Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 03, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | B. Riley Financial, Inc. | |
Entity Central Index Key | 1,464,790 | |
Trading Symbol | RILY | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 19,043,072 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 48,123 | $ 30,012 |
Restricted cash | 12,108 | 51 |
Securities owned, at fair value | 24,644 | 25,543 |
Accounts receivable, net | 7,997 | 9,472 |
Due from related parties | 2,255 | 409 |
Advances against customer contracts | 5,609 | 5,013 |
Goods held for sale or auction | 36 | 37 |
Prepaid expenses and other current assets | 8,507 | 2,415 |
Total current assets | 109,279 | 72,952 |
Property and equipment, net | 475 | 592 |
Goodwill | 34,528 | 34,528 |
Other intangible assets, net | 4,545 | 4,768 |
Deferred income taxes | 18,722 | 18,992 |
Other assets | 1,989 | 588 |
Total assets | 169,538 | 132,420 |
Current liabilities: | ||
Accounts payable | 1,084 | 1,123 |
Accrued payroll and related expenses | 3,084 | 7,178 |
Accrued value added tax | 34 | 1,785 |
Accrued expenses and other liabilities | 5,335 | 5,806 |
Auction and liquidation proceeds payable | 15,959 | 672 |
Due to related parties | 166 | |
Securities sold not yet purchased | 5,932 | 713 |
Mandatorily redeemable noncontrolling interests | 2,512 | 2,994 |
Revolving credit facilities | 272 | |
Contingent consideration- current portion | 1,196 | 1,241 |
Total current liabilities | 35,136 | 21,950 |
Contingent consideration, net of current portion | 1,150 | |
Total liabilities | 35,136 | 23,100 |
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; 40,000,000 shares authorized; 19,043,072 and 16,448,119 issued and outstanding as of June 30, 2016 and December 31, 2015, respectively | 2 | 2 |
Additional paid-in capital | 140,555 | 116,799 |
Retained earnings (deficit) | (6,158) | (6,305) |
Accumulated other comprehensive loss | (1,075) | (1,058) |
Total B. Riley Financial, Inc. stockholders' equity | 133,324 | 109,438 |
Noncontrolling interests | 1,078 | (118) |
Total equity | 134,402 | 109,320 |
Total liabilities and equity | $ 169,538 | $ 132,420 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
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 | 40,000,000 | 40,000,000 |
Common stock, issued | 19,043,072 | 16,614,786 |
Common stock, outstanding | 19,043,072 | 16,448,119 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues: | ||||
Services and fees | $ 20,261 | $ 39,442 | $ 40,205 | $ 61,026 |
Sale of goods | 6,019 | 2 | 10,466 | |
Total revenues | 20,261 | 45,461 | 40,207 | 71,492 |
Operating expenses: | ||||
Direct cost of services | 5,560 | 8,539 | 12,243 | 15,317 |
Cost of goods sold | 2,181 | 2 | 3,071 | |
Selling, general and administrative expenses (including transaction costs of $905 and $922 for the three and six months ended June 30, 2016, respectively) | 14,521 | 20,072 | 26,117 | 32,973 |
Total operating expenses | 20,081 | 30,792 | 38,362 | 51,361 |
Operating income | 180 | 14,669 | 1,845 | 20,131 |
Other income (expense): | ||||
Interest income | 3 | 3 | 6 | 5 |
Interest expense | (275) | (418) | (407) | (671) |
(Loss) income before income taxes | (92) | 14,254 | 1,444 | 19,465 |
Benefit (provision) for income taxes | 65 | (5,685) | (101) | (7,460) |
Net (loss) income | (27) | 8,569 | 1,343 | 12,005 |
Net income (loss) attributable to noncontrolling interests | 74 | (95) | 1,196 | 659 |
Net (loss) income attributable to B. Riley Financial, Inc. | $ (101) | $ 8,664 | $ 147 | $ 11,346 |
Basic (loss) income per share (in dollars per share) | $ (0.01) | $ 0.53 | $ 0.01 | $ 0.7 |
Diluted (loss) income per share (in dollars per share) | $ (0.01) | $ 0.53 | $ 0.01 | $ 0.7 |
Weighted average basic shares outstanding (in shares) | 17,935,254 | 16,237,860 | 17,212,716 | 16,177,824 |
Weighted average diluted shares outstanding (in shares) | 17,935,254 | 16,310,829 | 17,547,073 | 16,236,748 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||
Transaction costs | $ 905 | $ 922 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Net (loss) income | $ (27) | $ 8,569 | $ 1,343 | $ 12,005 |
Other comprehensive (loss) income: | ||||
Change in cumulative translation adjustment | (82) | 71 | (17) | (8) |
Other comprehensive (loss) income, net of tax | (82) | 71 | (17) | (8) |
Total comprehensive (loss) income | (109) | 8,640 | 1,326 | 11,997 |
Comprehensive income (loss) attributable to noncontrolling interests | 74 | (95) | 1,196 | 659 |
Comprehensive (loss) income attributable to B. Riley Financial, Inc. | $ (183) | $ 8,735 | $ 130 | $ 11,338 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Deficit) [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interests [Member] | Total |
Balance at Beginning at Dec. 31, 2014 | $ 2 | $ 110,598 | $ (12,891) | $ (648) | $ 18 | $ 97,079 | |
Balance at Beginning (in shares) at Dec. 31, 2014 | 15,968,607 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of MK Capital, LLC and contigent equity consideration | 4,657 | 4,657 | |||||
Issuance of common stock for acquisition of MK Capital, LLC and contigent equity consideration (in shares) | 333,333 | ||||||
Issuance of common stock | 35 | 35 | |||||
Issuance of common stock (in shares) | 3,296 | ||||||
Share based payments | 381 | 381 | |||||
Dividends paid | (978) | (978) | |||||
Net income | 11,346 | 659 | 12,005 | ||||
Foreign currency translation adjustment | (8) | (8) | |||||
Balance at End at Jun. 30, 2015 | $ 2 | 115,671 | (2,523) | (656) | 677 | 113,171 | |
Balance at End (in shares) at Jun. 30, 2015 | 16,305,236 | ||||||
Balance at Beginning at Dec. 31, 2015 | $ 2 | 116,799 | (6,305) | (1,058) | (118) | 109,320 | |
Balance at Beginning (in shares) at Dec. 31, 2015 | 16,448,119 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of MK Capital, LLC and contigent equity consideration | |||||||
Issuance of common stock for acquisition of MK Capital, LLC and contigent equity consideration (in shares) | 166,667 | ||||||
Vesting of restricted stock | |||||||
Vesting of restricted stock (in shares) | 7,306 | ||||||
Offering of common stock, net of offering expenses | 22,759 | 22,759 | |||||
Offering of common stock, net of offering expenses (in shares) | 2,420,980 | ||||||
Share based payments | 997 | 997 | |||||
Net income | 147 | 1,196 | 1,343 | ||||
Foreign currency translation adjustment | (17) | (17) | |||||
Balance at End at Jun. 30, 2016 | $ 2 | $ 140,555 | $ (6,158) | $ (1,075) | $ 1,078 | $ 134,402 | |
Balance at End (in shares) at Jun. 30, 2016 | 19,043,072 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 1,343 | $ 12,005 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 399 | 421 |
Provision for credit losses | (3) | 255 |
Share based compensation | 997 | 416 |
Effect of foreign currency on operations | 5 | |
Non-cash interest | 54 | 73 |
Deferred income taxes | 271 | 5,499 |
Income allocated to mandatorily redeemable noncontrolling interests and redeemable noncontrolling interests | 960 | 1,116 |
Change in operating assets and liabilities: | ||
Accounts receivable and advances against customer contracts | 1,087 | (439) |
Securities owned | 899 | 4,273 |
Goods held for sale or auction | 1 | 52 |
Prepaid expenses and other assets | (7,646) | (1,414) |
Accounts payable and accrued expenses | (5,998) | 9,218 |
Due from related party | (1,935) | (1,310) |
Securities sold, not yet purchased | 5,219 | 7,311 |
Auction and liquidation proceeds payable | 14,667 | (665) |
Net cash provided by operating activities | 10,315 | 36,816 |
Cash flows from investing activities: | ||
Acquisition of MK Capital, net of cash acquired $45 | (2,451) | |
Purchases of property and equipment | (58) | (171) |
Proceeds from sale of property and equipment | 4 | |
Increase in restricted cash | (12,026) | 7,155 |
Net cash (used in) provided by investing activities | (12,084) | 4,537 |
Cash flows from financing activities: | ||
Repayment of asset based credit facility | (18,506) | |
Proceeds from (repayment of) revolving line of credit | (272) | 71 |
Proceeds from note payable - related party | 4,500 | |
Repayment of from note payable - related party | (4,500) | |
Payment of contingent consideration | (1,250) | |
Proceeds from issuance of common stock | 22,999 | |
Offerring costs from issuance of common stock | (240) | |
Dividends paid | (978) | |
Distribution to noncontrolling interests | (1,441) | (1,421) |
Net cash provided by (used in) financing activities | 19,796 | (20,834) |
Increase in cash and cash equivalents | 18,027 | 20,519 |
Effect of foreign currency on cash | 84 | 9 |
Net increase in cash and cash equivalents | 18,111 | 20,528 |
Cash and cash equivalents, beginning of period | 30,012 | 21,600 |
Cash and cash equivalents, end of period | 48,123 | 42,128 |
Supplemental disclosures: | ||
Interest paid | 252 | 413 |
Taxes paid | $ 409 | $ 695 |
Condensed Consolidated Stateme9
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Statement of Cash Flows [Abstract] | |
Cash acquired from acquisition | $ 45 |
ORGANIZATION, BUSINESS OPERATIO
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of 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, Canada, and Europe. The Company has three operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, restructuring, 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; and (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. Public Offering of Common Stock On May 10, 2016, the Company completed the public offering of 2,420,980 shares of common stock at a price to the public of $9.50 per share. The net proceeds from the offering were $22,759 after deducting underwriting commissions and other offering expenses. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2SUMMARY 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 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. 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. 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 have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Companys 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 Companys Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on March 28, 2016. The results of operations for the six months ended June 30, 2016 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 Revenues are recognized in accordance with the accounting guidance when persuasive evidence of an arrangement exists, the related services have been provided, the fee is fixed or determinable, and collection is reasonably assured. Revenues in the Capital Markets segment are primarily comprised of (i) fees earned from corporate finance, investment banking, restructuring and wealth management services; and (ii) revenues from sales and trading activities. Fees earned from corporate finance, investment banking and restructuring services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent and from financial advisory services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. Fees from underwriting activities are recognized in earnings when the services related to the underwriting transaction are completed under the terms of the engagement and when the income was determined and is not subject to any other contingencies. Fees from wealth management services consist primarily of investment management fees that are recognized over the period 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 include (i) commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis, (ii) related net trading gains and losses from market making activities and from the commitment of capital to facilitate customer orders, (iii) fees paid for equity research and (iv) principal transactions which include realized and unrealized net gains and losses resulting from our principal investments in equity and other securities for the Companys account. Revenues in the Auction and Liquidation segment are comprised of (i) commissions and fees earned on the sale of goods at auctions and liquidations; (ii) revenues from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation; (iii) revenue from the sale of goods that are purchased by the Company for sale at auction or liquidation sales events; (iv) fees earned from real estate services and the origination of loans; and (v) revenues from contractual reimbursable expenses incurred in connection with auction and liquidation contracts. Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of an arrangement exists, the sales price has been determined, title has passed to the buyer and the buyer has assumed the risks of ownership, and collection is reasonably assured. The commission and fees earned for these services are included in revenues in the accompanying consolidated statements of operations. Under these types of arrangements, revenues also include contractual reimbursable costs which totaled $1,825 and $2,041 for the three months ended June 30, 2016 and 2015, respectively, and $4,843 and $3,989 for the six months ended June 30, 2016 and 2015, respectively. 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 based on proceeds received. The Company records proceeds received from these types of engagements first as a reduction of contractual reimbursable expenses, second as a recovery of its guarantee and thereafter as revenue, subject to such revenue meeting the criteria of having been fixed or determinable. Contractual reimbursable expenses and amounts advanced to customers for minimum guarantees are initially recorded as advances against customer contracts in the accompanying consolidated balance sheets. If, during the auction or liquidation sale, the Company determines that the proceeds from the sale will not meet the minimum guaranteed recovery value as defined in the auction or liquidation services contract, the Company accrues a loss on the contract in the period that the loss becomes known. The Company also evaluates revenue from auction and liquidation contracts in accordance with the accounting guidance to determine whether to report Auction and Liquidation segment revenue on a gross or net basis. The Company has determined that it acts as an agent in a substantial majority of its auction and liquidation services contracts and therefore reports the auction and liquidation revenues on a net basis. Revenues from the sale of goods are recorded gross and are recognized in the period in which the sale of goods held for sale or auction are completed, title to the property passes to the purchaser and the Company has fulfilled its obligations with respect to the transaction. These revenues are primarily the result of the Company acquiring title to merchandise with the intent of selling the items at auction or for augmenting liquidation sales. For liquidation contracts where we take title to retail goods, our net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional allowances and are recorded net of sales or value added tax. Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized upon the delivery of the completed services to the related customers and collection of the fee is reasonably assured. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs which totaled $707 and $753 for the three months ended June 30, 2016 and 2015, respectively, and $1,386 and $1,422 for the six months ended June 30, 2016 and 2015, respectively. In the normal course of business, the Company will enter into collaborative arrangements with other merchandise liquidators to collaboratively execute auction and liquidation contracts. The Companys collaborative arrangements specifically include contractual agreements with other liquidation agents in which the Company and such other liquidation agents actively participate in the performance of the liquidation services and are exposed to the risks and rewards of the liquidation engagement. The Companys participation in collaborative arrangements including its rights and obligations under each collaborative arrangement can vary. Revenues from collaborative arrangements are recorded net based on the proceeds received from the liquidation engagement. Amounts paid to participants in the collaborative arrangements are reported separately as direct costs of revenues. Revenue from collaborative arrangements in which the Company is not the majority participant is recorded net based on the Companys share of proceeds received. There were $12,508 of revenues and $1,099 of direct cost of services subject to collaborative arrangements during the three months ended June 30, 2015 and there were $14,009 of revenues and $1,293 of direct cost of services subject to collaborative arrangements during the six months ended June 30, 2015. There were no revenues and direct cost of services subject to collaborative arrangements during the three and six months ended June 30, 2016. (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 does not include an allocation of the Companys overhead costs. (e) Concentration of Risk Revenue from one liquidation engagement represented 25.3% of total revenues during the three months ended June 30, 2015 and 18.1% of total revenues during the six months ended June 30, 2015. Revenues in the Capital Markets, Auction and Liquidation, and Valuation and Appraisal segment are primarily generated in the United States, Canada and Europe. The Companys 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 Companys 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 Corporations (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. (f) Share-Based Compensation The Companys share based payment awards principally consist of grants of restricted stock and restricted stock units. Share based payment awards also include grants of membership interests in the Companys majority owned subsidiaries. The grants of membership interests consist of percentage interests in the Companys majority owned subsidiaries as determined at the date of grant. 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 statement of operations 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. (g) 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. (h) 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. (i) Restricted Cash As of June 30, 2016, restricted cash included $11,648 of cash collateral for letters of credit, $410 of cash collateral for foreign exchange contracts and $50 cash segregated in a special reserve bank account for the benefit of customers related to our broker dealer subsidiary. As of December 31, 2015, restricted cash included $51 of cash segregated in a special reserve bank account for the benefit of customers related to our broker dealer subsidiary. (j) Accounts Receivable Accounts receivable represents amounts due from the Companys auction and liquidation, valuation and appraisal, and capital markets 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 six months ended June 30, 2016 and 2015 are included in Note 3. (k) Advances Against Customer Contracts Advances against customer contracts represent advances of contractually reimbursable expenses incurred prior to, and during the term of the auction and liquidation services contract. These advances are charged to expense in the period that revenue is recognized under the contract. (l) Goods Held for Sale or Auction Goods held for sale or auction are stated at the lower of cost, determined by the specific-identification method, or market. At June 30, 2016 and December 31, 2015, goods held for sale or auction includes aircraft parts and other with a carrying value of $36 and $37 which includes a lower of cost or market adjustment of $1,331 and $1,330, respectively. (m) 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. Property and equipment under capital leases are stated at the present value of minimum lease payments. Depreciation and amortization expense was $84 and $110 for the three months ended June 30, 2016 and 2015, respectively, and $175 and $213 for the six months ended June 30, 2016 and 2015, respectively. (n) 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 June 30, 2016 and December 31, 2015, the Companys securities owned and securities sold not yet purchased at fair value consisted of the following securities: June 30, December 31, 2016 2015 Securities owned Common stocks $ 19,538 $ 17,586 Corporate bonds 1,938 941 Partnership interests 3,168 7,016 $ 24,644 $ 25,543 Securities sold not yet purchased Common stocks $ 5,188 $ - Corporate bonds 744 713 $ 5,932 $ 713 (o) Fair Value Measurements The Companys 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 Companys 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 Companys securities owned and securities sold and not yet purchased are comprised of common stocks, corporate bonds and investments in partnerships. Investments in common stocks are based on quoted prices in active markets which are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common 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, managements determination of fair value is based on the best available information which may incorporate managements own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuers 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 Companys partnership interests are valued based on the Companys 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 2 of 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 June 30, 2016 and December 31, 2015. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable June 30, identical assets inputs inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 19,538 $ 19,295 $ - $ 243 Corporate bonds 1,938 - 1,369 569 Partnership interests 3,168 - 861 2,307 Total assets measured at fair value $ 24,644 $ 19,295 $ 2,230 $ 3,119 Liabilities: Securities sold not yet purchased Common stocks $ 5,188 $ 5,188 $ - $ - Corporate bonds 744 - 744 - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,111 - - 2,111 Contingent consideration 1,196 - - 1,196 Total liabilities measured at fair value $ 9,239 $ 5,188 $ 744 $ 3,307 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2015, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable December 31, identical assets inputs inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 17,586 $ 17,296 $ - $ 290 Corporate bonds 941 - 941 - Partnership interests 7,016 - 5,250 1,766 Total assets measured at fair value $ 25,543 $ 17,296 $ 6,191 $ 2,056 Liabilities: Securities sold not yet purchased Corporate bonds $ 713 $ - $ 713 $ - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 2,330 $ - $ - $ 2,330 Contingent consideration $ 2,391 $ - $ - $ 2,391 Total liabilities measured at fair value $ 5,434 $ - $ 713 $ 4,721 The changes in Level 3 fair value hierarchy during the six months ended June 30, 2016 and 2015 is as follows: Level 3 Level 3 Changes During the Year Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Period Adjustments Earnings Settlements of Level 3 Period Six Months Ended June 30, 2016 Common stocks $ 290 $ (47 ) $ - $ - $ - $ 243 Corporate bonds - - - 569 - 569 Partnership interests 1,766 123 418 - - 2,307 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,330 - (219 ) - - 2,111 Contingent consideration 2,391 55 - (1,250 ) - 1,196 Six Months Ended June 30, 2015 Common stocks $ 319 $ - $ - $ (293 ) $ - $ 26 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,285 - (138 ) - - 2,147 Contingent consideration - 2,302 - - - 2,302 The amount reported in the table above for the six months ended June 30, 2016 and 2015 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis. The fair value adjustment for contingent consideration in the table above of $2,391 includes the initial value of contingent consideration of $2,229 and an adjustment for imputed interest of $55 and $73 for the six months ended June 30, 2016 and 2015, respectively. The carrying amounts reported in the condensed consolidated financial statements for cash, restricted cash, accounts receivable, accounts payable, accrued payroll and related, accrued value added tax, and accrued expenses and other current liabilities approximate fair value based on the short-term maturity of these instruments. The carrying amounts of the asset based credit facility approximate 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. (p) Contingent Consideration In connection with the acquisition of MK Capital on February 2, 2015, the purchase agreement required the payment of contingent consideration to the former members of MK Capital in the form of future cash payments of $1,250 and issuance of 166,667 shares of common stock on the first anniversary date of the closing (February 2, 2016) and a final cash payment of $1,250 and issuance of 166,666 shares of common stock on the second anniversary date of the closing (February 2, 2017). The contingent cash consideration has been classified as a liability in the condensed balance sheets in accordance with ASC 805, Business Combination (ASC 805). The fair value of the contingent cash consideration has been discounted at 8.0%. The balance of the contingent consideration liability was $1,196 (discount of $54) at June 30, 2016. The balance of the contingent consideration liability was $2,391 (discount of $109) at December 31, 2015 and has been recorded as contingent consideration liability current portion in the amount of $1,241 and contingent consideration liability, net of current portion in the amount of $1,150 in the condensed consolidated balance sheet. Imputed interest expense totaled $24 and $44 for the three months ended June 30, 2016 and 2015, respectively, and $55 and $73 for the six months ended June 30, 2016 and 2015, respectively. The fair value of the contingent stock consideration has been classified as equity in accordance with ASC 805. The contingent cash and stock consideration is payable on the first and second anniversary dates of the closing provided that MK Capital generates a minimum amount of gross revenues as defined in the purchase agreement for the twelve months following the first and second anniversary dates of the closing. MK Capital achieved the minimum amount of revenues for the first anniversary period and the contingent cash consideration in the amount of $1,250 and contingent stock consideration consisting of 166,667 shares of common stock for such first anniversary period was paid and issued on February 2, 2016. (q) 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 six months ended June 30, 2016, the Companys use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $2,200 Canadian dollars that was settled prior to March 31, 2016; (b) in the amount of $4,000 Canadian dollars that was settled prior to July 29, 2016; and (c) in the amount of $4,000 Canadian dollars that is required to be settled prior to August 31, 2016. During the six months ended June 30, 2015, the Companys use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $6,000 Canadian dollars that was settled prior March 31, 2015; (b) in the amount of $4,000 Canadian dollars that was settled prior to May 29, 2015; and (c) in the amount of $5,000 Canadian dollars that was settled prior to June 30, 2015. The net loss from the foreign exchange contracts of $39 and $40 during the six months ended June 30, 2016 and 2015, respectively, is reported as a component of selling, general and administrative expenses in the condensed consolidated financial statements. 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 income in the accompanying condensed consolidated balance sheets. Foreign currency transaction losses were $35 and $142 during the three and six months ended June 30, 2016. Foreign currency transaction losses were $207 and $315 during the three and six months ended June 30, 2015. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of operations. (r) Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. ASU 2016-02 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amends revenue recognition requirements for multiple deliverable revenue arrangements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendments should be applied retrospectively. In July 2015, the FASB approved a one-year deferral of the effective date with early adoption permitted. The Company has not yet adopted this update and is currently eva |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 ACCOUNTS RECEIVABLE The components of accounts receivable, net, include the following: June 30, December 31, 2016 2015 Accounts receivable $ 7,197 $ 8,417 Investment banking fees, commissions and other receivables 591 709 Unbilled receivables 295 435 Total accounts receivable 8,083 9,561 Allowance for doubtful accounts (86 ) (89 ) Accounts receivable, net $ 7,997 $ 9,472 Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Balance, beginning of period $ 69 $ 788 $ 89 $ 728 Add: Additions to reserve 55 195 60 255 Less: Write-offs (34 ) (10 ) (34 ) (10 ) Less: Recoveries (4 ) - (29 ) - Balance, end of period $ 86 $ 973 $ 86 $ 973 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. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill And Other Intangible Assets | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 4 GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill of $34,528 at June 30, 2016 and December 31, 2015 is comprised of $28,840 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, and $3,713 in the Valuation and Appraisal segment. There were no changes in goodwill during the six months ended June 30, 2016. Intangible assets consisted of the following: June 30, 2016 December 31, 2015 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 13 Years $ 3,600 $ 795 $ 2,805 $ 3,600 $ 572 $ 3,028 Non-amortizable assets: Tradenames 1,740 - 1,740 1,740 - 1,740 Total intangible assets $ 5,340 $ 795 $ 4,545 $ 5,340 $ 572 $ 4,768 Amortization expense was $111 and $116 for the three months ended June 30, 2016 and 2015, respectively, and $223 and $208 for the six months ended June 30, 2016 and 2015, respectively. At June 30, 2016, estimated future amortization expense is $224, $447, $326, $222 and $222 for the years ended December 31, 2016 (remaining six months), 2017, 2018, 2019 and 2020, respectively. The estimated future amortization expense after December 31, 2020 is $1,364. |
CREDIT FACILITIES
CREDIT FACILITIES | 6 Months Ended |
Jun. 30, 2016 | |
Line of Credit Facility [Abstract] | |
CREDIT FACILITIES | NOTE 5 CREDIT FACILITIES Credit facilities consist of the following arrangements: (a) $100,000 Asset Based Credit Facility At June 30, 2016, the Company has a $100,000 asset based credit facility pursuant to a Second Amended and Restated Credit Agreement as amended from time to time (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo Bank). The credit facility currently expires on July 15, 2018. On March 19, 2014, the Company entered into a separate credit agreement (a UK Credit Agreement) with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom. The 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 $100,000 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 lenders 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 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 5% to 20% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. Interest expense totaled $251 (including amortization of deferred loan fees of $24) for the three months ended June 30, 2016 and $274 (including amortization of deferred loan fees of $47) for the six months ended June 30, 2016. Interest expense totaled $175 (including success fees of $119 and amortization of deferred loan fees of $24) for the three months ended June 30, 2015 and $321 (including success fees of $119 and amortization of deferred loan fees of $47) for the six months ended June 30, 2015. At June 30, 2016, there was $11,896 of standby letters of credit issued and outstanding under the credit facility. There were no borrowings outstanding under this credit facility at June 30, 2016 and December 31, 2015. The Credit Agreement governing the credit facility contains certain covenants, including covenants that limit or restrict the Companys 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) Line of Credit On May 17, 2011, Great American Group Advisory & Valuation Services, LLC, a majority owned subsidiary of the Company (GAAV), entered into a Loan and Security Agreement (Accounts Receivable Line of Credit) (the Line of Credit) with BFI Business Finance (BFI). The Line of Credit was collateralized by the accounts receivable of GAAV and allows for borrowings in the amount of 85% of the net face amount of prime accounts, as defined in the Line of Credit, with maximum borrowings not to exceed $2,000. The interest rate under the Line of Credit was the prime rate plus 2% (6.5% at December 31, 2015), payable monthly in arrears. The Line of Credit was amended effective February 3, 2012 and the maximum borrowings allowed was increased from $2,000 to $3,000. On December 7, 2015, the Company notified BFI to terminate the Line of Credit, all outstanding amounts under the Line of Credit were repaid on January 27, 2016 and the Line of Credit was terminated upon maturity on February 3, 2016. At December 31, 2015, there was $3,922 of accounts receivable as collateral for the Line of Credit and the total borrowings outstanding was $272 and $2,738 was available and unused. Interest expense totaled $77 for the six months ended June 30, 2016. Interest expense totaled $16 for the three months ended June 30, 2015 and totaled $66 for the six months ended June 30, 2015. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2016 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTE 6 NOTES PAYABLE In March 2015, the Company had capital deployed for three retail liquidation engagements. On March 10, 2015, the Company borrowed $4,500 from Riley Investment Partners, L.P. (RIP) in accordance with the subordinated unsecured promissory note (the RIP Note). The principal amount of $4,500 for the RIP Note accrued interest at the rate of 10% per annum (or 15% in the event of a default under the RIP Note). The borrowings were for short-term working capital needs and capital for other retail liquidation engagements. RIP was also entitled to a success fee (the Success Fee) of 20% of the net profit, if any, earned by the Company in connection with a designated liquidation transaction. Pursuant to the terms of the RIP Note, under no circumstances was the Company obligated to pay RIP any portion of the combined amount of interest and the Success Fee which exceeded twelve percent (12%) of the $4,500 principal amount of the RIP Note. The outstanding principal amount, together with the accrued and unpaid interest and the Success Fee, were due and payable by the Company on March 9, 2016. The RIP Note was subordinated in certain respects to the Companys guaranty relating to its existing credit facility with Wells Fargo Bank, National Association and, in the event of certain insolvency proceedings, with respect to such credit facility itself, as well as to any other indebtedness of the Company to the extent required by the documents governing the repayment thereof. Interest expense on the RIP Note totaled $181 and $207 for the three and six months ended June 30, 2015, which includes success fees of $140. The RIP Note was repaid on May 4, 2015. Riley Investment Management LLC, a wholly owned subsidiary of the Company, is the general partner of RIP. Bryant Riley, the Chief Executive Officer and Chairman of the Board of Directors of the Company, owns or controls approximately 45% of the equity interests of RIP. In addition, Thomas Kelleher, the President and a director of the Company, and one other employee of the Company, own or control de minimis amounts of the equity interests of RIP. After considering the economic interests of Mr. Riley and Mr. Kelleher in the RIP Note and comparing the terms of the RIP Note to terms that may have been available from unaffiliated third parties, the disinterested members of the Companys Board of Directors unanimously approved the issuance of the RIP Note. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 INCOME TAXES The Companys effective income tax rate was 7.0% and 38.3% for the six months ended June 30, 2016 and 2015, respectively. The effective income tax rate for the each of the six month periods ended June 30, 2016 and 2015 is lower than the statutory federal and state income tax rate due to the tax differential on net income attributable to noncontrolling interests during such periods. As of June 30, 2016, the Company had federal net operating loss carryforwards of $12,023, state net operating loss carryforwards of $13,886, and foreign tax credit carryforwards of $1,121. The Companys federal net operating loss carryforwards will begin to expire in the tax year ending December 31, 2030, the state net operating loss carryforwards will begin to expire in 2032, and the foreign tax credit carryforwards will begin to expire in 2022. 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 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. As a result of the common stock offering by the Company that was completed on June 5, 2014, the Company had a more than 50% ownership shift 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 Companys actual taxable income. As of June 30, 2016, the Company believes that the net operating loss that existed as of the more than 50% ownership shift 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 an allowance. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2012 to 2015. The Company and its subsidiaries state tax returns are also open to audit under similar statutes of limitations for the same tax years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 8 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 66,000 common shares at June 30, 2016 and 2015 that are held in escrow and subject to forfeiture as a result of the failure to achieve certain performance targets specified in connection with the transaction with Alternative Asset Management Acquisition Corp. in 2009 (the Acquisition). The 66,000 common shares issued to the former members of Great American Group, LLC are subject to forfeiture upon the final settlement of claims for goods held for sale in connection with the Acquisition. 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 for goods held for sale in connection with the Acquisition was satisfied at the end of the respective periods. Basic and diluted earnings per share was calculated as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net income (loss) attributable to B. Riley Financial, Inc. $ (101 ) $ 8,664 $ 147 $ 11,346 Weighted average shares outstanding: Basic 17,935,254 16,237,860 17,212,716 16,177,824 Effect of dilutive potential common shares: Restricted stock units and non-vested shares - 28,091 289,705 14,046 Contingently issuable shares - 44,878 44,652 44,878 Diluted 17,935,254 16,310,829 17,547,073 16,236,748 Basic income per share $ (0.01 ) $ 0.53 $ 0.01 $ 0.70 Diluted income per share $ (0.01 ) $ 0.53 $ 0.01 $ 0.70 Shares that may be dilutive potential common shares in the future that were excluded from the computation of diluted net (loss) income per share related to restricted stock units was 797,112 and 457,828 for the three months ended June 30, 2016 and 2015, respectively, and 507,407 and 471,873 for the six months ended June 30, 2016 and 2015, respectively, because the effect would have been antidilutive. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 COMMITMENTS AND CONTINGENCIES Legal Matters The Company is subject to certain legal and other claims that arise in the ordinary course of its business. The Company does not believe that the results of these claims are likely to have a material effect on its consolidated financial position or results of operations. In January 2015, the Company was served with a lawsuit that seeks to assert claims of breach of contract and other matters in connection with auction services provided to a debtor. The proceeding is pending in the bankruptcy case of the debtor and its affiliates (the Debtor). In the lawsuit, a former landlord of the Debtor generally alleges that the Company and a joint venture partner were responsible for contamination while performing services in connection with the auction of certain assets of the Debtor and is seeking approximately $10,000 in damages. In April 2015, the Company filed a motion to dismiss the lawsuit and in March 2016 the Court issued its opinion dismissing some claims while denying the motion with respect to other claims. In April 2016, the Company filed an answer with the Court denying the allegations in the complaint. The Company is vigorously defending this lawsuit. This lawsuit is in the initial stages, and the financial impact to the Company, if any, cannot be estimated. |
SHARE BASED PAYMENTS
SHARE BASED PAYMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE BASED PAYMENTS | NOTE 10 SHARE BASED PAYMENTS During the six months ended June 30, 2016, the Company granted equity incentive rewards representing 487,769 shares of common stock with a total fair value of $4,670 to certain employees and directors of the Company. Such equity incentive awards consisted of restricted stock units subject to vesting representing 487,769 shares of common stock. During the year ended December 31, 2015, the Company granted equity incentive rewards representing 527,372 shares of common stock with a total fair value of $5,255 to certain employees and directors of the Company. Such equity incentive awards consisted of restricted stock units subject to vesting representing 521,772 shares of common stock and stock bonus awards of 5,600 fully vested shares of common stock. The vesting periods for the equity incentive awards generally range from one to three years. Share based compensation expense was $560 and $997 for the three and six months ended June 30, 2016, respectively. Share based compensation expense was $381 during the three and six months ended June 30, 2015, 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 Companys 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 June 30, 2016, the expected remaining unrecognized share based compensation expense of $6,737 will be expensed over a weighted average period of 2.3 years. A summary of equity incentive award activity for the periods indicated was as follows: Weighted Average Shares Fair Value Nonvested at December 31, 2015 322,731 $ 9.96 Granted 487,769 9.58 Vested (7,306 ) 9.59 Forfeited (6,082 ) 9.96 Nonvested at June 30, 2016 797,112 $ 9.73 |
NET CAPITAL REQUIREMENTS
NET CAPITAL REQUIREMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Brokers and Dealers [Abstract] | |
NET CAPITAL REQUIREMENTS | NOTE 11 NET CAPITAL REQUIREMENTS B. Riley & Co., LLC (BRC), a subsidiary of the Company, is a registered broker-dealer and, accordingly, is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1) which requires BRC to maintain minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As of June 30, 2016, BRC had net capital of $10,397 (an excess of $10,036. BRCs net capital ratio for June 30, 2016 was 0.19 to 1. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 RELATED PARTY TRANSACTIONS On March 10, 2015, the Company borrowed $4,500 from RIP in accordance with the RIP Note. The borrowings were for short-term working capital needs and capital for other retail liquidation engagements. The principal amount of $4,500 for the RIP Note accrued interest at the rate of 10% per annum (or 15% in the event of a default under the RIP Note) and included a Success Fee as more fully described in Note 6. Riley Investment Management LLC, a wholly owned subsidiary of the Company, is the general partner of RIP. Bryant Riley, the Chief Executive Officer and Chairman of the Board of Directors of the Company, owns or controls approximately 45% of the equity interests of the RIP. In addition, Thomas Kelleher, the President and a director of the Company, and one other employee of the Company, own or control de minimis amounts of the equity interests of RIP. After considering the economic interests of Mr. Riley and Mr. Kelleher in the RIP Note and comparing the terms of the RIP Note to terms that may have been available from unaffiliated third parties, the disinterested members of our Board of Directors unanimously approved the issuance of the RIP Note. Interest expense on the RIP Note totaled $181 and $207 for the three and six months ended June 30, 2015, respectively. The RIP Note was repaid on May 4, 2015. At June 30, 2016 and December 31, 2015, amounts due from related party of $467 and $409, respectively, represented amounts due from GACP I, L.P, of which Great American Capital Partners, LLC, a wholly owned subsidiary of the Company, is the general partner, for management fees and other operating expenses. At June 30, 2016, amounts due from related party also included $1,788 due from CA Global Partners, LLC (CA Global). At December 31, 2015, amounts due to related party of $166 represents amounts due to CA Global. CA Global is one of the members of Great American Global Partners, LLC. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 13 BUSINESS SEGMENTS The Companys business is classified by management into the Capital Markets segment, Auction and Liquidation segment, and Valuation and Appraisal segment. The Companys operating segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance internally. These reportable segments are all distinct businesses, each with a different marketing strategy and management structure. The Company has several operating subsidiaries through which it delivers specific services. The Company provides investment banking, corporate finance, restructuring, research, wealth management, sales and trading services to corporate, institutional and high net worth clients in the Capital Markets segment. 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 in the Auction and Liquidation segment. The Company provides valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs in the Valuation and Appraisal segment. The following is a summary of certain financial data for each of the Companys reportable segments: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Capital markets reportable segment: Revenues - Services and fees $ 7,172 $ 13,657 $ 12,736 $ 22,865 Selling, general, and administrative expenses (7,669 ) (9,429 ) (13,843 ) (15,924 ) Depreciation and amortization (23 ) (143 ) (44 ) (250 ) Segment (loss) income (520 ) 4,085 (1,151 ) 6,691 Auction and Liquidation reportable segment: Revenues - Services and fees 5,393 18,012 12,300 23,134 Revenues - Sale of goods 0 6,019 2 10,466 Total revenues 5,393 24,031 12,302 33,600 Direct cost of services (2,087 ) (5,337 ) (5,505 ) (8,920 ) Cost of goods sold 0 (2,181 ) (2 ) (3,071 ) Selling, general, and administrative expenses (1,577 ) (4,501 ) (2,802 ) (6,465 ) Depreciation and amortization (37 ) (93 ) (78 ) (102 ) Segment income 1,692 11,919 3,915 15,042 Valuation and Appraisal reportable segment: Revenues - Services and fees 7,696 7,773 15,169 15,027 Direct cost of services (3,473 ) (3,202 ) (6,738 ) (6,397 ) Selling, general, and administrative expenses (2,124 ) (2,246 ) (4,243 ) (4,434 ) Depreciation and amortization (24 ) (35 ) (53 ) (69 ) Segment income 2,075 2,290 4,135 4,127 Consolidated operating income from reportable segments 3,247 18,294 6,899 25,860 Corporate and other expenses (3,067 ) (3,625 ) (5,054 ) (5,729 ) Interest income 3 3 6 5 Interest expense (275 ) (418 ) (407 ) (671 ) (Loss) income before income taxes (92 ) 14,254 1,444 19,465 Benefit (provision) for income taxes 65 (5,685 ) (101 ) (7,460 ) Net (loss) income (27 ) 8,569 1,343 12,005 Net income (loss) attributable to noncontrolling interests 74 (95 ) 1,196 659 Net (loss) income attributable to B. Riley Financial, Inc. $ (101 ) $ 8,664 $ 147 $ 11,346 Capital expenditures: Capital Markets segment $ 16 $ - $ 32 $ 108 Auction and Liquidation segment 2 - 2 - Valuation and Appraisal segment 14 10 16 17 Corporate and Other 8 32 8 46 Total $ 40 $ 42 $ 58 $ 171 As of As of June 30, December 31, 2016 2015 Total assets: Capital markets segment $ 58,798 $ 54,882 Auction and Liquidation segment 47,729 45,892 Valuation and Appraisal segment 10,919 12,171 Corporate and other 52,092 19,475 Total $ 169,538 $ 132,420 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 SUBSEQUENT EVENTS Acquisition of United Online, Inc. On May 4, 2016, the Company entered into a definitive agreement and plan of merger to acquire all of the outstanding common stock of United Online, Inc. (United Online), a leading provider of consumer services and products over the Internet, for $11.00 per share, or approximately $169,354 in aggregate merger consideration. The consideration represents approximately $50,000 in cash consideration from the Company after taking into account United Onlines cash balance at closing. The shareholders of United Online voted in favor of the acquisition on June 29, 2016, customary closing conditions were satisfied and the acquisition was completed on July 1, 2016. The acquisition of United Online will be accounted for using the purchase method of accounting. The acquisition of United Online is in line with the Company's stated strategy to be an acquirer of misunderstood or orphaned assets. The Company believes that it can utilize its infrastructure and various operating units to enhance value in these types of assets in the future. At the present time, the Company is not able to disclose the preliminary purchase price allocation of the assets and liabilities acquired since the Company is still in the process of closing its books as of the acquisition date and completing the valuation of United Onlines assets and intangible assets acquired. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
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 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. 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. 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 have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Companys 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 Companys Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on March 28, 2016. The results of operations for the six months ended June 30, 2016 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 Revenues are recognized in accordance with the accounting guidance when persuasive evidence of an arrangement exists, the related services have been provided, the fee is fixed or determinable, and collection is reasonably assured. Revenues in the Capital Markets segment are primarily comprised of (i) fees earned from corporate finance, investment banking, restructuring and wealth management services; and (ii) revenues from sales and trading activities. Fees earned from corporate finance, investment banking and restructuring services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent and from financial advisory services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. Fees from underwriting activities are recognized in earnings when the services related to the underwriting transaction are completed under the terms of the engagement and when the income was determined and is not subject to any other contingencies. Fees from wealth management services consist primarily of investment management fees that are recognized over the period 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 include (i) commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis, (ii) related net trading gains and losses from market making activities and from the commitment of capital to facilitate customer orders, (iii) fees paid for equity research and (iv) principal transactions which include realized and unrealized net gains and losses resulting from our principal investments in equity and other securities for the Companys account. Revenues in the Auction and Liquidation segment are comprised of (i) commissions and fees earned on the sale of goods at auctions and liquidations; (ii) revenues from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation; (iii) revenue from the sale of goods that are purchased by the Company for sale at auction or liquidation sales events; (iv) fees earned from real estate services and the origination of loans; and (v) revenues from contractual reimbursable expenses incurred in connection with auction and liquidation contracts. Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of an arrangement exists, the sales price has been determined, title has passed to the buyer and the buyer has assumed the risks of ownership, and collection is reasonably assured. The commission and fees earned for these services are included in revenues in the accompanying consolidated statements of operations. Under these types of arrangements, revenues also include contractual reimbursable costs which totaled $1,825 and $2,041 for the three months ended June 30, 2016 and 2015, respectively, and $4,843 and $3,989 for the six months ended June 30, 2016 and 2015, respectively. 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 based on proceeds received. The Company records proceeds received from these types of engagements first as a reduction of contractual reimbursable expenses, second as a recovery of its guarantee and thereafter as revenue, subject to such revenue meeting the criteria of having been fixed or determinable. Contractual reimbursable expenses and amounts advanced to customers for minimum guarantees are initially recorded as advances against customer contracts in the accompanying consolidated balance sheets. If, during the auction or liquidation sale, the Company determines that the proceeds from the sale will not meet the minimum guaranteed recovery value as defined in the auction or liquidation services contract, the Company accrues a loss on the contract in the period that the loss becomes known. The Company also evaluates revenue from auction and liquidation contracts in accordance with the accounting guidance to determine whether to report Auction and Liquidation segment revenue on a gross or net basis. The Company has determined that it acts as an agent in a substantial majority of its auction and liquidation services contracts and therefore reports the auction and liquidation revenues on a net basis. Revenues from the sale of goods are recorded gross and are recognized in the period in which the sale of goods held for sale or auction are completed, title to the property passes to the purchaser and the Company has fulfilled its obligations with respect to the transaction. These revenues are primarily the result of the Company acquiring title to merchandise with the intent of selling the items at auction or for augmenting liquidation sales. For liquidation contracts where we take title to retail goods, our net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional allowances and are recorded net of sales or value added tax. Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized upon the delivery of the completed services to the related customers and collection of the fee is reasonably assured. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs which totaled $707 and $753 for the three months ended June 30, 2016 and 2015, respectively, and $1,386 and $1,422 for the six months ended June 30, 2016 and 2015, respectively. In the normal course of business, the Company will enter into collaborative arrangements with other merchandise liquidators to collaboratively execute auction and liquidation contracts. The Companys collaborative arrangements specifically include contractual agreements with other liquidation agents in which the Company and such other liquidation agents actively participate in the performance of the liquidation services and are exposed to the risks and rewards of the liquidation engagement. The Companys participation in collaborative arrangements including its rights and obligations under each collaborative arrangement can vary. Revenues from collaborative arrangements are recorded net based on the proceeds received from the liquidation engagement. Amounts paid to participants in the collaborative arrangements are reported separately as direct costs of revenues. Revenue from collaborative arrangements in which the Company is not the majority participant is recorded net based on the Companys share of proceeds received. There were $12,508 of revenues and $1,099 of direct cost of services subject to collaborative arrangements during the three months ended June 30, 2015 and there were $14,009 of revenues and $1,293 of direct cost of services subject to collaborative arrangements during the six months ended June 30, 2015. There were no revenues and direct cost of services subject to collaborative arrangements during the three and six months ended June 30, 2016. |
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 does not include an allocation of the Companys overhead costs. |
Concentration of Risk | (e) Concentration of Risk Revenue from one liquidation engagement represented 25.3% of total revenues during the three months ended June 30, 2015 and 18.1% of total revenues during the six months ended June 30, 2015. Revenues in the Capital Markets, Auction and Liquidation, and Valuation and Appraisal segment are primarily generated in the United States, Canada and Europe. The Companys 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 Companys 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 Corporations (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. |
Share-Based Compensation | (f) Share-Based Compensation The Companys share based payment awards principally consist of grants of restricted stock and restricted stock units. Share based payment awards also include grants of membership interests in the Companys majority owned subsidiaries. The grants of membership interests consist of percentage interests in the Companys majority owned subsidiaries as determined at the date of grant. 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 statement of operations 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. |
Income Taxes | (g) 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. |
Cash and Cash Equivalents | (h) 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 | (i) Restricted Cash As of June 30, 2016, restricted cash included $11,648 of cash collateral for letters of credit, $410 of cash collateral for foreign exchange contracts and $50 cash segregated in a special reserve bank account for the benefit of customers related to our broker dealer subsidiary. As of December 31, 2015, restricted cash included $51 of cash segregated in a special reserve bank account for the benefit of customers related to our broker dealer subsidiary. |
Accounts Receivable | (j) Accounts Receivable Accounts receivable represents amounts due from the Companys auction and liquidation, valuation and appraisal, and capital markets 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 six months ended June 30, 2016 and 2015 are included in Note 3. |
Advances Against Customer Contracts | (k) Advances Against Customer Contracts Advances against customer contracts represent advances of contractually reimbursable expenses incurred prior to, and during the term of the auction and liquidation services contract. These advances are charged to expense in the period that revenue is recognized under the contract. |
Goods Held for Sale or Auction | (l) Goods Held for Sale or Auction Goods held for sale or auction are stated at the lower of cost, determined by the specific-identification method, or market. At June 30, 2016 and December 31, 2015, goods held for sale or auction includes aircraft parts and other with a carrying value of $36 and $37 which includes a lower of cost or market adjustment of $1,331 and $1,330, respectively. |
Property and Equipment | (m) 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. Property and equipment under capital leases are stated at the present value of minimum lease payments. Depreciation and amortization expense was $84 and $110 for the three months ended June 30, 2016 and 2015, respectively, and $175 and $213 for the six months ended June 30, 2016 and 2015, respectively. |
Securities Owned and Securities Sold Not Yet Purchased | (n) 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 June 30, 2016 and December 31, 2015, the Companys securities owned and securities sold not yet purchased at fair value consisted of the following securities: June 30, December 31, 2016 2015 Securities owned Common stocks $ 19,538 $ 17,586 Corporate bonds 1,938 941 Partnership interests 3,168 7,016 $ 24,644 $ 25,543 Securities sold not yet purchased Common stocks $ 5,188 $ - Corporate bonds 744 713 $ 5,932 $ 713 |
Fair Value Measurements | (o) Fair Value Measurements The Companys 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 Companys 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 Companys securities owned and securities sold and not yet purchased are comprised of common stocks, corporate bonds and investments in partnerships. Investments in common stocks are based on quoted prices in active markets which are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common 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, managements determination of fair value is based on the best available information which may incorporate managements own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuers 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 Companys partnership interests are valued based on the Companys 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 2 of 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 June 30, 2016 and December 31, 2015. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable June 30, identical assets inputs inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 19,538 $ 19,295 $ - $ 243 Corporate bonds 1,938 - 1,369 569 Partnership interests 3,168 - 861 2,307 Total assets measured at fair value $ 24,644 $ 19,295 $ 2,230 $ 3,119 Liabilities: Securities sold not yet purchased Common stocks $ 5,188 $ 5,188 $ - $ - Corporate bonds 744 - 744 - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,111 - - 2,111 Contingent consideration 1,196 - - 1,196 Total liabilities measured at fair value $ 9,239 $ 5,188 $ 744 $ 3,307 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2015, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable December 31, identical assets inputs inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 17,586 $ 17,296 $ - $ 290 Corporate bonds 941 - 941 - Partnership interests 7,016 - 5,250 1,766 Total assets measured at fair value $ 25,543 $ 17,296 $ 6,191 $ 2,056 Liabilities: Securities sold not yet purchased Corporate bonds $ 713 $ - $ 713 $ - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 2,330 $ - $ - $ 2,330 Contingent consideration $ 2,391 $ - $ - $ 2,391 Total liabilities measured at fair value $ 5,434 $ - $ 713 $ 4,721 The changes in Level 3 fair value hierarchy during the six months ended June 30, 2016 and 2015 is as follows: Level 3 Level 3 Changes During the Year Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Period Adjustments Earnings Settlements of Level 3 Period Six Months Ended June 30, 2016 Common stocks $ 290 $ (47 ) $ - $ - $ - $ 243 Corporate bonds - - - 569 - 569 Partnership interests 1,766 123 418 - - 2,307 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,330 - (219 ) - - 2,111 Contingent consideration 2,391 55 - (1,250 ) - 1,196 Six Months Ended June 30, 2015 Common stocks $ 319 $ - $ - $ (293 ) $ - $ 26 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,285 - (138 ) - - 2,147 Contingent consideration - 2,302 - - - 2,302 The amount reported in the table above for the six months ended June 30, 2016 and 2015 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis. The fair value adjustment for contingent consideration in the table above of $2,391 includes the initial value of contingent consideration of $2,229 and an adjustment for imputed interest of $55 and $73 for the six months ended June 30, 2016 and 2015, respectively. The carrying amounts reported in the condensed consolidated financial statements for cash, restricted cash, accounts receivable, accounts payable, accrued payroll and related, accrued value added tax, and accrued expenses and other current liabilities approximate fair value based on the short-term maturity of these instruments. The carrying amounts of the asset based credit facility approximate 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. |
Contingent Consideration | (p) Contingent Consideration In connection with the acquisition of MK Capital on February 2, 2015, the purchase agreement required the payment of contingent consideration to the former members of MK Capital in the form of future cash payments of $1,250 and issuance of 166,667 shares of common stock on the first anniversary date of the closing (February 2, 2016) and a final cash payment of $1,250 and issuance of 166,666 shares of common stock on the second anniversary date of the closing (February 2, 2017). The contingent cash consideration has been classified as a liability in the condensed balance sheets in accordance with ASC 805, Business Combination (ASC 805). The fair value of the contingent cash consideration has been discounted at 8.0%. The balance of the contingent consideration liability was $1,196 (discount of $54) at June 30, 2016. The balance of the contingent consideration liability was $2,391 (discount of $109) at December 31, 2015 and has been recorded as contingent consideration liability current portion in the amount of $1,241 and contingent consideration liability, net of current portion in the amount of $1,150 in the condensed consolidated balance sheet. Imputed interest expense totaled $24 and $44 for the three months ended June 30, 2016 and 2015, respectively, and $55 and $73 for the six months ended June 30, 2016 and 2015, respectively. The fair value of the contingent stock consideration has been classified as equity in accordance with ASC 805. The contingent cash and stock consideration is payable on the first and second anniversary dates of the closing provided that MK Capital generates a minimum amount of gross revenues as defined in the purchase agreement for the twelve months following the first and second anniversary dates of the closing. MK Capital achieved the minimum amount of revenues for the first anniversary period and the contingent cash consideration in the amount of $1,250 and contingent stock consideration consisting of 166,667 shares of common stock for such first anniversary period was paid and issued on February 2, 2016. |
Derivative and Foreign Currency Translation | (q) 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 six months ended June 30, 2016, the Companys use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $2,200 Canadian dollars that was settled prior to March 31, 2016; (b) in the amount of $4,000 Canadian dollars that was settled prior to July 29, 2016; and (c) in the amount of $4,000 Canadian dollars that is required to be settled prior to August 31, 2016. During the six months ended June 30, 2015, the Companys use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $6,000 Canadian dollars that was settled prior March 31, 2015; (b) in the amount of $4,000 Canadian dollars that was settled prior to May 29, 2015; and (c) in the amount of $5,000 Canadian dollars that was settled prior to June 30, 2015. The net loss from the foreign exchange contracts of $39 and $40 during the six months ended June 30, 2016 and 2015, respectively, is reported as a component of selling, general and administrative expenses in the condensed consolidated financial statements. 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 income in the accompanying condensed consolidated balance sheets. Foreign currency transaction losses were $35 and $142 during the three and six months ended June 30, 2016. Foreign currency transaction losses were $207 and $315 during the three and six months ended June 30, 2015. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of operations. |
Recent Accounting Pronouncements | (r) Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. ASU 2016-02 will be effective for the Company in fiscal year 2019, but early application is permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amends revenue recognition requirements for multiple deliverable revenue arrangements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this ASU will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendments should be applied retrospectively. In July 2015, the FASB approved a one-year deferral of the effective date with early adoption 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 March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments in this update do not change the core principle of the guidance as noted above at ASU No. 2014-09. The amendments clarify the implementation guidance on principal versus agent considerations. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of ASU No. 2014-09. 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 March 2016, the FASB issued ASU No. 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update involve simplification in several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update require both prospective and retrospective application with earlier application permitted as of the beginning of an interim or annual reporting period. 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. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of securities owned and securities sold not yet purchased at fair value | As of June 30, 2016 and December 31, 2015, the Companys securities owned and securities sold not yet purchased at fair value consisted of the following securities: June 30, December 31, 2016 2015 Securities owned Common stocks $ 19,538 $ 17,586 Corporate bonds 1,938 941 Partnership interests 3,168 7,016 $ 24,644 $ 25,543 Securities sold not yet purchased Common stocks $ 5,188 $ - Corporate bonds 744 713 $ 5,932 $ 713 |
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 June 30, 2016 and December 31, 2015. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable June 30, identical assets inputs inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 19,538 $ 19,295 $ - $ 243 Corporate bonds 1,938 - 1,369 569 Partnership interests 3,168 - 861 2,307 Total assets measured at fair value $ 24,644 $ 19,295 $ 2,230 $ 3,119 Liabilities: Securities sold not yet purchased Common stocks $ 5,188 $ 5,188 $ - $ - Corporate bonds 744 - 744 - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,111 - - 2,111 Contingent consideration 1,196 - - 1,196 Total liabilities measured at fair value $ 9,239 $ 5,188 $ 744 $ 3,307 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2015, Using Quoted prices in Other Significant Fair Value at active markets for observable unobservable December 31, identical assets inputs inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Securities owned Common stocks $ 17,586 $ 17,296 $ - $ 290 Corporate bonds 941 - 941 - Partnership interests 7,016 - 5,250 1,766 Total assets measured at fair value $ 25,543 $ 17,296 $ 6,191 $ 2,056 Liabilities: Securities sold not yet purchased Corporate bonds $ 713 $ - $ 713 $ - Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 2,330 $ - $ - $ 2,330 Contingent consideration $ 2,391 $ - $ - $ 2,391 Total liabilities measured at fair value $ 5,434 $ - $ 713 $ 4,721 |
Schedule of changes in Level 3 fair value hierarchy | The changes in Level 3 fair value hierarchy during the six months ended June 30, 2016 and 2015 is as follows: Level 3 Level 3 Changes During the Year Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Period Adjustments Earnings Settlements of Level 3 Period Six Months Ended June 30, 2016 Common stocks $ 290 $ (47 ) $ - $ - $ - $ 243 Corporate bonds - - - 569 - 569 Partnership interests 1,766 123 418 - - 2,307 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,330 - (219 ) - - 2,111 Contingent consideration 2,391 55 - (1,250 ) - 1,196 Six Months Ended June 30, 2015 Common stocks $ 319 $ - $ - $ (293 ) $ - $ 26 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,285 - (138 ) - - 2,147 Contingent consideration - 2,302 - - - 2,302 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Schedule of components of accounts receivable | The components of accounts receivable, net, include the following: June 30, December 31, 2016 2015 Accounts receivable $ 7,197 $ 8,417 Investment banking fees, commissions and other receivables 591 709 Unbilled receivables 295 435 Total accounts receivable 8,083 9,561 Allowance for doubtful accounts (86 ) (89 ) Accounts receivable, net $ 7,997 $ 9,472 |
Schedule of allowance for doubtful accounts | Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Balance, beginning of period $ 69 $ 788 $ 89 $ 728 Add: Additions to reserve 55 195 60 255 Less: Write-offs (34 ) (10 ) (34 ) (10 ) Less: Recoveries (4 ) - (29 ) - Balance, end of period $ 86 $ 973 $ 86 $ 973 |
GOODWILL AND OTHER INTANGIBLE27
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill And Other Intangible Assets Tables | |
Schedule of intangible assets | Intangible assets consisted of the following: June 30, 2016 December 31, 2015 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 13 Years $ 3,600 $ 795 $ 2,805 $ 3,600 $ 572 $ 3,028 Non-amortizable assets: Tradenames 1,740 - 1,740 1,740 - 1,740 Total intangible assets $ 5,340 $ 795 $ 4,545 $ 5,340 $ 572 $ 4,768 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per share | Basic and diluted earnings per share was calculated as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net income (loss) attributable to B. Riley Financial, Inc. $ (101 ) $ 8,664 $ 147 $ 11,346 Weighted average shares outstanding: Basic 17,935,254 16,237,860 17,212,716 16,177,824 Effect of dilutive potential common shares: Restricted stock units and non-vested shares - 28,091 289,705 14,046 Contingently issuable shares - 44,878 44,652 44,878 Diluted 17,935,254 16,310,829 17,547,073 16,236,748 Basic income per share $ (0.01 ) $ 0.53 $ 0.01 $ 0.70 Diluted income per share $ (0.01 ) $ 0.53 $ 0.01 $ 0.70 |
SHARE BASED PAYMENTS (Tables)
SHARE BASED PAYMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of equity incentive award activity | A summary of equity incentive award activity for the periods indicated was as follows: Weighted Average Shares Fair Value Nonvested at December 31, 2015 322,731 $ 9.96 Granted 487,769 9.58 Vested (7,306 ) 9.59 Forfeited (6,082 ) 9.96 Nonvested at June 30, 2016 797,112 $ 9.73 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of company's reportable segments | The following is a summary of certain financial data for each of the Companys reportable segments: T hree Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Capital markets reportable segment: Revenues - Services and fees $ 7,172 $ 13,657 $ 12,736 $ 22,865 Selling, general, and administrative expenses (7,669 ) (9,429 ) (13,843 ) (15,924 ) Depreciation and amortization (23 ) (143 ) (44 ) (250 ) Segment (loss) income (520 ) 4,085 (1,151 ) 6,691 Auction and Liquidation reportable segment: Revenues - Services and fees 5,393 18,012 12,300 23,134 Revenues - Sale of goods 0 6,019 2 10,466 Total revenues 5,393 24,031 12,302 33,600 Direct cost of services (2,087 ) (5,337 ) (5,505 ) (8,920 ) Cost of goods sold 0 (2,181 ) (2 ) (3,071 ) Selling, general, and administrative expenses (1,577 ) (4,501 ) (2,802 ) (6,465 ) Depreciation and amortization (37 ) (93 ) (78 ) (102 ) Segment income 1,692 11,919 3,915 15,042 Valuation and Appraisal reportable segment: Revenues - Services and fees 7,696 7,773 15,169 15,027 Direct cost of services (3,473 ) (3,202 ) (6,738 ) (6,397 ) Selling, general, and administrative expenses (2,124 ) (2,246 ) (4,243 ) (4,434 ) Depreciation and amortization (24 ) (35 ) (53 ) (69 ) Segment income 2,075 2,290 4,135 4,127 Consolidated operating income from reportable segments 3,247 18,294 6,899 25,860 Corporate and other expenses (3,067 ) (3,625 ) (5,054 ) (5,729 ) Interest income 3 3 6 5 Interest expense (275 ) (418 ) (407 ) (671 ) (Loss) income before income taxes (92 ) 14,254 1,444 19,465 Benefit (provision) for income taxes 65 (5,685 ) (101 ) (7,460 ) Net (loss) income (27 ) 8,569 1,343 12,005 Net income (loss) attributable to noncontrolling interests 74 (95 ) 1,196 659 Net (loss) income attributable to B. Riley Financial, Inc. $ (101 ) $ 8,664 $ 147 $ 11,346 Capital expenditures: Capital Markets segment $ 16 $ - $ 32 $ 108 Auction and Liquidation segment 2 - 2 - Valuation and Appraisal segment 14 10 16 17 Corporate and Other 8 32 8 46 Total $ 40 $ 42 $ 58 $ 171 As of As of June 30, December 31, 2016 2015 Total assets: Capital markets segment $ 58,798 $ 54,882 Auction and Liquidation segment 47,729 45,892 Valuation and Appraisal segment 10,919 12,171 Corporate and other 52,092 19,475 Total $ 169,538 $ 132,420 |
ORGANIZATION, BUSINESS OPERAT31
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) $ / shares in Units, $ in Thousands | May 10, 2016USD ($)$ / sharesshares | Jun. 30, 2016N |
Subsidiary, Sale of Stock [Line Items] | ||
Number of operating segment | N | 3 | |
Public Offering [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares during the period | shares | 2,420,980 | |
Share price (in dollars per share) | $ / shares | $ 9.50 | |
Proceeds from the offering before deducting underwriting commissions and other offering expenses | $ | $ 22,759 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Securities owned | ||
Securities owned | $ 24,644 | $ 25,543 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 5,932 | 713 |
Common Stock [Member] | ||
Securities owned | ||
Securities owned | 19,538 | 17,586 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 5,188 | |
Corporate Bond [Member] | ||
Securities owned | ||
Securities owned | 1,938 | 941 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 744 | 713 |
Partnership Interest [Member] | ||
Securities owned | ||
Securities owned | $ 3,168 | $ 7,016 |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Securities owned | ||
Total assets measured at fair value | $ 24,644 | $ 25,543 |
Liabilities: | ||
Securities sold not yet purchased | 5,932 | 713 |
Mandatorily redeemable noncontrolling interests | 2,512 | 2,994 |
Contingent consideration | 1,196 | 1,241 |
Common Stock [Member] | ||
Securities owned | ||
Total assets measured at fair value | 19,538 | 17,586 |
Liabilities: | ||
Securities sold not yet purchased | 5,188 | |
Corporate Bond [Member] | ||
Securities owned | ||
Total assets measured at fair value | 1,938 | 941 |
Liabilities: | ||
Securities sold not yet purchased | 744 | 713 |
Partnership Interest [Member] | ||
Securities owned | ||
Total assets measured at fair value | 3,168 | 7,016 |
Recurring Basis [Member] | ||
Securities owned | ||
Total assets measured at fair value | 24,644 | 25,543 |
Liabilities: | ||
Total liabilities measured at fair value | 9,239 | 5,434 |
Recurring Basis [Member] | Common Stock [Member] | ||
Securities owned | ||
Total assets measured at fair value | 19,538 | 17,586 |
Liabilities: | ||
Securities sold not yet purchased | 5,188 | |
Recurring Basis [Member] | Corporate Bond [Member] | ||
Securities owned | ||
Total assets measured at fair value | 1,938 | 941 |
Liabilities: | ||
Securities sold not yet purchased | 744 | 713 |
Recurring Basis [Member] | Partnership Interest [Member] | ||
Securities owned | ||
Total assets measured at fair value | 3,168 | 7,016 |
Recurring Basis [Member] | Mandatorily Redeemable Noncontrolling Interests [Member] | ||
Liabilities: | ||
Mandatorily redeemable noncontrolling interests | 2,111 | 2,330 |
Recurring Basis [Member] | Contingent consideration [Member] | ||
Liabilities: | ||
Contingent consideration | 1,196 | 2,391 |
Recurring Basis [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) | ||
Securities owned | ||
Total assets measured at fair value | 19,295 | 17,296 |
Liabilities: | ||
Total liabilities measured at fair value | 5,188 | |
Recurring Basis [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) | Common Stock [Member] | ||
Securities owned | ||
Total assets measured at fair value | 19,295 | 17,296 |
Liabilities: | ||
Securities sold not yet purchased | 5,188 | |
Recurring Basis [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) | Corporate Bond [Member] | ||
Securities owned | ||
Total assets measured at fair value | ||
Liabilities: | ||
Securities sold not yet purchased | ||
Recurring Basis [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) | Partnership Interest [Member] | ||
Securities owned | ||
Total assets measured at fair value | ||
Recurring Basis [Member] | Other Observable Inputs (Level 2) [Member] | ||
Securities owned | ||
Total assets measured at fair value | 2,230 | 6,191 |
Liabilities: | ||
Total liabilities measured at fair value | 744 | 713 |
Recurring Basis [Member] | Other Observable Inputs (Level 2) [Member] | Common Stock [Member] | ||
Securities owned | ||
Total assets measured at fair value | ||
Liabilities: | ||
Securities sold not yet purchased | ||
Recurring Basis [Member] | Other Observable Inputs (Level 2) [Member] | Corporate Bond [Member] | ||
Securities owned | ||
Total assets measured at fair value | 1,369 | 941 |
Liabilities: | ||
Securities sold not yet purchased | 744 | 713 |
Recurring Basis [Member] | Other Observable Inputs (Level 2) [Member] | Partnership Interest [Member] | ||
Securities owned | ||
Total assets measured at fair value | 861 | 5,250 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Securities owned | ||
Total assets measured at fair value | 3,119 | 2,056 |
Liabilities: | ||
Total liabilities measured at fair value | 3,307 | 4,721 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Common Stock [Member] | ||
Securities owned | ||
Total assets measured at fair value | 243 | 290 |
Liabilities: | ||
Securities sold not yet purchased | ||
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Bond [Member] | ||
Securities owned | ||
Total assets measured at fair value | 569 | |
Liabilities: | ||
Securities sold not yet purchased | ||
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Partnership Interest [Member] | ||
Securities owned | ||
Total assets measured at fair value | 2,307 | 1,766 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mandatorily Redeemable Noncontrolling Interests [Member] | ||
Liabilities: | ||
Mandatorily redeemable noncontrolling interests | 2,111 | 2,330 |
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Contingent consideration [Member] | ||
Liabilities: | ||
Contingent consideration | $ 1,196 | $ 2,391 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Significant Unobservable Inputs (Level 3) [Member] - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Common Stock [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | $ 290 | $ 319 |
Fair Value Adjustments | (47) | |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | (293) | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 243 | 26 |
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 | ||
Fair Value Adjustments | ||
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | 569 | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 569 | |
Partnership Interest [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 1,766 | |
Fair Value Adjustments | 123 | |
Relating to Undistributed Earnings | 418 | |
Purchases, Sales and Settlements | ||
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 2,307 | |
Mandatorily Redeemable Noncontrolling Interests [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 2,330 | 2,285 |
Fair Value Adjustments | ||
Relating to Undistributed Earnings | (219) | (138) |
Purchases, Sales and Settlements | ||
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 2,111 | 2,147 |
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 | 2,391 | |
Fair Value Adjustments | 55 | 2,302 |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | (1,250) | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | $ 1,196 | $ 2,302 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) CAD in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)Nshares | Jun. 30, 2015USD ($) | Jun. 30, 2016CAD | Dec. 31, 2015USD ($) | Jun. 30, 2015CAD | |
Services and fees | $ 20,261 | $ 39,442 | $ 40,205 | $ 61,026 | |||
Direct cost of services | 5,560 | 8,539 | 12,243 | 15,317 | |||
Goods held for sale or auction | 36 | 36 | $ 37 | ||||
Market adjustment for goods held for sale or auction | 1,331 | 1,331 | 1,330 | ||||
Depreciation and amortization expense | 84 | 110 | 399 | 421 | |||
Initial value of contingent consideration | 2,229 | 2,229 | 2,391 | ||||
Contingent consideration- current portion | 1,196 | 1,196 | 1,241 | ||||
Contingent consideration, net of current portion | 1,150 | ||||||
Net loss on derivate contract | (5) | ||||||
Collaborative Arrangements [Member] | |||||||
Services and fees | 12,508 | 14,009 | |||||
Direct cost of services | 1,099 | 1,293 | |||||
Purchase Agreement [Member] | MK Capital [Member] | |||||||
Initial value of contingent consideration | 2,391 | ||||||
Contingent consideration imputed interest expense | 24 | 44 | $ 55 | 73 | |||
Contingent consideration discount rate | 8.00% | ||||||
Contingent consideration- current portion | 1,196 | $ 1,196 | 1,241 | ||||
Contingent consideration discount | 54 | 54 | 109 | ||||
Purchase Agreement [Member] | MK Capital [Member] | First Anniversary Date of Closing February 2, 2016 [Member] | |||||||
Future cash payments for contingent consideration | $ 1,250 | ||||||
Number of shares issued upon contingent consideration | shares | 166,667 | ||||||
Purchase Agreement [Member] | MK Capital [Member] | Second Anniversary Date of Closing February 2, 2017 [Member] | |||||||
Future cash payments for contingent consideration | $ 1,250 | ||||||
Number of shares issued upon contingent consideration | shares | 166,666 | ||||||
Auction and Liquidation Reportable Segment [Member] | |||||||
Contractual reimbursable costs | 1,825 | 2,041 | $ 4,843 | 3,989 | |||
Services and fees | 5,393 | $ 18,012 | 12,300 | $ 23,134 | |||
Percentage of concentration of risk | 25.30% | 18.10% | |||||
Depreciation and amortization expense | 37 | $ 93 | 78 | $ 102 | |||
Valuation And Appraisal Reportable Segment [Member] | |||||||
Contractual reimbursable costs | 707 | 753 | 1,386 | 1,422 | |||
Services and fees | 7,696 | 7,773 | 15,169 | 15,027 | |||
Depreciation and amortization expense | $ 24 | 35 | $ 53 | 69 | |||
Great American Capital Partners, LLC [Member] | |||||||
Percentage of ownership | 50.00% | 50.00% | 50.00% | ||||
Number of executive officers | N | 3 | ||||||
Letter of Credit [Member] | |||||||
Restricted cash | $ 11,648 | $ 11,648 | |||||
Special Reserve Bank Account Deposits [Member] | |||||||
Restricted cash | 50 | 50 | $ 51 | ||||
Foreign Exchange Forward (Settled Prior June 30, 2015) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | CAD 5,000 | ||||||
Foreign Exchange Forward (Settled Prior May 29, 2015) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | 4,000 | ||||||
Foreign Exchange Forward (Settled Prior March 31, 2015) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | CAD 6,000 | ||||||
Foreign Exchange Forward (Settled Prior August 31, 2016) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | CAD 4,000 | ||||||
Foreign Exchange Forward (Settled Prior July 29, 2016) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | 4,000 | ||||||
Foreign Exchange Forward (Settled Prior March 31, 2016) [Member] | Canada, Dollars [Member] | |||||||
Derivatives purchase contract amount | CAD | CAD 2,200 | ||||||
Foreign Exchange Contract [Member] | |||||||
Restricted cash | 410 | 410 | |||||
Foreign Exchange Forward [Member] | Selling, General and Administrative Expenses [Member] | |||||||
Net loss on derivate contract | 39 | 40 | |||||
Accumulated other comprehensive income transaction losses | $ 35 | $ 207 | $ 142 | $ 315 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Accounts receivable | $ 7,197 | $ 8,417 |
Investment banking fees, commissions and other receivables | 591 | 709 |
Unbilled receivables | 295 | 435 |
Total accounts receivable | 8,083 | 9,561 |
Allowance for doubtful accounts | (86) | (89) |
Accounts receivable, net | $ 7,997 | $ 9,472 |
ACCOUNTS RECEIVABLE (Details 1)
ACCOUNTS RECEIVABLE (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Balance, beginning of period | $ 69 | $ 788 | $ 89 | $ 728 |
Add: Additions to reserve | 55 | 195 | 60 | 255 |
Less: Write-offs | (34) | (10) | (34) | (10) |
Less: Recoveries | (4) | (29) | ||
Balance, end of period | $ 86 | $ 973 | $ 86 | $ 973 |
GOODWILL AND OTHER INTANGIBLE38
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Total intangible assets | ||
Gross Carrying Value | $ 5,340 | $ 5,340 |
Accumulated Amortization | 795 | 572 |
Intangibles Net | 4,545 | 4,768 |
Trade Names [Member] | ||
Non-amortizable assets: | ||
Gross Carrying Value | 1,740 | 1,740 |
Intangibles Net | 1,740 | 1,740 |
Customer Relationships [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | 3,600 | 3,600 |
Accumulated Amortization | 795 | 572 |
Intangibles Net | $ 2,805 | $ 3,028 |
Customer Relationships [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 4 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 13 years |
GOODWILL AND OTHER INTANGIBLE39
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Goodwill | $ 34,528 | $ 34,528 | $ 34,528 | ||
Amortization expense | 111 | $ 116 | 223 | $ 208 | |
Estimated future amortization expense | |||||
December 31, 2016 (remaining six months) | 224 | 224 | |||
2,017 | 447 | 447 | |||
2,018 | 326 | 326 | |||
2,019 | 222 | 222 | |||
2,020 | 222 | 222 | |||
After December 31, 2020 | 1,364 | 1,364 | |||
Capital Markets Segment [Member] | |||||
Goodwill | 28,840 | 28,840 | |||
Auction And Liquidation Segment [Member] | |||||
Goodwill | 1,975 | 1,975 | |||
Valuation and Appraisal segment [Member] | |||||
Goodwill | $ 3,713 | $ 3,713 |
CREDIT FACILITIES (Details Narr
CREDIT FACILITIES (Details Narrative) £ in Thousands, $ in Thousands | Mar. 19, 2014GBP (£) | May 17, 2011USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Feb. 03, 2012USD ($) |
Interest expense | $ 251 | $ 175 | $ 274 | $ 321 | ||||
Amortization of deferred loan fees | 24 | 24 | 47 | 47 | ||||
Success fees | 119 | 119 | ||||||
Standby letters of credit issued and outstanding | 11,896 | |||||||
Second Amended and Restated Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Asset Based Credit Facility [Member] | ||||||||
Credit facility | $ 100,000 | $ 100,000 | ||||||
Credit facility expiration date | Jul. 15, 2018 | |||||||
Description of interest rate | 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. | |||||||
Description of success fees | The credit facility also provides for success fees in the amount of 5% to 20% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. | |||||||
Description of collateral | 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. | |||||||
UK Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Line of Credit [Member] | ||||||||
Description of interest rate | 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. | |||||||
Description of success fees | The credit facility also provides for success fees in the amount of 5% to 20% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. | |||||||
Description of collateral | 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. | |||||||
UK Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Line of Credit [Member] | GBP [Member] | ||||||||
Maximum borrowing capacity credit facility | £ | £ 50,000 | |||||||
Loan and Security Agreement [Member] | Great American Group Advisory And Valuation Services, LLC [Member] | Line of Credit [Member] | BFI Business Finance [Member] | ||||||||
Credit facility expiration date | Feb. 3, 2016 | |||||||
Maximum borrowing capacity credit facility | $ 2 | $ 3 | ||||||
Description of interest rate | The interest rate under the Line of Credit was the prime rate plus 2% (6.5% at December 31, 2015), payable monthly in arrears. | |||||||
Interest expense | $ 16 | $ 77 | $ 66 | |||||
Standby letters of credit issued and outstanding | $ 272 | |||||||
Description of collateral | The Line of Credit was collateralized by the accounts receivable of GAAV and allows for borrowings in the amount of 85% of the net face amount of prime account. | |||||||
Accounts receivable collateral amount | 3,992 | |||||||
Total borrowings available and unused | $ 2,738 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) $ in Thousands | Mar. 10, 2015USD ($)N | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) |
Interest expense | $ 251 | $ 175 | $ 274 | $ 321 | |
Success fees | 119 | 119 | |||
Riley Investment Partners, L.P. [Member] | Mr. Bryant Riley [Member] | |||||
Percentage of ownership | 45.00% | 45.00% | |||
Riley Investment Partners, L.P. [Member] | 10% Subordinated Unsecured Promissory Note (RIP Note) Due March 9, 2016 [Member] | |||||
Principal amount | $ 4,500 | ||||
Debt default rate | 15.00% | ||||
Number of retail liquidation engagements | N | 3 | ||||
Description of success fees | RIP was also entitled to a success fee (the Success Fee) of 20% of the net profit, if any, earned by the Company in connection with a designated liquidation transaction. | ||||
Description of obligation | Pursuant to the terms of the RIP Note, under no circumstances was the Company obligated to pay RIP any portion of the combined amount of interest and the Success Fee which exceeded twelve percent (12%) of the $4,500 principal amount of the RIP Note. | ||||
Interest expense | $ 181 | 207 | |||
Success fees | $ 140 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Loss Carryforwards [Line Items] | ||
Effective income tax rate | 7.00% | 38.30% |
Federal Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 12,023 | |
Expirate date | Dec. 31, 2030 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 13,886 | |
Expirate date | Dec. 31, 2032 | |
Foreign Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 1,121 | |
Expirate date | Dec. 31, 2022 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share Details | ||||
Net income (loss) attributable to B. Riley Financial, Inc. | $ (101) | $ 8,664 | $ 147 | $ 11,346 |
Weighted average shares outstanding: | ||||
Basic | 17,935,254 | 16,237,860 | 17,212,716 | 16,177,824 |
Effect of dilutive potential common shares: | ||||
Restricted stock units and non-vested shares | 28,091 | 289,705 | 14,046 | |
Contingently issuable shares | 44,878 | 44,652 | 44,878 | |
Diluted | 17,935,254 | 16,310,829 | 17,547,073 | 16,236,748 |
Basic income per share (in dollars per share) | $ (0.01) | $ 0.53 | $ 0.01 | $ 0.7 |
Diluted income per share (in dollars per share) | $ (0.01) | $ 0.53 | $ 0.01 | $ 0.7 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - Restricted Stock Units [Member] - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of shares held in escrow account | 66,000 | 66,000 | ||
Number of antidilutive securities were excluded from the computation of diluted net (loss) income per share | 797,112 | 457,828 | 507,407 | 471,873 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 1 Months Ended |
Jan. 31, 2015USD ($) | |
Bankruptcy Case [Member] | |
Loss Contingencies [Line Items] | |
Damages value | $ 10,000 |
SHARE BASED PAYMENTS (Details)
SHARE BASED PAYMENTS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested at beginning | 322,731 | |
Granted | 487,769 | 527,372 |
Vested | (7,306) | |
Forfeited | (6,082) | |
Nonvested at end | 797,112 | 322,731 |
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 | $ 9.96 | |
Granted | 9.58 | |
Vested | 9.59 | |
Forfeited | 9.96 | |
Nonvested at end | $ 9.73 | $ 9.96 |
SHARE BASED PAYMENTS (Details N
SHARE BASED PAYMENTS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation expense | $ 997 | $ 416 | |||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | 487,769 | 527,372 | |||
Total fair value | $ 4,670 | $ 4,670 | $ 5,255 | ||
Number of shares vesting | 487,769 | 521,772 | |||
Share based compensation expense | 560 | $ 381 | $ 997 | $ 381 | |
Unrecognized share based compensation expense | $ 6,737 | $ 6,737 | |||
Unrecognized share based compensation weighted average period | 2 years 3 months 18 days | ||||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting periods | 1 year | ||||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting periods | 3 years | ||||
Stock Bonus Awards [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares vesting | 5,600 |
NET CAPITAL REQUIREMENTS (Detai
NET CAPITAL REQUIREMENTS (Details Narrative) $ in Thousands | Jun. 30, 2016USD ($) |
Maximum [Member] | |
Ratio of indebtness to capital | 15 |
Minimum [Member] | |
Ratio of indebtness to capital | 1 |
B. Riley & Co., LLC [Member] | |
Net capital | $ 10,397 |
Excess capital | $ 10,036 |
B. Riley & Co., LLC [Member] | Maximum [Member] | |
Ratio of indebtness to capital | 0.19 |
B. Riley & Co., LLC [Member] | Minimum [Member] | |
Ratio of indebtness to capital | 1 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | Mar. 10, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Interest expense | $ 251 | $ 175 | $ 274 | $ 321 | ||
Due from related party | $ 166 | |||||
GACP I, L.P [Member] | ||||||
Due from related party | 467 | 467 | 409 | |||
CA Global Partners, LLC [Member] | ||||||
Due from related party | $ 1,788 | $ 1,788 | $ 166 | |||
Riley Investment Partners, L.P. [Member] | Mr. Bryant Riley [Member] | ||||||
Percentage of ownership | 45.00% | 45.00% | ||||
Riley Investment Partners, L.P. [Member] | 10% Subordinated Unsecured Promissory Note (RIP Note) Due March 9, 2016 [Member] | ||||||
Principal amount | $ 4,500 | |||||
Debt default rate | 15.00% | |||||
Interest expense | $ 181 | $ 207 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||
Revenues - Services and fees | $ 20,261 | $ 39,442 | $ 40,205 | $ 61,026 | |
Revenues - Sale of goods | 6,019 | 2 | 10,466 | ||
Total revenues | 20,261 | 45,461 | 40,207 | 71,492 | |
Selling, general, and administrative expenses | (14,521) | (20,072) | (26,117) | (32,973) | |
Depreciation and amortization | (84) | (110) | (399) | (421) | |
Segment (loss) income | 180 | 14,669 | 1,845 | 20,131 | |
Consolidated operating income from reportable segments | 3,247 | 18,294 | 6,899 | 25,860 | |
Corporate and other expenses | (3,067) | (3,625) | (5,054) | (5,729) | |
Interest income | 3 | 3 | 6 | 5 | |
Interest expense | (275) | (418) | (407) | (671) | |
(Loss) income before income taxes | (92) | 14,254 | 1,444 | 19,465 | |
Benefit (provision) for income taxes | (65) | 5,685 | 101 | 7,460 | |
Net (loss) income | (27) | 8,569 | 1,343 | 12,005 | |
Net income (loss) attributable to noncontrolling interests | 74 | (95) | 1,196 | 659 | |
Net (loss) income attributable to B. Riley Financial, Inc. | (101) | 8,664 | 147 | 11,346 | |
Capital expenditures | 40 | 42 | 58 | 171 | |
Total assets | 169,538 | 169,538 | $ 132,420 | ||
Capital Markets Reportable Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues - Services and fees | 7,172 | 13,657 | 12,736 | 22,865 | |
Selling, general, and administrative expenses | (7,669) | (9,429) | (13,843) | (15,924) | |
Depreciation and amortization | (23) | (143) | (44) | (250) | |
Segment (loss) income | (520) | 4,085 | (1,151) | 6,691 | |
Capital expenditures | 16 | 32 | 108 | ||
Total assets | 58,798 | 58,798 | 54,882 | ||
Auction and Liquidation Reportable Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues - Services and fees | 5,393 | 18,012 | 12,300 | 23,134 | |
Revenues - Sale of goods | 0 | 6,019 | 2 | 10,466 | |
Total revenues | 5,393 | 24,031 | 12,302 | 33,600 | |
Direct cost of services | (2,087) | (5,337) | (5,505) | (8,920) | |
Cost of goods sold | 0 | (2,181) | (2) | (3,071) | |
Selling, general, and administrative expenses | (1,577) | (4,501) | (2,802) | (6,465) | |
Depreciation and amortization | (37) | (93) | (78) | (102) | |
Segment (loss) income | 1,692 | 11,919 | 3,915 | 15,042 | |
Capital expenditures | 2 | 2 | |||
Total assets | 47,729 | 47,729 | 45,892 | ||
Valuation And Appraisal Reportable Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues - Services and fees | 7,696 | 7,773 | 15,169 | 15,027 | |
Direct cost of services | (3,473) | (3,202) | (6,738) | (6,397) | |
Selling, general, and administrative expenses | (2,124) | (2,246) | (4,243) | (4,434) | |
Depreciation and amortization | (24) | (35) | (53) | (69) | |
Segment (loss) income | 2,075 | 2,290 | 4,135 | 4,127 | |
Capital expenditures | 14 | 10 | 16 | 17 | |
Total assets | 10,919 | 10,919 | 12,171 | ||
Corporate and Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Capital expenditures | 8 | $ 32 | 8 | $ 46 | |
Total assets | $ 52,092 | $ 52,092 | $ 19,475 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Definitive Agreement [Member] - United Online Inc [Member] $ / shares in Units, $ in Thousands | May 04, 2016USD ($)$ / shares |
Subsequent Event [Line Items] | |
Share price (in dollars per share) | $ / shares | $ 11 |
Merger consideration | $ 169,354 |
Cash consideraion received | $ 50,000 |