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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated upon consolidation. The Company consolidates all entities that it controls through a majority voting interest. In addition, the Company performs an analysis to determine whether its variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”) including ongoing reassessments of whether it is the primary beneficiary of a VIE. See Note 3(o) for further discussion. 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 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, 2022, filed with the SEC on March 16, 2023. The results of operations for the three and nine months ended September 30, 2023 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, allowance for doubtful accounts, the fair value of loans receivables, intangible assets and goodwill, share based arrangements, contingent consideration, and accounting for income tax valuation allowances, recovery of contract assets and sales returns and 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) 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 and totaled $38,368 and $17,447 during the three months ended September 30, 2023 and 2022, respectively, and $106,572 and $43,757 during the nine months ended September 30, 2023 and 2022, respectively. (d) Concentration of Risk Revenues in the Capital Markets, Financial Consulting, Wealth Management, and Communications segments are primarily generated in the United States. Revenues in the Auction and Liquidation segment and Consumer segment are primarily generated in the United States, Australia, Canada, and Europe. 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. 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 liquidations services contract, the Company sometimes conducts operations with third parties through collaborative arrangements. (e) Advertising Expenses The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $6,047 and $1,584 during the three months ended September 30, 2023 and 2022 and $16,904 and $5,941 during the nine months ended September 30, 2023 and 2022, respectively. Advertising expense was included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. (f) Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. (g) Restricted Cash As of September 30, 2023 and December 31, 2022, restricted cash included $2,060 and $2,308 of cash collateral for leases, respectively. Cash, cash equivalents and restricted cash consist of the following:
| September 30, 2023 |  | December 31, 2022
Cash and cash equivalents | $ | 252,288 |  |  | $ | 268,618 |
Restricted cash | 2,060 |  |  | 2,308 |
Total cash, cash equivalents and restricted cash | $ | 254,348 |  |  | $ | 270,926 |
(h) Loans Receivable Under Accounting Standards Codification (“ASC”) 326 - Financial Instruments – Credit Losses, the Company elected the irrevocable fair value option for all outstanding loans receivable that were previously measured at amortized cost. Under the fair value option, loans receivables are measured at each reporting period based upon their exit value in an orderly transaction and unrealized gains or losses from changes in fair value are recorded in the condensed consolidated statements of operations. These loans are no longer subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through fair value changes. Loans receivable, at fair value totaled $549,142 and $701,652 as of September 30, 2023 and December 31, 2022, respectively. The loans have various maturities through December 2027. As of September 30, 2023 and December 31, 2022, the historical cost of loans receivable accounted for under the fair value option was $576,553 and $769,022, respectively, which included principal balances of $578,581 and $772,873 respectively, and unamortized costs, origination fees, premiums and discounts, totaling $2,028 and $3,851, respectively. During the three months ended September 30, 2023 and 2022, the Company recorded net unrealized losses of $859 and $19,158, respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded net unrealized gains of $51,807 and net unrealized losses of $19,287, respectively, on the loans receivable at fair value, which was included in trading income (loss) and fair value adjustments on loans on the condensed consolidated statements of operations. Loans receivable, at fair value on non-accrual was $41,656 and $7,153 as of September 30, 2023 and December 31, 2022, respectively, which represented approximately 7.6% and 1.0% of total loans receivable, at fair value as of September 30, 2023 and December 31, 2022, respectively. The Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending clients. As of September 30, 2023, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc. (“B&W”) as further described in Note 17. In accordance with the credit loss standard, the Company evaluates the need to record an allowance for credit losses for these loan guarantees since they have off-balance sheet credit exposures. As of September 30, 2023, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure. Interest income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance plus the amortization of any costs, origination fees, premiums and discounts and is included in interest income - loans and securities lending on the condensed consolidated statements of operations. 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. Badcock Loan Receivable On December 20, 2021, the Company entered into a Master Receivables Purchase Agreement (“Badcock Receivables I”) with W.S. Badcock Corporation, a Florida corporation (“WSBC”), an indirect wholly owned subsidiary of Franchise Group, Inc., a Delaware corporation (“FRG”). The Company paid $400,000 in cash to WSBC for the purchase of certain consumer credit receivables of WSBC. On September 23, 2022, the Company's majority-owned subsidiary, B Riley Receivables II, LLC (“BRRII”), a Delaware limited liability company, entered into a Master Receivables Purchase Agreement (“Badcock Receivables II”) with WSBC. This purchase of $168,363 consumer credit receivables of WSBC was partially financed by a $148,200 term loan discussed in Note 11. During the nine months ended September 30, 2023, BRRII entered into Amendment No. 2 and No. 3 to Badcock Receivables II with WSBC for a total of $145,278 in additional consumer credit receivables. The accounting for these transactions resulted in the Company recording a loan receivable from WSBC with the recognition of interest income at an imputed rate based on the cash flows expected to be received from the collection of the consumer receivables that serve as collateral for the loan. These loan receivables are measured at fair value. On August 21, 2023, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables, Inc. (“Freedom VCM Receivables”), for a purchase price of $58,872, which resulted in a loss of $78. In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 11 and as consideration for the purchase price, Freedom VCM Receivables entered into a note receivable in the amount of $58,872, with a stated interest rate of 19.74% and a maturity date of August 21, 2033. Principal and interest is payable based on the collateral without recourse to Freedom VCM Receivables which includes the performance of certain consumer credit receivables. This loan receivable is measured at fair value. In connection with these loans, the Company entered into a Servicing Agreement with WSBC pursuant to which WSBC provides to the Company certain customary servicing and account management services in respect of the receivables purchased by the Company under the Receivables Purchase Agreement. In addition, subject to certain terms and conditions, FRG has agreed to guarantee the performance by WSBC of its obligations under the Master Receivables Purchase Agreements and the Servicing Agreement. As of September 30, 2023 and December 31, 2022, the Badcock Receivables I loan receivable to WSBC in the Company's condensed consolidated balance sheets included loans measured at fair value in the amount of $33,604 and $175,795, respectively. The Badcock Receivables II loan receivable was measured at fair value in the amount of $142,314 as of December 31, 2022. As of September 30, 2023, the Freedom VCM Receivables’ loan receivable in connection with the sale of all of the equity interests of BRRII was included in the Company's condensed consolidated balance sheets in loans receivable, at fair value in the amount of $50,789. (i) Securities and Other Investments Owned and Securities Sold Not Yet Purchased Securities and other investments 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, 2023 and December 31, 2022, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:
| September 30, 2023 |  | December 31, 2022
Securities and other investments owned: |  |  |
Equity securities | $ | 1,088,567 |  |  | $ | 1,046,710 |
Corporate bonds | 66,341 |  |  | 8,539 |
Other fixed income securities | 3,872 |  |  | 3,956 |
Partnership interests and other | 38,807 |  |  | 70,063 |
| $ | 1,197,587 |  |  | $ | 1,129,268 |
Securities sold not yet purchased: |  |  |
Equity securities | $ | 458 |  |  | $ | 4,466 |
Corporate bonds | 4,057 |  |  | 1,162 |
Other fixed income securities | 2,605 |  |  | 269 |
| $ | 7,120 |  |  | $ | 5,897 |
The Company owns certain equity securities that are accounted for under the fair value option where the Company would otherwise use the equity method of accounting. Investments become subject to the equity method of accounting when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the Company possesses more than 20% of the voting interests of the investee. However, the Company may have the ability to exercise significant influence over the investee when the Company owns less than 20% of the voting interests of the investee depending on the facts and circumstances that demonstrate that the ability to exercise influence is present, such as when the Company has representation on the board of directors of such investee. On August 21, 2023, the Company purchased a 31% equity interest in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group, Inc., for $281,144. The Company has elected to account for this equity investment under the fair value option. The following tables contain summarized financial information with respect to Freedom VCM, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 correspond to amounts as of September 30, 2023 of the Company; income statement amounts during the three and nine months ended June 30, 2023 correspond to amounts during the three and nine months ended September 30, 2023 of the Company), which is the period in which the most recent financial information is available:
| June 30, 2023 |  |
Total assets | $ | 3,571,861 |  |  |
Total liabilities | $ | 3,346,430 |  |  |
Equity attributable to investee | $ | 225,431 |  |  |
| For the three months ended June 30, |  |  |  | For the nine months ended June 30, |  |
| 2023 |  |  |  | 2023 |  |
Revenues | $ | 1,038,686 |  |  |  |  | $ | 3,259,396 |  |  |
Net loss attributable to investees | $ | (50,796) |  |  |  |  | $ | (159,824) |  |  |
The following tables contain summarized financial information with respect to two of the Company's individually greater than 20% investments, where the Company has a voting interest in each investee of 41% and 43%, respectively, which has been aggregated and included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 and September 30, 2022 correspond to amounts as of September 30, 2023 and December 31, 2022, respectively, of the Company; income statement amounts during the three and nine months ended June 30, 2023 and 2022 correspond to amounts during the three and nine months ended September 30, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:
| June 30, 2023 |  | September 30, 2022
Total assets | $ | 193,335 |  |  | $ | 202,520 |
Total liabilities | $ | 9,780 |  |  | $ | 5,737 |
Equity attributable to investee | $ | 183,555 |  |  | $ | 196,783 |
| For the three months ended June 30, |  | For the nine months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenues | $ | 30,327 |  |  | $ | 23,891 |  |  | $ | 82,827 |  |  | $ | 72,774 |
Net income attributable to investees | $ | 18,038 |  |  | $ | 20,198 |  |  | $ | 40,724 |  |  | $ | 51,934 |
The following tables contain summarized financial information with respect to B&W, in which the Company owns a 31% voting interest, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of June 30, 2023 and September 30, 2022 correspond to amounts as of September 30, 2023 and December 31, 2022, respectively, of the Company; income statement amounts during the three and nine months ended June 30, 2023 and 2022 correspond to amounts during the three and nine months ended September 30, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:
| June 30, 2023 |  | September 30, 2022
Total assets | $ | 986,880 |  |  | $ | 881,567 |
Total liabilities | $ | 999,900 |  |  | $ | 898,695 |
Equity attributable to investee | $ | (13,020) |  |  | $ | (17,128) |
| For the three months ended June 30, |  | For the nine months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenues | $ | 305,187 |  |  | $ | 221,019 |  |  | $ | 812,311 |  |  | $ | 617,363 |
Net (loss) income attributable to investees | $ | (8,803) |  |  | $ | (6,282) |  |  | $ | (22,993) |  |  | $ | 7,613 |
As of September 30, 2023 and December 31, 2022, the fair value of these equity securities totaled $603,390 and $371,948, respectively, and are included in securities and other investments owned, at fair value in the condensed consolidated balance sheets. (j) 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 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, 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 loans receivable valued at fair value, 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 also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds; the value for these investments is derived from the most recent statements received from the general partner or fund administrator. These partnership and investment fund interests are valued at net asset value (“NAV”) in accordance with ASC 820 - Fair Value Measurements. As of September 30, 2023 and December 31, 2022, partnership and investment fund interests valued at NAV of $38,807 and $70,063, respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets. Securities and other investments owned also include investments in nonpublic entities that do not have a readily determinable fair value and do not report NAV per share. These investments are accounted for using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold. Any investments adjusted to their fair value by applying the measurement alternative are disclosed as nonrecurring fair value measurements, including the level in the fair value hierarchy that was used. As of September 30, 2023 and December 31, 2022, investments in nonpublic entities valued using a measurement alternative of $79,683 and $94,109, respectively, are included in securities and other investments owned in the accompanying condensed consolidated balance sheets. The Company measures certain assets at fair value on a nonrecurring basis. These assets include equity method investments when they are deemed to be other-than-temporarily impaired, investments adjusted to their fair value by applying the measurement alternative, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. The Company did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition as of September 30, 2023 and December 31, 2022, other than the fair value of goodwill and tradename as more fully discussed in Note 9. As of December 31, 2022, the Company had $174,437 of funds held in trust that were invested in a mutual fund that invests in U.S. Treasury securities that were purchased with funds raised through the initial public offering of B. Riley Principal 250 Merger Corporation (“BRPM 250”), which was a special purpose acquisition corporation (“SPAC”). The funds raised were held in a trust account that was restricted for use and may only be used for purposes of completing an initial business combination or redemption of the class A public common shares of the SPAC as set forth in the trust agreement. As of December 31, 2022, the funds held in trust were included within Level 1 of the fair value hierarchy and included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. The BRPM 250 Class A public shares were deemed cancelled on May 4, 2023, and the funds held in trust were used to fund the corresponding redemption amounts to the BRPM 250 Class A shareholders. The Company had warrant liabilities related to warrants of the SPAC that are held by investors in BRPM 250. The warrants were accounted for as liabilities in accordance with ASC 815 - Derivatives and Hedging and were measured at fair value at inception and on a recurring basis using quoted prices in over-the-counter markets. Warrant liabilities were included in Level 1 of the fair value hierarchy and included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets in the amount of $173 for BRPM 250 as of December 31, 2022. The warrants expired worthless on May 4, 2023 when all of the BRPM 250 Class A public shares were redeemed. Changes in fair value of warrants were included within change in fair value of financial instruments and other as part of other income (expense) in the consolidated statements of operations. The fair value of mandatorily redeemable noncontrolling interests was 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, 2023 and December 31, 2022.
| Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2023 Using
| Fair value as of September 30, 2023 |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Assets: |  |  |  |  |  |  |
Securities and other investments owned: |  |  |  |  |  |  |
Equity securities | $ | 1,008,884 |  |  | $ | 333,767 |  |  | $ | — |  |  | $ | 675,117 |
Corporate bonds | 66,341 |  |  | 56,781 |  |  | 9,560 |  |  | — |
Other fixed income securities | 3,872 |  |  | — |  |  | 3,872 |  |  | — |
Total securities and other investments owned | 1,079,097 |  |  | 390,548 |  |  | 13,432 |  |  | 675,117 |
Loans receivable, at fair value | 549,142 |  |  | — |  |  | — |  |  | 549,142 |
Total assets measured at fair value | $ | 1,628,239 |  |  | $ | 390,548 |  |  | $ | 13,432 |  |  | $ | 1,224,259 |
Liabilities: |  |  |  |  |  |  |
Securities sold not yet purchased: |  |  |  |  |  |  |
Equity securities | $ | 458 |  |  | $ | 458 |  |  | $ | — |  |  | $ | — |
Corporate bonds | 4,057 |  |  | 3,103 |  |  | 954 |  |  | — |
Other fixed income securities | 2,605 |  |  | — |  |  | 2,605 |  |  | — |
Total securities sold not yet purchased | 7,120 |  |  | 3,561 |  |  | 3,559 |  |  | — |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,584 |  |  | — |  |  | — |  |  | 4,584 |
Contingent consideration | 27,987 |  |  | — |  |  | — |  |  | 27,987 |
Total liabilities measured at fair value | $ | 39,691 |  |  | $ | 3,561 |  |  | $ | 3,559 |  |  | $ | 32,571 |
| Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2022 Using
| Fair value at December 31, 2022 |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Assets: |  |  |  |  |  |  |
Funds held in trust account | $ | 174,437 |  |  | $ | 174,437 |  |  | $ | — |  |  | $ | — |
Securities and other investments owned: |  |  |  |  |  |  |
Equity securities | 952,601 |  |  | 584,136 |  |  | — |  |  | 368,465 |
Corporate bonds | 8,539 |  |  | — |  |  | 8,539 |  |  | — |
Other fixed income securities | 3,956 |  |  | — |  |  | 3,956 |  |  | — |
Total securities and other investments owned | 965,096 |  |  | 584,136 |  |  | 12,495 |  |  | 368,465 |
Loans receivable, at fair value | 701,652 |  |  | — |  |  | — |  |  | 701,652 |
Total assets measured at fair value | $ | 1,841,185 |  |  | $ | 758,573 |  |  | $ | 12,495 |  |  | $ | 1,070,117 |
Liabilities: |  |  |  |  |  |  |
Securities sold not yet purchased: |  |  |  |  |  |  |
Equity securities | $ | 4,466 |  |  | $ | 4,466 |  |  | $ | — |  |  | $ | — |
Corporate bonds | 1,162 |  |  | — |  |  | 1,162 |  |  | — |
Other fixed income securities | 269 |  |  | — |  |  | 269 |  |  | — |
Total securities sold not yet purchased | 5,897 |  |  | 4,466 |  |  | 1,431 |  |  | — |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,648 |  |  | — |  |  | — |  |  | 4,648 |
Warrant liabilities | 173 |  |  | 173 |  |  | — |  |  | — |
Contingent consideration | 31,046 |  |  | — |  |  | — |  |  | 31,046 |
Total liabilities measured at fair value | $ | 41,764 |  |  | $ | 4,639 |  |  | $ | 1,431 |  |  | $ | 35,694 |
As of September 30, 2023 and December 31, 2022, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $1,224,259 and $1,070,117, respectively, or 19.9% and 17.5%, 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, 2023 and December 31, 2022:
| Fair value at September 30, 2023 |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
Assets: |  |  |  |  |  |  |  |  |
Equity securities | $ | 604,657 |  |  | Market approach |  | Multiple of EBITDA |  | 1.8x - 13.0x |  | 6.8x
|  |  |  |  | Multiple of Sales |  | 0.7x - 3.3x |  | 0.8x
|  |  |  |  | Market price of related security |  | $0.01 - $84.35 |  | $2.81
| 65,297 |  |  | Discounted cash flow |  | Market interest rate |  | 20.2% - 26.3% |  | 23.7%
| 5,163 |  |  | Option pricing model |  | Annualized volatility |  | 25.0% - 183.0% |  | 77.0%
Loans receivable at fair value | 523,232 |  |  | Discounted cash flow |  | Market interest rate |  | 10.0% - 24.3% |  | 13.7%
| 25,910 |  |  | Market approach |  | Market price of related security |  | $16.09 - $21.18 |  | $16.83
Total level 3 assets measured at fair value | $ | 1,224,259 |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | $ | 4,584 |  |  | Market approach |  | Operating income multiple |  | 6.0x |  | 6.0x
Contingent consideration | 27,987 |  |  | Discounted cash flow |  | EBITDA volatility |  | 70% |  | 70%
|  |  |  |  | Asset volatility |  | 69.0% |  | 69.0%
|  |  |  |  | Market interest rate |  | 8.5% |  | 8.5%
|  |  |  |  | Revenue volatility |  | 5.1% |  | 5.1%
Total level 3 liabilities measured at fair value | $ | 32,571 |  |  |  |  |  |  |  |  |
| Fair value at December 31, 2022 |  | Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average
Assets: |  |  |  |  |  |  |  |  |
Equity securities | $ | 304,172 |  |  | Market approach |  | Multiple of EBITDA |  | 1.5x - 10.5x |  | 6.0x
|  |  |  |  | Multiple of Sales |  | 3.0x |  | 3.0x
|  |  |  |  | Market price of related security |  | $10.01 - $18.88 |  | $16.91
| 57,267 |  |  | Discounted cash flow |  | Market interest rate |  | 23.8% |  | 23.8%
| 7,026 |  |  | Option pricing model |  | Annualized volatility |  | 0.3% - 26.1% |  | 70.0%
Loans receivable at fair value | 694,499 |  |  | Discounted cash flow |  | Market interest rate |  | 6.0% - 83.5% |  | 23.9%
| 7,153 |  |  | Market approach |  | Multiple of EBITDA |  | 4.5x |  | 4.5x
Total level 3 assets measured at fair value | $ | 1,070,117 |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | $ | 4,648 |  |  | Market approach |  | Operating income multiple |  | 6.0x |  | 6.0x
Contingent consideration | 31,046 |  |  | Discounted cash flow |  | EBITDA volatility |  | 80.0% |  | 80.0%
|  |  |  |  | Asset volatility |  | 69.0% |  | 69.0%
|  |  |  |  | Market interest rate |  | 8.5% |  | 8.5%
Total level 3 liabilities measured at fair value | $ | 35,694 |  |  |  |  |  |  |  |  |
The changes in Level 3 fair value hierarchy during the three months ended September 30, 2023 and 2022 were as follows:
| Level 3 Balance at Beginning of Period |  | Level 3 Changes During the Period |  | Level 3 Balance at End of Period
| Fair Value Adjustments (1) |  | Relating to Undistributed Earnings |  | Purchases, Sales and Settlements |  | Transfer in and/or out of Level 3 |
Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 387,130 |  |  | $ | (11,194) |  |  | $ | (47) |  |  | $ | 299,763 |  |  | $ | (535) |  |  | $ | 675,117 |
Loans receivable at fair value | 683,827 |  |  | (859) |  |  | 1,531 |  |  | (135,357) |  |  | — |  |  | 549,142 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,352 |  |  | — |  |  | 557 |  |  | (325) |  |  | — |  |  | 4,584 |
Contingent consideration | 27,724 |  |  | 9 |  |  | — |  |  | 254 |  |  | — |  |  | 27,987 |
Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 333,916 |  |  | $ | 5,453 |  |  | $ | — |  |  | $ | 34 |  |  | $ | (47) |  |  | $ | 339,356 |
Loans receivable at fair value | 770,840 |  |  | (19,158) |  |  | 4,181 |  |  | 58,852 |  |  | — |  |  | 814,715 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,160 |  |  | — |  |  | 356 |  |  | (194) |  |  | — |  |  | 4,322 |
Contingent consideration | 17,722 |  |  | 620 |  |  | — |  |  | 11,236 |  |  | — |  |  | 29,578 |
(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $(2,347) relating to equity securities and $(859) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $(8,847) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended September 30, 2023. Fair value adjustments represent realized and unrealized gains (losses) of which $4,606 relating to equity securities and $(19,158) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $847 relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the three months ended September 30, 2022. The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2023 and 2022 were as follows:
| Level 3 Balance at Beginning of Year |  | Level 3 Changes During the Period |  | Level 3 Balance at End of Period
| Fair Value Adjustments (1) |  | Relating to Undistributed Earnings |  | Purchases, Sales and Settlements |  | Transfer in and/or out of Level 3 |
Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 368,465 |  |  | $ | (2,923) |  |  | $ | (35) |  |  | $ | 317,168 |  |  | $ | (7,558) |  |  | $ | 675,117 |
Loans receivable at fair value | 701,652 |  |  | 51,807 |  |  | 481 |  |  | (204,548) |  |  | (250) |  |  | 549,142 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,648 |  |  | — |  |  | 1,335 |  |  | (1,399) |  |  | — |  |  | 4,584 |
Contingent consideration | 31,046 |  |  | (4,561) |  |  | — |  |  | 1,502 |  |  | — |  |  | 27,987 |
Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 377,549 |  |  | $ | (18,594) |  |  | $ | — |  |  | $ | 18,457 |  |  | $ | (38,056) |  |  | $ | 339,356 |
Loans receivable at fair value | 873,186 |  |  | (19,205) |  |  | 9,554 |  |  | (7,983) |  |  | (40,837) |  |  | 814,715 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,506 |  |  | — |  |  | 824 |  |  | (1,008) |  |  | — |  |  | 4,322 |
Contingent consideration | — |  |  | (3,880) |  |  | — |  |  | 33,458 |  |  | — |  |  | 29,578 |
(1) - Fair value adjustments represent realized and unrealized gains (losses) of which $11,573 relating to equity securities and $51,807 relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $(14,496) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the nine months ended September 30, 2023. Fair value adjustments represent realized and unrealized gains (losses) of which $(732) relating to equity securities and $(19,205) relating to loans receivable, at fair value were included in trading income (loss) and fair value adjustments on loans and $(17,862) relating to equity securities were included in realized and unrealized gains (losses) on investments in the condensed consolidated statement of operations during the nine months ended September 30, 2022. The amount reported in the table above during the three and nine months ended September 30, 2023 and 2022 included 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. As of September 30, 2023 and December 31, 2022, the senior notes payable had a carrying amount of $1,667,088 and $1,721,751, respectively, and fair value of $1,388,840 and $1,431,787, respectively. The carrying amount of the term loans approximates fair value because the effective yield of such instruments are consistent with current market rates of interest for instruments of comparable credit risk. The investments in nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in realized and unrealized gains (losses) on investments on the condensed consolidated statements of operations. These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another observable transaction occurs. Therefore, the determination of fair values of these investments in nonpublic entities that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments. Investments in nonpublic entities that do not report NAV are subject to a qualitative assessment for indicators of impairment. If indicators of impairment are present, the Company is required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value. The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022. These investments were measured due to an observable price change or impairment during the periods below.
| Fair Value Measurement Using
| Total |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
As of September 30, 2023 |  |  |  |  |  |  |
Investments in nonpublic entities that do not report NAV | $ | 1,240 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,240 |
As of December 31, 2022 |  |  |  |  |  |  |
Investments in nonpublic entities that do not report NAV | $ | 20,251 |  |  | $ | — |  |  | $ | 18,659 |  |  | $ | 1,592 |
(k) Derivative and Foreign Currency Translation The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain loans receivable and Auction and Liquidation engagements with operations outside the United States. As of September 30, 2023 and December 31, 2022, there were no forward exchange contracts outstanding. The forward exchange contracts were entered into to improve the predictability of cash flows related to a retail store liquidation engagement and a loan receivable. The net gain from forward exchange contracts was zero during the three months ended September 30, 2023 and 2022, and zero and $68 during the nine months ended September 30, 2023 and 2022, respectively. This amount was reported as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. 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 gains were $981 and $783 during the three months ended September 30, 2023 and 2022, respectively, and transaction gains were $394 and $1,913 during the nine months ended September 30, 2023 and 2022, respectively. These amounts were included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. (l) Redeemable Noncontrolling Interests in Equity of Subsidiaries The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the class A ordinary shareholders in the BRPM 250 sponsored SPAC and the 20% noncontrolling interest of Lingo Management, LLC (“Lingo”), which on February 24, 2023, the Company acquired, increasing its ownership interest in Lingo to 100%. These interests are presented as redeemable noncontrolling interests in equity of subsidiaries within the condensed consolidated balance sheet, outside of the permanent equity section. The class A ordinary shareholders of BRPM 250 have redemption rights that are considered to be outside of the Company’s control. Remeasurements to the redemption value of the redeemable noncontrolling interest in equity of subsidiaries are recorded within retained earnings (accumulated deficit). The operating agreement with Lingo has provisions which result in the noncontrolling interest being accounted for as temporary equity. Net income (losses) are reflected in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in the condensed consolidated statement of operations. Changes to redeemable noncontrolling interest consist of the following:
|  |  |  |  | Nine Months Ended September 30, 2023
Balance, December 31, 2022 |  |  |  |  | $ | 178,622 |
Net loss |  |  |  |  | (146) |
Purchase of Lingo minority interest |  |  |  |  | (11,190) |
Remeasurement adjustments for Lingo and BRPM 250 |  |  |  |  | 8,477 |
Redemption of BRPM 250 Class A common stock |  |  |  |  | (175,763) |
Balance, September 30, 2023 |  |  |  |  | $ | — |
(m) Equity Investment As of September 30, 2023 and December 31, 2022, equity investments of $32,705 and $41,298, respectively, were included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. The Company’s share of earnings or losses from equity method investees was included in income from equity investments in the accompanying condensed consolidated statements of operations. bebe stores, inc. As of September 30, 2023 and December 31, 2022, the Company had a 47.5% and 40.1% ownership interest in bebe, respectively. The equity ownership in bebe for the periods covered by this report was accounted for under the equity method of accounting and the investment is included in prepaid expenses and other assets in the condensed consolidated balance sheets. On October 6, 2023, the Company purchased an additional 3,700,000 shares of bebe for an aggregate purchase price of $18,500, resulting in an increase in the Company's ownership interest to 76.2%. The purchase of these additional shares resulted in the Company having a majority voting interest in bebe and will require the consolidation of bebe financial results for periods subsequent to October 6, 2023. The impact of the consolidation of bebe's financial statements is not expected to be material to the Company's financial position or operating results. Since the controlling interest was acquired subsequent to quarter end, the Company believes the disclosure of pro forma financial information is impracticable because the financial information and valuation reports needed to account for the acquisition and prepare unaudited pro forma financial information has not been made available to the Company as of the reporting date. As of September 30, 2023, the carrying value of the Company’s equity method investment in bebe was remeasured as a result of the purchase of additional shares on October 6, 2023 and the remeasurement resulted in the recognition of a loss in the amount of $12,891, which is included in other income (expense) - change in fair value of financial instruments and other in the accompanying condensed consolidated statements of operations. The carrying value and fair value of the investment in bebe was $30,575 as of September 30, 2023. The carrying value of the investment in bebe was $40,383 and the fair value was $25,423 as of December 31, 2022. Other Equity Investments The Company had other equity method investments over which the Company exercises significant influence but that did not meet the requirements for consolidation, the largest ownership interest being a 40% ownership interest in Lingo, which was acquired in November 2020. On May 31, 2022, the Company's ownership increased to 80% and Lingo's operating results were consolidated with the Company. On February 24, 2023, the Company acquired the remaining 20% ownership in Lingo, increasing the Company's ownership interest from 80% to 100%. The equity ownership in these other investments was accounted for at the applicable times under the equity method of accounting and was included in prepaid expenses and other assets in the condensed consolidated balance sheets. (n) Supplemental Non-cash Disclosures During the nine months ended September 30, 2023, non-cash activities related to the sale of BRRII and other businesses consisted of: (1) non-cash investing activity for a decrease in loans receivable of $124,397 and receipt of a loan receivable in the amount of $58,872, and (2) non-cash financing activity for a decrease in term loan in the amount of $65,790 and decrease in non-controlling interest related to the distribution of equity of subsidiary of $3,374. Other non-cash investing activities during the nine months ended included $24,780 of notes receivable that converted into equity securities; $23,668 of other receivables financed with a loan receivable; $1,190 of loans receivable that was included in consideration paid for the purchase of the Lingo noncontrolling interest; and $2,111 of common stock issued as part of the purchase price consideration for a business acquisition. During the nine months ended months ended September 30, 2023, non-cash financing activities also included $7,000 in seller financing related to the purchase of the Lingo noncontrolling interest. During the nine months ended September 30, 2022, non-cash investing activities included $20,320 in issuance of the Company's common stock as part of the purchase price consideration from an acquisition and $22,661 in seller financing for deferred cash consideration; the conversion of $17,500 of debt owed by Lingo to equity; and the repayment of loans receivable in the amount of $850 with equity securities. (o) Variable Interest Entities The Company holds interests in various entities that meet the characteristics of a VIE but are not consolidated as the Company is not the primary beneficiary. Interests in these entities are generally in the form of equity interests, loans receivable, or fee arrangements. 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 Company, has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance. The Company earns fees from the Funds in the form of placement agent fees and carried interest. For placement agent fees, the Company receives a cash fee of generally 7% to 10% of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred. The Company receives carried interest as a percentage allocation (8% to 15%) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized under the ownership model of ASC 323 - Investments – Equity Method and Joint Ventures as an equity method investment with changes in allocation recorded currently in the results of operations. As the fee arrangements under such agreements are arm’s length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company does not consolidate such VIEs. Placement agent fees attributable to such arrangements were $2,551 and $349 during the three months ended September 30, 2023 and 2022, respectively, and $2,950 and $12,437 during the nine months ended September 30, 2023 and 2022, respectively, and were included in services and fees in the condensed consolidated statements of operations. The carrying value of the Company’s investments in the VIEs that were not consolidated is shown below.
| September 30, 2023 |  | December 31, 2022
Securities and other investments owned, at fair value | $ | 35,190 |  |  | $ | 33,743 |
Loans receivable, at fair value | 52,856 |  |  | 46,700 |
Other assets | 2,655 |  |  | 3,755 |
Maximum exposure to loss | $ | 90,701 |  |  | $ | 84,198 |
B. Riley Principal 150 and 250 Merger Corporations In 2021, the Company along with BRPM 150 and BRPM 250, both newly formed special purpose acquisition companies incorporated as Delaware corporations, consummated the initial public offerings of 17,250,000 units of BRPM 150 and 17,250,000 units of BRPM 250. Each Unit of BRPM 150 and BRPM 250 consisted of one share of class A common stock and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 150 or BRPM 250 class A common stock at an exercise price of $11.50 per share. The BRPM 150 and BRPM 250 Units were each sold at a price of $10.00 per unit, generating gross proceeds to BRPM 150 of $172,500 and BRPM 250 of $172,500. These proceeds which totaled $345,000 were deposited in a trust account established for the benefit of the BRPM 150 and BRPM 250 class A public shareholders and was included in prepaid expenses and other assets in the condensed balance sheet. These proceeds are invested only in U.S. treasury securities in accordance with the governing documents of BRPM 150 and BRPM 250. Under the terms of the BRPM 150 and BRPM 250 initial public offerings, BRPM 150 and BRPM 250 are required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of their respective initial public offerings. In connection with the completion of the initial public offerings of BRPM 150 and BRPM 250, the Company invested in the private placement units of BRPM 150 and BRPM 250. Both BRPM 150 and BRPM 250 are determined to be VIE’s because each of the entities do not have enough equity at risk to finance their activities without additional subordinated financial support. The Company has determined that the class A shareholders of BRPM 150 and BRPM 250 do not have substantive rights as shareholders of BRPM 150 and BRPM 250 since these equity interests are determined to be temporary equity. As such, the Company has determined that it is the primary beneficiary of BRPM 150 and BRPM 250 as it has the right to receive benefits or the obligation to absorb losses of each of the entities, as well as the power to direct a majority of the activities that significantly impact BRPM 150 and BRPM 250’s economic performance. Since the Company is determined to be the primary beneficiary, BRPM 150 and BRPM 250 are consolidated into the Company’s financial statements. On July 19, 2022, BRPM 150 completed a business combination with FaZeClan Holdings, Inc. (“Faze Holdings”) in a reverse merger transaction resulting in BRPM 150 no longer being a VIE of the Company and no longer being included in the consolidated group of the Company. In connection with the de-consolidation of BRPM 150, among other items, prepaid expenses and other assets decreased by $172,584 related to funds held in a trust account and redeemable noncontrolling interests in equity of subsidiaries decreased by $172,500. During the year ended December 31, 2022, the Company recognized incentive fees of $41,885, which was included in services and fees in the consolidated statement of operations. On April 21, 2023, the Board of Directors of BRPM 250 approved a plan to redeem all of the outstanding shares of Class A common stock of BRPM 250, effective as of May 4, 2023. The BRPM 250 Class A public shares were deemed cancelled on May 4, 2023, and the funds held in trust were used to fund the corresponding redemption amounts to the BRPM 250 Class A shareholders and BRPM 250 is no longer a VIE. (p) Recent Accounting Standards Not yet adopted In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820). This update clarifies that a contractual restriction on the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security’s unit of account. Therefore, a contractual sale restriction should not be considered when measuring an equity security’s fair value. The update also prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. Specific disclosures related to equity securities subject to contractual sale restrictions are required and include the fair value of such equity securities on the balance sheet, the nature and remaining duration of the corresponding restrictions, and any circumstances that could cause a lapse in the restrictions. The amendments in this update are effective for the Company for fiscal periods beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. Investment companies as defined by Topic 946 should apply the amendments in this update to an equity security with a contract containing a sale restriction that was executed or modified on or after the date of adoption. For an equity security with a contract containing a sale restriction that was executed before the date of adoption, investment companies should continue to account for the equity security under their historical accounting policy for measuring such securities until the contractual restrictions expire or are modified. The Company has not yet adopted this update and is currently evaluating the effect, if any, this new standard will have on its financial position and results of operations. Recently adopted In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, to enhance transparency about an entity’s use of supplier finance programs. Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. An entity should also consider whether the existence of a supplier finance program changes the appropriate presentation of the payables in the program from trade payables to borrowings. The Company adopted the ASU effective January 1, 2023. The ASU had no impact on the consolidated results of operations, cash flows, and financial position and was immaterial to the financial statement disclosures.

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