What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-14 compared with 2023-08-07 · 424 added, 322 removed, 679 unchanged (52% of the section changed)

FINANCIAL STATEMENTS

SIEBERT FINANCIAL CORP.

FINANCIAL CORP.

& SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF FINANCIAL CONDITION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

September 30,

Current assets

9 unchanged sentences

Total Current assets

1,043,029,000

Deposits with broker-dealers and clearing organizations

30 unchanged sentences

Common stock, $ .01 par value;

100 million shares authorized;

40,580,936 and 32,505,329 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

100,000,000 shares authorized;

40,580,936 shares issued and 39,580,936 shares outstanding as of September 30, 2023, respectively.

32,505,329 shares issued and outstanding as of December 31, 2022.

Treasury stock, at cost;

1,000,000 and 0 shares held as of September 30, 2023 and December 31, 2022, respectively

( 2,510,000 )

Additional paid-in capital

5 unchanged sentences

$ 728,048,000

Numbers are rounded

for presentation purposes.

are rounded for presentation purposes.

See notes to condensed consolidated financial statements.

SIEBERT FINANCIAL

FINANCIAL CORP.

& SUBSIDIARIES

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Commissions and fees

17 unchanged sentences

Operating income (loss)

( 2,105,000 )

Impairment of investments

( 1,035,000 )

Earnings of equity method investment in related party

Earnings of (loss from) equity method investment in related party

Non-operating income (loss)

Income (loss) before provision for (benefit from) income taxes

( 1,890,000 )

Provision for (benefit from) income taxes

( 1,027,000 )

( 1,309,000 )

Net income (loss)

Less net income (loss) attributable to noncontrolling interests

Net income (loss) available to common stockholders

$ ( 261,000 )

Net income (loss) available to common stockholders per share of common stock

Net income available to common stockholders

Net income available to common stockholders per share of common stock

Basic and diluted

1 unchanged sentence

Basic and diluted

Numbers are rounded

for presentation purposes.

are rounded for presentation purposes.

See notes to condensed consolidated financial statements.

SIEBERT FINANCIAL CORP.

FINANCIAL CORP.

& SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN EQUITY

Number of Shares Issued

$.01 Par Value

Paid-In Capital

Retained Earnings

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Treasury Stock

Stockholders’

Noncontrolling Interests

Noncontrolling

Balance – January 1, 2022

4 unchanged sentences

Balance – June 30, 2022

Number of Shares Issued

$.01 Par Value

Termination of agreement with technology partner

Share-based compensation

Net income (loss)

Balance – September 30, 2022

$ ( 293,000 )

Treasury Stock

Paid-In Capital

Retained Earnings

Stockholders’

Noncontrolling Interests

Noncontrolling

Balance – January 1, 2023

2 unchanged sentences

Balance – June 30, 2023

Numbers are rounded

for presentation purposes.

Reacquisition of shares outstanding

( 2,510,000 )

Net income (loss)

Balance – September 30, 2023

$ ( 2,510,000 )

are rounded for presentation purposes.

See notes to condensed consolidated financial statements.

SIEBERT FINANCIAL CORP.

FINANCIAL CORP.

& SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

Six Months Ended

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Cash Flows From Operating Activities

Net income (loss)

$ ( 581,000 )

Adjustments to reconcile net income (loss) to net cash (used in) operating activities:

Adjustments to reconcile net income to net cash (used in) operating activities:

Deferred income tax expense / (benefit)

3 unchanged sentences

Impairment of investments

Share-based compensation

Receivables from customers

7 unchanged sentences

Prepaid expenses and other assets

( 1,578,000 )

( 1,614,000 )

Prepaid service contract

6 unchanged sentences

Drafts payable

( 1,368,000 )

Payables to broker-dealers and clearing organizations

Accounts payable and accrued liabilities

( 1,824,000 )

Securities loaned

2 unchanged sentences

Taxes payable

( 1,252,000 )

Deferred contract incentive

Retail trading platform implementation

Cloud computing implementation

Net cash (used in) operating activities

6 unchanged sentences

Build out of property

( 1,140,000 )

Net cash (used in) investing activities

( 1,627,000 )

( 1,264,000 )

Cash Flows From Financing Activities

9 unchanged sentences

Net cash provided by (used in) financing activities

( 1,041,000 )

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

15 unchanged sentences

Non-cash investing and financing activities

issuance cost (1)

$ ( 2,500,000 )

$ ( 293,000 )

Kakaopay issuance cost (2)

Transfers of RISE membership interests (3)

Purchase of equity method investment in related party, net of cash paid of $ 350,000 (1)

(1) Refer to Note 5 – Kakaopay

Transaction for further detail.

(2) Refer to Note 4 – RISE for

further detail.

(3) Refer to Note 3 – Transactions

with Tigress and Hedge Connection for further detail.

Numbers are rounded

for presentation purposes.

to Note 3 – Transactions with Tigress and Hedge Connection for further detail.

to Note 5 – Kakaopay Transaction for further detail.

to Note 4 – RISE for further detail.

are rounded for presentation purposes.

See notes to condensed consolidated financial statements.

3 unchanged sentences

Organization and Basis of Presentation

Siebert Financial Corp.,

a New York corporation, incorporated in 1934, is a holding company that conducts the following l ines

of business through its wholly-owned and majority-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:

Siebert & Co., Inc.

21 unchanged sentences

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

purposes of this Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and

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

purposes of thi s Report on Form 10-Q, 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.

in Miami Beach, FL with primary operations in Florida, New Jersey, and California.

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

7 unchanged sentences

All of the Company’s revenues for the

three and six months ended June 30, 2023 and 2022 were derived from its operations in the U.S.

of June 30, 2023 , 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.

three and nine months ended September 30, 2023 and 2022 were derived from its operations in the U.S.

of September 30, 2023 , 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.

Basis of Presentation

22 unchanged sentences

The Company’s ownership in RISE remained 68 % as of

June 30, 2023.

Certain reclassifications have been made to previously reported amounts to conform to current presentation.

September 30, 2023.

consolidated subsidiaries that are not wholly-owned, the third-party holdings of equity interests are referred to as noncontrolling interests.

9 unchanged sentences

accounting policies are included in Note 2 – Summary of Significant Accounting Policies in the Company’s 2022 Form 10-K.

the three and six months ended June 30, 2023, there were no significant changes made to the Company’s significant accounting policies.

the three and nine months ended September 30, 2023, there were no significant changes made to the Company’s significant accounting

New Accounting Standards

Company did not adopt any new accounting standards during the three and six months ended June 30, 2023.

In addition, the Company has evaluated

other recently issued accounting standards and does not believe that any of these standards will have a material impact on the Company’s

financial statements and related disclosures as of June 30, 2023.

Company did not adopt any new accounting standards during the three and nine months ended September 30, 2023.

In addition, the Company

has evaluated other recently issued accounting standards and does not believe that any of these standards will have a material impact

on the Company’s financial statements and related disclosures as of September 30, 2023.

Transactions with

7 unchanged sentences

a note payable.

The Company paid off $ 350,000 of its note payable to Hedge Connection during the six months ended June 30, 2022.

The Company paid off $ 350,000 of its note payable to Hedge Connection during the nine months

ended September 30, 2022.

July 10, 2023, the Company entered into a Share Redemption Agreement with Cynthia DiBartolo, CEO of Tigress, pursuant to which

the Company repurchased from Ms.

DiBartolo one million shares of its common stock held by Ms.

DiBartolo in exchange for conveying to Ms.

DiBartolo the Company’s 17 % interest in Tigress.

Refer to Siebert’s Current Report on Form 8-K filed on July 14, 2023, incorporated

herein by reference, and Note 12 – Equity Method Investment in Related Party in this Report

for more detail on these transactions and information that impacted the periods presented.

During the three months ended

16 unchanged sentences

There have been no further

transactions completed by the Company related to RISE’s membership interests for the three and six months ended June 30, 2023.

As of June 30, 2023, RISE

reported assets of $ 1.4 million and liabilities of $ 0.05 million.

transactions completed by the Company related to RISE’s membership interests for the three and nine months ended September 30, 2023.

As of September 30, 2023,

RISE reported assets of $ 1.4 million and no liabilities.

As of December 31, 2022, RISE reported assets of $ 1.3 million and liabilities

2 unchanged sentences

Kakaopay Transaction

April 27, 2023, the Company entered into an agreement to raise capital into the Company by issuing new shares of the Company’s common

stock to Kakaopay Corporation (“Kakaopay”), a company established under the Laws of the Republic of Korea, and a fintech subsidiary

of Korean-based conglomerate Kakao Corp.

to stock purchase and ancillary agreements with Kakaopay, the transaction will occur in two tranches.

On May 18, 2023, the first tranche

closed and Kakaopay purchased a 19.9 % stake of the Company or 8,075,607 newly issued shares for approximately $ 17.4 million.

In the second

tranche, subject to shareholder and regulatory approval, Kakaopay will acquire an additional 31.1 % of the Company or 25,756,470 additional

newly issued shares for approximately $ 60.5 million.

Refer to the Company’s Current Report on Form 8-K filed on May 3, 2023 for

further detail regarding this transaction.

On April 27, 2023, Siebert

entered into a Stock Purchase Agreement with Kakaopay (the “First Tranche Stock Purchase Agreement”), pursuant to which Siebert

agreed to issue to Kakaopay Corporation (“Kakaopay”), a company established under the Laws of the Republic of Korea and a

fintech subsidiary of Korean-based conglomerate Kakao Corp., 8,075,607 shares of Siebert’s common stock (the “First Tranche

Shares” and, such transaction, the “First Tranche”) at a per share price of Two Dollars Fifteen Cents ($ 2.15 ), which

represented 19.9 % of the outstanding equity securities of Siebert on a fully diluted basis (taking into account the issuance of the First

Tranche Shares).

The First Tranche closed on May 18, 2023.

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

(the “Second Tranche Stock Purchase Agreement” and, together with the First Tranche Stock Purchase Agreement, the “Stock

Purchase Agreements”), pursuant to which Siebert agreed to issue to Kakaopay an additional 25,756,470 shares of Siebert’s

common stock (the “Second Tranche Shares” and, such transaction, the “Second Tranche”) at a per share price of

Two Dollars Thirty Five Cents ($ 2.35 ), so that Kakaopay will own 51 % of the outstanding equity securities of Siebert on a fully diluted

basis (taking into account the issuance of the First Tranche Shares and the Second Tranche Shares).

consummation of the Second Tranche is subject to a number of conditions , which have not yet been satisfied as of the date of this

The conditions to Kakaopay’s obligation to close the Second Tranche include, among

others, (i) the affirmative vote of a majority of the outstanding shares of Siebert’s common stock and the affirmative vote of the

holders of a majority of the outstanding shares of Siebert’s common stock not beneficially owned, directly or indirectly, by certain

family members related to Directors John J.

Gebbia and Gloria E.

Gebbia (“Gebbia Stockholders”), Kakaopay or any of their

respective affiliates, (ii) approval by FINRA, (iii) favorable completion of the review by the Committee on Foreign Investment in the

United States (“CFIUS”), (iv) certain performance conditions relating to order execution and the execution of employment and

consulting agreements for key personnel of Siebert and MSCO, (v) the approvals in connection to the filing of an overseas direct investment

report as required under the Foreign Exchange Transactions Act of the Republic of Korea, and, if applicable in accordance with applicable

law, any antitrust report or filing with the Korea Fair Trade Commission shall have been obtained or provided, (vi) the listing

by Siebert of the Second Tranche Shares on the Nasdaq Capital Market, (vii) the accuracy of certain representations and warranties of

Siebert as of the closing of the Second Tranche, (viii) the absence of any material adverse effect having occurred with respect to Siebert

between April 27, 2023 and the closing of the Second Tranche, and (ix) the performance by Siebert of all covenants, agreements and obligations

required to be performed by it prior to the closing of the Second Tranche .

The conditions to Siebert’s

obligation to close the Second Tranche include, among others, (i) the affirmative vote of the holders

of a majority of the outstanding shares of Siebert’s c ommon stock not beneficially

owned, directly or indirectly, by the Gebbia Stockholders, Kakaopay or any of their respective affiliates, (ii) approval by FINRA, (iii)

favorable completion of the review by CFIUS, (iv) the accuracy of certain representations and warranties of Kakaopay as of the closing

of the Second Tranche, (v) the absence of any material adverse effect having occurred with respect to Kakaopay between April 27, 2023

and the closing of the Second Tranche, and (vi) the performance by Kakaopay of all covenants, agreements and obligations required to be

performed by it prior to the closing of the Second Tranche.

Refer to the Company’s Current Report on Form 8-K filed on May

3, 2023, incorporated herein by reference, for further detail regarding this transaction.

the closing of the First Tranche, Korean authorities have taken action against Kakaopay, its parent company, Kakao Corp., and their affiliates.

In addition, Kakao Corp., recently announced that it will establish an independent compliance committee for Kakao Corp.

and its subsidiaries

to address what it described as the current crisis at Kakao Corp.

and its subsidiaries.

Siebert believes these events have had a material

adverse effect on both Kakaopay and its ability to perform its obligations under the Second Tranche Stock Purchase Agreement and consummate

the transactions contemplated therein.

Accordingly, on November 11, 2023, Siebert delivered a notice to Kakaopay stating that a material

adverse effect had occurred with respect to Kakaopay and that, as a result, Siebert’s conditions to closing will not be satisfied.

The notice also specified that Kakaopay has indicated that it has no intention of satisfying the conditions precedent to Siebert preparing

the proxy statement contemplated by the Second Tranche Stock Purchase Agreement.

Siebert is considering its rights and obligations under

the Second Tranche Stock Purchase Agreement, including evaluating whether and under what circumstances the Second Tranche Stock Purchase

Agreement might be terminated, and has reserved all of its rights and remedies, including Siebert’s right to assert that Kakaopay

has materially breached a number of covenants in the Second Tranche Stock Purchase Agreement.

On November 12, 2023, Kakaopay delivered

a letter in response to the notice that expressed Kakaopay’s disagreement with the statements in the notice.

As a result of the

foregoing, Siebert has incurred and may incur additional legal expenses evaluating these matters, the amount of which is uncertain as

of the date hereof.

of December 31, 2022, the Company capitalized deferred issuance costs related to this transaction of $ 318,000 , which was recorded within

3 unchanged sentences

in stockholders’ equity in the statements of financial condition.

During the six months ended June 30, 2023, the Company recognized

During the nine months ended September 30, 2023, the Company recognized

$ 1,589,000 of issuance costs related to this transaction.

the three and nine months ended September 30, 2023, the Company incurred deferred issuance costs related to the Second Tranche of $ 58,000 ,

which was recorded within the line item “Prepaid expenses and other assets” in the statements of financial condition.

May 22, 2023, Gloria E.

6 unchanged sentences

in the Company.

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

and Clearing Organizations

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:

September 30,

Receivables from and deposits with broker-dealers and clearing organizations

14 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, MSCO

had shares of DTCC common stock valued at approximately $ 1,236,000 and $ 1,054,000 , respectively, which are included within the line item

“Deposits with broker-dealers and clearing organizations” on the statements of financial condition.

As of September 30, 2023 and December 31, 2022,

MSCO had shares of DTCC common stock valued at approximately $ 1,236,000 and $ 1,054,000 , respectively, which are included within the line

item “Deposits with broker-dealers and clearing organizations” on the statements of financial condition.

In September 2022, MSCO and

1 unchanged sentence

As part of the agreement, RISE deposited a clearing

fund escrow deposit of $ 50,000 to MSCO, and had excess cash of approximately $ 1.3 million in its brokerage account at MSCO as of June

fund escrow deposit of $ 50,000 to MSCO, and had excess cash of approximately $ 1.0 million in its brokerage account at MSCO as of September

The resulting asset of RISE and liability of MSCO is eliminated in consolidation.

There was no income or expense related to

this clearing relationship for the periods presented.

The Company had terminated its clearing relationships with GSCO and Pershing in

The Company terminated its clearing relationships

with GSCO and Pershing in 2022.

Prepaid Service

9 unchanged sentences

to these transactions that impacted the periods presented is shown below.

Company recorded amortization of prepaid service contract assets of $ 177,000 and $ 354,000 for the three and six months ended June 30,

2022, respectively.

The Company recorded consulting fee income of $ 250,000 and $ 833,000 for the three and six months ended June 30, 2022,

respectively.

The Company did not record consulting fee income or amortization of prepaid service contract assets for the three and six

months ended June 30, 2023.

As part of the termination,

in September 2022, the technology partner returned 193,906 shares of the Company’s common stock previously issued and agreed to

pay the Company a total of $ 950,000 .

The Company recorded amortization of prepaid

service contract assets of $ 357,000 and $ 711,000 for the three and nine months ended September 30, 2022, respectively, which is included

in the line item “Technology and communications” in the statements of operations.

The Company recorded consulting fee income

of $ 867,000 and $ 1,700,000 for the three and nine months ended September 30, 2022, respectively, which is recorded in “Other income”

in the statements of operations.

The Company did not record consulting fee income or amortization of prepaid service contract assets for

the three and nine months ended September 30, 2023.

Fair Value Measurements

10 unchanged sentences

based on the lowest level of input that is significant to the respective fair value measurement.

As of June 30, 2023

As of September 30, 2023

Cash and securities segregated for regulatory purposes

29 unchanged sentences

government securities with the below market values and maturity dates for the periods indicated:

September 30,

Market value of U.S.

government securities portfolio

Maturing 07/25/2023, 4.762% Discount Rate

Maturing 08/03/2023, 4.820% Discount Rate

Maturing 08/31/2023, 1.375% Coupon Rate

Maturing 09/21/2023, 4.865% Discount Rate

Maturing 11/16/2023, 5.270% Coupon Rate

Maturing 12/31/2023, 0.750% Coupon Rate

Maturing 01/31/2024, 0.875% Coupon Rate

Maturing 05/16/2024, 4.966% Coupon Rate

Maturing 05/16/2024, 5.019% Coupon Rate

Maturing 05/31/2024, 2.500% Coupon Rate

Maturing 08/15/2024, 0.375% Coupon Rate

Maturing 04/30/2025, 3.875% Coupon Rate

Maturing in 2023

Maturing in 2024

Maturing in 2025

Accrued interest

4 unchanged sentences

government securities portfolio

Maturing 03/23/2023, 3.750% Discount Rate

Maturing 05/18/2023, 2.700% Discount Rate

Maturing 08/31/2023, 1.375% Coupon Rate

Maturing 12/31/2023, 0.750% Coupon Rate

Maturing 01/31/2024, 0.875% Coupon Rate

Maturing 05/31/2024, 2.500% Coupon Rate

Maturing 08/15/2024, 0.375% Coupon Rate

Maturing in 2023

$ 106,873,000

Maturing in 2024

Accrued interest

12 unchanged sentences

significant unobservable inputs (Level 3).

September 30,

Equity method investment in related party

9 unchanged sentences

As a result of the 2023 transaction

discussed in Note 24 – Subsequent Events, the Company observed current market prices of Tigress’ membership interests that

were below the Company’s carrying value of its equity investment in Tigress.

As the Company has no intention of retaining its investment

in Tigress for a long enough period of time sufficient to allow for any anticipated recovery in market value of the investment, the Company

determined that the decline in market value of its investment in Tigress indicated an other than temporary impairment.

For the three months

ended June 30, 2023, the Company recognized an impairment charge for its investment in Tigress of approximately $ 185,000 , which was included

in “Impairment of investments” in the statements of operations for the three months ended June 30, 2023.

discussed in Note 3 – Transactions with Tigress and Hedge Connection, the Company recognized an impairment charge for its investment

in Tigress of approximately $ 185,000 during the nine months ended September 30, 2023, which is included in “Impairment of investments”

in the statements of operations.

The fair value of the Company’s investment in Tigress was determined using observed current market

prices of Tigress’ membership interests that were below the Company’s carrying value of its equity investment in Tigress.

Following the 2023 transaction discussed in Note 3 – Transactions with Tigress and Hedge Connection, the Company had no remaining

interest in Tigress.

Financial Assets and

1 unchanged sentence

The following represents financial

instruments in which the ending balances as of June 30, 2023 and December 31, 2022 that are not carried at fair value in the statements

instruments in which the ending balances as of September 30, 2023 and December 31, 2022 are not carried at fair value in the statements

of financial condition:

4 unchanged sentences

and carry interest rates that approximate market rates.

The Company had no cash equivalents for regulatory purposes as of June 30, 2023

The Company had no cash equivalents for regulatory purposes as of September 30,

2023 and December 31, 2022.

Securities segregated for regulatory purposes consist solely of U.S.

government securities and are included in

the fair value hierarchy table above.

government securities and are included

in the fair value hierarchy table above.

Cash and cash equivalents and cash and securities segregated for regulatory purposes are classified

12 unchanged sentences

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

Due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value

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.

17 unchanged sentences

and equipment consisted of the following as of the periods indicated:

September 30,

Office facilities

5 unchanged sentences

Total depreciation expense

for property, office facilities, and equipment was $ 156,000 and $ 99,000 for the three months ended June 30, 2023 and 2022, respectively.

Total depreciation expense for property, office facilities, and equipment was $ 237,000 and $ 196,000 for the six months ended June 30,

for property, office facilities, and equipment was $ 168,000 and $ 102,000 for the three months ended September 30, 2023 and 2022, respectively.

Total depreciation expense for property, office facilities, and equipment was $ 403,000 and $ 298,000 for the nine months ended September

30, 2023 and 2022, respectively.

1 unchanged sentence

December 30, 2021, the Company purchased an office building located at 653 Collins Ave, Miami Beach, FL (“Miami office building”).

The Miami office building contains approximately 12,000 square feet of office space and serves as a primary operating center of the Company.

The Miami office building contains approximately 12,000 square feet of office space and serves as the headquarters of the Company.

expense commenced in April 2023 when the Miami office building was completed and placed in service.

Total depreciation expense for the

Miami office building and the associated build out of the office space was $ 90,000 for both the three and six months ended June 30, 2023.

The Company invested $ 275,000 and $ 320,000 in the three months ended June 30, 2023 and 2022, respectively, to build out the Miami office

The Company invested $ 840,000 and $ 596,000 in the six months ended June 30, 2023 and 2022 respectively, to build out the Miami

office building.

The Company invested $ 299,000 and

$ 296,000 in the three months ended September 30, 2023 and 2022, respectively, to build out the Miami office building.

The Company invested

$ 1,140,000 and $ 892,000 in the nine months ended September 30, 2023 and 2022 respectively, to build out the Miami office building.

Software, Net

1 unchanged sentence

following as of the periods indicated:

September 30,

Other software

7 unchanged sentences

the Company partnered with a technology partner to develop a new retail trading platform for the Company’s customers and integrate

the trading platform into the Company’s operations.

this platform into the Company’s operations.

The total capitalized software development work related to this project was $ 1,133,000

$ 914,000 as of June 30, 2023, of which $ 284,000 and $ 557,000 was capitalized during the three and six months ended June 30, 2023, respectively.

as of September 30, 2023, of which $ 219,000 and $ 776,000 was capitalized during the three and nine months ended September 30, 2023, respectively.

Total amortization of software

was $ 105,000 and $ 162,000 for the three months ended June 30, 2023 and 2022, respectively.

was $ 98,000 and $ 138,000 for the three months ended September 30, 2023 and 2022, respectively.

Total amortization of software was $ 312,000

and $ 324,000 for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, the Company estimates future amortization

of software assets of $ 326,000 , $ 595,000 , $ 450,000 , and $ 165,000 in the years ended December 31, 2024, 2025, 2026, and 2027, respectively.

of June 30, 2023, all of the Company’s leases are classified as operating and primarily consist of office space leases expiring

and $ 461,000 for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, the Company estimates future

amortization of software assets of $ 176,000 , $ 684,000 , $ 537,000 , and $ 304,000 in the years ended December 31, 2023, 2024, 2025, and 2026,

respectively.

of September 30, 2023, all of the Company’s leases are classified as operating and primarily consist of office space leases expiring

in 2023 through 2028.

6 unchanged sentences

on the statements of financial condition and the below tables display further detail on the Company’s leases.

July 7, 2023, the Company entered into a new lease agreement expiring in December 2028 for office space in the World Financial Center

in New York City.

This office will replace the New Jersey office as one of the Company’s key operating centers and the total commitment

of the lease is approximately $ 2.1 million.

The estimated build out cost for this office space is approximately $ 500,000 .

Lease Term and Discount Rate

September 30,

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

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating lease cost

8 unchanged sentences

Future annual minimum payments

for operating leases with initial terms of greater than one year as of June 30, 2023 were as follows:

for operating leases with initial terms of greater than one year as of September 30, 2023 were as follows:

Remaining balance of lease payments

difference between undiscounted cash flows and

discounted cash flows

difference between undiscounted cash flows and discounted cash flows

Lease liabilities

4 unchanged sentences

a result of the reorganization agreement with Tigress on October 18, 2022, the Company’s ownership interest of Tigress decreased

from 24 % to 17 %, and the Company reassessed whether it had significant influence over Tigress.

Based on the level of the Company’s

ownership of Tigress, the Company concluded that it was still able to exercise significant influence over Tigress through June 30, 2023.

Therefore, the Company continued to account for this investment under the equity method of accounting as of June 30, 2023.

the three months ended June 30, 2023 and 2022, the earnings recognized from the Company’s investment in Tigress were $ 73,000

from 24 % to 17 %.

Based on the level of the Company’s ownership of Tigress, the Company concluded that it was still able to

exercise significant influence over Tigress following the reorganization agreement.

Therefore, the Company continued to account for this

investment under the equity method of accounting through the Company’s sale of its interest in Tigress on July 10, 2023.

July 10, 2023, the Company entered into a Share Redemption Agreement with Cynthia DiBartolo, pursuant to the Share Redemption Agreement,

the Company repurchased from Ms.

DiBartolo one million (1,000,000) of its common stock held by Ms.

DiBartolo in exchange for conveying

DiBartolo the Company’s 17% interest in Tigress.

The Company has accounted for the Share Redemption Agreement as a sale

of a financial asset in accordance with ASC 860.

As the one million shares of Company common stock that the Company received from Ms.

DiBartolo had a fair value equal to the fair value of the Company’s 17% interest in Tigress sold to Ms.

DiBartolo, no gain or loss

was recognized as a result of the transaction.

Following the transaction, the Company had no remaining interest in Tigress.

the three months ended September 30, 2023 and 2022, the loss recognized from the Company’s investment in Tigress was $ 0

and $ 148,000 , respectively.

For the six months ended June 30, 2023 and 2022, the earnings recognized from the Company’s investment

in Tigress were $ 111,000 and $ 198,000 , respectively.

For both the three and six months ended June 30, 2022, the Company received cash

distributions from Tigress of $ 172,000 .

of June 30, 2023 and December 31, 2022, the carrying amount of the investment in Tigress was $ 2,510,000 and $ 2,584,000 , respectively.

the impairment of the Company’s investment in Tigress detailed in Note 8 – Fair Value Measurements, there were no events or

circumstances suggesting the carrying amount of the investment may be impaired as of June 30, 2023 and December 31, 2022.

is a table showing the summary from the consolidated statements of operations and financial condition for Tigress for the periods indicated

Three Months Ended

Six Months Ended

For the nine months ended September 30, 2023 and 2022, the earnings recognized from the Company’s

investment in Tigress were $ 111,000 and $ 67,000 , respectively.

The Company received cash distributions from Tigress of $ 0 and $ 172,000

during the three and nine months ended September 30, 2022, respectively.

of September 30, 2023 and December 31, 2022, the carrying amount of the Company’s investment in Tigress was $ 0 and $ 2,584,000 , respectively.

is a table showing the summary of the consolidated statements of operations and financial condition for Tigress based on the most recent

financials prior to the transaction on July 10, 2023 (unaudited):

Six Months Ended June 30,

Operating income

December 31, 2022

Stockholders’ Equity

Investments, Cost

Retail Platform

As of both June 30, 2023 and

December 31, 2022, the Company maintained a 2 % ownership interest in a retail platform (“Retail Platform”).

the three months ended June 30, 2023, in view of the Retail Platform’s business performance and near-term business outlook that

were below the Company’s previous expectations, as well as observed market transactions of the Retail Platform’s equity that

were below the carrying value of the Company’s investment of the Retail Platform, the Company determined that an other than temporary

impairment existed.

For the three months ended June 30, 2023, the Company recognized an impairment charge for its investment of the Retail

Platform of approximately $ 850,000 .

The impairment loss was included in “Impairment of investments” in the statements of operations

for the three months ended June 30, 2023.

As of both June 30, 2023 and

December 31, 2022, the Company’s carrying amount of goodwill was $ 1,989,000 , all of which came from the Company’s acquisition

As of June 30, 2023, management concluded that there have been no impairments to the carrying value of the Company’s goodwill

and no impairment charges related to goodwill were recognized during the three and six months ended June 30, 2023 and 2022.

Additionally,

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

As of both September 30, 2023

and December 31, 2022, the Company maintained a 2 % ownership interest in a retail platform (“Retail Platform”).

June 2023, in view of the Retail Platform’s business performance and near-term business outlook that were below the Company’s

previous expectations, as well as observed market transactions of the Retail Platform’s equity that were below the carrying value

of the Company’s investment of the Retail Platform, the Company determined that an other than temporary impairment existed.

the three months ended September 30, 2023, the Company did not recognize an impairment charge for its investment in the Retail Platform.

For the nine months ended September 30, 2023, the Company recognized an impairment charge

for its investment in the Retail Platform of $ 850,000 .

The impairment loss was included in “Impairment of investments” in

the statements of operations for the nine months ended September 30, 2023.

As of both September 30, 2023

and December 31, 2022, the Company’s carrying amount of goodwill was $ 1,989,000 , all of which came from the Company’s acquisition

As of September 30, 2023, management concluded that there have been no impairments to the carrying value of the Company’s

goodwill and no impairment charges related to goodwill were recognized during the three and nine months ended September 30, 2023 and 2022.

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

Long-Term Debt

17 unchanged sentences

by 1% each year thereafter, with the prepayment penalty ending after 5 years.

As of June 30, 2023, the Company was in compliance with

all of its covenants related to this agreement.

As of September 30, 2023, the Company was in compliance

with all of its covenants related to this agreement.

Remaining Payments

remaining annual minimum principal payments for the mortgage with East West Bank as of June 30, 2023 were as follows:

interest expense related to this mortgage was $ 40,000 for both the three months ended June 30 ,

2023, and 2022.

The interest expense related to this mortgage was $ 79,000 and $ 65,000 for the six months ended June

remaining annual minimum principal payments for the mortgage with East West Bank as of September 30, 2023 were as follows:

interest expense related to this mortgage was $ 40,000 and $ 39,000 for the three months ended September 30 ,

2023, and 2022, respectively.

As of June 30, 2023, the interest rate for this mortgage was 3.6 %.

The interest expense related to this mortgage was $ 119,000 and $ 104,000 for the nine months ended September

30 , 2023, and 2022, respectively.

As of September 30, 2023, the interest rate for this mortgage

Loan with East West Bank

2 unchanged sentences

the Company borrowed $ 5.0 million and paid off the full remaining balance of the loan of approximately $ 2.7 million in the second quarter

of 2023 resulting in no outstanding balance as of June 30 , 2023.

Refer to Note 13 –

Long-Term Debt in the Company’s 2022 Form 10-K for more information.

Refer to Note 13 – Long-Term Debt in the Company’s 2022 Form 10-K for more information.

Deferred Contract Incentive

6 unchanged sentences

the agreement in the line item “Clearing fees, including execution costs” on the statements of operations.

For both the three

months ended June 30 , 2023 and 2022, the Company recognized $ 213,000 in contra expense.

both the six months ended June 30 , 2023 and 2022, the Company recognized $ 425,000 in contra

As of June 30, 2023 and December 31, 2022, the balance of the deferred contract incentive was $ 1.6 million and $ 2.0 million,

The Company recognized

$ 213,000 and $ 196,000 in contra expense for the three months ended September 30 , 2023 and

2022, respectively.

The Company recognized $ 637,000 and $ 621,000 in contra expense for the nine months ended September 30 ,

2023 and 2022, respectively.

As of September 30, 2023 and December 31, 2022, the balance of the deferred contract incentive was $ 1.4 million

and $ 2.0 million, respectively.

Revenue Recognition

13 unchanged sentences

The Company continuously invests in treasury bills and treasury notes as part of its normal operations to meet deposit requirements.

The aggregate unrealized loss on the portfolio of approximately $ 2.4 million as of June 30, 2023 will be returned over the duration of

the government securities, at a point no later than the maturity of the securities.

The aggregate unrealized loss on the portfolio of approximately $ 1.3 million as of September 30, 2023 will be returned over the duration

of the government securities, at a point no later than the maturity of the securities.

Refer to Note 8 – Fair Value Measurements

1 unchanged sentence

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

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

3 unchanged sentences

government securities

( 1,387,000 )

Total Principal transactions and proprietary trading

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

6 unchanged sentences

Stock Borrow / Stock

the three and six months ended June 30, 2023, stock borrow / stock loan revenue was $ 4,513,000 ($ 11,524,000 gross revenue less $ 7,011,000

expenses) and $ 7,955,000 ($ 21,300,000 gross revenue less $ 13,345,000 expenses).

For the three and six months ended June 30, 2022, stock

borrow / stock loan revenue was $ 4,148,000 ($ 8,836,000 gross revenue minus $ 4,688,000 expenses) and $ 7,726,000 ($ 16,301,000 gross revenue

less $ 8,575,000 expenses).

the three and nine months ended September 30, 2023, stock borrow / stock loan revenue was $ 4,008,000 ($ 13,000,000 gross revenue less $ 8,992,000

expenses) and $ 11,963,000 ($ 34,300,000 gross revenue less $ 22,337,000 expenses), respectively.

For the three and nine months ended September

30, 2022, stock borrow / stock loan revenue was $ 4,183,000 ($ 9,921,000 gross revenue minus $ 5,738,000 expenses) and $ 11,909,000 ($ 26,222,000

gross revenue less $ 14,313,000 expenses), respectively.

Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s

2 unchanged sentences

estimate of the annual effective tax rate and records cumulative adjustments as necessary.

As of June 30, 2023, the Company has concluded

that its deferred tax assets are realizable on a more-likely-than-not basis with the exception of certain state net operating losses.

For the three and six months

ended June 30, 2023, the Company recorded an income tax provision of $ 969,000 and $ 2,105,000 on pre-tax book income of $ 3,697,000 and

$ 8,048,000 .

The effective tax rate for both the three and six months ended June 30, 2023 was 26 %.

The effective tax rate differs from

the federal statutory rate of 21 % primarily related to certain permanent tax differences and state and local taxes.

For the three and six months

ended June 30, 2022, the Company recorded an income tax benefit of $ 1,027,000 and $ 1,309,000 on pre-tax book loss of $ 517,000 and $ 1,890,000 .

The effective tax rate for the three and six months ended June 30, 2022 was 199 % and 69 % respectively.

As of both June 30, 2023 and

December 31, 2022, the Company recorded an uncertain tax position of $ 1,596,000 related to various tax matters, which is included in the

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

As of September 30, 2023, the Company has concluded

that its deferred tax assets are realizable on a more-likely-than-not basis with the with the exception of investments that are expected

to generate a capital loss when realized and certain state net operating losses.

the three months ended September 30, 2023, the Company recorded an income tax provision of $ 1,516,000 on pre-tax book income of $ 4,273,000 .

For the nine months ended September 30, 2023, the Company recorded an income tax provision of $ 3,621,000 on pre-tax book income of $ 12,321,000 .

The effective tax rate for the three and nine months ended September 30, 2023 was 35 % and 29 % respectively.

The effective tax rate differs

from the federal statutory rate of 21 % primarily related to certain permanent tax differences and state and local taxes including the

impact of finalizing the prior year tax filings.

the three months ended September 30, 2022, the Company recorded an income tax provision of $ 473,000 on pre-tax book income of $ 1,440,000 .

For the nine months ended September 30, 2022, the Company recorded an income tax benefit of $ 836,000 on pre-tax book loss of $ 451,000 .

The effective tax rate for the three and nine months ended September 30, 2022 was 33 % and 185 %, respectively.

The effective tax rate differs

from the federal statutory rate of 21 % primarily related to the benefit from the reversal of the uncertain tax position related to the

2018 amended tax return due to the expiration of the statute of limitations and certain permanent tax differences and state and local

As of both September 30, 2023

and December 31, 2022, the Company recorded an uncertain tax position of $ 1,596,000 related to various tax matters, which is included

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

Capital Requirements

3 unchanged sentences

shall not be less than the lower of $ 1 million or 2 % of aggregate debit items arising from customer transactions.

As of June 30, 2023,

MSCO’s net capital was $ 45.8 million, which was approximately $ 44.2 million in excess of its required net capital of $ 1.6 million,

and its percentage of aggregate debit balances to net capital was 57.60 %.

As of September 30,

2023, MSCO’s net capital was $ 54.1 million, which was approximately $ 52.3 million in excess of its required net capital of $ 1.8

million, and its percentage of aggregate debit balances to net capital was 60.50 %.

As of December 31, 2022, MSCO’s

4 unchanged sentences

Protection Rule 15c3-3 which requires segregation of funds in a special reserve account for the exclusive benefit of customers.

June 30, 2023, MSCO had cash and securities deposits of $ 253.4 million (cash of $ 81.3 million, securities with a fair value of $ 172.1

September 30, 2023, MSCO had cash and securities deposits of $ 236.2 million (cash of $ 118.1 million, securities with a fair value of $ 118.1

million) in the special reserve accounts which was $ 26.1 million in excess of the deposit requirement of $ 210.1 million.

After adjustments

for deposit(s) and / or withdrawal(s) made on July 3, 2023, MSCO had $ 2.5 million in excess of the deposit requirement.

for deposit(s) and / or withdrawal(s) made on October 2, 2023, MSCO had $ 2.0 million in excess of the deposit requirement.

of December 31, 2022, MSCO had cash and securities deposits of $ 276.2 million (cash of $ 135.2 million, securities with a fair

1 unchanged sentence

The Company made no subsequent deposits or withdrawals on January 3, 2023.

of June 30, 2023, the Company was subject to the PAB Account Rule 15c3-3 of the SEC which requires segregation of funds in a special reserve

account for the exclusive benefit of proprietary accounts of introducing broker-dealers.

As of June 30, 2023, the Company had $ 1.3 million

in the special reserve account which was approximately $ 0.01 million in excess of the deposit requirement of approximately $ 1.3 million.

The Company made no subsequent deposits or withdrawals on July 3, 2023.

As of December 31, 2022, the Company did not hold any proprietary

accounts of introducing broker-dealers.

of September 30, 2023, the Company was subject to the PAB Account Rule 15c3-3 of the SEC

which requires segregation of funds in a special reserve account for the exclusive benefit of proprietary accounts of introducing broker-dealers.

As of September 30, 2023, the Company had $ 1.2 million in the special reserve account which

was approximately $ 0.2 million in excess of the deposit requirement of approximately $ 1.0 million.

The Company made no subsequent deposits

or withdrawals on October 2, 2023.

As of December 31, 2022, the Company did not hold any proprietary accounts of introducing broker-dealers.

RISE, as a member of FINRA,

6 unchanged sentences

Exchange Act or Rule 15c3-1.

As of June 30, 2023, RISE’s

net capital was approximately $ 1.3 million which was $ 1.1 million in excess of its minimum requirement of $ 250,000 under 15c3-1.

December 31, 2022, RISE’s net capital was approximately $ 1.2 million which was $ 0.9 million in excess of its minimum requirement

of $ 250,000 under 15c3-1.

As of September 30, 2023, RISE’s

regulatory net capital was approximately $ 1.2 million which was $ 1.0 million in excess of its minimum requirement of $ 250,000 under 15c3-1.

As of December 31, 2022, RISE’s regulatory net capital was approximately $ 1.2 million which was $ 0.9 million in excess of its minimum

requirement of $ 250,000 under 15c3-1.

Financial Instruments with Off-Balance

4 unchanged sentences

the Company’s 2022 Form 10-K for further information.

of June 30, 2023, the Company had margin loans extended to its customers of approximately $ 350.3 million, of which $ 61.1 million is within

the line item “Receivables from customers” on the statements of financial condition.

As of December 31, 2022, the Company

had margin loans extended to its customers of approximately $ 365.4 million, of which $ 52.1 million is in the line item “Receivables

of September 30, 2023, the Company had margin loans extended to its customers of approximately $ 359.3 million, of which $ 71.8 million

is within the line item “Receivables from customers” on the statements of financial condition.

As of December 31, 2022, the

Company had margin loans extended to its customers of approximately $ 365.4 million, of which $ 52.1 million is in the line item “Receivables

from customers” on the statements of financial condition.

There were no material losses for unsettled customer transactions for

the three and six months ended June 30, 2023 and 2022.

the three and nine months ended September 30, 2023 and 2022.

Commitments, Contingencies, and Other

1 unchanged sentence

Company is party to certain claims, suits and complaints arising in the ordinary course of business.

As of June 30, 2023, all legal matters

are without merit or involve amounts which would not have a material impact on the Company’s results of operations or financial

As of September 30, 2023, all legal

matters are without merit or involve amounts which would not have a material impact on the Company’s results of operations or financial

Overnight Financing

of both June 30, 2023 and December 31, 2022, MSCO had an available line of credit for short term overnight demand borrowing with BMO Harris

Bank (“BMO Harris”) of up to $ 25 million.

As of those dates, MSCO had no outstanding loan balance and there were no commitment

fees or other restrictions on this line of credit.

On May 23, 2022, MSCO increased its principal amount for this line of credit from $ 15

million to $ 25 million.

of both September 30, 2023 and December 31, 2022, MSCO had an available line of credit for short term overnight demand borrowing with

BMO Harris Bank (“BMO Harris”) of up to $ 25 million.

As of those dates, MSCO had no outstanding loan balance and there were

no commitment fees or other restrictions on this line of credit.

On May 23, 2022, MSCO increased its principal amount for this line of

credit from $ 15 million to $ 25 million.

At the Market Offering

10 unchanged sentences

and terms of alternative sources of capital.

For the three and six months ended June 30, 2023 and 2022, the Company did not sell any shares

pursuant to this Sales Agreement.

For the three and nine months ended September 30, 2023 and 2022, the Company did not sell

any shares pursuant to this Sales Agreement.

August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of the arrangement

6 unchanged sentences

Prior to August 1, 2025

For the three and six months

ended June 30, 2023 and 2022, there has been no expense recognized for any early termination fees.

The Company believes that it is unlikely

it will have to make material payments related to early termination fees and has not recorded any contingent liability in the financial

statements related to this arrangement.

For the three and nine months

ended September 30, 2023 and 2022, there has been no expense recognized for any early termination fees.

The Company believes that it is

unlikely it will have to make material payments related to early termination fees and has not recorded any contingent liability in the

financial statements related to this arrangement.

Technology Vendor

March 31, 2023, the Company entered into an agreement with a technology vendor for certain development projects for a total of approximately

$ 1.2 million over a term of 2 years.

As of June 30, 2023, no expenses were incurred.

March 31, 2023, the Company entered into an agreement with a technology vendor for certain development projects.

As of September 30,

2023, the total budget for this project was approximately $ 1.1 million over a term of 2 years.

For the three and nine months ended September

30, 2023, we incurred $ 214,000 in expenses related to this project.

General Contingencies

1 unchanged sentence

Other than the below, there have been no material updates to the Company’s general contingencies during the three and

six months ended June 30, 2023.

nine months ended September 30, 2023.

Company, through its affiliate, Kennedy Cabot Acquisition, LLC (“KCA”), is self-insured with respect to employee health claims.

As part of this plan, the Company recognized expenses of $ 266,000 and $ 409,000 for the three months ended June 30, 2023 and 2022, respectively.

The Company recognized expenses as part of this plan of $ 466,000 and $ 905,000 for the six months ended June 30, 2023 and 2022, respectively.

Company had an accrual of $ 55,000 as of June 30, 2023, which represents the estimate of future expense to be recognized for claims incurred

during the period.

As part of this plan, the Company recognized expenses of $ 336,000 and $ 234,000 for the three months ended September 30, 2023 and 2022,

respectively.

The Company recognized expenses as part of this plan of $ 782,000 and $ 1,139,000 for the nine months ended September 30,

2023 and 2022, respectively.

Company had an accrual of $ 76,000 as of September 30, 2023, which represents the estimate of future expense to be recognized for claims

incurred during the period.

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.

a result of the transaction and recent developments with Kakaopay, the Company has incurred and may incur additional legal expenses evaluating

these matters, the amount of which is uncertain as of the date hereof.

Refer to Note 5 – Kakaopay Transaction for further detail.

Employee Benefit Plans

3 unchanged sentences

The Company may also make discretionary contributions

The Company incurred $ 109,000 of expense for the three and six months ended June 30, 2023 for 401(k) employee contribution

No contributions to the plan were made by the Company or KCA for the three and six months ended June 30, 2022.

For 401(k) employee contribution matching, the Company incurred $ 26,000 and $ 135,000 of expense for the three and nine months

ended September 30, 2023, respectively.

The Company did not incur any expense for 401(k) employee contribution matching in 2022.

Company has an equity incentive plan that provides for the grant of stock options, restricted stock, and other equity awards of the Company’s

1 unchanged sentence

There were 3 million

shares reserved under the equity incentive plan and 2,704,000 shares remained as of June 30, 2023.

The Company did not issue any shares

under this plan for the three and six months ended June 30, 2023 and 2022.

shares reserved under the equity incentive plan and 2,704,000 shares remained as of September 30, 2023.

For the three and nine months

ended September 30, 2022, the Company granted 138,000 restricted units that were fully vested upon grant date.

The restricted

units had a grant date fair value of $ 1.70 per share and compensation expense of $ 235,000 was recognized and is included in

the line item “Employee compensation and benefits” in the statements of operations both for the three and nine months ended

September 30, 2022.

The Company did not issue any shares under this plan for the three and nine months ended September 30, 2023.

Related Party

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.

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 the first quarter of 2023, KCA entered into an agreement with the Company for payroll processing services.

The Company incurred $ 10,000 and $ 40,000 of expenses related to these services for the three and nine months ended September 30, 2023,

respectively.

owns a license from the Muriel Siebert Estate / Foundation to use the names “Muriel Siebert & Co., Inc.” and “Siebert”

within business activities, which expires in 2025.

KCA passed through to the Company its cost of $ 15,000 for the use of these names in

both the three ended June 30, 2023 and 2022, respectively, and $ 30,000 for the use of these names in both the six months ended June 30,

2023 and 2022.

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 for the three

and six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, the Company had a payable to KCA for miscellaneous

expenses of $ 6,000 and $ 4,000 , respectively, which are in the line item “Accounts payable and accrued liabilities” on the

statements of financial condition.

For the use of these names, KCA passed through to the Company $ 15,000 and $ 45,000 for

the three and nine months ended September 30, 2023, respectively.

There were no costs passed through to the Company for the use of these

names in 2022.

Other than the above arrangements,

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 for the three and nine months ended September 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, the Company

had a payable to KCA for miscellaneous expenses of $ 11,000 and $ 4,000 , respectively, which are in the line item “Accounts payable

and accrued liabilities” on the statements of financial condition.

brokers the insurance policies for related parties.

Revenue for PW from related parties was $ 8,000 and $ 7,000 for the three months ended

June 30, 2023 and 2022, respectively.

Revenue for PW from related parties was $ 91,000 and $ 95,000 for the six months ended June 30, 2023

September 30, 2023 and 2022, respectively.

Revenue for PW from related parties was $ 99,000 and $ 102,000 for the nine months ended September

30, 2023 and 2022, respectively.

1 unchanged sentence

March 31, 2022, Gloria E.

Gebbia, a director of the Company, exchanged approximately $ 2.9 million of her notes payable to the Company

for 24 % of the outstanding and issued membership interests in RISE.

Gebbia, a director of the Company, exchanged approximately $ 2.9 million of the Company’s notes payable

Gebbia for 24 % of the outstanding and issued membership interests in RISE.

Company has entered into various notes payable with Gloria E.

The Company paid off this notes payable in 2022 and as such,

the Company had no interest expense related to these notes payable in 2023.

The Company had interest expense related to these notes payable

of $ 0 and $ 31,000 for the three months ended June 30, 2023 and 2022, respectively.

The Company had interest expense related to these notes

payable of $ 0 and $ 101,000 for the six months ended June 30, 2023 and 2022, respectively.

of $ 30,000 and $ 131,000 for the three and nine months ended September 30, 2022, respectively.

Gebbia had extended loans to certain Company employees for the purchase of the Company’s shares.

4 unchanged sentences

Gebbia hold executive positions within the Company’s subsidiaries and their compensation was

in aggregate $ 606,000 and $ 631,000 for the three months ended June 30, 2023 and 2022, respectively.

The compensation for the sons of Gloria

in aggregate $ 748,000 and $ 820,000 for the three months ended September 30, 2023 and 2022, respectively.

The compensation for the sons

Gebbia and John J.

Gebbia was in aggregate $ 1,130,000 and $ 1,074,000 for the six months ended June 30, 2023 and 2023, respectively.

Gebbia was in aggregate $ 1,878,000 and $ 1,894,000 for the nine months ended September 30, 2023 and 2022,

respectively.

Part of their compensation includes performance-based payments related to key revenue streams.

5 unchanged sentences

Gebbia as Chairman of the Board and Chief Executive Officer.

Company compensated Gloria E.

Gebbia and John J.

Gebbia $ 90,000 each for the nine months ended September 30, 2023 for board of director

1, 2023, Gloria E.

Gebbia and John J.

Gebbia entered into a consulting agreement with the Company for services.

The compensation for the

consulting agreement for Gloria E.

Gebbia was $ 30,000 for both the three and nine months ended September 30, 2023.

The compensation for

the consulting agreement for John J.

Gebbia was $ 125,000 for both the three and nine months ended September 30, 2023.

Gebbia Sullivan County Land Trust

2 unchanged sentences

is a member of the Gebbia Family.

For both the three months ended June 30, 2023 and 2022, rent expense was $ 15,000 for this branch office.

For both the six months ended June 30, 2023 and 2022, rent expense was $ 30,000 for this branch office.

Tigress and Hedge

Company entered into various agreements and subsequent terminations with Tigress and Hedge Connection.

Refer to Note 3 – Transactions

with Tigress and Hedge Connection and Note 12– Equity Method Investment in Related Party for further detail.

For both the three months ended September 30, 2023 and 2022, rent expense was $ 15,000 for this branch

For both the nine months ended September 30, 2023 and 2022, rent expense was $ 45,000 for this branch office.

During the year ended December

2 unchanged sentences

RISE entered into a clearing arrangement with MSCO and deposited a clearing fund escrow deposit of $ 50,000 to

MSCO and had excess cash of approximately $ 1.3 million in its brokerage account at MSCO as of June 30, 2023.

MSCO and had excess cash of approximately $ 1.0 million in its brokerage account at MSCO as of September 30, 2023.

Kakaopay and Affiliates

April 27, 2023, the Company entered into the First Tranche Stock Purchase Agreement, pursuant to which the Company agreed to issue to

Kakaopay the First Tranche Shares at a per share price of Two Dollars Fifteen Cents ($ 2.15 ).

Refer to Note 5 – Kakaopay Transaction

for further details on the transaction.

MSCO entered into an agreement whereby it would provide an omnibus trading account for Kakaopay’s

subsidiary, Kakao Pay Securities Corp., and provide trade execution services to Kakao Pay Securities Corp, subject to compliance with

applicable U.S.

laws, rules and regulations.

Subsequent Events

The Company has evaluated

events that have occurred subsequent to June 30, 2023 and through August 7, 2023, the date of the filing of this Report.

July 7, 2023, the Company entered into a new lease agreement expiring in December 2028 for office space in the World Financial Center

in New York City.

This office will replace the New Jersey office as one of the Company’s key operating centers and the total commitment

of the lease is approximately $ 2,114,000 .

July 10, 2023, the Company entered into a Share Redemption Agreement with Cynthia DiBartolo, CEO of Tigress, pursuant to which the Company

repurchased from Ms.

DiBartolo one million ( 1,000,000 ) of its common stock held by Ms.

DiBartolo in exchange for conveying to Ms.

the Company’s 17 % interest in Tigress.

The financial impact of the transaction for the Company will be a one-time non-cash expense

of approximately $ 185,000 for the three months ended June 30, 2023, which is recorded in the line item “Impairment of equity investments”

in the statements of operations.

Refer to Siebert’s Current Report on Form 8-K filed on July 14, 2023 for further detail regarding

this transaction.

events that have occurred subsequent to September 30, 2023 and through November 14, 2023, the date of the filing of this Report.

On October 20, 2023, the Company relocated its headquarters to 653 Collins

Avenue, Miami Beach, FL 33139.

the closing of the First Tranche with Kakaopay, there have been numerous developments related to Kakaopay and the transaction with Siebert.

Refer to Note 5 – Kakaopay Transaction for further detail.

Based on the Company’s

assessment, 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 financial statements as of June 30, 2023.

would require disclosure in this Report or would be required to be recognized in the financial statements as of September 30, 2023.

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-Q

Item 1. Financial Statements