of common stock of bebe, representing a conversion price at $6.00 per share. On January 12, 2018, the Company also purchased 500,000 shares of bebe common stock at $6.00 per share of which 250,000 shares were newly issued common stock by bebe and 250,000 shares were purchased from the majority shareholder of bebe. At September 30, 2018, the Company had an ownership of approximately 30.1% of bebe’s outstanding common shares.

The equity ownership in bebe is accounted for under the equity method of accounting. The carrying value for the bebe investment at September 30, 2018 was $26,012 and is included in prepaid expenses and other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2018, the equity income from bebe was $1,062 and $7,144, respectively, and is included in income from equity investments on the condensed consolidated statements of income.

(x) Statements of Cash Flows – Supplemental Non-cash Disclosures

During the nine months ended September 30, 2018, non-cash investing activities included the conversion of a loan receivable in the amount of $16,867 and accrued interest receivable of $51 into an equity investment that totaled $16,918 as more fully discussed in Note 2(v) above.

(y) Variable Interest Entity

In January 2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations. The Company’s investment in the Partnership is a Variable Interest Entity (“VIE”) since the unaffiliated limited partners do not have substantive kick-out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership. The Company has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant. 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. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed.

The carrying value of the Company’s investments in the VIE that was not consolidated is shown below.

	September 30, 2018
Partnership investments	$	5,179
Due from related party		1,071
Maximum exposure to loss	$	6,250

(z) Reclassification

The Company reclassified $262 of revenues that was reported as interest income – securities lending during the three months ended March 31, 2018 to revenues – services and fees. The previously reported amount of $7,553 as interest income – securities lending was reduced by $262 to $7,291 for the three months ended March 31, 2018 and the previously reported amount of $52,776 as revenues – services and fees was increased by $262 to $53,038 for the three months ended March 31, 2018.

The Company reclassified $309 of revenues that was reported as interest income – securities lending during the three months ended September 30, 2017 to revenues – services and fees. The previously reported amount of $7,206 and $9,424 as interest income – securities lending for the three and nine months ended September 30, 2017, respectively, was reduced by $309, to $6,897 and $9,115, respectively. The previously reported amount of $85,141 and $202,354 as revenues – services and fees for the three and nine months ended September 30, 2017, respectively, was increased by $309, to $85,450 and $202,663.

The impact of these reclassifications is reflected in the revenues as reported in the condensed consolidated statements of income for the three and nine months ended September 30, 2018 and 2017. The impact of this reclassification on the amounts reported during the periods was deemed to be immaterial.

(aa) Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13: Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in this update change the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company early adopted ASU 2018-13 in the third quarter of 2018 and the adoption did not have a material impact on our consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. This ASU also discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will continue to evaluate indicators that may give rise to a change in our tax provision as a result of the Tax Reform Act. See Note 10 for additional information on the Tax Reform Act.

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued ASU 2018-10: Codification Improvements to Topic 842, Leases, which provides narrow-scope improvements to the lease standard. ASU 2016-02 and ASU 2018-10 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of these updates on the consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income that provides for the reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Reform Act. The accounting update is effective for the fiscal year beginning after December 15, 2018 and early adoption is permitted. The accounting update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. We are currently evaluating the impact of the accounting update, but the adoption is not expected to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal year 2019, but early application is permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet adopted this update and currently evaluating the effect this new standard will have on its financial condition and results of operations

On January 1, 2018, we adopted ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) using the retrospective method which requires adjustment to prior periods in the statement of cash flows. ASU 2016-18 clarifies how restricted cash should be presented on the statement of cash flows and requires companies to include restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period totals on the statement of cash flows. Restricted cash previously classified under investing activities is now included in the reconciliation of beginning and ending cash on the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on the Company’s financial condition and results of operations.

On January 1, 2018, we adopted ASC 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 9 for additional information on the adoption of this standard.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

ACQUISITIONS

NOTE 3— ACQUISITIONS

Acquisition of Wunderlich Investment Company, Inc.

On May 17, 2017, the Company entered into a Merger Agreement (the “Wunderlich Merger Agreement”) with Wunderlich. Pursuant to the Wunderlich Merger Agreement, customary closing conditions were satisfied and the acquisition was completed on July 3, 2017. The total consideration of $65,118 paid to Wunderlich shareholders in connection with the Wunderlich acquisition was comprised of (a) cash in the amount of $29,737; (b) 1,974,812 newly issued shares of the Company’s common stock at closing which were valued at $31,495 for accounting purposes determined based on the closing market price of the Company’s shares of common stock on the acquisition date on July 3, 2017, less a 13.0% discount for lack of marketability as the shares issued are subject to certain escrow provisions and restrictions that limit their trade or transfer; and (c) 821,816 newly issued common stock warrants with an estimated fair value of $3,886. The common stock and common stock warrants issued includes 387,365 common shares and 167,352 common stock warrants that are held in escrow and subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition. The Company believes that the acquisition of Wunderlich will allow the Company to benefit from wealth management, investment banking, corporate finance, and sales and trading services provided by Wunderlich. The acquisition of Wunderlich is accounted for using the purchase method of accounting. The Company also entered into a registration rights agreement with certain shareholders of Wunderlich (the “Registration Rights Agreement”) on July 3, 2017 for the shares issued in connection with the Wunderlich Merger Agreement. The Registration Rights Agreement provides the Wunderlich shareholders with the right to notice of and, subject to certain conditions, the right to register shares of the Company’s common stock in certain future registered offerings of shares of the Company’s common stock.

The assets and liabilities of Wunderlich, both tangible and intangible, were recorded at their estimated fair values as of the July 3, 2017 acquisition date for Wunderlich. The application of the purchase method of accounting resulted in goodwill of $37,200 which represents the benefits from synergies with our existing business and acquired workforce. For the nine months ended September 30, 2018, acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Wunderlich, were charged against earnings in the amount of $12 are included in selling, general and administrative expenses in the condensed consolidated statements of income. The purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes.

The purchase price allocation was as follows:

Consideration paid by B. Riley:
Cash paid	$	29,737
Fair value of 1,974,812 B. Riley common shares issued		31,495
Fair value of 821,816 B. Riley common stock warrants issued		3,886
Total consideration	$	65,118

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	4,259
Securities owned		1,413
Accounts receivable		3,193
Due from clearing broker		15,133
Prepaid expenses and other assets		10,103
Property and equipment		2,315
Deferred taxes		5,456
Accounts payable		(1,718	)
Accrued payroll and related expenses		(6,387	)
Accrued expenses and other liabilities		(10,223	)
Securities sold, not yet purchased		(1,707	)
Notes payable		(10,579	)
Customer relationships		15,320
Trademarks		1,340
Goodwill		37,200
Total	$	65,118

The revenue and earnings of Wunderlich included in our condensed consolidated financial statements for the three months ended September 30, 2018 were $17,239 and $276, respectively. During the nine months ended September 30, 2018, revenue and loss of Wunderlich included in our condensed consolidated financial statements were $60,578 and $844, respectively. The earnings (loss) from Wunderlich of $276 and ($844) for the three and nine months ended September 30, 2018, respectively, included restructuring charges in the amount of $317 and $1,083, respectively, related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

The revenue and loss of Wunderlich included in our condensed consolidated financial statements for the period from July 3, 2017 (the date of acquisition) through September 30, 2017 were $20,412 and $1,928, respectively. The loss from Wunderlich of $1,928 included a restructuring charge in the amount of $1,387 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

Acquisition of FBR & Co.

On February 17, 2017, the Company entered into an Agreement and Plan of Merger (the “FBR Merger Agreement”) with FBR, pursuant to which FBR was to merge with and into the Company (or a subsidiary of the Company), with the Company (or its subsidiary) as the surviving corporation (the “Merger”). On May 1, 2017, the Company and FBR filed a registration statement for the planned Merger. The stockholders of the Company and FBR approved the acquisition on June 1, 2017, customary closing conditions were satisfied and the acquisition was completed on June 1, 2017. Subject to the terms and conditions of the FBR Merger Agreement, each outstanding share of FBR common stock (“FBR Common Stock”) was converted into the right to receive 0.671 of a share of the Company’s common stock as summarized below. The Company believes that the acquisition of FBR will allow the Company to benefit from investment banking, corporate finance, securities lending, research, and sales and trading services provided by FBR and planned synergies from the elimination of duplicate corporate overhead and management functions with the Company. The acquisition of FBR is accounted for using the purchase method of accounting.

The assets and liabilities of FBR, both tangible and intangible, were recorded at their estimated fair values as of the June 1, 2017 acquisition date for FBR. The application of the purchase method of accounting resulted in goodwill of $11,336 which represents expected overhead synergies and acquired workforce. The purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes.

The purchase price allocation was as follows:

Consideration paid by B. Riley:
Number of FBR Common Shares outstanding at June 1, 2017		7,099,511
Stock merger exchange ratio		0.671
Number of B. Riley common shares		4,763,772
Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards		67,861
Total number of B. Riley common shares to be issued		4,831,633
Closing market price of B. Riley common shares on December 31, 2016	$	14.70
Total value of B. Riley common shares		71,025
Fair value of RSU’s attributable to service period prior to June 1, 2017 (a)		2,446
Total consideration	$	73,471

(a) Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the FBR Merger Agreement with the right to receive 0.671 shares of the Company’s common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company’s common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period.

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	15,738
Securities owned		11,188
Securities borrowed		861,197
Accounts receivable		4,341
Due from clearing broker		29,169
Prepaid expenses and other assets		5,486
Property and equipment		8,663
Deferred taxes		17,706
Accounts payable		(1,524	)
Accrued payroll and related expenses		(7,182	)
Accrued expenses and other liabilities		(22,411	)
Securities loaned		(867,626	)
Customer relationships		5,600
Tradename and other intangibles		1,790
Goodwill		11,336
Total	$	73,471

The revenue and loss of FBR included in our condensed consolidated financial statements for the period from June 1, 2017 (the date of acquisition) through September 30, 2017 were $37,745 and $12,706, respectively. The loss from FBR of $12,706 includes transaction costs of $3,551 related to an employment agreement with the former Chief Executive Officer of FBR and restructuring charges in the amount of $9,096 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.

Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of the Company, Wunderlich and FBR, as though the acquisitions had occurred as of January 1 of the respective periods presented. The pro forma financial information presented includes the effects of adjustments related to the amortization charges from the acquired intangible assets and the elimination of certain activities excluded from the transaction and transaction related costs. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results.

	Pro Forma (Unaudited)
	Three Months Ended September 30, 2017			Nine Months Ended September 30,  2017
Revenues	$	92,461		$	320,546
Net (loss) income attributable to B. Riley Financial, Inc.	$	(42	)	$	11,785
Basic (loss) earnings per share	$	(0.00	)	$	0.46
Diluted (loss) earnings per share	$	(0.00	)	$	0.43
Weighted average basic shares outstanding		26,094,000			25,888,446
Weighted average diluted shares outstanding		26,094,000			27,137,419

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SECURITIES LENDING	9 Months Ended
	Sep. 30, 2018
Securities Lending
SECURITIES LENDING	<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 4— SECURITIES LENDING</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">As a result of the acquisition of FBR, the Company has an active securities borrowed and loaned business in which it borrows securities from one party and lends them to another. 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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2018 and December 31, 2017:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amounts not</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>offset in the</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated balance</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>sheets but eligible</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>offset in the</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center; white-space: nowrap"><font style="font: 10pt Times New Roman, Times, Serif"><b>included in the</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>for offsetting</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>upon counterparty</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>recognized</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>balance sheets <sup>(1)</sup></b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>balance sheets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>default<sup>(2)</sup></b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net amounts</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of September 30, 2018</b></font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 32%; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities borrowed</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities loaned</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of December 31, 2017</b></font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities borrowed</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities loaned</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="margin-top: 0; margin-bottom: 0"></p> <table cellspacing="0" cellpadding="0" style="font-size: 11pt; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td style="font-family: Times Roman; width: 5%; white-space: nowrap; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><sup>(1)</sup></font></td> <td style="font-family: Times Roman; width: 95%; white-space: nowrap"><font style="font: 10pt Times New Roman, Times, Serif">Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="font-family: Times Roman; white-space: nowrap; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><sup>(2)</sup></font></td> <td style="font-family: Times Roman; white-space: nowrap"><font style="font: 10pt Times New Roman, Times, Serif">Includes the amount of cash collateral held/posted.</font></td></tr> </table>

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ACCOUNTS RECEIVABLE

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

ACCOUNTS RECEIVABLE

NOTE 5— ACCOUNTS RECEIVABLE

The components of accounts receivable, net, include the following:

	September 30,			December 31,
	2018			2017
Accounts receivable	$	22,597		$	15,593
Investment banking fees, commissions and other receivables		16,219			4,199
Unbilled receivables		966			1,023
Total accounts receivable		39,782			20,815
Allowance for doubtful accounts		(824	)		(800	)
Accounts receivable, net	$	38,958		$	20,015

Additions and changes to the allowance for doubtful accounts consist of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	796		$	599		$	800		$	255
Add:  Additions to reserve		192			123			840			827
Less:  Write-offs		(164	)		(94	)		(816	)		(262	)
Less:  Recoveries		—			—			—			(192	)
Balance, end of period	$	824		$	628		$	824		$	628

Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service based auction and liquidation contracts.

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 6— GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was $120,129 and $98,771 at September 30, 2018 and December 31, 2017, respectively. The increase in goodwill of $21,358 is due to $2,562 from the finalization of the purchase price accounting for Wunderlich and $18,796 from the acquisition of a business consulting firm in the third quarter of 2018. At September 30, 2018, goodwill is comprised of $98,714 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $15,727 in the Principal Investments - United Online segment. At December 31, 2017, goodwill is comprised of $77,356 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $15,727 in the Principal Investments - United Online segment.

Intangible assets consisted of the following:

		As of September 30, 2018						As of December 31, 2017
		Gross						Gross
		Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Useful Life	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Customer relationships	4 to 16 Years	$	58,330	$	14,440	$	43,890	$	58,330	$	9,100	$	49,230
Domain names	7 Years		237		75		162		287		61		226
Advertising relationships	8 Years		100		28		72		100		19		81
Internally developed software and other intangibles	0.5 to 4 Years		3,373		2,035		1,338		3,373		1,445		1,928
Trademarks	7 to 8 Years		4,190		881		3,309		4,190		447		3,743
Total			66,230		17,459		48,771		66,280		11,072		55,208
Non-amortizable assets:
Tradenames			2,240		—		2,240		1,740		—		1,740
Total intangible assets		$	68,470	$	17,459	$	51,011	$	68,020	$	11,072	$	56,948

Amortization expense was $2,093 and $2,172 for the three months ended September 30, 2018 and 2017, respectively, and $6,399 and $5,248 for the nine months ended September 30, 2018 and 2017, respectively. At September 30, 2018, estimated future amortization expense is $2,093, $8,369, $7,987, $7,605 and $7,585 for the years ended December 31, 2018 (remaining three months), 2019, 2020, 2021 and 2022, respectively. The estimated future amortization expense after December 31, 2022 is $15,132.

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CREDIT FACILITIES

9 Months Ended

Sep. 30, 2018

Line of Credit Facility [Abstract]

CREDIT FACILITIES

NOTE 7— CREDIT FACILITIES

Credit facilities consist of the following arrangements:

(a) $200,000 Asset Based Credit Facility

On April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $100,000 to $200,000. Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022. On April 19, 2018, the Company entered into an amended and restated consent to the Credit Agreement, pursuant to which Wells Fargo Bank increased the maximum borrowing limit solely for the purposes of the Bon-Ton Transaction from $200,000 to $300,000, and reverts back to $200,000 upon repayment of the amounts borrowed in connection with the Bon-Ton Transaction. The amounts borrowed in connection with the Bon-Ton Transaction were fully repaid as of September 30, 2018 and the maximum borrowing limit under the Credit Agreement reverted back to $200,000. The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom. Such facility allows the Company to borrow up to 50 million British Pounds. Any borrowings on the UK Credit Agreement reduce the availability on the asset based $200,000 credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion. The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more fully described in Note 2(c). All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding. The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. The Company paid Wells Fargo Bank a closing fee in the amount of $500 in connection with the April 2017 amendment to the Credit Agreement. The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. Interest expense totaled $809 and $168 for the three months ended September 30, 2018 and 2017, respectively, and for the nine months ended September 30, 2018 and 2017, $4,138 and $863, respectively. At December 31, 2017, there was $18,505 of letters of credit outstanding under the credit facility.

The Credit Agreement governing the credit facility contains certain covenants, including covenants that limit or restrict the Company’s ability to incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. Upon the occurrence of an event of default under the Credit Agreement, the lender may cease making loans, terminate the Credit Agreement and declare all amounts outstanding under the Credit Agreement to be immediately due and payable. The Credit Agreement specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, nonpayment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, and material judgment defaults.

(b) $20,000 UOL Line of Credit

On April 13, 2017, UOL, in the capacity as borrower, entered into a credit agreement (the “UOL Credit Agreement”) with Banc of California, N.A. in the capacity as agent and lender. The UOL Credit Agreement provides for a revolving credit facility under which UOL may borrow (or request the issuance of letters of credit) up to $20,000 which amount is reduced by $1,500 commencing on June 30, 2017 and on the last day of each calendar quarter thereafter. The final maturity date is April 13, 2020.  The proceeds of the UOL Credit Agreement can be used (a) for working capital and general corporate purposes and/or (b) to pay dividends or permitted tax distributions to its parent company, subject to the terms of the UOL Credit Agreement. Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans.

UOL paid a commitment fee equal to 1.00% of the aggregate commitments upon the closing of the UOL Credit Agreement. The UOL Credit Agreement also provides for an unused line fee payable quarterly, in arrears, in an amount equal to: (a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank). Any amounts outstanding under the UOL Credit Facility are due at maturity. Interest expense for the three and nine months ended September 30, 2018, totaled $62 (including amortization of deferred loan fees of $34) and $228 (including amortization of deferred loan fees of $102) respectively. At September 30, 2018 and December 31, 2017, there was no outstanding balances under the UOL Credit Agreement.

Each of UOL’s U.S. subsidiaries is a guarantor of all obligations under the UOL Credit Agreement and are parties to the UOL Credit Agreement in such capacity (collectively, the “Secured Guarantors”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of UOL and a subsidiary of the Company, are guarantors of the obligations under the UOL Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares of outstanding capital stock of UOL are pledged as collateral. The obligations under the UOL Credit Agreement are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of UOL and the Secured Guarantors, including a pledge of (a) 100% of the equity interests of the Secured Guarantors and (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India. Such security interests are evidenced by pledge, security and other related agreements.

The UOL Credit Agreement contains certain negative covenants, including those limiting UOL’s and its 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 UOL Credit Agreement requires UOL and its subsidiaries to maintain certain financial ratios. We are in compliance with all covenants in the UOL Credit Agreement at September 30, 2018.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2018

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 8—NOTES PAYABLE

Senior Notes Payable

Senior notes payable, net, is comprised of the following as of September 30, 2018 and December 31, 2017:

	September 30,			December 31,
	2018			2017
7.50% Senior notes due October 31, 2021	$	46,407		$	35,231
7.50% Senior notes due May 31, 2027		107,429			92,490
7.25% Senior notes due December 31, 2027		100,441			80,500
7.375% Senior notes due May 31, 2023		109,183			—
6.875% Senior notes due September 30, 2023		100,050			—
		463,510			208,221
Less: Unamortized debt issuance costs		(7,727	)		(4,600	)
	$	455,783		$	203,621

(a) $46,407 Senior Notes Payable due October 31, 2021

At September 30, 2018, the Company had $46,407 of Senior Notes Payable (“2021 Notes”) due in 2021, interest payable quarterly at 7.50%. On November 2, 2016, the Company issued $28,750 of the 2021 Notes and during the second half of 2017, the Company issued an additional $6,481 of the 2021 Notes pursuant to the At the Market Issuance Sales Agreement (the “Sales Agreement”) as further discussed below. During the nine months ended September 30, 2018, the Company issued an additional $11,176 of the 2021 Notes. The 2021 Notes are unsecured and due and payable in full on October 31, 2021. In connection with the issuance of the 2021 Notes, the Company received net proceeds of $45,502 (after underwriting commissions, fees and other issuance costs of $905). The outstanding balance of the 2021 Notes was $45,885 (net of unamortized debt issue costs and premiums of $522) and $34,483 (net of unamortized debt issue costs and premiums of $748) at September 30, 2018 and December 31, 2017, respectively. Interest expense on the 2021 Notes totaled $898 and $643 for the three months ended September 30, 2018 and 2017, respectively, and $2,380 and $1,829 for the nine months ended September 30, 2018 and 2017, respectively.

(b) $107,429 Senior Notes Payable due May 31, 2027

At September 30, 2018, the Company had $107,429 of Senior Notes Payable (“2027 Notes”) due in 2027, interest payable quarterly at 7.50%. On May 31, 2017, the Company issued $60,375 of the 7.5% 2027 Notes and during the second half of 2017, the Company issued an additional $32,115 of the 7.50% 2027 Notes pursuant to the Sales Agreement. During the nine months ended September 30, 2018, the Company issued an additional $14,939 of the 7.50% 2027 Notes. The 2027 Notes are unsecured and due and payable in full on May 31, 2027. In connection with the issuance of the 7.50% 2027 Notes, the Company received net proceeds of $105,621 (after underwriting commissions, fees and other issuance costs of $1,808). The outstanding balance of the 7.50% 2027 Notes at September 30, 2018 and December 31, 2017 was $105,860 (net of unamortized debt issue costs and premium of $1,569) and $90,904 (net of unamortized debt issuance costs and premium of $1,586), respectively. Interest expense on the 2027 Notes totaled $2,034 and $1,407 for the three months ended September 30, 2018 and 2017, respectively, and $5,672 and $1,810 for the nine months ended September 30, 2018 and 2017, respectively.

(c) $100,441 Senior Notes Payable due December 31, 2027

At September 30, 2018, the Company had $100,441 of Senior Notes Payable (“7.25% 2027 Notes”) due in December 2027, interest payable quarterly at 7.25%. In December 2017, the Company issued $80,500 of the 7.25% 2027 Notes and during the nine months ended September 30, 2018, the Company issued an additional $19,941 of the 7.25% 2027 Notes pursuant to the Sales Agreement. The 7.25% 2027 Notes are unsecured and due and payable in full on December 31, 2027. In connection with the issuance of the 7.25% 2027 Notes, the Company received net proceeds of $97,825 (after underwriting commissions, fees and other issuance costs of $2,616). The outstanding balance of the 7.25% 2027 Notes was $98,023 (net of unamortized debt issue costs and premium of $2,418) and $78,234 (net of unamortized debt issue costs of $2,266) at September 30, 2018 and December 31, 2017, respectively. Interest expense on the 7.25% 2027 Notes totaled $1,871 and $5,155 for the three and nine months ended September 30, 2018, respectively.

(d) $109,183 Senior Notes Payable due May 31, 2023

At September 30, 2018, the Company had $109,183 of Senior Notes Payable (“May 2023 Notes”) due in May 2023, interest payable quarterly at 7.375%. In May 2018, the Company issued $100,050 of the May 2023 Notes and during the second and third quarter of 2018, the Company issued an additional $9,133 of the May 2023 Notes pursuant to the Sales Agreement. The May 2023 Notes are unsecured and due and payable in full on May 31, 2023. In connection with the issuance of the May 2023 Notes, the Company received net proceeds of $107,248 (after underwriting commissions, fees and other issuance costs of $1,935). The outstanding balance of the May 2023 Notes was $107,396 (net of unamortized debt issue costs and premium of $1,787) at September 30, 2018. Interest expense on the May 2023 Notes totaled $2,047 and $3,023 for the three and nine months ended September 30, 2018, respectively.

(e) $100,050 Senior Notes Payable due September 30, 2023

At September 30, 2018, the Company had $100,050 of Senior Notes Payable (“September 2023 Notes”) due in September 2023, interest payable quarterly at 6.875%. The September 2023 notes were issued in September 2018. The September 2023 Notes are unsecured and due and payable in full on September 30, 2023. In connection with the issuance of the September 2023 Notes, the Company received net proceeds of $98,603 (after underwriting commissions, fees and other issuance costs of $1,447). The outstanding balance of the September 2023 Notes was $98,619 (net of unamortized debt issue costs of $1,431) at September 30, 2018. Interest expense on the September 2023 Notes totaled $398 for the three and nine months ended September 30, 2018.

(f)       At Market Issuance Sales Agreement to Issue Up to Aggregate of $50,000 of 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes or May 2023 Notes

On June 5, 2018, the Company filed a prospectus supplement pursuant to which the Company may sell from time to time, at the Company’s option up to an aggregate of $50,000, including notes offered pursuant to the prior prospectus supplement, of the 2021 Notes, the 7.50% 2027 Notes, the 7.25% 2027 Notes and the May 2023 Notes. On December 19, 2017, the Company previously entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc., pursuant to which the Company may offer to sell, from time to time, the 2021 Notes, the 7.50% 2027 Notes and the 7.25% 2027 Notes. As of June 5, 2018, the Company sold Notes having an aggregate offering price of $6,343 under the prior prospectus supplement dated April 25, 2018, leaving up to $43,657 available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes sold pursuant to the Sales Agreement on or following June 5, 2018 will be issued pursuant to a prospectus dated April 6, 2018, as supplemented by a prospectus supplement dated June 5, 2018, in each case filed with the SEC pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-223789), which was declared effective by the SEC on April 6, 2018. As of September 30, 2018, the Company sold Notes pursuant to the June 5, 2018 prospectus having an aggregate offering price of $36,903 (inclusive of the $6,300 sold under the April 25, 2018 prospectus supplement), leaving up to $13,097 available for offer and sale pursuant to the June 5, 2018 prospectus. The Notes will be issued pursuant to the Indenture, dated as of November 2, 2016, as supplemented by a First Supplemental Indenture, dated as of November 2, 2016, the Second Supplemental Indenture, dated as of May 31, 2017, and the Third Supplemental Indenture, dated as of December 13, 2017 and the Fourth Supplemental Indenture, dated as of May 17, 2018, each between the Company and U.S. Bank, National Association, as trustee. Future sales of the 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes and May 2023 Notes pursuant to the Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the notes and the Company’s capital needs. At September 30, 2018, the Company had an additional $12,997 of 2021 Notes, 7.50% 2027 Notes, 7.25% 2027 Notes or May 2023 Notes that may be sold pursuant to the Sales Agreement. There can be no assurance that the Company will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that the Company may deem appropriate.

Notes Payable

Notes payable include notes payable to a clearing organization for one of the Company’s broker dealers. The notes payable accrue interest at rates set at each anniversary date, ranging from prime rate plus 0.25% to 2.0% (5.25% to 6.50% at September 30, 2018). Interest is payable annually. The principal payments on the notes payable are due annually in the amount of $357 on January 31, $214 on September 30, and $121 on October 31. The notes payable mature at various dates from September 30, 2018 through January 31, 2022. At September 30, 2018 and December 31, 2017, the outstanding balance for the notes payable was $1,671 and $2,243, respectively. Interest expense was $29 and $86 for the three and nine months ended September 30, 2018. Interest expense was $34 during the period from July 3, 2017 (date of acquisition) to September 30, 2017.

On April 19, 2018, the Company borrowed $51,020 from GACP II, L.P., a direct lending fund managed by Great American Capital Partners, LLC, a wholly owned subsidiary of the Company. In accordance with the note payable, the Company was advanced $50,000 and the note payable included an origination fee of $1,020 that increased the face value of the note payable to $51,020. Interest accrued at the three-month LIBOR rate plus 9%. The note payable was due in September 2018 and was fully repaid in August 2018. The note was collateralized by the proceeds generated from the joint venture liquidation of inventory and real estate related to a retail liquidation agreement. Interest expense was $1,103 (including amortization of deferred loan fees of $620) and $2,721 (including amortization of deferred loan fees of $1,110) for three and nine months ended September 30, 2018, respectively.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 9— REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from contracts with customers by reportable segment for the three months ended September 30, 2018 is as follows:

	Three Months Ended September 30, 2018
	Reportable Segment
								Principal
				Auction and		Valuation and		Investments -
	Capital Markets			Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	35,902		$	—	$	—	$	—	$	35,902
Wealth and asset management fees		19,171			—		—		—		19,171
Commissions, fees and reimbursed expenses		10,533			2,399		9,404		—		22,336
Subscription services		—			—		—		9,151		9,151
Service contract revenues		—			108		—		—		108
Advertising and other		—			—		—		2,276		2,276
Total revenues from contracts with customers		65,606			2,507		9,404		11,427		88,944
Other sources of revenue:
Interest income - Securities lending		8,954			—		—		—		8,954
Trading loss on investments		(3,462	)		—		—		—		(3,462	)
Other		5,245			—		—		—		5,245
Total revenues	$	76,343		$	2,507	$	9,404	$	11,427	$	99,681

Revenue from contracts with customers by reportable segment for the nine months ended September 30, 2018 is as follows:

	Nine Months Ended September 30, 2018
	Reportable Segment
							Principal
			Auction and		Valuation and		Investments -
	Capital Markets		Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	84,927	$	—	$	—	$	—	$	84,927
Wealth and asset management fees		56,928		—		—		—		56,928
Commissions, fees and reimbursed expenses		31,546		33,212		27,383		—		92,141
Subscription services		—		—		—		27,335		27,335
Service contract revenues		—		11,648		—		—		11,648
Advertising and other		—		—		—		6,925		6,925
Total revenues from contracts with customers		173,401		44,860		27,383		34,260		279,904
Other sources of revenue:
Interest income - Securities lending		22,836		—		—		—		22,836
Trading gain on investments		1,449		—		—		—		1,449
Other		16,771		—		—		—		16,771
Total revenues	$	214,457	$	44,860	$	27,383	$	34,260	$	320,960

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. Revenues by geographic region by segment is included in Note 16 – Business Segments.

The following provides detailed information on the recognition of our revenues from contracts with customers:

Corporate finance and investment banking fees. Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.

Wealth and asset management fees. Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.

Commissions, fees and reimbursed expenses. Commissions and other fees from clients for trading activities are earned from equity securities transactions executed as agent or principal are recorded at a point in time on a trade date basis. Commission, fees and reimbursed expenses earned on the sale of goods at auction and liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer. Revenues from fees and reimbursed expenses for valuation services to clients are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the completed services to the customer.

Subscription services. Subscription service revenues are derived primarily from fees charged to pay accounts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period.

Service contract revenues. Service contract revenues are primarily earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized over time when the performance obligation is satisfied. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of services to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or decrease the transaction price upon completion of our performance obligations under the contract. Estimated amounts are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not occur. Our estimates of variable consideration and determination of whether or not to include estimated amounts in the transaction price are based on an assessment of our anticipated performance under the contract taking into consideration all historical, current and forecasted information that is reasonably available to us.

Advertising and other. Advertising and other revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements and the sale of product revenues from the sale of mobile broadband service devices to customers. Advertising revenues are recognized in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available. Sale of product revenues also includes the related shipping and handling fees.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

We do 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 at September 30, 2018. Corporate finance and investment banking fees and retail liquidation engagement 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 at September 30, 2018.

Contract Balances

The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied. Receivables related to revenues from contracts with customers totaled $38,958 and $20,015 at September 30, 2018 and December 31, 2017, respectively. We had no significant impairments related to these receivables during the three and nine months ended September 30, 2018. Our deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, valuation and appraisal engagements and subscription services where the performance obligation has not yet been satisfied. Deferred revenue at September 30, 2018 and December 31, 2017 was $3,205 and $3,141, respectively. During the three and nine months ended September 30, 2018, we recognized revenue of $5,423 and $9,889, respectively, that was recorded as deferred revenue at the beginning of the period.

Contract Costs

Contract costs include: (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) costs to fulfill auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue is recognized over time when the performance obligation is satisfied.

At September 30, 2018, capitalized costs to fulfill a contract were $2,387, which is recorded in prepaid expenses and other assets in the condensed consolidated balance sheet. For the three and nine months ended September 30, 2018, we recognized expenses and related capitalized costs to fulfill a contract of $0 and $602, respectively. There were no significant impairment charges recognized in relation to these capitalized costs during the three and nine months ended September 30, 2018.

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INCOME TAXES

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10— INCOME TAXES

The Tax Reform Act was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, provides an exemption from U.S. federal tax for dividends received from foreign subsidiaries, and creates new taxes on certain foreign sourced earnings. As of the completion of these financial statements and related disclosures, we have not completed our accounting for the tax effects of the Tax Reform Act; however, we have made a reasonable estimate of such effects and recorded a provisional tax expense of $13,052, which is included as a component of income tax expense in the fourth quarter of 2017 and is comprised of (a) $12,954 related to the remeasurement of deferred tax assets and liabilities in the United States and (b) $98 related to the transition tax on foreign earnings. This provisional tax expense incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act, and may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Reform Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Reform Act no later than the fourth quarter of 2018. Future adjustments made to the provisional effects will be reported as a component of income tax expense in the reporting period in which any such adjustments are determined.

The Company’s effective income tax rate was a provision of 24.9% and a benefit of 80.5% for the nine months ended September 30, 2018 and 2017, respectively. During the nine months ended September 30, 2017, the Company elected to treat the acquisition of UOL as a taxable business combination for income tax purposes in accordance with Internal Revenue Code Section 338(g) (“IRS Code Section 338(g)”). This resulted in the Company foregoing the income tax attributes of UOL that existed at the acquisition date which included net operating loss carryforwards, capital loss carryforwards and foreign tax credits. The income tax election in accordance with IRS Code Section 338(g) provides the Company with a tax step-up in the basis of the intangible assets and goodwill acquired for tax purposes. In accordance with ASC 740, the impact of the election in accordance with IRS Code Section 338(g) on deferred income taxes resulted in the recording of a tax benefit in the amount of $8,389 during the nine months ended September 30, 2017.

As of September 30, 2018, the Company had federal net operating loss carryforwards of approximately $63,445 and state net operating loss carryforwards of $76,978. The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2029 through December 31, 2034. The state net operating loss carryforwards will expire in the tax years commencing in December 31, 2029.

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 September 30, 2018, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance. The Company believes that it is more likely than not that the Company will not be able to utilize the benefits related to certain state net operating loss and capital loss carryforwards and has provided a full valuation allowance in the amount of $4,694 against these deferred tax assets.

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 federal, 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, 2014 to 2017.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 11— EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic common shares outstanding exclude 387,365 common shares in 2018 and 453,365 common shares in 2017 that are held in escrow and subject to forfeiture. The common shares held in escrow includes 387,365 common shares that are subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition of Wunderlich. and in 2017 excluded 66,000 common shares held in escrow issued to the former members of Great American Group, LLC that were subject to forfeiture upon the final settlement of claims for goods held for sale in connection with the transaction with Alternative Asset Management Acquisition Corp. in 2009. In August 2018, the shares held in escrow issued to the former members of Great American Group, LLC were released and 21,233 of the 66,000 shares held in escrow were cancelled to satisfy the resolution of escrow claims. The shares that remain in escrow are subject to forfeiture upon the final settlement of claims as more fully described in the related escrow instructions. Dilutive common shares outstanding includes contingently issuable shares that are currently in escrow and subject to release if the conditions for the final settlement of claims in accordance with the escrow instructions were satisfied at the end of the respective periods.

Basic and diluted earnings per share was calculated as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net income attributable to B. Riley Financial, Inc.	$	2,814	$	368	$	24,314	$	17,669
Weighted average shares outstanding:
Basic		25,968,997		26,059,490		25,856,339		22,180,808
Effect of dilutive potential common shares:
Restricted stock units and warrants		705,557		1,193,007		740,087		816,841
Contingently issuable shares		179,707		387,365		179,707		387,365
Diluted		26,854,261		27,639,862		26,776,133		23,385,014
Basic income per share	$	0.11	$	0.01	$	0.94	$	0.80
Diluted income per share	$	0.10	$	0.01	$	0.91	$	0.76

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12— COMMITMENTS AND CONTINGENCIES

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 our 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 our business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In view of the number and diversity of claims against our company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, we cannot state with certainty what the eventual outcome of pending litigation or other claims will be.  Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations.

On January 5, 2017, complaints filed in November 2015 and May 2016 naming MLV & Co. (“MLV”), a broker-dealer subsidiary of FBR, as a defendant in putative class action lawsuits alleging claims under the Securities Act, in connection with the offerings of Miller Energy Resources, Inc. (“Miller”) have been consolidated. The Master Consolidated Complaint, styled Gaynor v. Miller et al., is pending in the United States District Court for the Eastern District of Tennessee, and, like its predecessor complaints, continues to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged material misrepresentations and omissions in the registration statement and prospectuses issued in connection with six offerings (February 13, 2013; May 8, 2013; June 28, 2013; September 26, 2013; October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate offering price of approximately $151,000. The plaintiffs seek unspecified compensatory damages and reimbursement of certain costs and expenses. In August 2017, the Court granted Defendant’s Motion to Dismiss on Section 12 claims and found that the plaintiffs had not sufficiently alleged a corrective disclosure prior to August 6, 2015, when an SEC civil action was announced. Defendants’ answer was filed on September 25, 2017. Plaintiffs have filed motions for class certification and to remand the case to state court following a positive ruling in an unrelated case by the U.S. Supreme Court. Although MLV is contractually entitled to be indemnified by Miller in connection with this lawsuit, Miller filed for bankruptcy in October 2015 and this likely will decrease or eliminate the value of the indemnity that MLV receives from Miller.

In February 2017, certain former employees filed an arbitration claim with FINRA against WSI alleging misrepresentations in the recruitment of claimants to join WSI. Claimants also allege that WSI failed to support their mortgage trading business resulting in the loss of opportunities during their employment with WSI. Claimants are seeking $10,000 in damages. WSI has counterclaimed alleging that claimants misrepresented their process for doing business, particularly their capital needs, resulting in substantial losses to WSI. WSI believes the claims are meritless and intends to vigorously defend the action.

In March 2017, United Online, Inc. received a letter from PeopleConnect, Inc. (formerly, Classmates, Inc.) (“Classmates”) regarding a notice of investigation received from the Consumer Protection Divisions of the District Attorneys’ offices of four California counties (“California DAs”). These entities suggest that Classmates may be in violation of California codes relating to unfair competition, false or deceptive advertising, and auto-renewal practices. Classmates asserts that these claims are indemnifiable claims under the purchase agreement between United Online, Inc. and the buyer of Classmates. A tolling agreement with certain California District Attorneys has been signed and informal discovery and production is in process. At the present time, the financial impact to the Company, if any, cannot be estimated.

In July 2017, an arbitration claim was filed with FINRA by Dominick & Dickerman LLC and Michael Campbell against WSI and Gary Wunderlich with respect to the acquisition by Wunderlich Investment Company, Inc. (“WIC”) (the parent corporation of WSI) of certain assets of Dominick & Dominick LLC in 2015. The Claimants allege that respondents overvalued WIC so that the purchase price paid to the Claimants in shares of WIC stock was artificially inflated. The Statement of Claim includes claims for common law fraud, negligent misrepresentation, and breach of contract. Claimants are seeking damages of approximately $8,000 plus unspecified punitive damages. Respondents believe the claims are meritless and intend to vigorously defend the action.

In September 2017, Frontier State Bank (“Frontier”) filed a lawsuit against Wunderlich Loan Capital Corp., a subsidiary of WIC (“WLCC”), seeking rescission of the purchase a residential mortgage in the amount of $1,300. Vanguard Funding, LLC (“Vanguard”) sold the mortgage to WLCC who then assigned its rights to Frontier. Shortly after closing, Frontier was advised that the mortgage had been previously pledged to another lender. In the lawsuit against WLCC, it is alleged that WLCC did not deliver the mortgage to Frontier with clear title. In September 2018, the matter was settled and general releases were exchanged.

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SHARE-BASED PAYMENTS

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED PAYMENTS

NOTE 13— SHARE-BASED PAYMENTS

(a) Amended and Restated 2009 Stock Incentive Plan

During the nine months ended September 30, 2018, the Company granted restricted stock units representing 424,235 shares of common stock with a total fair value of $8,855 to certain employees of the and directors Company under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “Plan”). During the year ended December 31, 2017, the Company granted restricted stock units representing 486,049 shares of common stock with a total fair value of $7,732 to certain employees and directors of the Company under the Plan. Share-based compensation expense for such restricted stock units was $1,714 and $1,410 for the three months ended September 30, 2018 and 2017, respectively, and $4,085 and $3,624 for nine months ended September 30, 2018 and 2017, respectively.

The restricted stock units generally vest over a period of one to three years based on continued service. In determining the fair value of restricted stock units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S. Treasuries for a maturity matching the expected holding period.

As of September 30, 2018, the expected remaining unrecognized share-based compensation expense of $12,661 will be expensed over a weighted average period of 2.2 years.

A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		792,264		$	13.30
Granted		424,235			20.87
Vested		(304,599	)		13.17
Forfeited		(9,057	)		12.49
Nonvested at September 30, 2018		902,843		$	16.91

The per-share weighted average grant-date fair value of restricted stock units was $20.87 during the nine months ended September 30, 2018. There were 304,599 restricted stock units with a fair value of $4,012 that vested during the nine months ended September 30, 2018 under the Plan.

(b) Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan

In connection with the acquisition of FBR on June 1, 2017, the equity awards previously granted or available for issuance under the FBR & Co. 2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”) may be issued under the Plan. During the nine months ended September 30, 2018, the Company granted restricted stock units representing 186,662 shares of common stock with a total grant date fair value of $3,869 under the FBR Stock Plan. During the year ended December 31, 2017, the Company granted restricted stock units representing 871,317 shares of common stock with a total fair value of $14,577 to certain employees under the FBR Stock Plan. Share-based compensation expense was $1,321 and $4,509 for the three and nine months ended September 30, 2018, respectively. Share-based compensation was $1,383 and $1,687 for the three and nine months ended September 30, 2017, respectively. As of September 30, 2018, the expected remaining unrecognized share-based compensation expense of $9,468 will be expensed over a weighted average period of 2.3 years.

A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		1,066,133		$	16.15
Granted		186,662			20.73
Vested		(347,265	)		15.33
Forfeited		(84,238	)		15.85
Nonvested at September 30, 2018		821,292		$	17.57

The per-share weighted average grant-date fair value of restricted stock units was $20.73 during the nine months ended September 30, 2018. There were 347,265 restricted stock units with a fair value of $5,324 that vested during the nine months ended September 30, 2018 under the FBR Stock Plan.

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NET CAPITAL REQUIREMENTS

9 Months Ended

Sep. 30, 2018

Brokers and Dealers [Abstract]

NET CAPITAL REQUIREMENTS

NOTE 14— NET CAPITAL REQUIREMENTS

B. Riley & Co., LLC (“BRC”), B. Riley FBR, MLV and B. Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and are 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 subsidiaries to maintain minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, they are subject to the minimum net capital requirements promulgated by the SEC. As of September 30, 2018, BRC had net capital of $350, which was $100 in excess of its required net capital of $250 (net capital ratio of 3.50 to 1); B. Riley FBR had net capital of $76,053, which was $74,059 in excess of its required net capital of $1,994 (net capital ratio of 1.03 to 1); MLV had net capital of $657, which was $557 in excess of its required net capital of $100 (net capital ratio of 1.18 to 1), and BRWM had net capital of $4,128, which was $3,514 in excess of its required net capital of $614 (net capital ratio of 1.17 to 1).

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 15— RELATED PARTY TRANSACTIONS

At September 30, 2018, amounts due from related parties include $6,807 from GACP I, L.P. (“GACP I”) and $1,943 from GACP II, L.P. (“GACP II”) for management fees, incentive fees and other operating expenses and $1,171 due from CA Global Partners (“CA Global”) for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Ptrs. At December 31, 2017, amounts due from related parties include $5,585 from GACP I, $52 from GACP II, and $52 from CA Global for management fees, incentive fees and other operating expenses.

On April 19, 2018, the Company borrowed $51,020 from GACP II, L.P., a direct lending fund managed by Great American Capital Partners, LLC, a wholly owned subsidiary of the Company. The note was fully repaid as of September 30, 2018. Interest expense was $1,103 (including amortization of deferred loan fees of $620) and $2,721 (including amortization of deferred loan fees $1,110) for three and nine months ended September 30, 2018, respectively. See Note 8 for additional information.

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BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

BUSINESS SEGMENTS

NOTE 16— BUSINESS SEGMENTS

The Company’s operating segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance internally. The Company has several operating subsidiaries through which it delivers specific services. The Company provides investment banking, corporate finance, securities lending, restructuring, consulting, research, sales and trading and wealth management services to corporate, institutional and high net worth clients. The Company also 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 and valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs. As a result of the acquisition of UOL on July 1, 2016, the Company provides consumer services and products over the Internet.

The Company’s business is classified into the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment and Principal Investments - United Online segment. These reportable segments are all distinct businesses, each with a different marketing strategy and management structure.

The following is a summary of certain financial data for each of the Company’s reportable segments:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Capital Markets reportable segment:
Revenues - Services and fees	$	67,389		$	56,782		$	191,621		$	96,181
Interest income - Securities lending		8,954			6,897			22,836			9,115
Total revenues		76,343			63,679			214,457			105,296
Selling, general, and administrative expenses		(57,207	)		(53,955	)		(168,559	)		(87,753	)
Restructuring charge		(428	)		(3,322	)		(2,457	)		(7,245	)
Interest expense - Securities lending		(6,425	)		(4,950	)		(16,317	)		(6,515	)
Depreciation and amortization		(1,309	)		(1,636	)		(4,428	)		(2,167	)
Segment income (loss)		10,974			(184	)		22,696			1,616
Auction and Liquidation reportable segment:
Revenues - Services and fees		2,459			7,376			44,812			43,179
Revenues - Sale of goods		48			1			48			1
Total revenues		2,507			7,377			44,860			43,180
Direct cost of services		(838	)		(3,385	)		(12,263	)		(25,482	)
Cost of goods sold		(24	)		(2	)		(41	)		(2	)
Selling, general, and administrative expenses		(1,289	)		(1,963	)		(7,787	)		(6,562	)
Depreciation and amortization		(7	)		(5	)		(23	)		(15	)
Segment income		349			2,022			24,746			11,119
Valuation and Appraisal reportable segment:
Revenues - Services and fees		9,404			9,043			27,383			24,799
Direct cost of services		(4,067	)		(3,778	)		(12,388	)		(11,031	)
Selling, general, and administrative expenses		(2,379	)		(2,253	)		(7,138	)		(6,395	)
Depreciation and amortization		(56	)		(43	)		(159	)		(130	)
Segment income		2,902			2,969			7,698			7,243
Principal Investments - United Online segment:
Revenues - Services and fees		11,403			12,249			34,170			38,504
Revenues - Sale of goods		24			78			90			220
Total revenues		11,427			12,327			34,260			38,724
Direct cost of services		(3,251	)		(2,975	)		(9,082	)		(9,711	)
Cost of goods sold		(28	)		(122	)		(101	)		(311	)
Selling, general, and administrative expenses		(2,348	)		(2,433	)		(6,321	)		(8,536	)
Depreciation and amortization		(1,682	)		(1,703	)		(5,040	)		(5,313	)
Restructuring charge		—			(150	)		—			(633	)
Segment income		4,118			4,944			13,716			14,220
Consolidated operating income from reportable segments		18,343			9,751			68,856			34,198
Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018; and restructuring charge of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively.		(5,505	)		(8,395	)		(16,938	)		(19,571	)
Interest income		442			76			736			358
Income (loss) on equity investments		828			(157	)		5,049			(157	)
Interest expense		(9,340	)		(2,510	)		(23,926	)		(5,195	)
Income (loss) before income taxes		4,768			(1,235	)		33,777			9,633
(Provision for) benefit from income taxes		(2,046	)		1,357			(8,412	)		7,753
Net income		2,722			122			25,365			17,386
Net (loss) income attributable to noncontrolling interests		(92	)		(246	)		1,051			(283	)
Net income attributable to B. Riley Financial, Inc.	$	2,814		$	368		$	24,314		$	17,669

The following table presents revenues by geographical area:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenues:
Revenues - Services and fees:
North America	$	90,649	$	85,437	$	296,718	$	200,809
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues - Services and fees	$	90,655	$	85,450	$	297,986	$	202,663
Revenues - Sale of goods
North America	$	72	$	79	$	138	$	221
Revenues - Interest income - Securities lending:
North America	$	8,954	$	6,897	$	22,836	$	9,115
Total Revenues:
North America	$	99,675	$	92,413	$	319,692	$	210,145
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues	$	99,681	$	92,426	$	320,960	$	211,999

The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area:

	September 30,		December 31,
	2018		2017
Long-lived Assets - Property and Equipment, net:
North America	$	11,143	$	11,977
Australia		—		—
Europe		—		—
Total	$	11,143	$	11,977

Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

(a) Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“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 presentation of the financial position and the results of operations for the periods presented have been included. These 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 for the year ended December 31, 2017, filed with the SEC on March 14, 2018. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods.

Use of Estimates

(b) Use of Estimates

The preparation of the 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 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, reserves for accounts receivable and slow moving goods held for sale or auction, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share-based arrangements, fair value of contingent consideration in business combinations and accounting for income tax valuation 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 differ.

Revenue Recognition

(c) Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services.

Revenues from contracts with customers in the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment, and Principal Investments – United Online segment are primarily comprised of the following:

Capital Markets Segment - Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.

Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.

Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research.

Auction and Liquidation Segment - Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of a contract or arrangement exists, the transaction price has been determined, and the performance obligation has been satisfied when control of the product and risks of ownership has been transferred to the buyer. The commission and fees earned for these services are included in revenues in the accompanying condensed consolidated statements of income. Under these types of arrangements, revenues also include contractual reimbursable costs.

Revenues earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized over time when the performance obligation is satisfied. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of services to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract include labor and other direct costs related to the contract. Due to the nature of the guarantees and performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or decrease the transaction price upon completion of our performance obligations under the contract. Estimated amounts are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not occur. Our estimates of variable consideration and determination of whether or not to include estimated amounts in the transaction price are based on an assessment of our anticipated performance under the contract taking into consideration all historical, current and forecasted information that is reasonably available to us. Costs that directly relate to the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in the accompanying condensed consolidated balance sheets. These costs are amortized as the services are transferred to the customer over the contract period, which generally does not exceed six months, and the expense is recognized a component of direct cost of services. If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

Valuation and Appraisal Segment - Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the completed services to the customer. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs.

Principal Investments – United Online Segment - Revenues in the Principal Investments - United Online segment include subscription service revenues that are derived primarily from fees charged to pay accounts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Payments from pay accounts received in advance of our performance obligations are recorded in the condensed consolidated balance sheets as deferred revenue. 

Advertising revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available.

Sale of product revenues are derived primarily from the sale of mobile broadband service devices to customers and includes the related shipping and handling fees.

Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders, (iii) trading activities from our principal investments in equity and other securities for the Company’s account, and (iv) other income.

Interest income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned.

Other revenues includes (i) net trading gains and losses from market making activities in our fixed income group, (ii) carried interest from our asset management recognized as earnings from financial assets within the scope of ASC 323 - Investments - Equity Method and Joint Ventures, and therefore will not be in the scope of ASC 606 - Revenue from Contracts with Customers. In accordance with ASC 323 - Investments - Equity Method and Joint Ventures, the Company will record equity method income (losses) as a component of investment income based on the change in our proportionate claim on net assets of the investment fund, including performance-based capital allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements, and (iii) other miscellaneous income.

Direct Cost of Services

(d) Direct Cost of Services

Direct cost of services relate to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to auction and liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments - United Online segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks and data centers, depreciation of network computers and equipment, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs.

Interest Expense - Securities Lending Activities

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; margin-bottom: 0pt; margin-top: 0pt; width: 100%"><tr style="vertical-align: top"><td style="width: 0.35in"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>(e)</i></b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Interest Expense - Securities Lending Activities</i></b></font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company.</font></p>

Concentration of Risk

f) Concentration of Risk

Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments – United Online segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe.

The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts operations with third parties through collaborative arrangements.

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 concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements.

Advertising Expense

g) Advertising Expenses

The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $371 and $183 for the three months ended September 30, 2018 and 2017, respectively, and $1,656 and $1,227 for the nine months ended September 30, 2018 and 2017, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of income

Share-Based Compensation

h) Share-Based Compensation

The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period.

Restructuring Charge

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; margin-bottom: 0pt; margin-top: 0pt; width: 100%"><tr style="vertical-align: top"><td style="width: 0.35in"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>(i)</i></b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Restructuring Charge </i></b></font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The Company recorded a restructuring charge in the amount of $428 and $4,896 for the three months ended September 30, 2018 and 2017, respectively, and $2,247 and $11,484, for the nine months ended September 30, 2018 and 2017, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The restructuring charge of $428 and $2,247 during the three and nine months ended September 30, 2018, respectively, was primarily related to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The restructuring charge of $4,896 and $11,484 during the three and nine months ended September 30, 2017, respectively, was primarily related to costs savings measures taking into account the planned synergies as a result of the acquisitions of FBR & Co. (“FBR”) and Wunderlich Investment Company, Inc. (“Wunderlich”), which included a reduction in workforce for some of the corporate executives of FBR and Wunderlich and a restructuring to integrate FBR’s and Wunderlich’s operations with the Company’s operations in the Capital Markets segment.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The following table summarizes the changes in accrued restructuring charge during the three and nine months ended September 30, 2018 and 2017:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; margin-left: 0.25in; width: 92%"> <tr style="vertical-align: bottom"> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="6" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Three Months Ended</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="6" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine Months Ended</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="6" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>September 30,</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="6" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>September 30,</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 48%"><font style="font: 10pt Times New Roman, Times, Serif">Balance, beginning of period</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,827</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,287</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,600</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">694</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Restructuring charge</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">428</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,896</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,247</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,484</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Cash paid</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(504</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(3,092</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2,954</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(4,880</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; text-align: left; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Non-cash items</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,732</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(143</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(3,939</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt; padding-left: 0.125in"><font style="font: 10pt Times New Roman, Times, Serif">Balance, end of period</font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,750</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,359</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,750</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,359</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The following table summarizes the restructuring activities during the three months ended September 30, 2018 and 2017:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; margin-left: 0.25in; width: 97%"> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="30" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Three Months Ended September 30,</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="14" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="14" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2017</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Principal</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Principal</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investments -</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investments -</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>United</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>United</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Markets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Online</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Corporate</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Markets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Online</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Corporate</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Restructuring charge:</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 22%; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Employee termination costs</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">76</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 8%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">76</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,285</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">150</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,102</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,537</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Facility closure and consolidation charge</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">352</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">352</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,037</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">322</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,359</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; text-align: left; padding-left: 0.375in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Total restructuring charge</font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">428</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">428</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,322</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">150</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,424</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,896</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0; margin-right: 0; margin-bottom: 0"></p> <p style="color: #000033; font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The following table summarizes the restructuring activities during the nine months ended September 30, 2018 and 2017:</font></p> <p style="color: #000033; font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; margin-left: 0.25in; width: 97%"> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="30" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Nine Months Ended September 30,</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="14" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="14" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2017</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Principal</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Principal</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investments -</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Investments -</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>United</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>United</b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Markets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Online</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Corporate</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Markets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Online</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Corporate</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Restructuring charge:</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 22%; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Employee termination costs</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">729</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 8%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">729</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,819</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">633</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,284</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 6%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">8,736</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Facility closure and consolidation charge (recovery)</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,728</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(210</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,518</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,426</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">322</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,748</font></td> <td style="padding-bottom: 1pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; text-align: left; padding-left: 0.375in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Total restructuring charge</font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,457</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(210</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,247</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,245</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">633</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,606</font></td> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="padding-bottom: 2.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.5pt double; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">11,484</font></td></tr></table>

Income Taxes

(j) Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense.

The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, provides an exemption from U.S. federal tax for dividends received from foreign subsidiaries, and creates new taxes on certain foreign sourced earnings. As of the completion of these financial statements and related disclosures, we have not completed our accounting for the tax effects of the Tax Reform Act; however, as described below, we have made a reasonable estimate of such effects and recorded a provisional tax expense of $13,052, which is included as a component of income tax expense in the fourth quarter of 2017. This provisional tax expense incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act, and may change as we receive additional clarification and implementation guidance and as the interpretation of the Tax Reform Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Reform Act no later than the fourth quarter of 2018. Future adjustments made to the provisional effects will be reported as a component of income tax expense from continuing operations in the reporting period in which any such adjustments are determined.

Cash and Cash Equivalents

(k) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

(l) Restricted Cash

As of September 30, 2018, restricted cash balance of $468 is cash collateral for one of our telecommunication suppliers. As of December 31, 2017, restricted cash balance of $19,711 included $19,197 of cash collateral related to a retail liquidation engagement and $514 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication suppliers.

Securities Borrowed and Securities Loaned

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; margin-bottom: 0pt; margin-top: 0pt; width: 100%"><tr style="vertical-align: top"><td style="width: 0.35in"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>(m)</i></b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Securities Borrowed and Securities Loaned</i></b></font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The Company accounts for securities lending transactions in accordance with ASC <i>“Topic 210: Balance Sheet,” </i>which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets.</font></p>

Due from/to Brokers, Dealers, and Clearing Organizations

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; margin-bottom: 0pt; margin-top: 0pt; width: 100%"><tr style="vertical-align: top"><td style="width: 0.35in"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>(n)</i></b></font></td> <td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Due from/to Brokers, Dealers, and Clearing Organizations</i></b></font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker.</font></p>

Accounts Receivable

(o) Accounts Receivable

Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and Principal Investments - United Online segment customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. Bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2018 and 2017 are included in Note 5.

Advances Against Customer Contracts

(p) Advances Against Customer Contracts

Advances against customer contracts represent advances of contractually reimbursable funds incurred prior to, and during the term of the auction and liquidation services contract. On April 18, 2018, the Company entered into an agency agreement to participate in the right to liquidate certain assets of The Bon-Ton Stores, Inc. (the “Agency Agreement”). There are three parties to the Agency Agreement which were granted the right to act as the exclusive agent to conduct the sale of substantially all of the assets of The Bon-Ton Stores, Inc. (the “Bon-Ton Transaction”). The Company initially advanced $407,426 in connection with Agency Agreement.  As of September 30, 2018, $21,405 remained outstanding and is included in the advances against customer contracts.  Management expects the outstanding advance continue to be repaid from proceeds generated from the liquidation of the assets related to the Bon-Ton Transaction. 

Loans Receivable

q) Loans Receivable

Loans are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and for purchased loans, net of any unamortized premiums or discounts. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to interest income using a level yield methodology. Loans receivable at September 30, 2018, consists of one loan in the amount of $15,000 that was fully repaid in October 2018 and the other loan in the amount of $22,147 which is due in May 2020.

Property and Equipment

(r) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $1,005 and $1,243 for the three months ended September 30, 2018 and 2017, respectively, and $3,369 and $2,458 for the nine months ended September 30, 2018 and 2017, respectively.

Securities Owned and Securities Sold Not Yet Purchased

s) Securities Owned and Securities Sold Not Yet Purchased

Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices.  Changes in the value of these securities are reflected currently in the results of operations.

As of September 30, 2018 and December 31, 2017, the Company’s securities and other investments owned and securities sold not yet purchased measured at fair value consisted of the following securities and investments:

	September 30,		December 31,
	2018		2017
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	67,306
Corporate bonds		18,909		6,539
Fixed income securities		4,467		2,329
Loans receivable		36,587		33,713
Partnership interests and other		56,241		35,473
	$	222,521	$	145,360
Securities sold not yet purchased:
Common stocks	$	47,929	$	19,145
Corporate bonds		6,381		1,175
Fixed income securities		598		699
Partnership interests and other		4,764		7,272
	$	59,672	$	28,291

Fair Value Measurements

(t) 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 falls 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.

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, loans receivable 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 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’s partnership interests are valued based on the Company’s proportionate share of the net assets of the partnership which is derived from the most recent statements received from the general partner which are included in Level 3 of the fair value hierarchy. The Company also invests in certain proprietary investment funds that are valued at net asset value (“NAV”) determined by the fund administrator. The underlying securities held by these investment companies are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. As a practical expedient, the Company relies on the NAV of these investments as their fair value. The NAVs that have been provided by the fund administrators are derived from the fair values of the underlying investments as of the reporting date. In accordance with ASC “Topic 820: Fair Value Measurements,” these investment funds are not categorized within the fair value hierarchy.

The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models.

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2018 and December 31, 2017:

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at September 30, 2018 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	September 30,		identical assets		inputs		inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	72,153	$	25,207	$	8,957
Corporate bonds		18,909		—		18,909		—
Fixed income securities		4,467		—		4,467		—
Loans receivable		36,587		—		—		36,587
Partnership interests and other		54,114		1,280		10		52,824
Total assets measured at fair value	$	220,394	$	73,433	$	48,593	$	98,368
Liabilities:
Securities sold not yet purchased:
Common stocks	$	47,929	$	47,929	$	—	$	—
Corporate bonds		6,381		—		6,381
Fixed income securities		598		—		598		—
Partnership interests and other		4,764		4,764		—		—
Total securities sold not yet purchased		59,672		52,693		6,979		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,409		—		—		4,409
Total liabilities measured at fair value	$	64,081	$	52,693	$	6,979	$	4,409

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at December 31, 2017 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	67,306	$	38,960	$	—	$	28,346
Corporate bonds		6,539		—		6,539		—
Fixed income securities		2,329		—		2,329		—
Loans receivable		33,713		—		—		33,713
Partnership interests and other		31,883		686		5,093		26,104
Total assets measured at fair value	$	141,770	$	39,646	$	13,961	$	88,163
Liabilities:
Securities sold not yet purchased:
Common stocks	$	19,145	$	19,145	$	—	$	—
Corporate bonds		1,175		—		1,175		—
Fixed income securities		699		—		699		—
Partnership interests and other		7,272		7,272		—		—
Total securities sold not yet purchased		28,291		26,417		1,874		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—		—		4,478
Total liabilities measured at fair value	$	32,769	$	26,417	$	1,874	$	4,478

As of September 30, 2018, securities and other investments owned included $2,127 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $222,521 in the condensed consolidated balance sheets at September 30, 2018 included investments in investment funds of $2,127 and securities and other investments owned in the amount of $220,394 as outlined in the fair value table above.

As of December 31, 2017, securities and other investments owned included $3,590 of investment funds valued at NAV per share as a practical expedient. As such, total securities and other investments owned of $145,360 in the condensed consolidated balance sheets at December 31, 2017 included investments in investment funds of $3,590 and securities and other investments owned in the amount of $141,770 as outlined in the fair value table above.

As of September 30, 2018 and December 31, 2017, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $98,368 and $88,163, respectively, or 5.1% and 6.4%, 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 following table summarizes 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 September 30, 2018: 

	Fair value at
	September 30,						Weighted
	2018		Valuation Technique	Unobservable Input	Range		Average
Assets:
Common stocks and warrants	$	8,957	Market approach	Over-the-counter trading activity		$10.00-$10.50/share	$	10.29
			Market approach	Market price of related security		$0.61/share	$	0.61
			Pending transaction	Discount		50%		50%
Loans receivable		36,587	Market approach	Revenue multiple		1.4x		1.4x
Partnership interests and other		52,824	Market approach	Revenue multiple		1.4x		1.4x
Total level 3 assets measured at fair value	$	98,368
Liabilities:
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	$	4,409	Market approach	Operating income multiple		6.0x		6.0x

The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2018 and 2017 are as follows:

	Level 3		Level 3 Changes During the Period												Level 3
	Balance at		Fair			Relating to			Purchases,			Transfer in			Balance at
	Beginning of		Value			Undistributed			Sales and			and/or out			End of
	Year		Adjustments			Earnings			Settlements			of Level 3			Period
Nine Months Ended September 30, 2018
Common stocks and warrants	$	28,346	$	(3,247	)	$	578		$	4,250		$	(20,970	)	$	8,957
Loans receivable		33,713		(11	)		100			2,785			—			36,587
Partnership interests and other		26,104		1,411			(2,735	)		28,044			—			52,824
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—			(69	)		—			—			4,409
Nine Months Ended September 30, 2017
Common stocks and warrants	$	299	$	(463	)	$	—		$	10,146		$	—		$	9,982
Corporate bonds		160		—			—			—			(160	)		—
Loans receivable		—		1,375			—			25,493			—			26,868
Partnership interests and other		13,426		2,820			—			(4,390	)		—			11,856
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		3,214		9,000			(190	)		—			806			12,830
Contingent consideration		1,242		8			—			(1,250	)		—			—

The fair value adjustment for contingent consideration of $8 represents imputed interest for the nine months ended September 30, 2017. During the second quarter of 2017, the Company had a triggering event for the mandatorily redeemable noncontrolling interests that resulted in a fair value adjustment of $6,250 of the total fair value adjustment of $9,000 for the nine months ended September 30, 2017. In connection with this event, the Company received proceeds of $6,000 from key man life insurance. These amounts have been recorded in the condensed consolidated statements of income in selling, general and administrative expenses in the Corporate and Other segment. The amount reported in the table above also for the nine months ended September 30, 2018 and 2017 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis.

The carrying amounts reported in the 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.

The carrying amount of the senior notes payable approximates fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk.

During the nine months ended September 30, 2018 and 2017, there were no assets or liabilities measured at fair value on a non-recurring basis.

Derivative and Foreign Currency Translation

(u) Derivative and Foreign Currency Translation

The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain auction and liquidation engagements with operations outside the United States. During the nine months ended September 30, 2018, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $54,406 Canadian dollars that were settled during the first and second quarter of 2018 and (b) $1,500 Euro’s that was settled in March 2018. During the nine months ended September 30, 2017, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of $25,000 Australian dollars that was settled on January 31, 2017. The forward exchange contract was entered into to improve the predictability of cash flows related to a retail store liquidation engagement that was completed in December 2016. The net loss from forward exchange contracts was $33 during the three months ended September 30, 2017 and net loss from forward exchange contracts was $91 and $103 during the nine months ended September 30, 2018 and 2017, respectively. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of income.

The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets. Transaction losses were $51 and $389 during the three months ended September 30, 2018 and 2017, respectively. Transactions gains were $843 during the nine months ended September 30, 2018 compared to transaction losses of $919 during the same 2017 period. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of income.

Common Stock Warrants

(v) Common Stock Warrants

The Company issued 821,816 warrants to purchase common stock of the Company in connection with the acquisition of Wunderlich on July 3, 2017. The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022.

Equity Investment

w) Equity Investment

At December 31, 2017, the Company had a loan receivable from bebe stores, inc. (“bebe”) with a fair value of $16,867 included in securities and other investments owned. On January 12, 2018, the loan receivable in the amount of $16,867 plus accrued interest of $51 was converted into 2,819,528 shares of common stock of bebe, representing a conversion price at $6.00 per share. On January 12, 2018, the Company also purchased 500,000 shares of bebe common stock at $6.00 per share of which 250,000 shares were newly issued common stock by bebe and 250,000 shares were purchased from the majority shareholder of bebe. At September 30, 2018, the Company had an ownership of approximately 30.1% of bebe’s outstanding common shares.

The equity ownership in bebe is accounted for under the equity method of accounting. The carrying value for the bebe investment at September 30, 2018 was $26,012 and is included in prepaid expenses and other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2018, the equity income from bebe was $1,062 and $7,144, respectively, and is included in income from equity investments on the condensed consolidated statements of income.

Statements of Cash Flows - Supplemental Non-cash Disclosures

x) Statements of Cash Flows – Supplemental Non-cash Disclosures

During the nine months ended September 30, 2018, non-cash investing activities included the conversion of a loan receivable in the amount of $16,867 and accrued interest receivable of $51 into an equity investment that totaled $16,918 as more fully discussed in Note 2(v) above.

Variable Interest Entity

y) Variable Interest Entity

In January 2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations. The Company’s investment in the Partnership is a Variable Interest Entity (“VIE”) since the unaffiliated limited partners do not have substantive kick-out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership. The Company has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant. 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. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed.

The carrying value of the Company’s investments in the VIE that was not consolidated is shown below.

	September 30, 2018
Partnership investments	$	5,179
Due from related party		1,071
Maximum exposure to loss	$	6,250

Reclassification

(z) Reclassification

The Company reclassified $262 of revenues that was reported as interest income – securities lending during the three months ended March 31, 2018 to revenues – services and fees. The previously reported amount of $7,553 as interest income – securities lending was reduced by $262 to $7,291 for the three months ended March 31, 2018 and the previously reported amount of $52,776 as revenues – services and fees was increased by $262 to $53,038 for the three months ended March 31, 2018.

The Company reclassified $309 of revenues that was reported as interest income – securities lending during the three months ended September 30, 2017 to revenues – services and fees. The previously reported amount of $7,206 and $9,424 as interest income – securities lending for the three and nine months ended September 30, 2017, respectively, was reduced by $309, to $6,897 and $9,115, respectively. The previously reported amount of $85,141 and $202,354 as revenues – services and fees for the three and nine months ended September 30, 2017, respectively, was increased by $309, to $85,450 and $202,663.

The impact of these reclassifications is reflected in the revenues as reported in the condensed consolidated statements of income for the three and nine months ended September 30, 2018 and 2017. The impact of this reclassification on the amounts reported during the periods was deemed to be immaterial.

Recent Accounting Pronouncements

(aa) Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13: Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in this update change the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company early adopted ASU 2018-13 in the third quarter of 2018 and the adoption did not have a material impact on our consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. This ASU also discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will continue to evaluate indicators that may give rise to a change in our tax provision as a result of the Tax Reform Act. See Note 10 for additional information on the Tax Reform Act.

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). The amendments in this update require lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued ASU 2018-10: Codification Improvements to Topic 842, Leases, which provides narrow-scope improvements to the lease standard. ASU 2016-02 and ASU 2018-10 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of these updates on the consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income that provides for the reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Reform Act. The accounting update is effective for the fiscal year beginning after December 15, 2018 and early adoption is permitted. The accounting update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. We are currently evaluating the impact of the accounting update, but the adoption is not expected to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal year 2019, but early application is permitted. The Company has not yet adopted this update and is currently evaluating the impact it may have on its financial condition and results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet adopted this update and currently evaluating the effect this new standard will have on its financial condition and results of operations

On January 1, 2018, we adopted ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) using the retrospective method which requires adjustment to prior periods in the statement of cash flows. ASU 2016-18 clarifies how restricted cash should be presented on the statement of cash flows and requires companies to include restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period totals on the statement of cash flows. Restricted cash previously classified under investing activities is now included in the reconciliation of beginning and ending cash on the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on the Company’s financial condition and results of operations.

On January 1, 2018, we adopted ASC 606 – Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our consolidated financial statements. The new revenue standard was applied prospectively in our consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 9 for additional information on the adoption of this standard.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Schedule of restructuring charges

The following table summarizes the changes in accrued restructuring charge during the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	1,827			3,287			2,600			694
Restructuring charge		428			4,896			2,247			11,484
Cash paid		(504	)		(3,092	)		(2,954	)		(4,880	)
Non-cash items		(1	)		(1,732	)		(143	)		(3,939	)
Balance, end of period	$	1,750		$	3,359		$	1,750		$	3,359

The following table summarizes the restructuring activities during the three months ended September 30, 2018 and 2017:

	Three Months Ended September 30,
	2018								2017
			Principal								Principal
			Investments -								Investments -
	Capital		United						Capital		United
	Markets		Online		Corporate		Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	76		—		—	$	76	$	2,285	$	150	$	1,102	$	3,537
Facility closure and consolidation charge		352		—		—		352		1,037		—		322		1,359
Total restructuring charge	$	428	$	—	$	—	$	428	$	3,322	$	150	$	1,424	$	4,896

The following table summarizes the restructuring activities during the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018									2017
			Principal									Principal
			Investments -									Investments -
	Capital		United							Capital		United
	Markets		Online		Corporate			Total		Markets		Online		Corporate		Total
Restructuring charge:
Employee termination costs	$	729		—		—		$	729	$	4,819	$	633	$	3,284	$	8,736
Facility closure and consolidation charge (recovery)		1,728		—		(210	)		1,518		2,426		—		322		2,748
Total restructuring charge	$	2,457	$	—	$	(210	)	$	2,247	$	7,245	$	633	$	3,606	$	11,484

Schedule of securities owned and securities sold not yet purchased at fair value

As of September 30, 2018 and December 31, 2017, the Company’s securities and other investments owned and securities sold not yet purchased measured at fair value consisted of the following securities and investments:

	September 30,		December 31,
	2018		2017
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	67,306
Corporate bonds		18,909		6,539
Fixed income securities		4,467		2,329
Loans receivable		36,587		33,713
Partnership interests and other		56,241		35,473
	$	222,521	$	145,360
Securities sold not yet purchased:
Common stocks	$	47,929	$	19,145
Corporate bonds		6,381		1,175
Fixed income securities		598		699
Partnership interests and other		4,764		7,272
	$	59,672	$	28,291

Schedule of financial assets and liabilities measured on recurring basis

The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2018 and December 31, 2017:

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at September 30, 2018 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	September 30,		identical assets		inputs		inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	106,317	$	72,153	$	25,207	$	8,957
Corporate bonds		18,909		—		18,909		—
Fixed income securities		4,467		—		4,467		—
Loans receivable		36,587		—		—		36,587
Partnership interests and other		54,114		1,280		10		52,824
Total assets measured at fair value	$	220,394	$	73,433	$	48,593	$	98,368
Liabilities:
Securities sold not yet purchased:
Common stocks	$	47,929	$	47,929	$	—	$	—
Corporate bonds		6,381		—		6,381
Fixed income securities		598		—		598		—
Partnership interests and other		4,764		4,764		—		—
Total securities sold not yet purchased		59,672		52,693		6,979		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,409		—		—		4,409
Total liabilities measured at fair value	$	64,081	$	52,693	$	6,979	$	4,409

	Financial Assets and Liabilities Measured at Fair Value
	on a Recurring Basis at December 31, 2017 Using
			Quoted prices in		Other		Significant
	Fair value at		active markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities and other investments owned:
Common stocks and warrants	$	67,306	$	38,960	$	—	$	28,346
Corporate bonds		6,539		—		6,539		—
Fixed income securities		2,329		—		2,329		—
Loans receivable		33,713		—		—		33,713
Partnership interests and other		31,883		686		5,093		26,104
Total assets measured at fair value	$	141,770	$	39,646	$	13,961	$	88,163
Liabilities:
Securities sold not yet purchased:
Common stocks	$	19,145	$	19,145	$	—	$	—
Corporate bonds		1,175		—		1,175		—
Fixed income securities		699		—		699		—
Partnership interests and other		7,272		7,272		—		—
Total securities sold not yet purchased		28,291		26,417		1,874		—
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—		—		4,478
Total liabilities measured at fair value	$	32,769	$	26,417	$	1,874	$	4,478

Schedule of changes in Level 3 fair value hierarchy

The following table summarizes 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 September 30, 2018: 

	Fair value at
	September 30,						Weighted
	2018		Valuation Technique	Unobservable Input	Range		Average
Assets:
Common stocks and warrants	$	8,957	Market approach	Over-the-counter trading activity		$10.00-$10.50/share	$	10.29
			Market approach	Market price of related security		$0.61/share	$	0.61
			Pending transaction	Discount		50%		50%
Loans receivable		36,587	Market approach	Revenue multiple		1.4x		1.4x
Partnership interests and other		52,824	Market approach	Revenue multiple		1.4x		1.4x
Total level 3 assets measured at fair value	$	98,368
Liabilities:
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	$	4,409	Market approach	Operating income multiple		6.0x		6.0x

The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2018 and 2017 are as follows:

	Level 3		Level 3 Changes During the Period												Level 3
	Balance at		Fair			Relating to			Purchases,			Transfer in			Balance at
	Beginning of		Value			Undistributed			Sales and			and/or out			End of
	Year		Adjustments			Earnings			Settlements			of Level 3			Period
Nine Months Ended September 30, 2018
Common stocks and warrants	$	28,346	$	(3,247	)	$	578		$	4,250		$	(20,970	)	$	8,957
Loans receivable		33,713		(11	)		100			2,785			—			36,587
Partnership interests and other		26,104		1,411			(2,735	)		28,044			—			52,824
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		4,478		—			(69	)		—			—			4,409
Nine Months Ended September 30, 2017
Common stocks and warrants	$	299	$	(463	)	$	—		$	10,146		$	—		$	9,982
Corporate bonds		160		—			—			—			(160	)		—
Loans receivable		—		1,375			—			25,493			—			26,868
Partnership interests and other		13,426		2,820			—			(4,390	)		—			11,856
Mandatorily redeemable noncontrolling interests issued after November 5, 2003		3,214		9,000			(190	)		—			806			12,830
Contingent consideration		1,242		8			—			(1,250	)		—			—

Schedule of investments in the VIE

The carrying value of the Company’s investments in the VIE that was not consolidated is shown below.

	September 30, 2018
Partnership investments	$	5,179
Due from related party		1,071
Maximum exposure to loss	$	6,250

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of pro forma financial information

The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results.

	Pro Forma (Unaudited)
	Three Months Ended September 30, 2017			Nine Months Ended September 30,  2017
Revenues	$	92,461		$	320,546
Net (loss) income attributable to B. Riley Financial, Inc.	$	(42	)	$	11,785
Basic (loss) earnings per share	$	(0.00	)	$	0.46
Diluted (loss) earnings per share	$	(0.00	)	$	0.43
Weighted average basic shares outstanding		26,094,000			25,888,446
Weighted average diluted shares outstanding		26,094,000			27,137,419

Delaware corporation ("Wunderlich") [Member]

Schedule of accquisition consideration

The purchase price allocation was as follows:

Consideration paid by B. Riley:
Cash paid	$	29,737
Fair value of 1,974,812 B. Riley common shares issued		31,495
Fair value of 821,816 B. Riley common stock warrants issued		3,886
Total consideration	$	65,118

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	4,259
Securities owned		1,413
Accounts receivable		3,193
Due from clearing broker		15,133
Prepaid expenses and other assets		10,103
Property and equipment		2,315
Deferred taxes		5,456
Accounts payable		(1,718	)
Accrued payroll and related expenses		(6,387	)
Accrued expenses and other liabilities		(10,223	)
Securities sold, not yet purchased		(1,707	)
Notes payable		(10,579	)
Customer relationships		15,320
Trademarks		1,340
Goodwill		37,200
Total	$	65,118

FBR & Co. ("FBR") [Member]

Schedule of accquisition consideration

The purchase price allocation was as follows:

Consideration paid by B. Riley:
Number of FBR Common Shares outstanding at June 1, 2017		7,099,511
Stock merger exchange ratio		0.671
Number of B. Riley common shares		4,763,772
Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards		67,861
Total number of B. Riley common shares to be issued		4,831,633
Closing market price of B. Riley common shares on December 31, 2016	$	14.70
Total value of B. Riley common shares		71,025
Fair value of RSU’s attributable to service period prior to June 1, 2017 (a)		2,446
Total consideration	$	73,471

(a) Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the FBR Merger Agreement with the right to receive 0.671 shares of the Company’s common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company’s common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period.

The assets acquired and assumed was as follows:

Tangible assets acquired and assumed:
Cash and cash equivalents	$	15,738
Securities owned		11,188
Securities borrowed		861,197
Accounts receivable		4,341
Due from clearing broker		29,169
Prepaid expenses and other assets		5,486
Property and equipment		8,663
Deferred taxes		17,706
Accounts payable		(1,524	)
Accrued payroll and related expenses		(7,182	)
Accrued expenses and other liabilities		(22,411	)
Securities loaned		(867,626	)
Customer relationships		5,600
Tradename and other intangibles		1,790
Goodwill		11,336
Total	$	73,471

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SECURITIES LENDING (Tables)	9 Months Ended
	Sep. 30, 2018
Securities Lending
Schedule of contractual gross and net securities borrowing and lending balances	<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2018 and December 31, 2017:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amounts not</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>offset in the</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated balance</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>sheets but eligible</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>offset in the</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>included in the</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>for offsetting</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross amounts</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>consolidated</b></font></td> <td style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>upon counterparty</b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1pt; text-align: center; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>recognized</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>balance sheets <sup>(1)</sup></b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>balance sheets</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>default<sup>(2)</sup></b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net amounts</b></font></td> <td style="font-weight: bold; padding-bottom: 1pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of September 30, 2018</b></font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 32%; text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities borrowed</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,042,295</font></td> <td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities loaned</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,035,408</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of December 31, 2017</b></font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities borrowed</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">807,089</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; padding-left: 0.25in; text-indent: -8.65pt"><font style="font: 10pt Times New Roman, Times, Serif">Securities loaned</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">803,371</font></td> <td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="margin-top: 0; margin-bottom: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="margin-top: 0; margin-bottom: 0"></p> <table cellspacing="0" cellpadding="0" style="font-size: 11pt; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td style="font-family: Times Roman; width: 5%; white-space: nowrap; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><sup>(1)</sup></font></td> <td style="font-family: Times Roman; width: 95%; white-space: nowrap"><font style="font: 10pt Times New Roman, Times, Serif">Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="font-family: Times Roman; white-space: nowrap; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><sup>(2)</sup></font></td> <td style="font-family: Times Roman; white-space: nowrap"><font style="font: 10pt Times New Roman, Times, Serif">Includes the amount of cash collateral held/posted.</font></td></tr></table>

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

Intangible assets consisted of the following:

		As of September 30, 2018						As of December 31, 2017
		Gross						Gross
		Carrying		Accumulated		Intangibles		Carrying		Accumulated		Intangibles
	Useful Life	Value		Amortization		Net		Value		Amortization		Net
Amortizable assets:
Customer relationships	4 to 16 Years	$	58,330	$	14,440	$	43,890	$	58,330	$	9,100	$	49,230
Domain names	7 Years		237		75		162		287		61		226
Advertising relationships	8 Years		100		28		72		100		19		81
Internally developed software and other intangibles	0.5 to 4 Years		3,373		2,035		1,338		3,373		1,445		1,928
Trademarks	7 to 8 Years		4,190		881		3,309		4,190		447		3,743
Total			66,230		17,459		48,771		66,280		11,072		55,208
Non-amortizable assets:
Tradenames			2,240		—		2,240		1,740		—		1,740
Total intangible assets		$	68,470	$	17,459	$	51,011	$	68,020	$	11,072	$	56,948

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ACCOUNTS RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

Schedule of components of accounts receivable

The components of accounts receivable, net, include the following:

	September 30,			December 31,
	2018			2017
Accounts receivable	$	22,597		$	15,593
Investment banking fees, commissions and other receivables		16,219			4,199
Unbilled receivables		966			1,023
Total accounts receivable		39,782			20,815
Allowance for doubtful accounts		(824	)		(800	)
Accounts receivable, net	$	38,958		$	20,015

Schedule of allowance for doubtful accounts

Additions and changes to the allowance for doubtful accounts consist of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	796		$	599		$	800		$	255
Add:  Additions to reserve		192			123			840			827
Less:  Write-offs		(164	)		(94	)		(816	)		(262	)
Less:  Recoveries		—			—			—			(192	)
Balance, end of period	$	824		$	628		$	824		$	628

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NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2018

Notes Payable [Abstract]

Schedule of senior notes payable

Senior notes payable, net, is comprised of the following as of September 30, 2018 and December 31, 2017:

	September 30,			December 31,
	2018			2017
7.50% Senior notes due October 31, 2021	$	46,407		$	35,231
7.50% Senior notes due May 31, 2027		107,429			92,490
7.25% Senior notes due December 31, 2027		100,441			80,500
7.375% Senior notes due May 31, 2023		109,183			—
6.875% Senior notes due September 30, 2023		100,050			—
		463,510			208,221
Less: Unamortized debt issuance costs		(7,727	)		(4,600	)
	$	455,783		$	203,621

(a) $46,407 Senior Notes Payable due October 31, 2021

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of revenues from contracts with customers

Revenue from contracts with customers by reportable segment for the three months ended September 30, 2018 is as follows:

	Three Months Ended September 30, 2018
	Reportable Segment
								Principal
				Auction and		Valuation and		Investments -
	Capital Markets			Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	35,902		$	—	$	—	$	—	$	35,902
Wealth and asset management fees		19,171			—		—		—		19,171
Commissions, fees and reimbursed expenses		10,533			2,399		9,404		—		22,336
Subscription services		—			—		—		9,151		9,151
Service contract revenues		—			108		—		—		108
Advertising and other		—			—		—		2,276		2,276
Total revenues from contracts with customers		65,606			2,507		9,404		11,427		88,944
Other sources of revenue:
Interest income - Securities lending		8,954			—		—		—		8,954
Trading loss on investments		(3,462	)		—		—		—		(3,462	)
Other		5,245			—		—		—		5,245
Total revenues	$	76,343		$	2,507	$	9,404	$	11,427	$	99,681

Revenue from contracts with customers by reportable segment for the nine months ended September 30, 2018 is as follows:

	Nine Months Ended September 30, 2018
	Reportable Segment
							Principal
			Auction and		Valuation and		Investments -
	Capital Markets		Liquidation		Appraisal		United Online		Total
Revenues from contracts with customers:
Corporate finance, consulting and investment banking fees	$	84,927	$	—	$	—	$	—	$	84,927
Wealth and asset management fees		56,928		—		—		—		56,928
Commissions, fees and reimbursed expenses		31,546		33,212		27,383		—		92,141
Subscription services		—		—		—		27,335		27,335
Service contract revenues		—		11,648		—		—		11,648
Advertising and other		—		—		—		6,925		6,925
Total revenues from contracts with customers		173,401		44,860		27,383		34,260		279,904
Other sources of revenue:
Interest income - Securities lending		22,836		—		—		—		22,836
Trading gain on investments		1,449		—		—		—		1,449
Other		16,771		—		—		—		16,771
Total revenues	$	214,457	$	44,860	$	27,383	$	34,260	$	320,960

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

Basic and diluted earnings per share was calculated as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net income attributable to B. Riley Financial, Inc.	$	2,814	$	368	$	24,314	$	17,669
Weighted average shares outstanding:
Basic		25,968,997		26,059,490		25,856,339		22,180,808
Effect of dilutive potential common shares:
Restricted stock units and warrants		705,557		1,193,007		740,087		816,841
Contingently issuable shares		179,707		387,365		179,707		387,365
Diluted		26,854,261		27,639,862		26,776,133		23,385,014
Basic income per share	$	0.11	$	0.01	$	0.94	$	0.80
Diluted income per share	$	0.10	$	0.01	$	0.91	$	0.76

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SHARE BASED PAYMENTS (Tables) - Restricted Stock Units (RSUs) [Member]

9 Months Ended

Sep. 30, 2018

Amended and Restated 2009 Stock Incentive Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of equity incentive award activity

A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		792,264		$	13.30
Granted		424,235			20.87
Vested		(304,599	)		13.17
Forfeited		(9,057	)		12.49
Nonvested at September 30, 2018		902,843		$	16.91

FBR Stock Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of equity incentive award activity

A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2018 was as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at January 1, 2018		1,066,133		$	16.15
Granted		186,662			20.73
Vested		(347,265	)		15.33
Forfeited		(84,238	)		15.85
Nonvested at September 30, 2018		821,292		$	17.57

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BUSINESS SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of reportable segments

The following is a summary of certain financial data for each of the Company’s reportable segments:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Capital Markets reportable segment:
Revenues - Services and fees	$	67,389		$	56,782		$	191,621		$	96,181
Interest income - Securities lending		8,954			6,897			22,836			9,115
Total revenues		76,343			63,679			214,457			105,296
Selling, general, and administrative expenses		(57,207	)		(53,955	)		(168,559	)		(87,753	)
Restructuring charge		(428	)		(3,322	)		(2,457	)		(7,245	)
Interest expense - Securities lending		(6,425	)		(4,950	)		(16,317	)		(6,515	)
Depreciation and amortization		(1,309	)		(1,636	)		(4,428	)		(2,167	)
Segment income (loss)		10,974			(184	)		22,696			1,616
Auction and Liquidation reportable segment:
Revenues - Services and fees		2,459			7,376			44,812			43,179
Revenues - Sale of goods		48			1			48			1
Total revenues		2,507			7,377			44,860			43,180
Direct cost of services		(838	)		(3,385	)		(12,263	)		(25,482	)
Cost of goods sold		(24	)		(2	)		(41	)		(2	)
Selling, general, and administrative expenses		(1,289	)		(1,963	)		(7,787	)		(6,562	)
Depreciation and amortization		(7	)		(5	)		(23	)		(15	)
Segment income		349			2,022			24,746			11,119
Valuation and Appraisal reportable segment:
Revenues - Services and fees		9,404			9,043			27,383			24,799
Direct cost of services		(4,067	)		(3,778	)		(12,388	)		(11,031	)
Selling, general, and administrative expenses		(2,379	)		(2,253	)		(7,138	)		(6,395	)
Depreciation and amortization		(56	)		(43	)		(159	)		(130	)
Segment income		2,902			2,969			7,698			7,243
Principal Investments - United Online segment:
Revenues - Services and fees		11,403			12,249			34,170			38,504
Revenues - Sale of goods		24			78			90			220
Total revenues		11,427			12,327			34,260			38,724
Direct cost of services		(3,251	)		(2,975	)		(9,082	)		(9,711	)
Cost of goods sold		(28	)		(122	)		(101	)		(311	)
Selling, general, and administrative expenses		(2,348	)		(2,433	)		(6,321	)		(8,536	)
Depreciation and amortization		(1,682	)		(1,703	)		(5,040	)		(5,313	)
Restructuring charge		—			(150	)		—			(633	)
Segment income		4,118			4,944			13,716			14,220
Consolidated operating income from reportable segments		18,343			9,751			68,856			34,198
Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018; and restructuring charge of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively.		(5,505	)		(8,395	)		(16,938	)		(19,571	)
Interest income		442			76			736			358
Income (loss) on equity investments		828			(157	)		5,049			(157	)
Interest expense		(9,340	)		(2,510	)		(23,926	)		(5,195	)
Income (loss) before income taxes		4,768			(1,235	)		33,777			9,633
(Provision for) benefit from income taxes		(2,046	)		1,357			(8,412	)		7,753
Net income		2,722			122			25,365			17,386
Net (loss) income attributable to noncontrolling interests		(92	)		(246	)		1,051			(283	)
Net income attributable to B. Riley Financial, Inc.	$	2,814		$	368		$	24,314		$	17,669

Schedule of revenues by geographical area

The following table presents revenues by geographical area:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenues:
Revenues - Services and fees:
North America	$	90,649	$	85,437	$	296,718	$	200,809
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues - Services and fees	$	90,655	$	85,450	$	297,986	$	202,663
Revenues - Sale of goods
North America	$	72	$	79	$	138	$	221
Revenues - Interest income - Securities lending:
North America	$	8,954	$	6,897	$	22,836	$	9,115
Total Revenues:
North America	$	99,675	$	92,413	$	319,692	$	210,145
Australia		—		—		—		940
Europe		6		13		1,268		914
Total Revenues	$	99,681	$	92,426	$	320,960	$	211,999

Schedule of long-lived assets of property and equipment and other assets, by geographical area

The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area:

	September 30,		December 31,
	2018		2017
Long-lived Assets - Property and Equipment, net:
North America	$	11,143	$	11,977
Australia		—		—
Europe		—		—
Total	$	11,143	$	11,977

XML

ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2018 Number	Nov. 09, 2017 USD ($) $ / shares
Business Acquisition [Line Items]
Number of operating segment | Number	4
MagicJack VocalTec [Member]
Business Acquisition [Line Items]
Right share price (in dollars per share) | $ / shares		$ 8.71
Total consideration | $		$ 143,500

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Restructuring Reserve [Roll Forward]
Balance, beginning of period	$ 1,827	$ 3,287	$ 2,600	$ 694
Restructuring charge	428	4,896	2,247	11,484
Cash paid	(504)	(3,092)	(2,954)	(4,880)
Non-cash items	(1)	(1,732)	(143)	(3,939)
Balance, end of period	$ 1,750	$ 3,359	$ 1,750	$ 3,359

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Restructuring charge	$ 428	$ 4,896	$ 2,247	$ 11,484
Capital Markets Reportable Segment [Member]
Restructuring charge	428	3,322	2,457	7,245
Principal Investments - United Online Segment [Member]
Restructuring charge		150		633
Corporate Overhead [Member]
Restructuring charge		1,424	(210)	3,606
Employee Termination (Recovery) Costs [Member]
Restructuring charge	76	3,537	729	8,736
Employee Termination (Recovery) Costs [Member] | Capital Markets Reportable Segment [Member]
Restructuring charge	76	2,285	729	4,819
Employee Termination (Recovery) Costs [Member] | Principal Investments - United Online Segment [Member]
Restructuring charge		150		633
Employee Termination (Recovery) Costs [Member] | Corporate Overhead [Member]
Restructuring charge		1,102		3,284
Facility closure and Consolidation Charge (Recovery) [Member]
Restructuring charge	352	1,359	1,518	2,748
Facility closure and Consolidation Charge (Recovery) [Member] | Capital Markets Reportable Segment [Member]
Restructuring charge	352	1,037	1,728	2,426
Facility closure and Consolidation Charge (Recovery) [Member] | Principal Investments - United Online Segment [Member]
Restructuring charge
Facility closure and Consolidation Charge (Recovery) [Member] | Corporate Overhead [Member]
Restructuring charge		$ 322	$ (210)	$ 322

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Securities and other investments owned:
Securities and other investments owned	$ 222,521	$ 145,360
Securities sold not yet purchased:
Securities sold not yet purchased	59,672	28,291
Common Stock [Member]
Securities sold not yet purchased:
Securities sold not yet purchased	47,929	19,145
Common Stocks and Warrants [Member]
Securities and other investments owned:
Securities and other investments owned	106,317	67,306
Corporate Bonds [Member]
Securities and other investments owned:
Securities and other investments owned	18,909	6,539
Securities sold not yet purchased:
Securities sold not yet purchased	6,381	1,175
Fixed Income Securities [Member]
Securities and other investments owned:
Securities and other investments owned	4,467	2,329
Securities sold not yet purchased:
Securities sold not yet purchased	598	699
Loans Receivable [Member]
Securities and other investments owned:
Securities and other investments owned	36,587	33,713
Partnership Interests and Other [Member]
Securities and other investments owned:
Securities and other investments owned	56,241	35,473
Securities sold not yet purchased:
Securities sold not yet purchased	$ 4,764	$ 7,272

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Securities and other investments owned:
Total assets measured at fair value	$ 222,521	$ 145,360
Securities sold not yet purchased:
Total securities sold not yet purchased	59,672	28,291
Common Stock [Member]
Securities sold not yet purchased:
Total securities sold not yet purchased	47,929	19,145
Common Stocks and Warrants [Member]
Securities and other investments owned:
Total assets measured at fair value	106,317	67,306
Corporate Bonds [Member]
Securities and other investments owned:
Total assets measured at fair value	18,909	6,539
Securities sold not yet purchased:
Total securities sold not yet purchased	6,381	1,175
Fixed Income Securities [Member]
Securities and other investments owned:
Total assets measured at fair value	4,467	2,329
Securities sold not yet purchased:
Total securities sold not yet purchased	598	699
Loans Receivable [Member]
Securities and other investments owned:
Total assets measured at fair value	36,587	33,713
Partnership Interests and Other [Member]
Securities and other investments owned:
Total assets measured at fair value	56,241	35,473
Securities sold not yet purchased:
Total securities sold not yet purchased	4,764	7,272
Fair Value, Measurements, Recurring [Member]
Securities and other investments owned:
Total assets measured at fair value	220,394	141,770
Securities sold not yet purchased:
Total securities sold not yet purchased	59,672	28,291
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	4,409	4,478
Total liabilities measured at fair value	64,081	32,769
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value	73,433	39,646
Securities sold not yet purchased:
Total securities sold not yet purchased	52,693	26,417
Mandatorily redeemable noncontrolling interests issued after November 5, 2003
Total liabilities measured at fair value	52,693	26,417
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value	48,593	13,961
Securities sold not yet purchased:
Total securities sold not yet purchased	6,979	1,874
Mandatorily redeemable noncontrolling interests issued after November 5, 2003
Total liabilities measured at fair value	6,979	1,874
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value	98,368	88,163
Securities sold not yet purchased:
Total securities sold not yet purchased
Mandatorily redeemable noncontrolling interests issued after November 5, 2003	4,409	4,478
Total liabilities measured at fair value	4,409	4,478
Fair Value, Measurements, Recurring [Member] | Common Stock [Member]
Securities sold not yet purchased:
Total securities sold not yet purchased	47,929	19,145
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Securities sold not yet purchased:
Total securities sold not yet purchased	47,929	19,145
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member]
Securities and other investments owned:
Total assets measured at fair value	106,317	67,306
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value	72,153	38,960
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value	25,207
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value	8,957	28,346
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member]
Securities and other investments owned:
Total assets measured at fair value	18,909	6,539
Securities sold not yet purchased:
Total securities sold not yet purchased	6,381	1,175
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value	18,909	6,539
Securities sold not yet purchased:
Total securities sold not yet purchased	6,381	1,175
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Fixed Income Securities [Member]
Securities and other investments owned:
Total assets measured at fair value	4,467	2,329
Securities sold not yet purchased:
Total securities sold not yet purchased	598	699
Fair Value, Measurements, Recurring [Member] | Fixed Income Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Fixed Income Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value	4,467	2,329
Securities sold not yet purchased:
Total securities sold not yet purchased	598	699
Fair Value, Measurements, Recurring [Member] | Fixed Income Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member]
Securities and other investments owned:
Total assets measured at fair value	36,587	33,713
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value	36,587	33,713
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member]
Securities and other investments owned:
Total assets measured at fair value	54,114	31,883
Securities sold not yet purchased:
Total securities sold not yet purchased	4,764	7,272
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 1 [Member]
Securities and other investments owned:
Total assets measured at fair value	1,280	686
Securities sold not yet purchased:
Total securities sold not yet purchased	4,764	7,272
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 2 [Member]
Securities and other investments owned:
Total assets measured at fair value	10	5,093
Securities sold not yet purchased:
Total securities sold not yet purchased
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 3 [Member]
Securities and other investments owned:
Total assets measured at fair value	52,824	$ 26,104
Securities sold not yet purchased:
Total securities sold not yet purchased

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Common Stock And Warrants [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period	$ 28,346	$ 299
Fair Value Adjustments	(3,247)	(463)
Relating to Undistribute Earnings	578
Purchases, Sales and Settlements	4,250	10,146
Transfer in and/or out of Level 3	(20,970)
Balance at End of Period	8,957	9,982
Loans Receivables [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period	33,713
Fair Value Adjustments	(11)	1,375
Relating to Undistribute Earnings	100
Purchases, Sales and Settlements	2,785	25,493
Transfer in and/or out of Level 3
Balance at End of Period	36,587	26,868
Partnership Interests and Other [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period	26,104	13,426
Fair Value Adjustments	1,411	2,820
Relating to Undistribute Earnings	(2,735)
Purchases, Sales and Settlements	28,044	(4,390)
Transfer in and/or out of Level 3
Balance at End of Period	52,824	11,856
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period	4,478	3,214
Fair Value Adjustments		9,000
Relating to Undistribute Earnings	(69)	(190)
Purchases, Sales and Settlements
Transfer in and/or out of Level 3		806
Balance at End of Period	$ 4,409	12,830
Corporate Bond [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period		160
Fair Value Adjustments
Relating to Undistribute Earnings
Purchases, Sales and Settlements
Transfer in and/or out of Level 3		(160)
Balance at End of Period
Contingent Consideration [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at Beginning of Period		1,242
Fair Value Adjustments		8
Relating to Undistribute Earnings
Purchases, Sales and Settlements		(1,250)
Transfer in and/or out of Level 3
Balance at End of Period

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Fair value assets	$ 98,368
Common Stocks and Warrants [Member] | Market Approach [Member] | Over-The-Counter Trading Activity [Member]
Fair value assets	$ 8,957
Weighted Average	10.29
Common Stocks and Warrants [Member] | Market Approach [Member] | Over-The-Counter Trading Activity [Member] | Minimum [Member]
Range	10.00
Common Stocks and Warrants [Member] | Market Approach [Member] | Over-The-Counter Trading Activity [Member] | Maximum [Member]
Range	10.50
Common Stock And Warrants [Member] | Market Approach [Member] | Market Price Of Related Security [Member]
Range	0.61
Weighted Average	0.61
Common Stock And Warrants [Member] | Pending Transaction [Member] | Discount Rate [Member]
Range	0.5
Weighted Average	0.5
Loans Receivables [Member] | Market Approach [Member] | Revenue Multiple [Member]
Fair value assets	$ 36,587
Range	1.4
Weighted Average	1.4
Partnership Interests and Other [Member] | Market Approach [Member] | Revenue Multiple [Member]
Fair value assets	$ 52,824
Range	1.4
Weighted Average	1.4
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member] | Market Approach [Member] | Operating Income Multiple [Member]
Fair value liabilities	$ 4,409
Range	6.0
Weighted Average	6.0

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) - Variable Interest Entity, Primary Beneficiary [Member] $ in Thousands	Sep. 30, 2018 USD ($)
Variable Interest Entity [Line Items]
Partnership investments	$ 5,179
Due from related party	1,071
Maximum exposure to loss	$ 6,250

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) $ / shares in Units, € in Thousands, $ in Thousands, $ in Thousands, $ in Thousands			3 Months Ended					6 Months Ended	9 Months Ended
	Jan. 12, 2018 USD ($) Number $ / shares shares	Dec. 22, 2017	Sep. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2018 CAD ($)	Mar. 31, 2018 CAD ($)	Mar. 31, 2018 EUR (€)	Jan. 31, 2017 AUD ($)
Advertising costs			$ 371			$ 183			$ 1,656	$ 1,227
Restructuring charge			428			4,896			2,247	11,484
Restricted cash and cash equivalents			468		$ 19,711			$ 468	468
Cash collateral					19,197
Net gain (loss) from forward exchange contracts			33			33			91	103
Transaction losses			51			389			843	919
Securities and other investments owned			2,127		3,590			2,127	2,127
Securities and other investments owned, at fair value			222,521		145,360			222,521	222,521
Proceeds from key man life insurance										6,000
Fair Value Adjustments									6,250	9,000
Total assets measured at fair value			$ 220,394		$ 141,770			$ 220,394	$ 220,394
Percentage of assets measured at fair value			5.10%		6.40%			5.10%	5.10%
Revised federal statutory rate		21.00%
Previously federal statutory rate		35.00%
Estimate provisional tax expense					$ 13,052
Depreciation and amortization			$ 1,005			1,243			$ 3,369	2,458
Number of shares issued | shares	500,000
Shares issued price per share (in dollars per share) | $ / shares	$ 6.00
Ownership percentage			30.10%					30.10%	30.10%
Carrying value of investment			$ 16,918					$ 16,918	$ 16,918
Loss from equity method investments			828			(157)			5,049	(157)
Non-cash investing activities, conversion of a loan receivable									16,867
Non-cash investing activities, accrued interest receivable									51
Interest Income - Securities lending [Member]
Interest income				$ 7,291			$ 7,553
Services And Fees [Member]
Interest income				$ 53,038			$ 52,776
Majority Shareholder [Member]
Number of shares issued | shares	250,000
Bebe Stores, Inc. ("bebe") [Member]
Securities and other investments owned					16,867
Loan face value	$ 16,867
Loan accrued interest	$ 51
Number of shares converted | Number	2,819,528
Loan conversion price (in dollars per share) | $ / shares	$ 6.00
Number of shares issued | shares	250,000
Loss from equity method investments			1,062					6,470	7,144
Bebe Stores, Inc. ("bebe") [Member] | Prepaid Expenses and Other Current Assets [Member]
Carrying value of investment			26,012					26,012	26,012
Capital Markets Reportable Segment [Member]
Restructuring charge			428			$ 3,322			2,457	$ 7,245
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Total assets measured at fair value			$ 98,368		88,163			$ 98,368	$ 98,368
Foreign Exchange Contract [Member] | CAD
Derivatives											$ 54,406	$ 54,406
Foreign Exchange Contract [Member] | AUD
Derivatives														$ 25,000
Foreign Exchange Contract [Member] | EUR
Derivatives | €													€ 1,500
Special Bank Accounts [Member]
Restricted cash and cash equivalents					$ 514

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative 1) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended			6 Months Ended	9 Months Ended
	Jan. 12, 2018	Jul. 03, 2017	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Apr. 18, 2018	Dec. 31, 2017
Number of shares issued	500,000
Fair Value Adjustments							$ 6,250	$ 9,000
Loss from equity method investments			$ 828		$ (157)		5,049	(157)
Outstanding balance			21,405			$ 21,405	21,405			$ 5,208
Revenue			99,681		92,426		320,960	211,999
Interest Income - Securities lending [Member]
Decrease in revenue					309
Revenue			8,954		6,897		22,836	9,115
Services And Fees [Member]
Revenue			90,655		85,450		297,986	202,663
One Loans Receivable [Member]
Loans receivable maturity period			15,000			15,000	15,000
Other Loans Receivable [Member]
Loans receivable maturity period			22,147			22,147	$ 22,147
Loans receivable maturity period							2020-05
Previously Reported [Member]
Interest income - Securities lending				$ 262
Previously Reported [Member] | Interest Income - Securities lending [Member]
Revenue					7,206			9,424
Previously Reported [Member] | Services And Fees [Member]
Revenue					$ 85,141			202,354
Increase in revenue								309
Bebe Stores, Inc. ("bebe") [Member]
Number of shares issued	250,000
Loss from equity method investments			1,062			6,470	$ 7,144
Fair Value, Inputs, Level 3 [Member] | Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member]
Fair Value Adjustments								$ 6,250
Agency Agreement [Member] | Bon-Ton Stores, Inc. [Member]
Initial advance									$ 407,426
Outstanding balance									21,405
Agency Agreement [Member] | Bon-Ton Stores, Inc. [Member]
Initial advance									$ 407,426
Outstanding balance			$ 21,405			$ 21,405	21,405
MK Capital Advisors, LLC [Member] | Purchase Agreement [Member]
Imputed interest							$ 8
Warrant [Member] | Wunderlich [Member]
Number of shares issued		821,816
Exercise price (in dollars per share)		$ 17.50

XML

ACQUISITIONS (Details) $ / shares in Units, $ in Thousands		Jul. 03, 2017 USD ($) shares	Jun. 01, 2017 USD ($) $ / shares shares	Sep. 30, 2018 shares	Dec. 31, 2017 shares	Sep. 30, 2017 shares	Dec. 31, 2016 shares
Common Stock [Member]
Consideration paid by B. Riley:
Number of FBR Common Shares outstanding at June 1, 2017 | shares				26,526,445	26,569,462	26,461,568	19,140,342
FBR & Co. ("FBR") [Member]
Consideration paid by B. Riley:
Number of FBR Common Shares outstanding at June 1, 2017 | shares			7,099,511
Stock merger exchange ratio			0.671
Number of B. Riley common shares | shares			4,763,772
Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards | shares			67,861
Total number of B. Riley common shares to be issued | shares			4,831,633
Closing market price of B. Riley common shares on December 31, 2016 | $ / shares			$ 14.70
Total value of B. Riley common shares			$ 71,025
Fair value of RSU's attributable to service period prior to June 1, 2017	[1]		2,446
Total consideration			73,471
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member]
Consideration paid by B. Riley:
Cash paid		$ 29,737
Fair value of shares issued for acquisition		31,495
Total consideration			$ 65,118
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member]
Consideration paid by B. Riley:
Cash paid		$ 29,737
Total number of B. Riley common shares to be issued | shares		1,974,812
Fair value of shares issued for acquisition		$ 3,886

[1] Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the Merger Agreement with the right to receive 0.671 shares of the Company's common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company's common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period.

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ACQUISITIONS (Details 1) - USD ($) $ in Thousands	Sep. 30, 2018		Dec. 31, 2017	Jun. 01, 2017
Tangible assets acquired and assumed:
Securities borrowed	$ 1,042,295	[1]	$ 807,089
Securities loaned	(1,035,408)	[1]	(803,371)
Goodwill	$ 120,129		$ 98,771
FBR & Co. ("FBR") [Member]
Tangible assets acquired and assumed:
Cash and cash equivalents				$ 15,738
Securities owned				11,188
Securities borrowed				861,197
Accounts receivables				4,341
Due from clearing broker				29,169
Prepaid expenses and other assets				5,486
Property and equipment				8,663
Deferred taxes				17,706
Accounts payable				(1,524)
Accrued payroll and related expenses				(7,182)
Accrued expenses and other liabilities				(22,411)
Securities loaned				(867,626)
Customer relationships				5,600
Trade name and trademarks				1,790
Goodwill				11,336
Total consideration				73,471
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member]
Tangible assets acquired and assumed:
Cash and cash equivalents				4,259
Securities owned				1,413
Accounts receivables				3,193
Due from clearing broker				15,133
Prepaid expenses and other assets				10,103
Property and equipment				2,315
Deferred taxes				5,456
Accounts payable				(1,718)
Accrued payroll and related expenses				(6,387)
Accrued expenses and other liabilities				(10,223)
Securities loaned				(1,707)
Notes payable				(10,579)
Customer relationships				15,320
Trade name and trademarks				1,340
Goodwill				37,200
Total consideration				$ 65,118

[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.

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ACQUISITIONS (Details 2) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Weighted average basic shares outstanding (in shares)	25,968,997	26,059,490	25,856,339	22,180,808
Weighted average diluted shares outstanding (in shares)	26,854,261	27,639,862	26,776,133	23,385,014
United Online Inc [Member]
Revenues		$ 92,461		$ 320,546
Net (loss) income attributable to B. Riley Financial, Inc.		$ (42)		$ 11,785
Basic (loss) earnings per share (in dollars per share)		$ (0.00)		$ 0.46
Diluted (loss) earnings per share (in dollars per shares)		$ (0.00)		$ 0.43
Weighted average basic shares outstanding (in shares)		26,094,000		25,888,446
Weighted average diluted shares outstanding (in shares)		26,094,000		27,137,419

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AQUISITIONS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
		Jul. 03, 2017	Jun. 01, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Increase in goodwill				$ 21,358	$ 2,562	$ 18,796
Acquisition consideration payable							$ 10,381
Goodwill				120,129		120,129		$ 98,771
Revenues				99,681	92,426	320,960	211,999
Net income (loss)				2,722	122	25,365	17,386
Revenue				99,681		320,960
Earnings				2,814	368	24,314	17,669
Restructuring charges				428	4,896	2,247	11,484
FBR & Co. ("FBR") [Member]
Share price (in dollars per share)			$ 14.70
Goodwill			$ 11,336
Number of shares issued for acquisition			4,831,633
Total consideration			$ 73,471
Fair value of total purchase consideration	[1]		2,446
Revenues							37,745
Net income (loss)							12,706
FBR & Co. ("FBR") [Member] | Richard J. Hendrix [Member]
Acquisition related costs							3,551
Payroll and severance costs							9,096
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member]
Cash consideration paid		$ 29,737
Goodwill			37,200
Payroll and severance costs				317		1,083
Total consideration			$ 65,118
Revenues				17,239		60,578
Net income (loss)				276		844
Value of shares issued upon acqusition		31,495
Earnings				$ 276		$ 844
Revenue		20,412			17,239		60,578
Earnings		1,928			276		(844)
Restructuring charges		1,387			$ 317		$ 1,083
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member]
Cash consideration paid		29,737
Acquisition consideration payable		$ 65,118
Number of shares issued for acquisition		1,974,812
Number of shares issued held in escrow account		387,365				387,365
Value of shares issued upon acqusition		$ 3,886
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Warrant [Member]
Number of shares issued for acquisition		821,816
Fair value of total purchase consideration		$ 3,886
Number of shares issued held in escrow account		167,352
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Selling, General and Administrative Expenses [Member]
Acquisition related costs		$ 12

[1] Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the Merger Agreement with the right to receive 0.671 shares of the Company's common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company's common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period.

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SECURITIES LENDING (Details) - USD ($) $ in Thousands	Sep. 30, 2018		Dec. 31, 2017
Securities borrowed
Gross amounts recognized	$ 1,042,295	[1]	$ 807,089
Gross amounts offset in the consolidated balance sheets		[2]		[1]
Net amounts included in the consolidated balance sheets	1,042,295	[1]	807,089
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default	1,042,295	[1]	807,089	[2]
Net amounts		[2]
Securities loaned
Gross amounts recognized	1,035,408	[1]	803,371
Gross amounts offset in the consolidated balance sheets		[2]		[1]
Net amounts included in the consolidated balance sheets	1,035,408	[1]	803,371
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default	1,035,408	[1]	803,371	[2]
Net amounts		[2]

[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] Includes the amount of cash collateral held/posted.

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ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Receivables [Abstract]
Accounts receivable	$ 22,597	$ 15,593
Investment banking fees, commissions and other receivables	16,219	4,199
Unbilled receivables	966	1,023
Total accounts receivable	39,782	20,815
Allowance for doubtful accounts	(824)	(800)
Accounts receivable, net	$ 38,958	$ 20,015

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ACCOUNTS RECEIVABLE (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Receivables [Abstract]
Balance, beginning of period	$ 796	$ 599	$ 800	$ 255
Add: Additions to reserve	343	379	840	827
Less: Write-offs	(164)	(94)	(816)	(262)
Less: Recoveries				(192)
Balance, ending of period	$ 824	$ 628	$ 824	$ 628

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Sep. 30, 2018	Dec. 31, 2017
Amortizable assets:
Gross Carrying Value		$ 66,230	$ 66,280
Accumulated Amortization		17,459	11,072
Intangibles Net		48,771	55,208
Non-amortizable assets:
Gross Carrying Value		68,470	68,020
Accumulated Amortization		17,459	11,072
Intangibles Net		51,011	56,948
Customer Relationships [Member]
Amortizable assets:
Gross Carrying Value		58,330	58,330
Accumulated Amortization		14,440	9,100
Intangibles Net		43,890	49,230
Customer Relationships [Member] | Minimum [Member]
Amortizable assets:
Useful Life	4 years
Customer Relationships [Member] | Maximum [Member]
Amortizable assets:
Useful Life	16 years
Domain Names [Member]
Amortizable assets:
Gross Carrying Value		237	287
Accumulated Amortization		75	61
Intangibles Net		162	226
Useful Life	7 years
Advertising Relationships [Member]
Amortizable assets:
Gross Carrying Value		100	100
Accumulated Amortization		28	19
Intangibles Net		72	81
Useful Life	8 years
Internally Developed Software and Other Intangibles [Member]
Amortizable assets:
Gross Carrying Value		3,373	3,373
Accumulated Amortization		2,035	1,445
Intangibles Net		1,338	1,928
Internally Developed Software and Other Intangibles [Member] | Minimum [Member]
Amortizable assets:
Useful Life	6 months
Internally Developed Software and Other Intangibles [Member] | Maximum [Member]
Amortizable assets:
Useful Life	4 years
Trademarks [Member]
Amortizable assets:
Gross Carrying Value		4,190	4,190
Accumulated Amortization		881	447
Intangibles Net		3,309	3,743
Trademarks [Member] | Minimum [Member]
Amortizable assets:
Useful Life	7 years
Trademarks [Member] | Maximum [Member]
Amortizable assets:
Useful Life	8 years
Tradenames [Member]
Non-amortizable assets:
Gross Carrying Value		2,240	1,740
Accumulated Amortization
Intangibles Net		$ 2,240	$ 1,740

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Goodwill	$ 120,129		$ 120,129		$ 98,771
Increase in goodwill	21,358	$ 2,562	18,796
Amortization expense	2,093	$ 2,172	6,399	$ 5,248
Estimated future amortization expense
Estimated future amortization expense 2018 (Remaining six months)	2,093		2,093
Estimated future amortization expense 2019	8,369		8,369
Estimated future amortization expense 2020	7,987		7,987
Estimated future amortization expense 2021	7,605		7,605
Estimated future amortization expense 2022	7,585		7,585
Estimated future amortization expense after 2022	15,132		15,132
Capital Markets Reportable Segment [Member]
Goodwill	98,714		98,714		77,356
Auction and Liquidation Reportable Segment [Member]
Goodwill	1,975		1,975		1,975
Valuation and Appraisal Reportable Segment [Member]
Goodwill	3,713		3,713		3,713
Principal Investments - United Online Segment [Member]
Goodwill	$ 15,727		$ 15,727		$ 15,727

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CREDIT FACILITIES (Details Narrative) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended
	Apr. 19, 2018	Apr. 21, 2017	Apr. 13, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Mar. 19, 2015
Interest expense				$ 1,103	$ 1,407	$ 2,721	$ 1,810
Amortization of deferred loan fees				620		1,110
Second Amended and Restated Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Asset Based Credit Facility [Member]
Credit facility		$ 200
Outstanding balance credit facility								$ 18,505
Credit facility expiration date		Apr. 21, 2022
Description of interest rate		<p><font style="font: 10pt Times New Roman, Times, Serif">The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided.</font></p>
Description of success fees		<p><font style="font: 10pt Times New Roman, Times, Serif">The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein.</font></p>
Interest expense				809	$ 168	4,138	$ 863
Description of collateral		<p><font style="font: 10pt Times New Roman, Times, Serif">The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract.</font></p>
Payment for closing fee		$ 500
UK Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Line of Credit [Member] | GBP [Member]
Maximum borrowing capacity credit facility									$ 50,000
Credit Agreement [Member]
Repayment of borrowing	$ 200
Credit Agreement [Member] | Maximum [Member]
Maximum borrowing capacity credit facility	200
Credit Agreement [Member] | Minimum [Member]
Maximum borrowing capacity credit facility	$ 300
Credit Agreement [Member] | Line of Credit [Member] | United Online, Inc. ("UOL") [Member]
Credit facility			$ 20
Credit facility expiration date			Apr. 13, 2020
Description of interest rate			<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></a><font style="font: 10pt Times New Roman, Times, Serif">Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans.</font></p>
Interest expense				62		228
Amortization of deferred loan fees				$ 34		$ (102)
Description of collateral			<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></a><font style="font: 10pt Times New Roman, Times, Serif">Each of UOL’s U.S. subsidiaries is a guarantor of all obligations under the UOL Credit Agreement and are parties to the UOL Credit Agreement in such capacity (collectively, the “Secured Guarantors”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of UOL and a subsidiary of the Company, are guarantors of the obligations under the UOL Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares of outstanding capital stock of UOL are pledged as collateral. The obligations under the UOL Credit Agreement are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of UOL and the Secured Guarantors, including a pledge of (a) 100% of the equity interests of the Secured Guarantors and (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India. </font></p>
Description of line of credit			<p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif">Amount is reduced by $1,500 commencing on June 30, 2017 and on the last day of each calendar quarter thereafter.</font></p>
Percent of commitment fees			1.00%
Description of unused line fee payable			<p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif">(a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank).</font></p>

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NOTES PAYABLE (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Short-term Debt [Line Items]
Senior notes payable	$ 463,510	$ 208,221
Less: Unamortized debt issue costs	(7,727)	(4,600)
Senior notes payable , net	455,783	203,621
7.50% Senior notes due October 31, 2021 [Member]
Short-term Debt [Line Items]
Senior notes payable	46,407	35,231
Less: Unamortized debt issue costs	(522)	(748)
7.50% Senior Notes Due May 31, 2027 [Member]
Short-term Debt [Line Items]
Senior notes payable	107,429	92,490
Less: Unamortized debt issue costs	(1,569)	(90,904)
7.25% Senior Notes Due December 31, 2027 [Member]
Short-term Debt [Line Items]
Senior notes payable	100,441	80,500
Less: Unamortized debt issue costs	(2,418)	(2,266)
7.375% Senior notes due May 31, 2023 [Member]
Short-term Debt [Line Items]
Senior notes payable	109,183
6.875% Senior Notes Due September 30, 2023 [Member]
Short-term Debt [Line Items]
Senior notes payable	100,050
Less: Unamortized debt issue costs	$ (1,431)

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NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands						3 Months Ended			9 Months Ended		12 Months Ended
	Jun. 05, 2018	Apr. 25, 2018	Apr. 19, 2018	Dec. 31, 2017	Nov. 02, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	May 31, 2018	Jun. 30, 2017	May 31, 2017
Interest expense						$ 1,103		$ 1,407	$ 2,721	$ 1,810
Unamortized debt issuance cost and premiums				$ 4,600		7,727			7,727		$ 4,600
Proceeds from Notes Payable									51,020
Notes payable				2,243		1,671			1,671		2,243
Amortization of deferred loan fees						620			1,110
GACP I, L.P [Member]
Principal amount			$ 51,020
Notes payable			1,020
Advance for borrowing			$ 50,000
LIBOR rate			<p><font style="font: 10pt Times New Roman, Times, Serif">Interest is payable monthly and accrues at the three-month LIBOR rate plus 9% (11.34% at June 30, 2018). </font></p>
Other Notes Payable [Member]
Interest expense							$ 34
Outstanding amount									$ 1,671		2,243
Description of non interest bearing notes payable									<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Notes payable include notes payable to a clearing organization for one of the Company’s broker dealers. The notes payable accrue interest at rates ranging from the prime rate plus 0.25% to 2.0% (5.25% to 7.00% at June 30, 2018) payable annually.</font></p>
Payment terms									<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The principal payments on the notes payable are due annually in the amount of $357 on January 31, $214 on September 30, and $121 on October 31.</font></p>
Maturity date, description									<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The notes payable mature at various dates from September 30, 2018 through January 31, 2022.</font></p>
7.50% Senior notes due October 31, 2021 [Member]
Principal amount					$ 28,750	46,407			$ 46,407
Interest expense						$ 898		643	2,380	2,380
Outstanding amount									$ 45,885		34,483
Proceeds from note payable					45,502
Interest rate						7.50%			7.50%
Unamortized debt issuance cost and premiums				748		$ 522			$ 522		748
Underwriting commissions, fees and other issuance costs					$ 905
7.50% Senior notes due October 31, 2021 [Member] | At The Market Issuance Sales Agreement [Member]
Principal amount						11,176			11,176				$ 6,481
7.50% Senior Notes Due May 31, 2027 [Member]
Principal amount						107,429			107,429					$ 60,375
Interest expense						$ 2,304		$ 1,407	5,672	$ 1,810
Outstanding amount									105,860
Proceeds from note payable									$ 105,621
Interest rate						7.50%			7.50%
Unamortized debt issuance cost and premiums				90,904		$ 1,569			$ 1,569		90,904
Underwriting commissions, fees and other issuance costs									1,808		1,586
7.50% Senior Notes Due May 31, 2027 [Member] | At The Market Issuance Sales Agreement [Member]
Principal amount						14,939			14,939				$ 32,115
7.50% Senior Notes Due 2021/ 7.25% Senior Notes Due 2027 [Member] | At The Market Issuance Sales Agreement [Member]
Principal amount	$ 50,000					12,997			12,997
Interest rate	7.50%
7.25% Senior Notes Due December 31, 2027 [Member]
Principal amount						100,441			100,441
Interest expense						$ 1,871			5,155
Outstanding amount									$ 98,023		78,234
Proceeds from note payable				97,825
Interest rate						7.25%			7.25%
Unamortized debt issuance cost and premiums				2,266		$ 2,418			$ 2,418		2,266
Underwriting commissions, fees and other issuance costs				2,616
7.25% Senior Notes Due December 31, 2027 [Member] | At The Market Issuance Sales Agreement [Member]
Principal amount				$ 80,500		19,941			19,941		$ 80,500
7.375% Senior Notes Due May 31, 2023 [Member]
Principal amount						109,183			109,183			$ 100,050
Interest expense						$ 2,047			3,023
Outstanding amount									107,396
Proceeds from note payable									$ 107,248
Interest rate						7.375%			7.375%
Unamortized debt issuance cost and premiums						$ 1,787			$ 1,787
Underwriting commissions, fees and other issuance costs									1,935
Offering price	$ 6,343	$ 43,657
7.375% Senior Notes Due May 31, 2023 [Member] | At The Market Issuance Sales Agreement [Member]
Principal amount						9,133			9,133
Offering price	$ 36,903	$ 13,097
6.875% Senior Notes Due September 30, 2023 [Member]
Principal amount						100,050			100,050
Interest expense						$ 398			398
Outstanding amount									98,619
Proceeds from note payable									$ 98,603
Interest rate						6.875%			6.875%
Unamortized debt issuance cost and premiums						$ 1,431			$ 1,431
Underwriting commissions, fees and other issuance costs									$ 1,447

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Revenues from contracts with customers:
Total revenues from contracts with customers	$ 88,944	$ 279,904
Other sources of revenue:
Total revenues	99,681	320,960
Corporate Finance And Investment Banking Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	35,902	84,927
Wealth And Asset Management Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	19,171	56,928
Commissions, Fees And Reimbursed Expenses [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	22,336	92,141
Subscription Services [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	9,151	27,335
Service Contract Revenues [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	108	11,648
Advertising And Other [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	2,276	6,925
Interest Income - Securities lending [Member]
Other sources of revenue:
Total revenues	8,954	22,836
Trading Gain On Investments [Member]
Other sources of revenue:
Total revenues	(3,462)	1,449
Other [Member]
Other sources of revenue:
Total revenues	5,245	16,771
Capital Markets Reportable Segment [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	65,606	173,401
Other sources of revenue:
Total revenues	76,343	214,457
Capital Markets Reportable Segment [Member] | Corporate Finance And Investment Banking Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	35,902	84,927
Capital Markets Reportable Segment [Member] | Wealth And Asset Management Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	19,171	56,928
Capital Markets Reportable Segment [Member] | Commissions, Fees And Reimbursed Expenses [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	10,533	31,546
Capital Markets Reportable Segment [Member] | Subscription Services [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Capital Markets Reportable Segment [Member] | Service Contract Revenues [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Capital Markets Reportable Segment [Member] | Advertising And Other [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Capital Markets Reportable Segment [Member] | Interest Income - Securities lending [Member]
Other sources of revenue:
Total revenues	8,954	22,836
Capital Markets Reportable Segment [Member] | Trading Gain On Investments [Member]
Other sources of revenue:
Total revenues	(3,462)	1,449
Capital Markets Reportable Segment [Member] | Other [Member]
Other sources of revenue:
Total revenues	5,245	16,771
Auction and Liquidation Reportable Segment [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	2,507	44,860
Other sources of revenue:
Total revenues	2,507	44,860
Auction and Liquidation Reportable Segment [Member] | Corporate Finance And Investment Banking Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Auction and Liquidation Reportable Segment [Member] | Wealth And Asset Management Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Auction and Liquidation Reportable Segment [Member] | Commissions, Fees And Reimbursed Expenses [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	2,399	33,212
Auction and Liquidation Reportable Segment [Member] | Subscription Services [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Auction and Liquidation Reportable Segment [Member] | Service Contract Revenues [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	108	11,648
Auction and Liquidation Reportable Segment [Member] | Advertising And Other [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Auction and Liquidation Reportable Segment [Member] | Interest Income - Securities lending [Member]
Other sources of revenue:
Total revenues
Auction and Liquidation Reportable Segment [Member] | Trading Gain On Investments [Member]
Other sources of revenue:
Total revenues
Auction and Liquidation Reportable Segment [Member] | Other [Member]
Other sources of revenue:
Total revenues
Valuation and Appraisal Reportable Segment [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	9,404	27,383
Other sources of revenue:
Total revenues	9,404	27,383
Valuation and Appraisal Reportable Segment [Member] | Corporate Finance And Investment Banking Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Valuation and Appraisal Reportable Segment [Member] | Wealth And Asset Management Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Valuation and Appraisal Reportable Segment [Member] | Commissions, Fees And Reimbursed Expenses [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	9,404	27,383
Valuation and Appraisal Reportable Segment [Member] | Subscription Services [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Valuation and Appraisal Reportable Segment [Member] | Service Contract Revenues [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Valuation and Appraisal Reportable Segment [Member] | Advertising And Other [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Valuation and Appraisal Reportable Segment [Member] | Interest Income - Securities lending [Member]
Other sources of revenue:
Total revenues
Valuation and Appraisal Reportable Segment [Member] | Trading Gain On Investments [Member]
Other sources of revenue:
Total revenues
Valuation and Appraisal Reportable Segment [Member] | Other [Member]
Other sources of revenue:
Total revenues
Principal Investments - United Online Segment [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	11,427	34,260
Other sources of revenue:
Total revenues	11,427	34,260
Principal Investments - United Online Segment [Member] | Corporate Finance And Investment Banking Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Principal Investments - United Online Segment [Member] | Wealth And Asset Management Fees [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Principal Investments - United Online Segment [Member] | Commissions, Fees And Reimbursed Expenses [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Principal Investments - United Online Segment [Member] | Subscription Services [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	9,151	27,335
Principal Investments - United Online Segment [Member] | Service Contract Revenues [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers
Principal Investments - United Online Segment [Member] | Advertising And Other [Member]
Revenues from contracts with customers:
Total revenues from contracts with customers	2,276	6,925
Principal Investments - United Online Segment [Member] | Interest Income - Securities lending [Member]
Other sources of revenue:
Total revenues
Principal Investments - United Online Segment [Member] | Trading Gain On Investments [Member]
Other sources of revenue:
Total revenues
Principal Investments - United Online Segment [Member] | Other [Member]
Other sources of revenue:
Total revenues

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Revenue from Contract with Customer [Abstract]
Accounts receivable, net	$ 38,958	$ 20,015
Deferred revenue	3,205	3,141
Recognized revenue from contract	5,423	9,889
prepaid expenses and other assets	2,387
Contract capital cost	$ 0		$ 602

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INCOME TAXES (Details Narrative) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
	Dec. 22, 2017	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Operating Loss Carryforwards [Line Items]
Effective income tax rate					24.90%	80.50%
Tax benefit		$ (2,046)	$ 13,052	$ 1,357	$ (8,412)	$ 7,753
Expiration date					Dec. 31, 2029
Previous U.S. federal corporate tax rate	35.00%
U.S. federal corporate tax rate	21.00%
Remeasurement of deferred tax assets and liabilities			12,954
Transition tax on foreign earnings			98
Deferred tax assets valuation allowance			$ 4,694
Federal Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards		63,445			$ 63,445
Expiration date					Dec. 31, 2029
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards		$ 76,978			$ 76,978
Expiration date					Dec. 31, 2034

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Net income attributable to B. Riley Financial, Inc.	$ 2,814	$ 368	$ 24,314	$ 17,669
Weighted average shares outstanding:
Basic (in shares)	25,968,997	26,059,490	25,856,339	22,180,808
Effect of dilutive potential common shares:
Restricted stock units and warrants	705,557	1,193,007	740,087	816,841
Contingently issuable shares	179,707	387,365	179,707	387,365
Diluted	26,854,261	27,639,862	26,776,133	23,385,014
Basic income per share (in dollars per share)	$ 0.11	$ 0.01	$ 0.94	$ 0.8
Diluted income per share (in dollars per share)	$ 0.1	$ 0.01	$ 0.91	$ 0.76

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EARNINGS PER SHARE (Details Narrative) - USD ($) $ in Thousands		9 Months Ended
	Jul. 03, 2017	Sep. 30, 2018	Sep. 30, 2017
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares held in escrow account	387,365	387,365
Escrow Subject to Cancellation Escrow Claims [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares held in escrow account			453,365
Escrow Subject to Cancellation Escrow Claims [Member] | Great American Group, LLC [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares held in escrow account			66,000
Number of shares issued in escrow account to forfeiture for final settlement of claims			$ 387,365

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands		1 Months Ended
	Jan. 05, 2017	Sep. 30, 2017	Jul. 31, 2017	Feb. 28, 2017
Frontier State Bank Vs Wunderlich Loan Capital Corp [Member]
Loss Contingencies [Line Items]
Damages value		$ 1,300
Arbitration Claim Against WSI and Gary Wunderlich [Member]
Loss Contingencies [Line Items]
Damages value			$ 8,000
Arbitration Claim Against WSI and Gary Wunderlich [Member] | MLV & Co. [Member]
Loss Contingencies [Line Items]
Offering price	$ 151
Arbitration Claim Against Wunderlich Securities, Inc. [Member]
Loss Contingencies [Line Items]
Damages value				$ 10,000

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SHARE BASED PAYMENTS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Amended and Restated 2009 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested at beginning	792,264
Granted	424,235
Vested	(304,599)
Forfeited	(9,057)
Nonvested at end	902,843	792,264
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested at beginning	$ 13.30
Granted	20.87
Vested	13.17
Forfeited	12.49
Nonvested at end	$ 16.91	$ 13.30
FBR Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested at beginning	1,066,133
Granted	186,662	871,317
Vested	(347,265)
Forfeited	(84,238)
Nonvested at end	821,292	1,066,133
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested at beginning	$ 16.15
Granted	20.73
Vested	15.33
Forfeited	15.85
Nonvested at end	$ 17.57	$ 16.15

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SHARE BASED PAYMENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense			$ 8,650	$ 7,679
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted			424,235
Number of shares vested			(304,599)
Total fair value	$ 8,855		$ 8,855
Share based compensation expense	1,714	$ 1,410	4,085	3,624
Unrecognized share based compensation expense	$ 12,661		$ 12,661
Unrecognized share based compensation weighted average period	2 years 2 months 12 days
Weighted average grant date fair value (in dollars per share)			$ 20.87
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Employee and Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted			486,049
Total fair value	$ 7,732		$ 7,732
FBR Stock Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted			186,662		871,317
Number of shares vested			(347,265)
Total fair value	5,324		$ 5,324
Share based compensation expense	1,321	$ 1,383	4,509	$ 1,687	$ 14,577
Unrecognized share based compensation expense	$ 9,468		$ 9,468
Unrecognized share based compensation weighted average period			2 years 3 months 18 days
Weighted average grant date fair value (in dollars per share)			$ 20.73

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NET CAPITAL REQUIREMENTS (Details Narrative) $ in Thousands	Sep. 30, 2018 USD ($)
FBR & Co. ("FBR") [Member]
Net capital	$ 76,053
Excess capital	74,059
MLV & Co. [Member]
Net capital	657
Excess capital	557
Wunderlich Securities, Inc. [Member]
Net capital	4,128
Excess capital	3,514
Maximum [Member] | FBR & Co. ("FBR") [Member]
Net capital	1,994
Maximum [Member] | MLV & Co. [Member]
Net capital	100
Maximum [Member] | Wunderlich Securities, Inc. [Member]
Net capital	614
B. Riley & Co., LLC [Member]
Net capital	350
Excess capital	100
B. Riley & Co., LLC [Member] | Maximum [Member]
Net capital	$ 250

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Apr. 19, 2018	Dec. 31, 2017
Due from related party	$ 9,921		$ 9,921			$ 5,689
Due to related party	1,428		1,428			1,578
Unamortized debt issuance cost and premiums	7,727		7,727			4,600
Interest expense	1,103	$ 1,407	2,721	$ 1,810
Amortization of deferred loan fees	620		1,110
GACP I, L.P [Member]
Principal amount					$ 51,020
Due from related party	6,807		6,807			5,585
GACP II, L.P [Member]
Due from related party	$ 1,943		$ 1,943			52
CA Global Partners, LLC [Member]
Due from related party						$ 52

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BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total revenues	$ 99,681		$ 92,426	$ 320,960	$ 211,999
Interest expense - Securities lending	6,425		4,950	16,317	6,515
Cost of goods sold	52		124	142	313
Selling, general, and administrative expenses	(71,782)		(70,962)	(216,603)	(132,836)
Depreciation and amortization				(9,768)	(7,705)
Restructuring charge	(428)		(4,896)	(2,247)	(11,484)
Segment income (loss)	12,838		1,356	51,918	14,627
Consolidated operating income from reportable segments	18,343		9,751	68,856	34,198
Corporate and other expenses (including restructuring recovery of $172 and $210 during the three and six months ended June 30, 2018, respectively, and restructuring charge of $2,182 during the three and six months ended June 30, 2017	(5,505)		(8,395)	(16,938)	(19,571)
Interest income	442		76	736	358
Income on equity investment	828		(157)	5,049	(157)
Interest expense	(9,340)		(2,510)	(23,926)	(5,195)
Income before income taxes	4,768		(1,235)	33,777	9,633
(Provision for) benefit from income taxes	(2,046)	$ 13,052	1,357	(8,412)	7,753
Net income	2,722		122	25,365	17,386
Net income (loss) attributable to noncontrolling interests	(92)		(246)	1,051	(283)
Net income attributable to B. Riley Financial, Inc.	2,814		368	24,314	17,669
Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	90,655		85,450	297,986	202,663
Sale Of Goods [Member]
Segment Reporting Information [Line Items]
Total revenues	72		79	138	221
Interest Income - Securities lending [Member]
Segment Reporting Information [Line Items]
Total revenues	8,954		6,897	22,836	9,115
Capital Markets Reportable Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	76,343		63,679	214,457	105,296
Interest expense - Securities lending	(6,425)		(4,950)	(16,317)	(6,515)
Selling, general, and administrative expenses	(57,207)		(53,955)	(168,559)	(87,753)
Depreciation and amortization	(1,309)		(1,636)	(4,428)	(2,167)
Restructuring charge	(428)		(3,322)	(2,457)	(7,245)
Segment income (loss)	10,974		(184)	22,696	1,616
Capital Markets Reportable Segment [Member] | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	67,389		56,782	191,621	96,181
Capital Markets Reportable Segment [Member] | Interest Income - Securities lending [Member]
Segment Reporting Information [Line Items]
Total revenues	8,954		6,897	22,836	9,115
Auction and Liquidation Reportable Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	2,507		7,377	44,860	43,180
Direct cost of services	(838)		(3,385)	(12,263)	(25,482)
Cost of goods sold	(24)		(2)	(41)	(2)
Selling, general, and administrative expenses	(1,289)		(1,963)	(7,787)	(6,562)
Depreciation and amortization	(7)		(5)	(23)	(15)
Segment income (loss)	349		2,022	24,746	11,119
Auction and Liquidation Reportable Segment [Member] | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	2,459		7,376	44,812	43,179
Auction and Liquidation Reportable Segment [Member] | Sale Of Goods [Member]
Segment Reporting Information [Line Items]
Total revenues	48		1	48	1
Valuation and Appraisal Reportable Segment [Member]
Segment Reporting Information [Line Items]
Direct cost of services	(4,067)		(3,778)	(12,388)	(11,031)
Selling, general, and administrative expenses	(2,379)		(2,253)	(7,138)	(6,395)
Depreciation and amortization	(56)		(43)	(159)	(130)
Segment income (loss)	2,902		2,969	7,698	7,243
Valuation and Appraisal Reportable Segment [Member] | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	9,404		9,043	27,383	24,799
Principal Investments - United Online Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	11,427		12,327	34,260	38,724
Direct cost of services	(3,251)		(2,975)	(9,082)	(9,711)
Cost of goods sold	(28)		(122)	(101)	(311)
Selling, general, and administrative expenses	(2,348)		(2,433)	(6,321)	(8,536)
Depreciation and amortization	(1,682)		(1,703)	(5,040)	(5,313)
Restructuring charge			(150)		(633)
Segment income (loss)	4,118		4,944	13,716	14,220
Principal Investments - United Online Segment [Member] | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	11,403		12,249	34,170	38,504
Principal Investments - United Online Segment [Member] | Sale Of Goods [Member]
Segment Reporting Information [Line Items]
Total revenues	$ 24		$ 78	$ 90	$ 220

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BUSINESS SEGMENTS (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total revenues	$ 99,681	$ 92,426	$ 320,960	$ 211,999
Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	90,655	85,450	297,986	202,663
Sale Of Goods [Member]
Segment Reporting Information [Line Items]
Total revenues	72	79	138	221
Interest Income - Securities lending [Member]
Segment Reporting Information [Line Items]
Total revenues	8,954	6,897	22,836	9,115
North America
Segment Reporting Information [Line Items]
Total revenues	99,675	92,413	319,692	210,145
North America | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	90,649	85,437	296,718	200,809
North America | Sale Of Goods [Member]
Segment Reporting Information [Line Items]
Total revenues	72	79	138	221
North America | Interest Income - Securities lending [Member]
Segment Reporting Information [Line Items]
Total revenues	8,954	6,897	22,836	9,115
Australia
Segment Reporting Information [Line Items]
Total revenues				940
Australia | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues				940
Europe
Segment Reporting Information [Line Items]
Total revenues	6	13	1,268	914
Europe | Services And Fees [Member]
Segment Reporting Information [Line Items]
Total revenues	$ 6	$ 1,268	$ 13	$ 914

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BUSINESS SEGMENTS (Details 2) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Total Long-lived Assets - Property and Equipment, net	$ 11,143	$ 11,977
North America
Total Long-lived Assets - Property and Equipment, net	11,143	11,977
Australia
Total Long-lived Assets - Property and Equipment, net
Europe
Total Long-lived Assets - Property and Equipment, net