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 March 31, 2025

☐ 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 May 13, 2025, there were 41,409,936 issued and 40,409,936 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	22

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

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 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, including those resulting from extraordinary events; changes and volatility in tariffs and trade policies; 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, 2024, (“2024 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.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	March 31, 2025 (unaudited)			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	25,713,000		$	32,629,000
Cash and securities segregated for regulatory purposes; (Cash of $107.1 million, securities with a fair value of $44.4 million as of March 31, 2025; Cash of $135.8 million, securities with a fair value of $68.8 million as of December 31, 2024)		151,448,000			204,587,000
Receivables from customers		79,576,000			84,367,000
Receivables from broker-dealers and clearing organizations		4,771,000			3,920,000
Receivables from non-customers		802,000			607,000
Other receivables		2,904,000			2,744,000
Prepaid expenses and other assets		2,720,000			2,257,000
Securities borrowed		207,591,000			139,040,000
Securities owned, at fair value		29,364,000			21,385,000
Total Current assets		504,889,000			491,536,000

Deposits with broker-dealers and clearing organizations		5,599,000			4,227,000
Property, office facilities, and equipment, net		10,211,000			10,245,000
Software, net		5,651,000			4,836,000
Other intangible assets, net		648,000			697,000
Lease right-of-use assets		2,229,000			2,390,000
Deferred tax assets		2,641,000			3,418,000
Goodwill		2,319,000			2,319,000
Total Assets	$	534,187,000		$	519,668,000

LIABILITIES AND EQUITY
Liabilities
Current liabilities
Payables to customers	$	206,922,000		$	227,129,000
Payables to non-customers		2,656,000			3,297,000
Drafts payable		1,055,000			1,331,000
Payables to broker-dealers and clearing organizations		1,291,000			444,000
Accounts payable and accrued liabilities		4,810,000			5,240,000
Taxes payable		3,241,000			2,183,000
Securities loaned		210,688,000			184,962,000
Securities sold, not yet purchased, at fair value		142,000			26,000
Current portion of lease liabilities		1,092,000			886,000
Current portion of long-term debt		89,000			88,000
Current portion of deferred contract incentive		283,000			496,000
Current portion of contract termination liability		1,709,000			1,748,000
Total Current liabilities		433,978,000			427,830,000

Lease liabilities, less current portion		1,416,000			1,787,000
Long-term debt, less current portion		4,116,000			4,140,000
Contract termination liability, less current portion		405,000			819,000
Total Liabilities		439,915,000			434,576,000

Commitments and Contingencies

Equity
Stockholders’ equity
Common stock, $.01 par value; 100,000,000 shares authorized; 41,357,936 shares issued and 40,357,936 shares outstanding as of March 31, 2025, respectively. 41,120,936 shares issued and 40,120,936 shares outstanding as of December 31, 2024, respectively.		414,000			412,000
Treasury stock, at cost; 1,000,000 shares held as of both March 31, 2025 and December 31, 2024		(2,510,000	)		(2,510,000	)
Additional paid-in capital		46,642,000			46,090,000
Retained earnings		48,758,000			40,094,000
Total Stockholders’ equity		93,304,000			84,086,000
Noncontrolling interests		968,000			1,006,000
Total Equity		94,272,000			85,092,000

Total Liabilities and Equity	$	534,187,000		$	519,668,000

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 March 31,
	2025			2024
Revenue
Commissions and fees	$	2,102,000		$	2,300,000
Interest, marketing and distribution fees		6,945,000			8,763,000
Principal transactions and proprietary trading		12,961,000			3,506,000
Market making		552,000			672,000
Stock borrow / stock loan		4,837,000			4,098,000
Advisory fees		748,000			490,000
Other income		774,000			627,000
Total Revenue		28,919,000			20,456,000

Expenses
Employee compensation and benefits		11,922,000			10,376,000
Clearing fees, including execution costs		454,000			428,000
Technology and communications		1,105,000			876,000
Other general and administrative		1,509,000			1,029,000
Data processing		949,000			751,000
Rent and occupancy		467,000			497,000
Professional fees		1,359,000			1,037,000
Depreciation and amortization		415,000			255,000
Interest expense		89,000			51,000
Advertising and promotion		154,000			54,000
Total Expenses		18,423,000			15,354,000

Operating income		10,496,000			5,102,000

Income before provision for income taxes		10,496,000			5,102,000
Provision for income taxes		1,835,000			1,415,000
Net income		8,661,000			3,687,000
Less net income (loss) attributable to noncontrolling interests		(3,000	)		(1,000	)
Net income available to common stockholders	$	8,664,000		$	3,688,000

Net income available to common stockholders per share of common stock
Basic and diluted	$	0.22		$	0.09

Weighted average shares outstanding
Basic and diluted		40,192,036			39,769,398

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, 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

	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, 2025		41,120,936	$	412,000		1,000,000	$	(2,510,000	)	$	46,090,000	$	40,094,000	$	84,086,000	$	1,006,000		$	85,092,000
Share-based compensation		237,000		2,000		—		—			552,000		—		554,000		—			554,000
RISE Cash Distribution		—		—		—		—			—		—		—		(35,000	)		(35,000	)
Net income (loss)		—		—		—		—			—		8,664,000		8,664,000		(3,000	)		8,661,000
Balance – March 31, 2025		41,357,936	$	414,000		1,000,000	$	(2,510,000	)	$	46,642,000	$	48,758,000	$	93,304,000	$	968,000		$	94,272,000

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)

	Three Months Ended March 31,
	2025			2024
Cash Flows From Operating Activities
Net income	$	8,661,000		$	3,687,000
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income tax expense		777,000			384,000
Depreciation and amortization		415,000			255,000
Share-based compensation ⁽¹⁾		554,000			85,000
Interest related to contract termination liability payment		50,000			10,000

Changes in
Securities segregated for regulatory purposes	$	24,389,000		$	15,075,000
Receivables from customers		4,791,000			(1,904,000	)
Receivables from non-customers		(195,000	)		(405,000	)
Receivables from and deposits with broker-dealers and clearing organizations		(2,223,000	)		(5,458,000	)
Securities borrowed		(68,551,000	)		11,039,000
Securities owned, at fair value		(7,979,000	)		(1,232,000	)
Prepaid expenses and other assets		(623,000	)		(328,000	)
Payables to customers		(20,207,000	)		(41,438,000	)
Payables to non-customers		(641,000	)		36,000
Drafts payable		(276,000	)		108,000
Payables to broker-dealers and clearing organizations		847,000			1,522,000
Accounts payable and accrued liabilities		(430,000	)		1,227,000
Securities loaned		25,726,000			(29,959,000	)
Securities sold, not yet purchased, at fair value		116,000			(1,000	)
Net lease liabilities		(4,000	)		15,000
Taxes payable		1,058,000			1,029,000
NFS business development credits		(213,000	)		(213,000	)
Contract termination liability payment		(503,000	)		(500,000	)
Net cash used in operating activities		(34,461,000	)		(46,966,000	)

Cash Flows From Investing Activities
Purchase of office facilities and equipment		(63,000	)		(28,000	)
Purchase of software		(940,000	)		(877,000	)
Additions to property, office facilities, and equipment		(144,000	)		(821,000	)
Transaction with J2 Financial		—			(35,000	)
Net cash used in investing activities		(1,147,000	)		(1,761,000	)

Cash Flows From Financing Activities
Draws on bank loans		—			4,800,000
RISE cash distribution		(35,000	)		—
Repayments of long-term debt		(23,000	)		(21,000	)
Net cash (used in) / provided by financing activities		(58,000	)		4,779,000

Net change in cash and cash equivalents, and cash segregated for regulatory purposes		(35,666,000	)		(43,948,000	)
Cash and cash equivalents, and cash segregated for regulatory purposes - beginning of period		168,458,000			164,537,000
Cash and cash equivalents, and cash segregated for regulatory purposes - end of period	$	132,792,000		$	120,589,000

Reconciliation of cash, cash equivalents, and cash and securities segregated for regulatory purposes
Cash and cash equivalents - end of period	$	25,713,000		$	2,856,000
Cash segregated for regulatory purposes - end of period		107,079,000			117,733,000
Cash and cash equivalents, and cash segregated for regulatory purposes - end of period	$	132,792,000		$	120,589,000

Supplemental cash flow information
Cash paid during the period for income taxes	$	—		$	2,000
Cash paid during the period for interest	$	39,000		$	41,000

Non-cash investing and financing activities
Transaction with J2 Financial ⁽²⁾	$	—		$	350,000

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

⁽¹⁾

Refer to Note 18 – Employee Benefit Plans for further detail.

⁽²⁾

Refer to Note 10 – Software, Net in the Company’s 2024 10-K for further information.

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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 and investment banking services. MSCO is a Delaware corporation and broker-dealer registered with the 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.

●

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

●

Gebbia Entertainment, LLC (“GE”) is a Florida limited liability company and provides media entertainment services and serves as the in-house marketing and advertising function for Siebert.

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, STXD, and GE collectively, unless the context otherwise requires.

Effective January 1, 2024, MSCO changed its name from Muriel Siebert & Co., Inc. to Muriel Siebert & Co., LLC, and SNXT changed its name to from Siebert AdvisorNXT, Inc. to Siebert AdvisorNXT, LLC with their tax status changing from C-Corporations to LLCs under state law.

The Company is headquartered in Miami Beach, FL with primary operations in Florida, New York, and California. The Company has 12 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 engages in a single line of business as a securities broker-dealer, providing comprehensive brokerage services including custody and clearing of retail accounts, insurance and advisory services, principal transaction and proprietary trading, market making, and securities lending. The Company currently has no other reportable segments. All of the Company’s revenues for the three months ended March 31, 2025 and 2024 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 March 31, 2025, 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 the Financial Accounting Standards Board (“FASB”) ASC Topic 280 – “Improvements to Reportable Segment Disclosures” (“Topic 280”).

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 2024 Form 10-K.

- 5 -

Reclassification

Certain amounts for the three months ended March 31, 2024 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.

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 March 31, 2025 and December 31, 2024. Refer to Note 5 – RISE in the Company’s 2024 Form 10-K for further 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 2024 Form 10-K. During the three months ended March 31, 2025, there were no significant changes made to the Company’s significant accounting policies. Except as set forth below, those policies were unchanged during the three months ended March 31, 2025.

Restricted Equity Securities

During the three months ended March 31, 2025, the Company participated in a private placement and acquired restricted shares of a private U.S. company in 2025 (the “Investment in Equity Security”). These shares are subject to restrictions on transferability and did not have a readily determinable fair value at the time of acquisition.

Accordingly, the Company accounted for the investment at cost, in accordance with ASC 321-10-35-2, Investments – Equity Securities: Subsequent Measurement, using the measurement alternative under ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10).

On March 31, 2025, the issuer completed its initial public offering, and the Company’s restricted shares converted into restricted publicly traded shares as part of the IPO process. These shares remain subject to resale restrictions until such resale is registered with the SEC or an exemption from such registration requirement becomes available.

In accordance with ASC 321, once observable events indicate that fair value is readily determinable, the measurement alternative must be discontinued. As a result of the IPO, the Company began measuring the investment at fair value, with changes in fair value recognized in earnings on a recurring basis.

Additionally, the Company applied ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that contractual sale restrictions are not considered in fair value measurements under ASC 820. However, a discount for lack of marketability may still be considered if it reflects assumptions that market participants would use. In this case, the Company has not applied a discount solely for the period prior to the initial public offering, but did apply a discount subsequent to the initial public offering, including a 40% discount as of March 31, 2025 as indicated in Note 4 – Fair Value Measurement.

The investment is classified as a Level 3 asset in the fair value hierarchy due to the use of significant unobservable inputs in the valuation.

Refer to Note 4 – Fair Value Measurements for additional details.

2. New Accounting Standards

Recently Issued Accounting Standards

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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In November 2024, the FASB issued ASU “2024-03”, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”). The ASU is intended to enhance the transparency and decision usefulness of income statement expense disclosures by requiring greater disaggregation of certain expense categories. ASU 2024-03 will be effective for us for annual periods beginning after December 15, 2025, though early adoption is permitted. We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements and we anticipate the amendments will require significant changes to our expense disclosures.

Accounting Standards Adopted in Fiscal 2025

The Company did not adopt any new accounting standards during the three months ended March 31, 2025. 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 March 31, 2025.

3. 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 March 31, 2025		As of December 31, 2024
Receivables from and deposits with broker-dealers and clearing organizations
DTCC / OCC / NSCC ⁽¹⁾	$	7,647,000	$	5,777,000
Goldman Sachs & Co. LLC (“GSCO”)		53,000		50,000
National Financial Services, LLC (“NFS”)		2,482,000		2,102,000
Securities fail-to-deliver		113,000		90,000
Globalshares		75,000		68,000
Other receivables		—		60,000
Total Receivables from and deposits with broker-dealers and clearing organizations	$	10,370,000	$	8,147,000

Payables to broker-dealers and clearing organizations
Securities fail-to-receive	$	845,000	$	439,000
Payables to broker-dealers		446,000		5,000
Total Payables to broker-dealers and clearing organizations	$	1,291,000	$	444,000

⁽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 March 31, 2025 and December 31, 2024, MSCO had shares of DTCC common stock valued at approximately $1.1M 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. Refer to Note 19 – Related Party Disclosures for more detail.

4. 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 2024 Form 10-K for further information regarding fair value hierarchy, valuation techniques and other items related to fair value measurements.

- 7 -

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 March 31, 2025
	Level 1		Level 2		Level 3		Total
Assets
Cash and securities segregated for regulatory purposes
U.S. government securities	$	44,369,000	$	—	$	—	$	44,369,000

Securities owned, at fair value
U.S. government securities	$	17,271,000	$	—	$	—	$	17,271,000
Certificates of deposit		—		141,000		—		141,000
Municipal securities		—		117,000		—		117,000
Corporate bonds		—		16,000		—		16,000
Unit investment trust		—		229,000		—		229,000
Options		1,000		—		—		1,000
Equity securities		667,000		89,000		10,833,000		11,589,000
Total Securities owned, at fair value	$	17,939,000	$	592,000	$	10,833,000	$	29,364,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	78,000	$	—	$	—	$	78,000
Options		64,000		—		—		64,000
Total Securities sold, not yet purchased, at fair value	$	142,000	$	—	$	—	$	142,000

	As of December 31, 2024
		Level 1		Level 2		Level 3		Total
Assets
Cash and securities segregated for regulatory purposes
U.S. government securities	$	68,758,000	$	—	$	—	$	68,758,000

Securities owned, at fair value
U.S. government securities	$	20,086,000	$	—	$	—	$	20,086,000
Certificates of deposit		—		112,000		—		112,000
Corporate bonds		—		2,000		—		2,000
Options		58,000		—		—		58,000
Equity securities		1,055,000		72,000		—		1,127,000
Total Securities owned, at fair value	$	21,199,000	$	186,000	$	—	$	21,385,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	1,000	$	—	$	—	$	1,000
Options		25,000						25,000
Total Securities sold, not yet purchased, at fair value	$	26,000	$	—	$	—	$	26,000

- 8 -

The Company had U.S. government securities with the market values and maturity dates for the periods indicated below.

	As of March 31, 2025
Maturing in 2025	$	48,367,000
Maturing in 2026		13,063,000
Accrued interest		210,000
Total Market value	$	61,640,000

		As of December 31, 2024
Maturing in 2025	$	80,739,000
Maturing in 2026		8,019,000
Accrued interest		86,000
Total Market value	$	88,844,000

Level 3 Instrument

The Company valued the Investment in Equity Security using a Finnerty option-pricing model. A 45-day expected holding period and 120% expected volatility yielded approximately a 40% discount for a lack of marketability which reflects market-participant pricing for the typical reversion of IPOs with 500% day-one gains, meme-stock volatility premiums, and the issuer’s outstanding high-stakes litigation.

The following table provides a reconciliation of our Level 3 assets, which are valued using significant unobservable inputs. These assets are measured at fair value based on internally developed models, with adjustments reflecting market conditions and management’s best estimates. There were no transfers in or out of Level 3 assets for the three months ended March 31, 2025. The table below outlines changes in Level 3 assets for the reporting period, including purchases, sales, and unrealized gains or losses:

	As of and for the Three Months Ended March 31, 2025
Category	Opening Balance		Purchases		Sales		Transfers In / Out		Unrealized Gains / (Losses)		Closing Balance
Equity Security Investment	$	—	$	1,600,000	$	—	$	—	$	9,233,000	$	10,833,000

For the three months ended March 31, 2025, the Company recorded an unrealized gain of approximately $9.2 million in relation to the Investment in Equity Security. However, due to the volatility of the price of the shares, which has declined significantly since March 31, 2025, management is uncertain as to the total unrealized or realized gain or loss that will be recognized from the Investment in Equity Security. Solely for illustrative purposes, on May 7, 2025, the closing share price of the Investment in Equity Security fell to $25.24 per share, compared with $83.51 per share ($50.11 per share after the 40% discount) as of March 31, 2025. Had the Company sold its shares on May 7, 2025, the total gain would have been approximately $3.9 million, instead of the $9.2 million unrealized gain recognized during the three months ended March 31, 2025. Because the decline reflects conditions arising after March 31, 2025, no adjustment has been made to the accompanying financial statements. The potential change in the market value of the Investment in Equity Security may materially impact the results of future periods.

- 9 -

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 either due to their short-term nature, or in the case of long-term assets or liabilities, management has determined the difference in the carrying value and fair value is immaterial. The tables below represents financial instruments in which the ending balances as of March 31, 2025 and December 31, 2024 are not carried at fair value in the statements of financial condition:

	As of March 31, 2025
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets, not measured at fair value
Cash and cash equivalents	$	25,713,000	$	25,713,000	$	25,713,000	$	—	$	—
Cash – segregated for regulatory purposes		107,079,000		107,079,000		107,079,000		—		—
Securities borrowed		207,591,000		207,591,000		—		207,591,000		—
Receivables from customers		79,576,000		79,576,000		—		79,576,000		—
Receivables from non-customers		802,000		802,000		—		802,000		—
Receivables from broker-dealers and clearing organizations		4,771,000		4,771,000		—		4,771,000		—
Other receivables		2,904,000		2,904,000		—		2,904,000		—
Deposits with broker-dealers and clearing organizations		5,599,000		5,599,000		—		5,599,000		—
Total financial assets, not measured at fair value	$	434,035,000	$	434,035,000	$	132,792,000	$	301,243,000	$	—

Financial liabilities, not measured at fair value
Securities loaned	$	210,688,000	$	210,688,000	$	—	$	210,688,000	$	—
Payables to customers		206,922,000		206,922,000		—		206,922,000		—
Payables to non-customers		2,656,000		2,656,000		—		2,656,000		—
Drafts payable		1,055,000		1,055,000		—		1,055,000		—
Payables to broker-dealers and clearing organizations		1,291,000		1,291,000		—		1,291,000		—
Deferred contract incentive		283,000		283,000		—		283,000		—
Long-term debt		4,205,000		4,205,000		—		4,205,000		—
Contract termination liability		2,114,000		2,114,000		—		2,114,000		—
Total financial liabilities, not measured at fair value	$	429,214,000	$	429,214,000	$	—	$	429,214,000	$	—

	As of December 31, 2024
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets, not measured at fair value
Cash and cash equivalents	$	32,629,000	$	32,629,000	$	32,629,000	$	—	$	—
Cash – segregated for regulatory purposes		135,829,000		135,829,000		135,829,000		—		—
Securities borrowed		139,040,000		139,040,000		—		139,040,000		—
Receivables from customers		84,367,000		84,367,000		—		84,367,000		—
Receivables from non-customers		607,000		607,000		—		607,000		—
Receivables from broker-dealers and clearing organizations		3,920,000		3,920,000		—		3,920,000		—
Other receivables		2,744,000		2,744,000		—		2,744,000		—
Deposits with broker-dealers and clearing organizations		4,227,000		4,227,000		—		4,227,000		—
Total financial assets, not measured at fair value	$	403,363,000	$	403,363,000	$	168,458,000	$	234,905,000	$	—

Financial liabilities, not measured at fair value
Securities loaned	$	184,962,000	$	184,962,000	$	—	$	184,962,000	$	—
Payables to customers		227,129,000		227,129,000		—		227,129,000		—
Payables to non-customers		3,297,000		3,297,000		—		3,297,000		—
Drafts payable		1,331,000		1,331,000		—		1,331,000		—
Payables to broker-dealers and clearing organizations		444,000		444,000		—		444,000		—
Deferred contract incentive		496,000		496,000		—		496,000		—
Long-term debt		4,228,000		4,228,000		—		4,228,000		—
Contract termination liability		2,567,000		2,567,000		—		2,567,000		—
Total financial liabilities, not measured at fair value	$	424,454,000	$	424,454,000	$	—	$	424,454,000	$	—

- 10 -

5. Property, Office Facilities, and Equipment, Net

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

	As of March 31, 2025			As of December 31, 2024
Property	$	6,815,000		$	6,815,000
Office facilities		4,333,000			4,165,000
Equipment		984,000			945,000
Total Property, office facilities, and equipment		12,132,000			11,925,000
Less accumulated depreciation		(1,921,000	)		(1,680,000	)
Total Property, office facilities, and equipment, net	$	10,211,000		$	10,245,000

Total depreciation expense for property, office facilities, and equipment was $242,000 and $146,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company invested $99,000 to build out its office in Omaha, Nebraska, for the three months ended March 31, 2024. The Company invested $23,000 and $664,000 to build out the New York office space in the World Financial Center for the three months ended March 31, 2025 and 2024, respectively. Depreciation expense commenced in March 2024, when the New York office space was placed into service.

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.

The Company invested $120,000 and $58,000 in the three months ended March 31, 2025 and 2024, respectively, to build out the Miami office building. Depreciation expense commenced in April 2023 when the Miami office building was completed and placed in service.

6. Software, Net

Software consisted of the following as of the periods indicated:

	As of March 31, 2025			As of December 31, 2024
Software	$	1,881,000		$	1,774,000
Retail Platform		4,926,000			4,093,000
Total Software		6,807,000			5,867,000
Less accumulated amortization – Software		(1,156,000	)		(1,031,000	)
Total Software, net	$	5,651,000		$	4,836,000

The Company contracted with a technology vendor in the fourth quarter of 2023 to support the development of the Retail Platform, supplementing its internal technology resources. The total software development cost related to the Retail Platform was $4,926,000 as of March 31, 2025, 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.

- 11 -

Total amortization of software was $125,000 and $109,000 for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the Company estimates the following future amortization of software assets:

Year	Amount
2025	$	913,000
2026		1,235,000
2027		1,046,000
2028		983,000
2029 and after		1,474,000
Total	$	5,651,000

7. Leases

As of March 31, 2025, all of the Company’s leases are classified as operating and primarily consist of office space leases expiring in 2025 through 2029. 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.

Lease Term and Discount Rate

As of

March 31, 2025

As of

December 31,

2024

Weighted average remaining lease term – operating leases (in years)

3.2

3.3

Weighted average discount rate – operating leases

7.4

7.3

	Three Months Ended March 31, 2025
	2025		2024
Operating lease cost	$	270,000	$	283,000
Short-term lease cost		100,000		160,000
Variable lease cost		97,000		54,000
Total Rent and occupancy	$	467,000	$	497,000

Operating cash flows from operating leases	$	267,000	$	269,000

Operating leases	$	—	$	—

Lease Commitments

Future annual minimum payments for operating leases with initial terms of greater than one year as of March 31, 2025 were as follows:

Year	Amount
2025	$	781,000
2026		855,000
2027		613,000
2028		522,000
2029		58,000
Remaining balance of lease payments		2,829,000
Less: difference between undiscounted cash flows and discounted cash flows		321,000
Lease liabilities	$	2,508,000

- 12 -

8. Goodwill and Other Intangible Assets, Net

Goodwill

As of March 31, 2025 and December 31, 2024, the Company’s carrying amount of goodwill was both $2,319,000. As of March 31, 2025, $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 March 31, 2025, 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 months ended March 31, 2025 and 2024. Refer to Note 2 – Summary of Significant Accounting Policies in the Company’s 2024 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. Amortization commenced upon acquisition and is recognized over its estimated useful life of 4 years. Amortization expense for the intangible asset totaled $48,000 for the three months ended March 31, 2025.

As of March 31, 2025, the Company estimates the following future amortization of other intangible assets:

Year	Amount
2025	$	146,000
2026		194,000
2027		194,000
2028		114,000
Total	$	648,000

9. 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. As of March 31, 2025 and December 31, 2024, the Company’s outstanding balance of the mortgage was $4,205,000 and $4,228,000, respectively.

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 3.6%. As part of the agreement, the Company must maintain a debt service coverage ratio of 1.4 to 1. The loan is subject to a prepayment penalty over the first five years which is calculated as a percentage of the principal amount outstanding at the time of prepayment. This percentage is 5% in the first year and decreases by 1% each year thereafter, with the prepayment penalty ending after 5 years. As of March 31, 2025, the Company was in compliance with all of its covenants related to this agreement.

Remaining Payments

Future remaining annual minimum principal payments for the mortgage with East West Bank as of March 31, 2025 were as follows:

Year	Amount
2025	$	65,000
2026		91,000
2027		95,000
2028		98,000
2029		112,000
Thereafter		3,744,000
Total	$	4,205,000

- 13 -

The interest expense related to this mortgage was $38,000 and $39,000 for the three months ended March 31, 2025, and 2024, respectively. As of March 31, 2025, the interest rate for this mortgage was 3.6%.

10. Deferred Contract Incentive

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extended the term of the arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025.

As part of this agreement, the Company received a one-time business development credit of $3 million from NFS, and NFS will pay the Company four annual credits of $100,000, which are recorded in the line item “Deferred contract incentive” on the statements of financial condition. Annual credits shall be paid on the anniversary of the date on which the first credit was paid. The business development credit and annual credits will be recognized as contra expense over four years and one year, respectively, in the line item “Clearing fees, including execution costs” on the statements of operations. The amendment also provides for an early termination fee if the Company chooses to end its agreement before the end of the contract term.

In relation to this agreement, the Company recognized $213,000 in contra expense for both the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, the balance of the deferred contract incentive was $0.3 million and $0.5 million, respectively.

11. Revenue Recognition

Refer to Note 2 – Summary of Significant Accounting Policies in Company’s 2024 Form 10-K for detail on the Company’s primary sources of revenue and the corresponding accounting treatment. There were no significant changes to the accounting policies for revenue recognition and except as set forth below, those policies were unchanged during the three months ended March 31, 2025.

Principal Transactions and Proprietary Trading

The Company continuously invests in treasury bill and treasury notes as part of its normal operations to meet deposit requirements, which are primarily in the line item “Cash and securities segregated for regulatory purposes” on the statements of financial condition, in order to enhance its yield on its excess 15c3-3 deposits. In 2025, the Company acquired the Investment in Equity Security and the unrealized gain related to this investment is included in the “Unrealized gain on investment in equity security” line in the table below. Refer to Note 1 – Organization and Basis of Presentation, Note 4 – Fair Value Measurements, and Item 2. – Management’s Discussions and Analysis of Financial Condition and Results of Operations for further detail.

Restricted Equity Securities

The following table represents detail related to principal transactions and proprietary trading.

	Three Months Ended March 31,
	2025		2024		Increase (Decrease)
Principal transactions and proprietary trading
Realized and unrealized gain on primarily riskless principal transactions	$	3,712,000	$	3,443,000	$	269,000
Unrealized gain on investment in equity security		9,233,000		—		9,233,000
Realized and unrealized gain on portfolio of U.S. government securities		16,000		63,000		(47,000	)
Total Principal transactions and proprietary trading	$	12,961,000	$	3,506,000	$	9,455,000

Disaggregation of Revenue

The Company generated a significant portion of its revenue from financial instruments comprising of margin revenue, securities lending, principal transactions and proprietary trading, and interest revenue. These net interest and other revenues are not within the scope of FASB ASC Topic 606 – “Revenue from Contracts with Customers” (“Topic 606”), because they are generated from financial instruments covered by various other areas of GAAP. Market making activities are not within the scope of Topic 606, as they do not meet the definition of a contract with a customer under the standard. Consequently, revenue and expenses related to market making activity are accounted for separately and not included in the revenue figures presented in accordance with Topic 606.

The Company also has fee revenue and transaction revenue which are within the scope of Topic 606. Revenue from contracts with customers includes commission income charged to retail clients for executing transactions, markups on riskless principal transactions charged to retail clients for executing transactions, distribution income received from mutual funds for client transactions, stock locate fees charged to counterparties for providing locate services, payment for order flow received for executing transactions, and administrative fees to retail clients including for maintenance and other ancillary services. Under Topic 606, Revenue from Contracts with Customers, requires that an entity 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 guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.

- 14 -

The table below presents detailed information on the Company’s recognition of revenue from contracts with customers as well as revenues from financial instruments, which are outside the scope of Topic 606, by major types of services for the periods indicated.

	Three Months Ended March 31,
	2025			2024
Revenues from Contracts with Customers
Principal transactions and proprietary trading
Riskless principal transactions with customers	$	3,740,000		$	3,562,000

Commissions and fees
Brokerage commissions		1,543,000			1,892,000
Distribution fees		357,000			325,000
Insurance commissions		202,000			82,000

Stock borrow / stock loan
Retail fees (rebates)		6,000			(9,000	)
Stock locate services		4,032,000			3,598,000

Other income
Administrative fees		528,000			342,000
Payment for order flow		246,000			295,000
Other commissions		—			(9,000	)

Advisory fees		748,000			490,000

Total Revenues from contracts with customers	$	11,402,000		$	10,568,000

Revenue outside the scope of Topic 606
Principal transactions and proprietary trading
Proprietary trading		(12,000	)		(56,000	)
Principal transactions - equity investment		9,233,000			—

Interest, marketing and distribution fees
Margin interest		3,395,000			3,976,000
Interest income		3,050,000			4,281,000
Marking and distribution fees		500,000			506,000

Stock borrow / stock loan
Stock rebate revenue		799,000			509,000

Market making		552,000			672,000

Total Revenue Outside the Scope of Topic 606		17,517,000			9,888,000

Total Revenue	$	28,919,000		$	20,456,000

- 15 -

12. Income Taxes

The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary. As of March 31, 2025, the Company has concluded that its deferred tax assets are realizable on a more-likely-than-not basis with the exception of investments that are expected to generate capital losses when realized.

For the three months ended March 31, 2025, the Company recorded an income tax provision of $1,835,000 on pre-tax book income of $10,496,000. The effective tax rate for the three months ended March 31, 2025 was 17%. The effective tax rate differs from the federal statutory rate of 21% primarily related to the Company’s ability to utilize certain deferred tax assets for capital loss carryforwards to offset expected capital gains on its Investment in Equity Security. These capital loss carryforwards were not previously realizable on a more-likely-than-not basis and the Company has reversed a portion of its valuation allowance resulting in an income tax benefit.

For the three months ended March 31, 2024, the Company recorded an income tax provision of $1,415,000 on pre-tax book income of $5,102,000. The effective tax rate for the three months ended March 31, 2024 was 28%. The effective tax rate differs from the federal statutory rate of 21% primarily related to certain permanent tax differences and state and local taxes.

As of both March 31, 2025 and December 31, 2024, the Company recorded an uncertain tax position of $1,354,000 related to various tax matters, which is included in the line item “Taxes payable” in the statements of financial condition.

13. Capital Requirements

MSCO

Net Capital

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) of the Exchange Act. Under the alternate method permitted by this rule, net capital, as defined, shall not be less than the lower of $1 million or 2% of aggregate debit items arising from customer transactions. As of March 31, 2025, MSCO’s net capital was $62.3 million, which was approximately $60.4 million in excess of its required net capital of $1.9 million, and its percentage of aggregate debit balances to net capital was 65.53%.

As of December 31, 2024, MSCO’s net capital was $63.9 million, which was approximately $62.0 million in excess of its required net capital of $1.9 million, and its percentage of aggregate debit balances to net capital was 65.84%.

Special Reserve Account

MSCO is subject to Customer Protection Rule 15c3-3 which requires segregation of funds in a special reserve account for the exclusive benefit of customers. As of March 31, 2025, MSCO had cash and securities deposits of $150.2 million (cash of $105.8 million, securities with a fair value of $44.4 million) in the special reserve accounts which was $14.3 million in excess of the deposit requirement of $135.9 million. MSCO had no adjustments for deposit(s) and / or withdrawal(s) made on April 1, 2025.

As of December 31, 2024, MSCO had cash and securities deposits of $203.3 million (cash of $134.5 million, securities with a fair value of $68.8 million) in the special reserve accounts which was $9.5 million in excess of the deposit requirement of $193.8 million. After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2025, MSCO had $1.7 million in excess of the deposit requirement.

As of March 31, 2025, the Company was subject to the PAB Account Rule 15c3-3 of the SEC which requires segregation of funds in a special reserve account for the exclusive benefit of proprietary accounts of introducing broker-dealers. As of March 31, 2025, the Company had $1.3 million in the special reserve account which was approximately $0.2 million in excess of the deposit requirement of approximately $1.1 million. The Company made no subsequent deposits or withdrawals on April 1, 2025.

As of December 31, 2024, the Company had $1.3 million in the special reserve account which was approximately $0.1 million in excess of the deposit requirement of approximately $1.2 million. The Company made no subsequent deposits or withdrawals on January 2, 2025.

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RISE

Net Capital

RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. RISE is also subject to the CFTC’s minimum financial requirements which require that RISE maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1.

As of March 31, 2025, RISE’s regulatory net capital was approximately $1.2 million which was $0.9 million in excess of its minimum requirement of $250,000 under 15c3-1. As of December 31, 2024, RISE’s regulatory net capital was approximately $1.3 million which was $1.0 million in excess of its minimum requirement of $250,000 under 15c3-1.

14. Financial Instruments with Off-Balance Sheet Risk

The Company enters into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and is, therefore, subject to varying degrees of market and credit risk. Refer to the below as well as Note 19 – Financial Instruments with Off-Balance Sheet Risk in the Company’s 2024 Form 10-K for further information.

As of March 31, 2025, the Company had margin loans extended to its customers of approximately $390.1 million, of which $79.6 million is within the line item “Receivables from customers” on the statements of financial condition. As of December 31, 2024, the Company had margin loans extended to its customers of approximately $403.8 million, of which $84.4 million is in the line item “Receivables from customers” on the statements of financial condition. There were no material losses for unsettled customer transactions for the three months ended March 31, 2025 and 2024.

The following table presents information about the Company’s securities borrowing and lending activity depicting the potential effect of rights of setoff between these recognized assets and liabilities.

	As of March 31, 2025
	Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Consolidated Statements of Financial Condition¹		Net Amounts Presented in the Consolidated Statements of Financial Condition		FMV - Collateral Received or Pledged²		Net Amount³
Assets
Securities borrowed	$	207,591,000	$	—	$	207,591,000	$	197,710,000	$	9,881,000
Liabilities
Securities loaned	$	210,688,000	$	—	$	210,688,000	$	200,536,000	$	10,152,000

	As of December 31, 2024
	Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Consolidated Statements of Financial Condition¹		Net Amounts Presented in the Consolidated Statements of Financial Condition		FMV - Collateral Received or Pledged²		Net Amount³
Assets
Securities borrowed	$	139,040,000	$	—	$	139,040,000	$	126,484,000	$	12,556,000
Liabilities
Securities loaned	$	184,962,000	$	—	$	184,962,000	$	170,780,000	$	14,182,000

⁽¹⁾

Amounts represent recognized assets and liabilities that are subject to enforceable master agreements with rights of setoff. The Company did not net any securities borrowed or securities loaned as of March 31, 2025 or December 31, 2024.

⁽²⁾

Represents the fair value of collateral the Company had received or pledged under enforceable master agreements.

⁽³⁾

Represents the total contract value as presented in the financial statements less the fair market value of the collateral received or pledged.

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15. Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2025 and 2024.

	Three Months Ended March 31,
	2025			2024
Net income	$	8,661,000		$	3,687,000
Less net income (loss) attributable to noncontrolling interests		(3,000	)		(1,000	)
Net income available to common stockholders	$	8,664,000		$	3,688,000

Weighted-average common shares outstanding - basic		40,192,036			39,769,398
Dilutive effect of unvested shares		42,988			—
Weighted-average common shares used to compute diluted loss per share		40,235,024			39,769,398

Net income per share attributable to common stockholders:
Basic	$	0.22		$	0.09
Diluted	$	0.22		$	0.09

Basic earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated by adjusting the weighted-average number of common shares outstanding for the potential dilutive effect of securities, if applicable. For the three months ended March 31, 2025, the Company had 300,000 antidilutive shares outstanding. The Company had no anti-dilutive shares outstanding as of December 31, 2024.

16. Commitments, Contingencies, and Other

Legal and Regulatory Matters

In the normal course of business, the Company may be subject to various proceedings and claims arising from its business activities, including lawsuits, arbitration claims and regulatory matters. The Company is also involved in other reviews, investigations and proceedings by governmental and self-regulatory organizations regarding the business, which may result in adverse judgments, settlements, fines, penalties, injunctions and other relief. In many cases, however, it is inherently difficult to determine whether any loss is probable or reasonably possible or to estimate the amount or range of any potential loss, particularly where proceedings may be in relatively early stages. In the Company’s opinion, based on currently available information, the ultimate resolution of current matters will not have a material adverse impact on the Company’s financial position and results of operations as of March 31, 2025. However, resolution of one or more of these matters may have a material effect on the results of operations in any future period, depending upon the ultimate resolution of those matters and depending upon the level of income for such period.

Overnight Financing

As of both March 31, 2025 and December 31, 2024, MSCO had an available line of credit for short term overnight demand borrowing with BMO Harris Bank (“BMO Harris”) of up to $25 million. As of those dates, MSCO had no outstanding loan balance and there were no commitment fees or other restrictions on the line of credit. The Company utilizes customer or firm securities as a pledge for short-term borrowing needs.

The interest expense for this credit line was $1,000 and $2,000 for the three months ended March 31, 2025 and 2024, respectively. There were no fees related to this line of credit for the three months ended March 31, 2025 and 2024.

Credit Agreement

On August 15, 2024, the Company entered into a Loan and Security Agreement (the “Credit Agreement”) with East West Bank (the “Lender”), a California banking corporation, dated as of July 29, 2024. The Credit Agreement provides for a revolving credit facility of up to $20,000,000. The initial term of the Credit Agreement is two years. The Company may use any borrowings under the Credit Agreement for acquisitions, stock buybacks, and for general corporate purposes in an amount not to exceed $10,000,000. Obligations under the Credit Agreement shall be guaranteed by John J. Gebbia, the Company’s Chief Executive Officer, Gloria E. Gebbia, a Director of the Company, and John J. Gebbia and Gloria E. Gebbia, as co-trustees of the John and Gloria Living Trust.

Borrowings under the Credit Agreement bears interest on the outstanding daily balance at a rate of interest per annum equal to the greater of: (a) the one-month Term Secured Overnight Financing Rate (“Term SOFR”), as administered by CME Group Benchmark Administration plus 3.15% and (b) 7.50%. The origination fee is equal to one half of one percent (0.50%) of the $20,000,000 revolver cap. The Credit Agreement contains customary affirmative covenants and negative covenants and requires the Company to maintain a minimum debt service coverage ratio of not less than 1.35:1.00 and minimum net capital of $43,000,000.

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BMO Credit Agreement

On November 22, 2024, MSCO entered into a Credit Agreement (the “BMO Credit Agreement”) with BMO Bank N.A. (the “Lender”), a national banking association. The BMO Credit Agreement provides for a revolving credit facility of up to $20,000,000. The Company may use any borrowings under the BMO Credit Agreement to finance NSCC Deposit Requirements (other than an Adequate Assurance Deposit) and withdrawals from a Reserve Account. As part of the agreement, the Company entered into a Parent Guaranty agreement guaranteeing repayment of any debt issued to MSCO.

Borrowings under the BMO Credit Agreement bears interest on the outstanding daily balance at a rate of interest per annum equal 2.5% plus the greater of: (a) Term SOFR for such day plus 0.11448% and (b) Federal Funds Target Range – Upper Limit and (c) 0.25%. The annual commitment fee is equal to one half of one percent (0.50%) of the average daily unused portion of the commitment of $20,000,000. The BMO Credit Agreement contains customary affirmative covenants and negative covenants and requires MSCO maintain minimum total regulatory capital of $45,000,000, excess net capital of 20,000,000, assets to total regulatory capital ratio of not more than 5.0 to 1.0, and a minimum liquidity ratio of not less than 1.0. The Company satisfied its condition precedent to deliver a legal option to the Lender on December 18, 2024.

There was no interest expense for the BMO Credit Agreement for the three months ended March 31, 2025 and 2024. The fee for this credit line was $23,000 for the three months ended March 31, 2025 and there was no fee expense for the three months ended March 31, 2024.

NFS Contract

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of the arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. If the Company chooses to exit this agreement before the end of the contract term, the Company is under the obligation to pay an early termination fee upon occurrence pursuant to the table below:

Date of Termination		Early Termination Fee
Prior to August 1, 2025		$	3,250,000

For the three months ended March 31, 2025 and 2024, there has been no expense recognized for any early termination fees. The Company believes that it is unlikely it will have to make material payments related to early termination fees and has not recorded any contingent liability in the financial statements related to this arrangement.

Technology Vendor

The Company has entered into agreements with technology vendors for software development related to its Retail Platform. As of March 31, 2025, the Company incurred costs of approximately $4.1 million for these vendors.

General Contingencies

The Company’s general contingencies are included in Note 21 – Commitments, Contingencies, and Other in the Company’s 2024 Form 10-K. Other than the below, there have been no material updates to the Company’s general contingencies during the three months ended March 31, 2025.

The Company is self-insured with respect to employee health claims. As part of this plan, the Company recognized expenses of $385,000 and $394,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company had an accrual of $102,000 and $76,000 as of March 31, 2025 and December 31, 2024, respectively, which represents the estimate of future expense to be recognized for claims incurred during the periods.

The Company believes that its present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that the Company will not incur liabilities in excess of recorded reserves or in excess of its insurance limits.

17. Segment Reporting

The Company operates as a wholly-owned subsidiary of the Parent and is engaged in a single line of business as a securities broker-dealer providing comprehensive brokerage services including custody and clearance of retail accounts, principal transaction and proprietary trading, market making, and securities lending. The Company’s CODM, its Chief Financial Officer, reviews operating and financial information of the Company as a whole as presented on the statements of operations as well as the financial table in Note 11 – Revenue Recognition, and uses net income as the key measure to evaluate the results of the business, predominately in the forecasting process, to manage the Company. The CODM has determined that all activities contribute to the core brokerage business and the Company operates as a single reportable segment. The Company’s operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies.

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18. Employee Benefit Plans

The Company sponsors a defined-contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers substantially all employees (“401(k) plan”). Participant contributions to the 401(k) plan are voluntary and are subject to certain limitations. The Company may also make discretionary contributions to the plan. For 401(k) employee contribution matching, the Company incurred expense of $152,000 and $135,000 for the three months ended March 31, 2025 and 2024, respectively.

On September 17, 2021, the Company’s shareholders approved the Siebert Financial Corp. 2021 Equity Incentive Plan (the “Plan”). The Plan provides for the grant of stock options, restricted stock, and other equity awards of the Company’s common stock to employees, officers, consultants, directors, affiliates and other service providers of the Company. There were 3 million shares reserved under the Plan and 1,152,000 and 2,214,000 and shares remained as of March 31, 2025 and December 31, 2024, respectively.

The table below presents the Plan awards granted and the related fair values for the three months ended March 31, 2025.

	Shares			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2024		150,000		$	1.65
Forfeited		(50,000	)		1.65
Granted		1,112,000			2.69
Vested		(237,000	)		2.27
Nonvested as of March, 2025		975,000		$	2.69

As of March 31, 2025, there was $2,483,000 of total unrecognized compensation cost related to nonvested shares granted. The cost is expected to be recognized over a weighted average period of 2.1 years.

The Company recognized stock-based compensation expense of $554,000 and $85,000 for the three months ended March 31, 2025 and 2024, respectively. $554,000 and $62,000 of this expense is included in the line item “Employee compensation and benefits” for the three months ended March 31, 2025 and 2024, respectively. $0 and $23,000 of this expense is fully capitalized within the line item “Software, net” in the consolidated statements of financial condition.

19. Related Party Disclosures

KCA

KCA owns a license from the Muriel Siebert Estate / Foundation to use the names “Muriel Siebert & Co., Inc.” and “Siebert” within business activities, which expires in 2025. For the use of these names, KCA passed through to the Company its cost of $0 and $15,000 for the three months ended March 31, 2025 and 2024, respectively.

Other than the above arrangements, KCA has earned no profit for providing any services to the Company as KCA passed through any revenue or expenses to the Company’s subsidiaries for the three months ended March 31, 2025 and 2024.

PW brokers the insurance policies for related parties. Revenue for PW from related parties was $6,000 and $4,000 for the three months ended March 31, 2025 and 2024, respectively.

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SEC Form 10-Q filed by Siebert Financial Corp.