What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-31 · 57 added, 51 removed, 294 unchanged (27% of the section changed)

18 unchanged sentences

Financial Highlights

Results for the year ended December 31, 2024 included a net loss of approximately $4.6 million and total revenue of approximately $168.9 million, which compares to net income and total revenue of $0.5 million and approximately $168.0 million, respectively, for the year ended December 31, 2023.

Results for the year ended December 31, 2025 include net income of approximately $2.3 million and total revenue of approximately $187.1 million and a net loss of approximately $4.6 million and total revenue of approximately $168.9 million for the year ended December 31, 2024.

Total advisory and brokerage assets served were $29.9 billion at December 31, 2025, compared to $27.1 billion at December 31, 2024.

Total net new assets were $(2.1) billion for the year ended December 31, 2024, compared to $(3.6) billion for the same period in 2023.

Net new advisory assets were $0.0 million for the year ended December 31, 2024, compared to $(0.5) million in 2023.

Total net new assets were $(1.9) billion for the year ended December 31, 2025, compared to $(2.1) billion for the year ended December 31, 2024.

Net new advisory assets were $0.0 million for the year ended December 31, 2025, compared to $0.0 million for the year ended December 31, 2024.

Advisory assets were $2.9 billion at December 31, 2025, which is an increase of approximately 16% from the $2.5 billion at December 31, 2024.

Net new brokerage assets were $(2.1) billion for the year ended December 31, 2024, compared to $(3.1) billion in 2023.

Net new brokerage assets were $(1.9) billion for the year ended December 31, 2025, compared to $(2.1) billion for the year ended December 31, 2024.

Brokerage assets were $27.0 billion at December 31, 2025, an increase of approximately 10% from $24.5 billion at December 31, 2024.

Gross Profit Trend

Gross profit, a non-GAAP financial measure, was $32.0 million for the year ended December 31, 2024, an increase of 0.6% from $31.8 million for the year ended December 31, 2023.

Gross profit, a non-GAAP financial measure, was $37.8 million for the year ended December 31, 2025, an increase of approximately 12% from $33.7 million for the year ended December 31, 2024.

See the “Key Performance Metrics and Non-GAAP Financial Measures” section for additional information on gross profit.

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EBITDA is a non-GAAP financial measure defined as net income plus interest expense, provision for income taxes, and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA, a non-GAAP measure, plus business combination and re-financing costs.

Adjusted EBITDA is defined as EBITDA, a non-GAAP measure, plus non-recurring costs related to our business combination, costs related to the re-financing of the senior credit facility, and share-based compensation costs.

The Company presents EBITDA and Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations.

EBITDA and Adjusted EBITDA are not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.

Additionally, Adjusted EBITDA is used in connection with the Company’s credit agreements, specifically in the calculation of financial-related covenants.

A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP financial measures appears below in the footnotes to the table of our key operating, business and financial metrics.

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EBITDA is defined as net income plus interest expense, provision for income taxes, and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA plus non-recurring costs related to our business combination as well as re-financing the senior credit facility costs.

Adjusted EBITDA is defined as EBITDA plus non-recurring costs related to our business combination, costs related to the re-financing of the senior credit facility, and share-based compensation costs.

The Company presents EBITDA and Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations.

Additionally, Adjusted EBITDA is used in connection with the Company’s credit agreements, specifically in the calculation of financial related covenants.

Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the periods presented (in millions):

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Interest expense

(Benefit) Provision for income taxes

Provision for income taxes

Depreciation and amortization

Share based compensation

Business combination and re-financing costs

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Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the United States financial markets.

According to the most recent estimate from the U.S.

Bureau of Economic Analysis, the U.S.

economy grew 2.8% in 2024, and at an annualized pace of 2.3% in the fourth quarter of 2024 after growing at an annualized pace of 2.8% in the third quarter of 2024.

Although inflation, interest rates and volatile global markets were all headwinds the U.S.

economy added roughly 500,000 jobs in the fourth quarter of 2024, while the unemployment rate averaged 4.2% in the fourth quarter of 2024, up slightly from the average in the prior quarter.

The equity markets rose during the year ended December 31, 2025, with the S&P 500 and Russell 2000 index rising 17.9% and 12.8%, respectively.

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy.

During the fourth quarter of 2024, Fed policymakers maintained the target range for the federal funds rate at 4.25% to 4.50%.

During the fourth quarter of 2025, Fed policymakers lowered the target federal funds rate to a range of 3.50% to 3.75%.

Please consult the Factors Affecting Our Financial Condition and Results of Operations, including those described in the section of this proxy statement/prospectus titled “ Risk Factors .”

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Total expenses

(Loss) income before provision for income taxes

Provision (benefit) for income taxes

Net (loss) income

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

The Company’s primary source of revenue is from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors.

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The Company is principal for the commission revenue, as it is responsible for the execution of the clients’ purchases and sales and maintains relationships with the product sponsors.

Advisors assist the Company in performing it obligations.

Advisors assist the Company in performing its obligations.

Accordingly, total commission revenue is reported on a gross basis.

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Total commission revenue

Sales based revenue decreased by approximately $11.7 million or 15.7% for the year ended December 31, 2024 as compared to 2023.

Sales based revenue increased by approximately $8.4 million or 13.4% for the year ended December 31, 2025 as compared to 2024.

Trailing based revenue increased by approximately $5.6 million or 7.3% for the year ended December 31, 2025 as compared to 2024.

The decrease in sales based revenue for the year ended December 31, 2024 as compared to 2023 is attributable to a decrease in the generation of transactional based products.

The increase in sales based revenue for the year ended December 31, 2025 as compared to 2024 is attributable to an increase in the generation of transactional based products.

The increase in the trailing based revenues is primarily due to volatility driven increases in trail eligible assets.

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Other income primarily includes amounts earned by the Company related to marketing and incentives earned from the sales of certain investment products by the financial advisors to its clients, primarily alternative investments, as well as sponsorship income.

The decrease in interest and other income for the year ended December 31, 2024, compared to 2023 is primarily related to certain non-recurring income items earned during 2023.

The increase in interest and other income for the year ended December 31, 2025, compared to 2024, is primarily related to the increase in the interest income it earns with the Company’s clearing brokers.

Commissions and Fees

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For the years ended December 31,

For the year ended December 31, 2024, the payout rate decreased as compared to 2023 as a result of the reduction in non-recurring commission products that carried a payout at 90%.

For the year ended December 31, 2025, the payout rate remained consistent as compared to 2024.

Employee compensation and benefits

Employee compensation and benefits includes salaries, wages, benefits and related taxes for our employees.

Employee compensation and benefits for the year ended December 31, 2024 increased by $2.2 million which is directly related to the additional personnel costs attributed to the Company now operating as a public company.

Employee compensation and benefits for the year ended December 31, 2025 increased by approximately $3.3 million which is directly related to the additional personnel costs attributed to the Company now operating as a public company.

Rent and occupancy

Rent and occupancy remained relative consistent for the year ended December 31, 2024 compared to 2023, decreasing by 3.3% or $0.04 million.

Rent and occupancy remained relatively consistent for the year ended December 31, 2025 compared to 2024, decreasing by 0.8% or $0.01 million.

Professional fees

Professional fees includes costs incurred related to legal and accounting services.

Professional fees for the year ended December 31, 2024 as compared to 2023 increased by $2.3 million which is directly related to transaction costs associated with the Business Combination, the re-financing of the senior credit facility and specific costs related to the Company now operating as a public company.

Professional fees for the year ended December 31, 2025 as compared to 2024 decreased by $4.7 million which is directly related to non-recurring transaction costs associated with the Business Combination that was incurred during the year ended December 31, 2024.

Technology fees

Technology fees primarily represent infrastructure costs that support the Company’s technology and communications costs.

Technology fees decreased by $1.2 million for the year ended December 31, 2024 as compared to 2023.

Technology fees increased by approximately $1.7 million for the year ended December 31, 2025 as compared to 2024.

Interest expense

Interest expense primarily includes interest associated with the Company’s credit facility and other debt obligations.

Interest expense decreased by $1.1 million for the year ended December 31, 2024 as compared to 2023 resulting from the repayments and restructuring of the related party debt obligations of BMS.

Interest expense decreased by $1.9 million for the year ended December 31, 2025 as compared to 2024, as a result of scheduled repayments as well as the restructuring of related party debt obligations of BMS, re-financing of the senior credit facility and the reduction of interest rates that occurred during the second half of 2025.

Depreciation and amortization

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Other expense

Other expense includes insurance, travel-related expenses, office expenses, marketing and other miscellaneous expenses.

Other expense includes insurance, legal and regulatory settlements, travel-related expenses, office expenses, marketing and other miscellaneous expenses.

Provision for Income Taxes

Our effective income tax rate was 10.6% and (45.1)% for the years ended December 31, 2025 and 2024, respectively.

The change in our effective tax rate was related to the change in deferred adjustments.

The change in our effective tax rate was primarily related to generation of taxable income for the year ending December 31, 2025 as opposed to a taxable loss incurred during the year ending December 31, 2024.

Liquidity and capital resources

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and (iii) issue to BMS, from time to time, letters of credit (the “ Letters of Credit ” and together with the Term Loan and Non-Revolving Loans, the “ Loans ”) until the earliest to occur of (a) the one year from the Credit Agreement Closing Date and (b) the date on which the Non-Revolving Loans are fully drawn.

As of December 31, 2024, the outstanding balance on the Term Loan was $19.6 million, net of debt issuance costs.

As of December 31, 2025 and 2024, the outstanding balance on the Term Loan was $17.7 million and $19.6 million, net of debt issuance costs, respectively.

Under the terms of the Credit Agreement, to the extent that the Company requests a Letter of Credit, the Non-Revolving Loan Commitment shall be permanently reduced in an amount equal to the amount of such Letter of Credit.

The Non-Revolving Loans may not be requested by the Company and may only be advanced in connection with a repayment of a Letter of Credit (“ LC Payment ”).

As of December 31, 2024 there are no amount outstanding under the Non-Revolving Loan or Letters of Credit.

As of December 31, 2025 and 2024 there are no amounts outstanding under the Non-Revolving Loan or Letters of Credit.

The Loans (both principal and any remaining unpaid interest) made by the Lender to BMS are scheduled to mature and become immediately due and payable in full on December 23, 2029 (“Maturity Date”).

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and (iii) if any other obligations is created under the Loan Documents (as defined in the Credit Agreement), at the Term Loan Interest Rate.

As of December 31, 2024, the effective interest rate was 8.3%.

The Term Loan must be used by BMS to refinance Existing Credit Facilities (as defined in the Credit Agreement) and the Non-Revolving Loans must be used solely to reimburse the Lender with respect to any Letters of Credit issued to BMS.

The Term Loan refinanced and retired the previous Oak Street Funding Facility.

As of December 31, 2025 and 2024, the effective interest rate was 7.9% and 8.3%, respectively.

On April 10, 2025, BMS entered into an interest rate swap agreement with a notional amount of $10 million in connection with the above-mentioned Credit Agreement.

Under the terms of the swap, BMS pays a fixed rate of 3.98% plus four percent (4.00%) and receives a variable interest rate based on SOFR plus 4.00% as defined above.

The swap agreement requires monthly payments to be made or received.

The swap is designated as cash flow hedge of the variability of the SOFR-based interest payments on $10 million of BMS’s outstanding variable-rate debt.

As of December 31, 2025, the interest rate swap liability had a fair value of $0.2 million and is included in accounts payable, accrued expenses and other liabilities on the consolidated statement of financial condition.

The Company has adopted the shortcut method allowing it to assume perfect hedge effectiveness.

Changes in the effective portion of the swap’s fair value are recognized in other comprehensive income (loss) (“OCI”) and included on the consolidated statements of other comprehensive income (loss).

The Term Loan was used by BMS to refinance Existing Credit Facilities (as defined in the Credit Agreement) and the Non-Revolving Loans must be used solely to reimburse the Lender with respect to any Letters of Credit issued to BMS.

The Credit Agreement also includes customary covenants for a transaction of this type, including covenants limiting the indebtedness that can be incurred by BMS and restricting BMS’s ability to make certain loans and investments.

Additionally, BMS is subject to financial covenants whereby BMS and its subsidiaries on a consolidated basis may not have, as of the last day of each fiscal quarter, commencing with fiscal quarter ending on March 31, 2025, (1) a fixed charge coverage ratio as of the last day of the fiscal quarter for the twelve (12) month period then ended of not less than 1.20 to 1.00;

(ii) a senior net leverage ratio as of the last day of such Fiscal Quarter for the twelve (12) month period then ended, of (A) for the fiscal quarter ended March 31, 2025 and each fiscal quarter through

and including September 30, 2025, not more than 3.00 to 1.00;

and (B) for the fiscal quarter ended December 31, 2025 and each fiscal quarter ending thereafter, not more than 2.75 to 1.00;

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At the discretion of Holdings the payment may be made in cash or up to 50% of the amount due, in duly authorized, validly issued, fully paid and non-assessable share of Holdings Series A Stock at a value of $10 per share.

For the year ended December 31, 2024, the Company paid dividends under the Series A PIPE in the amount of approximately $1.1 million of which $0.56 million was paid in cash and $0.55 was paid in-kind.

As of December 31, 2025, the Company accrued 50% of the dividend to be paid in cash in the amount of $0.2 million and paid an in-kind dividend in the amount of $0.2 million.

As of December 31, 2024, the Company accrued 50% of the dividend to be paid in cash in the approximate amount of $0.2 million.

For the years ended December 31, 2025 and 2024, the Company paid dividends under the Series A Stock in the amount of approximately $1.4 million and $1.1 million, respectively.

The Holdings Series A Stock has liquidation preferences in the event of a voluntary or involuntary liquidation as follows:

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At the discretion of Holdings, the payment may be made in cash or up to 50% of the amount due, in duly authorized, validly issued, fully paid and non-assessable share of Holdings Series B Stock at a value of $10 per share.

For the year ended December 31, 2024 total dividends related to the Holdings Series B Stock amounted to approximately $0.03 million, which is payable as of December 31, 2024.

As of December 31, 2025 and 2024, included in accounts payable, accrued expenses and other liabilities on the accompanying consolidated statements of financial condition, is an accrued dividend in the amount $0.03 and $0.03, respectively, that was paid subsequent to December 31, 2025 and 2024.

For the year ended December 31, 2025 and 2024 total dividends related to the Holdings Series B Stock amounted to approximately $0.1 million and $0.03 million, respectively.

The Company may, at its option, in whole, or part, redeem the Holdings Series B Stock any time after the first anniversary of the date of the Subscription Agreement at a redemption price equal to the greater of (i) $12.00 per share of Holdings Series B Stock, plus accrued but unpaid dividends or (A) 1.20 multiplied by (B) the volume weighted average price for 20 trading days during the 30-day period immediately prior to the redemption;

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The interest on these notes continued to accrue until such time as these notes were paid or restructured.

Also, in connection with the acquisition of the PKSH Entities, BMS agreed to pay contingent consideration in the amount of $5.0 million to certain sellers.

Additionally, in connection with the acquisition of the PKSH Entities, BMS agreed to pay contingent consideration in the amount of $5.0 million to certain sellers.

The conditions related to this contingency were met on November 30, 2018, and thus the notes had been issued to the sellers.

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In connection with the closing of the Business Combination, the Company paid approximately $3.5 million on these notes.

In addition to the paydown, the noteholders agreed to forgive the remaining accrued but unpaid interest of approximately $3.8 million and entered into new promissory notes in the principal amount of approximately $5.3 million in the aggregate.

The terms of these new promissory notes provide for maturity on May 15, 2027 and carries an interest rate of Prime plus 1.00%, but no less than 7.50% per annum.

As of December 31, 2024, there was approximately $0.1 interest that was accrued and paid subsequent to December 31, 2024.

Related interest was approximately $0.5 million and $0.4 million for the years ended December 31, 2025 and 2024, respectively.

The following table sets forth a summary of cash flows for the years ended December 31, 2025 and 2024:

(in thousands)

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Net cash used in investing activities

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Cash Flows from Operating Activities.

Net cash used in operating activities was $0.6 million for the year ended December 31, 2024 compared to net cash provided by $2.6 million for the year ended December 31 2023, representing a decrease of approximately $3.2 million or 124%.

The decrease was primarily attributable to the decrease in net income offset by increases in accounts payable, accrued expenses and commissions payable.

Net cash provided by operating activities was approximately $5.1 million for the year ended December 31, 2025 compared to net cash used in operating activities of $0.6 million for the year ended December 31, 2024, representing an increase of approximately $5.7 million or 934%.

The increase was primarily attributable to the decrease in the net loss incurred for the year ended December 31, 2024 of approximately $6.4 million.

Cash Flows from Investing Activities.

Net cash used in investing activities was $0.09 million for the year ended December 31, 2024 consistent with the $0.08 million for the year ended December 31, 2023.

Net cash used in investing activities was approximately $0.06 million for the year ended December 31, 2025 consistent with the $0.08 million for the year ended December 31, 2024.

Cash Flows from Financing Activities.

Net cash provided by financing activities was approximately $1.6 million for the year ended December 31, 2024 compared to cash used in financing activities of $2.7 million for the year ended December 31, 2023.

The change is primarily related to the proceeds from the preferred financings offset by the repayments of the BMS related party debt obligations and the re-financing of the senior credit facility.

Net cash used in financing activities was approximately $2.9 million for the year ended December 31, 2025 compared to cash provided by financing activities of approximately $1.6 million for the year ended December 31, 2024.

The change is primarily related to the proceeds from the preferred financings during the year ended December 31, 2024 offset by the repayments of the BMS related party debt obligations, principal payments related to the senior credit facility and the payment of dividends to the Class A and Class B preferred stockholders.

Contractual Obligations and Commitments

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(2) Represents the obligations under the amounts due to certain sellers of the PKSH entities.

The amount includes accrued interest as of December 31, 2024 and the notes mature in March 2027.

(3) Represents future minimum lease payments as of December 31, 2024, under non-cancelable office leases.

The notes mature in March 2027.

(3) Represents future minimum lease payments as of December 31, 2025, under non-cancellable office leases.

Critical Accounting Policies and Estimates

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We have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater

than its carrying amount, then performing the two-step impairment test is not required.

If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required.

However, if we conclude otherwise, we are then required to perform the first step of the two-step impairment test.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis