What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-05-10 · 207 added, 315 removed, 215 unchanged (71% of the section changed)

21 unchanged sentences

Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other

Financial Overview

2024, earnings per share were $0.33, compared to earnings per share of $0.21 in 2023.

In 2024, our net revenues were $83.9 million and

net income was $13.3 million, compared to net revenues of $71.5 million and net income of $7.8 million in 2023.

highlights as of December 31, 2024:

● Retail customer net worth increased by 13% to $18.0 billion compared to 2023

● Revenue related to stock borrow / stock loan increased by 19% to 19.2 million compared to 2023

● Revenue related to commissions and fees increased by 32% to $9.6 million compared to 2023

Trends and Key Factors

Affecting our Operations

risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory and investment positions.

exposure to market risk primarily through our broker-dealer trading operations.

Through our broker-dealer subsidiary, we trade debt obligations

and equity securities and maintain trading inventories to ensure availability of securities to facilitate client transactions.

levels may fluctuate daily as a result of client demand.

Our primary market risks relate to interest rates and equity prices.

results from changes in prices of equity securities, affecting the value of the equity securities and other instruments that derive their

value from a particular stock.

may enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold securities issued in the offerings

to which we are committed.

Risk exposure is controlled by limiting our participation, the transaction size, or through the syndication

Interest Rates

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at fair value.

The following table presents

simulated changes to net interest revenue over the next 12 months beginning December 31, 2024 and 2023 of a gradual increase or decrease

in market interest rates relative to prevailing market rates at the end of each reporting period:

As of December 31,

Increase of 200 basis points

Increase of 100 basis points

Increase of 50 basis points

Decrease of 50 basis points

Decrease of 100 basis points

Decrease of 200 basis points

The difference in our simulated

incremental increases and decreases in the market interest rates as of December 31, 2024 compared to 2023 is primarily due to an increase

in the proportion of segregated cash to segregated securities and a decrease in the proportion of margin debit balances to cash credit

Technology Initiatives

During 2022 and 2023 we terminated

agreements with prior technology vendors that were primarily developing our Retail Platform, refer to Note 7 - Prepaid Service Contract

and Note 10 – Software, Net for further detail.

During 2023, we reassessed our technology needs and strategic direction and hired

new technology personnel, changed our primary software development vendor, and made additional investments in technology development related

to our Retail Platform and additional technology services for our customers.

We believe these changes will

be key to creating a Retail Platform and additional technology services for the next generation of retail customers, correspondent clearing,

as well as the overall growth of our business.

The termination of agreements with our prior technology vendors had minimal impact on our

current operations.

with Kakaopay

April 27, 2023, we entered into the First Tranche Stock Purchase Agreement with Kakaopay, a company established under the Laws of the

Republic of Korea, pursuant to which we issued to Kakaopay 8,075,607 shares of our common stock at a per share price of Two Dollars Fifteen

Cents ($2.15), which represented at the time of issuance 19.9% of our outstanding equity securities on a fully diluted basis (the “First

Concurrent with the execution of the First Tranche Stock Purchase Agreement, Siebert and Kakaopay entered into a Stock

Purchase Agreement (the “Second Tranche Stock Purchase Agreement”), pursuant to which we agreed to issue to Kakaopay additional

shares at a per share price of Two Dollars Thirty Five Cents ($2.35), that would have resulted in Kakaopay owning 51% of the outstanding

equity securities of Siebert on a fully diluted basis.

Siebert 2023 Form-10K 20

First Tranche closed on May 18, 2023 and, in connection therewith, we entered into the Registration Rights Agreement and a Stockholders’

Agreement (the “Original Stockholders’ Agreement”) with Kakaopay.

December 19, 2023, we entered into a Termination and Settlement Agreement (the “Settlement Agreement”) with Kakaopay, Kakaopay

Securities Corp.

(“Kakaopay Securities”), MSCO and certain Gebbia parties named therein.

Under the Settlement Agreement, the

parties mutually agreed to terminate the Second Tranche Stock Purchase Agreement.

The parties terminated the Second Tranche Stock Purchase

Agreement after reaching a compromise regarding their disagreement over, among other things, the occurrence of a “Purchaser Material

Adverse Effect” in the Second Tranche Stock Purchase Agreement, and the ability of the closing conditions in the Second Tranche

Stock Purchase Agreement to be satisfied.

Certain related agreements were also terminated, including the Foreign Broker-Dealer Fee Sharing

Agreement, dated April 27, 2023, between MSCO and Kakaopay Securities, and the Support and Restrictive Covenant Agreements by certain

Gebbia stockholders, each dated April 27, 2023.

The parties also agreed (i) to amend and restate the Original Stockholders’ Agreement

as described below, (ii) that Siebert will pay Kakaopay a fee of $5 million (payable in ten quarterly installments beginning on March

29, 2024) and (iii) to customary releases.

Kakaopay continues to own the 8,075,607 shares of our common stock that it purchased from Siebert

in May 2023, and Kakaopay agreed to certain standstill restrictions with respect to its ownership of our common stock, subject to certain

connection with the foregoing, on December 19, 2023, we entered into an Amended and Restated Stockholders’ Agreement (the “A&R

Stockholders’ Agreement”) with Kakaopay, certain stockholders listed on Schedule I thereto and John J.

Gebbia (in his individual

capacity and as representative of the Gebbia Stockholders (as defined therein)) to amend and restate the Original Stockholders’

the A&R Stockholders’ Agreement, Kakaopay is entitled to nominate one director to our board of directors (the “Board”)

and the Gebbia Stockholders are entitled to designate six directors to the Board, in each case, subject to certain conditions.

and each Gebbia Stockholder agreed to vote all shares of common stock held by such stockholder to elect directors nominated by Kakaopay

and Gebbia Stockholders.

A&R Stockholders’ Agreement also, among other things, provides that certain specified events, including certain significant

merger and acquisition transactions and related party transactions, stock exchange delistings, amendments to organizational documents

that materially and disproportionally prejudice Kakaopay and certain equity issuances, will require the prior written consent of two-thirds

of the Board, including at least one Kakaopay director and one Gebbia director.

The A&R Stockholders’ Agreement also provides

Siebert and the non-transferring party a right of first refusal if Kakaopay or any of the Gebbia Stockholders desires to accept a bona

fide offer to transfer all or any portion of its or their shares, subject to certain exceptions, and includes tag-along rights in favor

of Kakaopay and the Gebbia Stockholders.

The A&R Stockholders’ Agreement will terminate at such time as either the Gebbia Stockholders,

in the aggregate, or Kakaopay, hold less than five percent of the issued and outstanding Common Stock on a fully-diluted basis.

incurred $5,943,000 associated with the termination of the transaction with Kakaopay which is recorded in the line item “Transaction

termination costs” in the consolidated statements of operations.

This amount consisted of the $5,000,000 fee to Kakaopay (payable

in ten quarterly installments beginning on March 29, 2024) adjusted for the present value of the payments, as well as legal and other

consulting costs associated with the transaction of approximately $1,481,000.

was an institutional brokerage for which all its revenue producing customers transitioned to other prime service providers by the first

quarter of 2022.

Net revenue from customers that have transitioned to other prime service providers was approximately $0.3 million for

the year ended December 31, 2022.

During 2022, there were various transactions involving the ownership of RISE.

Refer to Note 3 –

Transactions with Tigress and Hedge Connection and Note 4 – RISE for additional detail.

part of this transition, Siebert had an agreement with JonesTrading Institutional Service, LLC (“JonesTrading”) whereby JonesTrading

pays RISE a percentage of the net revenue produced by certain historical clients of RISE less any related expenses.

For the years ended

December 31, 2023 and 2022, this agreement resulted in income of $265,000 and $137,000, respectively, which is recorded in the line item

“Other income” in the consolidated statements of operations.

a result of the transactions described in Note 3 – Transactions with Tigress and Hedge Connection, Siebert’s ownership in

RISE increased to 68% and, therefore, Siebert continued to consolidate RISE from October 18, 2022 through December 31, 2022.

been no further transactions completed by Siebert related to RISE’s membership interests for the year ended December 31, 2023.

Siebert 2023 Form-10K 21

Transactions with

Tigress and Hedge Connection

On November 16, 2021, we purchased

24% of the outstanding membership interests in Tigress, a disabled and woman-owned financial services firm, in exchange for 24% of RISE

and shares of Siebert common stock.

On January 21, 2022, we purchased 20% of Hedge Connection, a woman-owned fintech company, and an option

to acquire the remaining interest in Hedge Connection in exchange for consideration of $600,000 and 3.33% of RISE.

As part of these transactions,

Tigress’ founder, Cynthia DiBartolo, continued as CEO of Tigress, and assumed the position as CEO of RISE.

of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE.

DiBartolo was appointed to Siebert’s

and RISE’s Board of Directors and Ms.

Gebbia was appointed to Tigress’ Board of Directors.

In addition, Lisa

Vioni, founder of Hedge Connection, provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection,

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.

Based upon the strategic direction

of these ventures, management of the respective businesses decided to unwind the original transactions with Siebert, RISE, Hedge Connection

As a result, we exchanged our 7% ownership of Tigress for all of Tigress’ ownership of RISE.

We also entered into an

agreement with Hedge Connection whereby we re-conveyed 20% of the common stock of Hedge Connection and the related option to acquire 100%

of Hedge Connection in exchange for 3.17% of RISE and the cancellation of Siebert’s note payable to Hedge Connection.

part of these agreements, Ms.

DiBartolo and Ms.

Vioni resigned from their respective positions within Siebert and RISE.

also resigned from her position within Tigress.

financial impact of the transaction with Hedge Connection was a one-time loss of $719,000 for the year ended December 31, 2022, which

is in the line item “Loss on sale of equity method investment in related party” on the consolidated statements of operations.

The Company recognized impairment charges of its investment in Tigress of approximately $185,000 and $4,015,000 during the years ended

December 31, 2023 and 2022, respectively, which are in the line item “Impairment of investments” on the consolidated statements

of operations.

Refer to Note 3 – Transactions with Tigress and Hedge Connection for further detail on the terms and accounting treatment

of these transactions.

At the end of 2023, we hired

new technology personnel, changed our primary software development vendor, and made investments in technology development.

Some of these technology investments

include the development of a Siebert mobile trading application, online platform for our retail customer base and corporate services clients,

as well as upgrades to our technological and operational infrastructure to support these platforms and future growth.

We believe that

these ongoing investments in technology will be key to meeting the needs of our retail customers, correspondent clearing, corporate services

as well as expand into new markets and demographics.

Client Account and Activity Metrics

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Retail customer accounts

● Retail customer net worth represents the total value of securities and cash in the retail customer accounts

after deducting margin debits

● Retail customer margin debit balances represents credit extended to our customers to finance their purchases

against current positions

● Retail customer credit balances represents client cash held in brokerage accounts

● Retail customer money market fund value represents all retail customers accounts invested in money market

● Retail customer accounts represents the number of retail customers

Account Growth Initiatives

During 2023, our management

team engaged in several account growth initiatives that led to significant growth in our retail customer accounts from 2022.

drivers of this growth were related to a partnership with NFS as well as new retail accounts from corporate services.

Siebert 2023 Form-10K 22

● Retail customer net worth represents the total value of securities

and cash in the retail customer accounts after deducting margin debits

● Retail customer margin debit balances represent credit extended

to our customers to finance their purchases against current positions

● Retail customer credit balances represent client cash held

in brokerage accounts

● Retail customer money market fund value represents all retail

customers accounts invested in money market funds

● Retail customer accounts represent the number of retail customers

Consolidated Statements of Operations and Financial

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Commissions and fees for the

year ended December 31, 2023 were $7,541,000 and increased by $201,000 from the corresponding period

in the prior year, primarily due to market conditions.

year ended December 31, 2024 were $9,615,000 and increased by $2,339,000 from the corresponding

period in the prior year, primarily due to strong market conditions.

Interest, marketing and distribution

fees for the year ended December 31, 2024 were $32,407,000 and increased by $2,830,000 from the

corresponding period in the prior year primarily due to rising interest rates that resulted in an increase in margin interest income and

interest income received on U.S.

government securities and bank deposits.

corresponding period in the prior year primarily due to an increase in interest income received on U.S.

government securities and

bank deposits.

Principal transactions and

3 unchanged sentences

in unrealized gain on our portfolio of U.S.

government securities was due to the following.

We invested in 1-year treasury bills and 2-year

treasury notes in order to enhance our yield on excess 15c3-3 deposits.

During 2022, there was an increase in U.S.

government securities

yields, which created an unrealized loss on our U.S.

government securities portfolio.

In 2023, we recorded the reversal of the unrealized

loss resulting in a realized and unrealized gain due to the securities coming closer to maturity, the latest maturity being April 2025.

We continually invest in U.S.

government securities was due to the maturity of certain U.S.

government securities and a

decrease in investment in U.S.

government securities based on market yields and cash needs.

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Realized and unrealized gain on primarily riskless principal transactions

Realized and unrealized gain

(loss) on portfolio of U.S.

Realized and unrealized gain (loss) on portfolio of U.S.

government securities

1 unchanged sentence

Market making for the year

ended December 31, 2023 was $1,304,000 and decreased by $1,139,000 from the corresponding period

in the prior year, primarily due to market conditions.

ended December 31, 2024 was $2,255,000 and increased by $951,000 from the corresponding period in

the prior year, primarily due to strong equity markets.

Stock borrow / stock loan

for the year ended December 31, 2024 was $19,249,000 and increased by $3,077,000 from the corresponding

period in the prior year, primarily due to the growth of stock locate and securities lending businesses.

period in the prior year, primarily due to a growth in stock locate services.

Advisory fees for the year

ended December 31, 2023 were $1,928,000 and increased by $66,000 from the corresponding period in

the prior year.

ended December 31, 2024 were $2,369,000 and increased by $441,000 from the corresponding period

in the prior year, primarily due to growth in platform assets.

Other income for the year

ended December 31, 2023 was $1,898,000 and decreased by $1,064,000 from the corresponding period

in the prior year, primarily due to the termination of consulting fee income from a technology vendor.

ended December 31, 2024 was $3,390,000 and increased by $1,227,000 from the corresponding period

in the prior year, primarily due to fees related to an increase in maintenance fees during the current year.

Operating Expenses

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benefits for the year ended December 31, 2024 were $43,999,000 and increased by $12,063,000 from

the corresponding period in the prior year, primarily due to an increase in commission payouts and incentive compensation.

fees, including execution costs for the year ended December 31, 2023 were $1,672,000 and decreased by $471,000 from the corresponding

period in the prior year, primarily due to the elimination of RISE clearing and execution charges.

the corresponding period in the prior year, primarily due to an increase in commission payouts

and executive compensation.

fees, including execution costs for the year ended December 31, 2024 were $1,607,000 and decreased by $65,000 from the corresponding period

in the prior year.

Technology and communications

expenses for the year ended December 31, 2023 were $3,364,000 and decreased by $1,107,000 from the

corresponding period in the prior year, primarily due to a decrease in technology costs related to RISE as well as a decrease in costs

related to an agreement with a technology vendor that was terminated in 2022.

expenses for the year ended December 31, 2024 were $3,940,000 and increased by $576,000 from the

corresponding period in the prior year, primarily due to an expansion of technological infrastructure.

Other general and administrative

expenses for the year ended December 31, 2024 were $4,488,000 and increased by $78,000 from the

corresponding period in the prior year, primarily due to an increase in travel expenses as well as expense primarily related to the Miami

office building.

Siebert 2023 Form-10K 23

corresponding period in the prior year.

Data processing expenses for

the year ended December 31, 2023 were $3,236,000 and increased by $67,000 from the corresponding

the year ended December 31, 2024 were $3,200,000 and decreased by $36,000 from the corresponding

period in the prior year.

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for the year ended December 31, 2024 were $1,631,000 and decreased by $242,000 from the corresponding

period in the prior year, primarily due to the elimination of certain leases in 2023.

period in the prior year, primarily due to a discontinued rent expense related to the temporary Miami office.

Professional fees for the

year ended December 31, 2024 were $5,578,000 and increased by $1,119,000 from the corresponding

period in the prior year, primarily due to an increase in board of director compensation, executive officer compensation, as well as other

consulting costs.

period in the prior year, primarily due to an increase in legal and accounting fees offset by a decrease in consulting services.

Depreciation and amortization

expenses for the year ended December 31, 2023 were $2,020,000 and increased by $1,025,000 from the

corresponding period in the prior year, primarily due to the write-off of certain technology assets in 2023.

expenses for the year ended December 31, 2024 were $1,380,000 and decreased by $640,000 from the

corresponding period in the prior year, primarily due to the write off of development related

to integration of a technology platform that occurred in the prior year.

Interest expense for the year

ended December 31, 2023 was $263,000 and decreased by $177,000 from the corresponding period in

the prior year, primarily due to the elimination in interest related to notes payable at the end of 2022.

and promotion expenses for the year ended December 31, 2023 were $155,000 and decreased by $388,000 from the corresponding period in the

prior year, primarily due to a decrease in promotional costs for various marketing initiatives.

ended December 31, 2024 was $262,000 and decreased by $1,000 from the corresponding period in the

and promotion expenses for the year ended December 31, 2024 were $348,000 and increased by $193,000 from the corresponding period in the

prior year, primarily due to an increase in marketing initiatives in 2024.

Non-Operating

1 unchanged sentence

The earnings of equity method

investment in related party for the year ended December 31, 2023 was $111,000 and increased by $107,000

from the corresponding period in the prior year, primarily due to an increase in our proportional income from our investment in Tigress.

impairment of investments for the year ended December 31, 2023 was a loss of $1,035,000 and decreased by $2,980,000 from the corresponding

period in the prior year, primarily due to the impairment of our investment in Tigress occurring in 2022, partially offset by the impairment

in 2023 of our investment in a technology provider of a trading platform (“Trading Technology Provider”).

Loss on sale of equity method

investment in related party for the year ended December 31, 2023 was $0 and decreased by $719,000 from the corresponding period in the

prior year due to our loss on the transactions between Siebert, RISE, Hedge Connection and Tigress in 2022.

investment in related party for the year ended December 31, 2024 was $0 and decreased by $111,000

from the corresponding period in the prior year, primarily due to the exit of our investment in Tigress in the third quarter of 2023.

impairment of investments for the year ended December 31, 2024 was $0 and decrease by $1,035,000 from the corresponding period in the

prior year, primarily due to the impairment of our investment in a technology provider of a trading platform and the impairment of our

investment in Tigress occurring in 2023.

Transaction termination costs

for the year ended December 31, 2023 was $5,943,000 and increased by $5,943,000 from the corresponding period in the prior year due to

costs associated with the termination of the Kakaopay transaction.

for the year ended December 31, 2024 was $0 and decreased by $5,943,000 from the corresponding period in the prior year due to costs associated

with the termination of the Kakaopay transaction in 2023.

Provision For (Benefit From) Income Taxes

The provision for income taxes

for the year ended December 31, 2023 was $3,415,000 and increased from the benefit for income taxes by $4,715,000 from the corresponding

period in the prior year.

The change from the corresponding period in the prior year is primarily due to substantial increase in pre-tax

earnings for the year ended December 31, 2023.

Refer to Note 18 – Income Taxes for additional detail.

for the year ended December 31, 2024 was $4,165,000 and increased by $750,000 from the corresponding period in the prior year.

from the corresponding period in the prior year is primarily due to increased profitability year over year.

Refer to Note 17 – Income

Taxes for additional detail.

Net Income (Loss)

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a noncontrolling interests in our consolidated financial statements.

net income attributable to noncontrolling interests for the year ended December 31, 2023 was $18,000, and increased by $1,018,000 from

the corresponding period in the prior year, primarily due to expenses in RISE in 2022 associated with the exiting of the prime brokerage

Siebert 2023 Form-10K 24

net income attributable to noncontrolling interests for the year ended December 31, 2024 was $17,000, and decreased by $1,000 from the

corresponding period in the prior year.

Consolidated Statements of Financial Condition

1 unchanged sentence

Assets as of December 31,

2023 were $801,800,000 and increased by $73,752,000 from December 31, 2022, primarily due to an

increase in securities borrowed, receivables from customers, and securities owned, at fair value, partially offset by a decrease in cash

and cash equivalents.

2024 were $519,668,000 and decreased by $282,132,000 from December 31, 2023, primarily due to a

decrease in securities borrowed and cash and securities segregated, partially offset by an increase in cash and cash equivalents.

Liabilities as of December

31, 2023 were $731,091,000 and increased by $52,963,000 from December 31, 2022, primarily due to

an increase in securities loaned partially offset by a decrease in payables to customers and payables to non-customers.

31, 2024 were $434,576,000 and decreased by $296,515,000 from December 31, 2023, primarily due to

a decrease in securities loaned and payables to customers.

Liquidity and Capital Resources

of December 31, 2024, a significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.

A significant portion of our assets not held by customers or used for stock borrow / stock loan consisted primarily of cash and cash equivalents,

securities owned, at fair value, which are marked-to-market daily, and receivables from and deposits with broker-dealers and clearing

organizations.

expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of

2 unchanged sentences

imposed by regulators and SROs).

Based on our current level of operations, we believe our available cash, available lines of credit, overall

access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for the foreseeable future.

As of the date of this Report, there are no known or material events that would require us to use large amounts of our liquid assets to

cover expenses.

on our current level of operations, we believe our available cash, available lines of credit, overall access to capital markets, and cash

provided by operations will be adequate to meet our current liquidity needs for the foreseeable future.

As of the date of this Report,

other than the items detailed in the section below, there are no known or material events that would require us to use large amounts of

our liquid assets to cover expenses.

net capital infusion from Kakaopay to Siebert from the First Tranche was approximately $14.8 million after the issuance cost.

is currently being used to enhance our regulatory capital and is primarily invested in U.S.

government securities and is in the line

item “Securities owned, at fair value” on the consolidated statements of financial condition.

government securities and is in the line item

“Securities owned, at fair value” in the consolidated statements of financial condition.

Refer to Note 6 – Kakaopay

Transaction for further detail.

Cash and Cash Equivalents

cash and cash equivalents were $32.6 million and $5.7 million as of December 31, 2024 and 2023, respectively.

Credit Agreement

August 15, 2024, we entered into the Credit Agreement with East West Bank providing a $20 million revolving credit facility, which offers

substantial financial flexibility to support our strategic initiatives.

This credit facility allows the Company to fund acquisitions,

execute stock buybacks, and meet general corporate needs up to $10 million, ensuring access to capital for both growth and operational

The two-year term of the Credit Agreement, combined with a competitive interest rate structure that is tied to either the one-month

Term SOFR plus 3.15% or a minimum of 7.50%, provides a stable and predictable financing source.

The personal guarantees provided by key

executives, John J.

Gebbia and Gloria E.

Gebbia, and their trust, further strengthen the Company’s borrowing position and help secure

favorable terms.

BMO Credit Agreement

November 22, 2024, MSCO entered into a Credit Agreement (the “BMO Credit Agreement”) with BMO Harris Bank (“BMO Harris”).

The BMO Credit Agreement provides for a revolving credit facility of up to $20,000,000.

We may use any borrowings under the BMO Credit

Agreement to finance NSCC Deposit Requirements (other than an Adequate Assurance Deposit) and withdrawals from a Reserve Account.

of the agreement, we entered into a Parent Guaranty agreement guaranteeing repayment of any debt issued to MSCO.

Borrowings under the BMO Credit Agreement will

bear interest on the outstanding daily balance at a rate of interest per annum equal 2.5% plus the greater of:

(a) Term SOFR for such

day plus 0.11448% and (b) Federal Funds Target Range – Upper Limit and (c) 0.25%.

The annual commitment fee is equal to one half

of one percent (0.50%) of the average daily unused portion of the commitment of $20,000,000.

The BMO Credit Agreement contains customary

affirmative covenants and negative covenants and requires MSCO maintain minimum total regulatory capital of $45,000,000, excess net capital

of 20,000,000, assets to total regulatory capital ratio of not more than 5.0 to 1.0, and a minimum liquidity ratio of not less than 1.0.

We satisfied its condition precedent to deliver

a legal option to BMO Harris on December 18, 2024.

Debt Agreements

have a $4.3 million mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing of up to $25

million with BMO Harris as of December 31, 2023.

For the year ended December 31, 2023, we paid off our $2.7 million loan outstanding with

East West Bank.

As of December 31, 2023, we were in compliance with all covenants related to our debt agreements.

have $4.2 million outstanding on our mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing

of up to $25 million with BMO Harris as of December 31, 2024.

As of December 31, 2024, we were in compliance with all covenants related

to our debt agreements.

Cash Requirements

5 unchanged sentences

Technology vendors (3)

Leasehold improvements (4)

(1) Pursuant to the Settlement Agreement with Kakaopay, Siebert

will pay Kakaopay a fee of $5 million (payable in ten quarterly installments beginning on March 29, 2024.) See Management’s Discussion

and Analysis of Financial Condition and Results of Operations – Transaction with Kakaopay for further detail.

Broadridge contract (4)

(1) Pursuant to the Settlement Agreement with Kakaopay, we are

obligated to pay Kakaopay a fee of $5 million payable in ten quarterly installments that began in the first quarter of 2024.

Note 6 – Kakaopay Transaction for further detail.

(2) On December 30, 2021, we purchased the Miami office building

and financed part of the purchase price with a mortgage with East West Bank.

(3) In 2023 we entered into agreements with technology vendors

for certain development projects related to our Retail Platform and equity management solutions.

As of December 31, 2023, we have incurred

approximately $0.5 million out of the $2.6 million total budget for these projects.

(4) On July 7, 2023, we entered into a lease agreement expiring

in December 2028 for office space in the World Financial Center in New York City.

The estimated build out cost for this office space

is approximately $800,000.

As of December 31, 2023, we have incurred approximately $129,000 out of the $800,000 of the estimated build

Siebert 2023 Form-10K 25

Shelf Registration

February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the

potential offering, issuance and sale by us of up to $100.0 million of our common stock, preferred stock, warrants to purchase our common

stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these

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 shelf registration statement.

At the Market Offering

May 27, 2022, we entered into a Capital on Demand TM Sales Agreement with JonesTrading as agent, pursuant to which we may offer

and sell, from time to time through JonesTrading, shares of our common stock having an aggregate offering amount of up to $9.6 million

under our shelf registration statement on Form S-3.

For the years ended December 31, 2023 and 2022, we did not sell any shares pursuant

to this Sales Agreement.

Refer to Note 21 – Commitments, Contingencies and Other for additional detail.

As noted above, since we

filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements for use of registration statements on

As a result, we have suspended use of the shelf registration statement and we are not able to access the At the Market program

as of the date of this Report.

(3) We have entered into agreements with technology vendors for

certain development projects related to our Retail Platform.

As of December 31, 2024, we have incurred approximately $3.4 million out

of the $4.3 million total budget for these vendors.

(4) In June 2023, we entered into an amendment to its service

agreement with Broadridge Securities Processing Solutions, LLC with a total minimum expense of approximately $1.2 million for this arrangement.

Net Capital, Reserve Accounts, Segregation

26 unchanged sentences

For the year ended December

31, 2023, cash used in operating activities increased by $5.7 million compared to 2022, which was primarily driven by an increase in working

capital partially offset by an increase in net income.

The net change of receivables and payables from / to customers, receivables and

payables from / to non-customers, and securities borrowed and securities loaned between the periods offset each other.

31, 2024, cash used in operating activities increased by $14.9 million compared to 2023, which was primarily driven by the inclusion of

cash and securities segregated for regulatory purposes, which were previously not presented in the operating section.

The increase was

further impacted by the outflows related to the Kakao settlement and contract termination payments, as well as a decrease in payables

to customers and securities loaned.

These outflows were partially offset by inflows from securities borrowed, receivables from customers,

and other working capital adjustments.

For the year ended December

31, 2023, cash used in investing activities increased by $0.7 million compared to 2022, which was primarily driven by the build out of

the Miami office building as well as investment in our Retail Platform and other technology initiatives in 2023.

31, 2024, cash used in investing activities increased by $3.5 million compared to 2023, which was primarily driven by the acquisition

of GE as well as certain development projects related to our Retail Platform in 2024.

For the year ended December

31, 2023, cash flows provided by financing activities increased by $17.3 million compared to 2022, which was primarily driven by the issuance

of the Company’s common stock related to the transaction with Kakaopay.

Refer to Note 5 – Kakaopay Transaction for additional

Siebert 2023 Form-10K 26

31, 2024, we had a cash outflow of $0.1 million from financing activities, compared to a net cash inflow of $13.0 million in 2023, which

was primarily driven by the issuance of the Company’s common stock related to the transaction with Kakaopay in 2023.

Refer to Note

6 – Kakaopay Transaction for additional detail.

Long Term Contracts

22 unchanged sentences

Refer to Note 19 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

Transaction with J2

Financial Technology

January 18, 2024, Siebert Technologies, LLC (“STCH”) entered into a Purchase Agreement (the “Purchase Agreement”)

with J2 Financial Technology, Inc., d/b/a “Guild”, a Delaware corporation.

the Purchase Agreement, STCH purchased a mobile self-directed trading app for the total purchase price of $385,000.

The purchase price

consisted of 200,000 restricted shares of our common stock (priced at the historical 30-day moving average as of January 18, 2024) worth

approximately $350,000 and $35,000 cash.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative

guidance issued under FASB ASC Subtopic 740-10, which addresses the determination of whether tax benefits claimed or expected to be claimed

on a tax return should be recorded in the consolidated financial statements.

We may recognize the tax benefit from an uncertain tax position

only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical

merits of the position.

The tax benefits recognized in the consolidated financial statements from such position should be measured based

on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

FASB ASC Subtopic

740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements

We recognize interest and

penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of operations.

Accrued interest

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

As of both December 31, 2024

and 2023, the Company recorded an uncertain tax position of $1,354,000 and $1,405,000, respectively, related to various tax matters, which

is included in the line item “Taxes payable” in the statements of financial condition.

Critical Accounting Policies and Estimates

27 unchanged sentences

that includes the enactment date.

Siebert 2023 Form-10K 27

We recognize deferred tax

7 unchanged sentences

We record uncertain tax positions

in accordance with ASC 740 on the basis of a two-step process in which (1) we determine 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 we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate

settlement with the related tax authority.

in accordance with FASB ASC Topic 740 – “Improvements to Income Tax Disclosures” (“Topic 740”) on the basis

of a two-step process in which (1) we determine 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 we recognize

the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We recognize interest and

penalties related to unrecognized tax benefits on the provision for income taxes line on the consolidated statements of operations.

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

Goodwill and other intangible assets

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 acquired.

valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management.

For example, the valuation

of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining

market approaches.

The useful life of the finite lived intangible assets was determined based on management’s estimate of the period over

which those intangible assets were expected to provide economic benefit.

Management applies judgment in conducting impairment testing

for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to

determine the useful lives of finite lived intangible assets.

test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may

not be recoverable, or at least annually.

If our estimates of fair value change due to future events differing significantly from the

forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment

and recognize it in our consolidated financial statements during that reporting period.

also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in

estimate of the useful life.

Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of

an impairment or a change in the remaining life of these assets.

have concluded that as of December 31, 2023 and 2022, there has been no impairment to the carrying value of Siebert’s goodwill;

however, there has been an impairment to the carrying value of our investment in the Trading Technology Provider and our equity method

investment in Tigress for the years ended December 31, 2023 and 2022, which is included in line item “Impairment of investments”

on the consolidated statements of operations.

to Note 2 – Summary of Significant Accounting Policies, Note 3 – Transactions

with Tigress and Hedge Connection, and Note 13 – Investments, Cost for additional detail.

Siebert 2023 Form-10K 28

Accruals for contingent liabilities

for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan

reflect an estimate of probable losses.

In making such estimates for legal and regulatory claims, we consider many factors, including

the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage,

indemnification provisions and the advice of legal counsel and other experts.

In making such estimates for employee healthcare expenses,

we consider many factors, including trends of our health insurance expenses and our insurance reserve limits.

We believe that our present

insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not

incur liabilities in excess of recorded reserves or in excess of our insurance limits.

Significant judgment is required in making these

estimates, and the actual cost may be materially different than the estimated costs.

Refer to Note 21 – Commitments,

Contingencies and Other for additional detail.

New Accounting Standards

December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Improvements to Income Tax Disclosures”

(“ASU 2023-09”).

The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments

in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income

taxes paid information.

ASU 2023-09 will be effective for us for annual periods beginning after December 15, 2024, though early adoption

is permitted.

We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but

we expect considerable changes to our income tax footnote.

to Note 2 – Summary of Significant Accounting Policies for additional information regarding

new Accounting Standards Updates (“ASU”s) issued by the Financial Accounting Standards Board (“FASB”).

penalties related to unrecognized tax benefits on the provision for income taxes line in the consolidated statements of operations.

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

Disregarded entities and income tax treatment

Starting in 2024, both MSCO

and SNXT are single member limited liability companies that will be treated as disregarded entities for tax purposes.

As such, both MSCO

and SNXT will no longer be subject to direct taxation and will be disregarded by the relevant tax authorities.

The guidance in Accounting

Standards Update 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes specifies that an entity is not required

to allocate income tax provision to a legal entity that is both not subject to tax and disregarded by the taxing authority, but an entity

may elect to do so.

MSCO and SNXT are not making the available election to allocate income taxes.

Accordingly, on a prospective basis,

MSCO and SNXT will no longer record current or deferred income taxes.

Recent Accounting Pronouncements

to Note 2 – Summary of Significant Accounting Policies for information regarding new Accounting

Standards Updates (“ASU”s) issued by the FASB.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis