What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-30 compared with 2021-03-10 · 809 added, 949 removed, 459 unchanged (79% of the section changed)

5 unchanged sentences

Consolidated Statements of Income for each of the years in the two-year period ended December 31, 2021

Consolidated Statement of Changes in Stockholders’ Equity for each of the years in the two-year period ended December 31, 2020

Consolidated Statement of Changes in Stockholders’

Equity for each of the years in the two-year period ended December 31, 2021

Consolidated Statements of Cash Flows for each of the years in the two-year period ended December 31, 2021

Notes to Consolidated Financial Statements

Siebert 2020 Form-10K 33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Siebert 2021 Form-10K 37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 23 )

To the Shareholders and the Board of Directors of Siebert Financial Corp.

Opinion on the Financial Statements

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of Siebert Financial Corp.

Subsidiaries (the Company ) as of December 31, 2020 and 2019, the related consolidated statements of income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements ).

our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in

conformity with accounting principles generally accepted in the United States of America.

& Subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, changes in stockholders'

equity and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are

required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that

were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matters or on the accounts or disclosures to which they relate.

Deferred Tax Asset valuation allowance

As described in Note 16 to the consolidated financial statements, the Company’s consolidated net deferred tax asset balance of

$4,857,000 primarily related to net operating loss carryforwards.

As disclosed by management, the Company has evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized.

The ultimate realization

of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized.

The Company considered all positive and negative

evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized.

This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning

strategies, and projected future taxable income.

We identified the valuation allowance over the deferred tax asset as a critical audit matter.

The assessment of future realization, particularly auditing management’s forecast of future operating

results, involves significant judgment by management and, in turn, a high degree of auditor judgment, subjectivity, and effort.

Siebert 2020 Form-10K 34

The primary procedures we performed to address this critical audit matter included:

Testing management’s process for forecasting future taxable income and whether any factors exist that may materially bear on the Company's ability to achieve sufficient taxable

income to utilize remaining net operating loss carryforwards.

Evaluating whether management’s assumptions were reasonable by considering the past performance of the Company and whether such assumptions were consistent with evidence obtained in

other areas of the audit.

The Company's acquisition of StockCross Financial Services, Inc.

As described in Notes 1 and 3 to the consolidated financial statements, the Company acquired the remaining 85% interest in

StockCross Financial Services, Inc.

Management has concluded that this is an entity under common control with Siebert Financial Corp.

and that the transaction represented a change in the reporting unit, and as such, the companies have been

presented on a combined basis for all periods presented in the consolidated financial statements.

We identified the accounting for this transaction as a critical audit matter.

The determination of common control requires management to evaluate

the direct and indirect ownership of each entity and elements of control, as well as the period for which common control existed.

The determination of a change in reporting unit requires management to exercise significant judgment regarding

whether there is a change in the specific subsidiaries that make up the group of entities for which consolidated financial statements are presented.

Auditing these aspects of the transaction involved a high degree of subjectivity and complexity.

The primary procedures we performed to address this critical audit matter included:

Identifying and testing the direct and indirect ownership of each entity and identifying the period for which common control existed.

Evaluating the composition of the Company's subsidiaries that make up the group of entities which are consolidated.

Testing the underlying accounting information and assumptions utilized in management's combination of the historical results of Siebert Financial Corp.

and StockCross Financial

Services, Inc.

from the date that common control existed.

/s/ Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP)

We have served as the Company's auditor since 2017.

/s/ Baker Tilly US, LLP

We have served as the Company's auditor since 2017.

New York, New York

March 30, 2022

Siebert 2020 Form-10K 35

Siebert 2021 Form-10K 38

SIEBERT FINANCIAL CORP.

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Receivables from broker-dealers and clearing organizations

Receivables from non-customers

Other receivables

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1,372,233,000

1,352,733,000

Deposits with broker-dealers and clearing organizations

Prepaid service contract – non-current

Furniture, equipment, and leasehold improvements, net

Prepaid service contract –

Property, office facilities, and equipment, net

Software, net

Lease right-of-use assets

Equity method investment in related party

Investments, cost

Deferred tax assets

1 unchanged sentence

1,404,235,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

1,372,987,000

LIABILITIES AND STOCKHOLDERS’

Current liabilities

4 unchanged sentences

Accounts payable and accrued liabilities

Taxes payable

Securities loaned

Securities sold, not yet purchased, at fair value

Interest payable

Notes payable - related party

1 unchanged sentence

Current portion of long-term debt

Current portion of deferred contract incentive

Total Current liabilities

1,343,382,000

1,330,046,000

Lease liabilities, less current portion

Long-term debt, less current portion

Deferred contract incentive, less current portion

Total Liabilities

1,353,729,000

1,335,001,000

Commitments and Contingencies

Stockholders’ equity

Common stock, $.01 par value;

Stockholders’

Common stock, $.

01 par value;

100 million shares authorized;

30,953,710 and 30,459,804 shares

issued and outstanding as of December 31, 2020 and 2019, respectively**

32,403,235 and 30,953,710 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Additional paid-in capital

Retained earnings

Total Stockholders’ equity

Total Liabilities and stockholders' equity

Total Stockholders’

Noncontrolling interests

Total Liabilities and Equity

1,404,235,000

* Statement of financial condition as of December 31, 2019 represents the pro forma combination of Siebert and StockCross balances.

– Acquisitions” for additional detail .

**Shares outstanding as of December 31, 2019 represents the combined total of the Company’s shares outstanding and the shares issued for the Company’s acquisition of StockCross.

“Note 1 – Organization and Basis of Presentation” for additional detail.

Shares authorized were 100 million and 49 million as of December 31, 2020 and 2019, respectively.

1,372,987,000

Numbers are rounded for presentation purposes.

See notes to consolidated financial statements.

Siebert 2020 Form-10K 36

Siebert 2021 Form-10K 39

SIEBERT FINANCIAL CORP.

2 unchanged sentences

Commissions and fees

Margin interest, marketing and distribution fees

Interest, marketing and distribution fees

Principal transactions

Interest income

Market making

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Referral fees

Impairment loss

Interest expense

1 unchanged sentence

Total Expenses

Earnings of equity method investment in related party

Income before provision for income taxes

Provision for income taxes

Net income per share of common stock

Less net loss attributable to noncontrolling interests

Net income available to common stockholders

Net income available to common stockholders per share of common stock

Basic and diluted

3 unchanged sentences

See notes to consolidated financial statements.

* Statement of income for the year ended December 31, 2019 represents the pro forma combination of Siebert and StockCross balances.

– Acquisitions” for additional detail .

Siebert 2020 Form-10K 37

Siebert 2021 Form-10K 40

SIEBERT FINANCIAL CORP.

& SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Shares Issued

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

Number of Shares Issued

$.01 Par Value

Paid-In Capital

Additional Paid-In Capital

Retained Earnings

Balance – January 1, 2019

Total Stockholders’

Noncontrolling Interests

Balance –

January 1, 2020

Shares issued for StockCross purchase

Balance – December 31, 2019

Shares issued for payment of professional services

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Adjustment for deferred tax asset valuation

Balance – December 31, 2020

* Represents the purchase of the net assets of StockCross less Siebert’s 15% equity method investment in StockCross and also includes other pro forma adjustments.

See the statement of financial condition within “Note 3 – Acquisitions” for additional detail .

Balance –

December 31, 2020

Shares issued for OpenHand transaction

Shares retired from OpenHand transaction

( 1,318,000 )

Shares issued for Tigress Transaction

Balance –

December 31, 2021

Numbers are rounded for presentation purposes.

See notes to consolidated financial statements.

Siebert 2020 Form-10K 38

Siebert 2021 Form-10K 41

SIEBERT FINANCIAL CORP.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash Flows From Operating Activities

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Depreciation and amortization

Net lease liabilities

Loss on sale of OpenHand common stock

Impairment loss

Earnings of equity method investment in related party

Receivables from customers

Receivables from non-customers

Receivables from and deposits with broker-dealers and clearing organizations

Securities borrowed

( 712,256,000

Securities owned, at fair value

9 unchanged sentences

Interest payable

Lease liabilities

Taxes payable

Deferred contract incentive

Net cash provided by operating activities

Cash Flows From Investing Activities

Segregated cash acquired in a business acquisition

Cash paid in a business acquisition, net of cash and cash equivalents acquired

Purchase of furniture, equipment, and leasehold improvements

Equity method investment in related party

Purchase of Openhand common stock

Purchase of office facilities and equipment

Purchase of property

Purchase of software

1 unchanged sentence

Cash Flows From Financing Activities

Notes payable – related party

Notes payable –

related party

Long-term debt

Employee stock purchases

Purchase of StockCross common stock

Return of capital distribution - StockCross

Treasury stock sales - StockCross

Net cash provided by / (used in) financing activities

Net increase / (decrease) in cash and cash equivalents, and cash and securities segregated for regulatory purposes

Net cash provided by financing activities

Net increase in cash and cash equivalents, and cash and securities segregated for regulatory purposes

Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of year

Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of year

Reconciliation of cash, cash equivalents, and cash and securities segregated for regulatory purposes

Cash and cash equivalents - end of year

2 unchanged sentences

Supplemental cash flow information

Cash paid during the year for income taxes

Cash paid / (refunds received) during the year for income taxes

Cash paid during the year for interest

1 unchanged sentence

Shares issued for payment of professional services

Equity method investment in related party

Numbers are rounded for presentation purposes.

See notes to consolidated financial statements.

Siebert 2020 Form-10K 39

Siebert 2021 Form-10K 42

SIEBERT FINANCIAL CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 subsidiaries:

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:

Retail brokerage business through Muriel Siebert & Co., Inc.

(“MSCO”), a Delaware corporation and broker-dealer registered with the SEC

(“MSCO”), a Delaware corporation and broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (“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”).

MSCO engages in the business of providing brokerage services for retail customers and trading securities for its own account.

Investment advisory services through Siebert AdvisorNXT, Inc.

(“SNXT”), a New York corporation registered with the SEC as a RIA under the Advisers Act

(“SNXT”), a New York corporation registered with the SEC as a Registered Investment Adviser (“RIA”) under the Investment Advisers Act of 1940.

SNXT engages in providing investment advisory services to retail and high net worth clients.

Insurance services through Park Wilshire Companies, Inc.

(“PWC”), a Texas corporation and licensed insurance agency

Robo-advisory technology development through Siebert Technologies, LLC (“STCH”), a Nevada limited liability company

Prime brokerage services through WPS Prime Services, LLC (“WPS”), a Delaware limited liability company and a broker-dealer registered with the SEC

(“PW”), a Texas corporation and licensed insurance agency.

PW provides insurance agency services to retail and institutional accounts.

Robo-advisory technology development through Siebert Technologies, LLC (“STCH”), a Nevada limited liability company.  

Prime brokerage services through RISE Financial Services, LLC (“RISE”), formerly known as WPS Prime Services, LLC (“WPS”), a Delaware limited liability company and a broker-dealer registered with the SEC and NFA.

RISE is a woman-owned and operated financial services firm that offers a comprehensive suite of prime brokerage services aligned with the growing mission-driven Environmental Social and Governance (“ESG”) initiatives of institutional investors.

StockCross Digital Solutions, Ltd.

(“STXD”), an inactive subsidiary headquartered in Bermuda

For purposes of this Annual Report on Form 10-K, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp.

and its subsidiaries collectively,

unless the context otherwise requires.

The Company is headquartered in New York, New York, with primary operations in New Jersey, Florida, and California.

(“STXD”), an inactive subsidiary headquartered in Bermuda.

For purposes of this Annual Report on Form 10-K, the terms “Siebert,”

“Company,”

“we,”

“us,”

and “our”

refer to Siebert Financial Corp., MSCO, SNXT, PW, STCH, RISE, and STXD collectively, unless the context otherwise requires.

The Company is headquartered in New York, NY, with primary operations in New Jersey, Florida, and California.

The Company has 12 branch offices throughout the U.S.

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.”

and clients around the world.

The Company’s SEC filings are available through the Company’s website at www.siebert.com, where investors can obtain copies of the Company’s public filings free of charge.

The Company’s common stock, par value $.

01 per share, trades on the Nasdaq Capital Market under the symbol “SIEB.”

The Company primarily operates in the securities brokerage and asset management industry and has no other reportable segments.

All of the Company's revenues for the years ended December 31, 2020 and 2019 were derived from its operations in the U.S.

As of December 31, 2020, the Company is comprised of a single operating 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.

Acquisition of WPS Prime Services, LLC

Effective December 1, 2019, the Company acquired 100% of the member interests in WPS Prime Services, LLC and WPS became wholly-owned subsidiary of the Company.

The operating

results for the 31-day period ended December 31, 2019 were included in the Company’s statement of income.

Acquisition of StockCross

On January 25, 2019, the Company purchased approximately 15% of the outstanding shares of StockCross Financial Services, Inc.

(“StockCross”).

Subsequently, the Company acquired the remaining 85% of

StockCross’ outstanding shares in exchange for 3,298,774 shares of the Company’s common stock.

Effective January 1, 2020, StockCross was merged with and into MSCO, and as of January 1, 2020, all clearing and other services provided by StockCross

were performed by MSCO.

Change in Reporting Entity

As of the date of the Company’s acquisition of StockCross, the Company and StockCross were entities under common control of the Gebbia Family.

The acquisition represented a change in reporting

entity and as such, the companies have been presented on a combined basis for all periods presented in the consolidated financial statements (“financial statements”).

See “Note 3 – Acquisitions” for additional

detail on the transaction with StockCross and the corresponding accounting.

All of the Company's revenues for the year ended December 31, 2021 and 2020 were derived from its operations in the U.S.

As of December 31, 2021, the Company is comprised of a single operating 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.

Transaction with Tigress Holdings, LLC

On November 16, 2021, the Company entered into an agreement with Tigress, a Delaware limited liability company.

As part of the agreement, (i) Tigress transferred to the Company limited liability company membership interests representing twenty-four percent (24%) of the outstanding membership interests in Tigress;

and (ii) the Company transferred to Tigress limited liability company membership interests representing twenty-four percent ( 24 %) of the outstanding membership interests of RISE and 1,449,525 shares of the Company’s common stock.

The common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Siebert 2021 Form-10K 43

As of December 31, 2021 and 2020, Siebert holds a controlling financial interest in RISE and therefore consolidates RISE within its financial statements.

Siebert owns the majority of RISE’s membership interest which has voting rights in proportion to its ownership interest in RISE.

Siebert’s ownership percentage of RISE as of December 31, 2021 and 2020 was 76 % and 100 %, respectively.

These consolidated financial statements reflect the results of operations and financial position of RISE, including consolidation of its investment in RISE.

The noncontrolling interests in RISE are reported as a component of total equity in the consolidated statement of financial condition.

As part of the transaction, WPS Prime Services, LLC was renamed to RISE Financial Services, LLC, and Tigress’

founder, Cynthia DiBartolo, will continue as CEO of Tigress, and assumed the position as CEO of RISE.

Gebbia, one of the Company’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE.

DiBartolo was appointed to the Company’s and RISE’s Board of Directors and Ms.

Gebbia was appointed to Tigress’

Board of Directors.

RISE relaunched its business as a woman-owned and operated prime brokerage with a specific emphasis on aligning the mission-driven initiatives with the technological needs of institutional customers.

Arrangements with JonesTrading and Goldman Sachs

On August 30, 2021, Goldman Sachs & Co.

LLC ("GSCO") notified RISE that its clearing arrangement with RISE will be terminated.

Due to the termination of RISE’s clearing arrangement with GSCO, substantially all the revenue producing customers of RISE have transitioned to other prime service providers.

Revenue from customers that have transitioned to other prime service providers was approximately $ 12.6 million and $ 13.9 million for the year ended December 31, 2021 and 2020, respectively.

Pre-tax income from these customers was approximately $ 1.8 million and $ 1.3 million for the year ended December 31, 2021, and 2020, respectively.

As a result of this development, the Company recorded a full impairment of the RISE customer relationships intangible asset of $ 699,000 and RISE collected its clearing deposit from GSCO of approximately $ 2 million as of December 31, 2021.

In addition, RISE’s institutional customer assets under management were significantly reduced in the year ended December 31, 2021.

On October 7, 2021, RISE signed an agreement with JonesTrading Institutional Services, LLC (“JonesTrading”) to transfer certain customers of RISE to JonesTrading.

In exchange, JonesTrading agreed to pay RISE a percentage of the net revenue produced by those clients less any related expenses.

The percentage paid to RISE related to this agreement will decline every year and the arrangement will end in October 2024.

For the year ended December 31, 2021, this agreement resulted in a net expense of $ 22,000 as RISE was in the process of transitioning customers to JonesTrading.

The challenges posed by the COVID-19 pandemic on the global economy increased significantly starting in the first quarter of 2020.

COVID-19 has spread across the globe during 2020 and has impacted

economic activity worldwide.

In response to COVID-19, national and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews,

shelter-in-place orders and recommendations to practice social distancing.

Siebert 2020 Form-10K 40

The Company instituted a number of temporary closures of branch offices;

however, as of the date of the filing of this report, all of the Company’s branch offices have been re-opened while

maintaining compliance with federal, state and local mandates and guidelines.

The Company has taken numerous steps to ensure that its employees and customers are operating in a safe environment by implementing measures such as social distancing,

sanitizing workstations, temperature checks, requiring masks, and alternating staff.

The financial impact on the Company from the COVID-19 pandemic has been varied as revenue streams related to interest rates have decreased while revenue streams from

commissions and fees and principal transactions have largely benefited from the market volatility associated with the pandemic.

COVID-19 spread across the globe during 2020 and impacted economic activity worldwide.

The primary financial impact on the Company from the COVID-19 pandemic for both the year ended December 31, 2021 and 2020 was lower interest revenue resulting from lower benchmark interest rates beginning in early 2020.

The Company is actively monitoring the impact of COVID-19 on its business, financial condition, liquidity, operations, employees, clients and business partners.

Based on management’s assessment as of

December 31, 2020, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact

on the global economy, which are uncertain and cannot be predicted at this time.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional detail on COVID-19 and its impact on the Company.

Based on management’s assessment as of December 31, 2021, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.

Siebert 2021 Form-10K 44

Acquisition of StockCross

On January 25, 2019, the Company purchased approximately 15 % of the outstanding shares of StockCross Financial Services, Inc.

(“StockCross”).

Subsequently, the Company acquired the remaining 85 % of StockCross’

outstanding shares in exchange for 3,298,774 shares of the Company’s common stock.

The Company’s common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Effective January 1, 2020, StockCross was merged with and into MSCO, and as of January 1, 2020, all clearing and other services provided by StockCross were performed by MSCO.

Prior to and as of the date of the Company’s acquisition of StockCross, the Company and StockCross were entities under common control of Gloria E.

Gebbia, the Company’s principal stockholder, and members of her immediate family (collectively, the “Gebbia Family”).

The acquisition represented a change in reporting entity.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) as established by the Financial Accounting Standards Board (“FASB”) to ensure consistent reporting of financial condition.

The consolidated financial statements include the accounts of Siebert and its wholly-owned subsidiaries and upon

consolidation, all intercompany balances and transactions are eliminated.

The accompanying consolidated financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) as established by the Financial Accounting Standards Board (“FASB”) to ensure consistent reporting of financial condition.

The consolidated financial statements include the accounts of Siebert and its wholly-owned and majority-owned subsidiaries.

Upon consolidation, all intercompany balances and transactions are eliminated.

dollar is the functional currency of the Company and numbers are rounded for presentation purposes.

The Company’s investments in non-majority-owned partnerships and affiliates are accounted for using the equity method until such time that they become wholly or majority-owned.

Earnings attributable to noncontrolling interests are recorded on the statements of income relating to wholly or majority-owned subsidiaries with the appropriate noncontrolling interest that represents the portion of equity not related to the Company’s ownership interest recorded on the statements of financial condition in each period.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

These estimates relate primarily to revenue and expenses in the normal course of business as to which the Company receives no confirmations, invoices, or other documentation at the time the books are

GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

These estimates relate primarily to revenue and expenses in the normal course of business as to which the Company receives no confirmations, invoices, or other documentation at the time the books are closed.

The Company uses its best judgment, based on knowledge of these revenue transactions and expenses incurred, to estimate the amount of such revenue and expenses.

Actual results could differ from those estimates.

The Company is not aware of any

material differences between the estimates used in closing the Company’s books for the last five years and the actual amounts of revenue and expenses incurred when the Company subsequently receives the actual confirmations, invoices, or other

documentation.

Estimates are used in intangible asset valuations and useful lives, depreciation, income taxes, and the contingent liabilities related to legal and healthcare expenses.

The Company also estimates the

valuation allowance for its deferred tax assets based on the more likely than not criteria.

The Company is not aware of any material differences between the estimates used in closing the Company’s books for the last five years and the actual amounts of revenue and expenses incurred when the Company subsequently receives the actual confirmations, invoices, or other documentation.

Estimates are used in the allowance for credit losses, valuation of certain investments, intangible asset valuations and useful lives, depreciation, income taxes, and the contingent liabilities related to legal and healthcare expenses.

The Company also estimates the valuation allowance for its deferred tax assets based on the more likely than not criteria.

The Company believes that its estimates are reasonable.

3 unchanged sentences

Goodwill, as of the date of acquisition, is determined as the excess of the consideration transferred net of the acquisition date fair values of assets acquired and liabilities assumed.

Fair value estimates at acquisition date may be assessed

internally or externally using third parties.

Fair value estimates at acquisition date may be assessed internally or externally using third parties.

As part of the valuation and appraisal process, the third-party appraiser prepares a report assigning estimated acquisition date fair values to assets and liabilities.

These fair value estimations are

subjective and require careful consideration and sound judgment.

These fair value estimations are subjective and require careful consideration and sound judgment.

Management reviews the third-party reports for fairness of the assigned values.

1 unchanged sentence

The Company is engaged in various trading and brokerage activities whose contra-parties include broker-dealers, banks and other financial institutions.

Siebert 2020 Form-10K 41

Siebert 2021 Form-10K 45

In the event contra-parties do not fulfill their obligations, the Company may sustain a loss if the market value of the instrument is different from the contract value of the transaction.

default primarily depends upon the credit worthiness of the contra-parties involved in the transactions.

It is the Company’s policy to review, as necessary, the credit standing of each contra-party with which it conducts business.

The Company has

experienced no material historical losses in relation to its contra-parties for the years ended December 31, 2020 and 2019.

The risk of default primarily depends upon the credit worthiness of the contra-parties involved in the transactions.

It is the Company’s policy to review, as necessary, the credit standing of each contra-party with which it conducts business.

The Company has experienced no material historical losses in relation to its contra-parties for the year ended December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the Company maintained its cash balances at various financial institutions.

These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to

$250,000 per institution.

These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per institution.

The Company is subject to credit risk to the extent that the financial institution with which it conducts business is unable to fulfill its contractual obligations and deposits exceed FDIC limits.

Allowance for Credit Losses

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Measurement of Credit Losses on Financial-Instruments.”

This ASU amends several aspects of the measurement of credit losses on financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses model (“CECL”).

Under CECL, the allowance for credit losses on financial assets that are measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of the financial assets.

Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, would be recognized in earnings, and adoption of the ASU will generally result in earlier recognition of credit losses.

Expected credit losses will be measured based on historical experience, current conditions and forecasts that affect the collectability of the reported amount, and credit losses will be generally recognized earlier than under previous U.S.

The Company’s adoption of this ASU using the modified retrospective approach for all in-scope assets did not result in an adjustment to the opening balance in retained earnings.

The ASU impacts only those financial instruments that are carried by the Company at amortized cost such as securities borrowed / loaned, receivables from customers, receivables from broker-dealers and clearing organizations, and other receivables.

The adoption of this ASU did not have a material impact to the Company's financial statements.

Cash and Cash Equivalents

Cash and cash equivalents are all cash balances that are unrestricted.

The Company has defined cash equivalents as highly liquid investments with original maturities of less than 90 days that are not

held for sale in the ordinary course of business.

The Company has defined cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business.

As of December 31, 2021 and 2020, the Company did not hold any cash equivalents.

At time, cash balances may exceed FDIC insured limits.

At certain times, cash balances may exceed FDIC insured limits.

Cash and Securities Segregated For Regulatory Purposes

MSCO is subject to Exchange Act Rule 15c3-3, referred to as the “Customer Protection Rule,” which requires segregation of funds in a special reserve account for the exclusive benefit of customers.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined.

See “Note 17 – Capital Requirements” for additional

As of December 31, 2020 and 2019, MSCO had $0 and $1.3 million of securities segregated for regulatory purposes, respectively.

MSCO is subject to Exchange Act Rule 15c3-3, referred to as the “Customer Protection Rule,”

which requires segregation of funds in a special reserve account for the exclusive benefit of customers.

As of December 31, 2021, and 2020 the Company did not have any securities segregated for regulatory purposes.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined.

Receivables From and Payables To Customers

Accounts receivable from and payable to customers include amounts due and owed on cash and margin transactions.

Securities owned by customers are held as collateral for

Receivables from customers are reported at their outstanding principal balance, adjusted for any allowance for doubtful accounts.

An allowance is established when collectability is not reasonably assured.

When the receivable from a

brokerage client is considered to be impaired, the amount of impairment is generally measured based on the fair value of the securities acting as collateral, which is measured based on current prices from independent sources such as listed market

prices or broker-dealer price quotations.

Receivables from and payables to customers include amounts due and owed on cash and margin transactions.

Receivables from customers include margin loans to securities brokerage clients and other trading receivables.

Margin loans are collateralized by customers securities and are carried at the amount receivable, net of an allowance for credit losses.

Collateral is required to be maintained at specified minimum levels at all times.

The Company monitors margin levels and requires customers to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes.

The Company expects the borrowers will continually replenish the collateral as necessary because the Company subjects the borrowers to an internal qualification process to align investing objectives and risk tolerance in addition to monitoring customer activity.

The Company elected the practical expedient for Topic 326 which permits it to compare the amortized cost basis of the loaned amount with the fair value of collateral received at the reporting date to measure the estimate of expected credit losses.

The Company has no expectation of credit losses for its receivables from customers as of December 31, 2021 and 2020.

Securities beneficially owned by customers, including those that collateralize margin or other similar transactions, are not reflected in the statements of financial condition.

No valuation allowance for

doubtful accounts was necessary as of December 31, 2020 and 2019.

Siebert 2021 Form-10K 46

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

Accounts receivable from and payable to broker-dealers includes receivables from or payables to MSCO and WPS clearing broker-dealers, fail-to-deliver and fail-to-receive items, deposits with clearing

organizations, and amounts receivable for unsettled regular-way transactions.

The Company operates on a month-to-month basis with its clearing broker-dealers and their fees are offset against the Company's revenues on a monthly basis.

See “Note 4 – Receivables from, Payables to, and Deposits with Broker-Dealers and Clearing Organizations” for additional detail.

MSCO customer transactions for the year ended December 31, 2020 were both self-cleared and cleared on a fully disclosed basis through National Financial Services Corp.

MSCO customer

transactions for the year ended December 31, 2019 were cleared on a fully disclosed basis through NFS and StockCross, the latter of which was an affiliate.

As of January 1, 2020, all clearing and other services provided by StockCross were performed

by MSCO and all MSCO deposits with StockCross were eliminated.

WPS customer transactions clear on a fully disclosed basis through The Goldman Sachs Group, Inc.

(“Goldman Sachs”) and Pershing LLC (“Pershing”).

Amounts payable to broker-dealers and clearing

organizations are offset against amounts receivables from broker-dealers and clearing organizations.

Receivables from these broker-dealers and clearing organizations are subject to clearing agreements and include the net receivable from net monthly

revenues as well as cash on deposit.

Siebert 2020 Form-10K 42

The Company evaluates receivables from broker-dealers and clearing organizations and other receivables for collectability noting no amount was considered uncollectable as of December 31, 2020 and

No valuation allowance is recognized for these receivables as the Company does not have a history of losses from these receivables and does not anticipate losses in the future.

See “Note 13 – Revenue

Recognition” for additional detail on the accounting policies for the revenue related to these receivables.

Receivables from and payables to broker-dealers includes receivables from or payables to MSCO and RISE clearing broker-dealers, fail-to-deliver and fail-to-receive items, and amounts receivable for unsettled regular-way transactions.

Deposits with broker-dealers and clearing organizations include amounts held on deposit with broker-dealers and clearing organizations.

Amounts payables to broker-dealers and clearing organizations are offset against corresponding amounts receivables from broker-dealers and clearing organizations.

Receivables from these broker-dealers and clearing organizations are subject to clearing agreements and include the net receivable from net monthly revenues as well as cash on deposit.

Receivables from and deposits with broker-dealers and clearing organizations are in scope of the amended guidance for Topic 326.

The Company continually reviews the credit quality of its counterparties and historically has not experienced a default.

Further, management reassessed the risk characteristics of its receivables and applied the collateral maintenance practical expedient for the secured receivables in line with the CECL guidance.

As a result, the Company has no expectation of credit losses for these arrangements as of December 31, 2021 and 2020.

MSCO customer transactions for the year ended December 31, 2021 and 2020 were both self-cleared and cleared on a fully disclosed basis through National Financial Services Corp.

(“NFS”).

RISE customer transactions for the year ended December 31, 2021 and 2020 were cleared on fully disclosed basis through GSCO and Pershing LLC (“Pershing”).

The Company signed a four-year renewal with NFS commencing August 1, 2021 and ending on July 31, 2025, and NFS’s fees are offset against the Company’s revenues on a monthly basis.

All other broker-dealer and clearing organization relationships operate on a month-to-month basis.

Securities Borrowed and Securities Loaned

Securities borrowed are recorded at the amount of cash collateral advanced.

Securities borrowed transactions require the Company to deposit cash, letters of credit, or other collateral with the

Securities borrowed transactions are recorded at the amount of cash collateral delivered to the counterparty.

Securities loaned are recorded at the amount of cash collateral received.

For securities borrowed and loaned, the Company monitors the market value of the securities and obtains or refunds collateral as necessary.

The Company can elect to use an approach to measure the allowance for credit losses using the fair value of collateral where the borrower is required to, and reasonably expected to, continually adjust and replenish the amount of collateral securing the instrument to reflect changes in the fair value of such collateral.

The Company has elected to use this approach for its allowance for credit losses on securities borrowed.

As a result of this election, and the fully collateralized nature of these arrangements, the Company has no expectation of credit losses on its securities borrowed balances as of December 31, 2021 and 2020.

Securities Owned and Securities Sold, Not Yet Purchased at Fair Value

Securities owned, at fair value represent marketable securities owned by the Company at trade-date valuation.

Securities sold, not yet purchased, at fair value represent marketable securities sold

by the Company prior to purchase at trade-date valuation.

See “Note 6 – Fair Value Measurements” for additional detail.

Furniture, Equipment, and Leasehold Improvements, Net

Furniture, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation and amortization.

Depreciation is calculated using the straight-line method

over the estimated useful lives of the assets, generally not exceeding four years.

Leasehold improvements are amortized over the shorter of their estimated useful life or the remaining lease term unless the lease transfers ownership of the

underlying asset to the lessee, or the lessee is reasonably certain to exercise an option to purchase the underlying asset, in which case the lessee will amortize over the estimated useful life of the leasehold improvements.

Securities sold, not yet purchased, at fair value represent marketable securities sold by the Company prior to purchase at trade-date valuation.

Property, Office Facilities, and Equipment, Net

Property, office facilities, and equipment are stated at cost, net of accumulated depreciation and amortization.

Depreciation for equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally not exceeding four years.

Office facilities are amortized over the shorter of their estimated useful life or the remaining lease term unless the lease transfers ownership of the underlying asset to the lessee, or the lessee is reasonably certain to exercise an option to purchase the underlying asset, in which case the lessee will amortize over the estimated useful life of the leasehold improvements.

Depreciation for property is calculated using the straight-line-method over the estimated useful life of the property, not exceeding 40 years.

Software, Net

The Company capitalizes certain costs for software such as website and other internal technology development and amortizes them over their useful life, generally not exceeding three years .

on the terms of the contract, the Company either records costs from software hosting arrangements as prepaid assets and amortizes them over the contract term, or the costs are expensed as incurred.

The Company enters into certain software hosting arrangements where the cost associated professional development services is capitalized and then amortized over

the term of the contract.

Depending on the terms of the contract, the Company either records costs from software hosting arrangements as prepaid assets and amortizes them over the contract term, or the costs are expensed as incurred.

Siebert 2021 Form-10K 47

The Company enters into certain software hosting arrangements where the cost for professional development services is capitalized and then amortized over the term of the contract.

Other software costs such as routine maintenance and various data services to provide market information to customers are expensed as incurred.

Payables to Non-Customers

Payables to non-customers includes amounts due on cash and margin transactions on accounts owned and

controlled by principal officers and directors of MSCO.

Payables to non-customers amounts include any amounts received from interest on credit balances.

Payables to non-customers also include amounts due on cash transactions owned and controlled by the Company’s proprietary accounts of introducing broker-dealers.

Effective upon the Company’s

acquisition of StockCross on January 1, 2020, the Company no longer had any proprietary accounts of introducing broker-dealers.

Drafts Payable

Drafts payable represent checks drawn by the Company against customer accounts which remained outstanding and had not cleared the bank as of the end of the period.

Siebert 2020 Form-10K 43

Equity Method Investments

Investments in which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method of accounting and are included in the equity method investment in related party line item in the statements of financial condition.

Under this method of accounting, the Company’s share of the net income or loss of the investee is presented before the income before provision for income taxes on the statements of income.

The Company evaluates its equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired.

If the impairment is determined to be other-than-temporary, the Company will recognize an impairment loss equal to the difference between the expected realizable value and the carrying value of the investment.

Investments, Cost

The Company measures equity investments (other than equity method investments, controlling financial interests that result in consolidation of the investee and certain other investments) at fair value and recognizes any changes in fair value in net income.

Pursuant to ASU 2020-01, the Company has made an accounting policy election to measure equity securities without readily determinable fair value at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Intangible Assets, Net

Certain identifiable intangible assets the Company acquires such as customer relationships and trade names are amortized over their estimated useful lives on a straight-line

Amortization expense associated with such intangible assets is included in the “Depreciation and amortization” line item on the statements of income.

Certain identifiable intangible assets the Company acquires such as customer relationships and trade names are amortized over their estimated useful lives on a straight-line basis.

Amortization expense associated with such intangible assets is included in the line item “Depreciation and amortization”

on the statements of income.

The Company evaluates intangible assets for impairment on an annual basis or when events or changes indicate the carrying value may not be recoverable.

The Company also

evaluates the remaining useful lives of intangible assets on an annual basis or when events or changes warrants the remaining period of amortization to be revised.

The Company currently does not have any intangible assets with indefinite lives

other than goodwill.

Goodwill is recognized as a result of business combinations and represents the excess of the purchase price over the fair value of net tangible assets and identifiable

intangible assets.

The Company also evaluates the remaining useful lives of intangible assets on an annual basis or when events or changes warrants the remaining period of amortization to be revised.

Goodwill is recognized as a result of business combinations and represents the excess of the purchase price over the fair value of net tangible assets and identifiable intangible assets.

The Company evaluates goodwill for impairment on an annual basis or when events or changes indicate the carrying value may not be recoverable.

The Company has the option of performing a qualitative assessment of goodwill to

determine whether it is more likely than not that the fair value of its equity is less than the carrying value.

The Company has the option of performing a qualitative assessment of goodwill to determine whether it is more likely than not that the fair value of its equity is less than the carrying value.

If it is more likely than not that the fair value exceeds the carrying value, then no further testing is necessary;

otherwise, the

Company must perform a two-step quantitative assessment of goodwill.

otherwise, the Company must perform a two-step quantitative assessment of goodwill.

The Company may elect to bypass the qualitative assessment and proceed directly to performing a two-step quantitative assessment.

Payables to Non-Customers

Payables to non-customers includes amounts due on cash and margin transactions on accounts owned and controlled by principal officers and directors of MSCO.

Payables to non-customers amounts include any amounts received from interest on credit balances.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the Company no longer had any proprietary accounts of introducing broker-dealers.

Siebert 2021 Form-10K 48

Drafts Payable

Drafts payable represent checks drawn by the Company against customer accounts which remained outstanding and had not cleared the bank as of the end of the period.

Deferred Contract Incentive

The Company entered into an amendment with its agreement with NFS whereby the Company received a one-time business development credit of $ 3 million, and NFS will pay the Company four annual credits of $ 100,000 , which are recorded within 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 income.

Revenue Recognition

Revenue from contracts with customers and counterparties includes commissions and fees, principal transactions, market making, stock borrow / stock loan, advisory fees, margin

interest, marketing and distribution fees, interest income, and other income.

Revenue from contracts with customers and counterparties includes commissions and fees, principal transactions, market making, stock borrow / stock loan, advisory fees, interest, marketing and distribution fees, as well as other income.

The recognition and measurement of revenue is based on the assessment of individual contract terms.

Significant judgment is required to determine whether performance

obligations are satisfied at a point in time or over time;

how to allocate transaction prices where multiple performance obligations are identified;

when to recognize revenue based on the appropriate measure of the Company’s progress under the

and whether constraints on variable consideration should be applied due to uncertain future events.

As of December 31, 2020 and 2019, the acquisition of new entities did not impact the Company’s existing revenue streams as the acquired entities had consistent application of

the revenue recognition guidance.

Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time, how to allocate transaction prices where multiple performance obligations are identified, when to recognize revenue based on the appropriate measure of the Company’s progress under the contract, and whether constraints on variable consideration should be applied due to uncertain future events.

Advertising Costs

Advertising costs are expensed as incurred and were $0 and $2,000 for the years ended December 31, 2020, and 2019, respectively.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events

that have been included in the financial statements.

Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using

enacted tax rates in effect for the year in which the differences are expected to reverse.

Advertising costs are expensed as incurred and were $ 44,000 and $ 0 for the year ended December 31, 2021, and 2020, respectively.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized.

In making such a determination, the Company considers all

available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

If the Company determines that it would be

able to realize deferred taxes in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions

will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent

likely to be realized upon ultimate settlement with the related tax authority.

Siebert 2020 Form-10K 44

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

If the Company determines that it would be able to realize deferred taxes in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of income.

Accrued interest and penalties would be included

on the related tax liability line in the statements of financial condition.

Accrued interest and penalties would be included on the related tax liability line in the statements of financial condition.

Capital Stock

The authorized capital stock of the Company consists of a single class of common stock.

Shares authorized were 100 million and 49 million as of December 31, 2020 and 2019, respectively.

Shares authorized were 100 million as of both December 31, 2021 and 2020.

Per Share Data

Basic earnings per share is calculated by dividing net income by the weighted average number of outstanding common shares during the year.

Diluted earnings per share is

calculated by dividing net income by the number of shares outstanding under the basic calculation and adding, all dilutive securities, which consist of options.

Basic earnings per share is calculated by dividing net income available to the Company’s common stockholders by the weighted average number of outstanding common shares during the year.

Diluted earnings per share is calculated by dividing net income available to the Company’s common stockholders by the number of shares outstanding under the basic calculation and adding, all dilutive securities, which consist of options.

The Company has no dilutive securities as of December 31, 2021 and 2020.

Non-Cash Investing and Financing Activities

The Company entered into a promissory note of $3 million with Gloria E.

Gebbia to finance part of the acquisition of WPS.

This was a non-cash item for the Company for the year ended December 31, 2019

as the $3 million was paid directly from Gloria E.

Gebbia to WPS.

See “Note 12 – Notes Payable - Related Party” for additional detail.

Recently Issued Accounting Pronouncements

ASU 2019 - 12 - In December 2019, the FASB issued ASU No.

2019-12, “Simplifying the Accounting for Income Taxes.” This

guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

guidance also clarifies and simplifies other areas of ASC 740.

This guidance is effective for fiscal years beginning after December 15, 2020.

The guidance in this update has various elements, some of which are applied on a prospective basis and

others on a retrospective basis with earlier application permitted.

The Company is currently evaluating the effect of this new standard;

however, the Company believes there will be no material impact to its financial statements.

Recently Adopted Accounting Pronouncements

ASU 2020-04 / ASU 2021-01 - In

March 2020, t he FASB issued Accounting Standards Update (“ASU”), which was subsequently amended in January 2021, related to contracts or hedging relationships that reference London Interbank Offered Rate (“LIBOR”)

or other reference rates that are expected to be discontinued due to reference rate reform.

The new standard provides for optional expedients and other guidance regarding the accounting related to modifications of contracts, hedging relationships

and other transactions affected by reference rate reform.

The amendment in ASU 2021-01 clarifies that all derivative instruments affected by changes to interest rates used for discounting, margining or contract price alignment are in the

scope of Accounting Standards Codification (“ASC”) 848.

The Company adopted the new standards as of January 1, 2020 and determined they were immaterial to the Company’s financial statements as of December 31, 2020.

ASU 2018 - 15 - In August 2018, the FASB issued Accounting

Standards Update (“ASU”) 2018-15, Intangibles, Goodwill and Other Internal-Use Software, (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires customers

to apply the same criteria for capitalizing implementation costs incurred in a cloud computing arrangement that is hosted by the vendor as they would for an arrangement that has a software license.

The standard is effective for interim and annual

periods beginning after December 15, 2019 and early adoption is permitted.

The standard can be adopted prospectively or retrospectively.

The Company adopted this new standard on January 1, 2020 and there was no material impact to the Company’s

financial statements as the only transactions impacted by this new standard occurred during the year ended December 31, 2020.

See “Note 5 – Prepaid Service Contract” for additional detail.

ASU 2018-13 - In August 2018, the FASB issued ASU 2018-13, Fair value Measurement (Accounting Standards Codification (“ASC”) 820):

Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

The standard is effective for annual periods, including interim

periods within those annual periods, beginning after December 15, 2019 and early adoption is permitted.

The Company adopted the new standard on its effective date, January 1, 2020, and determined it was immaterial to the Company’s financial

statements as of December 31, 2020.

Siebert 2020 Form-10K 45

ASU 2018-07 - In June 2018, the FASB issued ASU No.

2018-07, Compensation - Stock Compensation (Topic

ASU 2018-07 is intended to reduce cost and complexity of financial reporting for non-employee share-based payments.

Currently, the accounting requirements for non-employee and employee share-based payments are significantly different.

2018-07 expands the scope of Topic 718, which currently only includes share-based payments to employees, to include share-based payments to non-employees for goods or services.

Consequently, the accounting for share-based payments to non-employees

and employees will be substantially aligned.

This ASU supersedes Subtopic 505-50, “Equity - Equity-Based Payments to Nonemployees.” The amendments to ASU 2018-07 are effective for fiscal years beginning after December 15, 2019, and interim periods

within fiscal years beginning after December 15, 2020.

Early adoption is permitted, but no earlier than a company’s adoption date of ASU No.

2014-09, (Topic 606), “Revenue from Contracts with Customers.” The Company adopted this new

standard on January 1, 2020 and there was no material impact to the Company’s financial statements as the only transactions impacted by this new standard occurred during the year ended December 31, 2020.

See “Note 5 – Prepaid Service Contract” for additional detail.

ASU 2017-04 – In January 2017, the FASB amended the guidance to simplify the test for goodwill impairment by eliminating Step 2 from

the goodwill impairment test.

The amended guidance requires the Company to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge should be recognized at the amount

by which the carrying amount exceeds the fair value of the reporting unit;

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

Income tax effects resulting from any tax-deductible goodwill

should be considered when measuring the goodwill impairment loss, if applicable.

The Company will still have the option to perform a qualitative assessment to conclude whether it is more likely than not that the carrying amount of the Company

exceeds its fair value.

The guidance will be effective for interim and annual periods beginning January 1, 2020, and must be applied prospectively.

Siebert 2021 Form-10K 49

Accounting Standards Adopted in Fiscal 2021

ASU 2020-01 - In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.”

The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions.

ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting.

For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted the new standard on January 1, 2020 and determined

that it did not impact the Company as goodwill was not impaired as of December 31, 2020.

ASU 2016-02 – In February 2016, the

FASB established ASC 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.

The new standard establishes a right-of-use model that requires a

lessee to recognize a lease right-of-use asset and lease liability on the statement of financial condition for all leases with a term longer than 12 months.

Leases will be classified as finance or operating, with classification affecting the

pattern and classification of expense recognition in the statement of income.

The new standard is effective for the Company on January 1, 2019, with early adoption permitted.

The Company adopted the new standard on its effective date.

retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application.

An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period

presented in the consolidated financial statements as its date of initial application.

The Company adopted the new standard on January 1, 2019 and used the effective date as the date of initial application.

Consequently, financial information

will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition.

The Company elected the “package of practical expedients,” which permits the Company not to

reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs.

The Company has not elected the hindsight practical expedient at transition.

The new standard also provides practical expedients for an entity’s ongoing accounting.

The Company elected the short-term lease recognition exemption for all leases that

This means, for those leases that qualify, the Company will not recognize lease right-of-use assets or lease liabilities.

As of December 31, 2020, the financial statements for the periods presented reflect the changes from this accounting

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s financial statements

and related disclosures as of December 31, 2020 .

The Company adopted this ASU on January 1, 2021.

The adoption of this standard did not have a material impact on the Company’s financial statements.

ASU 2019-12 - In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes”, as part of its initiative to reduce complexity in the accounting standards.

The ASU eliminates certain exceptions from ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes.

The guidance is effective for fiscal years beginning after December 15, 2020 and for interim periods within those fiscal years.

The Company adopted this ASU on January 1, 2021.

The adoption of this standard did not have a material impact on the Company’s financial statements.

ASU 2016-13 - In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial-Instruments”.

Under CECL, the allowance for losses for financial assets that are measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of the financial assets.

The Company adopted this ASU on January 1, 2021 using the modified retrospective approach for all in-scope assets, which did not result in an adjustment to the opening balance in retained earnings.

The ASU impacts only those financial instruments that are carried by the Company at amortized cost such as securities borrowed / loaned, receivables from customers, non-customers, broker dealers and clearing organizations and other receivables.

The adoption of this ASU did not have a material impact to the Company's financial statements.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s financial statements and related disclosures as of December 31, 2021.

Overview of Acquisition

Established in 1971, StockCross was one of the largest privately-owned brokerage firms in the nation and its operations consisted primarily of market making, fixed-income products distribution,

online and broker-assisted equity trading, securities lending, and equity stock plan services.

Siebert 2020 Form-10K 46

Established in 1971, StockCross was one of the largest privately-owned brokerage firms in the nation and its operations consisted primarily of market making, fixed-income products distribution, online or broker-assisted equity trading, securities lending, and equity stock plan services.

Prior to being acquired by the Company, StockCross and the Company were affiliated entities through common ownership and had various related party transactions.

In January 2019, the Company acquired

approximately 15% ownership of StockCross.

Effective January 1, 2020, the Company acquired the remaining 85% of StockCross’ outstanding shares and StockCross was merged with and into MSCO.

The purchase price paid was approximately $29,750,000 or

3,298,774 shares of the Company’s restricted common stock which was issued in connection with the acquisition.

Prior to the acquisition, MSCO had a clearing agreement with StockCross whereby StockCross provided custody and clearing services to MSCO

for its securities broker-dealer business;

however, as of January 1, 2020, all clearing and other services provided by StockCross were performed by MSCO.

In January 2019, the Company acquired approximately 15 % ownership of StockCross.

Effective January 1, 2020, the Company acquired the remaining 85 % of StockCross’

outstanding shares and StockCross was merged with and into MSCO.

The purchase price paid was approximately $ 29,750,000 or 3,298,774 shares of the Company’s common stock which was issued in connection with the acquisition.

The acquisition of StockCross added incremental business lines, revenue streams, cost synergies and additional experienced management team members to MSCO.

Accounting for Acquisition

Prior to and as of the date of the acquisition, the Company and StockCross were entities under common control of the Gebbia Family.

As such, the acquisition

was accounted for as a transaction between entities under common control.

This common-control transaction does not meet the definition of a business combination in accordance with GAAP because there was no change in control

over the net assets.

As such, the acquisition was accounted for as a transaction between entities under common control.

The acquisition represented a change in reporting entity.

As such, upon the closing of the acquisition, the net

assets of the Company were combined with those of StockCross at their historical carrying amounts.

The companies have been presented on a combined basis for all periods presented in the financial statements in a manner similar to a pooling of

interests, as the period of common control existed prior to the periods presented in the financial statements.

Accordingly, the historical financial statements of the Company have been presented under the “as if pooling” method.

The statement of income for the year ended December 31, 2019 reflects the elimination of StockCross’ other income and the

Company’s corresponding custody and clearing fees resulting from the fully disclosed clearing relationship between MSCO and StockCross.

In addition, the Company’s loss recognized as part of its equity method investment in StockCross for the year

ended December 31, 2019 was eliminated upon consolidation.

These adjustments to pre-tax income were tax affected using an estimated effective tax rate of 28.0%.

The statement of financial condition as of December 31, 2019 reflects the elimination of intercompany payables and receivables

between the Company and StockCross as part of their ongoing business relationship and reflects the elimination of the Company’s 15% ownership of StockCross.

The statement of financial condition as of December 31, 2019 reflects an adjustment to

increase the Company’s common stock by the par value of the shares issued in connection with the transaction and to eliminate the par value of StockCross’ common stock.

The adjustments also increase additional paid-in capital for the net

difference, as well as the change in retained earnings from the adjustments in the statement of income.

Prior to the Company’s acquisition of StockCross, StockCross sold its treasury stock totaling $172,000 to

third parties and the Company purchased approximately 15% of the outstanding shares of StockCross from an unrelated party for $3,665,000.

On September 5, 2019, StockCross made a return of capital distribution in the aggregate amount of $1.6

million, of which the Company received approximately 15%, or $241,000.

All of these cash transactions are reflected in the “Cash flows from financing activities” section of the statements of cash flows for the year ended December 31, 2019.

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the

periods presented, nor is it intended to be a projection of future results.

Siebert 2020 Form-10K 47

Assets Acquired and Liabilities Assumed

The Company acquired various assets and assumed liabilities from StockCross which were recorded at their historical carrying amounts and summarized below:

As such, upon the closing of the acquisition, the net assets of the Company were combined with those of StockCross at their historical carrying amounts and no goodwill was recorded as part of the transaction.

Siebert 2021 Form-10K 50

The Company acquired various assets and liabilities from StockCross which were recorded at their historical carrying amounts and summarized below:

Carrying Value

20 unchanged sentences

Securities sold, not yet purchased, at fair value

Notes payable – related party

Lease liabilities

Total Liabilities assumed

Net Assets acquired

Siebert 2020 Form-10K 48

Overview of Acquisition

WPS is a Delaware limited liability company originally organized as a corporation under the laws of the State of Florida in 2007.

WPS is a registered broker-dealer with the SEC and Commodity

Futures Trading Commission ("CFTC"), and is a member of the FINRA, National Futures Association ("NFA"), and SIPC.

WPS operations consist primarily of trade execution and risk management services for customers and is an introducing broker for the

transactions of institutional customers.

Prior to being acquired by the Company, WPS was comprised of two members, Weeden Investors L.P.

(“WILP”), a Delaware limited partnership, and Weeden Securities Corporation

(“WSC”), a Delaware corporation, and was managed by a Board of Managers.

Effective December 1, 2019, the Company purchased 100% of the member interests of WPS from WILP and WSC and WPS became a wholly-owned subsidiary of the Company.

price was approximately $7.1 million paid in cash and the Company borrowed $3 million in a promissory note payable to Gloria E.

Gebbia to finance part of the purchase.

The operating results for the 31-day period ended December 31, 2019 were

included in the Company’s statement of income for the year ended December 31, 2019.

Accounting for Acquisition

The transaction was accounted for under the acquisition method of accounting for business combinations pursuant to ASC 805 - Business Combinations.

ASC 805, requires, among other things, that the

assets acquired and liabilities assumed be recognized at their fair values as of the proposed acquisition date.

ASC 820 - Fair Value Measurements, which establishes a framework for measuring fair values, defines fair value as “the price that would be

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

Assets Acquired and Liabilities Assumed

The Company was required to allocate the WPS purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of

November 30, 2019.

The excess of the purchase price over those fair values was recorded as goodwill.

In accordance with ASC 805, the Company was required to finalize the fair value of net assets of the business combination on the acquisition date.

As of December 31, 2019, the Company completed its allocation of the WPS purchase price and adjustments were made for tax considerations.

In determining the fair value of assets acquired and liabilities assumed, the Company primarily used discounted cash flow analyses and market approaches.

Inputs to the

discounted cash flow analyses and other aspects of the allocation of purchase price required judgment.

The more significant inputs used in the discounted cash flow analyses and other areas of judgment included assumptions such as future revenue

growth or attrition rates, projected margins, discount rates used to present value future cash flows, the amount of synergies expected from the acquisition, and the economic useful life of assets.

Siebert 2020 Form-10K 49

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

Estimated Fair Value

Cash and cash equivalents

Cash segregated for regulatory purpose

Receivables from broker-dealers and clearing organizations

Furniture, equipment, and leasehold improvements, net

Software, net

Intangible assets, net

Lease right-of-use assets

Prepaid expenses and other assets

Total Assets acquired

Accounts payable and accrued liabilities

Notes payable –

related party

Lease liabilities

1 unchanged sentence

Net Assets acquired

Purchase price

The transaction resulted in $1,989,000 of goodwill, all of which is expected to be deductible for tax purposes.

Financial Results from WPS

The following table summarizes the revenue and net income from operations of WPS included in the Company’s statement of income for the year ended December 31, 2019 since the date of acquisition (for

the 31-day period ended December 31, 2019):

December 31, 2019

Pro Forma Statements

The following pro forma summary presents the statement of income of the Company as if the acquisition of WPS had occurred on January 1, 2019, inclusive of pro forma adjustments (unaudited).

financial statements have already been consolidated as part of the Company’s financial statements for the period presented for 2020.

The pro forma results include adjustments made for the consolidation of both entities.

These adjustments take into consideration the interest expense on the promissory note used in financing the

acquisition, the amortization of the acquired intangible assets, as well as the tax effect of pro forma adjustments using an estimated effective rate of 28.0%.

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of

future results.

December 31, 2019

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:

Siebert 2020 Form-10K 50

December 31, 2020

December 31, 2019

As of December 31, 2021

As of December 31, 2020

Receivables from and deposits with broker-dealers and clearing organizations

3 unchanged sentences

Securities fail-to-deliver

Other receivables

Total Receivables from and deposits with broker-dealers and clearing organizations

2 unchanged sentences

Total Payables to broker-dealers and clearing organizations

Under the DTCC shareholders’ agreement, MSCO is required to participate in the DTCC common stock mandatory purchase.

As of December 31, 2020, MSCO had shares of DTCC common stock valued at

approximately $937,000 which is included within the line item “Deposits with broker-dealers and clearing organizations” in the statements of financial condition.

As of December 31, 2019, StockCross had shares of DTCC common stock valued at

approximately $359,000.

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Under the Depository Trust and Clearing Corporation (“DTCC”) shareholders’

agreement, MSCO is required to participate in the DTCC common stock mandatory purchase.

As of December 31, 2021 and 2020, MSCO had shares of DTCC common stock valued at approximately $ 905,000 and $ 937,000 , respectively, which are included within the line item “Deposits with broker-dealers and clearing organizations”

on the statements of financial condition.

Prepaid Service Contract

On April 21, 2020, the Company entered into a Master Services Agreement (“MSA”), with InvestCloud, Inc.

(“InvestCloud”).

Pursuant to the MSA, InvestCloud agreed to provide the Company with the

InvestCloud Platform, a new client and back end interface and related functionalities for the Company’s key operations.

The Company agreed to pay InvestCloud as consideration therefore during the initial three-year term an annual license fee of

$600,000 as well as an upfront professional service fee of $1.0 million for one-time configuration, installation and customization of the software.

Following the initial three-year term, the MSA will automatically renew for additional one-year terms

unless terminated by the Company upon 120 days’ notice.

In connection with the MSA, InvestCloud entered into a Side Letter Agreement with the Company pursuant to which InvestCloud acquired 193,906 shares of the Company’s restricted common stock (the

“Shares”) at a per share price of $5.81 (the Company’s share price as of the close of May 12, 2020) for a total of $1.1 million for professional services, which approximates the cost of services to be provided, to integrate the InvestCloud Platform

into the Company’s existing systems and Robo-Advisor.

The Shares were issued to InvestCloud on May 12, 2020 without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2) thereunder.

This transaction

is reflected in the “Non-cash investing and financing activities” section of the statements of cash flows.

In accordance with ASU 2018-15, Intangibles, Goodwill and Other Internal-Use Software, the Company initially recorded a prepaid asset equal to the $2.1 million of the total professional services

related to the development work performed by InvestCloud, which is within the line item “Prepaid service contract” on the statements of financial condition.

The Company amortizes this asset over the 3-year term of the contract, a period during which

the arrangement is noncancelable.

The license fees related to the Company’s use of the InvestCloud Platform are prepaid three months in advance and are also within the line item “Prepaid service contract” on the statements of financial condition.

On April 21, 2020, the Company entered into a Master Services Agreement (“MSA”), with InvestCloud, Inc.

(“InvestCloud”).

Pursuant to the MSA, InvestCloud agreed to provide the Company with the InvestCloud Platform, a new client and back end interface and related functionalities for the Company’s key operations.

The Company agreed to pay InvestCloud as consideration therefore during the initial three-year term an annual license fee of $ 600,000 as well as an upfront professional service fee of $ 1.0 million for one-time configuration, installation and customization of the software.

Following the initial three-year term, the MSA will automatically renew for additional one-year terms unless terminated by the Company upon 120 days’

In connection with the MSA, InvestCloud entered into a side letter agreement with the Company pursuant to which InvestCloud acquired 193,906 shares of the Company’s restricted common stock at a per share price of $ 5.81 (the Company’s share price as of the close of May 12, 2020) for a total of $ 1.1 million for professional services, which approximates the cost of services to be provided, to integrate the InvestCloud Platform into the Company’s existing systems.

The common stock was issued on May 12, 2020 pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Company initially recorded a prepaid asset equal to the $ 2.1 million of the total professional services related to the development work to be performed by InvestCloud, which is within the line item “Prepaid service contract”

on the statements of financial condition.

The Company amortizes this asset over the 3 -year term of the contract, a period during which the arrangement is noncancelable.

The license fees related to the Company’s use of the InvestCloud Platform are prepaid three months in advance and are within the line item “Prepaid service contract”

on the statements of financial condition.

These prepaid license fees are amortized over the three-month term.

The amortization for all the prepaid assets related to InvestCloud is within the line item “Technology and Communications” on the statements of income.

The Company recorded $219,000 in expense related to share-based payments to InvestCloud for professional services and the total cost related to InvestCloud was $764,000 for the year ended December

The amortization for all the prepaid assets related to InvestCloud is within the line item “Technology and Communications”

on the statements of income.

The expense related to share-based payments to InvestCloud for professional services was $ 376,000 and $ 219,000 for the year ended December 31, 2021, and 2020, respectively.

The total cost related to InvestCloud was $ 959,000 and $ 764,000 for the year ended December 31, 2021, and 2020, respectively.

Fair Value Measurements

ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs.

Fair value is the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the

principal market for the asset or liability or, in the absence of a principal market, the most advantageous market.

Valuation techniques that are consistent with the market, income, or cost approach, as specified by ASC 820, are used to measure

Siebert 2020 Form-10K 51

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market.

Valuation techniques that are consistent with the market, income, or cost approach, as specified by ASC 820, are used to measure fair value.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1 - Quoted prices (unadjusted) in active markets for an identical asset or liability that the Company can assess at the measurement date.

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 1 - Quoted prices (unadjusted) in active markets for an identical asset or liability that the Company can assess at the measurement date.  

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.  

Level 3 - Unobservable inputs for the asset or liability.

The availability of observable inputs can vary from security to security and is affected by a variety of factors, such as the type of

security, the liquidity of markets, and other characteristics particular to the security.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires

more judgment.

The availability of observable inputs can vary from security to security and is affected by a variety of factors, such as the type of security, the liquidity of markets, and other characteristics particular to the security.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

As such, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

Siebert 2021 Form-10K 52

The inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, for disclosure purposes,

the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.

Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date.

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a

recurring basis is as follows:

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows:

government securities:

government securities are valued using quoted market prices and

as such, valuation adjustments are not applied.

government securities are valued using quoted market prices and as such, valuation adjustments are not applied.

Accordingly, U.S.

government securities are generally categorized in level 1 of the fair value hierarchy.

Corporate bonds and convertible preferred stock:

The fair value of corporate bonds and convertible

preferred stock are determined using recently executed transactions, market price quotations (when observable), bond spreads, or credit default swap spreads obtained from independent external parties such as vendors and brokers, adjusted for any

basis difference between cash and derivative instruments.

Certificates of deposit:

Certificates of deposit are included in investments valued at cost, which approximates fair value.

When certificates of deposits are held directly with banking institutions and issued directly to the Company, these are categorized within cash equivalents in level 2 of the fair value hierarchy.

When certificates of deposits are available for trading, they are categorized within securities owned, at fair value in level 2 of the fair value hierarchy.

Corporate bonds:

The fair value of corporate bonds is determined using recently executed transactions, market price quotations (when observable), bond spreads, or credit default swap spreads obtained from independent external parties such as vendors and brokers, adjusted for any basis difference between cash and derivative instruments.

The spread data used is for the same maturity as the bond.

If the spread data does not reference the issuer, then data that references a comparable issuer is used.

When position-specific

external price data is not observable, fair value is determined based on either benchmarking to similar instruments or cash flow models with yield curves, bond, or single-name credit default swap spreads and recovery rates as significant inputs.

Corporate bonds and convertible preferred stocks are generally categorized in level 2 of the fair value hierarchy.

When position-specific external price data is not observable, fair value is determined based on either benchmarking to similar instruments or cash flow models with yield curves, bond, or single-name credit default swap spreads and recovery rates as significant inputs.

Corporate bonds are generally categorized in level 2 of the fair value hierarchy.

Equity securities:

Equity securities are valued based on quoted prices from the exchange.

extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in level 1 of the fair value hierarchy.

To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in level 1 of the fair value hierarchy.

Securities quoted in inactive markets or with observable inputs are categorized into level 2.

there are no observable inputs or quoted prices, securities are categorized as level 3 assets in the fair value hierarchy.

Level 3 assets are not actively traded and subjective estimates based on managements’ assumptions are utilized for valuation.

Certificates of deposit:

Certificates of deposit included in investments are valued at cost, which approximates fair value.

certificates of deposits are held directly with banking institutions and issued directly to the Company, these are categorized within cash and cash equivalents in level 2 of the fair value hierarchy.

When certificates of deposits are available for

trading, they are categorized within securities owned, at fair value in level 2 of the fair value hierarchy.

If there are no observable inputs or quoted prices, securities are categorized as level 3 assets in the fair value hierarchy.

Level 3 assets are not actively traded and subjective estimates based on managements’

assumptions are utilized for valuation.

Fair Value Hierarchy Tables

The following tables present the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of the periods presented.

Siebert 2020 Form-10K 52

The following tables present the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of the periods presented.

As of December 31, 2021

8 unchanged sentences

Total Securities sold, not yet purchased, at fair value

Siebert 2021 Form-10K 53

As of December 31, 2020

Cash and securities segregated for regulatory purposes

government securities**

Securities owned, at fair value

government securities*

Certificates of deposit

Corporate bonds

4 unchanged sentences

Total Securities sold, not yet purchased, at fair value

*As of December 31, 2020 and 2019, these U.S.

government securities mature on 08/31/21

** As of December 31, 2019, these U.S.

government securities mature on 02/29/20

* As of December 31, 2021 and 2020, the U.S.

government securities had maturity dates of August 15, 2024 and August 31, 2021, respectively.

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a non-recurring basis is as follows:

Non-marketable equity securities:

The Company’s non-marketable equity securities are investments in privately held companies that do not have a readily determinable market value.

Due to the absence of quoted market prices, these are classified as level 3 since considerable judgement and estimation is involved in determining the fair value of these securities.

The table below summarized the total carrying value of Level 3 equity assets and changes made during the periods presented.

Changes in Level 3 Equity Assets

2 unchanged sentences

Reason for Change

Balance – January 1, 2020

Securities owned, at fair value

Balance –

January 1, 2020

Liquidation value based on valuation report

Transfers out of level 3

Sale of equity security

Balance – December 31, 2020

The following represents financial instruments in which the ending balances as of December 31, 2020 and 2019 are not carried at fair value in the statements of financial

Sale of equity security

Balance –

December 31, 2020

The following represents financial instruments in which the ending balances as of December 31, 2021 and 2020 are not carried at fair value on the statements of financial condition:

Short-term financial instruments:

The carrying value of short-term financial instruments, including cash and cash equivalents as well as cash and securities segregated for regulatory purposes are recorded at amounts that approximate the fair value of these instruments.

These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market rates.

The Company had no cash equivalents or securities segregated for regulatory purposes as of December 31, 2021 and 2020.

Cash and cash equivalents and cash and securities segregated for regulatory purposes are classified as level 1.

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Receivables and other assets:

Receivables from broker-dealers and clearing organizations,

receivables from customers, other receivables, prepaid service contact, and prepaid expenses and other assets are recorded at amounts that approximate fair value and are classified as level 2 under the fair value hierarchy.

Receivables from customers, receivables from non-customers, receivables from and deposits with broker-dealers and clearing organizations, other receivables, prepaid service contract, and prepaid expenses and other assets are recorded at amounts that approximate fair value and are classified as level 2 under the fair value hierarchy.

The Company may hold cash equivalents related to rent deposits that are categorized as level 2 under the fair value hierarchy in other receivables.

Securities borrowed and securities loaned:

Securities borrowed and securities loaned are recorded

at amounts which approximate fair value and are primarily classified as level 2 under the fair value hierarchy.

The Company’s securities borrowed and securities loaned balances represent amounts of equity securities borrow and loan contracts and

are marked-to-market daily in accordance with standard industry practices which approximate fair value.

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Payables to customers, payables to non-customers, drafts payable, payables to

broker-dealers and clearing organizations, accounts payable and accrued liabilities, interest payable, and taxes payable are recorded at amounts that approximate fair value due to their short-term nature and are classified as level 2 under the fair

value hierarchy.

Notes payable – related party:

The carrying amount of the notes payable – related party

approximates fair value due to the relative short-term nature of the borrowing.

Under the fair value hierarchy, the notes payable – related party is classified as level 2.

Line of credit :

The carrying amount of the line of credit with East West Bank approximates fair

value due to the relative short-term nature of the borrowing.

Securities borrowed and securities loaned are recorded at amounts which approximate fair value and are primarily classified as level 2 under the fair value hierarchy.

The Company’s securities borrowed and securities loaned balances represent amounts of equity securities borrow and loan contracts and are marked-to-market daily in accordance with standard industry practices which approximate fair value.

Payables to customers, payables to non-customers, drafts payable, payables to broker-dealers and clearing organizations, accounts payable and accrued liabilities, and taxes payable are recorded at amounts that approximate fair value due to their short-term nature and are classified as level 2 under the fair value hierarchy.

Notes payable –

related party:

The carrying amount of the notes payable –

related party approximates fair value due to the relative short-term nature of the borrowing.

Under the fair value hierarchy, the notes payable –

related party is classified as level 2.

Long-term debt:

The carrying amount of the line of credit and mortgage with East West Bank approximates fair value as they reflect terms that approximate current market terms for similar arrangements.

Under the fair value hierarchy, the line of credit is classified as level 2.

Furniture, Equipment, and Leasehold Improvements, Net

Furniture, equipment, and leasehold improvements consisted of the following as of the periods indicated:

Investments, cost:

The Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values.

Due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.

As there is no readily determinable fair value, the carrying amount of these investments minus impairment approximates the fair value.

The cost will be adjusted upwards or downwards in accordance with observable market transactions and is recorded in the line item “Other general and administrative”

in the statements of income.

Under the fair value hierarchy, the investments, cost is classified as level 3.

Property, Office Facilities, and Equipment, Net

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

As of December 31,

Leasehold improvements

Furniture and fixtures

Total Furniture, equipment, and leasehold improvements

Office facilities

Total Property, office facilities, and equipment

Less accumulated depreciation

Total Furniture, equipment, and leasehold improvements, net

Total depreciation expense for furniture, equipment, and leasehold improvements was $402,000 and $405,000 for the years ended December 31, 2020 and 2019, respectively.

Total Property, office facilities, and equipment, net

Total depreciation expense for property, office facilities, and equipment was 410,000 and $ 402,000 for the year ended December 31, 2021 and 2020, respectively.

Purchase of Office Building

On December 30, 2021, the Company acquired the Miami office building located at 653 Collins Ave, Miami Beach, FL.

The Miami office building contains approximately 12,000 square feet of office space, which will be used as one of the primary operating centers for the Company.

The seller of the property is City National Bank of Florida, a national banking association, as trustee under the provisions of a certain Trust Agreement, dated March 22, 1993 (the “Seller”).

The Seller has no material relationship with the Company.

The contract purchase price for the Miami office building was $ 6,750,000 , exclusive of customary real estate transaction costs.

The Company funded the purchase price via approximately $ 750,000 of the Company’s cash, a $ 2 million notes payable with Gloria E.

Gebbia, and the remaining $ 4 million via the mortgage with East West Bank.

Siebert 2021 Form-10K 55

Software, Net

3 unchanged sentences

Total Software

Less accumulated amortization – Robo-Advisor

Less accumulated amortization – Other software

Less accumulated amortization –

other software

Total Software, net

Total amortization of software was $951,000 and $562,000 for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company estimates future amortization of software

assets of $870,000, $390,000, and $74,000, in the years ended December 31, 2021, 2022, and 2023, respectively.

Total amortization of software was $ 925,000 and $ 951,000 for the year ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company estimates future amortization of software assets of $ 506,000 , $ 187,000 , and $ 59,000 , in the year ended December 31, 2022, 2023, and 2024, respectively.

As of December 31, 2021, the Company rents office space under operating leases expiring in 2022 through 2026, and the Company has no financing leases.

The leases call for base

rent plus escalations as well as other operating expenses.

The following table represents the Company’s lease right-of-use assets and lease liabilities on the statements of financial condition.

The Company elected not to include short-term leases

(i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the statements of financial condition.

The Company acquired two leases from both its acquisition of StockCross and WPS, the impact of which is

reflected in the following disclosures.

The leases call for base rent plus escalations as well as other operating expenses.

The following table represents the Company’s lease right-of-use assets and lease liabilities on the statements of financial condition.

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.

As of December 31, 2021, the Company does not believe that any of the renewal options under the existing leases are reasonably certain to be exercised;

however, the Company will continue to assess

and monitor the lease renewal options on an ongoing basis.

Siebert 2020 Form-10K 54

As of December 31,

however, the Company will continue to assess and monitor the lease renewal options on an ongoing basis.

Lease right-of-use assets

Lease liabilities

The calculated amounts of the lease right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum

lease payments.

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 income rather than capitalizing them as lease

right-of-use assets.

The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile.

As of December 31,

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

Weighted average discount rate – operating leases

The calculated amounts of the lease right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments.

The Company leases miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of income rather than capitalizing them as lease right-of-use assets.

The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile.

Siebert 2021 Form-10K 56

Lease Term and Discount Rate

Weighted average remaining lease term –

operating leases (in years)

Weighted average discount rate –

operating leases

The following table represents lease costs and other lease information.

The Company has elected the package of practical expedients and as a result, expired leases and classification of leases per

ASC 840 were not assessed as of the transition date.

In addition, the Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as

common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building.

The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building.

Operating lease cost

7 unchanged sentences

Operating leases

Siebert 2021 Form-10K 57

Lease Commitments

1 unchanged sentence

Remaining balance of lease payments

Less difference between undiscounted cash flows

and discounted cash flows

difference between undiscounted cash flows and discounted cash flows

Lease liabilities

Siebert 2020 Form-10K 55

As of December 31, 2020, the Company had an operating lease agreement for an office space in Beverly Hills, California with a term of approximately 5 years.

The total commitment of the lease is

approximately $1.6 million, and the lease will commence on March 1, 2021.

Rent and occupancy expenses were $2,767,000 and $2,570,000 for the years ended December 31, 2020 and 2019, respectively.

Equity Method Investment in Related Party

On November 16, 2021, the Company entered into an agreement with Tigress, a Delaware limited liability company.

As part of the agreement, (i) Tigress transferred to the Company limited liability company membership interests representing twenty-four percent ( 24 %) of the outstanding membership interests in Tigress;

and (ii) the Company transferred to Tigress limited liability company membership interests representing twenty-four percent (24%) of the outstanding membership interests of RISE, and 1,449,525 shares of the Company’s common stock.

The value of the shares of the Company’s common stock was determined using a 60-day average of the Company’s common stock price as reported by the NASDAQ Capital Market.

The common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Company’s ownership in Tigress is accounted for under the equity method of accounting.

In determining whether the investment in Tigress should be accounted for under the equity method of accounting, the Company considered the guidance under ASC 323, Investments –

Equity Method and Joint Ventures.

The Company maintains 24 % ownership interest in Tigress, which represents a significant ownership level, the Company and Tigress have common representation on their respective board of directors, and certain employees of Tigress are employees of RISE.

Based on these criteria, the Company determined that it was able to exercise significant influence of Tigress, and therefore the equity method of accounting was used for this transaction.

This investment is reported in the equity method investment in related party in the statements of financial condition.

Under the equity method, the Company recognizes its share of Tigress’

income or loss in the earnings of equity method investment in related party line item on the statements of income.

The Company has elected to classify distributions received from equity method investees using the cumulative earnings approach.

For the year ended December 31, 2021, the earnings recognized from the Company’s investment in Tigress was $ 172,000 and the Company did not receive any cash distributions.

As of December 31, 2021, the carrying amount of the investment in Tigress was $ 8,156,000 .

The Company evaluates its equity method investments for impairment when events or changes indicate the carrying value may not be recoverable.

As of December 31, 2021, the fair value of the investment in Tigress is not estimated because there were no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment and thus, no impairment was recorded.

Siebert 2021 Form-10K 58

Below is a table showing the summary from the consolidated statements of operations and financial condition for Tigress for the periods indicated (unaudited):

Year Ended December 31,

Operating income

As of December 31,

Stockholders’

Investments, Cost

On January 31, 2021, the Company and OpenHand Holdings, Inc.

(“OpenHand”) entered into a stock purchase agreement whereby the Company acquired an interest of 5 % of OpenHand common stock for consideration of a total of $ 2,231,000 consisting of $ 850,000 in cash and 329,654 restricted shares of the Company’s common stock valued at $ 1,381,000 or $ 4.19 per share.

The Company’s common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Company and OpenHand intended to develop a subscription-based brokerage platform providing zero-commission trading for equity and option transactions and crediting its members daily with rebates of revenues generated by the clients, less operational expenses.

The value of the Company’s restricted stock was determined using the thirty-day trading average.

The Company agreed to register the shares issued to OpenHand by filing a selling shareholder registration statement.

The Company also received an option to purchase an additional 7.5 % of OpenHand for approximately $ 4.5 million, based upon a $ 60 million valuation of OpenHand.

This option expires 18 months after the launch of the OpenHand platform.

On August 18, 2021, the Company and OpenHand agreed to terminate their working relationship.

In connection therewith, the Company and OpenHand amended and restated their January 31, 2021 stock purchase agreement to provide that the Company would pay $ 850,000 in cash in exchange for 2 % of the outstanding common stock of OpenHand as of January 31, 2021, and receive a 15 -month option to purchase an additional 2% of the outstanding common stock of OpenHand at an exercise price equal to a company valuation of $ 42.5 million.

The parties agreed to rescind OpenHand’s purchase of the 329,654 restricted shares of the Company’s common stock.

No value was attributed to the option because it is not a derivative and there were no transaction costs associated with this option as of December 31, 2021.

As of December 31, 2021 and 2020, the carrying value of the Company’s investment in OpenHand was $ 850,000 and $ 0 , respectively.

The investment does not have a readily determinable fair value since OpenHand is a private company and its shares are not publicly traded.

The Company made an accounting policy election to measure this investment at cost less any impairment adjusted for any changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

For the year ended December 31, 2021, there was a loss on sale of $ 63,000 as a result of the August 18, 2021 amendment and is included within the line item titled “Other general and administrative”

on the statements of income.

Management concluded that there have been no additional adjustments as there were no other identified events or changes in circumstances during the reporting period that could have a significant effect on the original valuation of the investment.

Goodwill and Intangible Assets, Net

As of December 31, 2020 and 2019, the Company’s carrying amount of goodwill was $1,989,000, all of which came from the Company’s acquisition of WPS.

The goodwill from the acquisition consisted of WPS providing a new customer base of institutional clients, several strategic clearing relationships, as well as

substantial cross-selling opportunities for the institutional and retail clients.

The addition of WPS brings economies of scale in terms of operational and administrative functions as well as a skilled management team within the institutional

space to Siebert .

See “Note 3 – Acquisitions” for more detail on the acquisition

As of both December 31, 2021 and 2020, the Company’s carrying amount of goodwill was $ 1,989,000 , all of which came from the Company’s acquisition of RISE.

Siebert 2021 Form-10K 59

On August 30, 2021, GSCO notified RISE that its clearing arrangement with RISE will be terminated.

The termination of the clearing arrangement was indicative of a potential impairment event and required impairment testing of the Company’s goodwill.

The Company elected to rely on a qualitative assessment to evaluate goodwill, which indicated that the fair value of the Company’s goodwill was in excess of its carrying value.

The Company concluded that it has one reportable segment and tested goodwill on a consolidated basis.

In addition to other qualitative factors such current market conditions and macro-economic factors, the Company’s market capitalization was above its book value as of the date of the assessment.

Accordingly, as of December 31, 2021, 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 in the year ended December 31, 2021 and 2020.

Additionally, the Company determined there was not a material risk for future possible impairments to goodwill as of the date of the assessment.

Intangible Assets, Net

As a result of the Company’s acquisition of WPS, the Company acquired intangible assets consisting of WPS customer relationships and trade name, the fair values of which were $987,000 and $70,000,

respectively, as of the acquisition date.

The Company recorded intangible assets which are subject to amortization over their estimated useful lives.

The intangible assets are deductible for tax purposes.

Pursuant to the Company’s agreement with the original owners of WPS, the Company agreed to discontinue using the name of Weeden Prime Services, LLC and filed to change it to WPS Prime Services, LLC

As of December 31, 2020, the WPS trade name was fully amortized.

The following tables summarize information related to the intangible assets as of the dates indicated.

As a result of the Company’s acquisition of RISE, the Company acquired intangible assets consisting of the RISE customer relationships and trade name, the fair values of which were $ 987,000 and $ 70,000 , respectively, as of the acquisition date.

The Company amortizes its acquired intangible assets over their useful lives and the intangible assets are deductible for tax purposes.

The termination of GSCO’s clearing arrangement with RISE was indicative of a potential impairment event and required impairment testing of the Company’s intangible assets.

The Company performed a qualitative assessment to evaluate definite-lived intangible assets.

The qualitative assessment performed indicated that the fair value of the RISE customer relationships intangible asset was less than its carrying amount, and the Company proceeded to performing the quantitative assessment.

Due to the termination of GSCO’s clearing arrangement with RISE, substantially all of the revenue producing customers of RISE have transitioned to other prime service providers.

The forecasted revenue associated with RISE’s historical customer base was determined to be minimal.

As such, the Company determined that the RISE customer relationships intangible asset was fully impaired, resulting in an impairment loss of $ 699,000 for the year ended December 31, 2021.

Financial Information

The following tables summarize information related to the Company’s intangible assets as of the dates indicated.

Date Acquired

2 unchanged sentences

As of December 31, 2021

WPS Customer Relationships

WPS Trade Name

RISE Customer Relationships

RISE Trade Name

Purchase Price

1 unchanged sentence

December 31, 2020

Balance as of December 31, 2020

WPS Customer Relationships

WPS Trade Name

Impairment Loss

Balance as of

December 31, 2021

RISE Customer Relationships

RISE Trade Name

Total Intangible assets

The weighted average remaining useful life for the above intangible assets as of December 31, 2020 was 4.9 years.

The Company expects its aggregate annual amortization expense for existing amortizable intangible assets for the below periods

to be as follows:

Total future amortization expense

Siebert 2020 Form-10K 56

For the years ended December 31, 2020 and 2019, management concluded that there have been no impairments to the carrying value of the Company’s goodwill and other tangible and intangible assets.

Siebert 2021 Form-10K 60

Long-Term Debt

Mortgage with East West Bank

On December 30, 2021, the Company entered into a mortgage with East West Bank for approximately $4 million to finance part of the purchase of the Miami office building.

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 December 31, 2021, the Company has an unused commitment of $ 338,000 with East West Bank which the Company intends to use for the build out of the Miami office building.

Remaining Payments

Future remaining annual minimum principal payments for the mortgage with East West Bank as of December 31, 2021 were as follows:

There is no interest expense related to this line of credit for the year ended December 31, 2021.

The effective interest rate related to this line of credit was 3.6 % for the periods this line of credit has been in place.

Line of Credit with East West Bank

On July 22, 2020, the Company entered into a loan and security agreement with East West Bank.

In accordance with the terms of this agreement, the Company has the ability to

borrow term loans in an aggregate principal amount not to exceed $10 million during the two-year period after July 22, 2020.

The Company’s obligations under the agreement are secured by a lien on all of the Company’s cash, dividends, stocks and

other monies and property from time to time received or receivable in exchange for the Company’s equity interests in and any other rights to payment from the Company’s subsidiaries;

any deposit accounts into which the foregoing is deposited and all

substitutions, products, proceeds (cash and non-cash) arising out of any of the foregoing.

In accordance with the terms of this agreement, the Company has the ability to borrow term loans in an aggregate principal amount not to exceed $ 10 million during the two-year period after July 22, 2020.

The Company’s obligations under the agreement are secured by a lien on all of the Company’s cash, dividends, stocks and other monies and property from time to time received or receivable in exchange for the Company’s equity interests in and any other rights to payment from the Company’s subsidiaries;

any deposit accounts into which the foregoing is deposited and all substitutions, products, proceeds (cash and non-cash) arising out of any of the foregoing.

Each term loan will have a term of four years , beginning when the draw is made.

The repayment schedule will utilize a five-year (60 month) amortization

period, with a balloon on the remaining amount due at the end of four years.

Term loans made pursuant to the agreement shall bear interest 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 3.25%.

In addition to the foregoing, on the date that each term loan is made, the Company shall pay to the lender an origination fee equal to 0.25% of the principal amount of such term

The repayment schedule will utilize a five-year (60 month) amortization period, with a balloon on the remaining amount due at the end of four years .

Term loans made pursuant to the agreement shall bear interest 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 3.25 %.

In addition to the foregoing, on the date that each term loan is made, the Company shall pay to the lender an origination fee equal to 0.25 % of the principal amount of such term loan.

Pursuant to the loan agreement, the Company paid all lender expenses in connection with the loan agreement.

This agreement contains certain financial and non-financial covenants.

The financial covenants are that the Company must maintain a debt service coverage ratio

of 1.35 to 1, an effective tangible net worth of a minimum of $25 million, and MSCO must maintain a net capital ratio that is not less than 10% of aggregate debit items.

Certain other non-financial covenants include that the Company must promptly

notify East West Bank of the creation or acquisition of any subsidiary that at any time owns assets with a value of $100,000 or greater.

As of December 31, 2020 and the date of the filing of this report, the Company was in compliance with all of its

covenants related to this agreement.

In addition, the Company’s obligations under the agreement are guaranteed pursuant to a guarantee agreement by and among, John J.

individually and as a co-trustee of the John and Gloria Living Trust, U/D/T December 8, 1994 (the “Trust”) and Gloria E.

Gebbia, individually and as a co-trustee of the Trust.

The financial covenants are that the Company must maintain a debt service coverage ratio of 1.35 to 1, an effective tangible net worth of a minimum of $ 25 million, and MSCO must maintain a net capital ratio that is not less than 10 % of aggregate debit items.

Certain other non-financial covenants include that the Company must promptly notify East West Bank of the creation or acquisition of any subsidiary that at any time owns assets with a value of $100,000 or greater.

As of December 31, 2021 and the date of the filing of this Report, the Company was in compliance with all of its covenants related to this agreement.

Siebert 2021 Form-10K 61

In addition, the Company’s obligations under the agreement are guaranteed pursuant to a guarantee agreement by and among, John J.

Gebbia and Gloria E.

Gebbia individually, and as a co-trustees of the John and Gloria Living Trust, U/D/T December 8, 1994.

Both lending agreements with East West Bank are considered senior debt facilities.

As of December 31, 2021, the Company has drawn down a $ 5.0 million term loan under this agreement and has an outstanding balance of $ 3.7 million.

has an additional $5.0 million remaining to draw down from this line of credit.

The Company has an additional $ 5.0 million remaining to draw down from this line of credit.

Remaining Payments

Future annual minimum payments for the line of credit with East West Bank as of December 31, 2020 were as follows:

The interest expense and cash interest paid related to this line of credit was both $54,000 for the year ended December 31, 2020.

The effective

interest rate related to this line of credit was 3.25% for the year ended December 31, 2020.

Note Payables - Related Party

Future remaining annual minimum principal payments for the line of credit with East West Bank as of December 31, 2021 were as follows:

The interest expense related to this line of credit was $ 138,000 and $ 54,000 for the year ended December 31, 2021, and 2020, respectively.

The effective interest rate related to this line of credit was 3.25% for the periods this line of credit has been in place.

Notes Payable - Related Party

On December 30, 2021, Gloria E.

Gebbia, the Company’s principal stockholder, entered into a note agreement to lend the Company $ 2 million to finance part of the purchase of the Miami office building.

The annual interest rate is 4 % which will be paid monthly.

The note matures on 12/30/2022 and can be renewed at any time.

As of December 31, 2021, the Company had various notes payable to Gloria E.

Gebbia, the Company’s principal stockholder, the details of which are presented

Siebert 2020 Form-10K 57

Gebbia, the details of which are presented below:

Issuance Date

Unpaid Principal Amount

4.00% due May 31, 2021

4.00% due December 30, 2022

December 30, 2021

4.00% due June 30, 2022*

December 31, 2021

4.00% due November 30, 2022**

November 30, 2020

Total Notes payable – related party

*This note payable is subordinated to MSCO and is subordinated to the claims of general creditors, approved by FINRA, and are included in MSCO’s calculation of net capital and

the capital requirements under FINRA and SEC regulations.

Total Notes payable –

related party

As of December 31, 2020, the Company had various notes payable to Gloria E.

2 unchanged sentences

Unpaid Principal Amount

4.00% due December 2, 2020

4.00% due May 31, 2021*

December 1, 2020

1 unchanged sentence

November 30, 2020

1.75% due September 4, 2020*

September 4, 2020

Total Notes payable – related party

*These notes payable are subordinated to MSCO and are subordinated to the claims of general creditors, approved by FINRA, and are included in MSCO’s calculation of net capital

and the capital requirements under FINRA and SEC regulations.

Subsequently, a rate adjustment was completed on March 3, 2020.

These notes were acquired as part of the transaction with StockCross and no consideration was paid or received as part of

the renegotiation.

MSCO subsequently repaid the notes on September 4, 2020 and November 30, 2020, respectively.

The Company’s interest expense for these notes for the year ended December 31, 2020 and 2019 was $276,000 and $106,000, respectively.

paid for these notes for the year ended December 31, 2020 and 2019 was $286,000 and $96,000, respectively.

The Company’s interest payable was $0 and $10,000 as of December 31, 2020 and December 31, 2019, respectively, for notes payable – related

Total Notes payable –

related party

* From May 31, 2021 to December 31, 2021, this notes payable was renewed multiple times with short term maturities.

On December 31, 2021, this notes payable was renewed with a maturity of June 30, 2022 and a new face amount of $ 2 million.

** This note payable is subordinated to MSCO and is subordinated to the claims of general creditors, approved by FINRA, and is included in MSCO’s calculation of net capital and the capital requirements under FINRA and SEC regulations.

On August 17, 2021, this note payable was renewed with a maturity of November 30, 2022.

The Company’s interest expense for these notes payable for the year ended December 31, 2021 and 2020 was $ 206,000 and $ 276,000 , respectively.

Siebert 2021 Form-10K 62

The Company’s interest payable related to these notes payable was $ 0 as of both December 31, 2021 and 2020.

Deferred Contract Incentive

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their 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, and NFS will pay the Company four annual credits of $ 100,000 , which are recorded within 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 income.

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 $ 354,000 in contra expense for the year ended December 31, 2021, and the balance of the deferred contract incentive was approximately $ 2.7 million as of December 31, 2021.

Revenue Recognition

2 unchanged sentences

Commissions and Fees

The Company earns commission revenue for executing trades for clients in individual equities, options, insurance products, futures, fixed income securities, as well as certain third-party mutual

funds and ETFs.

Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on the trade date when the performance obligation is

The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to /

from the customer.

The Company earns commission revenue for executing trades for clients in individual equities, options, insurance products, futures, fixed income securities, as well as certain third-party mutual funds and ETFs.

Principal Transactions

Principal transactions primarily represent riskless transactions in which the Company, after executing a solicited order, buys or sells securities as principal and at the same time buys or sells the

securities with a markup or markdown to satisfy the order.

Principal transactions primarily represent riskless transactions in which the Company, after executing a solicited order, buys or sells securities as principal and at the same time buys or sells the securities with a markup or markdown to satisfy the order.

Principal transactions are recognized at a point in time on the trade date when the performance obligation is satisfied.

The performance obligation is satisfied on the trade date because that

is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the customer.

Siebert 2020 Form-10K 58

Market Making

Market making is revenue generated from the buying and selling of securities.

Market making revenue is generated from the buying and selling of securities.

Market making transactions are recorded on a trade-date basis as the securities transactions occur.

The performance

obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the counterparty.

Securities owned are recorded at fair market value at the end of the reporting period.

Stock Borrow / Stock Loan

The Company borrows securities on behalf of retail clients to facilitate short trading, loans excess margin securities from client accounts, facilitates borrow and loan contracts for broker-dealer

counterparties, and provides stock locate services to broker-dealer counterparties.

The Company borrows securities on behalf of retail clients to facilitate short trading, loans excess margin and fully-paid securities from client accounts, facilitates borrow and loan contracts for broker-dealer counterparties, and provides stock locate services to broker-dealer counterparties.

The Company recognizes self-clearing revenues net of operating expenses related to stock borrow / stock loan.

Stock borrow / stock loan also includes any revenues generated from the Company’s fully paid lending programs on a self-clearing or introducing basis.

The Company does not utilize stock borrow / stock loan activities for the purpose of financing transactions.

Stock borrow / stock loan revenue is reported on a

monthly basis net of expense.

The performance obligation is satisfied on the contract date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have

been transferred to / from the counterparty.

Siebert 2021 Form-10K 63

For the year ended December 31, 2021, stock borrow / stock loan revenue was $ 11,864,000 ($ 29,441,000 gross revenue less $ 17,577,000 expenses).

For the year ended December 31, 2019, stock borrow / stock

loan revenue was $1,607,000 ($10,137,000 gross revenue minus $8,530,000 expenses).

For the year ended December 31, 2020, stock borrow / stock loan revenue was $ 4,045,000 ($ 10,068,000 gross revenue minus $ 6,023,000 expenses).

Advisory Fees

1 unchanged sentence

The performance obligation related to this revenue stream is satisfied over time;

however, the advisory fees are variable as

they are charged as a percentage of the client’s total asset value, which is determined at the end of the quarter.

Margin Interest, Marketing and Distribution fees

Margin interest, marketing and distribution fees consists of two components:

margin interest and 12b1 fees resulting from rebates in money market funds.

Margin interest is the net interest charged to

customers for holding financed margin positions, and 12b1 fees are fees paid to the Company related to trailing payments from money market funds.

Margin interest, marketing and distribution fees are recorded as earned.

Interest Income

The Company earns interest from clients’ accounts, net of payments to clients’ accounts, and on the Company’s bank balances and is recorded as earned.

Other income represents fees generated from correspondent clearing fees, corporate services client fees, payment for order flow, and transactional fees generated from client accounts.

Transactional

fees are recorded concurrently with the related activity.

however, the advisory fees are variable as they are charged as a percentage of the client’s total asset value, which is determined at the end of the quarter.

Interest, Marketing and Distribution Fees

The Company earns interest from clients’

accounts, net of payments to clients’

accounts, and on the Company’s bank balances.

Interest income also includes interest payouts from introducing relationships related to short interest, net of charges.

The Company also earns margin interest which is the net interest charged to customers for holding financed margin positions.

Marketing and distribution fees consist of 12b-1 fees which are trailing payments from money market funds.

Interest, marketing and distribution fees are recorded as earned.

Other income represents revenue generated from correspondent clearing fees, corporate services client fees, payment for order flow, and transactional fees generated from client accounts.

Transactional fees are recorded concurrently with the related activity.

Other income is recorded as earned.

Categorization of Revenue

The following table presents the Company’s major revenue categories and when each category is recognized:

Siebert 2020 Form-10K 59

The following table presents the Company’s major revenue categories and when each category is recognized:

Revenue Category

12 unchanged sentences

Total Trading Execution and Clearing Services

Margin interest, marketing and distribution fees

Margin interest

Interest, marketing and distribution fees

Recorded as earned

Margin interest

Recorded as earned

Total Margin interest, marketing and

distribution fees

Interest income

Recorded as earned

Total Interest, marketing and distribution fees

Recorded as earned

Total Other Income

Total Revenue

Siebert 2021 Form-10K 64

The following table presents each revenue category and its related performance obligation:

1 unchanged sentence

Performance Obligation

Commissions and fees, Principal transactions, Market making, Stock borrow / stock loan, Advisory fees

Commissions and fees, Principal transactions, Market making,

Stock borrow / stock loan, Advisory fees

Provide financial services to customers and counterparties

Margin interest, marketing and distribution fees, Interest income, Other income

Interest, marketing and distribution fees, Other income

Soft Dollar Arrangement

As a result of the acquisition of WPS, the Company has soft dollar and commission sharing arrangements with customers that fall both within, and outside of, the safe harbor provisions of Rule 28(e)

of the Securities Exchange Act of 1934 ("Rule 28(e)"), as amended.

For certain clients of RISE, the Company has soft dollar and commission sharing arrangements with customers that fall both within, and outside of, the safe harbor provisions of Rule 28(e) of the Securities Exchange Act of 1934 ("Rule 28(e)"), as amended.

These soft dollar arrangements were determined to be a separate performance obligation that should be allocated a portion of the transaction price.

Under these arrangements, the Company charges additional dollars on customer trades and uses these fees to pay third parties for research, brokerage services, market data, and related expenses

(“research services”) on behalf of clients.

Under these arrangements, the Company charges additional dollars on customer trades and uses these fees to pay third parties for research, brokerage services, market data, and related expenses (“research services”) on behalf of clients.

The Company is an agent in these arrangements, as it does not control the research services before they are transferred to the customer.

As such, the revenue from these agreements are recognized net of cost

in the statements of income in the line item “Commissions and fees.”

The Company paid client expenses of approximately $693,000 and $48,000 for the years ended December 31, 2020 and 2019, respectively.

The Company had an outstanding receivable and payable of

approximately $4,000 and $230,000, respectively, as of December 31, 2020.

The Company had an outstanding receivable and payable of approximately $31,000 and $158,000, respectively, as of December 31, 2019.

The receivable and payable related to soft dollar arrangements are in the line items “Other receivables” and “Accounts payable and accrued liabilities,” respectively, on the statement of financial

As of December 31, 2020 and 2019, no allowance for uncollectible commissions was necessary as the Company believes all commissions receivable and prepaid research services

expenses will be realized.

Siebert 2020 Form-10K 60

For the years ended December 31, 2020 and 2019, there were no costs capitalized related to obtaining or fulfilling a contract with a customer, and thus the Company has no balances for contract assets

or contract liabilities.

As such, the revenue from these agreements are recognized net of cost within the line item “Commissions and fees”

on the statements of income.

The Company paid client expenses of approximately $ 625,000 and $ 693,000 for the year ended December 31, 2021 and 2020, respectively.

The Company had an outstanding receivable and payable of approximately $ 30,000 and $ 247,000 , respectively, as of December 31, 2021 related to these arrangements.

The receivable and payable related to soft dollar arrangements are within the line items “Other receivables”

and “Accounts payable and accrued liabilities,”

respectively, on the statements of financial condition.

As of December 31, 2021 and 2020, no allowance for uncollectible commissions was necessary as the Company believes all commissions receivable will be realized.

For the year ended December 31, 2021 and 2020, there were no costs capitalized related to obtaining or fulfilling a contract with a customer, and thus the Company has no balances for contract assets or contract liabilities.

In addition, the acquisition of new entities did not impact the Company’s existing revenue streams as the acquired entities had consistent application of the revenue recognition guidance.

The Company concludes that its revenue streams have the same underlying economic factors, and as such, no disaggregation of revenue is required.

Employee Stock Purchases

On November 10, 2020, the Company issued 150,000 shares of its restricted common stock (the “Shares”) to each of Anthony Palmeri and Gerard Losurdo, each new employees of MSCO,

as part of their employment agreements.

On November 10, 2020, the Company issued 150,000 shares of its restricted common stock to each of Anthony Palmeri and Gerard Losurdo, each an employee of MSCO, as part of their employment agreements.

Palmeri and Mr.

Losurdo each paid the Company approximately $400,000 for their Shares, which was equal to 70% of the closing price of the common stock as reported on Nasdaq on November 9, 2020.

issued to Mr.

Losurdo each paid the Company approximately $ 400,000 for their common stock, which was equal to 70 % of the closing price of the common stock as reported on Nasdaq on November 9, 2020.

The common stock issued to Mr.

Palmeri and Mr.

Losurdo are subject to a three-year restriction on transfer commencing on the day of issuance.

The issuance of the Shares were each approved by unanimous written consent of the Company's board of directors.

Losurdo was subject to a three-year restriction on transfer commencing on the day of issuance.

The issuance of the common stock was each approved by unanimous written consent of the Company's board of directors.

The shares were issued to Mr.

Palmeri and Mr.

Losurdo as part of

their employment agreements in accordance with Nasdaq Listing Rule 5635(c)(4).

The Shares were issued without registration under the Securities Exchange Act of 1933, as amended in reliance upon the exemption provided in Section 4(a)(2) thereunder.

The above transaction had no impact to the Company’s statements of income, but is reflected in the Company’s statement of financial condition, statement of changes in

stockholders’ equity, and statement of cash flows within cash flows from financing activities for the year ended December 31, 2020.

Losurdo as part of their employment agreements in accordance with Nasdaq Listing Rule 5635(c)(4) and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The above transaction had no impact to the Company’s statements of income, but it is reflected in the Company’s statement of financial condition, statement of changes in stockholders’

equity, and statement of cash flows within cash flows from financing activities for the year ended December 31, 2020.

Referral Fees

Upon the acquisition of WPS, the Company has agreements with various third parties to share commissions and pay fees as defined in the respective agreements.

These expenses were approximately

$738,000 and $86,000 for the years ended December 31, 2020 and 2019, which are presented in the line item “Referral fees” in the statement of income.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic.

Under ASC 740, the effects of changes in tax rates and laws

are recognized in the period which the new legislation is enacted.

The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of

interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) and (iii) made modifications to the federal net operating loss rules including permitting federal net operating

losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of AMT tax credits.

The CARES Act did not have a significant impact on the financial statements.

The Company’s provision for income taxes is comprised of the following:

Year Ended December 31,

In relation to the operations of RISE, the Company has agreements with various third parties to share commissions and pay fees as defined in the respective agreements.

These expenses were approximately $ 1,213,000 and $ 738,000 for the year ended December 31, 2021 and 2020, respectively, which are within in the line item “Referral fees”

on the statements of income.

Siebert 2021 Form-10K 65

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to COVID-19 pandemic.

Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted.

The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) and (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of AMT tax credits.

The CARES Act did not have a significant impact on the Company’s financial statements.

The Company’s provision for income taxes is comprised of the following:

Year Ending December 31,

State and local

3 unchanged sentences

Total Provision for income taxes

Siebert 2020 Form-10K 61

The Company’s effective tax rate differs from the U.S.

federal statutory income tax rate of 21% for 2021 and 2020 as follows:

Year Ended December 31,

Year Ending December 31,

Federal statutory income tax rate

Tax amortization of intangible assets

Non-deductible fines and penalties

Share based compensation

Permanent differences

2 unchanged sentences

Effective tax rate

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

As of December 31,

4 unchanged sentences

Intangible assets

Investment in RISE

Accrued compensation

valuation allowance

1 unchanged sentence

Deferred tax liabilities:

Share-based compensation

Total Deferred tax liabilities

Net Deferred tax assets

In assessing the Company’s ability to recover its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized.

Siebert 2021 Form-10K 66

In assessing the Company’s ability to recover its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized.

The Company considered all

positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized.

This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary

differences, tax planning strategies and projected future taxable income.

Based on historical operating profitability, positive trend of earnings and projected future taxable income, the Company concluded as of December 31, 2020 that certain of its U.S.

deferred tax assets

are realizable on a more-likely-than-not basis.

The Company maintains a valuation allowance on certain federal net operating losses that are expected to expire unutilized and certain state net operating losses.

The Company’s valuation allowance

decreased by $166,000 during 2020.

The Company considered all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized.

This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income.

Based on historical operating profitability, positive trend of earnings and projected future taxable income, the Company concluded as of December 31, 2021 that its U.S.

deferred tax assets are realizable on a more-likely-than-not basis with the exception of certain federal net operating losses that are expected to expire unutilized as a result of limitations imposed by Section 382 of the Internal Revenue Code and certain state net operating losses.

The amount of the Company’s valuation allowance did not change during 2021.

The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit.

If it is determined in future periods that

portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly.

If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly.

As of December 31, 2021, the Company had U.S.

federal net operating loss carryforwards of approximately $13.8 million, of which (i) $12.8 million expire in varying amounts

starting in 2033 to 2036 if not utilized, and (ii) $1.0 million have an indefinite carryforward period, but are only available to offset 80% of future taxable income.

federal net operating loss carryforwards are subject to annual limitation

under Section 382 of the Internal Revenue Code.

federal net operating loss carryforwards of approximately $ 6.4 million which expire in varying amounts in 2035 and 2036 if not utilized.

federal net operating loss carryforwards are subject to annual limitation under Section 382.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

Siebert 2020 Form-10K 62

As of December 31,

Balance at beginning of period

Balance as of December 31, 2019

Additions for tax positions taken during current year

2 unchanged sentences

Expirations of statutes of limitations

Balance at end of period

Of the amounts reflected above as of December 31, 2020, the entire amount would reduce the Company’s effective tax rate if recognized.

The Company records accrued interest and

penalties related to income tax matters as part of the provision for income taxes.

For the year ended December 31, 2020 and December 31, 2019, the Company recognized expense related to interest and penalties on unrecognized tax benefits of $0 and $0,

respectively.

Balance as of December 31, 2020

Additions for tax positions taken during current year

Additions for tax positions taken during prior year

Reductions for tax positions taken during prior years

Expirations of statutes of limitations

Balance as of December 31, 2021

Of the amounts reflected above as of December 31, 2021, the entire amount would reduce the Company’s effective tax rate if recognized.

The Company records accrued interest and penalties related to income tax matters as part of the provision for income taxes.

For the year ended December 31, 2021 and 2020, the Company recognized expense related to interest and penalties on unrecognized tax benefits of $ 27,000 and $ 0 , respectively.

For the year ended December 31, 2021 and 2020, the accrued balance of interest and penalties on unrecognized tax benefits was $ 27,000 and $ 0 , respectively.

The Company does not believe that the amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company files a federal income tax return and income tax returns in various state tax jurisdictions.

The Company is not currently under examination by the IRS or any state or local taxing

authority for any tax year.

The Company is not currently under examination by the IRS or any state or local taxing authority for any tax year.

The open tax years for the federal and state income tax filings is generally 2018 through 2021.

Siebert 2021 Form-10K 67

Capital Requirements

MSCO and StockCross

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) of the Securities Exchange Act of 1934.

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 December 31, 2020, MSCO’s net capital was $27.5 million, which was approximately $25.2 million in excess of its required net capital of $2.3

million, and its percentage of aggregate debit balances to net capital was 24%.

As of December 31, 2019, MSCO’s net capital was $4.4 million, which was $4.2 million in excess of its required net capital of $250,000.

As of December 31, 2019, StockCross’ net capital was $18.8

million, which was $16.7 million in excess of its required net capital of $2.1 million, and its percentage of aggregate debit balances to net capital was 18%.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the capital of

MSCO and StockCross was combined.

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 December 31, 2021, MSCO’s net capital was $ 36.4 million, which was approximately $ 34.3 million in excess of its required net capital of $ 2.1 million, and its percentage of aggregate debit balances to net capital was 34.9 %.

As of December 31, 2020, MSCO’s net capital was $ 27.5 million, which was approximately $ 25.2 million in excess of its required net capital of $ 2.3 million, and its percentage of aggregate debit balances to net capital was 24.3 %.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the capital of MSCO and StockCross was combined.

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 December 31, 2020, MSCO had cash

deposits of $324.9 million in the special reserve accounts which was $5.0 million in excess of the deposit requirement of $319.9 million.

After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2021, MSCO had $1.0 million in excess

of the customer reserve requirement.

As of December 31, 2019, MSCO did not have any special reserve accounts.

As of December 31, 2019, StockCross had deposits of $223.4 million (cash of $222.1 million and securities with fair value of

$1.3 million) in the special reserve account which was $4 million in excess of the deposit requirement of $219.4 million.

After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2020, StockCross had $1 million in excess of the

customer reserve requirement.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined.

As of December 31, 2019, StockCross was also 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 December 31, 2019, StockCross had segregated cash of $1.4 million under rule 15c3-3.

As of December 31, 2019, StockCross had $1.4 million in the special reserve account which was $282,000 in

deficit of the deposit requirement of $1.7 million.

After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2020, StockCross had $218,000 in excess of the PAB reserve requirement.

Effective upon the Company’s acquisition of

StockCross on January 1, 2020, MSCO no longer had a PAB requirement.

Siebert 2020 Form-10K 63

WPS, 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.

WPS is also subject to the CFTC's minimum financial requirements which

require that WPS 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 both December 31, 2020 and 2019, WPS net capital was approximately $3.9 million which was approximately $3.7 million in excess of its minimum requirement of $250,000 under 15c3-1.

Special Reserve Account

As of December 31, 2019, cash of $110,000 for WPS was segregated in a special reserve bank account for the benefit of customers.

As of December 31, 2021, MSCO had cash deposits of $ 326.8 million in the special reserve accounts which was $ 31.9 million in excess of the deposit requirement of $ 294.9 million.

After adjustments for deposit(s) and / or withdrawal(s) made on January 3, 2022, MSCO had $ 1.9 million in excess of the deposit requirement.

As of December 31, 2020, MSCO had cash deposits of $ 324.9 million in the special reserve accounts which was $ 5.0 million in excess of the deposit requirement of $ 319.9 million.

After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2021, MSCO had $ 1.0 million in excess of the deposit requirement.

Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined.

Siebert 2021 Form-10K 68

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 December 31, 2021, RISE’s net capital was approximately $ 1.7 million which was $ 1.4 million in excess of its minimum requirement of $ 250,000 under 15c3-1.

As of December 31, 2020, RISE’s net capital was approximately $ 3.9 million which was $ 3.7 million in excess of its minimum requirement of $ 250,000 under 15c3-1.

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

In the normal course of business, the Company's customer

activities involve the execution, settlement, and financing of various customer securities transactions.

These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted

obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss.

The Company's customer securities activities are transacted on either a cash or margin basis.

In margin transactions, the Company extends credit to its

customers, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the customers' accounts.

In connection with these activities, the Company executes and clears customer transactions involving the sale

of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations.

Such transactions may expose the Company to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may

In the event the customer fails to satisfy obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations.

The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various

regulatory and internal guidelines.

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.

In the normal course of business, the Company's customer activities involve the execution, settlement, and financing of various customer securities transactions.

These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss.

The Company's customer securities activities are transacted on either a cash or margin basis.

In margin transactions, the Company extends credit to its customers, subject to various regulatory and internal margin requirements, and is collateralized by cash and securities in the customers'

In connection with these activities, the Company executes and clears customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations.

As of December 31, 2021, the Company had margin loans extended to its customers of approximately $ 0.6 billion, of which $ 84.2 million is within the line item “Receivables from customers”

on the statements of financial condition.

Siebert 2021 Form-10K 69

Such transactions may expose the Company to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur.

In the event the customer fails to satisfy obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations.

The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory requirements and internal guidelines which meet or exceed regulatory requirements.

The Company monitors required margin levels daily and pursuant to such guidelines, requires customers to deposit additional collateral or to reduce positions when necessary.

The Company's customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various

secured financing sources such as bank loans and securities loaned.

In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring

the securities at prevailing market prices in order to satisfy its customer obligations.

On a daily basis, the Company controls this risk by monitoring the market value of securities pledged and by requiring adjustments of collateral levels in the

event of excess market exposure.

The Company's customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various secured financing sources such as bank loans and securities loaned.

In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its customer obligations.

The Company seeks to mitigate this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposure.

In addition, the Company establishes credit limits for such activities and continuously monitors compliance.

The Company’s securities lending transactions are subject to master netting agreements with other broker-dealers;

however, amounts are presented gross in the statements of financial condition.

The Company further mitigates risk by using a program with a clearing organization which guarantees the return of cash to the Company as well as using industry standard software to ensure daily changes to market value are continuously updated and any changes to collateralization are immediately covered.

There were no material losses for unsettled customer transactions for the year ended December 31, 2021 and 2020.

Commitments, Contingencies and Other

1 unchanged sentence

The Company is party to certain claims, suits and complaints arising in the ordinary course of business.

On January 22, 2021, the California Department of Financial Protection and Innovation proposed that StockCross enter into a consent order related to StockCross and one of its registered

representatives for activities that occurred prior to its acquisition by Siebert.

The California proposed order seeks an aggregate amount of approximately $900,000 in relation to this matter.

Based on the facts of the matter as well as historical

resolutions, the Company does not believe that the matter will have a material impact on the Company’s financial statements.

Siebert 2020 Form-10K 64

As of December 31, 2020, all other legal matters are without merit or involve amounts which would not have a significant effect on the financial statements of the Company.

All of the below legal matters are related to activities related to operations of StockCross Financial Services, Inc.

(“StockCross”), prior to the Company’s acquisition of StockCross on January 1, 2020.

On July 14, 2021, StockCross entered into a Letter of Acceptance, Waiver, and Consent with FINRA in connection with alleged excessive trading and suitability violations by a registered representative of StockCross in a customer’s account, supervisory failures to comply with supervisory requirements relating to certain equity and options and stock lending transactions, and certain record keeping requirements.

Pursuant to the consent, the Company agreed to a censure, pay a fine of $ 250,000 , and made an undertaking to retain an independent consultant to conduct a comprehensive review of the Company’s compliance with suitability rules in connection with solicited equity and options transactions, as well as possession-or-control requirements in connection with the firm’s stock loan business.

As of December 31, 2021, this legal matter has been resolved and the Company paid $ 250,000 for the year ended December 31, 2021, which is within the line item “Other general and administrative”

in the statements of income.

On July 9, 2021, StockCross entered into a Consent Order with the California Department of Financial Protection and Innovation in connection with alleged supervisory failures relating to the sale of Unit Investment Trusts to six customers.

Pursuant to the consent order, the Company agreed to desist and refrain from violations of California law relating to supervision by broker-dealers, to make a payment of $ 100,000 to the California Department of Financial Protection and Innovation for administrative costs, and to offer restitution of commissions of approximately $ 315,000 in aggregate to the six customers.

The Company paid $ 100,000 for the year ended December 31, 2021 related to this legal matter, which is within the line item “Other general and administrative”

in the statements of income.

As of December 31, 2021, this legal matter has been resolved and the six customers rejected the offer of restitutions.

For activity related to operations of StockCross prior to the Company’s acquisition of StockCross, FINRA’s Division of Enforcement is currently investigating UIT transactions that were executed by StockCross that the enforcement staff believes were terminated early.

All of these transactions occurred prior to the Company’s acquisition of StockCross on January 1, 2020.

Management cannot at this time assess either the duration or the likely outcome or consequences of this matter.

Nevertheless, FINRA has the authority to impose sanctions on the Company or require that it make offers of restitution to other customers who FINRA believes incurred sales charges in early liquidations of UITs.

No assurances can be given that a mutual settlement with FINRA regarding these matters can be reached or that any amount paid in settlement will not be material.

As of December 31, 2021, all other legal matters are without merit or involve amounts which would not have a material impact on the Company’s results of operations or financial position.

Siebert 2021 Form-10K 70

Overnight Financing

The Company has available lines of credit for short term overnight demand borrowing of up to $15 million with both BMO Harris Bank and Texas Capital Bank as of December 31,

As of December 31, 2020, the Company had no outstanding loan balances with either institution.

There are no commitment fees or other restrictions on the credit lines.

MSCO utilizes customer or firm securities as a pledge for short-term

borrowing needs.

The interest expense and the cash paid related to the utilization of these credit lines were both $18,000 and $29,000 for the year ended December 31, 2020 December 31, 2019,

respectively.

There were no fees associated with the utilization of these credit lines for the years ended December 31, 2020 or December 31, 2019.

As of December 31, 2021, MSCO had an available line of credit for short term overnight demand borrowing of up to $ 15 million with BMO Harris Bank.

As of December 31, 2021, MSCO had no outstanding loan balance with BMO Harris Bank and there were no commitment fees or other restrictions on this line of credit.

As of December 31, 2020, in addition to the $ 15 million line of credit with BMO Harris Bank, MSCO had a $ 15 million line of credit with Texas Capital Bank, which MSCO did not renew as of December 31, 2021.

The removal of this line of credit was due to Texas Capital Bank exiting the business line and did not impact MSCO’s ability to meet its liquidity requirements.

MSCO utilizes customer or firm securities as a pledge for short-term borrowing needs.

The interest expense for these credit lines was $ 17,000 and $ 19,000 the year ended December 31, 2021 and 2020, respectively.

There were no fees associated with these credit lines for the year ended December 31, 2021 and 2020.

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, 2022

Prior to August 1, 2023

Prior to August 1, 2024

Prior to August 1, 2025

For the year ended December 31, 2021, 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 for these fees.

General Contingencies

In the normal course of its business, the Company indemnifies and guarantees certain service providers against specified potential losses in connection with their acting as an agent of, or providing

services to, the Company.

In the normal course of its business, the Company indemnifies and guarantees certain service providers against specified potential losses in connection with their acting as an agent of, or providing services to, the Company.

The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated.

However, the Company believes that it is unlikely it will have to make material

payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications.

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the

breach of those representations and warranties.

The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse

application of certain tax laws.

However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications.

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties.

The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws.

These indemnifications generally are standard contractual terms and are entered into in the normal course of business.

The maximum potential amount of future payments that the Company could be required to make under

these indemnifications cannot be estimated.

However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these

indemnifications.

The Company is self-insured with respect to employee health claims.

The Company maintains stop-loss insurance for certain risks and has a health claim reinsurance limit capped at approximately

$50,000 per employee.

The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated.

The Company, through its affiliate, Kennedy Cabot Acquisition, LLC (“KCA”), is self-insured with respect to employee health claims.

KCA maintains stop-loss insurance for certain risks and has a health claim reinsurance limit capped at approximately $ 65,000 per employee as of December 31, 2021.

The estimated liability for self-insurance claims is initially recorded in the year in which the event of loss occurs and may be subsequently adjusted based upon new information and cost estimates.

Reserves for losses represent

estimates of reported losses and estimates of incurred but not reported losses based on past and current experience.

Reserves for losses represent estimates of reported losses and estimates of incurred but not reported losses based on past and current experience.

Actual claims paid and settled may differ, perhaps significantly, from the provision for losses.

This adds uncertainty to the

estimated reserves for losses.

This adds uncertainty to the estimated reserves for losses.

Accordingly, it is at least possible that the ultimate settlement of losses may vary significantly from the amounts included in the financial statements.

As part of this plan, the Company recognized expenses of $1,308,000 and $876,000 for the years ended December 31, 2020 and 2019, respectively.

Siebert 2021 Form-10K 71

As part of this plan, the Company recognized expenses of $ 1,405,000 and $ 1,308,000 for the year ended December 31, 2021 and 2020, respectively.

The Company had an accrual of $ 105,000 as of December 31, 2021, which represents the historical estimate of future claims to be recognized for claims incurred during the period.

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.

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.

Employee Benefit Plans

The Company through its affiliate, Kennedy Cabot Acquisition, LLC (“KCA”), sponsors a defined-contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers substantially

all employees.

The Company through KCA sponsors a defined-contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers substantially all employees.

Participant contributions to the plan are voluntary and are subject to certain limitations.

The Company may also make discretionary contributions to the plan.

No contributions were made by the Company or KCA for the years ended

December 31, 2020 and 2019.

Siebert 2020 Form-10K 65

No contributions were made by the Company or KCA for the year ended December 31, 2021 and 2020.

On August 6, 2021, the Company’s Board of Directors approved a 401(k) matching program for employees of the Company.

On September 17, 2021, the Company’s shareholders approved the Siebert Financial Corp.

2021 Equity Incentive Plan (the “Plan”) at the Company’s 2021 Annual Meeting of Shareholders.

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 are 3 million shares reserved under the Plan, and the Company issued no securities under the Plan for the year ended December 31, 2021.

Related Party Disclosures

StockCross and the Company were under common ownership, and prior to January 1, 2020, StockCross served as one of the clearing broker-dealers for the Company.

The StockCross

clearing agreement with the Company provided that StockCross passed through all revenue and charged the Company for related clearing expenses.

Outside of the clearing agreement, the Company had an expense sharing agreement with StockCross for its

Beverly Hills and Jersey City branch offices, and StockCross paid some vendors for miscellaneous expenses which it passed through to the Company.

In January 2019, the Company purchased approximately 15% of StockCross’ outstanding shares from an outside party.

Effective January 1, 2020, the Company acquired the remaining

85% of StockCross in exchange for 3,298,774 shares of the Company’s common stock and StockCross was merged with and into MSCO.

Upon the closing of this transaction on January 1, 2020, all receivables and payables between the Company and StockCross

as well as any loss from the Company’s equity method investment in StockCross was eliminated upon consolidation.

Prior to being acquired by the Company, StockCross and the Company were affiliated entities through common ownership and had various related party transactions.

In January 2019, the Company acquired approximately 15 % ownership of StockCross.

Effective January 1, 2020, the Company acquired the remaining 85 % of StockCross’

outstanding shares and StockCross was merged with and into MSCO.

The purchase price paid was approximately $ 29,750,000 or 3,298,774 shares of the Company’s common stock which was issued in connection with the acquisition.

Upon the closing of the transaction on January 1, 2020, all receivables and payables between the Company and StockCross were eliminated upon consolidation.

Kennedy Cabot Acquisition, LLC

KCA is an affiliate of the Company and is under common ownership with the Company.

To gain efficiencies and economies of scale with billing and administrative

functions, KCA serves as a paymaster for the Company for payroll and related functions, the entirety of which KCA passes through to the subsidiaries of the Company proportionally.

In addition, KCA has purchased the naming rights of the

Company for the Company to use.

KCA sponsors a 401(k)-profit sharing plan which covers substantially all of the Company’s employees.

In January 2020, MSCO sold approximately $288,000 worth of a private equity security to KCA at

To gain efficiencies and economies of scale with billing and administrative functions, KCA serves as a paymaster for the Company for payroll and related functions, the entirety of which KCA passes through to the subsidiaries of the Company proportionally.

In addition, KCA has purchased the naming rights of the Company for the Company to use.

KCA sponsors a 401(k) profit sharing plan which covers substantially all of the Company’s employees.

Employee contributions to the plan are at the discretion of eligible employees.

There were no contributions by the Company or KCA to the plan for the year ended December 31, 2021 and 2020.

In January 2020, MSCO sold approximately $ 288,000 worth of a private equity security to KCA at cost.

For the year ended December 31, 2021 and 2020, KCA has earned no profit for providing any services to the Company as KCA passes through any revenue or expenses to the Company’s subsidiaries.

Park Wilshire Companies, Inc.

PWC brokers the insurance policies for related parties.

Revenue for PWC from related parties was $73,000 and $69,000 for the years ended December 31, 2020 and 2019.

Gebbia and John J.

PW brokers the insurance policies for related parties.

Revenue for PW from related parties was $ 70,000 and $ 73,000 for the year ended December 31, 2021 and 2020, respectively.

Gebbia, John J.

Gebbia, and Gebbia Family Members

The Company has entered into various debt agreements with Gloria E.

Gebbia, the Company’s principal stockholder .

12 – Notes Payable - Related Party” for additional detail .

In addition, the Company’s obligations under its agreement with East West Bank are guaranteed pursuant to a guarantee

agreement by and among, John J.

Gebbia, individually and as a co-trustee of the John and Gloria Living Trust, U/D/T December 8, 1994 (the “Trust”), and Gloria E.

Gebbia, individually and as a co-trustee of the Trust.

See “Note 11 – Long-Term Debt” for additional detail .

Gebbia has extended loans to certain Company employees for the purchase of the Company’s shares.

These transactions have not materially impacted the

Company’s financial statements.

Gebbia, the Company’s principal stockholder.

Refer to Note 14 –

“Notes Payable - Related Party”

for additional detail .

Siebert 2021 Form-10K 72

In addition, the Company’s obligations under its line of credit with East West Bank are guaranteed pursuant to a guarantee agreement by and among, John J.

Gebbia and Gloria E.

Gebbia, individually, and as a co-trustees of the John and Gloria Living Trust, U/D/T December 8, 1994.

Refer to Note 13 –

“Long-Term Debt”

for additional detail.

Gebbia has extended loans to certain Company employees for the purchase of the Company’s shares.

These transactions have not materially impacted the Company’s financial statements.

The sons of Gloria E.

Gebbia and John J.

Gebbia hold executive positions within the Company’s subsidiaries.

Their compensation was in aggregate $ 1,179,000 and $ 543,000 for the year ended December 31, 2021 and 2020, respectively.

Their compensation was higher in the year ended December 31, 2021 primarily due to voluntary reductions in their salaries and bonuses during the COVID-19 crisis in 2020.

Gebbia Sullivan County Land Trust

The Company operates on a month-to-month lease agreement for its branch office in Omaha, Nebraska with the Gebbia Sullivan County Land Trust, the trustee of which is a relative of the Gebbia Family.

For both years ended December 31, 2020 and 2019, rent expense was $60,000 for this branch office.

The Company operates on a month-to-month lease agreement for its branch office in Omaha, Nebraska with the Gebbia Sullivan County Land Trust, the trustee of which is a member of the Gebbia Family.

For both the year ended December 31, 2021 and 2020, rent expense was $ 60,000 for this branch office.

Tigress Holdings, LLC and Cynthia DiBartolo

On November 16, 2021, the Company entered into an agreement with Tigress in exchange for 24% of RISE and shares of the Company’s common stock.

Refer to Note 1 –

“Organization”

for additional detail.

As part of the transaction, WPS was renamed to RISE, and Tigress’

founder, Cynthia DiBartolo, will continue as CEO of Tigress, and will assume the position as CEO of RISE.

Gebbia will assume the position of Chief Impact Officer at RISE.

DiBartolo will be appointed to the Company’s Board of Directors and Ms.

Gebbia was appointed to Tigress’

Board of Directors.

Certain employees of Tigress are also employees of RISE.

Subsequent Events

The Company has evaluated events that have occurred subsequent to December 31, 2021 and through March 30, 2022, the date of the filing of this report.

Pursuant to a stock purchase agreement dated as of January 31, 2021, the Company acquired an interest of 5% of OpenHand Holdings, Inc.

("OpenHand") common stock for consideration of a total of

$2,231,000 consisting of $850,000 in cash and 329,654 restricted shares of the Company's common stock valued at $1,381,000 or $4.19 per share.

The value of the restricted stock was determined using the thirty (30) day trading average.

agreed to register the shares issued to OpenHand by filing a selling shareholder registration statement.

Siebert 2020 Form-10K 66

OpenHand is a subscription-based brokerage platform that will provide zero-commission trading for equity and option transactions and credit its members daily

with rebates of revenues generated by the clients, less operational expenses.

The Company will be the exclusive broker-dealer for all OpenHand account services and will benefit from their cloud-based technology which uses Amazon Web Services.

Through this strategic, operational, regulatory, and technological partnership, OpenHand and the Company’s clients will benefit from numerous financial and operational efficiencies.

The Company also received an option to purchase an additional 7.5% of OpenHand for approximately $4.5 million, based upon a $60 million valuation of OpenHand.

Other than the event described above, there have been no material subsequent events that occurred during such period that would require disclosure in this report or would be required to be recognized

in the consolidated financial statements as of December 31, 2020.

Siebert 2020 Form-10K 67

From January 31, 2022 to the date of this Report, RISE issued and Siebert sold membership interests in RISE to certain employees, directors, and affiliates of RISE and Siebert.

This amount represented, as of the date of this Report, an aggregate of 7 % of the total issued and outstanding membership interests in RISE.

Transaction with Hedge Connection

On January 21, 2022, RISE entered into an agreement with Hedge Connection, Inc.

(“Hedge Connection”), a Florida corporation and a woman-owned fintech company founded by Lisa Vioni that provides capital introduction software solutions for the prime brokerage industry.

Pursuant to the agreement, Hedge Connection transferred to RISE common stock representing twenty percent ( 20 %) of the outstanding post-closing issued and outstanding capitalization in Hedge Connection and an option from Ms.

Vioni to acquire 100 % of the remaining interest in Hedge Connection at fair value market at the time of the option exercise, provided such valuation of Hedge Connection is not less than $ 5 million for a consideration of $ 1,000,000 .

This consideration is to be paid in three cash installments over 180 days totaling $ 600,000 as well as approximately 3.33 % of the issued and outstanding membership interests of RISE.

In addition, RISE acquired a technology license agreement from Hedge Connection to use its capital introduction software, Fintroz, for an annual license fee of $ 250,000 , Ms.

Vioni provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection, and Ms.

Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime –

Capital Introduction, a division of RISE.

Shelf Registration Statement

On February 18, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC, File No.

333-262895, pursuant to General Instruction I.B.6 to Form S-3 (the “Baby Shelf Rule”), that was declared effective on March 2, 2022 (the “Registration Statement”).

The Company may from time to time sell any combination of the securities described in the Registration Statement in one or more offerings up to an aggregate offering price of $ 100.0 million;

provided, however, at the time the Company sells securities pursuant to the Registration Statement, the amount of securities to be sold plus the amount of any securities it has sold during the prior twelve months in reliance on General Instruction I.B.6 may not exceed one-third of the aggregate market value of the Company’s outstanding Common Stock held by non-affiliates as of a day during the 60 days immediately preceding such sale as computed in accordance with Instruction I.B.6 while the Company remains subject to the Baby Shelf Rule.

Other than the events described above, there have been no material subsequent events that occurred during such period that would require disclosure in this report or would be required to be recognized in the consolidated financial statements as of December 31, 2021.

Siebert 2021 Form-10K 73

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data