Siebert Financial Corp

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, 2021

☐	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.)
535 Fifth Avenue, 4^th Floor, New York, NY 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 644-2400
(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, 2021, there were 30,953,710 shares of the registrant’s common stock.

SIEBERT FINANCIAL CORP.

INDEX


PART I - FINANCIAL INFORMATION	2
ITEM 1. FINANCIAL STATEMENTS	2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4. CONTROLS AND PROCEDURES	37
PART II - OTHER INFORMATION	38
ITEM 1. LEGAL PROCEEDINGS	38
ITEM 1A. RISK FACTORS	38
ITEM 6. EXHIBITS	39
SIGNATURES	40

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., and its subsidiaries collectively, unless the context otherwise requires.

The statements contained throughout this Report, including any documents incorporated by reference, 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 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, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other 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 under Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”) as well as in our filings with the 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. 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.

-1-

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	September 30, 2021 (unaudited)		December 31, 2020
ASSETS

Current assets
Cash and cash equivalents	$	4,260,000	$	3,632,000
Cash and securities segregated for regulatory purposes		327,367,000		324,924,000
Receivables from customers		86,913,000		95,358,000
Receivables from non-customers		25,000		—
Receivables from broker-dealers and clearing organizations		7,550,000		15,815,000
Other receivables		2,759,000		1,692,000
Prepaid service contract - current		709,000		809,000
Prepaid expenses and other assets		1,518,000		2,095,000
Securities borrowed		791,349,000		905,785,000
Securities owned, at fair value		4,016,000		2,623,000
Total Current assets		1,226,466,000		1,352,733,000

Deposits with broker-dealers and clearing organizations		8,327,000		7,209,000
Prepaid service contract – non-current		473,000		1,004,000
Furniture, equipment and leasehold improvements, net		724,000		762,000
Software, net		845,000		1,334,000
Lease right-of-use assets		3,002,000		2,290,000
Investments, cost		850,000		—
Deferred tax assets		4,528,000		4,857,000
Intangible assets, net		—		809,000
Goodwill		1,989,000		1,989,000
Total Assets	$	1,247,204,000	$	1,372,987,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Current liabilities
Payables to customers	$	373,843,000	$	380,524,000
Payables to non-customers		16,211,000		11,570,000
Drafts payable		1,060,000		4,021,000
Payables to broker-dealers and clearing organizations		3,132,000		1,810,000
Accounts payable and accrued liabilities		4,118,000		3,777,000
Securities loaned		789,836,000		920,811,000
Securities sold, not yet purchased, at fair value		27,000		21,000
Taxes payable		1,280,000		—
Current portion of notes payable - related party		2,000,000		5,200,000
Current portion of lease liabilities		1,348,000		1,314,000
Current portion of long-term debt		998,000		998,000
Current portion of deferred contract incentive		750,000		—
Total Current liabilities		1,194,603,000		1,330,046,000

Notes payable - related party, less current portion		3,000,000		—
Lease liabilities, less current portion		1,944,000		1,298,000
Long-term debt, less current portion		2,909,000		3,657,000
Deferred contract incentive, less current portion		2,125,000		—
Total Liabilities		1,204,581,000		1,335,001,000

Commitments and Contingencies
Stockholders’ equity
Common stock, $.01 par value; 100 million shares authorized; 30,953,710 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		309,000		309,000
Additional paid-in capital		21,831,000		21,768,000
Retained earnings		20,483,000		15,909,000
Total Stockholders’ equity		42,623,000		37,986,000

Total Liabilities and stockholders' equity	$	1,247,204,000	$	1,372,987,000

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

-2-

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue
Commissions and fees	$	4,019,000	$	4,679,000	$	15,352,000	$	15,149,000
Interest, marketing and distribution fees		3,435,000		3,226,000		10,517,000		10,885,000
Principal transactions		3,924,000		2,342,000		12,279,000		8,126,000
Market making		1,514,000		423,000		4,886,000		1,508,000
Stock borrow / stock loan		3,465,000		1,267,000		7,552,000		2,482,000
Advisory fees		441,000		305,000		1,200,000		810,000
Other income		253,000		333,000		982,000		1,035,000
Total Revenue		17,051,000		12,575,000		52,768,000		39,995,000

Expenses
Employee compensation and benefits		9,294,000		6,584,000		27,205,000		20,489,000
Clearing fees, including execution costs		986,000		1,270,000		4,128,000		3,907,000

SEC Form 10-Q filed by Siebert Financial Corp.