What changed in this filing

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Item 1A. Risk Factors

2025-03-31 compared with 2024-05-10 · 123 added, 102 removed, 421 unchanged (35% of the section changed)

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stockholders.

The Dodd-Frank Wall Street

Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted in 2010, required many federal agencies to adopt new rules

and regulations applicable to the financial services industry and called for many studies regarding various industry practices.

In particular,

the Dodd-Frank Act gave the SEC discretion to adopt rules regarding standards of conduct for broker-dealers providing investment advice

to retail customers.

The Dodd-Frank Act, enacted

in 2010, required many federal agencies to adopt new rules and regulations applicable to the financial services industry and called for

many studies regarding various industry practices.

In particular, the Dodd-Frank Act gave the SEC discretion to adopt rules regarding

standards of conduct for broker-dealers providing investment advice to retail customers.

The rules and interpretations

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We are also subject to regulation by SROs and other regulatory

bodies in the U.S., such as the SEC, the NYSE, FINRA, MSRB, the Commodity Futures Trading Commission (“CFTC”) and the NFA.

MSCO is registered as a broker-dealer in 50 states, the District of Columbia, and Puerto Rico, and RISE is registered as a broker-dealer

in 7 states and territories.

The regulations to which MSCO and RISE are subject as broker-dealers cover all aspects of the securities

business including training of personnel, sales methods, trading practices, uses and safe keeping of customers’ funds and securities,

capital structure, record keeping, fee arrangements, disclosure and the conduct of directors, officers and employees.

bodies in the U.S., such as the SEC, the NYSE, FINRA, MSRB, the CFTC and the NFA.

MSCO is registered as a broker-dealer in 50 states,

the District of Columbia, and Puerto Rico, and RISE is registered as a broker-dealer in 7 states and territories.

The regulations to which

MSCO and RISE are subject as broker-dealers cover all aspects of the securities business including training of personnel, sales methods,

trading practices, uses and safe keeping of customers’ funds and securities, capital structure, record keeping, fee arrangements,

disclosure and the conduct of directors, officers and employees.

SNXT is registered as an investment

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Our subsidiaries, RISE and MSCO, are also regulated

by the National Futures Association (“NFA”) and function as a registered introducing broker.

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by the NFA and function as a registered introducing broker.

The laws, rules and regulations,

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accounting principles relating to our business could materially and adversely affect our business, results of operations and financial

Additionally, like other

participants in the financial services industry, we and our subsidiaries face the risks of lawsuits by clients and regulatory proceedings

Additionally,

like other participants in the financial services industry, we and our subsidiaries face the risks of lawsuits from clients and regulatory

proceedings against us.

The outcome of regulatory proceedings and client lawsuits is uncertain and difficult to predict.

An adverse resolution of

any regulatory proceeding or client lawsuit against us could result in substantial costs or reputational harm to us.

Further, any such

proceedings or lawsuits could have an adverse effect on our ability to retain key registered representatives, investment advisers and

wealth managers, and to retain existing clients or attract new clients, any of which could have a material adverse effect on our business,

financial condition, results of operations and prospects.

An adverse resolution

of any regulatory proceeding or client lawsuit against us could result in substantial costs or reputational harm to us.

such proceedings or lawsuits could have an adverse effect on our ability to retain key registered representatives, investment advisers

and wealth managers, and to retain existing clients or attract new clients, any of which could have a material adverse effect on our

business, financial condition, results of operations and prospects.

Refer to Item 3 – Legal Proceedings for additional detail.

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The secure transmission of confidential information over public networks is also a critical element of our operations.

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In providing services to clients,

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identifiable information.

These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict.

These laws and regulations are increasing in complexity and number, changing frequently and sometimes conflict.

If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect

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significant remediation costs, legal liability, and damage to our reputation and could have a material adverse effect on our results of

In addition, our liability insurance might not be sufficient in type or amount to cover us against claims related to security

breaches, cyber-attacks and other related breaches.

We have purchased liability

insurance and cybersecurity insurance with a coverage limit of $15 million and a deductible of $250,000 to mitigate the financial impact

of potential cyber-attacks.

However, our insurance may not be sufficient in type or amount to fully cover claims arising from security

breaches, cyber-attacks, and other related incidents.

We may be exposed to damage to our business

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and severity, and it is expected that these trends will continue.

Should we be affected by such an incident, we may incur substantial costs

and suffer other negative consequences, which may include:

● Remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives

to customers or business partners in an effort to maintain relationships after an attack;

● Increased cybersecurity protection costs, which may include the costs of making organizational changes,

deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants;

● Lost revenues resulting from the unauthorized use of proprietary information or the failure to retain

or attract customers following an attack;

● Litigation and legal risks, including regulatory actions by state and federal regulators;

Should we be affected by such an incident, we may incur substantial

costs and suffer other negative consequences, which may include:

● Remediation costs, such as liability for stolen assets or

information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after

● Increased cybersecurity protection costs, which may include

the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging

third party experts and consultants;

● Lost revenues resulting from the unauthorized use of proprietary

information or the failure to retain or attract customers following an attack;

● Litigation and legal risks, including regulatory actions by

state and federal regulators;

● Loss of reputation.

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have a material adverse effect on our business, financial condition and operating results.

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Rapid market or technological changes may

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● Enhance our existing products and services;

● Develop and/or license new products and technologies that address the increasingly sophisticated and varied

needs of our clients and prospective clients;

● Develop and/or license new products and technologies that

address the increasingly sophisticated and varied needs of our clients and prospective clients;

● Continue to attract highly-skilled technology personnel;

● Respond to technological advances and emerging industry standards and practices on a cost-effective and

timely basis.

● Respond to technological advances and emerging industry standards

and practices on a cost-effective and timely basis.

Developing our electronic

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If we face material delays in introducing new services, products and enhancements,

our clients may forego the use of our products and use those of our competitors.

Further, the adoption of new

internet, networking or telecommunications technologies may require us to devote substantial resources to modify and adapt our services.

We cannot assure that we will be able to successfully implement new technologies or adapt our proprietary technology and transaction-processing

systems to client requirements or emerging industry standards.

We cannot assure that we will be able to respond in a timely manner to

changing market conditions or client requirements.

our clients may forgo the use of our products and use those of our competitors.

the adoption of new internet, networking or telecommunications technologies may require us to devote substantial resources to modify

and adapt our services.

We cannot assure that we will be able to successfully implement new technologies or adapt our proprietary technology

and transaction-processing systems to client requirements or emerging industry standards.

We cannot assure that we will be able to respond

in a timely manner to changing market conditions or client requirements.

Risks Related to Our Business Operations

Our management identified a material weakness

in our internal control over financial reporting which could, if not remediated, result in material misstatements in our consolidated

financial statements.

Our management is responsible

for establishing and maintaining adequate internal controls over our financial reporting, as such term is defined in Rule 13a-15(f) under

the Exchange Act.

As disclosed in this report, we evaluated the effectiveness of our internal control over financial reporting and identified

a material weakness as of December 31, 2023.

The material weakness is that we did not design and maintain effective controls over certain

information technology (“IT”) or general computer controls for information systems that are relevant to the preparation of

the consolidated financial statements.

Specifically, we did not design and maintain user access controls to ensure appropriate segregation

of duties and adequate restricted user and privileged access to financial applications, data and programs to the appropriate personnel.

The IT deficiencies did not result in adjustments to the consolidated financial statements.

A material weakness is defined

as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility

that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

remediated, the material weakness identified above could result in material misstatements in our consolidated financial statements.

addition, if we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our

ability to record, process and report financial information accurately, and to prepare financial statements within required time periods

could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal

and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

We previously identified material weaknesses

in our internal control over financial reporting and if we fail to maintain an effective system of internal control in the future, this

could result in loss of investor confidence and adversely impact our stock price.

We reported in our Annual

Report on Form 10-K for the fiscal year ended December 31, 2023, a material weakness because we did not design and maintain effective

controls over certain information technology (“IT”) or general computer controls for information systems that are relevant

to the preparation of the consolidated financial statements.

Specifically, we did not design and maintain user access controls to ensure

appropriate segregation of duties and adequate restricted user and privileged access to financial applications, data and programs to the

appropriate personnel.

During 2024, we also identified material weaknesses relating to (1) our failure to design adequate internal controls

surrounding security market values within our back-office stock record system, including the accuracy and completeness of pricing of firm

and customers’ fully paid and excess margin securities, and (2) our internal controls surrounding the quarterly securities count

lacking sufficient documented review and precision of review to demonstrate the completeness and accuracy of the count performed in accordance

with Rule 17a-13 of the Exchange Act.

As of December 31, 2024, we completed the remediation measures related to the material weaknesses

and concluded that our internal control over financial reporting was effective as of December 31, 2024.

Completion of remediation does

not provide assurance that our remediation or other controls will continue to operate properly.

If we are unable to maintain effective

internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information

accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation

or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our

financial statements and adversely impact our stock price.

Potential strategic acquisitions and other

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entail numerous risks, including:

● Difficulties in the integration of acquired operations, services and products;

Siebert 2023 Form-10K 12

● Difficulties in the integration of acquired operations, services

and products;

● Failure to achieve expected synergies;

● Diversion of management’s attention from other business concerns;

● Diversion of management’s attention from other business

● Assumption of unknown material liabilities of acquired companies;

● Amortization of acquired intangible assets, which could reduce future reported earnings;

● Amortization of acquired intangible assets, which could reduce

future reported earnings;

● Potential loss of clients or key employees of acquired companies;

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of the employees, directors, and affiliates of RISE and Siebert who own equity in RISE may differ from the interests of shareholders of

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Risks Related to Our Common Stock

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13,908,556 shares of our common

stock, or approximately 33.3% of our shares of our common stock outstanding, are currently held by non-affiliates as of May 1, 2024.

stock with a small number of shares held by non-affiliates, known as the “float,” will generally be more volatile than a stock

with a large float.

stock, or approximately 34.4% of our shares of our common stock outstanding, are currently held by non-affiliates as of March 5, 2025.

A stock with a small number of shares held by non-affiliates, known as the “float,” will generally be more volatile than a

stock with a large float.

Although our common stock is traded on the Nasdaq Capital Market, there can be no assurance that an active public

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Executive Officer, has, along with other family members, the power to nominate six directors to the Board of Directors and owns approximately

43% of our common stock.

42% of our common stock as of December 31, 2024.

As a result, they have significant influence on matters submitted to a vote of shareholders.

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In accordance with the Registration Rights Agreement

and the Settlement Agreement (as defined below), in January 2024 we filed a Form S-3 registration statement with the SEC registering these

shares for resale.

However, since we filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements

for use of registration statements on Form S-3, which requires that we file in a timely manner all reports required to be filed during

the prior twelve calendar months.

As a result, we have suspended use of the registration statement on Form S-3.

Kakaopay may still sell

shares pursuant to Rule 144 under the Securities Act of 1933, as amended, prior to the filing of any future registration statement.

and the Settlement Agreement (as defined below), we filed a registration statement with the SEC registering these shares for resale.

number of shares of common stock could be significant in relation to our currently outstanding common stock and the historical trading

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very high volatility and trading that may or may not track fundamental valuation models.

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As a result of the foregoing,

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such as deposits and borrowings.

Increases in interest rates positively impact our revenue from margin and other interest income, and

distribution fees received from money market securities.

economy remains in a strong recovery, aided by fiscal and monetary policies, inflation has been rising at historically high rates,

and the Federal Reserve may raise, maintain or lower rates in the future.

Although we believe we may benefit from the current interest

rate environment, higher interest rates may cause our funding costs to increase if market conditions or the competitive environment induces

us to raise our interest rates to avoid losing deposits, or replace deposits with higher cost funding sources without offsetting increases

in yields on interest-earning assets which can reduce our interest revenue.

Decreases in interest rates negatively impact our revenue by reducing the margin and other interest income,

as well as distribution fees received from money market securities.

Lower rates can compress net interest margins, impacting the profitability

of our interest-earning assets and affecting overall revenue.

economy navigates a period of stabilization, inflation remains elevated, and the Federal Reserve may raise, maintain or lower

rates in the future in response to evolving economic conditions.

While we believe the current interest rate environment may present challenges,

a decrease in rates could reduce our interest revenue if yields on interest-earning assets decline without a corresponding decrease in

our funding costs, compress net interest margins if competitive pressures prevent us from lowering deposit rates, and impact market conditions

by reducing trading volumes, spreads, and demand for certain brokerage products.

A prolonged economic slowdown, volatility

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vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political and financial uncertainty

and the European Union, renewed concern about China’s economy, conflict with Russia and Ukraine, the conflict in Israel

and the Gaza Strip, complications involving terrorism and armed conflicts around the world, or other challenges to global trade or travel.

More generally, because our business is closely correlated to the macroeconomic outlook, a significant deterioration in that outlook or

an exogenous shock would likely have an immediate negative impact on our overall results of operations.

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and the European Union, renewed concern about China’s economy, geopolitical conflicts, complications involving terrorism

and armed conflicts around the world, or other challenges to global trade or travel.

More generally, because our business is closely correlated

to the macroeconomic outlook, a significant deterioration in that outlook or an exogenous shock would likely have an immediate negative

impact on our overall results of operations.

There is intense competition in the brokerage

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Many of these competitors conduct extensive marketing campaigns and may have or achieve exceptional market name recognition.

be able to compete effectively with current or future competitors with stronger capital position, greater name recognition or who partner

be able to compete effectively with current or future competitors with stronger capital positions, greater name recognition or who partner

or combine with other larger firms.

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on fees earned by discount brokers for the sale of order flow.

Continued or increased competition from ultra-low cost, flat-fee brokers

Continued or increased competition from ultra-low costs, flat-fee brokers

and broader service offerings from other discount brokers could limit our growth or lead to a decline in our customer base which would

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could have a material adverse effect on our business, results of operations and financial condition.

The soundness of other financial institutions

and intermediaries affects us.

We face the risk of operational

failure, termination or capacity constraints of any of the clearing agents, exchanges, clearing houses or other financial intermediaries

that we use to facilitate our securities transactions.

As a result of the consolidation over the years of clearing agents, exchanges and

clearing houses, our exposure to certain financial intermediaries has increased and could affect our ability to find adequate and cost-effective

alternatives should the need arise.

Any failure, termination or constraint of these intermediaries could adversely affect our ability

to execute transactions, service our clients and manage our exposure to risk.

Our ability to engage in routine

trading and funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, funding, and counterparties or other relationships.

We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial

industry, including brokers and dealers, commercial banks, investment banks, mortgage originators and other institutional clients.

a result, defaults by, or even rumors or questions about the financial condition of, one or more financial services institutions, or the

financial services industry generally, have historically led to market-wide liquidity problems and could lead to losses or defaults by

us or by other institutions.

Many of these transactions expose us to credit risk in the event of default of our counterparty or client.

In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices insufficient

to recover the full amount of the loan or derivative exposure due us.

Although we have not suffered any material or significant losses

as a result of the failure of any financial counterparty, any such losses in the future may materially adversely affect our results of

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 1A. Risk Factors