UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________to___________

Commission file number 0-5703

Siebert Financial Corp.

(Exact Name of Registrant as Specified in its Charter)

New York		11-1796714
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

653 Collins Avenue, Miami Beach, FL 33139

(Address of Principal Executive Offices) (Zip Code)

(310) 385-1861

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock - $0.01 par value		SIEB		The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 12, 2024, there were 41,120,936 issued and 40,120,936 shares outstanding of the registrant’s common stock.

SIEBERT FINANCIAL CORP.

INDEX

PART I - FINANCIAL INFORMATION		1

ITEM 1. FINANCIAL STATEMENTS		1

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION		1

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		2

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY		3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		4

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		5

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		29

ITEM 4. CONTROLS AND PROCEDURES		30

PART II - OTHER INFORMATION		31

ITEM 1. LEGAL PROCEEDINGS		31

ITEM 1A. RISK FACTORS		31

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		31

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		31

ITEM 4. MINE SAFETY DISCLOSURES		31

ITEM 5. OTHER INFORMATION		31

ITEM 6. EXHIBITS		32

SIGNATURES		33

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Forward-Looking Statements

For purposes of this Quarterly Report on Form 10-Q (“Report”), the terms “Siebert,” “Company,” “we,” “us” and “our” refer to Siebert Financial Corp., its wholly-owned and majority-owned subsidiaries collectively, unless the context otherwise requires.

The statements contained throughout this Report that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear throughout this Report, including in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect our beliefs, objectives, and expectations as of the date hereof, are based on the best judgement of management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including the following: economic, social and political conditions, global economic downturns resulting from extraordinary events; securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in Part I, Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, (“2023 Form 10-K”), and our other filings with the Securities and Exchange Commission (“SEC”).

We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this Report. You should not place undue reliance on these forward-looking statements. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	September 30, 2024 (unaudited)			December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	4,435,000		$	5,735,000
Cash and securities segregated for regulatory purposes; (Cash of $129.6 million, securities with a fair value of $87.8 million as of September 30, 2024; Cash of $158.8 million, securities with a fair value of $115.5 million as of December 31, 2023)		217,429,000			274,317,000
Receivables from customers		78,206,000			72,823,000
Receivables from broker-dealers and clearing organizations		4,051,000			3,863,000
Receivables from non-customers		471,000			241,000
Other receivables		4,062,000			2,424,000
Prepaid expenses and other assets		1,748,000			1,700,000
Securities borrowed		222,584,000			394,709,000
Securities owned, at fair value		16,938,000			18,038,000
Total Current assets		549,924,000			773,850,000

Deposits with broker-dealers and clearing organizations		6,047,000			7,885,000
Property, office facilities, and equipment, net		10,130,000			9,404,000
Software, net		4,241,000			1,432,000
Other intangible assets, net		778,000			—
Lease right-of-use assets		2,175,000			2,736,000
Deferred tax assets		3,542,000			4,504,000
Goodwill		2,319,000			1,989,000
Total Assets	$	579,156,000		$	801,800,000

LIABILITIES AND EQUITY
Liabilities
Current liabilities
Payables to customers	$	238,754,000		$	289,777,000
Payables to non-customers		3,630,000			713,000
Drafts payable		2,133,000			1,726,000
Payables to broker-dealers and clearing organizations		1,111,000			481,000
Accounts payable and accrued liabilities		5,157,000			3,639,000
Taxes payable		2,179,000			2,313,000
Securities loaned		232,524,000			419,433,000
Securities sold, not yet purchased, at fair value		6,000			2,000
Current portion of lease liabilities		751,000			759,000
Current portion of long-term debt		87,000			84,000
Current portion of deferred contract incentive		625,000			808,000
Current portion of contract termination liability		1,782,000			1,898,000
Total Current liabilities		488,739,000			721,633,000

Lease liabilities, less current portion		1,690,000			2,227,000
Long-term debt, less current portion		4,162,000			4,229,000
Deferred contract incentive, less current portion		—			438,000
Contract termination liability, less current portion		1,242,000			2,564,000
Total Liabilities		495,833,000			731,091,000

Commitments and Contingencies (see Note 19)
Equity
Stockholders’ equity
Common stock, $.01 par value; 100,000,000 shares authorized; 41,120,936 shares issued and 40,120,936 shares outstanding as of September 30, 2024, respectively. 40,580,936 shares issued and 39,580,936 shares outstanding as of December 31, 2023, respectively.		412,000			406,000
Treasury stock, at cost; 1,000,000 shares held as of both September 30, 2024 and December 31, 2023		(2,510,000	)		(2,510,000	)
Additional paid-in capital		46,056,000			45,016,000
Retained earnings		38,362,000			26,808,000
Total Stockholders’ equity		82,320,000			69,720,000
Noncontrolling interests		1,003,000			989,000
Total Equity		83,323,000			70,709,000
Total Liabilities and Equity	$	579,156,000		$	801,800,000

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

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SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023			2024		2023
Revenue
Commissions and fees	$	2,270,000	$	1,903,000		$	7,173,000	$	5,607,000
Interest, marketing and distribution fees		8,350,000		7,194,000			24,948,000		21,583,000
Principal transactions and proprietary trading		4,197,000		3,753,000			11,277,000		9,207,000
Market making		597,000		223,000			1,706,000		836,000
Stock borrow / stock loan		5,784,000		4,008,000			14,578,000		11,963,000
Advisory fees		629,000		506,000			1,670,000		1,421,000
Other income		733,000		463,000			2,527,000		1,195,000
Total Revenue		22,560,000		18,050,000			63,879,000		51,812,000

Expenses
Employee compensation and benefits		11,886,000		8,723,000			32,569,000		23,770,000
Clearing fees, including execution costs		345,000		581,000			1,011,000		1,265,000
Technology and communications		1,147,000		827,000			2,903,000		2,409,000
Other general and administrative		1,070,000		1,108,000			3,169,000		3,320,000
Data processing		894,000		725,000			2,377,000		2,317,000
Rent and occupancy		365,000		467,000			1,240,000		1,436,000
Professional fees		1,464,000		979,000			3,741,000		3,060,000
Depreciation and amortization		350,000		265,000			941,000		716,000
Interest expense		72,000		40,000			183,000		222,000
Advertising and promotion		128,000		62,000			225,000		52,000
Total Expenses		17,721,000		13,777,000			48,359,000		38,567,000

Operating income		4,839,000		4,273,000			15,520,000		13,245,000

Impairment of investments		—		—			—		(1,035,000	)
Earnings of equity method investment in related party		—		—			—		111,000
Non-operating loss		—		—			—		(924,000	)

Income before provision for income taxes		4,839,000		4,273,000			15,520,000		12,321,000
Provision for income taxes		1,005,000		1,516,000			3,952,000		3,621,000
Net income		3,834,000		2,757,000			11,568,000		8,700,000
Less net income (loss) attributable to noncontrolling interests		8,000		(4,000	)		14,000		40,000
Net income available to common stockholders	$	3,826,000	$	2,761,000		$	11,554,000	$	8,660,000

Net income available to common stockholders per share of common stock
Basic and diluted	$	0.10	$	0.07		$	0.29	$	0.24

Weighted average shares outstanding
Basic and diluted		40,022,458		39,678,762			39,894,622		36,224,313

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

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SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited)

	Common Stock				Treasury Stock
	Number of Shares Issued		$.01 Par Value		Number of Shares		Amount			Additional Paid-In Capital		Retained Earnings		Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
Balance – January 1, 2023		32,505,329	$	325,000		—	$	—		$	29,642,000	$	18,982,000	$	48,949,000		$	971,000		$	49,920,000
Net income		—		—		—		—			—		3,196,000		3,196,000			19,000			3,215,000
Balance – March 31, 2023		32,505,329	$	325,000		—	$	—		$	29,642,000	$	22,178,000	$	52,145,000		$	990,000		$	53,135,000
Kakaopay transaction, net of issuance cost		8,075,607		81,000		—		—			15,374,000		—		15,455,000			—			15,455,000
Net income		—		—		—		—			—		2,703,000		2,703,000			25,000			2,728,000
Balance – June 30, 2023		40,580,936	$	406,000		—	$	—		$	45,016,000	$	24,881,000	$	70,303,000		$	1,015,000		$	71,318,000
Reacquisition of shares outstanding		—		—		1,000,000		(2,510,000	)		—		—		(2,510,000	)		—			(2,510,000	)
Net income (loss)		—		—		—		—			—		2,761,000		2,761,000			(4,000	)		2,757,000
Balance – September 30, 2023		40,580,936	$	406,000		1,000,000	$	(2,510,000	)	$	45,016,000	$	27,642,000	$	70,554,000		$	1,011,000		$	71,565,000

	Common Stock				Treasury Stock
	Number of Shares Issued		$.01 Par Value		Number of Shares		Amount			Additional Paid-In Capital		Retained Earnings		Total Stockholders’ Equity		Noncontrolling Interest			Total Equity
Balance – January 1, 2024		40,580,936	$	406,000		1,000,000	$	(2,510,000	)	$	45,016,000	$	26,808,000	$	69,720,000	$	989,000		$	70,709,000
Transaction with J2 Financial		200,000		2,000		—		—			348,000		—		350,000		—			350,000
Share-based compensation		50,000		1,000		—		—			84,000		—		85,000		—			85,000
Net income (loss)		—		—		—		—			—		3,688,000		3,688,000		(1,000	)		3,687,000
Balance – March 31, 2024		40,830,936	$	409,000		1,000,000	$	(2,510,000	)	$	45,448,000	$	30,496,000	$	73,843,000	$	988,000		$	74,831,000
Share-based compensation		120,000		1,000		—		—			299,000		—		300,000		—			300,000
Net income		—		—		—		—			—		4,040,000		4,040,000		7,000			4,047,000
Balance – June 30, 2024		40,950,936	$	410,000		1,000,000	$	(2,510,000	)	$	45,747,000	$	34,536,000	$	78,183,000	$	995,000		$	79,178,000
Share-based compensation		170,000		2,000		—		—			309,000		—		311,000		—			311,000
Net income		—		—		—		—			—		3,826,000		3,826,000		8,000			3,834,000
Balance – September 30 2024		41,120,936	$	412,000		1,000,000	$	(2,510,000	)	$	46,056,000	$	38,362,000	$	82,320,000	$	1,003,000		$	83,323,000

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

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SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended September 30,
	2024			2023
Cash Flows From Operating Activities
Net income	$	11,568,000		$	8,700,000
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income tax expense		962,000			893,000
Depreciation and amortization		941,000			716,000
Earnings of equity method investment in related party		—			(111,000	)
Share-based compensation		460,000			—
Impairment of investments		—			1,035,000
Interest related to contract termination liability payment		62,000			—

Changes in
Receivables from customers		(5,383,000	)		(19,704,000	)
Receivables from non-customers		(230,000	)		70,000
Receivables from and deposits with broker-dealers and clearing organizations		1,650,000			561,000
Securities borrowed		172,125,000			(68,015,000	)
Securities owned, at fair value		1,100,000			(15,483,000	)
Prepaid expenses and other assets		(1,670,000	)		(190,000	)
Payables to customers		(51,023,000	)		(51,170,000	)
Payables to non-customers		2,917,000			(10,515,000	)
Drafts payable		407,000			(1,368,000	)
Payables to broker-dealers and clearing organizations		630,000			2,786,000
Accounts payable and accrued liabilities		1,518,000			1,594,000
Securities loaned		(186,909,000	)		81,215,000
Securities sold, not yet purchased, at fair value		4,000			(1,000	)
Net lease liabilities		16,000			(4,000	)
Taxes payable		(134,000	)		1,444,000
Deferred contract incentive		(621,000	)		(638,000	)
Trading platform implementation		—			(776,000	)
Contract termination liability payment		(1,500,000	)		—
Net cash used in operating activities		(53,110,000	)		(68,961,000	)

Cash Flows From Investing Activities
Purchase of office facilities and equipment		(68,000	)		(191,000	)
Purchase of software		(2,548,000	)		(246,000	)
Additions to property, office facilities, and equipment		(1,240,000	)		(1,190,000	)
Transaction with J2 Financial		(35,000	)		—
Cash paid in a business acquisition, net of cash and cash equivalents acquired		(1,123,000	)		—
Net cash used in investing activities		(5,014,000	)		(1,627,000	)

Cash Flows From Financing Activities
Kakaopay issuance cost		—			(1,589,000	)
Proceeds received from shares issued for Kakaopay transaction		—			17,363,000
Repayments of long-term debt		(64,000	)		(2,714,000	)
Net cash (used in) / provided by financing activities		(64,000	)		13,060,000

Net change in cash and cash equivalents, and cash and securities segregated for regulatory purposes		(58,188,000	)		(57,528,000	)
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of period		280,052,000			299,838,000
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period	$	221,864,000		$	242,310,000

Reconciliation of cash, cash equivalents, and cash and securities segregated for regulatory purposes
Cash and cash equivalents - end of period	$	4,435,000		$	4,932,000
Cash and securities segregated for regulatory purposes - end of period		217,429,000			237,378,000
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period	$	221,864,000		$	242,310,000

Supplemental cash flow information
Cash paid during the period for income taxes	$	3,125,000		$	1,284,000
Cash paid during the period for interest	$	121,000		$	222,000

Non-cash investing and financing activities
Kakaopay issuance cost (1)	$	—		$	318,000
Transaction with J2 Financial (2)	$	350,000		$	—
Share-based compensation (3)	$	236,000		$	—
Treasury stock (4)	$	—		$	(2,500,000	)

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

(1)

Refer to Note 6 – Kakaopay Transaction for further detail.

(2)

Refer to Note 10 – Software, net for further detail.

(3)

Refer to Note 20 – Employee Benefit Plans for further detail.

(4)

Refer to Note 4 – Transaction with Tigress for further detail.

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SIEBERT FINANCIAL CORP. & SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Basis of Presentation

Organization

Siebert Financial Corp., a New York corporation, incorporated in 1934, is a holding company that conducts the following lines of business through its wholly-owned and majority-owned subsidiaries:

●

Muriel Siebert & Co., LLC (“MSCO”) provides retail brokerage services. MSCO is a Delaware corporation and broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the Exchange Act and the Commodity Exchange Act of 1936, and member of the Financial Industry Regulatory Authority (“FINRA”), the New York Stock Exchange (“NYSE”), the Securities Investor Protection Corporation (“SIPC”), and the National Futures Association (“NFA”).

●

Siebert AdvisorNXT, LLC (“SNXT”) provides investment advisory services. SNXT is a New York corporation registered with the SEC as a Registered Investment Advisor (“RIA”) under the Investment Advisers Act of 1940.

●

Park Wilshire Companies, Inc. (“PW”) provides insurance services. PW is a Texas corporation and licensed insurance agency.

●

Siebert Technologies, LLC (“STCH”) provides technology development. STCH is a Nevada limited liability company.

●

RISE Financial Services, LLC (“RISE”) is a Delaware limited liability company and a broker-dealer registered with the SEC and NFA.

●

Gebbia Entertainment, LLC (“GE”) is a Florida limited liability company and provides media entertainment services.

●

StockCross Digital Solutions, Ltd. (“STXD”) is an inactive subsidiary headquartered in Bermuda.

For purposes of this Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, SNXT, PW, STCH, RISE, GE, and STXD collectively, unless the context otherwise requires.

On August 12, 2024, the Company entered into a Membership Interest Purchase Agreement with GE, whereby the Company purchased 100% of GE from related parties. Refer to Note 3 – Business Combinations for more detail.

The Company is headquartered in Miami Beach, FL with primary operations in Florida, New York, and California. The Company has 10 branch offices throughout the U.S. and clients around the world. The Company’s SEC filings are available through the Company’s website at www.siebert.com, where investors can obtain copies of the Company’s public filings free of charge. The Company’s common stock, par value $.01 per share, trades on the Nasdaq Capital Market under the symbol “SIEB.”

The Company primarily operates in the securities brokerage and asset management industry and has no other reportable segments. All of the Company’s revenues for the three and nine months ended September 30, 2024 and 2023 were derived from its operations in the U.S.

The Company has evaluated the impact of its recent acquisition of GE on its consolidated financial statements and has determined that the acquisition is immaterial. As of September 30, 2024, the Company operates as a single reportable segment based on the factors related to management’s decision-making framework as well as management evaluating performance and allocating resources based on assessments of the Company from a consolidated perspective. Management will continue to monitor the financial significance of the GE acquisition and may report additional segments in accordance with ASC 280 – Segment Reporting.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (“financial statements”) of the Company have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes.

In the opinion of management, the financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s 2023 Form 10-K.

Reclassification

Certain amounts for the three and nine months ended September 30, 2023 and certain cash flows within the Investing Activities section have been reclassified to conform to the presentation of the current period. The reclassification has not materially impacted the Company’s financial statements, and did not result in a change in total revenue, net income or cash flows from operations or investing activities for the periods presented.

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Principles of Consolidation

The financial statements include the accounts of Siebert and its wholly-owned and majority-owned consolidated subsidiaries. Upon consolidation, all intercompany balances and transactions are eliminated. The Company’s ownership in RISE was 68% as of both September 30, 2024 and December 31, 2023. Refer to Note 5 – RISE for more information.

For consolidated subsidiaries that are not wholly-owned, the third-party holdings of equity interests are referred to as noncontrolling interests. The net income or loss attributable to noncontrolling interests for such subsidiaries is presented as net income or loss attributable to noncontrolling interests in the statements of operations. The portion of total equity that is attributable to noncontrolling interests for such subsidiaries is presented as noncontrolling interests in the statements of financial condition.

For investments in entities in which the Company does not have a controlling financial interest but has significant influence over its operating and financial decisions, the Company applies the equity method of accounting with net income and losses recorded in earnings of equity method investment in related party.

Significant Accounting Policies

The Company’s significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in the Company’s 2023 Form 10-K and any updates as of September 30, 2024 are listed below.

Accounting for Acquisitions

ASC 805 is used for accounting in business acquisitions. ASC 805 requires that goodwill be recognized separately from assets acquired and liabilities assumed at their acquisition date fair values. Goodwill, as of the date of acquisition, is determined as the excess of the consideration transferred net of the acquisition date fair values of assets acquired and liabilities assumed. Fair value estimates at acquisition date may be assessed internally or externally using third parties. As part of the valuation and appraisal process, the third-party appraiser prepares a report assigning estimated acquisition date fair values to assets and liabilities. These fair value estimations are subjective and require careful consideration and sound judgment. Management reviews the third-party reports for fairness of the assigned values.

Intangible Assets, Net

Certain identifiable intangible assets the Company acquires are amortized over their estimated useful lives on a straight-line basis. Amortization expense associated with such intangible assets is included in the “Depreciation and amortization” line item on the statements of income.

The Company evaluates intangible assets for impairment on an annual basis or when events or changes indicate the carrying value may not be recoverable. The Company also evaluates the remaining useful lives of intangible assets on an annual basis or when events or changes warrants the remaining period of amortization to be revised.

2. New Accounting Standards

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this ASU to determine its impact on its disclosures.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”). The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for the Company for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company is still evaluating the presentational effect that ASU 2023-09 will have on its consolidated financial statements, but the Company expects considerable changes to its income tax footnote.

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Accounting Standards Adopted in Fiscal 2024

The Company did not adopt any new accounting standards during the three and nine months ended September 30, 2024. In addition, the Company has evaluated other recently issued accounting standards and does not believe that any of these standards will have a material impact on the Company’s financial statements and related disclosures as of September 30, 2024.

3. Business Combinations

Overview of Acquisition

On August 12, 2024, the Company entered into a Membership Interest Purchase Agreement by and among the Company, GE and members of the Gebbia family, the (“Gebbia Entertainment Purchase Agreement”), pursuant to which the Company acquired all of the outstanding equity of GE for a purchase price of $1,250,000.

Accounting for Acquisition

The acquisition will be accounted for under the acquisition method of accounting for business combinations pursuant to ASC 805 – Business Combinations which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the proposed acquisition date. ASC 802 – Fair Value Measurements, which establishes a framework for measuring fair values, defines fair value as “the price that would be received to sell an asse or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.

Allocation of Purchase Price

The Company was required to allocate the GE purchase price to tangible and identifiable intangible assets acquired based on their fair values as of August 12, 2024. The excess of the purchase price over those fair values is recorded as goodwill. The Company acquired intangible assets consisting of GE artist contracts, the fair value of which were $778,000 as of the acquisition date.

The fair value of identifiable intangible assets and goodwill was determined primarily through a Discounted Cash Flow (“DCF”) analysis, which falls under the income approach. The valuation included the projection of future cash flows from the intangible asset, discounted at a rate that reflected the company’s weighted average cost of capital and accounting for a company-specific risk premium. Additionally, a perpetuity growth rate was applied beyond the forecast period. Goodwill was calculated as the excess of the acquisition price over the fair value of separable assets, capturing anticipated synergies from the business combination.

The following table summarizes the Company’s allocation of the purchase price as of the date of acquisition:

	Estimated Fair Value
Cash and cash equivalents	$	127,000
Accounts receivable		5,000
Security deposits		10,000
Other Intangible assets, net		778,000
Total Assets acquired		920,000

Goodwill		330,000
Purchase price	$	1,250,000

Since the date of acquisition, there has been no material impact on the Company’s financial statements for both the three and nine months ended September 30, 2024.

4. Transaction with Tigress

The Company entered into agreements and subsequent terminations with Tigress Holdings, LLC (“Tigress”). Refer to Note 3 – Transactions with Tigress and Hedge Connection in the Company’s 2023 Form 10-K for more detail. Information related to transactions with Tigress that impacted the periods presented is detailed below.

During the three months ended September 30, 2024 and 2023, no earnings were recognized from the Company’s investment in Tigress. During the nine months ended September 30, 2024 and 2023, the earnings recognized from the Company’s investment in Tigress were $0 and $111,000, respectively. As of both September 30, 2024 and December 31, 2023, the Company had no interest in Tigress.

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5. RISE

As of both September 30, 2024 and December 31, 2023, the Company’s ownership in RISE was 68% and Siebert consolidated RISE under the voting interest model (“VOE model”). As of both September 30, 2024 and December 31, 2023, RISE reported assets of $1.3 million and liabilities of $0. There are no restrictions on RISE’s assets.

6. Kakaopay Transaction

On April 27, 2023, the Company entered into a Stock Purchase Agreement (the “First Tranche Stock Purchase Agreement”) with Kakaopay Corporation (“Kakaopay”), a company established under the Laws of the Republic of Korea and a fintech subsidiary of Korean-based conglomerate Kakao Corp. pursuant to which the Company agreed to issue to Kakaopay 8,075,607 shares of the Company’s common stock (the “First Tranche Shares” and, such transaction, the “First Tranche”) at a per share price of Two Dollars Fifteen Cents ($2.15), which represented 19.9% of the outstanding equity securities of the Company on a fully diluted basis (taking into account the issuance of the First Tranche Shares). The First Tranche closed on May 18, 2023.

Refer to Note 5 – Kakaopay Transaction in the Company’s 2023 Form 10-K for further detail.

7. Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations

Amounts receivable from, payables to, and deposits with broker-dealers and clearing organizations consisted of the following as of the periods indicated:

	As of September 30, 2024		As of December 31, 2023
Receivables from and deposits with broker-dealers and clearing organizations
DTCC / OCC / NSCC ⁽¹⁾	$	7,397,000	$	9,332,000
Goldman Sachs & Co. LLC (“GSCO”)		46,000		38,000
National Financial Services, LLC (“NFS”)		2,312,000		2,212,000
Securities fail-to-deliver		273,000		119,000
Globalshares		70,000		47,000
Total Receivables from and deposits with broker-dealers and clearing organizations	$	10,098,000	$	11,748,000

Payables to broker-dealers and clearing organizations
Securities fail-to-receive	$	262,000	$	399,000
Payables to broker-dealers		849,000		82,000
Total Payables to broker-dealers and clearing organizations	$	1,111,000	$	481,000

⁽¹⁾	Depository Trust & Clearing Corporation is referred to as (“DTCC”), Options Clearing Corporation is referred to as (“OCC”), and National Securities Clearing Corporation is referred to as (“NSCC”).

Under the DTCC shareholders’ agreement, MSCO is required to participate in the DTCC common stock mandatory purchase. As of September 30, 2024 and December 31, 2023, MSCO had shares of DTCC common stock valued at approximately $1,145,000 and $1,236,000, respectively, which is included within the line item “Deposits with broker-dealers and clearing organizations” on the statements of financial condition.

In September 2022, MSCO and RISE entered into a clearing agreement whereby RISE would introduce clients to MSCO. As part of the agreement, RISE deposited a clearing fund escrow deposit of $50,000 to MSCO, and had cash of approximately $1.2 million and $1.0 million in its brokerage account at MSCO as of September 30, 2024 and December 31, 2023, respectively. The resulting asset of RISE and liability of MSCO is eliminated in consolidation.

8. Fair Value Measurements

Overview

ASC 820 defines fair value, establishes a framework for measuring fair value as well as a hierarchy of fair value inputs. Refer to the below as well as Note 2 – Summary of Significant Accounting Policies in the Company’s 2023 Form 10-K for further information regarding fair value hierarchy, valuation techniques and other items related to fair value measurements.

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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present, by level within the fair value hierarchy, financial assets and liabilities, measured at fair value on a recurring basis for the periods indicated. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.

	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
Assets
Cash and securities segregated for regulatory purposes
U.S. government securities	$	87,814,000	$	—	$	—	$	87,814,000

Securities owned, at fair value
U.S. government securities	$	15,231,000	$	—	$	—	$	15,231,000
Certificates of deposit		—		113,000		—		113,000
Municipal securities		—		321,000		—		321,000
Corporate bonds		—		14,000		—		14,000
Collateralized mortgage obligations		—		1,000		—		1,000
Options		28,000		—		—		28,000
Equity securities		494,000		736,000		—		1,230,000
Total Securities owned, at fair value	$	15,753,000	$	1,185,000	$	—	$	16,938,000

Liabilities
Securities sold, not yet purchased, at fair value
Options	$	—	$	6,000	$	—	$	6,000
Total Securities sold, not yet purchased, at fair value	$	—	$	6,000	$	—	$	6,000

	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Cash and securities segregated for regulatory purposes
U.S. government securities	$	115,515,000	$	—	$	—	$	115,515,000

Securities owned, at fair value
U.S. government securities	$	17,636,000	$	—	$	—	$	17,636,000
Certificates of deposit		—		114,000		—		114,000
Corporate bonds		—		3,000		—		3,000
Options		2,000		—		—		2,000
Equity securities		146,000		137,000		—		283,000
Total Securities owned, at fair value	$	17,784,000	$	254,000	$	—	$	18,038,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	2,000	$	—	$	—	$	2,000
Total Securities sold, not yet purchased, at fair value	$	2,000	$	—	$	—	$	2,000

The Company had U.S. government securities, certificates of deposit, municipal securities, and corporate bonds with the market values and maturity dates for the periods indicated below:

	As of September 30, 2024
Maturing in 2024	$	2,988,000
Maturing in 2025		91,804,000
Maturing in 2026		8,097,000
Maturing after 2026		446,000
Accrued interest		158,000
Total Market value	$	103,493,000

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	As of December 31, 2023
Maturing in 2023	$	30,000,000
Maturing in 2024		98,931,000
Maturing in 2025		3,965,000
Maturing after 2025		115,000
Accrued interest		257,000
Total Market value	$	133,268,000

Financial Assets and Liabilities Not Carried at Fair Value

Financial assets and liabilities not measured at fair value are recorded at carrying value, which approximates fair value due to their short-term nature. The tables below represents financial instruments in which the ending balances as of September 30, 2024 and December 31, 2023 are not carried at fair value in the statements of financial condition:

	As of September 30, 2024
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets, not measured at fair value
Cash and cash equivalents	$	4,435,000	$	4,435,000	$	4,435,000	$	—	$	—
Cash – segregated for regulatory purposes		129,615,000		129,615,000		129,615,000		—		—
Securities borrowed		222,584,000		222,584,000		—		222,584,000		—
Receivables from customers		78,206,000		78,206,000		—		78,206,000		—
Receivables from non-customers		471,000		471,000		—		471,000		—
Receivables from broker-dealers and clearing organizations		4,051,000		4,051,000		—		4,051,000		—
Other receivables		4,062,000		4,062,000		—		4,062,000		—
Deposits with broker-dealers and clearing organizations		6,047,000		6,047,000		—		6,047,000		—
Total financial assets, not measured at fair value	$	449,471,000	$	449,471,000	$	134,050,000	$	315,421,000	$	—

Financial liabilities, not measured at fair value
Securities loaned	$	232,524,000	$	232,524,000	$	—	$	232,524,000	$	—
Payables to customers		238,754,000		238,754,000		—		238,754,000		—
Payables to non-customers		3,630,000		3,630,000		—		3,630,000		—
Drafts payable		2,133,000		2,133,000		—		2,133,000		—
Payables to broker-dealers and clearing organizations		1,111,000		1,111,000		—		1,111,000		—
Deferred contract incentive		625,000		625,000		—		625,000		—
Long-term debt		4,249,000		4,249,000		—		4,249,000		—
Contract termination liability		3,024,000		3,024,000		—		3,024,000		—
Total financial liabilities, not measured at fair value	$	486,050,000	$	486,050,000	$	—	$	486,050,000	$	—

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	As of December 31, 2023
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets, not measured at fair value
Cash and cash equivalents	$	5,735,000	$	5,735,000	$	5,735,000	$	—	$	—
Cash – segregated for regulatory purposes		158,802,000		158,802,000		158,802,000		—		—
Securities borrowed		394,709,000		394,709,000		—		394,709,000		—
Receivables from customers		72,823,000		72,823,000		—		72,823,000		—
Receivables from non-customers		241,000		241,000		—		241,000		—
Receivables from broker-dealers and clearing organizations		3,863,000		3,863,000		—		3,863,000		—
Other receivables		2,424,000		2,424,000		—		2,424,000		—
Deposits with broker-dealers and clearing organizations		7,885,000		7,885,000		—		7,885,000		—
Total financial assets, not measured at fair value	$	646,482,000	$	646,482,000	$	164,537,000	$	481,945,000	$	—

Financial liabilities, not measured at fair value
Securities loaned	$	419,433,000	$	419,433,000	$	—	$	419,433,000	$	—
Payables to customers		289,777,000		289,777,000		—		289,777,000		—
Payables to non-customers		713,000		713,000		—		713,000		—
Drafts payable		1,726,000		1,726,000		—		1,726,000		—
Payables to broker-dealers and clearing organizations		481,000		481,000		—		481,000		—
Deferred contract incentive		1,246,000		1,246,000		—		1,246,000		—
Long-term debt		4,313,000		4,313,000		—		4,313,000		—
Contract termination liability		4,462,000		4,462,000		—		4,462,000		—
Total financial liabilities, not measured at fair value	$	722,151,000	$	722,151,000	$	—	$	722,151,000	$	—

9. Property, Office Facilities, and Equipment, Net

Property, office facilities, and equipment consisted of the following as of the periods indicated:

	As of September 30, 2024			As of December 31, 2023
Property	$	6,815,000		$	6,815,000
Office facilities		3,963,000			2,475,000
Equipment		800,000			726,000
Total Property, office facilities, and equipment		11,578,000			10,016,000
Less accumulated depreciation		(1,448,000	)		(612,000	)
Total Property, office facilities, and equipment, net	$	10,130,000		$	9,404,000

Total depreciation expense for property, office facilities, and equipment was $222,000 and $168,000 for the three months ended September 30, 2024 and 2023, respectively. Total depreciation expense for property, office facilities, and equipment was $582,000 and $403,000 for the nine months ended September 30, 2024 and 2023, respectively.

On July 7, 2023, the Company entered into a new lease agreement for office space in the World Financial Center in New York City. Depreciation expense commenced in March 2024, when the New York office space was placed into service. The Company invested $9,000 and $818,000 in the three and nine months ended September 30, 2024 to build out the New York office space. For both the three and nine months ended September 30, 2023, the Company invested $50,000 to build out the New York office space.

In the second quarter of 2024, the Company completed the construction of its office in Omaha, Nebraska, investing $37,000 and $211,000 during the three and nine months ended September 30, 2024, respectively.

Miami Office Building

On December 30, 2021, the Company purchased an office building located at 653 Collins Ave, Miami Beach, FL (“Miami office building”). The Miami office building contains approximately 12,000 square feet of office space and serves as the headquarters of the Company.

Depreciation expense commenced in April 2023 when the Miami office building was completed and placed in service. The Company invested $113,000 and $299,000 in the three months ended September 30, 2024 and 2023, respectively, to build out the Miami office building. The Company invested $211,000 and $1,140,000 in the nine months ended September 30, 2024 and 2023, respectively, to build out the Miami office building.

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10. Software, Net

Software consisted of the following as of the periods indicated:

	As of September 30, 2024			As of December 31, 2023
Software	$	1,677,000		$	1,081,000
Retail Platform		3,469,000			635,000
Total Software		5,146,000			1,716,000
Less accumulated amortization – Software		(905,000	)		(284,000	)
Less accumulated amortization – Retail Platform		—			—
Total Software, net	$	4,241,000		$	1,432,000

The Company contracted with a technology vendor in the fourth quarter of 2023 to develop a new retail platform for the Company’s customers and integrate this platform into the Company’s operations (“Retail Platform”). The total software development expense related to this project was $3,469,000 as of September 30, 2024, all of which was capitalized. Amortization for the Retail Platform will commence once it is placed in service, which is expected to be in the second quarter of 2025.

Total amortization of software was $128,000 and $98,000 for the three months ended September 30, 2024 and 2023, respectively. Total amortization of software was $359,000 and $312,000 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company estimates the following future amortization of software assets:

Year	Amount
2024	$	114,000
2025		929,000
2026		920,000
2027		731,000
2028 and after		1,546,000
Total	$	4,240,000

Transaction with J2 Financial Technology

On January 18, 2024, STCH entered into a Purchase Agreement (the “Purchase Agreement”) with J2 Financial Technology, Inc., d/b/a “Guild”, a Delaware corporation (“J2 Financial”).

Under the Purchase Agreement, STCH purchased a mobile self-directed trading app for the total purchase price of $385,000. The purchase price consisted of $35,000 of cash and 200,000 restricted shares of the Company’s common stock (priced at the historical 30-day moving average as of January 18, 2024) worth approximately $350,000. This purchase is part of the software related to the Retail Platform and recorded in the line item “Software, net” on the statements of financial condition.

11. Leases

As of September 30, 2024, all of the Company’s leases are classified as operating and primarily consist of office space leases expiring in 2024 through 2028. The Company elected not to include short-term leases (i.e., leases with initial terms of less than twelve months), or equipment leases (deemed immaterial) on the statements of financial condition. The Company leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of operations rather than capitalizing them as lease right-of-use assets. The balance of the lease right-of-use assets and lease liabilities are displayed on the statements of financial condition and the below tables display further detail on the Company’s leases.

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On July 7, 2023, the Company entered into a new lease agreement expiring in December 2028 for office space in the World Financial Center in New York City. This office replaced the New Jersey office as one of the Company’s key operating centers and the total commitment of the lease is approximately $2.1 million.

Lease Term and Discount Rate	As of September 30, 2024			As of December 31, 2023
Weighted average remaining lease term – operating leases (in years)		3.4			3.9
Weighted average discount rate – operating leases		7.1	%		6.9	%

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	236,000	$	356,000	$	771,000	$	965,000
Short-term lease cost		75,000		67,000		296,000		346,000
Variable lease cost		54,000		44,000		173,000		125,000
Total Rent and occupancy	$	365,000	$	467,000	$	1,240,000	$	1,436,000

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	218,000	$	315,000	$	755,000	$	969,000

Lease right-of-use assets obtained in exchange for new lease liabilities
Operating leases	$	78,000	$	1,693,000	$	78,000	$	1,693,000

Lease Commitments

Future annual minimum payments for operating leases with initial terms of greater than one year as of September 30, 2024 were as follows:

Year	Amount
2024	$	209,000
2025		909,000
2026		694,000
2027		520,000
2028		443,000
Remaining balance of lease payments		2,775,000
Less: difference between undiscounted cash flows and discounted cash flows		334,000
Lease liabilities	$	2,441,000

12. Goodwill and Other Intangible Assets, Net

Goodwill

As of September 30, 2024 and December 31, 2023, the Company’s carrying amount of goodwill was $2,319,000 and $1,989,000, respectively. As of September 30, 2024, $1,989,000 of the Company’s carrying amount of goodwill came from the Company’s acquisition of RISE and $330,000 came from the Company’s acquisition of GE. As of September 30, 2024 and December 31, 2023, management concluded that there have been no impairments to the carrying value of the Company’s goodwill and no impairment charges related to goodwill were recognized during the three and nine months ended September 30, 2024 and 2023. Refer to Note 2 – Summary of Significant Accounting Policies in the Company’s 2023 Form 10-K for further information.

Other Intangible Assets, Net

As a result of the Company’s acquisition of GE, the Company acquired intangible assets consisting of GE artist contracts, the fair value of which were $778,000 as of the acquisition date. The useful life of the GE artist contracts is 5 years.

13. Long-Term Debt

Mortgage with East West Bank

Overview

On December 30, 2021, the Company purchased the Miami office building for approximately $6.8 million, and the Company entered into a mortgage with East West Bancorp, Inc. (“East West Bank”) for approximately $4 million to finance part of the purchase of the Miami office building as well as $338,000 to finance part of the build out of the Miami office building.

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The Company’s obligations under the mortgage are secured by a lien on the Miami office building and the term of the loan is ten years. The repayment schedule will utilize a 30-year amortization period, with a balloon on the remaining amount due at the end of ten years. The interest rate is 3.6% for the first 7 years, and thereafter the interest rate shall be at the prime rate as reported by the Wall Street Journal, provided that the minimum interest rate on any term loan will not be less than

SEC Form 10-Q filed by Siebert Financial Corp.