Item 1.01. Entry into a Material Definitive Agreement.
On December 5, 2019, B. Riley Financial,
Inc. (the “Company”) filed a prospectus supplement related to the sale from time to time of up to $100,000,000 of the
Company’s 7.25% Senior Notes due 2027 (the “7.25% 2027 Notes”), 7.50% Senior Notes due 2027 (the “7.50%
2027 Notes”), 7.375% Senior Notes due 2023 (the “7.375% 2023 Notes”), 6.875% Senior Notes due 2023 (the “6.875%
2023 Notes”), 6.75% Senior Notes due 2024 (the “2024 Notes”) and 6.50% Senior Notes due 2026 (the “2026
Notes” and, together with the 7.25% 2027 Notes, 7.50% 2027 Notes, 7.375% 2023 Notes, 6.875% 2023 Notes and 2024 Notes, the
“Notes”), Common Stock, par value $0.0001 per share (“Common Stock”) and Depositary Shares, each representing
1/1000th of a share of 6.875% Series A Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”)
(Liquidation Preference Equivalent to $25.00 per Depositary Share) (the “Depositary Shares” and, together with the
Notes and Common Stock, the “Offered Securities”). The prospectus supplement filed on December 5, 2019 replaces our
prior sales agreement prospectus dated September 30, 2019 (the “prior prospectus”).
On December 5, 2019, the Company entered
into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc. (the “Agent”),
pursuant to which the Company may offer and sell, from time to time, the Offered Securities. Sales of the Offered Securities pursuant
to the Sales Agreement, if any, may be made in transactions that are deemed to be “at the market offerings” as defined
in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). The Agent is not required to sell
any specific number of the Offered Securities, but the Agent will make all sales using commercially reasonable efforts consistent
with its normal trading and sales practices on mutually agreed terms between the Agent and the Company. Under the Sales Agreement,
the Agent will be entitled to compensation of up to 2.0% of the gross proceeds of all Offered Securities sold through it as the
Company’s agent.
The Offered Securities sold pursuant to
the Sales Agreement will be issued pursuant to a prospectus dated September 30, 2019, as supplemented by a prospectus supplement
dated December 5, 2019, in each case filed with the Securities and Exchange Commission (the “Commission”) pursuant
to the Company’s effective Registration Statement on Form S-3 (File No. 333-233907) (the “Registration Statement”),
which was declared effective by the Securities and Exchange Commission on September 30, 2019.
The 7.25% 2027 Notes, 7.50% 2027 Notes,
7.375% 2023 Notes and 6.875% 2023 Notes have been and are issued pursuant to the terms and conditions of an Indenture entered into
by and between the Company and U.S. Bank National Association, as trustee (the “U.S. Bank Trustee”), dated as of November
2, 2016 (the “Base Indenture”), as supplemented by the First Supplemental Indenture dated as of November 2, 2016 (the
“First Supplemental Indenture”), the Second Supplemental Indenture dated as of May 31, 2017 (the “Second Supplemental
Indenture”), the Third Supplemental Indenture dated as of December 13, 2017 (the “Third Supplemental Indenture”),
the Fourth Supplemental Indenture dated as of May 17, 2018 (the “Fourth Supplemental Indenture”) and the Fifth Supplemental
Indenture dated as of September 11, 2018 (the “Fifth Supplemental Indenture” and, together with the Base Indenture,
First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture and Fourth Supplemental Indenture, the
“2016 Indenture”). The 2024 Notes and 2026 Notes have been and are issued pursuant to the terms and conditions of an
Indenture entered into by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “BNYM
Trustee”), dated as of May 7, 2019 (the “BNYM Base Indenture”), as supplemented by the First Supplemental Indenture
dated as of May 7, 2019 (the “BNYM First Supplemental Indenture”) and the Second Supplemental Indenture dated as of
September 23, 2019 (the “BNYM Second Supplemental Indenture” and, together with the BNYM Base Indenture and BNYM First
Supplemental Indenture, the “2019 Indenture” and, together with the 2016 Indenture, the “Indentures”).
The Series A Preferred Stock is being issued
pursuant to the certificate of designation that sets forth the terms of a series of preferred stock consisting of up to 10,000
shares, designated 6.875% Series A Cumulative Perpetual Preferred Stock.
The 7.375% 2023 Notes, 6.875% 2023 Notes,
2024 Notes, 2026 Notes, 7.50% 2027 Notes and 7.25% 2027 Notes are listed on NASDAQ under the symbols “RILYH,” “RILYI,”
“RILYO,” “RILYN,” “RILYZ” and “RILYG,” respectively. The Common Stock is listed
on NASDAQ under the symbol “RILY” and the Depositary Shares are listed on NASDAQ under the symbol “RILYP.”
The foregoing description of the Sales
Agreement is not complete and is qualified in its entirety by reference to the entire Sales Agreement, a copy of which is attached
hereto as Exhibit 1.1, and incorporated herein by reference.
The foregoing description of the Notes
does not purport to be complete and is qualified in its entirety by reference to the full text of the form of the 2026 Notes, 2024
Notes, 6.875% 2023 Notes, 7.375% 2023 Notes, 7.25% 2027 Notes and 7.50% 2027 Notes, included as Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed on filed on September 23, 2019, Item 1.01 to the Company’s Current Report filed on May 7,
2019, Item 1.01 to the Company’s Current Report filed on September 11, 2018, Item 1.01 to the Company’s Current Report
filed on May 17, 2018, Item 1.01 to the Company’s Current Report filed on December 13, 2017 and Item 1.01 to the Company’s
Current Report filed on May 31, 2017, and incorporated by reference herein and into the Registration Statement.
Attached as Exhibit 5.1 to this Current
Report and incorporated herein by reference is a copy of the opinion of The NBD Group, Inc. relating to the validity of the Notes
issuable under the Sales Agreement (the “Legal Opinion”). The Legal Opinion is also filed with reference to, and is
hereby incorporated by reference into, the Registration Statement.