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FINANCE | Investment Banking
brileyfin.com/capabilities/investment-banking-and-capital-markets

Investments

6

Partners & Customers

3

About B. Riley Securities

B. Riley Securities is an independent investment bank which provides a full array of corporate finance, research, sales, trading, and otcqx dad services to corporate, institutional, and high net worth individual clients. Investment banking services include merger and acquisition advisory to public and private middle-market companies, initial and secondary public offerings, and institutional private placements. Its Corporate Governance Advisory Services Group is engaged by both companies and investors to help maximize value for shareholders.

Headquarters Location

11100 Santa Monica Blvd Suite 800

Los Angeles, California, 90025,

United States

310-966-1444

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Latest B. Riley Securities News

SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Applied Digital Corporation of Class Action Lawsuit and Upcoming Deadline - APLD

Sep 24, 2023

New York, New York--(Newsfile Corp. - September 23, 2023) - Pomerantz LLP announces that a class action lawsuit has been filed against Applied Digital Corporation ("Applied Digital" or the "Company") (NASDAQ: APLD) and certain officers. The class action, filed in the United States District Court for the Northern District of Texas, and docketed under 23-cv-01805, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Applied Digital securities between April 13, 2022 and July 26, 2023, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. If you are a shareholder who purchased or otherwise acquired Applied Digital securities during the Class Period, you have until October 11, 2023 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com . To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased. Applied Digital, originally known as Applied Blockchain, designs, develops, and operates datacenters in North America, and provides artificial intelligence ("AI") cloud services, computing datacenter hosting, and crypto datacenter hosting services. In April 2022, Applied Digital conducted its initial public offering ("IPO"), issuing 8 million shares of common stock priced at $5.00 per share for a total of approximately $40 million in proceeds. The primary underwriter of the IPO was B. Riley Securities, Inc. ("B. Riley Securities"), an investment bank and subsidiary of the diversified financial services platform B. Riley Financial, Inc. ("B. Riley Financial"). On April 13, 2022, pursuant to the offering documents issued in connection with the IPO (the "Offering Documents"), Applied Digital's securities began trading on the Nasdaq Global Select Market ("NASDAQ"). The Offering Documents described several close connections between Applied Digital and B. Riley. For example, in the "conflicts of interest" section of the IPO Prospectus, Applied Digital stated that, in August 2021, the Company's Chief Executive Officer ("CEO"), Defendant Wesley Cummins ("Cummins"), sold a majority interest in a registered investment adviser controlled by Cummins to B. Riley Financial, and thereafter became President of B. Riley Asset Management. At the time of the IPO, Cummins also served as the CEO and President of B. Riley Capital Management, LLC. Further, the IPO Prospectus stated that two members of the Board, Chuck Hastings ("Hastings") and Virginia Moore ("Moore"), maintained similarly close connections to B. Riley. Specifically, at the time of the IPO, Hastings served as the CEO of B. Riley Wealth Management, Inc. and Moore was married to the CEO of B. Riley Securities. As a company publicly traded on the NASDAQ, Applied Digital is required to comply with Listing Rule 5605(b)(2), which states that a majority of the Company's board of directors (the "Board") must be comprised of independent directors. Nasdaq Listing Rule 5606(a)(2) defines an independent director as "a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director." Notwithstanding the close ties between Applied Digital and B. Riley, the prospectus issued in connection with the IPO (the "IPO Prospectus") nonetheless assured investors that Applied Digital had "structured [its] Board composition and corporate governance in order to meet the requirements of the [NASDAQ]". On May 15, 2023, Applied Digital announced that it was launching cloud service to "[e]mpower [a]rtificial [i]ntelligence [a]pplications". Eight days later, on May 23, 2023, Applied Digital entered into a loan and security agreement with B. Riley Commercial Capital, LLC and B. Riley Securities. The agreement, the purpose of which Applied Digital claimed was to supply "additional liquidity to fund the buildout of the Company's recently announced AI cloud platform and datacenters by the Company," provided for a term loan in the principal amount of up to $50 million, with an interest rate of 9.00% per annum, and a maturity date of May 23, 2025. However, Applied Digital repaid the total balance of the loan nearly two years ahead of its contractual maturity, a timeframe that corresponded with B. Riley's own efforts to finance its recent acquisition of the holding company Franchise Group, Inc. The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Applied Digital had overstated the profitability of its datacenter hosting business and its ability to successfully transition into a low-cost AI Cloud services provider; (ii) Applied Digital's Board of Directors was not independent within the meaning of NASDAQ listing rules; (iii) accordingly, Applied Digital had overstated the efficacy of its business model and failed to maintain proper corporate governance standards; (iv) the foregoing, once revealed, was likely to subject the Company to significant financial and/or reputational harm; and (v) as a result, the Company's public statements were materially false and misleading at all relevant times. In July 2023, market analysts began scrutinizing Applied Digital's business model as well as assembling the various connections between Applied Digital and B. Riley into a cogent picture. First, on July 6, 2023, market analysts Wolfpack Research ("Wolfpack") and The Bear Cave ("Bear Cave") published short reports on Applied Digital. The Wolfpack report raised questions about the viability of the Company's business model, stating, for example, that the Company "pumped up its stock in May by claiming to pivot from a floundering business hosting bitcoin miners, to becoming a low-cost AI Cloud service provider," and "[t]he explosion of interest in AI after the emergence of Chat GPT has predictably attracted the worst promoters []to peddle fake AI wares to credulous investors, and our analysis indicates that APLD is one of these grifters because it is not an AI company[.]" The Bear Cave report, for its part, detailed Applied Digital's problematic corporate history, alleging that "Applied Digital relies on puffery over substance and is a perfect case study on our market's bizarre underbelly of reverse mergers, microcaps, and shell companies." Following publication of the Wolfpack and Bear Cave short reports, Applied Digital's stock price fell $1.27 per share, or 14.16%, to close at $7.70 per share on July 6, 2023. Finally, on July 26, 2023, The Friendly Bear published a short report on Applied Digital. The Friendly Bear report expressed the view that B. Riley "is controlling managerial decisions at Applied Digital to the detriment of Applied Digital shareholders"; that Applied Digital's board does not "meet[] the independence requirements under Nasdaq rules and . . . is essentially controlled by B. Riley." The Friendly Bear report also alleged that clear conflicts of interest undermined the Company's purported investigation into sexual harassment claims made against Defendant Cummins the previous month, noting that the manner in which the claims were summarily dismissed by Applied Digital's Audit Committee could subject Applied Digital to "significant legal blowback." Following publication of the Friendly Bear Report, Applied Digital's stock price fell $0.60 per share, or 6%, over the following two trading sessions, to close at $9.40 per share on July 28, 2023. Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com . CONTACT:

B. Riley Securities Investments

6 Investments

B. Riley Securities has made 6 investments. Their latest investment was in Lilium as part of their PIPE - IV on July 7, 2023.

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B. Riley Securities Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

7/18/2023

PIPE - IV

Lilium

$42M

No

3

12/16/2022

Corporate Minority - P2P

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$99M

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10

11/23/2022

PIPE - II

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$99M

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10

11/16/2020

PIPE

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$99M

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10

1/23/2019

Corporate Minority - P2P

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$99M

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10

Date

7/18/2023

12/16/2022

11/23/2022

11/16/2020

1/23/2019

Round

PIPE - IV

Corporate Minority - P2P

PIPE - II

PIPE

Corporate Minority - P2P

Company

Lilium

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Amount

$42M

$99M

$99M

$99M

$99M

New?

No

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Co-Investors

Sources

3

10

10

10

10

B. Riley Securities Acquisitions

4 Acquisitions

B. Riley Securities acquired 4 companies. Their latest acquisition was MLV & Co. Financial on September 01, 2015.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

9/1/2015

$99M

Acquired

1

5/8/2015

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$99M

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10

12/18/2012

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$99M

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10

2/19/2007

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$99M

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0

Date

9/1/2015

5/8/2015

12/18/2012

2/19/2007

Investment Stage

Companies

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Valuation

$99M

$99M

$99M

$99M

Total Funding

Note

Acquired

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Sources

1

10

10

0

B. Riley Securities Partners & Customers

3 Partners and customers

B. Riley Securities has 3 strategic partners and customers. B. Riley Securities recently partnered with iMedia Brands on September 9, 2022.

Date

Type

Business Partner

Country

News Snippet

Sources

9/12/2022

Client

United States

1

11/17/2021

Partner

United States

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10

7/8/2019

Client

United States

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10

Date

9/12/2022

11/17/2021

7/8/2019

Type

Client

Partner

Client

Business Partner

Country

United States

United States

United States

News Snippet

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Sources

1

10

10

B. Riley Securities Team

22 Team Members

B. Riley Securities has 22 team members, including current Chief Executive Officer, Bryant Riley.

Name

Work History

Title

Status

Bryant Riley

Chief Executive Officer

Current

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Name

Bryant Riley

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Work History

Title

Chief Executive Officer

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Status

Current

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