B. Riley Financial Inc. (RILY.US), a U.S.-based diversified financial services firm, has filed its overdue second-quarter report with the SEC, bringing it closer to compliance with Nasdaq's listing requirements and averting another potential delisting. The delayed 10-Q filing, submitted ahead of Nasdaq's December 23 deadline, triggered a 40% surge in after-hours trading.
The Los Angeles-headquartered company reported a turnaround to profitability in Q2 compared to a loss in the prior-year period, though its Q3 filing remains outstanding. Chairman Bryant Riley expressed confidence in meeting Nasdaq's January 20 deadline for the missing reports. The 10-Q document was not immediately available on the SEC's website.
B. Riley's reporting struggles follow a turbulent period marked by investment losses, financial reporting deficiencies, and an ongoing SEC civil investigation into transactions with former key partner Brian Kahn. Kahn, ex-CEO of Franchise Group Inc. (FRG), recently pleaded guilty to defrauding hedge fund investors of $300 million through Prophecy Asset Management.
FRG's late-2024 bankruptcy saddled B. Riley with hundreds of millions in writedowns and reporting delays. While the firm denies knowledge of Kahn's fraudulent activities, the reporting lapses have left investors uncertain about its financial health, prompting repeated Nasdaq delisting threats.
The Q2 filing shows $71.7 million in continuing operations profit versus a $449.2 million loss in 2024. Adjusted EBITDA rose to $38.5 million from $31.2 million. Net income of $137.5 million included $66.8 million from GlassRatner's sale and $44.5 million from senior note exchanges, compared to a $435.6 million net loss previously.
Nasdaq recently granted B. Riley an extension after a hearing, citing remediation efforts. The company appointed new CFO Scott Yessner, whose bonuses are tied to timely filings.
Once a diversified financial leader, B. Riley now faces existential threats—its stock has collapsed from $60 in early 2022 to $3.70 amid FRG-related losses, SEC scrutiny, short-seller attacks, and asset sales to reduce leverage. The firm suspended preferred dividends and offloaded assets (including Great American-linked businesses) to shore up liquidity, further depressing valuations.